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Kevin Muir: Bearish Signals for Risk Assets Everywhere

Tom welcomes back private trader and newsletter publisher Kevin Muir of “The Macro Tourist” back to the show.

Kevin discusses the Treasury General Account and how the Fed has mopped up some of the excess liquidity. They seem increasingly hawkish and are finally expressing concerns about inflation.

The Fed and Central Banks are increasingly risky when one considers the heights of the stock markets. It seems they will choose to tighten until something breaks.

Kevin explains how inflation is generated either by Central Banks lending money or government spending. The government has demonstrated over the last couple of years that they can spend almost without limits. The only limit being inflation.

S.E.C. chair Gary Gensler was recently featured on mainstream news hinting that a crackdown is coming. With markets feeling a bit like the wild west and exuberant behavior by CEO’s investors need to pay attention.

He believes the next Fed chair may be more dovish and that Powell is likely to be replaced.

China appears to be working hard to purge the excesses in its system. If your looking for the next big problem it likely won’t be in China.

He believes the energy sector is going to be one of the greatest trades. Oil is still cheap but what would happen should it reach $200. How would the Fed respond in that scenario?

Time Stamp References:
0:00 – Introduction
0:50 – Fed & Risk Assets
7:20 – QE & Balancing
10:02 – Bond Markets & Yields
16:20 – Tightening Risks
19:02 – Inflation & Euro Markets
23:27 – True Sources of Inflation
31:30 – Other Market Risks
40:08 – Fed Scandals
45:25 – Evergrande Conclusions
51:50 – The Biggest Risks
57:43 – Energy, China, & Policy
1:09:23 – Wrap Up

Talking Points From This Episode

  • Feds policy, liquidity issues, and scandals.
  • Drivers for inflation and supply shocks.
  • Possibility of market crackdown by the SEC.
  • China and the potential for higher energy prices.

Guest Links:
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Kevin Muir started as an institutional equity derivative trader for a big Canadian bank in the 1990s. In 2000, Kevin decided that bank-life wasn’t for him, so he traded his own account for the next two decades. Along the way, he started writing the MacroTourist newsletter – which he describes as an “almost daily” letter about the markets that still manages to have fun. The MacroTourist newsletter attempts to bring a unique take on a variety of different financial topics. Kevin’s tagline is “All I Bring to the Party is 25 Years of Mistakes.”

Kevin Muir is a CFA and a graduate of the University of Toronto economics program.

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