Reality’s Revenge on Emerging Markets

Published on
1 October, 2018
Topic
Oil, Monetary policy, Emerging markets
Duration
35 minutes
Asset class
Commodities, Equities

Reality’s Revenge on Emerging Markets

Featuring Daniel Lacalle

Daniel Lacalle, Chief Economist at Tressis Gestión, debunks the illusion of synchronized growth in a global economy fueled by low rates and rising debt. Lacalle tackles China, where he sees stimulus delivering less growth at progressively higher costs, as well as mounting risks in Argentina, Turkey, India, and other EM economies. Filmed on September 18, 2018 in Madrid.

Published on
1 October, 2018
Topic
Oil, Monetary policy, Emerging markets
Duration
35 minutes
Asset class
Commodities, Equities
Rating
14
Sharing

Comments

  • MZ

    Mike Z.

    11 11 2018 16:36

    0       0

    For me, this was a much better, more informative video than the Stanley Druckenmiller interview.

  • DS

    David S.

    28 10 2018 22:17

    0       0

    As you can see, I like to go back to listen to videos more than a few times. The only thing that politicians think and/or do is maintaining power whether in republics or dictatorships. Like late Rome, keep the people happy at least until you die. DLS

  • DY

    Damian Y.

    16 10 2018 05:20

    0       0

    Great Interview, it's always good to hear what Daniel has to say.
    The Mises institute just interviewed him recently which was another great interview. If you're interested in QE then listen to what he says about it on this interview.
    https://www.youtube.com/watch?v=NQlIVJ3I75o

  • RE

    Russell E.

    13 10 2018 05:03

    0       0

    Always love listening to Daniel.

  • DS

    David S.

    12 10 2018 02:02

    0       0

    Chinese shadow banking makes it very difficult to tell what total debt is in China. Much of the liquidity that China is adding through its central bank may be replacing diminishing balances in the shadow banking system. DLS

  • WP

    William P.

    9 10 2018 19:46

    0       0

    More of this guy, please.

  • WM

    Will M.

    5 10 2018 17:35

    8       0

    Superb. Daniel has a crispness and a clarity that clearly makes him a top 10% contributor to RV.
    Would be fantastic to get him on an interactive interview and maybe present us with some opportunities to protect ourselves for the coming debacle.

  • PG

    Philippe G.

    4 10 2018 23:44

    1       0

    Great interview! Well-articulated.

  • DS

    David S.

    4 10 2018 21:09

    2       0

    It is hard for me to see that the problems in emerging markets are significantly different than problems in most developed markets. We are all floating in our own ocean of debt while FX traders try to figure out a moment by moment equilibrium. Some boats are just more stable. Since there is no free lunch, we will all suffer the same fate at different rates. DLS

  • AW

    Aaron W.

    3 10 2018 02:25

    20       0

    Please tell the graphics editors to leave the graphics/text up for longer. Like double as long. Maybe triple. Please.

  • GF

    George F.

    2 10 2018 23:16

    0       0

    Secular stagnation, but will there be secular stagflation?

  • RA

    Robert A.

    2 10 2018 19:46

    0       0

    Very well presented thesis. Excellent RV presentation.

  • H

    Hans .

    2 10 2018 19:31

    0       0

    Excellent analysis. Refreshing

  • MM

    Mak M.

    2 10 2018 19:13

    3       0

    Excellent speaker and excellent summarizing of the global macro. Thank you for this interview.I live in Greece and i completely agree with the speaker, he has summarize the Greek issues excellently.

  • MH

    Marco H.

    2 10 2018 10:33

    0       0

    Very interesting overview of current monetary issues. One thing I do not understand: If increasing the interest rate is exactly the opposite of what one should do (ie Argentine or Turkey) then why did Volcker get away with this when he raised rates in the early '80-ies?

  • PW

    Peter W.

    2 10 2018 09:38

    1       0

    Just brilliant. And very very worrying. If we are indeed heading for a period of prolonged secular stagnation, will this not have major political consequences? For example, what will be the reaction of the Chinese government when they realize they can no longer dump excess production on the US market as the solution to their lack of internal demand so as to keep their growth rate high enough to push back their debt problem for another year or two? Will they then change the direction of their current policies and call for painful structural reform, or find an external scapegoat for their problems?

  • CY

    CHIHLUN Y.

    2 10 2018 07:59

    3       0

    A great learning experience listening to Daniel Lacalle. Not only did I better understand the real drivers of the current EM collapse, but his insights, for me, lays out what will happen next and what I should consider for my portfolio.

    All this knowledge is slowly becoming second nature to me, and when I talk to friends and family who are 1) clearly interested in investing as well as 2) unquestionably smart, they don't have a clue of the narrative I'm talking about. They still say "Yes, no need for you to tell us, we know. Turkey went down because of Trump's actions, but now that Turkey raised interest rates they are rebounding towards recovery." This initially surprised me, but a thought came to me - if it wasn't for these few months binging through RV - I would be repeating the traditional talking heads just like they are.

  • TR

    Thomas R.

    2 10 2018 01:15

    4       1

    I enjoyed the narrative. Having said that, at 28:00 of the presentation - a brief showing of a chart reflecting China Corporate Debt as a % of GDP reflected a rise from from 158% to 160.5% or 2.5% of GDP over, what appeared to be, one year – from Dec-16 to Dec-17 was provided. If China’s GDP, for example purposes, is $12T then a 2.5% rise would calculate to 300B. Without aggregating the Balance Sheets of China Corporations this calculation, by itself, seems meaningless. What is a $300B increase over a year as a percent increase in aggregate corporate debt? What is a $300B increase as a percentage of Total Assets? How does this compare to or impact Debt/Equity relationships over the same period? Despite what I have typed above, it is clear that in any economy, having Corporate debt as high as 160% of GDP, even without correlations of Corporate metrics, is simply a very high percentage. Acknowledged.

  • MC

    Matt C.

    1 10 2018 23:43

    2       0

    Excellent.

  • DR

    David R.

    1 10 2018 19:54

    6       0

    Very good. Extend his central theme of "synchronized DEBT growth" to debt CYCLES (I forget who penned that last year). Point is, the business cycle has been largely replaced by the debt cycle. Blame government. ALL government; it's bipartisan.

  • DS

    David S.

    1 10 2018 19:34

    1       0

    Where to invest during secular stagflation - any suggestions? DLS

  • DS

    David S.

    1 10 2018 18:20

    4       0

    The Greek bailout was tragic for Greece, but exceptionally successful to get high risk Greek debt off the other European bank's balance sheet. There is no union in the EEU when it comes to protecting their own banks from bad balance sheet decisions by their banks. DLS

  • DK

    Daniel K.

    1 10 2018 15:54

    3       0

    While we're on the topic of emerging markets, does someone care to comment on the rumors that Poland's CB began buying gold too? Poland has lower government debt than most European countries and seems to be buying gold to defend their currency. What are the growth prospects for Poland? Here is the article I read stating that the FT claimed they bought 9 tonnes the past few months: http://www.thenews.pl/1/12/Artykul/384823,Poland-increases-gold-reserves-FT

  • DP

    Devraj P.

    1 10 2018 15:20

    10       0

    Simply the best. Easy to understand underlying issues and unearthed noise from media about synchronized global growth storytelling 🔥🔥🔥

  • NI

    Noah I.

    1 10 2018 14:55

    7       0

    Always a pleasure to hear Mr. Lacalle's take on structural economic issues. I think one of the biggest problems with today's central bankers is that they view everything through their own paradigm, looking for evidence of the issues they already believe exist. Empirical evidence is thrown out the window when it doesn't match up with the central banks narrative. Ignoring reality because it diverges from a fundamental framework doesn't mean reality should change to match the framework - it means the framework should change to match reality.

  • PU

    Peter U.

    1 10 2018 13:13

    5       0

    Couldn't have explained it better myself! Bravo!!!

  • YB

    Yuriy B.

    1 10 2018 09:41

    13       0

    This guy is brilliant. Thank you Real Vision.