This starting point leaves no stone unturned in attempting to spot unrecognized political and policy developments that could not only shape markets, but also entire countries and regions. A great starting point for macro and political enthusiasts.
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.
Dr. Kayvon Modjarrad, director of the Emerging Infectious Diseases Program at Walter Reed Army Institute of Research, joins Ash Bennington to explain what the Department of Defense's coronavirus vaccine research project is doing to combat the pandemic. Dr. Modjarrad breaks down the different factors that have culminated to increase the difficulty of creating a vaccine. He shares details on the vaccine that his research group is creating with nanoparticles that bind to the virus itself. Finally, he answers questions like, "how long will vaccine deployment take?", "what effects do mutations have on the success of vaccines?", and "how does one protect themself from COVID-19?" from the perspective of an infectious disease doctor on the inside of the scientific effort to mitigate this deadly pandemic. 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.
The Highest Quality Macro Trades and the Impending End of U.S. Outperformance
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.
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.
David Rosenberg of Rosenberg Research joins Real Vision managing editor, Ed Harrison, to break down his view of the economy, financial markets, and their direction over the next six to eighteen months. Rosenberg notes the success of working from home and the negative implications it has for commercial real estate – both residential and office. He points to internet infrastructure, consumer staples, healthcare, and big tech as sectors that are poised to do well over the next year and predicts that elevated personal savings rates, a reduction in capital expenditures, and a credit downgrade cycle will contribute to weaker GDP numbers for 2020. He argues that the Fed has enabled the zombification of the corporate sector though artificially low interest rates, and Rosenberg and Harrison consider whether the actions of the Fed could trigger insolvency and liquidity crises by suppressing price discovery in the market. Rosenberg also touches on Japan, Canada, and gold in the context of COVID-19 and monetary policy responses to the pandemic. Filmed on June 23, 2020. To register for Rosenberg Research’s free trial, visit https://www.rosenbergresearch.com/clients/register.
While many are focused on making sense of equity markets, attributing daily moves to capricious COVID headlines and an army of retail investors hungry for risk, Jeff Snider of Alhambra Investment Partners is avoiding the noise and focusing on unemployment and the bond market. To him, both of these indicators suggest that V-shaped recovery is not the base case for the businesses and large financial institutions that are most affected by the pandemic. As well, Snider touches on important topics for Real Vision viewers like the effectiveness and consequences of recent Fed stimulus measures, the risks of inflation, and the health of the global dollar system. Filmed on June 19, 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.
Brent Johnson, CEO of Santiago Capital, joins Lyn Alden of Lyn Alden Investment Strategy for an in-depth discussion on the fate of the world's most important currency: the U.S. dollar. Johnson gives a strategic update on his "Dollar Milkshake" thesis and explains his bullish long-term view of the dollar, based on the outstanding glut of dollar-denominated debt. Alden considers this analysis and introduces a less bullish view, which she bases on the U.S.'s high trade deficit and negative net international investment position (NIIP). Using many detailed charts, Alden and Johnson compare their ideas and reach something of a synthesis between their two views. The pair also reflect on the dollar's status as the world's reserve currency, and they also explore whether a move to a multipolar currency world is possible. Filmed on June 16, 2020.
In these unprecedented times of economic stress, the mainstream playbook has been tossed out the window as fiscal and monetary authorities continue to throw everything but the kitchen sink at the problem of synchronized global economic downturn. In this interview with Ed Harrison, heterodox economist Steve Keen argues that, although some of these policies are headed in the right direction, many are completely missing the core issue – ungodly levels of private sector debt. Together, Keen and Harrison discuss common misconceptions about private debt, MMT, and the circumstances where ballooning public debt led to hyperinflation. They also break down Keen's argument that the exogenous nature of the COVID crisis might improve the palatability of a much-needed private debt jubilee. Filmed on June 16, 2020.