Scott Colbert, chief economist at Commerce Trust Company in St. Louis, rejoins the Contrarian Investor Podcast to discuss the upcoming Federal Reserve meeting and state of the economy.
This was a quick call recorded over a phone line on Tuesday, June 15.
- The Fed meeting that concludes June 16 and the coming discussion around the rolldown of QE (0:52);
- Colbert's reasons for being "grossly optimistic" about the economy (3:43);
- The biggest concern is around the length of the current expansion (5:04);
- The prospects of asset bubbles and why the 'dot plot' should see an increase from four to six or seven members of the FOMC who want to see higher interest rates (7:37);
- Where does all this leave investors? (11:06);
- What is driving the drop in bond yields (14:41);
Więcej odcinków z kanału "The Contrarian Investor Podcast"
The Lessons From Iceland's Financial Collapse, With Jared Bibler
48:35This episode brought to you by the Me, Myself and AI podcast. To get episodes without ads or interruptions, and take advantage of a host of other benefits (including the Daily Contrarian briefing and podcast), consider joining our premium service. Prices start at $9/month. More information on our Substack and Supercast. Jared Bibler joins the podcast to discuss his book 'Iceland's Secret' and his experience living through that country's financial collapse in 2008. It was a very dark period in Iceland's history, with individuals losing homes and savings and not being able to buy food. The author experienced this first-hand, initially as an asset manager and later working for regulators seeking to bring the responsible parties to justice. The crisis in Iceland shocked the world but was quickly overshadowed by the collapse of Lehman Brothers in the U.S. Today it is largely forgotten outside of Iceland. But the author says his experience holds many lessons for the present day. If nothing else, his experience holds lessons for those interested in hedging against a total collapse of capital markets and civil society. Content Highlights (Spotify users can link to the start of the segment directly by clicking on the timestamp) Why Iceland's financial crisis remains misunderstood and not discussed while still holding important relevance to global capital markets today (2:36); Iceland as an extreme example of the contemporary world (7:51); Corruption unfortunately remains 'fairly endemic' worldwide in the guest's experience, which transcends several countries (12:43); The next crisis will make 2008 'look like a walk in the park' (14:27); Lessons for the prepper community: hard currency retains its value quite well in such crises (18:57); The crypto world is ripe for fraud and 'tethered' coins do not seem to offer the protection claimed (23:30); Background on the guest (29:21); How he's spending his days now and why ESG has the attention of global regulators (36:54); Insider trading, especially around M&A deals, is rampant (38:36); What has changed in Iceland, other than a tourist explosion (43:50). More Information on the Author Order the book online here; Website: IcelandsSecret.com; Twitter: @Jared_Bibler. Not intended as investment advice.
The Long Term Bull Case for Oil, With Todd Sullivan, ValuePlays.com
45:19This episode brought to you by StockMarketHats.com. Enter the code "contrarian" at checkout for a 10% discount! To get episodes without ads or interruptions, and take advantage of a host of other benefits (including the Daily Contrarian briefing and podcast), consider joining our premium service. Prices start at $9/month. More information on our Substack and Supercast. Todd Sullivan of ValuePlays.com joins the podcast to discuss his long term bullish views on oil. The guest also provides his favorite stocks -- all portfolio holdings of his -- for investors to take advantage of this trend. Content Highlights (Spotify users can click on the timestamp to link to the start of the section directly) Big picture elements of supply, demand, and infrastructure that are driving the long term bull case for oil (2:50); What about the potential for an economic slowdown in the U.S. and more importantly China? How might that impact things? (7:39); Background on the guest and how he turned his passion as a blogger and investor into his current position (11:17); The three energy names he really likes right now (18:51); Energy has been unpopular for some time and people are under the illusion that gas and oil are going away. "Nothing could be further from the truth." (25:28); Why transport companies are more of a pure-play on energy prices than drillers (29:30); $100/barrel oil is a "realistic scenario" and prices could stay high after that as the macro outlook remains constructive (37:17); The bullish outlook for the cannabis industry in the U.S. -- this will be the topic of a future episode (42:49). More Information on the Guest Website: ValuePlays.com; Twitter: @ToddSullivan. Special Offer for Listeners Subscribe to ValuePlays at the original rate (discount of 63% over current prices). The guest discusses specifics of the service starting at (32:04).
The Transformation of the Hedge Fund Industry, With Dominique Mielle
48:54Get this podcast episode without ads and receive episodes up to a full week before regular subscribers. You also get the Daily Contrarian briefing and mini-podcast each morning. Sign up through our Substack or Supercast. Dominque Mielle joins the podcast to discuss the transformation of the hedge fund industry, as encapsulated in her book 'Damsel in Distressed: My Life in the Golden Age of Hedge Funds.' Mielle's career in hedge funds spans three decades, a period of dramatic growth that has culminated with many investors today questioning whether it still makes sense to allocate to the asset class -- to the extent that it can even be called an asset class. The guest says hedge funds still have value in certain circumstances, but there are many forces working against them. She also has some views on markets and even cryptos that are discussed in the back end of the episode. Content Highlights (Spotify users can click on the timestamp to link to the start of the segment directly) Her reasons for writing the book: very few women in hedge funds and the critical growth periods she observed in the industry (2:05); So does the hedge fund industry have a future? (5:15); What exactly has changed in the last 20+ years to make hedge funds less compelling? (8:02); There is certainly less mystique around hedge funds, and the media now reports returns and other things regularly -- something the host himself has been guilty of. How has that affected things? (13:54); Okay, so what is the value proposition for hedge funds? (18:58); Background on the guest (25:36); What if a woman wrote a 'Liar's Poker' of the hedge fund world? And why aren't there more women in finance? (31:30); The guest's view of markets at present. Tapering is critical (40:23); Her views on cryptocurrencies (44:47). More Information on the Guest: Website: DominiqueMielle.com; Book: Damsel In Distressed, by Post Hill Press; Twitter: DominiqueMielle. Not intended as investment advice.
Dangers Lurk in Market Structure's Changing Dynamics
43:12This episode brought to you by the Connecticut Economic Literacy Initiative. The get this podcast without ads or announcements, and a week before regular subscribers, sign up for the premium service through our Substack or Supercast. Michael Green, portfolio manager and chief strategist at Simplify Asset Management, joins the podcast to discuss the changing dynamics of market structure and how these are creating the potential for havoc. Content Highlights: (Spotify users can click on the timestamp to link to the segment directly) Market structure: what it means and how it has changed (3:30); How passive investing pools are changing the equation (6:26); How Tesla (TSLA) is the perfect case study for this phenomenon (8:39); The Fed's impact when it comes to the bond market. This has ripple effect (13:02); The interest rate and inflation outlook in the U.S. (15:34); Background on the guest (20:55); Passive investing has caused a host of confusing signals where the market cycle is concerned (24:37); Business cycles are still alive and well, and this can of course impact the market. Where that stands today (30:05); Market 'skew' is dramatically higher and chances of a collapse are increasing. "The market senses something is wrong." (34:31). More Information on the Guest: Twitter: @profplum99; Website: Simplify.us.
The 'New Normal' of Blue-Collar Labor Shortages, With Gad Levanon, The Conference Board
35:05This episode brought to you by the Connecticut Economic Literacy Initiative. The get this podcast without ads or announcements, and a week before regular subscribers, sign up for the premium service through our Substack or Supercast. Gad Levanon, head of Labor Market Institute at The Conference Board, joins the podcast to discuss his views of employment trends. Levanon's analysis differs from the consensus view of labor markets. In his view, unusual demographic and educational trends are causing a 'new normal' of shortages among blue-collar workers. These jobs can be expected to see fast wage growth, bringing a host of restraints on the next stage of economic expansion. Content Highlights: (Spotify users can link directly to the start of the segment in question by clicking on the timestamp below) The 'new normal' of labor shortages (3:35); The economic impact of rising wages for blue-collar workers: corporate profits and higher consumer prices (7:29); Automation has the potential to help the trend somewhat, but there are reasons to be skeptical (10:37); How close is the U.S. to reaching full employment? (14:29); What all of this says for the next stage of the economic cycle (16:57); Background on the guest (20:22); The 'work-from-home' trend and how that is impacting things (22:47); Other trends in employment and labor markets (27:27); The guest's primary concerns about the economy and society at present (31:22). Background on the Guest: The Conference Board website and bio; Forbes contributions.
When Investors Become Gamblers -- And Why It's Happening Now
47:32This episode brought to you by the Connecticut Economic Literacy Initiative. The get this podcast without ads or announcements, and a week before regular subscribers, sign up for the premium service through our Substack or Supercast. William L. Silber, author of the book ‘The Power of Nothing to Lose: The Hail Mary Effect in Politics, War, and Business,’ joins the podcast to discuss his thesis that individuals, including investors, can become reckless gamblers if they have nothing to lose. Silber has a career dating back to 1966 in academia and Wall Street. His comments are pertinent in the present day of cryptocurrencies, the ‘retailization’ of options trading, NFTs, and meme stocks, among others. So is his recommendation (not investment advice) to reduce risk exposure. Content Highlights When people have downside protection and limitless losses, “they tend to become reckless and almost gamblers” (3:48) Rogue traders and the skewed payoff that makes them go rogue (14:41); What to make of the present day and investors’ collective risk appetite, especially regarding meme stocks? (17:32); Background on the guest (24:55); A valuable lesson learned at Odyssey Partners in the 1980s: what’s an exit strategy? (27:47); Is this a time for investors to reduce risks and sell stocks? (30:26); Precious metals and their place in a modern portfolio (36:52); More Information on the Guest Website: WilliamLSilber.com; Wikipedia; Places to buy the book; LinkedIn.
Bubbles Lurk in Sovereign Debt, Financial Engineering, With Michael Ehrlich
32:35Check out the new Substack and sign up to listen without ads or announcements -- and get the Daily Contrarian briefing and podcast each morning. Michael Ehrlich, director of the Leir Center for Financial Bubble Research at the New Jersey Institute of Technology, joins the podcast to discuss his views. Dr. Ehrlich has identified two areas of concern: sovereign debt and financial engineering. This is not his only area of interest however, as Dr. Ehrlich is passionate about early-stage venture/angel investing, which guides the discussion in the second half of the episode. Content Highlights It's been a long time since the last sovereign debt crisis. Too long (1:47); Keep an eye out for private equity as well (8:02); Bubbles are part of the market and can even be viewed as a good thing. Until they aren't (9:44); SPACs and cryptos are two examples of financial engineering potentially gone awry (10:56); Background on the guest (15:07); Venture capital has historically controlled early-stage investing. But this is changing (18:07); Financial technology, aka 'fintech' is one area Dr. Ehrlich likes a lot (20:20); What about driverless cars? (23:35) For More Information on the Guest NJIT.edu biography; Henry J. and Erna D. Leir Research Institute for Business, Technology, and Society website. More Coverage of These Topics S3E12: The Real and Present Regulatory Risk Facing Cryptocurrencies; S2E35: How Bubbles and False Narratives Made Financial Markets; S2E4: Private Credit is Fentanyl.
Don't Fear Inflation, the Fed is Right, 10-Year Yields to Drop to 0.5%: Alfonso Peccatiello
1:00:24Check out the new Substack and sign up to listen without ads or announcements -- and get the Daily Contrarian briefing and podcast each morning. Alfonso Peccatiello joins the podcast to discuss his contrarian views on inflation, bond yields, and interest rates. The guest doesn't buy the inflation narrative entirely, believing credit creation has peaked. We are likely to see negative economic surprises and drawdowns in risk assets starting in the fourth quarter. Yield on 10-year bonds should peak at 0.5% due to a 'Eurofication' of the U.S. yield curve. Content Highlights: Why concerns about inflation are misguided (1:54); The Fed is right. Inflation is transitory (6:37); Demand for bank loans is "terrible," despite extremely low yields (13:54); Why do bond yields continue to drop? (18:16); The bond market is saying growth and credit creation has peaked (23:24); Why central banks' digital currency experiments are potentially a game-changer (27:49); Background on the guest (33:04); The 'four quadrant' approach to macro investing and where we are right now (36:26); The Fed tightening cycle should start in late 2022 and peak around 0.75% (47:50); How low do we go on the 10-year this cycle? (57:00) More Information on the Guest: Website: The Macro Compass; Twitter: @MacroAlf. Not intended as investment advice.
Merger Arbitrage and Why to Not Fear The Antitrust Boogeyman, With Deepak Gurnani, Versor Investments
39:14This episode is brought to you by Merk Research. Visit this link to take advantage of the offer presented on the podcast. To listen without ads or announcements, become a premium subscriber or join our substack, which gets you access to a host of other benefits, including (but not limited to) the new Daily Contrarian podcast and briefing, published every market day morning by 7:00 a.m. ET. Deepak Gurnani, managing partner of Versor Investments, joins the podcast to discuss merger arbitrage investing. Merger arb is the rare strategy that can (really!) consistently produce non-correlated returns. But it isn't easy to execute. Gurnani provides some information around what has worked for his firm and things to look for for those wishing to get involved with the strategy. Not intended as investment advice. Content Highlights:(Spotify users can click on the time stamp to link to the start of the segment) Versor Investments' unique approach to merger arbitrage and why it's different from most fundamental-based approaches (3:53); Ultimately success in merger arb comes down to differentiating between mergers that will close successfully and those that will be terminated -- and then overweighting the former (5:39); Some of the alternative data sources that Versor uses to track and rate announced deals (7:49); A merger's time-to-completion and why it can be vital (13:51); Digging in to the 10% failure rate for announced mergers and why it is likely inflated (15:41); The antitrust environment under new FTC chair Lina Khan and other regulatory uncertainty (18:28); Technology M&A: an opportunity? (21:44); Background on the guest (25:12); The state of M&A dealflow in the U.S. (28:50); Improved offers and competing bids are on the rise, dramatically (33:23). For More Information on this Topic: Website: VersorInvest.com; The Environment for Merger Arbitrage 2021: Link to paper.
Colin Lancaster is Fed Up!
43:28This episode is brought to you by Merk Research. Visit this link to take advantage of the offer presented on the podcast. To listen without ads or announcements, become a premium subscriber or join our substack, which gets you access to a host of other benefits, including (but not limited to) the new Daily Contrarian podcast, released every market day morning by 7:00 a.m. eastern time. Colin Lancaster, global head of macro/fixed income at Schonfeld Strategic Partner Fund, joins the podcast to discuss his book Fed Up! Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader. The book spans the period from October 2019 to June 2020 and includes the height of the coronavirus crisis. This features heavily into the conversation. We also discuss the Federal Reserve and his view of current markets. Content Highlights: (Spotify users can click on the timestamp to link to the segment directly) What went into him writing the book? What was the impetus? (3:50); Macro investing and the need to be a diversifier and disaster hedge (7:38); What is he most concerned about right now in markets? (12:07); What does an investor do in this market, especially with the Fed continuing to hold rates near zero? (14:30); The Fed's experiment is "dangerous" and the central bank has "very little credibility" when it comes to inflation (18:55); Background on the guest (23:49); The Fed's role in creating and fostering wealth inequality is significant, despite its good intentions (27:48); How to go about fixing this? Does the Fed perhaps have too much autonomy? (31:30); The book is technically a novel and has quite a few characters. Are these fictional or based on real people? (36:28); Alternative data; some ideas of what to look for (40:35). More Information on the Guest Website: ColinLancaster.me; Twitter: @ColinLancaster; Buy the book on Amazon. Not intended as investment advice.