Update from Raoul on the Dollar, Rates, Growth, and Crypto (w/Raoul Pal & Ash Bennington)

uh happy friday everyone welcome to real vision daily briefing i'm ash bennington live without annette with our ceo and co-founder ralph powell rao welcome i didn't realize we were live i would have put makeup on her big hair break out the hair dryer around it's time to go live i'm ready let's do it so ral we were talking a little bit off camera uh what's on your mind interesting time in markets it's interesting not interesting right basically the macro sphere it's absolutely dull as dishwater nothing's really going anywhere bob market's correcting a bit the dollar's kind of gone up a bit but not doing a lot and the equity market's grinding higher so there's not a lot going on but beneath the scene we had something very interesting and i i would take it as a unique signal i've i've been warning about the excessive leverage in the financial system and i know that um weston on the real vision exchange has been talking about this and he's doing a piece on it something very interesting happened which was archigas blowing up it's a story of excess leverage and hubris and the usual financial market stuff that we've all grown up with but if you remember i'd isolated the issues of the leverage within the system and how it was layered with option market makers record short gamma all of these traders record long options you know record low cash record um high hedge fund exposure all of that so we have a massive event that basically wipes out something like 10 to 12 billion right money off the investment banks who take it on the chin and nothing happened yeah the markets didn't go anywhere volatility didn't move as retail investors have started going back to work the call buying from stimuluses don't seem to be applying so the leverage is slowly coming out my guess is some of the hedge funds degrost in this environment so we've got into a slightly less risky situation than we were and that's fascinating look people are pretty fully invested in markets i'm not saying that's gone but we had the vast shock and it was a big one i mean robin hood and all of that none of that blew up 12 billion dollars worth of money off the prime booking balance sheets but this did and nothing happened so it makes me think that the market is much more robust than people are imagining and you know it always concerns people to say that but to me it looks bulletproof and it looks bulletproof from another angle is and i've talked about this at length is once you adjust the s p or the nasdaq or any of these assets by and change the denominator to the fed balance sheet as opposed to the us dollar so i the s p divided by the fed balance sheet that takes into account the excess printing or the debasement of fiat currency and what we found that the s p in 2008 collapsed about 80 in balance sheet terms and then traded sideways for the next 12 years um and it tells me that the markets aren't wildly expensive when i look at the s p versus gold or the s p versus real estate or real estate versus the s p they all are in normal valuations so something else is going on i think that what it's telling us is any expansion of the fed balance sheet is a devaluation of fiat currency it's not the mechanism that most people thought that that fed printing equals more money leaking out of banks into the markets because volumes don't show that what it's actually showing is the denominator is going down and so therefore once you adjust for that these markets i think have a lot further they can run um because we're only going to see more balance sheet expansion from these fiscal policies if bond yields go up too much and we have yield curve control then they're going to buy the bonds which is more balance sheet expansion if the stock market falls they're going to do more qe more balance sheet expansion so we've got balance sheet expansion in a normal scenario balance sheet expansion in a fall in the equity market balance sheet expansion in a reflationary trade where bond yields go up that only tells you markets are going up yeah i know people would like to hear that but they're going up and they're going up because the value of the denominator is falling so to explain that a bit clearer the venezuelan stock market looks like this in bolivar when you adjust it for us dollars it looks like this because the bolivar went down in value so we're seeing something similar to that i know it's a lot to get people's heads around i'll probably do a whole big piece on it over the weekend that i'll i'll put out uh next week um but that's what's going on so yeah there's nothing going on in markets but there's everything going on well you know it's so interesting because it's it's counterintuitive to people especially if they're new to the macro space uh you know effectively the too long didn't read version is if the economy improves stocks are going to go up if the economy goes down or stays stagnant there's going to be fed action and policy action coordinated globally and stocks are going to go up that's hard for people to get their head around well oh god yes it's very difficult and so that's why valuations don't make sense and again i've divided much of the valuation stuff by the fed balance and everything makes sense everything looks normal when you do it there's a it's going to take a while to get people's heads around what i'm talking about i have written about it in macro insiders i will put something out on real vision just to show people what i'm talking about when you talk about the change in the the denominator but the too long didn't read is it's almost impossible for stocks to go down except a small a yeah a sharp spike and if nobody learnt any lessons from what just happened then nobody's paying attention we had the biggest economic recession the world has ever seen at one point and the markets fell like a stone for a month and rallied then on and everyone's like why this makes no sense to me of course it makes no sense it's because we're looking at everything wrong so i think it's a really really important this is why bitcoin goes up um it's because it's the inverse of the fed balance sheet and more uh it's a really really important thing for people to understand yeah and of course ethereum too up over 2000 as we have this conversation here today yeah i mean it's up over 175 this year you know there's network effects and a lot going on and again i'll do i'm going to do a whole piece on this a long deep dive in my thinking because i've got a lot of extended thinking i want to get across to people to try and bring people up on the knowledge journey of where i've got to in my overall thought process because it's changing a lot um you know i'm even changing for global macro investor i've not kind of wheeled it out yet changing the potential hypothesis for my entire investment framework uh just as an aside a lot of people you know hit me up and say you know what happened to the insolvency phase and that's a great question the insolvency phase if you remember was the final phase of a recession where we're left with a bunch of companies and or people who basically can't pay their bills because there's a lot of debt out there and economic growth are vaporized well what we saw was the largest ever central bank and government combined response in all recorded history right and what we've created is a bunch of zombies so the stimulus payments are zombie payments to keep people alive until their jobs kick in we don't know what the structural unemployment is going to be from all the people in retail jobs etc we are doing the same with corporations too if interestingly i used to talk about those triple b entities and the chance of them going tits up in this recession because of cash flow well divide the price of ge by the fed balance sheet it's basically a zero it's a zombie it's only the denominator that makes it look not like a zombie the same with most of these a t and t any of these they just look like they're zeros there's a very different world you see it and that's the insolvency it's there but it's hidden by the excess printing of money so i think this economic recovery probably takes longer than most people imagine because there is a lot of insolvency and impairment of balance sheet but other parts are just going to keep exploding higher so it's going to be a really complicated world but i think it's a world where equities go higher yeah it's a lot to get uh people's heads around especially if they're new to the space and interestingly enough those two stories intersect the things we were talking about the beginning so you've got this money illusion with price in u.s equities and simultaneously you have this breakdown that archigos archos the family office that nobody knows how to pronounce uh and nothing happens silence deafening all because of the intervention that we see yeah i mean again step back you're dead right so we have one of the largest blow-ups of recent times in terms of this archigas and nothing happened yeah we have the largest recession of all recorded history as far as we can tell and nothing happened yeah so either we're not looking at it right or something has changed and you know we should all be asking ourselves these questions the intellectual honest answer is not well you know the fed have just stopped the recession just making it worse maybe everything is wrong that we assume and i don't know what that even means so i'm not well i do have a lot of answers but i'm not prepared to present them yet until i more robustly test them um but i think we're looking at it wrong and that's that's all i can that's all i can really explain at the moment well you know another really fascinating point and you and i were just talking about this off camera before we started the show uh this sounds in many ways when we hear about the archigos story it sounds like an asian story obviously mr huang was born in korea he was involved in asian funds there were a lot of asian stocks involved in this but mr hwang lives directly across the river right right there in new jersey this is not a story that takes place somewhere else this is a story right here based on wall street it's also a story of family offices and the shift of power on wall street so i know internally the big sales people the guys who get paid the big bucks at goldman um or you know the big investment jp morgan that shifts around depending where the action is where the real money is you know i was lucky to be in part of that sphere when it was the hedge fund sales people we were the big swinging dicks we were the guys who got paid the most we you know we had all the glory we could spend the wine on our customers that's all changed that changed about seven years ago and it went to family offices so the people are getting paid the big bucks a salesman now are people selling to family offices because family offices are lucrative they use a wide range of services and they tend to be less price sensitive than hedge funds who have huge staff to beat down every single price so they they're very attractive high margin customers because there's everything from you know nice juicy lending businesses through to securities it businesses they tend to buy a lot of more expensive derivative products all sorts of stuff but in order to capture them when that race is on investment banks always do the same thing which is start offering ridiculous incentives i first started hearing about non-recourse loans about seven years ago that non-league recourse loans are being offered to family offices basically just giving them free money on the understanding that they spend that free money within the investment bank i mean friends of mine bought houses on non-recourse loans from swiss investment banks i'm like really so what that means to the average person is you don't have to pay them back it's like the money your dad lends you you kind of never have to pay it back and the idea was for them to spray that money around and it would multiply across the investment bank um and i think the archegos story is going to be about that hidden beneath it is the perverse incentives of investment bank sales people and leverage and the more leverage you can offer and this was the same story of long-term capital yeah we as salespeople and i was one of those people would put on obscene leverage at ridiculous rates because they did so much business and our job was kind of to turn a blind eye because we got paid on how much business we did but in the end we all did too much business and the story for me with that is i was on a 1998 summer 98 i'm on a fishing boat at a mate stag in kilkenny in southern ireland and i want to boat with a whole group of friends of mine we all have to work in financial markets and i spoke to her mates my name is at salomon i'm right who's your biggest customer he's like long-term capital he was in equity derivatives i said how much have you got he's like probably about a couple of billion dollars worth in equity derivatives i said what about you there's another mate of mine and he was i think it was a jp morgan and he was in equities to represent that said what have you got biggest customer long term capital buy a country mile how much i don't know two or three billion i'm not okay so that's now already larger than their entire fund because at the time they were like three billion dollars i can't remember so then i'm like huh then a friend of mine was head of bun trading at deutsche bank i'm like justin how much have you got it's like 20 billion whatever the number was right like 10 times because fixed income markets are less volatile so you can have more leverage right and then i'm like okay and i was at nat west and i'm like we've probably got four billion just in equity derivatives proving obviously that i was a better sales than my friends because i'd done more business and then realizing with horror that this was a house of cards i went back to the office on the monday and went to see our head of risk and said we've got a huge problem here um i think we managed to get out of it without any losses actually i can't remember how we unwound it or how we reduce some of the risk but we didn't really we didn't really get hit but a lot of people did um obviously but 1919 and everybody blew up in that but i've got a just did a great masterclass interview um about this with uh uh with um mike varanos who runs ellington he's one of the 10 billion legend of the hedge fund industry structured finance he blew up in in 98 because of long-term capital and when leverage gets pulled but leverage didn't get pulled last week right but it's all those same forces ralph listen to them it's exactly the same right right finance people we have shortest tension spans and and you know fat wallets so you know every once they get paid and it's the same way banks only get paid from leverage and number of transactions that's it there's no other way of getting paid so we're always incentivized to do the same thing leverage principal agency conflict multiple banks exposed to the same large exogenous shark from the buy side and we all do this i can't hear you sorry you haven't got any positions have you no we haven't either because no salesman wants to miss out and no risk manager doesn't want to allow the business to happen nobody wants to get fired by the big boss why aren't you doing business with that family office they're all getting rich i mean we've all been there absolutely and it's amazing to me also how rarely this comes up in the academic literature around this this principal agency conflict between the sales gaza and the house i remember many years ago working at a bank i won't name it and mentioning a product to uh to someone and and the guy looked at me like i just gotten off the turnip truck and he said the ytb is too low i said what the hell's the ytb and he said yield to broker and he walked away right i mean this extent to which this is driven by individuals making decisions uh that are in their own economic self-interest always but always a factor but that's all businesses all business is the same right it's either higher margin high volume there's very few businesses in the world that are high volume high margin those become massive when i was at first at goldman we used to charge a premium because we were goldman sachs and with snobbish and we were a partnership and we do high volume that was great then deutsche bank came in kind of completely changed the economics and lehman and so we all went to lower margin higher volumes yeah and always the search was the high margin product and it ended up in 2008 being um close and all of that stuff right and by the way none of those uh deals we've gotten done if goldman we're still a partnership so cbs all of this stuff um because they were higher margin but over time they become low margin because everybody goes into them there's an interesting story so john good friend there was an interview with him there was an interview with him i think about 2010 so he retired years ago right he's one of the most legendary chairman of salomon one of the most legendary traders in the history of wall street and there was an interior john good friend i don't know how old he was at the interview 80 or something and somebody took him out and he said i haven't given an interview for a long time but i just want to say i'm sorry i think some of this maybe all of this is my fault like john how can that be you've not been active you're not you've not been involved he said it all started when i made the decision to turn to make salomon a public company he said when we moved away from being a partnership everybody followed and when everybody followed we stopped taking partners risk and we had unlimited risk and that was what led to this amount of leverage it could never have happened before and i think that's true you know the goldman partnership model all of that so fascinating but it's all the same every business is the same either high margin low volume high volume low margin and as a salesperson the easiest way is sell the highest margin project he can in the largest size until it blows up and it all it all did start ed solomon brothers of course your downside is you lose your job your upside is a call option it's phenomenal right it's it's a twisted it's a twisted incentive structure and we joke about it but every set every sales shop is it's just because we're dealing with money everything gets everything gets a little spicier when you're just dealing with money it's like the reason why the the network effects of bitcoin and crypto is so large is because it's money humans get funny around money it's like the ring yeah it's like my precious in lord of the rings people get all kind of it's money they become obsessed yeah and then you add leverage to the system right and it's just a way of making more of that precious money oh it's hilarious but we're humans it's what we do uh you know ralph i don't know if you had a chance to see but earlier today i did a live with harry krishnan uh talking about some of these issues about price instability about the regime shifts that we see uh when normal markets turn into routes uh talking about the book that harry and i are writing together called market tremors which is all about this topic yeah i mean it was super interesting i can't wait to see what that book's about and how the story plays out yeah it's good to partner with someone who's much smarter than you are that's that's my that's my that's always the rule of thumb somebody's uglier than you but but smarter generally works the uh yeah other things are interesting uh that should be on people's radar screens coinbase everyone knows about everyone's head the story blah blah blah [Music] coinbase has 56 million accounts if i checked right robin hood is about 13 million accounts yup four times the size it's the size of fidelity and robin hood added together if people don't understand the magnitude of this crypto thing that's going on look no further and people say yeah but it's a bubble that's why and i'll say no it's network effects that's why the more people come into it the more important it becomes but it's extraordinary to see that it's extraordinary to see i just double checked you know one of my great mistakes was recommending to macro insiders cust clients to buy galaxy at i can't remember it was about three dollars or something and it went up like a hundred percent in a month so i sold it patted myself on the back galaxy last time i checked is up three two thousand nine hundred percent in a year yeah two thousand nine hundred percent that's a equity listed in canada that is a crypto play and their earnings are exploding with it so that that's been a very interesting thing i've been watching i just saw the numbers q4 comprehensive net income at galaxy excluding non uh controlling interest up 1175 percent q4 per tanzil octar coindesk yeah this is big stuff going on people still are not going to get it talking not getting it the other story have amused me greatly and again i'll reveal it more in due course my change of framework but i'm very interested in kathy wood's arc invest yeah i'm very interesting for two reasons one is everybody hates it every old man railing at the internet is kathy wood she she her funds they double dip their their their they've got the same investments she's got illiquid things and it's criminal and those it's all gonna blow up and it's all gonna go wrong she owns tesla she's an idiot her price target's wrong she doesn't understand what she's doing this is a narrative that is pervasive i i'm interested when i hear a narrative like that because i've talked to kathy and she's very smart very rational and then so i started looking at what she's doing and her investment themes i believe are absolutely spot-on i think she is so far ahead of understanding the exponential world that we are in and moving in towards that most people don't understand people don't like to see a fund manager outperform everybody else by that order of magnitude it must be a bubble said in mixes of small caps and big caps you know it's criminal it's fraud there's something no she i would say i'm guessing that and it could fall a bit further from here no real issue with where it goes in the short term but my view is i think this thing is going to go up another 20x from here maybe even 50x if if my hypothesis is right that basically almost every one of her themes is spot on um because none of these are valuation-based businesses that use traditional valuations all of them are based on metcalfe's law and my big understanding of bitcoin has got me a big understanding of some of the huge changes that are actually taking place in the world and i'm not going to go through it in huge detail but so arc invest keep it on people's radar screens you might hate it question why you hate it do you hate its success are you going to blame how it's constructed have you actually gone and asked other fund managers why they have a price target on their at t stock and their assumptions no you're doing it because of jealousy of kathy woods performance and that she has outrageous price targets and they've been right question why you hate it is great advice for anything new that you don't understand but it is dead true you know because we all you know i i've been questioning why i never ever got amazon right you know can't you see it's got a p of 800 which is what it traded most of the 2000s in yeah well can't you see it it sells it's worth more than every book sold on earth every year it's worth more than all the book sellers added together guess what it was never a book company right it was a network adoption business and none of us saw it some people few people did and in fact the only person who actually made money of owning amazon for all this time was jeff bezos because he only he could see really what he was doing which is that's why these network effects changes so hard facebook's been the same yeah facebook has another chance of creating another whole network effect which is it's got vr and anybody seen the pierced kicks video and understands the metaverse understands that vr is not a small thing this is a huge future it is also launching dm which is basically the crypto payment rails a stable coin payment rails across the largest network on earth those two things give it a gigantic quantum leap into where the future of the world is going which is the digital universe so is there a chance that facebook is undervalued i hate facebook as a company for its privacy reasons and i thought that they run out of network effect because of facebook itself um and what's apps seeming to have peeking out and uh and instagram the same but if they get this next bet right this thing's off to the races again yeah it's all network effects all over again because if you can bring all the digital global shopping transactions and wallets on the facebook network you've just exponentially increased the network value people don't understand this and i'm only trying to get my head around it yeah the new oculus vr headset pretty impressive piece of hardware as well uh yeah i mean anybody's picked up an oculus put it on turn it on you you're in a room and it's gorgeous and it's the moment you put that thing on forget the games and you sit look around this room and you're like wow i'd like to live here you realize everything's changed ralph i want to live in your house you don't i've got builders in and my mum is there she's been over she's been over uh she went through quarantine and she's been saying with it so we've got we've got the mum we've got mum we've got people redoing the garden and a bunch of builders you don't want to be at my house i hope she's down on the beach at least a few steps away yeah she's not too far she's been on the beach by the way we should say just so we don't sound like we're completely uh engaged in euphoric thinking here talking about amazon which is a great metaphor to understand the broad scope of the way we think about it why are you apologizing interesting stop why are you apologizing for euphoric thinking why the question is and i know this mm-hmm you're a mean reversionist as is most of us no hold on this time can't be different because it gives everybody the fear to say it's going up because everybody doesn't want to be told well see it was expensive you idiot you bought it's a really interesting thing i wasn't calling you out but i see this all the time yeah and i do it is a terrible fear of having an opinion about upside it's very comfortable for everybody to say well stock market's over value any day now this can collapse that's accepted universally yeah as he's being smart and acknowledging the downside but if you say like kathy wood i think tesla's going to 3000 they say you're an idiot it's fascinating just what observe that and the clarification statements that people make around euphoric euphoria really interesting well it's such a fascinating point ryan i think you're spot on with this because i think that if you look at the general trend if you look at technology we understand and we've now seen over the last 20 years the enormous gains in productivity efficiency and the changes the massive changes to the world that technology has created but the interesting thing is if you look at if you look at amazon which is i think in many ways a great metaphor for the way we think about the the technology uh that we're looking at today whether it's on the digital asset side or on the equity side which is that amazon had a max drawdown i think i think about 93 percent was the highest max truck so this is another thing i'm trying to rethink the world you know when the facts change i change and i've been very slow to change because i hadn't realized it there is a narrative the narrative is well 2000 was a stock market bubble and we all learned the hard way no it wasn't it was a minor blip on an exponential chart of interest anybody who did nothing over that period of time but held on has made a fortune and yes somebody's going to go yeah but oracle or whatever stock xyz stock never made it back to the high the market did so if you held the nasdaq it was a blip and i've learned that now with bitcoin as well is that exponential trends these little s-curve bumps are bumps so that 90 fall in amazon was irrelevant so now what's interesting is i know exactly what's going on through the heads of 75 percent of the people watching this as we speak they're gonna be going you know the top's in right you know the top said look around he's getting all balled up the top's in it's gonna collapse any day now the market's gonna go down you know two percent over the next week and they're gonna see that idiot he called the that is mean reversionist thinking it's fascinating but over time it's proven that all of these trends are exponential and they're not linear there's many linear things any value stock you want to choose that's a linear trend nothing wrong with value but you won't make as much money as an exponential trend right so how do you reconcile those two positions ral how do you think about it how do you think about time horizons how do you think about risk tolerance and how do you think about this in a way that allows you to protect against the downside but participate in what is clearly uh a massive shift i don't know yet because i've not been investing in it i've you know crypto is the better bet right now but there'll be a time when that will change and i've realized i wrote this on twitter some time ago if i had my time again i just invest in network effect opportunities it's far better it's far better because you basically get a higher concentration of returns over a shorter period of time in in that strategy than you do in let's say the concentrated returns that you get out of macro out of macro shocks it's just a better use of capital over time now can you overlay the two together and capture macro shocks an exponential of specs i think you can and i think that's what stan drockamill is doing as well if i think back about his technology investment and the world's change he basically runs a core long tech and then macro hedge that he over levers in down cycles and that's what's protecting him i kind of like that as a strategy um i just don't know what the macro shock is anymore because the problem is is i don't think i'm going to let the dollar go anywhere and i don't think rates are going anywhere so what's the macro macros equity there's nothing left to trade if if the dollar and rates are kind of range bound because so say the central banks then equity is the game and equity can't go down because of the mechanism we talked about at the beginning right so if equity goes down central bank prints it's fascinating scuderous roared um and i know people go well you figure this out now why don't you tell us in march last year when you closed out your shorts on the low you should have gone record long yeah i'm an idiot i'll take that on the chin all day but it's i'm actually not talking about you know the next 10 or 15 percent i'm talking about opportunities and not just with stock markets in general not that interested in stock market i'm interested in a lot of sectors that will that will exhibit this kind of trend and the best of all obviously is crypto yeah by the way uh talking about the tech bubble uh the alleged tech bubble which now we see as the technology has matured uh the processes have come into place oracle took out its 2000 high in 2017. looks like it's up about 80 percent there from 2000 so 17 years but far above uh it's high yeah but the compound average return is not great yeah the market overall has done absolutely fine and some of these have done have been some of the best performing stocks in all recorded history yeah um you know i looked at microsoft microsoft's a fascinating company because it's had two it's had an s curve and had had two network effect adoption cycles one was obviously software pc software yep and then it peaked out as a company and you know the steve balmy years kind of it was like going nowhere and then change of ceo cloud gaming yeah and you've got two new exponential adoption curves because both of those became went from small things to very very big things um and microsoft captured both of them and a few more in between microsoft is a fascinating story because they missed the internet and they missed cloud and then they managed to get back in both of those games and uh and absolutely crushed it well they didn't really get the internet so they missed that whole bit as i said that 2000 to about 2 000 and whatever um the whenever they change ceo let's say 2014 15 i can't remember the exact time yeah dead money because they had no strategy they missed it and then they figured out cloud and they went massively into that and they figured out gaming which was you know not as big and then they had their obviously their core software business and it's like oh my god you get a company that big and you get to reinvent yourself again astonishing astonishing story yeah yeah one of the great one of the great comeback stories in american uh industry and certainly in tech history yeah without question amazing like the apple comeback was as well indeed um just to shift gears here a little bit to talk about uh uh janet yellen's remarks to the imf i know this is also something that you've been looking about on the macro side so remember i put out that video called the bitcoin life raft because the imf have started putting statements out about a new bretton woods and i had conjecture that within the new bretton woods it was something to do with maybe stabilizing exchange rates maybe agreeing on a a combined fiscal stimulus and janet yelling came out this week talking about bretton woods and talking about the imf meeting she's going to which was an interesting turn of phrase and she was talking about a global minimum corporate tax rate because everybody needs to raise taxes which is another very important thing so another important mega trend that's coming so she talks about new bretton woods clearly part of it is going to be the us putting for a tax rate my guess is other countries are going to pushing for dollar stability and maybe this idea of a of a currency block um i think that's on the table and i think that a a a combined cohesive fiscal stimulus that's coordinated is also on offer let's wait and see but it feels like these are forth turning moments when truly big things are up for grabs whether it happens this time around doesn't matter what it means is it's being talked about and these are really big things like the central bank digital currencies these are gigantic changes to the system fourth turning system yeah how do you even begin to think about the framework around such a monumental shift in the baseline for how the global economy functions that's a that's a hard thing to even conceptualize yeah there's a great example of this is in i think it's new market wizards the interview with stan drucker miller and trying to figure out what happens to the german currency the german stock market in german rates on reunification of germany it's really difficult to figure out and the market took the wrong bet and stan figured and got it right and made a fortune from it it's really hard we will see because the market will tell us um but what it's also going to offer is opportunities and complexities um so a fascinating time you know as a macro thinker you don't get anything better than this you don't get massive structural changes where we're not just talking about oh there's too much leverage in the world we kind of all know that now um we all know about the demographic crisis but we've got huge changes of which we don't even understand the magnitude and that's really really interesting to me because when you change the when you're not just changing the sec secular cycle but you're changing uh the cyclical aspect but you're changing the secular story that's when macro gets really interesting because you could be early and being early in secular stuff is where you make the big big bucks yeah i know we've got a lot of uh activity coming in uh from our subscribers from the audience uh people who want to get some questions answered we'll start out with this one how many of them are saying it must be the top uh i see i see one on that uh on that topic ralph you capitulate on equities could this mean the top is in seriously thank you as always um here's another one coming to us from viv uh how much reading slash analysis does ral do to be so in sync with everything around the world i'm blown away with his knowledge and especially with his ability to explain things you know i don't know it's weird i don't i'm not the guy who's reading every article you know if you'll send me an article i'll skim read it but i'm a guy who keeps narratives in his head visually and i see them i can't explain it it's all like a 3d jigsaw puzzle that i see and i absorb bits of information whether it's price action on bloomberg or it's observable behavior people hating kathy wood or it's my own hypothesis that i'm clinging on to that feels now like it's been disproven or it's something else or it's a snippet of conversation so i'm not one who reads people's analysis i i have no interest in it you know i'm actually paid to do my own analysis for people so i need to think more than anything else and it's only really when i get time to think do i get time to really get more um to get better at quality ideas so thinking is more important than reading yeah but you need to have a broad exposure that you can stop teasing together why was that headline there what did that mean how did that happen what could that all be maybe it's nothing i'll just park it over here come back to it three years later that's what i do yeah i find the longer i do this the more i try to restrict the amount of time i spend reading the news yes i skim read the ft because it is useful and i'm starting to even skim twitter less because i'm finding less value there's too much noise and not enough signal yeah here's a great question from sergio which ties into everything we've been talking about here uh which is how do you spot nascent network effects so when these are just rolling up how do you spot it at the beginning of the s-curve you can't it's at that point it's a guess it's true right every token right now that's operating a new amazing protocol that could be the future you do not know so that is the hard part some people are good at that and i'm not um i can guess that the whole space is going like that i have no idea which ones but some people be great at that you know many friends of mine are making 100x in all of these smaller tokens because they really understand the technology and the early adoption phase you know andreas and horowitz are phenomenally good at that i'm just not so the answer is i don't know if you know let me find out but really i think that requires detailed analysis of individual opportunities and a conviction and an understanding that you can be wrong so it's a sizing and time horizon issue you know you need to size those bets small while you can size amazon pretty big if you think amazon's network effect continues yeah here's a kind of a narrow question i can take this one or you can route it's up to you uh jared is bitcoin in cold storage the new cash on the sidelines that's a great question no because it never gets spent there is i've been thinking this through about bitcoin and one of the problems of the potential outcomes of bitcoin being money is it's too deflationary and everyone's like oh we want deflationary currency it makes our savings go up problem is it makes the value of everything else go down as a denominator right so you are incentivized never to spend your money because everything is cheaper tomorrow if it's very deflationary then you've got a huge problem because why spend on anything why invest any corporate capital why do anything at all so it's it's interesting um so i don't think it is cash on the sidelines but it's a problem because there's gonna be more and more of that cash because right now you get an eight percent yield if you put it in tether or three or two percent in bitcoin and um why bother putting it into anything else as i said bitcoin's eating the world right now it's it's the supermassive black hole that outperforms everything so there's no point putting it anywhere else yeah this is such a key point about deflation this is one of the interesting things that has yet to shake out which is the store value function versus the medium of exchange function really very much an open question specifically and i'll give a little bit more narrow answer to jared's question which is is uh is the uh is the cash and cold wallets uh the new cash on the sidelines we don't know i think what's interesting about bitcoin is that we haven't had enough time obviously to observe or all these correlations yet uh but these on-chain metrics give us the ability to see things not just with bitcoin but across the digital asset universe at a far more detailed and granular level than we've ever had before so when we start to look at this it's going to be really interesting to see how those correlations do play into other metrics and then imagine what it's like when we've got central bank digital currencies imagine the granularity of economic understanding in real time that we will have that's extraordinary talk about game changing it's totally mind-blowing the kind of information we will have with digital currencies and the ability to respond in real time it's astonishing people don't understand any of this yeah um here's a question that's a macro question uh that comes to us from hugh uh any thoughts as far as this short-term blip uh in inflation uh will it be a blip or will it be something that's more problematic in the longer term julie and i had a long julian brigden and myself who both write macro insiders had a big debate about this on the insider talks this week um i'm a deflationist he's an inflationist um we don't know my view is my view is this is a blip and supply comes back on market as the economies open up so the supply restrictions he's off technology uh globalization and the ongoing pressures continue to crush inflation over time and the economy won't be as strong as expected flip side of that is more stimulus is coming um you know maybe maybe fiscal stimulus spending on infrastructure is more inflationary maybe wages get spread higher and maybe it gets out of control that is the other argument i have no idea but why do we care right now why we why we used to care is because it drove bonds that was the old world bond yields go up above two percent the fed's buying them so they're not going there and if if interest rates get down to zero percent the fed's doing anything else it can do to avoid it so you've got two percent range in bonds so why do we care about the inflation narrative we should be thinking about the demand narrative if commodities is your play is there real demand or is this pricing pressure um you know is it going to wipe out the future expected return of tech stocks if inflation goes up my guess is not because we've noticed the um how tech stocks have actually outperformed the fed balance sheet they've actually ended up being a place that outperforms inflation too so it's not the discounted model it's the va it's the it's the quality it's the quality of the earnings that matter to people right now so don't know not sure it matters as much um yes it matters to savings um and what you do with it but i think most people have adjusted for that already i don't think many people are sitting with all their savings in cash i think many people got exposure in gold bitcoin uh commodities real estate yeah as we get sort of close to the end here i know we're about to get yelled at for running over time rounds we always do i should say if you have a moment uh and you'd like to hit the subscribe button on youtube uh if you're watching on the platform uh we appreciate that so we can get more of this information out to you we enjoy doing this and it's fun to do it live as always it's super fun obviously to get questions from the audience and to have this interactive dialogue across the world give us one more question just because we can an illinois nick let's see oh this is a really interesting one comes to us from mike uh what are your thoughts on residential and commercial real estate in this macro environment a really interesting question with the ships we've seen with covet so real estate if you divide the schiller case-shiller index by the fed balance sheet has basically been trading sideways so real estate's been doing its job it's kind of offsetting the devaluation of money so at a basic core level it's fine it's not doing anything amazing um there are structural shifts with commercial real estate i've no idea how this is going to play out i can't imagine us going back into our offices in manhattan in the same way that we were um do we still have an office in manhattan rail yeah we're still paying a fortune for it i bet because we can't get out of the bloody lease till october but you're the only person who goes in it's right max max yeah he's the only person the one the office over sprawling over two floors he's probably living in that apartment the old studio the old keith richards apartment he's probably living there we don't even know right probably maybe he does uh his like his zoom calls like our internal zoom calls from like the boardroom he's probably just moved in there and it's got free rent on this huge apartment and you know in midtown he's he's a smart kid he's going somewhere yeah so i don't really know with the real estate question i think you know i'm looking here at the cayman islands and everything is being sold off zoom to canadians brits and americans particularly canadians sight unseen on zoom 5 million apartments are trading in an hour why because taxes so there's a story here yeah miami same story different tax regime but similar it's trading what's happening is clearly a lot of millennials have moved out of the city in new york and other cities and they've got more space but my guess is you'll end up lowering the rent enough to attract other people back into the city so it comes it changes over time real estate's not a market i fully understand investing in i don't see any particular problems for the asset class per se but ever it's all about stock picking you know which market you buy which market you sell by the way top tax rate new york state combined federal state and local going up to 52 percent and the top tax rate that came out last time i checked was zero well but we do pay like 30 import duty yeah as i've said before the supermarket's like shopping at harrods here it's so expensive you know it's a lettuce some eggs uh you know a can of coke and you know pack of lacroix water and it's like 800 bucks it's ridiculous and of course americans pay taxes uh abroad wherever they are so less of an incentive than uh for brits and canadians yeah that's right and that's why here's staffed by south africans and ex-british uh commonwealth countries because they have the same legal and taxation commonwealth law rules so that's why that applies but that's why you know different markets have different drivers to them um and so yeah they're all new ones so you need to understand your own market so there's no broad brush yeah well final thoughts uh in the in the weeks to come what are you going to be watching to give some of the folks who are listening to this conversation uh a dashboard of things to think about and look at bitcoin full stop but you know i i keep bleating on about it it's all i care about the crypto market that is the best bet in the world still it is where it is outperforming everything by a massive margin there is nothing close there is almost no point putting my attention span into any other thing now i don't do that because i'm a macro guy and i want to keep aware because things will change and shift and i say this flippantly but this is the opportunity and it remains the opportunity for other things to look at you know you might want to keep arc on your radar screen i don't think it's a story for right now so i'm not that fussed about it you know i'm always interested in india because that is also going through the digital revolution but it's not the time for it now i don't see the time it's not the time for it now is the answer to everything except crypto yeah you know i made a major life decision a few months ago that i am focusing on right now i am coding again and i'm thinking very seriously about doing an ethereum development certification because i'm fascinated by it and i want to actually understand this at the mechanical nuts and bolts level and the deeper i get in the more it sucks me down fascinating stuff yeah i just want to understand it on my pnl right i don't think we can improve upon that as an exit and again i'm being flippant i actually care about this whole space a lot but you know it's good to be given opportunities and you know that's i've been telling everybody pounding the drum is this is the opportunity that you've all been waiting for your whole lives and it's still in play um and the opportunity is not going away and it's not going away just because we might finish the cycle at the end of this year it's not going away because regulators it's not going away from content computers not going away because of green energy it's not going away it's getting bigger there's another 100x from this whole space to come over the next 10 to 20 years 100x and we're going to be here to cover it we are indeed ralph thanks for joining us good have a good weekend everybody enjoy yourselves and uh think bitcoin thanks for watching everyone

Channel: Real Vision Daily Briefing

Views: 43,018

Rating: 4.9252872 out of 5

Keywords: real vision, real vision daily briefing, real vision tv, raoul pal, ash bennington, finance, economics, stock analysis, dollar, rates, growth, crypto, coinbase, ipo, macro, ARK, etf, galaxy digital, raoul pal ethereum, eft customs guide

Id: 2FaD0fDEEX8

Length: 65min 33sec (3933 seconds)

Published: Fri Apr 09 2021