Erik: Welcome to Part 6 of MacroVoices Eurodollar University with Alhambra Investments CIO Jeffrey Snider. I’m your host, Erik Townsend. There is a slide deck to accompany this podcast and we recommend that you download it before listening, as we’ll be referring to the charts and graphs it contains throughout this program. You’ll find the download link, along with the other parts of the series at https://www.macrovoices.com/edu (for Eurodollar University).
As you know, it was a challenge to decide in the editing room where to break Parts 5 and 6 apart, because Jeff Snider was really on a roll, talking about how the sheer panic across the industry associated with the subprime mortgage crisis was creating a liquidity crisis, even in cases where the underlying credit itself was actually sound. We cut off just before Jeff began to explain how gold would come into the story as the collateral of last resort.
Just to refresh your memory, we’re going to rewind by a couple of minutes and replay the final two minutes or so of Part 5, just to keep the continuity of thought going as Jeff brings gold into the story.
Be sure to download the slide deck that accompanies this conversation. You’ll find the download link at https://www.macrovoices.com/edu (for Eurodollar University).
Erik: Welcome to Part 5 of MacroVoices Eurodollar University with Alhambra Investments CIO Jeffrey Snider. I’m your host, Erik Townsend. There is a slide deck to accompany this podcast and we recommend that you download it before listening, as we’ll be referring to the charts and graphs it contains throughout this program. You’ll find the download link, along with other parts of the series at https://www.macrovoices.com/edu (for Eurodollar University).
Now, you might be wondering how this could be Part 5 in what we’ve described in the past as a four-part series. The original four-part series, produced in 2017, focused on the history of the Eurodollar system before the great financial crisis. In Season 2 of Eurodollar University, produced in 2018, we’re going to analyze how and why the system broke down, beginning on August 9 of 2007, and hasn’t been the same since. Season 2 adds Parts 5, 6, and 7 to what has now become a seven-part series overall.
Erik: Jeff Snider, thanks so much for joining us again for Eurodollar University, Season 2. This is Part 5 in what was originally conceived to be a four-part series. And the reason for that is the original series really was focused on the history of the Eurodollar system up until it broke down in 2007. In Season 2, we’re going to talk about what’s happened since 2007. Thanks so much for being with us and doing this again with us, Jeff.
Erik: Joining me next is Jesse Felder, editor and publisher of The Felder Report, one of the most popular newsletters, as well as the occasional Felder Report podcast, which is also extremely popular with listeners.
Jesse, thanks so much for joining us. I’ve got a lot I want to cover. First of all, listeners, Jesse put a great slide deck together for us. The download link is in your Research Roundup email. We’re going to start with that. Then there is also a blog post to discuss, also linked in your Research Roundup email.
Jesse, let’s start with this chart deck. As I go to Chart 2, I notice that you’re talking about some popular concepts: dot com bubble, housing bubble, and then everything bubble. I love the metaphor. It feels good.
But I want you to be really specific with me. What are you talking about, “everything bubble?” Exactly what do you mean? Because dot-com bubble and housing bubble – everybody knew exactly what that meant.
Why is it an everything bubble? And what is causing there to be a price inflation bubble in so many different asset classes all at once?
Erik: Joining me next on the program is Martin Armstrong, founder of Armstrong Economics.
Martin, I’ve really got to hand it to you. Last time we had you on the program, a little more than a year ago, the S&P was at 2,385.
And, to summarize approximately what you said: You could easily make the argument that we’re already way overvalued on a fundamental basis. But it doesn’t matter. The market could easily double from here.
And, of course, as much as everybody was calling for a crash at that point, your words were proven quite prescient. It was all uphill from there.
Now we’ve had a few hiccups. Are we finally at the point where, maybe, we’re running out of steam? Or do you think that we’re going to get past this correction and continue to move higher?
Dave, thanks so much for being with us on the program. Listeners, we’ve got a great slide deck that Dave put together a few months ago. This is dated from March, but it is every bit as relevant today as the day that it was published in March of 2018. You’ll find the download link in your Research Roundup email and I strongly encourage you to download it as we’ll be referring to it throughout this interview.
Dave, the first few slides you’ve got here – you’ve done such a brilliant job as always at getting together some of the smartest people in the industry and quotes from – all kind of on the same theme, which is we should be pretty much coming to an end of this cycle.
But I was particularly caught by Jeremy Grantham’s comment on Slide 3 where he says this thing ought to be over but, on the other hand, as a historian, there’s also the possibility that we’re just going to see a great big blow off or melt-up phase at the end of this bull market. And he’s saying the potential of maybe another 60% surge up before it’s finally over.
So where does that bring us? This was a few months ago. What’s the current update on your outlook on the market? Are we looking at maybe that last hurrah? Or is this cycle finally ending?