Incredible interview!

Wow!

Best insight for me was that the USD funding dynamic within the Chinese financial system between the corporates and banks - the public/private distinction is often not clear and everything is very controlled and managed from the top, including the flow of USD from one entity of another. The Aug 2015 RMB devaluation event simply facilitated a transfer of USD from the right pocket to the left pocket within the Chinese financial system - it's all one balance sheet. Which makes investing in China challenging in its own right.

Outstanding discussion! Off the charts with such clear-eyed content.

Real Vision at it's best

I genuinely struggle to find anything in this interview that is not consenus. As Hugh Hendry would probably say: “It’s not a minority view to say that it’s advisable to buy defensive assets with strong cashflow. It’s not a minority view to say that a further leg down in stock prices is likely and you should be prepared to digest the drawdown. It’s not a minority view to say that you expect the dollar to fall at some point following the ultra expansive monetary policies adopted by the FED. It’s not a minority view to say the FED should not buy junk bonds. It’s not a minority view the FED will not provide dollar liquidity to China. It’s not a minority view to say you expect inflation to pick up after a couple of quarters. It’s not a minority view to say oil prices will fall further. Hey, let’s be honest, you are not a contrarian!” Chit chatting consensus views. That’s all there is in this video.

Great

Excess leverage always seems to be the third rail for most of the crises in the financial markets, especially after the derivative market appeared. It is important to note that the big banks are still involved in this crisis through leveraging. This will continue if massive leverage is allowed. We cannot socialize all the losses every time. Some of the major leverage players not be not bailed out. Bankruptcy is an important part of capitalism. If we constantly bail them out, there is no fear. DLS

great interview. loved it.

I have criticized RV in the past but I have to say that this interview was the best I have seen in any network.. The knowledge that James has is incredible. Great work...

Good interview - thank you. I think James' insights on funding markets are very strong and helpful in some areas but in other areas perhaps unnecessarily complicated or with overemphasis of certain issues at the expense of the big picture.

brilliant guy

The intersection?

James is eloquent. Too bad he was wrong about the Fed straight up buying junk bonds.

This was absolutely brilliant - by a long shot, one of the more substantive, insightful and original interviews I have seen on RV for some time. Thank you, James & Raoul!

WOW GENTLEMAN GREAT DAMN VIDEO! EXCELLENT 100%! MY HAND HURTS WRITING SO MUCH! ITS 12:45 PM I'M ON THE EAST COAST I'M GOING TO TAKE A SHOWER THEN TO BED SO I CAN GET BACK UP AT 6AM TO RE WATCH AGAIN TO LEARN STUDY AND HOPEFULLY BETTER MY FAMILY MY SMALL BUSINESS AND OTHERS AROUND ME!! THANK YOU MR RAOUL AND MR JAMES!!

I like the extensive library behind the speaker.

Connecting James' thoughts on Japanese banks using dollars to invest in less than IG credit, and now being exposed to losses and risks they never perceived, would this be a reason for the Fed to buy HYG? In order to not collapse liquidity of Japanese banks? Or because Japanese banks are unwinding these trades and causing undue selloff in high yield? Any thoughts? If Japanese banks regain adequate liquidity, will the buying of HYG cease? What other banking systems are exposed to high yield to such a degree?

Fantastic!

Thank you. Particularly thought-provoking were James' insights on China: Chinese banks' ownership of China HY paper, rumored shenanigans with Treasury dumping, and carry trade being conducted by Chinese banks on Yen/USD via Japanese banks. I did however take the bullish statements on now-is-the-time-to-buy-the-quality with a grain of salt, as one must with a seasoned professional of this pedigree. Agree it's absolutely the time to be building the list. Thanks again.

I suspect in the transcript it should read "It's like LTCM meets October in '87" rather than "It's like LTCM meets October in '97" LTCM for the highly levered cash-fut basis trade and '87 for the risk parity/portfolio insurance deleverage.

Fantastic interview!!

Great interview, no question. But to someone with PhD was also hard to track. I think lot of things could be said in simpler manner, in which Raoul tried few times to lead interview. But no matter what, great things were heard. Congrats !

Gun buyers are buying guns, ammo and accessories, most good stuff is out of stock. Thank goodness we still have some recognition of our 2nd amendment rights in some parts of the USA.

Realvision at its best, Realvision at its core. I used to watch 100% of vids, till Realvision changed to massive vid expansion. Now I barely watch 10%. But as long as the 10% is as good as this video, I will continue to be a subscriber.

You know an interviewee is intensely interesting when you can only comprehend 50% of the granular what he is explaining, but nonetheless still coming away with the greater sentiment of what he is expressing. BTW anyone have an idea on how you can invest in airports or tollbridge operators?

Brilliant. I bought out of the money calls on USDJPY last week. Now I’m buying otm puts as well.. Whatever happens the next 6-12 months I doubt that USDJPY, EURUSD and USDCNH will be close to where they are now after that time. And FX vol is still strangely low.

Given the Fed action on Thursday is there any chance of a follow up? Thanks PS top interview and insight on plumbing of markets.

Raoul, would you mind typing up a brief paragraph explaining the repo near-crisis? I know James explained it around 8 minutes in, but not in terms that were clear to me. It would be great to hear it in layman's terms.

Too bad the interview wasn’t conducted after Thursday’s fed announcement...

James is on fire!

All I could think during the State Administration of Foreign Exchange discussion was the following Southpark Clip - https://www.youtube.com/watch?v=l1hCRBwGAXE

Best interview yet. Mr. Aitken is perhaps the clearest talking guest I have heard. His examples of specific trades to illustrate concepts is immensely helpful if you could get him to do that even more that's better yet. Absolutely great. As a side note it would be well worth an extra 10min. Of video length if you would stop and break down some of the technical concept's into simple terms for unsophisticated such as myself.

Incredible 1 on 1. Much needed break from the constant bearish bias that has been on display from major media sources and RV. I'm hopeful for a pullback tomorrow to load many of the undervalued equities out there, many of which are in the energy markets as mentioned in this video. Shareholder can always sell covered calls for downward protection on a lot of these high IV equities ;)

Outstanding....the closing comment from James nailed it!

great to see james here, thanks

James needs to be on video every week. Fabulous!

A good idea is having debate on Chinese Yuan between James Aitken and Kyle Bass.

Fantastic interview and educational as well. Hope there will be a follow up with James in the future.

Great interview, well done!

Excellent interview. Some really great thoughts and insight. Thanks!

This is fantastic. Many of the more esoteric discussion points were certainly beyond my scope of knowledge but this is yet another interview that captures the immense value that Real Vision is adding to the financial and economic literacy of subscribers. Another home run. Thank you.

James expressed a clear view that the Fed would most likely not be backstopping JNK and HYG-like products (I think he believed they would too smart to do that). I think most people might have guessed the same. So, I now wonder what he thinks about the Fed's announcement (probably just a day or two after this was filmed) that they are going to buy those very types of high-yield items.

On the point of the Libor floor. I understand that the Fed liquidity facilities (MMLF, CPFF) incur a borrow cost of 110-125bps. But why does that translate into a floor on Libor? Libor is a barometer of banks’ expected unsecured funding costs. These facilities restrict what you can do with the money you borrow to allowable HQ MM assets (CP) which are then parked with the Fed until maturity. I’ve been trying to make sense of this for a couple of days since I first came upon this particular “floor” argument, which was an unexpanded statement. Any clarity would be much appreciated. In the video the concept starts from the 41m remaining mark.

When did this conversation happen? I feel like all the conversation that happened before April 9th are essentially outdated considering that the FED decided to BUY JUNK ! Changes the game. ALL the hypothesis built on the fact that JUNK cant be salvaged is changed.

Thanks for featuring these great Aussie talent! We’ve had Russell Clark, Ben Melkman and now James Aitken. Bravo RV

Great interview

James Aitken with Raoul double the Brilliant! So many nuggets, thank you both!!🙏

Perhaps need a Kyle Bass / James Aitken one-on-one!

For those of us trying to use the interview to better understand a space we are not experts on it was a hard interview to digest.

How many times do we have to ask. . . please put the date filmed back in the description. Why do you continue to ignore your customers'/clients' requests? Arrogant!

Great interview and I thank you for that. Obviously recorded before the Fed announced that it would indeed bail out HY market. How does that change you illiquidity thesis Raoul? I am still onboard to be honest - I don’t think the Fed can backstop every company in US but would be curious of your opinion.

James needs to be hired as the #2 interviewer after Raoul

Wow! Awesome stuff from James there! Definitely want to hear from James more often!

When james talk about the fed fx swap line or CPFF, he says OIS (overnight index swap) not OAS (option adjusted spread). The fx swap line is OIS +25, whihc is allin as James correctly says is about OIS +35/60 at the moment depending on the currency. The CPFF is OIS +110 for A1 paper and OIS +200 for A2 paper, on top of which you add a 10 bp fee. Anyway this is a fanstastic interview. Wish to hear more from James in this current environment

Amazing interview!

One of the beat interview guests I’ve seen in a while. James obviously been around the poker table a few times. Well done.

Great interview.!

Best interview on RV I’ve seen. Great to have a proper MM guy with an understanding of the wider markets and then very expert knowledge on particular subjects. He’s got a huge amount of xp. Keep him coming back!

Everywhere, there seems to be the same mindset: 18 months to a vaccine, rolling shutdowns, quarantines until fall, etc. What no one is talking about or discounting is the possibility of an effective treatment strategy being determined. If physicians can keep infected younger, healthier patients from being hospitalized and dying, the game changes immediately. Since it doesn't seem like this is on many people's radar, it may be the lost cost, high reward bet that is worth taking a toss on. Thoughts?

Deadline Wong on fed buying junk bonds

Things are so crazy at this time that the fundamental piece in this interviewwhere assumption is FED to NOT buy junk/High Yield credit is being falsified the very next day. They are buying everything now so how does this change the game now that all rules are changed. Why not take this as another shot at a new bull market or way to current ATHs atleast. They are not going to stop.

OIS = overnight index swap, not OAS, option-adjusted spread as stipulated in the video text around 42:30.

On a scale of 1-10 stars, Mr. Aitken is off the charts fantastic. I loved every second of this. Just wish it would have been even longer!

Why do Chinese firms need to borrow USD ? To buy raw materials , I guess. If so, China inc no longer has those USD. Yes the firm is short, but the PBOC is long and China Inc is square. PBOC selling UST may have been to lend to Chinese firms ( not mischief ) to enable those firm to repay offshore banks. China needs to quietly exit UST ( not like an elephant ) and buy gold or hard assets including US equiites ( under the cover of Bridgewater, Blackstone etc ). When China wants to cause mischief it will happen all at once, not just markets, but internet, power grids, trade and then bombs. They are not ready for this yet , I hope.

The Fed balling out non-federal pension funds is a sticky wicket. Firstly, all the federal pension obligations are unfunded and paid out of current tax revenues -which are at high risk. The Fed is going to have to bail the federal pensions first. Secondly, there are many non-federal pension funds that owe huge annual pensions to individuals as discussed in the RVTV Pension Series - annual pensions in excess of $200,000 a year to individuals which are poorly funded. Why would millions of Americans without a pension want the Fed to bail out a $200,000 a year pensioner? State and local pensions are going to have to rationalize their obligations like Greece had to. Pension funds may have to liquidate and allocate pension money to the pension holders. A defined pension plan has been a dinosaur for 50 years. This is just another government promise that will not be met. DLS

Epic is so right! Great conversations gents... TY How has James opinions changed since we have the Junk market bailout announced now as well Thanks in advance!

one of the best interviews on RV. Superb. Bring James back!

Would also like to add I think all the subscribers would agree, We NEED much more of James please 😬 in the future

James I must say God Bless you for gracing us not only with your time but my God your incredible wealth of knowledge. Raoul your platform is truly amazing and I thank you for bringing James to real vision. I’m honestly blown away and lost for words just how much I have learned last couple years from real vision. Thanks to both of you guys, incredibly informative and really shines a light in to the mind set that is needed to truly win in this crazy game we all love. God bless guys and thank you again

And what I also have to say that Mr James Aitken try not to make a prognoses in the long term (or to be cautious), but the short- or mid-term (about equities that are hit with shutting down the economies), which is also quite good. But I see here two different approaches which is priceless.

I'm furious with this. KEN GRIFFITH'S FUND SHOULD BE WIPED OUT. Yes, the Fed can intervene to fix things and make sure it doesn't spill over - BUT WIPE THEM OUT. This is cronyism at its worst. It's completely disgusting. The folks levering up a zillion to one to collect their seven points as long as the boat doesn't get rocked need to be taken out on a stretcher. What a crooked system.

Bravo. That was excellent.

What a great interview. Some of the details stretched my knowledge but that's why I subscribe. I'll probably watch this again I think.

Incidentally, showing my age here, but if Mick Dundee had been a bond/credit trader and not a Northern Territory bushman, I'd imagine him to be James. ;)

It was one of the best interviews recently. Thank you for the great, great content and the spotlight over some investing ideas. I can listen those two smart guys chatting every day. I really want to see more from James Aitken toughts.

What happened to clearly posting the date of recordings? Accurate context and transparency matters. Oversight? Cool, please fix it. Intentional? Unacceptable to me, please rethink the reasoning and fix it.

Great discussion, how can we follow Jame's work ?

Just have to say that Real Vision is just blowing it out of the water since this crises started. Due to the outstanding interviews such as this, the daily briefings and Raoul's updates we've been one of the 'not so sophisticated' Mum and Dad investors that have benefited immensely from you and your teams insights. Can't thank you enough. Keep up the great work.

Each time I watch a RV interview I tell myself “best ever.” This time I mean it! It was a lot to swallow and much of the discussion was beyond my skill set. I realize the Fed entered the debt market just after this video was published. Possibly Raoul could revisit the main points discussed and explain the takeaways post Fed recent actions? Thank you for this!!!

PLEASE HAVE THIS GUY BACK AGAIN, AND FREQUENTLY!

Thoroughly enjoyed this. You need to have James Aitken back on RV.

Omg!!! Blown away. That was more than worth the year’s sub. Talk about providing value. Thank you, thank you Raoul and James.

“The principled man unwinding risk dis-parity” too funny!

The Best and most useful interview, thus far.

This is the reason RV exists because of interviews like this.

Dear RV, Some are your videos are fantastic. However timing is everything. I suggest, you shorten the editing and dump the video online raw and unedited. I know glossy editing makes for better viewing, but in these crazy days, your product would be more valuable if was published immediately.

Thanks guys sharing - really helped me understand a little more about funding markets 👍

As many have said, please have the filmed on date back on the videos. Thank you!

This is one of the best interviews I've ever seen on RV. The breadth and depth of James' knowledge are palpable. So instructive! Very much enjoyed the shooting from the hip communication style.

What a jet!

What a jet!

How come I can’t listen to this I’m back ground when I have the screen off?

There has to be a breaking point where the smart people realize they weren’t smart enough and they have to resort war in order to hit the reset button.

I would only add that Mr. Aitken is perhaps the clearest talking guest I have heard. His examples of specific trades to illustrate concepts is immensely helpful to someone like me.

Holy crap this Bloke is so friggen Wired...Ya gotta get him back on again in 3 Months time...I had to back up soo many times to keep up....Great Interview

Well this video did not age well. FED buying JUNK bonds is the worst thing that could have happen for the optics

Being in isolation is certainly giving me too much time to think. The Brussels bond trick - all Euro members bonds are as good as German bonds - was played at the start of the Euro. Greece, Italy, Spain, Portugal were able to borrow at low German rates. How did that work out??? Brussels bureaucrats will put pressure on some Euro countries to repeatedly save other Euro countries. The European Economic Community was and is a good economic idea. The Euro is a political fiat currency without a sovereign. (At least Italian government IOUs have a sovereign.) Only politicians could have thought of this. Economically Brussels must force Euro countries to make it The Sovereign under the banner of the Euro will fail without a bureaucratic sovereign in charge. The Euro will fail anyway as Euro countries will not kowtow to beaucrates forever. Why not avoid the further strain on the EEU, let the Euro pass? When the Euro came into being all the black money came out the woodwork. When the Euro dies, billions will come out of the woodwork again. We are almost there. Set up a long term, transparent plan. Cross the Rubicon. DLS

Great Discussion. Mr. Aitkin is a wealth of information and front runs advice with timing and future events are completely unknown. Mr. Aitken’s idea of patient money is spot on. I am making a new list but already reversing my little nibbles before earning season. If I miss the first part of the move up, it will not kill the world’s smallest family office. Most CEO will right off as many problems as possible so COVIN-19 can be responsible. Since there is so much uncertainty, I hope most CEOs will be quiet about forecasting. DLS

Fantastic, watched that one twice.

I'm echoing a number of the comments below here regarding the advent of the Fed now buying HYG and JNK. It would be great to get James back for a 15 - 30 minute update if possible, please (pretty please, with icing sugar on top)?

The BBB downgrade snowfall doesn’t matter anymore. The Fed, sorry the Treasury, sorry Trump, has made sure of it.

At 24 minutes in James comments regarding liquidity for the real economy in the US which is what really matters which made me think. Yes he is right but the narrative of the last number of years is that, in fact, the real economy doesn't matter, until it does. This is all readily apparent by looking at the action in the equity markets and in fact there is a vested interest in keeping the real economy from mattering for as long as possible in order to extract maximum value for the 1%. How many of those involved in this ponzi scheme thought perhaps the real economy would never matter again? Perhaps they thought this orchestrated ponzi economy was now the only economy that mattered...and then came Covid-19... How many of those people still don't get it? I'm guessing still a bunch of them.

I'm sorry but after what happened with the Fed on Friday has largely made a lot of this conversation irrelevant. Maybe bring him back for short 1\2 hour follow up next week with the knowledge of the Fed buying junk.

"The PBOC is a bit of a mystery to me. I don't think they're boxed in by the renminbi or the dollar borrowing by Chinese corporates, but I am surprised they're not doing a heck of a lot more. We know they're going to stimulate, but it seems quite limited and very gradual". Is it a stretch to think they are deliberately positioning monetary moves as measured and limited to present as a port in the storm ahead of their digitization of the RMB?

Superb. Thank you.

Not difficult for Fed to buy anything.. $JNK $HYG $MUB

How does this impact EM? Time to invest in EM now?

Great conversation. Please bring him back often.

Why do I get the feeling I just watched an episode of RV watching their RV? Meta meta anyone?

Napalm, the ultimate Daisy Cutter. https://en.wikipedia.org/wiki/BLU-82

"Patches on indigestion" - that made me laugh

Funny that it was said that it's impossible for the Fed to buy the High Yield market and that's what they did yesterday. Unbelievable times.

What was the date this interview was conducted so we have context compared to where we are with central bank actions (purchase of high yield bonds)? Interview dates really need to be added to the description!

Brilliant conversation!

thank you for clarifying the euro situation, taking the noise out

isn't the China constraint simply their fixed currency regime?

Mr. James doesn't just own a library, he uses it

the very best energy play is TPL bare none !!!!

Well they are going to buy the Junk to. Now What ?

Excellent

Holy crap, imagine trying to play a game of chess against James. He'd be at checkmate before you even get a chance to move your first piece

Epic interview, had to pause to take notes. However, pricing of swap lines is done at OIS (not OAS as per the subtitles) + 25 bps.

Easily one of the best interviews I've seen yet on RV. Thank you! Please make James back on a regular basis.

super interesting conversation ! Got a bit lost in the conversation about credit markets since I don't know alot about those but eager to learn :D

Is the "principled man" Dalio?

great seeing RP interviewing as much as he does nowadays

Raoul. Be interested to know your view on high yield now? More what’s this telling us rather than a trade recommendation? The Fed have clearly crossed the “impossible politically” rubicon. Great interview, one of the best ever on RVtv; many thanks to James. Cheers. Pete

Thanks Raoul. Aitken brothers are very well known here in Aus. I always looked forward to reading Charlies (James's brother) daily afternoon report after the market close during my career on the sell side. However, we didn't get into the offshore USD (or Euro$) plumbing issue in enough detail and this seems to be the key issue atm. Share your concerns about swap lines (not) flowing to corporates. What happens to open swap lines in an insolvency event? And how is China really maintining the peg when it can't access USD through trade? James hinted at this but gave no detail as to size of China's USD reserves and how long they will last. Can you do a deeper dive into this with an expert? Would Jeff Snider be the guy? Or a second interview with James Aitken?

Well the fed started buying junks!

They just announced their plan to bail out high yield markets, how does that change the dynamics?

Great primer on value investing in the end!

That was an amazing tour d’horizon of the macro landscape and we got some Equity investment opportunities to ponder as a cherry on the cake. Worth a repeat listen for sure as there was a lot to absorb. I appreciated to Listen to how experts like James (and Dylan and Mike) think about starting to nibble at the market again, or at a min, like Julian says, advise to start making your lists. Everyone seems to agree, as also articulated on the Daily Briefings, that there is a very high probability that in the medium term the real economy will catch up with current reality and send another shock wave through the markets.

date ?

Excellent interview Raoul. One of my favorite conversations recently. Highly recommended.

"Let's just call him a Principled man" has got to be one of the funniest comments this year....