The End of Deflation

Published on
August 30th, 2017
Topic
Global Outlook, Monetary policy, Fiscal Policy
Duration
32 minutes
Asset class
Equities, Bonds/Rates/Credit, Currencies

The End of Deflation

Featuring Jawad Mian

Published on: August 30th, 2017 • Duration: 32 minutes • Asset Class: Equities, Bonds/Rates/Credit, Currencies • Topic: Global Outlook, Monetary policy, Fiscal Policy

Jawad Mian challenges the conventional wisdom of the apparent global deflationary environment, channeling the nexus of politics, policy, economics and markets, to present his view of the world economy. A stronger mandate for President Trump and the possible return of productivity, leads Jawad to envisage a reflationary boom with more upside for equities and a toxic environment for bonds. Filmed on August 14, 2017, in Saudi Arabia.

Comments

  • KC
    Klendathu C.
    11 April 2018 @ 13:57
    This is so good.
  • JF
    John F.
    19 November 2017 @ 21:42
    Wow! Well thought out. I concur. I also see the USD strengthening in the short term to allow it to spend down more in the future. Thus keeping it within a targeted range. Inflation will help to liquidate debt as old debt becomes a smaller percentage of revenues. People tend to purchase a new car if interest rates are rising in order to not get trapped with the highest interest rate on their car loan. It will be interesting to watch this unfold. Perhaps this will motivate home purchases initially, too. Jawad is a brilliant mind. Government & Fed decisions have intent. He has a good understanding of such things. And he offers a reasonable possibility. I see the pivot point for letting the USD fall being approximately 2nd or 3rd Quarter 2018. Republicans have a reputations for pushing the economy hard, pulling out all the stops to maximize growth and inflation.
  • DS
    David S.
    31 October 2017 @ 11:36
    Trump will continue, but it will be very difficult for Congress to actually pass his pro-growth policies.
  • JL
    James L.
    6 October 2017 @ 17:05
    So, I very much enjoyed Jawad's thesis which is beautifully explained and articulated. However, since stocks are really just a very long dated (i.e., long duration) asset, I don't see how rising inflation can be so bullish for stocks other than commodity producers. Companies have blown out their margins by benefitting from cheap debt and keeping wages low via robotics and relocation, but broader inflation will end those trends and compress margins regardless of revenues expanding with inflation to some degree. Yes, fixed rate bonds will get crushed, and yes, that will result in rotation from fixed rate bonds to floating rate bonds, stocks and other assets better able to weather inflation, but that is just means Jawad's thesis boils down to TINA, which I don't buy.
  • CC
    Charles C.
    30 September 2017 @ 16:48
    I'm going to watch this again. So many well reasoned contrarian concepts it caused cognitive dissonance for me the first time. Maybe the second time I can take off my predetermined blinders and really think this through. Great Think Piece.
  • RA
    Robert A.
    26 September 2017 @ 23:24
    An EXTREMELY well reasoned argument to many of the major seemingly consensus viewpoints. Personally I relish hearing clearly defined and well reasoned arguments against ANY position I may have. One can question his assumptions and each "a fortiori" argument that he presents, but the beauty of his presentation is that you are going to have some serious work to do in order to refute him either item by item or his thesis in its entirety! Thanks RV for presenting this excellent counter point to many of the other positions taken by RV presenters.
  • BW
    B. W.
    25 September 2017 @ 03:44
    I have to admit something to the RV audience: I signed up for this service about 2 years ago, and it really helped me to keep client money exposed on the long side to read the comment section for various videos. That was the value to me: a perspective is offered up, and hundreds of people are either embracing or pissed. There was a time not long ago at all when it was impossible for a piece to be published saying anything other than "the market is about to crash" and not receive about 500 thumbs down. That kept me in my framework of "contrarian bull". But now here we are, with this interview suggesting a much more durable recovery, accelerating growth, and significant further upside to equities, and yet it's all "thumbs up". This is a major indication of something important changing. The RV sentiment indicator is finally capitulating to the trend!
  • JD
    Jonathan D.
    16 September 2017 @ 11:39
    What we KNOW is that inflation is rising, equities have broken out everywhere, govts are ending austerity, c banks are reversing, commodities and EMs are soaring. Don't fight it, like you've BEEN fighting it for years. Jaw ad was right in 2016 and he's right still.
  • JK
    John K.
    12 September 2017 @ 00:30
    Rt
  • JV
    Jens V.
    10 September 2017 @ 18:46
    Very interesting and refreshing. Let's just say: either Jawad or Lacy Hunt will be very wrong about their outlooks. I find it hard to imagine a simultaneous bond bear market and equity bull market, because low rates have done so much to push up stocks. Overall I think 2017 is far too reminiscent of 2006 for the next five years to see strong equity gains. But sure, stranger things have happened. If Jawad's scenario plays out, he has certainly deserved the resulting investment gains.. I do however suspect that Jawad and Co. has benefited more than most in the equity bull market since 2008, but that he has missed the bond bull market - and that this affects his thinking.
  • PB
    Pieter B.
    10 September 2017 @ 10:06
    A true independent thinker! Massive thanks for adding so much value
  • DG
    Daniel G.
    7 September 2017 @ 17:59
    The US central bank commentary was spot on, Trump to stack it with doves. I love his perspective.
  • HK
    H K.
    7 September 2017 @ 02:06
    Finally, someone who is thinking clearly!!! This is why I have a subscription to RVTV.
  • JH
    Joel H.
    5 September 2017 @ 23:00
    Covering a lot of topics in a short period of time. Wish more time dedicated to the reasons and evidence for the conclusions given.
  • JN
    John N. | Contributor
    5 September 2017 @ 00:08
    Nice piece. I love anyone who challenges conventional wisdom. It doesn't have to be correct to enhance your process, it just needs to present another perspective that forces you to continually evaluate your own.
  • DR
    Daniel R.
    4 September 2017 @ 06:47
    Excellent diagnosis and prognosis Jawad. It seems its always a matter of degree and timing, mixed with exogenous events that makes for good discussion and eventual outcome. I'll be watching the effects of debt and inflation on consumer spending and the unanticipated consequences of higher bond yields on the stock market and retiree employment.
  • KS
    Kaz S.
    3 September 2017 @ 12:41
    Excellent interview!!
  • JM
    Jim M.
    2 September 2017 @ 21:31
    This man is very, very smart and more importantly, he's been correct. He's a real asset to us viewers given the tone of RVTV.
  • MO
    Mike O.
    2 September 2017 @ 18:17
    Wow ... I will have to listen to this again to appreciate the ideas that Jawad expressed, as I find it difficult to reconcile the notion of a volatile bond market peaking with a rising stock market. For those who may be interested in a fascinating discussion on the bond market, I recommend this interview with Julian Brigden on The Big Question podcast (unless, of course, you are already Macro Insider members): https://capitalistexploits.at/2017/08/julian-brigden-talks-macro-with-chris-macintosh/
  • CH
    Calvin H.
    2 September 2017 @ 13:35
    One his best pieces. Interesting pov on QT being counter intuitive. Was contradictory after bond bubble creating market turmoil but then saying the markets wont collapse ??
  • DY
    Dmytro Y.
    2 September 2017 @ 12:35
    It seems he contradicts to himself during interview. Very mixed impression. Sorry but very one sided and not the best ...
  • PB
    Pier B.
    2 September 2017 @ 07:25
    Excellent interview. Similar thoughts to Martin Armstrong except Martin thinks there is going to be a nosebleed rally in the Dollar.
  • MR
    Marten R.
    2 September 2017 @ 02:07
    Jawad has a very interesting 'probability assessment' framework and an eloquent presentation manner. I watched this twice, enjoyed it, and the 'Piece' did make me 'Think'... so it was a success and I give it a thumbs up. I don't necessarily agree with (most of) the conclusions which Jawad arrives at and by extension, the speculative positioning which he advocates... but that's what makes markets... For me, it's really important to differentiate between 1. causality, 2. correlation and 3. coincidence. the 3 c's if you will... The key is to identify causality, because that's investable. The problem is, when everything is corrupted due to financial repression... and in complex / dynamic systems / markets identifying causality is NOT easy. To quote the late great Yogi Berra... 'the future ain't what it used to be...' And so we are left with C number 4... Confusion. Keep up the good work RVTV. MR
  • KA
    Kelly A.
    1 September 2017 @ 20:56
    Kudos to Jawad. Kudos to all the viewers who commented. The robust discussions/comments are essential. Thank you to everyone.
  • DM
    Doug M.
    1 September 2017 @ 05:03
    Did I hear that a stronger dollar will be needed to support increasing U.S. gov't deficits to satisfy entitlements? I will be listening to this again. Great piece.
  • AH
    Andreas H.
    31 August 2017 @ 18:28
    Jawad made me 330k with his bull call in Feb 2016! Thank you!
  • AH
    Andrew H.
    31 August 2017 @ 18:23
    I do not see any way that a $trillion of capital is unleashed with capacity utilization where it is. I could see the economy and mkt doing well as fiscal stimulus blows out our deficit. While I am quite cautious due to high asset prices and the move to reduce global (I hope) monetary policy, his bullish stance has been more in line with recent mkt performance over the past year.
  • PU
    Peter U.
    31 August 2017 @ 18:14
    https://app.hedgeye.com/insights/61625-the-fed-fueled-bubble-in-residential-real-estate?type=guest-contributors
  • PU
    Peter U.
    31 August 2017 @ 18:11
    we live in an economic era defined by Darwinian dynamics. The asset-inflationary nature of quantitative easing has obscured the power of this progression, stemming the tide of creative destruction. The meteoric rise of passive investing may be contributing as well — disempowering price discovery, thus allowing more struggling laggards to slip through more cracks. However, with central banks in the process of normalizing monetary policy, the dollar falling and the power of digital technologies only rising, it appears a matter of time before reality catches up to this artificially-engineered stability, as is already apparent in retail. The rise of zombies is one more reason it is imperative to search for opportunities in markets largely untouched by extreme financial engineering. - a quote from 13D Research
  • PU
    Peter U.
    31 August 2017 @ 18:08
    Hermes Investment Management, Eoin Murray, encapsulated the threat zombies pose to markets: “Like animals in captivity, companies incubated on the milk of QE and low rates may no longer exhibit the natural behaviours needed for success in the wild of a stimulus-free market. Ultra-low rates and excessive borrowing may have allowed corporate financial alchemists to present ailing patients in rude health. Unfortunately for bondholders, the elasticity of unreality has a snapping point. QE and ultra-low rates have insulated many companies, and unwary investors, from the dangers that normally lurk; they are now treading a dangerous path…Central bankers have inadvertently managed to stem natural attrition, something which is paramount for healthy capital markets, with a knock-on effect on the flow of money into new enterprises. Eventually, the natural order must prevail.” Along with QE, digital technologies lie at the heart of the zombie boom. In 1979, 109 firms accounted for half the profits of all publicly-traded companies in the U.S. In 2015, that number had fallen to just 30.
  • PU
    Peter U.
    31 August 2017 @ 18:05
    Can we imagine this away?.... With corporate leverage continuing to surge—on record pace again in 2017—the threat of the “zombie” bubble popping appears increasingly real. The Bank for International Settlements (BIS) defines “zombie” companies as any listed firm which is more than 10 years old and has a ratio of EBIT-to-interest expense below one. According to a BIS study from earlier this year, zombies in the U.S. more than doubled between 2007 and 2015, reaching roughly 9% to 10% of all public firms. And given the surge in leverage over past two years, the number of U.S. zombies has likely continued to rise. Total debt-to-EBITDA of non-financial S&P 500 companies remains historically elevated (see chart below). Moreover, high-risk covenant-lite loans are now roughly 72% of total outstanding leveraged loans—up from 30% in 2007— meaning more debt is in weak hands.
  • PU
    Peter U.
    31 August 2017 @ 18:03
    The International Monetary Fund’s annual Global Financial Stability report included a stark warning about the health of the U.S. economy: 22% of U.S. corporations are at risk of default if interest rates rise. The IMF cited the rapid decline in the average coverage ratio over the past two years—the ability of current earnings to cover interest payments—as its primary evidence.
  • BL
    Bruce L.
    31 August 2017 @ 16:48
    thoughts on fixed income are so on the money. The deficits coming will be putting so much more new supply in play which hasn't been happening for a good while.
  • NH
    Neil H.
    31 August 2017 @ 14:40
    presentations by jawad are always interesting, and it is great to hearing opposing viewpoints, however I was waiting for the end to hear Jawad talk about the Feds response should what he proposes come true. The Fed for sure would realize they were behind the curve and would hike aggressively. since the last 11 recessions since 1949 were caused by the Fed hiking why will this time be different.
  • GF
    George F.
    31 August 2017 @ 13:26
    Not to keep flogging the shale horse but it really is spreading outside 2 regions in the US and some places in Canada. Fracking in the UK: Javid 'misunderstood planning policies' in approving fracking site, court hears https://www.theguardian.com/environment/2017/aug/30/javid-misunderstood-planning-policies-in-approving-fracking-site-court-hears If you want to stop fracking in the UK stop sterling from falling. Those that only see an upside to a falling currency may miss the hidden message in this article. And being of a certain age I can't help but take notice of the name of the bureaucrat that gave official OK to the first fracking project in the UK: Sajid Javid.
  • DY
    Damian Y.
    31 August 2017 @ 12:10
    Thanks Jawad for your interesting opinion. Jawad, try and look at things for how they are, not for how you"imagine" them to be. There's nothing wrong with using your imagination but there are a 1001 possibilities that can play out, and nobody knows the future. When I hear people saying, they can't see a recession coming, at this part of the game, it really make me thinks that we're not far off.
  • EF
    Eric F.
    31 August 2017 @ 09:06
    Disagree by all means, but with respect. Why do people have to be rude just because they don't like or agree with what is being said.
    • GW
      Grant W. | Founder
      1 September 2017 @ 18:27
      My favourite comment ever posted in the Real Vision comments thread! Thank you Eric. Jawad is a dear friend and a wonderful intellect and we disagree about SO many things but I would fly round the world to sit and talk with him for that very reason. Civilised disagreement and discussion is absent in the modern world. In finance, we are all making educated guesses about the future. There are no correct answers about the future given in the present because it is unknowable so why all the rudeness and disrespect? Thanks Jawad (you crazy fool!!!) I treasure our conversations and value your opinions
    • JH
      Jesse H.
      2 September 2017 @ 06:53
      Amen to that! Must listen to this talk again to really understand Jawad's views more thoroughly. I wonder if this rudeness, or sense of threat arising in disagreements, is symptomatic of the "fourth turning" that Neil Howe and William Strauss discuss in their book, The Fourth Turning. Thanks, Grant, for the recommendation on the podcast! Very interesting book. Following the logic in the book, it may be that the rhetoric in an "Unravelling" stage of the seculum becomes increasingly divisive and vitriolic as we approach the "Crisis" stage. This makes sense intuitively to me, but not sure if it stands up to scrutiny. It may also relate to which generation (hero, prophet, etc.) controls the rhetoric at that stage in the cycle. Haven't finished the book yet, so will listen with this in mind.
  • sp
    shashwat p.
    31 August 2017 @ 07:25
    agree on the stock to bond ratio, but that is coz nom gdp growth at 5% will blow the sov debt markets sky high. If they crack down on the nom yields that the commodity markets and gold will blow out. Bottom line this Goldilocks will last probably less than 1 year
  • NI
    Noah I.
    31 August 2017 @ 06:15
    Great to see a dissenting opinion to contrast the general consensus here. Always good to have your views challenged to see potential flaws in a thesis.
  • SD
    Stephen D. | Contributor
    31 August 2017 @ 03:15
    This is interesting stuff and very much at odds with a widespread bearishness on Real Vision's contributors. One very impactful thing I take from Jawad's analysis is that we should all look at our bond holdings as a potential area of massive risk. Most investors see them as the safe part of the portfolio. If Jawad is even half right on inflation, bonds, especially the safest (and therefore lowest yielding) will collapse.
  • TR
    Thomas R.
    31 August 2017 @ 03:05
    First of all – really enjoyed listening. One reconciliation issue I had in the presentation was the discussion of the possibility of 4 to 5% GDP growth in the US and a bullish outlook on stocks and then, starting at about 6:50 left in the presentation, discussion of bond market volatility, dramatically higher budget deficits, a crashing bond and equity market, then as the presentation came towards the end a discussion of rising equity markets. It would seem that for this to happen it would be non-US markets rising against a back drop of falling US equity markets and a bear bond market. For myself, I can’t simply see how worldwide debt levels won’t be a major headwind to growth. If we are in a bear bond market going forward, and rising rates, how do we get real growth. Isn’t relative worldwide stagnation a another possible outcome that deserves consideration? Likely 90+% of the RV subscribers have invested in a post-1980 world and thus a tail-wind bond bull market to both bonds and equities with falling interest rate costs over time. Last year did mark the end of that time. I have a 20 year old son – what will his next 35 years look like? Will the bond bear market and strained equity market with rising interest rate headwinds last 5 years, 10 years, 20 years… Rather than buying equity weakness, wouldn’t the next logical area for capital allocation be commodities?
  • RT
    Richard T.
    31 August 2017 @ 03:04
    The thing I like about Jawad's approach is that he lays out clearly his assumptions and then proceeds to detail the implications. As mentioned by many others, this is an excellent piece making the case against current market consensus and is, therefore, highly valuable
  • FC
    Fractal C.
    31 August 2017 @ 01:27
    QE has been inflationary, Jawad. It has inflated all financial assets. So now, please ask your question again - if QE inflated all financial assets, what would lack of QE do to those assets?
    • BM
      Bryan M.
      31 August 2017 @ 04:12
      Right on!!!
    • NI
      Nate I.
      31 August 2017 @ 21:40
      There can hardly be any debate about asset price inflation. I'm not convinced QT will happen unless the CBs manage to pull it off without driving interest rates higher. How would corporate zombies, or the US Gov for that matter, make the interest payments? As Jawad points out, the debt is only going to grow for quite some time to come.
  • DM
    Davis M.
    31 August 2017 @ 00:27
    Jawed states the past 8 years have been deflationary. I do not understand how he comes about this view. Everything is INFLATED. Stocks, bonds, real estate, government/corporate/consumer debt, my health insurance has doubled (not from $200 to $400 but from $1,100 to $2,200 a month!), my daughter's college fund is no longer adequate as the cost has increase by 30-40% over the past eight years. I could go on and on. Yes, I know oil and gas are down which helps with food cost, but these are some big increases. I appreciate hearing his view but cannot buy into this based on a lot of "imagination". I used to imagine I could fly when I was a kid but after jumping off the barn two times, I realized it wasn't going to happen.
  • PS
    Paul S.
    31 August 2017 @ 00:18
    Interesting view - but I cant see the de-risking of China he talks about - let alone the 'austerity' in the West
  • BM
    Bryan M.
    31 August 2017 @ 00:17
    I forgot...you also suggested that oil prices are set to increase. Really? It seems to me that when a few million gasoline powered vehicles are remeved from the "mix", oill prices have nowhere to go but down.
  • BM
    Bryan M.
    31 August 2017 @ 00:13
    Jawad, excuse me for being old fashioned but...I don't remember you taking into account the debt issue and I seem to recall your view that DT's tax cuts et all will be paid for by yet more borrowing. Can this be a plausible solution? Really? Seems to me you are suggesting the Bond Vigilantes will not mind a further deterioration in the U.S.'s fiscal house - which is already full of holes. Did I miss something?
  • RP
    Roberto P.
    30 August 2017 @ 21:07
    Since the Fed begun to rise rates, core inflation is down. I disagree with Jawad about QT bringing back inflation.
    • WK
      William K.
      2 September 2017 @ 15:44
      IMO raising rates is not QT. QT is removing public sector liquidity from the market (shrinking the balance sheet and demand for MBS/UST) and hoping (praying) the private sector will pick up the slack. Private sector credit growth is inflationary. Public sector credit growth (QE) is disinflationary.
  • JH
    Josh H.
    30 August 2017 @ 20:19
    Regarding the high GDP growth he forecasts in the future, I think that's possible, but only under a scenario where we see a structural paradigm shift in productivity brought along by AI/robotics/etc. Of course, the likely resulting unemployment issues brought about by such a development would amplify the current social tensions we see in the world. Ironically, if a productivity jump led by AI/robotics did come about, I actually think Japan has the potential to take everyone off guard by becoming a major source of growth and productive investment. Reason being that because Japan has the most dire demographic problems right now, they are currently most incentivized to run quickly towards AI, robotics, and other such technologies. I actually think they are already one of the leaders (if not the leader) in pouring money into these areas. Such a head start could make Japan the first big beneficiary of these new technologies, particularly since they're chronic demographic problems and the homogeneity of their population makes them arguably least likely of the major world economies to experience any sort of policy/regulatory pushback to such developments.
    • RM
      Ron M.
      31 August 2017 @ 03:37
      I lived in Japan nearly 20 years ago, and then again recently. Sadly, Japan's economy has regressed significantly over that time. Back around the turn of the century, Japan was ahead of us in some ways. For example, they had mobile internet (DoCoMo), iPad like devices, serious robotics, advanced chemicals/materials, etc. Flash forward to today and it seems as though the choking debt, new generation (not interested in their dad's lifetime career at Toyota, instead working 1-2 part-time jobs), deep bureaucracy (makes the US look efficient, ha!), educational system rooted in 1950s manufacturing, super high costs and inefficiencies of doing almost anything, and cultural upbringing whereby entrepreneurship is unnatural, Japan has continued to sink. It is hard to see how they will compete against China or the US. I have a deep affinity for Japan, but until there is a revolution, it is hard to imagine them overtaking any Western economy.
    • JB
      Jonathon B.
      1 September 2017 @ 03:35
      China to make shirts in USA for .33c each. No humans need apply. We are from the govt, we are here to help you; Nice to know tax payers funded the govt to kill their jobs. "It took seven years for Softwear Automation, founded in 2007 by a group of engineers from Georgia Tech, to introduce its first sewbot, which is capable of making bathmats and towels. A $1.8 million grant from the Pentagon’s Defense Advanced Research Projects Agency funded the work. The T-shirt bots will produce one piece about every 26 seconds, Santora says." or 3,200 shirts a day per bot. https://www.bloomberg.com//news/articles/2017-08-30/china-snaps-up-america-s-cheap-robot-labor
  • JH
    Josh H.
    30 August 2017 @ 20:01
    Regarding QE/QT, I'd argue he's confusing cause and effect. Just because QE did not result in inflation does not imply that QE produced the more deflationary reality of the past few years as he states. That seems too simplistic. I see inflation/deflation as more of a dynamic tug-of-war with factors on both sides. In the case of our collective experience since the financial crisis, I'd say the persistently low inflation is likely not a direct result of QE, but instead is a result of and highlights the significant deflationary factors (debt/demographics/etc) on the other side of the equation that have built up to such an extent that they're overwhelming the inflationary ramifications of QE. If that is the case, it would seem the withdrawal of liquidity that would follow QT could only exacerbate the problem.
    • RP
      Roberto P.
      30 August 2017 @ 21:04
      Hi Josh, Fully agree with your coment. In fact since the Fed has hiked rates, core inflation has been going down.
    • MG
      Mandeep G.
      30 August 2017 @ 21:55
      Unless QT, takes out zomby companies on supply side and consumer incomes rise , its hard to see inflation jumping significantly. Reduction in supply combined with fiscal infra spend could potentially create the right environment for inflation
    • WK
      William K.
      2 September 2017 @ 15:40
      QE lowered the cost of capital. QT will raise it. QE expanded multiples, QT will contract multiples. Jawad's solid advice is to move to real assets from financial assets.
  • AK
    Anthony K.
    30 August 2017 @ 17:07
    Whether I agree or not, Jawad always offers a compelling conversation
    • NI
      Nate I.
      31 August 2017 @ 21:43
      Yes. It would be great to sit down and talk to Jawad. We wouldn't agree about anything, but I would surely come away smarter.
  • DR
    David R.
    30 August 2017 @ 16:37
    The world needs more competition, not inflation.
  • tW
    tgwtom W.
    30 August 2017 @ 15:21
    Jawad, thank you for sharing such a comprehensive and well thought out worldview. The thought process itself is so enlightening and helpful. See you on Twitter :)
  • CM
    Carl M.
    30 August 2017 @ 14:44
    Jawad, you just kicked my ass and I thank you! The five years backward/forward theme, have you been talking to John Burbank? Brilliant! This "opposing view" still gets a 3% return globally? Did I hear that correctly? I guess if I am sitting on cash, "inflation" and "imagine" are dirty four letter words. Being "agnostic" is tough.
  • SW
    Scott W.
    30 August 2017 @ 13:21
    This was solid 2nd+ order thinking and a good summary of probable/possible outcome that doesn't fit the "things are so crazy right now - anything could happen" narrative. What if the world decoupled from the US not with a bang but with a whimper? Could the status of US sovereign debt as the safe harbor diminish, while at the same time Apple remained a global darling?
  • RI
    R I.
    30 August 2017 @ 13:08
    Would like to see more Think Pieces such as this one with various views.
  • RI
    R I.
    30 August 2017 @ 12:51
    Jawad - what are your thoughts on the influence of the labor force participation rate on GDP growth especially as baby boomers are now retiring in droves?
  • sm
    stephane m.
    30 August 2017 @ 11:32
    I think that Jawad 5 years views are correct BUT would like to remember him that in 1987 there was no recession... Please bring Martin Armstrong back!!
  • js
    jacob s.
    30 August 2017 @ 10:59
    over investment in trucks
  • PU
    Peter U.
    30 August 2017 @ 10:55
    Raul needs to toss a cold bucket of water on this guy.
    • MG
      Mandeep G.
      30 August 2017 @ 22:00
      It is a well argued piece, and it is such divergent views presented with good reasoning why I pay for RV. Divergent views is what makes markets.
  • PU
    Peter U.
    30 August 2017 @ 10:52
    I recall that the presenter was expecting the US 10 Yr to be above 3% over 18 months ago. He was bullish then and said that ' if the 10 Yr did not rise, and interest rates in general did not rise, then he would change his bullish equities and bullish inflationary view'. None of his earlier predictions have come to fruition, yet he remains steadfast in his belief of higher equity prices and higher inflation. When the facts change, you should change your views to reflect reality and stop relying on " a little bit of imagination". Your comments are full of bromides. . . . "we are in a paradigm shift". . . . If so, do a better job providing the rationale. In short, disappointed as I believe he is smart but suffers from position bias.
    • PU
      Peter U.
      30 August 2017 @ 10:54
      the more I listen to the presenter the more the following rings in my ears . . . "he is a dreamer!"
    • RI
      R I.
      30 August 2017 @ 12:51
      Jawad - what are your thoughts on the influence of the labor force participation rate on GDP growth especially as baby boomers are now retiring in droves?
    • PA
      Pascal A.
      30 August 2017 @ 12:54
      "The world needs inflation." WHY?
    • GF
      George F.
      30 August 2017 @ 13:11
      I thought the issue was TINA, There Is No Alternative. In terms of financial assets, low capital costs seem to be crushing capital investments return. For example look at what Amazon+Wholefoods did to once safe boring dependable Kroger. I suspect you will see wonderful Amazonian earnings growth coupled with nonexistent Amazonian dividends. What ever you think of Tesla, a major auto materialized out of nowhere in California. When I look at Emerging Market returns I have to wonder what happens when internet retailers wipe out those areas' retailers. I think many EM stocks are really old school industries that will not survive technology changes. People think gold cannot be disrupted. Bitcoin is one sign that is not true. As the return on capital falls in every other business, why wouldn't there be a gold rush of capital into gold mining and recycling? Amazon+Wholefoods is going to flood capital into low margin supermarkets, which were always considered safe as who would actually flood a low margin business like supermarkets with capital? So in summary, bonds suck. But not as bad as Kroger, which was thought to be a bond alternative. But TINA. No advice here but I personally see sucky bonds priced correctly in terms of sucky equities like kroger, and sucky currencies like all of them. The shale story is not just US shale and Canadian shale. I am reading about Chinese shale now with some internet traffic suggesting Argentina. So the shale issue might be just getting bigger not smaller as negative interest rates cause more capital to flow into anything that might work out.
    • RR
      Rock R.
      30 August 2017 @ 13:35
      Maybe the world needs inflation to inflate the debt away?
    • CW
      Chad W.
      31 August 2017 @ 03:38
      Well said Peter M .