The Exponential Age: Crypto's Fast and Furious Rise
Raoul Pal returns in his role as the founder of Global Macro Investor to update Real Vision members on the exponentially large role crypto is playing within his macro framework. Raoul argues that crypto is a "black hole" that is sucking in all of the world's talent and value at a speed that no one can comprehend and that its capacity to generate phenomenal returns for investors is not temporary but rather part of a durable long-term trend that is at the vanguard of what he calls "The Exponential Age." Raoul contends that since central banks have suppressed the volatility of currencies and interest rates, large "macro" on heavy swings in these variables no longer offer the opportunity they once did and that it is in the world of crypto where these outsized returns can be found. Filmed on April 10, 2021. Key learnings: Raoul sees the migration of value to the digital world as an exponential trend that offers opportunities for investment return that are no longer possible in traditional capital markets
Scott Burg: Identifying Opportunities and Risks in Structured Credit
Scott Burg, CIO and managing partner at Deer Park Road, is among the most seasoned and disciplined investors in the structured credit space who joins Real Vision managing editor Ed Harrison for a conversation to break down the complex financial market within fixed income investing. Following the Global Financial Crisis (GFC), structured credit has carried a stigma among certain investors of being unduly risky. There have since been significant regulatory and other changes to the structured credit asset class that have helped improve investor protection and rendered the market more attractive. Filmed April 13, 2020. Key Learnings: In the age of Covid-19, Burg is bullish on structured products like residential real estate, aircrafts and franchises. Elsewhere though, there are problems, particularly in commercial real estate where Wall Street never skipped a beat in pumping out product post-GFC and where lending standards were loose, especially after 2012. The result is a plethora of opportunities on both the long and short side due to motivated pension fund and bank sellers. In the coming months and years, there is expected to be more opportunities, due to likely distress in hotels, office and retail.
The Value vs. Growth Stalemate: SPACs, Rising Yields, and Long/Short in a Post-GME World
Tobias Carlisle, principal and founder of Acquirer's Fund, returns to Real Vision to share his analysis on the "growth vs. value" divergence that has been at the vanguard of 2021's equity price action. Carlisle breaks down what "value" means to him using the classic valuation metrics (price-to-book, price-to-sales, price-to-earnings, etc.) as well as more nuanced factors such as balance sheet strength and quality of earnings. Carlisle analyzes how rising yields impact the value spread and shares specific stocks that his portfolio is long or short on. Key learnings: Carlisle sees the recent surge in value as part of a larger narrowing of the "value spread" relative to growth. He notes that "junkier" value has outperformed quality value, and rather than turning his attention to energy stocks, airlines, and cruiseliners, Carlisle is focusing on quality "Tech 1.0" businesses. On the short-side, Carlisle sees lots of excess in SPACs and software-as-a-service companies that have yet to make a profit.
Gold, Active Management, and Macro Hedge Funds: The Alaska Permanent Fund's Unconventional Allocation
The Alaska Permanent Fund is the $75 billion sovereign wealth fund of the state of Alaska, and since oil was discovered in Alaska in the 1970s, the APF has been receiving royalties and investing that capital on behalf of Alaskan citizens. Every year, it pays out a dividend—a form of UBI—to the citizens, who also do not pay any state income tax. In this interview with Sean Fieler, president and CIO of Equinox Partners, Marcus Frampton, CIO of the APF, explains his own unconventional views on investing and how he is bucking the trend in the large institutional investor space. Together, they discuss why Frampton has allocated the APF in gold, active management, and macro hedge funds while resisting the urge to chase private equity like many of his peers. They also discuss Frampton's personal investing style and why he is so attracted to micro-cap stocks and OTC markets. Filmed on March 31, 2021. Key Learnings: Institutional investors, who are the major forces in global markets, are largely driven by the actuarial projections of consultants and, with a few exceptions like Marcus Frampton and the APF, tend to cluster into similar portfolios and assets.
Veteran macro investor Michael Nicoletos returns to Real Vision to share the opportunities and risk he sees across a wide array of assets including currencies, equities, interest rates, commodities, and crypto. He shares with Real Vision's Jack Farley his view that central bank balance sheet expansion will likely continue to result in skyrocketing asset inflation and that the United States dollar is poised to benefit from rising interest rates. He argues that emerging markets face serious challenges in this potentially bullish-dollar regime and analyzes the recent chaos in Turkey. He compares the burgeoning fiscal and monetary stimulus in the United States with the shortcomings of the European Union’s efforts to implement fiscal stimulus. Linking macro to crypto, Nicoletos explains his views on Bitcoin, Ethereum, Cardano, and several other altcoins. Filmed on March 24, 2021. Key learnings: Nicoletos' view on central bank liquidity leads him to be very bullish on dollar-denominated assets as well as Bitcoin. Since the U.S. stimulus efforts will accelerate economic recovery, Nicoletos sees the U.S. dollar poised to outperform the Euro and the currencies of emerging markets.
Fourth Turning Update: The Pandemic's Impact on Demographics, the Economy, and Society
Even with birthrates slowing and rapid aging in the developed world, years like 2021 where deaths outpace new births are a huge demographic outlier. In this interview with Ed Harrison, Neil Howe, author and managing director of demographics at Hedgeye, helps viewers make sense of the outsized impact that events like this can have on demographic trends. Howe and Harrison also go further than the demographics to examine how this has impacted different generations and the key players in the Fourth Turning saga. Specifically, they examine trends around migration, housing, commercial real estate, COVID variant risk, and political polarization. Filmed on March 23, 2021. Key Learnings: As well as accelerating and altering the trajectory of many societal trends around urbanization, housing, and migration, the pandemic has altered the entire demographic trajectory of the developed world. Although these consequences will take time to become measurable, investors need to be aware of the effects this can have going forward on the economy and the fabric of society.
The Unique Advantages Broadly Syndicated Loans Offer Investors
The Broadly Syndicated Loan (BSL) market is relatively new, having been created less than two decades ago. It is also widely misunderstood. So, what exactly makes this market an interesting play? Peter Gleysteen, CEO and CIO of AGL Credit Management LP, joins Real Vision managing editor Ed Harrison to break down how the BSL market has emerged over time, its unique advantages as an asset class, and how to navigate it while maximizing returns. Gleysteen explains that broadly syndicated loans are not securities like investment grade and high yield bonds—they’re loans that are originated by banks, and borrowers range from medium to very large companies that are mostly private. He addresses some of the misconceptions in the BSL market around covenants, leverage, and diversification and how to view them. He also discusses the current macro picture, why BSL issuers are predominantly U.S.-based, and the market's similarities to and differences from high yield credit. Key Learnings: Gleysteen offers insight into why broadly syndicated loans are suitable and advantageous for investors with longer time horizons, describing bank loans as an "all-weather asset class". Presently, fewer than 10% of borrowers have been affected by the pandemic, and most are U.S.-based, which, in a world where the U.S. is outperforming, provides valuable exposure. He also highlights how much more liquid BSLs are relative to similar instruments, emphasizing how they offer stable cash returns. Rather than considering a loan on its own, he advises to pay more attention to properly diversifying BSLs within a portfolio as it minimizes the impact of default and loss rates and provides the means to employ leverage and earn outsized returns
INK Ultra Money Free: Could Bandito take on strategic importance?
The March 16th INK Morning Report looked at the only gold miner to make it into our March Top 40 Stock Report. As it turns out, Endurance Gold (EDG) may have more than gold going for it. INK Research is the only source in Canada for independent and non-sponsored research driven by insider sentiment for more than 1,000 Canadian stocks . Join us via the Canadian Insider Club or INKResearch.com as we let the insiders guide us to opportunity.
In the summer of 2020, Larry McDonald, New York Times bestselling author and publisher of The Bear Traps Report, argued that technology stocks would be vulnerable to a rise in interest rates. Now that his prediction has played out, he returns in this conversation with Real Vision's managing editor Ed Harrison to update his thesis on growth stocks, yield curve control, and commodities. Filmed on March 15, 2021. Key learnings: McDonald argues that the Federal Reserve has no choice but to prevent the bond market from derailing the economy. He expects the Fed to issue calendar guidance, give assurances on their balance sheet, and even (perhaps) indicate a willingness to experiment with yield curve control. In this environment, McDonald expects a rotation out of big tech and into cyclical and value sectors of the market
500 Years of Speculation: Learning From Prior Market Manias
These days, it's easy to witness some speculative activity in today’s markets and declare, "This is unprecedented." In this interview, Jamie Catherwood, associate at O'Shaughnessy Asset Management and publisher of Investor Amnesia, joins Real Vision’s Jack Farley to declare the exact opposite: that markets have been "here" before many times. Catherwood outlines how financial bubbles begin, evolve, stretch, and ultimately burst, citing many examples such as British Railway Mania, the 1890's "Brewery Bubble," Bicycle Mania, and the notorious South Sea Bubble. Catherwood traces the origin of short squeezes from Isaac Le Maire's struggle against the Dutch East India Company in 1610 to the 1923 "corner" in grocer Piggly Wiggly. Farley incorporates this history to the recent squeeze in GameStop Corp, which leads Catherwood to recount the emergence of the retail investor. Catherwood ends by sharing the surprisingly long history of "electric vehicle" stocks and connects the ongoing surge in non-fungible tokens (NFTs) to "Rabbitmania" among idle Samurai in Meiji Japan. Filmed on March 12, 2021. Key learnings: History doesn't repeat, but it does rhyme. Almost every financial transaction – whether inanely routine or outrageously unscrupulous – has a corollary throughout history, and by studying the past, investors can prepare themselves for the future. For Catherwood's blog, Investor Amnesia, click here: https://investoramnesia.com/category/sunday-reads/.
Narratives around the reflation trade and asset prices are currently pointing towards a full recovery and a period of extended growth as the world exits lockdowns. In this interview with Real Vision managing editor Ed Harrison, Daniel Lacalle, chief economist and CIO at Tressis, argues that this is being fueled by nothing more than hope and that, although this is a recovery, the world will return to the same state of secular stagnation and low growth that existed pre-COVID. Lacalle explains why fiscal and monetary policies, which have not generated inflation, will only make this situation worse, why he thinks there is only a few months left in the reflation trade, and the resulting asset allocation based on his outlook. They also discuss current pockets of value and the sectors that Lacalle considers to be value traps like energy and financials as well as Lacalle’s outlook for the dollar. Filmed on March 10, 2021. Key Learnings: Sectors like energy and financials, which have been benefiting from reflation narratives and trade at low multiples, should not be considered "value". Current negative views on the US and the dollar remind Lacalle of the GFC, but the reality is that the US and the dollar are still the cleanest dirty shirt.