US Credit Cycle: Why Powell Needs to Act Quickly

Published on: March 27th, 2019

Julian Brigden has also made available for MI readers his latest MI2 report in which he looks at weak US data and a worrying shift in the credit cycle, to make a strong case for the FED to act quickly to ease financial conditions


  • MG
    Miguel G.
    6 April 2019 @ 20:02
    Julian, after reading your piece you sound convinced that the fed can and with high probability will, add more stimulus to the US economy and today's set up looks similar to 2016. Here's where I have to disagree. In 2016 we had a much different set up than we have today where we had very low levels of inflation (sub 1%) and oil crashing to a 2 handle along with the 10 year trading at 1.6is% if my memory serves me right. Today 2019 inflation should continue to track around 1.7-1.8% and oil is trading at 63/bbl along with the 10 year making a higher low at 2.3xx%. I cant see how the fed can step up to the plate and unleash QE 4 with the current macro set up theyll risk sparking higher inflation. IMO inflation looks like the market's deciding veto card for the fed and what I think keeps them at bay. Where the most I can see the fed doing is more "cooing" as you put it and less actual stimulative action. A way to get a 2016 redux I think we's surely at minimum need much lower equity prices along with oil probably breaking much lower as well to temper these inflation embers. Another round of stimulus imo from this point looks disastrous for risky assets and Id assume the fed is keeping a close eye on oil and knows it cant really do much from today's current set up. Now if Raoul is right and we are about to see a lift off in the dollar and we rally a good percent to 105-110 dxy then sure that would break oil's back and the fed likely has a little more room to tinker with policy, but all scenarios that I can think of from today's market and the next 3-6 months keeps the fed at bay from doing much of anything other than talking UNLESS we see a deflationary wave cause by a stronger dollar. In which case a fed elongating the business cycle would have to come in the form of weaker asset prices and probably much lower oil. I dont hold a candle to the likes of your experience and am a huge fan of your work, but I'm really struggling with your piece here as to how this credit cycle can be stretched with the current back drop. I may be over looking something silly and please feel free to punch holes through my argument as I have a ton of respect for both you and Raoul which is why Im a life time member
    • MG
      Miguel G.
      6 April 2019 @ 20:11
      Excuse my terrible grammar in a rush and heading out the door. Wanted to get this out after reading your piece and pushing me to think it through.
    • MC
      Mathieu C.
      1 May 2019 @ 21:03
      Nice comment, it seems Julian has agreed to it in his insider talk video. Fed don't anticipate, they act on clearly defined risks and this isn't clear at that moment where we going, in my opinion it is the point missed in Julian's work. I think also they can hardly fight the tide of the world at that point of the cycle without increasing significantly their domestic risks. That's where I agree with you. The main risk I see to ease early would be a slow domestic growth but with high inflation but how many times one said this about QE. China seems not ready to stimulate further though that time because of their economy's leakage and Europe is completely hopeless. My thesis is the FED will try to negotiate a rather lengthy soft landing rather than playing the saver of the world. Remember this is a global slow down. They already managed to buy until September for free which I found quite fascinating whereas it unveiled also there is a ceiling (quite lower than anticipated) on risk free rates. That seem like the major risk to me and let me think that they will indeed not anticipate any easing (your inflation risk). So at the end, if the fed isn't ready to ease the global risks, isn't there only one way out that everybody is too cautious to call it wrong. It is over. We are in now and it just started. On a different topic, a nice indicator in my opinion which is never being discussed is to watch the Chinese outbound tourism, I think it is just starting to contract globally but I understand it is still just a forecast and not a hard data. (perhaps in between?!) If it confirms, despite indicating on the health of the Chinese economy, it might be quite the global shock the world didn't need. In September we will know more I guess.
  • MH
    Marc H.
    4 April 2019 @ 23:46
    What is causing the lenders to tighten credit for the small businesses?
  • HH
    Hugh H.
    27 March 2019 @ 18:56
    Hmmm,... I received the same one yesterday via TT. Considering MI is a premium service, it would be better at least to share the information with MI subscribers in advance.
    • SS
      Steve S.
      27 March 2019 @ 19:57
      I tweeted Julian and asked him to put it on MI. Kind of him to respond.
    • HH
      Hugh H.
      28 March 2019 @ 16:02
      Oh, I was confused. I thought this piece is for the meeting of minds. I really appreciate sharing this with us!
  • MB
    Matthias B.
    28 March 2019 @ 10:58
    very informative and helpful. But I am baffled: all of a sudden, there is a chorus of analysts, market observers and even future FED board members demanding a rate cut. This is the same kicking the can down the road we witnessed the last 10 years. When do leaders finally stand up and acknowledge that the best cure to a drug addict (financial markets) raising his/her future prospects is to go through that detox process. The longer one waits, the bigger the pain... but the concept of subscribing more morphine or so to an addict is stupid, irresponsible and highly selfish.
  • SS
    Steve S.
    27 March 2019 @ 19:56
    Thanks very much Julian
  • KC
    Ken C.
    27 March 2019 @ 17:42
    Excellent piece Julian! Is our best option to just stay long short duration fixed income or should we extend duration?
  • TB
    Thibault B.
    27 March 2019 @ 17:34
    It came out on Think Tank yesterday? Still - fantastic work, can't get enough.

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.

Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.

Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best Sellers list.

Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy.

Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channel watched by over 80,000 people. In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years.

He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

Caitlin Long

Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

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Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.

FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

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CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltem oversees the firm’s managed strategies group and its New York office and leads corporate development.

Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.