July 27, 2024 • 46 mins
Ever wondered how Federal Reserve policies are shaping the markets and economy? Join us as we welcome Joseph Wang, former senior trader at the Federal Reserve's open markets desk and author of "Central Banking 101." Joseph brings an unparalleled perspective to our discussion, shedding light on the Fed's increasing market interventions and its growing tendency to prioritize low unemployment over inflation control. You'll gain unique insights into the political dynamics within the Federal Reserve, including its apparent bias towards the Democratic Party and the political motivations behind calls for rate cuts.
We also tackle the intricate effects of rate cuts on various sectors, such as REITs and RMBS REITs, distinguishing between cuts spurred by economic downturns and those driven by declining inflation. Joseph provides an expert analysis of the banking sector's health, especially focusing on the challenges faced by regional banks and potential risks from commercial real estate. The conversation broadens to encompass the global rate-cutting cycle, exploring the actions of other central banks like the ECB and the Bank of Canada and their implications for the Fed and global monetary policy.
Looking ahead to the 2024 presidential election, we delve into how a potential Trump administration could influence US currency policy, particularly in terms of favoring a weaker dollar to boost exports. Joseph offers intriguing market indicators, including Taiwan's stock market and its impact on the tech sector, alongside classic Trump trades like immigration and tax cuts. We also highlight gold as an attractive investment, driven by global geopolitical tensions and US fiscal policies. This episode is packed with valuable insights on monetary policy, economic trends, and investment strategies you won't want to miss.
Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:11):
My name is Michael Guyatt, publisher of the Lead
Lagrime Report.
Joining me for the rough houris Mr Joseph Wang, the Fed guy
himself.
Joseph, a lot of people haveseen you and know of you, but
for those who don't know aboutyour background, do a quick
recap on who you are, whatyou've done throughout your
career, and is it kind of likethe matrix, where you're like
the 12th iteration of Neo?
Is that why, on the Fed?
Speaker 2 (00:30):
side.
Well, first of all, michael,thanks so much for inviting me.
It's a pleasure to be here.
So, as my moniker suggests that, I used to work at the Fed
before I started my own businessas writing commentary for the
markets, I was a senior traderon the open markets desk.
What that is?
It's the Fed's trading desk.
So, as we all know, the Fed isvery active in markets, does a
(00:50):
whole lot of things like QE,like repo, like FX swaps and so
forth, and it also pays closeattention to just everyday
goings of in the markets.
So when you're on the openmarkets desk, what you do is you
execute trades on behalf of theFed, but you also study markets
.
So when you're there, you areable to talk to a whole range of
(01:11):
market participants fromforeign central banks,
commercial banks, hedge funds,government agencies basically
everyone is willing to talk toyou and you have access to
tremendous amounts of data.
So it's a really good way tokind of have a peek behind the
curtain to see how the marketsworked.
And so I was there for a fewyears learning about things, and
then I figured that I would dosomething myself, and, of course
(01:34):
, on my way here to where I amnow I also have a bestselling
book on Amazon called CentralBanking 101.
That describes the things thatI learned and, of course, in a
past life I was actually alawyer and that is how I began
my career, but of course I don'tlike talking about that.
I hope to generate goodwill.
Speaker 1 (01:54):
Since you wrote that sort of book on Fed inner
workings, I am curious, becauseyou interact a lot of people,
both sophisticated and noviceinvestors.
What do you think is thecommonality in terms of what
people get wrong about how theFederal Reserve responds to
shocks to the economy?
Speaker 2 (02:12):
So first off, I love to be clear that the Fed is
comprised of people and thatchanges over time.
Who sits on the FOMC of coursecolors how the FOMC perceives
the world and how they maketheir trade-off between, let's
say, full employment and pricestability.
Now, over the past let's saydecade, I'd say the FOMC has
(02:35):
tended to be more and moredovish, more and more afraid of
high unemployment rather thaninflation.
The way that I see this is thatthe Fed has been willing to be
more and more active andintervening in the markets.
For example, if you ask anyonepre-2008, pre-great financial
crises, what do you think aboutthe Fed going in and being
(02:56):
active in the corporate bondmarket?
What do you think about the Fedtrying to lend to small and
medium-sized businesses orsupport the bad business
decisions of commercial banks?
I think back then they wouldsay no, the Fed shouldn't be
doing that.
But fast forward to where weare today recently in 2020, we
have the corporate creditfacility, we have the mainstream
lending facility.
(03:16):
It really seems like the Fed isreally just afraid of having any
uptick in unemployment and sothey're willing to be very
active in the markets atsometimes at the cost of high
inflation, which we've seen thepast couple of years right.
Let's not forget that even ashome prices were surging 20%
year over year, the Fed wasstill buying hundreds of
(03:38):
billions of dollars of MBS.
Their balance of risk is alwaystowards having lower employment
, even if that means having abit higher than inflation.
So what I think people miss isthat the Fed is not really
nefarious.
They're just kind of peopletrying to do the best job that
they perceive.
It's just that over time theirreaction function.
I think it has changed.
Speaker 1 (04:00):
That point about them being people is important
because, from a peopleperspective, people are biased
and I remember in a conversationwe had maybe a year or so ago,
you had mentioned that from yourperspective, it seems like the
people inside the FederalReserve tend to be a little bit
more blue biased and red biasedpolitically.
Speaker 2 (04:21):
I think that's kind of an understatement.
I think that's kind of anunderstatement.
I think it's important.
In the US, if you make apolitical donation, it shows up
at a federal website, it'sregistered, so you can either go
to the official FFI federalelections website or you can go
to Open Secrets, which compilesthis data for you, and it will
(04:42):
show you that basically everysingle person who works at the
Fed donates to the DemocraticParty.
It's like over 90%.
So that is consistent with myexperience at the New York Fed.
It is heavily, heavilyleft-leaning, and so I think
that also contributes to some ofthe shift that I've been
talking about.
I think the thinking is thatmore left-leaning people have
(05:05):
especially sensitive to a risein unemployment.
Now, on that vein, though, wecan also see very clearly that
what former Fed officials havesaid, now today, former New York
Fed President Bill Dudley is onthe wire saying that you know
the Fed, they have to cut ratesASAP.
On the wire saying that youknow the Fed, they have to cut
(05:26):
rates ASAP.
The same Bill Dudley nowremember.
This guy was the formerpresident of the New York Fed,
which is the third mostimportant position in the entire
Federal Reserve System In 2019,he actually wrote an op-ed in
Bloomberg openly suggesting thatthe Fed should try to run
policy to sway the electionagainst Trump because Trump's
such a bad person and that he'sgot no threat to institutions
(05:49):
and so forth.
So obviously these are very,very left-leaning actors who
have a lot of power, and thatcolors how they perceive the
world and how they conductpolicy.
Speaker 1 (06:03):
So it sounds to me like you would agree that the
Fed cutting rates would bepolitical.
I saw that headline that Trumpput out saying the Fed better
not cut rates before theelection and the market seems to
be betting on it.
Speaker 2 (06:15):
No.
So to be clear, I think there'sa good case to be made for
cutting rates and personally Ithink we will cut rates three
times this year.
Not next week, obviously, butagain when you're looking at
this problem, I wouldn't say so.
Like Bill Dudley openly saysthat Fed should do this for the
reasons of the election.
Okay, I can't read anyone'smind, so I don't know if people
(06:37):
on the FOMC actually think thatway.
But again, it's not so much ofa bias towards this candidate or
the other.
It's that they share the sameworldview, very, very sensitive
to unemployment, and that colorshow they shape policy.
Now.
Unemployment rate has beensteadily ticking higher over the
past several months, so it'snot unreasonable to try to
(06:58):
adjust policy to be lessrestrictive Now, in the back of
their minds.
If they think that would alsohelp their preferred candidate,
I don't know.
But again, like you mentioned,michael, they're people, so I
imagine that also plays a part,even if they don't say it out
loud.
Speaker 1 (07:17):
Let's talk about reasons for why the Fed should
cut rates, because it stillseems like the inflation picture
is a little bit mixed and ifoil were to have another move
higher, then presumablyinflation expectations, because
they're correlated to oil, wouldalso move higher.
So where are we in terms of thecycle?
Speaker 2 (07:36):
Inflation is actually really close to target.
So we have different measuresof inflation, right.
We have CPI measures consumerprices we have PPI measures
producers' prices, that is tosay prices paid by businesses
and we have PCE, which is theFed's preferred measure.
Pce is just another measure ofconsumer prices.
Now PCE right now is printingat 2.6% year over year.
(08:00):
Now the Fed's target is 2%.
Pce is 2.6%.
It's not that far away.
So I think inflation has comedown significantly.
Whether or not it's going to beable to go to 2% and stay there
is another question.
I think that's quite difficultgiven the fiscal situation.
We have very large fiscaldeficits and that puts upward
(08:22):
pressure on inflation.
But just looking at it from theFed's perspective, if let's say
2.6% just a little bit above 2%target, and at the same time
unemployment rate has beenrising several months now about
4.1% well you know what shouldinterest rates be?
Should it be at 5.5%multi-decade highs?
(08:44):
I think it doesn't make sensefor it to be that high.
And they don't either, which iswhy they've been telling you
for some time that they're goingto cut rates this year.
How much the market has beenpretty volatile on this.
In the beginning of the yearthe market was saying seven cuts
.
More recently it was one cut.
Now it's two and a half cuts.
I personally think we'll getthree cuts starting in September
(09:05):
.
Speaker 1 (09:09):
I would think the question of how many times the
Fed cuts will be a function ofhow deep a correction in equity
markets could get if we'reentering that sort of more
classic volatility period.
This is something that's kindof obviously near and dear to me
, but I am curious just to hearyour thoughts, independent of my
own views.
Do you think the cutting cycleresults in investors fleeing
(09:32):
back into long durationtreasuries in that volatility
that could be coming, or is thatflight to safety trade dead and
gold ends up being thepreferred asset class for those
looking for safety?
Speaker 2 (09:45):
So I'm very bullish on gold.
I have no position in bonds, sothis is how I think of it.
So if you listen to the marketcommentary, they'll tell you
that rate cuts are bearishUsually when you have your first
cut, that's when the equitymarket doesn't do well.
I think that misunderstands howthis works in a very
fundamental way.
(10:05):
Now, it depends on why you getrate cuts.
Now, in the past, what we'veconsistently seen for the most
part, you get rate cuts when theeconomy is not doing well.
So the economy is not doingwell.
Fed cuts rates.
Or maybe you have a disasterright, like March 2020, you have
the pandemic, you have thegreat financial crises in 2008.
(10:27):
So the Fed cuts rates.
Now it's not the rate cut thatmakes stocks go down, it's the
change in other conditions.
But the Fed can also cut ratesfor other reasons as well, not
because the economy is not doingwell, but simply because
inflation is coming down.
We're making progress oninflation.
I think that's what's happeningright now.
(10:48):
They're going to cut notbecause the economy is doing
poorly, it's not.
If you look at GDP now, it'sstill comfortably above trend.
It looks like it's forecasting2.7% today.
It's just that inflation iscoming down and I think that's a
whole different ballgame andthat when rate cuts come, I
think it would actually continueto be positive for the market.
Speaker 1 (11:11):
I assume there are going to be some sectors where
it's more positive than how itaffects other sectors, and my
mind goes to financials regionalbanks, which have been a little
bit on fire the last severalweeks, at least on a relative
basis, against tech.
There's a post here from BrittBurden on YouTube.
I'm going to share it.
How do you feel about theover-levered banks factoring
derivatives, of sorts?
(11:31):
How do you feel about theover-levered banks factoring
derivatives, of sorts?
But where are we in terms ofthe health of the banking sector
itself, and how do rate cutsimpact the likelihood that these
stocks actually keep pushinghigher after the hemorrhage
that's occurred since theregional bank crisis of last?
Speaker 2 (11:46):
year.
So rate cuts are going to helpsome levered entities that
borrow short, I think, notably.
Let's say you are a REIT, forexample, let's say today we have
Blackstone's commercial REITdoing not well because they cut
their dividend.
Yeah, these entities are highlylevered when you cut REITs, so
it will help them.
Something I think that I likepersonally are the RMBS REITs,
(12:11):
the MREITs like Analeigh orAGNCY.
So those things are basicallythey borrow short in the repo
market.
Their funding is tied to theovernight rate, but then they've
been buying longer-datedmortgages and the mortgage rate
has been widening, so that seemslike they will benefit from
(12:32):
rate cuts directly.
When you come to the bankingsystem, though, I'm not worried
about it at all, not even alittle bit.
So I think we will have to bevery careful about fighting the
last war In 2008,.
We did have a banking crisis.
Fast forward to today Again, wehad severe tests of our banking
system in 2020.
Tremendous, tremendousvolatility in the financial
markets, and they all did verywell.
(12:54):
Now there have been tremendousamounts of changes in regulation
going forward.
The entire landscape for bankshas just changed so much.
For example, when you havetremendous QE, you're stuffing
the banks with a lot of extracash.
It's really hard for them tohave liquidity problems and when
they do, because of very poormanagement, as we saw in the
case of Silicon Valley Bank.
(13:14):
You saw the Fed come out androll out these brand new
facilities.
They're going to do whatever ittakes again to not rock the
boat.
So banking system I thinkthat's kind of a boring place
actually to be.
They've been regulated soseverely that they are basically
utilities.
So I think that's not aninteresting place to be If you
want exposure to credit.
(13:37):
Actually, I think these privatelenders they are probably what
you would think of as banks ofthe past and you would get
better return there.
Speaker 1 (13:46):
It's funny to see the comments from people here's one
saying he's not worried in likea shocking type of way.
I think a lot of people are youcan argue just slightly worried
about commercial real estateimpacting some of these banks.
Still, do you think that'spriced in at this point, this
sort of concern of an ongoingcommercial real estate recession
(14:08):
crisis?
Speaker 2 (14:09):
Now, commercial real estate is a really broad
category.
It includes things that aredoing very well like, say, data
centers, and it includes thingsthat are not doing as well,
specifically, office spaces indowntown big cities and the
commercial and, let's say, theretail that depends on those
people who work in offices.
Now, that segment is not doingwell and we have some banks that
(14:32):
have larger concentrations tothat segment.
But banks you know, we got over4,000 banks.
If you have 4,000 of anything,they're going to have different
niches, different businessmodels, different regions, and
they're going to have differentdegrees of sophistication, and
some of them are not going to dowell.
That's what you would expectwith 4,000 of anything.
(14:53):
Does it mean it's going to besystemic?
Are not going to do well.
That's what you would expectwith 4,000 of anything.
Does it mean it's going to besystemic?
Is it going to be contagion?
I don't think so.
Listen, this is something thatpeople have been talking about
for a couple years.
Right, if you have a coupleyear head start and you have the
Fed breathing down your neck,you're going to be able to make
deals, rollover, things likethat.
Speaker 1 (15:16):
So I don't worry about this at all.
Let's talk about things thatyou do worry about and talk
about risks from a maybe moreglobal perspective that the Fed
would need to respond to afterthe fact.
Any thoughts on what's going onas far as monetary policy
changes with the ECB, withwhat's going on in China and how
that might complicate thingspotentially for Powell?
Speaker 2 (15:38):
So what we are seeing is a start of a global rate
cutting cycle.
So we got the ECB moving today,with the Bank of Canada moved
for a second time, and soon theFed will move as well.
So what I'm wondering is if youhave a saying so, on the way up
, when everyone was hikingtogether, they were all, like
you know, synchronated ratehiking cycle.
(15:58):
That's going to be extrahawkish because everyone is
hiking at the same time.
Now my question is if everyoneis cutting at the same time, is
that extra accommodative?
Are we really just going tocontinue to melt up and I think
there's a good possibility ofthat?
Again, everyone is movingtowards rate cutting cycles.
Economy so far seems fine andat the same time, more
(16:19):
importantly, fiscal spendingcontinues to be very, very loose
.
So in that context, I thinkit's very difficult for the
equities to go anything but upAgain, not going to be in a
straight line, but I think thatthat's a trend Again, not going
to be in a straight line, but Ithink that's a tread If we're in
a more coordinated cuttingcycle.
Speaker 1 (16:39):
The question then becomes how do relative interest
rate differentials impactcurrencies?
Obviously I'm curious to hearyour thoughts on the direction
of the dollar, because we wentthrough the fastest rate hike
cycle in history.
Dollar obviously a bigbeneficiary, and yet it seems
like even with rate cuts, thedollar still wants to keep on
going higher.
Maybe this time will bedifferent.
So how does currency factorinto all this.
Speaker 2 (17:02):
So, currency I think that's a really hard question
right now and I'll tell you why.
So, first off, like youmentioned, the dollar, interest
rates have been high and that'sbeen strengthening the dollar
but at the same time, though,going forward.
What do you think about therelative growth strength of the
US vis-a-vis these othercountries like, say, china, say
(17:25):
Europe, say Canada, and so forth?
The US continues to performbetter than these other
countries.
Again, we have an economythat's both growing in people
through migration, but also alot of technology.
At the same time, those othercountries not so much.
Now, I think the picture forcurrency is not going to be
shaped by, let's say, interestrate, different tools and so
(17:47):
forth.
It's going to be shaped by theoutcome of the presidential
election, because PresidentTrump has been very open that he
thinks it's okay to depreciatethe dollar in order to boost US
exports.
Vice presidential candidate JDVance has also been very open
that you know this dollar stuff,reserve currency, maybe it's
(18:09):
not that important.
Maybe if we could have acheaper dollar, we could boost
exports and create jobs forAmericans.
Now in the US, currency policyis squarely within the purview
of the US Treasury, that is tosay, the White House, who
controls the Treasury.
So if they wanted to, theycould definitely depreciate the
(18:29):
dollar going forward.
Depreciate the dollar goingforward.
So even if, let's say, dollarinterest rates remain higher
relative to other countries, ifyou have a White House who is
openly trying to depreciate thedollar, they definitely can.
We've done it before.
In the 1980s, we had somethingcalled the Plaza Accord, where
the White House basically wentover across the world and said
that if you don't depreciate, ifyou don't strengthen your
(18:52):
currency against ours, we'regoing to put tariffs on you, and
in Japan's case, they did.
So this is something that theycan definitely do.
Tons of other things they cando as well.
I personally think that ifTrump were president again and
he just tweeted saying that youknow USDJPY, it should be 100.
I think we would get there, atleast very close to there.
(19:13):
It would have a big impact.
So I think the future of thedollar depends on the 2024
presidential election.
Speaker 1 (19:22):
Let's talk about things you're tracking that
might give you a sense of wherethe market itself is betting as
far as who might win.
I've noted before in writingsthat in general, when you have a
Democrat in office, the techsector tends to do better than
when you have a Republican inoffice, and when I look at this
post that you had shared theother day on the screen, here's
(19:46):
an example of, I think, one wayof trying to see what the market
itself may be betting on as faras who wins.
This shows a chart of Taiwan'smarket, taiwan's stock market
selling off after comments lastweek suggesting Taiwan should
pay for US defense, coming fromTrump making that statement.
What parts of the investablelandscape are you looking at, as
(20:06):
maybe tells separate frompolling, as far as what the
market thinks is going to happenwith who wins?
Speaker 2 (20:13):
So in this particular story.
So the Taiwan stock marketindex is heavily weighted
towards chips.
So, like Taiwan semiconductorright, and at that time Trump
was, you know, kind ofexpressing some ambivalence to
US commitment to the defense ofTaiwan.
Well, that's obviously not goodfor companies in Taiwan and at
(20:36):
the moment, of course, lookingat the NASDAQ, a lot of the
rally is driven by chips andAI-related plays, which of
course, is a derivative of chips.
So if you have Taiwansemiconductors impacting Taiwan
chip stuff, that's going toreverberate to the NASDAQ, which
of course drags down the othermajor indexes.
So that probably has somethingto it, but a lot of it may be
(20:58):
just an excuse.
After all, we've run so quickly, so so much.
We were due for some kind ofpullback.
Now the classic Trump trades, Ithink, are actually more about
reflation.
Now Trump, famously, is aboutlooking at the stock market,
wanting it to go higher lowerinterest rates, weaker dollar
and more tax cuts.
(21:19):
You add that together you'regoing to have a more
inflationary economy.
Now, in addition to that, trump, one of his signature policies
is, of course, to have acontrolled border or enforce
immigration law according towhat it is on the books.
So that is also going to limitlabor supply.
One of the big stories over thepast two years that has put
(21:42):
downward pressure on Americanwages is just that there's been
tremendous, tremendous amountsof migration, mostly illegal,
from the southern border.
Now, if you stop that again,american wages are probably not
going to have as much downwardpressure.
So again, if you have strongfiscal policy, limited labor
supply growth, you're going tohave a more inflationary economy
(22:05):
, and that is to say thatlong-dated rates go higher.
So big Trump trade, of course,is a steeper curve.
Trump exercises influence andmakes sure the Fed doesn't make
rates too high.
So, short end, not that high,and then you do more
inflationary policies.
Longer dated rates go up a bit.
So that's classic Trump tradesteepener.
(22:27):
Other trades again.
Prison complex worked very wellin 2016,.
Seems to be getting some lifeagain.
Again, you have these chipstocks as well.
So again, all this is, to bevery clear, speculative.
At the moment, sometimespoliticians says one thing and
when he gets into office he hasother priorities, he encounters
(22:49):
other constraints and he's notable to do all the things that
he wanted to do.
But from my vantage point, sofar, these are the oh, of course
, with your dollar are the macrothemes for Trump trades.
Speaker 1 (23:04):
There's another one I want to show which just earlier
, before we went live, I put outin my classic form.
I said the end-bottomed NVIDIAtopped Few.
Understand this, unless youunderstand the carry trade, and
you had put a post out on July11th.
Speaker 2 (23:22):
Were there many.
Speaker 1 (23:24):
Funding their AI trades in yen.
Now I know it sounds crazy, butthe carry trade's a real thing.
It is, it is.
I've been early and wrong inthinking the reverse carry trade
would happen at the end of lastyear, with everyone on that.
But now the yen is starting tomove and it does seem like it's
coinciding with the sell-off intech.
So let's think through that.
(23:47):
I mean, is there a possibilityhere that a lot of this tech
momentum is just?
The carry trade is not so muchfundamentally driven and as
quickly as the AI mania occurred, it could very quickly go the
other way.
If the yen were to continue,it's move higher.
Speaker 2 (24:02):
So there are definitely a lot of people who
fund their trades in Japaneseyen.
So let's think about how thatwould have been the past couple
of years.
You borrow in yen.
You're buying AI stuff.
Ai stock goes to the moon, yendepreciates double play.
You are making bank Fantastictrade.
Everyone knows about it,everyone piles in.
So you saw AI trades go to themoon.
(24:23):
You saw the yen depreciatesignificantly a breach in 160.
So when you have a lot ofleverage in some place, it
creates vulnerabilities, and nowwe're seeing that vulnerability
.
There's a lot of peopleseemingly getting stopped out.
So if you get stopped out onthe inside and you got to close
the other sides as well, so Ithink that's causing a bit of
the volatility Now that actually, when I look at that, so again,
(24:48):
structurally speaking, the yenshould be weaker, right?
So I mean rates so much lowerthan the US and so forth.
So I think of this as kind ofmore of a correction towards
what was getting extended andnothing moves in a straight line
.
We could take two steps forward, one step back, and so forth.
So just as during that post, wesaw a lot of this yen strength
(25:12):
retrace, we saw the AI tradeswent down, went back up again.
So I think of this more as acorrection going forward rather
than some permanent shift in thetrade.
Speaker 1 (25:25):
Yeah, and I don't disagree.
To be clear, my whole thesis isthat because there's such a
large short position on the yen,there's a risk of a squeeze
which creates a momentarystructural disruption.
Right, right, just from what?
Which is the credit event?
At least that I've been again,I still think it's out there.
But that does tie into anotherpost which I think is worth
(25:46):
exploring.
Foreign investors have been themarginal buyer of longer-dated
treasuries, purchasing an amountcomparable to the issuance.
I think the concern is, ifJapan is going to try to push
the yen higher temporarily, theywould do so by having to sell
treasuries, or at least not bethe marginal buyer of treasuries
(26:07):
.
How does the demand from theforeign side of things on
treasuries?
How does that play into forexvolatility in general?
Speaker 2 (26:19):
I think that's a bit so.
Like you mentioned, if you area foreign country and you want
to intervene in your FX market,you have to have dollars.
Where do you get those dollars?
Oftentimes, you have to sellthe treasuries you hold in your
foreign reserves, so that's animpact.
It's really difficult to tracehow big that impact is Now.
I will say this to your morebroader point, though.
(26:39):
So over the past few years,foreigners have been buying a
lot of treasuries and they alsoown a lot of US equities.
That position has grown verylarge as a US equity market has
appreciated in price.
Now one very, very big risk tothe markets going forward and I
don't think it's going tomaterialize immediately, but
(27:01):
something to think about in thecoming months is that if we do
have a Trump victory and thedollar does depreciate, a lot of
foreigners are going to have tosell, because if you think
about it from a foreignerperspective, dollar depreciation
is basically guaranteednegative returns.
Right, I'm owning these dollars.
(27:22):
As dollar depreciates, thenthat means, in my own foreign
currency terms, I'm losing money.
So I think a lot of foreignerswill have to position and try to
get ahead of any depreciation,and that means selling
treasuries, selling stocks andrepositioning to their own
currency or other currencies, orsomething like that.
So I think that, to me, is thebiggest risk to the market in
(27:45):
the coming months.
Again, this is all subjective,of course, we don't know who's
going to win in November.
We don't know if PresidentTrump will actually carry out
this policy, but to me, that, Ithink, is the clearest risk.
That I'm thinking aboutGeopolitics, of course, but that
I just don't know.
I read about stuff in the news.
(28:06):
Sometimes it's true, sometimesit's fake.
I don't really know what'shappening there.
Speaker 1 (28:26):
Yeah, the truth changes every day.
I wonder what you think aboutChina maybe complicating the
path of things.
I have gone on record saying Ithink China may have bought them
, but I'll have to have some eggon to somehow magically
re-accelerate after this periodof nothingness.
Economically that seems likethat could be inflationary too,
because that'll push at themargin some demand pressure on
commodities.
How does China factor intoglobal policies?
Speaker 2 (28:50):
Like you mentioned, I think the big impact of China
is that it is world's largestconsumer of commodities,
Workshop of the world, importstremendous amounts of iron ore,
copper and so forth, consumes alot of oil and then uses that to
make finished products andsells to the West.
Now if you have weakness inChina, you could have weakness
(29:11):
in commodity prices, so that's adisinflation.
But again a lot of the sourceof demand for Chinese goods
comes from the West.
So again, strong US economy,then you could have more experts
in China.
Now, beyond that, though, Ithink it's important to note
that China is manageddifferently from the US.
China they have kind of a oneparty state.
(29:33):
The government controlseverything, controls the banks,
has tremendous influence overeverything in the private sector
, so I don't think that theirentire goal is to maximize
economic growth and so forth.
They have their longer-termplans.
So I wouldn't look at that as asource of tail risk.
But whether or not it's goingto reaccelerate more fiscal
(29:57):
spending there, I think that's apolitical decision by them and
I don't know their politicsenough to comment on that.
Speaker 1 (30:05):
I wonder if you think this big focus by Trump around
Bitcoin also maybe changes thelandscape a little bit when it
comes to the Fed.
Any thoughts on that?
I know a lot of this could justbe for show, but let's say,
Trump wins and something he putsin some kind of mandate or
edict around Bitcoin and centralbanks.
Speaker 2 (30:23):
So Trump is openly embracing Bitcoin.
I think Bitcoin when I look atthe price of Bitcoin, it seems
to track the probability ofTrump winning.
I think it's actually a verysavvy political move, because if
you are open to Bitcoin again,you're increasing your voter
base and you're getting a lot ofdonations, a lot of Bitcoin.
People have a lot of wealth.
(30:44):
I think it's probably.
I think it's legitimate.
So when I look at the Republicanethos, I think they seem.
There's a lot of people thereconcerned about currency
debasement.
There are a lot of people therewho have a view of government
that is, you know, let's givethe private sector more freedom
to do what they want.
So that's all consistent with aposition that's being more open
(31:05):
to Bitcoin and you know.
So I think that that makessense.
One other thing that I'll noteis that it looks like, whereas
the Biden administration has notbeen as open as President Trump
, they're also allowing thingslike Bitcoin, cash ETFs, ether
ETFs and so forth.
So it seems like the trendthough more strongly, of course,
(31:28):
on the Republican side is to bemore open towards crypto.
Speaker 1 (31:35):
Let's talk about from an investment perspective.
You mentioned financials arekind of boring, doesn't excite
you?
I don't disagree.
What does excite you?
Meaning like if you're lookingat things given your macro view
and you've got a perspective onwhere things are going to be
headed, independent of who'spresident?
I mean, where are their newmomentum plays or allocations,
(31:57):
do you think?
Speaker 2 (31:57):
I really like gold.
I think gold is, is, is doingis.
I mean, listen, look at thegold making new, all-time highs.
That's one thing.
Secondly, we know that in thesovereign space, over the past
couple years, more foreigncentral banks are buying.
Now china hasn't been buyingfor the past two months, but
they have been increasing.
They have really strong reasonsto as well.
(32:21):
We know that the US has beenopen on imposing sanctions on
countries that they are notfriends with.
If you are China, obviously youhold a lot of US dollars, a lot
of exposure there, and you arenot best friends with the USs.
Just from a basic practicalself-defense standpoint, you
have to diversify a bit.
So there's a sovereign bid forgold, not just china, though I
(32:43):
imagine there's a whole lot ofcountries who you know, just not
that they're enemies, but youknow they.
They are not best friends.
So I could say india or middleeastern countries and so forth.
So they got to be careful now,and so that's going to give a
sovereign bid for gold.
Thirdly, stepping outside thesovereign space from a private
(33:06):
sector investor base.
Looking at, we're headingtowards global rate cutting
cycle and at the same time it'svery clear that the US has
trouble controlling its fiscaldeficits and you can think about
I think about this as a sort ofdebasement, because when you
print treasuries you arebasically printing more dollars.
So I can understand if youwould as a private sector
(33:29):
investor.
You would also think globalcutting cycle possibility.
A dollar could be depreciatedby more gold.
So I think there's a lot oftailwinds for gold going forward
and it's no surprise to me thatit continues to surge.
Speaker 1 (33:48):
You think a part of that is betting that we're going
to see negative real ratesagain.
I mean just given the interestexpense and the reality that you
can't have positive real rateswith government spending like
this.
Speaker 2 (33:59):
So that's going to be a political decision.
If you have a more populistgovernment that says my gosh,
inflation is so high, I got togive people more money, that's
going to solve it right and thatis the predictable populist
response.
And, of course, inflation is sohigh, people can't afford to
buy homes.
I know.
Let's keep interest rates low.
(34:23):
Again, this happens all thetime.
I think there's a really goodchance that in the coming years,
whoever's president will try todo something like this Again.
This is so predictable, ithappens every time and I think
it wins votes as well.
Free stuff yes, inflation goeshigher, but then I get my cheap
loan, I get my free money and soforth.
Speaker 1 (34:40):
So, yeah, I think we could have some sort of negative
real rates let's talk about umthe book a little bit more um
central banking 101.
So to your point, um,congratulations.
I didn't realize this until I'mlooking up as we're chatting
real time.
You got 4.7 star, 756 ratings,and I'm pretty sure those are
(35:03):
not bots, uh, unlike what yousee on x.
No, no, and we have very real.
Speaker 2 (35:06):
yeah, we have versions in uh mand, in
Portuguese, in Korean and soonJapanese as well.
So it's a book that has beenvery helpful for many people,
simply because.
So I wrote that book because Irealized that all the stuff that
I learned in school just wasn'tadequate in describing how the
system actually worked.
(35:27):
So I studied economics and mathin college, have a master's
degree in financial economics aswell, and all this stuff, like
you know, big equilibrium modelsand stuff that that stuff is
just not true and not useful inunderstanding how monetary
policy actually works, how thenuts and bolts of the financial
system actually works.
How does policy impact the realeconomy?
(35:47):
How does hiking overnight ratesreverberate throughout the
broader financial system?
So that was just not taught,and so I figured that I could
help fill that gap, to helppeople understand, just from a
practitioner's perspective.
It's essentially the book thatI wish I had when I was looking
at this over a decade ago.
Speaker 1 (36:11):
I think the cover is a little bit of a spoiler alert.
It's just a printer.
Speaker 2 (36:16):
Yeah, now listen.
One big insight that I have iseverything you see is just
numbers in the database, be itwhat's in your brokerage account
, be it what's in your bankaccount, be it what the FUD does
.
At the end of the day, it'sjust numbers in a database, and
because it's numbers in adatabase, it can easily be
changed.
What can't be changed, ofcourse, is goods and services.
(36:39):
So, ultimately, the constraintto everything that they do in
the financial system isinflation.
Speaker 1 (36:47):
Another post from another person on YouTube
Infinite Ponzi scheme.
Until it's not, because, toyour point, it's just numbers in
a database.
I mean, is that a fair way ofthinking about things?
I mean, I think that is anarrative.
It's like it is a Ponzi.
They're going to keep oninflating and putting on more
zeros and there's no realconsequences to them, but to
lower class, lower middle class.
It hurts Absolutely, absolutely, without doubt, every.
It hurts.
Speaker 2 (37:08):
Absolutely, absolutely, without doubt.
Every day you are just printing.
So again, deficit spending.
You are buying goods andservices by printing treasuries.
Right, just keep printing andprinting and printing and
deficit fiscal deficit right nowexpected to be six to 7%
basically forever.
No one is going to go run anelection on the platform of less
(37:30):
spending, because you can't getelected that way.
The only way you can getelected is if you promise more.
So this is basically just doingthis borrowing and printing
more and more treasuries untilyou get to the point that the
market wisens up.
People realize that you knowwhat.
This is not sustainable.
This is very inflationary.
(37:50):
We're going to get paid backwith dollars that are worth much
less and eventually I think themarket will realize that.
It blows my mind that it'staking so long, but I think
eventually they'll get there.
Speaker 1 (38:07):
Any plans on doing a second book, perhaps when CBDCs
are overage?
Speaker 2 (38:12):
Let's hope that we never have CBDCs.
I think that's very dangerousbecause it gives a lot of power
to a very small amount of peoplewho may or may not make good
decisions.
One of the things that I'veseen over the past few years,
let's say during the pandemicdid you ever believe that they
could just snap their fingers,shut down all your local
businesses, leave the big, hugemulti-corporation businesses
(38:35):
open and shut you in your home?
Or, if you're in Canada, didyou ever believe that when you
have a legitimate protest, thegovernment can actually take
away your bank account to makeyou stop protesting against the
government?
It so, again, these are thingsthat could be easily done.
More easily done if you have aCBDC gives concentrated control
(38:58):
to very small amounts of numbersof people who may or may not be
accountable to it with theiractions.
So let's hope we never have aCBDC.
I think it's a very dangerousprecedent Again.
Authoritarian countries likeChina love it they are already
on the frontier of this rulingthe South but I think it has no
place in a free society.
Speaker 1 (39:15):
Interesting comment here.
Since the dollar isn't backedby gold since the 60s, it's only
backed by in quotes in God wetrust, which is funny because
I'm sure you've seen the samestats as I have around.
Faith and religion is notexactly in a bull market in the
US.
So we have a currency where wesay in God, we trust, but people
really don't believe in God asmuch as they used to.
(39:37):
Are we in the sort of finalthroes and this is a very broad
question, but in the finalthroes of sort of the fiat
experiment?
Speaker 2 (39:48):
So I don't think it makes a difference if your money
is backed by gold or fiat oranything like that.
Now, because let's take a lookat history we used to be on the
gold standard.
Guess what?
The political class decidedthat we don't like the gold
standard.
We'll just change your mind.
So what really makes a currencysound is not what it's backed,
(40:09):
what it's printed on.
What really makes a currencysound is its governance.
How is it managed?
And that has to do with how thegovernment is run.
Now, if you have a government,that is okay.
So have a gold-backed currencybut continues to deficit spend,
continues to do a source ofinflationary things that
(40:31):
decrease the value of theircurrency, then eventually, when
the going gets tough, they'lljust change their mind, say
revalue it or something likethat.
So it's ultimately about theculture and the politics that
supports the value of thecurrency, not some kind of
commodity, because at the end ofthe day, the guys who manage
(40:56):
the currency, they have the gunsthey have, they have the tanks
and they can do what they want.
Speaker 1 (41:00):
It's funny how people forget about that the one who
has the currency control is theone who can actually shoot you.
I mean, that's the unfortunatereality.
Speaker 2 (41:09):
So, again, gold's not going to help.
What really helps is havinggood governance, and that's very
difficult, but the good thingis that we rediscover this over
the ages, but not until we feelsome pain as to well, it was
nice having good governance, weshould have that again.
Speaker 1 (41:30):
Joseph, as we start to wrap up here, talk about how
people can track you and thenwhat people get from your
website, your service atFedGuycom.
Speaker 2 (41:40):
Sure.
So, first off, thanks so muchfor tuning in.
If you're interested in hearingmore about me, so I have a
YouTube channel.
It's called Joseph Wang.
Every week, I post updates asto what's happening in the
markets.
Now, this website here that Ihave it is my subscriber service
.
What I do is I teach peopleabout how the market's working,
(42:01):
what's happening, and that, Ithink, is essential to
understanding just how toposition yourselves as an
investor.
Now, for example, one of thecalls that I've made is that we
were going to crash up thisentire year based on my
understanding of the monetarysystem and what the central
banks are doing, because that is, of course, the largest driver
(42:24):
of financial markets, and that'sturned out very well.
So, having this perspective,this financial plumber
perspective, I think is anessential part of any investor's
toolkit.
So, again, we have a free trial.
Take a look.
If it's helpful for you,definitely definitely check it
out.
And, of course, if you post, wehave a form and all that and I
will reply to your questions inmy service.
Speaker 1 (42:47):
Everybody.
Please make sure you check outhis website, as well as Central
Banking 101.
I'm going to actually check itout myself and I'm being serious
when I say that I will put iton my to-do list.
It only gets longer nowadays.
Appreciate you, joseph,appreciate those that watch this
live stream.
Please make sure you like andshare the word, spread the word
around this effort that I putout there, because I don't get
(43:07):
paid really for it, and I'll seeyou all in another episode of
Lead Lag Live.
Thank you, joseph, appreciateit.
Speaker 2 (43:13):
Thanks Michael, Thanks everyone, Cheers
everybody, Thank you.
My name is Michael Guyatt, publisher of the Lead
Lagrime Report.
Joining me for the rough houris Mr Joseph Wang, the Fed guy
himself.
Joseph, a lot of people haveseen you and know of you, but
for those who don't know aboutyour background, do a quick
recap on who you are, whatyou've done throughout your
career, and is it kind of likethe matrix, where you're like
the 12th iteration of Neo?
Is that why, on the Fed?
Speaker 2 (00:30):
side.
Well, first of all, michael,thanks so much for inviting me.
It's a pleasure to be here.
So, as my moniker suggests that, I used to work at the Fed
before I started my own businessas writing commentary for the
markets, I was a senior traderon the open markets desk.
What that is?
It's the Fed's trading desk.
So, as we all know, the Fed isvery active in markets, does a
(00:50):
whole lot of things like QE,like repo, like FX swaps and so
forth, and it also pays closeattention to just everyday
goings of in the markets.
So when you're on the openmarkets desk, what you do is you
execute trades on behalf of theFed, but you also study markets
.
So when you're there, you areable to talk to a whole range of
(01:11):
market participants fromforeign central banks,
commercial banks, hedge funds,government agencies basically
everyone is willing to talk toyou and you have access to
tremendous amounts of data.
So it's a really good way tokind of have a peek behind the
curtain to see how the marketsworked.
And so I was there for a fewyears learning about things, and
then I figured that I would dosomething myself, and, of course
(01:34):
, on my way here to where I amnow I also have a bestselling
book on Amazon called CentralBanking 101.
That describes the things thatI learned and, of course, in a
past life I was actually alawyer and that is how I began
my career, but of course I don'tlike talking about that.
I hope to generate goodwill.
Speaker 1 (01:54):
Since you wrote that sort of book on Fed inner
workings, I am curious, becauseyou interact a lot of people,
both sophisticated and noviceinvestors.
What do you think is thecommonality in terms of what
people get wrong about how theFederal Reserve responds to
shocks to the economy?
Speaker 2 (02:12):
So first off, I love to be clear that the Fed is
comprised of people and thatchanges over time.
Who sits on the FOMC of coursecolors how the FOMC perceives
the world and how they maketheir trade-off between, let's
say, full employment and pricestability.
Now, over the past let's saydecade, I'd say the FOMC has
(02:35):
tended to be more and moredovish, more and more afraid of
high unemployment rather thaninflation.
The way that I see this is thatthe Fed has been willing to be
more and more active andintervening in the markets.
For example, if you ask anyonepre-2008, pre-great financial
crises, what do you think aboutthe Fed going in and being
(02:56):
active in the corporate bondmarket?
What do you think about the Fedtrying to lend to small and
medium-sized businesses orsupport the bad business
decisions of commercial banks?
I think back then they wouldsay no, the Fed shouldn't be
doing that.
But fast forward to where weare today recently in 2020, we
have the corporate creditfacility, we have the mainstream
lending facility.
(03:16):
It really seems like the Fed isreally just afraid of having any
uptick in unemployment and sothey're willing to be very
active in the markets atsometimes at the cost of high
inflation, which we've seen thepast couple of years right.
Let's not forget that even ashome prices were surging 20%
year over year, the Fed wasstill buying hundreds of
(03:38):
billions of dollars of MBS.
Their balance of risk is alwaystowards having lower employment
, even if that means having abit higher than inflation.
So what I think people miss isthat the Fed is not really
nefarious.
They're just kind of peopletrying to do the best job that
they perceive.
It's just that over time theirreaction function.
I think it has changed.
Speaker 1 (04:00):
That point about them being people is important
because, from a peopleperspective, people are biased
and I remember in a conversationwe had maybe a year or so ago,
you had mentioned that from yourperspective, it seems like the
people inside the FederalReserve tend to be a little bit
more blue biased and red biasedpolitically.
Speaker 2 (04:21):
I think that's kind of an understatement.
I think that's kind of anunderstatement.
I think it's important.
In the US, if you make apolitical donation, it shows up
at a federal website, it'sregistered, so you can either go
to the official FFI federalelections website or you can go
to Open Secrets, which compilesthis data for you, and it will
(04:42):
show you that basically everysingle person who works at the
Fed donates to the DemocraticParty.
It's like over 90%.
So that is consistent with myexperience at the New York Fed.
It is heavily, heavilyleft-leaning, and so I think
that also contributes to some ofthe shift that I've been
talking about.
I think the thinking is thatmore left-leaning people have
(05:05):
especially sensitive to a risein unemployment.
Now, on that vein, though, wecan also see very clearly that
what former Fed officials havesaid, now today, former New York
Fed President Bill Dudley is onthe wire saying that you know
the Fed, they have to cut ratesASAP.
On the wire saying that youknow the Fed, they have to cut
(05:26):
rates ASAP.
The same Bill Dudley nowremember.
This guy was the formerpresident of the New York Fed,
which is the third mostimportant position in the entire
Federal Reserve System In 2019,he actually wrote an op-ed in
Bloomberg openly suggesting thatthe Fed should try to run
policy to sway the electionagainst Trump because Trump's
such a bad person and that he'sgot no threat to institutions
(05:49):
and so forth.
So obviously these are very,very left-leaning actors who
have a lot of power, and thatcolors how they perceive the
world and how they conductpolicy.
Speaker 1 (06:03):
So it sounds to me like you would agree that the
Fed cutting rates would bepolitical.
I saw that headline that Trumpput out saying the Fed better
not cut rates before theelection and the market seems to
be betting on it.
Speaker 2 (06:15):
No.
So to be clear, I think there'sa good case to be made for
cutting rates and personally Ithink we will cut rates three
times this year.
Not next week, obviously, butagain when you're looking at
this problem, I wouldn't say so.
Like Bill Dudley openly saysthat Fed should do this for the
reasons of the election.
Okay, I can't read anyone'smind, so I don't know if people
(06:37):
on the FOMC actually think thatway.
But again, it's not so much ofa bias towards this candidate or
the other.
It's that they share the sameworldview, very, very sensitive
to unemployment, and that colorshow they shape policy.
Now.
Unemployment rate has beensteadily ticking higher over the
past several months, so it'snot unreasonable to try to
(06:58):
adjust policy to be lessrestrictive Now, in the back of
their minds.
If they think that would alsohelp their preferred candidate,
I don't know.
But again, like you mentioned,michael, they're people, so I
imagine that also plays a part,even if they don't say it out
loud.
Speaker 1 (07:17):
Let's talk about reasons for why the Fed should
cut rates, because it stillseems like the inflation picture
is a little bit mixed and ifoil were to have another move
higher, then presumablyinflation expectations, because
they're correlated to oil, wouldalso move higher.
So where are we in terms of thecycle?
Speaker 2 (07:36):
Inflation is actually really close to target.
So we have different measuresof inflation, right.
We have CPI measures consumerprices we have PPI measures
producers' prices, that is tosay prices paid by businesses
and we have PCE, which is theFed's preferred measure.
Pce is just another measure ofconsumer prices.
Now PCE right now is printingat 2.6% year over year.
(08:00):
Now the Fed's target is 2%.
Pce is 2.6%.
It's not that far away.
So I think inflation has comedown significantly.
Whether or not it's going to beable to go to 2% and stay there
is another question.
I think that's quite difficultgiven the fiscal situation.
We have very large fiscaldeficits and that puts upward
(08:22):
pressure on inflation.
But just looking at it from theFed's perspective, if let's say
2.6% just a little bit above 2%target, and at the same time
unemployment rate has beenrising several months now about
4.1% well you know what shouldinterest rates be?
Should it be at 5.5%multi-decade highs?
(08:44):
I think it doesn't make sensefor it to be that high.
And they don't either, which iswhy they've been telling you
for some time that they're goingto cut rates this year.
How much the market has beenpretty volatile on this.
In the beginning of the yearthe market was saying seven cuts
.
More recently it was one cut.
Now it's two and a half cuts.
I personally think we'll getthree cuts starting in September
(09:05):
.
Speaker 1 (09:09):
I would think the question of how many times the
Fed cuts will be a function ofhow deep a correction in equity
markets could get if we'reentering that sort of more
classic volatility period.
This is something that's kindof obviously near and dear to me
, but I am curious just to hearyour thoughts, independent of my
own views.
Do you think the cutting cycleresults in investors fleeing
(09:32):
back into long durationtreasuries in that volatility
that could be coming, or is thatflight to safety trade dead and
gold ends up being thepreferred asset class for those
looking for safety?
Speaker 2 (09:45):
So I'm very bullish on gold.
I have no position in bonds, sothis is how I think of it.
So if you listen to the marketcommentary, they'll tell you
that rate cuts are bearishUsually when you have your first
cut, that's when the equitymarket doesn't do well.
I think that misunderstands howthis works in a very
fundamental way.
(10:05):
Now, it depends on why you getrate cuts.
Now, in the past, what we'veconsistently seen for the most
part, you get rate cuts when theeconomy is not doing well.
So the economy is not doingwell.
Fed cuts rates.
Or maybe you have a disasterright, like March 2020, you have
the pandemic, you have thegreat financial crises in 2008.
(10:27):
So the Fed cuts rates.
Now it's not the rate cut thatmakes stocks go down, it's the
change in other conditions.
But the Fed can also cut ratesfor other reasons as well, not
because the economy is not doingwell, but simply because
inflation is coming down.
We're making progress oninflation.
I think that's what's happeningright now.
(10:48):
They're going to cut notbecause the economy is doing
poorly, it's not.
If you look at GDP now, it'sstill comfortably above trend.
It looks like it's forecasting2.7% today.
It's just that inflation iscoming down and I think that's a
whole different ballgame andthat when rate cuts come, I
think it would actually continueto be positive for the market.
Speaker 1 (11:11):
I assume there are going to be some sectors where
it's more positive than how itaffects other sectors, and my
mind goes to financials regionalbanks, which have been a little
bit on fire the last severalweeks, at least on a relative
basis, against tech.
There's a post here from BrittBurden on YouTube.
I'm going to share it.
How do you feel about theover-levered banks factoring
derivatives, of sorts?
(11:31):
How do you feel about theover-levered banks factoring
derivatives, of sorts?
But where are we in terms ofthe health of the banking sector
itself, and how do rate cutsimpact the likelihood that these
stocks actually keep pushinghigher after the hemorrhage
that's occurred since theregional bank crisis of last?
Speaker 2 (11:46):
year.
So rate cuts are going to helpsome levered entities that
borrow short, I think, notably.
Let's say you are a REIT, forexample, let's say today we have
Blackstone's commercial REITdoing not well because they cut
their dividend.
Yeah, these entities are highlylevered when you cut REITs, so
it will help them.
Something I think that I likepersonally are the RMBS REITs,
(12:11):
the MREITs like Analeigh orAGNCY.
So those things are basicallythey borrow short in the repo
market.
Their funding is tied to theovernight rate, but then they've
been buying longer-datedmortgages and the mortgage rate
has been widening, so that seemslike they will benefit from
(12:32):
rate cuts directly.
When you come to the bankingsystem, though, I'm not worried
about it at all, not even alittle bit.
So I think we will have to bevery careful about fighting the
last war In 2008,.
We did have a banking crisis.
Fast forward to today Again, wehad severe tests of our banking
system in 2020.
Tremendous, tremendousvolatility in the financial
markets, and they all did verywell.
(12:54):
Now there have been tremendousamounts of changes in regulation
going forward.
The entire landscape for bankshas just changed so much.
For example, when you havetremendous QE, you're stuffing
the banks with a lot of extracash.
It's really hard for them tohave liquidity problems and when
they do, because of very poormanagement, as we saw in the
case of Silicon Valley Bank.
(13:14):
You saw the Fed come out androll out these brand new
facilities.
They're going to do whatever ittakes again to not rock the
boat.
So banking system I thinkthat's kind of a boring place
actually to be.
They've been regulated soseverely that they are basically
utilities.
So I think that's not aninteresting place to be If you
want exposure to credit.
(13:37):
Actually, I think these privatelenders they are probably what
you would think of as banks ofthe past and you would get
better return there.
Speaker 1 (13:46):
It's funny to see the comments from people here's one
saying he's not worried in likea shocking type of way.
I think a lot of people are youcan argue just slightly worried
about commercial real estateimpacting some of these banks.
Still, do you think that'spriced in at this point, this
sort of concern of an ongoingcommercial real estate recession
(14:08):
crisis?
Speaker 2 (14:09):
Now, commercial real estate is a really broad
category.
It includes things that aredoing very well like, say, data
centers, and it includes thingsthat are not doing as well,
specifically, office spaces indowntown big cities and the
commercial and, let's say, theretail that depends on those
people who work in offices.
Now, that segment is not doingwell and we have some banks that
(14:32):
have larger concentrations tothat segment.
But banks you know, we got over4,000 banks.
If you have 4,000 of anything,they're going to have different
niches, different businessmodels, different regions, and
they're going to have differentdegrees of sophistication, and
some of them are not going to dowell.
That's what you would expectwith 4,000 of anything.
(14:53):
Does it mean it's going to besystemic?
Are not going to do well.
That's what you would expectwith 4,000 of anything.
Does it mean it's going to besystemic?
Is it going to be contagion?
I don't think so.
Listen, this is something thatpeople have been talking about
for a couple years.
Right, if you have a coupleyear head start and you have the
Fed breathing down your neck,you're going to be able to make
deals, rollover, things likethat.
Speaker 1 (15:16):
So I don't worry about this at all.
Let's talk about things thatyou do worry about and talk
about risks from a maybe moreglobal perspective that the Fed
would need to respond to afterthe fact.
Any thoughts on what's going onas far as monetary policy
changes with the ECB, withwhat's going on in China and how
that might complicate thingspotentially for Powell?
Speaker 2 (15:38):
So what we are seeing is a start of a global rate
cutting cycle.
So we got the ECB moving today,with the Bank of Canada moved
for a second time, and soon theFed will move as well.
So what I'm wondering is if youhave a saying so, on the way up
, when everyone was hikingtogether, they were all, like
you know, synchronated ratehiking cycle.
(15:58):
That's going to be extrahawkish because everyone is
hiking at the same time.
Now my question is if everyoneis cutting at the same time, is
that extra accommodative?
Are we really just going tocontinue to melt up and I think
there's a good possibility ofthat?
Again, everyone is movingtowards rate cutting cycles.
Economy so far seems fine andat the same time, more
(16:19):
importantly, fiscal spendingcontinues to be very, very loose
.
So in that context, I thinkit's very difficult for the
equities to go anything but upAgain, not going to be in a
straight line, but I think thatthat's a trend Again, not going
to be in a straight line, but Ithink that's a tread If we're in
a more coordinated cuttingcycle.
Speaker 1 (16:39):
The question then becomes how do relative interest
rate differentials impactcurrencies?
Obviously I'm curious to hearyour thoughts on the direction
of the dollar, because we wentthrough the fastest rate hike
cycle in history.
Dollar obviously a bigbeneficiary, and yet it seems
like even with rate cuts, thedollar still wants to keep on
going higher.
Maybe this time will bedifferent.
So how does currency factorinto all this.
Speaker 2 (17:02):
So, currency I think that's a really hard question
right now and I'll tell you why.
So, first off, like youmentioned, the dollar, interest
rates have been high and that'sbeen strengthening the dollar
but at the same time, though,going forward.
What do you think about therelative growth strength of the
US vis-a-vis these othercountries like, say, china, say
(17:25):
Europe, say Canada, and so forth?
The US continues to performbetter than these other
countries.
Again, we have an economythat's both growing in people
through migration, but also alot of technology.
At the same time, those othercountries not so much.
Now, I think the picture forcurrency is not going to be
shaped by, let's say, interestrate, different tools and so
(17:47):
forth.
It's going to be shaped by theoutcome of the presidential
election, because PresidentTrump has been very open that he
thinks it's okay to depreciatethe dollar in order to boost US
exports.
Vice presidential candidate JDVance has also been very open
that you know this dollar stuff,reserve currency, maybe it's
(18:09):
not that important.
Maybe if we could have acheaper dollar, we could boost
exports and create jobs forAmericans.
Now in the US, currency policyis squarely within the purview
of the US Treasury, that is tosay, the White House, who
controls the Treasury.
So if they wanted to, theycould definitely depreciate the
(18:29):
dollar going forward.
Depreciate the dollar goingforward.
So even if, let's say, dollarinterest rates remain higher
relative to other countries, ifyou have a White House who is
openly trying to depreciate thedollar, they definitely can.
We've done it before.
In the 1980s, we had somethingcalled the Plaza Accord, where
the White House basically wentover across the world and said
that if you don't depreciate, ifyou don't strengthen your
(18:52):
currency against ours, we'regoing to put tariffs on you, and
in Japan's case, they did.
So this is something that theycan definitely do.
Tons of other things they cando as well.
I personally think that ifTrump were president again and
he just tweeted saying that youknow USDJPY, it should be 100.
I think we would get there, atleast very close to there.
(19:13):
It would have a big impact.
So I think the future of thedollar depends on the 2024
presidential election.
Speaker 1 (19:22):
Let's talk about things you're tracking that
might give you a sense of wherethe market itself is betting as
far as who might win.
I've noted before in writingsthat in general, when you have a
Democrat in office, the techsector tends to do better than
when you have a Republican inoffice, and when I look at this
post that you had shared theother day on the screen, here's
(19:46):
an example of, I think, one wayof trying to see what the market
itself may be betting on as faras who wins.
This shows a chart of Taiwan'smarket, taiwan's stock market
selling off after comments lastweek suggesting Taiwan should
pay for US defense, coming fromTrump making that statement.
What parts of the investablelandscape are you looking at, as
(20:06):
maybe tells separate frompolling, as far as what the
market thinks is going to happenwith who wins?
Speaker 2 (20:13):
So in this particular story.
So the Taiwan stock marketindex is heavily weighted
towards chips.
So, like Taiwan semiconductorright, and at that time Trump
was, you know, kind ofexpressing some ambivalence to
US commitment to the defense ofTaiwan.
Well, that's obviously not goodfor companies in Taiwan and at
(20:36):
the moment, of course, lookingat the NASDAQ, a lot of the
rally is driven by chips andAI-related plays, which of
course, is a derivative of chips.
So if you have Taiwansemiconductors impacting Taiwan
chip stuff, that's going toreverberate to the NASDAQ, which
of course drags down the othermajor indexes.
So that probably has somethingto it, but a lot of it may be
(20:58):
just an excuse.
After all, we've run so quickly, so so much.
We were due for some kind ofpullback.
Now the classic Trump trades, Ithink, are actually more about
reflation.
Now Trump, famously, is aboutlooking at the stock market,
wanting it to go higher lowerinterest rates, weaker dollar
and more tax cuts.
(21:19):
You add that together you'regoing to have a more
inflationary economy.
Now, in addition to that, trump, one of his signature policies
is, of course, to have acontrolled border or enforce
immigration law according towhat it is on the books.
So that is also going to limitlabor supply.
One of the big stories over thepast two years that has put
(21:42):
downward pressure on Americanwages is just that there's been
tremendous, tremendous amountsof migration, mostly illegal,
from the southern border.
Now, if you stop that again,american wages are probably not
going to have as much downwardpressure.
So again, if you have strongfiscal policy, limited labor
supply growth, you're going tohave a more inflationary economy
(22:05):
, and that is to say thatlong-dated rates go higher.
So big Trump trade, of course,is a steeper curve.
Trump exercises influence andmakes sure the Fed doesn't make
rates too high.
So, short end, not that high,and then you do more
inflationary policies.
Longer dated rates go up a bit.
So that's classic Trump tradesteepener.
(22:27):
Other trades again.
Prison complex worked very wellin 2016,.
Seems to be getting some lifeagain.
Again, you have these chipstocks as well.
So again, all this is, to bevery clear, speculative.
At the moment, sometimespoliticians says one thing and
when he gets into office he hasother priorities, he encounters
(22:49):
other constraints and he's notable to do all the things that
he wanted to do.
But from my vantage point, sofar, these are the oh, of course
, with your dollar are the macrothemes for Trump trades.
Speaker 1 (23:04):
There's another one I want to show which just earlier
, before we went live, I put outin my classic form.
I said the end-bottomed NVIDIAtopped Few.
Understand this, unless youunderstand the carry trade, and
you had put a post out on July11th.
Speaker 2 (23:22):
Were there many.
Speaker 1 (23:24):
Funding their AI trades in yen.
Now I know it sounds crazy, butthe carry trade's a real thing.
It is, it is.
I've been early and wrong inthinking the reverse carry trade
would happen at the end of lastyear, with everyone on that.
But now the yen is starting tomove and it does seem like it's
coinciding with the sell-off intech.
So let's think through that.
(23:47):
I mean, is there a possibilityhere that a lot of this tech
momentum is just?
The carry trade is not so muchfundamentally driven and as
quickly as the AI mania occurred, it could very quickly go the
other way.
If the yen were to continue,it's move higher.
Speaker 2 (24:02):
So there are definitely a lot of people who
fund their trades in Japaneseyen.
So let's think about how thatwould have been the past couple
of years.
You borrow in yen.
You're buying AI stuff.
Ai stock goes to the moon, yendepreciates double play.
You are making bank Fantastictrade.
Everyone knows about it,everyone piles in.
So you saw AI trades go to themoon.
(24:23):
You saw the yen depreciatesignificantly a breach in 160.
So when you have a lot ofleverage in some place, it
creates vulnerabilities, and nowwe're seeing that vulnerability
.
There's a lot of peopleseemingly getting stopped out.
So if you get stopped out onthe inside and you got to close
the other sides as well, so Ithink that's causing a bit of
the volatility Now that actually, when I look at that, so again,
(24:48):
structurally speaking, the yenshould be weaker, right?
So I mean rates so much lowerthan the US and so forth.
So I think of this as kind ofmore of a correction towards
what was getting extended andnothing moves in a straight line
.
We could take two steps forward, one step back, and so forth.
So just as during that post, wesaw a lot of this yen strength
(25:12):
retrace, we saw the AI tradeswent down, went back up again.
So I think of this more as acorrection going forward rather
than some permanent shift in thetrade.
Speaker 1 (25:25):
Yeah, and I don't disagree.
To be clear, my whole thesis isthat because there's such a
large short position on the yen,there's a risk of a squeeze
which creates a momentarystructural disruption.
Right, right, just from what?
Which is the credit event?
At least that I've been again,I still think it's out there.
But that does tie into anotherpost which I think is worth
(25:46):
exploring.
Foreign investors have been themarginal buyer of longer-dated
treasuries, purchasing an amountcomparable to the issuance.
I think the concern is, ifJapan is going to try to push
the yen higher temporarily, theywould do so by having to sell
treasuries, or at least not bethe marginal buyer of treasuries
(26:07):
.
How does the demand from theforeign side of things on
treasuries?
How does that play into forexvolatility in general?
Speaker 2 (26:19):
I think that's a bit so.
Like you mentioned, if you area foreign country and you want
to intervene in your FX market,you have to have dollars.
Where do you get those dollars?
Oftentimes, you have to sellthe treasuries you hold in your
foreign reserves, so that's animpact.
It's really difficult to tracehow big that impact is Now.
I will say this to your morebroader point, though.
(26:39):
So over the past few years,foreigners have been buying a
lot of treasuries and they alsoown a lot of US equities.
That position has grown verylarge as a US equity market has
appreciated in price.
Now one very, very big risk tothe markets going forward and I
don't think it's going tomaterialize immediately, but
(27:01):
something to think about in thecoming months is that if we do
have a Trump victory and thedollar does depreciate, a lot of
foreigners are going to have tosell, because if you think
about it from a foreignerperspective, dollar depreciation
is basically guaranteednegative returns.
Right, I'm owning these dollars.
(27:22):
As dollar depreciates, thenthat means, in my own foreign
currency terms, I'm losing money.
So I think a lot of foreignerswill have to position and try to
get ahead of any depreciation,and that means selling
treasuries, selling stocks andrepositioning to their own
currency or other currencies, orsomething like that.
So I think that, to me, is thebiggest risk to the market in
(27:45):
the coming months.
Again, this is all subjective,of course, we don't know who's
going to win in November.
We don't know if PresidentTrump will actually carry out
this policy, but to me, that, Ithink, is the clearest risk.
That I'm thinking aboutGeopolitics, of course, but that
I just don't know.
I read about stuff in the news.
(28:06):
Sometimes it's true, sometimesit's fake.
I don't really know what'shappening there.
Speaker 1 (28:26):
Yeah, the truth changes every day.
I wonder what you think aboutChina maybe complicating the
path of things.
I have gone on record saying Ithink China may have bought them
, but I'll have to have some eggon to somehow magically
re-accelerate after this periodof nothingness.
Economically that seems likethat could be inflationary too,
because that'll push at themargin some demand pressure on
commodities.
How does China factor intoglobal policies?
Speaker 2 (28:50):
Like you mentioned, I think the big impact of China
is that it is world's largestconsumer of commodities,
Workshop of the world, importstremendous amounts of iron ore,
copper and so forth, consumes alot of oil and then uses that to
make finished products andsells to the West.
Now if you have weakness inChina, you could have weakness
(29:11):
in commodity prices, so that's adisinflation.
But again a lot of the sourceof demand for Chinese goods
comes from the West.
So again, strong US economy,then you could have more experts
in China.
Now, beyond that, though, Ithink it's important to note
that China is manageddifferently from the US.
China they have kind of a oneparty state.
(29:33):
The government controlseverything, controls the banks,
has tremendous influence overeverything in the private sector
, so I don't think that theirentire goal is to maximize
economic growth and so forth.
They have their longer-termplans.
So I wouldn't look at that as asource of tail risk.
But whether or not it's goingto reaccelerate more fiscal
(29:57):
spending there, I think that's apolitical decision by them and
I don't know their politicsenough to comment on that.
Speaker 1 (30:05):
I wonder if you think this big focus by Trump around
Bitcoin also maybe changes thelandscape a little bit when it
comes to the Fed.
Any thoughts on that?
I know a lot of this could justbe for show, but let's say,
Trump wins and something he putsin some kind of mandate or
edict around Bitcoin and centralbanks.
Speaker 2 (30:23):
So Trump is openly embracing Bitcoin.
I think Bitcoin when I look atthe price of Bitcoin, it seems
to track the probability ofTrump winning.
I think it's actually a verysavvy political move, because if
you are open to Bitcoin again,you're increasing your voter
base and you're getting a lot ofdonations, a lot of Bitcoin.
People have a lot of wealth.
(30:44):
I think it's probably.
I think it's legitimate.
So when I look at the Republicanethos, I think they seem.
There's a lot of people thereconcerned about currency
debasement.
There are a lot of people therewho have a view of government
that is, you know, let's givethe private sector more freedom
to do what they want.
So that's all consistent with aposition that's being more open
(31:05):
to Bitcoin and you know.
So I think that that makessense.
One other thing that I'll noteis that it looks like, whereas
the Biden administration has notbeen as open as President Trump
, they're also allowing thingslike Bitcoin, cash ETFs, ether
ETFs and so forth.
So it seems like the trendthough more strongly, of course,
(31:28):
on the Republican side is to bemore open towards crypto.
Speaker 1 (31:35):
Let's talk about from an investment perspective.
You mentioned financials arekind of boring, doesn't excite
you?
I don't disagree.
What does excite you?
Meaning like if you're lookingat things given your macro view
and you've got a perspective onwhere things are going to be
headed, independent of who'spresident?
I mean, where are their newmomentum plays or allocations,
(31:57):
do you think?
Speaker 2 (31:57):
I really like gold.
I think gold is, is, is doingis.
I mean, listen, look at thegold making new, all-time highs.
That's one thing.
Secondly, we know that in thesovereign space, over the past
couple years, more foreigncentral banks are buying.
Now china hasn't been buyingfor the past two months, but
they have been increasing.
They have really strong reasonsto as well.
(32:21):
We know that the US has beenopen on imposing sanctions on
countries that they are notfriends with.
If you are China, obviously youhold a lot of US dollars, a lot
of exposure there, and you arenot best friends with the USs.
Just from a basic practicalself-defense standpoint, you
have to diversify a bit.
So there's a sovereign bid forgold, not just china, though I
(32:43):
imagine there's a whole lot ofcountries who you know, just not
that they're enemies, but youknow they.
They are not best friends.
So I could say india or middleeastern countries and so forth.
So they got to be careful now,and so that's going to give a
sovereign bid for gold.
Thirdly, stepping outside thesovereign space from a private
(33:06):
sector investor base.
Looking at, we're headingtowards global rate cutting
cycle and at the same time it'svery clear that the US has
trouble controlling its fiscaldeficits and you can think about
I think about this as a sort ofdebasement, because when you
print treasuries you arebasically printing more dollars.
So I can understand if youwould as a private sector
(33:29):
investor.
You would also think globalcutting cycle possibility.
A dollar could be depreciatedby more gold.
So I think there's a lot oftailwinds for gold going forward
and it's no surprise to me thatit continues to surge.
Speaker 1 (33:48):
You think a part of that is betting that we're going
to see negative real ratesagain.
I mean just given the interestexpense and the reality that you
can't have positive real rateswith government spending like
this.
Speaker 2 (33:59):
So that's going to be a political decision.
If you have a more populistgovernment that says my gosh,
inflation is so high, I got togive people more money, that's
going to solve it right and thatis the predictable populist
response.
And, of course, inflation is sohigh, people can't afford to
buy homes.
I know.
Let's keep interest rates low.
(34:23):
Again, this happens all thetime.
I think there's a really goodchance that in the coming years,
whoever's president will try todo something like this Again.
This is so predictable, ithappens every time and I think
it wins votes as well.
Free stuff yes, inflation goeshigher, but then I get my cheap
loan, I get my free money and soforth.
Speaker 1 (34:40):
So, yeah, I think we could have some sort of negative
real rates let's talk about umthe book a little bit more um
central banking 101.
So to your point, um,congratulations.
I didn't realize this until I'mlooking up as we're chatting
real time.
You got 4.7 star, 756 ratings,and I'm pretty sure those are
(35:03):
not bots, uh, unlike what yousee on x.
No, no, and we have very real.
Speaker 2 (35:06):
yeah, we have versions in uh mand, in
Portuguese, in Korean and soonJapanese as well.
So it's a book that has beenvery helpful for many people,
simply because.
So I wrote that book because Irealized that all the stuff that
I learned in school just wasn'tadequate in describing how the
system actually worked.
(35:27):
So I studied economics and mathin college, have a master's
degree in financial economics aswell, and all this stuff, like
you know, big equilibrium modelsand stuff that that stuff is
just not true and not useful inunderstanding how monetary
policy actually works, how thenuts and bolts of the financial
system actually works.
How does policy impact the realeconomy?
(35:47):
How does hiking overnight ratesreverberate throughout the
broader financial system?
So that was just not taught,and so I figured that I could
help fill that gap, to helppeople understand, just from a
practitioner's perspective.
It's essentially the book thatI wish I had when I was looking
at this over a decade ago.
Speaker 1 (36:11):
I think the cover is a little bit of a spoiler alert.
It's just a printer.
Speaker 2 (36:16):
Yeah, now listen.
One big insight that I have iseverything you see is just
numbers in the database, be itwhat's in your brokerage account
, be it what's in your bankaccount, be it what the FUD does
.
At the end of the day, it'sjust numbers in a database, and
because it's numbers in adatabase, it can easily be
changed.
What can't be changed, ofcourse, is goods and services.
(36:39):
So, ultimately, the constraintto everything that they do in
the financial system isinflation.
Speaker 1 (36:47):
Another post from another person on YouTube
Infinite Ponzi scheme.
Until it's not, because, toyour point, it's just numbers in
a database.
I mean, is that a fair way ofthinking about things?
I mean, I think that is anarrative.
It's like it is a Ponzi.
They're going to keep oninflating and putting on more
zeros and there's no realconsequences to them, but to
lower class, lower middle class.
It hurts Absolutely, absolutely, without doubt, every.
It hurts.
Speaker 2 (37:08):
Absolutely, absolutely, without doubt.
Every day you are just printing.
So again, deficit spending.
You are buying goods andservices by printing treasuries.
Right, just keep printing andprinting and printing and
deficit fiscal deficit right nowexpected to be six to 7%
basically forever.
No one is going to go run anelection on the platform of less
(37:30):
spending, because you can't getelected that way.
The only way you can getelected is if you promise more.
So this is basically just doingthis borrowing and printing
more and more treasuries untilyou get to the point that the
market wisens up.
People realize that you knowwhat.
This is not sustainable.
This is very inflationary.
(37:50):
We're going to get paid backwith dollars that are worth much
less and eventually I think themarket will realize that.
It blows my mind that it'staking so long, but I think
eventually they'll get there.
Speaker 1 (38:07):
Any plans on doing a second book, perhaps when CBDCs
are overage?
Speaker 2 (38:12):
Let's hope that we never have CBDCs.
I think that's very dangerousbecause it gives a lot of power
to a very small amount of peoplewho may or may not make good
decisions.
One of the things that I'veseen over the past few years,
let's say during the pandemicdid you ever believe that they
could just snap their fingers,shut down all your local
businesses, leave the big, hugemulti-corporation businesses
(38:35):
open and shut you in your home?
Or, if you're in Canada, didyou ever believe that when you
have a legitimate protest, thegovernment can actually take
away your bank account to makeyou stop protesting against the
government?
It so, again, these are thingsthat could be easily done.
More easily done if you have aCBDC gives concentrated control
(38:58):
to very small amounts of numbersof people who may or may not be
accountable to it with theiractions.
So let's hope we never have aCBDC.
I think it's a very dangerousprecedent Again.
Authoritarian countries likeChina love it they are already
on the frontier of this rulingthe South but I think it has no
place in a free society.
Speaker 1 (39:15):
Interesting comment here.
Since the dollar isn't backedby gold since the 60s, it's only
backed by in quotes in God wetrust, which is funny because
I'm sure you've seen the samestats as I have around.
Faith and religion is notexactly in a bull market in the
US.
So we have a currency where wesay in God, we trust, but people
really don't believe in God asmuch as they used to.
(39:37):
Are we in the sort of finalthroes and this is a very broad
question, but in the finalthroes of sort of the fiat
experiment?
Speaker 2 (39:48):
So I don't think it makes a difference if your money
is backed by gold or fiat oranything like that.
Now, because let's take a lookat history we used to be on the
gold standard.
Guess what?
The political class decidedthat we don't like the gold
standard.
We'll just change your mind.
So what really makes a currencysound is not what it's backed,
(40:09):
what it's printed on.
What really makes a currencysound is its governance.
How is it managed?
And that has to do with how thegovernment is run.
Now, if you have a government,that is okay.
So have a gold-backed currencybut continues to deficit spend,
continues to do a source ofinflationary things that
(40:31):
decrease the value of theircurrency, then eventually, when
the going gets tough, they'lljust change their mind, say
revalue it or something likethat.
So it's ultimately about theculture and the politics that
supports the value of thecurrency, not some kind of
commodity, because at the end ofthe day, the guys who manage
(40:56):
the currency, they have the gunsthey have, they have the tanks
and they can do what they want.
Speaker 1 (41:00):
It's funny how people forget about that the one who
has the currency control is theone who can actually shoot you.
I mean, that's the unfortunatereality.
Speaker 2 (41:09):
So, again, gold's not going to help.
What really helps is havinggood governance, and that's very
difficult, but the good thingis that we rediscover this over
the ages, but not until we feelsome pain as to well, it was
nice having good governance, weshould have that again.
Speaker 1 (41:30):
Joseph, as we start to wrap up here, talk about how
people can track you and thenwhat people get from your
website, your service atFedGuycom.
Speaker 2 (41:40):
Sure.
So, first off, thanks so muchfor tuning in.
If you're interested in hearingmore about me, so I have a
YouTube channel.
It's called Joseph Wang.
Every week, I post updates asto what's happening in the
markets.
Now, this website here that Ihave it is my subscriber service
.
What I do is I teach peopleabout how the market's working,
(42:01):
what's happening, and that, Ithink, is essential to
understanding just how toposition yourselves as an
investor.
Now, for example, one of thecalls that I've made is that we
were going to crash up thisentire year based on my
understanding of the monetarysystem and what the central
banks are doing, because that is, of course, the largest driver
(42:24):
of financial markets, and that'sturned out very well.
So, having this perspective,this financial plumber
perspective, I think is anessential part of any investor's
toolkit.
So, again, we have a free trial.
Take a look.
If it's helpful for you,definitely definitely check it
out.
And, of course, if you post, wehave a form and all that and I
will reply to your questions inmy service.
Speaker 1 (42:47):
Everybody.
Please make sure you check outhis website, as well as Central
Banking 101.
I'm going to actually check itout myself and I'm being serious
when I say that I will put iton my to-do list.
It only gets longer nowadays.
Appreciate you, joseph,appreciate those that watch this
live stream.
Please make sure you like andshare the word, spread the word
around this effort that I putout there, because I don't get
(43:07):
paid really for it, and I'll seeyou all in another episode of
Lead Lag Live.
Thank you, joseph, appreciateit.
Speaker 2 (43:13):
Thanks Michael, Thanks everyone, Cheers
everybody, Thank you.
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