In the past few years, nobody could have predicted that a pandemic would be the catalyst sending shock waves through the entire global economy, plunging us into a bear market in record time. Some voices though have been screaming from the rooftops about the macroeconomic and structural weaknesses that left markets vulnerable to any potential disruption. One of those voices was Steen Jakobsen, CIO of Saxo Bank. In this interview with Roger Hirst, Jakobsen examines the weaknesses of a buyback-driven and debt-ridden market that have been quickly exposed by coronavirus. They also look into the future at how the crisis will affect real assets, the dollar, the banking system, and why, when all is said and done, we could see both inflation and deflation.
Keith McCullough, founder and CEO of Hedgeye Risk Management, joins Raoul Pal, CEO and co-founder of Real Vision, to explore what happens when a biological crisis turns into a financial crisis. They explain why they both think this liquidity crisis is far from over and why, as the deleveraging continues, the dollar will continue to reign supreme. They also examine whether shorting equities is worth the risk, how much juice is left in the bond trade, and if it’s too early to go into gold. Filmed on March 20, 2020, over Skype.
Credit Chaos and Fool's Yield: Updating the Thesis
Dan Rasmussen, the CIO and Founder of Verdad Capital Advisers, speaks with his colleague Greg Obenshain, Verdad’s director of credit, to examine the credit market sell-off over the past two months. They focus on the recent widening of spreads and other areas of financial markets hit hardest by the recent acceleration. Rasmussen asks Obenshain what the biggest factors for returns in corporate credit are, the turmoil in the credit markets has impacted the energy sector, and where they see the biggest opportunities for investors will be coming out of the crisis. They also update Verdad’s Fool’s Yield thesis that the company has been writing about since January 2020 and that Rasmussen has presented to Real Vision members in the past few months. Filmed on March 17, 2020 over Skype.
What happens when leveraged companies that have little tolerance for risk encounter one of the greatest exogenous shocks in macroeconomic history? This is the question that Mike Green, chief strategist and portfolio manager at Logica Capital Advisors, and Srinivas Thiruvadanthai, director of research at the Jerome Levy Forecasting Center, attempt to answer in a wide-ranging conversation about the long-term consequences of the COVID-19 pandemic. They argue that the knock-on effects of this crisis are made worse by very high debt levels and that, while the coronavirus will sweep away thousands of overindebted entities, resilient market actors will nevertheless be able to emerge from this chaos stronger than ever. Filmed on March 11, 2020, in New York.
With coronavirus wreaking havoc worldwide, it’s a perilous time to be in the market. Businesses around the world are shutting down. Equities are plummeting as investors flee to safety, and central banks, desperate to contain the financial contagion, are reaching into their arsenal to do whatever it takes. Today, Michael Gayed, portfolio manager at the ATAC Rotation Fund, sits down with Michael Venuto, chief investment officer of Toroso Investments, and explores the question that’s on everyone’s mind: Is this a fleeting moment of panic, or are we seeing the conditions for a true doomsday scenario? The pair place the massive sell-off in context, explore whether ETFs are making the violent price swings worse, and take a deep dive into the plumbing of the markets. Filmed on March 10, 2020, in New York.
Gold and Coronavirus: The Party is Just Getting Started
After this week’s massive exhale in the gold price, investors are left wondering whether this was the famed effect of margin call selling that could continue if equities move lower, or an unexplained opportunity to pile in at levels not seen since January. Regardless, with central banks cutting interest rates, the return of QE, and the potential for continued woes in equity markets, the medium-term outlook for gold has seldom looked better. That’s why we are bringing back George Milling-Stanley, chief gold strategist at State Street, to assess gold in a world ravaged by coronavirus. He endeavors to answer the questions of whether we will see gold continue to sell-off due to margin call selling, if the speculative interests that drove the price of gold higher after the last crisis have finally returned to the market, and how gold will perform relative to other precious metals and miners that people often see as levered play on the spot price. Filmed on March 11, 2020 in New York.
Real Vision CEO Raoul Pal reports from self-quarantine on Little Cayman to break down this jaw-dropping week of volatility, rate-cutting, and continued contagion. Using charts published today in his renowned research publication, Global Macro Investor, Raoul analyzes the ongoing spread of the COVID-19 virus. He examines the plumbing of the markets in what could be the beginnings of a full-fledged liquidity crisis. Raoul unpacks his macro outlook on stocks, bonds, credit, gold, and the dollar. Filming in real time, Raoul then adds a post-script about the astonishing rate cut by the Fed. Filmed on March 15, 2020, on Little Cayman. Find Raoul's latest GMI report on the coronavirus outbreak here: https://rvtv.io/2vv2h04
What’s the impact on the ground from coronavirus in Italy right now? Giovanni Pozzi, managing director at a family office in Italy, joins Real Vision’s Raoul Pal to discuss his first-hand experience during the national shutdown in Italy. Pozzi details the effect he’s witnessed on the health system, the economy, and people’s behavior during the ongoing crisis. Pozzi and Pal break down the knock-on effects that coronavirus and the government’s response will have on the economy, fiscal and monetary policy, and financial markets. Filmed on March 13, 2020 via Skype in the Cayman Islands and Italy.
Even before Ben Bernanke made the official declaration that the Fed is in fact targeting inflation, economists and governments around the world have counted on it to manage ever increasing debts. Jeff Booth, author of “The Price of Tomorrow,” argues that they are fighting an inevitably losing battle. In this interview with Max Wiethe, Booth makes the case that secular deflationary trends will be the ultimate undoing of monetary policy and technology is driving this deflation at an increasing rate. He touches on several of the most culpable technologies, the potential issues society will face as a result, and the asset classes and businesses in the best position to take advantage of this trend. Filmed on February 25, 2020 in New York.
Tobias Carlisle, principal and founder of Acquirer's Fund, sits down with Chris Cole of Artemis Capital Management to discuss how to find pockets of deep value in a world saturated with liquidity. Carlisle outlines the various valuation metrics (price-to-book, price-to-sales, price-to-earnings, etc.) and describes which metrics he thinks have the most predictive power in today's market. Surveying the mediocre performance of value over the past two decades, Carlisle argues that value is due for a bounce. Cole and Carlisle conclude by constructing the framework for investors to combine the "long-val" play with "long-vol" play. Filmed on February 7, 2020, in Austin, Texas.
Dan McMurtrie, founder of Tyro Capital Management (also known as SuperMugatu on Twitter), joins Real Vision to discuss his analytical research into the off-the-beaten path sub-sectors of the global economy that he believes will provide asymmetric returns. He talks about the evolution of financial markets and how he takes advantage of inefficiencies in financial markets and social trends to find edge in a world sparse with alpha generating opportunities. He reveals his philosophy on asset allocation – balancing potential non-linear risks with opportunity capitalization. McMurtrie also shares a few of his favorite value plays and explains the reasoning behind his theses. Filmed on February 20, 2020 in New York.
With a record number of pension funds underfunded, the notion of having an "overfunded pension" can sound impossible. And yet that is exactly what Jim Keohane, CEO of the Healthcare of Ontario Pension Plan (HOOPP) has managed to achieve. Keohane speaks to Real Vision's Ed Harrison about the remarkable obstacles pension funds face and how they can survive and thrive in the face of these challenges. Keohane argues that defined-benefit pensions can be sustainable if the fund manages risk the right way. Keohane articulates his process in constructing HOOPP’s portfolio, which is relied upon by its over 350,000 members, and describes how he uses derivatives to manage risk for over $80 billion in assets. Filmed on February 13, 2020 in Toronto.