Playing the Powell Pivot

Published on
May 29th, 2019
Duration
32 minutes


Playing the Powell Pivot

The Exchange ·
Featuring Daniel Alpert and Peter Boockvar

Published on: May 29th, 2019 • Duration: 32 minutes

At the end of last year, the Federal Reserve was forced into a major pivot on monetary policy. The question on everybody's mind now is what this means for the U.S. and global economy as well as asset markets. Real Vision's Ed Harrison joins Daniel Alpert, managing partner of Westwood Capital, and Peter Boockvar, chief investment officer at Bleakley Advisory Group, to discuss both why the Fed changed tack so aggressively, and where we are headed for the rest of 2019. Of particular concern is whether we will see a recession in 2019 or 2020, and whether U.S. equity markets will continue to outperform the rest of the world. Filmed on May 21, 2019 in New York.

Comments

Transcript

  • CL
    Chris L.
    1 June 2019 @ 14:48
    christ it's now stocks that made Powell flip. it's the credit markets, particularly junk. this fed into stocks but let's get it straight in order to see things more clearly
  • SA
    Stephen A.
    1 June 2019 @ 12:25
    I enjoyed this. The Daniel Alpert guy tends to throw massive bombs with a really soft voice. He was like "Italy will have to leave the Euro" as if that is something that happens every day. Italy leaving the Euro is a cataclysmic financial event that is at minimum 10 times bigger than the Greece crisis. Italy has 1 trillion of debt maturing in 2019, 3 trillion in debt that matures in 2020, 1.3 trillion in 2021.
    • DS
      David S.
      2 June 2019 @ 01:30
      Stephen A. - You are absolutely correct and so is Mr. Alpert. Everyone is speaking softly so they do not blow over the house of cards of bad sovereign debt in Italy and many other European countries. Italy may not leave the Eurozone, as the Eurozone may just dissolve on its own. The Eurozone is a failed political system with no sovereign or financial norms. No country wants to pay down their debt if the Eurozone may not exist much longer. No one is willing or big enough to bail out the Eurozone. (The private sector holding Italian debt is down from 57% to maybe less than 5% - Mr. Draghi gave them the time.) Rome and Milan banks wish they could do the same. French banks are next in line holding Italian debt. I think that this problem is above everyone's pay grade. Try to protect yourself. DLS
    • DS
      David S.
      3 June 2019 @ 17:25
      I guess it is just human nature to want the Euro, but not follow the rules that would make the Euro solvent. The critical point for the Euro and the markets is Mr. Draghi retirement this year. Who can hold the Euro together with all the divided interests? They have succeeded before, but it is getting more difficult each time. It is fortunate that England is not in the Euro as they try to Brexit. I am sitting on the side lines and increasing my gold and cash positions. I am certainly not smart enough to navigate these waters. DLS
  • DS
    David S.
    30 May 2019 @ 21:34
    The following quote from Mr. Alpert is my major takeaway: “…a global environment in which there's an enormous exportation, exporting of disinflation from the developing emerging world into the advanced nations…” One of the main causes was the differential in wages between countries. With the Tri-Polar world the manufacturing companies can return to the developed countries. The wage differential within the developed countries will, however, be from robots and not new higher paying manufacturing jobs. Will the other GNP sectors of the US or any other country keep up with a constantly declining manufacturing sector GNP contribution? Certainly not a trade idea, but interesting. DLS
  • IF
    Ian F.
    30 May 2019 @ 20:05
    Boockvar: "The trade war will ignite a US recession." What an ignorant thing to say. Sounds like something he quoted from reading the 'failing' New York Times. I am glad Dan defused that quickly and eloquently.
  • DR
    David R.
    30 May 2019 @ 12:06
    Excellent interview and moderation by this host, Ed. He has been doing an outstanding job. Ed shines in this "Exchange" format and he added value.
    • RA
      Robert A.
      30 May 2019 @ 22:07
      I agree, Ed has a real knack for this format.
  • DR
    David R.
    30 May 2019 @ 12:05
    One of the key takeaways, this one in terms of investment implications: PETER BOOCKVAR: If you look out over the next 5, 10 years the growth will be in Asia. I know China's got their problems, of course, and as wherever China goes, so goes with that area. But if you look in terms of the demographics and debt levels and business growth, the future is Asia and particularly in emerging Asia. So, I'd argue in the next 5 to 10 years, emerging Asian markets will do much better than US markets. ED (Moderator): Dan, you agree with that? DANIEL ALPERT: Totally. Absolutely. Without a doubt.
  • DS
    David S.
    30 May 2019 @ 00:33
    The low Euro and Yen helps to promote the German and Japanese exporters that keeps factories humming – which is the plan. In addition, the low interest rates help to finance manufacturing and the leasing of exports from both countries like automobiles – which is the plan. In order to keep the Swiss Franc competitive, the Swiss must lend at negative interest rates. This is a source of funds for the Swiss National Bank – which is part of the plan. The American consumer with money certainly benefits from these foreign low rates now. As we move to the Tri-Polar world and automated factories, these will look like the good old days of parties, cars and travel. Charleston anyone. DLS
    • DR
      David R.
      30 May 2019 @ 12:18
      I agree. Americans with decent jobs have been living the good life with an artificially high standard of living courtesy of an artificially high currency. This is going to come crumbling down to reality soon. There's an excellent, must-hear 12-minute discussion of this today at Macrovoices with Luke Gromen: https://www.macrovoices.com/110-macro-voices-all-stars/576-all-stars-luke-gromen-2
  • DS
    David S.
    30 May 2019 @ 00:08
    From the intense credit card competition in the US mail, I would say that the big US banks are a credit card provider tied to an ATM. It would be interesting to know how much of the earnings the major bank credit card providers get from penalties like extra-high interest rates and late fees on credit cards. DLS
    • DR
      David R.
      31 May 2019 @ 05:40
      Seems that unrequested, pre-approved c/cards in the mail are a routine thing. It's annoying but could be worse. Swiss banks and Zurcher Kantonalbank are going to begin charging 2F and 5F respectively for each cash use withdrawal. This is on top of the negative rates Swiss banks began charging deposit holders about 2 years ago. It's insane - especially when the savings rates in most western nations is horrendous and people need to be incentivized to save, as for example 52% of the US population have no savings or 401K heading into retirement (I dunno about Europe or CHF). European banks are desperate for revenue after a decade of ZIRP and NIRP and a flat yield curve courtesy of ECB policy. Good luck to Jens Weidmann if he's the next ECB head. A benefit of US Fed policy that aimed the money spigot straight at its banks for a decade is that US banks are recapitalized, although the cost among the hollowed-out US middle classs who indirectly paid for it has been high and they're pissed off now, but mostly at China and not banks or corps who've benefitted much more than anyone.
  • RA
    Robert A.
    29 May 2019 @ 22:19
    Great to see the “round table” format making another appearance. Daniel has a very nice manner and keeps the flow of conversation focused. This has always been one of my favorite RV formats.
  • gg
    georgy g.
    29 May 2019 @ 21:51
    Inflation in what? Inflation in stuff that you must have: education for kids, healthcare and housing is certainly not 2pc. Try telling that to ppl in real world and see what they say
    • DR
      David R.
      31 May 2019 @ 05:46
      Here, here. Boockvar himself showed in detail this spring in one of his own reports that real US inflation is closer to 5%, not 1%. Why didn't he speak up on it? It makes my blood boil every time I hear that there's no inflation and we need more. It's a false narrative, by the government, of the government, for the government - that the mindless financial media repeats like parrots.
  • TC
    Thomas C.
    29 May 2019 @ 19:57
    Interesting statement that 80-85% of inflation this cycle in the U.S. has come in increases in rent of primary residence. Emerging markets can export deflation in many consumer goods, but they can't export deflation in the cost of Americans primary residences. Thus Apartment buildings have been tremendous investments the past 10 yrs, as rents have only gone up, up, up, cap rates have gone down, interest rates have been stable or gone down, and vacancies down.
  • CT
    CHRISTIAN T.
    29 May 2019 @ 19:13
    I feel the guys were good, did a great job. But conversation itself did not contain much new stuff. Everywhere still looks nasty, but US tallest midget. Misallocation of capital is gross in this day and age- lets buy gold?
  • RM
    Richard M.
    29 May 2019 @ 14:43
    Great discussion - very enlightening! Peter and Dan make some great observations, and Ed was very good at digging in with specific questions. All in all, excellent!
  • JL
    Johnny L.
    29 May 2019 @ 13:30
    The facilitator said how do we continue the growth we had in the economy. What growth? Every 3% GDP came by disaster relief from hurricane/wildfire rebuilds and from trade war stocking. The subpar 2% 10 yr avg GDP is the lowest on record and it cost us everything by way of debt. I am tired of comments about sustains robust growth. It never came. Stock prices not economic strengths.
    • JM
      John M.
      29 May 2019 @ 18:24
      How much of America's "growth" was a result of increasing government debt levels?
  • JL
    Johnny L.
    29 May 2019 @ 12:44
    Another very sane and sensible conversation
  • BZ
    Bin Z.
    29 May 2019 @ 11:20
    ok
  • ns
    niall s.
    29 May 2019 @ 10:33
    US outperformance might have something to do with average Joe only getting two weeks vacation a year .Just a thought from the Spanish beach.
    • DR
      David R.
      31 May 2019 @ 05:52
      2-3 weeks is great. In most of Eastern Asia, 4-million people receive no vacation or days off except on Sunday (or Saturday) and some major public holidays. They also have the highest worker productivity in the world (at the lowest cost to boot). Just sayin.
    • DR
      David R.
      31 May 2019 @ 05:54
      Oops, typo, that shoulda been 4-billion ppl, not 4-million.