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.
Are stock market rallies a sign that the bear market might be over? To Julian Brigden of MI2 Partners and of Macro Insiders, the answer to this question is a resounding no. He argues that in such times of extreme volatility, melt-ups are to be expected – but these brief flashes of upward momentum offer nothing more than false hope. Surveying the latest macroeconomic data, Brigden concludes that a significant contraction in GDP growth is imminent and that a sustained recovery in stocks and bonds is unlikely because consumer spending is extremely vulnerable to social distancing. Brigden also comments on central banks’ responses to the ongoing crisis and notes that their liquidity injections reduce the risk-reward of shorting traditional assets. Filmed on March 18, 2020, over Skype.
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.
Jim O’Shaughnessy, chairman and co-CIO of O’Shaughnessy Asset Management, joins Real Vision’s Ed Harrison to discuss the proper investing mindset that is a prerequisite for sustained investment success. He proposes that volatile downswings in stocks is precisely why there is such a thing as an “equity risk premium.” O’Shaughnessy argues that investors who “follow the herd” are often destined for mediocre performance and that a more contrarian, counter-cyclical approach will lead to better results. Filmed on February 28, 2020, in New York.
Konstantin Boehmer, portfolio manager of global fixed income at McKinsey Investments, joins Ed Harrison to present his long-term macro thesis, based on emerging trends in ESG investing. Boehmer explains that his investment thesis is not about the ESG movement within the investment industry specifically, but rather it is about generational changes and lifestyle choices people are already making. Identifying patterns in business and technology cycles over the last 250 to 300 years, he argues that mankind is on the brink of another technological golden age. Along with the evolution in technology adoption he predicts, he also foresees cultural changes that will lead to actionable investment opportunities based on new priorities in how people choose to live their lives. Filmed on February 13, 2020 in Toronto.
Rashique Rahman is a global macro specialist on the front lines of emerging market investing. He speaks to Real Vision’s Ed Harrison about the structural obstacles that emerging market economies face. Rahman discusses the compounding trade deficits that could trigger a liquidity crisis in countries like Argentina and Turkey, the enormous commodity risks that lumbering giants like Russia must overcome, and how stagnating income-per-capita is pushing countries like South Africa and Chile to the brink of societal collapse. Overhanging all of that is the U.S. dollar, which has appreciated greatly over the past half-decade and is a chain around the neck of all countries with liabilities denominated in dollars. Rahman argues that at the end of the day, emerging markets are not just a sector to which investors can allocate capital, but rather a world in and of itself. He reveals why investing in winners and avoiding losers will provide returns that taking secular bets will not. Filmed on January 28, 2020.