Long-time macro investor Axel Merk (@AxelMerk), Chief Investment Officer of and founder of Merk Investments, returns to the pod for episode 70 and a wide-ranging conversation on monetary policy, the economy, the banking crisis, problems plaguing commercial real estate, the U.S. Dollar, gold and more.
In this episode, Merk points out how the economy is a mess. He also explains that those in the “soft landing” camp are ignoring “the big elephant in the room,” which is the bank balance sheets exposed to interest rate risk and commercial real estate. He later adds that the Fed’s actions are converting an acute problem into a chronic problem, where banks with holes in their balance sheets will lend less, which is a headwind to growth.
Axel has grown Merk Investments into a $1 billion investment advisory firm offering investment funds and advisory services on liquid global markets, including domestic and international equities, fixed income, commodities and currencies.
0:00 Intro
1:50 Welcome Axel Merk
2:22 Background in macro
3:32 Deep dives into central banks
4:00 The Fed is higher for longer
4:53 Big elephant in the room are the banks
6:02 Banking crisis is still here
8:40 Banking system limping along
10:38 Policymakers will bend the rules
11:29 People will invest based on next bailout as opposed to fundamentals
13:00 Commercial real estate
15:22 How to fix banks
20:07 Moral hazard?
21:30 Banking is risky
23:22 SVB depositors
29:00 Converting acute problems into chronic problems
30:00 Inflation
34:00 Stagflation a longer more persistent issue
48:00 Dedollarization
51:47 Risk of people moving out of the dollar is more than theoretical
56:41 Debt ceiling fight
1:01:01 Capitalism
