Mark Hart – China

Published on
18 January, 2016
Topic
China, Financial System, Structural flows
Duration
55 minutes
Asset class
Equities, Commodities, Currencies

Mark Hart – China

Featuring Mark Hart

In this outstanding follow-up to his Master Class from September 2014 in which he predicted correctly that China would devalue the Yuan, Mark Hart, founder of Corriente Advisors, lays out a roadmap for how the deflationary consequences of fiscal stimulus in the West and capital controls within China will lead to a far greater devaluation of the Yuan than anybody expects.

Published on
18 January, 2016
Topic
China, Financial System, Structural flows
Duration
55 minutes
Asset class
Equities, Commodities, Currencies
Rating
14
Sharing

Comments

  • MC

    Michael C.

    7 9 2017 05:09

    0       0

    Sopunds like he has just reversed his negative view. Would be interesting to hear what drove this? CNY has been quite strong.

  • fT

    forecast T.

    2 4 2017 05:56

    0       0

    Whats a mini short squeeze

  • SB

    Sam B.

    13 12 2016 18:58

    3       0

    I think Mark's logic is dead on and he'll ultimately be proven right... but now that almost a year has gone by and the sharp CNY devaluation has yet to happen, I'd love to get his current take. Seems like global central bank coordination staved off the need for a sharp deval back in February ("Shanghai Accords")... please get him back on RV pronto!

  • ML

    Marc L.

    28 2 2016 09:56

    2       0

    you can buy 3 different CNY or CNH put options at the SIX (Swiss Exchange) denominated in USD - check the following ISIN: CH0283710884, CH0259488713 or CH0259490883

  • LA

    Linda A.

    23 2 2016 21:57

    0       0

    Thank u Mark! I enjoyed getting a truncated lesson in global macro economics & specifically the "carry-trade". U are a smart, impressionable & humble person.

  • GA

    Guy A.

    17 2 2016 02:54

    0       0

    Don't have access to currency options & the roll charge for shorting CNH prohibitivly expensive in my forex account. Any thoughts on shorting HKD? Will they necessarily devalue it along with the yuan?

  • SM

    Stuart M.

    13 2 2016 12:12

    1       1

    Mark, or anyone, can you comment on perspective in this article -- that western bias is causing us to miss what China is actually up to?https://www.goldmoney.com/shorting-the-yuan-is-dangerous

  • CM

    Charlie M.

    7 2 2016 18:35

    3       0

    I really enjoyed this interview. Replayed several sections - very educational. RV is my new graduate school.

  • PB

    Peter B.

    6 2 2016 05:50

    0       1

    3rd time watching this

  • LP

    Lynn P.

    28 1 2016 20:48

    4       1

    Interesting trade here, as Hendry and Louis-Vincent Gave have a different perspective.

  • AG

    Alexander G.

    27 1 2016 13:47

    0       0

    I heart Hart! Big deval will come, but Chinese have to give local companies a chance to prepare / wait for contracts to mature (otherwise huge losses at importers/exporters possible)

  • DK

    Damian K.

    25 1 2016 21:52

    4       0

    Would also be interrested in knowing if there's a US retail broker offering yuan options

  • RW

    Raymond W.

    25 1 2016 14:49

    2       0

    The January 24th "Thoughts From The Frontline" by John Mauldin gives the steady as she goes slow rate change argument if anyone is interested. You can google it.

  • FC

    Fractal C.

    24 1 2016 19:53

    1       0

    @Ian, I have nothing against Hugh Hendry. I saw this link and I felt curious and hence mentioned the same here - http://www.eclectica-am.com/fund-statistics-eamf
    Best wishes.

  • IF

    Ian F.

    24 1 2016 14:17

    1       1

    @DHIREN - Frighteningly your math must be bad. Eclectica is one of the longest running London Macro Funds at 14 years with 8% CAGR. Hendry's 2016 Outlook: https://www.youtube.com/watch?v=ZWz_Pln_uuI

  • DS

    DAVID S.

    22 1 2016 18:27

    4       0

    Mark also demonstrates putting on a good trade ...with an excellent favourable risk to reward ratio, + He's extra clear on his view. What a great example. Thank you MH and RV

  • FC

    Fractal C.

    22 1 2016 16:45

    1       0

    Fwiw, Hugh Hendry fund has a CAGR of 2.47% since inception.

  • TS

    Tamara S.

    22 1 2016 01:15

    2       0

    You both are such interesting thinkers and can express the issues so well. Thank you.

  • IF

    Ian F.

    21 1 2016 14:43

    4       1

    My favorite hedge fund manager Hugh Hendry is taking the other side of the trade. His interview here: http://www.bloomberg.com/news/videos/2015-10-07/markets-most-influential-investment-outlook-panel

  • JH

    John H.

    20 1 2016 19:29

    3       0

    if the Chinese leave their banks, its an easy stretch to say physical gold will move up. But, will this move break, once and for all, the western paper gold manipulation? maybe force a raid on comex?

  • MC

    Mike C.

    20 1 2016 19:15

    1       1

    Either the Chinese government declares Bitcoin to be it's national currency or the citizens will. Outflows into BTC have already commenced. I know this is bold but none the less, possible!

  • DS

    DAVID S.

    20 1 2016 18:56

    2       0

    What's to say: Brilliant!! ...Long Hart!!!

  • FC

    Fractal C.

    20 1 2016 16:34

    0       0

    any brokers that offer options on forex in the US? Thanks

  • TB

    Tim B.

    20 1 2016 15:51

    11       0

    Mark is a fantastic mind. However, I'm concerned by the comments of almost sycophantic proportions on this thread. Where's the discomforming evidence, the counterfactuals and the debate!?!

  • TT

    Turing T.

    20 1 2016 14:47

    1       0

    Sorry Mark and Grant, didn't mean to be so curt with prior comment - would have enjoyed a more free ranging discussion of anything and everything interesting to you Mark. Good luck with the trade :)

  • RL

    Rick L.

    20 1 2016 12:41

    0       0

    Won't be able to sleep after watching that. He's 100% right. Its sterling 1992 on a massive scale.

  • jm

    joeri m.

    20 1 2016 11:37

    3       0

    Varun, in his first interview he explains how to trade this. He buys 7 strike out of the money yuan puts 6 months to one year and a half out

  • SL

    Steven L.

    20 1 2016 03:54

    0       0

    USD/JPY weaker. Maybe China waits for the next BOJ shoe to drop and then devalues. Lots of cover then.

  • db

    don b.

    20 1 2016 02:22

    1       1

    This makes me wonder if the US is suppressing gold for China in exchange for China agreeing not to devalue the Yuan. Perhaps oil as well giving China time to pick off oil reserves at the low.

  • db

    don b.

    20 1 2016 01:33

    0       0

    http://seekingalpha.com/article/3440886-further-devaluation-of-the-yuan-will-drive-gold-prices-higher

  • RM

    Robert M.

    20 1 2016 01:29

    6       0

    I would like to know what I should study to get the framework that Mark, Raoul, and Grant all come up with.

  • VK

    Varun K.

    20 1 2016 00:27

    3       0

    Did anybody get how he is playing this trade? Buy Puts on RMB futures (around 7 Yuan or more; 6-12 months out) as traded on CME?

  • TT

    Turing T.

    19 1 2016 23:24

    0       2

    Prefer a conversation format personally

  • CM

    Corentin M.

    19 1 2016 19:47

    3       0

    As usual, outstanding! By far, the best of the best you got out there on RV. @RV Agreed on the possibility to broaden the rationale towards other assets/asset classes

  • KE

    Kenan E.

    19 1 2016 18:50

    4       0

    Does it really matter if you are short yuan or any other major developed stock market. Wouldn't a sharp yual deval take a lot of those markets A LOT lower??

  • JA

    J A.

    19 1 2016 18:25

    2       0

    Where does he get the estimated data in regards to the FX intervention in the first 12 days of January???

  • FL

    Frank L.

    19 1 2016 17:14

    3       0

    Assuming Mark is right ,what happens to the price of gold? Especially considering the amount of gold China has in reserves, along with the other BRIC nations. Frank

  • tW

    tgwtom W.

    19 1 2016 16:35

    9       0

    IMHO, If you liked this, must read perfect companion piece by RV contributor @WorthWray of @EvergreenGK 'For What It's Worth'1/15/16 http://bit.ly/1PoaHmg

  • GM

    Gerald M.

    19 1 2016 15:36

    0       0

    Interesting how one-sided all the comments are. Nothing can be that assured (effects of CNY deval). Agree that Mark is brilliant. Thank you RVTV for having him on. We are lucky to have access!

  • RM

    Richard M.

    19 1 2016 15:08

    0       0

    Part 2 - (previous comment box to short to finish) - Fantastic interview, Mark is definitely one brilliant yet humble guy! Thanks for having him on RV!

  • RM

    Richard M.

    19 1 2016 15:07

    3       0

    Perhaps they are delaying the deval while they quietly tell all the SOE's and public/private equity/corp's to convert their US$ based loans to CNY loans so they don't get killed on the deval.

  • MA

    Meshari A.

    19 1 2016 11:36

    1       0

    Great interview, one of the smartest guys around. Anyone know why he opted for puts rather than calls? or are they just priced that much cheaper?

  • bp

    bart p.

    19 1 2016 10:53

    1       0

    Very good interview, would really love to see him back on RV this year for an update on the rest of the world!

  • RA

    Ricardo A.

    19 1 2016 10:00

    7       3

    Maybe my expectations were too high (after 2014 interview) but this interview felt somewhat short of it. Would have been nice to see 5-10 min Mark's view on 2016 and the rest of the world

  • TL

    T L.

    19 1 2016 09:19

    2       0

    AA you can buy yuan puts = USDCNH calls at Saxo with a welcome bonus through this link: http://uk.saxomarkets.com/iit-dcf/referral/?RefId=05C34E88-9E1E-40E5-A3DF-3E629C0B96DE&cmpid=GLOBAL-REF-UK

  • GT

    Graham T.

    19 1 2016 08:48

    2       0

    Anyone made a call to Xi ? "Hello is that Mr Hart? its President Xi here"

  • MS

    Mark S.

    19 1 2016 06:36

    3       0

    Simply stunning analysis. Real Vision has done it again. For about the 100th time.

  • SD

    Stephen D.

    19 1 2016 06:01

    1       0

    Mark is 100% right about the Asian crosses.But the quanta mentioned are too wild. CNY is 20% above a 10 year average versus Yen, 12% above Korean won and 10% versus Taiwan $.

  • S

    Swapnesh .

    19 1 2016 05:45

    3       0

    really awesome, talk about knock on effects, if Fed were required to do QE4(as a result of the deval), I think we can agree that it's going to get very ugly out there.

  • JS

    John S.

    19 1 2016 05:38

    5       0

    Domestic savers should be shielded from a devaluation to some extent by their substantial gold holdings.

  • BJ

    Brent J.

    19 1 2016 04:32

    6       0

    1 of my 1st comments after meeting Mark was my belief CNY would need to deval. At time I didnt know his thesis or positioning. He simply said "me too". Smartest guys in the room are always quietest

  • CD

    Connor D.

    19 1 2016 04:06

    6       0

    Has played out exactly as he stated in his previous interview from last year. Would love to know more of what he thinks are the "knock on effects" for world markets. Equities, treasuries, credit etc!

  • RP

    Raul P.

    19 1 2016 03:56

    5       0

    Great interview! Thanks for your insights and thoughts. Besides playing Yuan puts, can we assume a vast devaul being a negative for the Chinese stock market?

  • sp

    shashwat p.

    19 1 2016 02:19

    5       0

    F***ing Brilliant Interview. My only counter argument is that China now has lots more "wealth" than China in 94. A devaluation this big is exponentially more difficult decision than in 94.

  • BV

    Bryan V.

    19 1 2016 01:52

    9       0

    I wonder if the possible yuan devaluation explains why the Chinese have been pushing gold to their domestic population, so as to reduce social uprisings.

  • DC

    Dave C.

    19 1 2016 01:52

    6       0

    Very well constructed argument - I have just googled "The Global Macro Analyst Art of Exporting Disinflation" and found a report that is very relevant to this discussion IMHO

  • TL

    T L.

    19 1 2016 01:30

    2       0

    This video by Mark will again be the best of the year on RVTV.

  • MR

    MIGUEL R.

    19 1 2016 01:24

    10       0

    i think part 2 is needed, what are the second order effects? we need Mark back to unpack his entire post china deval thesis.

  • MR

    MIGUEL R.

    19 1 2016 01:16

    32       0

    Mark Hart - smartest guy in the room period. Can we please vote to have him back regularly! His clarity and connecting of dots is hugely impresive.

  • CN

    Chasen N.

    19 1 2016 01:16

    7       0

    Excellent job RV bringing Mark back on

  • CN

    Chasen N.

    19 1 2016 01:11

    8       0

    I thoroughly enjoy listening to Mark's thought process. I never connected a yuan deval to QE4. Seems to further the long gold and dollar thesis and short anything that's connected to commodities

  • WW

    Worth W.

    19 1 2016 00:54

    30       0

    I've learned more about macro from Mark Hart than anyone in my career. He doesn't do media interviews. Ever. But this is the 3rd time he's been on RVTV. Love it.

  • ds

    david s.

    19 1 2016 00:49

    2       0

    Unknown Unknown - China could force HK to peg HK $ to RMB. This could buy China time

  • BK

    Bruce K.

    19 1 2016 00:39

    0       0

    Oops: make that "per Andrew's comment BELOW."

  • BK

    Bruce K.

    19 1 2016 00:38

    15       0

    Fantastic interview, great to hear such timely stuff from the "front lines." Per the comment above, I would have LOVED to hear a bit on the knock-on effects ... US Treasuries, for example.

  • je

    james e.

    19 1 2016 00:38

    5       0

    Really beautiful to listen to Mark. He said in last intvw that he was "chasing Flow" (see Book). He has achieved it because he loves what he does probably more than the money he makes if right. A+++

  • TV

    Todd V.

    19 1 2016 00:29

    3       0

    Wow! I have never heard of Mark before but I agree with an earlier comment he is def' the smart man in the room concerning the event's and possible effect in China and on the Global Theater. Brilliant

  • SS

    Sam S.

    19 1 2016 00:04

    4       0

    A post on suggested yuan puts and other effect$. Hart to Heart---simple yet brilliant. More Please.

  • KD

    Kevin D.

    18 1 2016 23:49

    6       0

    Brilliant. And the fact that market still only looking for 5-10% deval (and most scared to even position for that) shows that absolutely nothing was learned from 2008, or 1998/98, or '94, or.....

  • DM

    Daniel M.

    18 1 2016 23:42

    3       0

    Btw My posts are my humble attempts to answer C. They do make it difficult for residents but RMB leaves many ways and but New Elites buy property, & companies simply do trade fx. Hart is great.

  • AS

    Andrew S.

    18 1 2016 23:40

    108       0

    Great interview but in the future when you have the smartest guy in the room available please expand the scope a little bit. Effects of a sharp yuan devaluation on gold? Stocks? Dollar? Oil? etc.

  • AA

    A A.

    18 1 2016 23:37

    15       0

    Very good interview but could someone share a broker /platform in UK/US for buying low delta yuan puts pls?

  • PR

    Peter R.

    18 1 2016 23:28

    12       0

    A well signposted interview and boy was it worth waiting for. Mark has a great insight into how the mechanics of China finance work and how they will play out. For me a lesson in global economics.

  • DM

    Daniel M.

    18 1 2016 23:27

    4       1

    Devalues also a slap in face to current foreign capital but Harts right - if you go quick&low enough you will see new money come in AND equilibrium and free market global fxtrading then feasible L/T

  • H

    Harry .

    18 1 2016 23:20

    16       0

    Marks clarity of thought is a pleasure to listen to. His humbleness always particularly strikes me. Low delta yuan puts!

  • DM

    Daniel M.

    18 1 2016 23:19

    1       0

    On cap controls- considering outright trading halts and a command control history, it is possible they will tighten controls but cap controls tend to backfire L/T as it scares away inflows L/T.

  • CB

    C B.

    18 1 2016 22:54

    5       1

    Excellent. Wish he had spent some more time on capital controls, who inside China is dumping RMB and why can't these leakages be stopped (like the short sell ban). China giving up FX control is big.

  • DM

    Daniel M.

    18 1 2016 22:19

    2       0

    Yeay!!