MAGGIE LAKE: Welcome to the Real Vision Daily Briefing. It's Tuesday, April 5th. I'm Maggie Lake. We are once again coming to you from live from the Real Vision macro experience at the Fairmont Grande del Mar. It's been terrific. Our guest today here with me is someone really special that we're excited to introduce you to, Mish Schneider, Director of Trading Education at MarketGauge.com. Misha is someone who's a frequent contributor for Real Vision and guest on the platform. This is the first time she's doing the Daily Briefing. Welcome, Mish.
MICHELE SCHNEIDER: Thank you, Maggie. I just want to start out by saying, how wonderful Real Vision is. Not just as a company, everybody in the staff. Then to be able to put on a presentation like this and make everybody feel so special is really appreciated.
MAGGIE LAKE: Oh, that's great. It's so good to be here live in person and get to mingle with the people that we see on the platform. We don't really get to spend time in person. You guys don't get to spend time in person. We're really getting a good taste of the environment we're in right now, because we have a lot of divergent opinions.
You were listening to sessions. We were just talking about it. And you're like, that made sense to be. That was interesting. I'm not sure about that. It's great to air it all out and try to hear what people are thinking and see if we can all use that. Before we dive in, and it's a good day to talk, because we had equities settling into the close. Never a good sign.
US markets down. NASDAQ really taking a hit a lot of it. It seems like it's coming from Fed Governor Brainard saying, listen, we're going to rapidly reduce the size of the balance sheet. We're going to start to do it soon. Again, getting a little more aggressive than maybe people had anticipated, even as we talk about 50 basis point rate hike at the next meeting. And just try to figure out what it all means, especially for risk assets.
There's a lot to unpack. But first, give everyone a little background. You and I have done shows together, so I know some of it. But for those who are new to you, just tell us a little bit about yourself.
MICHELE SCHNEIDER: Well, I grew up in New York. I grew up with parents that were very middle class. And so, we weren't kind of family that sat around and talked about our stock portfolios to dinner. I became a teacher, which is what they thought I should do. I became a special ed teacher because I was particularly fascinated by the different brain.
Then years later, after doing that for a while, I met this girl in a building that I lived in in Manhattan, at that point I've moved on from being near my parents, and she worked for Merrill Lynch down on the floor, commodities exchange floor. She said, hey, you want to come down and have a look? I did. And it was one of those light bulbs.
I was just like, oh my god, because I had been so sheltered. And now here, I could see that these people running around had their fingers on the pulse. I loved all the flashing of the numbers. I didn't understand what commodities were at the point, but I just felt this was where I needed to be. And so, I wound up, not so easily, but I did get down there.
MAGGIE LAKE: That's an understatement.
MICHELE SCHNEIDER: Yeah. I got down there at a time that was probably up till now the most interesting and exciting time for commodities, which was the hyperinflation of the late 1970s, early 1980s. I was a young girl who was hired as a coffee sugar cocoa expert, where I was getting on the Squawk Box telling brokers around the world what was going on, which of course was a real fast track to having to learn and then Conti commodities put me in the pit.
Then they went under because again, this is so interesting how history comes full circle with LME and the Nickel exposure. The LME Silver blew up because of the Hunt brothers and Conti commodities was clearing those trades. They blew up and I found myself now on the floor without a job. So, I became a local. Then I started trading all the different pits. Most of my time in the oil pit and I spent 13, 14 years there, so it was great the best education, not just in markets but really life.
MAGGIE LAKE: It's so true. A quick teaser, I'm going to give you more information later, but Mish is, you can hear a lot more about that background. She is one of the guests on a new podcast that we're doing, My Life in 4 Trades, which gives the two best to worst trades and what it means. Not just about trading those really bad decision making tradeoffs in life, and how people got to where they are, and the strategies and thinking that helped them stay successful. So, super excited about it.
We had a great conversation. That's a little sneak bit to it. That background is one of the reasons we love having you on because there's so much happening, and commodities are at the center of it. Of course, you look at everything. You look across all asset classes and bring that trading experience with your education experience I think, and really help us understand it, which is why I love having Mish on.
Let's dive into today. What's top of mind for you as you look at the action? A lot of we've been talking about leading up to this a lot of questions about it was this a bear market rally, meaning stocks going up and only temporary and going to have another leg down. What would be the catalyst? Then sure enough today, it looks like things are deteriorating. What do you think about as you look across the screen today?
MICHELE SCHNEIDER: Well, I've watched certainly a lot of people get really bullish at the top. Just like we're probably going to watch a lot of people get bearish at the bottom because ultimately, I think where we're at right now, is an established trading range. Now, that doesn't mean that we can't break under the trading range or break out from the trading range. Right now, obviously, we'd be looking more at the breakdown.
It does tell me that if we are looking at somewhat of a mimicry of where we were at the last time we had these levels of inflations, the market traded within a 40% range for 15 years. And so-- Yeah, the DAO. The DAO went from 1000 to 600, and traded within that range until 1984, when it finally broke out of 1000 and never looked back. Now we have the reverse situation, because we had commodities at historical lows with equities at historical highs. It was seemed pretty obvious to people who really studied this, that that was not sustainable. Now, of course--
MAGGIE LAKE: [?] we were talking about. Gosh, I don't know. Sort of late summer, you are flagging that.
MICHELE SCHNEIDER: Yeah. This whole idea of stagflation is really, I think, the narrative here. Yes, there's a lot of conversation about recession coming with the inverted yield curve leads to recession. But nothing about today is typical. Even though we see parallels to the 1970s, there certainly are. We still have a very unique situation because of the accommodative Fed policy we've had. Also because of COVID.
I think people are forgetting about the impact of a pandemic, that really change everything, labor, bank policy, the way goods move, supply chain, all of that. And we're still just coming out of it. Some countries aren't even coming out of it.
MAGGIE LAKE: China?
MICHELE SCHNEIDER: Yeah, exactly. And so, here we are. Now everybody's trying to decipher what's going on. I say, really what's going on is that we're seeing a supercycle of commodities. Equities, even though the Fed was hawkish today, it seems like Powell sends out his minions. Yet, when it push comes to shove, they're doing things very slowly, probably too slowly. And as a result, you have a lot of retail investors. Huge amount of options buying. Volatility is still a relative lows.
That's really why I think the recession thing, maybe at some point, but now I'm more like I say, sticking to the trading range theory. If we just look at small caps, if they hold at 202, which they basically tested today, and they went to 212, which was the resistance, then this chop could be going on. That's why I'm trying to tell most people who invest, get creative and look at other things outside of the typical index funds or regular growth assets.
MAGGIE LAKE: That's where people gotten in that lane. You didn't have to be very discriminating. You just stuck your money in an equity fund, and it went up. And it went up substantially. So, you didn't have to think about cross assets that much.
MICHELE SCHNEIDER: Right. And so, that's also part of the problem is that, for the last 13 years, the market was very forgiving. Even if it went against you, even if it went against you 10%, 20% or 40%, like it did in COVID, it came roaring back. That is now I think a completely different mindset that people have to embrace.
MAGGIE LAKE: What I like about what you're saying is, as you know we have traders and active traders, as part of our viewership. We have longer term. We have investors. Everyone's got to grow their money. So, the problem with range trade is you're not going to be able to grow your savings, especially if you're on the retail side. You need to do something to be able to get yield and to get income.
MICHELE SCHNEIDER: Absolutely. What I've told a lot of the boomers, especially those who are getting ready to retire, is that they really need to call their financial planners. Look at their portfolios, and get out of their growth stocks, especially if they're really counting on that money for their retirement. If they want to continue to invest to look across other assets, and of course, we've been talking about commodities for quite some time.
Even today with the market down so much, wheat, coffee, sugar, DBA, which represents a lot of the other grains and the softs, we're all up. That's a whole other thing we can talk about. But yeah, in terms of where is your money going to grow right now, that's going to be a really interesting question. And that could ultimately lead to a lot more of what we're already seeing, which is just general malaise and unrest, because the status quo has been completely changed.
MAGGIE LAKE: I think you say an interesting thing about COVID, because you're right, we've pivoted, because now we have war, so we're all focused on that. I don't know that we know the changes that have happened yet. We know things were accelerated, massively disrupted. Things may not go back to the way they were before. But I'm not sure we really know what that looks like yet. That makes it hard to figure out what's happening, whether you look at the labor market or supply chains.
MICHELE SCHNEIDER: Exactly. Let's pick last month, two months ago now, in February, 4.4 million people quit their jobs. This isn't a situation where clearly people are paying more for the goods. And yet, even though you hear a lot of media about people really feeling the pinch, and of course they are, they're still a general sentiment out there. I think a little bit of disbelief that this will last. I think people still think this is all transitory.
They blame COVID for part. Obviously, the war in Ukraine is the other part. But this was mulling about even before because suppliers just stopped producing raw material. When you take somebody like Cathie Wood, and I'm certainly not going to discredit her because I think her vision is interesting and probably going to be right in about 15 years.
But this whole idea that technology is going to take care of us, and we never have to worry about the price of raw materials, or how things get moved about, again, while you can see by the ARK fund, that to me was the precursor of where things were going to shift in terms of growth stocks, disruptive technology, is not the future right now. And so, again, people need to look at what's really happening, and there's a real sea change going on.
All of a sudden, people are looking around and saying, this is what I need, not necessarily what I want. And yet there's still the sense of the stock market is the best place to put your money because it always yields a returns. If you just wait seven years. Also, on top of that, we have a whole other macro thing going on, which we can talk about it another time. But really, I think we're in a just a state of distress and lack of credibility exists everywhere. And people are waking up to that.
MAGGIE LAKE: Yeah, I think that's so true. I don't think enough attention to be paid. Mish is going to do a panel. I'm talking about some of these macro issues. So, I hope we get a chance tomorrow to dive into that and unpack that a little bit. Because I think it is an undercurrent that's not being addressed. I want to ask you about commodities. We've seen big moves already in some of this. You telegraph some of them to us last year, and then they've even been stronger some of the advances because of the disruptions we've seen from Ukraine. Has that played out, like people were not in commodities already, is there still time to get in them? How are you thinking about that?
MICHELE SCHNEIDER: Oh, definitely. If we just take something like DBA, and we just look at a chart. If you put out a chart, it's been consolidating now for the last several months. Probably because there has been volatility even in some of the commodities. Wheats gone up as high as 13, and then drop down to the mid-950, if we're looking at W-E-A-T, not the actual crop price. Oil has been all over the map. Sugar has been all over the map. Coffee has been all over the map.
But the resiliency continues to be there. And I think it's just another Launchpad waiting to happen. I do believe that food inflation, I believe this for two years now, is really the driver of where we're going in terms of this hyperinflation. That oil can be up and down and be tossed around by the politicians and everything else. And whether or not we drill or don't drill, or we look at ESG or not, and again, that's all something we can talk about another time, but people need to eat.
I think what we're seeing here is exactly that is the realization that regardless of what's happening, we have mother nature as another factor here. The weather patterns in the United States have been insane in some of these weak growing regions, that this is still an opportunity. And we have not seen anywhere near the pinnacle of where this can go.
MAGGIE LAKE: Wow. And they've been up a lot. That's both interesting and really frightening, from a consumer point of view. John was asking that, John from the RV side, do you expect commodities, metals, energy, etc.-- so, let's put food aside for just one second and we'll take this question, because he's asking about metals and energy too. And we need to segment them because you can have broad commodity exposure, or you could have it more targeted.
John's asking, do you expect commodities, metals, energy sector to pull back after such a strong run in the past few weeks? What's the outlook for the rest of the year? But I'll tag on that, John, if you don't mind? Should we think of them separately, or should we think of them broadly? Because we just said it can't do that with stocks. What about what about commodities?
MICHELE SCHNEIDER: I think you have to look at them in both ways, because there's a connection among all the commodities right now, and that is good. Again, getting back to this period that we have come into, and again, I don't want to overlap too much into what I'm going to talk about tomorrow. But really, we're talking about a period of a revolutionary mindset. And that revolution can look like a lot of different things.
MAGGIE LAKE: Revolutionary in terms of--
MICHELE SCHNEIDER: Just changing the way things have always been done, because after a long period of complacency, people have woken up to a level of distrust, banks, medical places, science, government, information in general, false news. I mean, all of that. Everything that we had counted on, especially in our complacent years, is now we're saying, oh, wait a minute, we can't count on any of this right now.
If you look at that from a commodities trading perspective, where do commodities shine in periods of these hyper unrest situations, whether that looks like a war in Ukraine, whether that looks like a political party that emerges that's different like the Tea Party did years ago, whether it looks like cryptocurrency or decentralization. However, that looks, it's coming, and it's been coming, and it's continuing to come.
In that way, we look at it collectively. As far as the individual instruments, I think you have to look at obviously, the data points in the charts, and things do obviously get overbought and oversold. However, energy right now is in a situation where there's more of it. It's actually in some ways more readily available, if we are actually, I mean, not like tomorrow, but it's readily available if we go there, and if we can get past all the conversations about ESG versus [?] and blah, blah, blah.
If we will and then look at nuclear energy and all of that stuff. Clearly, what we've discovered, really started I think in the Texas freeze a couple of years ago, is that we don't have enough energy to fuel the planet in a crisis, the way things are right now. That can I think continue to be volatile. Probably, I [?] say more to the upside and the downside at this point. If you take a look at the grains, I'm just straight up bullish. Any dip I think should be bought. If you look at gold and silver, that's a whole other animal.
MAGGIE LAKE: Everyone's joking, how--
MICHELE SCHNEIDER: I know. And it is tough, because again, it's not acting in the classic way. But if things actually get more unruly, and when people can eat, it's already started. Obviously, in poorer countries, and now Europe is going to have an issue. The United States, we do have people here starving, which is amazing. But for the most part, we still have access to food. If that gets worse, this is where people turn to gold.
Gold is the mechanism of geopolitical strife. In 1979, it also can be a laggard to oil. If you go back and look at what happened in the 1970s, oil went up first. We had the oil embargo. Then after that, you had another spike when OPEC played around with the prices. It