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Real VisionMarch 08, 2021
The "Right" Price for Bonds, Demographics and Inflation, and Cheap Bets on Volatility
With bonds selling off alongside equities and the volatility of both asset classes rising, there is perhaps no better time to hear from The Convexity Maven himself, Harley Bassman. In this interview with Logica Capital Advisors partner, chief strategist, and PM Mike Green, Bassman outlines his view that this move higher in rates is the bond market finally moving towards the "right" price after a decade of interest rate suppression. Green and Bassman discuss the positive and negative consequences of higher rates, a steeper yield curve, and monetary and fiscal policies like negative interest rates and stimulus checks. They also touch on the current opportunities that Bassman sees and his prediction of inflationary impulse due to demographics sometime between 2023 and 2025. Harley Bassman has provided a slide deck to accompany this interview which can be found here: https://rvtv.io/3cai4CR and his commentary on convexity can be found here: https://rvtv.io/38eiXZS. Filmed on March 3, 2021. Key Learnings: Bassman believes interest rates have been kept artificially low, and the current sell-off in bonds is the market moving towards the "right" price. He also advocates for investors to be long convexity and believes that OTM calls on equities and long-dated options on interest rates are extremely cheap.
Real VisionMarch 05, 2021
Hidden Credit Risk, Jobs, and the Sudden "De-Frothing" Reversal
Real Vision senior editor Ash Bennington welcomes managing editor Ed Harrison and editor Jack Farley to make sense of today’s confounding price action. Growthy names plummeted alongside re-opening stocks like cruise lines and airlines, only for a sudden risk reversal to take place midday for all U.S. stock indexes to end the day deep in the green. Harrison and Bennington analyze today’s non-farm payroll numbers, which showed strength in the labor market concentrated in the beleaguered leisure and hospitality sector. After the three explore how rising bond yields impact credit spreads and credit risk, Harrison investigates whether the rotation away from growth and into value and re-opening stocks will be a lasting trend. Farley provides data concerning SPACs, showing that the number of special purpose acquisition vehicles trading below $10 has steadily rose and why this could be another sign of the fragility of growth stocks.
Real VisionMarch 05, 2021
Will China's Largest Export Become Data?
Everyone agrees that data is the oil of the 21st century. But how to invest? Charles Li, recently retired chief executive of the Hong Kong Exchanges and Clearing (HKEX) and the creator of the brilliant but very complex Hong Kong - Shanghai Stock Connect, and later the Hong Kong Shenzhen Stock Connect, explains the investment opportunities in this sector. Due to its population and less stringent views on privacy, China could well become the world's largest exporter of data—health data and financial data among others. Li also discusses why Hong Kong is crucial to China and why it will continue to prosper. Li also explains the magnitude and speed of the digitalization of the Chinese economy and the investment implications. Finally, he talks about his latest, incredibly innovative project in China—to provide financing for small and medium-sized enterprises, which have been starved of capital for years. His vehicle is what he calls revenue participation swaps, where the lender participates directly in the revenues of the business. Li was born in China, went to journalism school at the University of Alabama, and obtained a doctorate at Columbia Law School, later becoming a Trustee of Columbia University. Before HKEX, Li worked at Davis Polk & Wardwell and Brown & Wood, and he was Chairman of JP Morgan China. Filmed on February 20, 2021.
Real VisionMarch 04, 2021
Bonds Bite Back: How and When Will the Fed Respond?
Peter Boockvar, CIO of Bleakley Advisory Group and editor of The Boock Report, joins Real Vision managing editor Ed Harrison to break down today’s volatile price action in bonds and high beta stocks. Boockvar explains that Fed Chairman Powell’s dovish comments earlier in the day triggered another sell-off in bonds as the market, emphasizing their fear of inflationary pressures to come in 2021, pushed back on the Fed for staying the course. Harrison and Boockvar explore a few different scenarios where the Fed could begin to move against the rise in rates including ramping up their bond buying programs and implementing yield curve control. They also examine the consequences of these actions and the possibility that the Fed will refrain from intervening until markets begin to break. Finally, Boockvar discusses equities, considering the potential winners and losers in this environment.

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