Tesla’s Bitcoin Wager, Rising Yields, and Ed’s Take on the Banks

Published on
February 8th, 2021
Duration
32 minutes

Raoul Pal on Bubbles, Short Squeezes, and Systemic Market Risk


Tesla’s Bitcoin Wager, Rising Yields, and Ed’s Take on the Banks

Daily Briefing ·
Featuring Jack Farley and Ed Harrison

Published on: February 8th, 2021 • Duration: 32 minutes

Real Vision managing editor Ed Harrison and editor Jack Farley discuss Tesla’s decision to buy $1.5 billion worth of Bitcoin as a reserve asset on its balance sheet. They then analyze how rising yields on the 10-year and 30-year Treasurys will impact growth stocks as well as bank net interest margins. Using bank profitability as a jumping-off point, Jack notes that the S&P 500 Financials Sector SPDR ($XLF) is at all-time highs, and Ed analyzes why this could be the case, sharing his outlook on the future of the U.S. banking industry. Lastly, Jack and Ed give a sneak peek of the interviews coming up for the “Is Everything a Bubble?” campaign with Howard Marks, Joel Greenblatt, Mark Cuban, Felix Zulauf, Lyn Alden, Lacy Hunt, Tom Steyer, Mark Yusko, Danielle DiMartino Booth, Steve Clapham, and many other investors. To share your thoughts about “Is Everything a Bubble?” on the Real Vision exchange, click here: http://rvtv.io/3ju1T6q.

Comments

Transcript

  • LP
    Lasse P.
    12 February 2021 @ 21:51
    Ed is simply great. Probably the most underappreciated journalist on realvision.
  • OC
    O C.
    10 February 2021 @ 01:58
    This was good. I liked this. Thanks.
  • df
    darth f.
    9 February 2021 @ 08:30
    would have preferred more on Tesla, less on banks. Australia treats btc as both an asset and a currency. If you use your btc in a short time frame, it's a currency. If you hold on to it and then buy goods, it's a taxable event. I think the US tax treatment of btc will cripple its use as a currency and needs to be rethought.
    • jb
      joseph b.
      9 February 2021 @ 18:16
      Oz is far ahead of the curve in many ways. Of course it does not have the world's reserve currency to defend.
  • MJ
    Marius J.
    9 February 2021 @ 10:34
    As a moderator Jack, please come to the point a bit earlier. Sometimes you are talking too much. See Ash and the way he does it.
    • JF
      Jack F. | Real Vision
      9 February 2021 @ 13:49
      Noted, thanks Marius
  • PG
    Philippe G.
    9 February 2021 @ 13:46
    Quite the line-up!! Looking forward to it!
  • FL
    Francis L.
    9 February 2021 @ 01:41
    Ed, what's the connection between higher rates and fee income for banks?
    • EH
      Edward H. | Real Vision
      9 February 2021 @ 02:03
      Here’s an example for American Banker. It’s paywalled but the gist is that banks are missing net interest margin. So they are drumming up ways to boost fee income https://www.americanbanker.com/news/small-banks-play-swaps-middlemen-in-bid-to-boost-fee-income I am also assuming that banks have higher fees as rates rise because at the zero bound banks have to issue a lot of money-market fee waivers. And in general, in this cycle, fee income has declined during the downturn.
    • SS
      Scott S.
      9 February 2021 @ 13:25
      As rates rise the spread between what banks pay depositors and the rate that borrowers pay them widens. When rates are low the spread is very narrow (like now). Usually, higher rates tend to mean the economy is doing well and rising rates indicate anticipated improvement and economic growth. Since COVID drove rates down banks have struggled because of this. He is a more complete explanation of this: https://www.investopedia.com/ask/answers/041015/how-do-interest-rate-changes-affect-profitability-banking-sector.asp
  • FD
    Frank D.
    9 February 2021 @ 08:52
    Thank you for bringing back the topic thumbnails, makes it easier to navigate.
  • VD
    Vincenzo D.
    9 February 2021 @ 07:58
    In the end Bubble Gum was invented by an accountant
  • bb
    brian b.
    9 February 2021 @ 06:35
    the whole rigged market is a bubble.has been since greenspan.THE FED NEEDS TO GO.NO FED ES=1500 NOT 4000.
  • mc
    mark c.
    9 February 2021 @ 05:57
    liked the faster pace, good to see your noticing these crazy times.
  • AT
    Abraham T.
    9 February 2021 @ 05:12
    Like the quick pace convo. Could be shortened to 20 minutes. Everything is not a bubble.
  • CE
    Ch E.
    9 February 2021 @ 04:40
    This is very good format!! Especially because there was a tutorial recently on YIELDs and so the questions asked about how YIELDS impact BANKS and the hearing the mechanics from Ed helped further articulate and expand general education for me. Please continue this format: using today's event, combining it with a recent tutorial and socratically educating the audience. I also like Ash B.'s rotation of investor and traders (like Mr. Green) every so often. Daily Briefing is becoming the main reason to tune into RV now!!
  • WD
    Wendi D.
    9 February 2021 @ 04:35
    "new format" - I REALLY like that it hits a number of topics; but I also missed the more explanatory, pensive input from Ed in particular. As the end, I felt more "bombarded" than "educated" on the themes of the day, if that makes sense? Between this format and the "update by Hailey" then someone else as the deep content, I prefer this though.
  • PP
    Patrick P.
    9 February 2021 @ 04:17
    One word I never hear on RV .... IMO we are headed for severe "Stagflation"
  • JD
    John D.
    9 February 2021 @ 00:03
    Love you guys - but, I must say the "Uh's" make these videos hard to stomach on a daily basis...
    • JF
      Jack F. | Real Vision
      9 February 2021 @ 00:35
      Appreciate the feedback, thanks John
    • JA
      John A.
      9 February 2021 @ 01:08
      What?
    • AH
      Anthony H.
      9 February 2021 @ 01:33
      Music to my ears!
    • BM
      Brook M.
      9 February 2021 @ 03:54
      The "Uh's" tell me that this isn't scripted. Keep up the good work. I enjoyed the change of pace.
  • jb
    joseph b.
    9 February 2021 @ 03:51
    It would help if people would understand the crypto space if they are going to analyze it. They comment about buying Teslas with BTC increasing the velocity is grossly misinformed about the nature of BTC as well as the fact that current tax laws penalize a person to pay for anything with crypto. If you buy a Tesla with BTC it is a taxable event. In other words you will be passing up the gains to be made with BTC as a reserve currency to pay the government their pound of flesh. BTC is not a payment rail. It is a store of value.
  • OT
    Omar T.
    9 February 2021 @ 03:33
    Really looking forward to lacy hunt answering why Russell Napier and others are wrong on inflation
  • CM
    Cory M.
    9 February 2021 @ 03:24
    Jack, Yes to the fast paced switching. Three valuable topics all covered with insights and without hubris. Ever true....
  • TX
    Ticker X.
    9 February 2021 @ 02:42
    Thanks fellas, i'm all in on these convo's so keep em coming. Decentraland to the moon!
  • MC
    Michael C.
    9 February 2021 @ 02:41
    Love you guys. To your question Jack, I prefer the longer form discussion format, so having this conversation run into the 40-50 minute mark would have been preferable from my perspective. Thanks again to you both.
  • MC
    Michael C.
    9 February 2021 @ 02:36
    Like the pace of this one for a change. Good to see variety of formats to avoid getting stale. And a great conversation across a number of topics.
  • VN
    Vitali N.
    9 February 2021 @ 02:09
    BTC and TSLA are playing off each other? You know what other pair "plays off each other" at 0.9 correlation? Churches and Bars. So does religion drives people to drink or does drinking make people search for salvation? Or maybe, both are correlated to something else, like population. A story I vaguely remember from a college stat course.
  • mf
    massimo f.
    9 February 2021 @ 01:36
    Is money printing what is pumping markets, or market participant’s belief that there is money printing? Citi panic/euphoria indicator is off the charts euphoric, that (euphoria) seems like a better explanation for what is occurring. People cannot see it because, of course, they are themselves euphoric.
  • AP
    Andrew P.
    9 February 2021 @ 01:25
    Great briefing Jack. I like the DB to discuss what happened overnight (I'm in Shanghai) and touch on current topics. I'm not looking for in depth analysis, more a roundup leading me to explore further if need be. On another note, looking forward to Felix Zulauf. He's a personal favourite.
  • GF
    Gordon F.
    9 February 2021 @ 01:17
    I'll echo here what I said to Raoul. Bubble or not, I feel that our markets and economic system are quite fragile, and getting more so. What it might take for them to become robust again, I can't even imagine. Or where we might wind up if/when things really fall apart.
  • CB
    Camille B.
    9 February 2021 @ 01:11
    Guys, I think you are both gems. Thank you. My suggestion is go hybrid, so temper the hyper speed exchanges.
  • SW
    Suzanne W.
    9 February 2021 @ 01:10
    Love the back and forth between you two. You have great chemistry - more please!
  • MR
    Michael R.
    9 February 2021 @ 01:04
    Yes, everything is a bubble as a direct manifestation of fiscal and monetary policy. With interest rates near 0, or negative in other economies, capital is chasing yield, growth, WFH trade, reflation trade, crypto, etc. Risk is the only game in town these days.
    • JF
      Jack F. | Real Vision
      9 February 2021 @ 01:08
      Well said, Michael
  • DL
    David L.
    9 February 2021 @ 00:50
    I did like the faster format. I like it plenty when it’s a bit more detailed too though. Could see it being a nice quick way for me to catch episodes more frequently if it was like this though.
  • PA
    Paul A.
    9 February 2021 @ 00:48
    How much of an effect will the new crypto finance space have on legacy banking? If I can get a loan with a lower rate using crypto as collateral, doesn't it stand to reason that this will hurt the banks as customers leave for better pastures?
  • JD
    John D.
    9 February 2021 @ 00:37
    I'm with Luke Gromen. The bubble is the US national debt. Everything else is rational given the missprising of the debt
  • CC
    Christopher C.
    9 February 2021 @ 00:29
    Loved the pace, loved the back and forth. Great briefing!
    • JF
      Jack F. | Real Vision
      9 February 2021 @ 00:36
      Glad to hear, Christopher!
  • HM
    Harold M.
    9 February 2021 @ 00:35
    Great exchange Jack & Ed. Enjoyed the mix of topics and opinions thereof.
  • WS
    William S.
    8 February 2021 @ 23:56
    Tesla at a "Trillion" is insanity and eventually has to come to earth when others comps are directly challenging them.
    • NL
      Nikola L.
      9 February 2021 @ 00:08
      If it gets there then it’s more insanity than already is, but with the euphoria we see, it will not be surprise.
    • JK
      John K.
      9 February 2021 @ 00:22
      Tesla at 1 trillion is in line with current growth, 800k+ deliveries, possible levrl 5 autonomy in less than 2 years, solar that will be bigger than EV, and disrupting power grid economy, mobility as a service to undercut Uber/Lyft, largest battery manufacturer in the world, and per EV gross margin a level of magnitude over ICE manufacturers, as well as Wright's law for batteries and solar continuing on track So, yes valuing based on a 5 year runway is ridiculous in this ZIRP environment, most people have no where else to invest in a deflationary environment with economic downturn, with technological acceleration into new technologies. Tesla Dojo, the and Tesla insurance are interesting xfactors
  • JD
    John D.
    9 February 2021 @ 00:15
    Looking forward to this entire campaign...you guys rock...keep it going!
  • WS
    William S.
    9 February 2021 @ 00:06
    Fade xlf 3rd/4th qtr as interest rates go south again
  • NL
    Nikola L.
    9 February 2021 @ 00:06
    Off course everything is a bubble. Just in the US 10m more unemployed while markets are higher than pre-covid.
  • FR
    FLAVIO R.
    9 February 2021 @ 00:05
    Proper RVDB, thanks.
  • WS
    William S.
    8 February 2021 @ 23:59
    10 yr at > 1.6% is likely when the Fed clamps down. - they have to or MMT doesn't work past current inflation rate.