Videos Of The Week
Some Weekend Reading, Financial Market Distortions And Structural Issues & The Geopolitical Landscape Of The US, China, And Gold
I listened to a lot of good podcasts this week, but a couple stood out. The first video is talks about some of the distortions in financial markets created by price insensitive buyers, passive investing, as well as private equity and private credit. The second video talks about gold and geopolitics, the relationship between US and China, and several other big picture topics that are worth thinking about. I also wanted a share a quick read on a straightforward way to think about LIBOR, SOFR, and how the US has taken control of monetary policy over the last couple years.
Entering the Fall w/ David Einhorn
This was my favorite video of the week, and it was from Simplify Asset Management’s Fall conference. It was a discussion between Mike Green and David Einhorn on the various changes in financial markets. They talked about the abandonment of valuation as a focal point of markets, how passive is eating the market (active management is down to 10% of the volume), and why the market doesn’t have as many investors that push securities towards fair value. Einhorn talks about why investors need to focus on dividends and buybacks from the underlying business to return capital to investors if nobody cares about a stock, and why you can’t count on buyers showing up to by at a higher price.
They also covered some of the major tech stocks and how the capital investment in AI and data centers does show some comparison to the dot com bubble. They have become much more capital intensive than the capital light businesses that they used to be, and it has become a circular economy where no one knows what kind of return will come from it. Another topic was the potential issues in private equity and private credit, and how they aren’t marking to market. Policy makers are unaware of all this (or they don’t care), and the SEC is asleep at the wheel. There are a bunch of structural issues with financial markets today, and they joked that the emperor has no clothes and nobody cares. This one is definitely worth your time if you’re interested in some of the distortions in financial markets.
The Competent Man w/ Vince Lanci
For anyone more interested in gold and geopolitics, you will like this one. They talked about the importance of the geopolitical tension between the US and China, and how gold factors into that calculus. The US needs to rebuild our manufacturing base and Vince points out how we are vulnerable to a recession. He also talks about the high equity valuations in the US, and why policy signs point to the US leaning towards inflation. They also covered stablecoins, and how it could support the US dollar. There were several other topics but for anyone interested in the big picture, it’s worth a listen.