Fearing deflation and eager to sponsor growth post the GFC, Central Banks around the world became a near permanent fixture in markets, gathering vast stockpiles of risk free assets. Few were more impactful in determining clearing prices than was the ECB. With this in mind, it was a pleasure to welcome Alfonso Peccatiello, founder of the Macro Compass, to the podcast.

Our conversation is one part retrospective, looking back on the period between 2013 and 2019 when interest rates in the Eurozone descended to shocking low and negative levels. Alf shares his views on the trade-offs in seeking favorable risk-adjusted carry in such a low rate regime, making the point that it's important to identify and understand the capital that serves to sponsor the trade along with you. We touch on some of the unique political considerations for risk assets in Europe and here, Alf looks back on a shock to Italian markets that materialized in May of 2018 as fears advanced that a Euro-skeptic government coalition could seek to abandon the Euro.

We also survey the uncertainties today, focusing on the risks that may result from nominal yields in Italy approaching 4%. From Alf's perspective, while there is plenty of negative sentiment, one can argue that the price of risk does not fully reflect the degree of economic and financial vulnerability resulting from the combination of inflation and the risks of energy prices.

Lastly, we touch on Alf's efforts at the Macro Compass, the newsletter he launched to share his insights on the big picture of risk and to play a role in financial education. I hope you enjoy this episode of the Alpha Exchange, my conversation with Alfonso Peccatiello