Danny Dayan @DannyDayan5 Twitter profile | Pikagi

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Danny Dayan

@DannyDayan5

14,793

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Ex Hedge Fund Manager; Global Macro Volatility Portfolio Manager. Chicago Booth MBA & CFA. My views do not consist of investment advice.

https://t.co/uOOrMfocQR

Joined October 2022

Don't wanna be here? Send us removal request.

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@DannyDayan5

Danny Dayan

4 months

"The Loop" is a deep dive note into financial conditions and the role they are playing in either reinforcing or undermining monetary policy. The economy has become financialized, especially since the GFC when the QE era began, with household wealth rising to almost 6x GDP.

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@DannyDayan5

Danny Dayan

17 days

I strongly recommend watching Stan Druckenmiller’s full interview. He is probably the best macro investor of all time. I don’t think he’s ever had a down year. He explains succinctly why he doesn’t think policy is restrictive. Hard to argue with him.

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Stan Druckenmiller on Fed Policy, Election, Bonds, Nvidia

Duquesne Family Office Chair and CEO Stanley Druckenmiller sits down for a wide-ranging interview with Sonali Basak. He talks about selling Nvidia shares, th...

www.youtube.com

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@DannyDayan5

Danny Dayan

9 months

This is my 1970's roadmap. The Burns mistake was cutting Fed Funds below inflation prematurely, and we can see the Volcker solution on the right. The Fed thinks they are following Volcker by cutting alongside the falling inflation level. BUT...

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@DannyDayan5

Danny Dayan

3 months

Since the last hike 1y ago: -Nominal GDP went from 5.95% to 5.9% now -CPI went from 3% to 3% now -NFP went from 184k to 206k now -Housing prices went from 3% YoY to 6.3% now -SPX went up 20% -IG OAS spreads went from 128 bps to 93 bps now Cutting rates here would be pure lunacy

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@DannyDayan5

Danny Dayan

8 months

Dovish dots. Irresponsibly dovish. Maybe it's time for the bond market to do the job they're unwilling to do.

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@DannyDayan5

Danny Dayan

7 months

Don't worry guys, inflation ex inflation is 0%. All good.

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Danny Dayan

10 months

I don't understand how anyone can justify rate cuts with initial claims close to 50 year lows

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@DannyDayan5

Danny Dayan

2 months

People have been calling for a recession since 2022. It's fine to get things wrong, but I have yet to see anyone then say, "I was wrong, something is different". Those people have simply moved their call forward every 3 months. Recession calls are a black hole very hard to exit

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@DannyDayan5

Danny Dayan

2 months

Stocks are down because we probably don't get a 50 bps cut, so then bonds go bid because stocks are down which means we price more cuts. Got it? Cool, me neither

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Danny Dayan

4 months

The immaculate disinflation of 2H 2023 during a period of exceptionally strong nominal GDP was chalked up to a material step up in productivity (GDP/worker). It now seems clear this was in fact due to undercounting workers due to the surge in immigration.

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@DannyDayan5

Danny Dayan

11 months

As a result of the dovish pivot, there are a very wide range of outcomes for 2024. Not all of these are realistic, each should be probability weighted. Please let me know which scenario you see most likely and why, and I will then let you know my view

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@DannyDayan5

Danny Dayan

2 years

Is it possible the Fed's QT program is unintentionally working against the Fed's fight against inflation? It might be. Let's do a thread.

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@DannyDayan5

Danny Dayan

1 month

They have absolutely no clue. The end.

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Danny Dayan

6 months

FOMC Recap: Irresponsibly dovish, FCI loop intact, say goodbye to 2% or rate cuts anytime soon.

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@DannyDayan5

Danny Dayan

8 months

I’m not a single name guy at all, but from my seat there’s literally nothing to take negatively from NVDAs earnings. This is not the dot com bubble. There is massive capex going on that will lead to productivity increasing. It’s very bullish the economy.

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@DannyDayan5

Danny Dayan

19 days

I am increasingly getting concerned that we are heading towards a major accident in the equity market. That being said, the VIX being at these levels and the release of election uncertainty soon make me think it’s not imminent. My alarm bells are ringing like in the summer.

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Danny Dayan

7 months

It has begun. Suddenly my warnings are not so bonkers

@financialjuice

FinancialJuice

@financialjuice

7 months

FED'S WILLIAMS: IF DATA CALLED FOR HIGHER RATES, THE FED WOULD HIKE.

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@DannyDayan5

Danny Dayan

11 months

The Fed has two levers to pull 1) hike until things break. They abandoned this when they downshifted to start the year and especially when SVB happened 2) hold at a level they think is restrictive and hope financial conditions tighten over time

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Danny Dayan

2 months

A lot of smart macro guys have been saying for months the equity market is expecting too much in cuts and will be disappointed. They were ridiculed, got angry and hateful responses but they were right and deserve credit. @ces921 @BobEUnlimited @dampedspring

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Danny Dayan

2 months

Fun facts of the day: Fed has never cut rates more than 75 bps outside of a recession. In 1989 they cut 150 bps for a recession that came a year later. We're pricing 250 bps. We've never had 200+ bps in cuts without at least a 1.5% pop in inflation

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@DannyDayan5

Danny Dayan

9 months

It was an absolute pleasure talking to @JackFarley96 about my macro views and the current balance of risks as well as asymmetric opportunities in both rates and equity vol markets. Hope you enjoy it and find it informative.

@JackFarley96

Jack Farley

9 months

How @DannyDayan5 is seeing macro right now: - the Fed's fight with inflation is NOT over - risk of economic re-acceleration >>> recession risk - bond yields are still way too low - Fed to cut interest rates only twice this year (his base case), right-tail risk that the Fed is

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Danny Dayan

8 months

CPI was not a catastrophe, but really not far from it. This report is BAD. OER, Supercore big step down from Jan, yet core still 0.36% MoM. Medical care services negative?!? Makes no sense. This report is far closer to catastrophe then good. Sorry for the doomer post.

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@DannyDayan5

Danny Dayan

8 months

PPI is perhaps signaling goods deflation has ended, jobless claims defy everyone's doom fears, and consumption continues at a nice pace. Goodbye rate cuts. Dear Fed, break out your hawkish talk. It's been awhile.

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Danny Dayan

4 months

The data is softening more than I expected, so this naturally causes an update to views. I would note that softening is not recessionary, but this is what the Fed wanted to see and they are seeing it. They will need 2-3 more months of confirmation to cut, which seems likely.

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Danny Dayan

7 months

First they push back on cuts the market priced due to their irresponsible dovishness. Then they say rate cuts are optional. Then they hike again to regain credibility. We are right on schedule.

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@DannyDayan5

Danny Dayan

3 months

@ericwallerstein It’s so funny you mention this. My entire career, having an edge in macro meant finding downside risks others are not aware of. This cycle it’s navigating doomers views and finding optimism they refuse to see.

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Danny Dayan

2 months

Weekend thought: -YC inversion one of longest ever -Money supply YoY went < 0% -Sahm backtest creator says it may not work -LEI has signaled recession for 2yrs -Survey/soft data has been useless What else is needed for people to realize something has structurally changed?

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Danny Dayan

7 months

@biancoresearch They should just have a talk show at this point

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Danny Dayan

4 months

I think the story today is bad news is bad news again. Either this is a growth scare or precursor to recession. The equity market is waking up to the fact that earnings season can be bad. Small caps shorts are getting covered as a general de-grossing theme.

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Danny Dayan

7 months

I am open minded to the possibility the equity correction is complete. I closed shorts earlier today close to flat (went 4 for 5 on put spreads over last two weeks). Tax season liquidity drain ends Monday. I am not flipping bullish until we see earnings. Neutral for now.

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@DannyDayan5

Danny Dayan

29 days

Just a friendly reminder that many people demanded a 50 bps cut because the Fed was "dangerously behind the curve" and also said 250 bps in cuts in a year was totally reasonable because it's "normalization". Fed needs to pause and understand this economy better.

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Danny Dayan

9 months

The conservative choice is to wait a very long time. The risky choice is to cut based on some hypothetical weakness you think will materialize based on real rates being too high. Cutting anytime soon will be an enormous policy mistake.

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Danny Dayan

6 months

The equity market went up 28% in 5 months in a parabolic fashion, with no material pullback. It started with expectations of a big easing cycle, and for a growth reacceleration. With the former off the table for now, we are left with the latter.

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Danny Dayan

6 months

The QRA this week will dictate the supply of debt sold in the next 3 months. There are societal needs that will require massive spending in the years to come. More military spending. Huge investments in electric grid. Social security reform. Term premium needs to rise.

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Danny Dayan

8 months

The more I look at household balance sheets, the more I think that 2020/2021 fiscal and monetary policy weren’t just providing stimulus for that year, but for an entire generation.

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Danny Dayan

6 months

Wait, I thought we had immaculate wage disinflation? Guess not. Rate hikes are coming.

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Danny Dayan

6 months

Quietly, without much fanfare, nearly every single commodity today was up. The bond relief rally is not going to last long.

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Danny Dayan

2 months

I thought Gold was supposed to protect against days like today. Never seems to hedge anything whatsoever with any consistency.

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Danny Dayan

7 months

@FedGuy12 I think it’s the anti dollar trade. Could be geopolitical. But the other side of currency trades aren’t appealing because they’re all weaker economies that are going to cut more than the Fed.

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@DannyDayan5

Danny Dayan

11 months

#2 is complicated because they don’t control FCI directly. If conditions loosen prematurely, they have to respond. Failure to respond is precisely what turns them into Arthur Burns 2.0 In 11 days we see what their response is.

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@DannyDayan5

Danny Dayan

6 months

Core PCE is in line, but not sure why anyone is surprised given how telegraphed it is. More importantly, another massive month of personal spending, at 7.2% annualized pace for second month in a row. This economy is too strong.

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Danny Dayan

3 months

Can we get a live feed of Jeremy Siegel during data releases please?

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Danny Dayan

8 months

We've priced out 3-4 cuts for this year, 10y +50 bps, and yet the dollar is not rallying and equities are flying. So FCI has actually loosened to start the year. See the problem, Fed? Credibility is the theme.

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Danny Dayan

3 months

Weak report, no way around it. There were positives, but can't mask the overall weakness. Got this wrong.

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Danny Dayan

8 months

According to the Fed's projections, we won't have a recession or material job losses for the next 3 years nor ever! 4.1% unemployment rate for eternity. Good to know!

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Danny Dayan

2 months

If the Fed cuts 50, I hope they understand the future political pressure they will face from Presidents and members of Congress at 4.2% unemployment from now on. This will now be considered an urgent and unacceptable level of unemployment. The business cycle becomes dead.

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Danny Dayan

9 months

Their mistake is ignoring this key lesson. Inflation falling without economic weakness, namely job losses or credit events, simply leads to economic re-acceleration. This is exactly why I expected the economy to reaccelerate in 2023. The Fed has seemingly missed this.

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@DannyDayan5

Danny Dayan

2 months

There’s a general view that the Fed can cut 250 bps in a year and there will be no GDP or inflation response because it’s “normalization”. Not only does the historical record dispute this, but so do the Fed’s own models. Torsten Slok ran simulations in the FRB/US models.

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Danny Dayan

7 months

Had a great time discussing macro and markets with @kevinmuir yesterday after the close. We cover a lot of different topics in the wide ranging conversation, so I hope you enjoy it!

@TheMarketHuddle

The Market Huddle

@TheMarketHuddle

7 months

It's interview only this week to give @PatrickCeresna some much needed R & R. So @KevinMuir welcomes, @DannyDayan5 from Macro Musing. They discuss how the FED has lost control of financial conditions & why inflation will be higher than the market expects in the coming years.

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Danny Dayan

1 year

The funniest part of this is that I’ve never once commented on any of his content, directly or indirectly.

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Danny Dayan

2 months

This is quarterly consumer spending. Please tell me again why the consumer is dead and we need deep rate cuts. Thanks.

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Danny Dayan

1 month

Be prepared for the ultimate flip flop ahead. Can't wait to hear the "We didn't see this coming" excuses when the data rebounds very strongly ahead. From the PMIs.

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@DannyDayan5

Danny Dayan

1 month

I think we are in for lots of flip flopping, erratic policy making ahead. They’re winging it. The Fed is going to learn that their hard fought credibility borne over many decades can evaporate in an instant. All it would take is a single or couple data points.

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Danny Dayan

15 days

Gold +1%, Silver +6%, Copper +1.5%, Palladium +4%, Uranium +2.5%, Crypto +2.5%. To quote @Convertbond : "Markets are speaking" They are sniffing out now just US growth, but global growth improving.

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Danny Dayan

3 months

Breaking News: The economy didn't head into recession this week. Check back next week!

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Danny Dayan

29 days

This place can get contentious at times, but when I joined last year I did so to provide my perspective on macro and markets. The early August labor report came in the midst of a VAR shock and thus spooked many. I analyzed the data and tried to provide a different perspective

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Danny Dayan

5 months

Getting really tired of obsession with the Fed. They don't know more than we do. Trade your own view.

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Danny Dayan

7 months

Every meltup has a meltdown, usually caused by leverage. Leverage has moved from margin debt to products like these. I really can't say a correction is imminent, but the fact that nobody can make a bearish argument (including me) has me a bit spooked at the moment.

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Danny Dayan

7 months

Small anecdote that may or may not mean anything, but inflation break-evens have moved up for two days in a row when oil has done nothing. Fear is rising.

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@DannyDayan5

Danny Dayan

5 months

Ahead of Memorial Day weekend, I want to express thanks to the valued contributors here. Here is my list. Hopefully I don't forget anyone.

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Danny Dayan

8 months

We are now fully immersed in scenario 5: markets are testing the Fed credibility. Inflation breakevens higher -> check Stocks -> check Gold-> check Dollar weakening -> check Only thing left is long end collapse. I have been wrong on this the last 2 weeks, expected follow thru

@DannyDayan5

Danny Dayan

11 months

As a result of the dovish pivot, there are a very wide range of outcomes for 2024. Not all of these are realistic, each should be probability weighted. Please let me know which scenario you see most likely and why, and I will then let you know my view

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Danny Dayan

2 months

Canada just posted one of the largest monthly increases in building permits in history. I have been bearish Canada but this is shocking. Could be noise, or housing could already be responding to 3 rate cuts. But hey, keep thinking this is 2007 if it suits you.

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@DannyDayan5

Danny Dayan

11 months

Exactly. The market responded to this data release by pricing even more rate cuts. Which tells you we are in a narrative phase right now. My view hasn't changed that the bond market is misreading the economic situation and will cause a re-acceleration in Q1/Q2.

@RBAdvisors

Richard Bernstein Advisors

11 months

Despite the consensus economic #forecast for landing/recession, there’s never been a #recession with ISM New Orders ( #LEADINGIndicator ) at 55.5.

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Danny Dayan

2 months

If someone posts core inflation ex-shelter, but doesn't post unemployment ex-immigration, they are guilty of analysis crime

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Danny Dayan

9 days

I have made the case repeatedly that the Fed Funds rate does not matter; it is the 10y rate that impacts economic activity. Given this, we can actually see that we have had 4 rate cut & hike cycles via the 10y since the fall of 2022 when mega rate hikes ended.

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Danny Dayan

1 year

Macro is a puzzle. It's always important to respond to new information that could change your view. I had strong conviction that we would see re-accelerating growth this year, but I expected it to also reignite inflationary pressures.

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Danny Dayan

9 months

Their second mistake is ignoring how the economy has changed dramatically. Household wealth to GDP was 350% in the 70s and is 550% now. The financialization of the economy is crucially important, which is why large FCI moves impact the economy on the margin in a big way.

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Danny Dayan

6 months

I get things right and wrong like everyone. I got the retail sales data wrong today, while CPI is in line and nothing to be excited about. But I do find some of the celebrations on here pretty lame, like "sucka bond bears". Act like this isn't your first time making money

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Danny Dayan

11 months

Giving @dampedspring back a shout out. My entire career I found risk premium approaches useful but impossible to trade. Andy is the only person I have ever seen develop tradeable insights from changes in risk premiums. His timing has been spectacular. Pay attention.

@dampedspring

Andy Constan

11 months

Santa Rallies are driven by performance chasing of winners and tax deferral (less selling) of winners. This is not what Santa Rallies look like. DSR on topic.

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Danny Dayan

2 months

The oil collapse is likely to be a major form of stimulus for households. This is a 20% decline since July in a non discretionary spending item. It also hurts Russia pretty badly in their war funding efforts, but I am unsure their response. They may not afford to cut production

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Danny Dayan

7 months

I would not want to be long duration at these levels, nor short stocks. just my hunch, and i'll mostly stay away of everything else. VAR event.

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Danny Dayan

7 months

Today is a random day that is designed to shake people out of their positions

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Danny Dayan

7 months

@EffMktHype He's saying R* higher without even realizing he's saying it.

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Danny Dayan

9 months

As I said, the economy reaccelerated by January. R* is way way higher. Do not cut rates. The end.

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Danny Dayan

2 years

I am rather new to FinTwit, but tomorrow I will be doing a detailed thread on an unintended consequence from the Fed's QT that might be making its inflation fight harder than it needs to be. Stay tuned!

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Danny Dayan

6 months

I have no edge in predicting next week's CPI report, but I do know it will tell us inflation is too high. Some data missed expectations which has led to another FCI loosening, and commods are bid again. These loop dynamics reinforce my view the Fed will have to hike again

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Danny Dayan

9 months

Equity vol is ridiculously cheap. Terminal breakevens on 1month trades are 2-3 days worth of regular moves in these markets. Sectors are not correlated to each other. Individual stocks are flying out of control. I would not short vol anywhere in equities.

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Danny Dayan

7 months

Thought ahead of weekend. Iran will put on a show but fall short of escalating this into a full war, so some geopolitical premium should unwind. I expect a strong print for retail sales. Argues for an unwind in bond move rather than stocks at the margin. Unclear on FX/Commods.

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Danny Dayan

4 months

Canada CPI report cancels July cut. On top of cell phones, airfares and other services categories, Ontario rents bounced from 6.1 to 8.4%. Quebec renewals come this month. Bounce in housing is the worst case scenario for BOC cutting cycle.

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Danny Dayan

9 months

Friendly reminder that I literally called the exact month of this economic reacceleration

@DannyDayan5

Danny Dayan

1 year

@dampedspring Data will pickup as soon as January. 10y goes to 5.5%.

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Danny Dayan

7 months

@BobEUnlimited Great thread. Nobody expects recession, nobody expects inflation revival. Nobody expects rate cuts that need to be immediately reversed. Nobody expects an out of control long bond going to 8% as policy makers try to stop it. We are pricing very narrow and unrealistic outcomes.

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Danny Dayan

7 months

The Fed thinks time is on their side. They think they can hold for as long as possible so in their mind they are long optionality. I think they have this entirely backwards.

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Danny Dayan

3 months

It's going to take more than just wiping out one month's equity gains to get cuts. Wealth gains are 17TRN since November. We probably shaved 1TRN off that. Economy is too strong. We need persistent tightening to finish the job. If we selloff, then bounce right back no dice

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Danny Dayan

2 months

Put out a simple post to compliment some guys. Maybe didn't illustrate their thesis well, but have gotten nothing but annoying minutae comments to start endless debates and arguments I'm taking a break from this place. Focusing on trading. Y'all know where to find me. Peace!

@DannyDayan5

Danny Dayan

2 months

A lot of smart macro guys have been saying for months the equity market is expecting too much in cuts and will be disappointed. They were ridiculed, got angry and hateful responses but they were right and deserve credit. @ces921 @BobEUnlimited @dampedspring

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Danny Dayan

10 months

To be long bonds here, you have to believe 1) more rate cuts will be delivered than currently priced 2) term premium of 0 is a good deal and may even move negative I am unconvinced inflation is beaten. Goods deflation ending + sticky services will keep us above target.

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Danny Dayan

8 months

If the Feb inflation prints are strong, coupled with strong growth, I expect the market to price hikes as much as ~50% probability, even if delivery of them is still lower likelihood than that. Base effect for CPI get really easy to beat after February.

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Danny Dayan

2 months

Surge in MBS apps, led by refinance index which is +65% since July. This frees up disposable income just like oil's decline. Is the FCI loop back in effect right as they cut rates?

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Danny Dayan

5 months

Funny observation but in the last 4 days: 1) nobody can agree whether QE is debt monetization 2) nobody can agree whether FCI is loose or tight 3) nobody can agree whether the Fed should hike or cut Fun times!

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Danny Dayan

4 months

For all the talk about significant progress made on inflation, this is CPI YoY. No progress in a year since policy went on hold.

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Danny Dayan

3 months

Last week was about fading extremes. This week I am mostly content to sit on my hands and wait for the next extreme. I'll briefly explain.

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Danny Dayan

11 months

Imagine if tight FCI from end October had persisted. We would be close to finishing the job on inflation within months. Instead we have goosed the economy with a lot of easing. This is not a game of tag. They fumbled the ball at the goal line.

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Danny Dayan

8 months

Biggest takeaway from the data is the huge beat in personal income. This confirms the AHE isn't as flukey as we thought. Both supercore measures CPI/PCE at extremely elevated levels. Income -> Consumption.

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Danny Dayan

6 months

The last hike was almost a year ago, yet 6 of the last 8 months have seen core CPI print 0.3% or higher. I think it's pretty safe to conclude that anything below that is an anomaly, not the norm. 3.6% is the steady state of core inflation and has been for about 1.5 years.

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Danny Dayan

28 days

The biggest risk to the US economy is from 50% of Hollywood going to jail over this Diddler investigation

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Danny Dayan

6 months

Interestingly, the economy that looks closest to achieving a soft landing is Europe. They hiked to restrictive levels, held there for a year despite barely any growth, didn’t put out speeches to undermine their stance, and can now cut as slow or as fast as needed.

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Danny Dayan

7 months

Step 2 is nearly complete.

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Danny Dayan

7 months

First they push back on cuts the market priced due to their irresponsible dovishness. Then they say rate cuts are optional. Then they hike again to regain credibility. We are right on schedule.

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Danny Dayan

1 month

I think we are in for lots of flip flopping, erratic policy making ahead. They’re winging it. The Fed is going to learn that their hard fought credibility borne over many decades can evaporate in an instant. All it would take is a single or couple data points.

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Danny Dayan

1 month

They have absolutely no clue. The end.

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Danny Dayan

10 months

Dealers in equity indices are now short vega and vanna, and short VIX gamma. Translation: if we get a 5% selloff, it could morph into a violent one. This setup does not predict selloffs, but it does tell you that the options market is not prepared if we get one. Put skew is cheap

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Danny Dayan

10 days

I’m expecting one more completely bonkers random thing to happen before this election.

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Danny Dayan

11 months

I suspect this will be a 2021 style policy mistake from the Fed. Let's see by February. Right now the only trade is melt up in stocks. SPX -> 5k

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Danny Dayan

28 days

@Dr_Gingerballs No the real problem is Mark Cuban thinking we need to hear him speak everyday

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