“Ask Me Anything” With the Real Vision Editorial Team

Video Transcription:

  “Ask Me Anything” With the Real Vision Editorial Team

Welcome this is the real vision ask me anything for the editorial team I'm ash Bennington here in New York I'm joined by Roger Hurst and Jack Farley welcome everyone oh hey so let's go around the horn here where are we all coming from this morning geographically not metaphysically I'll go first I'm doing this from the UK and from all bro not quite it's which put all BER up on the coast and I'm doing this from Bethesda Maryland not quite Washington DC but usually we call it DC because I live four blocks from the from the town and I'm reporting from New York City Jack intentionally vague on the neighborhood I like that and I'm here in New York City on the Upper East Side and we're getting started now you know this is a really interesting time to be having this conversation because we've obviously just finished up a significant three-week deep dive into the global recession the potential for the global recession risks of global recession I think it's probably reasonable to say we are in a global recession what are your opening thoughts gentlemen on where we are with that right now I I feel like I could go first because I thought it was interesting I was I was looking at a Albert Edwards piece that came out I think it came out on Thursday and the interesting bit was he was talking to Gerard Minich he was using a Jerrod min AK a graph and Jared's gonna be on the platform next week and what min axe showed is that if you look at the performance of the S&P 500 versus the MSCI World Index there's huge outperformance for the US but if you look at the S&P 500 and you take out the top six companies that is the fang companies plus Microsoft the out performance of the the top six is equally large to the performance of the sp500 / MSCI and so what that really tells you is that there's an incredibly narrow leadership that's going on right now in terms of what's driving the markets so when we talk about the S&P 500 when we talk about markets and what's happening really what we should be thinking about is liquidity and I think this is something that Roger talks to all the time that liquidity is driving people into those biggest six in the sp500 and it's it's not completely understandable whether or not there are any fundamentals behind that or whether this is a completely liquidity driven rally that we're having while we're at you know almost 20 percent unemployment in the United States and I think also you think about you know what has this been I mean it's been the fastest and the deepest move in history and that speed has both informed our ability to say were in a recession because normally we sort of look back and we'd say it's a recession six to nine months off it's actually happened was this time we knew was happening to inform the reaction function of central banks but it still goes back to what we talked about before which is how deep is it and even if we recover how quickly do we recover and what it's a terminal point of that recovery and more importantly is what were government corporate and household bound sheet-like before February and is there having to be an intense adjustment because of what has happened and can central banks prevent that happening which is all about how they direct this accommodation that they're providing so I think in terms of you that the size of the recession size of the event it's huge but it's the long-term fallout that matters now because this has impacted the consumer in a way that we hadn't seen the last two or three recessions really going back to the 70s and the double-dip of the early eighties yeah track any thoughts you'd like to add oh yeah I think that'd be liquidity versus insolvency paradigm that that Ralph talks about is so important here because we've seen the Fed being able to try and pay over the cracks but it remains to be seen whether they'll be able to fill the holes and the deep financial holes that are left in the wake and I also think something that I know ash you and Roger and Edie talk about all the time on the real vision daily briefing because it just stares us in the face is the bifurcation between the continued appreciation of capital markets in the face of a truly a depression level era of you know pain on Main Street on Main Street you know the labor market people every 140 million people initial payrolls um so I think that's really important I actually think no Edie at the first week of our campaign he did a great made a great talk with the renowned economist Richard Kuh talking about balance sheet recessions and that was referred to Japan when there is a massive decrease in capital fleeing the capital markets but at the same time growth rating steady and actually going up I think we're seeing the exact opposite right now yeah add anything to add to that yeah you know actually I was talking to Jack literally right before we got on this about his pieces at the beginning which I find very useful in terms of doing a deep dive into specific situations that we're trying to frame as important within the context of what's happening in the day and one thing and when I was talking to him about was this Buffett you know he did this one on Buffett in the banks that I thought was really good in terms of thinking about how this is going forward so why is Warren Buffett selling bank shares or in Jack's case he was talking he was like investment banks when in the last recession he was buying them is is that a sign of what's happening going forward or do we not even care about Buffett I mean Bill Ackman was saying actually I'm selling out of Berkshire Hathaway they're too big to actually be nimble in this environment I mean I thought that what what Jack put forward in terms of what Buffett's doing is emblematic of the situation that we're in right now I think also it goes back to what really matters here is understanding how how the environment was before we got into this because what people now realize in the last two months is that the prior five years this was the framework but we're still trying to apply fundamental analysis to a marking which was being driven by something else which is the shift towards rules-based funds passive money over active money and this is why you know we Buffett is relevant but what's interesting is that Buffett has underperformed not just now but for me elongated period as nearly every active manager has in an environment where we've been trying to get our heads around this what looks like a significant shift away from the old paradigm where your valuation mattered active managers to something which is actually oh my god you know what it has been liquidity the Fed and the drive that they've created into chasing yield moving away from active into passive and share buybacks which has been the real driver of particularly us our performance which informs everybody's view of the world equity market but it stands out u.s. our performance and that US our performance is not driven necessarily by fundamentals although there are some utterly brilliant companies at the top end of the S&P yeah really interesting points from from both of you guys Minh and from Jack to I just question as you as you mention it Roger to talk about the the pivot from the strategic to the tactical we've done a lot of discussion about retracement levels especially on the S&P 500 and when you look at where we are now it's fun to be able to do this live we're trading about three thousand three on the S&P right now which is well let's take a look it brings us to about the sixty seven and a half percent retracement level above the 61.8% 29:33 level that you've been watching what are your thoughts about that right now so the of all the big sellers that we've seen and I'm talking about that's from 10 to 20 percent over the last few years and over the longer term this is an unusual one because 1929 1989 Japan 2002 2003 multiple times in fact Japan multiple times in itself they never got beyond the 62% apart from Valle mageddon which went up to the sick 76% retracement level and then retested but didn't break through the lows so this is unusual mean obviously the Nasdaq breaking back to the highs maybe there's a similarity with what we saw in 2000 where the S&P did sell off and then rebounded back to the highs by September of 2000 having initially sold off for the Nasdaq in early 2000 but this is unusual on that on that sense and now we've seen the RUS also get back to the 62 percent retracement off of this enormous rally over the last couple of weeks technical technically wise this is where things should already have rolled over the fact that they haven't tells us something again about fundamentals versus what the Fed can do or what the Fed can drive in terms of sentiment and we talked about the Robin Hood ins and real kind of retail investors coming back in the difficulty here is is do we look at the u.s. for our driver as our leadership in terms of how we should do markets or should we look everywhere else which is struggling at 38% 58% retracements and I think that everywhere else remains in this bear market and why would I want to invest in Europe and sometimes the UK and Asia when the US and particularly six stocks and the US look good so these technical levels are key in the whole point here is that having this as a tilt out you having the technicals the short term view the trading view and the long term view the totality of that is what we should be using and some people prefer fundamentals versus technicals it's fine together you get a much more complete picture and what this is telling us is there is a key driver that we historically have not been used to which is the Fed and the feds influence so you know it doesn't tell me really where things are gonna go you've got to put a finger in the air but you know strip out those top five or six and obviously that the stock market is close to 2,400 on the S&P not three thousand yeah those are such good points and I think we try and take a look at it on revision daily briefing every day from both of those perspectives so incredibly valuable points from both of you you know I would also say if you're interested in some of the deeper dive aspects on a global liquidity and on market positioning Mike Howell is a terrific resource who's been on the platform multiple times he was last on in February of 2020 and talks about exactly these issues Roger we have to get you on camera with him because he does these expert views and listening to the two of you talk about these issues is fantastic we have to get you guys together in front of a camera at some point do it Instagram the expert view interviews off-camera before so yeah I'd love to get him as a full time full sized interview that'd be great fun yeah you know speaking of all of these issues one of the things now that I think I've been most excited about over the last month that real vision is our global recession campaign and the first question that I wanted to get to from the viewers cuz this is after all and ask me anything comes from Joseph and he's spot on on these points he wants to know over during the last three weeks what are the key learnings that you guys have all taken away from the videos that we've been doing in this series let's start with that let's start with that yeah a good question I think the the key learnings actually Roger he sort of touched on what the key learning is for me which is you know finger in the air right that is is that we're in an unprecedented situation I was just yeah I don't know if you saw the numbers they came out today in the US personal consumption was down 13% after being down 7% in March so a massive reduction in US personal consumption and one of the comments what I tweeted this out was I expected it to be more and when you look at the numbers on a relative basis this is just off the charts and yet you know some people the only comment that I got or the first comment that I got was about it's being I thought it would be more so we have no idea what the data look like I mean actually maybe that number will be revised in a massive way going forward and we have no idea what the data are going to look like going forward so from a real economy perspective which are the inputs into fundamentals we have no idea so when you put your finger in the air what you're definitely doing is you're doing it basic a lot of liquidity that is liquidity is driving a lot of the market sentiment and as a result of that because of this great degree of uncertainty that we have this particular period in time we really have no idea what's gonna happen to the markets over the next three months over the next six months anything could happen because in the real economy anything could happen so that's my takeaway from all of the different things that we've seen all the different interviews Jack key learnings um I have to say I agree with what I just said about liquidity getting getting involved in organizing this campaign and speaking with some of the guests there I don't think we really had a guest who said liquidity doesn't matter central banks don't matter I'm just a fan fundamentals person those are what I'm looking at in fact later today I'm speaking to Teddy Valley buoy TV Teddy belly and hee hee in our email exchange he said that we're entering the new golden age of macro and I think Russell Clark who didn't even be with RAL that came out today you should definitely check that out he he anticipates the same thing and that we're going to enter a new decade in which there's high growth appreciating commodity prices and a relatively weak US dollar and I think it's it's so going forward there's macro is so important I think that's what I've learned over this campaign I mean book for me this is something you just mentioned there and this is something which is not just on our platform but it's viscerally out there in you know the big guns in the hedge fund space they are going bifurcating into two camps there is the deflation camp and as the inflation camp people had caught you too Jones talking about when you've got you know when you've got global monetary inflation on this scale you always had inflation RAL and others saying look this is such a destruction on demand in a world where demographics are against you debts against you this is massively deflationary for me that that's it's the biggest takeaway is that people are on both sides of this this argument and these are people that I've respected all my life in this game and you can just see them basically this is an unknown and some just say well it's a differencing differentiation of time it's a time scale type of thing yeah that's probably going to be the biggest argument for discussion for all of us for the next four or five years is do we get off the chart inflation or do we get down in the depths deflation and I tend to move towards it's gotta be deflation first and I do think that the set up today is different from the 70s and the late 40s where we got inflation and I do believe in the demographic story but people who it's really better than me I say no no this is massively inflationary when you combine fiscal monetary on this scale with the idea you can do it infinitely that has to be inflationary so it's an incredible battle that's going on yes in that space yeah and rouse had an interesting response to that which is the question inflation or deflation rouse answer yes all of the above we're going to have price dislocations we're gonna have paradigms breaking we're going to see potential cost push inflation on things like food and then generalize deflation representing an absence of aggregate demand and anything you'd like yeah I was gonna say a second and say you know going back to Jack and what precipitated what Roger was talking about is that it is the greatest time for a macro if that's the dichotomy that you're facing really you could be on one side of the the table and get your your clock cleaned or you could be on the other side and scoop up or as I was thinking in terms of the interview that Rao did with with Hugh Hendry where they were scoping out a trade like you know in live time trying to say okay I don't know what's gonna happen but how can I mitigate my downside and make sure that I have a trade in this particular scenario that works in all scenarios and all outcomes how can I structure something so maybe you can actually have your cake and eat it too even if you're wrong on the most fundamental level of other macro basis I mean there's one of their arguments as well which you know it's the greatest world for macro but what if Central Bank's managed to put a lid back on volatility managed put a lid on bond deal so the yield curve caps managed to support corporate bonds but corporate bonds get issued at lower and lower yield so everything converges towards zero again the hunt for yield so what are we going to a world where yeah you know that you're protected on the S&P but the S&P kind of will just grind out corporate bonds will have low tight yields bond volatility will be low FX volatility is already falling back to the lows VIX adventure drops back below 20 you get the opportunity to sell vol which you can do now because the curve is back in your favor for selling vault forward and not losing money because of the roll maybe it's it kind of goes back to you and my view is if you want to play the macro you maybe got to go into emerging markets you got to go to place but the central banks are not quite so powerful and the macro story is it the central bank story or is the central bank story will fail and that creates two macro streams if the central banks are still in power you go to emerging markets central banks failed going to get one almighty show of very very interesting opportunities in Japan in Europe and in the US and that could kick off any time in the next few months yeah Roger you've been so eloquent on he mfx especially on RVD be and elsewhere yeah and and to pick up on on Ed's point I thought that was really interesting that you mentioned the Hugh Hendry Rao piece of which I'm sure we'll hear more as we continue this discussion but just to move on because we've got a substantial backlog of questions here so actually let me ask you that question myself what I found the most can intriguing I I thought that the the great Lacey hunt Carol Sokolov injured the interview was fantastic because it talked about the limitations of monetary policy I think you know to Jack's point we all believe that monetary policy liquidity from central banks is the key driver of this market in addition into some of this fiscal stimulus where we're seeing out of Congress here in the US and potentially abroad in the EU but the limitations of central bank policy lacey hunt is so eloquent about what it can and cannot do and on the law of diminishing return that we see in place where for every additional dollar in debt that gets added to the system we get progressively less economic output which i think is absolutely it's just crucial to understand where we are today and the fact that there is not a imagine print magic printing press that can change structural factors in the US or global economy and return us immediately you know to the sort of Goldilocks scenario of growth I see Roger smiling which makes me think he has something to add no no no I just just suddenly I agree I mean I was thinking about that once that one episode Lacey huh I think is I think it's a brilliant brilliant episode and it also informs yeah I don't do questions on the UK later but some of the things he said on the Bank of England demeanor for me that that's great that's a great interview yeah a lot of financial thinkers and commentators investors from a wide array of different backgrounds are reaching the same conclusion I think Richard Kuh he wrote the textbook on liquidity traps and balance sheet recessions and he documented how in Japan when the Bank of Japan lowered rates companies were actually rushing to pay down debt just because their anticipation of future aggregate demand was so low that they didn't see any profitable opportunities for growth so I I like it when people from different backgrounds can view things from the same way and sort of synthesize their argument so that's what I love about religion and in the case of Richard Kuh when you say he wrote the textbook for it you mean it literally he actually wrote such isn't going the term so it's hard to believe but we are 25 minutes into to this so we're gonna just start moving along a little bit more quickly here there's a question from Alisha which is an interesting one she's in a paraphrase here a little bit but she's new to real vision and she hasn't had a chance to watch all the videos yet and she's curious to hear what points that we thought were most important in in the videos that we saw any I wouldn't want to jump in yeah you know let me uh I'll jump in really quickly with Russell Clark which came out today and I was looking at that I only got through about twenty or thirty minutes before we came to this and what I found interesting or informative about it is that it was exactly the opposite of what a lot of other people are saying to me from what I saw in the beginning he was very bullish on China that is he was bullish on the ability of the Chinese to do the pivot away from external demand that's based on the United States based on Europe and exports there to the degree that you have a new cold war that involves China in the United States his view is is that China is already deep in terms of their trade connections within Asia and their sourcing of raw materials from the rest of the emerging markets and that's not what you're hearing around the world I think that the the general view that you hear is that actually this is bad everything that's happening now is bad for China so I appreciated it because you don't actually have to believe what he's saying is true but if what he's saying makes sense it gives you an opposite view that you just have to have in the back of your mind and say ok this is someone who's thinking about it hard who makes valid points and they're coming to an opposite conclusion I think that's really valuable and for me that's one of the best values of real vision in general I could not agree more and I definitely have been influenced by the thinking of Kyle bass who used things the lens that China has a really over leveraged banking system that has essentially extended and pretended and it doesn't have these opportunities for profit and growth but I was doing editorial on Russell Clark and that four years of him that means I was from adding charts Adonal chapters just just sort of quality control stuff um so I I got pretty familiar with his argument and I was really interested in the fact that china now exports more to belt Road initiative countries than it does to the US so you see in the data that you know day by day year by year China is less reliant on exports to the US and and Russell Clark has a different view about the Chinese banking says sector and he looked at you know indicators such as the ratio between gold and oil precious metals to base metals so he comes out from a really interesting angle and that's what I love about real vision is that in the same campaign you could have someone like Kyle Bosch who has a certain view and then you also have Russell Clark who has a very very different view and they're interviewed by the same person CEO rail pal so I love having that that different views and no it's not about balance but it's about exposing yourself to different perspectives and that's what I love about real vision and this campaign here's another question from a slightly different angle this comes from Anthony who says look you know you guys have been talking about markets and what's been coming for the last three weeks and he asks as a 29 year old with minimal debt what do you feel are the best takeaways for those of us with minimal capital to be able to build wealth and take advantage of the current cycle so I think firstly I mean my view here which is actually announced to the previous one as well as is ever is going to be nimble and so I'm just gonna say what you should invest in but be nimble in your views don't get wedded tribally to wander you obviously have a framework I've said this all along get your framework first but be willing to change the framework because a trade idea is maybe applicable to ten twenty percent of people because some people have different outcomes or needs but a framework is applicable to a trader an investor whether you like gold whether you don't like gold the framework is what's needed but also don't get viscerally attached to any one view because if you do you kind of get this attachment and then you don't want to change and what we've seen and just exactly what Jack was talking about is two completely different views might mean that you change your own view slightly always be nimble and that informed that informative style I think is the basis for all trades and so I always use a basic framework and then I watch something I disagree with I always try and watch the people I think I will disagree with you trying to change my view and that might mean that I reinvest in something else that for me is the first thing yeah that's such an interesting sort of big bigger picture almost macro focused meta point I had any thoughts you know actually I was say that Roger said it all and that you know if we want to get as many questions in as possible we should move forward but I would say that yes that just to make an addendum that being wedded to one view as a way to lose a lot of money that is is that if you have a macro paradigm and that you become wedded to it and things shift and you're not nimble enough to take advantage of that you can get taken out in a very big way I just has it a perfect example for me I was wedded to a view this was back at 9/11 that if anything bad happened in the Middle East it would mean oil would go up and so I took a position that just like when you had the first Gulf War that I should be leveraged to oil in a positive way because even though oil prices were going up and bad things happen in the Middle East when there was there was the possibility that was gonna happen then that was net positive and it didn't play out that way at all in fact because we had a recession oil tanked and was exactly the opposite so if you become too leveraged in your position you become very wedded to it but not just wedded but leveraged it could cost you a lot of money yeah and I would say for you know you know my answer that question is probably to pick up on what Rolla said which is you know invest in yourself really if you're you know 29 years old man if I can be 29 again knowing what I know now I would say invest invest in yourself the idea that that that you know for me the best investment if I you know is probably go and take a course on Coursera about data modeling go and go and take a udemy course about some sort of programming topic that you're not familiar with artificial intelligence something that you think is going to be interesting to you in the future so the next question comes to us from Ron it is as short as it is complex and the question is how likely is a military conflict between the United States and China it's the you know hundred billion under trillion dollar question I should smell that one I think yeah yeah I think that it's a it's a known unknown to you know to think about it in terms that Rumsfeld would like we know that it is that it's a possibility but it's an unknown I mean the I think that the framework that I generally used when I think about the political economy is really about mitigating risk and the way that I think about it is that politicians are generally risk-averse that they don't they like to minimize unknowns because they want to preserve the status quo and so whenever there's a chance for brinksmanship they usually step back after the last minute in order to mitigate circumstances in which they could potentially lose because there are too many unknown factors going forward but when you have so many crosscurrents that are competing in terms of interest policy errors are always available you know escalation can happen and you think that you're making a a you know an escalation that you could draw back from but you can't so I think that the more difficult and the more you know conflicted the signals are between the United States and China and also with regard to the economy the greater the chance there is so I wouldn't say outright that war is likely but I think it's it's definitely more likely at least in a proxy formation than it was a year ago two years ago Roger Klotz yeah I mean what the problem we'll have here is that you know this is fed very very famous articles and the wars preceding the first world war where people said because of economic growth we have now reached the point where we're never going to have a war and then four years later obviously went into it and people talk about sleeping and sleepwalking into that war what actually happen there is they didn't sleep walk-ins that war it was very much agitated for but what people didn't realize is how would change and how what they thought would be a few months would turn into a number of years and a complete stalemate with millions of deaths today I think it's a little bit more certainty about the potentially outcomes of wars because we know what destructive weapon are we now have so you don't want to say no but you know I think that it's going to be very different I think when we get a physical war now I think we're already in a war of attrition of intellect as it were technology and I think that's that's the battleground but you know you it feels like you don't want to say very very low chance but I don't wanna be like all those people in 1910 who said that so it feels I think that the outcomes unknown now of a real war which clearly reduces it compared to that comment said in 1910 yeah Jack any quick thoughts on that I think any Roger gave great answers to that my hunch is that I would agree with Roger just said but I really yeah I think it's it's best like if you just to take a full pass if you want to feel on the hook or now and so I like I like Rogers point is is that look it's a low probability outcome but look you know come on I don't want to be the guy from 1910 that that's exactly right yeah I'll take a good journalistic punt on this and not hold an opinion myself but say if you're interested in seeing the case for escalating tension with China the place to go is the Kyle bass interview on real vision with Rao because he's so eloquent about those points look obviously Kyle has a very specific point of view here he does not purport to be an objective observer but it's extremely well argued I think whether you agree or disagree and the data points that he uses I think are absolutely fascinating so our producers are now gently whispering in our gear that we need to pick up the pace because we've got a lot of questions and not a lot of time left so let's just maybe hit these a little bit quicker so here's one form that comes to us from Harry I expected massive inflation after QA of 2008 a lot of people did obviously never arrived it didn't happen or was limited to real estate and stocks are the reasons why this time is different other than the sheer scale of QE and the rescue package should we expect inflation to seep into other assets goods and services this is something we've touched on a little bit before any quick responses well don't have a good bot sir yeah and it's quick because I just end I'll hand it off to to the adults in the room but I think it a lot of this hinges on the velocity of money how quickly the money that is printed can be used both to the real economy or does it continue to go into asset markets and I think that the the big unknown here which is what people are really working on is we've had military before it was monetary back in 2008 which was the Fed giving it to banks the banks not giving it to right people and go there for going into asset prices today it's fiscal and monetary and it's the fiscal authorities that is potentially the game changer that's where people think the inflation comes from can the fiscal authorities give money to the man and woman in the street which with it they will then spend and at the same time can the central bank's by those buy those bonds so it's whether that combination and everyone says well this is could be infinite and that combination could work but I still think that in this in this environment with the demographics that rolled over the hole that's been made the size of that is got to be so big that I'm not sure that it's still the political will yet to do that I think we need to be a lot lower I in a much more deflationary environment that we are already in for it to ever become reality yeah then to pick up on both of those points if you if you're interested in seeing the velocity of the money stock go check out the Fed Fred economic database from the st. Louis Fed and you will see the velocity of the money stock from roughly 1997 completely roll over from over to down to about 1.3 now this is a measure of how rapidly money is moving through the system and any final points you'd like to add to that just Richard Werner focus on the private banks the majority of money is created by private banks in terms of debt if there's no capacity for supply or for demand then you're not going to get any inflation yeah well said so next question is from Matteo could it be possible that investors are piling into banks taxes or safe haven hedge instead of gold regardless of deflation or hyperinflation and regardless of Big Tex future earnings so the question is basically our Fang stocks the new safe haven and I have some thoughts about that but who'd like to start very quickly in fact one of our subscribers in the comments a couple of days ago said look what happened to buns in 2012 they went up whilst Italian bonds went down so you spread white now I would agree with that sentiment which is this is a safe haven trade where you put your money into into these stocks because you think that safety and everything else is losing out so I think that very much is it play yeah and any thoughts no I I want to get as many questions in as possible so I'm gonna I'm not gonna add to what Roger said I think that makes a lot of sense yeah here's my quick thought if you look at the bottom of your brokerage statement it will say this is not an fdic-insured account equities can go down in value so just by way of general disclosure okay just that some people have argued that this crisis this pandemic has triggered a secular change that would have taken ten years it's now happened over three months everyone is having calls over zoom or Skype you know we at real vision are debating about whether whether we want to go back at the office and I know you know many other companies are having that discussion as well so that would be bad for real estate and pretty good for text I think that that's important taken as well sorry great so this next question comes to us from Cindy Cindy begins by saying this is pretty far out there but if the Fed was to go negative on rates and ordinary citizens did not want to pay banks to hold their money and decide to withdraw their savings could it cause a bank run would banks limit withdrawal leading to another possible run of banks any other unintended consequences o answer quickly saying that negative rates are just attacks on on banks that's really what it is is uh because the multiplier isn't the way that it works is that you know loans create deposits and so if there's no if if there's no demand for money or if the bank doesn't have enough capital they're not gonna make the loans having negative interest rates it's just taxing banks it doesn't have any of back it hasn't worked in Japan hasn't worked in Europe it's not gonna work and I think very quickly to add to that it also depends on whether we get big deflation or big inflation if you're being text 20 basis points for having your money in the bank but we've got two percent deflation where you still better off in a year's time however if we got rampant inflation then you do take your money out of the bank but that's not because the minus 20 basis points really because you've got rampant inflation to get there we're going to go for deflation back to normal inflation and Beyond and we'll probably be back on to positive rates by then anyway great yeah I would probably add to that I don't know how it's possible to sort of pull your money out of banks entirely and withdraw from the system the reality is that most of us receive direct deposits or paychecks that we cash or banks we have mortgage payments and rents that need to get paid and I don't know about you but my landlord probably is not going to accept you know gonna accept payment in kind or or barter of services so so I think banks are probably unavoidable let's uh let's move on a little bit here to some questions in a different domain from the crypto space specifically this one comes to us from Martin what do you think of Goldman Sachs's investor call this week in which they say the cryptocurrencies are not an asset class and bitcoin is a Ponzi scheme and I would say that this is a question for ash Bennington since he asked it but since he's the guy who knows crypto better he should answer it as well that's what I would say now so so I wouldn't I wouldn't take any I wouldn't take any position about the the you know the the relative day-to-day gyrations of the price of any particular coin they're far too volatile to do that or to just speak in any way that's definitive but but i but I will say that the underlying technology here is something that I think is intrinsically valuable and I think that as we move forward we are going to see a greater reliance on distributed ledger technologies on Digital payment rails and on the underlying technologies that drive coins like Bitcoin and aetherium and and and the the whole panoply of thousand-plus coins that are now just traded you know I would say that there are people who are skeptical about it and I understand that and that and that makes sense you know my one of my great mentors on the macro front Nouriel Roubini has been probably the biggest cryptocurrency bear in the space but I think there's value there and you know I've there are a whole lot of arguments that we could make if we had more time about why crypto currencies and digital ledger technologies or something that are so compelling but if I had to make just one the reason that I would never bet against it is when I see incredibly incredibly smart young men and women in their 20s with background some computer science economics and Finance flocking to that field looking to make their contribution they're seeing that as the potential future I wouldn't want to bet against it on a secular basis you know where's the price going to be in two weeks flip a coin okay now that I'm asking the next question I guess I have to move on but so here's one from from another Bitcoin related question does individual ownership of bitcoins versus investing in a coin fund compare with ownership of physical precious metals versus investing in paper ETF precious metals anybody want to take that or if like I've just asked myself another question yeah yeah I think it's actually I think it's actually quite analogous in many ways to investing it's the ETF versus physical ownership part of the lore of cryptocurrencies especially Bitcoin is that you get to custody your own key pair which is the equivalent of not just having an allocated share of gold somewhere under the bank Strasse in in Zurich apologies for my pronunciation of the German there edie but it's the it's the equivalent of actually having it in a vault in your own basement and I would say that it probably has the same attendant risks and also the the the potential to truly custody your own assets and to control it that's a trade-off that everyone has to negotiate for themselves but I'd say my own advice and I'm speaking personally here if you are an investor who is relatively new to this Kate to the space caveat emptor buyer beware be careful lots of people more people I suspect have lost their stake in Bitcoin and other cryptocurrencies because they've misplaced the key or the hard drive died or you know the cat that the the physical paper backup or whatever then they have having their assets hacked from you know from from from large reputable custodians so with that because I'm probably asking these Bitcoin questions for myself let's move on to the next section which I which it's like ask myself anything and we probably should avoid that the next section here is called that it's basically behind the scenes which i think is really interesting i know this could be a little bit of inside baseball but it is interesting to think about how we how we talk about this stuff internally what our process is because i think it also in in addition to the the kind of like well that's kind of neat which isn't that interesting it it also informs how we think about the actual material and the content itself so this is a question before you ask the question let me just give a shout out to Jack because right before this we were talking about inside baseball and behind-the-scenes so I'm thinking that this is gonna be a great question for you Jack it's not just a question it's a whole section of them oh yeah and I have a couple of this moves myself that I'd like to ask you guys to hear how some some of some how you guys think about things but so the first one comes just from Chris and the question is how much of the dialogue of the real vision daily briefings is scripted versus impromptu Roger you have the biggest smile so you take this one first as long as you unscripted and and how impromptu you is it nearly always depends on whether we're filming these at 4:30 my time or after 7:30 my time after which time I might have a glass of wine but yeah I mean I come into these basically unprepped and just go for whatever questions you throw at me you know which is which is fun right Edie yeah so I think that there's a lot of preparation and there's a lot Jack can talk to this and there's a lot of these are the facts in the intro so I think that the intros are a lot more scripted than the back-and-forth afterwards which is basically you know we talk ahead of time about what's happening in the markets what's relevant what's on the platform I think which is I think very important is and then we just have a free-form conversation based upon that yeah I think the main segments with u3 is we just turn the camera on and you guys just go and it's a master class and obviously that involves a lot of prep work beforehand but it's not stiffly talking things whereas the intro which I do with Nik Peter and Gabrielle that uh you know I I'm still have so much to learn so I I'm trying to hunt down individual stories and shine a light on a particular aspect and yes that my segment is 100% scripted it's not like I just turned to my webcam and I say you know these tech stocks are blooming in the desert like that doesn't just happen it is a process alright the magic behind the curtain yeah you know I'd say that they're totally unscripted that we have we don't actually have a script that we're reading off of but it's like a good improv comedy troupe you know I he's speaking for I think myself but but also to a certain extent for all of editorial I'm I'm so so like it's great to work with people who really care about this we love what we do so much and that's not just that's not just IDI and and and Roger and Jack but also but also Max and Drew who are not on the call and who you've seen on various shows before and Gabrielle who we hope to get in front of the cameras soon I think this something we're all incredibly passionate about we we work on this pretty much all waking hours when we're not with family or doing stuff that we have to do otherwise so it's it's an all-encompassing pursuit I think for everybody on the team and and because we think about this and we talk about this and we we slack each other and text each other at all hours of night and day weeks and week days and weekends it comes together pretty naturally because there's there's so much there's so much sort of common basis because we've been thinking about the same things here's a question that comes to us from Kim another behind the scenes question so you guys must have heard so many narratives about the ongoing crisis can I ask which one is the most frightening to you and it may or may not have played out yet so the most frightening narrative anyone want to jump in all right I definitely could jump in the most frightening narrative is a mutation that is deadlier in the disease that makes it or lethal to me that's frightening and I have you know I'm not in epidemiology so I have no idea how likely that is to play out yeah now from my perspective it's just the we actually do see the consumer the retrenchment we see the balance sheet recession so again from the economic rather than the sort of social side but I mean they do combine itself this actually does become a true balance sheet type of story where we actually have multiple years of a grinding a slow grinding death in certain risk assets I think that's that's the danger because the short shot correction we've seen them before we know what they did we know how to deal with them in some ways we don't know most of us in our lifetime how to deal with something which is pernicious and lasts in multiple years young the inning the example of Japan is not an encouraging one when Japan I mean yeah actually in Japan wasn't so bad I mean in terms of we look in and we always kind of look at it in a negative way but individually you know it wasn't such a terrible outcome but that's because the rest of the world was growing and they're an exporting nation to a large extent some people say it was bad but I think you know the rest of the world has managed to keep that going but if the whole world goes into this deleveraging phase and the knock-on effects are notwithstanding what I said everything about no conflict if we go into that and for some countries with the highest level of balance sheet imbalances and then the alternative or some of the choices become a little bit more fractious that's the bit that scares me I still don't think it's a likely thing but that's the bit that scares me Roger that was a more optimistic answer for a worst-case scenario that I was expecting for me well you know it's more case that I expect in the end of the world but really there is a there is something here which none of us have experienced before or none of us can really think that we'd experienced before and that's the unknown is what keeps most people awake jack quick thoughts I think the prospect of a second a third a fourth wave as well as a mutation us not being able to get a vaccine all of these are very long meaning especially if unemployment continues to increase and and we continue to see a bifurcation between large companies which can secure financing because they have collateral to pledge and the Fed is letting the money versus small businesses which really are not getting that assistance if that continues to play out I think there could be very negative consequences but from an economic my perspective and a social perspective and I I am optimistic but I'm optimist I'm optimistic not because I think that that nightmare scenario is necessary unlikely but because I choose to be optimistic and I want to be optimistic right yeah I choose to be optimistic - I would just say though that the the I don't think they're necessarily the most likely but I would say that the worst case in areas right now are pretty terrible and I could you know I can think of three the first being a rebound in the virus a in in the second wave coming in the fall or the winter of this year viruses unlike in science fiction movies tend to tend to mutate to become less virulent rather than more mostly because if a virus is incredibly virulent it wipes out populations too quickly for it to spread so hopefully it becomes less pernicious as time passes but a second wave I think could be catastrophic - you know consumer consumer sentiment confidence and and obviously the reopening effort because we'd have to go right back into lockdown so that's a that's a tricky one quick flood while we're talking about viruses the hidden gem of this campaign was the interview with Frank Snowden who's a professor of the history of Medicine do you really should check that out always feel free to interrupt for a quick plug about crazy but you know the the second one is civil unrest here in the United States it's increasingly something that's coming on the table recently literally in the last 48 hours and I guess if you wanted to be really grim because I think she the question was about the the worst-case scenario what is what is the scariest possible outcome well nuclear war with China the ultimate uninsurable risk I don't think that's a likely event but it is interesting to me if you think about balance of risk and how they've come onto the table the three things that I've just put forth not based case scenarios maybe not the most likely hopefully not something that we're going to actually see but what's interesting is that these were not things that were even in our consciousness six months ago right no one would have said six months ago like well what are your base case risks well you know this terrible virus that's sweeping the world could come back in another phase and we have civil unrest in the United States on a broad scale and potential and a potential conflict with a nuclear-armed superpower these were not even issues that we were thinking about six months ago so I think if you look at it if you're if you're bringing an analytic framework to bear the reality is that the balance of risk has probably increased in some of the tale risk scenarios really negative outcomes are more likely today than they were six months ago this next question let me ask you something here I just want to put something out here that I'm asking this actually to our audience because we we talk about markets all the time but everything you just said asked much of that was geopolitical and I struggle with because we live in such a fractured environment you know where people take sides how do we capture that within the narratives that we tell because that's not our bread and butter but it does seem like that's where a lot of the tail risk resides I'd love to hear what people think about what they want to see and you know how we can best represent it in a way that's not partisan that's all I want to say yeah you know that's such an incredibly important point and I completely agreed I'm curious to hear what people's thoughts are as well we struggle with these issues because they're obviously there are issues that have moral dimensions and we all have opinions about them but also we look at them because they have an impact on markets which is what we cover and so if you're looking at if you're looking at markets now and you're not thinking about potential outcomes in November you're probably not looking at the full picture if you're not baking in some of those political issues as well and social issues that could potentially have an impact on on the directionality and magnitude of moves and markets so it's it's part and parcel of it and it's a very tricky thing to cover in an objective way I think we try to do what we always do at real vision just to provide different views of the story we try and look at both sides of every issue sometimes all sides of every issue when they're more than two and it's something that we put a great deal of effort into to trying to be objective balanced and to provide people all of the information that they need to make the best possible investment decisions so with that next question comes to us from Wouter I apologize if I'm not pronouncing that correctly after interviewing a variety of interesting guests what are your key takeaways for the short term until November in the US election and the mid slash long term if possible can you organize this into asset class this small question so what you wants us to effectively come up with a with a dynamic asset based analysis of everything that's happening in the world in the short medium and long term anybody want to take a crack at that I'll get a very quick go I mean firstly bonds probably first protocol and this is kind of this term I think someone was also asking at what assets would you have on your radar in terms of this so one is one would be bond because I think bonds if we're worried about deflation you'll see it in bonds or certainly the front end it looks like yields potentially capped in the short term so that's number one number two you know in the currency world we want to see what these emerging market currencies are doing they're having a little bit of a bounds as soon as they start rolling over and that's why you've got to keep your eye on the the Chinese currency there and in be if they start rolling over then we still know that the global situation is one which is still very poor and that would inform us that the dollar is probably still a relative safe haven play at this point in time in terms of the equity space focus on the banks because the banks are Norma the mechanism for the real economy the banks have been struggling again if you if you put Nasdaq versus the bkx in the US you'd see that the Nasdaq is obviously at an all-time high versus those banking index factor than banking indexes an all-time low versus the S&P and in Europe we just recently touched an all-time low so to me it's a case of equities particular outside the US remained vulnerable but the banks have really are going to give us the clicky emerging market currencies gonna give us a key and bonds are going to give us a key young anyone have anything else I'd like to jump in and add to that well you know III have a discussion I don't necessarily want to say it ad but when you talked about rates being pinned on the on the you know the short end of the curve I'm thinking to myself that to the degree that you have a reflation Airy rally as we've had to a degree they're also pinned on the on the the long end I mean because how how much further up can yield to go before the Fed or any sort of central bank steps in and then engages in yield curve control or tries to get those yields down because that's really what's driving asset markets that's also what's driving you know refinancing for mortgages etc it's very important for central banks that not just the cherdon but they also control the long end so I think that you know when you look at bonds it's really about the belly of the curve to the the longer end of the curve that makes more sense than say the the shore debt yeah the only prediction I'll make is expect to hear more of the acronym ycc in the future yes you know we're we're down to one of the last questions here and this comes to us from Lee it's actually a series of questions and I think it's a really I think this is actually great so Lee's these questions are I'm going to throw all three of them out there why doesn't everyone pick one that they find most interesting to them and and give the view so Lee says what number one what was the most valuable piece of information you've ever received from an interview number two what was the most shocking piece of information you ever received in an interview and number three which interview the interviewee most impressed you and why boy that's a tough question because we have so many really compelling I think interviews so anyone want to jump in it's a hard question because there's so there's such a there's so much to choose from so how about maybe just a narrow it a little bit why don't we think about just over the course of this particular campaign for global recession maybe what was the thing that you thought was most surprising and and and why so firstly I think for me it's it's the it's not surprising but it's again and very useful one is the number of people I've spoken to who said yes this is you know we expect more fall out but if you've got dry powder start looking at opportunities so it's not about trying to find the very bottom it's not trying to find the extreme move it's about again what is your view what is your need for return and I think Dylan Grace has said this Mach Mobius has said this these guys all had dry powder and all saying look if you've got dry powder and you see a massive dislocation think about taking that as an opportunity don't look for it to maybe roll over another temps and when it's down 30% it's like get some now maybe get a little bit more and ease your way into those positions and three or four people I've spoken to have all said that some of completely change I've used like like Horseman capital have so take those I think take that on board and I've taken that on board because I'm still looking for much lower prices but these are also opportunities even if you think you're going to be catching the falling knife some people say do capture the blunt knife on the way down but do try that I think that's a couple people have said that I'll go with the surprising one but I want to piggyback on what Roger was saying by saying that you know I was you know I was writing this blog credit writedowns back when the last crisis happened and I remember catching a falling knife being the titled one of my posts and Jeremy Grantham was famed by right now catching a falling knife this was March of 2009 and I just don't see anyone like Grantham coming out now saying the exact same things I find that really sort of unnerving in terms of where we are in this particular crisis but in terms of your other question about people who surprised me I think that actually it's the horseman Capitol interview that surprised me with regard to the comment that Jack mentioned earlier about more trade in China with non-us non EU trading partners for China meaning the Chinese potentially are thinking to themselves wait a minute we can actually ride this out and so that's driving they're not just you know markets but it's also driving their geopolitical thinking they're gonna say to themselves okay how you know what's our you know best option instead of a negotiated agreement our best alternate a baton a best alternative to a negotiated agreement they're saying to themselves mentally we actually have and we have an alternative here better than you guys think that you are and that's where errors happen when when one side says we think that your alternatives aren't there and the other side says actually we know that we have better alternatives and then that's when bad things happen so that's my thinking there right Eddy Roger you mentioned falling knives and there was an interview during this campaign where a guest mentioned that he specifically enjoyed or that he valued trying to catch falling knives because that's where the value is and of course I'm talking about a legendary distressed debt investor Howard Marks the dean of fixed income the Warren Buffett of distressed debt of and he and Rao had a very interesting conversation because rollick comes from a very macro view whereas Howard Marx's becomes much more fundamental you so I found the interview to be a great synthesis of those views because it really there is a lot of crossover of course ral looks at things from fundamental angle and as we I'm gonna serve you Howard Marks actually does have a macro view it took you know Rallo sort of chipping away at him for a half an hour but at the end there really was some good stuff and I also really enjoyed Rao's interview with Mike Novick rats um I know sometimes when you're in these investors they they have a different framework than say an analyst who goes on TV say a lot but I think it's really important that we have on you know truly very serious investors who have a demonstrated track record of high sustainable returns both on a risk-adjusted basis and restof so I love that in addition to having all these fascinating analysts we could have on to two very prominent investors yep I'm gonna give a bit of a meta answer here so for me the most shocking thing is the power of these long-form interviews so I I joined real vision in about 2017 and I remember one of the first edits I had to do was an extremely technical piece actually from my Calot we just mentioned you know Mike how obviously a brilliant guide been at Salomon Brothers PhD macroeconomist and I I start the first time I watched that interview I well let's be charitable myself I understood about 70% of what he said and as I edited the interview over a few hours and I inserted a bunch of charts and did a bunch of things and I watched that video when it went live and I thought my god I actually feel completely in command of all these facts I could do a 30-minute you know live interview with him and feel totally confident that I understand his thesis so to me the most surprising thing is the way that this material creeps in I almost shared my screen there by accent that wouldn't have been good the way that this material seeps into the to the subconscious by accent there's something that's magical about this form there's something that's magical about a 30 minute interview that you do with one person when the charts flow across the screen as they're speaking you can literally see in real time the data series that they're talking about to me it is it's it's just the magic of how the way we can learn this material in a way that feels engaging that is actually interesting because you feel like you're having an inner dialogue with a person who's on the screen and the sense that you just simply cannot get from an economics textbook or even from reading you know a terrific newspaper you just there's something about this form I think that's magical and the the ability to come away with it and to be at a cocktail party on Saturday night when we used to do those things leave the house and to feel that you actually understand the material you have because you sort of passively sat back on a couch and watch an interview for an hour to me it's surprising just how powerful and effective it is and I really think that what we're doing here is the future of information probably not just about markets but for the purview of what we're interested in markets macro economics finance and business such a powerful powerful medium goodnight the only thing is I did catch you talking about cocktail parties and talking about high finance and cocktail parties I don't know use your mind to what you're talking about that but I'm not going to those Nouriel Roubini parties I yes it's a it's a real nerd fest here for me we've actually we've actually run over but we got a couple of additional questions and I mean I say we just keep going until the producers pull the plug on us so a couple more questions here that I thought were really interesting how long does it take to watch all of the real fission videos but actually that would be a great little thing to put together the total run time and then yeah you know say how long it would take to watch we should we should do that yeah I I'd say for me the trick you know sometimes you go away for a week or you get a little bit behind for me the thing that that I do is I turn it up to 2x and I watched the first 20 minutes it makes me feel as though like I haven't missed anything when I know that there's more if I had more time I go in and watch the full video but I try and watch the first 20 minutes of everything no matter how busy I am no matter what that's my advice yeah it's the same and on three my yo which is where I and some of the other junior members of the editorial team work with video editors to do quality control and post-production work the actually you can only speed it up to 1.75 X so sometimes be up to 1.75 X I actually feel like I'm watching it in slow motion because I'm used to the 2 X on the platform yes that question came to us from Atia I should say who I should have credited here's one more from Steve and this one I think is specifically to Roger any great wine recommendations for him his girlfriend wants to know yeah I've been I've been enjoying Priya to say which is a Chardonnay it's kind of a cheaper end of the market as it were but it's still quite nice and I've been enjoying a bit of that recently I also like Rome Reds so Rome south of France Reds okay so I don't know how much time we have we think we're at 12:10 here why don't you ask them in on the UK cuz I'd be interested if there any questions in the UK for Roger to answer on that I don't actually see any specific questions on the UK but let's just put it to Roger more generally Roger when you look at the UK what are your thoughts big picture well the other was I think I did see a question just before I came on which was looking at the does the US ETF on the UK has a 5% dividend yield and what do I think about UK assets from here with things like Briggs and I think the key here I think is what's gonna happen with sterling and I think sterling pressure is gonna be on the downside there's a lot of banks now are kind of taking that same to you because there's uncertainty on brexit and there's this clearly we're going through quite a big fiscal push and if you go to the Lacey Hunt interview you talk about how the East the the Bank of England can be the experimental central bank unlike the Fed which is still got some type rules in the UK we can do the physical expenditure and the central bank can can buy it all that basically now that should with a freely floating current freely floating currency give us first mover initiative and see a bit of pressure on sterling from here with the potential for a clean or with potential for resolution on brexit becoming less likely by the end of this year because everyone's got a deal with so much now if you're looking at an ETF which is in dollars you've got to worry about the pound I like the UK because I think that pound is going to be an adjustment mechanism and it'll get to the point where people look at UK assets from the broad with a pound lower and say that looks very exciting so for me the trigger would be I'd like the pan get towards parity and I think we become a very very attractive market for foreign investment this year for the first year foreign direct investment has shifted to I think France more than the UK UK's been the leader for the whole of Europe for 20 years or more it's lost its um its title on that front but think it will come back with a pound of justing so I'm positive on the UK if the pound falls I don't sit there going I want the pound stronger because I love Britain and to think the pound coming down from here would be really good for the UK because we can start exporting our services again and you know people will always buy London property but a pounds ten a twenty ten or twenty percent lower people are going to pile into London property again it might be yeah and I should say that question actually came to us from Jeffrey and the question was basically what you just answered which is are a big picture are you bullish on England post breaks it yeah I mean it is there's gonna be adjustment there will be problems I think I've said before I was a euro skeptic remainer but the I think there's a lot of upside here rather than focusing on the negatives let's look at what could be the outcome here unbiased Lee and it feels like the outcome should be a weaker sterling and that's gonna create a lot of investment opportunities for foreigners into the UK now you know interestingly enough which got another question they came to us from Oscar on a similar note Oscar wants to know if there's a consensus of the potential for high US dollar and high gold prices simultaneously and can they coexist again if I'd just quickly go on that one I think the thesis in some ways is yes because the high dollar higher dollar is most people say this is the sort of last vestiges of a dollar move goal of being the I was called the apex predator of the global economy and so much of the global economy is defined in dollars and this is the real story behind pretend to the strong goal it's not the US is a catastrophe waiting to happen it's just the world still deals in dollars and needs dollars and if we see a balance sheet recession how did you pay your dollar debts when there's fewer dollars in the world fully going up is that balance sheet recession and sheet recession deflationary that's positive for gold or the response is central bank's print more money still inflation area first central bank's print money destroy currencies Gold's been going up in all currencies and normally think door up commodities down but golden dollar can go together so I still feel that's a fair a fair move the one risk too bad is if the dollar moves too quickly the adjustment is a problem and you will get gold being sold off as a margin call to pay for losses elsewhere so it's the speed of the door does mine grind hiring the dollar and the move hiring goal I think is a very acceptable viewpoint yeah thanks Roger anyone else on that question yeah I think that you know not really once the liquidation happens as a result of margin calls then you're back to a more fundamental question which Roger was addressing which is you know gold as a hedge and also with regard to you know what Gold's purpose is you know when you have rates at zero percent or negative one the the opportunity cost for holding gold are negligible and actually it's better than if you're being taxed you know negative one percent so I think that negative real interest rates are gonna drive a lot of the demand to hold gold because there's no opportunity cost there right so we've got a few more minutes I think so let's go around the horn what questions would you like to have answered that you were not asked anyone Roger which would I like to balance it so um I think for me you know the the big question that I'm you know maybe we shouldn't focus a little bit more on the inflation deflation debates I think that that's kind of you know which one do I think will happen and when and how will this transpire and I think we did talk about a little bit of that you get variegated inflation deflation I think for me the big story here is still the story about the economy before covert hit the story about the economy before covert hit was this was a very weak economy where debt I've been giving up so think about it this way is that lets say one unit of debt created one unit of GDP what we got to the point where four units of debt of creating one unit of GDP that's not growth even though in GDP it can still look like growth that's leverage in my view it's always seen as a leveraged economy globally this has happened on a global basis and when we talk about the sort of Keynesian reaction of closing the output gap by fiscal and monetary expenditure the problem with that view in my in terms of how I look at it is that the demand that had been created in the previous ten years was a demand based on debt it wasn't a natural rate of demand it was excess demand so even if we pushed demand back up we're going to push it up to the mat natural rate which is still below the rate that the whole year global system had been accommodating for so this is still spectacularly deflationary because even if you got it back to the old level when you get it back to that point and used to take your foot off the pedal we drop back into deflation so for me the key areas is that it's understanding the framework before and that informs the framework going forward it's not just a case of recovering from code it's have we damaged the old framework which was built on debt and that that needs repaying we're moving into a new framework based on that I want to pose a question to the three of you which is based on some of the comments I've seen for the real vision daily briefing um you know many times you guys have used to phrase the Fed or central banks have injected liquidity and I've seen a lot of comments saying actually in my opinion I don't think the Fed is injecting liquidity liquidity injection is when you know there needs to be B in order for the transaction to transpire but this is not about a flows thing it's really about the stock it's they're not social not phone but equity so much as they are monetizing debt what do you guys think of that yeah I'll give you go ahead yeah I was gonna say that really you know like quantitative easing is an asset swap so basically what you're doing is you're swapping interest bearing assets for non-interest bearing assets so when you're increasing the number of excess reserves in the system you are putting assets onto the balance sheets of banks and of other investors that are bearing you know very marginal amounts when the the Fed is paying you know very marginal amount for excess reserves for assets that actually were yielding more so that actually is decreasing the amount of net income in the system what then happens is is that you know you're putting a you're causing people to move from that market into other markets and also when the Fed is is acting as an anchor in specific markets where it's it's taking the bid for these assets even though it's removing net interest income from the private sector and and getting that onto the Fed's balance sheet they're telling people that you can move into those markets as well and that there's an extra bid there so that's from from my sense that's where the liquidity play is it's all about you know the signaling effect that the Fed gives and pushing people into those markets and to other markets you know increasing their risk tolerance their their desire to move out the curve and to move out the risk spectrum I think you know I think the two elements in it what and actual one of our one of our subscribers actually put a nice nice thing in the comment section a couple of weeks ago talking about its basics the hot potato there's two parts one is the hot potater one which is effective you pass the parts around it and I think they finished it up with saying that it's a bit like you've got a barbeque and you go into the butcher's to buy some fillet or have you caught in the US you find the feds already been there nicked all the good stuff so you're going to go okay well I'm gonna get some lamb steak oh that's gone I've been to the last person gets in and although God is the offcuts of you know the end of the sausages so that's the equity market so eventually goes eventually someone has to buy the sausages as it were so that that is an element to it but also there's been this element which is the front-running on which i was talking about as well and you can see that if you look at QE and bond yields bond yields you know if you were gonna buy bonds buying bonds yields go down yields at she fell ahead of QE and yield had gone up during QE every time QE one two and three and then 40 include the ECB QE so there is an element of the Fed signaling you know telling us what to do and I guess it's a combination of both is that first there is the hot potato it kind of drives a liquidity parcel around until eventually somebody buys equities but then as you get used to the Pavlovian bid is that if you know they're doing QE and you know that the reaction function of the market is to go up you front-run the Fed which is what happened in the corporate bond market in March and April because the Fed only came in to the corporate bond market about two weeks ago four weeks after they initially it's a bit longer before we stopped the initially said they were going to do this so those two elements in there and we've obviously seen the retail market come in as well so the liquidity does go in very very indirectly remember the Fed gives it's the banks so doesn't hand it out to people they can lend but they can't spend is then for the banks to do it the banks go the real economy is pretty dross but I'll give it to my mates who are shadow banks and the brokers and they're going to leverage up with their prime broking clients who are hedge funds you buy the market and that's how it kind of goes through there and you know retail might front-running - everyone goes here we confirm rates as long as you're not in a liquidity crunch well they did three two months ago they could eek liquidity crunch was there they fixed that first and then I think the Pavlovian conditioning kicked in as well and you know to pay back on that Roger when you talk about the signaling of fact I mean what the Fed is essentially doing jack is is they're telling you we're taking all of the worst case scenarios off the table there's no tail risk on the downside we're telling you that we're buying this market or that market and you know because the bid is there from the Fed that you know those extreme outcomes are not there and that's generally speaking negative for you know longer duration assets in fixed income and so that's why you would expect the yield curve is steep and in that case because what it's saying is is you know worst-case outcomes are off the table and going forward you know you're gonna have a better economy on average yeah extremely well said from both of you I have nothing to add to that except if you're interested in looking at a deep dive on the mechanics of monetary policy you can't go wrong with Lacey Hunt and Carol Sokolov from the global recession watch campaign so we're starting to wrap up here there's one question that I thought was great we see if I can find the exact wording of it this comes from this comes to us from from Bill ass and let's go around for in everyone to answer this would be great what do each of you like most about working every illusion well you know actually rather than ask that answer that question I want to answer the last question which was what do I wish had been asked and this is a total of process answer or the answer to that question is I wish people would have asked the question what do they want to see RVD become or what are they missing from the daily briefing and by that I mean that you know for a long time the interview that long form interview was the product here at real vision just because of the coronavirus in the lockdown we felt that we wanted to move to this paradigm where we were reacting to what's going on at the at the time but when you look at what's happening we're very much still within what I wouldn't say there which is the the brand of real vision which is our bread and butter which is macro we're not taking the lens and focusing in on the nuances of the day-to-day the market was up you know 2% because you know the Fed did X or this conflict company you know announced why that doesn't make any sense that's not where we add value and so I think that the real vision daily briefing even though it's daily is putting all of that stuff in the context of a much more macro framework yeah what I want to know is is uh how do you want to see that evolve what pieces to the daily briefing are missing from your point of view do the viewers that's a great that's a great question I'd love to hear that I'd like to hear that more as well what would you like to see more of what would you like to see less of and how would you like to see things done differently we're obviously you know we read those questions the excuse me the comments at the end of the piece it you know kind of obsessively because we're trying to find the insight about how we can add the most value to all of your lives so we'd love to hear your thoughts on that Edie real quick I'm go back to that question though what do you like about working in RV you know I like working at RV in that you know for a long time I was thinking of my own and coming up with ideas in much less of a inclusive environment on a day to day basis pinging ideas off it's like being in you know a bank or an investment house and that there are tons of other people who have competing views they they synthesize the information just differently I mean think about the QE question that jack just asked before and the way that you know roger answered the question the way that i was looking at the question synthesizing those things together coming to a much more complete understanding of what's happening not just from the interviews but you know from your college it's a great thing right jack how about you well I think there's so many things I love about working at religion I think the thing I love most is organizing the guests and helping select which guests are going to have conversations because you're really sort of selecting the narratives that are going to go out to you the the real vision audience um and you know real vision it's about taking we take a longer-term view and we're not looking ahead and saying oh oh the nest equity percent because of this reason but I do really feel privileged to help come up with the stories and choose the sort of orchestrate which conversations are gonna be had and I always like me and whether you know I'm really and because part of that is you have to be involved in the markets like you three are so you know following them so assiduously uh but you know I read rallies GMI I say Oh interesting he heard that would pair that with him oh you know ed said this his credit writedowns maybe I'll pair with this guy and then I also like sort of something that we're experiencing experimenting more with is peer to peer interviews um so I'm not gonna you know the golden rule of looking never say the name before it's before a snail down there are two people who are in the distressed debt world the private illiquid credit market investing sort of one of the very areas that's not the depends not intervened in and they both are doing they both are investing in aviation they're sort of lending to what they're doing lending based on planes and helicopter assets and obviously with travel down the tubes um this is a it's a very distressed market so I love pairing mines both that think alike and in this case that I'm thinking of but also you know having that uh that balance between the the Kyle basses and the Russell Clark's I think it's important to you know orchestrate mind as well as having that synthesis I hope I explained that well enough very interesting very interesting helicopter assets in the age of helicopter money I'm looking for writer or something you should do really thinking about it thinking about it Roger what do you like most about being here at row vision it's it's all about framework and just a variety of different views that come on the show and the challenges that they have and so this is comparing it to you know I was over over two decades as a macro broker derivative sales and trading and it's being unencumbered by the need to have a trading idea every single day because that's what you had to have with clients and on a trading floor being able to take all these different views and build them into an unbiased framework and adjust that framework and I think for me it's just I feel I have a better view in the market over the last two years since I've been working in real vision nearly three years working real vision but I ever had whilst working your numerous broker dealers and so I think that it be and that's because of the variety of people who we can speak to you you have such incredibly different views they're all valid none of them are necessary right or wrong but they might all be right and wrong but they're just different views to build into that framework and keep on adjusting and for me that that has been the exciting thing I love my markets and I love listening to other people's views however challenging or incorrect I might think they are that's such an interesting answer Roger the idea that you've you're more comfortable thinking about markets and your own understanding of them here at real vision than you were at Goldman Sachs at Deutsche Bank and it Morgan Stanley that's true it's a really compelling statement I think you know for me three three it's three things quick answers first it's it's working with with all of you Edie Roger Jack and of course max and drew who are not on this call and Gabrielle and and of course and of course with with RAL the the team that we have here is so intensely passionate about what we do and it is a pleasure to get to do it with you guys number two the thing that I said before which is the the real magic of this formula the the medium itself is I think just incredibly incredibly exciting and and I really think that religion has discovered the formula that we are going to look back on this and in in five years and see that that everyone is trying to imitate the thing that we put together here and the third and the third thing I would say is the so so you know you Roger and Edie have a lot been in hardcore finance much more recently than I have you know when I was about Jack's age I worked at in banks at Credit Suisse and and BB&T I was yeah I was younger and thinner and had more hair back then but for the last ten years I've been I've been working in in in journalism specifically in covering financial markets and I was at CNBC Yahoo Finance for a little while a couple of other places ran Nouriel Roubini macroeconomics blog and the thing that that I think is so special about what we do here is the speed that we can adapt to things and the way that we can dynamically change the things that we do I think to better serve the subscribers that's something that doesn't happen elsewhere you know and I have an idea and I send add a slack message and say Edie can I do this he goes I'm busy right now just do it and let's I'm sure it'll work out well that's pretty cool you don't get to do that at a big journalism shop just because it's you know they're big they're big battleships they're really slow to steer and at real vision we can be really nimble and we can go on and ask me anything and say the audience hey what would you like to see more of in RVD be we can ask that question on a Friday and come on Monday and say we're trying something new today tell us what you think and and I guess the final thing is I really enjoy the interactions that we have with our subscribers in the comments section it seems to me it feels like a dialogue it feels like a back-and-forth it feels like we're all having a conversation we're all here to learn we're all here to grow and it's an incredibly exciting place to be I think for all of those reasons so with that does anyone have any final thoughts or should we leave it there I think that's a perfect place to leave it ash well done and thanks for moderating this and let's do this more in the future Jack Roger edy thank you to all of you and to the subscribers thank you for joining us.