The Data Advantage from Global FX Reserve Constraints

Featuring Luke Gromen

Luke Gromen, founder of FFTT, maps a wide range of data sources to identify economic bottlenecks and potential sources of excess returns. The movements around global FX reserves are significant, pointing to what Luke thinks will be the biggest mean reversion in 70 years. His wide ranging discussion with Michael Green spans the implications for the US dollar and China’s ultimate ambition to print yuan for oil. Filmed on February 9, 2017 in New York.

Published on
1 March, 2017
Macro, Structural flows, US Dollar
44 minutes
Asset class
Bonds/Rates/Credit, Currencies, Commodities


  • MR

    Marten R.

    10 9 2017 10:49

    1       0

    Luke Gromen, FFTT.... gold (pun intended) star for you. This is truly wonderful insight / dot connecting. just this interview is worth the price of RVTV subscription alone.
    I'm not sure exactly when this was recorded, but mate - you are 100 % right.
    Short term dollar strength did indeed take place, and that has since rolled over.
    Oil weakness did indeed take place, and that has stabilised.
    Gold has broken out.
    The Gold/Oil ratio is beginning to rise. Driven initially by Gold strength, Dollar weakness, and oil doing not much.
    Luke. You have (literally) been on the money (which is actually GOLD by the way, not worthless paper or electronic USD).
    Your trade is playing out.
    Long Gold. Short Dollar. Short Oil.
    Big money to be made.

  • BA

    Blair A.

    20 4 2017 03:07

    0       3

    Wrong. The Chinese have seen US print Trillions and use exorbitant privilege of the world reserve currency and will follow suit for the next 50 yrs. Why convert to gold when you can print and every body wants you to buy their stuff. China then India will print print print copying the US.

  • Sv

    Sid v.

    25 3 2017 20:36

    2       0

    holy cow! more of this is required.

  • JS

    John S.

    21 3 2017 06:42

    3       0

    Listened to this 3 times - it gets better every time. So many great insights

  • B

    Bojo .

    20 3 2017 08:59

    2       0

    This was brilliant and clearly explained in a humble and authoritative way. One of the best pieces so far.

  • VS

    Victor S.

    10 3 2017 15:10

    1       0

    Give Luke a gold medal for what is happening in the FX world ... excellent analysis.... only did not mention the end of the EU WHEN LePen wins?

  • MP

    Mark P.

    9 3 2017 00:26

    0       0

    This sounds like "Freegold." If you're not farmiliar with FOFOA... this sounds like that...

  • PJ

    Peter J.

    8 3 2017 20:46

    1       0

    One of the best interviews to date. Mike Green - fantastic job as interviewer!

  • RE

    Richard E.

    8 3 2017 04:07

    0       0

    Dead on , and a plausible explanation for the comments of Liran Blum on the dollar. Great work.

  • SB

    Stewart B.

    7 3 2017 23:07

    1       0

    Really enjoyed the interviewer's insights too.

  • AB

    Aaron B.

    7 3 2017 14:06

    0       0

    Bravo, informed data driven actionable insight.

  • CH

    Calvin H.

    6 3 2017 02:54

    1       0

    Great interview. Shades of Jim Rickard, Grant W and 4Turning.

  • p5

    peel 5.

    5 3 2017 15:47

    1       0

    If it happens it will be huge and will be extremely disruptive?
    What will happen to price of oil?. Will the oil powers like Saudi keep quiet?. Will they continue to sell in dollars or will remove their peg with the dollar?

  • WK

    William K.

    4 3 2017 19:51

    2       0

    There's a tendancy to think China's globalism will be a stratight line. It won't be given debt and/or armed conflict

  • WK

    William K.

    4 3 2017 19:50

    0       0

    Why would anyone exchange oil for yuan? Ask the AIIB.

  • db

    don b.

    4 3 2017 00:21

    0       0

    Silver worked pretty good for a long time in America.

  • ZB

    Zachary B.

    3 3 2017 22:26

    23       0

    I could watch Mike Green brainstorm all day. It was clear that Green stepped off the gas a bit when he clearly brought up knock-on effects that Luke hadn't fully thought out. I totally agree with Luke in that the break in correlations between the dollar and treasuries, among other yield derived assets, is alarming and that divergence must revert somehow. The question is how that reversion takes place - whether it's the dollar that meets the yield assets or vice versa - and when such a reversion takes place. I can also agree with Luke's construct of an ultimately weaker dollar vis-a-vis a wholesale change in how leading markets attain power in a more heterogeneous, multi-polar world. A global sea-change to a "my dollar, my problem" mercantilist paradigm seems as much or more plausible than another fiat taking the role of world's reserve currency - specially without a low debt-burdened alternative to the treasury market waiting in the wings. The gaps, however, remain in just how we get there; but now I'm splitting hairs, and I can't blame anyone for not having that level of clairvoyance. I do give Luke tons of credit for wrapping his mind around this idea of a new global monetary paradigm: I wouldn't have gotten there myself.

  • TY

    Tyler Y.

    3 3 2017 17:19

    18       0

    The one thing (IMO) that RV does better than anyone is that RV interviews intelligent people with intelligent interviewers.

    The back and forth about the $6.6B on Energy Leases from XOM landmen is a perfect example why I am such a fan persistent fan of RV.

    Keep it up, RV!

  • JH

    Jesse H.

    3 3 2017 14:24

    5       1

    Fascinating - some excellent points made and very thought-provoking. I do think that this interview probably overestimated the intelligence of global policy-makers and government officials. But, nonetheless a fantastic interview.

  • LN

    Lucy N.

    3 3 2017 13:23

    4       0

    incredible interview

  • RA

    Ricardo A.

    3 3 2017 12:14

    6       0

    Watched this 3 times to fully absorb all the info. The world economy is indeed complex

  • SP

    Steve P.

    3 3 2017 05:59

    25       0

    That is the most profound video RV has put out yet. What an absolutely stunning dissection of the current global trade and currency imbalances thus associated problems we now face. Tthe suggested possible methods put forward for various sovereigns to mitigate the coming reckoning are rather sobering, but the one trade that keeps surfacing with a very high pay off probability is gold. 3000 years of providing financial system stability will likely stand the test of time!! .

  • GG

    Gerald G.

    3 3 2017 04:00

    6       18

    I thought this interview was fascinating and thought provoking but, after taking some time to process and mull it over, I realized there was at least one relatively absurd point made. Michael Green postulated that the border tax proposal was designed to pre-empt an inevitable confrontation with the Chinese and take the fight to them on American terms. Is he actually suggesting that Trump, the guy who didn't even understand the nature of the "One China Policy" and who was forced to backtrack on his initial tactics, all of a sudden has a developed a highly sophisticated understanding of China and their long term master plan? Is he suggesting that Trump, the guy who doesn't even bother to get properly briefed on intelligence reports, is now all of a sudden highly knowlegeable about long term Pentagon theories? Riiiiiight.....I guess people will believe anything in a bizarro land where Trump is going to magically conjure wealth and prosperity out of thin air and without any price.

  • JH

    Joe H.

    3 3 2017 03:30

    7       0

    Who are the three down votes? What's not to like about this.

  • DM

    Daniel M.

    3 3 2017 00:09

    6       0

    Great interview! Love Mike Green

  • GC

    Gary C.

    2 3 2017 22:29

    9       0

    This was a great extention of the discussion Grant W had about Gromans brilliant description of the Yuan/Gold convertibility for commodities like oil in TTMYGH

  • AC

    Andrew C.

    2 3 2017 21:15

    2       0

    Brilliant interview. One of your best.

  • jh

    john h.

    2 3 2017 20:19

    2       0

    Good discussion

  • BG

    Brad G.

    2 3 2017 19:18

    1       0

    Interesting how this process of restructuring compares with Simon Hunt interview.

  • IO

    Igor O.

    2 3 2017 19:13

    3       0

    All pieces of puzzle nicely put together.

  • TS

    Tyler S.

    2 3 2017 19:06

    15       0

    The more I watch real vision the more informed I feel and the more I want to dig a giant hole and hide...

  • AK

    Ai K.

    2 3 2017 18:45

    13       0

    One of the clearest/best interview on dollar! Thank you!

  • ag

    anthony g.

    2 3 2017 18:45

    0       1

    Interesting without a doubt. Not sure if I am certain of the implications however.

  • RC

    Ryan C.

    2 3 2017 18:33

    1       0

    What a thought provoking outlook on China and the financial system. Will definitely be watching this one again.

  • WP

    William P.

    2 3 2017 14:29

    12       0

    Thoughtful. And, Mike, and you do a wonderful job asking questions.

  • DS

    Darryl S.

    2 3 2017 13:24

    1       0

    Thanks. Clear format. Props to the IV guy and a message I have seen before but very well articulated here

  • GA

    Giedrius A.

    2 3 2017 13:21

    1       0

    Great mind, absolutely grateful to RV team.Thank you

  • VK

    Viresh K.

    2 3 2017 12:02

    1       0

    I mean with 34 minutes to go!

  • VK

    Viresh K.

    2 3 2017 11:54

    3       0

    Michael's explanation around 34 minutes was fantastic.

  • DF

    Dominic F.

    2 3 2017 09:59

    13       0

    I have been following Luke on Twitter and it so so nice to see him speak about his ideas in a long form interview.
    Thats what makes RVTV Great... again ;-)

  • DT

    Dave T.

    2 3 2017 09:19

    8       1

    Absolutely fascinating! But now I want to know more. The interviewer touched on it when he mentioned that all currencies will need to be revalued to gold (in the eventuality that the underlying thesis of the interview is correct).
    Will States try to confiscate gold to build reserves?
    My gut feel is that there would be a window of opportunity after the revaluation of yuan/gold in which to profit. But the window would be slammed on some fingers.
    And what are the implications for gold miners?

  • TT

    Timothy T.

    2 3 2017 06:59

    4       0

    As it becomes obvious to USD holders on the lack of choices the US has, so will be speed at which USD is divested from reserves. Illuminating interview

  • MC

    Minum C.

    2 3 2017 06:07

    3       0


  • WS

    William S.

    2 3 2017 04:21

    3       0


    Two impressions: 1) There is no outcome that does not include the dynamic float of the gold price against oil -- and by extension, the USD; 2) If I understand the implications correctly, I cannot see how gold does not ultimately find a price well in excess of $50,000/oz.

  • GG

    Gerald G.

    2 3 2017 03:20

    3       0

    The question about implications to the dollar where addressed. I wish implications to gold prices in dollars would have also been explicitly addressed. I think the implication of inflating gold to 400 barrels and ounce suggests gold in dollar terms goes up but after that interview I'm not sure I understand anything anymore ;^)

  • GG

    Gerald G.

    2 3 2017 03:13

    10       0

    I just love it that I can watch a RVTV interview to kill some time and end up seeing something that gives me a whole new perspective. Thanx Real Vision. Keep up the great work!

  • HJ

    Harry J.

    2 3 2017 02:58

    15       0

    Expand the conversation and bring both
    Of them back soon!!

  • js

    jacob s.

    2 3 2017 02:32

    22       0

    Damn. Mike is sharp AF. What a good interview.

  • RB

    R B.

    2 3 2017 02:10

    2       0


  • DG

    Don G.

    2 3 2017 02:06

    2       1

    I really don't know how scared to be.

  • RV

    Richard V.

    2 3 2017 01:13

    3       0

    What are the implications of a universal currency inflation on the US economy?

  • PR

    Peter R.

    1 3 2017 23:49

    33       0

    A fascinating conversation between two intelligent and informed contributors. The best explanation of the dollar trade and its impact on potential changes to terms of trade. RVTV outstanding again.

  • WB

    William B.

    1 3 2017 23:38

    2       0

    what a great interview

  • JS

    John S.

    1 3 2017 23:32

    9       0

    Fascinating discussion. So much to think about.

  • SS

    Steven S.

    1 3 2017 23:20

    21       1

    I just wish Michael Green would have elaborated more on the views for a new neutral global currency. Ended it at the start of the most interesting point. Gold or SDR mix or both? why and why not.....great interview and content as always!

  • DM

    Dom M.

    1 3 2017 22:40

    8       1

    end of Pax Americana