Long Gold, Short Renminbi

Published on
August 19th, 2019
Duration
30 minutes

Long Gold, Short Renminbi

Investment Ideas ·
Featuring Marc Chandler

Published on: August 19th, 2019 • Duration: 30 minutes

Marc Chandler, chief market strategist at Bannockburn Global Forex, returns to Real Vision with a warning that the dollar appears to be topping out. In this interview with Ed Harrison, Chandler also touches on the euro, the British pound, and the overall macro factors he sees driving markets today. He also provides his thesis for going long gold, and short the Chinese renminbi. Filmed on August 13, 2019 in New York.

Comments

Transcript

  • MF
    M F.
    28 August 2019 @ 12:09
    Good interview...I like Ed Harrison's style...inserts well-informed questions, but lets the speaker get on with it without interrupting or trying to prove his own point ...Good job Marc, and especially Ed.
  • MC
    Mathew C.
    22 August 2019 @ 04:58
    “I take China at their word” “have to assume they are rational actors” - rational in what sense? We’ve been saying to clients for years that in China political outcomes mean more than economic outcomes and therefore what seems rational politically can often appear irrational economically, this has not changed. This is the problem with drawing inferences based of “what would I be doing in their scenario” without fully appreciating the political tensions going on behind the scene in China as many elites with competing needs clash with one another.
  • CL
    Chris L.
    21 August 2019 @ 14:44
    Again, not really much to take from this. The weakness of the RMB is exactly why I'd worry about a prolonged drop in gold. China's financial sector is the most levered in the world. A weak RMB absolutely destroys Chinese financials. Fundamentally, that's true; but also feel free to overly CNYUSD and CHIX (Chinese financials ETF). What do you think China did when they were struggling in early 2018? Sold gold. Collateral was called in then dumped to recoup. What do you think Turkey did while the lira was imploding to protect their banks in AUg 2018? Sold gold. You have to be astute to determine what its a structural move and a sentiment move. This current gold move is almost all sentiment. Look at treasuries, corp. debt, gold, HOUSING, all breaking out with the purpose of front-running the Fed. 2007: Nobody called for recession. 2019: Everybody calling for recession.
  • JW
    Joel W.
    20 August 2019 @ 18:42
    Thanks Brian T. for the cogent commentary. In addition, I am perplexed by Marc’s 20% target for gold. Why 20%? Why not 5%, or 50% for that matter? I don’t disagree that gold could run to 1700 in the next few months, but I’d love to hear whether Marc thinks it will hold, roll over, or rally from that level, and why.
  • BS
    Bill S.
    20 August 2019 @ 01:23
    EU will not blow up ..it will restructure ala LaGarde....
  • RE
    Renato E.
    19 August 2019 @ 18:04
    On the next financial crisis, the EU will either blow up or take advantage of it by increasing its power. The ruling class doesn’t want change, but they will get it. More and more people have enough of this bureaucratic monster. This will not end well.
  • BT
    Brian T.
    19 August 2019 @ 16:54
    I'm not impressed. The big challenge I have with his argument, which is obviously contrary to Raoul's (and I very much appreciate RV having alternative points of view), is he (1) doesn't address the built up "short dollar" $13B position outside the US, (2) doesn't discuss the competitive rate / stimulus between various CBs that make it hard for the US to devalue and (3) does note make a compelling argument that the Euro will appreciate, especially in light of the coming banking crisis (even if you don't buy Raoul's views on the chart, it's just logical that banks are not going to be profitable with negative rates. He also doesn't refute the argument that the US is the cleanest shirt in a dirty laundry - he admits EU is weak (Germany recession), etc. He admits China is short dollars. And, he admits that US Treasury rebuilding their cash reserves drives up basis point swap for currency in the 2011 event - but does not talk about the near-term large rebuild in 3Q/4Q 2019, and how it could drive much higher dollar as a result. In short, he doesn't address the reasons for the dollar-bull thesis head-on. I'm still with Raoul and Brent on dollar bull spike thesis, even though it may not last long. I just don't agree with his position that the dollar is near ready to roll over here - it's not compelling to me, his logic is weak. This doesn't mean he won't be right on the outcome, but if he is, I would argue it will be because of luck, not because he has the right supporting logic.
    • BM
      Beth M.
      19 August 2019 @ 21:57
      I concur Brain T. Why didn't he properly address the euro bank crisis? On one hand he is essentially admitting everything is interconnected, but then doesn't address the knock-on effects of euro bank's negative interest rates rippling through the world economy.
    • EK
      Edward K.
      19 August 2019 @ 21:59
      Thoughtful rebuttal. Am inclined to stay on your side of the boat but interview was intriguing.
    • RA
      Robert A.
      20 August 2019 @ 00:52
      I concur, this was an excellently reasoned and articulated rebuttal, Brian. I also very much second the notion that RV has presented a credentialed guest with an opposite view to Raoul’s strong dollar thesis (which seems to be a minority view just now). Just the fact that HIS arguments don’t seem to quite hold up helps us evaluate which side of the Boat to be on. RV is NOT an echo chamber.
  • T~
    Tshort63 ~.
    19 August 2019 @ 16:46
    Great interview, accessible and logical path. Nice job guys.
  • SB
    Stephen B.
    19 August 2019 @ 15:10
    Great guest, well interviewed.
  • SG
    Sven G.
    19 August 2019 @ 11:51
    very interesting perspective(s) thanks Marc !
  • DS
    David S.
    19 August 2019 @ 07:53
    Another great interview, but I am somewhat confused at some of the linkages. I will watch it again. Thanks Ed as always for the takeaways at the end. At this point I do not see why the dollar should rollover as the carry is positive, but Mr. Chandler sees and knows a lot more than I do. DLS
  • Hv
    Hannah v.
    19 August 2019 @ 05:16
    Great content. But I gotta say.. that couch was made for action.
    • DT
      Dave T.
      21 August 2019 @ 03:48
      Past tense perhaps. That chinchilla looks sus