The End of the Long Term Debt Cycle

Kenny: I think we're in the very late stages of this long term debt cycle. How can you level up an economy from 100% debt to GDP and still make it sustainable? Well, you lower borrowing costs. So basically Japan has been stagnating effectively for the last 20 years because they reached the point where you cannot lower real interest rates anymore. And the private sector is not willing to lever up more. The risk is that you keep stretching the system until like in Japan in the 90s you end up creating too much leverage and at some point the bubble burst.

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Rebecca Hotsko and Alfonso Peccatiello discuss the current market outlook, including the driving force behind the market rally, its sustainability, Alfonso’s prediction of a 0% rate cut by the Fed in 2024, and a whole lot more!

Alfonso Peccatiello is former Head of a $20 billion Investment Portfolio and now is the Founder and author of The Macro Compass, which is an investment strategy firm that provides financial education, macro insights and investment ideas.

IN THIS EPISODE, YOU’LL LEARN:

00:00 - Intro.

02:05 - His current market outlook, whether this recent market rally is sustainable or not.

10:43 - Why Alfonso expects the Fed to cut rates to 0% in 2024?

22:07 - How the long-term debt cycle works, what are the key factors that drive it over time?

29:27 - Why Alfonso believes we are in the very late stages of the long term debt cycle?

33:41 - What implications does this has economically, and for the financial markets?

34:02 - Will we see a period of deleveraging similar to 2008 and 1929 in the US?

41:11 - The difference between a period of deleveraging and a recession.

50:22 - His thoughts on the trend of de-dollarization, is a US dollar centric world over and are there any possible alternatives to this dollar central world?

54:49 - The Impacts that an economic downturn and de-leveraging would have on a US dollar based global system.

60:09 - Alfonso’s portfolio strategy and investment take-aways given his outlook.

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Kyle and the other community members.
Check out The MacroCompass.
Check out: The MacroCompass Substack.
Related Episode: Listen to MI232: Understanding Quantitative Easing w/ Alfonso Peccatiello , or watch the video.

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Email: Rebecca@theinvestorspodcast.com

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