원문 보기
I always say in the rough times you can go cry to your daddy and when I say daddy I mean you know you Big Daddy Dahlia this terrible name that I've come up with but sometimes when you go cry to him he's not so comforting he's known mr. Rodgers sometimes he's like this a rougher daddy a daddy that's gonna give you that hard hard truth and maybe even make you cry a little more and this unfortunately is one of those times something that has been in the back of my head behind you know the whole market collapsing and shutting down and it breaking down at a structural level was the long term debt cycle which if you've been with us a fallible macros for a while then you know we used to cover that all the time it's basically our base macro thesis for how the world works and guess who we learned it from yeah daddy Dahlia so not only have we been tracking it and following it and understanding it but you know Bridgewater has been doing the same because that's their main basis of all their research and they're just you know it's slightly bigger and better funded shop than we are but that's ok so going forward in a lot of these videos I think we're gonna venture back into macro land which I gotta admit it gets pretty depressing first time I learned about the long-term debt cycle I just wanted to build a bunker in my backyard and live there so just remember even when things get really bad and a debt bomb explodes the Sun will still shine it's not gonna be that bad in a sense you just got a key perspective and I'm bringing this up because Dalio just published an article about interest rates hitting that zero percent floor so the whole long-term debt cycle thing is starting to play out at least the negative part now if you just type in fallible debt cycles you can go back to my videos where I explain how this works but let's go over dahlias recent research that he published to talk about some of the effects the implications of hitting that interest rate floor and then he goes into a lot of recommendations of what our government should be doing but before we get into it the Nasdaq all-stars trading system is open open till Sunday check it out that will explain more right now is a great time to have a system in your pocket because things are getting rough in the market so let's jump in and it looks like all the highlights I made are magically gone so that's really convenient so Dahlia has been concerned for some time that the next economic downturn would lead to hitting that 0% interest rate floor and it becomes a problem when you got a lot of debt outstanding the economy and big wealth and political gaps this is the same thing that happened in the 1930s which we needed great depressions and Wars to fix now the corona virus is definitely scary and I am worried about older folk and ones that don't have an immune system Dalio is actually one of those guys but Dahlia says at least those economic impacts don't scare him what does scare him is combining them with that zero percent floor that we just hit because the Fed reduced again right big cut so that floor means that all asset classes go down because the positive effect of interest rates falling won't exist the Rd at zero right also every country central bank what do they do they're always trying to stimulate right cut rates and guide the yield curve but that won't work at zero either and then what they try to do by printing money and buying debt assets that's not gonna work because bonds can't really go any higher and they're less likely to be sold to buy other assets because everything's going down another problem is that real interest rates will likely rise because there's going to be disinflation or deflation coming from those lower oil prices that we already talked about and other commodity prices are gonna drop too we're also gonna have that economic weakness and more credit problems so by the way our real interest rate is the interest rate you get when you take out inflation nominal is the inflation included so yeah nominal with inflation those rates would be going down but the real ones will rise and if that happens we'll get rising credit spreads which will raise debt service payments for how these companies at the same time as credit lending shrinks that means credit will tighten even more and it'll cause more deflation and more negative growth forces and a bunch of countries have their currencies being absolutely smacked right now they're gonna be in even worse shape and this is all complicated macro stuff but basically what's happening is a negative feedback loop because we hit that 0% interest rate it's the out of bullet scenario that people have been talking about for years now it's actually happening so this causes a lot of problems for a lot of different institutions so I think about pension funds or insurance companies they have a lot of long term liabilities which is you know like the pension they got to pay out to people or the insurance they got to pay out to people that are funded with equity and equity like assets and if all assets are going down that's not a good look so when Dalio does his calculations and includes the expected returns of assets compared to these companies liabilities they're definitely gonna come up short again this goes back into the pension crisis which hasn't been popular lately but that narrative is gonna come back full force they're gonna have to end up selling their assets to make their payments then you got oil producers that are gonna get screwed to the countries and the companies which remember we just made that video and as of this recording oil is approaching the teens it's insane and for those guys their expenses are much greater than their revenues so they're gonna have to slash spending and sell their assets and those are only two examples there's similar circumstances for many different industries and companies and institutions and it's really a problem the thing is is that most investors and businesses are long they're holding assets that they hope will go up in price on a leveraged basis so they have a lot of debt so when the asset price declines it's gonna have even bigger financial effects them overseeing right now in just the stock prices they're gonna have that ripple effect because of the debt good example right now is these airlines asking for a bailout like what they spent all their free cash flow over the years buying back shares and now they're in trouble and they want the government to help them out because they're gonna go bankrupt by the end of the year that's how most businesses are they're not conservative operators who are very careful and keep cash for any day they're living on the edge of their seat a bunch of debt and just living day to day and when you get into the bigger corporations that aren't run by like a founder who actually cares about the long-term vision of the company then a lot of that management what are they doing they're just trying to pump up stock prices get their options higher and then cash out right they don't actually care about long term it's all short-term just like a politician a lot of short-term thinking too much debt now we're at this problem so right now the markets are likely to have a bigger effect on the economy than the other way around just because of all the things that Dalio just mentioned so here's what Dalio thinks needs to happen big fiscal stimulation with monetary cooperation but it's not happening yet so you need the federal government making fiscal changes you know like taxes and things like that and then you need the central bank to print and a big problem with our government right now is the divisive politics you try to put something through and the other party blocks it so yeah there was some fiscal stimulation put into place like right now they're gonna do helicopter money give everyone checks but it's not large enough or targeted enough to neutralize the contagion of the economic and market effects of the virus you got to move to whatever it takes throw as much money as you can at it so let's go over what's happening in the US right now we got billions and billions going to Corona research and development of vaccines and you know helping all these hospitals that's good and we also got billions going to small businesses so think about all the restaurants bars venues in general closing down they need help especially if the airlines are getting bailed out bail them out - the thing is it's in Trump's best interest to really turn on the stimulus he's at serious risk of doing too little too late the clock is ticking a big fiscal stimulation going into elections that would be great for him because right now it does not look like he's gonna get reelected so what Dalio wants is more targeted measures there have been some good stuff like the loans to the small businesses paid sick leave for those people you know who can't work coverage for virus treatment for those that don't have insurance unemployment benefits direct transfers that helicopter money I was talking about but even everything we're doing Dalia says is still not enough the measures are too small and they'll need to be much bigger so one thing is that we need more loans to the small businesses like I was saying they're really in trouble and Dahlia thinks the best way to do it is for the government to guarantee the safety of the banks lending there needs to be government protection on any new lending and that's important so these small businesses could get that loan to bridge them through this tough time the thing is is what happened here is seriously unprecedented these small businesses and bars that had to shut down they went from a hundred percent to zero revenue like that overnight in previous recessions you know it's been a more gradual decline it wasn't just a hundred to zero real quick like that so these trouble companies and you know it's not just restaurants that's just the easiest example but they're tapping pre-existing lines of credit at the banks which the banks don't want because they don't want to take on more risk when the economy is deteriorating so to allow them to get more money just have the government step in and say hey we got your back if they default we'll take care of it we need protected lending programs and some of this is similar to what we saw in 2008 just in the sense that liquidity is tightening up and remember in all the market reviews that we do the one thing you don't want is for liquidity to dry up then you get free falls and prices of everything lots of people going out of business it's horrible but that's exactly what's happening now which is again why Dalio wants the Federal Reserve and the government to just go all out you just need a firehose of cash just let it go so based on the analysis the Dow and his team is doing he sees lots of companies and industry that are gonna have debt problems and we'll have to restructure and restructure means bankruptcy restructure and he doesn't know what the government is doing he doesn't know if they're expecting these companies to keep operating through the bankruptcy process because that would be debilitating and it could become a big political and social issue remember we did those two videos on Gallio and capitalism and how he talked about the wealth gap and all the problems that we're facing well this is a situation where all that might hit the fan if you got a bunch of people losing their jobs losing their money with no savings like most Americans don't even have a thousand dollars of savings they're gonna be pissed and I'm sure Dalio is scared for himself too because he's one of the rich ones this is when you get massive social upheaval and you need some type of redistribution at least in the short term you got to be supporting all these people with the government or you're facing real problems like even violence you can't let people go hungry he says a fuse in Trump shoes he'd be generous and empathetic especially as the news becomes increasingly bad at this politically sensitive time so that's all the stuff the government should do the fiscal policy as for the monetary policy and the Federal Reserve they've done pretty much everything they could do before moving into monetary policy 3 so the first type of monetary policy and p1 is using interest rates but hey now we're at zero so what do you did well you move on to MP 2 the printing of money and buying of financial assets which as we talked about right in the beginning of this video it's not working as well anymore again because we hit that zero percent so then you got to move on to NP 3 which is the central government runs big deficits and sells the resulting bonds to the central bank so basically the Federal Reserve is printing money and giving it to the federal government to give out to the people so they might likely have to move to that and it's important for fiscal and monetary policy to be coordinated that's the only way to make this work and there's not much else that can be done theoretically the Fed could directly buy assets like stocks but that's controversial and the Fed is really not supposed to do that it wouldn't have much of an impact and it would need congressional approval anyway so the best path forward is to do all the things Dalio mentioned plus provide support to the banks with those fiscal protections which will help businesses get credit when they need it and then Dalio goes on to talk about Europe and all the other countries that are facing this but what's interesting is China because the most targeted and appropriately sized fiscal and monetary response has come from them and that's because of communism they have a greater ability to coordinate fiscal and monetary policies and cut through political disputes because there is only one party and one ruler and they have pretty smart economic policymakers so sadly our democracy is holding us back in this situation and the government isn't doing enough it sucks and you can see that because the stock market keeps falling but let's see what happens hopefully they turn it around and we will continue to cover this story so make sure to subscribe and hit that notification bell so you get an email notification when we release new videos and don't forget Nasdaq all-stars is open check it out it closes Sunday so do it now okay subscribe I'll see you in the next video stay for a lot there bye
Comments 0