Jay Pelosky – The Golden Age of Asset Allocation

Published on
December 21st, 2020
Duration
55 minutes

Gary Shilling’s Investment Ideas for a Hard Winter in the Real Economy


Jay Pelosky – The Golden Age of Asset Allocation

Investment Ideas ·
Featuring Jay Pelosky

Published on: December 21st, 2020 • Duration: 55 minutes

Jay Pelosky, CIO and co-founder of TPW Investment Management, joins Real Vision managing editor Ed Harrison to discuss his macro outlook for 2021. Pelosky shares the areas of opportunity that are on his radar, including high-yield bonds, and equities in Europe and China. Harrison asks Pelosky to update his positive thesis on small-caps equities and emerging market stocks, which have been on a tremendous tear for almost two month. Pelosky explains why despite their frenetic upsurge, he remains bullish on these asset classes as well as other assets that benefit from an increase in growth and inflation. Lastly, Pelosky tells Harrison why the reflation that he expects to see in 2021 will be a drag on sovereign bonds, particularly U.S. Treasurys. Filmed on December 15, 2020. Key learnings: The rotation from growth stocks into value equities is just getting started. Reflation and re-opening will further boost stocks, specifically small-cap and emerging market equities.

Comments

Transcript

  • SB
    Stewart B.
    13 January 2021 @ 14:16
    Great ideas. I disagree on the EU though. The EU will suffer because it is trying to become the former USSR. Their bureaucracy is continually expanding to meet the ever growing needs of the expanding bureaucracy. It has become an over-regulated wasteful corrupt institution. Killing small business with excessive regulations, political censorship, and excessive state bureaucracy are not a recipe for growth or innovation.
  • VT
    Vincent T.
    3 January 2021 @ 09:35
    Great point on RCEP. Interesting view on EU unity
  • JM
    Jason M.
    29 December 2020 @ 12:33
    Re Europe: Look at Germany versus France in the handing of Turkey. Very far away
  • je
    johannan e.
    26 December 2020 @ 10:37
    Markets are always "forward-looking" is one of those easy narratives to explain the stock market boom over the last 7-8 months. Markets are always "efficient", in the medium and long term. Or until they realise the severe structural damage that has been done to the economies all over the world (incl. China btw). I understand the euphoria, and I - now - understand it can go on for a very long time, but at some point the blank reality of deep economic destruction, the consequences of rearrangement of supply chains and social consequences will get into the viewing field of those forward-looking markets.
  • RM
    Robert M.
    22 December 2020 @ 17:45
    Some other points to consider from this interview: 1. Will there be an explosion of spending or will there be a rotation of spending. There is already in an explosion in many categories like housing, home improvement, and electronics. Will this money just rotate to travel and entertainment? 2. If there is an explosion, where will the money come from? From additional consumer debt to drive spending? Higher salaries? Gains in the market (which is limited to a small % of people)? With unemployment probably staying higher than last four years, curious on where this spending capacity comes from. We will see less helicopter money from government as you look at this most recent stimulus package. You will see spending capacity come back to those in entertainment and travel. But you should see spending move away from construction, home improvement, appliances, toys, and other stay at home industries. 3. Would disagree on his view on the 10 year treasury. If rates go to 2%, Fed will have an issue as many consumer loans hinge on this rate. Will definitely hurt home sales as mortgage rates go up as well as auto loans. If rates double, I see Fed stepping in to buy bonds to flatten the curve and will not allow them to stay at 2% per Jay's comments.
  • RL
    Ryan L.
    22 December 2020 @ 17:36
    I hope he is right. but I think his certainty and ego is going to get him. RV should start with every interview with the return record of the person they are speaking with. Let's the viewers determine if she/he is believable. we also need to try strip out luck vs. skill so the overlaying investment thesis that provided those returns would also be helpful.
  • RM
    Robert M.
    22 December 2020 @ 17:21
    Funny how the market moves as a crowd. Lots of people have been pushing Japan and other emerging markets. Some talking Brazil. He is stronger on Europe than others. Move to the value trade, which happened a month ago. Believes vaccine solves all problems like many forecasters. Good to hear the interview, but find it very consensus with other forecasters.
  • GF
    Gordon F.
    22 December 2020 @ 00:30
    I hope Jay is right, but I see an economy that is very fragile. If absolutely nothing goes wrong, then I would tend to agree with his optimism, but I see so many things that could break. As long as nothing serious goes wrong, I would guess Jay is likely to be right, but... Like I said, it will be wonderful if he is right.
  • JS
    Jon S.
    22 December 2020 @ 00:23
    Jay makes a solid argument for repositioning out of the U.S., but deploying fresh capital into the "outside the U.S. markets" is just too scary at this time. Perhaps he'll be proven right.
  • JM
    Jason M.
    21 December 2020 @ 23:39
    I find this gentlemen interest in his optimism. I recall in the GFC 2008 optimist spoke of China as the "growth" and future oriented saviour for systemic issues. This gent, now turns to a higher rate of personal savings as a similar flow and pool of money to allow another saviour to growth. Domestic and/or global consumption growth as a saviour has two major issues. One, Record Govt, Corp and Household debt levels. Two, employment with the challenges of Automation, Gig Economy, fewer full time jobs, lack of manufacturing, weakening of labour codes. Three, demographics, the Boomers have very different consuming indoctrination / education than Gen X or Gen Z.
  • RL
    Remmelt L.
    21 December 2020 @ 22:17
    Ed this was your best interview of the year, because of your questions.
  • RL
    Remmelt L.
    21 December 2020 @ 21:58
    If you are a working person in the United States. It made more sense from risk perspective and portfolio perspective to invest outside United States. If US is economic performance is bad (you lose job or less paid) and Europe is doing well (investment perform).
  • RL
    Remmelt L.
    21 December 2020 @ 21:53
    Why Americans are so negative about Europe?
  • PU
    Peter U.
    21 December 2020 @ 21:42
    excellent summary
  • PG
    Philippe G.
    21 December 2020 @ 20:46
    Interesting thesis..!
  • EW
    Eric W.
    21 December 2020 @ 19:54
    I can't agree with Jay regarding EU or UK equity markets going forward. But the EM markets do look promising.
  • GP
    Giorgio P.
    21 December 2020 @ 18:44
    He has no clue of what is going on in Europe.
    • DS
      David S.
      21 December 2020 @ 19:28
      Giorgio P. - I agree there are many problems. I would like to hear your perspective or from anyone else. Thanks. DLS
  • DS
    David S.
    21 December 2020 @ 18:32
    Great balanced dialog. Well-developed points by both. Mr. Pelosky has been ahead of the curve for a long time. I agree with his longer-term outlook, but do not know how much damage COVID has caused the western economies. The combination of better virus containment and focusing on business in the Asian countries has given them a head start. I am placing a few bets there. Thanks. DLS
    • DS
      David S.
      21 December 2020 @ 19:23
      I am hesitant to invest in the domestic sectors in Europe or the UK. Desperate times call for desperate measures. It feels like the frugal EU countries giving in to save Europe and the Euro is a desperate measure. As Mr. Napier said the Euro is still an experimental currency. Likewise the US Senate will pass a real emergency COVID spending bill when the stock market tanks - a desperate time for the rich. DLS
  • SK
    Sergejs K.
    21 December 2020 @ 19:19
    The party is coming!
  • DM
    Dom M.
    21 December 2020 @ 14:58
    The party will not last long and never envy Europe.
  • RW
    Richard W.
    21 December 2020 @ 12:57
    interesting interview - but see counter view on europe here: https://www.cityam.com/europe-hurtles-into-decline/?utm_source=dlvr.it&utm_medium=twitter
  • df
    diamantino f.
    21 December 2020 @ 10:20
    Real Vision has such a hard time dealing with positive bull outlooks, now when it comes to Europe I not so sure I agree, the money very rarely is used in a productive manner...
  • BP
    Bryce P.
    21 December 2020 @ 09:12
    Gee shocker dystopian thinking again.