Bob Elliott

Bob Elliott

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CIO at @UnlimitedFnds | PM of $HFND | Fmr IC @Bridgewater | Described as one of the few "sane" voices on #fintwit | Comments are not investment advice

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Maybe its a TACO, maybe its a negotiating tactic, or maybe its a ruse. No one knows for sure, maybe not even Trump himself. What's a lot clearer is that we are in a structurally higher volatility environment these days.

In the WSJ yesterday dashing the hopes of an easy Fed in response to this oil shock. h/t @Spencerjakab wsj.com/finance/stocks/this-ma...…

The most direct way rising oil prices can create a positive economic impulse is through either rising hiring or capex. Despite the surge in profitability after the 2022 shock global capex only rose 0.1% of GDP, making it a pretty minimal growth support. bloomberg.com/news/articles/20...…

An even more important dynamic than the oil shock itself right now. h/t @dampedspring

Small Benefit to US from Rising Oil Prices While the US produces far more oil today than in past shocks, a study of ‘22 shows price rises are just accumulated as profits rather than spent on labor or capex, creating little economic lift. bobeunlimited.substack.com/p/s...…

Stocks down, bonds down like today is exactly what you should expect in the early stages of an oil shock. The hard thing is figuring out when to shift away from those views. My convo with @fejau_inc earlier this week on that & more:

Forward Guidance

@ForwardGuidance

Apple 🎙️: https://shorturl.at/Se1Nt Spotify 🎙️: https://shorturl.at/hdfDU YouTube 🎥: https://youtu.be/91up0VxYeNw

While sentiment has become a little softer on the US equity market over the last couple weeks, it's still well above past bottoms.

The oil curve is now pricing in a far more extended oil shock than what we saw in '22. Dec contracts now pricing oil 40% higher to end '26 relative to the 60 bucks to start the year.

While folks fall all over each other to claim private credit losses will be a systemic crisis, the losses math just doesn't work out. And importantly, the vast majority of the risk is held by unlevered investors vs 30:1 levered banks back in '08.

In the most extreme scenario (say 25% losses on the whole 1.3tln industry in the US), the losses on private credit will be less than a 1 day standard deviation in the US stock market.

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