julian brigden headshotPlease note this was transcribed to best of the ability of the transcriber and may have minor errors. Please refer to the podcast itself to clarify anything.    

Erik:     Joining me next on the program is Julian Brigden founder of Macro Intelligence 2 Partners. Julian of course has been one of our most favorite guests and you absolutely want the chart deck that accompanies this interview. We told you earlier in the program where you can find the download.

Julian why don’t we go ahead and jump right into the book of charts that you sent us, this first one is talking about the U.S. dollar and the effect, the knock-on effect on the shale bubble. So, let's talk about that connection.

Julian:  Right absolutely, so thanks very much for having me back on the show Erik first off and let's sort of do a little bit of background before we kick off. So, last time I was on in December we discussed how this sort of pause that we had in the dollar starting in 2016 unleashed this very powerful cyclical effect.

Obviously, we've all seen it in energy prices and how oil prices are percolating through into inflation. But I think what's also not quite as well understood is how that also manifest itself via that same sort of essentially base effect into the economic data, the growth data.

That is very simply because when we typically look – and this is something we talked about in December – when we typically look at growth data we very rarely look at the level of growth. What we typically discuss is the speed or the acceleration of growth and by that, I mean, month on month, quarter on quarter, year on year.

So, if you look at the first light in the pack and what we've done is we've taken wholesale sales for a whole bunch of various different components in the economy and you can see how the activity in the shale space influence some of these series.

Now we think that to a large extent you can explain some of the enormous growth divergences that we had between Europe and the United States in particular in sort of 2012, 13 and 14 via this build out of what was essentially a brand-new industry for the U.S.

So, then the dollar rally comes along starting in 2012 and accelerates obviously as we know in 2014 and the Fed busts their own bubble. The rig count absolutely collapses and implodes and you see it drags down the rate of change of a number of those key wholesale industries.

What's interesting though is that we've seen a bounce now. Now in absolute terms the rig count has risen reasonably substantial about 25, 26% but when you look at the rate of change of that rig count you can it’s up 80% and the same applies to petrochemicals and you're seeing some of the other stuff in some of these other metals and some of these other industries.

That's the point of this base effect and the same thing manifests itself if you look at the next chart to a large extent when you look at something like PMIs. PMIs are also a measurement at the end of the day of rate of change and not of the level.

Now I know a lot of people, I’m sure you're very familiar with Erik will say oh you know much below 48 and we’re moving into recession and generally that's sort of true but the rate of change element you can see here in stark contrast because you look at what happened in 2009, remember this is the depths of the GFC, the first half of the year growth was imploding, second half of the year recovered somewhat but essentially over the whole year we got zero growth and yet ISM went from the very low 30's up all the way to 60's why because essentially we were seeing the negative effect of 2008 dropout. We had this very powerful base effect.

So, to a large extent what we've seen is that in terms of some of these PMI data and that's what we were playing all of last year and what we said in December, we will come to a point where this thing will just naturally run its course. It just doesn't get any faster.

J ChristianPlease note this was transcribed to best of the ability of the transcriber and may have minor errors. Please refer to the podcast itself to clarify anything.   

Erik:       CPM Group founder Jeffrey Christian is back with us this week as our featured interview guest. Jeff, you are best known as a precious metals expert but I want to start today with the U.S. dollar because obviously, everything is priced in U.S. dollars.

Last time you were on this show most of our guests were just wildly bullish the U.S. dollar index, you had a different view you said you were biased to the upside but you thought more sideways was likely as opposed to a really big move up and you're definitely been proven right on that. So, where do you see it going from here?

Jeffrey: I guess I’m the comfortable slippers in the in the currency markets. I’m never exciting, sometimes I’m exciting but the last year or so we haven't really changed our view.

I still think that there is a little bit of upside on the dollar. It's interesting because a lot of people are talking about the dollar coming off and I don't see the dollar falling sharply because for the dollar to fall sharply you really have to have faith in Europe and faith in Europe is hard to come by.

Now it's all relative so with the Dutch election behind us, it's possible that you'll see a little bit more faith in Europe which could help bolster the euro a little bit more faith in the U.K. which seems unlikely because probably the Brexit talks are going to be extremely hostile and sloppy and they're not going to impress anybody with the intellectual quality of the conversation going on, on either side.

So, I think that that is actually supportive of the dollar so I don't necessarily see the dollar falling but by the flipside I don't necessarily see the dollar rising much more. So, we're still looking for it to move sideways with a slight upward bias but less dynamic than it was in 2015 or so. We sort of see the dollar relatively fairly valued about where it is right now.

Grant WilliamsPlease note: this was transcribed to best of the ability of the transcriber and may have minor errors. Please refer to the podcast itself to clarify anything.

Download the Full transcript: pdf 2017-03-02 - Transcript of the Podcast Interview between Erik Townsend and Grant Williams (574 KB)   

Erik:                Joining me next on the program is Grant Williams, Real Vision co-founder and of course author of the extremely popular, Things That Make You Go Hmmm newsletter.

Grant, your views on the global rise in populism have been among the most prescient of any guest who's appeared on this program. You predicted the Brexit outcome and you've described the rise of Donald Trump, Bernie Sanders and various European politicians including Marine Le Pen, as all being part of a connected global trend.

Since our last interview many of your predictions have come true. So, bring us up to date on your outlook, what is driving the global rise in populism, what does it mean and what's coming next for Europe, the United States and the rest of the world?

Grant:             Hi Eric, it’s great to be back on and good to speak to you again. The populism thing is so interesting and I think it's so important right now and I think, me predicting Brexit and Trump does not make me a great market seer, I think the beauty I had during those election campaigns was that I was in neither place so I could sit back from a distance and look at it objectively which I think both of those – the Brexit situation and the U.S. elections – was so just electrified with high feelings on both sides and it was really difficult if you were in the middle of that to be able to be objective about it.

Louis 201211Please note: this was transcribed to best of the ability of the transcriber and may have minor errors. Please refer to the podcast itself to clarify anything.

Download the Full transcript: pdf 2017-16-21 - Transcript of the Podcast Interview between Erik Townsend and Louis-Vincent Gave (700 KB)     

Erik:              Joining me next on the program is Louis Vincent Gave of course from a very famous institutional advisor firm Gavekal headquartered in Hong Kong. Louis thanks so much for joining us.

I want to start by talking about you being headquartered in Hong Kong there. This whole China reflation trade, a year ago, the buzz was, “hey 2016 is going to be the year where China is forced to devalue markedly and that will send a massive deflationary shockwave around the world.” Well it didn't happen in 2016, how do you see this, is that really a risk, is that the right story, what's going on with China?

Louis:            To be honest, you're absolutely right, that’s been one of the biggest surprises of 2016. I think if you look back at the past year most people – and you talk about the surprises – most people talk about Trump and they talk about Brexit because this is what makes newspaper headlines. But you're absolutely right that a year ago, everyone thought China was going to implode.

Instead of imploding the government obviously re-stimulated the economy. You saw big spending from state owned enterprises, you saw oil imports go up 24% year on year in the first quarter, iron ore imports, copper imports everything goes through the roof in the first half of 2016 and instead of imploding China turned out to be reflationary force for the rest of the world to the point where actually today everybody talks about the Trump-flation and how the U.S. election has triggered a big reflationary trade for the world, for me it's not as much Trump and what's happening in the U.S. really as what occurred in China we had another round of fiscal stimulus just like we had in 2009,2010 and this led to rebound in commodities, rebound in Baltic Dry Index, rebound in steel prices.

Now interestingly I think if you project yourself forward to this summer – China basically stopped stimulating around the summer of 2016 and in fact starting in November, they started to tighten monetary policy, started to raise interest rates, started to lean on the banks to lend less – so if you project yourself to this summer the big risk for me is that perhaps – now there's reasons to think that reflation trade will continue and we can maybe go into that – but one of the risk is that as Chinese growth rolls over as the year on year comparisons for China get tougher what you will see in China is weaker growth starting this summer and that might start to curtail the reflation trade you're seeing on the markets today.

DSC06699 2Please note this was transcribed to best of the ability of the transcriber and may have minor errors. Please refer to the podcast itself to clarify anything.

Download the Full transcript: pdf 2017-16-09 - Transcript of the Podcast Interview between Erik Townsend and Jeffrey Snider (557 KB)     

Erik:                Jeffrey Snider from Alhambra Partners joins me now as this week's featured interview guest. Jeff put together a fantastic book of charts and graphs to support this interview and I strongly encourage you to download it so that you can refer to it while you're listening.

Registered users at macrovoices.com will find the download link in your research roundup email. If you're not yet registered Patrick told you earlier in the show how to get registered and get the download.

Jeff your last interview back in August was one of our most popular shows ever. But we also lost a few people because we dove straight into the intricacies of the Eurodollar futures market without stopping to first define what a Eurodollar is and why that's important.

So, to set the stage for this interview the term Eurodollar refers to time deposits at banks outside the United States which are denominated in U.S. dollars so in other words U.S. dollars on deposit outside of the United States. The term Eurodollar originally referred to bank deposits in Europe but in today's usage it really refers to any place in the world that U.S. dollars are on deposit in banks other than U.S. banks.

Now at first glance it might seem that the Eurodollar market would only be of interest to international corporations who need to hold dollar denominated deposits around the world. So, it's tempting to question why an investor located in the United States would even care about Eurodollars.

So, Jeff let's start by answering that question what signals can the Eurodollar market give us about the global economy. Why is it so important for an investor who seeks to understand the global economy to understand the Eurodollar market and the messages that it’s sending us?

Jeffrey:            Well first of all Erik I want to thank you for having me back here I really appreciate the opportunity. I think you guys do a fantastic job with your podcast and I'm a big fan of it too. To answer your question, the Eurodollar is as you describe it. It's an offshore currency market of various forms and as it evolved in the last half century or so it's taken on far more proportions than just deposit accounts or vanilla currency transactions. In fact, it's become sort of ubiquitous. What I mean by that is that there's Eurodollars pretty much behind every facet of global finance and economy.

If you look back at 2008 for example, the panic in 2008 was actually a Eurodollar panic not specifically one of Wall Street but one of Lombard Street and you were correct to point out that the main Eurodollar is sort of a misnomer because it denotes any offshore currency transactions that happen all over the world. It just so happened that the earliest markets of these offshore dollar areas happen to be in Europe, London, Zurich, Frankfurt but there was Eurodollar markets all over the world. Montreal was one, Tokyo was another big one.

So, there's a global system that is a currency system, a reserve currency system, that really isn't currency though and it functions in a lot of ways that are to our first brush, kind of strange and unusual and maybe a little bit too unfamiliar to allow comfortable interpretation.

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MACRO VOICES is presented for informational and entertainment purposes only. The information presented in MACRO VOICES should NOT be construed as investment advice. Always consult a licensed investment professional before making important investment decisions. The opinions expressed on MACRO VOICES are those of the participants. MACRO VOICES, its producers, and hosts Erik Townsend and Patrick Ceresna shall NOT be liable for losses resulting from investment decisions based on information or viewpoints presented on MACRO VOICES.

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