YouSaid · the spoken record

Harald Malmgren

lines on the record: 88
first: 2022-07-25
most recent: 2022-07-25
sittings or episodes: 1
sources: podcast

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“Think we're probably somewhat aligned, I think, because there's bifurcation between the West and China. But then you have to define what the West is. And it just strikes me that we're almost going back a period of time, maybe a century, maybe more, whereby the rule of law is the key thing. You mentioned EU regulations are a real problem for many manufacturers So, on that basis, what would be the obviously the US, clearly Canada by association, but which countries do you believe will benefit from this onshoring process, this de-globalization, for want of a better word?”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“So that's where my antennae come up. Okay, I completely concur. Then we have the investment process, especially for long-term, some of these large pension funds and endowment funds, they have to think about what's going to happen a couple of years down the road. Where do we need to be? Because we've got so much money shifting it. We're not short term. We've got to do this slowly. I've got a, you know, I have a particular view of what countries are going to be able to provide that the target countries to benefit from this process.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Like the Mediterranean, North Africa, but it has effects all the way through really serious problems for Asia. So even that whole sector, agribusiness, food production is being transformed dramatically. So all of this is a period of change. And when you're looking at stock markets, you have to think who are the innovators because the older companies in these fields are going to drop away and probably end up being zombies.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you have fertilizer, gas, especially for nitrogen, and you have to harvest and then you have to dry the product out for shipping, big ovens. And then you put it on trucks or trains long distances, a lot of diesel is a huge consumer of energy. And again, now vertical farming is coming into more right around the corner. We're going to see more and more of that. So much is in flow here. And the shortage of food that's emanating from this Russia-Ukraine mess is forcing shortages throughout the world, particularly in broader areas.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Is being overlooked in all this debate. When I was running trade policy in the White House, we had a declining interest in the corporate world in the free trade because the big companies basically had put their roots in each of the other major economies and they didn't want Washington bothering them with new policies. So what we did was turn to agriculture because agriculture in the US is in every state 100% are involved. The deeper I got into Agri's house, and frankly, I was offered to be Secretary of Agriculture at one time because I knew so much about agriculture and I was popular with the farm groups because no one paid attention to them. But agriculture is highly capital intensive and extremely oil and gas dependent. Oil for diesel, you know, you have to crops, you have to”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“And so we can get to that if you want, but what's coming is a big shift in what we make, where we make it, how we make it, and we're going to be moving away from use of dug up from the earth, iron ore, copper, or all these metals. We're going to be moving to new materials that are invented at MIT or other places more and more shipped to 3D printing where it's now called additive manufacturing, layering materials so that when you produce, let's say, a vehicle, you don't have to do big sheets of steel and bars of steel. You make something the way you want it, you don't have to bend it, you don't have to drill it. There's this whole new thing, whole vertical plumbing. But the industry providing the machinery and equipment for vertical farming is booming. Nobody even pay attention to it. So everything agriculture, by the way.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“For the world, because everybody, you know, the Japanese were the leaders in just-in-time inventory, and all of a sudden, whoops, all the inventory of microchips for the automobile sector were in one place. So for a while, we had this shift in fad from just-in-time to just in case, have more sources. But now that supply chain problem got more compounded by all these pandemic port closures and interruptions with pile-ups of ships and fighting with regulation, local regulation of ports. Now everybody's thinking, why do we need all these supply chains? Why can't we do most of what we want to do?”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“It's a number of things rising costs in China are important. Shift to automation means labor cost is less and less important. It's becoming a shrinking element of what you do where you do it. And the supply chain problems that actually became really manifest with the earthquake and tsunami in Fukushima was the big alarm.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Harold, if you know it's, I know this is extraordinarily nuanced, so forgive me for asking you to simplify it, but if I had to ask you what would be the most powerful reason for deglobalization, what would it be? Would it be COVID and supply chain issues? Would it be geopolitical? Would it be rising costs in places like China? Or would it be some other factor?”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“So, oh, this is a precursor to what's coming. But we can talk about it in a few minutes where this is all going. But one thing it means to me is moving stuff across the Atlantic and Pacific, high value added stuff for long distances with lots of containers. Thus, you're going to dry down. More and more production is going to be done in new places, more close to markets. And so this deglobalization is going to have a really major impact on economies and on stock markets where the businesses are. And I think not many people are thinking about this, but I've been involved with this rearrangement for now 40 years directly working with some of the big companies, but of course Toyota being the biggest of all. And I've been deeply involved with thinking through where this is going as opposed to where it's been.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. And eventually that will come through as all these lungs have been washed out. So there's a lot of messages that you've got to take on inflation is going to come down. Okay, that's fair enough, but some of the sticky elements are making new highs. And when I say sticky, I'm talking about rents, which is a big element of the core CPI. All these cross currents going on, and I just think that this is where what Harold's saying right now is so key. Focus on the core themes, the thematics. Everything else is sort of noise, but you've got to keep within the cognitive threshold and figure where are we aiming for? What are the consequences and use this volatility to your benefit?”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“There's been the selling and the selling accumulates and it accumulates. And you've seen these huge moves. Well, huge moves like that can only occur if people are along. And if you look at the actual commodity players like a traffic aura, like a Glencore, and you look at what they're doing, let's take crude oil, which has really had a rough couple of weeks. But there's something strange going on there. So you've got where the futures are trading, but there's such a demand for actual that the spot price for delivery Is making new records over the futures price. So that”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Cell. You saw it with commodities. Now, I guess we'll get on to the commodity market later on. This big set off has, just to define the sell-off, people have been stopped out because there were an enormous element of tourists, whether directly in the commodity futures or through ETFs, probably ETFs, that went into the commodities market because that was the place to be. Express inflation, it's probably a better hedge than inflation as inflation starts rallying, because TIPS has been controlled by the Fed, for example. And the minute risk off occurs.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Penalized for the impact on the economy. So you saw that with the reaction to the Korean 1 two nights ago when the Koreans raised by half a percent. Initial rally and then it weakened again. And you're seeing that with India, you're seeing this all over the place. This tells you there is something wrong. It also tells you quite critically if you're an investor in the market, it's trying to figure out what's going on because you can have the right fundamentals and be hit hard by the flows. The flows, the flows may be illogical. I would say yesterday's reaction in the stock market was somewhat illogical and we're now seeing the adjustments today. But the key thing is a market cannot fall unless people are long that market. So these are adjustments we're seeing in various markets is because people got long and they're forced to.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“They're still being punished. It's like a no-win scenario. Either they're hawkish on monetary policy to fight inflation because that's the big thing for them. Currency strengthens because people think, oh, we've got good carry and they're being hawkish. Then now they're getting...”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“It doesn't take much for suddenly that DXY and the dollar to spike, you see a spike in the dollar room against one of the major currencies, you know something's happened. There are spikes going on in the emerging markets. I mean, we're seeing, you know, at 453 on the Brazilian Real, everybody's going, we're going to run into a contested election in October, November. So that's not going to be good. And this whole situation is going to get worse and worse. And if we are deglobalizing, suddenly we're at 546, almost 547 in a couple of weeks. And that's been a really volatile ride. And they've been extremely hawkish in Brazil. Even these countries that are doing what water back, I found out waterbag hot, although it's actually pronounced badget, would recommend and being”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“It's a wipeout of the zombie firms, the zombie credits. And It's interesting, Jack. It's been easy since the GFC in particular, but even beforehand, if you could take out the GFC, it's been rather easy to make a case for I call sort of a somewhat lazy investment strategy and not really have to worry about changing your how you approach the markets. The carry trade being one of them, well, the carry trade is in at great risk at the moment because when we have this sort of stress and we're now 109 15 on the dollar index, a DXY, when you have this sort of... Outside of the US.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“So we're going to have, besides a recession in the US, which will be painful, but will come out of, we're going to have brutal, severely damaging impact on Maybe up to 100 countries out there, smaller ones, there'll be a lot more Sri Lanka. Now, that will lead to credit market disturbances, and they may be big. But I think we're going to see the repo fails. We've had a few recently some ridiculous level between three and four hundred trillion. But I think we're going to see Really rapid growth and repo fails, and then we're going to have all of a sudden unexpected insolvencies, not in VP Morgan, but in a lot of institutions in Europe and Asia. So I think this credit market implosion is going to be severe.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“On this Leslie, everybody's overlook The consequence of a strong doubt. And it's a diminishing liquidity. What it really means is there will be in most countries, even China, a storage of dollars. China's exports have died. German's exports have died in Kamuholt. And that's how you earn dollars. That's how you add the reserve. And there will be extreme shortage of dollars. That will have massive impact, negative impact on almost all the emerging market economies that are all heavily indebted in dollar-denominated debt.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Is going right back to what I said at the end of last year and the beginning of this year, and I've said it publicly, I've said it on other videos. We are for much more volatility. And I am not talking the VIX, which is really become a retail thing. And I'm talking about volatility in the treasury market, volatility in the commodities market, which we've seen the consequences of volatility in FX. All of the volatility measures are moving up. But the key one is the volatility in the Treasury market has led to less liquidity.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“So that's going to be interesting. So, I think the last thing you will hear about if things get very scary on the economic front and there's a lot of pressure applied to the Fed, the thing you will hear least about is the quantitative tightening. And I think it's just going to run in the background. People are a little bit concerned about that. What does that do to treasury market or the repo market given that we've suffered bounce of illiquidity? Look, the Fed has created a couple of new facilities to deal with stresses in the repo market. They still have a little concern, not quite sure how Qt is going to work through the markets.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“The one other thing that people are forgetting. And Jack, it's our mutual friend Joseph, is very focused on this as well. People are forgetting about quantitative tightening. What I've been hearing is that the Fed, now that it started, they want it running in the background on automatic. And all the rest of the nuance on policy comes via the interest rate cycle.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Behavior is the Fed doing its independent stuff. That's critical. So I think Brainard is the one we need to watch. And the reason I say she's on side with Powell at the moment is when Bostic came out a month ago and said, you know, well, maybe we'll have a pause in September if things get a little bit tricky. She was the one that slapped it down. No pause. Okay, so that was very important. The other thing that we have to remember is, and from my context, I mean, everything Harold's been saying about the Fed and indeed everything he said about Yann, I've been hearing elsewhere as well as in discussions with Harold. And if you talk about the big investors, I would include probably the Swiss National Bank, the Central Bank of Switzerland. The largest hedge fund in the world, right”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“They want to front load as much as possible because there's this window up until that point where the White House affiliated members of the FOMC, and we know who they are, anybody affiliated to the San Francisco Fed is White House affiliated. So that would be Williams, Daly. Then you have Kashkari, who's on his own, you know, he is naturally a dove. The swing I think the swing person is Brainard, of course, because she is actually a renowned economist. And, you know, one of the things that's clear is that they've got the forecasts extremely wrong. She's recovering from being involved in justifying what was said. So I think that, and she's also now number two. And she has to behave accordingly.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Look, I think if it doesn't happen, if it's another 75, that means September will be 75. My personal view is... If the market gives him room to do 100 basis points, he will take that. That's where he's very different to Yellen. If the market will give him room, he won't ignore it.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“So the boning will change. The question is, will there be a shift to a majority against power? Sooner or later, yes. And when he sees that, then he will make an adjustment. But not until he sees that the majority has shifted, then he'll go with the new majority. We can't judge that. But the election is really important to Yellen and to Powell. Both are aware that's going to be a critical crunch time for new decisions.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Excuse me, you got to kill the bees. And he's going to try and keep going that way because he understands this will create recession. And he's not going to say it, but he wants a recession. He wants a really good recession, a deep recession, a lasting recession. He wants to kill inflation. So everybody's underestimating that in play. Nick is right. There's a critical moment just before the midterm elections when the members of the FOMC are going to be divided with Powell saying let's keep going more very high. But at least four or five of the members are. Let's say affiliates of the White House or of the President. And so they're going to say, no, time to stop. Time to pause. Time to begin thinking of stimulants.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Absence or growth based only on domestic demand because it's not there. So now on the other side, what's going on with Powell? Nick is right. Powell is thinking about how history will judge him. It happens to all these top-level people. Sooner or later they say, oh, what would be written about me? my grandchildren and the world see will I be just another flanky or did I do something bold? Probably he's thinking it would be another voker. So he's going on the side of really harsh, powerful measures. And so if you ask me what's the next rate hike, I think it'll be 100 basis points because of the CPI yesterday given.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Blows a lot of minds because why would she do that? Well, she wants the biggest ones to know that if there are buying opportunities in the equity market, the dollar is going to be really strong. It's a good time to buy. And it puts a lot of pressure on China because China is running out of dollar reserves. And China really cannot climb out of its present.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“So she's worrying about, okay, stock market's going to go down, but how far can we put a floor under it? Can we create some kind of sentiment? No, I have not listened to her personally on her phone calls to large investment funds like Norwegian sovereign wealth fund, which is over a trillion dollars. It happens, I know, some of the people see the other end for phone calls. And so I can say she's saying to the really big investors, the mega investors, ordinary retail, that she's been saying it now for three months. I'm aiming at dollar index of 110 or more. We were back at 033. When she said that, I think that”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Among the things that I look at besides repositioning of industry and the trade flows, I don't tend to spend a lot of time thinking about what at the leadership level. Is there something going on? Is there an agenda? And right now, I think there are two things going on that are not fully understood the markets. Number one, elections are coming up very soon. And she knows that Powell has turned Hawkins.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Comparable to Arthur Burns, which was the bad fed in terms of the inflation that led to Volcker. And then this deglobalization aspect, Harris absolutely right. It's going to be deflationary. In the short term, but by definition, actually it's inflationary in the long term. How do we cope with that? And my practice on investing is to try and think of what's coming and then be able to focus on, okay, what are the first signs I'm looking for so I can get positioned accordingly and then build a position from that point”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Perspective because what happens to your investments if you're looking at what happens to your bond investment if you're looking at Germany suddenly lost its surplus is again returning to the 90s of the sick man of Europe which is how Germany was defined so there's a lot of imponderables a lot of variables that I think people are not used to thinking about And I think then we'll have a huge impact. Yesterday's price action was merely the market making the assumption Fed's going to tighten, they'll tighten as far as they're allowed to. And yes, Harold's right, the slowdown coming. My view is actually the Fed's going to... Really tight. They have to. Powell does not, it's all about his legacy now, now that he's renominated for a second time. He doesn't want to be remembered as.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“Inclusion US dollar debasement, long-term yields above 4% by 2024. So I know that, for example, not speaking for Harold, but we're not of the view US dollar debasement. I mean, what we're seeing right now is... Contrary to a lot of the debasis argument, the dollar is continuing to screech higher. I mean, we're now nicely below parity on the euro. Then the question is how long can, if it's that hawkish, how long can Powell carry the FOMC members to the point where he clearly Could well break something. And I suspect it may not be the Fed and it may not be the dollar. It could just be Europe imploding on the gas situation. This end of the mercantileist economic model, that has to be thought about on a longer term.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“There's not a lot of good news because some of the slow sticky stuff is making new highs. So I think what we've got, so the markets have assumed that we're going to have more front-loaded interest rate hikes. The economy will come down much more rapidly, and hence you've got the break-evens are suggesting inflation's down. Everything will be fine. And it's all a matter of timing. Well, it always is a matter of timing. Michael Hartner, who's another expat Brit, we're all over the place, came out really succinctly with how he sums up this view because BlackRock have just come out with a huge paper expressing this view. And he says, it's basically deflation to inflation, globalization to isolationism, which I think is where Harold's going to lead us, monetary to fiscal excess, capitalism to populism, inequality to increase.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“What's interesting, I mean, you often hear that phrase that's different this time. And in fact, actually, if you look at the way the financial markets reacted to, what was an absolutely shocking CPI data yesterday? And I'm writing my piece today and digging deeper into that inflation scenario.”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“We're on the edge now of a massive slowdown in manufacturing. And that means the drivers of growth that have been so powerful in past decades. Japan, China, Germany. Sorry for me a less so, but all of them are now experiencing non-growth. This goes back several years because in the second half of 2019, we had a period every forgotten. The IMF World Bank and Virtually every other organization said we were”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT
“To have you here, Harold. The first question I'd like to ask is why is the economy slowing? You've been doing a lot of work, Harold, on what you call the mountain of excess stuff, just the buildup in inventories. You know, for a while, we had, there was a shortage of everything. You couldn't get your hands on anything. Now it seems to be like the opposite problem. You're an expert in global trade. What do you think is the cause of this? And where do you see things going?”
2022-07-25 · Forward Guidance · Credit Market Implosion Will Be Severe, Says Harald Malmgren | Nicholas Glinsman, Harald Malmgren · IDENTIFIED FROM THE TRANSCRIPT