Tracing the Bullish Narrative

Published on
June 11th, 2018
27 minutes

Tracing the Bullish Narrative

The Expert View ·
Featuring Urban Carmel

Published on: June 11th, 2018 • Duration: 27 minutes

Urban Carmel makes a detailed case for remaining long U.S. equities. Carmel sees an investment landscape replete with bullish indicators — including tailwinds from a favorable employment picture, a strong housing market, and favorable signals from the U.S. Treasury curve. Filmed on May 29, 2018 in San Francisco.


  • DC
    D C.
    12 February 2019 @ 08:02
    I had been misreading his name and thought it was a moniker: the "Urban Camel"
  • AZ
    Arthur Z.
    16 June 2018 @ 03:09
    Great bullish case. My biggest issue is that not once did he mention the manipulation of the fed and how quantitative tightening might throw the market in for a loop. It’s easy to say “this will happen because historically this and this have happened...” Nobody know what’s going to happen in the near future because we’ve never experienced a fed that’s about to taper its balance sheet after expanding it to 4 trillion dollars. It’s dangerous to be this confident right now imho.
  • CL
    Charles L.
    15 June 2018 @ 19:43
    market grows on average 10% to 12% per annum? Is that number corrected for survivor bias??
  • DM
    Don M.
    14 June 2018 @ 20:45
    Also last two recessions were caused by bear markets - not vica versa.
  • DM
    Don M.
    14 June 2018 @ 20:44
    This guy's good but his charts were deceptive.
  • CB
    Chris B.
    14 June 2018 @ 19:55
    It was very helpful to get the bullish view from what appears to be a very smart guy. I am not sure I accept all his conclusions yet but the video was intriguing enough to make me start to read his blog. Thanks RV for this view and thanks to Urban for doing the video; look forward to reading your blog!
  • gg
    gurdeep g.
    14 June 2018 @ 19:12
    Been lobbying for Urban to get on RV for sometime. Well done great interview
  • AF
    Antonio F.
    13 June 2018 @ 08:52
    - "Unemployment is low" - What about workforce participation ? - "People are buying more houses" - How are they paying for them ? - "The job of the stock market is to confuse you" - is it ? - "In pre-election years it's very common for the market to trade sideways" - Then he will add a note to his materials saying "past performance is no guarantee of future returns". - "Stock markets have a propensity to rise over time" - well, sure... But why and why do you think it will be the same going forward ? He could be right, he could be wrong, but his arguments are weak.
    • CM
      C M.
      14 June 2018 @ 03:11
      On houses, corporations/investment funds have been big buyers in my city. Home prices have risen so much, many young people say they can not afford to buy a house. Also know lots of baby boomers that say they can't move from their current home as prices are too high (even if they sell their current home at a higher price). So not sure that I can make a direct correlation between home sales and individuals buying those homes.
  • WS
    William S.
    11 June 2018 @ 22:07
    Were I a university professor teaching a first-year course entitled "How to Lie with Statistics", I would make analysis of this presentation the sole focus of the final examination.
    • mw
      mathias w.
      11 June 2018 @ 22:26
      what specific statistics do you think are presented incorrectly? and what data would you present instead?
    • CB
      C B.
      12 June 2018 @ 01:45
      Pmi was not addressed and it is decelerating
    • CB
      C B.
      12 June 2018 @ 01:55
      I think how to lie with statistics refers to tactics like looking at average instead of median
    • WS
      William S.
      13 June 2018 @ 21:41
      His use of that average wage graph was the dead give-away for me. In my considered opinion, the employment of that chart, in the context of his argument, was calculated to deceive. There are several other less transparent (but no less deceptive) examples.
  • AH
    Andreas H.
    13 June 2018 @ 21:09
    Urban has been right with his bullish call since at least end of 2015. read his blog, its very, very rational constructed and data based. Jawad Mian, Urban and Joseph Fahmy have been the three early lonly and explicit bulls since 2015 on RV (Urban with his blog).. they kept me on the right side of the market and made me a ton of money. they where lonly, but their arguments made much more sense to me then the bears arguments and the fed argument is right, but if we all know the fed created a bull market in equities, why not ride it? intellectually the sceptics sound brilliant, but with what could happen you do not make money, you make money with whats probable: so looking at the macro stuff from Urban can give you a big edge to find out whats probable
  • AH
    Andreas H.
    13 June 2018 @ 20:17
    Love it!!!!
  • JL
    Johnny L.
    13 June 2018 @ 17:04
    This is bad analysis and conclusions across to many talking points. Anyways, it is a view other participants have.
  • KS
    Kim S.
    13 June 2018 @ 09:36
    "the market mostly goes up"... ie modern portfolio theory. Why bother with the selective rationalization? I appreciate Real Vision posting this. It makes me question my biases. But I question this fellow's even more. One of the most glaring examples was the statements about both government and consumers not spending much on debt servicing. Yessir... and what happens after that?
  • BO
    Bryan O.
    13 June 2018 @ 07:50
    Refreshing for Real Vision to give some air time to the bullish case of what ‘is’ happening rather than the plethora of bearish views on what ‘could’ happen.
  • HM
    Harold M.
    13 June 2018 @ 00:35
    Not very convincing nor compelling. Many of his cases for market expansion and continued equity growth run contrary to proven historical cases. Perhaps if he used more examples and tangible statistics I would have been more convinced.
    • AK
      Andreas K.
      13 June 2018 @ 01:31
      check his blog, the fat pitch. Hell provide you would countless examples of evidence that informs his views.
  • AK
    Andreas K.
    13 June 2018 @ 01:30
    one of the best blogs on the net, finally getting a mic. Well done RV team. I
  • JB
    John B.
    13 June 2018 @ 01:27
    I don't buy the "unemployment is low, consumers have more money in their pockets" assumption. I think the plethora of jobs out there that we are seeing are not necessarily high paying jobs. Additionally, for the competitive jobs that do pay well, Companies are so specific in their hiring practices now, roles go unfilled for extended periods of time. As a mid-level Director at a Fortune 500 firm, as many of my friends and neighbors as well, I can tell you we are not getting raises. We are getting 2% annual merit to keep up with inflation and companies are focused on buybacks to boost EPS. My family is trying to save more and pay all of our debts off. We can see what's coming down the pike. Hopefully I'm not trying to retire in the middle of the next disaster.
  • SL
    Stephen L.
    12 June 2018 @ 22:24
    Sure some of the pre-recession indicators seem useful if we trust his math. But I don’t think we need to listen to someone hand-wave through stock returns are lognormally distributed.
  • FB
    Floyd B.
    12 June 2018 @ 21:51
    Far too optimistic or maybe naive about government debt and the effect of higher interest rates on that debt. Entitlement spending probably worth a mention. Don't have any idea where he gets the figures on assets owned by the government relative to liabilities. Not real impressed.
  • BM
    Beth M.
    12 June 2018 @ 17:43
    Since when is GDP at 3%? First quarter this year it was 2.2% Last year total average was under 2.5%. Where is he getting his GDP data from?
  • DV
    David V.
    11 June 2018 @ 15:03
    Not buying an argument based on historical comparisons given the continued liquidity inflows from global central banks. Unemployment at decade lows...but methodology used to calculate the rate has changed dramatically and full time work has declined. Corporate debt levels historically unchanged...but much higher percentage being used for stock buy backs, not capital expenditures. Wages growing at 3% annually? Perhaps on average, but not with middle and lower tiered earners. 30% plus of new home sales are being generated by foreign buyers. That said...the stock market may very well continue upwards...because it's largely driven by liquidity flows, not by performance or market fundamentals. The Swiss National Bank can create money out of thin air and buy billions in US Stocks. bust your ass to set aside money to invest. Seems totally bizarre and unfair to me, and that's why I have difficulty going along with economic arguments based on historical principles.
    • IF
      Ian F.
      12 June 2018 @ 17:11
      Where do you get data for 30% of new home sales are foreign driven? That data doesn't exist.
  • MM
    Mike M.
    11 June 2018 @ 12:19
    Disingenuous/ Buffoonery. We have not had price discovery for more than ten years. We have a Central Planned economy. The 800 lb gorilla is the Fed.Res. They have nationalized the bond market, and have created the ETF's to facilitate control of equity markets. How is that 'wealth effect' working for you? Pali Alti, San Francisco the average home prices for 1500 sq. ft. house is more than $1.5 million. Maybe, on your next interview you can tell us there is no inflation. Hopefully, you have paid off your $250K MBA loan from Stanford for this bedtime analysis. You make Cramer look like a rocket scientist. Mike M.
    • IF
      Ian F.
      12 June 2018 @ 17:09
      The big bad spooky fed argument.... yawn
  • VP
    Vincent P.
    12 June 2018 @ 16:18
    Just want to quickly say that it's really not nice that some RV subscribers criticize fellow "RV Community" people just because they might be skeptical of today's market environment or not on the same side as they are. I've NEVER seen RV Contributors or RV Personnel do that, so you definitely SHOULD NOT! In fact, contributors and principles "expect" feedback from RV subscribers in either direction and welcome that as part of the "spirit" this platform stands for. That's because they are professional courteous and constructive in managing and developing relationships along with running a business. I'm sorry but it is inappropriate for anyone to rebuke co-subscribers as if they are "off shoot" cult members with only one way of thinking. There are many very smart people here who have and continue to have "negative" views of today's market environment and are extremely skeptical of it, with data and logic to support those views. If you know anything about trading, investing or managing money, it's in your DNA to be objective, flexible and reactive. Those market skeptics have adjusted and will continue to survive and be winners long term way more than you ever will! It's the only way to survive. So just sit back and enjoy yourself but shut up if you're going to say sh*t about us. Thanks in advance for your cooperation :)
  • mw
    mathias w.
    11 June 2018 @ 21:43
    this guy is data driven, which i respect. Read his stuff, can highly recommend it. His calls has been more or less dead right as long as i have followed him. RV is useful no doubt...but when reading comments am concerned that the whole RV community seem to always want the market lower for whatever reason.
    • RK
      Robert K.
      12 June 2018 @ 13:11
      I guess the majority wants the market higher. The RV community is hopefully a special subset of investors with a brain that wants the market up for the right reasons like a healthy and robust economy - not the one we have now that is pumped up by a decade long monetary manipulation of central banks with fragilities yet to be manifested.
  • TH
    Tomi H.
    12 June 2018 @ 12:52
    Great interview! I fully agree. If you want to make money in the markets you have to know the narrative and what the sentiment is. And how do you know it? You watch CNBC. I know this sounds ridiculous, but if you want to know what majority of people are thinking, then you have to watch CNBC even though it's painful as hell. If you want to learn and have a deep knowledge about markets, then you watch Realvision. If you had to choose either CNBC or Realvision, my pick would be Realvision. The reason why this analysis works and has worked in the past is, because it includes the factors, data and narrative that the majority use, same kind of analysis you'd find when watching CNBC. I want to be clear that this is by no means intended to offend, I think the view presented here is well thought. My only problem is whether this is tradable anymore? If he's right (and maybe he probably is), then you'll make maybe 15 % profit in the best case scenario, but there is a risk that you'd loose 50%. Of course it all comes down to risk management, but if we assume that we buy the dip thinking the crash is not here yet. With these odds to make the expected value positive, you'd need to be at least 77 % certain that this is not the crash and in practice you'd want to be at least 90% certain, if you really want to make meaningful bets (using Kelly criterion and assuming some uncertainty on this analysis). So while I think the analysis is done well and he is probably right, I would definitely not trade this. I wouldn't necessarily be net short equities either. I would rather seek stocks that usually outperform in the late cycle. Just a thought, but for example going long value (QVAL, and IVAL) and maybe consumer staples (XLP) and hedging this with short SPX etc. PS: What comes to home sales, sure it was leading indicator years ahead in 2007-2008 subprime, but not in 2000 crisis. I don't think it will be leading indicator this time. What comes to yield curve, I think everyone agrees that the theory says yield curve tends to be more steeper when rates are low. That's why I'm not so sure if the yield curve inverts in this cycle and we can still have a recession as has happened in Japan last 20 years. Predictions based on yield curve aren't that reliable in this environment. Sure the Fed can reverse QT and the the stock market would be up another 30%. I think there is a small possibility for this also.
  • KK
    Kevin K.
    12 June 2018 @ 10:39
    RV, please can you ensure that the charts are added to the transcript? Personally, I like to read the transcript while listening to the video in the background and a lot of information is missed when the charts are not included. Thank you.
  • Nv
    Nick v.
    12 June 2018 @ 09:58
    I like the data-driven approach. And I also look forward to -15% interest rates in 2053 (The big bull market discussed happened as rates fell from 16% to 1% over 36 years)
  • RC
    Robert C.
    12 June 2018 @ 07:55
    I find myself confused over two points Urban makes that are some what counters each other out. One the one hand he says that interest rates going up correlates with the stock market going up with increase profit margins due to low unemployment rates. But with rates being so low, any shift of rates upwards would mean a significant increase in marginal debt servicing. Unless real wage growth rates are much higher than what is currently reported, doesn't the rate increase simple just transfers the wages from profit margins to debt servicing? Also not including the comparative difference of the historic period of high savings in cash vs now (which basically help China absorb some of the impact of the last recession) just makes the argument a bit weak.
    • RC
      Robert C.
      12 June 2018 @ 07:57
      Sorry, grammar and typos. it's late here :(
  • SR
    Steve R.
    12 June 2018 @ 03:05
    The markets are not trading 'normally' and everyone is trying to fit past 'normalised' markets/patterns/correlations into today's 'un-normalised' markets - this just doesn't work IMHO, as the last decade has clearly demonstrated. Everything is off the charts, at extreme levels, but guess what, it could go even more off the charts, and even more extreme. I also follow Peter Brandt, and so far, he's been right. A few years ago you would have been sectioned just for suggesting the S&P would trade above 2800, and the DOW above 25000, but guess what - they did - and pretty much all the so-called 'experts' were proved wrong, yet again. There are way too many negative people around on RV - look at all the opportunities missed because "armageddon is just around the corner". Well it's been 'just around the corner' for years and years - and yet the markets still rip higher! So why is this? Could it be that perhaps 99% of US retail investors have never heard of RV, only follow CNBC, and just keep 'buying the dips'? Actually, it could well be. Because what you don't know can't harm you, and so you have nothing to be worried about. Fighting the 99% herd hasn't been a good strategy over the last decade. Just stay/go long, but with tight trailing stops. Yes, eventually your stops will get taken out, but in the meantime, as they say, make hay while the sun shines, because this total madness could go on for far longer than anyone thinks, so why not make some money in the meantime because you probably won't be able to time the market top anyway?
    • MZ
      Martin Z.
      12 June 2018 @ 06:13
      "What you don't know can't harm you"...Really? I stopped right there. If that is the case, why did you waste your money on a subscription to RV? If "you can't time the market top", it means you can't time the market bottom either. So where do you place your stops? In any case, it certainly looks to me like the sky is a lot closer than the pavement, which means the odds are that "this total madness" probably doesn't have all that much longer to run.
  • JH
    Jesse H.
    12 June 2018 @ 05:08 two cents, anyway from following some of the best investors I’ve heard from on RV.
  • JH
    Jesse H.
    12 June 2018 @ 05:07
    And risk-reward balance of probabilities speaks to patience on the US market at this time. Even if you forgo 20% in gains, you run the risk of losing 40-50%. So better not to be net -20% to -30%. My t
  • JH
    Jesse H.
    12 June 2018 @ 04:54
    ...period and post-war boom. Would be good to get this guy to debate Stephanie Pomboy of Macro Mavens.
  • JH
    Jesse H.
    12 June 2018 @ 04:53
    Interesting analysis, but respectfully strongly disagree with it. Also, idea of taking market trends since 1950s is very misleading, as that is recent market history and arguably has been an anomalous
  • CB
    C B.
    12 June 2018 @ 03:23
    This analysis is valuable. It made me question my own biases. At the same time it made me refer back to my professional training and focus in on position sizing, analyzing probabilities and maintaining a long term perspective. I think a lot of my doubts centered around using the past to project the future. History does rhyme. This rally likely does have legs. I think Camel should have offered stats on Schiller or over pe1. Vanguard research shows equity at these levels produces very low forward returns. The risk reward setup is very unfavorable to allocate too much to stock.
  • GS
    Greg S.
    12 June 2018 @ 03:16
    Corporate debt hits a major maturity wall in 2019 and 2020 about the time rates should be substantially higher as long as we don't get a recession in the meantime. If we do get a recession in 2019 then companies will be trying to refinance in the depths of economic weakness and you can see some carnage in the bond space.
    • GS
      Greg S.
      12 June 2018 @ 03:21
      He is completely wrong about consumer debt by the way. Household liabilities are the highest ever and consumer debt is the highest ever as a percentage of DPI.
  • JW
    James W.
    12 June 2018 @ 02:07
    Hope you'll continue to have him back.
  • SZ
    Scott Z.
    11 June 2018 @ 12:25
    The fact that his bullish views elicit such negative responses probably means he is correct.
    • CT
      Christopher T.
      11 June 2018 @ 22:24
      lots of bitter and jaded bears in RV comments (and sidelines)
    • CB
      C B.
      12 June 2018 @ 01:59
      More than anything I think this interview tells asset allocators all over the world that a zero allocation to equity is inappropriate. However a 100% allocation is pure insanity!
  • PS
    Paul S.
    12 June 2018 @ 00:41
    I'm waiting for rates to rise strongly before going long - data driven
  • SW
    Scott W.
    11 June 2018 @ 22:25
    Thought provoking. By most metrics that I follow (rightly or not) indicators are positive for the US economy and equities. It's hard to lose the conviction that there is some outstanding adverse effect of QE/intervention that's yet to materialize. And yes, FANG valuations are insane. But the Schiff/Stockman meltdown remains elusive... I would however question Camel's assertion about the national debt. Looking at the debt/asset ratio - what would a liquidation look like? Could that even be close to orderly? Who wants our coal reserves anyway? We won't mine for ourselves - we're going to let some foreign entity do so?. Who's buying our national parks and forests? Sure they're worth a ton in theory, but I just can't imagine a non-disruptive process. So I think the liabilities matter and they matter bigly. But opinions seem to vary.
  • PU
    Peter U.
    11 June 2018 @ 10:32
    Again, his debt discussion is based in data mining dream land! He gets a thumbs down as his debt discussion is intellectually dishonest. Debt service levels (for corporations, governments and consumer) are all low BECAUSE we have low interest rates that are not market determined (the Great Monetary Experiment).
    • WS
      William S.
      11 June 2018 @ 22:14
      What you said is true, but one should also take into account that Japan had been doing this since the late 80's and the 0 bound has been going on for a long, long time there. I'm not saying it's morally or economically sound policy, but this "experiment" could go on a while. On the other hand it could end very rapidly. This is why I have a sizeable percent of my savings and investments (albeit meager...I'm only 30) in silver. Current allocation is 50%. I view it as global cash (ditto gold, although gold satisfies that definition a bit better than silver, but I see silver as having more upside potential). I've tried to structure my portfolio in a way that I can benefit long term no matter what. This CB fantasy market could go on much longer then we expect.
  • DS
    David S.
    11 June 2018 @ 22:03
    Mr. Carmel's bullish case is much better than many. He includes the business cycle and the rise and fall of the market. There seems to me, however, to be too many disruptors out there to trust the rear-view mirror too much. DLS
  • DS
    David S.
    11 June 2018 @ 21:47
    Good interview, but my thinking is much more in line with Peter U. - well done. "Housing prices cannot go down" caused a major crisis. How about the S&P will also go up, therefore ETFs are the way to play. Be careful an ETF may track the market, but do you want to track the market if the S&P falls 40%?? DLS
  • GP
    Gero P.
    11 June 2018 @ 20:50
    Unemployment is a lagging economic indicator as people get laid off AFTER everybody knows we are in a recession anyway. By the time you see changes in the unemployment stats it will be way too late
  • PU
    Peter U.
    11 June 2018 @ 20:21
  • PU
    Peter U.
    11 June 2018 @ 20:19
    In 2007, 17% of outstanding loans were covenant-lite. Today it’s over 75% with over 80% of new issuance lacking decent covenant protections.
  • PU
    Peter U.
    11 June 2018 @ 20:14
    For the bigger reality is that the global economy is now awash in debt — not just corporate debt but also record amounts of government debt, household debt and investor debt — at a time when interest rates are rising from historically low levels. Here in the United States, as a result of a misguided and irresponsible tax cut, the federal budget deficit is expected to top $1 trillion a year in 2019, on top of the $20 trillion of outstanding debt, crowding out other borrowing and putting upward pressure on interest rates. The Congressional Budget Office projects that interest payments on the federal debt will grow from $316 billion this year to $915 billion by 2028. Not only does the new debt need to be financed, but trillions of dollars in old debt will also need to be refinanced when it comes due. And then there is household debt. After the last financial crisis, American consumers made a concerted effort to save more, borrow less and pay off credit card and auto loan debt. But memories are short, and a decade later, mortgage debt, credit card debt, student loan debt, and car loan debt are all, once again, at record levels and growing briskly. Among the 38 percent of households with credit card debt, the average balance is nearly $11,000, according to ValuePenguin, based on data from the Federal Reserve. The Consumer Financial Protection Bureau recently reported that, among subprime borrowers, credit card debt is up 26 percent in just the past two years. Finally, there is the debt that investors large and small take on to buy stocks, bonds, derivatives and other securities. That’s also at an all-time high.
  • PU
    Peter U.
    11 June 2018 @ 20:12
    “Flashing red” is how this buildup of corporate debt was characterized by the U.S. Treasury’s Office of Financial Research in its latest annual report on the stability of the financial system. The International Monetary Fund recently issued a similar warning. What concerns these regulators is not simply the growth of the corporate debt market but also the change in its structure and how it will perform during a sell-off. In the past, most corporate loans were made and held by banks, while corporate bonds were held by pension funds, insurance companies and mutual funds that held them to maturity, keeping bond prices stable. But with the rise of ETFs, some market analysts and observers have begun to worry about what would happen if, in response to a sudden spike in interest rates or defaults, large numbers of individual investors rushed to sell at a time when nobody is interested in buying, sending ETF prices into a tailspin. According to a recent paper by Kevin Pan of Harvard and Yao Zeng of the University of Washington, this lack of “liquidity” in the bond market could send prices down sharply, trigger waves of panic selling and cause the market price of the ETFs to fall far below the price of the underlying bonds. The ETF industry has mounted a concerted PR campaign to convince regulators and investors that the market will be able to cope with a rush of sell orders. But because these products are relatively new, nobody really knows how they will perform in a crisis. Certainly the experience with complex mortgage securities and credit default swaps during the 2008 crisis does not inspire confidence. There is also the danger of contagion — that panic selling and falling prices of corporate bonds and ETFs will spread to other credit markets.
  • RA
    Robert A.
    11 June 2018 @ 19:58
    Excellent Counterbalance presentation by Curator Milton. Agree or disagree, but a pithy, concise and well reasoned argument, IMO, is always welcome.
  • PU
    Peter U.
    11 June 2018 @ 19:54
    It used to be that issuing bonds was the most common way for corporations to borrow money. A decade ago, in 2008, there was $2.8 trillion in outstanding bonds from U.S. corporations. Today, it’s $5.3 trillion, after the record $1.7 trillion of new bonds issued last year, according to Dealogic, and $500 billion more issued this year. In recent years, at least half of those new bonds have been either “junk” bonds, the riskiest, or BBB, the lowest rating for “investment-grade” bonds. And investor demand for riskier bonds has largely been driven by the growth of bond ETFs — or exchange traded funds — securities that trade like stocks but are really just pools of different corporate bonds. ETFs have made it easier for individual investors to participate in the corporate bond market. A decade ago, about $15 billion worth of bond ETFs were being traded. Today, that market has grown to $300 billion. In recent years, moreover, a greater part of corporate borrowing has come in the form of bank loans that are quickly packaged into securities known as CLOs, or collateralized loan obligations, which are sliced and diced and sold off to sophisticated investors just as home loans were during the mortgage bubble. Bloomberg News recently reported that pension funds and insurance companies, particularly those in Japan, can’t get enough of the CLOs because of the higher yields that they offer. Wells Fargo estimates that a record $150 billion will be issued this year, roughly double last year’s issuance. And as happened with the late-cycle home mortgages in 2007 and 2008, analysts are noticing a marked decline in the quality of loans in the CLO packages, with three-quarters of them now without the standard covenants designed to reduce the chance of default. As a result of all this corporate borrowing, Daniel Arbess of Xerion Investments calculates that more than a third of the largest global companies now are highly leveraged — that is, they have at least $5 of debt for every $1 in earnings — which makes them vulnerable to any downturn in profits or increase in interest rates. And 1 in 5 companies have debt-service obligations that already exceed cash flow — “zombies,” in the felicitous argot of Wall Street.
  • VP
    Vincent P.
    11 June 2018 @ 18:57
    WOW, really?? BS, this market has gone generally straight up for 9+ years with barely any meaningful or extended downtrends. When downturns did happen (after long periods of melt-ups), there was usually a Central Banking solution imposed such as QE2,QE3,OpTwist and Shanghai Accord etc. BTFD, FOMO etc are instinctive normal market strategies along with insiders selling into buybacks. Equities have been perpetually supported by unprecedented central banking (only takes one) stimulus and unending corporate financial engineering (still going) with policies in place (i.e. non-gaap) to defer lower valuations. Giant ponzi scheme of epic proportions. Must play along though but Urban's view is not compelling. So, at some point the cash flow will tighten and so will buybacks. Then we'll talk. Until then, keep chuckin' the blab. Thanks for the interview.
  • NR
    Nicholas R.
    11 June 2018 @ 18:54
    This guy makes a lot of the sense.
  • WG
    Wade G.
    11 June 2018 @ 18:53
    I was hoping for a compelling case but I personally wasn't moved much, while I certainly do allow that his shorter term call higher into end of year may well be right. What I liked... his useful reminder said different ways that markets typically behave in ways to fool many/majority investors. I guess I'll have to go examine unemployment claims to see if he might have an argument for it being a leading indicator. I had all employment stats and lagging indicators. My biggest concerns were 3 fold: (1) not a mention of how we got here thru rounds of central bank manipulation and where their policies appear to be heading; (2) each of his "looks" at debt (corp, household, gov't) were based on a comparison to assets (inflated and subject to dramatic reduction) or the low servicing requirements (changing with the increasing rate environment); and (3) his remarks about equity valuations. I think its pretty widely recognized and agreed upon by folks who study valuations that earnings ratios (ttm, forward, whatever) are fairly lousy metrics. Hussman presents as much data as anyone, but u want to go out at least 7 years or ideally 10 to 12 if u want to find correlations in the 90s with total return. And critically, you'll never get their using inferior metrics based on earnings ratios... they're so mean reverting that a sales ratio will outperform them, but more importantly, market cap to gdp; Hussman's adjusted CAPE; market cap to GVA all correlate in the low 90s based on data going back to pre-war era (versus a laughable correlation in the 30s based on the "fed model"; tells u all you need to know about our central bank). I get it, 10 to 12 year return prediction is a time frame too long for some investors. But I can't ignore a correlation to returns in the 90s; that's a stunningly tight relationship with a really important outcome. It tells me all possible gains to new highs this year will be transitory; along with all those from last year and the year before, etc. Hussman's last regression analysis based on the 90+ correlations with 10 to 12 year total returns predicts an S&P of 1000 before this cycle is over. My understanding is that doesn't require an overshoot; that's the predicted value with no overshoot (again, based on an r-square greater than 86%). I agree with presentation that no valuation method can predict short term market performance; I'm willing to invest based on longer term returns when carefully chosen predictors produce correlations in the low 90s based on pretty comprehensive data.
  • RM
    Russell M.
    11 June 2018 @ 18:11
    He told you HOW he will decide when he will take his toys and go home. That makes it a good interview. 1 how is worth 100 whens without hows. That is my hope from realvision; 50 how interviews. Rauol and Peter Brandt framework and process interviews my favorite so far. Has anyone invited David Tepper?
  • SH
    Steve H.
    11 June 2018 @ 18:07
    'The consumer has more money in his pocket.' Yes, and that money is borrowed. Median income in the US is only now poking its head above ithe 1999 level - and that's nominal, not real. The savings rate is low and getting lower. 'Average earnings' are close to meaningless in an economy structured to accrue as much income as possible into the pockets of the already-wealthy. His stats on the proportion of time the stock market rises are true but misleading. A lot of the time spent rising is actually recovery of drawdown during the prior bear. Markets over the last century have actually spent little more than a quarter of their time above prior long-term highs, the rest being spent in drawdown or recovery. Folks who are smart enough to buy low in a recovery can indeed benefit from the fact that markets 'go up' 80% of the time; retail - especially buy-and-hold retail - is rarely so lucky. None of which matters to a buyback-fuelled market which still hasn't completed its hand-off-at-the-top to retail. He's probably right about further upside, but other comments below are equally correct to caution about the risk:reward balance at this point in what is an historically very overvalued space.
  • AM
    Alonso M.
    11 June 2018 @ 17:34
    This guy is probably right. But what if he's wrong. It's surely not just about the probability of being right or wrong but also about the consequence of being right or wrong. I found the macro analysis to be very US centric, and this is where I think his thinking might go catastrophically wrong. I agree with his comment about the importance of macro analysis, but I think this means global macro and not just U.S. macro.
  • KL
    Ken L.
    11 June 2018 @ 16:15
    I am in the camp the markets grind higher to 3000 on the S&P500, since I feel it is too easy if this is the top. However, after watching this video, it felt more like a CNBC or Bloomberg TV type of interview. The stats and theories presented were very vanilla and something mainstream media has discussed extensively. I usually learn something new watching Real Vision, but not this time.
  • AC
    Andrew C.
    11 June 2018 @ 16:09
    Both Urban and Peter Brandt saying the SP500 is heading higher. Hmmm, there might be something in this; buy equities until the masses become euphoric!
  • BK
    Brian K.
    11 June 2018 @ 15:54
    He didn't mention corporate debt is riskier ? More BBB than ever before, about double since 1990 ?
  • SD
    Scott D.
    11 June 2018 @ 15:35
    Not sure where he is coming up with some of his numbers. Oil reserves in the SPR are 660M and have a current value of approx. $43.5B (assuming WTI prices - which is generous given where physical grades are trading) . If he is referring to proved reserves, TOTAL US oil proved reserves are approx. 35B bbls which would imply a value of slightly over $2T (again, given generous price assumptions). Not sure how you get to an "oil reserve" value of over $160T (his assertion of eight times federal debt).
  • CC
    Christopher C.
    11 June 2018 @ 15:24
    Was hoping to hear a really compelling case. Perhaps I am missing it, but all I heard were general platitudes and vague generalizations, that sounded to me like very earnest ignorance couched as wisdom, which is cumbersome. When someone attempts to lay a foundation for a thesis or position they wish to espouse and begins by saying/claiming that, (21:37) "The most broad measure of stock market is the S&P 500....." alarm bells go off for me. When more than half of the gains in an index come from just 5 stocks (The FANG's), and they have valuations that rival or exceed the top of the dot com bubble, calling anything to do with the rise in that index "broad based" strikes me as uninformed, disingenuous, or worse. To be very clear, I am in no way saying that the result this guy is claiming will happen (higher highs), will not happen. What I am saying is that if it does happen, it will not happen due the reasons he laid out. Maybe I was put off too early. (25:26) I suppose it has to do with all I have learned from RealVision in the years since I first joined. In my uninformed/naive past when folks made definitive statements like "The S&P WILL BE HIGHER at some point.", I used to find great comfort in such certitude regarding markets. Now statements like that make my ass twitch.
  • NO
    Neil O.
    11 June 2018 @ 15:20
    I tend to agree with the negative comments here, but I think it is very helpful to hear both sides of the bullish/bearish case through different interviews, to cause us to question our views and assumptions.
  • LT
    Lucas T.
    11 June 2018 @ 15:17
    Nice to see an alternate view on here. However, I wonder if this guy has ever in his life seen a peak in the stock market coming.
  • NG
    Nick G.
    11 June 2018 @ 12:35
    Oh, no! Urban Camel peddles the truth (with data proof) as opposed to bearish mumbo-jumbo. Likely to get lots of thumbs down. But he is spot on.
    • DV
      David V.
      11 June 2018 @ 15:06
      take a closer look below the surface level of his "data proof" and you may find a different set of facts.
  • RD
    Ravi D.
    11 June 2018 @ 13:45
    I am not sure about this.. the assumptions are real insights. quoting stats from history is not my thing..
  • TJ
    Terry J.
    11 June 2018 @ 13:40
    Being a glass half full man, I am usually a sucker for a persuasive bull case, so I watched this enthusiastically hoping all my bearish worries would be banished. Sadly they haven't although I accept Urban's argument that the US equity market will probably exceed its previous high, as it is likely in a topping out process but that will probably be the last stand, and a likely bear trap before the reality of sub par growth economy courtesy of the debt headwinds (I'm sorry but I could not buy Carmel's arguments on the debt situation for individuals, corporates and government being less of a concern than most pundits and the data have told us). I would love nothing more than to see Urban proved right though, and welcome seeing a strong equity bull argument.
  • JB
    Jason B.
    11 June 2018 @ 13:07
    Given current levels of interest, would it be possible for the yield curve to fully invert? I wonder if the 2s10s would be a reliable leading indicator in this cycle.
  • MM
    Michael M.
    11 June 2018 @ 10:54
    great amount of data. transcript pls
  • KS
    Karen S.
    11 June 2018 @ 10:50
    i love this guy's name
  • PU
    Peter U.
    11 June 2018 @ 10:29
    While I agree with his historical perspective, I do not believe he has accounted for or recalibrated his views vis-a-vis the highly unusual monetary policy. If we don't have market driven interest rates (at least less so than in the past) then how can you put faith in prior historical paradigms. He is also data mining his corp debt presentation and his overall debt discussion.
  • SA
    Sultan A.
    11 June 2018 @ 09:26
    My favorite insights have come from Urban Camel.