YouSaid · the spoken record

James Aitken

lines on the record: 117
first: 2018-06-25
most recent: 2018-06-25
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“What a treat, Ted. I mean, who would have imagined that you and I'd be doing this even six months ago? Amen to that. Look, it's such a pleasure and such a treat, and I can't thank you enough for inviting me on.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wish I'd done even more reading on cross all sorts of topics, and I wish I'd paid greater attention and been more disciplined with how I allocate my time every single day.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“That as much as I liked to read from a very young age I should have done even more that's the number one. Yeah, that's the number one. I could have done so much better. Could have been so much smarter related to which with the way I approach things. I could have been so much smarter with process, discipline as seemingly mundane as getting up the same time every day, doing the same thing over and over again. And I'm glad we kind of almost by accident got into this, but the common thread across all the most successful investors I have the great great fortune to work with is their absolute obsession with process absolute obsession. If they've got three offices around the world, good for them, but they're identical. And having that comfort, knowing your process, doing the same thing every day for decades, depends in the same spot, the mouse is identical. I mean, it sounds inane, but it helps you be anticipatory and remain in control in what remains a very, very emotional and often hyperventilating world. So two things, Ted.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And when it comes to a Facebook or a Twitter or some of these other platforms, there are real problems pending. And I found it very helpful well ahead of this Cambridge Analytica stuff to just go to the website of the House of Commons and calmly read it, and it is the most appalling. Now, self indictment's a strong term, but metaphorically the self indictment that you can read in these transcripts, the disconnect is appalling”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And when it comes to social media companies, the House of Commons digital media committee has been holding hearings in London and Washington about the role and activities of these social media platforms. And not just because I'm personally interested in it, but I've been reading the transcripts of these committee hearings, and it's absolutely awful. And the sanctomanious hypocrisy not to mention borderline law breaking. That comes screaming out of these transcripts is just appalling. And it's there in the public domain.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“There is a tremendous amount of information in testimony provided to various parliamentary committees around the world. Now I know that sounds awfully anorac, but I'll give you a very important example. By definition, if I'm testifying to a House of Commons or House of Lords committee, I am doing so under oath, meaning that it's likely to be more reliable than what you read in the Times or the FT which will be an interpretation of what's happening in the world. In other words, someone else's view of what's happening.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Been present for your family one. I think about the heroic effort that our dear late mother put in to the point of exhaustion most days to feed three very hungry sons in Sydney, the shopping involved and the cooking involved. I mean, she was magnificent. And then Dad, who had a very busy job, he was always, I know it sounds cliched, but he was always there for us. And I think that's the number one lesson being present for your family, not just in the room, but being present. And that goes back to being disciplined when it comes to technology. You can't lecture two preteen girls about the evils of the iPhone, which I sometimes do. If you're walking around your living area with an iPhone in your pocket, it just doesn't work. So the number one lesson for mum and dad was being present, and that's there's nothing more important.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“That from time to time I've pretended to know something that I don't understand. That's my number one pet peeve, is that for too long I was impulsive. and reactive, and so I'm calling myself out as opposed to what other people do. If I'm thinking about what other people do, One of my pet peeves is people that jump up and down and up and down, up and down, up and down, up and down, and they say I told you so. Now maybe I'm old fashioned. If I was providing independent research to people sitting on top of prodigious piles of capital, I could think of no better way than to antagonize them, let alone upset them, by when something I've been predicting for years suddenly happens, and then I say I told you so, or we nailed it. So that's my, so there's two angles to your PV question.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“What age does youth go up to? Now I'm going to say getting a single figure golf handicap. My handicapped today is three children under 13.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“The better I seem to understand issues of the day and I say to my clients that related to your question I'm just trying to be less wrong. Trying to be less wrong, and if I can come to grips with that and I'm patient and I read, then from time to time I I'm hopeful there will be opportunities that I can steer my clients toward, whether they be being sensible after Brexit, whether they mean the investing opportunities in january twenty sixteen when you had certain Asian equities trading at Asian crisis lows. I mean, that's just absurd. You know, well-run businesses are good balance sheets. The opportunity in US short-term interest rates, sometimes you have to wait a while, but the more you step back and create the space to reflect, my hunch would be you're more likely to be less wrong. And that's the challenge.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Look at all these books and I think, my gosh, how could I not read that? How could I have not known that? How could I oh my God, I'm not heard of her or him or that or that event? This is terrible right I'll say delicately, you know, midlife ish, and I benefited from a wonderful education in Sydney thanks to mum and dad. I went to the University of Sydney, but I got to say I feel that my education truly began. When I started working for myself and I started carving out huge chunks of time just to read and think and reflect and it's a journey. And look, I'm not saying that I've got it sorted out. I'm not saying that I've figured it out far from that. All I know is that the more disciplined I am with my time,”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“But I find that all the mistakes I make are either because I pretend or I get caught up in a narrative that I don't understand and I haven't adequately reflected upon, or heaven forbid I get caught up in the group think, or I go down some ridiculous rabbit hole on Twitter, which is apparently insight, although I do have my doubts. So it's a battle, but it starts with discipline, and I continue to work on that. And when I started working for myself, I really ramped up my reading. Why? Because I could. If you're sitting on an investment bank sales desk, you can't sit there with a book in your hand, you'll be out in the street. I really ramped up my reading, and it's humbling. Every day I walk into my library and I look at the shelf of unread books. My wife often asks why I've not been invited to join the Board of Amazon. Goodness knows I give him a bit of support.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“We are in a world that preferences the reactive over the reflective, and I would have thought if one is hoping to succeed as an investor, an allocator of capital over a long period of time, you must preference the reflective over the reactive, so you invert what too many people are doing today. And as shame in other people, and Mr Buffett and others advise. The most precious asset all of us own is not some stock or bond or private equity investment or whatever, it's our time. And since I've been working for myself, one of the things I've had to learn is to say no. That's the most important thing. And my dream week is to open the calendar and other than family commitments there's nothing in it. My dream week. I'm not always able to do that. There's always someone interesting to speak with or talk to.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“From my perspective, it seems to be under discussed, and yet structurally I feel like I need to know much more about it, and I'm encouraging my clients to think about it. It's not to trade it, it's not to sort of punt it, it's to think about where India is in its cycle and what could go right in a day and age where every conversation is dominated by China.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“fairly well supported. And I need to do more homework on that. But you recall in years gone by we used to reflect on what the filling of the Strategic Petroleum Reserve in Louisiana salt caverns meant for the energy markets when they were topping that up. Then we were experts on China topping up their strategic patrolling reserve. And you look at India's strategic patrolling reserve. They got a long way to go. So I'm trying to learn as much as I can about India because like China, it's not going away. It seems to be undercovered.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now because it's India and because it's happily a democracy, it's going to take longer to do things than the Chinese where it's just like hey do that or you know you're on the next bust of Mongolia. So there's going to be frustrations, there's going to be bureaucracy, but it's happening. But here is the next observation What if India today is at the same point of its commodity demand cycle as China was in two thousand three? Now that could be big. And my suspicion is that that consider Could explain part of why global commodity markets and energy markets remain.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I'm loving it because it's investable today. No one's talking about it. I allocate my capital patiently, and if I've done my homework correctly, and Modi's backing it and the whole government apparatus in India is backing it, I feel comfortable with that. And then I'll come back in a few years and so forth. And I've started reading about this, and it comes back to the China narrative. Oh, look how many people we've lifted out of poverty. We have lifted hundreds of millions of Chinese out of poverty. Yes, you have. How many million people is Modi going to lift out of poverty? Right? I reckon it might be more than the Chinese have, but just whisper it. But then there's another dimension to this.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm ashamed to admit it was not until I had lunch with a great friend who lives on the same street in Wimbledon who's his great emerging market equity investor and he's so enthusiastic and he put up a slide DMEC I'm like what he's like yeah Delhi Mumbai industrial corridor was there last week here are all the companies developing it unsurprisingly Ted you know Delhi to Mumbai captures an awful lot of humanity And here's what they're doing the roads, here's what they're doing to the railways, here's what they're doing with the infrastructure, India's getting it right, and it's not getting much coverage. I'm like, and he's like, it's investable.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“the master of propaganda. Yes, of course they are. So we're inundated with commentary about one belt, one road, one belt, one road. And it's China getting people to buy into the China dream. We know that. Why is nobody talking about the Delhi Mumbai industrial corridor?”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Now it's not a big number now if we include Tartar or not, you know, Infosys and so forth. Let's say for simplicity it's $20 billion What? And again, we could debate whether we include flip card or not, but in private placement, put it this way. It's a very low number. And yet you have these immensely talented Indian men and women doing extraordinary things in technology all around the world, not to mention running important companies in the Bay Area. I'm like, yeah, that doesn't make sense. Now, it's not as if the Indians are about to allow foreigners to throw money into the Indian equities, and it's not as if an Indian authority is about to let foreigners jump into Indian credit fixed income. In fact, it's often awkward to do so. It's like, wait a second, I'm not thinking about India properly. I'm not. But that's one dimension. Here's another. China, China, China, China, China, China, China, China, China, every conversation China, China, China, one belt, one road, one belt, one road, run belt, run. Yeah, it's important. And the reason we hear about it all the time is because China is.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“India And here's what I'm wondering about it's a big place, it's a complicated place, it's a bureaucratic place, it's not going away and in the not too distant future it'll have more people than China and some of the conversations that are starting to come up I find fascinating because it forces me to broaden my knowledge and get outside of my comfort zone so here is this country that is probably a structural opportunity so take one example We're all experts on Chinese technology giants My gosh these things are juggernauts I mean just juggernauts and we all know the valuations let's say simplistically that the market cap of the Chinese technology giants is a trillion dollars subject to what the next tweet from the White House says What's the total market cap of Indian technology companies?”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And some of the things we talked about, like one of the topics that comes up a lot is how should I think about my exposure to onshore Chinese assets? The other thing is a lesson on liquidity and what markets are like today is in nearly every discussion. If you're waiting, as we said earlier for Mr and Mr Central Banker to tell you it's okay to rebalance, it's too late. You've got to have a strategy, you've got to have a plan. So it's a whole range of things. But also, Ted, the most interesting part of the discussion with a pension fund or endowment or family office is what are people not talking about? And that's where you learn so much. Hey, what are people not talking about that you think is really interesting?”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And I thought that was a great lesson. He said, I've just got to stay in the game. I can't duck and weave. I can't flip. I can't hedge. I just got to suck it up. And that's important. It's often overlooked. You frankly, I don't want my pension fund clients and endowment clients and family office clients to be in and out of stuff and trading. That's really counterproductive. But my number one challenge is to explain some of the things we've discussed about the Fed in a simple, understandable way to be able to condense it into this is what's material to you.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Stop by trying to understand if there's been any changes in their process or any changes in key personnel or are they under pressure, you know, trying to understand their incentives. I've had this conversation with one very large pool of money and he was actually saying, this is a great example actually. Was during the Eurozone crisis, and we got into a great discussion about what was going wrong, and he said, James, you know, I get all of that, but I'm sitting on top of a hundred billion dollars and given my mandate, I just have to bull through it.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you were in front of the chief investment officer of a pension fund or an endowment, different liability structures, how do you take and synthesize the information that you have and advise someone on how to shift or think about their portfolio differently for this period of time coming up?”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And owning duration Which is great right up until the point you made. Because if I'm assuming a steady state discount rate, great. But then I sort of add a hundred basis points to it.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“that when they're done hiking this cycle they'll end up at a number much less than previous cycles which seems reasonable frankly so fed funds doesn't get to five hundred twenty five basis points like it did in oh six it gets to something like say three hundred which I think would surprise some people if we got there but that's where I think it's the minimum and if you mister and mrs central banker say that when we're done terminal policy rates this cycle will be much lower you're advertising to every long term asset allocator nearly all of whom are chafing under heroic if not absurd return targets mid to high single digits you are telling them that if terminal nominal policy rates are going to peak out at a much lower number then the nominal return on risk assets is going to be lower and the only way I am going to meet these absurd return targets is by remaining fully invested”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of course you're correct. Let's think about incentives. And this is where central bankers get muddled, and they many of them say to me James, we're trying to tell people that we'll tolerate more volatility and we're not interested in holding the market's hand anymore and it's time for people to think for themselves. I'm like, yeah, that's great. I get that. People appreciate that. They just don't believe you. But then from an asset allocation perspective, think of it this way. If central bankers keep saying over and over and over again”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, where are the institutions have been piling their money in these long-duration assets? More and more in private equity. You hear about private credit. And on the one hand from an investment perspective, that's nice because they get out of their own way. They own an asset for a long period of time. On the other hand, the longer the duration, the more the risk that they're going to get hit if rates do eventually move up.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“One of those consequences might be sharply higher, long term interest rates in this country, which means that the discount rate the people need to apply to evaluate various assets for the first time in many years goes up potentially a long way, and I don't think markets are ready for that, and I think the market's ability, as we've seen recently in BTPs, to intermediate an abrupt change in thinking is impaired compared to previous cycles.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the number one risk is the assumption that long term interest rates can only go down. That's the number one risk. That underpins, I think nearly every major asset allocation. The assumption that we are perpetually mired in some sort of secular stagnation, but Ted secular stagnation is a euphemism for policy failure, meaning that secular stagnation is a choice. And we're just starting to see in this country now the long term consequences of going for it with tax cuts, not to mention the extra three hundred billion spending that they shoved into the budget in January at this stage of the cycle, or there'll be some consequences.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“You are dead right but from time to time we get attempted regime shifts by central bankers attempted and that's when we need to be on guard and when central bankers privately and publicly tell you over and over again that we're trying to reactivate markets and when they go on and on about geez implied volatility is too low they're actually saying that our tolerance for some kind of market correction is higher which makes sense when in some parts of the world and particularly here you're trying to tighten policy”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And in reflecting upon that period, Jeremy Stein delivered this tremendous speech, and he talked of leveraged quantitative easing optimists. In other words, people who were fully invested in the idea that central banks would have their back forever. And I think that pretty much describes where we are right now.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Central banks, with the exception of the Bank of Japan, have been signalling for a year or more that they are trying to reactivate financial markets, and financial markets don't want to hear it. There's a very fine fellow called Jeremy Stein, who was at the Board of Governors until twenty fourteen, and in his last speech departing the board, he reflected upon the taper tantrum in two thousand thirteen. And I've reflected a lot about that too. It's popularly believed that the taper tantrum was a colossal communication error by Ben Bernanke. I'm not so sure about that. He was telling people via his speeches from february twenty thirteen onwards that he thought US long term interest rates were too low, and people just refused to listen.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“What's happened the past couple of days? People are already stepping in to buy the dip, and I'm not sure that's right. I'm really not sure that's right. Now as a tactical opportunity, go for it. If I can scoop up a few BTPs at three hundred over Bournes, great. But at three hundred over Buns, effectively that is implying. I mean, this is subjective, but effectively implying a 30% probability of some kind of redenomination or tactical default in Italy, thirty percent My word that's not good. So the tactical trade go for it, but the structural problem not going away. But there's a bigger lesson, Ted, if I may.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“But at a minimum, it's refocused people on unfinished business and economic and monetary union and perhaps permanently unfinished business. And how the heck can the ECB, which is the only game in town, ever step away from asset purchases? How can they? And we sometimes forget that we're talking about global growth being X or realised inflation being Y, and the Fed's balance sheet is still four trillion plus, the ECB is still buying assets, and the ECB's policy rate is minus 40 basis points. What on earth might be the market clearing price of risk with regards to Eurozone peripheral credit were it not forty basis points and a certain amount of ECB asset purchases? So when I look at what...”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Not denying that Italy can't have a referendum at some point on the Euro, but basically denying these two guys who wanted to form a government come charging in and saying, right, you know, this is what we're going to do before they put it to the Italian electorate. So, guess what? We had some pretty spectacular price discovery. And I'll say straight up, I'm not sure what this all means yet.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then he also says that, look, you really need to follow up, please, Mr. Politician, follow up on structural reforms, but you keep promising but never delivering. There's no banking union, there's no capital markets union. And arguably, given the setbacks, the self-inflicted setbacks that Merkel has had, the probability that we're going to get widespread structural reform is going down by the minute. And then we have this extraordinary episode over the past few days. And I'm afraid I was not nearly as astute as some of my clients were in March when you had this election. And a couple of them said, hey, this doesn't smell good. And I was like, okay, I was more focused on US rates, which was a mistake. And then you get this matarella.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“I took a step back from all of that the other day, and I just read through the transcripts of the opening statement he has made at every governing council meeting since whatever it takes, and when you step back from all the what's he saying now, you realize that he opens every governing council press conference with a plea for structural reform, and nothing's happened. He basically says, Well, he's saying two things A, if it goes wrong it can't be our fault because the ECB has done things that it was never designed to do, which is true.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, it's all good, Ted, it's all good. Look, what is it about these people that they always want to play chicken with their own financial system? What is it? There's been this obsession with the Draghi wizard, as I think of him, for the past several years, which is fair. He's an extraordinarily accomplished, fiendishly market savvy man. Look, people have sweated and obsessed over everything he's said which is important about short term interest rates about quantitative easing, about lending, about everything he's done, which is important if I'm trying to duck and weave through FX trading, trading Uribor, trading various curves in the Eurozone.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's still these companies out there. I think it's quite cliched these days to say own Japanese banks, but I've liked them for a long time and I like to stick with them because I know how much they've invested in their risk management technology. I know how much they've upgraded their personnel. I know how keen they are to understand how they run their balance sheets and stuff like that. So I think they're in pretty good shape. And there's further re-rating. So I think of Japan as I need to keep an open mind. I need to keep an open mind. I think there's less excitement surrounding Japanese equities broadly. And my suspicion is that I need to retain a core minimum allocation to Japanese equities more broadly. And if in doubt I'll just stick at an index fund and actually that's what we have. And I just want to sit it over there and just write it out.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Are they a Japanese corporations that are absolutely the best in the world at what they do? And the answer is of course yes, and it's not just about robotics, it's about a whole range of things. There's even activists getting involved in Japanese equities. By the way, under Arbe's patronage, he's like, look, if I can't convince my countrymen to do it, can you come in and give it a kick It's been a good opportunity so far for people with a mandate to do that, whether they be here in New York or elsewhere. And it makes sense.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm seeing a lot of opportunity because it's boring. I love boring. Boring compared to everyone being an expert on why Ab's three arrows were going to drive Dollyan to infinity and, you know, all that kind of stuff, right? And all these people projecting that, oh, this is the greatest macro opportunity of all time. It's quite striking how few of them actually made any money out of that. But look, Japan's still ticking away a little bit of a setback in the economy in the first quarter, but by and large it's looking pretty good. The Bank of Japan sort of waffles from time to time about exiting their asset purchases. I don't see how they can. I really don't. And I could get myself into a lather about what it eventually means for the JGB market and everything else, or I can step back and say.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Trying to calibrate the trade offs and most of all trying to be proportionate. About an immensely complex, gigantic economy about which by design Westerners will never know much.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is there something that's structural that's changing? I don't recall any country being included in the MSCI indices to be subsequently excluded. But I'm afraid the facts are that whether it be passive money or active money, over the next several years there will be increasing allocations to Chinese onshore equities, and that's not going to go away. I know that this is going to be a powerful change for global capital markets, so I need to find a way to calibrate it. I need to find a way to think about this structural shift and how there's probably a great opportunity for stock pickers in the mainland if I can find some. And I need to calibrate that structural change against the deleveraging the complexity of deleveraging, the way China's trying to come to grips with this extraordinary stock of debt and shadow banking.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“To observe and to work with clients who are picking Chinese stocks on shore, and to notice how Chinese equities seem to be slowly more aligned to what we in the West might call fundamentals. So responding more to earnings results, better calibrated with multiples. Now this is an iteration. There was a wonderful friend of mine told me the other day that some of the best performing external fund managers he's had since the early 2000s have been onshore Chinese longshore equity hedge funds. There's a structural shift occurring. We can be as sceptical as we like about Chinese policy and economics. In fact, we should be. We should be.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“So the fixed income and credit bit is going to take time, but it's coming. Meanwhile, the MSCI inclusion has started, and over the past several years the ebbs and flows of Chinese onshore equities have seemed more about the rotation of the Chinese liquidity bubble. So this gigantic liquidity bubble inside China rotates from housing to bonds to commodities to stocks, and round and round it goes, whatever's hot next month until the authorities say don't do that anymore. So for a long time, Chinese equities have nothing to do with fundamentals and everything to do with liquidity and speculation. But what's interesting over the past, say, three to six months?”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, global asset allocators out of necessity will have an increasing amount allocated to onshore remnimbi assets. Now, of course, it is easier, and it's taken a while, to plug Chinese equities into the MSCI indices. Plugging in onshore credit and fixed income, which is a gigantic market, into global bond indices is much trickier. You've got to think about custody, you got to think about can I hedge on shore, you got to think about repo, and of course plugging in onshore Chinese credit and fixed income requires further opening of the capital account because you and I are not going to commit X billion to China's government bonds if we can't get it out. It's just not going to happen.”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Chinese policy or economics or tariffs or trade or predicting what the PBOC is going to do with interest rates or the remnimbi or whatever. Is there anything happening that is a structural change, that is not about predicting, but is structural? And the answer is, of course, yes. We're just at the start of Chinese onshore financial markets being plugged into global capital markets, and over a long period of time I think that's going to change correlations everywhere. Really do”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source
“Guess what? Dollar paper issued by Chinese corporations. I'm like, wait a minute, you mean all these dollar bonds are stuffed into the Chinese banks in the Roshal bounties? Yeah. And then I triangulate it. I call a couple of large fixed income clients in the Far East and I say, look, you've expressed an interest from time to time in owning dollar bonds issued by Asian and Chinese corporates. How many of you have been able to buy? None. Why not? Oh, it all goes into Chinese banks. Ah So you've got to think differently, right? And suffice to say the Chinese like to support the home team. That's never going to change. Then there's another angle to this that I think is important, Ted. Rather than getting caught up in the game of predicting”
2018-06-25 · Capital Allocators · James Aitken – Macro Strategist Extraordinaire (Capital Allocators, EP.58) · IDENTIFIED FROM THE TRANSCRIPT · source