I want to refer our listeners – we don’t have a slide deck today because Jim has just been flat out with the various situations in markets. Jim’s timeline on Twitter has some of the best graphs and charts showing the case growth of COVID-19 cases around the world. So I encourage our listeners to check that out.
Jim, I want to start with the big picture of, okay, monetary policy two weeks ago versus today is a very, very different story. I think some of our listeners have been overwhelmed.
We know there was a massive intervention last weekend. We know there is an alphabet soup of new accommodative facilities, but almost nobody can keep track of all of them.
Give us the big-picture summary. What has happened? What are central banks doing? And what’s the summary of all the actions that they’ve taken?
Let’s start with the high-level big picture of what’s going on – both the stock market coming off of its all-time highs, new all-time lows in bond yields.
Is this all about the coronavirus crisis? Or is the coronavirus just a catalyst that brought something else about?
Axel: Great to be with you. In this industry we always love to give a story to the action and, by all means, let’s fit that story, right?
Clearly, we’ve had a many-year bull market, stocks were at an all-time high – that may have been due for a correction according to many. And sure enough, we got a shock. And it helped us. And so, ultimately, does it really matter?
One of the things, if you’ve been around the block a few times now, is that there is a storyline that starts these things. And then these stories evolve. Remember in 2000 for example (or whenever you’ve had a crisis or a bear market coming), it starts somewhere. But then suddenly there are ripple effects that you don’t foresee.
Jesse, it’s been way too long. It’s great to get you back on the program.
I want to start with the market because you have been a voice of reason for years now, saying, hey guys, it’s great that the stock market is making money for people. But it’s 10 years straight up. It’s too much, too far, too fast.
The question on my mind now, Jesse, obviously the COVID-19 situation is the proximal catalyst that’s caused the recent selling. But is this the extent of what’s going on? Or is it more likely the case that COVID-19 is the catalyst that was needed to bring about a change in market direction that might have been overdue to start with?
Erik: Joining me now is Fasanara Capital founder, Francesco Filia. And I always enjoy interviewing Francesco because, not only does he always send us a terrific slide deck, but it’s usually a big slide deck. So we won’t be able to get to all of the slides in this deck. I do strongly encourage our listeners to peruse the entire deck because it has some really fantastic content in it.
You’ll find the download link in your Research Roundup email. If you don’t have a Research Roundup email, that means you haven’t yet registered a free account at macrovoices.com.
Just go to our home page at macrovoices.com, look for the red button that says Looking for the Downloads? right next to Francesco’s picture on our home page.
Francesco, we can’t get into every single slide here, so I want to start maybe with Page 6, I believe, where you’re looking at the 50-year swap rate. Tell us what’s going on here and fit it in to the big picture of what you see in the market.
Erik: Joining me now is Ralph Delguidice, global macro strategist for Pavilion Global Markets. Ralph put together a terrific slide deck for today’s interview. You’ll find the download link in your Research Roundup email.
If you don’t have a Research Roundup email, that means you’re not yet registered. In that case, just go to our home page at macrovoices.com, look for the red button that says Looking for the Downloads? right next to Ralph’s picture on our home page.
Ralph, it’s great to have you on the show. I know that you are a regular listener. And I want to take advantage of that, because I know you’ve been listening to my interviews with Jeff Snider.
Something Jeff has said that just really threw me for a loop when he said it recently is he said, you know, really, we have to just accept that US Treasury bonds are not really an investment anymore. Big institutions need to have them as a balance sheet management tool, but they don’t make any sense as an investment.
And I thought about that after the fact. I thought, holy cow, what are all of the knock-on implications of the United States Treasury bond? You know, the full faith and backing of the United States government (cue the patriotic music), most safest, reliable investment on earth, and it’s not even an investment in Jeff’s eyes.
How did we get here? What does Jeff mean by that? And what’s the story of regulatory changes that have gotten us to this point?