Carly Fiorina: Big tech Has Unprecedented Economic Power
Carly Fiorina, founder and chairman of Carly Fiorina Enterprises and 2016 Republican Presidential candidate, joins Real Vision managing editor Ed Harrison to discuss the value and challenges of regulating big tech and the enormous economic power it has amassed across the globe. Hailing from an extensive career in tech and finance as former CEO of HP, she discusses the opportunities that business can bring to the political table and the challenges she faced as a woman in male-dominated industries, and the value of regulating big tech. She also shares her views on current events from the storming of the Capitol to the political climate to the effects of the pandemic on public policy. Filmed on January 11, 2021. Key Learnings: Fiorina argues that focusing on results rather than partisan issues encourages competition and accountability to restore political systems and revitalize the economy.
Iran: Investing in One of the Best-Performing Stock Markets
Real Vision founder and CEO Raoul Pal welcomes back Maciej Wojtal, founder and CIO of Amtelon Capital, an investment fund devoted to Iranian equities, to discuss how he's identified a diversified economy in Iran despite decades of sanctions and geopolitical risks. His interest in Iran was sparked by the nuclear deal brokered by President Obama in 2015 where he found a stock market that had been operating for more than two decades and included nearly 600 companies with $200 million in daily liquidity. His fund gives Western investors access to fast-growing businesses with low valuations in an array of industries—from utilities and automotive to commodities and agriculture. He shares his perspective on managing volatility as well as how the U.S.-Iran relations are expected to change under a new Democratic administration, and he weighs in on trade with neighboring countries in the Middle Eastern region. Filmed on January 12, 2021. Key Learnings: Despite an overall economy that has been rapidly contracting because of U.S. sanctions and weak oil prices, Iran has one of the best-performing stock markets. Iran's stock market is dominated by retail investors with foreign ones making up less than half a percent of the market cap. Wojtal looks for companies that have pure export exposure, and he has been able to find companies with exports in the region that are usually not affected by sanctions.
Capital Destruction and Mimetic Desire in Tech and Finance
Byrne Hobart, writer at The Diff, joins Taylor Pearson, co-chief investment officer of Mutiny Fund, for a wide-ranging discussion on everything from monopolization within technological companies to "Straussian" readings of Jerome Powell and Anthony Fauci to what the 800-year chart of real interest rates indicates about the history of capital markets. Hobart scrutinizes what the tendency of technological firms to mimic the major winners in the space means for the future of technological innovation and the venture capital industry as well as the capital that tracks it. After Pearson asks Hobart about the notion of "optionality" as applied to Airbnb, they discuss their risk/reward analysis of Bitcoin as well as the recent companies that went public via special purpose acquisition companies (SPACs). Filmed on January 8th, 2021. Key learnings: This interview contains many contradictory propositions such as the notion that bubbles can be useful and that citizens living during the fall of an empire have a better quality of life than those that lived during its rise. Hobart argues that SPACs as a whole offer little upside and that Bitcoin has a favorable (if skewed) risk/reward profile.
Lyn Alden of Lyn Alden Investment Strategies shares her 2021 thesis for the U.S. dollar, interest rates, inflation, and growth, providing a strategic update of how her expectations for these key macro variables influence her outlook on assets such as commodities, EM equities, real estate, gold, and bitcoin. Alden evaluates whether her bearish view on the dollar, which has proven enormously successful over the past year, has now become a "crowded trade" that offers less upside than it used to. . With insolvency remaining a serious risk, Alden insists that when searching for individual securities, quality must be sought above all else. Looking beyond 2021, Alden evaluates the possibility of the fall of the dollar not just in value, but as a hegemonic reserve currency, and she weighs various replacements to the Petrodollar system, such as a multipolar currency regime, a digital Bancor system, and the possibility of Bitcoin becoming a reserve asset. Filmed on December 17, 2020. For Alden’s article, "The Fraying of the U.S. Global Reserve System," click here: The Fraying of the US Global Currency Reserve System (lynalden.com) Key learnings: Alden expects the U.S. dollar to continue to weaken against hard assets over the course of 2021, with a 3-6 month period of uncertainty. As nominal yields on the long-end of the U.S. Treasurys curve pick up, Alden continues, risk-assets broadly will perform well with equities and commodities outperforming bonds and value outperforming growth. Alden remains very bullish on Bitcoin.
The Highest Quality Macro Trades and the Impending End of U.S. Outperformance (RE-RELEASE)
Ben Melkman, CEO and founder of Light Sky Macro, returns to discuss the biggest macro themes and trades on the horizon with Real Vision CEO and co-founder, Raoul Pal. In this wide-ranging discussion, they examine everything from COVID and the effects of its handling by the U.S. and Europe to the probability of fiscal union in Europe as well as the potential outcomes of the U.S. election. Melkman and Pal agree that the combination of unprecedented fiscal and monetary policy has to have unwanted consequences somewhere and that this likely will play out in FX markets. Conversely, Melkman pushes back on Raoul's dollar shortage thesis, arguing that the dollar is in store for a rough 2020 and makes the case for the end of U.S. equity outperformance sooner rather than later. Filmed on Wednesday, July 1, 2020.
Roy Niederhoffer, president of R. G. Niederhoffer Capital Management, joins Jason Buck of The Mutiny Fund to share the lessons Niederhoffer learned during his fruitful career as a systematic trader and portfolio manager. Niederhoffer tells Buck about his journey from being a high school entrepreneur to a trader at his brother's firm to then developing his own systematic trading algorithms and ultimately starting his own firm, R. G. Niederhoffer. Using vivid examples from financial crises such as "Black Monday" in 1987, 9/11, and the 2008 Great Financial Crisis, Niederhoffer discusses the advantages of systematic trading as a way to avoid behavioral traps that humans fall into. Niederhoffer provides insights on the nuances of risk parity, particularly the waning correlation between stocks and bonds, before sharing with Buck his views on monetary debasement, inflation, and Bitcoin. Filmed on December 15, 2020. Key Learnings: Negatively correlated assets are crucial to hold as they reduce volatility within a portfolio. Systematic trading (as opposed to discretionary trading) is an effective way to exploit emotional foibles of other market participants and not fall victim to your own. The negative correlations between stocks and bond prices is not an unmoving axiom of financial law, but rather a feature of the last four decades which may no longer be true.
Jay Pelosky, CIO and co-founder of TPW Investment Management, joins Real Vision managing editor Ed Harrison to discuss his macro outlook for 2021. Pelosky shares the areas of opportunity that are on his radar, including high-yield bonds, and equities in Europe and China. Harrison asks Pelosky to update his positive thesis on small-caps equities and emerging market stocks, which have been on a tremendous tear for almost two month. Pelosky explains why despite their frenetic upsurge, he remains bullish on these asset classes as well as other assets that benefit from an increase in growth and inflation. Lastly, Pelosky tells Harrison why the reflation that he expects to see in 2021 will be a drag on sovereign bonds, particularly U.S. Treasurys. Filmed on December 15, 2020. Key learnings: The rotation from growth stocks into value equities is just getting started. Reflation and re-opening will further boost stocks, specifically small-cap and emerging market equities.
Stephen Clapham on IPO Bubbles, Earnings Manipulation, and Balance Sheet Jiggery-Pokery
Real Vision editor Jack Farley welcomes Stephen Clapham, founder of Behind the Balance Sheet and author of "The Smart Money Method." Using the tools gained as a forensic accountant in the hedge fund business, Clapham analyzes the current ploys that companies use in order to flatter earnings, garnish cash flow, and hide risk. These hijinks include one-time charge-offs, stock-based compensation, and the widespread practice of listing "adjusted earnings" – the holy grail of financial chicanery. Clapham considers the flurry of IPOs and SPAC mergers, which he calls a "bubble," sharing his views on companies such as Nikola, Airbnb, and DoorDash. Clapham's article on stock-based compensation can be viewed here: https://www.behindthebalancesheet.com/blog-1/stock-based-comp-the-disappearing-expense. Filmed on December 15, 2020 Key learnings: IPOs and SPAC deals are in a bubble that reminds Clapham of the dot-com crash. Investors should be wary of adjusted earnings, but since almost every company in the S&P 500 employs that metric, research and prudence is required to separate the wheat from the chaff.
David Salem, managing partner of Windhorse Capital Management, welcomes Andrew McDermott, president of Mission Value Partners, an investment firm that invests almost exclusively in Japanese equities. McDermott argues that Japan is a hidden repository of balance sheet strength, and he and Salem discuss why Japan's business leaders seem not to exhibit the same bad habits that have ruined so many previously-great American companies, such as Intel and GE. McDermott breaks down his analysis of specific companies such as Hitachi, Sazaby, and Daiichikosho Co., and then he tells Salem about the time Warren Buffett called him to seek out his knowledge and advice on investing in Japan. McDermott and Salem also reflect on macroeconomic factors such as demographics and Japan's government debt burden. Filmed on December 14, 2020 Key Learnings: Japanese equities are one of the least-loved and arguably most misunderstood asset classes in the world. But they offer opportunity to the thoughtful investor, as the management of Japanese companies are more prudent and sensible with their allocation of capital.
The most important question in the world right now is whether the 40-year trend of disinflation is ending. Is inflation coming? Are you ready? In this interview, Kiril Sokoloff, Chairman and Founder of 13D Global Strategy & Research, talks with Mike Wilson, CIO and Chief U.S. Equity Strategist of Morgan Stanley. He also chairs Morgan Stanley's asset allocation committee of $3.5 trillion in assets. Wilson has had the hottest hand on Wall Street these past three years and nailed the bottom of the March lows to the very day. He believes a whole new investment paradigm has begun. The winners of the past decade of outperformance will fade and many new winners will dominate and outperform for the next several years. Filmed on December 2, 2020.
Gary Shilling's Investment Ideas for a Hard Winter in the Real Economy
With cases spiking and economic data surrounding the recovery slowing or outright rolling over in many cases, it appears as though a hard winter is in store for the global economy. Gary Shilling, president of A. Gary Shilling & Co., is well known for having forecasted these types of downturns in the past and, along with Real Vision's Ed Harrison, discusses why he thinks we are in store for another economic downturn this winter. Shilling highlights real economic data like slowing job gains, increased COVID-19 deaths, and the potential for renewed economic shutdowns, but he cautions that the strange correlation, where bad news equals more stimulus and thus is bullish for equities, can draw out irrationality longer than investors might expect — even if stimulus fails to fully replace economic losses in the long-term. Shilling and Harrison also discuss his investment ideas that arise from this forecast: cautiously short equities, short dollar, and long treasuries. Filmed on December 4, 2020. Key Learnings: The real economy and market are once again moving in the opposite direction. Shilling argues that this disconnect will close and that the long bond may be the best way to play to it. He also sees the stimulus feedback loop as putting more downward pressure on the dollar.
James Litinsky: Rare Earths Taking Center Stage in the Electric Vehicle Boom
James Litinsky, founder and CEO of MP Materials ($MP), is joined by Real Vision editor Jack Farley to discuss his mission to restore to North America the rare earth supply chain, which for decades has been dominated by China. Litinsky highlights the critical role rare earth elements are playing in the economy of the future, explaining their uses in electric vehicles, wind turbines, and other markets that are set to dramatically expand. After Litinsky shares his experience in MP Materials’ going public via a special purpose acquisition company (SPAC), he and Farley discuss the properties of MP Materials’ Mountain Pass mine that make it uniquely able to produce rare earth concentrate at a low cost and in an environmentally-friendly manner. Lastly, Litinsky, a former hedge fund manager, puts back on his "investor" hat to share his macro framework. For the Real Vision "Discoveries" documentary on the Mountain Pass mine, click here: https://www.realvision.com/shows/discoveries/videos/the-rare-earth-metal-megatrend. For more about MP Materials, click here: https://mpmaterials.com/. Filmed on December 2, 2020. Key Learnings: Litinsky believes rare earths are an effective "picks and shovels" play on the exponential growth of electric vehicles (EVs), since all electric vehicles require Neodymium Praseodymium (NdPr) magnets to power their motors, and since EV stocks are priced to perfection and are largely in the pre-profit stage (and in some cases, pre-revenue). Litinsky argues that the rich ore body of the Mountain Pass mine best positions MP Materials to command market share, calling the mine "the Saudi Arabia of Rare Earths."