Lance Roberts: Record margin debt threatens fed-fueled bull market

Posted by Patrick Ceresna on Apr 16, 2017 10:02:36 AM


Lance is also the Chief Editor of the Real Investment Report and the host of the Lance Roberts Radio show.

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Juliette Declercq: A Red String of Fate Ties U.S. to China

Posted by Patrick Ceresna on Apr 7, 2017 12:37:34 PM

Juliette Declercq.jpg

Juliette Declercq founder of JDI Research a boutique institutional advisory service that advises some of today's most successful portfolio managers. During the interview on MacroVoices, Erik and Juliette discuss the outlook for the US Dollar, the 10-year US Treasury Yields and the FOMC policy moving forward.  

They reflect on Juliette’s perspectives on the red string of fate ties U.S. to China and the current business cycle.  They further discuss where is the ISM heading next, the impact on Trump’s tax and infrastructure spending and the potential surprises for the upcoming French election.

Here are some notable excerpts from the interview discussing the idea that the current business cycle is long in the tooth and Trump is running out of time.  They further discuss the strong ISM numbers and her views as to if this has now turned.   

Erik:              Now in the next section you move on to the business cycle and you pose the critical question of how long does Donald Trump have before it's too late. Please elaborate because a lot of our guests have suggested that this business cycle is very long in the tooth. So, how much longer can the euphoria last and what are the charts on page six telling us?

Juliette:         In the section, you describe, I’ve modeled aggregate demand which is all monetary by adding the two sorts of money, basically incomes and the change in debt level. You can see on page six that this perfectly defines the business cycle and also the intermediate cycles.  What should normally happen on the strong ISM boost is that income growth picks up on higher employment or wage gains and credit demand should also pick up. This time the opposite is happening and this is telling me that the Trump trade is fantasy rather than the reality.  The reality is that there is no such thing as a Trump trade in 2016, there was no magic. The global economy reacted to the sharp easing in financial conditions stemming from the Fed's relent and China's vigorous stimulus like it has always done. Because of very strong price base it takes we had a bounce in activity for example energy sector cap ex collapsed 70% from 2014 to early 2016 and this subtracted0.7% from real GDP.  It's only natural that the bounce in prices necessarily causes the bounce in activity in 2016 from extremely low levels. The same goes for the distressed level of inventory. The issue is that none of those effects can be extrapolated into 2017 and the effect of the global stimulus has largely run its cause. In fact, base effects now work in reverse. In short there is no such thing as a Trump trade although it is somewhat discounted by both markets and the Fed and I see this as a trading opportunity.

 Erik:              Juliette the bulls would tell us that the ISM is the near all-time highs and that signals nothing but rock solid growth and economic strength on the horizon, meanwhile another popular narrative is the president’s Trumps tax and infrastructure spending initiatives will soon become reality and these factors can only be bullish for asset markets at least according to the bulls. You see it differently, so please explain why, why don't we start with the graph from pages nine and ten and what they're telling us and explain also where China fits into this story.

 Juliette:         So, on pages nine and ten you can see that investment does not in any way corroborate the bounce in ISM and we started to see signs of a peak in ISM this week with both a weaker manufacturing ISM and a much softer non-manufacturing report. The leading indicators defined by new orders versus inventory sentiment also look to have already turned the corner. Basically, my fear is that the China driven early 2016 stimulus caused the debt cap bounce in global activity. Trump’s campaign promises greatly and artificially amplified the position of survey effect as hard instincts took over and created the illusion of a more sustainable cycle. I think we have already reached the top in terms of how far hope can support markets and I had recommended from the Trump’s night to pay rates anticipating hope to run wild but reality is now about to hit. The longer China growth can hold steady and the longer it will take for financial conditions to tighten more meaningfully but my best guess is that China growth can only be supported into the congress.


Juliette shared some very important insights, particularly the sensitivity the U.S. economy has to China.  The entire interview transcript and chart book are available for download on the website.   





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Topics: bonds, macroeconomics, China

Economic Data Has Peaked And Going To Start To Disappoint

Posted by Patrick Ceresna on Apr 1, 2017 12:54:09 PM

julian_brigden_headshot.jpeg Julian Brigden is the co-founder and President of Macro Intelligence 2 Partners and is one of the most streets most respected macro strategists. In the interview on MacroVoices, Erik and Julian discuss the U.S. Dollars impact on the US shale bubble, the peak acceleration in ISM manufacturing and the risk that headline inflation is peaking.  They further discuss if the Fed tightening is going to start to impact data. 

Julian also points out that the bond shorting opportunity is over and the subsequent risks to the reflationary trades.  Also discussed are the wage trends in the U.S., perspectives on European growth and inflation and the relative pricing between U.S. and European bunds.

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Topics: bonds, macroeconomics, inflation, reflation

The Gold Bottom is in!  MacroVoices interview with Jeffrey Christian

Posted by Patrick Ceresna on Mar 25, 2017 1:15:21 PM


  • Jeffrey believes the gold bottom is in and the support has been stronger than he had expected
  • He expects gold to be at nominal record high prices by 2020, 2021
  • He sees that the fundamentals in the gold market are getting much better
  • MacroVoices Erik Townsend interviewed Jeffrey Christian on March 23rd, 2017

Jeffrey Christian is the Managing Director and founder ofthe CPM Group, one of the most respected precious metals and commodities research companies in the world. During the interview, Jeffrey shares his outlook on the US dollar, his secular bullish call on gold and silver and the current demand for physical gold.  He further discusses his outlook on the fundamentals for the platinum, palladium, which in his eyes do not have the same upside potential. 

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Understanding the Global U.S. Dollar Shortage

Posted by Patrick Ceresna on Feb 19, 2017 11:21:10 AM

In an exhaustive, 70-minute interview, a prominent analyst who has been closely tracking the global dollar shortage, Alhambra Partners' Jeffrey Snider sat down with Erik Townsend to explain - once again - why this is such a critical topic, even if it comes at a time of unprecedented global complacency (it's amazing what record high stock prices will do to concerns - or lack thereof - about the future).

As Snider puts it, while most other risk indicators imply smooth sailing, "there is 'something' weird going on" when it comes to dollar funding and global imbalances of the world's reserve currency, i.e., dollar shortage.

  • In the interview, among the many topics covered, are
  • Understanding the Eurodollar Money Market
  • Swap Spreads and Interbank Hierarchy
  • Dimensions in the Eurodollar Futures and Eurodollar Money Supply
  • Why does the World Need So Many Dollars?
  • How the Eurodollar market supplanted the Bretton Woods System
  • S. Dollar and the Dollar Funding Gap
  • Reflation Trade Debunked
  • Interest Rates Trapped
  • Failing Global Currency System

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Topics: macroeconomics, U.S.Dollar, Dollar Shortage

Jim Rogers: "We're About To Have The Worst Economic Problems Of A Lifetime"

Posted by Patrick Ceresna on Feb 12, 2017 9:37:42 PM

Joining hosts Erik Townsend and Patrick Ceresna is a man that needs no introduction, investing legend, Jim Rogers. Jim has become one of the most popular macro thinkers of our time.   Those not familiar with Jim, back in 1973, George Soros and Jim Rogers founded the Quantum Fund. During 1970 - 1980, the portfolio gained 4,200% while the S&P advanced about 47%.  The Quantum Fund was one of the first truly international funds.

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Topics: macroeconomics, Jim Rogers, macro outlook

Is the 35 Year Bond Bull Market Over?

Posted by Patrick Ceresna on Jan 29, 2017 12:47:33 PM


David Rosenberg_headshot_HR - small.jpg
In an exclusive interview on, David Rosenberg, Chief Economist & Strategist at Gluskin Sheff, discusses his views on Trump, inflation expectations, the Fed, the U.S. Dollar, Bonds and Stocks.  Some of his most interesting observations are his views on bonds and the 35-year secular bond bull market. Bond gurus like Bill Gross and Jeffrey Gundlach have suggested that the bond bull market may be over, but David has a much different view.  Here are some highlights:  

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Topics: bonds, Federal Reserve, economy, fed

Raoul Pal: Day of Reckoning Coming for VIX Shorts?

Posted by Patrick Ceresna on Jan 21, 2017 10:58:44 AM

MacroVoices interview with Real Vision Television co-founder Raoul Pal

Key excerpts in attached article:

  • compares the VIX contango trade to the portfolio insurance problem that was blamed for the 1987 crash
  • they don't realize the rate of change of the VIX can be so extraordinary that the losses can mount up massively and super quickly
  • record level of speculative long positions in the oil markets compares to the conditions in the summer of 2014 prior to the bear market decline
  • The other thing was speculative position in crude oil was all time high in fact if I took the trend going back from the early 80's it was seven standard deviations above that trend and well over three standard deviations maybe four standard deviations from the trend in the last 20 years or 15 years.
  • I've seen a similar situation with copper driven by China and a few other things where copper position is wildly extreme and so I start to think well too much reflation is priced into these things maybe there’s an interesting opportunity on the short side
  • What is interesting oil volatility has been coming lower. Look, I don't think it's going to get back to where it was in 2014 when it was trading below 20 but it has come down from a peak of 80, a kind of a real trading range of 50 down to 30. If it comes any lower the ability to buy options start to make sense because oil volatility can go to 80 can go to a 100
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Topics: oil, copper, vix

Which is right on Trump: Bill Gross or Ray Dalio

Posted by Patrick Ceresna on Nov 16, 2016 11:18:13 AM

Ceresna Comment: Ray Dalio wrote an article reflecting on the Trump Presidency(click to read).  His initial view: Our very preliminary assessment is that on the economic front, the developments are broadly positive—the straws in the wind suggest that many of the people under consideration have a sufficient understanding of how the economic machine works to run reasonable calculations on the implications of their shifts so that they probably won’t recklessly and stupidly drive the economy into a ditch. 
On the other end, Bill Gross has taken a much more concerned view of the situation.  (click to read). His view centers on the idea that the populist movement is only beginning and that Trumps policies do not address the big picture headwinds of demographics, technological displacement, deglobalization and overleveraged balance sheets.  
I have to agree with Bill Gross on this one.  Trump cannot undo the global debt cycle that needs to deleverage. While this may not be immediately bearish, I do feel that the short-term optimism will have a reality check as soon as all the dumb money finishes its panic buying. 

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Topics: Trump, populism

Passive Negligence - Dangers in Passive Investing

Posted by Patrick Ceresna on Nov 6, 2016 8:42:30 PM

Ceresna Comment: Important article written by Michael Lebowitz highlighting the flaws in passive investing using indexing. I would summarize that as indexing becomes more popular, the more it will distort the market pricing and increase the risk to those believing it to be a conservative strategy. The more the public pours into the strategy, the more likely it is to be the epicenter to the next major market event.  The smaller and smaller the active management sector gets, the more likely that there will be considerable opportunities presented to the few dinosaur managers left using bazaar voodoo techniques like bottom up value investing. 

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Topics: passive investing, indexing

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