Daily Briefing – May 28, 2020

Published on
May 28th, 2020
Duration
30 minutes


Daily Briefing – May 28, 2020

Daily Briefing ·
Featuring Jack Farley, Ed Harrison, and Roger Hirst

Published on: May 28th, 2020 • Duration: 30 minutes

Managing editor, Ed Harrison, joins managing editor, Roger Hirst, to discuss the latest developments in markets, macro, and coronavirus. They talk through why US equities are still not suffering even though the real economic data demonstrates an increasingly bleaker picture. In light of that, Harrison and Hirst break down what lessons to draw from this investing environment. In the intro, Real Vision's Jack Farley looks at the continued strain on employment in the airline and tech industries.

Comments

Transcript

  • JA
    Jerram A.
    2 June 2020 @ 00:15
    Great yarn. Roger is in a league of his own.
  • OM
    Owen M.
    29 May 2020 @ 00:46
    Random question: Is Roger a CFA charter holder?
    • MB
      Matthias B.
      29 May 2020 @ 18:30
      would that matter anyway? no offense but it’s a piece of paper for studying hard and not for knowledge.
    • OM
      Owen M.
      30 May 2020 @ 11:34
      Matthias -- no, is doesn't matter. I ask because the book he references is published by the CFA Institute. I am a charter holder and did study very hard for it and have more knowledge because of it. Certainly not the end all be all though.
  • AW
    Angela W.
    29 May 2020 @ 05:24
    I’m always interested that RV and Hedgeye both talk about the performance of tech and the Nasdaq. YTD the top performing sector is the Gold Miners as represented by GDX which is up +15.8% YTD Wondering why this fact doesn’t get more attention.
    • AW
      Angela W.
      29 May 2020 @ 21:57
      Roger, just found your two videos on Gold and Silver Miners for Real Vision Finance, on You Tube. Both brilliant of course! Why are they not on the Real Vision App?
  • DR
    Derrick R.
    29 May 2020 @ 16:06
    EURUSD is past 1.11, I don't know how we haven't seen this addressed this week in any daily updates, unless I missed something? Hopefully Raoul or someone talks about it today?
  • GM
    Gary M.
    29 May 2020 @ 10:15
    Roger - re. your point about rotation signalling distribution, could you not argue that it also signals improving breadth, which could actually be bullish?
    • RH
      Roger H. | Real Vision
      29 May 2020 @ 11:22
      Hi Gary - yes it could. I tend to think of this as greater confidence returning (which might be a contrarian signal) as people feel confident in rotating out of the winners into the laggards. A rotation from the winners should slow down the momentum in S&P500 and Nasdaq - though overall I think that the momentum in the Fed's balance sheet is key. The rate of change of its expansion is starting to slow (though it is still expanding) - but this is the corner that they are now painted into. If its all just about liquidity, then they have to keep this game going, at the expense of real economic growth, or pull back their intervention, at risk of a weaker equity market.
  • IP
    IDA P.
    29 May 2020 @ 06:33
    Dear Roger Hirst, don't you look at breakeven rates? I noticed that the 5y forward breakevens are turning up in Germany and US, those are not liquidity driven and they tended to anticipate in the past, I hope you may comment the usefulness of these indicators.
    • RH
      Roger H. | Real Vision
      29 May 2020 @ 11:15
      Hi Ida - I look at the US and eurozone 5Y5Y forward breakeven. Both have bounced - the EZ version has been following oil (Brent) - so has bounced with the rebound in oil prices but still remains below the pre-virus lows by some margin. The US bounced more emphatically and appears to have responded better to the Fed's interventions (it held onto most of its initial rebound even after oil made new lows in April, whereas the eurozone version retested the lows when oil rolled over). I also look at US term premium (I follow the brilliantly named Adrian Crump and Moench 10 Year treasury version from the NY Fed). This has also bounced off the lows but remains toward the bottom of the 5 year trend channel and deep in negative territory. I think the 5Y vs 30Y part of the US yield curve will give a good indication (via steepening) of inflation/fiscal fears - it was getting steeper prior to the crisis and is closing in on the 2 year highs again - though there's always the potential for the Fed to impose full yield curve control which would limit the informational value even on this part of the curve.
  • jR
    james R.
    28 May 2020 @ 23:38
    Vix and 10 yr rates say suckers rally that will take the elevator down at some point
    • TM
      Tom M.
      29 May 2020 @ 01:40
      Hi James - can you explain a little more about this for us noobs? I am struggling to make any sense of this market. How do you use those charts in your analysis?
    • RK
      Roger K.
      29 May 2020 @ 10:11
      VIX is still higher around 30 ( healthy average range 12-17). 10Y rates is good indicator to gauge the future outcome: right now is at 0.70 and seems it wants to go down further, indicating that the deflation is in the cards. And the investors are still not selling their safe-heavens( 10Y bond) to file onto risk assets ( $SPX). If we see a substantial pull back of the bonds then it's a good indication that risk-off is turning into risk-on. In this current rally so far we don't see these market dynamics at all. Hence it's a not a fundamental risk-on rally and as Roger pointed out that rather Technical rally based on the FED liquidity and the hopium of the madding crowd.
  • BB
    Brannigan B.
    29 May 2020 @ 08:25
    One of key take away points that must be stressed is any companies with strong balance sheets will become safe haven assets in a downturn . Think Apple , Microsoft , google . With liquidity provision at record highs there is significantly more money in the system chasing fewer quality assets. The new norm will be buying safe haven growth stocks in any risk off environment . If you want a comparison look how German bond yields traded over 2012/2013 crises
  • DZ
    Dennis Z.
    29 May 2020 @ 05:54
    After hearing Roger talk about "death by a thousand cuts", small businesses going under and rising unemployment I started to wonder if, as far as the equity markets go, if wealth inequality hasn't reached the stage where the bottom 80% or so of the population simply doesn't matter anymore because they don't have enough money to have any effect. Perhaps equities can go far higher than we all think.
  • NJ
    Nimitt J.
    29 May 2020 @ 04:07
    The AMA should be interesting... Is Raoul doing a cameo appearance ? ;)
  • DC
    David C.
    29 May 2020 @ 03:58
    Always enjoyed hearing from Roger. Excellent video :)
  • CG
    Chadd G.
    29 May 2020 @ 03:40
    I almost missed this because the thumbnail said Wednesday!
  • SS
    Shanthi S.
    29 May 2020 @ 02:55
    Awesome. Thank you guys.
  • NL
    Nicholas L.
    28 May 2020 @ 23:45
    Roger hirst is my hero
    • MC
      Melson C.
      29 May 2020 @ 01:26
      Yeah, amazing. Have my babies please
  • DR
    Derrick R.
    28 May 2020 @ 23:27
    Just a thought to add to the expected fall in stock purchase volumes from unemployed and cancelled buybacks... what about companies dropping their 401k match for existing employees? That could be significant
    • jR
      james R.
      29 May 2020 @ 00:05
      also fewer people working = fewer contributors. more boomers also facing mandatory withdrawals.
  • GB
    Griffin B.
    28 May 2020 @ 23:49
    Just noticed some of the overlays on the title of the videos are wrong (i.e. this thumbnail said Wed 28), great content however!
  • SS
    Shannon S.
    28 May 2020 @ 23:12
    Hey lads, I thought Tony Greers SPX top was approx 3300, not 3030? I could be incorrect.
    • jR
      james R.
      28 May 2020 @ 23:41
      i thought it was 3100, either way, time to get him back on
  • SP
    Saxon P.
    28 May 2020 @ 23:27
    Always interesting to get analysis on the potential directions of the equity markets and the reasoning behind it.
  • GS
    Gary S.
    28 May 2020 @ 23:12
    Ive been long pretty much since Powell said "äll it takes" . I will go short when liquidity stops. The macro stuff is irrelevant to stocks, its been irrelevant for 10 years minus 2018 when they tried to tighten. Why is it so hard for you guys to get that
  • AI
    Armando I.
    28 May 2020 @ 23:11
    Can't go to bed without watching the daily briefings. Amazing work gents. Really appreciate all the knowledge and insights shared in these videos.
  • ER
    Ernesto R.
    28 May 2020 @ 22:21
    Question for the first part all the companies doing great now the tech companies Amazon Zoom Facebook they deliver a service not a product or I am seeing wrong? I believe the people need the final product I understand the service of delivery now how we build the product safety in order to put it on those companies a product such a jacket for example? thanks and amazing news again
  • SS
    Steve S.
    28 May 2020 @ 22:20
    Roger said he wants to get into stocks once we hit ATH. Sounds like a FOMO Trader. No thanks.