Daily Briefing – May 13, 2020

Published on
May 13th, 2020
Duration
34 minutes


Daily Briefing – May 13, 2020

Daily Briefing ·
Featuring Peter Cooper, Ash Bennington, and Roger Hirst

Published on: May 13th, 2020 • Duration: 34 minutes

Real Vision's senior editor Ash Bennington sits down with managing editor Roger Hirst to discuss the latest in macro, markets, and coronavirus. They dive into the psychological and economic repercussions that the shutdown has had on both New York City and London. They also talk about how the Fed's intervention in markets has played a role in supporting asset prices, the level of uncertainty about where they will go in the future, and why currency markets are the optimal place to express a macro position. In the intro, Peter Cooper examines businesses that are considering cutting back on physical office space and how that could turn into a secular trend that devastates commercial real estate.

Comments

Transcript

  • MS
    Matt S.
    17 May 2020 @ 03:29
    This guy should put that book down and read some Michael E Jones.
  • MR
    Matthew R.
    13 May 2020 @ 22:47
    Interesting. I can't see things re-opening until the end of October here in the UK, as whilst the furlough programme is running, there is no demand for a lot of business to re-open, and they'll get penalised for doing so by removal of furlough payments, and increased overheads.
    • CH
      Charlie H.
      15 May 2020 @ 02:01
      At this point we are hitting winter in the northern hemisphere aka Flu season. Not a good time for things to open then up either. Next Spring is what I'm targeting.
  • TL
    Tom L.
    14 May 2020 @ 22:20
    Shouldn't the thumbnail say Wednesday 13th May?
  • ca
    carlo a.
    14 May 2020 @ 20:17
    Roger is always amazing
  • VS
    Ville S.
    14 May 2020 @ 18:48
    There has definitely been a rush to retail online stock brokers in EU too... heard that for example Degiro in Belgium has been unable to open accounts as fast as new application roll in, resulting in queues of Thousands of willing customers....fresh blood eh
  • RC
    Ron C.
    14 May 2020 @ 18:20
    Imaging Jaws music under “We’re going to need a bigger bailout”
  • AP
    Alfonso P.
    14 May 2020 @ 12:19
    amazing episode, it is for sure one of the best, the concepts dealt with by Roger are in itself an economics real time lesson.
  • JS
    James S.
    14 May 2020 @ 11:49
    More Roger please. At least 2x / week
  • RS
    Robin S.
    14 May 2020 @ 00:23
    Excellent Daily Briefing once again. Thanks. Really keen to get from you guys or maybe Roger in particular a simple way to play the EM currencies in the UK? I'd like to put a little on that bet but just don't know the mechanic by which to do it? Thanks
    • MT
      Mike T.
      14 May 2020 @ 11:30
      Robin, I got a bit carried away with this message, but just trying to help. I think you may find it difficult to find a liquid instrument to trade, stress trade, as opposed to simply being able hold EM currency deposits. If the UK means listed instruments on the LSE, your choices are limited to a few highly illiquid ETF's, strongly suggest stay away, as sooner or later with any illiquid instruments you'll get burnt. If however you still want to see the listings go to https://www.lseg.com/areas-expertise/our-markets/london-stock-exchange/fixed-income-markets/listed-products/etfs As the aforementioned is a really bad idea, if you're inclined to start looking around the world as to what is available you will probably need a new broker. Take a look at Interactive Brokers **Exchange Listings** followed by **Product Listings** at https://www.interactivebrokers.co.uk/en/index.php?f=46814 As you look around the World, you will notice there are possibilities to trade anywhere e.g. Tokyo, Frankfurt, Sydney, you name it, it's all there. However let me save you some time. Compared to the USA, liquidity in the rest of the World is sub-optimal whatever the instrument Stocks, Futures, Options. There is a downside to using I.B. their platform is not trivial to learn, they have really fallen behind in 'useability' compared to recent new entrants, but unless you have maybe > $50M to open an account with Goldman Sachs, I.B. is really the only choice for the 'poor man' i.e. people like me :-) What ever the idea or thesis might be, no matter how compelling, if it can't be expressed in a liquid underlying, IMHO, forget it and move on to something else. For optimal liquidity ALL ROADS LEAD TO USA MARKETS, end of story, it's just a simply fact. That all said, the currency ETF's in the US, with the possible occasional exception of FXE (Euro) are poor trading instruments. Currency liquidity may be found in Globex Futures Markets /6a, /6b, /6c, /6e, /6y. Nothing optimal for any emerging currency. I better stop now :-)
  • cl
    christian l.
    13 May 2020 @ 22:50
    You need to fix app so you can use another app while still listening like YouTube.
    • NF
      N. F.
      14 May 2020 @ 00:07
      The RV app originally could do picture-in-picture but the feature seems to have been removed.
    • JE
      Jon E.
      14 May 2020 @ 11:26
      Picture in picture is still there and will float above other apps while playing.
  • BB
    Bob B.
    14 May 2020 @ 00:25
    Agree on inflation. Price inflation takes two main actors - monetary policy and expectations Ex $3T x zero velocity = zero inflation. Social mood is negative and people will tend to hunker down - do with what we have aka velocity heading toward zero in aggregate. Happy positive mood people buy, They tolerate more - ignore grievances Unhappy negative mood people horde. They become angry over grievances and act out their anger. Where is social mood trending tells us more about recovery than liquidity or price inflation. Do you have global macro sociologists for Real Vision?
    • ab
      alfred b.
      14 May 2020 @ 09:54
      A little myopic comment IMO. Yes mood affects patterns but then so do all emotions. Fear and Greed play far larger roles. Being happy about your family being safe, but being scared about the unknown future will still bring spending down. You don't need to be happy to increase spending, you need to feel safe that this money will not be needed for emergencies. Conversely, you don't need to be sad to reduce spending, you need to be pragmatic in a world of unknowns. Being happy makes for a healthier person as is proven. Many happy people spend less based on being happy with less rather than more consumerism. Spending velocity requires more than being happy or sad.... It requires systemic confidence.
  • ab
    alfred b.
    14 May 2020 @ 09:47
    Thanks guys. I always enjoy the gentlemanly pushback between the contributors. Agreeing to disagree is a very constructive environment to find solutions. Really enjoy Roger, but all hosts are gr8 and add their unique viewpoints.
  • BT
    Ben T.
    14 May 2020 @ 08:15
    Wednesday 13th May - Small typo in the graphic
  • AP
    Agnieszka P.
    14 May 2020 @ 07:55
    Gentlemen, thank you for this. It is always such a pleasure to hear very valuable insights in a respectful and professional manner. You have no idea how much you bring into this channel with such discussions. In an era of noise and news and tweets and information overload, such 30 min brief is pure gold. My hat goes off to you. To each and one of you, Ash, Rog, Ed, but also Jack, Peter, and others. Thank you. I hope RV will stick to the idea of daily briefings even after this whole virus story is over and we go back to new normal.
  • OO
    Oliver O.
    14 May 2020 @ 06:18
    Ash and Roger, would the BOE, BOC and RBA be considered central banks that lack the power and/or influence to buoy their respective equity markets and currencies? Thanks
  • DG
    Dave G.
    13 May 2020 @ 22:49
    Just thinking Amazon AWS and Microsoft cloud must have alot of small business customers for their web services. With what's going on with small business taking a big hit because of the virus. Wouldn't this be a substantive hit to cloud computing companies? I dont think this is being priced in or am I off base on this?
    • CC
      Christopher C.
      14 May 2020 @ 05:34
      The businesses that have been hit the worst are retail, restaurants, travel, tourism, etc. I don't think those sectors make a large percentage of cloud consumption.
  • AL
    Austin L.
    14 May 2020 @ 02:03
    Ash, I'm no interior designer but the cabinet directly in front of a painting seems off.
    • DR
      David R.
      14 May 2020 @ 05:34
      Great comment Austin , also note Roger needs to stock up on his wine again ! Jokes aside , you guys are brilliant . As bad as this situation is I think it has changed the dynamic of Real Vision for the better with this type of analysis . Keep going lads !
  • NL
    Nikola L.
    13 May 2020 @ 23:27
    great stuff.. I have a question though. Can the FED forgive debt? That solves the solvency problem Roger is talking about. FED is already doing things none of us thought FED would do so why not just go full retard?
    • JS
      Jim S.
      14 May 2020 @ 00:14
      I think so, but that would be the debt jubilee that everyone references.
    • CC
      Christopher C.
      14 May 2020 @ 05:32
      The Fed doesn't own all the debt. The world is in $250 trillion in debt, private and public.
  • BB
    Bob B.
    14 May 2020 @ 04:03
    Another hidden startup factor will be insurance. Event cancellations for instance are mounting. There will likely be COVID-19 exclusions when trying to get event insurance going forward. Hosting costs and financial risks will certainly escalate for events. https://www.canadianunderwriter.ca/insurance/why-covid-19-cost-this-reinsurer-1-2-billion-in-three-months-1004178153/
  • SC
    Sam C.
    14 May 2020 @ 00:16
    Really interesting comments but the U.S consumer is borrowing hard on big ticket discretionary items from the forums I am reading regarding things like boat traffic at ramps and new boat sales. The smaller trailer boats are on fire while larger boats are probably down a tick. A salesman just sent me a text that the average credit score is down 100 points and banks started turning the screws two weeks ago requiring down payments, higher interest rates and tighter terms. I am betting mortgage forbearance and stimulus checks are allowing the average guy one last chance to tie a noose around his neck. Very interesting to say the least. Maybe some nice low hour boats for sale in 18 months...
    • WW
      Will W.
      14 May 2020 @ 00:19
      To add on to this, and this is totally anecdotal, but we were shopping for a new camper van, $100k+, and people were lining up with masks on making purchases, and at another place, they were so busy you had to make an appointment to meet with a salesperson.
    • CM
      Chris M.
      14 May 2020 @ 01:49
      Sam and Will, you are both referencing products that allow you to escape without being around other people. You can spend the day on your boat and not worry about social distancing. Car sales may increase in certain cities as people avoid mass transit. Some argue rural home sales may now increase as people leave crowded cities and their work place allows them to telecommute. I have personally thought about the camper van (probably need to go buy stock in Camping World) as not too keen about staying in hotels, don't want to fly (particularly after watching story tonight on NBC News about their on-air doc getting sick from a flight), but I still want to get out. People may be redirecting other expenditures like new designer clothes, eating out all the time, or that trip to Europe this summer into a boat to take the kids to the lake on the weekends. Though interesting point about small boats vs large boats. Flip side, I have read where people are becoming more careful with other expenditures like big home remodeling jobs (though they are doing some stuff themselves while on quarantine) as job uncertainty is still out there. So both your examples make perfect sense to me and those that are employed are redirecting their purchases to social distancing recreation. But people that are getting stimulus checks are just trying to get by and pay the rent or get groceries. That is why food banks are running dry. That group is not hitting Camping World or getting a new boat.
    • CM
      Chris M.
      14 May 2020 @ 01:59
      Since I can't edit a comment, meant to say that those unemployed and getting a stimulus check are just trying to get by. Those that are getting "free" money, may be spending on discretionary items if they have job security.
    • WW
      Will W.
      14 May 2020 @ 03:21
      Chris - you are exactly right, but it still blew me away the number of people lined up to make a big ticket purchase given the carnage on Main St.
    • CM
      Chris M.
      14 May 2020 @ 03:46
      Will, I track retail store sales to get a feel for consumers. High end clothing, as an example, seems to be selling while lower end stuff is getting discounted. This makes sense since the majority of unemployed make less than $40k. People with money may be looking for a splurge opportunity having quarantined for several months. It is hard to imagine a bunch of people spending over $100k on campers, but they haven’t felt the pain yet in the markets with this bounce.
  • JP
    Jan P.
    14 May 2020 @ 02:11
    Get Roger on more.
  • PB
    Paul B.
    14 May 2020 @ 01:16
    Love the Dragon Fly
  • DR
    Derrick R.
    13 May 2020 @ 22:47
    Is anyone here buying puts on CEW to play this EM currency weakness against the dollar? Curious what your strikes and expiration are, and if it’s still worth jumping in thia
    • JS
      Jim S.
      14 May 2020 @ 00:16
      I looked at it and have been thinking about it but haven’t done so yet, the the open contract volume looks a little low so I’ve been hesitant.
  • BB
    Bob B.
    14 May 2020 @ 00:08
    Q - When does Liquidity become plain old debt?
  • MS
    Malcolm S.
    13 May 2020 @ 22:28
    Would it possible to post a transcript? This would be faster to review.
    • MW
      Max W. | Real Vision
      13 May 2020 @ 22:59
      The video is finalized around 6PM ET and sent off to our transcriber in Asia. Once she has completed the transcript she will upload it immediately.
  • DR
    Derrick R.
    13 May 2020 @ 22:38
    Ash, what kinda parties are you going to where “inflation is always a result of monetary policy” is a great line to throw out? LOL..
    • AB
      Ash B. | Real Vision
      13 May 2020 @ 22:41
      Ha
    • DR
      Derrick R.
      13 May 2020 @ 22:48
      Sorry I’m like 2 drams of scotch in and only halfway through the daily briefing. Haha
  • MR
    Matthew R.
    13 May 2020 @ 22:44
    "inflation is always a result of monetary policy" Was it not meant inflation in terms of the inflation of the actual currency supply, rather than in terms of prices.