https://www.youtube.com/watch?v=H62cfg1E2Ts
Kevin Muir, who writes The Macro Tourist, opens the monthly Last Call wrap with a trade he says is barely being discussed: buying forward volatility on the S&P 500 around the midterms. Matt Zeigler and Jack Forehand bracket the segment with their own discussion of what Kevin Warsh's Fed gives up by dropping forward guidance, and what Stanley Druckenmiller's AI-written Wall Street Journal op-ed says about whether writing is thinking.
👤 Guest: Kevin Muir, who writes The Macro Tourist
🎙️ Host: Matt Zeigler
👥 Also on: Jack Forehand
📰 Published: 30 August 2026
🔴 YouTube | 🟢 Spotify | 🟣 Apple Podcasts | ⏱️ 63 min | ✅ Time saved: 51 min
Key Takeaways
Forward volatility around the midterms is the trade nobody is looking at
"it is in essence buying forward volatility on the S&P 500 or the stock market around the midterms"
The market is pricing the midterm period at almost the same level as an ordinary stretch of the calendar
A career short-volatility trader is buying volatility, and says so
"I am not one to tell you to buy vol, especially short-dated vol"
He made money being short implied volatility at a bank and does not enjoy paying time decay
Seasonality and implied correlation make the case before the election is even counted
September is usually the more volatile month, and implied correlation is at all-time lows
This midterm is different because the president has already given the playbook
A prime-time address that turned into an hour on election interference, which Muir read as staging a dispute
Losing the House means subpoenas and investigations, not lost legislation
He does not have to be right about the outcome
"I don't even need to be right about the outcome." — the worry gets priced in on the way to the vote
The straddle around this midterm is priced below 2022 and 2018
He is pulling the numbers up live and reads them off the screen
Buy the insurance while it is cheap, not when you need it
"you buy your straw hats in the winter and you shouldn't buy insurance when you have to. You should buy it when you can"
The end of forward guidance means walking into Fed meetings blind
"we're going to go into these meetings not knowing what's happening" — Forehand
Officials cave when the market tests them, on the hosts' reading of the record
"it's basically zero" — Forehand on the track record of resolve
Druckenmiller owned the AI authorship, and both hosts respect that more than the writing question
The harder question is whether the thinking happened at all
Warsh's Fed Is Taking Away the One Tool That Made Meetings Predictable
Zeigler opened on Kevin Warsh's Jackson Hole remarks and the end of forward guidance, and said the framing he keeps hearing is play the ball, not the referee. He said he wants markets to price themselves and still cannot get comfortable: "I want markets to function like markets and find their own prices here. But I still find this unsettling for some reason."
Forehand said the change breaks a career-long habit. The vast majority of Fed meetings in their working lives came with very high probabilities attached and the Fed always did what the probabilities said. The last meeting was not like that, and neither is the next one.
On what the next meeting looks like: "I think it's like 55/45 in favor of a hike right now at the next meeting", he said, and "we're going to go into these meetings not knowing what's happening"
Less guidance means more volatility around the short end, and probably in stocks too, because stocks react to everything the Fed does
"it is just to me is very interesting that that tool, which has been a huge tool for the Fed, this forward guidance tool, is not going to be used anymore"
Zeigler credited Cameron on the Excess Returns show Click Beta with the read that the change is good for short-duration bond traders, because odds a touch better than a coin flip create spread going into a decision
Why he thinks the ripple matters more than the odds: "the bond market is smart because anything that happens with bonds that happens with debt, what happens with leverage creates a ripple through every single other asset class"
Forehand put the argument on the other side, crediting Andy Constan with it. Forward guidance was a tool the Fed reached for when it had nothing else: "forward guidance really was a tool the Fed decided to use when it had no other tools." Rates were at zero and there was nothing left to do. Now the conventional tools are available again, so the case is that the Fed no longer needs it.
Zeigler said the test is whether the approach survives contact with a crisis: "It will be can Warsh's Fed assert confidence when this approach is tested?"
Forehand's expectation, stated flatly: "If you look at government officials and you look at their track record on will they give in when their resolve is tested by the market, it's basically zero." Giving speeches at Jackson Hole is a different thing from holding the line while the market is falling and the president is shouting
The Trade Is Buried Behind the Hovercraft Ads
Zeigler introduced Muir with the running joke about The Macro Tourist: that he is always on page 18, 19, 20, next to the mail-order ray guns, and finds the thing that ends up on page one. Muir said this one is further back than that. He has seen one or two people talk about it and is shocked it is not getting more play.
The trade is buying forward volatility on the S&P 500 across the midterms. He said he would walk through the reasons and warned it would be a little technical.
For anyone who does not want to trade a forward, he said the simpler version exists: "you could buy vol now, today, buying vol"
The disclosure he leads with: "And Matt, I just want to say, I am not one to tell you to buy vol, especially short-dated vol. I love using long-dated options, but to buy three-month vol is very unusual for me."
He learned the business on the sell side — "I cut my eye teeth on an institutional equity derivatives desk" — where the bank had a balance sheet and index implied volatility generally traded above realized
Why long volatility is the uncomfortable side for him: "I hate being long vol because the theta monster just eats you", and the timing has to be close to perfect for the trade to pay
Seasonality and All-Time-Low Correlation Make the Case Before the Election Does
Muir's first two reasons have nothing to do with politics. September is where the seasonal pickup in volatility starts, and the second reason is structural.
"if you just look on a seasonal basis, this is the point upon which the vol rally starts" — go back through the years and September is often the more volatile month
The technical leg: "implied correlation, which is the amount that the market is priced in terms of how much the stocks are going to move in within like within an index compared to one another, is at all-time lows"
"It's very clear to me that the risk-reward favors owning volatility at this point."
He then added the election on top of that. Midterm years are more volatile even in the best of cases: "the midterms in general, even in the best of cases are more volatile period."
He Does Not Have the Numbers on Midterm Volatility, and Says So Twice
Zeigler asked how much more volatile, and Muir would not fake it. "I can't remember the exact numbers", he said, and a moment later, "I unfortunately I don't have the number but I I've seen the stats and it's more volatile."
The sample is thin by construction. "the option market hasn't been trading that long", he said, and midterms come once every four years
Zeigler agreed the sample is a couple of decades and suggested looking at price instead
What the curve is actually saying: "the amount that they expected the market to move over the midterm is in essence almost the same as a regular curve, and that should be higher"
Why He Thinks This Midterm Is Not Like the Others
Muir's case for a bigger move rests on the president's own behavior rather than on the polls.
"in terms of Trump, his approval rating is the lowest out of any president apart from, Nixon 3 days before he resigned"
Losing the House matters for oversight, not legislation. "He hasn't been passing legislation, apart from the One Big Beautiful Bill." Everything else has gone through executive order, so what changes is who can issue subpoenas and open investigations
On the assumption that the administration simply accepts the result: "they see the same polls as everyone else. So to think that they're just quietly sitting by and just going to allow this to happen is I think naive."
He pointed to the prime-time address to the nation. There had been chatter it would be about going to war with Iran; instead "he just basically talked about election interference, like started ranting about that for an hour", and even Fox seemed confused
His answer to the charge that this is derangement talking: he said the same thing happened with tariffs. People told him it was a negotiating posture, and he pointed at the 1980s record. "he's given you the playbook already"
The Point of the Trade Is That He Does Not Have to Be Right
Muir was explicit that the position does not depend on his forecast landing. He said the market is ignoring the possibility that this gets heated — "the market is just ignoring the potential that this could get heated" — and that anyone who thinks he is being alarmist is entitled to.
"even if you disagree with me and think I am a huge panic mechanic, which is fine"
The structure of the trade: "I don't even need to be right about the outcome. You could just surf the wave that going into the election, we are going to have increased worry about the midterm election."
Zeigler laid out why the setup is unusual: the S&P 500 is up 12, 13% year to date on his screen, which is an above-average return with below-average realized and expected volatility, and there is a dated event on the calendar getting less coverage than the next round of Mag 7 earnings.
What the Midterm Straddles Actually Cost, 2010 Through 2022
Muir pulled the charts up live and read the implied moves for the period around each midterm, which can be isolated by buying the far leg and selling the near one.
"We had in 2022 they were expecting on the S&P like a 1.8% day", against a materially smaller expected move for this one
"In 2018, they were expecting a 1.25% day", and again, in his words, "Again, under 1% today."
2014 was relatively low, and 2010 was priced about where today is
His view of the risk: "I think today is a lot more dangerous than the other midterms", and the pricing should be at least as high as 2022, with an outside chance of much more
The fallback if none of it happens is the one he keeps coming back to: between now and the vote, he expects the price of that protection to get bid higher regardless. He closed on a line from the trading desk: "you buy your straw hats in the winter and you shouldn't buy insurance when you have to. You should buy it when you can." His own position follows from it — "I'm buying my insurance today."
Zeigler signed him off by objecting to the self-description. Panic mechanic undersells it, he said, reaching for a better Canadian metaphor and not finding one. Muir gave out his email address as the way to reach him.
Druckenmiller Wrote It With AI, Said So, and That Is the Part Both Hosts Respect
Forehand closed the show by raising Stanley Druckenmiller's piece in the Wall Street Journal. Zeigler said the interesting question is not whether the writing is good but whether the author owned it, and he did.
"I did like that he owned the thing." Where most people deny it, Druckenmiller's answer to the detector score was that of course he wrote it with AI
Forehand said the refusal to hedge is the best part of the story: "he even went so far as to say, you'd be an idiot if you're not doing this, too"
Zeigler's test is whether the thought is the author's: for PR copy, academic writing and thought-leadership he does not care about the prose, so long as the thinking is theirs, and this read like something Druckenmiller has been saying his whole career
Forehand turned it into an investing question, which is where the disagreement actually sits.
Investing blogs are already full of writing that is clearly machine-produced, some of it giving actionable advice
The distinction he drew: Druckenmiller is one of the greatest investors alive and plainly believes every word; elsewhere the question is whether the author read it, believed it, or thought it through
"so much of having an investing opinion is the process of thinking through that investment opinion"
"the process of writing that down is so much the part of the process of thinking. And if you're not doing that, are you thinking?"
Zeigler agreed and took it a step further, pointing to an essay of his own on the subject.
A person can still be a financial influencer, he said; the thing that matters is the commitment behind the writing
The formulation he built the essay on: "a covenant with yourself to write, to figure out what you think, to explore what you feel" — which is what separates work carrying a piece of the writer from what he called AI slop
On Druckenmiller specifically, he called it a felt statement that the tools helped organize and present
"I don't read the Wall Street Journal for Emily Dickinson. I read Emily Dickinson for Emily Dickinson and she can use an M dash."
Muir's bottom line is that the options market is charging an ordinary price for an extraordinary event, and that the way to trade it is to own the protection now rather than to be right about the election later.
Products, Companies & Tools Mentioned
The Macro Tourist (Muir's newsletter, and the running joke of the segment — the trade is further back than page 18)
S&P 500 index options (The instrument for the whole trade: forward volatility isolated around the midterm period by selling the near leg and buying the far one)
Click Beta (The Excess Returns show where Zeigler says Cameron argued the end of forward guidance is good for short-duration bond traders)
Fox (Muir's evidence that the prime-time address confused even friendly coverage)
The Wall Street Journal (Publisher of the Druckenmiller op-ed that closes the show, and of the op-ed committee gag that opens it)
Pangram (The AI-text detector whose score on the op-ed started the argument)
Panoptica (Where Zeigler publishes; his essay on the subject is there and free to read)
Books & Resources Mentioned
More Eccentrics, Less Influencers – Matt Zeigler (His essay on writing as a covenant with yourself, published on Panoptica and free to read)
Stanley Druckenmiller's Wall Street Journal op-ed (Written with AI and acknowledged as such; the subject of the closing discussion)
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