Daily Briefing – June 22, 2020

Published on
June 22nd, 2020
Duration
30 minutes


Daily Briefing – June 22, 2020

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

Published on: June 22nd, 2020 • Duration: 30 minutes

Senior editor Ash Bennington and managing editor Ed Harrison explore the perilous state of the global markets amid the unrelenting spread of coronavirus. They discuss the disturbing "second wave" of coronavirus in the U.S. – in states like Florida, Texas, and Arizona – as well as around the world and evaluate how the continued spread will impact economic growth and financial returns across different asset classes. Ed hazards whether the U.S. yield curve will see bear-steepening (or bull flattening), and Ash puts the widening "breadth" of the U.S. rally in proper context. In the intro, Jack Farley explores why CLO managers are often rendered incapable just at the time that bold action is most required.

Comments

Transcript

  • mt
    martin t.
    22 June 2020 @ 23:22
    Looked at the line-up for the crypto days and I think realvision is making a big mistake and a big disservice to their audience. All you will get is a bunch of people telling you that bitcoin is the alpha and omega of the space because that's where their bags lie. This is a space which is constantly evolving and still looking for the right direction, realvision should seek multiple perspectives. People like @Rewkang, @iam__vance or @delitzer would have been so much more insightful than freeking Saifedean Ammous who is gonna tell you to hodl and eat meat.
    • DR
      Derrick R.
      23 June 2020 @ 01:16
      Of notable omission is anyone from Ripple or the XRP community, which does somewhat reflect a lack of diverse perspectives.
    • CA
      Cyrus A.
      23 June 2020 @ 10:05
      Agree with that sentiment...I have learnt a lot about BTC from listening to perennial opponents such as Peter Schiff....understanding his argument, at the very least, provides a counter weight to either substantiate or adjust your own thoughts on BTC . Once you have drunk the initial BTC kool-aid, you need to have a cold shower and analyse the space with a clear mind...listening to opponents helps one do that. Not to mention, BTC and the broader altcoin and stablecoin space are two different kettles of fish
    • DR
      Derrick R.
      25 June 2020 @ 02:18
      Correcting myself, I now notice one speaker who used to work at Ripple, and another who is bullish on XRP. This should be good. Thanks RV for putting it together!!
  • JI
    Jose I.
    23 June 2020 @ 21:12
    Good discussion! Food for thought - I agree with Ed’s thesis, but could we have a confirmation bias in terms of what data we look at and consider key? Are there other economic new data points or info that would make a different or more nuanced case? - It would be great if you could share some data on the flows into equities. Perhaps equity markets are not going up because an optimistic V recovery, but just because of liquidity flows, QE and Fed put?
  • DS
    David S.
    23 June 2020 @ 00:05
    Good introduction Mr. Farley especially about R naught. Although it is easy to say that the stock market may be pricing in a V-shaped economic recovery back to prior GDP levels, it may just be money flowing into the most promising stock market helter skelter. There is apparently a huge amount of cash in money market accounts still on the side. The stock market may continue to go up caused by more and more investors chasing fewer and fewer stocks. Inflation may make them correct in the long run. At this point I do not think any rational person is really planning on a V-shaped economic recovery to former GDP levels soon. DLS
    • BB
      Benjamin B.
      23 June 2020 @ 06:44
      That's it, regardless of what you think the shape of the recovery is going to be, if you have sat out of this equity rally you have lost serious $$$...
    • DS
      David S.
      23 June 2020 @ 20:37
      Benjamin B. - You are correct. If I would have just bought Fangs and held on I would have made money in this market. This is in 20/20 hindsight. Since I do not trade other people's' money, I am ok. I see a long time until corporate profits come back. Many governments will be in revenue trouble all over the world. Governments at all levels will see radically less in tax receipts unless they tax at the top line. Taxes as the top line will reduce cash flow and net income. Most governments started out before the COVID-19 crisis underwater. How much farther underwater are they now.? How much farther will they go? For now, I am sticking to gold, gold miners and cash. I am hoping to find some value within the next year or two. It will be that long before anything good happens on the COVID-19 front. I guess I just have a low fear of missing out. A problem with being happy. DLS
  • CT
    Chris T.
    23 June 2020 @ 08:42
    Does anyone genuinely believe, given how quickly Coronavirus spreads, that it took until March /April /May/ June to go viral across the West from China in "January"? or is it just the testing is whats changing
    • JW
      Jim W.
      23 June 2020 @ 11:44
      First known Chinese case November 17, 1999.
  • JW
    Jim W.
    23 June 2020 @ 11:44
    On Japan...I'm a long term resident, so a few things that I hope the RV team manages to ask: 1-given the demographics of Japan and the US being so different, what kind of positive tailwinds could we see for the JP equity market? 2-Japanese firms have been hoarding cash for the last 20-30 years. Is that going to be what happens with the shift in the US towards stakeholder capitalism that everyone is talking about (https://www.bloombergquint.com/onweb/japan-firms-habit-of-hoarding-cash-becomes-boon-for-dividends) 3-The actual number of cases for the "Shingata Coronavirus" in Japan are comparatively few, vis-a-vis the rest of the world, considering the low amount of testing--wouldn't that affect the unemployment rate more than anything else?
  • SM
    Shaun M.
    23 June 2020 @ 10:26
    Haha, "that is my microphone"..... "yeah, I like that, its looking good"! This made me laugh this morning, great opening :)
  • TZ
    Tibor Z.
    23 June 2020 @ 03:37
    Quite frankly speaking the whore reopening process (at least here in Europe) is a joke! It is highly unlikely that we going to get any vaccination against it! Either way, we start serious testings and border control or let it spread like in Sweden! In Europe, it's none of these two in most of the countries. Therefore I believe it will be an epic disaster! This opening, closing thing is good for nothing! Then I would rather do the Swedish model! If you know you have a chronic disease or some serious health issue, quarantine yourself, if not, do whatever you want! That would be better for the economy as well. Plus by the next time people will be asked for going into lockdown, they gonna show the middle finger! As most of them are fed up with it already!
    • TZ
      Tibor Z.
      23 June 2020 @ 03:38
      Misstype: It is whole reopening :D You can't edit it once you hit enter!
    • CT
      Chris T.
      23 June 2020 @ 08:51
      Horse already bolted.. with sample data showing over 27% of London having antibodies and only 198 official London deaths its clear the whole lockdown was too late/ arguably a waste of time as the virus had already gone viral in the populations by March. Again that London data in line with the Stanford study. The denominator (people that have been exposed to it already) is way higher than the experts thought. Quite simply it doesnt take from "January" until March-June for a virus to spread from China https://www.london.gov.uk/coronavirus/coronavirus-numbers-london https://www.youtube.com/watch?v=PC3nptwY50I
  • JG
    Jonathan G.
    23 June 2020 @ 08:09
    Great explanation on the yield curve! Thanks a lot!
  • CC
    Cornelius C.
    23 June 2020 @ 04:06
    he bought a mike but still sounds the same...
  • SG
    Sebastian G.
    23 June 2020 @ 03:19
    Wow. I can't wait to hear this interview about Japan being some sort of leader...
  • RJ
    R J.
    23 June 2020 @ 02:32
    Great microphone Ash!
  • CH
    Connor H.
    23 June 2020 @ 02:19
    Why are you showing ads before RV essential? We are paying for it.
  • RA
    Rob A.
    23 June 2020 @ 00:42
    Ash, I must say your audio quality is fantastic. Would you mind letting me know the brand / model number of your new mic?
    • AB
      Ash B. | Real Vision
      23 June 2020 @ 01:58
      Hi, Robert. It's a HyperX QuadCast. https://www.hyperxgaming.com/unitedstates/us/microphone/quadcast-gaming-microphone?gclid=CjwKCAjwrcH3BRApEiwAxjdPTUsykGIP7HPSiR5GjW-4jqYTQZ2Vl9mW5_Ts3WV2pfiJQSZhNjYiBBoCGwUQAvD_BwE
  • TM
    Trent M.
    23 June 2020 @ 01:46
    Ash, I can't help but wonder what you keep in those huge file cabinets. Next time you decorate you could get rid of the cabinets?
  • MC
    Michael C.
    23 June 2020 @ 01:29
    Ed/Ash, Please put broader context around the yield curve coversation by overlaying inflation expectations on it. Make it more relevant. I hope you have noticed that commodity prices (look at CRB), have been rallying since May. The bond market bought the reflation narrative for a few days in early June and then quickly discounted it with Treasury yields falling hard and the curve flattening (like you said Ed). Meanwhile commodity prices have continued trending higher. So either the rally in commodities is about to stall and come back in line with traditional signals of inflation or this reflation narrative might be turning into a stagflation narrative. Talk about this. Traditional signals like 5Y5Y forwards have been trending sideways for 2 months (not really saying much about inflation) but a broad spectrum of commodities are waving a few flags. Early days but you could put a lot of cotect around this coversation.
    • MC
      Michael C.
      23 June 2020 @ 01:44
      Navarro just took the trade deal out behind the shed and shot it. See if this pulls commodities back in line with inflation expectation over the next few days/weeks.
  • CL
    Christopher L.
    23 June 2020 @ 00:51
    I know two things: 1) the bond market is extremely important to understand and 2) I don't understand it as well as I could. Thank you, Ed, for adding to and reinforcing clarity on this subject and its importance.
  • RR
    Ramon R.
    23 June 2020 @ 00:24
    Always good vibes from both Ash and Ed. Thank you I agree with the long term favorable circumstances in Japan and probably most Asia. Another factor is that the US is the only country with significant social unrest and given the lack of safety net and extreme media polarization it can get even worse this fall before the election. Seriously considering moving out of the US next year.
  • AT
    Andrew T.
    23 June 2020 @ 00:08
    In a world where there is more passive than active money flows the market breadth is not the signal it used to be.
  • RA
    Robert A.
    22 June 2020 @ 23:39
    Ash, make sure you watch Brent and Lyn’s interview/debate on the US $ as it’s not only one of the best interviews to date, but it really helps to explain in more plainly spoke detail as to the juxtaposition of Raoul/Julian and Brent/Luke Gorman views. Another nice intro today Jack.
    • AB
      Ash B. | Real Vision
      23 June 2020 @ 00:00
      Will do!
  • RK
    Robert K.
    22 June 2020 @ 23:16
    C'mon guys unemployment in Japan dropping mainly because the population is dying out - look at the demographics and very prohibitive immigration policy. https://worldpopulationreview.com/countries/japan-population/
  • AC
    Ay C.
    22 June 2020 @ 23:12
    Great interview. Thank you guys.
  • TS
    Tom S.
    22 June 2020 @ 22:58
    Given the recent flood of data detailing highly diverse impacts of COVID-19 dependent on previously ignored specifics (such as blood type), my “hope for the best” is rapidly morphing from “finding a vaccine” to “finding and tailoring effective treatments”.