Andreas Steno Larsen: The New Era of Fiscal Policymaking

Real VisionMay 03, 2021
In this interview with Real Vision's Ed Harrison, Andreas Steno Larsen, chief global FX/rates strategist at Nordea Markets, returns to the platform with his most comprehensive interview yet. Steno Larsen outlines a world where fiscal policy has become the most important policy variable, and he believes that will have a large impact on a host of asset classes including currencies, equities, bonds, and more. Over the medium-term, the most important asset is the US dollar because of what Steno Larsen predicts will be US outperformance on growth. Eventually, other countries will catch up—but until they do, Steno Larsen is tactically long US dollars, short US bonds, long commodities, and negative on gold. He also sees the potential for a major correction in US equities. Over a longer time horizon, he sees US policies undermining the role of the dollar as the main reserve currency and believes the emergence of the Digital Yuan will hasten the dollar's decline. On the policy front, the most important long-term change is the move to fiscal policy. Eventually, Steno Larsen believes we may come to think of the changes afoot in the developed world as heralding the emergence of Universal Basic Income as a permanent feature of fiscal policy. Filmed on April 28, 2021.
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Lawrence Lewitinn: The Skeptical Insider
Real Vision senior editor Ash Bennington sits down with Lawrence Lewitinn, managing editor and host of First Mover at Coin Desk, to discuss the crypto markets, ETFs, use cases, value propositions, and long-term viability. Lewitinn views the crypto markets as incredibly thin, fueled by hope and greed, and he discusses the power of surpassing psychological barriers like round numbers. This has been prevalent in the recent increase of Ethereum's value as it crossed the $3000 threshold. With its value quadrupling, the trajectory of hope and trust in the system grows with it, leading to a positive change in the global ecosystem. However, Lewitinn also points to the issues whales such as Elon Musk can cause—if they were to throw all their holdings into the market at all once, that would pose a huge problem for blockchains such as Bitcoin because there would not be enough buyers in the space, triggering a huge wave of liquidations. Lewitinn states that while Bitcoin and crypto have huge potential, we do not know yet if there will be a better version as Bitcoin has yet to achieve one of its original goals. Lewitinn asks, "Would Bitcoin be at $50,000 if not for the pandemic? Would the space be as we know it today if Trump had won re-election?" Ultimately, the future is unknown. Filmed May 3rd, 2021. Key learnings: According to Lewitinn, when one reads the Bitcoin paper, it is elegant and solves the problem of transactions in trustless spaces. However, it requires a lot of work and energy. Further, it is more successful than it should have been when it started. In relation to the crypto industrial complex, Lewitinn believes that Bitcoin will not be the end-all, be-all solution as different specializations emerge. He views the explosion in the space as still being in the early innings. Even as there are a lot of unknowns that still exist in this market, what we do know is that Ethereum is becoming increasingly more viable in today’s society. Lewitinn believes that many of the things attributed to blockchain technology will live as an Ethereum specialty rather than Bitcoin fantasy.
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Are Interest Rate Traders Calling the Fed's Bluff?
What does the wild world of interest rate derivatives say about the Federal Reserve's credibility? Nancy Davis, chief investment officer of Quadratic Capital, takes viewers deep into the esoteric world of constant maturity swaps, forward swap curves, and options on interest rate swaps ("swaptions") to illustrate this. In this conversation with Real Vision editor Jack Farley, Davis notes several key indicators that cause interest rate traders to believe the Federal Reserve will tighten policy far sooner than it claims. Davis, the founder of the Quadratic Interest Rate Volatility and Inflation Hedge ETF ($IVOL), argues that her ETF, which consists largely of Treasury Inflation-Protected Securities (TIPS) as well as over-the-counter fixed income options, will perform favorably in risk-on, risk-off, as well as stagflationary environments (Davis notes that $IVOL has posted positive returns every quarter since its inception in 2019). Farley and Davis look at insightful charts such as the backwardation of the forward swap curve, the spread between swap rates of different tenors, real interest rates, as well as the correlations between equities and interest rate volatility. Filmed on May 5, 2021. Key learnings: Davis argues that the forward curve for dollar swaps is pricing in rate hikes far sooner than the Federal Reserve maintains. She makes the case that interest rate volatility is an effective way to hedge duration risk and argues that it is more preferable than taking on credit risk.
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Gold Breaks Out As Labor Market Trouble Endures
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