How to Listen to What the Market Is Trying to Tell You

Joe Weisenthal (0:11)

Hello, and welcome to another episode of the Odd Lots Podcast.

Tracy Alloway (0:16)

And I'm Tracy Alloway.

Joe Weisenthal (0:18)

Tracy, remember like last year when we used to start off episodes of our show complaining about all the lack of volatility in markets?

Tracy Alloway (0:29)

Yeah, that's kind of a classic beware of what you wish for kind of thing, isn't it? Cause now of course we've had too much volatility at various times this year.

Joe Weisenthal (0:38)

Well, I'm not really complaining.

I mean, from the perspective of what you and I do, and probably from the perspective of a lot of market practitioners, it has been a very different year. But yeah, absolutely. A lot of those intros, they just don't apply anymore.

Tracy Alloway (0:54)

No, it's true. We have been blessed by news flow when it comes to markets this year. Of course, we had the big volpocalypse in February that we spoke about. And since then, we've had some more interesting moves in markets most recently caused by some of the trade tensions, which we've also talked about on the show.

Joe Weisenthal (1:13)

Well, I think it's interesting that you say caused by the trade tensions, because I think one of the fascinating aspects of this year has been the difficulty sort of disentangling news stories from the actual results. So sometimes I think it looks like trade stories are weighing on markets and then other times, not so much. Or sometimes it looks like the president's tweets are hitting markets and then you see the companies, he's tweeting about hitting new highs. So it's been a really tricky market environment to navigate. And so we've had all this volatility, all this news flow, and we just haven't really gone anywhere.

Tracy Alloway (1:51)

Yeah, you're absolutely right. I mean, in markets, to some extent, it's always a bit difficult to disentangle the narrative from the price action that you're seeing, right? Like sometimes it's tempting for us as journalists to just say, there are more buyers than sellers or more sellers than buyers, and that's really the explanation. But I think you're right that this year has been trickier than a lot of other years, because not only do we have volatility coming back, we also have a really complicated political narrative. And it's difficult for investors to price in the unpredictability of someone like the US president, Donald Trump.

Joe Weisenthal (2:26)

That's exactly right. So today we're gonna do something a little bit different that we don't normally do on the show, which is sort of really talk about markets right now. Obviously listeners know we like to find the Odd Lot stories, the, you know, some obscure old bubble or financial regulatory thing or something arcane about market structure. Today we're sort of gonna try to really keep it present tense and actually talk with an active market practitioner who's seen a lot of different environments to gain some understanding of what's going on right now in markets.

Tracy Alloway (3:01)

I will do my best to keep it present tense, but I think we're having someone on that we've actually had on before, right? To talk about essentially the opposite of what we're gonna talk about today.

Joe Weisenthal (3:10)

Yeah, that's right. So without further ado, we will be speaking to Peter Borish. He's a chief strategist at the Quad Group, a real market veteran. He was on one of our very early episodes and we talked about some of the history in markets and some of the patterns that historically repeat throughout markets and so hopefully, he'll be able to walk us through what he's seeing right now and apply some of that experience.

Peter, thank you very much for joining us.

Peter Borish (3:44)

Always a pleasure. And I do very much enjoy being on the show so we can drill deeper.

Joe Weisenthal (3:51)

Before we talk about what's going on right now, as Tracy and I mentioned, there are a lot of threads to pull on these days. For those who may not have listened to our older episode with you, and they really should go back and listen to it, tell us a little bit about your background and sort of your general approach that you've devised over the years in trading markets.

Peter Borish (4:14)

Well, thanks. I've been very fortunate and lucky. I finished graduate school in, wow, a long time ago, 1982 I went to the New York Fed. I happened to start the first month that S&P Futures began trading. And then some young guy out of the floor of the cotton exchange by the name of Paul Tudor Jones recruited me out of there in 1985, the first month of crude oil futures trading. So I've been in the industry really since the beginning of the financial futures derivative markets and have had a long arc. And it's a perfect segue to today because if you think about the late 1980s, November 9th, 1989, the Berlin Wall came down.