Real Vision: Finance & Investing

Renowned author, professional trader and quantitative analyst Euan Sinclair describes the subtle difference between inefficiency and risk premium in options and markets. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Inflation is rampant globally, and the world’s major central banks are all taking decisive measures to tighten policy in their respective ways, with the exception of one major developed market central bank: the Bank of Japan. Weston Nakamura is based in Tokyo, Japan and has been monitoring, analyzing and trading the BOJ throughout Governor Kuroda’s controversial tenure, and explains how the Bank of Japan’s Yield Curve Control policy has enabled the other major central banks and governments from making tough decisions and allowed for them to keep monetary and fiscal policy loose by “exporting low yields.” Weston also warns of a major potential inflection point ahead, as global central banks retreat from policy accommodation, leaving the BOJ the sole source of policy continuity in the QE-era. Learn more about your ad choices. Visit podcastchoices.com/adchoices

The University of Michigan Consumer Sentiment Index for February read 61.7, down from 67.2 in January, well short of a median estimate of 67, and the lowest print since October 2011 – even lower than April 2020, when the global economy was locked down. “To put it bluntly,” notes Jim Bianco, president and macro strategist at Bianco Research, “this was not a good report.” And the decline was largely attributable to waning confidence among the investor class, which fears the stock-market implications of the Federal Reserve’s tightening cycle. Regular consumers are simply in fear of falling behind because of inflation. An emerging Wall Street consensus now sees seven rate hikes coming down the pike, a process that could result in an inverted yield curve. And an inverted yield curve often means “recession.” Meanwhile, Bitcoin appears to be decoupling from other risk assets, perhaps on the perception that it’s an effective hedge against still-accelerating inflation. Bianco joins Real Vision’s Ash Bennington to talk about next moves for the Fed amid increasing chatter about an emergency session ahead of the Federal Open Market Committee’s next regular meeting in March. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3HLyUX8 Learn more about your ad choices. Visit podcastchoices.com/adchoices

The Bureau of Labor Statistics reported this morning that the Consumer Price Index for January 2022 was up 0.6% and 7.5% year over year. St. Louis Federal Reserve Bank President James Bullard said he’s become "dramatically" more hawkish in light of the hottest inflation in nearly 40 years. Bullard, a voting member of the Federal Open Market Committee, would now like to see a total of 100 basis points of rate hikes by July. In the aftermath of Bullard’s comments, federal funds futures are pricing in a 60% chance of a 50-basis-point hike in March. Rent has gone up nearly 30% in some cities, but the grass isn’t greener for would-be homeowners. U.S. mortgage rates have surged to a two-year high, with the average 30-year fixed rate up to 3.69% from 3.55% last week. Meanwhile, the European Commission has raised its inflation forecast for 2022 to 3.5% from 2.2% due to high energy prices stemming from geopolitical tensions in Eastern Europe. Thomas Thornton, founder of Hedge Fund Telemetry, joins Real Vision’s Ash Bennington to discuss today’s CPI report and what it means for the Federal Reserve, markets, and your portfolio. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3swruR5 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Japan Machine Tool Orders, the best leading indicator of the global industrial cycle, accelerated in January. And recent data suggest the backlog at Los Angeles Port may begin to ease by summer. At the same time, the coming Federal Reserve rate-hiking cycle is a major wild card for investors. Darius Dale, founder and CEO of 42 Macro, joins Real Vision’s Maggie Lake to talk about why, according to his analysis, “deflation” is now equal to “inflation” as the dominant short-term market regime. Was the January sell-off merely a precursor to a larger correction? However the case turns, Fed Chair Jay Powell’s “right-tail hawkishness” means more volatility. Darius shares his thoughts on a murky macro picture and how specific assets are likely to perform under various scenarios. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3HESUe5 Learn more about your ad choices. Visit podcastchoices.com/adchoices

President Emmanuel Macron of France met with President Vladimir Putin of Russia in Moscow on Monday and emerged with what seemed like good news: There’d be no further escalation of the Ukraine crisis. Indeed, equity indexes rallied, and crude oil prices backed off seven-year highs. But the Kremlin, while conceding the meeting had provided the basis for further work toward deescalation, said Macron’s interpretation of Putin’s intentions was “not right.” Meanwhile, President Joe Biden hosted new German Chancellor Olaf Scholz for talks about the situation in the Baltics, agreeing that construction of the critical Nord Stream 2 natural gas pipeline would be stopped should Russia invade Ukraine. Tony Greer, founder of TG Macro and editor of the Morning Navigator newsletter, joins Real Vision’s Alfonso Peccatiello to sort out implications for stock and commodity markets in light of recent geopolitical events. Tony also talks about why the FAANG stocks have lagged of late, particularly relative to energy. And Weston Nakamura, our man on the ground in Asia, drops in to share insights on China’s recent moves to accommodate markets even as western policymakers withdraw stimulus. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3guKIB9 Learn more about your ad choices. Visit podcastchoices.com/adchoices

The small-cap Russell 2000 Index posted an impressive 14.8% gain during 2021, but nearly all of it came in the first quarter. And weakness over the ensuing nine months carried into the first month of 2022, when the index shed 9.7%. Francis Gannon, co-chief investment officer of Royce Investment Partners, notes this frustrating performance came despite generally strong earnings growth for small-cap companies. Gannon joins Real Vision’s Maggie Lake to share his outlook for small caps over the balance of 2022, including the fact that it’s the only major asset class to have outpaced inflation during every decade since the 1930s. And rising interest rates could provide an additional tailwind for small-cap value stocks such as regional banks. Meanwhile, major indexes reflect uncertainty ahead of Thursday’s release of Consumer Price Index data for January, as investors weigh the potential for a 50-basis-point hike by the Federal Reserve. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3HBlVau Learn more about your ad choices. Visit podcastchoices.com/adchoices

Mike Green sits down with Louis Vincent Gave, CEO of Gavekal Research, to examine the political and economic climate of China. They look at China's 'outsized' role in the world and what impact joining the WTO had on the Chinese nearly two decades ago. The conversation also looks to the future -and the possibility of a digital currency in China -in time for the Beijing Olympics. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Weston Nakamura closes his long Sony Corp. (NYSE: SONY)/short Technology Select SPDR Fund (NYSE: XLK) market-neutral pair trade, as SONY shares rallied following an intraday trading halt on news of its acquisition of Bungie for $3.6 billion Weston shares his thought process and overall assessment. Though it was a net-profitable trade in an environment of elevated global equity volatility, Weston’s frank self-evaluation is that this was a flawed structure. He categorizes this win as “right for the wrong reasons.” In other words, he got lucky. Weston expands on the importance of applying the framework of being “right/wrong, for the right/wrong reason” for all traders and investors. Learn more about your ad choices. Visit podcastchoices.com/adchoices

It wasn’t just the nonfarm payrolls data for January that moved markets on Friday. Upward revisions to prior months’ reports put a fresh glow on the U.S. economy – and also invited questions about Federal Reserve policy. “Too late the hawk” is how Harry Melandri might put it. Melandri, currently an advisor with MI2 Partners and formerly of Deutsche Asset Management and the Bank of England, notes that we have hit our “max non-inflationary growth potential.” In fact, the Fed “could tighten a lot without having a restrictive monetary policy.” The issue now could be either how big is the “everything bubble” in the U.S. or whether inflation or growth is the central bank’s key policy objective. Melandri joins Real Vision’s Maggie Lake at the end of one of the most fascinating weeks in recent financial market history. Want to submit questions? Drop them right here on the Exchange: https://rvtv.io/3rsVnTh Learn more about your ad choices. Visit podcastchoices.com/adchoices