Macro Tourist Markets

Spooz And Blues: The ‘Final Hurrah’ Of Wall Street Over Main Street?

It was a terrific trade, but its time is up.

[Editor’s note: The following is an excerpt from a recent, longer piece by Kevin Muir, formerly head of equity derivatives at RBC Dominion and better known for his exploits as “The Macro Tourist." His daily letter is now subscriber-only. The following is reprinted here with permission and is available exclusively to his subscribers and mine. Those interested in trading ideas from Kevin related to the piece below can check out the new MacroTourist here.] I'm a big fan of Jefferies’ market strategist David Zervos, who, for years, has been consistent on his “long spooz and blues” idea. For my non-bond crowd, I know you hoped I would stop writing about yield curves and other fixed-income trades, but rest assured, this is important for everyone. David Zervos pioneered (or at least popularized) the strategy of being long stocks (by buying the spooz contract - the S&P 500 futures) while also being long “blues.” At this point, some of you will ask, “what the heck does it mean to buy blues?” For the longest time, I was in that camp. These macro guys (don’t give me too much guff for using that noun - let’s face it, they are almost exclusively guys) would talk
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4 comments on “Spooz And Blues: The ‘Final Hurrah’ Of Wall Street Over Main Street?

  1. runamok says:

    Great comment from Mr. Muir. Thank you for sharing.

    I need “pills and booze” for my aching head.

  2. Ria says:

    This article is another way of saying a 60/40 portfolio has hit its expiration. There is plenty of talk out there from strategists about this, Muir is one of them but certainly is not alone. Personally I am shopping for alternative allocations for clients for this reason amongst others. Stay tuned.

  3. os72 says:

    yes good old 60/40. i think mr muir is now advocating long inflation (long tips, short nominal)

  4. fredm421 says:

    Democrats are going to be good for Main Street? The same way Obama was? I mean, this is not AOC and Sanders taking control of the US…

    Furthermore, while capital may lose on a relative basis (hope, hope), if Keynesian-inspired policies do (still?) work, if the pie grows thanks to inequality reduction, it’s not clear it’ll be a bad environment for equity. Extra consumption should translate in rising Revenue, for one. Bonds ought to suffer, yes, if inflation settles higher. And over leveraged companies may also have a tough time if IR rise… I mean, it’s not for nothing that equities are a traditional inflation hedge…

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