The Epic Rally: A Mirage? – Live with Teddy Vallee & Raoul Pal

Published on
August 24th, 2020
62 minutes

The Fundamentals of a Mine – Live with Adam Rozencwajg

The Epic Rally: A Mirage? – Live with Teddy Vallee & Raoul Pal

Live ·
Featuring Raoul Pal & Teddy Vallee

Published on: August 24th, 2020 • Duration: 62 minutes

Six months ago, when COVID-19 first made its debut on the global stage, market participants were forced to take a step back as countries around the world shutdown. Not surprisingly, fear over how things would play out enveloped markets and sent them crashing. As we all know, that phase was short lived, and today, the opposite is true. Hope has taken over and equities have staged a spectacular comeback -- one that perhaps not even the biggest optimists could have predicted. It could be argued, however, that there is more uncertainty now than there was back then. As fiscal and monetary policies lift risk assets, one has to wonder whether this rally is the real thing or if it is a mirage of sorts. To this end, Teddy Vallee, founder & CIO of Pervalle Global, will be sitting down with Real Vision CEO, Raoul Pal, in this segment of Real Vision Live where they’ll explore the equity markets, what the macro indicators are signaling, and which assets could stand to benefit from a loss of hope.



  • JS
    Jon S.
    6 September 2020 @ 19:13
    This is RV! Nice one!
  • CW
    Claude W.
    31 August 2020 @ 21:46
    brilliant interview. RV at its best.
  • JH
    Jonathon H.
    31 August 2020 @ 12:21
    Thanks Raoul and Teddy. As a grown man with a serious job I am somewhat ashamed to admit I am a Teddy fanboy. I thought the discussion around frameworks was tremendous and introduced some novel ideas which is all one can ask from this format, thanks guys!
  • RV
    30 August 2020 @ 13:12
    Hi...brilliant interview. I would like a recommendation for more information on the topic of why one would actually invest in bitcoin as an alternative to fiat currency. And in particular, i'm looking for an argument focussing on non-existent (i know of) yield generating assets in BTC (or other cryptos), so why invest? I buy USD if i think i can earn yield from the USD denominated real estate, bonds, equities etc. What is the equivalent argument for bitcoin?
  • SB
    Samuel B.
    25 August 2020 @ 22:09
    Raoul can you make it so the RV app can play in the background.
    • RP
      Raoul P. | Founder
      25 August 2020 @ 23:21
      Working on it, boss! We know the issues... annoying..
    • DT
      Douglas T.
      26 August 2020 @ 00:02
      My feature request to Milton is to leverage the podcast player UX, ie create a subscriber RSS feed that we can point to from our podcast players. Let the podcast UX do the heavy lift - better voice audio when sped up, better indexing, better download / subscribe features, comfortable with users who listen a lot. All ya need to do is serve them up then. Thanks! Love the content!
    • VK
      Victor K.
      27 August 2020 @ 06:28
      It kind of does but not perfectly. Assuming iOS, start playing in RV app, power off the screen, go back to Lock Screen and bring up/pull down the control center, and you can continue to play via the controls. It'll continue to play until the audio is interrupted.
    • VD
      Violeta D.
      29 August 2020 @ 23:23
      The way I get around it is by downloading the audio and playing it in the background.
  • JA
    Jordan A.
    26 August 2020 @ 03:47
    Short tips wow this guy's got some balls. Good luck buddy.
    • CM
      Cory M.
      29 August 2020 @ 21:51
      Could happen. Deflation and/ or reversion toward historical rate levels. CPI distortions. Cheap side of trade. Longer term overreach on inflationeers.
  • SG
    Steve G.
    28 August 2020 @ 21:09
    This guy might wanna update his photo lol..he looks about 10 shades darker. As for the selling your gold for a short term was a good example of why you dont try to be too smart. Miners were up some 7-8 percent, I think most of us are in it for the long trade and even though Raoul and Ted make a good case for a 3 month correction it doesn't seem worth missing out on what could be the largest gold bull run of all time by trying to get too cute.
  • TS
    Theodoros S.
    28 August 2020 @ 12:31
    Disagree with the crypto era. Agree that emerging markets will bring the returns the next 10 years.
  • TM
    Tyler M.
    27 August 2020 @ 20:59
    Excellent. This kind of stuff is exactly why I subscribe.
  • sc
    steve c.
    27 August 2020 @ 17:53
    Fab interview!
  • CS
    Clifford S.
    27 August 2020 @ 10:25
    Raoul - great interview. There's one thing I'm not sure about with the call for higher real rates. Surely higher real rates are the last thing economic policy makers want at this stage given the fragile economy, debt overhang and the risk of a deflation loop? Andreas Steno Larsen posted a chart today on Twitter showing "The Fed has bought LESS than the promised minimum of 80bn a month in the Treasury market over the past running four weeks." This would seem to indicate that the Fed still has plenty of spare firepower should it see real rates starting to rise. Given your observations around solvency risks, surely rising real rates just pours kerosene on that potential fire? What have I missed? I think Teddy is logically correct from an economic reality standpoint, but I'm not sure he's factoring the desperation of policy makers to avoid a major sell-off. If they have to choose between a lower dollar or a major sell-off in the S&P, what do they choose?
  • MJ
    Marius J.
    27 August 2020 @ 08:31
    Love these two!
  • RA
    Robert A.
    27 August 2020 @ 02:40
    I saw somewhere that Vanguard is buying TIPS in size via a mandate and this is distorting price discovery—buyer constantly at the bid without regard to value or any other metrics. Could this be part, or a substantial part, of the reason for the break evens price disconnect?
  • AW
    Andrew W.
    27 August 2020 @ 01:23
    Most important realization I think in the interview, when RP + Vallee agree that $180T in equities and bonds that have expected zero returns (in the case of bonds, probably negative) over the next 10 years, what are the chances that a significant amount of that capital doesn't find its way into Emerging Markets + BTC? India mentioned a few times but I'd like to hear more talk about Russia. Never mind that you can get a 6.7% yield right now, you don't need a currency hedge because the ruble is arguably undervalued and it's essentially a pure play on the turning commodities/EM/DXY cycle. India to me would be the growth component of EM, whereas Russia is the commodities component.
  • TP
    Tom P.
    26 August 2020 @ 21:54
    No one expecting gold and dollar to go up right now.
  • HR
    Humberto R.
    26 August 2020 @ 21:21
    Imagine coming from the Old World and knowing ahead of time that land will be unbelievably valuable for the next 200 years. How much would you have grabbed? Imagine rewinding the clock to the early 90s and scooping up domain names. BTC is your personal chance to be "one of the few" going forward, like the previous mentioned. With 7.8 billion people on the planet, imagine owning just 1 of 21 million of anything. Raoul has been pounding the table. Waiting for a 10% short term correction on this kind of opportunity may not make a lot of sense in a few years.
  • BA
    Bruce A.
    26 August 2020 @ 12:06
    Agreed that Fed/Treasury action has driven dollar down and with the specter of huge deficits as far as the eye can see it would seem reasonable to expect more of same perhaps with a political hiccup or two. Currently there are no signs of financial tightening in the TED spread (Treasury/ Eurodollar Spread currently 0.16%). No tightening showing in high yield index option-adjusted credit spreads (currently 5.17%) and the St Louis Fed Financial Stress Index is near pre-covid lows (-0.46). Couldn't it be that the Fed's actions in the bond market have directly or indirectly kept a bid going for bonds (nominal yields at 0.65 on 10yr) while other bond buyers fearing inflation and 'effective yield curve control' are piling into TIPS (10yr at -1.02%). This would explain the 1.7% breakeven rate. Can't Primary Dealers and hedge funds borrow near zero and buy 10 yr treasuries at 0.65 and make heaps of easy money? Seems like the Fed actions and messages about allowing higher inflation going forward are driving the inflation breakeven level higher. Treasury issuance in excess of spending has led to $1.64T sitting in TGA and assuming congress have approved the spending (or that Trump/ Mnuchin 'executive order it into action'), it's ready to put new dollars into the system. This won't be 'high powered Fed reserve money that requires private bank lending', but rather direct into the economy spending.
    • GL
      G L.
      26 August 2020 @ 16:44
      The widening of deficits are not unique to the US. The impact on the USD is a relative game.
  • TP
    Timothy P.
    26 August 2020 @ 16:23
    Its validating seeing industry pros realize the same things I did back in 2011. Its a huge economic/monetary shunt, and the feedback loop has just gotten started.
  • OE
    Ozan E.
    26 August 2020 @ 13:10
    How are the stimulus checks a reduction of liquidity from the markets?
  • BR
    Brian R.
    25 August 2020 @ 21:28
    how does the loaded TGA and the potential executive order play into this? Is it too late for them to have an effect eg 'priced in'?
    • BR
      Brian R.
      25 August 2020 @ 21:42
      I should have clarified, obviously can't help the CPI, more the market impact
    • BA
      Bruce A.
      26 August 2020 @ 11:43
      $1.64T sitting in Treasury General Account. Bills/Bonds have been issued already and Fed bill/bond buying in past has enabled that issuance to happen without sending yields higher. So all those $ are ready to be spent (assuming congress has passed the spending bill or Trump/Mnuchin find an executive order to get around the congressional appropriation requirement.
  • nw
    nicholas w.
    26 August 2020 @ 11:42
    A great interview, and Raoul clearly respects this Guy- you can see him getting a it uncomfortable at points. Still it chimes with the reversing of his Dxy bearishness short term, and made sense to me. More Teddy please.
  • Nv
    Nick v.
    26 August 2020 @ 11:36
    Great interview. Well done guys
  • DN
    D N.
    26 August 2020 @ 04:45
    Would be interesting to hear Teddy's thoughts regarding UST issuance later this yr in relation to 2 other RV guests lately: 1) Richard Koo's balance sheet recession theory - where absent private borrowers (as everyone is in B/S recession due to COVID), the trend seems to be that when gov't does large fiscal (eg UST issuance), yields remain flat / near zero as gov't is the only borrower left, and there are certain institutional buyers that need to park $ in USD based assets 2) Luke Gromen's ideas shared re: the mechanisms of how the issuance is done through primary dealers - eg will primary dealers be 'stuffed' with the USTs given they have to buy the new issuance from the Fed (recalling the SLR exemption earlier in the year) and they also need to find a way to fund this which could cause dollar shortage?
  • WW
    Will W.
    25 August 2020 @ 23:26
    Raoul: You mention as one of the potential catalysts to a strong upside move in Bitcoin will be the growing wave of institutional investors/hedge funds moving into the space as more efficient onramps come on line. and how this could become quite reflexive. I couldn't find in the interview where Teddy mentioned that in October his fund will be able to buy physical coins vs future contracts. Do you know if this October date is something industry specific or was it more about his fund getting the proper linkages set up with his prime broker, crypto exchange .......?
    • RP
      Raoul P. | Founder
      26 August 2020 @ 02:55
      Fund specific... everyone needs to get their shot sorted out to buy it.
  • BP
    Ben P.
    25 August 2020 @ 21:53
    Can somebody help me understand how the term "breakevens" is used in this interview?
    • nw
      nicholas w.
      25 August 2020 @ 22:34
    • MB
      Matthew B.
      25 August 2020 @ 22:44
      It's the market's expected rate of inflation based on bond yields. More specifically, it is the difference between the yield on a standard bond and an inflation-linked bond of the same maturity.