Daily Briefing – November 5, 2020

Published on
November 5th, 2020
Duration
45 minutes


Daily Briefing – November 5, 2020

Daily Briefing ·
Featuring Haley Draznin, Ed Harrison, and Jay Pelosky

Published on: November 5th, 2020 • Duration: 45 minutes

Managing editor, Ed Harrison, is joined by Jay Pelosky, co-founder and CIO of TPW Investment Management, to provide an update on his current outlook amid a turbulent election and uncertain future with stimulus and COVID-19. Pelosky argues that markets are getting closer to end of this period of peak uncertainty around these variables and that deep cyclicals like airlines and oil will rally sharply higher. Pelosky also explains that as the election race comes to a close, markets have been oversold in the past week and are becoming more comfortable with the idea of a split government as investors gain clarity. He digs further into the question of stimulus - a matter of “when,” not “if” - and contends that a vaccine may roll out sooner than stimulus, which would cause the markets to react aggressively, raise rates, and could set up a rotation trade out of tech and into cyclicals. Finally, he also discusses asset allocation and his thesis of a tripolar world. In the intro, Real Vision's Haley Draznin looks at markets rallying as the U.S. presidential election outcome is still uncertain and analyzes the K-shaped recovery that continues to form as the job market remains high.

Comments

Transcript

  • JH
    Jacqueline H.
    5 November 2020 @ 23:58
    "Maximum uncertainty"? Don't think we've seen that yet. One can day/swing trade these markets, but i think long term investing is imprudent at this stage. As for a vaccine, that's a pipe dream. No one's ever been able to develop a covid vaccine. Too many mutations. I would not invest on wishful thinking.
    • MS
      Mark S.
      6 November 2020 @ 01:01
      It's laughable to think a vaccine is coming even in the next 6 months.
    • PC
      Paul C.
      6 November 2020 @ 12:05
      And even if it were, to be at the front of the queue to be what is effectively a guinea pig. Yours. Give me a nudge some time in 2025.
    • JH
      Jacqueline H.
      9 November 2020 @ 22:51
      Update: The so called Pfizer vaccine hyped today was announced via press release. No data on the study tests have been released. Several people who contracted COVID-19 in the Spring and recovered, developed antibodies that faded inside of 3 months and they caught COVID-19 a second time. Will this vaccine have the same issue? How often will it need to be administered? ALSO, a mutation has been announced in Denmark, present in ranched mink populations. There is no news on whether this mutation has spread beyond Denmark.
  • MD
    Matt D.
    6 November 2020 @ 03:15
    Interesting idea about America becoming a bit ordinary, and the Americas forming a bloc. One small point that oddly is not talked about much - what if Trump wins? The intel I have read would make me concerned about the voting, and I say that as a non-American. Politics aside, you would think both sides would want a result that is legit.
    • PB
      PHILLIP B.
      6 November 2020 @ 06:57
      The bit about about America becoming a bit ordinary ties back in with the narrative about the permanent decline of America power. It's not a political statement. Re the outcome that Trump wins a second term, agree that this is not being taken into consideration. A second term would translate hard into permanent decline. Still a superpower, but a failed vision, no longer the light on the hill. Lots of second and third order effects. In such a world, would be disentanglement of others from SWIFT and the terminal end of many US-created, post WWII institutions. Probably speed up CBDC. Not dollar bullish. The USD as a regional currency would be weaker. Don't see how the loss of reserve status would take less than many, many years. Too complex for my brain. Asia, select commodities, select EM.
    • DM
      Danny M.
      6 November 2020 @ 07:00
      The intel that you read? Stop watching Fox. Your comments are ridiculous as there is no evidence of voter fraud. Let the votes count and ignore the comments of Trump who is acting like a dictator but will have to succumb to the will of the people, something which has occurred for 240 years.
    • MD
      Matt D.
      6 November 2020 @ 07:29
      @Danny M - you assume I watch FOX. I have never watched FOX in my life so to speak. You then claim my comments are "ridiculous". I have no problem with any of that. Yet it seems to be how people "debate" these days. On the other hand, you could have asked about my intel, and then we discuss differing bits of evidence. None of us have the whole truth. I am just offering to be the 10th Man so to speak (see Israeli parliament). Some could argue the republicans are wanting every vote to count - they just want the votes to be legit at the same time. That is quite different to how it is being portrayed. Of course some don't. The truth is often down the middle. I think both sides would want what you want - the honest will of the people.
    • BA
      Bruce A.
      9 November 2020 @ 11:12
      I have never read about widespread voter fraud in developed democracies; especially in the USA. Could the court challenges and public pleas for protests be a sort of a smokescreen to minimize the emotional pain of losing? Is this all an effort to protect his ego? Would he be pursuing these court challenges if he had won the various states that he is contesting? Just a few of the questions going through my mind at the moment.
  • DC
    Dave C.
    8 November 2020 @ 23:50
    Great insight guys. Love the overall structure as an investment strategy long term.
  • AP
    Alfonso P.
    7 November 2020 @ 17:42
    Enjoyed Jay’s view, great conversation Ed!
  • AS
    Alan S.
    7 November 2020 @ 05:17
    wow, after watching this I thought I'd been asleep for 9 months and I'd just woken up. Did I really imagine RV saying day after day for months on end that we are in for a major correction, millions laid off from jobs they will never go back to? Raoul talking about hope phase going into insolvency? Incessant printing of money leading to loss of value loss of faith in the $b etc. What does everyone think - is this guy an outlier or do you share his unbridled optimism?
  • WM
    Will M.
    6 November 2020 @ 22:23
    I just disagree with at least 50% of what Jay said, but he is a welcome positive side for RVT. Good stuff.
  • RM
    Russell M.
    6 November 2020 @ 13:42
    I don't see Europe being big competition, too big a social safety net and regulation.
    • WM
      Will M.
      6 November 2020 @ 22:21
      Russell, don’t completely disagree with you, but the US social safety net is not so different in scale and given Biden and the Dems will now try to boost Medicare and Medicare and likely not reform Soc.Sec., the unfunded US programs will bankrupt the USA within 4 to 6 years.
  • RM
    Russell M.
    6 November 2020 @ 14:02
    Jay's view that we will put the Caronavirus behind us in 2021 leading to massive worldwide growth is certainly possible but I don't see the virology experts supporting that. If we get a vaccine, it would be in record time and not likely to be very effective. 50% would be very good. Listen to the Oterholm Update at University of Minnesota Center for Infectious Disease Research. https://www.cidrap.umn.edu/covid-19/podcasts-webinars/episode-30. Therapeutic trials from Regenron, Lilly, Astrazenica so far have been uniformly disappointing. And the medical community does not think much of remdesivir. The only promising therapeutic that continually reports positive results is leronlimab which is in a phase 3 severe/critical placebo controlled trial that got an encouraging go ahead from its Data Safety Monitoring Committee (which stopped the other companies' trials). But it is not clear that even when that drug is approved (lots of strong efficacy and safety data) that it will be effective enough to end the need for social distancing. It might be. Just not clear yet. So, the Caronavirus is likely to be with us through the end of 2021 at least and it will continue to make much of the economies business models untenable resulting in lots of bankruptcies and poor economic performance while the economy readjusts to the new reality.
    • JM
      John M.
      6 November 2020 @ 19:21
      I don't think he mentioned anything about the Pfizer vaccine which I heard may be very effective - maybe I missed it? I talks about a "rocket ship of cases" but not fatalities.
  • DM
    Dominic M.
    6 November 2020 @ 16:45
    Great discussion—thank you, gentlemen.
  • DA
    David A.
    6 November 2020 @ 14:10
    I hope to see Jay Polosky on Real Vision again. He presented thought provoking arguments clearly and supported them with evidence. The good sort of opinionated guest.
  • KD
    Kelley D.
    6 November 2020 @ 14:07
    Always enjoy Jay....great interview
  • RY
    Roy Y.
    6 November 2020 @ 12:22
    Upbeat ... great interview.
  • jG
    james G.
    6 November 2020 @ 00:32
    His words about near on-shoring industrial production rang a bell with me. I have been bending my friends ears for the last few months telling them that jobs will not come back to the USA. If they come here the manufacturers will prefer robots. --- But Latin America is a different story. I absolutely do not want it raped and abused by American Imperialistic Industrialism, as has been the case in the past but there is a great opportunity to bring prosperity to Central America and to cut the supply chain line to just a truck drive up the Pan American Highway . The caravans of migrants moving north come for a better life. We can absolutely provide that better life right there in their country of origin and everyone will benefit . I realize that this comment sounds a little naive in thinking this is an easy thing. I fully understand how incredibly complex it is but it is an idea worth pursuing
    • PP
      Patrick P.
      6 November 2020 @ 02:13
      The forever story for Latin American can be summed up in one word .... CORRUPTION...
    • PC
      Paul C.
      6 November 2020 @ 12:03
      Same with Africa, but alas, another continent with a history of broad corruption.
  • JM
    Justin M.
    6 November 2020 @ 01:33
    Jay, you really believe Europe is going to be leading tech in this coming decade? I'll happily take the other side of this bet.
    • LK
      Lauri K.
      6 November 2020 @ 09:29
      Yes totally delusional, the brain drain is still heavy towards North America on anything requiring capital and innovation.
    • CT
      Chris T.
      6 November 2020 @ 10:39
      would suggest he visits southern europe and asks the 20-30% unemployed youth what their view is on europe
    • PC
      Paul C.
      6 November 2020 @ 11:57
      Agreed.. with the Brits gone, Europe will stagnate as more countries lean to the left as the recession bites. There will be no anglo-saxon free markets voice at the table.
  • CB
    Clifford B.
    6 November 2020 @ 10:07
    Insightful discussion. Negative news sells headlines, but the world is realizing finally that life treads on regardless. As a foreigner looking in at US election shenanigans, will be nice to have an adult in the White House and not a petulant child.
  • HT
    Hans T.
    6 November 2020 @ 08:20
    Very much enjoy hearing from Jay, I listen to all his episodes. He has a broad perspective and his relentless optimism is a good counter to my own apprehension about what is going on. Living in Europe, it is always surprising to me that US investors assume Europe will be just like the US at some point, once we get over pesky things like national boundaries and different languages etc. My take is it will not happen in my lifetime...for which I am very grateful.
  • PB
    PHILLIP B.
    6 November 2020 @ 07:04
    Appreciate the bullish outlook. I think it's too early. Maybe Q4 2021. Let's see how bad the real estate bankruptcy problem turns out to be. And how bad COVID is this winter. Give it some more time to see what permanent changes people make in their preferences. Yeah, JETS will be fly again. Good speculative bet for a 18-36 month horizon. Could see how in some euphoria of first distribution of a successful vaccine it goes up 40% in just a couple of sessions. Probably some airline bankruptcies beforehand. Too early.
  • SM
    Shawn M.
    6 November 2020 @ 06:26
    I wonder how much of the optimism of a vaccine is correlated to the 80 / 20 bull-bear of stock performance. Meaning that because the markets go up 80 % and go sideways or down 20% Ed, WTF mutation nonsense. Please explain.
  • TR
    Tim R.
    6 November 2020 @ 05:41
    I think how much China and Russia can affect CPI an in turn force inflation isn't discussed enough in New Zealand for example: recreational goods (which the vast majority come from China) have the same percentage of CPI weighting as rent does. Food prices are based on international demand from China Gas is around 6% of CPI a 33% increase in gas prices = 2% inflation target.
  • JA
    John A.
    6 November 2020 @ 04:08
    This guy believed in the blue wave, pretty much all I need to know about his viewpoint lol. But, this was better than his last interview. I appreciate hearing his viewpoint even if I think he is dead wrong. I am just not built for momentum trading.
  • GW
    Greg W.
    6 November 2020 @ 03:02
    Excellent interview that provided a different view then others.
  • KP
    Kaushal P.
    6 November 2020 @ 02:49
    I was into the rosy picture because I’m desperate to get back to normalcy but then he said he is bullish European banks....
  • CS
    Christopher S.
    6 November 2020 @ 02:29
    Really, really, really bummed out that the Atwater interview is above the next paywall.
  • IS
    Ian S.
    6 November 2020 @ 02:26
    Not as bullish no way. But some really interesting points. Vaccine kryptonite and on-shoring industrial production particularly useful insights. Dont agree that Europe will be the next tech hub. Would be interesting to hear Jay expand on that.
  • JN
    Jerrick N.
    6 November 2020 @ 01:33
    everytime you've had this guy on theres been a crash the next day followed by a bull run
    • RC
      Rafael C.
      6 November 2020 @ 02:23
      Hahahaha futures are down, let's see.... I really like his different bullish view but (1) as Raoul commented recessions usually take up to 18 months, (2) getting a vaccine in November is not that clear and (3) apart from the logistics/distribution challenges of a new vaccine, it is not evident it will be fully effective
  • CM
    Cory M.
    6 November 2020 @ 01:58
    Great guest. Very interesting. Enjoy how Jay applies broad concepts to ongoing markets and is not a tape watcher.
  • MC
    Michael C.
    6 November 2020 @ 01:49
    To the RV bloggers: Thank you for saving 44 minutes of my life...lol. I will spend it trying to find out how 50 states simultaneously corrupted the Presidential election process...;)
  • SP
    Simon P.
    6 November 2020 @ 00:49
    WoW, this guy is great!!!
  • MS
    Mark S.
    6 November 2020 @ 00:07
    I just heard Trump speak. This is not ending this month.