Foresight from Present Insight

Featuring Daniel Want

Daniel Want, CIO of Prerequisite Capital Management, is a master of interpreting liquidity trends and his last presentation on the shortage of global collateral in the economy blew Real Vision viewers away. Daniel contends that the popular reflationary narrative is transitory and the falling trends in productivity, liquidity and velocity provide greater insights into the contracting global system, incapable of creating net high quality assets. Filmed on March 21, 2017 in Sydney.

Published on
4 April, 2017
Topic
Macro, Financial System, Structural flows
Duration
73 minutes
Asset class
Equities, Currencies, Bonds/Rates/Credit
Rating
32

Comments

  • tw

    tam w.

    11 6 2017 13:37

    0       0

    A loan creates a deposit ! Whatever friction there is currently in that process, just wait for a cashless society.....frictionless money creation. The self reinforcing upward spiral will push asset prices to the moon...and we'all be rich. No one will need to work as the refinancing on our houses will create spending and more deposits so more loans and higher assets values. Etc.
    Governmanet-character- incentives....classic line Daniel. Loved it.

  • JH

    Jesse H.

    13 5 2017 13:30

    1       0

    I particularly like his comment, "If character is lacking, then we are primarily going to be motivated by incentives." Absolutely - this is one of the chief problems with incentive-based economic policies, I believe -- we focus on an Adam Smith style approach with little regard for character development, or indeed, an economic model that may lend itself to such development.

  • JH

    Jesse H.

    13 5 2017 13:00

    0       0

    Excellent - lots to digest here, and I happen to fully agree with his general message.

  • TL

    T L.

    19 4 2017 10:30

    3       0

    very insightful follow up to the previous presentation. Daniel, is there a way to receive your writings?

  • MY

    Madjid Y.

    16 4 2017 13:02

    4       0

    I had to take my time to watch and read the transcript, amazing insight into the Eurodollar market, liquidity and capital flows, helping fill the gaps in my understanding.
    Thank you both, it will be great if next time you can cover the role of the Yuan and the BRICS Clearing Account in Local Currency as a substitute to the dollar, and the possible easing of dollar shortage.

  • CB

    Conor B.

    13 4 2017 20:52

    2       0

    I think he spoke for 32 minutes without taking a breath.... impressive

  • GS

    Gordon S.

    12 4 2017 14:04

    1       0

    First of all I want to join previous commentators in saying that I’m deeply humbled and thankful to be able to listen to such an amazing interview, now easily my favorite one on RV. One of my other favorite’s is Michael Burry’s UCLA commencement speech, where at one point he describes his thirst for knowledge leading him to travel each day to the nearest town to pick up a copy of the Wallstreet Journal just to be able to check stock prices. We’ve come a long way and thank you Daniel and of course also RV for lowering the barrier of entry to knowledge so dramatically. Also thank you RV for finally unlocking the reply function and thank you Daniel for making ample use of it! I personally would love to know more about your thoughts on innovation? You quoted: “necessity is the mother of innovation”, which unfortunately is far from being a proactive approach I know many people would like to see, especially here on RV. Do you see innovation as being maybe one of the factors possibly delaying indefinitely the end game? How do you think does innovation (maybe including financial innovation) affect your mentioned aspects of liquidity? Probably too broad of a topic for a reply here, but I would appreciate it, if you could touch on that in a possible future interview!

  • TO

    Tim O.

    11 4 2017 15:44

    2       4

    Ten minutes of good content inflated with an hour of jargon.

  • jh

    john h.

    10 4 2017 16:36

    1       0

    I read the transcript several times as I thought there was a lot of very good material there. I definitely want to hear from him regularly.

    One area that I wished had been explained better was the idea of velocity as a measure of confidence. I can see, for instance, where an increase in debt used for buybacks would result in lower velocity but not because of less confidence but because the benefits are flowing disproportionately toward a small segment of the populace (those who own stocks).

    Another example would be balance sheet activity at banks where we might detect slower or lower levels of lending despite an increase in the M2 money supply. By the same token, such a decline in velocity could be the result of regulatory changes and not in confidence in the borrowers or the economy or anything of the sort.

  • RA

    Robert A.

    10 4 2017 01:57

    2       1

    First, Daniel I think I can speak for all of us in thanking you sooo much for taking the time to respond to some of our comments! Second, Boy Howdy I think you nailed it---if you take "character" out of it, incentives are indeed all that remain to drive decision making----why not borrow the money if you know you have no intention of paying it back and you will never be required to do so? Lastly, even if you are correct with regard to the headwinds for Gold short and medium term due to the US $ liquidity issues driving the US $ up could the following thought provide more of a bid for the dollar than you might think? That is, through behavioral psychology reflextivity if lots of perceived to be smart investors buy Gold and their disciples and followers buy Gold and then their friends who know they are smarter than they are buy Gold and then their friends and followers buy Gold and then common Portfolio construct indicates that one should own 10 % Gold and then everyone with assets buys a bit of Gold to stabilize and diversify their savings couldn't a case for Gold holding its value be made-----even short to medium term? Couldn't we lambs get lucky for all the wrong reasons and be in a little safer position when the LONG term eventually hits?

  • CR

    Chad R.

    9 4 2017 03:50

    0       0

    First viewing - thoroughly enjoyed. Second viewing made me realize this interview was conducted off-the-cuff. What a shame. So much depth shown here from seemingly random tangents, but in the end, the conclusions were too broad to really action. And, by action, I mean useful tools to dig deeper on. Granted, the log scale of gold vs. the case shiller index was illuminating - to say the least! Always hungry, Mr. Want seemed like the perfect subject to take us deep into the valves of the monetary system and it made me feel that the interviewer wasn't up to snuff to take us there.

  • DG

    Daniel G.

    9 4 2017 02:06

    8       0

    Could i please compliment Grant for letting Daniel just run with his ideas? This is why subscribers value your service - guest original thought. I love Grant and Raoul's insight, but the content of ea

  • GS

    Greg S.

    8 4 2017 03:46

    4       0

    We were all better off when investment banks were separate from deposit banks and the investment banks were general partnerships. Each partner thoroughly vetted any investment idea because ultimately each partner owned the risk that was created.

  • JV

    JACK V.

    7 4 2017 14:04

    10       0

    "I don't have the disadvantages of a university education." Best Realvision quote of all time.

  • HS

    Hubert S.

    7 4 2017 10:15

    2       0

    Daniel,
    thanks for this deeply honest conversation, I am really grateful for your search for truth from first principles beyond those academic follies.
    Two things. First, I believe the people really in charge understand the system better than the puppets in executive positions. So as the endgame draws closer, keep an eye out for game breakers like war, martial law, capital controls, and special taxes.
    Second, you may find a similar spirited and outspoken soul in Prof Richard Warner, from the University of Southampton - which would be a great guy too for Grant to interview btw.

  • JM

    John M.

    7 4 2017 02:53

    2       0

    I'm only half-way through, quite compelling. A question though on the comment that the system is 'untethered'.

    Since 'untethering' USD from Gold (Nixon Gold Shock) there is a view that USD was subsequently 'tethered' to Oil. That is, considerable portion of energy trades are done in USD (e.g. Saudi/Iraq oil exports, etc). Given global demand for energy and oil, this 'tethering' underpins demand for USD. Any move to change this 'tether' could, of course, affect demand for USD. (I wonder, for example, whether this is what Simon Hunt was vaguely alluding to before Xmas, when he projected his non-consensus view of a fall in USD).

    Grant / Daniel / RV subscribers - I'd welcome views on the underlying premise of this - please feel free to shoot it down....

  • RI

    R I.

    7 4 2017 01:23

    1       1

    I would give him my momey if it wasnt for his blind belief that gold's fate is tied to the USD. Both are going up together and with velocity sooner than later.

  • SL

    Stuart L.

    7 4 2017 00:44

    2       0

    Brilliant interview. Very good explanation of credit and liquidity creation initially by the private banking system. Then when confidence in real economic prospects declines and a credit/liquidity crisis occurs, the central bank liquidity/credit creation steps in to keep up asset prices. This is then likely to lead to increased money velocity and inflation and a currency crisis. So where is Japan on this journey? If Daniel, Grant or anyone else has any views I would love to hear them.

  • ww

    will w.

    6 4 2017 04:29

    2       0

    What a tragedy that the CBs don't - & presumably WON'T? - pay attention to the wisdom of Daniel, Jeff Snider, Michael Green, Raoul, Grant, & at least about half-dozen other of the top RV guests.

    Is there ANY way to get any of those CBs to take heed? It would save us ALL a tremendous amount of pain & loss.

  • an

    adrian n.

    6 4 2017 04:09

    6       0

    There was more intelligence in that interview than all the indoctrinated PHD's at the US FED.

  • TS

    Thomas S.

    6 4 2017 03:44

    3       0

    Governments and Investment Banks have been creating risk and then not owning that risk for a few decades. Passing on the bill to the future. That sums up the world right now

  • DS

    David S.

    6 4 2017 01:29

    2       0

    Keynes theory prescribed paying all stimulus back as the economy expands. Politicians just keep spending hoping for a free lunch and to get re-elected. DLS

  • RC

    Ryan C.

    5 4 2017 21:51

    8       0

    What a fascinating interview, it's so helpful to hear some unique and insightful perspectives like this. Daniel, I would love to hear more about the dichotomy of how liquidity flows will effect P/E multiple, the dollar and precious metals.

    My face looked like Grant's face the whole time I was watching this. Please bring him back to RVTV soon.

  • IZ

    Ileana Z.

    5 4 2017 21:33

    3       0

    Wow! So refreshing to hear such intellect and critical thinking delivered in such a humble, thoughtful way! Integrity...hard to find these days. Thanks RVTV for helping us navigate our troubled times. x

  • DM

    Dom M.

    5 4 2017 21:19

    0       0

    confidence shifting from public to private.

  • HF

    Hamish F.

    5 4 2017 20:34

    2       0

    Daniel has an absolutely brilliant mind and it is fascinating to learn about his processes. Great interview. Thank you Daniel and thank you RV

  • DC

    Dale C.

    5 4 2017 18:56

    4       0

    All the great macro thinkers seem to be saying the same thing. Reminds me of a 1960's movie "Something Wicked This Way Comes". I understand that no one wants to predict it but it would be interesting to hear their thoughts about "when".

  • DM

    Daniel M.

    5 4 2017 16:48

    2       1

    Sorry to place this comment here as it has nothing to do with the interview. But I've been listening to your podcast and sometimes there is music when people are talking. It's very distracting and definitely takes away from being able to follow what they are saying.

  • ss

    shaun s.

    5 4 2017 15:02

    15       0

    Daniel..thank you so much for taking the time to reply to the comments. Really helps me understand better.
    Cheers!

  • ag

    anthony g.

    5 4 2017 14:44

    3       0

    Good to hear this. Hopefully real vision
    can talk with him again in about 6 months ?

  • LN

    Lucy N.

    5 4 2017 14:26

    1       0

    Outstanding

  • FB

    Florian B.

    5 4 2017 11:55

    3       0

    very nice interview, really good stuff. When you say the price of gold is reflected in the excess liquidity of the USD, does that imply the assumption that gold and the USD are(will stay)inversely correlated?

  • CD

    Chris D.

    5 4 2017 10:26

    4       1

    I like it. Don't agree with him on everything though. For instance, there is nothing "organic" about the regular smackdowns in AU/AG - I wish we has a free market..

  • ML

    Michael L.

    5 4 2017 04:58

    3       0

    around 13:00 he seem to be saying a lack of liquidity = higher P/E ratios. This is completely unintuitive. Am I misunderstanding this?

  • js

    jacob s.

    5 4 2017 04:38

    0       0

    Amazing.

  • RW

    R W.

    5 4 2017 03:42

    22       0

    He doesn't have the "disadvantage of a university education"
    How can you not like this bloke

  • GS

    Greg S.

    5 4 2017 03:22

    5       0

    Reminds me a lot of a fellow Aussie who is no longer in the game, Bill Buckler, who produced the Privateer Newsletter. If he is still knocking about, he would be a great potential interviewee.

  • GM

    Greg M.

    5 4 2017 03:07

    4       1

    Brilliant interview, a great mind that hasnt been polluted by a university "education". Well done RV

  • MP

    Mark P.

    5 4 2017 01:56

    8       0

    RVTV outdoes itself again. Brilliant. Another watch to capture even more. Nothing else like RVTV out there. Thanks again.

  • VS

    Victor S.

    5 4 2017 00:00

    4       0

    Although Daniel did not say anything SPECIFIC ON A PREDICTION you have to like his manner of thought !

  • GG

    Gerald G.

    4 4 2017 23:58

    3       0

    I agree 100% with the premise that, essentially, the root of all evil is the belief in the concept of a "free lunch" but... I sure wish Mr. Want would have explained how the unravelling of all of this is going to result in a perpetually strong dollar and weak gold. Doesn't the recognition that the entire system is "untethered" (and that capital preservation is key) imply that gold is a natural safe haven?

  • EK

    Emil K.

    4 4 2017 23:57

    5       0

    Tour de force. Tour. De. Force. Looking forward to a mid-year video update. Will put up funds if necessary to sponsor.

  • IJ

    Ian J.

    4 4 2017 22:51

    4       0

    Highly recommend watching this in tandem w/Dr Lacy Hunt's interviews. They have different approaches but come to the same conclusion.

  • CD

    Charles D.

    4 4 2017 22:44

    5       0

    Hmmm....societal debt larger... productivity lesser... less monetary velocity means global economic contraction...which results in diminshrd confidence...Prescription....heads up everybody.

  • dd

    darrell d.

    4 4 2017 22:38

    6       0

    Umm ... What he said.

    This will be a necessary rewatch 1,2 3 times.

  • cb

    christian b.

    4 4 2017 22:10

    1       0

    great. comprehensive , clear view point.

  • SB

    Sam B.

    4 4 2017 21:07

    34       0

    Love it. Another guy who appreciates the wholesale/interbank/eurodollar system and the enormous impact of its dysfunction. Please keep bringing on the Wants, Sniders and Mylchreests of the world to educate us on this topic... one which nobody in the mainstream ever even briefly mentions. If possible, I think a Zoltan Pozsar interview would be a huge coup in that he best explains the nuts and bolts elements of the wholesale banking system.

  • MF

    Martin F.

    4 4 2017 20:10

    15       0

    Amazing!! The most passionate attempt to make sense of all the madness surrounding us. Even for RVTV standards your presentations are outstanding! Congratulations!! Hope to see you again!!