Meeting of Minds – September 2017

Published on: September 28th, 2017

Raoul examines how he identifies secular tailwinds for investment and navigates his asset allocation accordingly. Julian examines whether the FED can successfully shrink its balance sheet and extricate itself from a decade of market manipulation and balance sheet expansion.

Comments

  • SB
    S. B.
    29 September 2017 @ 10:48
    Raoul, I appreciate your thought process, but for some time your global framework has been more or less the same (as it probably should be). I just think there is not much information that you did not disclose previously in for example the few Macro Insider newsletters on Realvison Publications, Realvision interviews, and Twitter. I would really appreciate some more specific investable ideas. What are the best ways for a retail investor in invest in Emerging Markets? Are ETF’s in this space good enough? Some ETF’s in emerging markets have been vastly underperforming the Indexes of these countries (even when exchange rates are taken into account). Should specific companies be bought? I try to do my homework, but finding the best investment vehicles to play the themes remains very opaque. What are the best ways to invest in the Monsoon region/East Africa/India/Saudi Arabia? Is Poland still investable or is it too dependent on Germany? Is Malaysia still an opportunity?
    • SB
      S. B.
      29 September 2017 @ 14:17
      I don't mean to be too negative, there a lot of interesting data too.
    • DP
      Devraj P.
      30 September 2017 @ 19:17
      I totally agree with S.B on this. Like for Dollar trade there was an ETF - UUP
    • RP
      Raoul P. | Founder
      3 October 2017 @ 19:02
      Yes, but if I dont see a good trade set up, I cant recommend it. I only recommend things when I think the timing is right from various perspectives. Just because I talk about a market, doesn't mean Im recommending it... Im just talking about it, observing it, debating it..
    • DP
      Devraj P.
      9 October 2017 @ 02:16
      Thanks RP for reply.. It makes perfect sense.
  • AT
    A T.
    29 September 2017 @ 19:30
    Hi Raoul and everyone , would appreciate much can you pls tell how I can buy an IRAN ETF for a pension or ISA account (I am UK based ) . Many thanks for great piece .
    • GM
      Gerald M.
      29 September 2017 @ 23:17
      https://www.wsj.com/articles/investing-in-iran-frontier-market-opens-up-1457321015 (for non-US investors, UK partner)
    • AT
      A T.
      2 October 2017 @ 15:52
      Thanks but still not figure out any actionable source to buy IRAN ETF .
    • TM
      The-First-James M.
      6 October 2017 @ 00:53
      There is no IRAN ETF. You will have to find a way to be more inventive. ;)
  • LM
    Lawrence M.
    4 October 2017 @ 02:04
    Any chance we can get an audio recording by the moderator on these? This was jam packed with info and it would be awesome if I could re-listen while I'm on the run.
  • RI
    R I.
    3 October 2017 @ 12:32
    Raoul - regarding demographics, I'm sure you've considered opposing views and are up to speed on the evolving research on this important topic. Speaking of which, a recent working paper out of the BIS predicts that global population aging will reverse the following trends: (1) declining real interest rates; (2) declining returns to labor; and (3) increasing inequality within countries. They make a convincing case largely based on the assumption that governments will remain inept and do more of the same (somewhat ironic, but seems like a sure bet to me!). In case you haven't seen it, here is a link to the paper I'm referring to: http://www.bis.org/publ/work656.pdf. Thanks.
    • RP
      Raoul P. | Founder
      3 October 2017 @ 18:59
      Thanks. So far it hasn't worked in Japan. But yes, over time as the demographics work out, everything will change.
  • WD
    Wim D.
    2 October 2017 @ 11:51
    Great article! Next to India I was also thinking of Nigeria based on the same tailwind thinking.
    • GS
      George S.
      2 October 2017 @ 20:29
      Yeah, Nigeria is one of the best in that regard but it might take a decade (or 2) for them to sort it out. That country is a mess right now.
  • SJ
    Steven J.
    2 October 2017 @ 02:33
    Brilliant Piece - love the 3 D's and the illustrative sequential thought process and the contrast between headwinds and tailwinds. Wondering if either of you have thoughts on how your thesis impacts real estate investments?
  • DP
    Devraj P.
    1 October 2017 @ 19:44
    Bravo RP and JB. This issue alone is well worth the entire year cost of MI Subscriptions. Its not just about few trades instead its a life long process on how a sound/patience investor can build a robust and highly profitable framework with 10000% confidence in investments without worrying about day to day events. Truly a great work and ton of thanks for putting 3D together that alone is a years of work.
  • JM
    John M.
    30 September 2017 @ 06:06
    I like the idea of headwind versus tailwind economies. I wonder if historical data actually shows that stock market in tailwind economies outperforms markets in headwind economies - just wondering?
  • KA
    Kelly A.
    28 September 2017 @ 14:04
    I love you guys, but for me, on this one, you missed me. I could be a demographic of one, though, so if i'm the only one, please ignore! My thought is: I'm glad you are so smart. That is why i subscribe. Yet, i don't care HOW you do what you do, only that i get the benefits of the fruits of your labors. i do NOT want to become an expert. You are the experts. I do not want to learn/know what you know how to do. So, this report, except for the last page of investment thoughts, was of no value to me. AND, RAOUL, what happened to your views on oil. Still below 40? And in what time frame? Thanks, and keep the hits coming!
    • TM
      The-First-James M.
      28 September 2017 @ 15:00
      Personally I'd rather be taught to fish than be given fish, but each to his/her own.
    • CY
      C Y.
      28 September 2017 @ 15:17
      I care how you do what you do. Great work.
    • lD
      lance D.
      28 September 2017 @ 15:22
      ERRR plz don't listen to the above comment to much . I kind of understand the comment however this is NOT something i agree with.. i want the learning experience especially the "devil in the detail" if that detail can help me learn then I'm all for it . so please keep the information coming and the timely trades. from a happy subscriber . OTHER POSTER..... DONT YOU ROCK MY BOAT !! heheheheheh
    • lD
      lance D.
      28 September 2017 @ 15:23
      at the time there was only one other comment so a correction ... the comment above the one above lol
    • lD
      lance D.
      28 September 2017 @ 15:24
      oh ffs and obviously the one above my original comment . HEHEE
    • lD
      lance D.
      28 September 2017 @ 15:26
      OK comments are just coming in thick and fast ... so to be clear ignore Kelly A comment please
    • JM
      James M.
      28 September 2017 @ 15:54
      [Rolling my eyes] ...You can please some of the people all of the time, OR all of the people sum of the time. BUT you'll never please all of the people all of the time.
    • CD
      Cheryl D.
      28 September 2017 @ 15:56
      I'm with CY - I care how you do what you do too. Keep it coming - very informative...
    • BT
      Bryan T.
      28 September 2017 @ 18:27
      I'm not sure I could disagree with Kelly A. more than I do. I need the education in order to both broaden my investing chops and to fully understand what it is I'm being presented with. I'd hope that its not an either/or proposition...why be so limiting? I wouldn't want only opinion nor would I want only a trade recommendation. Providing trade ideas and the background for reaching the conclusion provides a rich experience especially at the level of expertise and experience I have come here to expect. Certainly the reasons for my subscription.
    • jm
      joeri m.
      28 September 2017 @ 20:26
      When I first started investing (I was around 15 years old) I wanted to know what Buffett was buying. When an interviewer asked him what his best investment was, Buffett answered the investment in himself, his education on the markets. I found this the most stupid answer ever. However now, I see that it was amazing advice. I can now decide, based on my own research, if I make a trade or investment. I don't need to rely on anyone else, I educated myself and after all those years I can now profit from it. I've got a feeling that Kelly A. will feel the same in a few years.
    • MG
      Miguel G.
      29 September 2017 @ 11:27
      Nice write up guys the amount of macro Ive been learning here is well worth the sticker price for this service. I love surrounding myself with people of your caliber thats the only way I'll ever reach my personal goals. If you guys ever need a coffee bean grinder in the mornings for the privilege of soaking up your guys wisdom, I'm your man :). Julian your piece made me really think about a lot of things. If inflation now becomes the villain and not deflation doesnt that essentially mean the end of being able to do QE? Seems like you guys are at polar opposite views when it comes to what could possibly transpire next. Thanks again for thoughtful pieces, greatly appreciated!
    • IO
      Igor O.
      29 September 2017 @ 16:26
      How learning something new going to make you worse off?
  • TK
    Thomas K.
    29 September 2017 @ 13:34
    Great piece guys, the best so far. In his last piece on currencies Julian stopped short of discussing how EM currency moves can best be managed. A follow up piece that addressed that subject would be helpful and would tie in well with Raoul's Monsoon theme as, for me at least, not having a great handle on how currencies like INR or IRR will perform puts me off investing in these more exotic equity markets.
  • MG
    Miguel G.
    29 September 2017 @ 11:48
    Julian your piece assumes balance sheet reduction from the fed and rate hikes to continue at least as far as the eye can see. But we all know that any sign of trouble in equities the fed will begin to stop any kind of tightening and may even walk away from balance sheet reduction all together. Assuming we can agree that volatility coming back in to markets is all but certain at some point if the fed continues to raise rates AND reduce their balance sheet, how do you think the fed reacts in kind to a market that is falling? More QE? Or are they just helpless this time around to markets falling and we are finally forced to take our medicine? Thanks Julian your piece really has me thinking this morning. Love reading your content.
    • CY
      C Y.
      29 September 2017 @ 13:08
      I think the fed has your back narrative is at risk. Under severe stress they'll likely step up in but the incessant pumping of liquidity mentality is undergoing change, at least at the Fed. I think the market believes exactly what you're saying about this but watch out when they realize that in fact the fed is leaving the party first.
  • TH
    Thomas H.
    28 September 2017 @ 20:52
    Raoul, are you concerned about the recent drop in the market in India?
  • DW
    Dave W.
    28 September 2017 @ 20:28
    Excellent report. The 3-D framework is fantastic. This is the reason I subscribed to MI-- to learn solid macro frameworks with live examples to drive the concepts home. Also the trade update is a great add.
  • gg
    gurdeep g.
    28 September 2017 @ 19:18
    Raoul take a break for the year ...great piece guys!
  • MC
    Minum C.
    28 September 2017 @ 18:05
    Found Raoul's framework very insightful and will look to apply it in my own process going forward. This is exactly the type of thing that made me want to subscribe.
  • RM
    R M.
    28 September 2017 @ 17:40
    Excellent report, maybe the best yet from MI. I am on board with the overall thesis as presented. A couple of future requests: 1. Can MI do regular coverage of the tailwind economies like India? I have invested, but I don't want to overdo it as the US cycle may negatively impact tailwind economies, as discussed in this report. 2. I cannot help think that China, because of the size of it's economy also needs watching closely by MI. China clearly impacts overall markets for commodities, as well as influences tailwind economies across the globe. Thanks Julian and Raoul!
  • JM
    James M.
    28 September 2017 @ 15:59
    Another great In Focus report. Thank you Julian & Raoul.
  • NH
    Neil H.
    28 September 2017 @ 15:01
    macro insiders keeps getting better if that is possible. keep it coming.