QE: “Questionable Euphoria”?

Published on
April 1st, 2019
Duration
34 minutes

QE: “Questionable Euphoria”?

The Expert View ·
Featuring Christophe Ollari

Published on: April 1st, 2019 • Duration: 34 minutes

Does QE stand for ‘Quantitative Easing’ or ‘Questionable Euphoria’? Christophe Ollari of Ollari Consulting argues that the economy is currently addicted to central bank intervention and stimulus. Ollari explores recent economic and financial data points, which he links back to a series of bubbles beginning with dotcom spree. Filmed on March 19, 2019 in London.

Comments

Transcript

  • JD
    James D.
    5 June 2019 @ 19:10
    very balanced and intelligent analysis of the situation, past & present. However, its even difficult for the transcriber to understand the audio.
  • RS
    Robert S.
    6 April 2019 @ 16:16
    Great stuff Christophe ...really enjoyed your views!
  • KM
    Kacem M.
    6 April 2019 @ 10:14
    Great interview. Please bring him back on a regular basis.
  • RD
    Rahul D.
    5 April 2019 @ 13:22
    Good but not great.
  • KW
    K W.
    5 April 2019 @ 03:03
    Always amazed at someone who can speak so eloquently on a such a complicated topic in a language which is not their first. Thank you Christophe
  • MW
    M W.
    4 April 2019 @ 17:29
    Great stuff!
  • PB
    Pieter B.
    3 April 2019 @ 18:40
    Amazing!
  • CD
    Cheryl D.
    2 April 2019 @ 22:40
    Excellent!!!!
  • DC
    Dave C.
    2 April 2019 @ 21:57
    Great analysis and highly credible forecasts. The projection of direction of US real rates and impact on the PM complex is one of the key take aways for me from a great interview. Combining this analysis with the latest from Russell Napier has made the potential future a lot clearer for me. More from Cristophe and an RV update from Russell please. https://www.zerohedge.com/news/2019-03-30/russell-napier-terrible-market-combination-has-emerged-suggests-it-indeed-all-over
  • JA
    Justin A.
    2 April 2019 @ 16:13
    This was a great interview as usual and I just wanted to point out two things as Real Vision is becoming a staple for gathering non-consensus investment opinions. The first thing I want to point out is that Mr. Ollari does a fantastic job of following up in the comments on the relevant questions. This is extremely helpful and I would encourage all presenters to do this as they are able. The second thing I would like to ask RV is, can you make the slides/graphs/tables used in the presentations when explaining certain points available in the transcript? I have seen so many great slides in these presentations but have no way to reference them without re-watching the videos. Thanks again and really appreciate what you guys are doing.
    • CA
      Craig A.
      3 April 2019 @ 01:38
      If possible do a screenshot and save the photo?
  • JW
    Joseph W.
    2 April 2019 @ 08:04
    Wow! Thanks RealVision for creating the adjustable volume slider! Awesome receptiveness to subscriber feedback
  • TM
    Timothy M.
    1 April 2019 @ 21:56
    Wow! Thanks for sharing this interview. I really think Mr. Ollari has actionable advice if you have the will and the means to sustain more upside in the equity markets. The fact that Lyft went public at lofty valuations while reporting $900 million in losses means we have to teach some lessons to retail investors.
    • CA
      Craig A.
      3 April 2019 @ 01:40
      And Cramer
  • TB
    Thibault B.
    1 April 2019 @ 20:16
    Mr. Ollari: You mention that the Fed will try to anchor nominal yields and reflate the economy (and break-evens will rise). For me this means that the yield curve will steepen, otherwise we need QE to keep down the long end as well. Which is more likely, or can your scenario occur another way?
    • CO
      Christophe O. | Contributor
      2 April 2019 @ 06:15
      Agreed Thibault. The issue would be a bear steepening but the FED could implement an Operation Twist 2 comparable to what Bernanke implemented in 2011.
    • TB
      Thibault B.
      2 April 2019 @ 13:12
      Thanks!! I'd forgotten about the twist.
  • TH
    Truman H.
    1 April 2019 @ 19:19
    "...do we go further down the rabbit hole of the unorthodox monetary policies?" Sure looks that way. Towards the end there was a prospective "step eight" from CBs = "where we are going." Unfortunately, after listening to that phrase 4 times I still have no idea what the words are that he pronounced for step eight. Anyone able to tell what he said? The whole presentation reminds me of an old market saw, something like, "you can either look like a genius before the trend change or after the trend change, but not likely both."
    • CO
      Christophe O. | Contributor
      1 April 2019 @ 20:41
      Here is what I call the monetary policy toolkit ladder at the disposal of the central banks: 1. Orthodox rate cuts: only the FED and to some extent the BoC have rebuild some ammunitions 2. Quantifiable forward guidance: already actively used by the ECB abd BoJ 3. Large Scale Assets Buybacks Programs: the FED is the only major to have stopped its buybacks and implemented an unwind of its balance sheet - roughly half a trillion 4. Discretionary fiscal stimulus 5. Negative rates: already in full motion for the ECB, BoJ and SNB 6. Yield curve control: already part of the current monetary policy mix of the BoJ 7. Employment of price-level, or nominal GDP, targeting 8. Helicopter money, or debt cancellation: next step for the ECB and BoJ?
    • CD
      Cheryl D.
      2 April 2019 @ 22:44
      read the transcript..
  • DS
    David S.
    1 April 2019 @ 18:23
    Thanks for another well documented presentation by Mr. Ollari. The Fed should just keep its interest rates on hold and be quiet about the future. Trying to be transparent about the future is a fool’s errand. A reduction in rates will not help the real economy as we have often seen. It will give cover for other CBs to hide behind the Fed. I believe, however, that Mr. Ollari is very much closer to the mark. It is reasonable that we will be facing increased volatility and instability as all the CBs try and fail. This leaves the smart money hedging volatility and trading as market overcompensates like December 24th. A trader’s market and a word from Mr. Ollari to the wise. DLS
  • TD
    Thomas D.
    1 April 2019 @ 18:19
    This guy’s accent reminds me of this movie clip....Then again, I am from Mississippi... https://youtu.be/BG6uMsq8PPs
  • NG
    Nick G.
    1 April 2019 @ 14:26
    All he said is very true. Or was, on the 19th of March. Since then we have had China PMI and US ISM. And a spike in bond vol. Has he changed his mind? Because facts have. Why don't you do a 5 second follow-up? All he has to say is: Yes/No I have/not changed my mind. PS: This huge bearishness not corresponding to price is getting very tiresome.
    • CO
      Christophe O. | Contributor
      1 April 2019 @ 14:58
      Thanks for your comment Nick. So here is my follow-up: I haven't changed my mind. First, one set of data doesn't make a trend. Second, as you are mentioning the China PMI: it is still far too early to draw definitive conclusion as a big part of the rebound is highly likely a consequence of activities resuming after the Chinese New Year holiday. In historical years when the Chinese New Year date was similar to this year, March NBS manufacturing PMI rebounded by an average of 1.7pp vs February. Which is exactly what happened here again. When looking at the real final demand, no sign of strength as growth in exports, new homes and cars remain in negative territory. In the US, ISM has been a tad stronger than expected but we should then also mention then weaker retail sales. While in Europe, all the flash Manufacturing PMIs (excepted Spain) have been revised lower. While the Japanese Tankan was dreadful with sentiment falling the most in 6 years. While South Korean exports fell for a straight fourth months. Regarding the huge bearishness: this was not a bearish assessment. Markets are highly addicted to central banks' accommodation. The rally so far in 2019 from risk assets has little to do with the global macro picture but has been essentially boosted by the come back of the "Invisible Hands" (the central banks).
    • CO
      Christophe O. | Contributor
      1 April 2019 @ 15:39
      I just want to add on a last comment: I am advocating for a a future armaggeddon. I think that we are witnessing a powerful paradigm shift compared to 2018. 2018, on the central banks side, was all about rebuilding monetary policy ammunition in order to address a future shock. 2019 is about doing anything to prolong the expansionary cycle in order to not have to face a recession/shock because the amount of ammunition is limited. So this is quite a bullish assessment for financial assets!
    • CO
      Christophe O. | Contributor
      1 April 2019 @ 15:40
      I am NOT advocating for a future armaggeddon. Apologies!
  • HC
    Howard C.
    1 April 2019 @ 14:07
    Heavy weight thinker, bring him back soon. The final four minutes, where he says in common-sensical terms that debating the merits of MMT is pointless, just understand the CBs will do whatever they can to keep the game going --- very important to understand. I'd personally like to hear what other theories he thinks might have a chance at adoption! Or the fact that Germany is now a liability to the EU .... LOL ... it is true, times have changed. Thanks RV, another winner.
  • PT
    Phil T.
    1 April 2019 @ 13:31
    To clarify certain words or names.
  • PT
    Phil T.
    1 April 2019 @ 13:30
    It is disappointing not to have the usual transcript for speakers with accents since certain words are clear.
    • M.
      Milton .. | Founder
      1 April 2019 @ 15:13
      Transcript is live, all good now!
    • BA
      Bruce A.
      2 April 2019 @ 05:12
      Yes, Milton, Transcript is Live..........but some words/phrases are missing and shown as (inaudible). In particular, I'd like clarification around missing transcript sections relating to Gold vs Real Yields vs Bond Market Breakevens at min 25-26
    • RM
      Robert M.
      2 April 2019 @ 08:15
      that means positive tailwinds for [INAUDIBLE-breakevens], which give leaders to what are my strong conviction. It's that [real yields] will fall further
    • CO
      Christophe O. | Contributor
      2 April 2019 @ 10:19
      Apologies if it is inaudible. Just a quick clarification: central banks + China attempting to reflate the whole economy supporting breakevens while the central banks' dovishness/forward rate guidance anchoring the belly of the nominals curve. Therefore scope for much lower real yields, which will be supportive for the precious metals complex.
  • VA
    Val A.
    1 April 2019 @ 11:38
    Nobody cares about the repetitive music intro, truly ;-)
    • DS
      David S.
      1 April 2019 @ 17:53
      I use the 15 second video advance to skip the music. For those that find the music in sync - no reference intended, they can enjoy it. No problem. DLS
    • MK
      Michael K.
      2 April 2019 @ 02:22
      I agree. Plus is that they added Justine doing the reading of questions so I can listen audio only. But the music has gotten so insanely loud they really need to ask the mastering engineer to normalize levels. All that said love RV TYTYTY
  • TB
    Thibault B.
    1 April 2019 @ 11:17
    Another great presentation from Christophe, glad to see more of him! As Cristian noted: the intro music and end music overwhelms the the talking.
  • CR
    Cristian R.
    1 April 2019 @ 10:52
    What is going on with the sound in the intro?