Tracy Alloway’s Post

NEW ODD LOTS Interesting conversation out today with Moderna's Chief Financial Officer Jamey Mock, who talks about how the company's $13 billion cash pile gets allocated and invested. I also finally got to ask a CFO what goes through their mind when they look at their company's stock price and it's going down (although that is not the definitely case with Moderna stock this morning). https://lnkd.in/ekFp6i6m

Very interesting conversation with Krishna Kumar, portfolio manager at Goose Hollow Capital Management, about the rise of multi-strategy hedge funds (aka the pod shops), why they're so popular, and how the increasing amount of money deployed by these firms is changing the way that markets trade. See also, some thoughts from last week's Odd Lots newsletter: https://lnkd.in/e8hfVd67 https://lnkd.in/eaQUj2Wa

New Odd Lots! Joe Weisenthal and I spoke to Dr. Chris Burns, the CEO of Novonix, about the challenges of building up a US battery industry. https://lnkd.in/gyk44Td4

Watch out, there’s a new short volatility ‘gone too far’ trade in town. Michael Purves argues the short dispersion trade is setting up the next VIX spike. https://lnkd.in/eG_GdXFj

NEW ODD LOTS The secret art of retail site selection. In this episode, Joe Weisenthal and I speak with Tom McGee and Chris Hatch about how retail businesses decide where to open brick-and-mortar stores and drive-thrus. There are lots of things to unpack here, but the most interesting to me is the idea that CRE is not a monolith. Yes, some office spaces (and some multi-family) in downtown areas are doing terribly, but equally, some suburban strip malls, drive-thrus etc. are absolutely booming. https://lnkd.in/eSDHQiXv

NEW ODD LOTS THE SHORT VOL TRADE IS BACK AND BIGGER THAN EVER Kris Sidial walks us through the recent explosion in options trading and what it means for the broader market. Lots of interesting stuff to pick out here, but Kris's comments on the incentive structure and what changed post-2020 really struck me: "2020 was a year that option trading did very well on both sides. Hedging programs did very well. And then also when the market rebounded, certain stock replacement programs did extremely well. When 2021 came, Q1, and the meme stock craze hit, that was almost like the nail in the coffin where you had certain investors and boards that started pounding on the door and saying ‘Why are we not exposed to options? Because look, everybody's making money,’ — not in the sense that they want exposure to meme stocks, but they're saying ‘Hey, we should have long call tech exposure, or we should have volatility risk premium harvesting programs.’ And ultimately that put a lot of pressure on certain consultants. It put a lot of pressure on certain teams. But as I said, simultaneously, when the exchanges began listing more and more tenors, people started realizing that ‘Well, ideally we probably want to engage in these volatility risk premium harvesting programs because look, if this is what the S&P's doing, look how much more we can make by selling vol.’ And now the path dependency has completely changed. So ideally this becomes an easier trade for everybody." https://lnkd.in/e5mJ3BC9

Super interesting conversation with Zongyuan Zoe Liu, PhD, CFA on today's Lots More, regarding China's attempts to diversify away from the dollar. Of particular interest is her argument that China's dominance in rare earths (with Ganzhou essentially being the Tungsten capital of the world) can act as a bulkhead to building more of a network around the renminbi. Check it out here: https://lnkd.in/erR3vYYu

NEW ODD LOTS WITH JASON CUMMINS Brevan Howard's chief economist thinks the labor market is weakening and monetary policy is already restrictive (much more than financial conditions show). https://lnkd.in/ec3EViNx

NEW ODD LOTS FEATURING AN EXCELLENT CONVERSATION WITH CFR'S Zongyuan Zoe Liu, PhD, CFA. She describes the structural problems, or 'Four Ds,' plaguing China's deteriorating economy. Beyond that, she argues that the Chinese economy is founded on financial repression, which presents a fundamental tension with the idea of providing direct support to households. "At the center of the financial repression are the Chinese banks. And who controls the bank? It’s essentially the Chinese government led by the Chinese Communist Party. In other words, the Chinese Communist Party has always been at the center of a capital allocation. And by empowering the household, or for that matter, the private sector, it basically dilutes or potentially removes their relevancy." And also, Idiot Melon Seeds! TRANSCRIPT + EPISODE HERE: https://lnkd.in/eDynpfa7