The Macro "Endgame": Growth, Gold, Deflation, and the Dollar ( w/ Eric Basmajian )

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🗓️ 14 March 2021

⏱️ 68 minutes

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Summary

Eric Basmajian, founder and editor at EPB Macro Research, joins Lyn Alden of Lyn Alden Investment Strategy to break down his near-term outlook on the global economy as well his longer-term framework for macro investing. Basmajian notes that the growth rate in industrial output, the pick-up in demand for commodities, and a steepening yield curve indicate a growth pick-up. Alden and Basmajian explore the significance of the underperformance of banks (particularly regional ones) and energy relative to the S&P 500 and then dive head-first into more macro issues on a longer-term time horizon such as the interplay of debt, inflation, the dollar, interest rates, and the velocity of money. Recorded on January 26, 2021. Key learnings: The strength of cyclical economic momentum indicators, particularly in industrials, indicates growth will continue in the short-term. Within a longer-term time horizon, Basmajian believes that extreme debt levels incurred on corporate as well as government balance sheets will hamper growth, ultimately leading to deflation. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	So I'm Ellen Alden and I'm here with Eric Bassmation of EPB macro research and we're going
0:18.7	to talk about a couple of different things related to his strategy and about the global macro
0:22.9	environment at the current time. So Eric, welcome to Real Vision. Thanks, thanks for having me.
0:28.4	Yeah, so I've been looking forward to this conversation because we've had a lot of interactions
0:33.0	in the past about some of the things happening on the economy and so I figured it's great
0:37.9	to be able to talk about it. So why don't we start by you giving the viewer some idea of your
0:43.2	background and what your overall process is as part of your research? Sure, so I'll start with
0:50.5	a quick background for those that are unfamiliar. I studied economics at NYU while I was there
0:57.1	basically in my last year. I worked at Morgan Stanley full-time on a wealth management team.
1:02.9	I then jumped straight to the buy side, worked for a quant fund in Midtown.
1:08.5	A good experience, learned some programming, some statistics. Economics was always my passion,
1:14.0	so I was still studying economics the whole time I was there. Basically reading everything that
1:19.7	was available in terms of academic research on debt and the impacts there. I have a big focus
1:25.9	on long-term trends. That's obviously where I ran into the work of Lacey Hunt, who's been highly
1:31.6	influential to my thinking. I also studied quite heavily Jeffrey Moore, who used more of a leading
1:37.7	indicator approach to the business cycle. So using some of those statistical techniques that I was
1:43.5	working with at the fund, I was creating some of my own composite indicators, taking five or six
1:49.2	or seven different data points and combining them until one aggregate indicator.
1:54.9	Basically, what I do was I was taking the long-term trends, which sometimes don't change for
2:02.2	20, 30, 40 years. It could be valuable for some people to just ride that trend for a long time,
2:09.5	but having experience on the buy side with performance that gets marked to market,
2:14.4	it's just not realistic for most people to stay on such a long-term trend like that.
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