Daily Briefing – June 15, 2020

Published on
June 15th, 2020
35 minutes

Daily Briefing – June 15, 2020

Daily Briefing ·
Featuring Jack Farley, Ash Bennington, and Ed Harrison

Published on: June 15th, 2020 • Duration: 35 minutes

Senior editor Ash Bennington joins Real Vision managing editor Ed Harrison to discuss a day of "risk on risk off" on Wall Street. Ed maps out a new paradigm he's noticing in the world of energy, equities, and the dollar, and Ash places the vacillations of U.S. stocks in context of central bank liquidity and the ongoing pandemic. Ed and Ash also discuss the CALPers bold move into private equity and private debt. In the intro, Jack Farley looks at the shape of the "volatility smile" and discusses the looming bankruptcy risks in the oil and gas sector.



  • ST
    Simon T.
    19 June 2020 @ 06:50
    Can anybody help - is it censorship or what ? No F... words, just reality check regarding CalPers
  • ST
    Simon T.
    19 June 2020 @ 06:50
    Your comment sections has serious bugs as I can’t post
  • JE
    Jon E.
    16 June 2020 @ 11:52
    Obviously the Fed has shown the viable path of moral hazard to calprs and others and the further path to privatized gains and socialized losses. Calprs knows it will be bailed, worst case, so there is no risk besides the currency being destroyed which they cannot be blamed for.
    • PU
      Peter U.
      17 June 2020 @ 17:29
      spot on!
  • JD
    John D.
    17 June 2020 @ 13:09
    Fed is re-capitalising businesses... this is great for the health of these businesses. Company's like Tesla would not exist if not for long term cheap capital access. That is the upside of a low rate, high liquidity environment. Negative is surviving low productivity businesses. In a consumer orientated free market however, there is a limit to survivability if you lack consumer alignment. Socialisation of corporate loses to product GDP/jobs... controversial as always.
  • CS
    Charles S.
    16 June 2020 @ 00:46
    General Question: Are pension funds not permitted to hold bonds for capital appreciation, as distinct for income ?
    • mB
      marc B.
      16 June 2020 @ 05:06
      Also can pensions own gold?
    • JE
      Jonathan E.
      16 June 2020 @ 19:32
      good question Marc B
  • TN
    Tim N.
    16 June 2020 @ 11:15
    I was almost tempted to short the market but luckily a little voice in my head said " don't fight the Fed" - in the short to medium term I do not have the skills to win but hopefully over the long term I will eventually succeed through gold and BTC.
    • DP
      Dan P.
      16 June 2020 @ 18:20
      holding cash is basically spot shorting the market
  • DS
    David S.
    16 June 2020 @ 03:22
    CAPLERS: Tell me whether they have bought GOLD, Bitcoin, or Goldstocks. If not, why not?
    • JE
      Jonathan E.
      16 June 2020 @ 15:31
      does anyone know the best way to find out whether pension funds are buying gold and how much exposure they hold?
  • pg
    pierre g.
    16 June 2020 @ 07:42
    "A V-shaped recovery *can happen*" No, it can't. Is the Real Vision staff falling for the sell-side bullsh*t or are they aiding and abetting?
    • WM
      Wolfgang M.
      16 June 2020 @ 10:56
      Depends on recovery *in what*. In the economy? Almost impossible. In the equity markets? Sure!
  • SS
    Steve S.
    15 June 2020 @ 23:00
    As a millennial at least 1 RVDB per week, I would love to see two young guys or girls like Jack and Max and others who do the intros take over the entire interview. They are obviously talented enough to do it. Another perspective would be great. We constantly hear from people in the 40+age bracket. Lets hear from the next generation.
    • AN
      Andrew N.
      16 June 2020 @ 00:03
      Not to disrespect Jack or Max (they're great), but generally speaking, I think our society does entirely too much listening to younger people. If you haven't lived as much life and synthesized as much real world data, your opinion is just not as valuable.
    • PB
      Phillip B.
      16 June 2020 @ 00:57
      I'm in my mid-50s. I think people in their 40-49 bracket are able to provide good perspective. I can understand the concern, though. I think as young as late 30s would be the youngest that could reasonably have the experience and perspective to weave narratives.
    • DS
      Derek S.
      16 June 2020 @ 02:12
      I tend to disagree with the idea that the older you are the more valuable your insights. Good insights can come from people of all ages and backgrounds and we should strive to listen to as many of them as possible, not be dismissive of what someone has to say because they haven’t “lived enough.” But I’m 28, so take what I say with a grain of salt :)
    • TS
      Tom S.
      16 June 2020 @ 02:35
      As one in his late '70s, I too appreciate the talents of both Jack and Max. They're stuck with inheriting this mess. That alone makes their perspectives important. I'd enjoy hearing more from them, but not to the exclusion of more seasoned members of the team.
    • RA
      Robert A.
      16 June 2020 @ 04:02
      Steve, I also am a big proponent of the younger RV cohort. These guys and girls (yes, there are some very talented females working behind the scenes) are simply amazing with regard to their energy, work ethic and knowledge of Macro and finance. That said....there is a HUGE learning curve when preparing for and handling on air interviews—the more experienced “older” interviewers have had hundreds of hours in the trenches and have had their share of gaffes and Edit “work arounds” leading to a more polished and genteel guest interface. What I’m trying to say as politely as I can is that the young bucks need time and trial by fire to get to where they most ardently want to get to. When Jack watched the tape of his performance in the DB “ask me anything” I’m sure he would agree with me.....”they make it look so easy and I seem to struggle to get the same thought out on air that I so easily discussed with them a half an hour before”. Jack and Max are the real deal, they just need the tincture of time, trial by fire and patience to reach their maximum potential. I believe they both will be forces to be reckoned with in this medium and am glad they set sail with RV.
    • pg
      pierre g.
      16 June 2020 @ 07:45
      As another millennial, no. We hear almost nothing but ourselves talk as it is.
    • SB
      Stewart B.
      16 June 2020 @ 10:09
      The current format seems like a winner. I'd be careful about changing the mix or format.
  • MC
    Michael C.
    16 June 2020 @ 01:32
    Ed and Ash, you are two great people with great talents but your frequencies cancel out when superimposed in coversation with each other. On a positive you are both great when you interview guest individually.
    • mB
      marc B.
      16 June 2020 @ 05:04
      I was thinking when watching them they may be the best duo. Everyone has diff perspectives.
    • SD
      Scott D.
      16 June 2020 @ 08:58
      i like them both together also
    • SB
      Stewart B.
      16 June 2020 @ 10:08
      They work well together IMHO. The correct balance of news plus debate/opinion too.
  • SB
    Stewart B.
    16 June 2020 @ 10:05
    Great work. Your discussions have become are regular part of my day. One thought on the recent catalyst for the selloff. Just before Jay Powell guided to $120B/month. If we assume QE puts upward pressure on asset prices, then this number looks a little on the low side to me. Remember Janet Yellen bought $85B/month when unemployment was relatively low and there was no crisis. When we try and understand the fight between QE putting upward pressure on equities, and economic gravity putting downward pressure on equities, we may have just entered a phase shift. Interestingly little was discussed on the Fed's high yield purchases at the meeting, however as soon as they tabled buying single name junk, we were off to the races again. Oh to play God. If only though these people were not gods unto themselves.
  • CT
    Chris T.
    16 June 2020 @ 09:18
    The comment about how busy NY is... London has been like that for 2 weeks at least. No one cares any more and nothing to suggest any chance of a second wave. Face masks are very rare sight now (away from public transport where its compulsory). The lack of knowing anyone affected is driving the public in ignoring the advice. Ill caveat that with, there is data to suggest 25% of London have antibodies now vs total number of deaths where COVID-19 mentioned on the death certificate is 187 in London. Which adds to the, why should city of nearly 10m still be locked down https://www.london.gov.uk/coronavirus/coronavirus-numbers-london
  • WM
    William M.
    16 June 2020 @ 06:34
    bubble bubble toil and trouble
  • KR
    Kevin R.
    16 June 2020 @ 06:24
    I wish you had told us this early as I sold my total portfolio in march and have lost a crap load of money since, give time lines with all your programs - thanks.
  • IP
    IDA P.
    16 June 2020 @ 05:42
    Calpers knows they are too big to fail , the problem is for those of us who are not.
  • CH
    Connor H.
    16 June 2020 @ 03:59
    I do not know why you guys are always talking about a second wave in the fall. If you really understand the concept of exponential spread, knowing the breakdown in mitigation techniques which occurred first on Memorial Day weekend then to much greatest extent during the recent protests/riots, it is hard not to conclude that the second wave or a crescendo of the first wave in some of these areas is likely to occur later this month or July (absent an intrinsic change in the biology of the virus). Relatively rapid increase in cases in the warmest states of the country, both dry and humid areas, puts to bed the theory that this would be a seasonal virus similar to influenza. This is not your father's flu virus.
    • CS
      Charles S.
      16 June 2020 @ 05:21
      your's neither -- Connor, "if you really understood" "second wave" you'd know it refers to a mutation of the first-wave virus, and is often more virulent, appearing months later, perhaps 9-12 months after the first.
  • KV
    Konstantinos V.
    16 June 2020 @ 02:41
    It's impossible to take in variables and draw accurate conclusions in an artificial market. Long Gold and Bitcoin and cautious of everything else for the time being.
    • mB
      marc B.
      16 June 2020 @ 05:02
      I think smaller companies not in S&p is the best route for alpha. There are companies that will perform well.
  • JR
    Jacob R.
    16 June 2020 @ 04:27
    The market has priced in unlimited fed intervention. We could have the economy and the virus go off a cliff, massive fed intervention and a massive asset bubble all at the same time.
  • DS
    David S.
    15 June 2020 @ 22:46
    The Fed buying bonds of a practically insolvent company does not increase its future cash flows or income for a long time even if it survives. When the Fed helps, it means you are in big trouble. All you bond holders, i am sure the Fed will be ahead of you in any bankruptcy. The chance of a V shape income recovery is negligible. What is the market mainlining? In addition, the world sovereign must print tons more money - hyper-printing - as tax revenue will be down for a long time - business and personal. It does not look good from an old man's point-of-view. DLS
    • AN
      Andrew N.
      15 June 2020 @ 22:49
      Will the fed really be at the front of the line? Somehow I doubt corporate America will let that happen.
    • rg
      ruben g.
      15 June 2020 @ 23:03
      Well said David
    • TS
      Tom S.
      16 June 2020 @ 03:57
      Thanks as always to Davis S. Perhaps the root of the problem is less specific and lies deeper. -Recently John Mauldin in his free 'Thoughts from the Front Line' featured a section inspired by dystopian sci-fi and cyberpunk author Neal Stephenson: “During this century, intellectualism failed, and everyone knows it. In places like Russia and Germany, the common people agreed to loosen their grip on traditional folkways, mores, and religion, and let the intellectuals run with the ball, and they screwed everything up and turned the century into an abattoir. “Those wordy intellectuals used to be merely tedious; now they seem kind of dangerous as well.” Mauldin’s examples include Fed intellectuals’ financialization and legislators’ PPP - both rife with unintended consequence. -Simultaneously George Friedman (Geopolitical Futures) graphically detailed effects of legislation written by multiple “intellectuals” without generalist oversight. No one person, expert or otherwise, can fully comprehend such laws.
  • BM
    Brook M.
    16 June 2020 @ 03:39
    CALPERS has no need to worry about risk. If the Fed is bailing out HYG they’ll be bailing out CALPERS for sure.
  • XM
    Xavier M.
    16 June 2020 @ 03:27
    Ash and Ed great as usual. Calpers is an absolute dèbâcle in the making. I believe it was the Carlyle Group and its avuncular godhead that lead them down this hell paved with good intentions. Cheers.
  • JD
    Jesse D.
    16 June 2020 @ 02:55
    The CPPIB entered private equity a long time ago. They were one of the first pension plans to do this.
  • MT
    Mark T.
    15 June 2020 @ 22:39
    I wouldn't be surprised if every single S&P500 company went bankrupt and the stock markets still went up. That's the world we live in now. :-)
    • DR
      Derrick R.
      16 June 2020 @ 01:01
      Yes and so, what is the trade, in this case? Gold, Bitcoin?
    • MT
      Mark T.
      16 June 2020 @ 02:20
      I'm going with gold bullion.
  • mB
    marc B.
    16 June 2020 @ 02:02
    Two of my favorite gents speaking high level about the market. Short,mid, long term view. Cautious short, neutral mid. Going all in long term!!!
  • TS
    Thomas S.
    15 June 2020 @ 23:09
    Ed .. when you were speaking of the zombies, is there some percentage of them that could see a turn around in the debt service being greater than profits situation today ? If so, the FED buying their debt could be a positive interim measure to get them over the hump until profits start expanding again ?
    • TZ
      Tibor Z.
      15 June 2020 @ 23:34
      When I was watching The Walking Dead series I never thought it will become a reality! :D
    • TZ
      Tibor Z.
      15 June 2020 @ 23:36
      Profits back to pre-covid-19? That, of course, depends on the sector but it can be as long as 10 years!
    • PB
      Phillip B.
      16 June 2020 @ 00:54
      I saw a chart recently that indicated that approximately 20% of companies in the SP will have debt service costs greater than profit this year. I'm not able to locate the chart this afternoon. Anyone, please feel free to correct me or to provide a link to a source.
  • CS
    Charles S.
    16 June 2020 @ 00:30
    Jack's intro -- good perspective & crisp delivery, as usual Unfortunately the jump-cuts were really really jarring, detracting from the content. I'm not looking for Godardian Cinema-Verite, or a music video, in the Daily Briefing -- please be a little more graceful in the editing.
    • CS
      Charles S.
      16 June 2020 @ 00:41
      I appreciate that there are likely some technical limits w/ studio-from-home, so perhaps remedy is a few more preps before the production take.
  • DT
    David T.
    15 June 2020 @ 23:53
    Ash and Ed, can you tell us what Japanese pension funds have done to reach the yield rate they were looking for and how much risk have they taken on for that?
  • TZ
    Tibor Z.
    15 June 2020 @ 23:41
    I really would love to see charts and data presented in these conversations. For example what exactly the FED bought (if it's public data) on what price they bought, how much they bought, and how high the price went! So I would like to see what is exactly the FED is capable of in terms of market manipulation. And what are the consequences. I know it's hard work but it would be great!
  • SP
    Saxon P.
    15 June 2020 @ 23:39
    Fantastic insights
  • PS
    Paul S.
    15 June 2020 @ 23:18
    Glad my pension's not with Calpers https://www.ft.com/content/2a6ec6aa-492e-4e7d-85f8-83789a2bc481
  • AN
    Andrew N.
    15 June 2020 @ 22:33
    That was an excellent summation of our ongoing saga, Ash. Over the weekend my thoughts drifted back to the 1992 presidential election. There was a lot of analysis about George H. W. Bush's unpopularity in the polls, some it quite complex, but really it was all very simple. James Carville, quite a character, cut through all the BS. To paraphrase him: "It's the coronavirus, stupid."
    • jR
      james R.
      15 June 2020 @ 22:54
      I remember, he recently cut thru the BS last week when he called defunding the police the worst idea he ever heard.
  • GC
    Gino C.
    15 June 2020 @ 22:39
    Excellent work Jack!!!
  • MR
    MARK R.
    15 June 2020 @ 22:28
    a remarkable day on the path to global japanification
  • PG
    Parminder G.
    15 June 2020 @ 22:14
    I like how Jack moves into with statement he makes. He really feels macro :) ! Keep it up Team!
  • SS
    Steve S.
    15 June 2020 @ 22:03
    Too big to fail. Too small to bail. What a great quote. Good job Jack. Those intros you do are amazing.