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Month: April 2020

Season 2, Episode 12: Market ‘Melt Up’ Will Continue Until Late Summer Before Onset of ‘Deflationary Bust’

With David Hunter of Contrarian Macro Advisors

David Hunter, chief macro strategist at Contrarian Macro Advisors, has for some time predicted a final “melt up” stage of the market cycle before markets crash.

This stage is now underway as markets recover from an initial sell-off caused by the coronavirus (which Hunter admits he did not and could not have predicted).

What comes next is a “secular top that I expect to be the high-water mark for decades to come,” he says. After markets peak around late summer, a “global deflationary bust” will ensue, with as much as 80% downside for equities.

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  • Target of 4,000 for the S&P as part of “the final melt up” (2:23)
  • The downside target. Forget the “retest narrative” in the short term (10:39). Markets should drop by 80% from the top (11:58)
  • Unprecedented leverage doesn’t leave policymakers much time (14:09)
  • Background on David: 47 years in financial markets (18:46)
  • The current crisis in historical context (26:35)
  • Deflation allows for liquidity injections. Until it creates inflation (32:01)
  • Discussing the potential political and social fallout from the coming economic crisis (36:12)
  • How deflation will eventually turn to inflation (40:20)
  • Discussion of the U.S. dollar’s reserve currency status (45:56)
  • Bullish outlook for gold and silver (51:37)

Highlights From Our YouTube Channel

For more information on the guest:

Not intended as investment advice.

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Season 2, Episode 11: Bargain Hunting in Frontier Markets, With Hedi Ben Mlouka of FIM Partners

Frontier markets are at greater risk of coronavirus fallout, but there are opportunities

Hedi Ben Mlouka joins the podcast to discuss his views of frontier markets in light of the coronavirus crisis.

Ben Mlouka has been investing in frontier markets for more than a decade as CIO and CEO of Dubai-based FIM Partners. He sees the asset class in general as being at greater risk of being impacted by fallout from the COVID-19 epidemic. The political risks are particularly vexxing.

Content segments timestamp:

  • Is this a good time to be investing in frontier markets? (6:03)
  • The first part of the equation: Frontier markets are less prepared for the coronavirus than developed markets (7:05)
  • The impact will be larger from a healthcare perspective while the policy response can be expected to be weaker, especially in fragile economies (9:56)
  • The crisis will expose the “downside of globalization,” precluding a “V-shaped” recovery (11:30)
  • Where are the opportunities? Oil importers like Pakistan and Egypt can benefit (15:26)
  • Speaking oil, forget about the demand shock for now. Oil prices should recover to $50 or $60 per barrel (18:57)
  • Beyond the macro picture, industries with access to capital are preferred. Avoid travel, hospitality, banks. (21:07)
  • Healthcare, education, retail, and consumer discretionary companies should recover over the long term (23:56)
  • Political risk is a major concern for many countries in frontier markets. Who’s most vulnerable? (31:09)

Highlights From Our YouTube Channel

More information on the guest:

Not intended as investment advice.

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Season 2, Episode 10, Transcribed: Coronavirus Crisis Continues, Expect ‘Rolling Recessions’

Moderator 0:02
Welcome to the Contrarian Investor Podcast. We give voice to those who challenge the prevailing sentiment in global financial markets. This podcast is for informational purposes only. Nothing on this podcast should be taken as investment advice. guests were not compensated for the appearance, nor do they supply payment in order to appear. Individuals on this podcast may hold positions in the securities that are discussed, listeners are urged to educate themselves and make their own decisions. Now, here’s your host, Mr. Nathaniel E Baker.

Nathaniel E. Baker 0:36
The situation around the corona virus continues to escalate. Markets are apparently at the whim now of policymakers in the US who are debating a congressional bailout of sorts to help the public in the US as well as corporations. And to that extent, I have a guest today, Rachel Ziemba. She is the founder of Ziemba Insights here in New York and a professor at NYU. Among other things that she’ll tell us about later.

Rachel Ziemba You are the founder of Ziva insights, a professor at NYU, and a geo economic and country risk expert. We are here of course to talk about the corona virus, which is wreaking havoc in financial markets and to the global economy. Of course, the health issues are paramount and we hope everybody stays healthy or gets health He, as the case may be, but for our purposes and now having you on the podcast, I wanted to get your views a little bit on your assessment of the economic impact of this coronavirus.

Rachel Ziemba 3:15
Thanks for having me on the podcast. It’s time you know, given the unfolding interlinked crises that we’re now experiencing, it’s an ideal time to sort of recognize what we know and what we still don’t know. What we know is that the economic impacts of not only the virus but the mitigation policies are incredibly dire. From day one when it was or not day, one, maybe day 30 as it was evolving in China. What became clear to me as an economist was that this was very different than past health crises and pandemics as soon as China put 50 million people on lockdown and shut down economic activity in Wuhan province that of course has manifested to rolling, lockdowns, quarantines and shut down quite a lot of economic activity around the rest of the world, even as the Chinese economy is reviving. So this has been, you know, economists like myself, until recently engaged in a debate over was this more a demand shock or a supply shock? I think it’s very clear now it is a very deep demand shock for oil and commodities for a wide range of goods, and also a shift in demand. And so I think this is going to mean some form of of rolling, rolling recessions. every data point we look at right now almost looks historic and are not reflecting the situation on the ground today. Even this from a week ago. You had several hundred thousand people filing for unemployment. When we think ahead to next week, it will probably be even greater. These will be people who still have cost to pay bills to pay, they might be sequestered. But their bills are not sequestered. And so that’s why the measures we’ve seen in the global from global policymakers are so important to keep element individuals and elements of the economy on a lifeline, so that we can try to evolve so that we can try to kill the virus, right? We’re shutting down parts of the economy to try to kill the virus, that obviously has collateral damage, but having millions and millions of people dead would be not only a massive human cost, but a major economic one.

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