The neoliberal model of free trade, open borders, and liberalized capital flows is under assault. Traditional economic models with rational agents and efficient markets don’t accord with reality, and people are starting to notice. Even recent advances in behavioral economics have failed to capture this disconnect. Mark Blyth, William R. Rhodes Professor of International Economics at Brown University, and Eric Lonergan, macro hedge fund manager at M&G Investments, explore and seek to resolve these conflicts in their new book, “Angrynomics.” Blyth and Lonergan examine how the outsourcing of economic management to grey-suited bureaucrats is fomenting a populist backlash that is redrawing political battle lines and molding the destiny of different asset classes in ways few fully grasp. They analyze the recent largesse of central banks as a sort of asymmetric put-option which rewards those who hold assets and punishes those who don’t. Blyth and Lonergan also explore potential solutions, which include dual interest rates, citizens’ wealth fund, and - yes - even helicopter money. Filmed on July 8, 2020.
In many ways, China is at the center of the public health and economic crisis that has gripped the entire world for most of 2020, but recently more focus has been placed on the U.S. and Europe. George Magnus, research associate for the China Centre at Oxford University, helps viewers revert their gaze back towards the global superpower sized elephant in the room. Together with Real Vision’s Ed Harrison, Magnus examines the current state of affairs for China from the perspective of the western countries left with a bad taste in their mouths after China’s handling of the COVID-19 outbreak, but also from the internal perspective of a country looking to restart its growth engine and position itself for a world with fewer allies and a new economy with less reliance on traditional global trade partners. In addition, they examine the health of the Chinese banking system, the return of credit growth in China, and the potential for western sanctions and the outright weaponization of the U.S. dollar. Filmed on July 6, 2020.
By both surprise and necessity, Modern Monetary Theory is here at our doorstep. And with neither major party remaining as the party of ‘fiscal responsibility’, it seems there is little standing in the way of MMT becoming the premise for US government spending initiatives. That’s why it is more important than ever to understand the thinking behind MMT and the common misconceptions surrounding it -- and to prepare your portfolio for its increased acceptance by politicians who view it as an invitation to spend. In this interview with Marshall Auerback of the Levy Economics Institute, Stephanie Kelton breaks down the arguments put forward in her new book, “The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy”. Together they discuss why MMT does not give governments carte blanche to spend indiscriminately. Kelton also articulates why comparing government debts to private debts is flawed. She explores the varying gradations of monetary sovereignty as it relates to constraints on countries potentially using MMT as an economic framework. Finally, Kelton touches on the ‘job guarantee vs. UBI’ debate and much more in this interview that is sure to be a learning experience for MMT skeptics and believers alike. Filmed on July 2, 2020.
COVID-19 and Financial Markets in a Post-Stimulus World
Dr. Z. Barton Wang of Barton Research joins Real Vision CEO, Raoul Pal, for a conversation about the lasting impact of COVID-19 on financial markets. Wang breaks down the institutional response from the Treasury Department and the Fed to the pandemic and considers that response's effect on financial markets. He points out several abnormal market drivers in order to explain how markets have behaved over the last few weeks and months. Wang also shares his view on the biggest risks to the market right now, including the roll-off of the CARES act and other stimulus packages, as well as provide his perspective on what could happen in the markets over the next few weeks, months, and years. Filmed on July 1, 2020.
Market Irrationality, Monetary Confidence, and Systemic Change
Peter Atwater, president of Financial Insyghts LLC, joins Dee Smith of the Strategic Insights Group to break down Atwater's perspective on systemic fragmentation and how that will impact financial markets. Atwater breaks down the end of cycle phenomena of overconfidence, fraud, and an eventual recovery. He and Smith also discuss where market sentiment is headed from here. Atwater and Smith explain how markets act like the world's most expansive social network and the role of money, markets, and faith in making that network work. Finally, Atwater breaks down the relationship between inflation and narrative and why markets have not seen the level of inflation that many have predicted. Filmed June 30, 2020.
Emerging markets have come back to the forefront of investor outlooks recently as many market participants and commentators argue that years of US outperformance are coming to an end sooner rather than later. Of those arguments, many rely on a handful of macro or valuation factors that lead them to a specific country or sector that is poised to pounce. Tassos Stassopoulos, managing partner and CIO of Trinetra Investment Management, takes a completely different approach and in this interview with Max Wiethe, he argues that the tailwind of emerging market consumer demand growth is strong enough to overpower any macro headwind. Here, Stassopolous lays out his ethnographic research framework where he gets face to face with the EM consumers driving trends. He explains how focusing on those consumers and their cultures over companies and their talking points can help investors identify trends long before other market participants. He also explores a few of the biggest consumer trends and companies he is focused on right now and discusses how COVID-19 is accelerating trends and affecting his ability to do the boots on the ground research that is so critical to his unique process. Filmed on June 25, 2020.
Rethinking Risk Management: Avoid Surprise, Not Risk
With recent market moves like the VIX spiking from 15 to 80 in a matter of weeks or oil futures trading at preposterous negative levels, taking even the most experienced professionals by surprise, many individuals and firms lucky enough to have avoided total collapse are rethinking their approach to risk management. In this interview, risk management consultants Brett Friedman of Winhall Risk Analytics and Michael Miller of Northstar Risk reexamine the recent carnage, with a particular focus on how variance swaps got a handful of sophisticated investors with well-established risk management practices in a world of trouble. Together they discuss why systematic vol selling has become the flavor of the day, debate whether these complex products are suitable for pension funds regardless of their sophistication, and put forward the idea that unbiased post-mortem trade analysis is as important for winning trades as it is for losing ones. Filmed on June 23, 2020.
Dan Zwirn, founder and CIO of Arena investors, returns to Real Vision to discuss credit investing in perilous and perplexing markets. He and Real Vision’s managing editor, Ed Harrison, discuss the rise of so-called “cov-lite” loans and the state of collateralized loan obligations (CLOs). Zwirn delves into the details surrounding the deterioration of credit quality across the fixed-income landscape, and he explores the various way shrewd credit investors can protect themselves, such as put-optionality and convertible bond arbitrage. Zwirn and Harrison also comment on the Federal Reserve’s role in propping up credit markets and what opportunities there are in permanently impaired sectors such as retail, airlines, and cruise lines. Filmed on June 18, 2020.
The U.S. dollar may be the most important "security" in the world and the cycle of its relative strength is a fantastic indicator of global economic health and the performance of a handful of asset classes. That's why Julian Brigden of MI2 Partners has been using this cycle to inform his outlook for decades. In today's interview, Brigden updates viewers on the dollar cycle and argues that we are entering a period of sustained dollar weakness. He examines dollar charts showing the technical support levels that are dangerously close to breaking, explores correlations with other major indicators, and breaks down the fundamental backdrop of fiscal and monetary excess that all seem to point to a dollar downturn. Filmed on June 10, 2020.
What will be the impact of COVID-19 on the way people think about money? Arthur Hayes, CEO and co-founder of BitMEX, joins Real Vision CEO, Raoul Pal, to discuss the future of money and his experience in the crypto space. He talks about building the crypto exchange BitMEX, the potential for increased adoption of digital currencies in the wake of the coronavirus pandemic, and his view on Bitcoin's future trajectory. Hayes and Pal break down their macro views on precious metals, currencies, and the new dynamic between China, Singapore, and Hong Kong. They also touch on decentralization, stable coins, and crypto's privacy issues. Filmed on June 4, 2020.