The Run of the Bulls

Featuring Grant Williams

Does it seem as though everyone is bearish on Real Vision these days? Grant Williams rounds up some of the more notable bulls in the market to assess their current views and what signals they are looking for, to establish how far this rally can go and how investors should be positioned.

Published on
29 November, 2017
Topic
Macro, US Economy, Sentiment
Duration
27 minutes
Asset class
Equities, Bonds/Rates/Credit
Rating
49

Comments

  • CM

    Chris M.

    4 12 2017 17:28

    3       0

    Good interview to see different perspectives. I do agree there is an argument to be made about supply and demand of equities in that the number of outstanding shares to purchase has been declining. And this has been exacerbated by central bank buying (Switzerland and Japan in particular). So agree you have a lot of cash chasing fewer securities thus driving prices.

    The flip side is that you also have a lot of debt creation that pulls demand forward. Debt, at some point, has to be paid back. You also have money being invested in unproductive assets and financed by debt (primarily China) which impacts commodity prices and influences other economies around the world.

    We are also witnessing a number of records: negative interest rates, near zero rates for the longest period in time, record low volatility both in level and length of time, record lack of market corrections of even small proportions (i.e. 3%), lack of inflation (befuddling central bankers and everyone else) in the face of extremely low unemployment, record high valuations of stocks in some metrics (i.e. median numbers and other valuations like price to sales), record inflows into a relatively new trading security (ETFs), and record real estate values in many countries and cities around the world (fueled by mortgages at low rates). And all this is happening as economic growth is muddled and middle class incomes in the US are not rising.

    Right now, these red flags are hard for me to overcome. Still remember the crazy run-up in 1998 and 1999 as well as local real estate brokers killing it in 2006 and 2007 before losing all their business. Also, in reading financial history books, this is how the party always ends. Market participants talking up their positions, government officials stating that it will always go up, brokers recommending up markets in the next year. Do yourself a favor and look up the Barron Roundtable interviews from 2007 and 2008 to see how well "experts' predict future markets.

    So great interview. RV needs to show both sides of the argument. But my gut is still telling me this may end as badly as 1929 where wealthy families lost all their money investing in conservative stocks. Highly recommend "The Great Depression: A Diary" to get a feel for what it could look like from an attorney living in Youngstown, OH. Will give you a different perspective on market crashes and their impact on local economies.

  • ZH

    Zack H.

    4 12 2017 00:53

    1       0

    SNB is buying Apple and other equities like crazy, “come one mon” this is a bizzaro world we are in

  • ZH

    Zack H.

    4 12 2017 00:50

    1       0

    We just heard in Jim Grants interview that european pension plans are shorting vol as a fixed income strategy! That says it all, so these guys can talk about how its not bad as you would think ans th

  • RT

    Rune T.

    2 12 2017 21:27

    7       4

    Maybe RVTV could normalize the damn audio so one doesn't have to turn the TV down every time you blast small tidbits of audio in between segments only to turn it back up to listen carefully a few seconds later. It's driving me f*cking nuts...

  • BS

    Brandon S.

    2 12 2017 15:04

    2       0

    Ding Ding Ding, the top is in! Real Vision is posting bullish videos! ;-)

    Seriously, thanks for the continued great material. This is the first year in a few that the performance of my 401k has suffered as I've been pretty conservative all year. Luckily I'll be rolling it out next week and can run my IRA similar to my brokerage account where I maintain hedges and it's easier to be longer the market.

  • RA

    Robert A.

    1 12 2017 22:03

    1       0

    Excellent work RV....three well reasoned and articulated arguments for the Bullish case. Where I get REALLY confused is when I juxtapose Stephanie Pomboy’s latest slide deck (not to mention her Brother’s as well) to this video. Nobody said growing or hanging on to our money was goin to be easy. Kudos to Curator Uncle Milty for getting these views out to us to provide the balance we all need.

  • JC

    John C.

    1 12 2017 20:27

    1       0

    Interesting views and I respect the commentators. But I don't believe that if rates go to 3.5-4% (even in an orderly fashion) things will still move along like we're doing today. No way - that will simultaneously impact the housing & equity markets bigtime (not to mention the bond markets), the dollar will shoot through the roof and severely impact EM, while governments will be severely squeezed with the new increase in interest expense which will crowd out investment. I still think that if the Fed keeps doing these little rate hikes as planned (big "if") then they will once again hike us into recession.

    China is also a huge wild card - what is Ji & Co. just decided to make the hard choices in terms of stopping credit growth and slowing down their economy?

  • ii

    ida i.

    1 12 2017 12:31

    1       0

    nobody rings a bell at the top, but the VIX is back up to 11, good enough for me

  • IL

    Ian L.

    1 12 2017 12:17

    4       0

    To say QE has had no impact on equities is utter rubbish in a world in which the SNB and BOJ print money to buy equities. Secondly corporates issue cheap debt to buy their own equity. Way too smug.

  • PM

    Paul M.

    1 12 2017 10:38

    1       0

    Great overview of bullish thesis, nothing new but great to refresh the main argument points. One question I have for the bulls is how can one not see a relationship between low yields and corporate buybacks? And if this relationship is valid, surely QE helped keep rates lower in the US and stimulate buybacks. Also, no mention of SNB buying directly into US equities and/or BOJ gobbling up a huge chunk of Japanese ETF market - surely if you're a bull, this is clearly something to keep an eye on.

  • HR

    Hari R.

    1 12 2017 10:08

    5       0

    Excellent! We need more bulls on the show i.e. people who have been right in last 2-3 years in making this call. It seems RV keeps bringing hedge fund managers who have been wrong over the last 2-3 years. If a hedge fund manager is wrong on the timing for over a year or two, he is simply wrong (unless being wrong is a short-term strategy ;). Can RV try and get Keith McCullough? Thx, this was a good episode.

  • MT

    Mike T.

    1 12 2017 08:29

    3       0

    https://app.hedgeye.com/insights/63832-8-5-years-no-recession-how-much-longer-can-this-continue?type=what-the-media-missed

    When will it end? Q4/16 saw rate of change/acceleration to the upside in earnings, followed by significant momentum gains in Q1/17 which has continued to present day particularly in Tech. Possible headwind on the horizon being Q1/18 earnings YoY comparison with Q1/17 will be a real challenge. Q1/18 earnings will be reported in April 2018.

    Other than being a subscriber I have no personal relationships or anybody associated with Hedgeye.com

  • JH

    Joel H.

    1 12 2017 06:54

    1       0

    Appreciate this one!

  • RR

    Raj R.

    1 12 2017 03:56

    2       1

    Finally some bull thesis! This market is going higher guys! Trump is caving into the deep state's demands. Bannon out, tillerson out! He gets a bullish stock market and possibly a tax reform

  • PS

    Paul S.

    1 12 2017 02:20

    1       0

    Which country is 'working out from underneath its debt burden'?

  • CC

    Charles C.

    1 12 2017 00:01

    3       0

    Thanks RV for these interviews to challenge the perceptions I have. I still think valuations ultimately matter and as a long term investor I'm not willing to bet alongside them but it does at least make me think.

  • AM

    Andy M.

    30 11 2017 23:27

    9       0

    Mark Ritchie is a trader. Pure and simple. He basically espouses being a trend follower. Nothing wrong with that if it works for you and you know when to change your position. However, he should remember the old adage - Price is what you pay. Value is what you get. Valuations (at least on the US averages) do not make sense, but the trend has been up. No denying that.

  • .

         
    • PM

      Paul M.

      1 12 2017 10:39

      0       0

      He's shaking his head a lot too.

  • GH

    Gary H.

    30 11 2017 19:20

    4       1

    I just follow the central bank money printing exercise. Hard to be bearish when Central banks balance sheets are still rapidly expanding in totality. Too much money

  • VM

    Vinnie M.

    30 11 2017 17:43

    0       0

    Old saying Don't fight the FED. Went all in 2009 NOV just sold 90% of my stocks. BUT this will run till 2019-2020 than when the RE crashes its all over... Then again do we sit a Q-7 in 2019 ?

  • NH

    Nigel H.

    30 11 2017 17:39

    2       0

    Fade RVTV = Edge?

  • PB

    Pieter B.

    30 11 2017 17:35

    1       0

    Fantastic piece! I was super wrong the last years going for gold and cash. Better to follow the trend;)

  • Nv

    Nick v.

    30 11 2017 07:17

    7       1

    Dear RV team, this is great. To be a better decision maker, I have to rid myself of my own biases and consider a broad range of outcomes.
    Covering the left and right of a topic is providing a true service. This is what would differentiate RV from CNBC etc

  • SR

    Steve R.

    30 11 2017 07:04

    8       3

    Yes, I have to admit that because the vast majority of RV content this year has had a bearish bias, I too have missed out on many of the possible gains. So far, RV's track record of predicting markets has not very good, probably due to the bearish stance.

    One thing I think is relevant here is that whilst most of the RV content has been biased to the bears, and even if they are 100% right, the vast majority of US retail punters are mega bullish! So with this massive momentum behind the markets it doesn't really matter what RV 'experts' think, it's not going to make one jot of difference when 99.99% of US retailer punters are massively bullish! The US media is so overwhelmingly bullish with its FOMO mantra it's hardly surprising markets are still rising. Just an observation.

  • GC

    Gerard C.

    30 11 2017 06:11

    4       0

    They could be all wrong as of tomorrow.

  • MS

    Michael S.

    30 11 2017 02:34

    1       2

    Fantastic

  • MS

    Michael S.

    30 11 2017 02:34

    2       0

    Fantastic

  • RD

    Ryan D.

    30 11 2017 02:26

    2       0

    Little bit of a problem with Dow's QE mechanism comment. He might be correct regarding the first order effect but the second and third order effects show otherwise.
    https://seekingalpha.com/article/4114189-u-s-corporate-debt-issuance-pace-record-year
    The market has floated on the back of QE at least since mid 2011 as S&P Buybacks started hitting the 100B per quarter mark.
    https://www.yardeni.com/pub/buybackdiv.pdf
    While S&P earnings have improved marginally since 2012. This in itself doesn't mean the market will fall as $ chases financial assets in a low rate environment but it certainly doesn't mean that QE didn't light the wick.

  • rr

    rlw r.

    30 11 2017 01:47

    14       0

    Yep, this is the RVTV we all appreciate - smart guys, smart counter arguments.
    Grant is top notch with this approach. More, please sir.
    Complaining perma-bears be dammed.

  • VS

    Victor S.

    29 11 2017 22:23

    13       0

    Grant’s comments are on the mark . Sadly i’m In his position... Bulls got paid ,bears lost real $$, and caution made you lose huge opportunity. But recognize as of today
    the S&P 500 has rallied 387 days without a 3% correction the longest in history breaking 1994-95 370 days. To suggest “little risk” is really irrational .

  • JM

    Jay M.

    29 11 2017 21:59

    8       0

    Thank you sincerely for finally adding some balance to RV! Thank you also for highlighting a trader's view, as well.

  • AG

    Amir G.

    29 11 2017 21:50

    11       2

    Two thumbs up! especially the first 8-9 mins with the first guy. Interviews like this make me wanna extend my membership with realvision and boring and expensive politically driven storytelling videos (which we have been seeing a lot lately) make me wanna discontinue my membership. Thank you realvision for interviews like this, keep up the good work!
    My favorite interview so far since I joined RV last June has been with “Joe Fahmy”under the title“THIS MARKET IS MOVING HIGHER”Published on Oct 18, 2016 where he predicted everything 100% correctly to the detail. Please bring Joe Fahmy back!

  • CS

    Christo S.

    29 11 2017 21:39

    2       5

    ...they use the wrong arguments: inflation, economic cycle. and so on...
    when the market turns, it will be something very different nobody looks for (and i haven't found it either yet)

  • NI

    Nate I.

    29 11 2017 21:12

    11       0

    Great interview Grant. Like others, I would like to see you appear more often. You know you're not in Kansas anymore when the argument to buy stocks is that the alternatives are worse. I concede that it's true, but the ever growing debt on corporate balance sheets is extremely dangerous for stocks. Sometimes it's better to forego some gains and live to fight another day that to be wiped out on the reversal.

  • FC

    FRED C.

    29 11 2017 20:03

    4       0

    excellent interviews......crisp, to the point and food for thought ..........

    would someone be kind enough to answer or attempt to answer this question...
    with the huge deficits/ debt of the developed economies how or why in the world can they raise rates to a point that matters.......i.e. us gtr than 3 ........

    i think someone is going to have to put a gun to the head of the central bankers and even then .......

  • EL

    Edward L.

    29 11 2017 19:48

    2       0

    For those of us seniors perhaps one foot in each of the bear and bull camp seems sensible since we are not in a position to regenerate funds in a short term perspective. Even so the value stocks seem a safer bet on the bull camp when considering capital preservation

  • ii

    ida i.

    29 11 2017 18:55

    10       3

    This interview seems to be a contrarian signal....

  • MC

    Minum C.

    29 11 2017 18:43

    21       0

    Nice interviews. Personally I get the feeling the bears understand the bull argument better than the bulls understand the bear argument. I'd rather be a bullish trader right now than a bullish investor. It should be said that high financial market valuation creates asymmetry in the bull and bear outcomes. The question shouldn't be what is the catalyst that will change the bullish trend. The question should be how much downside is there to financial markets should that catalyst arrive. Also, instead of focusing on North Korea for the exogenous event, it might be more constructive to see the changes occurring in Saudi Arabia as something that actually has the potential to dislocate financial market trends.

  • Jc

    Justin c.

    29 11 2017 18:42

    6       2

    Good piece, but the most bullish argument was the run of bearish commentary the last twelve months from the experts on RV. Yes, even they can be faded. I can't wait for the shakeout. Will the bulls jump off the train? Will the bears jump on? Everybody has a plan until they are punched in the face. Maybe volatility will land a few punches in 2018.

  • WB

    Wes B.

    29 11 2017 18:34

    10       1

    That was great! Grant looked sick having to do this piece. It was if he was asked to interview Hitler for a piece on Great European Leaders or something. Nice attempt to maintain some balance!

  • GS

    George S.

    29 11 2017 18:20

    8       0

    Incredibly honest interview with great contributors. Love it!

  • DR

    David R.

    29 11 2017 17:50

    2       0

    Marti Zweig's "Winning on Wall Street" listed high P/E as one of his three factors to watch out for (along with deflation in the PPI and inverted yield curve) as a bear market warning sign. But I'm sure he'd agree any one of those triggers may be necessary, but not sufficient. And, as we all know from more recent history, any of those signals can be persistently flashing before the party ends.

    For extended P/E multiples, that persistence may simply end if companies are not able to beat 1Q 2017 results in 1Q 2018. If that happened, then was was old becomes new again.

    FWIW, I think there is a big advantage to being a more tactical investor who can allocate around the world and in all asset classes. You don't need to run to cash b/c you're worried about a blow up in your home country.

    So while there is appeal to just ride US equities, for me it feels a lot like FOMO (Fear of Missing Out). And I have been willing to take some gains off the table, and may take more off the table in early 2018.

  • KA

    Kelly A.

    29 11 2017 16:39

    2       1

    Confirmation of my bias!... that is always fun. So, note to self: Don't fight the tape. Pay attention. Keep some powder dry. Thanks, RV.

  • DS

    David S.

    29 11 2017 16:37

    1       0

    Most all of the benefits of QE accrued to world-wide investors. If you wish to measure QE generated inflation look at the increase in investors' inflation like P/E values, hard assets, Bitcoins, ETFs with baby boomers trying to top-off their retirement funds. As long as there is too much money chasing too few stocks, the markets can go up. Classic economics. What will Fed tapering do? What has it done in the past? How fast will baby boomers sell ETFs if they start to head south? Certainly the risks are there! Be quick. DLS

  • JL

    Johnny L.

    29 11 2017 16:24

    2       0

    very nice program. Can't agree with everything said but I will acknowledge they have it right so far.

  • MB

    Matthias B.

    29 11 2017 15:11

    0       0

    should read "and now Free Cash Flow patterns". apologies.

  • MB

    Matthias B.

    29 11 2017 15:10

    8       0

    on inflation, I am always amused that market participants view CPI and PCE as a real barometer of price levels for individuals. again case in point: here in Switzerland, healthcare premiums over the last 10 years have been going up substantially not only on an absolute level but also as a %-age of gross and disposable income to the effect that it pushes more and more families towards the threshold of becoming "poor" (which has to be taken with a grain of salt as hardness in Switzerland is surely not comparable to other places). but in the national CPI calculation, these premiums are barely reflected adequately. So, the argument that there is barely any inflation probably underrates the situation for many individuals and real disposable income is lower than perceived which will affect future economic activity as job security and wage growth are not overcompensating. So in essence, I am still of the view that this bull market in FI, EQ and real estate is rather driven by excess liquidity which found more use in assets than in the real economy thus these asset prices are not price levels justified by real fundamentals. Neither to I believe that the economic world is undergoing a paradigm shift, akin to the arguments made in the dot-com bubble. Valuation expansion vs real underlying profit growth (and not Free Cash Flow patterns) is too skewed of late. Sure markets can rally from here but on behalf of future returns.

  • EL

    Elizabeth L.

    29 11 2017 15:06

    41       0

    I want to comment on the format of this piece. I like the fact that you Grant are doing this piece. We have seen far to little of you lately. However, I can understand that you cannot spend your life in a steady state of travel. This format still allows us to get your input without traveling for the direct interview. The interviewees are allowed to answer your questions and give their points of view. Perhaps this style will work where we can still hear on a regular basis Grant and Raoul, the Founders, without them giving the better parts of their time to travel all over the globe to do sit down interviews. Still will appreciate the sit down interviews by both of you as well when possible. Am interested in the opinion of other subscribers regarding this topic.

  • MB

    Matthias B.

    29 11 2017 14:48

    20       2

    so when the Swiss Nat. Bank "prints" money and buys equities across the world, it does not count?? While the gentlemen cited some reasonable arguments, some of the points are superficial or outright flawed. When central banks change the price for money and risk and therefore distort or at least skew the investment environment to the point that investors are convinced that these institutions will keep acting as an immediate backstop (ECB July 2012, Fed 1Q13), it is easy to argue for ever rising markets. But it rather sounds to me a right for the wrong reasons. Case in point? 1Q16, it was the backdoor Shanghai accord which saved markets from a further tumble. With free money and "no" risk, it is thus easy to argue that risk/reward is skewed to the upside. Given where we are in markets, these three gentlemen could not convince me with their arguments that I would consider changing my stance and chasing this market.

  • TS

    Tyler S.

    29 11 2017 14:47

    1       1

    good stuff, so now I'm a totally confused what to do :o) guess I'll just sit here and spin some more

  • DT

    Daniel T.

    29 11 2017 13:08

    11       6

    Finally...some balance

  • SZ

    SALEH Z.

    29 11 2017 11:34

    6       9

    Finally.....some brilliance