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Stifel Nicolaus Managing Director David Lutz on what is needed for the Federal Reserve to take further action to help the economy.
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-- -- -- David Lutz and we want to bring into the conversation -- with Stifel Nicolaus and he's the managing director.
You've just heard us talking with John Brady about that age you -- do you think that the Fed will jump in here.
And what signpost what they need to see to scare them into doing -- Hey listen Dave thanks lot for having -- -- really appreciate it it didn't surprise a lot of traders that are on -- he was not more -- today and one of the main reasons is because -- -- -- what are called the five year forward breakevens and what that does is that takes a difference between yield -- the tips bond and the nominal bond and then looks at the forward contracts to -- -- lot of intraday moves right now that -- -- about two point 8%.
Inflation over the next five years and what's important about that is that's a high end of the year to date range typically below 24 is when the Fed starts getting more dollars around 2% as when the Fed starts acting.
A lot of the traders in the credit markets were not anticipating band to be Davos today whatsoever but the equity markets were certainly disappointed because -- anticipating.
They sure were well tell us specifically.
David what did the market -- wanna hear specifically the equity markets what to they want to hear from Ben today that they -- I -- say that they probably wanted to hear more talk about a global coordinated G-7 move as far as a lot of this aspects moves have been concerned.
Just because you know it doesn't matter -- Euro goes ahead and use as a of the deal means is or Chinese is at the end of the day a lot of the problems are coming out of the epicenter of Europe Europe means to do something.
Straighten out their sovereign crisis that they have going on because that's impacting China Asian starting impacting US the gold market was sitting there telling you that they thought there was going to be some level of easing but gold got -- pretty good sedation -- a pilot in the couple reasons.
First bought Oracle's -- coalition -- starting to talk about a three trillion dollar.
-- -- that's backed by gold reserves over in the EU to try to stem the sovereign crisis and at the end of the day you know we've had 4 major Central Bank decisions this week only also used a little bit that was well anticipated OK so you didn't get the liquidity -- gold.
-- -- David we be remiss if we didn't get your pick something where the hot trades art you've got a couple of ideas here let's talk to our viewers about them.
Yeah absolutely you know and sticking with gold was one of the things don't look at its he underperformance we've seen for a while in the miners GD -- ETF for the miners vs a metal or use -- a year from my metal and there's been a big underperformance the main reason why.
-- cost of oil is one of the most important calls going into the miners and things we saw Brent accelerating higher we saw all the -- starting to decouple to the -- -- spreads -- close to a hundred barrel we've seen that trade compressing if you think -- Is going to continue its downward slide you wanna be long GTX some miners and you wanna be short the metal.
The other -- thing thing going one is in Japan we're gonna get Japanese GDP posted tonight.
And it's probably gonna -- and obsolete terrible because of the -- strength we've heard the BO JJ governor's.
Complaining about it they're asking the G-7 for some level of coordinated action sooner eleven later the BOJ in the G-7 it's gonna have to -- as far as yen strength this concern.
And interesting trade there is being short the yen which is proxy by the FX YET up.
And getting long the equity market EWJ because you'll have a nice reversion to -- mean I -- Aren't really want to highlight these -- but what we got a -- -- but these are that these -- the outlying trades that we love to hear by the way once again you short the yen.
Go long the Nikkei that is about wire trader forever when David -- great to hearing from you thank you very.
