Daily Briefing – May 19, 2020

Published on
May 19th, 2020
Duration
34 minutes


Daily Briefing – May 19, 2020

Daily Briefing ·
Featuring Ash Bennington and Ed Harrison

Published on: May 19th, 2020 • Duration: 34 minutes

Real Vision senior editor Ash Bennington hosts managing editor Ed Harrison to discuss the retracement of the S&P 500 amid a distressing Bank of America study that found that only 10 percent of fund managers are anticipating the V-shaped recovery that has been promised. Ed and Ash also explore the troubling stories coming out of Latin America, the trouble in the European banking sector, and the potential of a redenomination of the Euro into legacy currencies. In the intro, Jack Farley takes a closer look at PNC Financial's sale of its stake in Blackrock.

Comments

Transcript

  • JG
    Johannes G.
    24 May 2020 @ 11:58
    There is an error in Ed's description of the events around Brexit. David Cameron got exactly what he wanted from the EU, and campaigned for remaining in the EU based on his deal accomplishment as a success story for the referendum, which was set up long before then (I think as a promise during his last election).
  • TS
    Thomas S.
    21 May 2020 @ 03:18
    Roger sticking to his thesis in the face of the markets acting irrationally. Takes courage and conviction, but its very rational, unlike the markets
  • JW
    John W.
    20 May 2020 @ 12:59
    OK RV I can't get a clear answer on this so it's up to you! So... How is the extra Fed liquidity getting into the stock market? Who's using Fed QE money to buy more stocks? The fed isn't buying equities, so who is?
    • DR
      Derrick R.
      20 May 2020 @ 14:16
      I would also like to understand this; how much of it do we think is from passive index investing vs other categories, and what is the probability that staying out of the stock market ends up being a losing gamble, when the Fed is doing everything they can to keep it inflated?
    • MT
      Mark T.
      20 May 2020 @ 16:01
      It goes to Hedge Funds, Investment Banks who in turn buy the stocks. This is my understanding.
    • SN
      SATISH N.
      20 May 2020 @ 18:09
      Watch this Druckenmiller's interview, especially towards the end: https://www.youtube.com/watch?v=lpSjPyjDOPo He makes the point that QE is bullish for stocks and bearish for bonds. If Fed is buying bonds, you would think that it is bullish for bonds, but apparently not. Following is my reasoning -- I could be of course wrong. Fed buys bonds from institutions (e.g., hedge funds) and injects dollars into the systems. Institutions that sold bonds, are not going to buy them back (if they wanted the bonds, why would they sell them in the first place?). Now, what do they do with the cash they raised from selling bonds? Well, they use them to buy risky assets such as stocks. So stocks go up. That motivates other bond holders to start selling their bonds, and move to risky assets as well. So QE is bullish for risky assets, and bearing for bonds. QT could have the opposite effect: if Fed sells bonds, bond prices can go up!
    • SN
      SATISH N.
      20 May 2020 @ 18:13
      Just wanted to add one more argument. QE is inflationary (Fed is printing money). Inflation => higher bond yield => bearish bonds. So if you are a bond holder, you are motivated to sell and move to assets that protects you against inflation (stocks).
    • DR
      Derrick R.
      20 May 2020 @ 19:16
      Satish, I think I understand but wouldn't the bond yield dropping mean the bond price rises? So, how do we square this with the fact that SPY ETF is rising about the same as TLT ETF is dropping, looking back 1M to today? I had bought some TLT based on Raoul's insights, for this reason but they are dropping.
    • SN
      SATISH N.
      21 May 2020 @ 02:37
      Yes, lower yield => higher bond prices. Bond prices and stock prices tend to be inversely correlated. That is why often "balanced" portfolios tend to have 60:40 mix. So SPY rising and TLT dropping is a pretty common pattern. My earlier explanation is consistent with this pattern. Roger covered your question in today's briefing.
  • PP
    Patrick P.
    19 May 2020 @ 22:22
    Learn about Ed Harrison ..... IMPRESSIVE !! Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator on BBC World News, CNBC Television, Business News Network, CBC, Fox Television and RT Television. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.
    • MD
      Mike D.
      19 May 2020 @ 22:53
      Many of us have deep respect for Ed Harrison.
    • SL
      Stephen L.
      20 May 2020 @ 10:29
      .... and hes a handsome devil!!
    • DR
      Derrick R.
      20 May 2020 @ 17:36
      Wow. Very much enjoy his analysis. RV has such an impressive lineup.
    • nr
      nicholas r.
      21 May 2020 @ 01:40
      6 languages :0
  • SH
    Si H.
    20 May 2020 @ 21:33
    Ed raised some good points about Euro Bonds.... Its a mess.
  • JC
    Juan C.
    20 May 2020 @ 06:04
    Ed, as much as I would like to agree with your view on Spain, I think you got it wrong. Government is a socialist-communist coalition. They do not care about deificits and view public spending as a means to reach their political goals. The have appointed a communist party head in charge of "recosntruction" (whatever that means). Do some check on gvt officials and ministers, most of them do not have a universtity degree and those who have include the PM who has not answered the substantial accusations of plagiarism in his PhD. They are there to take advantage of the system for their own benefit and, unfortunately, the opposition are not any better.
    • DS
      David S.
      20 May 2020 @ 20:36
      I have an economist friend living in Madrid. We did not talk about the politics, but he said there are a lot of problems with the Spanish economy. DLS
  • DS
    David S.
    20 May 2020 @ 07:59
    A German bank/corporation can buy Deutsche Bank. Its market cap is about 15 billion. No big deal. Why get tied up with a supranational Euro bond? DLS
    • RM
      Richard M.
      20 May 2020 @ 14:31
      David, I don't think any German bank/corp in their right mind would consider purchasing DB, even if the price was only a symbolic 1 Euro price tag. DB's notoriously opaque book is chock full of very very bad derivative contracts that they will be on the hook for for many years out. Nobody wants that kind of exposure (unless of course you're trying to sink your own corporation!).
    • DS
      David S.
      20 May 2020 @ 20:31
      I agree for a normal purchase. Sorry, I wanted to emphasize that DB is not too big to fail. The German Government could spin DB into a "bad bank" fund. This has been done in other Euro countries so it would not set a precedent. This would be much less expensive than Germany bailing out all their brethren, especially in a recession. DLS
  • RK
    Roger K.
    20 May 2020 @ 08:29
    Can we have these briefing as brief as possible like 20min max ???
    • MS
      Matthew S.
      20 May 2020 @ 11:34
      No way, let them run and riff - content is great
    • DS
      David S.
      20 May 2020 @ 20:17
      I do not know if it is possible, but some RVTV presentations can be played at a faster speed. DLS
  • AR
    Anthony R.
    20 May 2020 @ 12:58
    When you comment on "comments," from your subscribers in realVision's video who described Nvgrtz opinions as liberal leaning (with over 220 people agreeing with that assessment), it appears you didn't understand what others really intended within those comments. Ash's rant on that issue was not a good look. I am politically agnostic, but even I recognized the liberal democratic overtones in Raul's interview. Love Raoul, he is an amazing Cassandra, Nvgrtz, not so much.
    • DS
      David S.
      20 May 2020 @ 20:12
      Mr. Bennington is just trying to keep the negative politics from either side out of the comment section. Everyone has an opinion. Being agnostic on politics is an opinion also. Everyone should just listen to ideas and accept or reject the ideas in your own investing. DLS
  • PC
    Petros C.
    20 May 2020 @ 19:44
    I think Ed is constantly trashing the Euro without any solid understanding of what is going on in European affairs. Can RV invite knowledgeable guests from France, Germany or Benelux please? No London based guys please. Grant Williams left a gaping hole in RV behind him...
    • DS
      David S.
      20 May 2020 @ 20:01
      The combination of Mr. Pal, Mr. Harrison and Mr. Hirst update us on their Euro views each week. I would enjoy hearing a full interview on the Euro also. Politically speaking I believe the Euro experiment is waning. I would also like to hear an objective view of the Euro being dissolved. This is not a binary event. There are many possibilities. We keep addressing China, when the second biggest macro possibility after the pandemic is in the Euro system. DLS
  • VS
    Ville S.
    20 May 2020 @ 18:06
    Covid cases in Egypt are starting to ramp up, despite the heat...check it
  • BE
    Benjamin E.
    20 May 2020 @ 16:10
    I really appreciate these daily analyses by these 2 guys. I think my subscription value is solid thanks to them. The longer form guest content is too sparse and has some real flops to cover the service value alone. These guys more than make up for those.
  • NF
    Neal F.
    20 May 2020 @ 11:54
    Nice summary of PNC.
  • II
    IDA I.
    20 May 2020 @ 10:27
    If Italy try to leave the euro, would Germany let them and give up their Target2 credits? Italy has very litte to lose leaving the Euro, while everyone would have a lot to lose with a Euro going up 30% thanks to italexit. I don't think Germany would allow italexit
  • RK
    Roger K.
    20 May 2020 @ 08:42
    "Spanish economy is more dynamic than the Italy's economy" is that true ???
  • HR
    Humberto R.
    19 May 2020 @ 22:46
    Thank you for these great summary interviews. Maybe direct question for Ed... how can investors take a position in Spanish bonds if we agree with your Spanish bond convergence thesis?
    • DB
      David B.
      20 May 2020 @ 01:30
      Not finding any corporate Spanish bond ETFs, just gov't bond ETFs. Would gov't be the the way to go?
    • DS
      David S.
      20 May 2020 @ 07:40
      If you have US dollars. Keep them. DLS
  • WR
    William R.
    20 May 2020 @ 07:14
    Thanks Ed and Ash. Ed, I would love to get your view on Portugal. It seems to be flying under the radar. I would imagine given its reliance on tourism there is some pain to expect here? Although over the past 5-8 years it has diversified its economy
  • GH
    Galen H.
    20 May 2020 @ 06:57
    "68% think its a bear market rally"... this level of bearishness, history suggests the 68% are wrong and rather it IS the dreaded "V" shaped recovery. Unfortunately. Hard pill to swallow. Each dip, a few of that 68% vote "bear market rally", but buy a little just in case they're wrong. And up the market melts, leaving most, except the index trackers behind.
  • WC
    Will C.
    20 May 2020 @ 06:23
    All those fund managers will be wrong, as usual. Every recovery since 1950 has been V shaped. None of them sold at the top when the risks were clear or bought at the bottom when stocks were down 30%, and now they are all waiting for "the next leg down" in the bear market. It looks like they may be waiting a while.
  • DS
    David S.
    20 May 2020 @ 02:47
    I think a lot of the numbers on COVID-19 cases, recoveries and deaths are just as fictitious in the US as they are elsewhere. The US did a poor job of shutting down like many other countries As a result, it is doing a poor job of opening up. States that chose to open before White House guidelines to rebuild their economies may be following the national policy of if it is not tested for COVID-19, it is not COVID-19. Individuals will need to make their own decisions on how to open. It is difficult to know because we are not testing or tracking well. Korea could track cases in three bars back to one man. If we have a significant second wave in the Fall you can forget a recovery until the Summer of 2021. The virus does not care. It is just looking for a way to reproduce itself repeatedly. Our only real hope is to be able to treat COVID-19 better and find a vaccine. Wash your hands it is kryptonite to viruses. DLS
  • DS
    David S.
    20 May 2020 @ 02:21
    Chancellor Merkel and President Macron are trying to figure out a way to give support to those countries hit the hardest with CORVID-19 without a large Euro bond. One problem is both are waning in power. Chancellor Merkel will not run again to lead her party and President Macron's party is no longer in the majority of the French Parliament. Europe like most parts of the world is heading into a sharp COVID-19 recession. A confederation of sovereigns is hard to manage in a crisis. We will see. DLS
  • SS
    Steven S.
    20 May 2020 @ 02:00
    Excellent as always, guys. I'd expect that within a few months following the state openings, we'll see additional flare-ups that vary across geography and time. The impact of testing on preventative measures is dependent on contact tracing. We can have widespread testing, but the reduction in viral spread is hampered without very active and large numbers of contact tracers. Much of the problem with SARS-Cov-2 lies in the pre-symptomatic transmission for extended periods of time. I'm betting on rolling lockdowns across the US and world for another 2 years. In my view, the wildcard remains new pathogenic mutations arising in the virus.
  • OM
    Owen M.
    19 May 2020 @ 23:32
    nice analysis on PNC, Jack. Well done.
    • JF
      Jack F. | Real Vision
      20 May 2020 @ 00:30
      Thanks, Owen!
    • EB
      Evan B.
      20 May 2020 @ 01:58
      If cash is king, then this is their coronation. Appreciate the lively phrasing Jack!
  • SF
    Stephen F.
    20 May 2020 @ 01:20
    Great job Ed, Ash and Jack!
  • ZY
    ZHENG Y.
    20 May 2020 @ 00:29
    Please bring Prof.Richard Werner for interview. Quite shocking after watch “Princes of the Yen”
    • JF
      Jack F. | Real Vision
      20 May 2020 @ 00:31
      Oh it’s happening. Stay tuned :)
  • OO
    Oliver O.
    20 May 2020 @ 00:10
    Now that restrictions have been relaxed for most states in the US, will private health insurers cover the medical costs of new infections? Could insurers deny coverage for people who willfully risk infections by going outside? Seems like one of the potential pitfalls of a for-profit medical system.
  • BS
    Bevyn S.
    19 May 2020 @ 23:35
    Thanks guys. One thing I don't hear people talk about is that southern hemisphere seasons are flipped, and winter will be coming soon. Wonder how much of what's happening in South America and the northern hemisphere is due to seasonality, and less to do with social distancing / lockdown. I haven't really seen anyone talk about this, and am curious what your thoughts are.
  • CH
    Charlie H.
    19 May 2020 @ 23:20
    Ed mentioned the SPX Fib retracement levels in today's RVDB. I believe he was incorrect saying the 61.8% level was around 2,920. It is around 2,935. Based on the Feb 19, 2020 SPX intraday high of 3,393.52 and March 23, 2020 intraday low of 2,191.86 we get the following retracement levels (using this calc http://www.patterntrapper.com/fibonacci-calculator.html): 78.6%: 3,136.36 61.8%: 2,934.49 50.0%: 2,792.69 38.2%: 2,650.89 23.6%: 2,475.45
    • CH
      Charlie H.
      19 May 2020 @ 23:22
      We closed underneath the 61.8% percent level after being above yesterday. Still haven't broken through that level I would say - this is the third test.
    • EH
      Edward H. | Real Vision
      19 May 2020 @ 23:25
      No. I said I was looking at 2920 as my support level, just under the close where Ash had worked out the exact retracement above the close
    • CH
      Charlie H.
      19 May 2020 @ 23:29
      Ahh ok Ed, my apologies.
  • RA
    Robert A.
    19 May 2020 @ 23:21
    You guys are the greatest. After seeing the comment yesterday you “switched it around” and had Ash to the prelim intro and handed it over to Jack for the News update. Well played and and another example of how the RV product is shaped and enhanced by we RV commenters working in partnership with Milton, the guys/girls behind the scene and, of course, Ed, Ash, and Roger.
  • RB
    Ron B.
    19 May 2020 @ 23:15
    Brilliant gentlemen.
  • MS
    Michiel S.
    19 May 2020 @ 22:46
    Odd this daily briefing episode published here later than with ZeroHedge!
  • PL
    Patrick L.
    19 May 2020 @ 22:40
    Anyone else got problems with sound cutting out in the app?
  • MT
    Mark T.
    19 May 2020 @ 22:35
    Great segment, and good intro Jack!
  • CH
    Charlie H.
    19 May 2020 @ 22:10
    Looks like this isn't linked to the main realvision.com landing page. I directly typed in the URL (which is date encoded).