Zoltan Pozsar on His Next Big Move and the Coming Monetary Divorce

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:14)

And I'm Joe Weisenthal.

Tracy Alloway (0:16)

Joe, do you remember what we were doing this time last year?

Yeah, I can barely remember two weeks ago. But I actually, I remember this one mostly because I looked it up right before we started doing this recording. But this time last year, we were preparing, organizing our first live Odd Lots debate between Zoltan Pozsar and Perry Merrill.

Joe Weisenthal (0:42)

That was really fun. We got to do that again.

Tracy Alloway (0:44)

Yeah.

Joe Weisenthal (0:44)

More debates.

Tracy Alloway (0:45)

So we were sort of frantically doing a lot of those sort of like travel arrangements and things like that for that.

Joe Weisenthal (0:52)

Sorry, waking up early in the morning, like of the day of the debate, entering names into a database so that people could get into the Bloomberg office.

Tracy Alloway (1:00)

Yeah.

Joe Weisenthal (1:01)

Do you remember that?

Tracy Alloway (1:03)

All right, but my point is, it's been a while since we've spoken to Zoltan Pozsar.

Joe Weisenthal (1:10)

It has been a while, and it's unfortunate because he is one of our most requested guests. People would listen to him every month if we interviewed him.

Tracy Alloway (1:18)

I agree.

In fact, I think we should do monthly or even quarterly interviews with Zoltan. But I am very happy to say, without further ado, that Zoltan is, he's back.

Joe Weisenthal (1:29)

He's back. And so, right, so he was at Credit Suisse. He left Credit Suisse. He's been kind of silent. There has been this incredible mystery about what he's going to do next.

And we don't know, but he's coming on the Odd Lots podcast. So let's find out.

Tracy Alloway (1:43)

He's going to tell us now. Zoltan, welcome back to the show. We're so glad to have you back on.

Joe Weisenthal (1:48)

This is like when LeBron James announced on ESPN all those years ago, what he was going to do next.

Tracy Alloway (1:57)

All right, so what are you doing? Let's just jump right into it. Yeah, you were a strategist at Credit Suisse, as everyone knows, at this point. And now what are you up to?

Zoltan Pozsar (2:07)

Well, the next steps is I have founded my own macroeconomic consultancy. The name of the firm is XUNOPLURUS, and I will be providing research to institutional investors and consult institutional investors about plumbing, as I always have.

Joe Weisenthal (2:25)

Okay, many questions. Well, let's just start simple. What does XUNOPLURUS mean?

Zoltan Pozsar (2:31)

XUNOPLURUS is the opposite of epluribus unum, which is this little motto that you can find on the Great Seal of the United States and on the dollar bill. It means in English, out of one, many. It's meant to capture two ideas. The first idea is, you know, my retrospective on what I've been doing for a strategist for a decade is basically anticipating moments when prices fall apart in funding and rates markets. So the basic idea is that most of the time, things trade on top of each other. You know, the industry structure is orderly. And then when something bad happens, whether it's panic or a pandemic or balance sheet constraints or liquidity constraints, prices fall apart. So out of one price, you are dealing with many prices. And so that's basically the bread and butter of what a rate strategist and a rates trader is doing, anticipating those moments and being on the right side of those moments.

And then the other idea is that, you know, global macro as such, I think it grew up as a concept and an asset price, if you will, in a unipolar moment where globalization was moving forward. The dollar was the undisputed global hegemonic currency.

And so we were all kind of trading the global dollar cycle. And going forward, as we discussed this in the context of Bretton Woods III, that's no longer going to be the case. So it's kind of capturing the zeitgeist in that, you know, China is trying to extract itself from the Western financial system, much like the Western real economy is trying to extract itself out of supply chains that are running through China. And so we are, I think, at the beginning of this era, the next five to ten years at least, where we are going to go through this monetary divorce. And, you know, the dollar's hegemony is going to be challenged by some geo-financial moves that the Chinese are plotting.

So out of one dominant reserve currency, we will have a world where we will have many.