Market Sets Trap; Most Crowded Trades Revealed | Jason Shapiro

Jason Shapiro (0:00)

Nobody's worried for their job, but they're all worried by everybody else's job, right?

And the truth is, it's probably going to take all of our jobs. It's not a bubble like historical bubbles have been. It's just not. It's almost the opposite. There's a fine line between being contrarian and just being stupid. And I am very aware of that fine line because I have been on the wrong side of that line many, many times.

David Lin (0:23)

It's Tuesday, September 22nd, and we're back with Jason Shapiro, founder of the Crowded Market Report.

Jason's a veteran trader and he's been in the game for decades. He was featured in Jack Schreiker's book Unknown Market Wizards, the best traders you've never heard of. Well, we've heard of Jason on the show, and he likes to take or identify the most crowded trades and do the contrarian bet which is to go against the crowd or at least identify where the risk return trade-off is not there anymore and stay away. So that's what he's going to do with us today. Right now, traders on Kalshi, a prediction market are bullish right now on the NASDAQ.

Sentiment is rather bullish, not extraordinarily bullish, but rather bullish. Jason's going to give his view on the indices and whether or not he agrees with how traders are positioned in prediction markets. So on Kalshi, we have a 59% chance that the NASDAQ 100 will get to 31,800 above or above by the end of the year. It's currently just under 31,000 at 30,600 points. So if you agree with this particular market, a $50 trade, a $50 trade rather can yield a payoff of $76 if you're right. This video is sponsored by Kalshi. It's the largest prediction market in the United States. Unlike a sports book, you're trading peer to peer on real world events from economic data to political outcomes. And the price moves based on public opinion, not a house. Go to the link in the description down below, scan the QR code here and use my code Lin. New users who use my code can get $25 in app credits when they trade $25. Kalshi is CFTC approved and available in all 50 states including California and Texas. Welcome back, Jason. Good to see you.

Jason Shapiro (2:00)

Good to see you, David.

David Lin (2:01)

Let's start with what's crowded and what isn't.

The 10-year yield has been making waves on the mainstream media all pretty much most of last quarter. At 5 percent, has a lot of people worried. Let me just pull up a chart of the 10-year yield and let's talk about, let's start with the bond market and then I want to move on to oil. And then Bitcoin has been surging in the last 48 hours as well.

We're speaking today on the 22nd of September. Okay, Jason, take a look at my chart here. Straight line up.

And yeah, this speaks to a global sell off in the US Treasuries. What's your take?

Jason Shapiro (2:41)

Yeah, it's basically a global sell off in the US Treasuries. It's not just the US Treasuries, by the way. It's about every treasury bond market in every country other than China.

A lot of people are focusing on the US and what the Treasury Secretary wants to do and all that stuff. But that's just not what the problem is. The problem is all these government bond markets. And I think people maybe are forgetting that a little bit, right? This guy can buy all the US Treasuries he wants.

But unless he plans to buy Japanese, German, British, everybody's treasuries, I don't see how he's going to stop it, right? And if he keeps, for whatever reason, US rates lower than where they theoretically should be, then the dollar is going to suffer. And if the dollar suffers, then you're going to have an inflationary problem. And if you have an inflationary problem, then it goes right back to the start, which is a rate problem. So they're kind of, I believe, stuck between a little bit of a rock and a hard place here. I think the only solution, I don't think there's any traditional macroeconomic solutions. Well, there are, but none that will actually be done. The easiest solution is what any normal person does when you are spending more money than you're taking in, which is you tighten your belt. But that is not something that governments do anymore. They don't tighten their belt. And it's not something the US government has the ability to do, I don't think, because they have to be elected, and nobody is getting elected on the back of that thought, right? I'm not going to get up there and start making speeches that, you know, I'm running for Senate, and what I want to do is give you people less money and charge you people more in taxes at the same time. No one's going to elect me on that. So therefore, the idea of tightening their belt is never going to happen. We've become completely drunk on the idea of, you know, of this for a very long time, but in particular since 9 So that's not happening. The only way that I can see something happening to solve the problem is this whole idea of creating demand for US government T-bills through the issuance of these coins, right?