We Study Billionaires - The Investor’s Podcast Network

TIP173: Stock Market Melt-up with Richard Duncan (Business Podcast)

Jan 14, 2018

Richard Duncan, a macroeconomics expert with over 30 years of experience at the World Bank and IMF, shares deep insights into the bond market’s relationship with stock prices. He explains how rising bond yields could indicate a stock market high and discusses the Federal Reserve's actions, notably their billion-dollar balance sheet reduction. Duncan also unpacks the U.S. trade deficit's role in maintaining the dollar's dominance globally and speculates on the future of commodities, offering essential advice on avoiding confirmation bias for investors.

51:50

Episode guests

Richard Duncan

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Episode notes

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Quick takeaways

The bond yield curve serves as a crucial indicator for anticipating stock market highs or potential recessions based on its shape.

The Federal Reserve's strategy of shrinking its balance sheet is expected to significantly impact interest rates and overall market dynamics in 2018.

The U.S. dollar maintains its dominance as the world's reserve currency primarily due to ongoing trade deficits and foreign capital inflows.

Deep dives

Bond Market Dynamics

The bond market dynamics are critically examined, particularly focusing on the bond yield curve, which is essential for understanding potential stock market movements. It is highlighted that the yield curve typically slopes upward, with long-term bonds yielding more than short-term ones. However, when approaching a recession, the curve can flatten or invert, often signaling economic downturns. Richard notes that the current situation sees the 10-year government bond yield at about 2.4%, raising questions about its future movement and its implications for the broader economy.

Intro

2min

Understanding the Bond Yield Curve

12min

Currency Dynamics and Global Implications

7min

The Dynamics of Currency Valuation

15min

Assessing the Impact of Monetary Policy Through Historical Crises

5min

The Evolution of US Monetary Policy and Economic Trends

7min

Navigating Monetary Influence and Investment Psychology

8min

On today’s show, we bring back a guest that often yields some of the biggest praise from our listeners. His name is Richard Duncan and this is the third time we’ve had him on the show. Richard comes with a wealth of knowledge and over 30 years of experience working for organizations like the World Bank, the IMF, large cap asset management companies, and many more. He’s the author of three incredible books that discuss macro economics and how the world of finance functions in a fiat world.

During today’s discussion we’re going to talk about the bond market and how it’s yield is potentially creating an environment for the stock market to go even higher. Richard outlines some interesting points about how central banks are going to act in 2018 and what that means for overall market movements. So with that, let’s roll.

IN THIS EPISODE, YOU’LL LEARN:

Why and how the bond yield curve can signal a stock market high.
Why the FED is shrinking its balance sheet with 1 trillion dollars.
Why US’s trade deficit is the reason why the US dollar is the world’s most dominant currency.
Where commodities are heading in 2018.
Ask The Investors: How do I avoid confirmation bias?

BOOKS AND RESOURCES

Join the exclusive TIP Mastermind Community to engage in meaningful stock investing discussions with Stig, Clay, and the other community members.
Richard Duncan’s Macro Economics site “Macro Watch.” Use the Coupon code “History” to get 50% of your annual subscription.
Richard Duncan’s book, The Dollar Crisis – Read reviews here.
Richard Duncan’s book, The New Depression – Read reviews here.

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