저자: StanleyDruckenmiller · 외국인
요약 보기
Druckenmiller는 연준이 인플레이션 승리를 너무 일찍 선언해 1970년대식 재상승 위험이 있다고 우려한다. 시장 금리(10년물 약 4.5%)가 연준 인하와 달리 오르고 있어 시장이 연준보다 낫다고 본다. 명목 GDP 기준으로 장기금리는 6~7%까지 갈 수 있으며 S&P500 이익수익률(약 3.3%)과 비교 시 주식시장 큰 하락 위험을 제기한다. 영상은 이 관점을 요약·해설한다.
다듬은 글
In today's video, we're going to analyze a fascinating conference between Stanley Durken Miller, the legendary investor and CEO of the Norwegian sovereign wealth fund, and how LeG Miller is undoubtedly the best investor of our time. We'll cover the main topics of this hour-long talk right here in this video.
You can see the topics right here next to me. Before we begin, remember that this is a channel driven by a passion for programming and valo investing. Every week, we're finding, analyzing, and even investing in our investment fund in many companies that represent investment opportunities this week. So, not subscribing to this channel could be costly.
Don't forget to subscribe before watching this video. Let's get started. Back Up Again Because they're easing financial conditions into a melt-up. If they were to have to start increasing interest rates again, which is why I think they should be so cautious about their optionality now that they've forward guided to a series of cuts that could cause it.
My best guess would be an auction failed but honestly it could be six months it could be six years I just don't know really since 2021 When this whole inflationary episode started and I said two years ago or a year and a half ago I was very confident that inflation was going to come down Which I was right on but I was worried about the economy Which I was completely wrong on more recently and you can Take this with a grain of salt since I Had One right and One wrong there um I've switched to Being more worried about inflation going Forward than the economy itself why do I Say that If We go back to the 70s there was an episode with opec that set off an inflation you Had a recession inflation Came down I think from about 8 to 3 and then went Back Up Again Yes and What What's bothered Me And what I have Wanted to see You're exactly right it went Back Up Again it went Back Up Again and the number of months would correlate to the bottom Being right about Now my confidence a year and a half ago was we're Going To Have that period Where we came down again and then we'd see and I'm a little worried that the Fed has declared victory too early I don't have conviction like I Had in 21 that inflation was going to go up That's When the money supply Was growing 40% and All sorts of things were happening but I also don't have conviction that they've snuffed this Thing out and won the Battle and they Cut 50 basis points with Credit spreads tight Gold at New highs which is roaring no Sign of weakness material weakness in the economy Of course there are some spots that Just makes me nervous that this Thing could turn up Again so he afid St to go up How High can they Go well That's a great question Because right now the 10y I Guess It's around 4 and a Half it can go to nominal gdp So let's say inflation went to four and a Half and real growth was 2 and a Half or three 10 year could go to six or Seven I'm not predicting that but that would be consistent If things If inflation turn Back Up Again and the economy wasn't weakening I Think You could get there It's interesting That's What happened the 70 the Bond Market didn't really respond until we went Back Up from like 3 to 12 and then it responded in spades Again I'm not predicting this But I'm as a practitioner I'm very open to it and I've got It's like on my radar but I think the fed's obsession with nailing this so-called soft landing I would remind everybody that The Reason we're having a landing is Cuz they took them Let inflation go from 2 to % yeah so there was no Need for a landing for 20 years but I think That's What theys with I don't I don't know the Norwegians have a sovereign fund to manage their pension plan by investing in companies like Google and as a goal we are going at the antipodes of the pay-as-you-go system within pension plans like the Spanish one today Each Norwegian citizen has a whopping amount of 300,000 if right now the fund is liquidated investment in your All of this also gives the Norwegian sovereign wealth fund a great deal of influence over many companies, as it is one of the main shareholders of large companies like Microsoft and Google.
This is why this gentleman manages to sit down with such important people as Ställy Drucken Miller. But let's get to the first question: how does Ställy Drucken Miller see the macroeconomy today? Is it approaching the Apocalypse? In the interview, Drucken Miller doesn't see any weakness in the market, except for the problem in the US housing market, so we can breathe a sigh of relief.
Drucken Miller doesn't foresee a crisis in the next six months. However, he also believes that current economic conditions are very weak and fragile, mainly like a house of cards, propped up a bit by the 50 basis point drop we've already experienced this year, but still quite unstable. Ställy Drucken Miller has also expressed concern about whether we are in a scenario similar to that of the 1970s in terms of an inflationary spiral.
As you can see in the graph, inflation in the United States in the 1970s... From being at levels of 5 or 6%, like those we're currently experiencing, in 2020 it could even reach levels close to 15%. That's why Dr. Miller sees that inflation has clearly decreased, but he's worried about the possibility of it rising again, as it did in the 1970s.
If we go back to the 1970s, we can clearly see how inflation fell from 6% in 1970 to a low of 2.6%, similar to today's levels, in 1973. Then it spiraled out of control as the next recession approached, and inflation skyrocketed until Paul Walker, with a pair of courage, had to raise interest rates to 20% in 1981.
What a hell it must have been to have a single variable rate hike in 1981! I do n't even want to imagine it. This decade, from 1971 to 1981, was a completely lost decade for the stock markets, and of course, that's the great risk that Dr. Miller sees. Miller is looking at the big picture in terms of decades and believes the Fed is taking a very short-term approach to its decisions, not considering the potential inflationary spirals that could arise.
I did a quick Google search to see what the market is thinking, and as you can see, the main news stories disagree with the Fed regarding this interest rate cut. For example, in this first news item, Reuters reports that the Fed will maintain its plan despite the October rise in inflation, from 2.4% to 2.6%.
This should be a warning sign for all investors. In the next news item, you can see this exact figure I just mentioned. And this last news item tells us that the Fed is ignoring inflationary risks to continue with its rate cut plan. So, theoretically, for the Fed, inflation is falling and the problem is under control.
But the market is surely seeing that we'll end 2024 with inflation around 2.5%. 3% and now we move on to the next question. We are on the verge of a decade with an inflationary spiral, and of course, if the Fed declares victory against inflation too soon, this could be a real catastrophe. Let's consider that they have already cut 50 basis points with credit spreads really tight, without many signs of weakness in the American economy, with stocks at their highest, Bitcoin at its highest, and it's soaring.
It seems that this interest rate cut at 5.5% has had very little impact on restrictive policy. That's why the market doesn't agree with the Fed on this rate cut, and inflation can easily rise again now that we are relaxing financial conditions. This is already happening this October, we have seen it clearly with the inflation figure of 2.6%, and with Trump's victory, Dr.
Miller sees even more regulation, less immigration, which will imply more expensive labor due to fewer workers, tariffs, etc. In other words, a cocktail that seems likely to bring even more inflation to the American economy. The Fed is obsessed with the soft landing and its narrative, and it may not be listening to the data the market is screaming right now.
Of course, its narrative is that we absolutely must lower rates because the inflation problem is solved, and we can refocus on making the United States a competitive power and getting GDP to boom. This also reduces the Fed's ability to maneuver because, since it's bluffing with the market and so committed to a plan, the possibility of the Fed being wrong can't even be considered.
According to Dr. Miller, the Fed's job should be to avoid major errors, not simply fine-tune an already established narrative. In more detail, the Fed's official plan is as follows: with exceptional unemployment data and reasonable economic growth, it seems they want to continue with their plan regardless of changes like the October inflation growth, as you can see in the following graph, where unemployment is at really low levels and real GDP growth is at quite reasonable levels.
And so, the Fed continues with its plan to lower rates. Interest rates are projected to reach the 2-3% range in the long term, as they estimate that inflation will remain slightly above 2% in the coming years, as you can see in the following charts. Their estimate is that rates will gradually compress and approach that 2% long-term target.
But this is the plan on paper. And of course, these forecasts justify the following consensus among Fed members regarding rate cuts, which you can see here. We can clearly see how in 2024 they intend to leave interest rates around 4.5%, and then gradually lower them in subsequent years to a consensus of around 2.5-3% in the long term.
This is theoretically their plan. You can clearly see how their narrative is that we must end 2025 with rates around 3%, and then gradually lower them to 2.5-3% by 2026-27. And as we know, the market is not... I agree with this forward guidance or these forecasts from the Fed because it's telling us this through the yield of the 10-year US Treasury bond, and this is where we'll stop at the third question of the video: Why are bond yields rising right now, for example?
Look at the following chart, you can see it clearly. Right now, the bond is around 4.5 percent. And of course the market is totally disagreeing with the Fed. Here in the chart, as you can see, it seems that the market started to disagree with the Fed from the first rate cut on September 14, rising from 3.5 percent yield to the current 4.5 percent.
It's easy to say that this is a 100 basis point increase in just under two months, and what's more, with the latest rate cut at the beginning of this month, you can also see how, in fact, the yield on US Treasury bonds has gone up, in total disagreement with the Fed. The market doesn't agree with the interest rate cut.
The market isn't buying the Fed's narrative or plan, and that's why Drucken Miller, if he has to choose between the Fed and the market right now, is very clear: he'll choose the market. And here's the key takeaway from this interview: according to Drucken Miller, the markets are better predictors of the future of the macroeconomy than the Fed.
This leads us to the fourth question and answers the most important question of today's video: Is the Fed really captive to its own narrative and will it continue with its plan even though the data says otherwise? So, put yourselves in the Fed's shoes right now: on the one hand, the markets disagree with you, and that's why the yield on Treasury bonds is rising when you're lowering rates.
Interest rates, on the other hand, inflation is much higher than you predicted. You've already tried lowering rates by 50 basis points in September and October, and inflation has rebounded. And no wonder, you're in a situation where gold is at its highest, the stock market is at its highest, and Bitcoin is skyrocketing.
Wow, maybe we're doing something wrong with this economic policy. Because, of course, what sense does it make to keep lowering rates? Have we gone mad? Is economic policy expansionary, and at the same time, fiscal policy with Donald Trump is going to be even more so? And in response to this, what we're proposing is even more expansionary monetary policy to defend a narrative that we explained to the market a few years ago.
That's why Starley Dren Miller even proposes in the interview the curious idea of shorting the US Treasury bond, since he believes that the bond yield should be around 6-7%. And we're going to put it in numbers, just as you see here in the The following formula, according to Dr. Miller, tells us that the yield on US Treasury bonds should be around real GDP plus the expected inflation for the next period.
Since inflation is back at 4% and real GDP is around 2-2.5%, he believes the sovereign bond yield should be at around 6%. And of course, for those of you watching this video who are in the stock market, what does this mean? Well, if the S&P 500 is currently trading at 30 times earnings, if you do the inverse calculation, as you see in the formula, you'll see that the return—the implicit earnings, so to speak—of the S&P 500 with its earnings is 3.33%.
If the sovereign bond yield reaches 7%, which is more than double the S&P 500's earnings yield, what can we expect from the capital markets? Basically, a massive flight to the 10-year sovereign bond. Because, let's not forget, the risk-free fixed income, the 10-year US Treasury bond, if it reaches 7%, is a siren song.
Even if we 're invested in the stock market and tied to the mast like Ulysses fighting against the sirens' song, the siren song is there. And it's a safe 7% versus a completely expensive stock market, so it wouldn't be surprising if we saw a 50% drop immediately if the risk-free bond reaches the 7% range.
But we'll talk about this nightmare in future videos. If you liked the analysis, don't forget to subscribe and tell me what you thought in the comments. Making these videos takes a tremendous effort, and knowing that you like the content is really important for us to continue making analyses like this, so your opinion matters a lot to us. A huge hug and see you in the next video, bye!
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