Daily Briefing – April 9, 2020

Published on
April 9th, 2020
Duration
25 minutes


Daily Briefing – April 9, 2020

Daily Briefing ·
Featuring Nick Correa, Ed Harrison, and Roger Hirst

Published on: April 9th, 2020 • Duration: 25 minutes

Real Vision's Roger Hirst and Ed Harrison talk about the Fed's intervention into high yield ETFs and whether that support would spill over into equity markets to support shares on a sustained basis. In that context, they analyze Mike Green's theory that continued passive investment flows would help equities back to new all-time highs, and they examine how oil markets are a barometer of market sentiment as well as demand in the real economy.

Comments

Transcript

  • BM
    Benoit M.
    13 April 2020 @ 13:10
    Great vol of vol and vol target strategies discussion
  • SP
    Steve P.
    12 April 2020 @ 17:45
    Every single time I hit play on an RTV video, I learn something new. Who thought of those big pensioners as the men and women that created historically significant industries which supplied their wealth? As common sense as it seems having heard it, I never thought of it on my own! RTV needs it’s own cable news network. I don’t subscribe to Netflix, cable TV, nothing - only RTV.
  • BB
    Bob B.
    11 April 2020 @ 00:40
    Raoul - Since you look at EW for trading you might wish to look at Socionomics for social transitions. I'd be happy to chat with you about that.
  • RM
    Russell M.
    10 April 2020 @ 15:53
    Very good discussion. It seems to me that one of the primary driving forces behind Fed action is that it has to intervene in the markets to the extent necessary to keep interest rates low or the expense of servicing of the Federal debt will quickly swallow the entire Federal budget and force a spiraling of Treasury issuance that they they will then have to buy. None of this will help the real economy. It will simply balloon Federal and, due to artificially low interest rates, private sector debt by those trying to keep their heads above water. With government the source of all money, you end up with a centrally planned economy like the old U.S.S.R. And we know how that turned out. Somehow, we have to get back to a free market based model or it is stagflation as far as the eye can see.
    • NZ
      Nikola Z.
      10 April 2020 @ 22:24
      Bitcoin
  • WM
    Will M.
    10 April 2020 @ 19:40
    Fed just bailed out zombie compose......socialization of all debt has started for players of size. The mom and pop backbone will be left behind...
    • WM
      Will M.
      10 April 2020 @ 19:40
      "companies"
  • ZV
    Zoltan V.
    10 April 2020 @ 13:10
    Pls help where can I see the conversation between Raoul and Mike dated 8th of April, mentioned in this video. Thanks
    • JF
      Jack F. | Real Vision
      10 April 2020 @ 15:10
      Hi Zoltan, here is the link: https://www.realvision.com/shows/live/videos/the-recovery-shape-matters-live-with-raoul-pal-mike-green?source_collection=8e80b18fdb074555bdd47d97e73fbe91 Available to all Real Vision Plus members
    • ZV
      Zoltan V.
      10 April 2020 @ 18:47
      Jack thanks!!!
  • MT
    Mark T.
    10 April 2020 @ 17:29
    I believe Jeffrey Gundlach. A take-out of March lows is the base case scenario.
  • SM
    Shivani M.
    10 April 2020 @ 14:41
    wow you guys look really happy in the first 30 seconds, I'm expecting great news suddenly
  • JT
    Jason T.
    10 April 2020 @ 13:21
    "vol of vol" settle down champ
  • SB
    Sunny B.
    10 April 2020 @ 08:50
    Why don't you look at real time delinquency data across different types of debt (car loans, credit cards, utilities, subscription services) to identify the speed at which money is reaching the population?
  • ag
    alan g.
    10 April 2020 @ 00:46
    The stock market seems to work like a big giant ponzi scheme, the more people pool in money the more it goes up. When its about to collapse the fed step in and save it, then it repeats the cycle. Ecominic data seems irrelevent.
    • CM
      Chris M.
      10 April 2020 @ 00:55
      Scary, but could be right. The only thing that would control this would be run away inflation that forces the Fed to act differently. If they had to raise rates, what a waterfall that would be to security prices.
    • JB
      James B.
      10 April 2020 @ 05:34
      Chris M. Is dead right, this is why the Fed will never ever give any meaningful amounts of money to the individuals who need it the most. They will hide inflation in risk assets.
  • TS
    Tim S.
    10 April 2020 @ 05:26
    Hey guys, appreciate that you try to end on an upbeat but I think it is important to call things as you saw them. We can all pull on out big boy pants and muddle through if need be, I agree things may be grim put putting lipstick on a pic for helping us feel better is a disservice. Just my $.02. Toughen up if yer' a buttercup.
  • sc
    sung c.
    10 April 2020 @ 02:41
    The thing that worries me when I hear about all this $trillion here and $trillion there, who is to monitor how much is actually getting siphoned off into deep pockets, a $billion here and a $billion there?
    • MF
      Michael F.
      10 April 2020 @ 04:01
      The answer is easy - no one.
  • JH
    Jason H.
    10 April 2020 @ 03:11
    A new normal that is.
  • KE
    Katherine E.
    10 April 2020 @ 03:07
    Ed believes that the Fed may still draw a line on only buying debt of fallen angels because they are back dating the eligibility. I thought that they were buying high yield debt through etfs. How would they only buy debt of fallen angels then? Can anyone clarify this for me? Is the back dated eligibility only for the investment grade debt?
  • RB
    Rob B.
    10 April 2020 @ 02:51
    Ed I have a similar view on oil as the truth teller, and assume most eyes have been on the commodity this week. Bigger picture my view is that Administration and Fed equate US equity markets to bargaining power with trade (rightfully so) and oil is no exception. So, they are deploying their entire toolkit, as well as all available tactics to keep shorts at bay, what a tool Twitter has been for them since early 2019. Any thoughts on these ideas, am I alone on this? Agree with Raoul's recently presentation this all could be a false narrative, but also open minded to Mike Green's thesis on passive investing. Will be interesting to see how this plays out. Personally I am expecting a sharp reversal in equities if oil remains where it currently is.
  • pa
    paolo a.
    9 April 2020 @ 22:29
    In the last few days more than once you mentioned the shortage of dollars, yet CAD, EUR, AUD all seem to rally on the dollar. Isn't it possible that all this money printing by the FED will bring about the dollar going bust?
    • CM
      Chris M.
      10 April 2020 @ 01:04
      Same thought. If we lost our status as world reserve currency and a deflation in the dollar's price, we would see increasing inflation that would really put the Fed in a bind on what to do with rates.
  • CM
    Chris M.
    10 April 2020 @ 00:52
    Seems to me that the Fed is impacting capital that is already placed in the public markets. Question is who is providing equity funding for start-ups, venture capital deals, private capital? These markets tend to lock up during recessions. Does the Fed move to buy out IPOs (with a change of law or via Treasury)? new issuance of low rated junk bonds, set up venture funds, extend funding to existing venture backed deals? While the Fed provides liquidity to keep existing capital markets from locking up, question will be all the non-public companies that need capital that goes beyond the lending program to retain employees or the new lending program to obtain additional debt. If we have a demand issue that reduces business, does a company want additional debt to bridge what is hopefully a short term issue or does it really need equity capital to bridge it through to the next upswing? And with all this new debt in what could be a strong downturn, is the Federal government now willing to backstop higher default rates and eat the losses? It reminds me of the Chinese markets where their government forces banks or companies to issue capital to struggling companies to keep their doors open and to not hurt their overall GDP stats that keeps them in power. If the Fed is going to be the one that bears future investment losses, then risk pricing can be thrown out the window.
  • RA
    Robert A.
    10 April 2020 @ 00:15
    Excellent point by Ed (Mr. Credit) about the Fed perhaps stopping FOR NOW with former Investment Grade “Fallen Angels” and not going down into Junk. When I saw the HYG up 6% I just assumed from Powell’s speech and the comments there on that the Fed was already there. Excellent point by Ed and let’s see if the Algos drove the HYG there without considering any of Ed’s thoughts and perhaps the Bots take the HYG pop away on Monday. Some of the HYG pop might have been knee jerk short covering as well. I’m really interested to see how HYG trades on Monday Nd whether the Fed (for now) walks it back on going into Junk just now. FWIW, I do think if Mike Green is wrong and the market re tests the low or maybe down to 1900 S & P that the Fed may well backstop the Junk space then. Really happy to see that Roger’s parents brought a few bottles over from their Cottage to refresh Roger for the long week end!
  • LS
    Lemony S.
    10 April 2020 @ 00:01
    What do you guys say to Daniel Alpert's thesis that there is too much supply in the global world to even come close to creating inflation of the dollar anytime soon?
  • LP
    Lynn P.
    9 April 2020 @ 22:58
    Gentlemen: One of your best dialogues. Have to follow the data, although I have a hard time believing Mike Green's thesis, despite his formidable intellect.
    • DG
      Dave G.
      9 April 2020 @ 23:23
      He has the same view as Tony Greer. So does this change Rouls view?
    • LS
      Lemony S.
      10 April 2020 @ 00:00
      What's his view quickly, apart from Bitcoin being eventually banned or made illegal?
  • AS
    Ash S.
    9 April 2020 @ 23:49
    You guys are the best.
  • TW
    Thomas W.
    9 April 2020 @ 23:24
    Equities are going to be a rollercoaster whatever happens. If the Fed claimed they could bend spacetime I would say the S&P was about to do a loop-de-loop.
  • DR
    Derrick R.
    9 April 2020 @ 20:54
    is the massive unemployment going to keep the dollar suppressed?
    • DR
      Derrick R.
      9 April 2020 @ 20:56
      https://www.investing.com/analysis/fed-firepower--massive-job-losses--weaker-us-dollar-200521187
    • TW
      Thomas W.
      9 April 2020 @ 23:19
      Not if everywhere else has higher unemployment. Plus when people are worried they often reflexively buy dollars.
  • NR
    Nathan R.
    9 April 2020 @ 23:18
    Roger nailed it. Everything (including pensions) depends on cash flows. No demand, no cash flow, no growth. Harris Kupperman hit this hard: balance sheets (personal and corporate) are going high cash, Japanese-style. Massive implications for flows.
  • Md
    Matthew d.
    9 April 2020 @ 22:37
    Anyone else excited to hear Ed's views on the Fed buying Junk bonds? I can also just imagine Danielle diMartino Booth getting super fed up (pun intended)...
    • TW
      Thomas W.
      9 April 2020 @ 23:15
      https://www.youtube.com/watch?v=2qOSG8gefo0
  • CR
    Chris R.
    9 April 2020 @ 23:12
    Hi Mr. Hirst, The SP-500(SPY) might be at a 50% retracement, but the Russell 2000 (IWM) is lagging at 38%
  • RP
    Reed P.
    9 April 2020 @ 22:38
    ..."Be sure to tune in next time for what is shaping up to be a doozy of a rematch between our fierce competitors: Fantastic Content, and Shockingly Bad Outro Sound Effects"