COVID-19 and Financial Markets in a Post-Stimulus World

Published on
July 6th, 2020
54 minutes

Today's Top Stories

COVID-19 and Financial Markets in a Post-Stimulus World

The Interview ·
Featuring Z. Barton Wang

Published on: July 6th, 2020 • Duration: 54 minutes

Dr. Z. Barton Wang of Barton Research joins Real Vision CEO, Raoul Pal, for a conversation about the lasting impact of COVID-19 on financial markets. Wang breaks down the institutional response from the Treasury Department and the Fed to the pandemic and considers that response's effect on financial markets. He points out several abnormal market drivers in order to explain how markets have behaved over the last few weeks and months. Wang also shares his view on the biggest risks to the market right now, including the roll-off of the CARES act and other stimulus packages, as well as provide his perspective on what could happen in the markets over the next few weeks, months, and years. Filmed on July 1, 2020.



  • GR
    George R.
    19 July 2020 @ 02:40
    It’s actually my first comment in one of the videos and have to say this person is really great. Very informative and nice interview.
  • AL
    Aaron L.
    15 July 2020 @ 10:44
    This guy is great, make him a regular please
  • JV
    Jan V.
    12 July 2020 @ 08:15
    Great discussion guys! It's been a while since i had to pauze an interview this much to reflect on what was being said.
  • AB
    AJ B.
    10 July 2020 @ 18:41
    I could have gotten this Covid hysteria from Jim Crammer
  • LC
    Lee C.
    7 July 2020 @ 05:59
    Thank you for giving a nod to morbidity instead of just focusing on mortality. The future will be left to the survivors not the dead. The old will die but the young will live crippled. In Hong Kong, a paper reported 25% of virus survivors had significant lung disease. Infarct 50% of your left ventricle and a cardiac cripple you will be. Infarct 70% of your kidney and dialysis will become your life. Ground glass opacities means some of your lung tissue tuned to shoe leather. There are multiple strains of virus which seems to have varying properties and population penetrance. There was an S strain, a more virulent L strain and now a G strain. The G mutation has stabilized the spike protein giving the virus a better infectivity. It's unclear S or L immunity transfers to G. The vaccine probably won't work either for multiple reasons. If there are multiple strains there may need to be a multi-valiant vaccine. How long does that take to make? If you can't get people to wear a mask what makes you think they will get a shot? If the vaccine is 75% effective and 30% of the people refuse the shot you may just as well do nothing. Herd immunity will not be attained by vaccine. If you own a company with a senior project manager and a junior engineer, both know how to design a bridge but the senior knows how to build it under budget, so even though both are engineers one has a far higher productivity than the other. If the senior becomes a cardiac cripple the bottom line will suffer because junior can't take up the slack. All of this implies a layer of unmeasured and largely unthought of volatility. That doesn't even take into account the ongoing exponential medical expense. People sit around and spit ball this like its a slightly more dangerous the flu. In the flu you pretty much recover close to 100%. With this disease the damage might be far more permanent and costly on every level of risk.
    • ST
      Simon T.
      7 July 2020 @ 11:02
      Very interesting - heard a lot about the destructive part of Covid19 after recovering ... would love to hear more of it now as we all become more complacent
    • LS
      Lemony S.
      10 July 2020 @ 16:20
      If it's so dangerous why does it not affect children? Why is the IFR for those under 70 less than influenza (coincidental reasoning)? The vaccine will be more dangerous even if it exists, especially since Gill Bates is planning on other things associated with it. This first wave is a test for more things to come. But no, this coronavirus doesn't cause extreme problems in healthy people, the only people with associated effects that "survive" are those that were unhealthy in the first place --- like every other disease. I'm sorry to tell you, overeating and the elderly finally got an environmental challenge that exposed their deficiencies. This is what happens in the world, in nature, and we can do our best to help people but the situation is always tenuous and nature always wins.
  • RA
    Robert A.
    9 July 2020 @ 17:15
    I’ve always enjoyed Barton and great curation RV as it’s not often we get to see a knowledgeable discussion at the intersection of Fed, Money markets, TGA, and COVID with a bit of China interwoven.
  • OM
    Owen M.
    8 July 2020 @ 18:40
    Barton's energy and excitement of the discussion is contagious. Great interview.
  • PE
    Paul E.
    8 July 2020 @ 18:17
    That was really good!
  • WB
    William B.
    8 July 2020 @ 00:59
    Brilliant for sure!
  • PS
    Patrick S.
    7 July 2020 @ 23:58
    Incredible interview. Super knowledgeable on virology and capital market movements
  • KJ
    Karl J.
    7 July 2020 @ 21:59
  • DS
    David S.
    6 July 2020 @ 19:19
    Great interview. Mr. Pal is excellent in uncovering important information with short direct question. Dr. Wang has a treasure trove of information he is willing to share. IMO it is necessary to have the $1.6 trillion ready in the treasury so it can be distributed to help President Trump's campaign in whatever way Mr. Mnuchin believes will help the most – lift the market, direct stimulus, etc. It will be gone before Congress or the press can ask questions. The legal or illegal use of the funds will be hammered out in court after the election. DLS
    • DS
      David S.
      6 July 2020 @ 19:44
      Pay no attention to that man behind the curtain
    • AN
      Andrew N.
      7 July 2020 @ 01:49
      I think the obvious use would be ~$4000 checks to Americans at the end of October. An obvious bribe, but one that just might be effective with enough people to do the trick.
    • AN
      Andrew N.
      7 July 2020 @ 01:51
      Or maybe 5-figure checks only to people in the swing states? that might be a little too obvious.
    • DS
      David S.
      7 July 2020 @ 20:26
      Andrew N. - Being too obvious does interfere with action these days. Most of money might be used in a grant program to businesses using the name Trump in the corporate name. Golf anyone? DLS
  • DS
    David S.
    7 July 2020 @ 20:21
    In the four-part Deep Dive interview on February 7, 2020 Mr. Pal interviewed Professor Barton about the Repo Market. It is as well done as this presentation and well worth a look back. DLS
  • MV
    Mathieu V.
    7 July 2020 @ 17:27
    Great ITW. But I did notice Raoul that over several itw, you are very often blurred. The focus on your camera is acting weird and it's kinda distracting, at least for me :)
  • GD
    Gabriel D.
    7 July 2020 @ 14:47
    great interview, thank you. Really great insight on the Fed and Treasury.
  • KD
    Karl D.
    7 July 2020 @ 13:38
    Raoul, Dr. Wang had great insight on the point that more efficient testing lengthens the case to death gap. Also great insight on accumulated negative gamma expected on Q4. Please make Wang a regular as requested in some other comments. Thanks for producing such amazing interviews!
  • MS
    Matthew S.
    7 July 2020 @ 12:58
    Trump is so corrupt. Draining the swamp actually starts with him and his puppet masters. How do we fix the US when the 90% are getting left behind?
  • TP
    Timothy P.
    6 July 2020 @ 16:37
    Interesting interview, just wondered how Mr Wang could keep a cheshire cat grin throughout topics that seemed inappropriate. Especially during "death counts". Also, curious no one - not even the MSM - are discussing the risks of the Three Gorges Dam having a structural failure probability during one of the worst floods in China's history.
    • MB
      Michael B.
      6 July 2020 @ 17:10
      His resting face is naturally smiley
    • TP
      Timothy P.
      6 July 2020 @ 17:41
      @MIchael B - At first I thought so too, but the more I watched the more I realized that there was an ongoing smile happening no matter what subject he was talking about. It was a bit unnerving.
    • AP
      Adam P.
      7 July 2020 @ 07:26
      It’s party a high-iq/introvert thing - too excited by the ideas being discussed to think about context.
  • MC
    Michael C.
    7 July 2020 @ 06:44
    Thanks Raoul, The TGA discussion raised more questions than it answered really. There is a general sense of bewilderment around this which is so frustrating because TGA is probably the most powerful policy tool in the shed a the moment and nobody seems to have any idea how its about to be used or what it means. Re confusing the Fed for the bond market, note the Reserve Bank of Australia has implemented YCC yet has been noticably absent in the secondary market for Aus Govt bonds. If inflation expectations (which are longer term expectations as opposed to shorter term supply side shocks that get rebalanced) were truly increasing then Central Banks would be in the markets every day trying to keep yields from running away.
  • dw
    douglas w.
    7 July 2020 @ 06:43
    Have Dr. Wang back- great insight, egoless, which is refreshing. Great to have him on the Daily to report on the Fed's plumbing shenanigans down the road!
  • FK
    Fred K.
    7 July 2020 @ 06:22
    On the pure subject of COVID, the new data from Spain tells us (for the first time) that the real mortality rate is 1.2%. Proof: A = 28,388 deaths. B = 5% antibodies (source: new lancet study) C = Population of Spain = 47 Million A / (C * A) = IFR = 1.2%
  • SM
    Shantanu M.
    7 July 2020 @ 05:39
    Two Thumbs Up A balanced discussion.
  • RA
    Ralph A.
    7 July 2020 @ 04:10
    If you want to understand why there is so much options trading, just go to the WallStreetBets subreddit. It is a huge community of retail speculators that buy unbelievably risky options. They post screenshots of the trades and they are always either up 10x or down 99%. There are some people that make six and seven figure bets and really short term options.
  • MD
    Matt D.
    7 July 2020 @ 03:42
    Maybe a bit late to get replies but one thing that might be a serious factor with the USD could be China (and now Hong Kong). The skirmished behind the scenes with China and it's USD requirements and shortages and all of that. They will probably raid HK's dollar reserves now, yet eventually they will have dollar shortfall problems (and so go it alone ??) They are large enough to be a strong influence, just how. They were gaming their sharemarket yesterday, which goes to show. Idea/ work in progress anyway.
  • DG
    Dave G.
    6 July 2020 @ 21:18
    Sounds to me like he's saying buy,buy,buy because of the brrrrrrrrrr. Not sure how this is ever going to end or if it's sustainable. Will the markets ever reflect the real economy again? E.g. Tesla
    • PP
      Patrick P.
      7 July 2020 @ 03:30
      Dave .. is there such a thing as a "real economy".......?
  • AN
    Andrew N.
    7 July 2020 @ 01:30
    That was a really interesting interview. I thought it was interesting that he mentioned, in passing, that COVID-19 related inflammation may damage reproductive organs. I have suspected that this might be but haven't heard much comment. The virus attaches to a receptor that is found on the cells in the testes that produce testosterone, and men have reported symptoms that are consistent with low T...although that could also be cause by general fever and malaise. Time will tell, but I suspect that many of these younger men, who think they are invincible and don't worry about the virus now, will discover that they're shooting blanks later on in life. Oops.
  • DA
    David A.
    6 July 2020 @ 22:06
    Here is my summary take. Feedback / thoughts please. ----- Fed prints $2.85T since March 1st Treasury issues $3T in new debt since March. Treasury essentially absorbs all Fed QE since March (directly and indirectly) Gov Spends $1.8T of the $3T new debt, which is a massive QE. Gov keeps $1.2T of newly created debt for some future purpose. In June/July, there is QT by the Fed (so far) and Treasury is furthering QT by growing TGA. Fed Bal.Sheet Net Net Change New Debt QE-new debt Ending TGA -------------- --------------- ------------ ------------- March: $ 1,095,641 $238,715 $856,926 $390,000 (3/25) April: $ 1,401,651 $1,368,607 $33,044 $997,507 (4/29) May: $441,387 $699,193 $(257,806) $1,310,491 (5/27) June: $(15,014) $670,183 $(685,197) $1,623,942 (6/24) July*: $(73,262) $94,425 $(167,687) ----------- ----------- ------------------ Total $2,850,403 $3,071,123 -$ (220,720) *Fed to July 1 and Treasury to July 15 so incomplete data. Treasury Reference: Fed Reference: TGA Reference: What am I missing?
    • DA
      David A.
      6 July 2020 @ 22:17
      Link to readable table:
  • MC
    Mark C.
    6 July 2020 @ 17:56
    @Raoul. You're funnel analogy is not correct as you are not taking into account age and health. When you market using a funnel approach you have to know and target your audience otherwise all you do is over-fill the funnel and waste time marketing and selling to a group that will not convert to sale. When you convert leads in a funnel to a sale you analyse them back through the funnel as you want to maximize the people who are most likely to convert to a sale. For example there's no point marketing Real Vision heavily to people who have no savings, they may watch and comment but they won't pay for the service as they have no money. Therefore your marketing people use the funnel but will be looking at the funnel from the other end saying who are our audience, who is willing to pay for our service and identifying marketing keywords to buy on Google to maximize sales, not maximizing leads. TLDR not all people in the funnel are equal and the very best companies have this down pat. In the case of COVID, it's old people with co-morbidities who are at most risk. The Swedish approach has been to identify that old people are the ones at risk and actually prefer the younger fitter to 'enter the funnel' but not 'convert' (sounds crass saying it that way so apologies). Time will tell, I'm with the Swedes but understand that it is still in the balance. I am fairly sure that your simplistic funnel approach is not the best way to think about it.
    • MC
      Mark C.
      6 July 2020 @ 17:59
      Oops, just unpaused and Barton just made some of my point for me.
  • KH
    Kavi H.
    6 July 2020 @ 17:53
    Great interview. Didnt really understand the short term view TGA unleashing is risk asset possitive yet Dr. BW mentioned volitility as a major factor and a risk period in the short run. Any opinions if he is bullish or bearish risk assets over the next 3 months? Cheers
  • SO
    Shaun O.
    6 July 2020 @ 12:33
    We have arrived to a point in time that we are all basically just speculating on how big a bribe gov will throw at the people to buy votes. This is somehow pretty standard for every country now. Strange new world.
    • XM
      Xiaoyu M.
      6 July 2020 @ 15:34
      it's always been a bribe, "i will fix this for you (whatever issue you have), if you vote for me". it's like that since Rome, there's nothing new under the sun.
    • ly
      lena y.
      6 July 2020 @ 17:08
      IN Singapore subway station was denied because voters in the region didn't vote for the new government! It is real AROUND THE WORLD!
  • wj
    wiktor j.
    6 July 2020 @ 15:33
    Treasury account: How about preparation for war? Any speculations?
  • RM
    Russell M.
    6 July 2020 @ 12:44
    Super interview!
  • NF
    Neal F.
    6 July 2020 @ 12:13
    Great interview.
  • PM
    Paul M.
    6 July 2020 @ 10:15
    Loved Barton’s stuff when the repo was blowing up and this is great too!
  • EM
    Eivind M.
    6 July 2020 @ 09:15
    Is there anything Barton doesn't know? So fascinated by how complete his picture is of the markets and events going on. Also has a lot of respect for someone that admits he can't predict what's coming :) Another amazing interview, thanks!
  • ES
    Edward S.
    6 July 2020 @ 08:46
    "Huge opportunities to make a lot of money and huge opportunities to lose a lot of money." Pretty much sums it up.
  • MD
    Matt D.
    6 July 2020 @ 07:31
    Solid interview again, appreciate the new ideas put forward. I like that there's a mysterious scheme or unknown going on with the Treasury war-chest. Interesting few months ahead indeed. Thanks Raoul and Barton.
  • MM
    Mark M.
    6 July 2020 @ 06:53
    Appreciated the interview. Well done as usual. Barton’s description of the relaxed behavior of Texans in the middle of spiking covid hospitalizations is not over stated. ICU beds are nearly full and people are acting unconcerned. There will have to be more restrictions very soon.