Daily Briefing – October 2, 2020

Published on
October 2nd, 2020
Duration
40 minutes


Daily Briefing – October 2, 2020

Daily Briefing ·
Featuring Jack Farley, Ash Bennington, and Raoul Pal

Published on: October 2nd, 2020 • Duration: 40 minutes

Real Vision CEO and co-founder, Raoul Pal, joins senior editor, Ash Bennington, to interpret the latest financial newsflow. Raoul explores the possibility of a top forming in U.S. equities through the lens of his "GMI crash pattern." He and Ash then analyze President Trump's diagnosis of COVID-19 and investigate its potential market impact. Raoul then talks about today's interview with hedge fund legend Dmitry Balyasny as well as next week's interview with bond kingpin Jeffrey Gundlach. Raoul and Ash briefly discuss the criminal charges brought against BitMEX, one of the world’s largest crypto exchanges. Lastly, Raoul shares his view on the enfeebled energy sector. In the intro, Real Vision's Jack Farley breaks down the price action following the COVID-19 outbreak in the White House.

Comments

Transcript

  • ab
    alfred b.
    6 October 2020 @ 11:17
    Raoul, you are missing the point of centralised digital currency. It allows the state to FORCE negative interest rates as it makes it harder to withdraw YOUR MONEY from the system. It is a MASSIVE increase in risk to civil liberty. massive.... :(
  • KN
    Kresten N.
    3 October 2020 @ 09:49
    Raoul you say you're bearish on the energy sector because of too many headwinds. Do you have a view on renewable energy stocks as the energy sector is transformed from old fossil based energy to renewable? An example is Orsted a big Danish energy company which sold off all oil/gas assets and went full on into renewables.
    • JC
      John C.
      4 October 2020 @ 13:21
      These companies will never be profitable without big government subsidies but that does not mean they cannot ride the ESG wave for years to come
    • ab
      alfred b.
      6 October 2020 @ 11:16
      Looking at the real numbers on Wind and Solar, and the massive leaning towards biofuels (ultimately NOT ECO). I am backing into a corner which implies better managed nuclear with better use of fuels and storage make it more viable in the face of the unrealistic narrative that Solar and Wind are viable at mass scale. Unfortunately NOT.
  • FL
    Fabrizio L.
    4 October 2020 @ 09:42
    Very interesting talk about centralized digital currency, we should explore possible scenarios further, there really could be embedded opportunities and /or risks for bullion and other untraceable means of payment....
    • ab
      alfred b.
      6 October 2020 @ 11:12
      Beware enforced cashless society as it ends with risk to individual freedoms. More importantly it makes it easier for banks to FORCE us to accept negative interest rates as there is no place to store our currency within the system. Tailwind for BTC. Unknown the effect for Gold/PM but should be positive as long as it is not confiscated. (lowish risk)
  • DL
    Darren L.
    5 October 2020 @ 20:47
    170,000 NYC restaurants to close? I don't think there are that many restaurants there. I think Raoul might be thinking about the recent estimate that 170,000 restaurant workers might lose their jobs. So far around 1,000 NYC restaurants have permanently closed.
    • ML
      Michele L.
      6 October 2020 @ 04:00
      NYC's comptroller estimates maybe 12,000. https://www.bizjournals.com/newyork/news/2020/10/02/nyc-restaurants-report-covid-comptroller-dinapoli.html 100,000 might be across the entire US
  • OC
    O C.
    5 October 2020 @ 20:42
    Adoption of Bitcoin may accelerate the stripping away of our constitutional freedoms by world governments.
  • IH
    Iain H.
    5 October 2020 @ 13:56
    On the topic of governments extending their powers, something I find troubling from my native NZ, is the implementation of managed isolation. Anyone who tests positive for convid must quarantine in a government managed isolation. IMHO.... this is outrageous, we should expect people to comply with regulations and go after those who don't, not take the easy way out and constrain law abiding citizens. Also speaks to what freedoms are easily tossed aside for the benefit of the greater good. It should have part of the analysis of the eradicate model, not everyone will comply and do we want to make them? I'd vote no.
  • SM
    Steven M.
    5 October 2020 @ 07:44
    With governments using the current health crisis to extend their powers socially, politically and financially, I fear that we're in a long-term bear market for individual freedom.
  • SS
    Shanthi S.
    5 October 2020 @ 05:10
    All hail the technocracy. :[
  • AS
    Ash S.
    4 October 2020 @ 22:50
    I'm late here, but I think it's an important point that central banks aren't likely to interact with the public direct due to the multitude of loan and savings product terms, and CBs aren't set up to manage that. They are better off propping up the banks to keep people employed, keep value there for pension funds and manage product terms, conditions, loan defaults etc. Eliminating tax avoidance is potentially a much more valuable return on capital for the CBs.
  • DS
    David S.
    2 October 2020 @ 22:58
    Politicians need to formulate polices from many points of view. I was looking at Florida early opening from the COVID point of view. The second front to the COVID war is the economy. The opening up will help Florida’s economy, especially small businesses. One of the Florida’s strongest money makers is death and dying. The warm weather attracts millions of elderly people. The hospital, rehab, home health care, banking, funeral, and trust attorney economies will be enriched by the complete opening. This is not the only reason for opening, but it will benefit the economy. DLS
    • DS
      David S.
      4 October 2020 @ 18:19
      This comment was written to show the political dilemma that COVID presents between locking down and opening up. I chose Florida as it locked down poorly and they have few options but to continue to open poorly. Florida is just and example. To a greater or lesser extent, we all are in the same boat in the US. I do not think COVID is going in waves like the Spanish Flu. In the US, our increases and decreases in COVID cases merely reflect opening up and locking down effectiveness. Our experience needs to be contrasted to a place like Taiwan who did it much better with 517 cases, seven deaths, and 484 recoveries as of 10/4/2020. Hopefully, we can still do better by coordinating and implementing better on a national, state, and local basis until this pandemic is over. We as individuals need to help by controlling our own behavior. We just opened restaurants in Hawaii with restrictions. I have not been as careful as I should have been while meeting local friends. Luckily, they are safe. At 74, I am going to try to be safer myself now. Best of luck to all. DLS
  • CS
    Christian S.
    4 October 2020 @ 10:38
    Hi guys, Does anyone know how I can find the Weston post he is referring to?
    • SB
      Samuel B.
      4 October 2020 @ 17:14
      If y you find it pls post how you did it.
    • JF
      James F.
      4 October 2020 @ 17:50
      Hey Christian! Here it is: https://exchange.realvision.com/user/weston Weston Nakamura is his profile and its his first video as of this writing (4th October)
  • JA
    Javaid A.
    4 October 2020 @ 16:39
    why can't we have 'forever'stimulus and an long drawn out deep insolvency side by side .So we get a mixture of deflation ( goods, rents, commercial property) , inflation ( A rated equities , housing , food) . So we get the insolvency phase but we dont get equities collapsing. Eventually a devalued $ will reprice the equities correctly. Does that make any sense?
  • pt
    popejumpingjohnpaul t.
    3 October 2020 @ 13:55
    Because us Europeans, we believe in Ye Olde Science, not guns, god or thoughts and prayers!
    • JC
      John C.
      4 October 2020 @ 13:19
      Spain & France having big lockouts due to botched handling of the virus. Also 1/5 or more of many EU countries are devoutly Muslim
  • TA
    Thomas A.
    4 October 2020 @ 11:46
    The odds mildly tilt toward the Senate shifting Democrat. Is Biden's 28% corporate tax plan on anyone's minds in this market?
  • jg
    john g.
    4 October 2020 @ 03:52
    The big news is the president of the United States has Covid and markets are reacting adversely. That is what this update needed to be about. However it seems we got the update prepared BEFORE the Covid announcement - which was not timely or helpful.
    • MT
      Mike T.
      4 October 2020 @ 09:25
      Trump going down with Covid is of course a big media and political story but fridays market move in say /ES futures was in round numbers equivalent to approx 0.5 (mental arithmetic calculation) standard deviation move essentially friday was not statistically significant for equity markets. It could therefore be argued based on Friday and only Friday the market expressed indifference to Trump situation. This could of course all change on Monday
  • SS
    Shane S.
    4 October 2020 @ 07:31
    I call them chinos too
  • QS
    Quenton S.
    3 October 2020 @ 16:01
    George Gammon pointed out something really interesting in his previous video. How many people have seen "US coin shortage" signs in stores? Notice how 80% of Walmart's self checkouts are not allowing cash payments or cash back? It looks like they are trying to condition us to cash free society. Speculation of course, but how do we magically have a coin shortage?
    • JK
      John K.
      4 October 2020 @ 00:31
      They closed coin minting when Covid hit. I do agree about conditioning but not on scheme to socially condition society
  • KC
    Kevin C.
    3 October 2020 @ 22:46
    Kevin C. something is wrong with your audio. there is a static distortion sound repeating in the recording every minute or two. like a loose microphone connection. this annoying noise has been present for 3 days now on daily briefing. It distracts me from you excellent presentation.
  • CM
    Conor M.
    3 October 2020 @ 22:42
    Really interesting discussion this week. Raoul - any recommendations on books or papers on the theme of behavioural economics as it relates to governments and central banking as you discussed ? I found this concept fascinating in the context of digital currency. Thanks and have a great weekend.
  • FK
    Fred K.
    3 October 2020 @ 18:46
    Fantastic RVDB. On the Bitmex side, the industry is talking about DEFI consequences.
  • JH
    Jesse H.
    3 October 2020 @ 16:57
    Thanks for a thoughtful and interesting RVDB as usual. I respectfully disagree with many of the views expressed here, except that we are nearing a top in US markets - that seems spot on to me. I would love to be as sanguine as Raoul is about the benefits of a centralised digital currency, but I see real political and human risks here if we allow government & corporates to get bigger and have yet more control. Thanks again. :-)
  • GA
    Gerald A.
    3 October 2020 @ 04:06
    Raoul predicting a "Brave New Animal Farm" on the horizon with impeccable arguments and a smile on his face. Almost, don't worry, be happy that our neofeudal overlords are coming for us. That can't be our destiny. Can it? There has to be another way where ordinary folks can actually be relatively free and prosperous, rather than nudged and pharmacologically induced to believe that debt slavery is freedom.
    • B
      Bojo .
      3 October 2020 @ 08:25
      Yes, we are going from sweet sleepy ''Brave New World'' straight into ''1984''. Poor Winston got two starving rats in front of his face to forsake Love. Fascism .. or chaos, as ego structures tend to self-destruct in the end.
    • AB
      Alastair B.
      3 October 2020 @ 11:33
      I bought a faraday pouch for my smartphone and bought a Nokia dumbphone. There’s a storm coming.
    • AD
      Antonio D.
      3 October 2020 @ 15:23
      Different countries may have varying levels of freedom, in my POV. The countries that go towards centralization, for whatever reason, will find themselves unable to get out of that hole. This is why you need to find investments without counterparty risk (Gold, BTC).
  • JM
    Jake M.
    3 October 2020 @ 05:44
    Can some one refer me to the video post Raoul mentioned on trading geopolitics event? thanks!
    • JM
      Jake M.
      3 October 2020 @ 06:06
      ah... someone mentioned it. sorry... It's already in exchange.
    • DB
      Dan B.
      3 October 2020 @ 06:30
      Where can I find it in the exchange ?
    • Hv
      Hannah v.
      3 October 2020 @ 15:22
      Google “Real Vision Exchange”. You’ll hit the landing page. Log In and fill out your profile. It’s $1USD per month.
  • RN
    Robert N.
    3 October 2020 @ 00:50
    Raoul often talks about bonds, 'the bond market tells us something'. Would you please take a minute and explain that. How does the bond market speak? How do I interpret it?
    • SL
      Shawn L.
      3 October 2020 @ 05:14
      I am by no means a financial expert nor do I work in the financial industry, but giving you my two cents may encourage the real experts to chime in. If you look at the two year Treasury note it was up aroung 1.6% until March 2020 (covid) and dropped to 0.14% and has been relatively flatlined since March. The 10 year has done something very similar. You can see this stuff for free here (https://tradingeconomics.com/united-states/government-bond-yield). So when they say, this is telling you something. What it is telling you is for the next two years and even the next 10 years risk free interest is gone or at least gone down to almost zero. Think about this, this means the bond market is telling us our economy is so bad it won't be better in two years, and probably won't be better in 10 years as far as risk free returns. This risk free rate affects everything or used to now that it's essentially gone. For example, if you could buy Treasuries and receive 2% return why would you take a riskier bet paying the same. So it influenced all investing/trading. Now that it's near zero, everything other possible investment must be better right? You might think so, but these risk free rates are controlled on the short term end of the yield curve by the Federal Reserve (fed funds rate, it is a 1 day overnight rate), influenced further out on the yield curve (all other timeframes) by the overnight rate and this incentivize investment. If the risk free rate is near zero investors are forced to look elsewhere for good returns. Currently the problem is non-Treasury bonds, such as corporate issued bonds that are much riskier, so investors are looking and moving where? To equities and this is a part of why the stock market is hitting so many new highs these days. This is a basic overview and simple interpretation of when the bond market talks and barely scratches the surface. Corporate bonds are divided into investment grade and non-investment grade (junk bonds) and they all shed insight onto many other parts of the market and economy. I hope this gets you started, never stop asking questions. It is the only way to grow.
    • JV
      Jerry V.
      3 October 2020 @ 13:46
      Robert, I second that statement
  • JV
    Jerry V.
    3 October 2020 @ 13:43
    I have said many times and will again here now. - The daily briefing has been a fantastic addition to the RV line up of content. - Pura Vida
  • AB
    Alastair B.
    3 October 2020 @ 12:04
    Can’t wait for the Gundlach interview!
  • RL
    Remmelt L.
    3 October 2020 @ 10:41
    The last part would be very interesting, financial government 2.0. What are the possibilities and also how Europe can get tax income from the Internet companies.
  • BA
    Bob A.
    3 October 2020 @ 10:13
    Raoul, always good to see you on a Friday. I'd like to hear more about your thoughts on what Europe will be doing. Sounds like an idea for a themed week. Thanks.
  • SC
    Shawn C.
    3 October 2020 @ 00:39
    Raoul mentions a video around 21. https://exchange.realvision.com/post/video-before-you-trade-trump-covid-5f76ef6f598d81276223e586
    • VS
      Viktor S.
      3 October 2020 @ 09:23
      Thank you for sharing the link!
  • MJ
    Marc J.
    3 October 2020 @ 08:46
    170,000? I have no words.
  • DS
    David S.
    3 October 2020 @ 08:07
    Raoul, how does the evolution of sovereign digital currencies effect the long-term investment prospects of Bitcoin?
  • SP
    Simon P.
    3 October 2020 @ 07:59
    Love the value you give Raoul
  • TC
    Timothy C.
    3 October 2020 @ 00:16
    I agree with the Behavior Economics commentary. US taxes have long been used for social engineering (for better or worse). The potential to use Behavioral Economics to shape economic growth and asset allocation in a more transparent fashion is interesting.
    • JL
      John L.
      3 October 2020 @ 01:52
      Yes. I think we now need at least one RV session as a primer on Behavioral Economics. Thanks for another great show, guys!
    • TN
      Tim N.
      3 October 2020 @ 07:15
      We have allowed ourselves to be lead step by step along a path to totalitarianism. Allowing the government to control our behaviour by financial coercion is an abomination.
  • VS
    Ville S.
    3 October 2020 @ 07:15
    With the news of deflation in euro area, this digital euro is certainly coming soon. https://www.ecb.europa.eu/press/blog/date/2020/html/ecb.blog201002~12ab1c06b5.en.html It basically means a euro issued by the central bank directly to citizens/businesses (circumventing banks) which isn't withdrawable. So you cannot cash it out. Definitely a bit dystopian but hardly stoppable Like Raoul says. From ECB point of view, it will be their new tool for direct fiscal stimulus, and negative rates on that same money. They can also discriminate between different categories of beneficiaries by rates and taxes. I am thinking of writing my master's thesis on this topic abd would be interested to hear some different suggestions on how to approach the topic.
  • BB
    Bob B.
    2 October 2020 @ 22:41
    As a Boomer who can't spend on ourselves there is a significant change to the trickle down to our kids, Gen Y and our grandchildren. Gen X could be stuck support their very senior parents needing care! Pandemic causes ramp in chaos everywhere including increase in generational chaos.
    • TM
      The-First-James M.
      2 October 2020 @ 23:24
      Speaking as a Gen Xer, I'm now in this boat with my elderly Father of 81 - suffered recent brain damage from a TIA/Mini-Stroke, and now in need of part time home care as a result. Fortunate enough to have power of attorney and my Parents have a substantial income stream from rental properties. Still going to be a fight with him as he's not used to not being in control and he's retained enough cognitive function to realise he no longer is, and is already pushing back hard on the idea of care in the home. Without this, he will likely put my Mother in the ground in the next 12 months due to the stress of trying to look after him. I count us fortunate to be in the position where my Parents income stream will support their care and an estate planning exercise they undertook in 2014 included the formation of an LPA agreement. The only hit on me is my time in helping to put the care in place, visiting regularly and managing my parents finances for them. If my parents did not have this income stream, my Father would end up needing to come and live with one of us (myself, or one of my sibblings), which would then likely put that person's relationship under strain (definitely mine, if it were me). Less fortunate Xers are likely to really struggle in a similar kind of situation. Rapidly coming to the conclusion that cognitive dysfunction is one of the most terrible ways for an elderly parent to die a degrading and lingering death. We'll do what we can as a Family to ensure my Father can live out his final years with some kind of quality of life, but it's not going to be easy...
    • DS
      David S.
      2 October 2020 @ 23:53
      The-First-James M. - Thank you for sharing your family's situation. We all need to take charge and be ready for similar situations. Words never suffice when they are really needed. I hope all will work out as well as possible for you and your family. Monitor your Mother's health closely. DLS
    • BM
      Bryan M.
      3 October 2020 @ 06:37
      Hi Bob, we went through that with my parents and with my wife's. All are now deceased but, for a couple of years it was a struggle, that's for sure. Just so you know...with my parents, there wasn't much money but - we live in Canada so the monetary strain was lifted. My in-laws were a different story; they had assets and fought like hell to maintain control which slowly slipped away from them. In the end, I ended up managing their estate through a broker until their passing so all that was gained was the 3 siblings each put a few hundred K in their pockets. Somehow something is wrong with that story.
  • BM
    Bryan M.
    3 October 2020 @ 06:17
    Gotta watch this again!!!! Mr. Pal you have again opened my eyes to the future. And...I am going to tie my wife to a chair and force her to watch this!! So how's that for a recommendation???
  • TN
    Tim N.
    3 October 2020 @ 05:34
    Great to see Raoul again. Most economies in the world for the last few months: 1 step forward and 2 steps back. Try and square that circle :):)
  • UJ
    Ulf J.
    3 October 2020 @ 05:16
    I am amazed that I can listen to great people in money managing who do this for a living, I am a guy who is working in construction and can take part of this it is truly great. It is never to late to learn still learning at 56 years old.
  • KR
    Kevin R.
    3 October 2020 @ 03:58
    What i am looking for is 2 stock picks from each of your experts for the next 12 months, so I can track the results and find one true winner to follow.
  • SB
    Samuel B.
    3 October 2020 @ 00:42
    Bitmex CTO Sam Reed was an excellent coder and a good dude when I worked with him. He lives 5-10 years in the future and was never afraid to follow his convictions. Bitcoin feels like Napster and Bittorrent back in the 2000s so hopefully the PTB will catch up in a similar manner. https://www.youtube.com/watch?v=PjGM0LufPWQ
    • KB
      Kurt B.
      3 October 2020 @ 02:46
      What is the title of the YouTube video? The link isn’t live and the “select” function doesn’t work in the comments section. Also, is your Napster/Bittorrent/BTC comparison meant to suggest BTC will be rendered obsolete? Finally, PTB? Thanks.
  • BS
    Brian S.
    3 October 2020 @ 01:28
    Raoul’s “Intellectual” thought at the end is definitely one that got my head spinning, the following are my thoughts. I am biased towards the Libertarian perspective, I think this is the case because I perceive the government ( I am from California) to be pretty much dysfunctional, and I would like to reduce the power of the government to make the world more functional in general. However, if I had been raised in an environment with a more functional government (Sweden?) I would imagine my bias might be towards a stronger government that I would trust to spend my taxes wisely and safeguard my personal information from harm. Ultimately, I think prosperity is usually a condition where a balance is reached rather than pursuing an extreme of an argument, in this case the two extremes are (1) a monetary system with 100% anonymity (in other words the government fully trusts the citizens to do the right thing and sustain the civilization and not end up in a “tragedy of the commons”), and (2) a monetary system where everyone’s information if fully known and tracked by the government, which would simplify the taxation of citizens, but the citizens would have to 100% trust the government to do the right thing and not take advantage of its own citizens with an unbelievable information arbitrage that could lead to God knows how much blackmail. I think the right balance is kind of what we have right now, which is to say, we all still have access to anonymity (cash), however it isn’t realistic to use it for large transactions, as such a small percentage of our transactions are truly anonymous, we can choose to follow tax rules or not on them, or to use them for legal or illegal means. However for large transactions, your information is pretty much in your personal record, and your property (address) are all known. So if we do transition to a digital currency, I would suggest a smaller percentage of the currency should be left anonymous (untraceable), but for large transactions (where the majority of the tax revenue comes from) I would be willing to give up my personal information for that to prevent a “Tragedy of the Commons” scenario. This is the best compromise I can think of.
    • RA
      Ross A.
      3 October 2020 @ 02:22
      I read that the powers-that-be may issue paper notes that have expiry dates. So you can withdraw some and use as you suggest but the notes need to be deposited back into the system before a certain date. So you can "Check out but never leave"
  • BS
    Benjamin S.
    3 October 2020 @ 02:17
    The governments are going to ruin my life :)
  • NL
    Nikola L.
    3 October 2020 @ 02:00
    the government will ruin my lifestyle again.
  • JA
    John A.
    3 October 2020 @ 01:59
    Had a good back and forth with Weston over GE when they popped about 2 weeks ago. Pretty sure that guy is like you top contributor that isn't employed by you guys right now.
  • BB
    Bob B.
    3 October 2020 @ 01:57
    Roul - Are you leaning in Ken's direction on consumption taxes???? https://kenmetcalfe.blogspot.com/
  • BK
    Binyam K.
    3 October 2020 @ 01:39
    Thanks Ash, Jack and Raoul!
  • ME
    Michael E.
    3 October 2020 @ 00:39
    https://vimeo.com/464408286
  • PB
    Paul B.
    3 October 2020 @ 00:21
    Well they have to do something this current system is about to blow up.
  • CM
    Cory M.
    3 October 2020 @ 00:18
    Last five minutes were worth 500 RV pro subscriptions! Thank you.
  • JS
    Jim S.
    3 October 2020 @ 00:17
    How Orwellian of you Raoul!
  • GL
    Gustavo L.
    3 October 2020 @ 00:17
    Governments "short their load" early... I don't even watch TV anymore, just RV and youtube. From Horror to comedy.... all you need, and you learn in the process.
  • PD
    Paul D.
    3 October 2020 @ 00:12
    Thanks as always guys. How would I find that exchange video by the chap explaining how institutional trades ‘news’.?
  • DS
    David S.
    3 October 2020 @ 00:06
    Currently in the US banks make most of the loans to small and medium size businesses. Even with digital dollars, I hope that our regional and local banks continue to do a great job in funding business. National and multi-national banks will be required in the future as well. What may be the best development will be a lot of excess capital in the stock market and under invested money in pension funds will be used by private investment firms to fill in for former bank loan responsibilities. The governments digitizing their currency will only function in part of the mega economy. I agree, however, the long arm of the tax collector will get longer and more intrusive. DLS
  • DF
    Diamantino F.
    3 October 2020 @ 00:00
    THE Bitcoin bias ... If there was a alleged fraud in any other derivative all hell would be lose
  • PD
    Paul D.
    2 October 2020 @ 23:32
    I was told there would be trumpets Ash!!!