Looking Forward at Interest Rates, the U.S. Dollar, Volatility, and the B117 Variant

Published on
January 15th, 2021
42 minutes

Real Vision’s New President on the Dollar, Bonds, Bitcoin, and Tether

Looking Forward at Interest Rates, the U.S. Dollar, Volatility, and the B117 Variant

Daily Briefing ·
Featuring Jack Farley, Ed Harrison, and Raoul Pal

Published on: January 15th, 2021 • Duration: 42 minutes

Real Vision CEO and co-founder Raoul Pal joins Real Vision managing editor Ed Harrison for a nuanced discussion of how the economic recovery will evolve over the next few months. Raoul and Ed interpret today’s dismal retail sales figures, which indicate a contraction of total retail activity for the third straight month. With the new B117 COVID-19 variant on the move, Raoul expects economic activity to continue to decline, ebbing away at the dominant reflationary trades that are short U.S. Treasurys as well as the U.S. dollar. Ed asks Raoul his thoughts on the recent storming of the U.S. Capitol, the approaching inauguration of President Elect Joe Biden, and Biden’s new $1.9 Trillion stimulus plan. Lastly, Raoul and Ed wax philosophical about “the death of macro”: what would happen if the volatility of interest rates and currencies – the bread and butter of macro investing – were extremely low over the next decade? In the intro, editor Jack Farley provides context on bank earnings and the recent short squeeze of GameStop Corp ($GME).



  • DB
    Danielle B.
    17 January 2021 @ 00:33
    Where was the censorship of antifa or blm induced racism and looting? I would like to know why I was assaulted by drunk rascist aboriginals shouting blm walking my dog in my local park. Point is...if you are going to censor, you can not be subjective without being hypocritical or having side effects. I would rather no censorship of legal speech. The repressed energy of censorship materialises in negative ways.
    • JC
      John C.
      18 January 2021 @ 18:39
      Its only going to get worse. US turning into a one-party state backed up by the media, Big Tech, academia and much of the crony capitalist corporations. I think RV needs to start getting a better handle on the hugely destructive consequences of all this woke marxism and how it's utterly destructive to these economies, along with the insane central banking
    • DG
      David G.
      19 January 2021 @ 06:57
      If you are going to call them "aboriginals", you can't call them racist for assaulting a "colonizer." That's called retribution or defense of ones homeland. It seems that you were trying to be disrespectful, but if you don't stick a singular narrative, you sound like an idiot.
    • sc
      sung c.
      28 January 2021 @ 18:55
      Check history: Nov.7th,1983, Susan Rosenberg of "May 19th Communist Organization" which was formed in 1982, bombed U.S. Senate to kill Republicans. She was later pardoned by Bill Clinton, She is now an administrator for BLM and a fundraiser for BLM. Apparently the bombing of U.S. Senate is not such a big deal and is pardonable. Double standard?
  • BA
    19 January 2021 @ 00:18
    Get a large monitor and use bluetooth headphones. Do the daily briefing while walking around the room and whenever you want to emphasize an important point, punctuate it by taking a shot at the pool table.
    • SM
      Suzanne M.
      20 January 2021 @ 23:46
      I love this.
  • ss
    stephen s.
    16 January 2021 @ 23:45
    Concern about Capitol protest? Where were you when anarchists were terrorizing Portland, Seattle etc.?
    • BC
      Bill C.
      17 January 2021 @ 17:32
      Were? More like "are."
    • TA
      Tom A.
      19 January 2021 @ 21:36
      https://en.wikipedia.org/wiki/Tu_quoque: The (fallacious) tu quoque argument follows the template (i.e. pattern): Person A claims that statement X is true. Person B asserts that A's actions or past claims are inconsistent with the truth of claim X. Therefore, X is false. As a specific example, consider the following scenario where Person A and Person B just left a store. Person A: "You took that item without paying for it. What you did is morally wrong!" Here, X is the statement: "Stealing from a store is morally wrong." Person A is asserting that statement X is true. Person B: "So what. I remember when you once did the same thing. You didn't think it was wrong and neither is this." Person B has pointed out that Person A is a hypocrite because Person A once committed this same action. Person B has argued that because Person A is a hypocrite, it is therefore not morally wrong to steal from a store (i.e. that therefore, statement X is false). It is a fallacy because the moral character or actions of the opponent are generally irrelevant to the logic of the argument. It is often used as a red herring tactic and is a special case of the ad hominem fallacy, which is a category of fallacies in which a claim or argument is rejected on the basis of facts about the person presenting or supporting the claim or argument.
  • DM
    Dominic M.
    19 January 2021 @ 04:25
    I'm personally undecided about inflation/deflation, but find this compelling: "RAOUL PAL: I get it. The Fed keeps saying, unemployment at the lower tier, i.e. the least privileged in society, if they do not have a job, that is who we are concentrating on. Yet the bond market thinks, no, no, they do not mean it at all. Look at the price of copper going up, it must be inflation. I do not buy that. I think that if you go and ask the regular person on a regular high street anywhere in the world, they are in a world of pain right now, any ordinary business. "Elon Musk is not an ordinary business. Amazon is not an ordinary business. The ordinary restaurant, the ordinary bar, the ordinary hairdressers, these people are in a world of pain right now, and that is deflationary. I think the marginal propensity for people to save money is much higher than people expect."
  • KS
    Kim S.
    16 January 2021 @ 14:49
    Very good content at usual (but keep working on that pool game) I'm so old so I remember getting just above 8% on my savings account. If I had grandkids, maybe they would grow up and then live their whole life in a world without any interest rates? Zero rates for the next hundred years, or increasingly negative rates?
    • CB
      Clifford B.
      16 January 2021 @ 17:33
      Yup. I remember getting 5-7 percent at a regular bank in the 80s and early 90s.
    • AA
      Aymman A.
      16 January 2021 @ 17:45
      Move to BTC. In a few years BTC will give higher yield once the BTC money market develops.
    • WG
      Wesley G.
      16 January 2021 @ 19:52
      I also remember that era and then the period of stagflation that all the economic experts of the day said could never happen. Hmmm. I keep that memory alive always. This was followed by the attempt to tamp down inflation with incredibly high rates. My older brother's initial home mortgage was 14%. It had a huge impact on tamping down home prices because no one could afford such mortgages. Now the rates are super low and property values are well up since 2013 everywhere.
    • BC
      Bill C.
      17 January 2021 @ 17:36
      Clifford, What was the real yield?
    • BA
      19 January 2021 @ 00:28
      You can get those yields for stablecoins on some yield farms like Yearn Finance, although rates fluctuate. One can argue whether the yield is commensurate with the possibly higher risks for those type of cryptocurrencies & those platforms compared to a bank account.
  • AB
    Alastair B.
    17 January 2021 @ 16:30
    Negative dollar will be terrible for stablecoins
    • Sp
      Scott p.
      18 January 2021 @ 01:53
      Yeah would be interesting, unless they back their stablecoins with bitcoin like tether does now.
    • JC
      John C.
      18 January 2021 @ 18:36
      But great for the rest of crypto
  • AS
    Atul S.
    18 January 2021 @ 17:48
    Chin to the cue!
  • JP
    Jean P.
    16 January 2021 @ 22:00
    Raoul is the barefoot tycoon!....
    • DA
      Dina A.
      18 January 2021 @ 00:35
      Bearish footwear retailers
  • MK
    Martin K.
    17 January 2021 @ 23:00
    Great from on the table, Raoul! Reminiscent of a young Eddie Charlton.
  • GA
    Greg A.
    17 January 2021 @ 18:44
    Good technique but the pros have more places of contact (cue on chin always)
  • BC
    Bill C.
    17 January 2021 @ 18:05
    What I gleaned, or think I gleaned, from today's and even past discussion(s) is there's no clear path forward. It's all about the Fed, and more broadly, rates, the "stimulus," (Which it is not. It is the opposite) and the dollar. Gundlach has recently (November Doubleline video) that a mix of inflation combined with deflation assets is a good place to be - Permanent Portfolio-ish. This seems to verify this "no clear path" scenario. In the recent Gundlach video one key hope he mentioned was that the Fed (and government at large) should quit supporting the markets. Interestingly, Gundlach agrees with me on this. Will Yellen be the new Volker in this respect? It will be a rough period if she does. Demographics couldn't be worse for it. And if it were to happen the economic pain amelioration process of MMT, which is welfare by any other name, destroys self-initiative and self-motivation - government money being monetary heroin, though I get the idea of the need to help people. One fundamental question I have has to do in regard to the rise of various EM nations and how they will rise and emerge. To my mind, China rose on manufacturing and exporting - which absorbed an astounding percentage of first world manufacturing and thus jobs. Will India's rise be based on similar approach of manufacturing and exporting or will it be from in-country consumption - an entirely different approach than China. Much of the West's problems would be lessened if they took back some of the manufacturing lost over the past 5-6 decades. The West is paying for the "false elation" sold to it in the form of "imported deflation" over these past decades, which coincided with astounding job losses.
  • JR
    Jorge R.
    17 January 2021 @ 00:48
    I live in South Florida, which is close enough to the libertarian paradise Raoul described in the last RVDB that he claims will still lock down if virus deaths go up because people have a survival instinct and don't want to die. At least in this part of the world, people are guided by their political ideology, not their survival instinct. The restaurants here are all completely full, no masks except the wait staff. If I move out of the way for someone in the grocery store, I get odd looks like "he's one of those people." I walked through a hotel lobby where people were lounging without masks, coughing like they had tuberculosis, not even bothering to cover their mouth. 150 people in the state are dying each day. People here will not suddenly decide the virus is lethal just because people die. Unless forced to by the government, the red areas of the country will plow on through the virus with an open economy regardless of deaths until the vaccines are deployed or they are forced to lock down.
    • TC
      TT C.
      17 January 2021 @ 11:55
      Interesting and thanks for info. Opposite in Europe and very bad third wave
  • TC
    TT C.
    17 January 2021 @ 11:52
    Don't think the US will allow negative rates. Reflation back in but markets don't turn on a dime
  • JD
    John D.
    17 January 2021 @ 05:23
    Great recap Jack...
  • SP
    Simon P.
    17 January 2021 @ 03:38
    I am surprised Raoul has pants on when he does interviews
    • AR
      Andrew R.
      17 January 2021 @ 04:18
      It’s a new feature on zoom. They started with the fake backgrounds but released their new clothing range in the new update “let it all hang out Zoomer”
  • Hv
    Hannah v.
    16 January 2021 @ 19:57
    “USA velocity of money is +1.25, and in the rest of the world is below one.” Does this mean people are spending more in US and people saving more in rest of world? Please help me understand this statement if you’ve got any thoughts to share. Thanks!
    • AS
      Ananth S.
      17 January 2021 @ 03:34
      Your understanding is my understanding
  • NC
    17 January 2021 @ 00:01
    I would hope for this kind of thing at least twice a week. Ed & Raoul.
  • SV
    Steven V.
    16 January 2021 @ 18:02
    Final five minutes most important five minutes of my week. Raoul's Macro mind is essential listening and, for me, why he remains among my top follows.
    • HR
      Harold R.
      16 January 2021 @ 21:20
      I agree with you wholeheartedly, the last five minutes were great!
  • HR
    Harold R.
    16 January 2021 @ 21:16
    Great conversation, I truly enjoyed it and learned from it as well. Thank You
  • WG
    Wesley G.
    16 January 2021 @ 20:04
    Low rates make buying land very attractive, but eventually drive up the prices. Not a bad thing unless it also drives up property taxes. I like to watch the big players as a strategist. I am struck by the fact that Bill Gates is now the owner of the largest amount of farmland in the US. He owns over a 100,000 acres in Louisiana and Arkansas alone. I would like to hear more discussion on ETFs and stocks such as IIPR.
  • JJ
    John J.
    16 January 2021 @ 18:37
    Fabulous DB, probably the best one I've seen. The chemistry between them brought out the best in both.
  • TS
    Tamim S.
    16 January 2021 @ 17:01
    Ed + Raoul is my favorite combination
  • RP
    Rashad P.
    16 January 2021 @ 00:26
    I have so much respect for Raoul for saying "I don't know" instead of pretending like he knows what's going on with the US stock markets. That's the difference between Real Vision and the other mainstream US financial outlets.
    • BP
      Brent P.
      16 January 2021 @ 15:53
      Sad we are in a day in age where he cannot even mention his opinion at the risk of pissing people off... people need to have open minds. We are humans that are able to communicate and even debate. We are not animals, although it feels like society is regressing by the day.
  • DD
    David D.
    16 January 2021 @ 10:11
    I'm glad Raoul wasn't wearing shoes. I feel like 2020-21 was the point where society finally started focusing entirely on the strength of a person's skills and ideas over clothing and personal presentation. There's still a need to avoid being wholly sloppy and unkept but that days of the realtor or banker getting by in life on the strength of their Savile Row tailoring and french cuffs are gone.
    • JE
      Jonathan E.
      16 January 2021 @ 11:52
      great observation
    • BP
      Brent P.
      16 January 2021 @ 15:17
      Indeed, and it is for the better. Innovation drives progress not clothing.
  • CH
    Calvin H.
    16 January 2021 @ 14:56
    Macro is dead, long live Macro...Amen
  • RC
    Robert C.
    16 January 2021 @ 13:16
    Thanks Raoul shoutout to Toronto! Not for a good reason though ...
  • TM
    Tommy M.
    16 January 2021 @ 12:35
    Can we get the transcript?
  • EP
    Elton P.
    16 January 2021 @ 11:45
    And 4 your shoes lol
  • RL
    Remmelt L.
    16 January 2021 @ 10:31
    So nice to talk about macro. It is also nice that they didn't talk about crypto, because it isn't the specialty of Ed. Thanks so much. But a shame Raoul can't talk free about us politics. He is more out spoken about Europe.
  • pt
    popejumpingjohnpaul t.
    16 January 2021 @ 10:04
    raoul thinks the same about the modern GOP as 95% of intelligent europeans.
  • YD
    Yusuf D.
    16 January 2021 @ 09:59
    Markets are looking out into the future. If the new strain had and effect on markets the South African equity markets would have been killed but its at all time highs. Its a liquidity induced mechanism. The South African Rand which is more of a macro instrument would have also got killed but it barely fell compared to last year March. Investors want yield and that is causing asset prices to fly. Why would one fight that ? Just follow it and run with it.
  • GT
    Gerald T.
    16 January 2021 @ 09:44
    I am always intrigued to see what watch Raoul is wearing. Today it looks like a platinum Rolex Daytona. Rolexes are a good store of value and normally increase every year. Any comments Raoul on watches as a mini asset class?
  • dw
    douglas w.
    16 January 2021 @ 08:53
    Ed and Raoul is my jam! Hope to make this my regular Friday thing with some vino!
  • LB
    Leslie B.
    16 January 2021 @ 02:14
    Did Spock have the day off today?
    • MG
      Michael G.
      16 January 2021 @ 08:24
      I think from past episodes he was talking about moving house this week. Hope he doesn't do his back in moving those filing cabinets!! Good luck with the move Spock! Hope to see you again soon.
  • PH
    Paul H.
    16 January 2021 @ 07:48
    Raoul has got legs then. lol
  • BF
    Bret F.
    16 January 2021 @ 07:13
    What does margin debt look like? Trust when people feel troubled. Saving hard cash and using debt for everything is real. I was caught in the mortgage crisis. (bankruptcy) So trust carry a nice debt along with savings right now. With all the promotional loans it's pretty easy not to pay much interest
    • BF
      Bret F.
      16 January 2021 @ 07:15
      We don't have a business cycle. Its a bankruptcy cycle ...
  • CW
    Chase W.
    16 January 2021 @ 05:54
    Two issues not discussed. I know Ed follows virus. Two pieces of bad news on the vaccine front. U.S. vaccine reserves used up, so there appears to be some supply-chain issues. https://www.washingtonpost.com/health/2021/01/15/trump-vaccine-reserve-used-up/ Pfizer/BioNTech tells EU it has to cut supplies for at least 4 weeks in order to build up capacity at its plant in Belgium. In addition to EU, Canada also impacted. https://apnews.com/article/public-health-europe-europe-coronavirus-pandemic-coronavirus-vaccine-74dfc5479fc2fca69e7d9704bedfc965
  • WF
    Will F.
    16 January 2021 @ 05:37
    is that pool or billerds
  • GB
    Griffin B.
    16 January 2021 @ 05:07
    Great video! RV should make the default sound not to max volume, never goes well with my headphones in...lol
  • AA
    16 January 2021 @ 04:28
    Guys , thanks for sharing your Friday with me! Much appreciated. Interesting times. Great open & honest digging in ! I listened for 42 minutes to two guys who are let's call them very humble subject matter experts, is fascinating. Ed and Raoul - thank you.
  • JK
    John K.
    16 January 2021 @ 04:13
    Lmaooo I love the macro stroke joke Ed
  • JC
    John C.
    16 January 2021 @ 02:33
    Raoul has the best insights and Ed is a very good sparring partner! Keep em coming boys.
  • JD
    John D.
    16 January 2021 @ 02:25
    Another great one...need to get Raoul and Travis on together...that would be real interesting.
  • BS
    Benjamin S.
    16 January 2021 @ 00:35
    Excellent as always. Thanks Raoul for doing these. I really appreciate your insight and viewpoints. Ed is top class as always. The TRADE is around the 17 minute mark : 1. There is a core belief the US CANNOT go negative. That's not up to the central bank, its up to the market. We are just a few basis points from flat line at 10 bips on the 2 year, and we are currently at 13 bips - so just a few bips above support. 2. IF Covid continues to wreak havoc and the equity market sells off a bit, and the reflation trade comes off - BAM - support is broken and all rates go toward zero quickly. 3. AND - pair that with the EPIC short position in the Bond Market, here comes the squeeze. That's the reason I subscribe. One may not agree with the trade, but the setup has been laid out clearly.
    • CG
      Christine G.
      16 January 2021 @ 02:20
      The new covid strain is predicted to become the dominant strain and statistically will increase transmission exponentially. So number 2 will wreak havoc if the vaccine roll-out does not increase significantly.
  • JC
    Joshua C.
    16 January 2021 @ 01:49
    "The stroke of macro, where I have a stroke, I can't move my arm, my arm is the one I use for writing, that's the G7 arm." Ed going deep on the metaphors lol
    • CG
      Christine G.
      16 January 2021 @ 02:15
      Strokes sometimes reveal something hidden. See My Stroke of Genius on TED talks.
  • CG
    Christine G.
    16 January 2021 @ 02:13
    Great. I second the Friday special and the wine.
  • TS
    Tom S.
    16 January 2021 @ 01:59
    I had a rough day today but seeing Raoul play some pool made it a lot better. There was so much mystique around that pool table so seeing that was extremely satisfying!
  • BS
    Bradley S.
    16 January 2021 @ 01:41
    my take away tighten up your stop loss orders this could get messy. Raoul your pool game is better then mine
  • GH
    Glen H.
    16 January 2021 @ 01:40
    One thing not talked about much re reflation is the impact of growing forbearance (rent, mortgages, utilities, etc). I imagine that’s going to be a huge drag on the economy and reflation in the future.
  • LF
    Lisa F.
    16 January 2021 @ 00:37
    My tip = switch to foosball
    • PB
      PHILLIP B.
      16 January 2021 @ 01:33
      He doesn't have any coordination, self admittedly. Foosball is the worst.
  • LP
    Lynn P.
    16 January 2021 @ 00:10
    A lefty
    • PB
      PHILLIP B.
      16 January 2021 @ 01:32
      An inny belly button. When I was young, my belly button was a lefty. But, by the time I got into college, it turned to an inny.
  • aA
    agle A.
    16 January 2021 @ 00:21
    I have seen no articles on how social security funding is being impacted by the business slowdown. It would seem that the social security system in the US is going to start running low on funds much sooner, much faster than anyone is currently anticipating.
    • Ab
      ADITYA b.
      16 January 2021 @ 01:01
      Your concern is right. But, they will just replinish that with "printed" money. Fed will lend to them at ZERO rate. Dont say cant happen. We have seen enough things recently that we thould could never happnen, happnen. Sad, but true.
    • PB
      PHILLIP B.
      16 January 2021 @ 01:31
      Well, they are just going to have to print some money to top it up. There is no alternative. Maybe I'm wrong and there is a secular period of 10 years with 5% growth and no inflation, no war, cold fusion becomes reality, we have good governance, and we all work together to colonize the inner solar system. I have no idea.
  • aK
    ac K.
    16 January 2021 @ 01:24
    Thanks for your honesty, expertise and continuing to be a "Macro-Bear."
  • SB
    Steve B.
    15 January 2021 @ 23:29
    He's missing shoes!
    • AD
      Anne-Marie D.
      16 January 2021 @ 01:19
      Like Raoul, I also live in the tropics. Shoes, being flipflops, are optional.
  • IN
    I N.
    16 January 2021 @ 00:55
    Had form. but gentlemen play billiards. How many times have you seen Raoul say "! don't know" ten times in a row...and end with "terrifying shotshow" Sums up my thoughts.
  • GC
    Grant C.
    15 January 2021 @ 23:56
    Get that chin down on the cue!
    • EH
      Edward H. | Real Vision
      16 January 2021 @ 00:50
      That’s it. Tell Raoul what he needs to do to play this game.
  • OM
    Owen M.
    16 January 2021 @ 00:33
    Raoul doesn't have a drink in his hand! cheers RV !
  • MK
    Michael K.
    16 January 2021 @ 00:28
    Great update. Saddened at the increased probability of general social breakdown. Like grant Williams said in a recent podcast. “I don’t think there will be a war behind the Middle East, but I don’t know that there won’t be one either.”
  • NL
    Nikola L.
    16 January 2021 @ 00:19
    There is too much debt so large part of the stimulus money will be taken by creditors rather than retailers.
  • CM
    Charles M.
    15 January 2021 @ 23:56
    4. Shoes! Very funny.
  • KT
    Kevin T.
    15 January 2021 @ 23:54
    Thumbs up just for the pool shot. I don't even care what happens after that
  • JS
    John S.
    15 January 2021 @ 23:34
    The Friday was my favourite day of the week obviously and now when Raoul is there becomes even a better day :). Many thanks
  • ES
    Eric S.
    15 January 2021 @ 23:25
    Solid form. As long as your having fun!