Corona Markets: Welcome to the Twilight Zone – Live with Kevin Muir

Published on
April 16th, 2020
Duration
61 minutes

Real Vision: A Guide to Investing – Live with Mark Ritchie II


Corona Markets: Welcome to the Twilight Zone – Live with Kevin Muir

Live ·
Featuring Kevin Muir

Published on: April 16th, 2020 • Duration: 61 minutes

To anyone that has been watching markets since the onset of COVID-19, they could be forgiven for mistaking the events of the last month with an episode of the Twilight Zone. Up is down, and down is up -- however, there is a method to the madness. On this week’s episode of Real Vision Live, Kevin Muir, author of the Macro Tourist newsletter, joins Ed Harrison to make sense of the madness and discuss what is driving markets, near-term value, and what the macroeconomic landscape could look like on the other side of this pandemic.

Comments

Transcript

  • VS
    Victor S. | Contributor
    27 April 2020 @ 13:57
    We are in a depression -do you all understand that?
  • GL
    G L.
    22 April 2020 @ 14:24
    Great interview - thank you! I do think the Fed will ultimately buy stocks (borrowing from the BOJ's playbook) because the prospect of a sudden, destabilising further leg lower in equities will hit state pension funds that are already massively underfunded.
  • wj
    wiktor j.
    21 April 2020 @ 12:23
    You really believe that fed will be loaning new loans to coorp? So not only buying Junk debt but basically rolling it over with new debt? remember swap lines are loans. Who will roll that over later? I think he is wrong. Oil is now at negative and we will see countries default.
  • JM
    Jason M.
    21 April 2020 @ 09:29
    Great interview. Sadly Varoufakis was right..
  • AH
    Andrew H.
    20 April 2020 @ 11:03
    In the case of the nasdaq we should expect the Fed to go full retard and start buying stocks too? Seems the rally is rallying on the expectation of a rally. The psychology of participants has to change, or indeed, they were simply riding a short term trade from the get go and their expectations are correct. Sure the Fed can come back and we can rinse and repeat, but why hold a position in this right now? Where is the incentive to hold equities in this environment?
  • WG
    Warren G.
    19 April 2020 @ 09:16
    Gosh ,from all the guests that have been had recently this guy is not bearish on emerginf market currencies like Raoul and some of the other experts here.He does make a good point about the ability of the fed to print as much as possible. What do you guys think here?Is kevin muir more accomplished and insightful than Raoul and some of the other guest regarding dollar strength?
    • mw
      max w.
      19 April 2020 @ 20:44
      I believe there is a problem with this solution as it's very hard to distribute the printed dollars to the people who need them. The swap lines only get them to the other CB's.
    • DS
      David S.
      20 April 2020 @ 01:12
      It is still possible that the Fed can print an infinite amount of money and the dollar remain strong as everyone else prints and an infinite amount of local currency plus one. Buy a little gold. DLS
  • II
    IDA I.
    18 April 2020 @ 12:45
    I have a request to Real Vision: please organize a round table on the dollar, nothing else, with these participants: Raoul Pal, Julien Brigden, Brent Johnson from Santiago Capital, Kevin Muir and Jeffrey Snider. I think most of us are now divided and in difficulty, the milkshake theory makes so much sense, and it is so contrarian! But Brigden and Muir are so smart, what do you need to watch to decide who is right before it's too late? I tend towards the Dollar bullish camp in the next 12 months because I believe china must devalue, then I'll be bearish. hope you will organize some interviews on the dollar, it is the most important topic right now I believe, thanks
    • RY
      Roy Y.
      18 April 2020 @ 15:08
      Seconded ...
    • lD
      lance D.
      18 April 2020 @ 20:20
      why not buy $ and gold one should work out
    • RR
      Robert R.
      19 April 2020 @ 01:03
      Brigden and Muir's theories are based on historical financial rules being thrown out the window.
    • lm
      luke m.
      19 April 2020 @ 07:36
      Yes a dollar debate would be amazing, very pivotal time for an update on the milkshake situation
    • MC
      Michael C.
      19 April 2020 @ 23:47
      How about creating a USD dashboard page on the RV website which updates daily all the critical data and charts that are important indicators for Euro$ markets?
  • TM
    The-First-James M.
    19 April 2020 @ 23:26
    I'm sure I can recall Lacy Hunt discussing the coin minting idea, and describing the day it happens as the day that the US turns itself into a Banana Republic. Would be great to hear him debate this with Kevin.
  • mw
    max w.
    19 April 2020 @ 20:50
    Ed is right. The Europeans don't want the United States of Europe... especially Germany. We are tired of paying for the bad fiscal policy of Italy and co.
  • lD
    lance D.
    19 April 2020 @ 18:37
    i buy everything he says nice 1
    • lD
      lance D.
      19 April 2020 @ 19:17
      yep im allin on his theme ive been very patient trying to learn about markets over the years rv has been exceptional tool and now the time has come to hang my hat on for the next 5yrs plus where and triple my wealth that would be perfect so fuck it & thanks rv team the journey has me now finally queuing in line at the firing range 1 bullet 1 shot Mr muir and Mr Harrison great job
  • RG
    Ryan G.
    19 April 2020 @ 04:26
    So if he is right reserves banks will just keep printing us out of recessions etc kicking the ever bigger tin can further down the road. Increasing the wealth gap over and over. Great.
    • BA
      Bruce A.
      19 April 2020 @ 06:01
      He is saying that anti-cyclical fiscal spending is needed to support the real economy instead of relying on monetary policy near the zero bound where it is not only 'pushing on a string' but if done to the point of negative rates that it is counterproductive to economic activity. The 'tea leaves' he is reading say that governments have been WOKE to the fact that they can run fiscal deficits when the private sector pulls back and they can do it until labor is fully engaged and inflation causes more problems than the contraction they are fighting.
    • RG
      Ryan G.
      19 April 2020 @ 07:11
      I understand what he is saying. Are you suggesting there will be a different outcome in the future to what I stated above?
    • BA
      Bruce A.
      19 April 2020 @ 10:45
      Yes, a different outcome to what you are suggesting: If the bulk of the money printing is supporting govt spending for Main Street instead of Wall Street. The wealth gap should not be increased under such a situation.
  • PC
    Petros C.
    19 April 2020 @ 07:14
    RV team: Will a transcript be published please?
  • RR
    Robert R.
    19 April 2020 @ 01:01
    So basically Kevin is in the camp that the rules of the financial system, specifically, the role of the fed, the definition of government debt, and the traditional pricing of stock markets, all no longer matter. Instead the new norm is, FED can do anything they want, governments debts aren't actual debts that ever need to be paid down, all-time high multiples in the market are justified no matter the economy, Sounds like a recipe for complete crony capitalism, and a horrible future where governments have unlimited power, and anyone who's not rich gets screwed, likely eventually reaching class warfare. Did I get that right?
    • RG
      Ryan G.
      19 April 2020 @ 04:27
      I think so as well if he is correct.
  • MC
    Michael C.
    18 April 2020 @ 10:35
    Kevin is great thanks. Just something I would like to bring up here. I think RV is asking too much from guest speakers outside their core competence. In particular refering to the Euro$ (offshore USD) plumbing debate. Most speakers are being asked very hard questions that they really can't answer and don't have data to back up opinions with. The conversation just spins around, stabbing in the dark as one narrative gets latched onto at a time. Are you able to dedicate a special line of conversation to this topic with specialists that share core compentencies in currency markets, institutional banking, cdentral banking & geopolitics etc (not only FX chart readers). Without data on how effective the Feds swap lines are in getting USD to indebted offshore non bank entities then how do you tell whose USD bull/bear opinion is more accurate? Eg Ideally we need to know the size of US$ shortage positions by geography, some local banking system understanding and what kind of default rate we might be looking at. Then what are the complications when swap lines mature (yes they get extended but not without consequences). I am probably asking the impossible because the shadow bank Euro$ market is just too opaque. The conversation agreed that MMT pushes up a currency because it stimulates an economy, inflation rises, rates go up. Isn't the US most likely to do it first? Especially under a Democrat?
    • JO
      JOHN O.
      18 April 2020 @ 20:05
      I agree with your last observation Michael and think we start to see blatant MMT in the next 2 to 3 years. The markets, workers, retirees, bankers and most other business sectors are getting too used to being tossed a lifeline every time something goes wrong whether is was man-made (GFC) or Mother Nature (COVID) or smaller issues. It isn't going to matter which party is in office, IMO.
    • CP
      Cosimo P.
      19 April 2020 @ 03:25
      Agree - from what I can work out listening to all the experts there is a $13tn short position on intl US dollar and the thesis is that short squeeze drives up US dollar. Fed will try to throw the kitchen sink at it but it gets “blocked up” by the US finance industry. Also some/most (?) can be covered somewhat by EM reserves which have been bolstered since the last time they got burned so they are starting from a healthier position. Fed has way more swap lines than 2008, and they can do what they want. Is this enough? It seems to me (and I’m a lay finance person so could have this completely wrong - please educate me) that this entirely depends on what “blocked” or “gummed up” means in terms of the feds inability to solve this international dollar shortage. Because the fed can do ANYTHING it wants with dollars given the political will. So maybe we need to know more about how it can’t be solved? That crucial inability of the fed to solve this appears to be central to the thesis but not explored as deeply as I would have liked.