Takeaways from TradeTech FX USA 2024
In recent years, more financial firms have begun to open up offices in Miami, in particular a number of prominent hedge funds. It has also been the home of TradeTech FX USA for a number of years, where participants from the sell side, buy side and vendors converge every February. This year, I made my way back to Miami to scope out the current developments in the FX market. These days, I am focused heavily on inflation at Turnleaf Analytics, these days, as opposed to FX, where I spent most of my career. However, that being said inflation is a key indicator for FX investors, and hence, it's always good to hear macro views at events like this, and to see how to they chime with our inflation models.
I also had the opportunity to represent Turnleaf Analytics in the "Shark Tech" startup session, which was great fun, where I talked about all the interesting work we've been doing forecasting inflation using machine learning and alternative data. I also participated in a panel on AI alongside Lee Ferridge (State Street), Vinay Trivedi (MaxxTrader Systems) and Revant Nayar (FMI Technologies LLC).
In this article, I'll try to cover some of the discussions at TradeTech FX covering a multitude of different topics, including macro, trade automation, regulation and so on. Some sessions took place under Chatham House rules, so I'll often try to give a flavour of discussions, rather than direct quotations each time.
On the macro front
There were many discussions on the macro front, which covered a spectrum of different topics ranging from the likely next move from the Fed to geopolitics. The main conference day started with presentation by Rebecca Patterson (formally Bridgewater). Patterson began her discussion by noting how FX implicitly requires a broad macro knowledge, and an understanding of trade flows and capital flows. On the question of a soft landing, she attributed slightly more possibility to that, compared to a hard landing. In particular, she wasn’t emphatic about the idea of a soft landing, because ultimately, it needed several factors to occur. First consumers need to keep spending, but at present, confidence is skewed more heavily towards high end consumers, as opposed to across a full spectrum, and any pullback could result in a negative feedback loop. On the inflation front she was worried there are a myriad of factors helping keep inflation higher, which could make the Fed go slow in terms of cutting. Indeed, the market has already begun to reduce the number of Fed cuts this year. Indeed, looking at our own Turnleaf Analytics inflation forecasting model for the US, across the curve they have been on the higher side compared to the market, even before the latest upward surprise in US CPI. Whilst the focus is unsurprisingly on the presidential election, Patterson noted that who wins Congress is crucial. The deficit has ratcheted higher with a combination of fiscal policy and tax cuts from Trump.
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