Mike Green’s 2021 Big Picture Outlook

Published on
January 4th, 2021
Duration
33 minutes


Mike Green’s 2021 Big Picture Outlook

The Expert View ·
Featuring Michael Green

Published on: January 4th, 2021 • Duration: 33 minutes

Mike Green of Logica Capital kicks off 2021 for Real Vision viewers with this big picture interview taking stock of an eventful 2020 and looking forward to 2021. Narratives abound and seem to be more important than ever, and although Green does not downplay the significance of narrative, he helps viewers separate the signal from the noise. He deemphasizes both the inflation and rotation trade narratives that have taken hold as of late and argues that their proponents are confusing short-term disruptions with longer-term structural changes. In terms of lasting changes from 2020 continuing in 2021, Mike believes that the current state of relations with US and China and the use of fear by governments to push forward previously unthinkable policies is here to stay. In addition, he gives a sneak peek at what viewers can expect from the "Mike Green in Conversation" series in 2021. Filmed on December 17, 2020. Key Learnings: Mike does not buy popular inflation narratives and believes that the rotation trade is played out at this point. He argues that the structural forces of passive indexation, which have resulted in US large cap and momentum outperformance, have only strengthened and will again be on display in 2021.

Comments

Transcript

  • pt
    popejumpingjohnpaul t.
    14 January 2021 @ 19:58
    MG is a super genius. amazing, thought, ideas and explanations.
  • JM
    John M.
    12 January 2021 @ 18:03
    "Somebody who never agrees with me unless we are both wrong" - love that idea i.e. the classic contrarian indicator!
  • JL
    J L.
    5 January 2021 @ 08:25
    Gotta love Mike Green, but the anti-inflation arguments were unacceptably weak in my view. I don't say this as an inflation bug. I just think the actual, substantive case for why inflation will occur was not really addressed here. After 2008, there was a broad expectation that the Federal Reserve's rapid expansion of its balance sheet would cause inflation. This expectation was wrong, as we now know, because QE is not inflationary by itself. It simply adds to the quantity of stagnant bank reserves. It is "pushing on a string" as it were. But here is the thing that doesn't get discussed. Those who see inflation potential would say something like this: — The Bernanke-Yellen Fed used loose monetary policy to wage a fight against tight fiscal. — Even as the Fed did lots of QE circa 2009-2019, tight fiscal pushed in the other direction. — The arrival of the Tea Party in 2010 reinforced tight fiscal impulses for the following years. — Fiscal policy did not really become loose until year end 2017, with the Trump tax cut. So basically, if loose monetary policy fights against tight fiscal policy, you get a cancellation of forces. The Fed's juicing of the system helps the valuation of corporate assets — which is what we saw — but tight fiscal policy is a contractionary influence. That is the reason the 2009-2019 was sluggish, but great for asset prices. Loose monetary and tight fiscal is an ideal recipe for mild-to-weak growth, no inflation, and asset prices going up. But here is what is different moving forward: — With the Trump tax cuts, fiscal policy went from tight to loose. — With Covid in 2020, fiscal policy flapped like the pages of a phone book. — Loose monetary AND loose fiscal at the same time is a game changer. I mean come on. How can we talk about inflation and NOT talk about the big fiscal change? They sent direct checks to people in March. That is a straight up helicopter drop. A $1,200 check is not an obligation to think carefully about or a loan to be repaid. It is straight up "here is some money." With the $600 check they are doing it again. And if the bottom half of the economy is weak in 2021 (an almost certainty) they will do more. Also, re Janet Yellen: The take there was way off base. Yellen doesn't care about the stock market. I seriously doubt she cares about the opinion of hard money types. But she cares deeply and passionately about labor economics, and she cares deeply and passionately about helping the weakened half of the U.S. economy. Translation: Yellen is happy to stimulate the living heck out of the U.S. economy, dollar debasement be damned, if she thinks it is the right thing to do to help the struggling lower half of the labor market. Yellen does not love Wall Street, but nor is she bothered by the thought of a big run-up — or a big run-up of inflation concerns — if that is what's needed to help labor. Yellen is a labor economist and a Keynesian's Keynesian; she loves labor economics and has given impassioned speeches about helping the struggling classes; she is willing to stimulate like crazy to help labor; and her and Powell will be of one mind on this. So look. You put monetary policy and fiscal policy rowing in the same direction; AND you put Yellen and Powell in exactly the same mental place (they worked together for years, remember, and Powell is a big stimulus advocate); AND you put shifting expectations around a vaccine recovery in the mix; AND you put direct checks going out to people with the potential for more to go out; AND you put a high likelihood of shortages for high demand goods in a post-vaccine recovery environment in line with expectations; and what you have is a recipe for serious inflation. As for the whole "Fed printer goes brr" thing — it's a red herring. It is a meme and a narrative that reddit/WSB can understand and build a framework around. Meanwhile the popularity of the "Fed printer goes brr" meme is a real thing. Why? Because inflation is influenced by expectations. Inflation is one of those weird things where perception can make it real. Why do you think Bitcoin is above $30,000? In part because inflation worries are taking hold. I am fine with those who are skeptical of inflation. But I wish they had more substantive arguments! One of the strongest pro-inflation arguments is that, for years, monetary policy had to fight against fiscal policy. Now monetary and fiscal are rowing in the same direction, and fiscal is a big fricking howitzer. It is the real deal when governments are sending checks to people. Then, too, about that QE. Richard Koo has pointed out that QE doesn't help anything, but it does in fact build up a large quantity of bank reserves that are sitting there inert. The issue with this is that, when animal spirits come back to life, the inert bank reserves created by QE can suddenly create a lending boom that quickly drives inflation. Bank reserves are just cash. Nothing more, nothing less. They are cash holdings that are required to be sequestered in bank vaults or kept on deposit with the Fed. QE, in a depressed environment, doesn't do anything because more cash to banks who don't want to lend it is coals to Newcastle, or water in an underground lake. BUT, when the appetite for lending returns, all that stagnant liquidity becomes available, and then it can start cycling through the economy, and meanwhile the Federal Reserve CANNOT remove the excess reserves quickly because that would be a destructive fiscal impulse that would kill the recovery. And none of this even mentions the dollar divestment argument (the USD is seeing a historic global rebalancing away from too-high levels of manager reserves in central banks and SWFs) or the commodity price argument (as the dollar weakens and commodity prices rise, investors get more excited about EM growth, which creates a cycle of further dollar weakening and greater rises in commodity prices). So, again, I'm not an inflation bug. But I see how those anticipating inflation have a real and substantive case. I can respect the anti-inflation view, but it should address more of the stuff I'm talking about here. The anti-inflation arguments being presented thus far are largely straw man.
    • JL
      J L.
      5 January 2021 @ 10:13
      p.s. Oh and by the way, via Jan 4 Bloomberg article: Treasuries Inflation Gauge Exceeds 2% for First Time Since 2018 "Traders see U.S. inflation averaging at least 2% per year over the coming decade, the first time expectations have climbed that high since 2018. The move came as real yields plumbed record lows. The 10-year breakeven rate -- a measure that draws on pricing for inflation-linked Treasuries -- rose as high as 2.017% Monday, a level last seen more than two years ago, data compiled by Bloomberg show..."
    • MB
      Matthias B.
      5 January 2021 @ 12:42
      hi JL, you state some very salient points. But on you observation about Mrs Yellen, I do hope that you are wrong. She allowed herself to being taken hostage of Wall Street, therefore dithering big times about monetary tightening which only planted to seeds for further massive capital misallocation by bringing forward wrong incentives. As a result, economic & income inequality continued the widening trend which started under her two predecessors. Being a Keynesian's Keynesian will not structurally change the fate of her target clientele you mention. math does not work in this case: -ve * -ve = +ve
    • JL
      J L.
      5 January 2021 @ 15:25
      @ Matthias B. On Yellen I am not wrong. It doesn't matter what you think or what I think, or what Austrians or hard money advocates think. It matters what Yellen thinks -- in terms of judging what Yellen will do -- and Yellen is a full-blooded Keynesian and a passionate advocate of labor economics, full stop. The following is from a Yellen speech in March of 2014. If she believed it seven years ago, think how much MORE she will believe it now, with the lower half of the economy in tatters: "The Federal Reserve has taken extraordinary steps since the onset of the financial crisis to spur economic activity and create jobs, and I will explain why I believe those efforts are still needed… We are trying to help families afford things they need so that greater spending can drive job creation and even more spending, thereby strengthening the recovery... When the Federal Reserve's policies are effective, they improve the welfare of everyone who benefits from a stronger economy, most of all those who have been hit hardest by the recession and the slow recovery."
    • RM
      Robert M.
      5 January 2021 @ 17:53
      Interesting take on Yellen and nice response. If you want a more substantive argument for low inflation, go read the quarterly reports by Lacy Hunt at Hoisington Management. He has been spot on for decades and argues the level of debt will act as blanket on the economy keeping inflation low. Well worth reading to get a different viewpoint.
    • CB
      C B.
      5 January 2021 @ 18:11
      You may be correct about Yellen's aims, but surely she also realizes that an inflationary boom that drives wages higher will also hurt those living hand to mouth the most once prices of consumables rise. It will more or less offset any benefit from wage increases. The way I look at things, inflation is the only outcome I need to hedge. We already know how the Fed responds to deflation - monetary easing is great for asset prices. But if inflation picks up, the Fed is boxed in. They can't raise rates without blowing holes in the sustainability of the public/private debt load. (without reverting to MMT at least) So an inflationary outcome is the what we need to be afraid of.
    • JL
      J L.
      5 January 2021 @ 18:48
      @ Robert M Thanks! I'm well familiar with Lacy Hunt -- started reading his stuff more than a decade ago. I mostly agree with his views and his treasury bond call has been epic. It is interesting you mention Hunt though, for a specific reason. In Lacy Hunt's Real Vision interview with Kiril Sokoloff -- I believe it was done this year and recently posted as a re-release -- Hunt essentially argued that if the Fed ever got on a direct monetization path, breaking the constraints of the Federal Reserve act and financing government expenditures directly, it would be game over in terms of monetary confidence. I would argue that Hunt's doom scenario is already happening by the back door. No less a luminary than Jeff Gundlach has argued the Federal Reserve broke the constraints of the Federal Reserve act with its 2020 actions. And if Yellen and Powell work hand in glove, the U.S. Treasury and the Fed collaborating creatively, those constraints can be broken even more. Yellen -- the only person to hold all three big jobs, Chairman of the Council of Economic Advisers, Chairman of the Fed, and next Treasury Secretary -- will know how to use the plumbing of the system creatively to channel funds into the real economy while making an end-run around congress. With Powell as her consigliere at the Fed, they will get it done. Picture slick moves like extending credit to state municipalities on terms so generous that the credit is the same as cash -- if I lend you a million dollars at 0.01% interest with a 50-year payback term it is functionally the same as giving you money. Broader point being, the Hunt paradigm of debt being a constraint consumes that there is some kind of hawkish boundary mechanism preventing the debt monetization of that debt. If you move onto the debt monetization continuum -- where the Fed is more or less financing the government's expenditures and turning debt into currency which then goes straight out the door -- the whole picture changes. And that is where we are headed. We're already on the way -- that is why inflation expectations are at two-year highs now imho. The other thing you have to remember is that, if a government really, really wants inflation, they WILL get it. Logically this has to be true for the following reason: -- if debt is always deflationary, no amount of stimulus will create inflation -- but this implies the ability to create an infinite amount of debt... -- because inflation via currency depreciation is the release valve. Put another way, debt is deflationary under normal circumstances, but if you accrue enough of it and monetize enough of it, you flip the switch. And again, with monetary and fiscal now rowing in the same boat and Yellen set to join Powell on a fiscal dominance monetization quest, that is where we're headed I would argue...
    • JL
      J L.
      5 January 2021 @ 18:56
      @ CB I would argue Yellen believes the Fed and Treasury can control undesirable downstream inflation consequences by way of monetary tools and the policy mix. I would argue Yellen also believes that a moderately above trend rate of inflation is sustainable, e.g. 2-3% -- "a little hot but not too hot" -- and that larger considerations will rein it in. I would further argue Yellen sees helping labor as an absolute imperative, and that side effects of heroic efforts can be dealt with later but should not prevent bold action. Whether she is correct in thinking all that stuff is a whole other story. But as a technocrat with a heart of gold, I think she is going to try and help labor as much as she can first and foremost, and then worry about the consequences later. And again, I'm not saying she is right in her assumptions. I'm just saying there is strong empirical evidence that this is how she thinks, which will influence how she acts. The market smells inflation too, bigtime. Look at commodity prices, look at silver, and so on. If those who anticipate inflation are wrong, then a whole lot of market instruments are wrong too... maybe it's the anti-inflationists who are being too clever by half instead?
    • RA
      RAMI A.
      6 January 2021 @ 17:46
      RV Please hire this dude :)
    • AM
      Anne M.
      10 January 2021 @ 21:45
      I would agree that now we will see both fed and fiscal loose monetary policy and I would add that in other times we would have had the deflationary impetus of some portions of the economy failing (real estate and mortgage sectors in 2008 and 2009 or tech in 2000) and therefore re-pricing to lower levels to offset some of the monetary largesse. But in this instance that does not appear to be happening --corporations have had massive access to government support and/or low rate debt and have successfully refinanced and lowered their costs, even high-yield is not showing much duress, housing prices in many areas are hitting all-time highs, and although we would expect to see dramatic downward pricing in CRE, other than hospitality it has so far been mostly contained. There have been some losers, but there has been plenty of money around from buyers to prevent the massive price reductions we have seen in the past. So with few to no offsets, I would agree that we are off to the races.
  • TR
    Tobias R.
    9 January 2021 @ 10:05
    Fairly useless observations unless they have some solution to the ICU capacity issue, which they clearly don't. All the same interesting observations around testing, what constitutes a positive test as well as the healthcare incentives. But without any solution to how the healthcare system should deal with the surge of cases they should not be so smug
  • DB
    Danielle B.
    8 January 2021 @ 09:21
    Don't go into finance ffs. Be useful, go into stem. Finance is a waste of intelligent humanity.
  • PV
    P V.
    6 January 2021 @ 14:09
    MG's position on China is puzzling. The statement of China's labor force shrinking is patently false as it has increased in 2019 from 805 to 811 mio (check for yourself). Granted labor participation rate is declining and that is common in most advanced economies. I reckon his views are tainted (as often is the case sadly) by his political beliefs and that puts in question all his analysis.
    • JL
      J L.
      6 January 2021 @ 18:24
      The other really odd thing re, China, is he stated that China policy was his rationale in voting for Trump. That seems wild because there is no empirical evidence Trump had a consistent China policy in the first place, meaning, Trump has gone through periods of praising Xi to the skies as well as criticizing him, and his penchant for 180 reversals meant he could go from anti-Xi to pro-Xi again (and thus pro-China) at the top of a hat (or the turn of an election cycle). The only detectible Trump through-line on China was political posturing -- Trump went anti-China as a scapegoat for the pandemic and a means of tarring Biden, but could just as easily have done a 180 towards "falling love" with Xi (to use his Kim Jong Un phrase) if, say, offered a hotel franchise in Shanghai. It's one thing to prefer one set of party policies over another; it's another thing to weirdly pretend Trump had any kind of coherent foreign policy other than 1) opportunism and 2) reciprocating like with like.
    • LS
      Lemony S.
      7 January 2021 @ 21:40
      Incorrect JL. By every objective measure president Trump handled China as a departure from (bought off) US policy regarding China and it's not even close. You name it - economic, social, domestic, etc. He was ousted/coup'd precisely because China had done such a good job of buying off our corps and politicians. Sadly, Joe Biden is the foremost of these, but there are many others - mainly Democrats (in size and scope) but also numerous Republicans, no doubt.
  • AC
    Andrew C.
    7 January 2021 @ 09:48
    Would be great to get a deck with evidence of some of the commentary (esp China), and links to papers mentioned also.. thanks
  • BB
    Bhaumik B.
    6 January 2021 @ 14:06
    Just too much to consume in half an hour. Thank you Mike Green as always!
  • JK
    John K.
    6 January 2021 @ 09:49
    Man, he is a total contrarian to conventional views
  • AA
    Andreas A.
    6 January 2021 @ 09:39
    Nice summary Mike, would be very grateful if you could elaborate on your method of obtaining long vol exposure. In the equity index space the market is too efficient for such an arbitrage to exist between ITM & OTM options. Trading delta-hedged would capture this difference. Perhaps in the single-stocks world... however when you account for the cost of trading, I can't understand where you find a net benefit. Any comments much appreciated thanks
  • JL
    J L.
    6 January 2021 @ 03:41
    Aaaand Republicans just lost control of the senate. So much for no inflation.
    • JL
      J L.
      6 January 2021 @ 03:50
      Edit -- not officially over yet but electionbettingodds.com has Dem control at 90%. They are massively outperforming with heavily D-favored mail-in yet to be counted (red mirage vs blue wave same as PA)
    • DG
      David G.
      6 January 2021 @ 07:13
      He just explained that spending will be coupled with higher taxes. In MMT taxes are used to limit inflation, or so the theory goes.
    • JL
      J L.
      6 January 2021 @ 08:46
      The tax assumption is far from simple. First, Yellen and Powell will want to establish an acceptable level of inflation to move away from deflationary risks, likely at some rate above two percent. They will likely target two-percent-plus, and then only seek to cap it if things get out of hand. The Fed in particular will be very hesitant to raise rates until there are signs that recovery is robust. By then inflation is likely to be rising. Second, you can't turn taxes on and off like a switch. It doesn't work that way. Attempting to address an inflation problem with taxes is theoretically feasible, but the calculation of which taxes to raise and how is immensely complex across a whole range of decisions -- before even getting to the politics of it. Third, if Democrats try to stimulate the labor economy while taxing the rich, those are two different areas of the economy. A tax on the wealthy might result in softer asset prices, but it won't necessarily put a brake on inflation. If a wealthy individual has a slightly smaller surplus amount of income to put into corporate bonds, it won't reduce inflation much. If Democrats take measures to raise the minimum wage, raise OSHA labor standards, increase benefits to lower income workers, and put more capital into the pockets of the lower half of the economy specifically, all of those actions are highly likely to increase monetary velocity (because higher labor costs can filter through to prices, and when you put income in the hands of a lower income person they tend to spend it quickly on necessities). The bigger picture reality is that the MMT theory about using taxes to cap inflation is exactly that, a theory. It may work as a concept but executing in practice is a whole different ballgame. And at the same time, raising taxes on the wealthy (which is where Dems would focus) is not necessarily an inflation-dampening action, whereas stimulating the labor economy (and sending out more direct payments) is absolutely inflation-inducing. And once again, markets are reflecting this. Bitcoin pushing $35,000, gold circa $2,000, crude oil circa $50, long-run inflation expectations at two-year breakout levels. The anti-inflation dog ain't hunting.
  • DD
    Dmitry D.
    4 January 2021 @ 08:05
    What an awesome way to start the year! Mike is an exceptionally generous guy with regard to his knowledge and wisdom, but I suspect in general too.
    • DD
      Dmitry D.
      4 January 2021 @ 08:54
      I would really love to see Mike speak to Lacy Hunt or Russell Napier regarding the inflation thesis. While Mike's view regarding the 70s inflation appears very logical and fits onto the reality extremely well, I have some difficulty completely giving up on the Milton Friedman's "monetary phenomenon" observation. After all, inflation has been observed outside of the circumstances of expanding labour force and strong population growth. Expanding money supply ought to matter (as extreme cases of Zimbabwe and Weimar demonstrate) also. In my humble and simplistic visualisation, CPI inflation did not occur as a result of QE because "liquidity" was restricted to circulating in a closed system that excluded the main street. As valves that can let it out to the wider circulation seem to be opening up (Russell articulated this thesis very well in my opinion), case for inflation seems to have merit to me. Sorry for the long post.
    • MG
      Michael G. | Contributor
      5 January 2021 @ 04:56
      Dmitry, I do not think Zimbabwe and Weimar were the same as the US in the 1970s, although both had similarities. Zimbabwe had a massive inward supply curve shift driven by "agricultural reform" (taking large farms away from skilled white farmers and dividing them into uneconomic plots farmed by subsistence black farmers) which turned them from a major food exporter to importer and then printed money to meet domestic demands for the higher food prices. Weimar similar as they had a need to export to obtain hard currency to pay reparations resulting in domestic shortages met by money printing. Occupation of the Ruhr by France in response to a default on reparations was the trigger.
    • HM
      Hazvinei M.
      6 January 2021 @ 02:57
      Mike, don't forget that Zimbabwe also came under immediate global sanctions that cut them out of the global monetary system, including access to BOP support and other development finance from IMF. They were printing to keep up appearances and to buy hard currency for imports. Never understood why people use this is an example of inflation coming to the US, the facts are so incomparable. Venezuela and Zimbabwe are better comparisons of each other.
  • BA
    Bruce A.
    5 January 2021 @ 03:11
    Given Mike's ability to understand and explain where things went astray in the 70's and given my scepticism that the FED/Treasury have the correct settings for today or post Covid, I humbly ask Mike the question: What is the correct policy setting now and in the immediate post-covid era in regards to interest rates, QE and govt spending? As background, here is my simpleton's understanding of Mike's description of inflation/deflation historical dynamics (please correct me Mike): 1) 70's demand curve shift outward overwhelms supply and leads to ill conceived interest rate hikes that curtailed supply more than they curtailed demand....leading to 'shortages' that pushed prices higher. This was within a US growth environment, not a stagflation environment. It wasn't currency devaluation (USD taken off the gold standard) and massive deficit spending by the US govt (Vietnam War, etc). 2) Pre-covid dynamic: Aging demographics leading to weaker demand while low interest rates and technological innovation result in supply further out pacing demand?? . 3) Covid dynamic: Supply disruptions shifting supply curve up at same time that capital goods demand is being brought forward (e.g. spend on recreation vehicle instead of international travel, etc). Corporations draw down credit lines leading to illusion of M1 growth, Fed starts QE 'whatever it takes' and introduces average inflation targeting. Treasury provides seed capital plus FED loans to create special purpose lending vehicles. Gov't deficit jumps and jumps and jumps. 4) Post-covid: Price inflation will be a temporary phenomenon as capital goods demand settles down and supply comes back on stream. Gov't deficit hawks will force taxes up to offset any excessive govt spending. Corporations will re-establish their original credit lines (reducing M1 money supply). Continuation of disinflation? as aging demographics and technological innovation keep FED in easy mode (bond yields low) and thus supply side is strong. Do wages remain contained?
    • MG
      Michael G. | Contributor
      5 January 2021 @ 04:48
      1) Nice outline 2) The correct policy setting is to stop using rates as a policy tool. Rates don't work the way economists think they do. Make good policy to create conditions that encourage private sector risk taking and growth. I lean towards Warren Mosler's view that rates should default to near zero at the front end with the market pricing the rest of the curve.
    • DS
      David S.
      5 January 2021 @ 05:10
      Michael G. - Well said. Lower rates are pushing on a string when there a few reasonable investments. COVID Times and politics are too disruptive. DLS
    • BA
      Bruce A.
      5 January 2021 @ 05:21
      Mike G. - Given your answer in 2): do you see QE as part of 'rates as a policy tool'? thanks in advance.
    • JL
      J L.
      5 January 2021 @ 08:54
      I would argue the working assumption about "government deficit hawks" is wildly wrong. If Dems win the Georgia senate run-off and take control of the senate, the hawks are plucked and feathered. You will see investors fearing a full-on MMT train. And even if Dems don't retake the senate, consider that -- Trump pounded the table for $2,000 stimulus checks -- Sen. Josh Hawley (aspiring Trump 2.0) pounded it too -- Hawley argues the GOP needs to be a "working class" party Basically: There are no true hawks on the Democrat side. If they take the senate, it's over. But the Republican side is losing its hawkish sheen too. Trump went full labor with his $2,000 push, and Hawley and others see the chance to expand and deepen the GOP's 2020 downballot gains by becoming more pro-worker. They aren't going to rein in the fiscal. They are going to crank it up, one way or the other. The odds of this are at least quite reasonable -- reasonable enough to make any "fiscal hawks will rein things in" assumption a very large question mark.
    • JL
      J L.
      6 January 2021 @ 02:33
      p.s. Real time update: electionbettingodds.com now has Dems at +80% to take the senate. Same day voting results are neck and neck and Ds dominated early voting, which means it looks like a repeat of Pennsylvania (red mirage overtaken by late blue wave).
  • PC
    Peter C.
    5 January 2021 @ 22:20
    Thank you for having Mike Green on RV. I'll watch anything and everything with him. I appreciate his somewhat contrarian views - effect of raising interesting rates in the 70s leading to more inflation through reduced supply, etc. - and especially his caution against fear-based, centrally-planned governance in the developed world. It seems that most accept further centralization as a foregone conclusion, even by the more libertarian among us. We need Green's deep thinking and influential challenge to that trend.
  • MM
    Michael M.
    5 January 2021 @ 19:06
    Thank god for Michael Green. Humanity is clearly at a tipping point and it's individuals like this, regardless of the domain they operate in, that will shift us towards world that's sustainable and worth living in
  • NZ
    Nicolas Z.
    5 January 2021 @ 18:55
    Mike: Please just get a normal background. Love the comments and insight as always!
  • RM
    Robert M.
    5 January 2021 @ 17:48
    Excellent comments. Appreciate the closing billboard that summarizes Mike's thoughts. That use to be standard on RV videos and have missed them.
  • DD
    David D.
    5 January 2021 @ 09:16
    Finally! Sensible comments on the money supply and inflation.
  • MH
    Michael H.
    4 January 2021 @ 19:24
    Does keto work? Just look at Mike Green!
    • RI
      R I.
      4 January 2021 @ 23:07
      Gotta love a guy who plays down covid but then proceeds to shred weight via the keto diet. Almost as if he was cognizant of the fact that covid murders fat people.
    • DS
      David S.
      5 January 2021 @ 05:37
      I do not know, but I think Mr. Green choice to lose weight supersedes COVID Times. In addition I feel, but do not know, Mr. Green is looking for a better balance between protecting against COVID and keeping the economy going as much as possible. For whatever set of reasons, the western world could have done a much better job. The convergence of COVID Times and constant conspiracy theories allowed many people to be stupid. Stupid has consequences. A little blunt. A few micro-brews loosens the tongue. Shakespeare: Wine increases the desire and decreases the ability. Be safe, but spend what you can. DLS
  • DK
    Daniel K.
    5 January 2021 @ 01:30
    I'm still confused why inflation isn't a concern. I understand covid-19 pulling demand forward pushes up prices temporarily but prices were going up before the outbreak. The Chapwood inflation index shows many cities with a five year average of double digit inflation growth: https://chapwoodindex.com/ The counter argument I always hear to this is everyone knows the CPI doesn't accurately measure inflation but the CPI is what the Fed looks at so everyone else uses it. How is this rational behavior? Shouldn't there be an advantage for investors using accurate information for such an important economic activity that is 'mispriced by the market' for using CPI to alleviate inflationary concerns??
    • DS
      David S.
      5 January 2021 @ 02:12
      You're confused precisely b/c it's confusing. Everyone is screaming inflation!! And, currently, the inflation trade is working. But then there are smart, informed, thoughtful experts like Mike Green, Lacy Hunt, and even Raoul, who suggest that deflation is the more likely outcome b/c of the massive debt overhang that exists. And it would be foolish to disregard their warnings. But would you really have wanted to be long the deflation thesis over the last 6 months, riding the dollar down into the ditch, riding treasuries sideways to down? Hence the conundrum. This is tough. FWIW, I would genuinely have liked it if Mike had taken a moment to explain how investors can realize his ideas and forecasts in certain types of trades in light of this inflation vs deflation argument. That is important information.
    • DS
      David S.
      5 January 2021 @ 05:03
      David S. -Good to hear from you. I believe you need to follow the money to see inflation. Scads of money went into the market. Stocks are inflated. Scads of money went into the US bond market and interest rates were driven down. You are much better at research than I am, but I hear non-Fed central banks are rebalancing toward the Euro and away from their $US reserves. If this is true, we should see changes with year-end data. It is always a "follow-the-money game." I expect inflationary forces at the GDP level to win on balance. I could easily be wrong. Whatever happens follow the flows of money. Happy New Year to all of you down under! DLS
  • NL
    Nikola L.
    5 January 2021 @ 03:36
    thank you Mike.
  • HE
    Hugo E.
    4 January 2021 @ 23:44
    Seriously - Mike is a fucking legend. Always provides huge value.
  • JB
    Jack B.
    4 January 2021 @ 23:43
    This is definitely a Power-Share; Mr. Green provides the most value per word and hypothesis.
  • SN
    Sean N.
    4 January 2021 @ 19:22
    Useful perspectives to start the year... Would love to see Mike in discussion with Jeff Booth, please!!
    • CM
      Cory M.
      4 January 2021 @ 23:01
      Yes, that's be GREAT.
  • EH
    Eric H.
    4 January 2021 @ 22:58
    Mike Green is a unique, pragmatic individual willing to think for himself vs buying into narratives. Love all of his content
  • TC
    Thomas C.
    4 January 2021 @ 22:57
    Great ideas and perspective as usual. Nice to see impartial independent thinking
  • JM
    Joeri M.
    4 January 2021 @ 17:32
    Hello Mike, only 5% of trading activity comes from passive instruments and more than 90% from etf trades take place on the secondary market which implies that buying etf's almost never has an impact on the underlying securities. As we all know, it's transactions that set prices. I'm having difficulty believing in your viewpoint after reading these two papers from Blackrock (Index investing supports vibrant capital markets) and Vanguard (Setting the record straight: truth about indexing)? Also, passive investment has gotten rid of bad active managers, which makes the market more, and not less, efficient. Passive investment has also reduced the cost of shorting, making the market more efficient. How would you reply to these points? Thank you very much!
    • MG
      Michael G. | Contributor
      4 January 2021 @ 17:52
      Very straightforward -- the premise is wrong. From Vanguard "The core concept underlying index fund investing, zero-sum game theory (Sharpe, 1991) states that a market consists of the cumulative holdings of all participants in that market such that the weighted-average return of these participants is the market return" From the same paper, "A passive investor always holds every security from the market" and "An active investor is one who is not passive". Since Vanguard must constantly BUY securities due to their inflows, they are by definition NOT passive and so the hunt turns from expense ratios to market impact. That's where my work is different. Academics are catching up (see https://bit.ly/2KY8IAg and https://bit.ly/3hHXMTn).
    • JM
      Joeri M.
      4 January 2021 @ 19:33
      Thank you very much for your answer Mike. I'll analyze the papers you recommend.
    • DJ
      D J.
      4 January 2021 @ 21:14
      Mike has a point there, the investors of vanguard might be passive, but, vanguard itself could be active. Quite an oxymoron.
  • DW
    Dave W.
    4 January 2021 @ 20:47
    If he's long vol, and unsure what direction the markets go, does this sound like a good setup for a "straddle" type trade? Any ideas? Cheers
  • DS
    David S.
    4 January 2021 @ 18:40
    Excellent presentation. Carl Jung: “It is as if our consciousness were a continent, an island or even a ship on the great sea of the unconscious.” I feel the same way about objective reason being a ship on an ocean of emotion and non-objective reason. Objective reason is a rare commodity. Mr. Green is exceedingly successful in the use of objective reason in financial analysis. We have seen this innumerable times on RVTV. It took me a long time to understand passive investment as just supply and demand without the filter of valuation getting in the way. Money flows in. Money flows out. During 2020, I finally came to terms with how emotional human beings are including myself. Most of us use non-objective reasoning to support our prior emotional conclusions. Enlightenment thinking plays a small roll in how we often act. Many voters in both parties based their vote on a single issue not on the common good. No wonder the US is so divided. The western world and China have many issues to work through. Both Republicans and Democrats recognize this. President Trump choose a direct confrontational strategy. President Elect Biden will probably choose an integrated strategy with our allies. In the long term I hope the combination will work for the betterment of both. Regardless, my understanding of emotionally driven conclusions supported by non-objective reason is my new understanding. Objective reason can be used to provide the initial thesis – China is not following international norms. Then the action can be emotional and/or non-rational. The Rave in France over the weekend of 2,500 people during a nation-wide lock down is a simple example of emotional driven actions. They are not alone. Long-term investments based on passive flows is even a better example. Paraphrasing a quote from movie The Lion in Winter – We can tangle spiders in the webs we weave. DLS
  • HS
    Henry S.
    4 January 2021 @ 17:05
    I remember not too long ago Mike said he didn't have time to be a regular on Real Vision. I'm glad all my incessant nagging on Twitter wasn't in vain :)
    • JC
      Jan C.
      4 January 2021 @ 18:39
      If you were the tipping point. Then yes, thank you.
  • TP
    Timothy P.
    4 January 2021 @ 18:28
    I fully enjoyed this video - Mr Green is pragmatic and forward-thinking without falling into the trap that most subjects on RV do, talking their book, which I appreciate. I do disagree on the inflation expectation, but that is a minor quibble. QE only works after all, if only one central bank is doing it, and the whole world is devaluing as we speak. I also appreciate his frank and honest opinions on China, and how they have significant headwinds described by their demographics and credit market problems. This is one of the few reasons why I continue my RV membership. Bravo, Mr. Green.
  • MF
    Max F.
    4 January 2021 @ 18:21
    Maybe in 3 or so years there is a great trade to be had playing the increasing passive penetration in the rest of the world versus perhaps passive-saturated US asset markets. In combo with the inelasticity of US asset markets you could have a lot of interesting set ups. Lots of moving parts to think about but this interview was great for that sort of thing. Many nuggets to build trade theses from!
  • WB
    Wes B.
    4 January 2021 @ 17:58
    Mike is the best. Smartest guy in the RV universe
  • SB
    Shaan B.
    4 January 2021 @ 17:10
    Brilliant interview, always look forward to Mike Green on RV
  • JM
    Joeri M.
    4 January 2021 @ 16:58
    Using the signal of the bond market as a sign that inflation will not come seems very strange to me. In October 2018 the 10 yield was above 3%. Surely, it was signaling that inflation was coming you would think. Of course, inflation didn't come and the economy slowed down sharply. The bond market isn't a good predictor at all. You need leading indicators like Julian Brigden uses. His models are predicting inflation. Too many people use theories and narratives. I've followed most people on realvision since the very beginning. My conclusion is that only those that use leading indicators have been right on a consistent basis (like Julian Brigden and Michael Howell from Crossborder Capital).
  • mf
    massimo f.
    4 January 2021 @ 16:56
    My god, someone finally said it; there are commodity shortages because of supply disruptions.
  • ND
    Nivtej D.
    4 January 2021 @ 16:10
    Population control through fear, challenging Jeremy Granthams’ world view. Awesome stuff! Run for office lol jk your too smart for that
  • AE
    Arash E.
    4 January 2021 @ 15:52
    This was awesome. Love the long vol views (also Chris Cole’s stuff). Currently a winner of “financed” long vol exposure that is starting to pay today. Thank you RV team!
  • CK
    Chris K.
    4 January 2021 @ 08:38
    Would love to see a debate between the late Jack Bogle and mike green on the rise of passive. would be epic.
    • AR
      Alexander R.
      4 January 2021 @ 14:56
      There would be no debate Before he die Jack Bogle kind warned about the dangers of passive investments. Passive is genius as long as it remains relatively small, once it become the market dominant fiture the whole dimamic has changed and new eco system was created Market inelasticity created a monster where if market goes down, it by default Requires government to step in, as they can not afford 50% drop in 3mo or 3 weeks Which created a feedback loop, of socialising losses, so if risk is taken away you gamble more and market goes up
  • SB
    Sean B.
    4 January 2021 @ 14:12
    Learned so much, thank you
  • JS
    Jon S.
    4 January 2021 @ 13:54
    Thank you for you generosity Mr. Green! Happy New Year!
  • RM
    Russell M.
    4 January 2021 @ 13:53
    Whoa, great start to the New Year! Very inciteful look at the trends that will affect markets. Lots to think about here!
  • KS
    Kim S.
    4 January 2021 @ 13:37
    Real Vision sub paid itself first day :)
  • AP
    Adam P.
    4 January 2021 @ 13:05
    Mike Green on day 1. This year is already looking up!
  • TR
    Tobias R.
    4 January 2021 @ 11:36
    The best possible way to start the RV year!
  • AA
    Andrew A.
    4 January 2021 @ 10:30
    I'm so glad Mike got his own show - always great listening to his thoughts. APA
  • MO
    Master O.
    4 January 2021 @ 10:02
    Mike Green can you pretty please register your long volatility fund in the Cayman Island so retail folks like me can invest in?
  • DV
    Dimitri V.
    4 January 2021 @ 07:53
    Mike your interviews on Realvision as interviewee and interviewer are always super! I hope you interview Druckenmiller in your series
  • BI
    Brett I.
    4 January 2021 @ 07:31
    Fascinating as always. Would love to see Mike interview Peter Zeihan. I feel that they may have a similar view on China, but would be interested to see how they view the rest of the world.
  • JS
    Jon S.
    4 January 2021 @ 07:22
    Cannot wait to see this! Thank you RV Happy Nee Year!