Navigating A 'Structural Shift' In Markets | Joseph Wang & Martin Pelletier

Martin Pelletier, Senior Portfolio Manage at TriVest Wealth joins Forward Guidance to discuss the "structural shift" that has occurred in markets due to rising inflation throughout 2021 & 2022, and how to navigate this new turning point.

With Martin's background running a long only energy hedge fund, we go on to discuss the energy trade and if the underinvestment in the industry has created the perfect catalyst for a sustained bull market, or not? We also discuss Joseph & Martin's thought on the labor market, the outlook for global central banks and the path ahead for 2023. To hear all this and more, you'll have to tune in!
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Use code GUIDANCE10 to get 10% off Permissionless 2023 in Austin:
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Timestamps:

00:00 Introduction
00:48 Managing Money During 2022
04:43 Markets Are Signalling A New "Turning Point"
10:19 2008 Signalled A "Structural Shift" In Canadian Asset Management
15:41 The Bank of Canada... Follows The Fed
17:55 Energy Is The Most Hated Trade Out There
24:11 Natural Gas & Energy Producers
30:24 Permissionless Plug
31:26 Housing & Interest Rates In Canada
37:50 Are We Heading For A Recession?
40:06 2020 Marked A "Structural Shift"
44:30 The Labor Market Remains Strong
52:46 The Anguish of Central Banking
57:42 The Role of Structured Notes In A Portfolio
01:07:30 The Path Ahead For 2023
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

[jonathanlee]

👍Jack is always well-informed in his questions. Thanks. Also, JW is the details man of Fed mechanics.👍

[ChuckSwiger]

Joseph makes my puny attempts to understand the fiscal and debt situation perfectly clear :) Last night after sunset (it happened to be VERY windy) I'm wondering how is civilization going to power all this stuff when the sun isn't shining and the wind is not blowing - you know that is going to have to be one heck of a gigantic battery. Ok, the govt can create as much money as is needed, you need more money? Boom, here it is. Of course the only problems are 1) still in debt ceiling debate which isn't making any waves since the Jan Yellen warning with a late Summer deadline to run out of 'extraordinary' measures and 2) Inflation. So the govt job is to somehow invest enough to get the supply side - as the demand side is going to be huge - productive and efficient to keep Inflation low. I've seen grand plans in the Economist mag, listened to some of TSLA master plan the other day. Getting from here to there is still pretty inconceivable to this electrical engineer.

[DylDeyfingOdds]

A video with both Joseph Wang & Jeff Snyder would be great…they’re kind on on opposing sides of things from my view, so a debate between them would be very revealing as to whose thesis is more credible surrounding the economy and markets

[sw]

Joseph is always so informative, love this guy.

[nwpete]

Not sure how some smart people come to a conclusion that Canadian real estate market is not in a bubble unless they are balls deep in REITs with their portfolio.

[Canadian_Eh_I]

The reason why Alberta Oil projects have been abandoned is because the dynamics at play dont make them profitable long term. It was a giant pump and dump. Oil sands projects use 25% of Canada's natural gas and rising. Its like burning gold to mine silver.

[brybryBillions]

Structured Notes overview was very interesting. Is this what JPM’s JEPI income ETF does with its equity linked notes that has Canadian Banks as counter party’s?

[unaldurmaz]

For natural gas gentleman spoke about weather effect but forgot about LNG and war in Ukraine, however I agree with his oil comments it always has been boom and bust cycle .

[WilliamBang]

I think the right thing to think about is how fast your currency will lose value & how strict lending standards will be for real estate, opposed to thinking real estate is going to fall. When rates were at 0, prices were going up beyond a million and people COULD borrow a million. How that rates are up, and the mortgage rate is 5-7%, people CAN'T Qualify. For most people, it's their ability to borrow the money because most people is not going to pay cash. Even if a house drops further, it only means your ability to borrow is even more narrow and probably you might not even qualify anymore. So what's the point of thinking the prices will drop?

Immigration should not be the focus. In fact, there's plenty of able Canadians. The problem is they are less motivated, thus most is waiting for inheritance. The entire education system need to be revised. Hell, people are going to need a PhD to flip burgers at McDonalds. I got my Bachelors degree, and so did all my friends. Most of them sit at home or some of a mediocre job that can't even afford a house. Immigrants are harder working because they do not need to keep an "image" they don't feel they have a "status", they are willing to climb the corporate ladder that Canadian-born are not.

The actual real problem is the lost in value of the currency. I've heard stories from people in Iran that were wealthy, suddenly they Sold their house then their money lost so much value it became useless. Then again that happened in other places as well. Having a roof over your head is better than hoarding cash that is constantly being devalued.

[ClyDIley]

Pelletier's outfit looking fresh!

[unaldurmaz]

Inflation shouldn't get out of control. This is very important

[DW-xtvz]

Bond duration is a predictive measure. Equity duration is an ex post narrative. You are using equity duration to explain the past - it doesn’t work in the future though so you are lying to yourself if you think you can proactively manage this. Too many other variables in equity pricing for this to be a useful concept.

[bn]

What do all of these comments about duration mean? Nobody ever defines it. Duration is a bond concept that is a price change in bond for 1% change in rates.

[KM-yxgh]

A lot of dribble drabble. Not much substance.

[FonderTomato]

Man I thought spam on twitter was bad.

But great interview

[Mt-gbjw]

Can you please do an interview like this but on Australia

[jcgoogle]

At about 47:00 Martin's question and Joseph's eventual reponse is absolutley correct.

The inflaiton in the US started

A, when senile ole joe started the demcorat war on the fossil fuel industry (the lifelblood of the economy) and

B when senile ole joe initiated and continued not only deficit spending, bu thelicoptering cjecks directly to consumers.

M2 (less M1) expansion, we've seen since the GFC, can be like the old phrase pushing on a string.

M1 expansion is pulling on the string, the demand side counter productive to the Fed's efforts to fight inflation with the only tools it has by raising rates



Joseph is wrong here at 52:00 where he says he hasn't heard anyone in the government being concerned about that (deficits)

A. Well demcorats have run the country (ie had control of the exec office, the senate and the house) for the last 2 years and them being members of the church of MMT, .. ie debts don't matter, you wouldn't.

But.... (apparently Joseph doesn't follow politics much)

B. now that the republicans took over the house in this January, 1/3rd of the government, .. they ran on and are trying to propose and pass policy to rein the deficits and eventually return to a balanced budget, .. but demcorats are fighting them, .. and they still control 2/3rds of the government.

Hopefully, the higher interest rates will deter additonal rampant deficit spending.

Bottom line is, ... yes, .. fiscal deficit spending does cause inflation.


Around 57:00

How can you guys in Canada afford to buy a home when the average price of a home is $1.5 to $2 million(?)

[howardglenmartinez]

I would vote for Martin Pelletier for President of the United States of America. He is a real and honest man, something rare in our current males!

[stevenobinator]

How do retail traders have access to these notes?

[MrJuanete]

Another FED groupie podcast, brought to you by Blockworks, lol!!!