“The Dry Tinder’s Been Lit”

Published on
March 19th, 2020
Duration
53 minutes


“The Dry Tinder’s Been Lit”

The Interview ·
Featuring Michael Gayed and Michael Venuto

Published on: March 19th, 2020 • Duration: 53 minutes

With coronavirus wreaking havoc worldwide, it’s a perilous time to be in the market. Businesses around the world are shutting down. Equities are plummeting as investors flee to safety, and central banks, desperate to contain the financial contagion, are reaching into their arsenal to do whatever it takes. Today, Michael Gayed, portfolio manager at the ATAC Rotation Fund, sits down with Michael Venuto, chief investment officer of Toroso Investments, and explores the question that’s on everyone’s mind: Is this a fleeting moment of panic, or are we seeing the conditions for a true doomsday scenario? The pair place the massive sell-off in context, explore whether ETFs are making the violent price swings worse, and take a deep dive into the plumbing of the markets. Filmed on March 10, 2020, in New York.

Comments

Transcript

  • ST
    Simon T.
    23 March 2020 @ 05:33
    Never heard of these guys, never mind, but saying this is not like 2008 and we are less leveraged, seriously, what is he doing again ? Stopped watching at minute 6
  • JS
    John S.
    22 March 2020 @ 00:57
    Short shallow would be nice but that sounds like a pipe dream to me. This is a perfect storm of debt, demographics, financial tampering, and dozens of structural mushroom clouds waiting to happen such as under funded pensions. The tinder was and remains dry...I think they just underestimate how much of it there is. I hope I'm wrong and they're right.
  • TS
    Tejush S.
    20 March 2020 @ 19:40
    People in the comments are not logical. He said it's a sovereign debt bubble. Not saying corporate is not in a bubble.
  • sc
    sung c.
    20 March 2020 @ 18:16
    Michael G. lost me at 5:00-5:20 when he stated he did not think this time was not like 2008 because there was not deep leverage. As I understand, there was huge borrowing and buying using leverage and this is why bond markets are falling apart and liquidity is non-existent.
  • CM
    Chris M.
    19 March 2020 @ 21:52
    Hard to watch a video when the guest starts off with inaccurate info. Per the Dallas Fed, nonfinancial corporate debt is at record highs. Number of business media outlets have written articles that agree. % of investment grade debt rated BBB is at record highs. Yet Venuto believes that this downturn will be short term because companies don't have a debt issue. Definitely on the opposite side of the trade with him.
    • MG
      Michael G. | Contributor
      20 March 2020 @ 00:05
      Chris - appreciate the perspective. The reality is corporate balance sheets have largely been in great shape prior to this. We agree on government debt. Stay safe. Michael A. Gayed, CFA www.twitter.com/leadlagreport
    • PV
      Peter V.
      20 March 2020 @ 05:20
      Michael g. Stop pushing for more twitter followers. Acknowledge you are wrong on corporate balance sheets every metric says you are. And stop coming on realvision we need better informed investors than you.
    • BT
      Benjamin T.
      20 March 2020 @ 16:55
      Corporate Debt: https://fred.stlouisfed.org/series/BCNSDODNS
  • BB
    Blair B.
    20 March 2020 @ 12:29
    Thank you Michael G. for replying to most/all of the comments. I believe it shows you have integrity. All the best
  • DD
    Dmitry D.
    20 March 2020 @ 08:55
    My positive comment about the video is that they have a ridiculous "it's nothing like 2008" (when evidence abound that it is already far worse and I am not even talking about the stocks) statement right at the beginning so that you can save time and skip the remainder
  • DC
    Daniello C.
    20 March 2020 @ 06:43
    Not actionable.
  • AF
    Andre F.
    20 March 2020 @ 06:22
    I'm very tired right now and wanted to make a more substantive comment but I'm unable to because of my tiredness. For the moment then, I just want to say this was a very good interview/exchange. Michael [Gyad] made me think about a lot of things. I'll have to come back and listen to this AND take notes Thank you Michael, thank you Real Vision, I appreciate this.
  • MR
    Matthew R.
    20 March 2020 @ 02:16
    Just a question. Why are these videos are released over a week after they are filmed? Are they released anywhere else as soon as they are filmed?
  • AW
    Austin W.
    20 March 2020 @ 00:11
    Enjoyed this very much.
  • VM
    Vash M.
    19 March 2020 @ 18:03
    Michael, You mentioned lumber prices collapsing will would change your thesis a bit. What are you thinking looking at lumber now? And at what price level(s) do you see your risk on thesis changing? Also-- does the Trump administrations higher likelihood implementation. of ultra long treasuries affect this?
    • MG
      Michael G. | Contributor
      20 March 2020 @ 00:08
      Vash - great questions. The move in Lumber did partially fortell the severity of the decline, but I also think it's overdone. With enormous central bank and fiscal actions coming, it's possible the yield curve steepens. Michael A. Gayed, CFA www.twitter.com/leadlagreport
  • JH
    Joseph H.
    19 March 2020 @ 19:25
    Do we really have to upgrade to Pro at $3500 per year to get useful information and videos on this site?
    • PV
      Peter V.
      19 March 2020 @ 20:00
      Hi Joseph, I upgraded to Plus at that I cannot recommend. They deleted my comment earlier
    • GS
      George S.
      19 March 2020 @ 20:38
      Guys, it's 1 video out of 500+ that we will get in a year. If you don't like it or don't agree, that is fine...absolutely fine. The Daily Briefing is an absolute must watch if you want to understand what is going on in markets right now; Friday we had an Expert View from Raoul with all of his current thinking AND Jim O'Shaughnessy; Saturday a deep dive into Italy's situation with a person on the ground; Dan Zwirn on credit last week was phenomenal too...and that is only over the last few days.
    • MG
      Michael G. | Contributor
      20 March 2020 @ 00:07
      Joseph - personally I think there's a lot of interesting discussion here. Then again, I'm biased. Stay safe. Michael A. Gayed, CFA www.twitter.com/leadlagreport
  • BM
    Beth M.
    19 March 2020 @ 19:45
    When you have a crises going on, with huge market swings, how does it make sense to make an interview available NINE days after it was taped??
    • MG
      Michael G. | Contributor
      20 March 2020 @ 00:07
      Beth - thanks for the comment. The reality is though that the past 9 days haven't changed anything in terms of how we view this. Stay safe. Michael A. Gayed, CFA www.twitter.com/leadlagreport
  • MC
    Minum C.
    19 March 2020 @ 21:32
    Lumber prices have dropped about 30% from the February peak according to my chart. Managed to hold above the June 2019 low. Not sure if this is relevant to MG's analysis.
    • MG
      Michael G. | Contributor
      20 March 2020 @ 00:06
      It is - but the move is also extreme short-term suggesting a reversion may be coming. Michael A. Gayed, CFA www.twitter.com/leadlagreport
  • JP
    John P.
    19 March 2020 @ 22:14
    All the upset comments are strangely uninformed. If you want moment to moment wax poetic commentary on markets, turn on CNBC. No one knows what to do right now, which is why there’s no liquidity and a record volatility. Sometimes watching a video where someone made a bad call and analyzing how they went wrong is as valuable lesson as a good idea (and there are hundreds of videos on realvision where ideas were given that didn’t or haven’t panned out ) Trading is a blood sport, you need to be able to take punches, think for yourself, and be in the mind of your opponents.
    • MG
      Michael G. | Contributor
      20 March 2020 @ 00:04
      Well said John. Stay safe. Michael A. Gayed, CFA www.twitter.com/leadlagreport
  • CM
    Carlos M.
    19 March 2020 @ 12:06
    short shallow ? no deep leverage ? what movie is this guy watching?
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:52
      Leverage is largely from the standpoint of the consumer. We agree on government. Stay safe.
    • CM
      Chris M.
      19 March 2020 @ 22:07
      No, we are talking corporate debt. Record levels.
  • JA
    John A.
    19 March 2020 @ 12:50
    This aged terribly. Turned off when he said that there isn't deep leverage. We found the guy holding all of the bags lol.
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:52
      John - signals factually went risk-off mid-January and remained that way. Looking at the strategies we run, as well as my public writings, proves that. This decline was avoided. We are getting close to a risk-on period. Stay safe.
    • CM
      Chris M.
      19 March 2020 @ 22:07
      Agree John, posted the same comment above. Can't evaluate the markets if you don't have a sense of the leverage that is in place, which is critical today with no cash flow.
  • SP
    Stephane P.
    19 March 2020 @ 15:27
    Again 10 days late ? wondering why im paying ... just wait 15 days you get it free on youtube !
    • MH
      Matthew H.
      19 March 2020 @ 21:46
      after RVTV move to NYC, quality went to shit
  • EM
    Evan M.
    19 March 2020 @ 12:03
    I stopped watching after he said there was no sign of too much debt in the corporate space - wtf is he talking about hahah
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:53
      Corporate balance sheets are among the healthiest they have been. Global debt when factoring in governments is a different story. Stay well.
    • PV
      Peter V.
      19 March 2020 @ 20:02
      Michael what world are you living in and why do you even come on when realvision viewers have more knowledge than you? Buy a sub and learn from experts!
  • PV
    Peter V.
    19 March 2020 @ 19:57
    Funny how realvision deletes comments if they are critical. Not great IMHO. Take the critique, argue your case if you disagree or change realvision strategy. But having to bubbleheads without any insight is not great. More quality please!
  • TS
    THEODOROS S.
    19 March 2020 @ 18:26
    Active Management will be back 2021! For the good of everyone! Stay tuned buy undervalued, outside USA, look Europe, Asia, Russia.
  • DS
    David S.
    19 March 2020 @ 09:04
    Not related to this video, but some major short sellers are claiming that the worst possible markets are ahead. Who should we listen to Doctors or short sellers who have a dog in the hunt? DLS
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:55
      If they are right, all money is worthless. It's a capitalism reset. I prefer not to bet that way. Michael A. Gayed, CFA www.twitter.com/leadlagreport
    • DS
      David S.
      19 March 2020 @ 18:05
      I do not believe they are correct. I think that they are just talking their book. DLS
  • DS
    David S.
    19 March 2020 @ 09:31
    Mr. Venuto see the government riding in on a white horse and saving the markets. This is an illusion out of a fairy tale. Mr. Venuto make think he is old, but I am much older. Everyone will try to save this market, but they will just print trillions and destroy value of their currency along the way. This will be worse than 2008 which was merely a financial fiasco. This is a combination of a health care black swan, an unwinding of huge, non-productive leverage black swan with major profit declines black swan. Get a grip, this is at least a triple black swan. I was at my favorite restaurant tonight and it will close indefinitely tomorrow. Thousands if not millions of business will close around the world. Millions of people all over the world will be unemployed. Governments that have trillions to much in debt already will print trillions more. Anyone who thinks that this is a just a market adjustment is not thinking with both sides of the brain. DLS
    • MS
      Michael S.
      19 March 2020 @ 14:19
      Very well put!!
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:54
      Indeed. But that is a binary bet. I prefer not to bet on the end of the world as I said on Bloomberg this week. Michael A. Gayed, CFA www.twitter.com/leadlagreport
    • wj
      wiktor j.
      19 March 2020 @ 16:26
      spot on! Markets already spoke. Everytime more money was promised the market tanked. Unless the fed and gov buy everything is going sideways and down.
    • DS
      David S.
      19 March 2020 @ 18:03
      Michael G. - I enjoy and learned from your RVTV interview. These comments are about the crisis. You were even kind enough to defend one of my comments when no one else would. Knowing how this is affecting friends and families, I felt that the bigger picture of this crisis should be addressed. I agree this is not the end of the world nor free markets. The virus will pass. We will go back to being unprepared for the next crisis. I do not believe, however, that this is a binary event, i.e., two possible outcomes. There are many possible outcomes country by country, economy by economy and market by market. We do not have any idea how much money has been lost in the venture capital markets. We have no idea how underfunded defined pension plans are now. As of now we are in the beginning phase of this crisis. So many of our companies that believe in free and unfettered capitalism are racing to the government to get bailed out. Some of these companies wasted billions of dollars on buybacks to enrich executive pay while borrowing to fund high P/E buybacks. It is time to let the zombie companies go bankrupt. The focus by the government needs to be what is good for the economy - large corporations as well as small businesses- and its citizens. Just trying to keep the stock market inflated is a failed strategy. In hindsight after QE1 it would have been better to switch to real infrastructure projects. We would have better bridges and more money in the real economy. We will see how a trillion dollars of socialism from the government to businesses will be delivered. None of us know how this will play out, but it will not be pretty. Because of the speed of implementation waste and theft will be hard to control. The reason that I think this will be worse than 2008 is not just markets but how people all over the world will pick up the pieces of their lives. DLS
  • MK
    Melissa K.
    19 March 2020 @ 07:53
    Wtf...leg into junk debt. Good luck....
    • MK
      Melissa K.
      19 March 2020 @ 07:57
      They can’t even get a treasury auction off without intervention.
    • MK
      Melissa K.
      19 March 2020 @ 08:02
      EM? Oil? There are way easier ways to skin this cat.
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:55
      The time to worry about credit spreads is when they are most narrow. not when they are widest. Stay safe. Michael A. Gayed, CFA www.twitter.com/leadlagreport
  • GC
    Gerard C.
    19 March 2020 @ 11:19
    They both look like they will be on ventilators in 3 weeks and they’re patting themselves on the back about their January newsletters.
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:53
      Gerard - certainly hope not. Not patting on the back. I am happy about the results of not just a "newsletter" but actual portfolios being run. There is a setup for risk-on as I've been addressed on Twitter as well, which I encourage you to take a look at at www.twitter.com/leadlagreport. Stay safe. Michael A. Gayed, CFA
  • KA
    Kelly A.
    19 March 2020 @ 15:05
    I guess I missed in the 53 minutes the answer to the question that RV posed: Is this a fleeting moment of panic, or are we seeing the conditions for a true doomsday scenario? Meandering, unfocused, and 53 minutes? Really. We are all super busy these days. Even reading the transcript takes valuable time. A) cut to the chase, or B) Don't misrepresent what this conversation was really about, so that I can give it a miss if I know that it is really about nothing much. Thank you.
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:51
      Kelly - certainly appreciate the sentiment here. I think in times like this, it's good to also take deep dives every now and then. Stay safe. Michael A. Gayed, CFA
  • tc
    thomas c.
    19 March 2020 @ 15:19
    Seen this guy before. not impressed. I'll take the advice of the comments
    • MG
      Michael G. | Contributor
      19 March 2020 @ 15:50
      Thomas - appreciate the comment. Factually, signals went risk-off January. This is evidenced in The Lead-Lag Report, the Fund, and my twitter stream (www.twitter.com/leadlagreport), as well as on SeekingAlpha in my writings. There is a very real risk-on setup coming. Stay safe. Michael A. Gayed, CFA