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https://www.cnbc.com/video/2020/08/17/all-asset-classes-are-currently-overpriced-strategist.html
Great to chat again with CNBC’s highly experienced and deeply knowledgeable duo @MartinSoong & Sri Jegarajah who asked whether Sino-US Trade Deal Phase 1 is academic, if markets are just ignoring the increased risk of geopolitical/military escalation
Great to chat again with CNBC’s highly experienced and deeply knowledgeable duo @MartinSoong & Sri Jegarajah who asked whether Sino-US Trade Deal Phase 1 is academic, if markets are just ignoring the increased risk of geopolitical/military escalation
I said much high octane dialogue from both sides for political reasons, heightened with Donald Trump playing to his domestic gallery in the run up to the 2020 elections, meant neither markets nor anyone else, knows whether these spats are real or pure Theatre
So nobody knows how seriously to take it, especially when Trump throws out comments like ‘whatever they are buying, they’re buying because of me’
It sounds like pure politics which we shouldn’t take too seriously but on the other hand, for the first time, we’re starting to see
It sounds like pure politics which we shouldn’t take too seriously but on the other hand, for the first time, we’re starting to see
commentary about the risks of ‘sleepwalking into WW3
I think that’s premature but you can understand why people think that complacency itself is probably the biggest danger
@cnbcSri followed up by noting global political risk seems to be that much more amplified & turned to the
I think that’s premature but you can understand why people think that complacency itself is probably the biggest danger
@cnbcSri followed up by noting global political risk seems to be that much more amplified & turned to the
weekend protests in Thailand, asking whether the largest political protests since 2004 posed a major threat to the Thai economy at this time or would local/foreign investors simply brush this off as in the past
I noted that the critical difference this time, In Thailand, China
I noted that the critical difference this time, In Thailand, China
USA, Europe& globally was the economic effect of COVID, which had increased the financial dissatisfaction &ensuing sense of political disenfranchisement that people everywhere, even in EZ, where protests have been suppressed for some time, was leading to widespread political
expression of economic resentment, brought to a head by COVID
Is a concern that so many people globally are in such disadvantaged situations that such dissatisfaction has built up
This could become a financial& economic wildcard
Martin, who knows Thailand far better than most
Is a concern that so many people globally are in such disadvantaged situations that such dissatisfaction has built up
This could become a financial& economic wildcard
Martin, who knows Thailand far better than most
observers, made the point that what really distinguished the Thailand protests this time and what Martin found shocking were reported anti-monarchy aspects in the recent protests
Limited by any foreigner’s inability to understand/comment on the intricacies of politics in another
Limited by any foreigner’s inability to understand/comment on the intricacies of politics in another
country, even one I’ve lived in for 26 years, I noted that this was probably because attitudes were changing as the Thai people inevitably had to adapt to a changing relationship with the monarchy after the more than 70 year rule of HRH Rama IX. That new relationship was now
coinciding with the financial setbacks that many Thais were suffering due to the economic consequences of COVID
So really, existing stress points were exacerbated by COVID which has elevated financial, economic& political risk, everywhere, not just in Thailand
So really, existing stress points were exacerbated by COVID which has elevated financial, economic& political risk, everywhere, not just in Thailand
Sri asked, against that backdrop of financial, economic & political uncertainty, what should investors do in an environment of global social fracture, whether driven by racial tensions, income equality or wealth inequality?
I agreed that this was really challenging partly bc of
I agreed that this was really challenging partly bc of
all those factors but also bc of relative asset pricing, which is making investment allocations more difficult right now
In just the last few weeks, there's becoming no way really attractive to turn-equities were becoming expensive anyway- then they became even more expensive by
In just the last few weeks, there's becoming no way really attractive to turn-equities were becoming expensive anyway- then they became even more expensive by
whichever metric we use but also even supposedly safe assets, like treasuries or gold, have become expensive in the last couple of weeks & in that kind of an environment, cash, at something like 25 to 30% of some advisory portfolios has now become the biggest holding, not bc of
a conscious urge to increase dry powder, so much as the consequence of selling holdings that are looking too expensive when frankly, there just doesn't seem to be that much else to buy
we still like is long short equity, because at least that plays into dispersion & also tries
we still like is long short equity, because at least that plays into dispersion & also tries
to cover the downside
@Martinsoong (who has seen MBMG’s extremely profitable gold analysis for many years) was surprised to hear this and asked to clarify my comments on gold.
I explained that our advice had been to reduce gold allocations (which had been up to something like
@Martinsoong (who has seen MBMG’s extremely profitable gold analysis for many years) was surprised to hear this and asked to clarify my comments on gold.
I explained that our advice had been to reduce gold allocations (which had been up to something like
20-25% of some advisory portfolios) because gold had suddenly become relatively expensive and therefore not only had more limited hedging properties than previously but also no longer looked as inherently attractive itself
I admitted in some scenarios gold could just go straight
I admitted in some scenarios gold could just go straight
up from here & I’d be left with egg on my face but on balance, it seemed as likely that gold needed to pull back a bit first& reset
Treasuries were not far off a buying price but I’d prefer to see gold closer to 1850 before rebuilding such sizable positions as previously
Treasuries were not far off a buying price but I’d prefer to see gold closer to 1850 before rebuilding such sizable positions as previously
Final question(s) from @cnbcSri was, is the top in for asset prices/are stocks then on the verge of a disorderly correction?
It really is starting to look that way- the big problem is that until now liquidity has lifted all the boats, but now, it seems there's no longer enough
It really is starting to look that way- the big problem is that until now liquidity has lifted all the boats, but now, it seems there's no longer enough
liquidity to do that & people are having to choose which boats are going to be lifted
That selection will likely become a smaller& smaller set all the time (unless new liquidity is created)
That selection will likely become a smaller& smaller set all the time (unless new liquidity is created)
Money is still flowing into stocks but the fact that the tech stocks aren't leading the market as strongly or clearly anymore makes us think that stocks could be probably the most vulnerable asset class that's out there
So, be careful.
So, be careful.
@threadreaderapp Please unroll
