Blowing the Doors Off

Published on: February 12th, 2021

Inflation was sticky to the downside and is now rising. Fiscal policy will be even more expansionary than many believe. Monetary policy is intent on financial repression, boiling the bond frogs ever so slowly. Nominal GDP will explode to the upside once the post-Covid re-opening starts in earnest. All pro-cyclical and a heady cocktail. Julian asks… what to do?

Comments

  • RM
    Richard M.
    12 February 2021 @ 19:48
    0 0
    Julian, many thanks. Are you able to explain what data you monitor that might make you short equities? you've shown patience not to pull the trigger already?
    • HM
      Harry M. | Real Vision
      16 February 2021 @ 13:51
      1 0
      Roger makes a good point. Similarly we might see a change in trend if something happens with the dollar. But there is no point jumping the gun in anticipating an equity sell off. Doing so can be incredibly expensive. Rather, JB's advice is to keep moving stops up, and make sure you have nothing which might be tricky to get rid of if markets change direction.
    • RK
      Roger K.
      14 February 2021 @ 23:25
      2 0
      My understanding is; If the US10Y hits 1.9% ( which is more than 50bps of S&P dividends) then high flying stonks ( P/E 40 ) will have to halve and halve again to to match the US10Y...
  • DW
    Dennis W.
    13 February 2021 @ 20:19
    2 0
    No new trades but I feel much more situated after reading this.
    • HM
      Harry M. | Real Vision
      16 February 2021 @ 13:52
      1 0
      Glad to hear. Julian is very concerned about the environment (lots of reasons for concern about excess speculation) but its just too early to call a bear.
  • RG
    Rob G.
    14 February 2021 @ 08:39
    1 0
    great piece
  • JM
    Jake M.
    14 February 2021 @ 19:09
    1 0
    Hi Julian, why are you bullish on hydrogen cell? here's a comment from some one (cathie wood) who seems to have researched this extensively: https://www.reddit.com/r/SPACs/comments/jhbj8v/cathie_wood_ark_interview_with_barrons/ basically, she claims it's much more expensive to run than an electric vehicle, and also not as convenient as you can't charge your car at home with hydrogen cell based car.
    • HM
      Harry M. | Real Vision
      16 February 2021 @ 13:55
      2 0
      JB has a piece coming on this (A Deep Dive). He doesnt disagree with Cathie Wood at all, but thats not the same as being bearish about all hydrogen investment plays. Fuel Cells have some applications for which they perform better than batteries. But rather than pre-empt the piece, I will just say that I know there is a piece coming on this in the next month (or month after).
  • RK
    Roger K.
    14 February 2021 @ 23:29
    0 0
    Very pragmatic piece! in the dream world all around you. Thank you...
  • NO
    Neil O.
    15 February 2021 @ 12:17
    0 0
    Hi Julian, won't a lot of the savings among US households that you highlight as a source of spending have to go to pay rent and mortgages that have been suspended during the pandemic? If so, how much of a dampener on your reflation/inflation view will that have?
    • NO
      Neil O.
      16 February 2021 @ 14:10
      1 0
      Hi Harry, thanks for your response. I guess the "k" shaped recovery becomes a "K" shaped one in that case.
    • HM
      Harry M. | Real Vision
      16 February 2021 @ 14:04
      1 0
      Hi Neil. Great question. Piping up for Julian on this. I would argue that the bottom line is that while there will be a lot of consumers who are cash constrained and have been financially damaged by Covid, there will be a whole bunch more who have been saving like crazy and a desperate to blow it on travel and restaurants. We can see this most simply in the unemployment numbers. At its peak there were 30mn new unemployed. A terrible macro event. Tragic. But that also means there were 120mn or so whose employment was unaffected and who continued to be paid and accumulate savings. The net savings numbers are objective. A lot of those people will not spend all that they saved recently. But there is definitely going to be pent up spending. We also have the example of the 1918 pandemic to go by. Not that we like to go by economists views, but on this there is great uniformity of opinion. But most of all, past experience for me is that its very easy to overestimate the importance of those who have been economically hurt relative to those who were not. But those who are unemployed have a much diminished impact on the economy. Their spending drops and they sort of disappear. To a great degree we can already see the impact of their reduced spending. Its those who can spend who have yet to make their economic preferences observable, simply because of restrictions in the spending they can do.
  • GP
    Gregory P.
    21 February 2021 @ 21:09
    1 0
    Hi Julian, As Platinum is prone to sharp reversals, what would you consider a worth while entry if you haven't entered into the position already? Any thoughts?
    • GP
      Gregory P.
      22 February 2021 @ 16:14
      1 0
      Thanks Harry. I didn't take the entry at 1035 - I've only just signed up. I wondered if there was still a chance to enter at this stage, and if so, any guidelines as to a valid entry?
    • HM
      Harry M. | Real Vision
      22 February 2021 @ 13:45
      0 0
      Platinum is in the Portfolio, with an entry and stop of 1035, as of Dec 4th.
  • GP
    Gregory P.
    21 February 2021 @ 21:28
    0 0
    Hi Julian, A question on your second tranch on the FTSE / GBPUSD. Do you happen, on GBP/USD with your buy recommendation at 1.37, have a target and stop-loss in mind on this pair? Thanks.
    • HM
      Harry M. | Real Vision
      22 February 2021 @ 13:43
      0 0
      Greg there should be a stop and Im not sure why it isnt listed. 6250.