How To Trade The New Warsh Fed | Bob Sheehan

**Bob Sheehan** (0:00)
The Fed put is essentially the market's assumption that if risk assets fall hard enough, the Fed is going to step in, right? People were like, don't worry, the Fed is coming in. Every time there's a big sell off, don't worry, buy the sell off. And I think Warsh has very much tried to signal that that's gone. That's not going to be back. I think the degree that he's removed it is meaningful. And I think it's something that should change the way investors perceive kind of Fed policy. If I'm looking at the Fed and I'm like, OK, they're not going to be as direct about what they're trying to tell us, then I'm going to be a little bit quicker to cut risk. Things aren't as clear as they should be. And I think that lends itself towards a more defensive posture. Most important takeaways is that there are two trades now. And this is the way like I'm really trying to frame it in terms of the market reaction. There is the...

**Felix** (0:48)
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All right, everybody, welcome back to another episode of Forward Guidance, and excited to have a new guest on the show, Bob Sheehan of Lighthouse Macro.
Bobby, you kind of came onto my radar about maybe a year or so ago now. Started to put out a lot of really good content on X. And I think at the time, it wasn't even under your personal but it was under Lighthouse Macro, and I was like, who is this guy? This is some really good stuff. So yeah, wildly overdue to get you on the show. And yeah, welcome to Forward Guidance.

**Bob Sheehan** (1:47)
Yeah, no, it's great to be on here. Felix, obviously, you and Forward Guidance do some great stuff and you have some great guests and I think are kind of attacking that new era of Macro that some people have been slow to get around to. So I'm excited to be on here and chat with you today.

**Felix** (2:04)
Yeah, yeah, 100% likewise. I want to just start off with just getting a bit of a better understanding of your career path, like how you think about Macro, what are the key most important points that you look at? Yeah, like how did you get to this point of launching Lighthouse Macro and what you do today?

**Bob Sheehan** (2:21)
Yeah, sure. So I've taken a bit of a, I guess, a non-traditional route to kind of running my own macro shop, let's call it. I started my career at Bank of America and I was on a portfolio management team. We were kind of a dual mandate team. And what I mean by that is on one hand, we ran a large cap macro equity strategy that was, had about a billion, billion two in assets.
And it was basically, you run it like a long only, but it was offered in an SMA format to internal portfolio managers.
But it was an equity top-down strategy and we really didn't have a macro guy kind of in that space. When I first joined the team, some of the other team members were kind of more bottoms up directed, but we really liked kind of the macro view space. And I kind of took over as one of the premier macro guys in terms of formulating our views for that strategy. And whether that was sector waiting or viewpoints of that regard, but then the other part of that team was, it was multi-asset team as well. So we also managed kind of institutional multi-asset portfolios, whether it was high net worth individuals or institutionals, we had our pension funds and things of that nature. And so really putting together both a macro viewpoint from an equity strategy standpoint and then a macro viewpoint from a multi-asset class where you're looking at fixed income, where you're looking at commodities and kind of the whole gamut of things, privates even as well. So it was a really cool way to start my career and I think a pretty unique way to start my career because I think a lot of people in the macro space come into it from a research first standpoint and then kind of formulate, be like, here's my book afterwards. I got thrown into the fire, so to speak, and from early on, I had to back up my thoughts with an investment thesis. And I was fortunate to be on a team that really kind of nurtured that and they trusted me. And it gave me like a really great kind of early opportunity to test the way I think. And it's not always going to be right, but that's great feedback when you're a young guy in the industry. And so I started there and that's been honestly, the bulk of my career was on that team. And then after that, I actually went to a couple of macro shops. I went to Trehan Macro, where I work with Frank Spauld Trehan. I'm sure a lot of people are familiar with him. He started his own firm. I think he's now actually at BMO.