COVID-19 Spiraling Out of Control, Whipsawing Crypto, and the Coiled Snake of Macro

Published on
January 22nd, 2021
Duration
42 minutes

The Fed’s Quandary: Speculative Fervor Around Inflation Expectations


COVID-19 Spiraling Out of Control, Whipsawing Crypto, and the Coiled Snake of Macro

Daily Briefing ·
Featuring Jack Farley, Ash Bennington, and Raoul Pal

Published on: January 22nd, 2021 • Duration: 42 minutes

Real Vision CEO Raoul Pal joins senior editor Ash Bennington to share his latest thoughts on COVID-19, market froth, and cryptocurrency. Using models from his latest Real Vision Pro report, “Wile E. Coyote,” Raoul plots several dire situations for COVID-19 deaths. Raoul then talks about why he may smell “fire in the room” in the equity market, looking at indicators such as call option volume, activity in the pink sheet stocks, and the sky-high use of margin. Raoul and Ash then discuss the recent pullback in Bitcoin, and Raoul tells Ash what he thinks of alt coins and the risk/reward they offer to investors. Raoul reflects on the recent flatness in bond yields and the dollar, and he explores whether macro investors are turning toward crypto markets because that’s where the action is happening. In the intro, editor Jack Farley breaks down today’s economic data release for the PMIs from Germany, France, and the U.S. as well as IBM’s earnings disappointment.

Comments

Transcript

  • CT
    Chris T.
    25 January 2021 @ 08:51
    Less crypto please. Not what we signed up for.
    • sc
      sung c.
      28 January 2021 @ 17:42
      It's half of my portfolio and what I signed up for.
  • TV
    Thomas V.
    26 January 2021 @ 19:25
    I am looking forward to this crypto report (assuming I can get access to it somehow). Hopefully Santiago Velez has some interesting insights but I am wary of the combination of Metcalfe's law in conjunction with "S-curve's" (aka Gompertz function I'm assuming) in building some sort of valuation model. If you try to model the value as a function of active wallets, then you already have to pick between a quadratic (n^2) or n log n version of Metcalfe's law (or something in between), along with estimating the affinity parameter which is probably time-dependent. Then, you have an exponential Gompertz function where you have to estimate 3 more parameters to try and fit the data. I suppose my point is you need to be careful when your model is a combination of quadratic and exponential functions and you have a limited dataset to work with. You can probably find parameters that fit the current data fairly well, but you should also test to see how drastically things change with even small changes in the parameter estimates. Especially when we are talking about non-physical phenomenon. Physics and biological processes can be evaluated using the normal scientific method, trying to apply the same analysis to something as unique as bitcoin prices (which is not constrained by the same forces) could lead you down a rabbit hole pretty quickly. I have worked through this exercise using active wallet counts and bitcoin price and realized that you can build several different models that all have very high explanatory value (from a mathematics viewpoint) but with terminal values that can vary by 2 or 3 orders of magnitude (which is probably expected when using an exponential function). Again, I'm curious to see the outcome but I would encourage everyone to thoroughly understand the maths and assumptions behind any model someone presents that explains the value of bitcoin before you rely on it too much. The trend is one thing, pinning down an exact price is much more complicated. Love the daily videos, keep up the good work.
  • AC
    Anthony C.
    26 January 2021 @ 18:48
    Overall great, as is usually the case when Raoul is on. However I find myself far apart from Raoul on the COVID narrative. Cases are dropping fast in the US (deaths too, and hospitalizations have clearly peaked and have turned down) and yet he persists with the "spiraling out of control" narrative. It's not. In fact, we were really rangebound in cases over the past few months, when the case count *should* have gone vertical. Simply extrapolating the exponential curve out several months is analysis far beneath RV. Exponential curves do not continue forever by their nature, and we are seeing clear evidence of that here. Would we not have seen the whole country infected in one wave in the spring, if that was the case?
  • gr
    graham r.
    24 January 2021 @ 04:23
    Jack, Please don't talk about the Dow in points! We need percentages. This is not CNBC!
    • JF
      Jack F. | Real Vision
      24 January 2021 @ 16:51
      Hi Graham, I talked about points only to set-up my comment about IBM. Really, I shouldn’t be talking the Dow at all. It is an antique of an index. United Health is weighted higher than Apple merely because of the price (rather than market cap)...
    • MT
      Mike T.
      26 January 2021 @ 11:38
      @ graham r : there's always another point of view. As someone that always looks to express positions using options (primarly short & occasionally long) I always think in $$ movement not %. Why? Because as new positions are established I know my breakevens in $$, the width of spreads in $$, the width of Strangles in $$, etc I find it much easier to mentally process far more quickly by constantly monitoring price movement in $$. Just my $0.02
  • an
    antti n.
    25 January 2021 @ 23:55
    Hi Jack, small correction. Leveraged loan buying has nothing do with investors positioning for increase in rates, floating coupons are largely irrelevant as swap costs are minimal. If anything, lev loans have LIBOR floors at zero so you can pick up optionality for US going negative. Increased lev loan buying has been driven by juice running out from HY at these spread levels, you can get a yield pick up up to 100bp while being senior in cap stack. Makes sense to switch out to less liquid market with Fed backstop.
  • JS
    Juraj S.
    25 January 2021 @ 21:33
    I am sorry but to say because bond yields are falling or low there is no inflation, that's very strange. I know Raoul thinks bonds signal the actual state of economy compared to stock market but I think it's too naive to think that such a messed up financial system would somehow not mess up bond markets as well. There has been enormous price rises in capital assets and certain services, technology being deflationary only in the least regulated sectors.
  • ND
    Nivtej D.
    25 January 2021 @ 21:20
    Yes more info on EM and country and company profiles
  • LH
    Lisa H.
    25 January 2021 @ 20:45
    https://youtube.com/watch?v=Rxdxf-zHfU8&feature=share Important video to watch on Covid and vaccines before it is taken down from YouTube
  • AP
    Alfonso P.
    25 January 2021 @ 14:33
    Raoul & Ash, this is one of the best RVDB we have seen, natural flowing and inspiring conversation, dealing with deep thinking, and complements your GMI piece which sent last week.
  • op
    osman p.
    23 January 2021 @ 08:19
    Perfect example of why I will not be renewing my plus membership. Not a bitcoin bear, but Real vision financial network has turned into a crypto forum. Don't think anything else is happening in the world besides bitcoin? Think again. ECB published some very interesting numbers and warned slowing recovery with Germany loosing steam, GME had a massive squeeze yesterday as more than $200,000,000 worth of very high gamma calls bought ON A SINGLE DAY (A hit job that was so professional, makes Leon look like a plush) , Republic of Turkey issued USD Bonds which was shockingly oversubscribed with 3.5% yield.
    • JD
      John D.
      23 January 2021 @ 10:47
      Well after watching the Jeff Booth's interview with Raoul. I think everything else is noise. In 1800 80% of economy has been farming. If you paid attention to farming you missed industrial revolution. If you pay attention to things mentioned you are going to miss the 80% of the future economy in 100 years. There is a reason to pay unproportional attention to bitcoin. It has a chance to become THE economy.
    • op
      osman p.
      23 January 2021 @ 18:21
      You may be right John D, and I would even say that Cyrpto Revolution 1.0 is already here, but going back you your example, as long as people continue eating, we must also discuss farming...
    • DS
      David S.
      23 January 2021 @ 21:32
      Bitcoin is not the economy. It is a medium of exchange and a store of value. DLS
    • CT
      Chris T.
      25 January 2021 @ 08:47
      And that daily briefings end up for free on youtube/podcasts.
  • CB
    Clifford B.
    23 January 2021 @ 14:02
    Actions for alpha? Really? I'm up over 5000 % on mara, riot and hive since March and these miners are traded on stock exchange easily bought on any broker. Buy BTC for alpha? Why? Miners have blown btc performance to smithereens in 2020 just as gold miners do with gold. You want asymmetric, miners all day long.
    • CB
      Clifford B.
      23 January 2021 @ 14:03
      Altcoins sorry.
    • NC
      NATHAN C.
      25 January 2021 @ 05:18
      Miners have fixed costs and could easily ride down to zero if bitcoin goes to winter for a while.
  • RM
    Robert M.
    23 January 2021 @ 17:15
    Converting to lifestyle chips. That is the key to valuation. Let's say you pay $10,000 for a bitcoin and it goes to $40,000. The buyer at $40,000 using US dollars is assuming his dollars are worth $.25 vs the guy that paid $10,000. Same for the person who pays $80,000 for a bitcoin. They are converting US dollars (which they will eventually need back for lifestyle chips) under the assumption that their dollars devalued to real goods/bitcoin by 50% when they make that bitcoin purchase from the person that paid $40,000. If you paid $10,000 for bitcoin and a buyer pays you $100,000, that devaluation for the second buyer is equivalent to the dollar valuation to real goods over the last 60 years. That is why bitcoin is in a bubble, it takes decades for the lifestyle dollar to devalue by 50%, yet in the last six months, buyers have been willing to accept that devaluation in under a one year time frame. So it is just traders to other traders solely on emotional judgements with no tie to the actual or projected future devaluation of the currency used in the purchase (unless you live in South America).
    • SS
      Sam S.
      23 January 2021 @ 20:12
      Hey Robert M, excellent explanation regarding the value of money from a debt, credit and time perspective. Tether on or around Jan 18th, was reported (coinlib) to have purchased $10 Billion worth of Bitcoin, which implies they are by far largest in the bitcoin market. Seems to me Bitcoin and others provide a "legal right" to the crypto holder rather than an "equitable/legal right", such as with stocks, bonds, etc. For myself only, the taking of such risk is spelled: SUCKER. Blockchain certainly appears to have real value, in our ever expanding techno world.
    • NC
      NATHAN C.
      25 January 2021 @ 05:17
      You're assuming this is all about depreciation as some sort of abstract percentage of the dollar from now to some fixed point in the future. Big assumption that as you yourself point out does nothing to explain bitcoin prices or any other price of any other store of value or high-performing asset. An explanation that explains nothing is not worth even one satoshi.
  • TC
    TT C.
    23 January 2021 @ 09:40
    Because you're typically wrong on macro - that's why you think nothing is going on. There is always something going on. You're obsessed with crypto due to lack of understanding.
    • DB
      Douglas B.
      25 January 2021 @ 00:04
      Grow up
  • MS
    Mark S.
    23 January 2021 @ 04:35
    I find it strange Raoul that your approach to the alt coins wasn’t to go to people you respect in the space and ask them what they think is good. That’s what I did.
    • AH
      Abraham H.
      23 January 2021 @ 05:43
      I too was curious, with his network and all the great guests on the show with Defi etc. why didn't he just phone them up instead of Twitter plebs
    • AI
      Andras I.
      24 January 2021 @ 23:59
      Because it's not about information but beating the tribal drums.
  • TZ
    Toomas Z.
    24 January 2021 @ 20:33
    Raoul made an interesting point about government cheques going straight into savings rather than being spent. If you then build up massive savings, that is followed by any hint of inflation when things re-open, isn't that a recipe for runaway inflation at the click of a finger? People increase their savings rate to the largest it's been since the early 20th Century, and then panic buy anything of value as inflation spikes, causing a run-off effect. Whatever the fed does with interest rates, is probably with a lag and will also affect businesses at record leverage rates. Coming out of this lockdown is going to be the biggest challenge of them all by the looks of things.
  • JJ
    John J.
    23 January 2021 @ 20:16
    I hope at some point there will be two DB; one for the market and one for crypto. This was 90% crypto.
    • JS
      John S.
      23 January 2021 @ 20:24
      Crypto is the market
    • AB
      Alastair B.
      24 January 2021 @ 17:19
      It will be crypto winter again soon. In the meantime, there is money to be made
  • MC
    Michael C.
    24 January 2021 @ 16:51
    Real Vision monitors There's a poster who feels moved to comment on nearly every video with commentary that borders on Professor Irwin Corey's style and (IMO) lacking solid facts to back his/her posts. Then more banter with those who respond with "this is the Way". It's too much work to debate each and every post. Again IMO, it's misguided and sucking up the bandwidth. I hate to see intelligent discourse limited but perhaps there needs to be a governor on said keyboard. I will now go back to suffering in silence...grin.
  • SS
    Scott S.
    24 January 2021 @ 10:29
    Raoul's comments on the difficulty in dealing with something that goes exponential really hit home for me. I've struggled to hold on to TSLA & now BTC doing 2020/21. Everyone was and is calling me an idiot for holding, I've lost a lot trying to delta hedge, and now I've capitulated and will not sell or hedge until I have enough for a Gulfstream jet :)
    • SS
      Sam S.
      24 January 2021 @ 11:38
      Love this idea of the Gulfstream and my neighbor pilots a Gulfstream for the executives at local utility. 30 million for the jet, 5 million a year to operate. Bitcoin really needs to "take off".
  • JL
    J L.
    23 January 2021 @ 09:36
    The insistence that Covid is going to create a series of significant market reversals (bonds up, dollar up, stocks down etc) is starting to become mystifying. Or Hussmanesque perhaps. Taking the data at face value, it's certainly plausible Covid could wind up killing more Americans than the U.S. Civil War (i.e. more than 620,000). But where is the evidence that the market cares about that? Covid has been worse than anticipated for some time now. We have already seen severe distress all across the country. And "Covid Winter" has been a thing for, what, two months now at least? And yet, on Jan. 20th, stocks had their most bullish inauguration day in 36 years (since Reagan's second term swearing-in in 1985) as the major indices hit all-time highs. It's really straightforward: — The lower half of the economy is greatly impacted by Covid. — The top third of the economy is not. The December jobs report actually illustrated the split quite nicely. Within the report, there was something like 550K jobs lost between service workers and state and local government workers. But on the top side, there were hundreds of thousands of new IT jobs ADDED, and the tech sector added jobs overall, and a global survey of corporations said 90% of them were looking to fill technology positions or add new technology positions over the course of 2021 (to cope with the transition to a world of stepped-up digital collaboration and WFH). Another recent study said that top-quartile Americans ($60K and above) are already seeing higher income levels than they did in January 2020 (before the pandemic began). And at the same time, U.S. household net worth recently hit all-time highs. Point being: Yes Covid is horrible. And yes the lower half of the economy is experiencing economic devastation, almost Great Depression level conditions. One out of five Americans is going hungry right now. But the market doesn't care about that. I would argue it's the same story that has already been in effect: — lower half of the economy is getting hurt; market doesn't care — top half of the economy is digital and WFH, they are doing fine — equities are responding to the top 30% of the economy — equities are responding to liquidity infusions w more to come — dollar is responding to U.S. fiscal and global rebalancing In addition to that, the more that the lower half of the economy suffers, the more pressure that Republicans will face to go along with the Biden administration's $1.9TR stimulus push. And there is a multi-trillion infrastructure package coming after that. And private equity is sitting on something like $1.6 trillion in dry powder. And BofA and Goldman estimate another $300-$400 billion of SPAC deals could be on deck in 2021. What does Covid change about this picture, even if deaths start to rise? And why would the dollar suddenly get strong if U.S. fiscal is blowing the doors out compared to Japan and Europe, with China happy to use their strong currency to stock up on base metals and grains? Also, the charts have been saying "markets don't care about Covid" for months now. The dollar chart is, still, historically bearish, having broken a ten-year trendline. And the liquidity factor favoring risk assets could potentially get stronger, not weaker, in the near term. I maintain that the market doesn't care about Covid, the top third of the economy is fine and continues to drive earnings and stock purchases, and the pain of the lower half of the economy (which is real, and severe) simply translates through to a policy reaction function of greater liquidity and bigger fiscal, a dynamic which the market understands. Even if Covid kills 625,000 Americans (i.e. more than the Civil War), it doesn't change that picture. And the picture has been the same for months now — as evidenced by charts and market behavior — and you guys keep fighting it with the same arguments…
    • TC
      TT C.
      23 January 2021 @ 09:53
      Good response. The market is looking past crypto but now and again looks in the mirror and adjusts corrects. Correct lower tier getting hit now but in time soon upper half will get their turn. Why because demand will fall and the central bankers pull back. What stoppes CB Intervention in markets ? When that happens top tier watch out
    • JL
      J L.
      23 January 2021 @ 10:04
      Re central banks, I would argue the Fed has almost become a fixed variable now which lessens their importance. Powell has the accelerator pressed to the floor and he isn't going to take it off any time soon. The big questions now revolve around the fiscal path (will it get through congress -- how much and how soon) and yield curve control (how high can 10-year yields rise before the Fed has to implement it, and what will happen to markets if they spike). I also don't understand the 10X BTC call (though I am bullish on BTC and have had a very large position) because it seems completely contra to the other views. If Pal is expecting bonds up, dollar up, stocks down, that implies a liquidity contraction and a withdrawal of risk appetite which at minimum implies a cooling off period for crypto. Then, too, to the extent the BTC use case is rooted in store of value / digital gold, BTC is vulnerable to rising real yields, just as gold is, which could easily be a thing if the 10-year yield rises faster than inflation expectations, which could easily happen in the interim between here and when the Fed is forced to implement YCC.
    • JD
      John D.
      23 January 2021 @ 11:00
      Ugly but reasonable view. Bitcoin has its adoption curve independent on other stuff, sure short term correlated but not longterm. Adoption of cars went from 10% in 1910 to 80% in 1920 during the World War 1. When the technology is ready nothing stops the S curve.
    • JL
      J L.
      23 January 2021 @ 11:47
      @ John D. I'm very bullish on Bitcoin longer-term. The challenge I see is that, if Bitcoin's primary use case is digital gold / global store of value -- which I would argue is correct -- that would imply: -- Bitcoin does gold's job better than gold -- Bitcoin is like 21st century gold with a higher beta -- Bitcoin should respond to the same macro drivers as gold By implication, if rising real yields are negative for gold they could be an even larger negative for Bitcoin. Eventually, either runaway inflation breaks out or catastrophic deflation hits, either of which are a recipe for gold $5,000 and Bitcoin $250K or some such, because the first scenario implies plummeting real yields and the second implies runaway debt monetization. But neither are on deck for 2021 -- whereas rising real yields very well could be.
    • sj
      sara j.
      23 January 2021 @ 18:40
      @JL is there not a danger of an another USD spike in the near term? This WSJ news item seems to be in that direction "Yellen to Make Clear U.S. Doesn’t Seek Weak Dollar" https://www.wsj.com/articles/yellen-prepared-to-affirm-commitment-to-market-determined-dollar-value-11610917212 If this happens will it not create a march 2020 like situation? On the other hand Yellen is supporting a big US stimulus package https://www.reuters.com/article/us-usa-biden-treasury/yellen-says-u-s-must-act-big-on-next-coronavirus-relief-package-idUSKBN29N1YJ How does this work, A strong dollar combined with A big US stimulus package? seems contradictory. This part gets confusing. Whats your take?
    • JL
      J L.
      23 January 2021 @ 19:17
      @ Sara J. Yellen's comments were specifically meant to allow as air cover for CONTINUATION of a weak dollar policy. The Trump administration advocated for a weak dollar to help manufacturers and reduce trade deficits. Trump was very vocal about it. He was probably the only POTUS in history to give an aggressive opinion, repeatedly, on the direction of the currency (rather than letting the Treasury Secretary talk about it). Trump wanted the dollar to be weaker as a form of trade stimulus. This was part of his thing with beating up on Powell for being too hawkish prior to the pandemic. Under the Biden administration, the USD is almost certain to continue weakening for reasons cited already. The U.S. fiscal program will be outsized relative to China and the G7, and there is a global rebalancing going on against the dollar. Yellen is razor sharp and probably knows this. At the same time, she doesn't want the Biden administration accused of trying to weaken the dollar deliberately (a form of currency war). Nor does she want the optics to appear as the Biden administration adopting the vocal weak dollar policy of the Trump administration. So Yellen's comments were a kind of game theory adjustment to the optics. She knows the dollar will probably continue to weaken -- by a lot -- as the Biden administration pumps trillions into the lower half of the economy. So what she does is vocally say, in advance, "WE AREN'T ADVOCATING FOR A WEAK DOLLAR, MARKETS SET POLICY ETC.," specifically so nobody can ACCUSE the Biden admin of wanting a weak dollar policy, or weakening the dollar deliberately, when it continues to fall like a stone. Yellen's husband, George Akerlof, is a specialist in game theory and behavioral economics who won a Nobel Prize for a paper on asymmetric information impacts in the marketplace. And she is probably smarter than he is. She's playing a game. The game is: "Pre-emptively shift blame for the dollar falling further by pointing out loudly that a weak currency isn't our policy" -- it's just something that, you know, happens to occur when you blow away everyone else's fiscal impulse by trillions.
    • sj
      sara j.
      23 January 2021 @ 20:13
      @JL, thanks and I agree, it seems a much clearer. What do you think of Stanley Druckenmiller quotes when he said something in this similar context, He says " if a huge deficit were accompanied by an expansionary fiscal policy and tight monetary policy, the country's currency would actually rise. The dollar provided a perfect test case in the 1981-84 period. At the time, the general consensus was that the dollar would decline because of the huge budget deficit. However, because money was attracted into the country by a tight monetary policy, the dollar actually went sharply higher. " Its from the book "The New Market Wizards" http://y0ungmoney.blogspot.com/2018/06/will-tight-monetary-policy-and-loose.html China is drinking US's milkshake and this might be a way to bring back the capital? What do you think of the chances of Druckenmillers quoted playing out? .
    • JL
      J L.
      23 January 2021 @ 20:55
      @ Sara J. I think Druckenmiller was correct in the context of a desire for safe haven assets. But the situation he described is different now, and it is important understand the whole context. Druckenmiller used comparable logic (playing the attractiveness of bonds as safe haven assets) in making giant bullish bets on the German deutschmark — once around the fall of the Berlin wall and reunification period, and then once again as an addendum to the famous short British pound trade of 1992, where Quantum Fund made a billion dollars in one day. The way I see it, the question here is desirability of the government securities being issued. Will investors want to buy the bonds? Will there be sufficient appetite for them? In the early 1980s you had a specific set of circumstances that favored U.S. Treasury purchases: — U.S. debt and leverage levels were starting from a low base — U.S. interest rates were high and coming down post-Volcker — U.S. Treasury bonds, and the U.S. economy, had a very bullish outlook In 1984, the 10-year yield was still above 13 percent. So basically, halfway through Reagan's term, you could look at bonds and say: America's outlook is bullish, and interest rates are so high they are likely to fall, which means bonds will rise — so buy treasuries for long-term price appreciation. That was also a point when central banks and emerging markets were building up their U.S. dollar reserves, having observed various crises in Latin America and so on. So their treasury demand was coming off a low base. Druckenmiller was right because he saw, in the mid-1980s environment, that U.S. treasury bonds were highly desirable assets. They had very high rates that were likely to come down, which meant price appreciation, and the world had a growing hunger for dollar assets (especially as the U.S. showed sign of winning the cold war). If you fast forward to 2021, though, the situation is completely reversed: — In the mid-1980s the 10-year yield was above 13%. Now it is close to zero (around one percent). — In the mid-1980s U.S. debt and leverage were coming off a low base. Now it is sky high. — In the mid-1980s global central banks needed to add to their dollar-denominated reserves. Now they are full. But here is the funny thing: I would say the debt expansion argument still applies — but it applies for EUROPE today, not the United States. Central banks already have way too many dollar-denominated assets (reserve mix above 60%) and USTs are not attractive at rock bottom yields and negative real returns. But the more stable the eurozone becomes — and it just got a lot MORE stable after parting ways with Britain — the more that an appetite will exist (particularly from Russia and China) to build up euro-denominated reserves. Imagine if the average central bank reserve mix shifts from USD 60% — > 40% and euro 20% —> 30%. With a shift like that, you would see a LARGE rebalancing away from the dollar and TOWARD euros. That, in turn, would mean a hunger for euro-denominated safe assets. They don't want or need USTs, in part, because they already have a full boat of them. So Druckenmiller was 100% spot on (no surprise) — but you have to look at the desirability of safe haven assets to understand why debt expansion can be favorable to a currency. It happens when there are broader context reasons for global investors to want the debt. With the U.S. in 2021, they aren't going to want more debt. They've already got too much! We already saw evidence of this in 2020 by the way. If I recall correctly, the Fed bought something like $2.8 trillion (or in that neighborhood) worth of USTs in 2020, and they bought MORE than foreign investors did. Then, too, the Biden administration is going to more or less continue the Trump administration's hawkish policies toward China, and emphasize domestic production over international trade. Guess what happens when you reduce the demand for dollars used in international trade transactions? More rebalancing away from dollars, as global exporters don't need so many of them anymore. And on top of everything else, the world is ALSO loaded up on overinflated U.S. equity assets! Guess what happens if the stock market corrects from its crazy-high valuations because the yield on the 10-year spikes? Global investors who are overexposed to U.S. equities will sell their U.S. equities… which means selling dollars… And U.S. investors, meanwhile, are starting to cast a hungry eye on E.M. equities, which look incredibly cheap in comparison to U.S. valuations — but to buy E.M. equities U.S. investors will have to sell dollars! The long-term dollar outlook, quite frankly, is just bearish as hell. Dollar bulls have been dead wrong for a long time now, as I started pointing out on these boards like six months ago.
    • JL
      J L.
      23 January 2021 @ 21:07
      p.s. Also re Druckenmiller, there is another simple way to look at it (without changing the conclusion). Apart from the desirability of bonds, the U.S. dollar bottomed out in 1978 because Volcker killed inflation expectations with super-hawkish policy. Volcker, the inflation slayer, then just kept ratcheting up the tightness (taking rates into the teens). But how could that ever be possible now? Under what circumstances could the Powell Fed in 2021 implement a Volcker-style monetary tightening? They couldn't. There is too much leverage in the system. If Powell raised the Fed Funds rate just a few hundred basis points, the whole financial system could crash. Meanwhile there is no way long rates will be allowed to go above, say, four percent, because the debt service cost would then become too high. So apart from the safe haven assets argument, if you predicate dollar bullishness on a tight monetary policy environment, that won't exist in the 2020s because the Fed does not have the ability to be tight anymore. They won't have it for a very long time.
    • sj
      sara j.
      23 January 2021 @ 21:11
      @JL Fantastic, really appreciate you taking time to write this insigtful and detailed comments. I really envy your Macro knowledge and clarity around such difficult topics :) Thanks again.
    • JL
      J L.
      23 January 2021 @ 21:13
      p.p.s. Or rather I should say, the USD bottomed in 1978 even BEFORE Volcker became Fed Chairman -- he was appointed in 79 -- which is interesting too because it implied dollar bearishness due to 1970s inflation had ALREADY burned itself out, before Volcker came in -- and then Volcker's superhawk stance fueled a big multi-year dollar upmove for reasons Druckenmiller described (a super-hawk, insanely tight monetary policy that is no longer an option today).
    • PC
      Peter C.
      23 January 2021 @ 23:15
      JL, I am appreciative of your investment insights & views. RV should get you on hehe ... another acceleration to Raoul's platform effect .... RV, one more. Please allow us to reach out to each other subject to both sides consent. For example, I would love to follow JL's work / thoughts, ... Thank you Peter
    • LJ
      Lynn J.
      23 January 2021 @ 23:51
      Hi JL, regarding the weak dollar forecast, would you please comment on why Biden terminated the keystone pipeline project? US$ is closely tied to crude oil since long time ago. Will it turn US from an oil exporter to importer? I don't think it is for the green energy purpose.
    • JL
      J L.
      24 January 2021 @ 08:33
      @ Lynn J Biden also halted oil and gas development in the Arctic Refuge and plans to freeze oil and gas leasing on federal land. I'm no expert in that area, but my sense is that aggressive movement against fossil fuels is a political strategy meant to appease the progressive wing of the Democratic party. To the extent Biden racks up progressive points on climate change issues, he keeps his political coalition more unified. It's also logical politics for the Democratic base in general (which ranks climate change highly as an issue). I don't really know what reduced U.S. oil and gas supply means for the dollar, other than to say it is generally good news for OPEC-Plus. In the past, the dollars spent on oil imports were parked in U.S. treasuries, but Russia and China are actively trying to shift away from dollar-denominated energy transactions as a response to hostile U.S. policy. If Saudi Arabia joins them (in moving away from dollars as the Biden administration turns hostile toward them too), you have further impetus for dollars going out (via purchase of oil imports) to be dumped on the open market, versus parked in treasury bonds, even as higher oil prices at the margins (via less supply and less shock absorber capacity in U.S. production) increases inflation pressure, which further makes bonds less attractive. So I guess, on balance -- it's political strategy on Biden's part and, probably, another bearish USD element given the growing hostility of OPEC-Plus members to adversarial U.S. foreign policy?
  • JS
    John S.
    22 January 2021 @ 23:29
    Raoul every Friday makes fridays even better! Thank you Sir.
    • B
      Bob .
      23 January 2021 @ 02:33
      Maybe we should get Raoul a filing cabinet too ...... :-)
    • AH
      Abraham H.
      24 January 2021 @ 02:40
      Raoul's amazing. Love his perspective. Please have him often. And don't hold back on crypto :)
  • JS
    James S.
    24 January 2021 @ 00:16
    So isn't it a bit of a contrarian indicator that Raol's clients are asking him more about crypto than macro? I continue to hold some crypto in my portfolio, but feel sentiment is pretty hot after the shot up from December to January. High volatility baby.
  • MN
    MYLENE N.
    23 January 2021 @ 07:39
    I have not seen Ash Bennington look more amazing! Is it AI filters? Lighting? He finally got enough sleep?
    • DD
      David D.
      23 January 2021 @ 08:46
      Are they using make-up now?
    • TC
      TT C.
      23 January 2021 @ 09:57
      His interview questions need an AI Injection. This constant pandering to to Raoul is really wearing thin. Quality of his questions is poor
    • AB
      Ash B. | Real Vision
      23 January 2021 @ 20:06
      Mylene: Ha. No AI, filters, or special lights. The trick is...sunlight. My new studio room has a massive window behind my camera.
  • OP
    Oren P.
    23 January 2021 @ 09:00
    Too much crypto - it’s the first FRiday review with Raoul that I actually turned off part way. Raoul....I get that you are going through an interesting journey in Crypto as I am travelling through a similar vortex, but I want a broader perspective at least with the end of week review than just what you provided.
    • WT
      William T.
      23 January 2021 @ 19:15
      i think what he is saying is that things are in a log jam right now with no real movement, waiting for a domino to fall, which one nobody knows. As Raoul said; waiting around for a bus and then 3 show up at the same time IMO
  • AB
    Alexander B.
    23 January 2021 @ 16:41
    IMO Michael Saylor and Raol Pal are a godsend for the Crypto World. ATM it is so important to explain and educate the rest of the world to the opportunities of the Crypto market (and of course the current dangers in the traditionel finance market) . IMO that's the key for further developement of Crypto assets.
  • CJ
    Chris J.
    23 January 2021 @ 16:07
    You just need to buy ONE Altcoin and that is RESERVE RIGHTS $RSR. Read yourself into it. Absolutely stunning prospects.
  • DS
    David S.
    23 January 2021 @ 03:39
    I still haven't found or heard any rational explanation how a blockchained line of code is an asset class. Can it "tulip" go up due to scarcity, sure, but come on man. You peeps are toking the good modern weed. Our Fed could cook this thing in 5 mins with new rules.
    • NH
      Nathan H.
      23 January 2021 @ 05:58
      It doesn't sound like they will. Janet Yellin just gave a positive speech on regulation.
    • DS
      David S.
      23 January 2021 @ 06:20
      Actually they floated a CB Crypto....not BTC
    • JW
      J W.
      23 January 2021 @ 09:51
      Looks like that ‘ gov will ban’ train has left the station but there may be some stops along the way. How a bit (vs an atom) can become an asset is via the same mechanism that determines how a bead, a button or a stone and yes, a gold coin, can become an asset - trust and consensus. If you have the time perhaps read Saifedean Ammous’ book ‘The Bitcoin Standard’. (And btw, most of that book is not about Bitcoin at all !).
    • JL
      J L.
      23 January 2021 @ 14:21
      You aren't framing the question properly. Why did gold become a store of value? It's just another form of metal. The ultimate answer is because, of all the elements on the periodic table, gold had the most useful set of properties for fulfilling a store of value function. Eventually there was global agreement on this point, because the utility and scarcity of gold was obvious. For Bitcoin it's the same story, but with a digital substrate rather than physical. Whether or not something is a store of value or not is a subjective judgement assigned by a group. But that judgement is often attached to some tangible form of utility. Bitcoin has significant and tangible utility aspects. It can't be copied either, because you can't copy a ten-year transaction history or a global network with millions of users buying in (and the footprint expanding). And it doesn't need to be physical to do what it does. The physicality is in the network, and the shared judgement of those who participate. If you still don't get this, you should ask yourself how abstract concepts like money and credit and sovereignty work. They aren't as obvious as one might assume either.
  • MS
    Martin S.
    23 January 2021 @ 13:49
    Dear Raoul, valuing crypto currencies or anything that resembles money by its network effect or like other social media, is neither crazy nor revolutionary: the Austrian School of Economics, already with Carl Menger proposed it, more than a hundred years ago. On youtube (but in Spanish) you have filmed class lessons by the great Huerta de Soto, on money, that are very contemporaneous to the crypto currency conversation. Cheers,
    • MS
      Martin S.
      23 January 2021 @ 13:54
      https://youtube.com/playlist?list=PLSKbCQY095R4jp6PoFulCDLYIzzdbD1DI
  • FB
    FILIP B.
    23 January 2021 @ 11:44
    How is this a daily briefing? This should be a public service announcement for anyone investing or looking to invest in crypto.
  • RT
    Ralf T.
    23 January 2021 @ 11:10
    Look into VET - VeChain and Bittorrent please.
  • UJ
    Ulf J.
    23 January 2021 @ 11:09
    Trustswap with the swap token I think is worth a look into. Great as always
  • AW
    Abigail W.
    23 January 2021 @ 10:39
    Welcome to the altcoin world, Raoul, yes, at the end of day it is about making money. However as an engineer I find extraordinary exciting to learn about new technology and applications that could potentially change the world.
  • WT
    William T.
    23 January 2021 @ 09:59
    Why does the world need so many coins again??? Somebody help me. Solutions looking for problems. Starting to look like the beverage business, new one coming out weekly.... Coke, Pepsi, pick one.
  • TR
    Timothy R.
    23 January 2021 @ 09:58
    In this episode the Parable of Ten Virgins
  • AT
    Arnaud T.
    23 January 2021 @ 03:34
    This conversation doesn’t sound at all like a genuine conversation... How long have you been rehearsing, who do you want to scare and why??
    • AT
      Arnaud T.
      23 January 2021 @ 04:22
      Ok, it got better after a while. Ash shook out of his robot self and even managed to feel like a hot-bloodied creature when he talked about Chainlink :D Ah the power of oracles... Am actually looking fwd the breakthrough article and the kick-ass interview ;-)
    • DD
      David D.
      23 January 2021 @ 09:33
      okay, don't watch.
  • CH
    Calvin H.
    23 January 2021 @ 03:36
    Raoul, you might consider asking Ash a question or two ,to mix it up. And let him finish,.,.I wanted to hear his Oracle opinion but alas.
    • DD
      David D.
      23 January 2021 @ 09:32
      No, we pay to hear Raoul.
  • RC
    Rich C.
    23 January 2021 @ 05:15
    There are a legion of super interesting things going on in the market right now! Yet..let’s just endlessly discuss Bitcoin.
    • DD
      David D.
      23 January 2021 @ 08:48
      People who like Bitcoin and people who hate Bitcoin all trade Bitcoin because it's volatile and (so far) a tad inefficient. That's the attractive. Bitcoin = alpha.
  • DD
    David D.
    23 January 2021 @ 08:44
    Honestly, just click on every video featuring Raoul Pal.
  • CW
    Chase W.
    23 January 2021 @ 07:14
    On EM, I haven't seen anything about how many of these countries aren't going to have significant vaccine numbers until 2022/23. Brazil, for example, is a disaster. How is this going to impact recovery, growth, and markets?
    • MT
      Mark T.
      23 January 2021 @ 08:08
      For the northern hemisphere it’s referred to as seasonality. Flu season starts in November and runs down in March. The charts are truly fascinating. This cycle has tended to reoccur since the European settlement of North America.
  • JN
    Jason N.
    23 January 2021 @ 06:53
    The only alternative coin worth investing is monero. Everything else is fluff
  • JL
    James L.
    23 January 2021 @ 04:59
    I don't think macro is dead. It just tells you to do something else. If the bond trade is over it is fixed at 0, and then it tells you to invest in equities or gold or EM, monitoring the macro signals until the debt is inflated away and the interest rates start to rise. That might be 10 years or more of monitoring, but still plenty to do.
  • JK
    John K.
    23 January 2021 @ 04:48
    God do I love the Friday Daily briefing. Raoul seems happy and it really puts off a good vibe to the friday video. Just wanted to say your crypto call might be the best of the decade if the bullrun goes anything close to how the s2f model predicts. I've been in crypto since 2017/16 but I was very tribalistic and narrow-minded. Your analogy about VC investing helped me out with divining in dipper into the altcoin space. As a college student with very little capital, I have no problem picking out 10-15 good projects with a solid team and tech and yoloing my money on them. If all my picks fail I still have my bitcoin stack which will hold me over. Mark my words by this time next year you might have created more millionaires than an Uncle Sam Stimulus package :)
  • JS
    John S.
    23 January 2021 @ 04:43
    Immediately Power-shared this one, as all the amateur investors I know have never heard: "A pull-back is your friend ... until it's not!" Some may call it silly but keeping perspective of your trading thesis, time horizon, and position size is a great continuing lesson from the professionals at Real Vision.
  • LH
    LINCOLN H.
    23 January 2021 @ 02:29
    Re: top 10 altcoin. Take a look at EWT. It's a token which runs on the energy web. I'm an energy engineer and work with regulated utilities to implement demand side management programs. The energy web is going to revolutionize how utilities operate the grid and by incentivizing consumers to use electrical consuming devices when it makes the
    • LH
      LINCOLN H.
      23 January 2021 @ 03:24
      Shit accidentally hit submit to soon. ... the most sense for stabilizing the grid. For example the energy web will be used to incentivize EVs to charge when the grid had excess renewable capacity, or setback thermostats when the grid is stressed. The grid is going through the same transition that telecom went through when it converted from landline to wireless. It's a play on metcalf's law (lots of internet connected devices that use energy and the number is growing fast). It's also a play on renewable energy. Look into FERC Order 2222. The stars are aligning.
    • JK
      John K.
      23 January 2021 @ 04:36
      if you like energy web check out powerledger. Pretty much the exact same goal/ product except not as focused on consumer incentives. They're EWT but mainly have customers in the east. They just partnered with the Indian government for an energy trading p2p POC. They also teamed up with the two largest entities ( one is a public utility) in Thailand for rec and p2p trading.
  • LS
    Lewis S.
    23 January 2021 @ 04:32
    What do you think of trading alt/btc pairs Raoul and Ash?
  • RK
    Ron K.
    23 January 2021 @ 01:17
    I miss Ash’s file cabinet.
    • B
      Bob .
      23 January 2021 @ 02:30
      so do I, maybe we should have a platform poll to ask Ash to bring it back. Maybe Milton can help? :-)
  • EK
    Egemen K.
    23 January 2021 @ 02:10
    Ash, Roaul, you guys are amazing. Thanks for your huge contribution to the community!
    • AB
      Ash B. | Real Vision
      23 January 2021 @ 02:17
      Thanks, Egemen!
  • Hv
    Hannah v.
    23 January 2021 @ 02:12
    Well done Raoul on sparking a Barra White Paper!! Your constant enthusiasm and years of experience will result in a game-changer for the regular citizen. We thank you!!!!!
  • Hv
    Hannah v.
    23 January 2021 @ 01:49
    So how about putting the new screen behind the filing cabinet? The beige beast deserve its limelight since its being with us from the beginning.
  • bf
    bill f.
    23 January 2021 @ 01:45
    what if bitcoin got to 5 million / btc?. would btc then become the unit of account?. so that would mean a barrel of oil would be 0.01 satoshis. thanks it was a great interview. i was interested in how Raoul maintains a positive vision of a macro trade and he gave some insight into that .
  • PD
    Peter D.
    23 January 2021 @ 01:24
    Re: Bitcoin sell-offs (I think he bought a condo) see BTC OG Marti Malmi: Martti Malmi @marttimalmi Dec 18, 2020 I'd be a *billionaire* now if I hadn't sold the 55,000 bitcoins I mined on my laptop in 2009-2010 way too early (mostly before 2012). That is regretful, but then again, with the early bitcoiners we set in motion something greater than personal gain.
  • PD
    Peter D.
    23 January 2021 @ 01:19
    Gotta say ... Roaul has major cojones on this BTC call. Been watching markets for 40 years and have never seen anyone stick his neck out like that. That said, well argued. Bought a pile... and so far, so good.
  • BC
    Bill C.
    22 January 2021 @ 23:50
    Where are the filing cabinets? I feel cheated.
    • AB
      Ash B. | Real Vision
      23 January 2021 @ 00:01
      hehe
    • NL
      Nikola L.
      23 January 2021 @ 01:14
      What do We want? the Filing Cabinets back!! When do we want them? Now!!!
  • DS
    David S.
    23 January 2021 @ 00:43
    I am glad major businesses are withholding political contributions until they see how Congress is going to proceed. The first stimulus packaged worked to fill in the GDP gap. The lack of political contributions will force reasonable compromises. Congress can and should move forward on all fronts. The low income stimulus now and a staged increase in minimum wage can be negotiated - an example. The stimulus will help the lowered income workers and the Mom and Pop stores now. If the Republicans want to try Former President Trump to eliminate his future run and splitting the party they can. Take a position; now or never. I have great faith that politicians can reasonably compromise if there is a personal monetary reason. Confirm the Cabinet. The US like the rest of the world needs action. We are going to swim together or drown together. DLS
    • PB
      PHILLIP B.
      23 January 2021 @ 01:00
      We so need action. Indeed, it is to swim together or down together.
  • BS
    Benjamin S.
    23 January 2021 @ 00:59
    Raoul, thanks for doing these. Ash, a pro as always. Thanks!!
  • BS
    Bradley S.
    23 January 2021 @ 00:41
    looking forward to the alt coin education coming our way I'm very curious about reserve.org there RSV token is a stable coin but they have an RSR token that looks like it really could be something but I am basic clueless about the space but with big investors like coinbase and founding members from paypal makes me want to learn more I'm oddly more excited about the EM trade that could be coming why I don't know but I can't wait for the EM education that awaits us thanks for the great Friday show
  • JS
    John S.
    23 January 2021 @ 00:15
    One thing - when Raoul said here we are laughing what happens around the world - we are in a pandemic please people are dying I think we should be more respectful with human life. I also find interesting and challenging this event in 100 year but we are all worried as well. In any event, the video is splendid.
  • MH
    Muddshir H.
    22 January 2021 @ 22:47
    They’re back again
    • AB
      Ash B. | Real Vision
      22 January 2021 @ 23:26
      Yep! Good to be back!!