Opportunities in a Growth-Starved World

Published on
May 23rd, 2019
Duration
34 minutes

Opportunities in a Growth-Starved World

Investment Ideas ·
Featuring Jay Pelosky

Published on: May 23rd, 2019 • Duration: 34 minutes

When the Fed pivoted dramatically earlier this year, markets rallied aggressively. Jay Pelosky, TPW Investment Management co-founder and CIO, thinks that the rally is over because the US economy has yet to bottom. Instead, he sees Europe and emerging markets bottoming first, giving equity investors a great opportunity to re-allocate assets. Pelosky joins Real Vision’s Ed Harrison to outline his thesis that “lower for longer” growth will yield investment opportunities in fixed income, currencies and commodities. Filmed on May 20, 2019 in New York.

Comments

Transcript

  • JO
    Johnny O.
    9 June 2019 @ 06:29
    This is certainly interesting, because different. As always, the bullish view requires minimization of concern regarding the massive debt overhangs everywhere, starting with and especially in China where increasingly unproductive debt is starting to bite corporates and banks. However, if China is really "bottoming" and then up, then maybe the rest of the narrative can apply. Struggling with the idea that industrials are on a different cycle and early into it while the rest of the bull market is admitted to be mature: when I look at XLI relative to other sectors every 200 days from 1990 to now, industrials seem well correlated with the rest of the equity market.
  • DH
    Dean H.
    28 May 2019 @ 11:17
    So let's call a spade a spade here. No central bank jawboning or stimulus, no new highs. If you're a bullish investor that's all that matters these days. Everything else has been priced in. That's the sad truth of global markets. Business fundamentals don't matter, passive investing floats all and equity correlations get closer and closer to 1. The Fed attempted to raise rates too late and failed. Meanwhile debt grows and so do interest servicing costs, draining future growth and prosperity. Debt per U.S. taxpayer is currently $181k according to usdebtclock.org. Are you good for your $181k? The notion of MMT giving a free lunch is a means for policy makers to extend the status quo. It means they won't have to do any significant structural reforms. Monetary policy now prevents fiscal responsibility. Surely there will be a Minsky moment where people realise the con for what it is.
  • NR
    Nelson R.
    26 May 2019 @ 14:10
    Great presentation, agree 100% U.S dollar is overvalued.
  • OC
    Otto C.
    24 May 2019 @ 23:08
    I don't buy that EM have bottomed just because the US is decelerating. Whenever US decelerates, the rest of the world follows. This time we have both China and US decelerating so the implications for EM are not optimistic.
  • DR
    David R.
    24 May 2019 @ 15:13
    Pretty much confirms my views already this year, which may or may not be good.... US growth and performance will lag the world, so go international, USD going down, commodities up, potential for a US tech wreck (especially if China sanctions REM exports to US as Trump is tasking for). And the bilateral relations between US-China are the full monty but Trump will blink despite his bluster because he's up for election in 17 months. Therefore, no market crash. Not good overall in US for the rest of this year but as Jay says, US gets better later, following pickups in Asia then Europe then US in time for Trump to get re-elected (just sayin, NOT picking sides in the election).
  • DS
    David S.
    23 May 2019 @ 21:07
    It is funny how some commentators, not RVTV, think that Chinese companies will not be able to compete with other Asian countries because of the tariffs. A Chinese company can easily set up business in a non-tariff country and ship its production to the US from that country. The corporation could also manufacture in China, sell to a sister company in Thailand and ship tariff free to the US without being caught. For many years Chinese companies exported Mainland China products and put “Made in Hong Kong” as the point of origin. The reverse is also true. US soybeans can be transshipped to China. There is no “Grown in the USA” on a soybean. The reasons for the trade dispute are apparent, but the strategies to solve them are certainly not. DLS
    • DP
      Devraj P.
      24 May 2019 @ 02:10
      If it’s so easy for folks like us to see it do you think administration didn’t consider how to curb those tactics 😂
    • DR
      David R.
      24 May 2019 @ 14:18
      In fact, US fishermen were/are still selling lobster & fish to China via first shipping and repacking in Atlantic Canada. Perhaps this is why they're still doing ok even while most US farmers are going bankrupt or are already bankrupt.
    • DR
      David R.
      24 May 2019 @ 14:20
      I could add that US farmers cannot copy US fishermen because Canada strictly exports those items only through its government marketing boards to which US producers have no access whatsoever.
    • RM
      Ryan M.
      26 May 2019 @ 01:47
      Spot on. Good article in FT about this. Vietnam's trade surplus with US was up +45% yoy in 1Q. https://on.ft.com/2wbf704
  • FA
    Frank A.
    23 May 2019 @ 19:49
    Don't think these old metrics of value are of any use today. Markets are disconnected from the underlying economies, especially the US but the rest of the world is in dire shape w/o the US and its $$
  • DS
    David S.
    23 May 2019 @ 18:51
    Excellent follow up interview with Mr. Pelosky. Mr. Harrison does a great job. The China/US trade talks are accelerating the Tri-Polar World thesis, as I do not think that negotiations will succeed in the next two years. My major takeaway is to invest in companies that can make money in all three areas, miners being one example per Mr. Pelosky. I normally do not buy ETFs but will look for global companies hopefully paying a dividend. DLS
  • GR
    Garey R.
    23 May 2019 @ 15:16
    Thank you Mr. Pelosky for taking the time to share your perspectives on the condition and potential direction of many global asset classes. It is always helpful to understand how others view events and circumstances within the financial industry. However, could not help but notice that you did not elaborate on the underlying structural causes of the global "lower for longer growth" predicament. This seems to be missing in many of the bullish presentations of recent and I find it odd that within many presentations the underlying bullish case is somehow pinned to expansion of central government stimulus as the catalyst for maintaining and/or sponsoring growth. This seems to create a void in the thesis by ignoring the global historical trend line of lower or even negative interest rates within developed economies. I would believe that if charted, the stimulus created by CBs lower interest rate policies (to steal a Jerome Powell term) "is transitory in nature" thereby leaving future markets vulnerable to needing greater levels of intervention with the effectiveness of each activity diminishing notably. I would definitely enjoy hearing his perspectives on the actual root causality of the "lower growth for longer view" and how the stimulative interventions by governments actually structurally resolves what by many measures is a potential "systemic risk" being ignored by asset managers and the general markets.