Market Analysis

Straight Talk

We live through very unique times, not only because of the shock of the coronavirus that recently hit the world unexpectedly, but also because of large complex structural issues that have been building for decades.

A popular mantra says the stock market is not the economy and the economy is not the stock market referring to the often seen disconnect between market prices and events taking place in the economy. The most recent example has been Wall Street rallying with each disastrous jobs report hitting the news wires. Even this last Friday markets rallied again unperturbed by the latest unemployment report showing the most severe collapse in employment in our recent history. Depression like figures, yet the Nasdaq is green on the year, the S&P 500 largely off the lows with many again predicting new highs to come. Why? Because of unprecedented liquidity flooding markets as a result of monetary intervention making the disconnect between Wall Street and Main Street even wider. We can pretend the stock market is not the economy, but there is no stock market without an economy yet we are witnessing an unprecedented disconnect between the two that has been building for years.

Can this disconnect be sustained? Are investors too optimistic about the current rally? What are the implications going forward?

These are complex issues everyone is confronted with and there are no easy answers. What an intellectually challenging and energizing time to be alive!

I am grabbling with these issues as much as you are, we all are. And for that reason the idea for an ongoing webinar arose, to find a format to discuss these issues in more depth and make the debate more accessible and personal.

Hence I couldn’t be more pleased and honored to have found two people I greatly respect who are extremely well versed in markets and the macro market debate who share my passion for the issues at hand to join me for the debate: Guy Adami and Dan Nathan, both of CNBC Fast Money Fame. As Guy Adami says all three of us have been trying to tell the truth in different ways for years. And that’s not an easy task for the truth is often unpopular or goes against the grain of a system that benefits from the truth being ignored.

So I invite you to join the three of us in this unscripted Zoom debate of what is hopefully the beginning of us discussing the issues we are all grappling with and we think matter to markets and you.

We hope you like it as much as we enjoyed recording it and please let us know what issues and topics are of interest to you for future episodes:

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30 replies »

  1. This was the most refreshing video in a long time. I have been going crazy on why 20 million plus out of work and the markets are up. When the music stops what then??? How big will this thing blow up? God help was when this fed stops pumping money. Great video guys. I like Fast Money.

    • Yardeni research is precisely observant that never ever fight the treasury and federal reserve they can pump and dump liquidity endlessly…and that’s that!

  2. Elon Musks newborn child has got a weird name, but l+BgkbTGfaTFhpwHAzxqbxuH+c21Yh35gu… is way beyond that! 33:53 minutes of doom. Enough depression for the weekend. Thanks!

  3. Wow wow & wow! This is fantastic! What a pleasant surprise to see three people I follow & respect all in one conversation. Interesting to see Dan & Guy unfiltered. Given current environment going forward topics of interest:
    1. What are your thoughts on next round of US/China talks. Will US be more or less hostile to China and what are your thoughts on how markets will react. Also wondering if you see any changes in regards to how EU now deals with China.
    2. Global supply chain diversification. Future trends
    3. As we enter Fall not only are we faced with potential continued virus infection but a Presidential election. Although lots can happen between now & then I just have not heard much on addition of elections into the equation. More of potential impact to markets.

  4. Love to hear from people that are in the business and have realistic views. I have been asking myself for awhile how the market is where it is. Great Job!

  5. Sven,

    This was so refreshing to watch! Please consider adding this as a permanent service. We learn so much from watching unfiltered, experienced perspectives. Also, I think Mella’s perspective would attract and expand subs as well. The three of you could easily disrupt the manipulated narrative, if you continued to do these webinars on a regular basis and it gains traction. So many of us need to hear straight talk like this. I see big things developing from this webinar and a movement being created from it. Intelligent people with kind hearts attract the same energy which can only produce good things. This was a winner and well done for thinking of producing this sort of medium.

    Cheers,

  6. Sven, that is a great presentation and 3-way dialog with the Fast Money guys! I appreciate getting this type of summary with multiple experts’ consensus. There will come a day (soon) when the horrific stock market inversions and the reckless central bank interventions collide with reality.

  7. Excellent video. Try to approach this market looking at the facts, but it is hard to avoid the emotion and FOMO. But the economic data, even looking past the valley, doesn’t justify these prices. So important to focus on the best facts at hand to make investing decisions.

  8. CLEVER! I suggested you do a free video once in a while and you already had a better idea waiting in the wings. 🙂

    Very entertaining!

  9. Great webinar guys. Completely agree with your views, been struggling to wrap my head around why the markets keep moving up lately.
    Two factors I’ve been grappling with, and would appreciate your views on them:
    1) With record low interest rates, and for a variety of reasons an almost certain probability that they will stay this low for a long time to come – where else are people supposed to invest to earn a positive return? Would the interest rate environment not support a new paradigm in terms of earnings multiples and hence valuation? A “safe” stock such as Microsoft with an earnings yield of 2% (50 P/E) may be perceived as superior to earning 0% in cash?
    This would suggest that markets could go a lot higher largely due to a lack of alternatives.
    We saw this relationship with interest rates play out in 2018, as soon as interest rates started rising, the market Re-related and prices dropped. This very quickly reversed when interest rates started dropping again.
    2) In terms of some of the tech stocks, not all, the digital economy is getting a real boost with people working from home. It’s not hard to imagine a lot of offline business being moved online – so even though the pie as a whole is shrinking, these companies with their established digital platforms, will eat up a larger piece of the whole pie. Their revenues and earnings could plausibly strongly grow even in a depressed economic environment? So there is a transfer of business from the offline (and largely unlisted) space to the online.
    Thank you!

  10. I would really love to hear you three talk Real Estate debt. It would be more understandable than just hearing about theFed an credit in general. An example came out from Colony Capital on Friday. On page 7 in their Hospitality Real Estate section they state that they have $3.5 billion of total debt, 3.2 billion of which is in default. They are in active negotiations with all their lenders for forebearances, and or debt modification including extension of upcoming maturities in2020. This is not like 08 when residential was highly impacted although residential is impacted again. This it seems tome is much much bigger. Think of the malls which were already so challenged

  11. Thanks and so good to hear from legit balanced people who aren’t afraid of speaking the truth and who try to help others and make them think. Fed lives in an ivory tower that is grossly out of touch with reality and beholden to the banks that own them not the people. I can see no legit way out of this situation without massive debt forgiveness across all sectors and this will create more inequality making the 1%er’s even richer. Don’t get me wrong I am huge believer in free enterprise and success but also believe in sharing the rewards but the present corporate system only rewards the CEO’s and friends mostly. Enough for now from me.

  12. thanks, good to know how they feel. If you cut to the chase and say earnings don’t matter at all, only Fed stimulus therefore by that logic you can own a company earning nothing or losing money and it’s ok as long as other people buy off you – is that a ponzi?

    It’s clear to me that the financial engineering of ETF’s and buy backs is the tool that has been used to help wealth distribution without any real definition of value – unless someone can tell me how you value any ETF – yep any – tell me how it is valued? you can’t, it’s all relative eg it’s higher than a year ago. So the question is, how long can monetary stimulus keep going to stimulate the prices of these things without growth in actual earnings? 1. as long as the people let it happen and 2. as long as the balance sheet allows it and that’s a bit too complicated – ie, winding down, inflation etc

  13. These are three very smart and experienced men. We will listen carefully to their words. The sky may not be falling, but that’s because its being propped up by unprecedented forces. These forces have consequences and so will the disconnect. GREAT Talk. Thanks, Guy, Dan, and Sven!

  14. Good stuff! I have to check-in every once in a while to make sure I’m not the only one who thinks this is nuts. I hope Guy and Dan both come back and do another one of these.

  15. Wonderful commentary, most impressive honest and knowledgable opinion . I look forward to the next instalment of ” the sanity fix “. Thanks chaps.

  16. Foolish bears! Nasdaq green for the year and so will S&P & DOW leading the way 2H. The doom & gloom headlines from global economies stemming from job losses and COVID-19 worries still can’t stop bulls from not buying. As they say, markets are always forward looking and the majority of the current investors are sure betting on a V-shaped recovery. Get in or get out of the bulls way is the way I see it….

  17. We have 535 incompetent politicians plagued with financial paralysis including federal reserve. Wall Street issued trillionS of ( unsecured corporate toilet 🚽 paper 🧻) “ brilliant money 💰 makes money from smart & stupid money 💴 “ what wiseman do early fools do late” not to mention 280 trillion of derivatives market.. the massive hemorrhaging unsustainable debt makes ( bitcoin ) a viable digitized exchange for commerce..invest in tax free municipals Nuveen interest payments (escrowed ) until maturity …hahahahahahahaha

  18. Excellent Perspective Objective Technical Analysis !! My profound eternal gratitude 🙏 to Swen…and Wife…it’s provided immeasurable support…

  19. Vix term structure is inverting back to contango. Likely the market is front running the imminent purchase of credit etfs by the Fed. This is $VIX crush. SPX upside potential until Friday.

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