Time to Reduce Equity Risk: Why Underappreciated Macro Risks Could Derail the Bull Market | Warren Pies
Episode publishedPodcast: Monetary Matters with Jack Far...Monetary Matters with Jack Farley
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If I knew with certainty the Fed was gonna hike in September, I'd be underweight stocks right now. It's not that I would say I'm straight up bearish here. I just think the risks are two sided. We highlighted the window from August 15 to October 15 as a period where I don't like the seasonals and I don't like the structure. I don't necessarily agree with how the market is priced. Some of these macro risks, you have this market structure of a single stock vol has been crushed. Correlations still are low. And so I just think that it's a time to take down risk.
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into it. Hello, and welcome to other people's money. I'm Max Sweetie. And today, I'm joined by Warren Pies, cofounder of three fourteen Research. Warren, thank you so much for coming back on the podcast.
Absolutely. Thanks for having me.
Alright. So last week to your clients, you wrote a report called macro takeover. It does feel like macro risk is taking over after what was a clearly very strong earnings season, but we're starting to see some choppiness in the market. So I want to know why you believe macro risk is taking over and what are the big macro risks in particular that are driving the market right now?
To avoid burying the lead, we downgraded stocks. I guess it was about two weeks ago now. And so off of that big bounce we had coming out of earnings season, we got up to right about 7,800, and that was really about where we said, Okay, this is a good place to take some risk off the board. We had been overweight from mid April, and I explained some of the overweight stuff to Jack on one of your family's podcasts back around that time, maybe more in the springtime.
Before we got going, he said, make sure to give Warren some credit. He made a great call on my podcast. So, yes, you you were you were decidedly bullish coming into earnings season.
Yeah. So for for mid April through into, I don't know when that was, tenth or whatever it was, we had stayed overweight stocks. And so that was our call, and we've neutralized that now. It's not that I would say I'm straight up bearish here. I just think the risks are two sided. I think that the concerns that were happening back in July were sort of misplaced and a little early. And so back in July, what I was hearing from a lot of clients was this worry that we have low correlations, internal correlations in the market, and that there could be a macro risk that emerges. We had the Fed's July
Okay. So when you downgrade stocks, what is taking their position in the portfolio?
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