Time to Get Bearish

Published on
November 6th, 2019
Duration
16 minutes

Time to Get Bearish

Trade Ideas ·
Featuring Teddy Vallee

Published on: November 6th, 2019 • Duration: 16 minutes

Is it finally time to short the stock market? Teddy Vallee, founder & CIO of Pervalle Global, makes the bear case for equities and argues that the market is in for a rude awakening over the next few months. In this interview with Jake Merl, Vallee walks through his leading indicators for earnings and global growth, highlights the glaring divergence between the stock market and economic indicators such as the ISM, and notes an options trade to take advantage of the unusual situation. Filmed on November 1, 2019.

Comments

Transcript

  • SB
    Stewart B.
    10 November 2019 @ 17:06
    Logically that makes sense. Be careful though, if the market starts to fall, Trump can reverse this in seconds with a tweet or two. Similarly the Federal Reserve 'Politburo' can easily make equity markets levitate with promises of even more QE. If they are stimulating asset markets this much currently, when we're already at all time highs, just imagine how they'll respond if markets fall even slightly!
  • SS
    Simeon S.
    8 November 2019 @ 17:41
    ISM at all time lows? Correct.
  • mp
    michael p.
    8 November 2019 @ 01:49
    Please in all interviews, we need to know past performance. Believe that this individual has been bearish for some time. Our goal, as traders/investors is to make money. Simple. It is not to sound smart or produce great stats/charts. Is this individual making us positive returns. No. I actually think he has never managed money in his life. Hence why would you have him on. I have asked polite questions to him on TWTR. No response. Why. He has none. Craziest thing on this interview is that NYSE A/D is hitting all time highs. I truly recommend RV to screen your people much better. It is one thing to sound smart, it is another to make money. You have a great platform, doing not destroy it with a bias.
    • AN
      Anh N.
      8 November 2019 @ 14:58
      Unless he’s managing your money then he doesn’t need to take the time out of his day to answer your “polite” questions. Trade Ideas is an open segment on views not actual trade advice.
    • KW
      K W.
      11 November 2019 @ 06:01
      You should make your own decision not relying on the speaker. I think RV brings all perspective of market to the table. I don't know the speaker but I have similar view of the market as him for the next two months.
  • BF
    Bref F.
    8 November 2019 @ 01:15
    Love listening to your insight Teddy. Will your new Institutional Research product you are launching be available to Retail Investors?
  • DP
    David P.
    8 November 2019 @ 00:21
    Good interview. The charts and discussion worked well together.. As to what's the root cause of the PMI / equities disconnect? Easy. FRBNY trading desking buying S&P futures and creating gap ups for the cash open. That combined with no human traders, algos, and passive allocation about all it takes. Question is when / if the disconnect creates any degree of market price discovery. SOXX is the place I'm watching. The semis as a group are so totally disconnected from reality that I can close my eyes and think I'm back in San Francisco in Fall of 1999. It's that crazy...
  • JK
    Jay K.
    7 November 2019 @ 19:51
    Very well thought out.
  • T
    Thomas .
    7 November 2019 @ 18:26
    Very thoughtful analysis. Have him back in January.
  • JM
    Jim M.
    7 November 2019 @ 13:40
    As always be careful. As good as RV is, it's bearish bent can be hazardous to your portfolio/career.
    • Av
      Arthur v.
      9 November 2019 @ 13:13
      Agreed, especially Raoul Pal with his doom loop as one of the founders. Hence why I like to also subscribe to hedgeye which I find quantative neutral.
  • GT
    Greg T.
    6 November 2019 @ 20:34
    He has been bearish for quite some time now hasn't he?
    • GT
      Greg T.
      6 November 2019 @ 20:40
      He has lack of liquidity? Seriously, the FED just said they are buying bonds again and not raising rates forever. Then he says he has no catalyst. Geez. Where did they find this guy. Never heard of him.
  • BC
    Brent C.
    6 November 2019 @ 19:38
    Teddy, I appreciate your view, and respect your process in arriving at your outcomes. I largely agree with your thoughts on the shorter-term (next 6 months). However, in my view, with the data that we currently have, your leads (as well as others whom I have tremendous respect for), a material decline in equities is the only thing standing btwn US stagnation/slow rebound & recession. My question then is, were that to occur, would that not change you optimism on risk assets generally next year? Not implying you sound overly bullish, just that it would likely take the US and global economy a bit longer to recover.
  • VP
    Vincent P.
    6 November 2019 @ 18:29
    Data stew. Liquidity provided in $100b daily repo and rising Fed balance sheet. Hard to think any large move lower to justify thesis. It is true the biggest wild cards remain headline "tweet" risk and interest rate expectations. Fu*k the data, this is the world as we know it.
  • GH
    Gary H.
    6 November 2019 @ 17:22
    Hedgeye called the outperformance of all these sectors some time ago. Going forward they are adding energy for 4Q
  • GB
    Gary B.
    6 November 2019 @ 17:07
    Not convinced of his outlook but if his Wall St career doesn't work he can fall back on being a mnemonist.
  • AA
    Aymman A.
    6 November 2019 @ 15:42
    Excellent analysis. New thought that this video this gave me was perhaps the market is rational and is moving into equity market bond substitutes because global yields are so crappy. I had not thought of things that way. Thanks.
  • EB
    Eric B.
    6 November 2019 @ 15:15
    Valued-added analysis. Thanks, Teddy!
  • JH
    Jesse H.
    6 November 2019 @ 13:03
    Found this not very useful and he seemed to be clutching at disparate straws in the PMI data. Also, not wise to just do historical comparisons right now and try to ascertain what is happening by looking in the rear-view mirror. We are in uncharted territory, so this analysis is not helpful and potentially misleading.
    • SJ
      Sean J.
      6 November 2019 @ 15:30
      Perhaps, but comparative base effects matter. While we live in a fractal world and any allocation process must be Bayesian, historical context is always a good starting point from which to build potential scenarios.
    • GT
      Greg T.
      7 November 2019 @ 01:32
      Agree. If you disagree with the perpetually forever bearish view on here, doom loop nonsense etc, expect the lemmings to give you a big thumbs down. LOL!
  • AN
    Anh N.
    6 November 2019 @ 12:03
    Fantastic Teddy!
  • Nv
    Nick v.
    6 November 2019 @ 10:56
    When I entered the market it lead the economy by around 6 months. Now markets responds. It doesn't lead anymore Trade progress tweet no 78, then ES rallies
    • Nv
      Nick v.
      6 November 2019 @ 10:57
      Apologies. I am referring to news, economic data
    • SJ
      Sean J.
      6 November 2019 @ 15:31
      Kyle Bass recently made the same point, that equity markets are now mainly coincident, not leading.
  • dd
    david d.
    6 November 2019 @ 10:54
    great