Looking Forward at Interest Rates, the U.S. Dollar, Volatility, and the B117 Variant: DB-Jan15,2021

Real Vision: Finance & Investing

Real Vision

Business News, News, Investing, Business

4.1 • 1.1K Ratings

🗓️ 15 January 2021

⏱️ 44 minutes

🔗️ Recording | iTunes | RSS

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Summary

Real Vision CEO and co-founder Raoul Pal joins Real Vision managing editor Ed Harrison for a nuanced discussion of how the economic recovery will evolve over the next few months. Raoul and Ed interpret today’s dismal retail sales figures, which indicate a contraction of total retail activity for the third straight month. With the new B117 COVID-19 variant on the move, Raoul expects economic activity to continue to decline, ebbing away at the dominant reflationary trades that are short U.S. Treasurys as well as the U.S. dollar. Ed asks Raoul his thoughts on the recent storming of the U.S. Capitol, the approaching inauguration of President Elect Joe Biden, and Biden’s new $1.9 Trillion stimulus plan. Lastly, Raoul and Ed wax philosophical about “the death of macro”: what would happen if the volatility of interest rates and currencies – the bread and butter of macro investing – were extremely low over the next decade? In the intro, editor Jack Farley provides context on bank earnings and the recent short squeeze of GameStop Corp ($GME). Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	It is Friday,
0:09.0	Friday, January 15, 2021. This is the Real Vision Daily Briefing. I'm Ed Harrison and I'm
0:18.9	going to be joined shortly by Real Vision CEO Raal Powell, but first with the news of the day, Jack Farlett.
0:26.0	Thanks, Ed. Price action was risk off today. Bonds rallied as U.S. equities edged lower alongside
0:32.4	copper and oil.
0:34.0	Energy was the S&P 500 sector that dipped the most.
0:37.0	And interestingly, ExxonMobil was down less than some of its peers,
0:41.0	despite the investigation that the SEC launched probing whether the company
0:44.7	overvalued key assets in the Perbian Basin. A flight to quality perhaps? The banks had a rough day as they
0:50.6	reported earnings. J.P. Morgan reported a record quarterly profit of $12.1 billion for Q4 2020.
0:57.6	It achieved this not just by its strong investment banking profits, but also by decreasing
1:02.4	its loan loss reserved, which it booked as a profit.
1:06.3	The bank also reported that deposits were up 30% year-over-year, largely due to the Federal Reserve's
1:11.8	balance sheet expansion, or QE.
1:14.0	Despite this, J.P. Morgan was down on the day.
1:17.0	The riskier banks whose balance sheets are less of a fortress, perhaps,
1:21.0	did not fare so well.
1:22.0	Why this roadblock in the reflation rotation perhaps did not fare so well.
1:22.6	Why this roadblock in the reflation rotation?
1:25.2	Well, you never know, was it the US Census Bureau announcing today
1:28.4	that retail sales were down for the third consecutive month,
1:31.8	well below expectations, or was it
	...

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