Debt Psychology Changed After Political Risk Repricing

Featuring Michael Schneider

Michael Schneider’s depth of experience as a bond manager and his fascinating perspective on credit markets, leaves him perfectly placed to examine the recent change in sentiment, including the scale of re-risking in bond portfolios as well as the broad and imprecise nature of systemic risk. Looking at how to attack the sell off in bonds, Michael strategizes investing on the other side, as well as doing credit work when the relationship between debt and equity has changed.

Published on
19 December, 2016
Topic
US Dollar, Credit Market, Australia/New-Zealand
Duration
43 minutes
Asset class
Currencies, Real Estate, Cash, Equities, Bonds/Rates/Credit
Rating
19

Comments

  • JS

    John S.

    23 1 2017 22:09

    4       0

    Yet another brilliant conversation on RealVision. I honestly feel sorry for those that are missing out on what I now consider indispensable to my practice and general knowledge.

  • AB

    ARIEL B.

    15 1 2017 09:31

    0       0

    Hi Grant. Very inciteful interview once again. Not sure how you get to that $1.2trn number on US government debt if yields go to 4%? Would love to know if you get a chance. Ariel

  • PN

    Paul N.

    10 1 2017 10:26

    1       0

    Sydney and Melbourne are some of the most obvious housing bubbles of all time. Now with rising rates, an economy near recession, and an oversupply of apartment, the next 18 months will be unsettling. More cranes in Australia than the entire east coast of America! Crazy.

  • SB

    Stephen B.

    10 1 2017 06:12

    1       0

    I could not disagree more with the comment that Grant was leading this interview. What Grant does brilliantly is to prod and probe the views of his guests, thereby getting the very best out of them. Raol has a similar skill, of course, which is one of the reasons why realvision is such a superior medium.

  • nc

    nana c.

    8 1 2017 23:40

    0       0

    heavy wight!

  • AW

    Anak W.

    4 1 2017 00:45

    0       0

    watch this after the trump effect. this really teach me alot about how perfectly reasonable logic can be wrong, and how reality responds.
    This is one of my favorite interview so far. Thank you so much.

  • SP

    Spencer P.

    30 12 2016 08:23

    2       3

    When I hear the $USD isn't backed by anything I shake my head. The $USD is backed up by the soldiers, sailors, airmen, and marines all over the world. There's a reason we have 10 aircraft carriers with two more on the way. Our nuclear submarine fleet makes China wet the bed in the South China Sea. Putin is fully aware we still keep Tactical B61-12's next to his Iskanders in Kaliningrad. Nobody wants to admit the truth but that's what ultimately backs those pieces of paper. Fortunately, no one wants to go that route either...for now.

  • SS

    Sebastien S.

    28 12 2016 13:29

    1       0

    My only concern is to suffer from self-confirmation bias by listening to sharp and smart people concurring on fundamentally contrarian ideas. I'd love to see diverging views on the unintended consequences of active central bank involvement.

  • TS

    Tyler S.

    23 12 2016 17:15

    1       0

    Again, another great interview

  • WM

    William M.

    22 12 2016 19:48

    0       0

    Yes I needed more good news to help with the Xmas cheer! These are deep discussions which the vast majority of investors are not party to and RVT provides a truly needed service. Oh and I certainly didn't see Grant doing any leading the interviewee at all...... he simply tries to get out of them their thoughts on a range of topics and these guests are not going to be railroaded on RVT. Great stuff

  • KA

    Kevin A.

    22 12 2016 02:04

    1       0

    DATE is located on the main page... expand the selected video "more info", and look waaay down at the BOTTOM BOTtom bottom. However, I too would like to see it at the top of the video, so; pausing, navigating to another page, and pushing some buttons is not required while viewing these fantastic interviews.

  • MB

    Matthew B.

    21 12 2016 20:39

    0       0

    Man, that was heavy...duty

  • M

    Mark .

    20 12 2016 17:06

    1       0

    Scary stuff. Really good.

  • GW

    Grant W.

    20 12 2016 15:03

    30       0

    @ Tommaso I absolutely don't try to lead the people I'm interviewing anywhere - I'm as keen as you are to hear what THEY have to say and try to stay out of their way as much as I can. As for the idea that there may be a reluctance on the part of the guests on Real Vision to tell the truth, I am afraid I have to take great exception to that. There is nowhere that these wonderful minds get the chance to speak at their leisure and to say EXACTLY what they feel and they take full advantage of that to a man (and woman). Watch 5 minutes of CNBC to get a sense of what it looks like when people are led places they don't want to go or, in the case of many 'touts', aren't necessarily being truthful... I hope you won't need any more time than that to understand the difference.

  • VS

    Victor S.

    20 12 2016 13:00

    3       0

    Grant gold silver and the grains are the most undervalued assets in the world. This occurs When they are scarce relative to paper and thereby -they are a buy. Timing is a matter of when ,but its not an "IF" they are a buy.

  • an

    adrian n.

    20 12 2016 11:18

    1       0

    Gold as a dependable currency. It'll probably deflate in value at 1 tenth of the over priced assets.

  • TA

    Tommaso A.

    20 12 2016 10:45

    3       23

    i think grant always leads his interviewee where he wants to and makes them feel like they have to say what he believes, it can be a negative to getting the truth out of people

  • TW

    Tom W.

    20 12 2016 09:41

    0       0

    Excellent discussion!! I especially liked the segment exploring risks to corp bond holders.

  • MM

    Michael M.

    20 12 2016 03:28

    18       1

    Please bring back the DATE of the Interview information. It seems to have vanished of late.

  • NH

    Neil H.

    20 12 2016 01:46

    3       0

    Well worth listening to twice. Covered a lot in a short amount of time.

  • RM

    R M.

    20 12 2016 01:42

    6       1

    This critical discussion is much appreciated. Brilliant line..."Be Long the Convergence between asset prices and growth" is exactly right from a multiyear perspective. Please G&R, more discussion on how we can initiate this in a set of trades. Thanks!

  • HJ

    Harry J.

    20 12 2016 00:18

    0       0

    Love it ... great questions Grant!
    Don't know about shorting bonds but like short on S

  • SS

    Steven S.

    19 12 2016 23:49

    0       2

    They'll buy negative rated treasuries. Just like people bet on the NBA's Golden State Warriors who lost only 7 games 2015-2016. 12/19/16 William-Hill Mobile Sports App; (Overnight) Tue, Dec 20, 2016 Money Line: Utah +600 Golden State Warriors -900.

  • BS

    Bryan S.

    19 12 2016 20:04

    1       0

    Fascinating!

  • T~

    Tshort63 ~.

    19 12 2016 19:12

    8       0

    Brilliant interview. And here I thought Grant was admired only for his charm and wit. :-)

    Great interview showing collaborative thinking, always my favorite vs monologue.

  • SB

    Sam B.

    19 12 2016 19:02

    34       0

    Extremely smart guy and great interview, but I'd put myself in Grant's camp that the bull market in Treasuries isn't over. First, unlike the rest of the DMs, USTs aren't yet negative yielding anywhere on the curve. So at least in USTs, banks are still carrying positive yielding, risk-free assets at a 100% risk weighting. Secondly, and this is interesting since it seems like Mr. Schneider is very aware of this, the amount of repo borrowings and derivatives contracts that are collateralized by USTs is several trillion USD and those notional values are many multiples of the UST collateral itself. That's before even getting into the degree of collateral rehypothecation in the repo market. I have to figure that in the next crisis, pretty much no matter what catalyzes it, there will be a big time scramble for UST collateral. That should result in the UST curve flattening considerably and, in my view at least, taking a good portion of the UST yield curve into negative territory. In the next crisis, I have to think that deflationary expectations will be far worse in comparison to the previous lows in yields in 2012 or 2016. That's how I see the supercyclical bottom in UST yields playing out... a bang not a whimper.

  • dd

    darrell d.

    19 12 2016 18:45

    0       4

    I wish I could give you some pointers about the interview ... not. Great stuff.

  • DS

    David S.

    19 12 2016 18:02

    18       1

    Published on Dec. 19th. How do I find the date of the interview? Thanks.

  • rr

    rlw r.

    19 12 2016 16:44

    4       0

    So thoughtful, well done guys lots of fine ideas