Forward Guidance

When Jack Farley ran into macro investor Michael Nicoletos at the Blockworks Digital Asset Summit in London, he knew the two had to film an interview. Nicoletos shares his thoughts on crypto’s role within a macro portfolio, why the U.S. dollar is rising against other currencies, and why the 40-year bull market in bonds might not yet be over. Nicoletos argues that central bank digital currencies (CBDCs) will eventually replace stablecoins as an onramp to crypto, and argues that China economic woes are very serious.Blockworks next crypto event in May 2021: https://blockworks.co/events/permissionless/Jack Farley’s Twitter: @JackFarley96Michael Nicoletos’ Twitter: @mnicoletos

We're heading for an inflationary decade that will change society as we know it. That's according to Vincent Deluard, director of global macro research at StoneX Group Inc, who argues inflation is not transitory as many insist but rather a feature of the new economic landscape that investors must prepare for. On the seventh episode of Forward Guidance, Deluard gives Blockworks' Jack Farley 5 reasons why high prices are no longer the cure to high prices, including today's tight labor market, the flurry of post-Covid spending packages, and China's withdrawal from its role as an exporter of deflation. Deluard argues that inflation itself is inflationary; while soaring commodity prices, supply chains bottlenecks, and excessive stimulus are undoubtedly the immediate drivers of the current spike in prices, the fundamental driver of secular inflation is an insidious increase in our collective preference for the present.

Tobias Carlisle, Portfolio Manager at Acquirers’ Funds, joins Jack Farley on this sixth episode of Forward Guidance to explain why he believes quality companies are being serially undervalued. Carlisle argues that the equity market assigns far too high of a value on fast-growing stocks, and far too-little of a value on companies whose revenues are growing slowly but whose return on capital is very high and whose balance sheets are pristine. Carlisle shares with Farley the methodology and structure of of his value funds, The Acquirers’ Fund ($ZIG) and the Roundhill Acquirers Deep Value ETF ($DEEP), and he shares his vision for the future of value investing.

Is the 40-year era of falling bond yields and low inflation coming to an end? That is the question investors have been asking themselves for months, and now that October's CPI reading hit its highest level since 1991, it is a query that can no longer be avoided.Eric Basmajian of EPB Macro Research is confident that all this anxiety is unnecessary. On today's episode of Forward Guidance, Basmajian tells Jack Farley why he thinks the rate of inflation will soon relent, and why he thinks the bull market in bonds is nowhere close to over. Pointing to the fall in economic growth rates as measured by industrial production, hirings, and real rates of consumption and income, Basmajian argues that an overweight allocation to Treasury bonds will protect investors from a slowdown in growth, as can be seen by the rolling over of coincident factors such as industrial production, hirings, and real rates of consumption and income. Basmajian explores particularly explosive parts of the Consumer Price Index like durable goods and rent, and he explains his long-term view that aging populations will ensure low bond yields in the United States just as they did in Europe and Japan.Basmajian's article on demographics:https://www.epbmacroresearch.com/blog/the-global-demographic-vortexBasmajian's article on rent inflation:https://www.epbmacroresearch.com/blog/are-you-worried-about-rent-inflationThe Dallas Fed's paper on rent inflation:https://www.dallasfed.org/research/economics/2021/0824

The world of macro investing is full of narratives: that a rising dollar threatens emerging market stocks and commodity prices; that rising bond yields imperil growth stocks but buoy value stocks; and that inflation is bad for Tesla, good for gold, and great for Bitcoin. There is more than a grain of truth to these mantras, but they miss the complex interplay of macro variables. On today’s episode of Forward Guidance, Jack Farley investigates these sacred cows of macro to see if they are a little shaky on their legs in a “man vs. machine” conversation with Huw Roberts, head of analytics at Quant Insight.

Do balance sheets matter? Do cash flows matter? In a world where asset prices are driven by liquidity rather than fundamentals, the answer can seem to be yes. But since this environment gives companies license to embroider their finances, the ability to spot their accounting sleight-of-hand is of immense value to investors. Today on the third episode of Forward Guidance, Jack Farley welcomes Stephen Clapham, forensic accountant and founder of Behind the Balance Sheet. Clapham shows the most common instances of financial legerdemain and gives in depth analysis of companies such as Tesla, Ferrari, and The Hut Group.

The world faces an energy crisis that threatens to stop the economic recovery in its tracks. On today’s episode of Forward Guidance, Warren Pies, founder of 3Fourteen Research, joins Jack Farley to explain the root causes of soaring prices of oil and natural gas. Pies argues that the world is entering a regime of secular inflation that will have profound implications for investors, such as turning the correlation between stocks and bonds from negative to positive. Pies shares his views on real assets and explains why he thinks Bitcoin will likely continue to outperform gold at least over the short-term. PIes challenges mainstream narratives about Bitcoin such as the stock-to-flow model as well its being uncorrelated with other risk assets.

“Forward Guidance” is a show dedicated to uncovering the heart of this conundrum. Twice a week, Jack Farley will be speaking directly with fund managers, analysts, and financial industry professionals about how investors can grow and protect their wealth in this brave new macro world. These episodes will air on Tuesday and Friday.Today's show is with Lyn Alden of Lyn Alden Investment Strategy. Lyn will be sharing why she thinks the global financial system is nearing the apogee of a long-term debt cycle, and the only way to unwind the leverage without causing ruinous economic data is through persistently higher inflation and a significantly weaker U.S. Dollar. Alden also shares her views on surging energy costs, China’s stock market woes, and the flurry of new Bitcoin ETFs that have come to market recently.