#119 Michael Kao: The Four Horsemen Of Economic Resilience, And Why We Haven’t Seen A Hard Landing (Yet)

Michael Kao (@Urbankaoboy) joins Julia La Roche on episode 119 to discuss his macro outlook, why we haven’t seen a hard landing yet thanks to the “four horsemen of economic resilience,” and why he’s favoring shorter duration assets in this economic environment. 

Mike has been in the investment business for 30 years and has experience analyzing and investing in many markets and asset classes, spanning commodities to credit to convertible/capital structure/event arbitrage to distressed debt/equity investing. 

Mike began his career in the commodities unit at J. Aron/Goldman Sachs in NYC in the early 90’s and traded over 25 different commodity markets and their derivatives. Mike left Goldman to pursue an MBA in Finance at The Wharton School. 

After business school, Mike joined Canyon Partners, a credit-oriented hedge fund in Los Angeles, where he went on to become partner and co-founder of the Canyon Arbitrage Fund, which focused on various strategies including convertible and capital structure arbitrage as well as event-driven/risk arbitrage.

After 5 years at Canyon, Mike decided to leave Canyon and begin his own investment firm, Akanthos Capital Management, LLC. At Akanthos, Mike ran an opportunistic, value-driven investment strategy that looked for “fulcrum securities” up and down the capital structure. 

Mike stopped actively managing external capital in 2019 and now invests primarily for his family office and enjoys blogging about the markets and economy on Substack at urbankaoboy.substack.com and Twitter @UrbanKaoboy. 

Mike holds a BS in Electrical Engineering/Computer Science from UC, Berkeley and an MBA in Finance from The Wharton School of the University of Pennsylvania.

Links: 

https://www.urbankaoboy.com/

https://twitter.com/UrbanKaoboy

0:00 Welcome Michael Kao 

0:51 Macro view / The Four Horsemen of economic resilience 

7:43 Recessionary outlook in the “vodka-Red bull” economy 

11:00 The dollar wrecking ball 

15:30 The rest of the world ‘out-doving’ the Fed 

19:23 Oil outlook 

26:27 Portfolio construction, favoring shorter duration 

33:00 Thinking about stocks and bonds

35:00 Exit strategies 

41:16 Parting thoughts