The Warped Physics of Markets: QE, Big Tech, and the Passive Flow Breaking Point - Live with Vincent Deluard

Vincent Deluard, CFA, of StoneX returns to update his views on passive flows and the macro picture and explains what he sees as the undoing of the market structure of the past decade. With Real Vision editor Max Wiethe, Deluard describes the three “perpetual motion engines” that have powered stocks’ unceasing rally—passive investing continually reinforcing large cap performance and rapid market gains, ongoing QE engendering the “wealth effect” without creating inflation, and big tech outsourcing their payroll to the market via stock option compensation. These three components together, Deluard argues, have supported the 2020 bull market. However, he foresees the return of secular inflation as the real drivers of inflation — bank credit, minimum wages, and commodity prices — come to the fore and the vaccine shifting demand from digital goods to real goods. He also shares how gold and bitcoin are leaks in the perpetual motion stock market and why the rise of populism will put this era in markets and the 60/40 portfolio to rest for good. Key Learnings: Deluard describes how the underlying elements that prop up today’s markets—passive flows, big tech, and QE—are eroding in the face of secular inflation picking up speed. In light of that, he discusses why gold and bitcoin will continue to outperform and warns that the return of inflation will destroy bonds, hurt equities, and wipe out risk-parity strategies by essentially tearing up the playbook for 60/40 portfolios. To view Deluard’s charts, click here:

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