YouSaid · the spoken record

Jonny Mathews

lines on the record: 100
first: 2024-09-05
most recent: 2024-09-05
sittings or episodes: 1
sources: podcast

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“Those savings, you know, the uplifting equity values and housing values. And so if you look at a chart of household wealth It has just, you know, just rocketed in the last four years. So So, yeah, I mean, yeah, there we go. So, the blue line is household net worth from the Fed accounts, the quarterly accounts. The red line is the S&P. And you can see really household wealth is very much dominated by equity values. These are directly held equities and indirectly held through pension funds and whatever. But since we had the last update on household wealth, the equity market has gone on to new highs. So it's quite reasonable to expect household wealth has taken another leg higher. So, you know, I think the US is in pretty good shape. There's no reason for consumers. I mean, if the savings rate suddenly, it's like we said before, if the savings rate suddenly jumps to five or six percent, then it's probably game over for US growth.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, you know, people I often hear, well, you know, the excess pandemic savings have been spent, you know, everyone's skint now. So that's it. All this spending on whatever trips to Las Vegas and all the rest of it and cruises and everything, that's going to come to an end. It's just not true. I mean, the savings rate is the savings rate has slowed down a bit. It's not that clear on that chart. It has slowed down a little bit. But if you look at, you know, if you look at total savings, don't forget these are... This is just really the difference between real. Between total consumption and disposable income. That's what this is. Or rather, disposable income and consumption. What's left goes into savings. This doesn't take account of the increase in valuation.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“I don't see why things should really fall apart. The only thing that does concern me, the real thing that does concern me is that if, for example, I'm right about short-term interest rates not coming down as fast as the market has priced, then there could be some disappointment in the equity market. Okay, so you could have a pullback. And if you're, you know, you could make some money from a pullback of 10% if you want to try for that. But I just think it's simpler and more straightforward for me to say, okay, well, you know, I'm not going to worry about the equity market for now, but I'm happy to be short fixed income.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Oh, yeah, yeah. I would say that's a fair view. You know, I don't see corporate earnings falling off a cliff anytime soon. Sure, you know, valuations are stretched, but the US economy is doing well in there and corporates have managed to grow their earnings over the last, I don't know how many quarters and the pace of earnings growth has accelerated in the first two quarters of this year. It's very, very hard for me to get super bearish of US equities, really. I mean, the only reason for it is to say, well, valuations are really stretched and there's too much dependence on the magnificent seven. But, you know, the other 493 are doing fine.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“But then 2007, there was a financing scare, short-term financing market, the TED spread blew out, and I think the Fed did an emergency cut. And that really scared me. I'd been aware of the US housing market going crazy up to that point. And I just thought the world was going to end. And I wasn't really prepared for it. Now, as it happens, as we came towards the end of 2007, things calmed down. You know, to me, that was the best opportunity to absolutely load the boat with variant swaps, with put spreads on the DAX, with just, you name it every sort of bearish trade, which paid off. And it was after that that I thought, well, forget about relative value. It doesn't count for anything. You've got to get the macro picture right or you haven't got a chance. It's as simple as that.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“You know, not much though, you know, first, I think one of the first trades I did was a Buying a variance flop on the Nike and selling a variant swap on the SP, that spread typically the Nikkei was more volatile than the S&P and it was traded at a discount, you know, for the long maturities.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“And fool yourself into thinking, well, it's because of my brilliant proprietary trading skills. You know, it was very easy to think that, you know, for me anyway, that I was just this brilliant, brilliant trader making money year in, year out. But, you know, I did have a massive advantage being the seat that I was in there. And then, of course, at Brevan Howard, as a trader there, as a purely proprietary trader, everything you do, you phone up a bank and ask for a price. And as soon as you do a trade, you're offside. You've paid the bid off a spread. So you're offside as soon as you put a trade on. So you've got to be pretty sure. And a lot of the stuff that I did at first was, you know, perhaps a little bit more complex than buying this call and selling that call”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“I think at the time, certainly for me. Unique to me, but we thought as traders, you know, we read liars, poker, you know, that was the kind of trader I wanted to be an obnoxious, horrible shit, basically. And it was very, very easy to make money. And we would often do trades where we thought they were proprietary positions. You know, it was very easy to go long of some options, you know, to have that big option portfolio, which was bleeding money each day in theta decay. But that was offset by the customer trades. And then when something would happen, you know, when the market would really move, make all this money”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Do my own research and capture the data from Bloomberg. And as you saw in some of those charts, represent it, what does this mean? This is going up. So that line should go up, that kind of thing. That is what really, really gives me a much better insights. And I would say that I am actually working much harder now than I certainly than I ever did, you know, when I was 30 at Solomon Brothers and Citigroup and all that. So, and I prefer it this way. I mean, you know, I much prefer it this way.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“There's a natural tendency to weight their opinions kind of higher than your own opinions and higher than the rest of the market and to follow them. And they weren't always right. But when you're on your own, completely on your own and you, like I do, you know, I have to produce the research. And I do take inputs from other research firms. I read their research.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“To be honest with you When I was 13, I was working for an investment bank, I was working for Citigroup, I was a derivatives trader, I was managing options on equity indices. Got to tell you, it was so easy. The job was so easy. The spreads were wide, the spread on implied volatility. We were doing complex products like variant swaps. We were very, very early into variant swaps. Huge spreads on those products. It was like, you know, honestly, you didn't really have to work that hard. Really in those days at an investment bank, it was really super easy. Then, you know, the next leg was when I went to Brevan Howard at first I thought, you know, I really don't know what I'm doing. I honestly, it was a struggle at first. It took me a year or two to really get to grips with macro trading and understanding what's the big picture rather than relative value and that kind of stuff. But throughout my period there, you know, we had in-house economists. And I suppose there is a...”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Capital has about 2.3 billion in total. I'll have a small portion of that. I do intend to continue writing my notes because that is what clarifies my thought process. That is what makes the investment decisions that much more profitable than it also. And the one really important thing it does, it stops me getting bored and just doing some stupid boredom trade. Some SPs or whatever.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“The economic data and take lots of different opinions about it, especially the opinions that you disagree with, and be able to say, well, I think they're wrong because of this, this and this. That discipline and producing something that's readable each day and each week really gave me some in-depth insights into the markets and to what are likely to be good trades. I've been doing that for the past four years. I've been managing my own capital. you know, tremendous results with that, but I just joined, it's an asset management firm called Fortum Capital, where I'll be managing a macro portfolio.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“After I quit Brevan, how had I asked to provide some macro research for a broker? Said that the broker sent it out to their clients, so they developed that and created my own website and started providing this research to, well, it goes to hedge funds, it goes to investment banks, it goes to family offices, and it goes to retail investors. And what I try to do in the note is just to make economics the economic reports clear and give some context to them and give my opinion for what what these economic reports mean, what the implications are for stocks, bonds, and currencies going forward. So that is my super macro note. It's a daily note, and the weekend note is full of, it's kind of a summary of the week and what's gone on in the markets and where I think the opportunities are. But what I found is that by writing that note, it really enhanced my trading. The discipline you need to really research.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Either you or one of your colleagues, these music sites where you can just say, you know, I want a song about, you know, strawberries in the winter or whatever it is in a particular style and there, bam, you get a song. The lyrics and the tune, and everything's put together for you, but really all it was doing was just looking at this back catalogue of tunes and taking out chord sequences and so on and putting something together and effectively plagiarizing the work that was there. So, you know, it's not super intelligent. It's just it can be a productivity enhancing tool and that's it.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and you look at these large tech companies like Meta and Microsoft spending, I think between them over $100 billion on AI and video chips, maybe several hundred billion dollars, it's a lot of money. And I just wonder if they're really going to get the returns. But we just don't know. To me, I can see tremendous opportunities for enhancing productivity in the tools that those companies provide. So, you know, maybe they will. I don't know. I don't know how they're going to charge for that. They spend all that money on these tools. Are they able to recover it from the users? I don't know. When, you know, so much stuff is given out for free, like chat GPT. You can just use for free. But, you know, another example of where it is limited. And I think it was in something you put out.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Well, I think long term, I mean, over the next hundred years, that's a lot of time for anything to happen. But I guess I can see your argument over the short term that it's not going to be as transformational as might be priced into the equity market. I mean, and if demand for NVIDIA's chips is high, we're seeing that in the profits already and the revenue growth, but in terms of the users of the people who are buying NVIDIA's chips, that definitely remains to be seen. That has not materialized yet.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“To the power of 21, whatever, and got the right answer. So to me, it's, you know, it's not the most, it's not the cleverest thing out there. And it's great. It is a productivity enhancement. It is a productivity enhancement. If I sometimes, you know, I might be asked to produce a document, a legal document for something, something to do with my business. Well, I don't need to go to a bunch of lawyers and pay, you know, a couple of thousand pounds. You know, I can just ask GPT, produce a legal document for so-and-so, and then I can tell it to enhance it, to do this, to do that. And I get. Exactly what I want Know it's got its uses, but I think people that are frightened that it's going to take over the world, are we going to have a sort of Terminator scenario, you forget it. It's just not that clever.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Even chat GPT, you know, sometimes gets things horribly wrong. I wanted to make sure I wasn't writing nonsense when I think I was writing about how this probably 18 months ago, something like 18, the prior 21 payroll prints had been above analyst median expectations. Now, if that was a coin flip, if it was a 50 50 chance, what is the probability of 18 heads out of 21? I kind of did the maths with, you know, combinations and NCR and all that. And I got the answer. And then I thought I'd check with ChatGPT, and I got the answer out, which was completely different to mine. So I said, are you sure? I don't make it that. I got a different answer. And then the third time, I said, I really don't think this is correct. My answer is this, and then ChatGPT showed me how it had calculated it with NCR 21C18 times”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I mean, if it was just a magnificent seven driving all the profit growth, then that would be a problem, especially since, you know, the main thing. There is efficiency. But as far as AI is concerned, it's got great potential, but I think perhaps people are getting carried away with what it might be able to do because It's not something that no, it's just been enhanced from something that we had previously. I don't see this. Kind of step changing intelligence. You know, if I'm on, if I'm online to my, for example, my bank and I have one of those little chats pops up and I go through the questions there. It's like I'm talking to an absolute bloody moron and it's, you know, it's no different to how it was, for example, five years ago.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Know if we exclude those magnificent seven stocks, the other 493, or we're at an all-time high on Friday. So they're doing fine. And as like I said, even if we take the unlisted companies, throw the whole lot into the pot, you know, whole economy, corporate profits, eight percent year on year. Well, that's not a shabby performance. You're right in what you say, well, you know, what if all this is driven by the video or these magnificent seven, but it isn't. It isn't. I think 80% of in this most recent earnings season, Q2 earnings, I think 80% of the companies that reported beat the earnings estimates. So sure, you know, the magnificent seven, huge profit growth and all the rest of it, but the others aren't doing so badly either, you know, the others are doing fine.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, I guess that's just a potential counter argument to, oh, SP 500 earnings growth is at 11%, so therefore there won't be layoffs. But yeah, what do you make of the bull market in American stocks as well? I mean, as well as the narrative behind it, which is AI and NVIDIA.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Right. And you mentioned the AI demand. Earlier you said how corporate S&P 500 earnings growth is robust and that supports a strong labor market because if companies are growing to earnings so much, you said you see it at 11%. They're not going to be laying off people if anything. They want to hire more people. I understand that if every single company in the S&P is increasing their earnings at 11%, but what if you have a scenario where it's NVIDIA is just dominating and so much of the corporate profit growth is NVIDIA? I haven't done the numbers. I'm not going to pretend that I have, but I just know that it is extraordinary. Never has a company that size grown its revenues and earnings like it has. As well as the rest of the now called Magnificent 7, they have had very high profit growth as well, nowhere close to NIDIS, of course, in some part because the revenues have gone up, but they've also cut their costs and they've tightened their belts.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“And copper, I think copper's got a bright future if we're going to electrify everything, the green revolution will increase demand for copper. Sure, infrastructure projects in China are not growing as fast as they were in the real estate market demands there. That's not growing as fast. But US with data centers and all the rest of it, you know, there are new sources of demand. these mining companies these large UK or Australian mining companies are extremely profitable even with prices where they are so Me, I think it's one of those trades where You're okay with things as they are now. If there's any pickup in demand, or there's some sort of efficiency drive in these companies, there's opportunities for profit growth.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Look, I mean, I'm not massively bearish on the Chinese equity market. The valuations have been beaten up so far that at this stage of the game, I think it's not worth going short here. But as far as if you look at Chinese steelmakers, you know, China is trying to cut back capacity and they've been unprofitable. And that's, of course, that's the source of iron ore demand. But the cost of iron ore, you know, it's about $100 a ton and maybe it's dip below that just over the last couple of days. But these big mining companies can dig this muck out the ground for a fraction of what it sells for, an absolute fraction. The less profitable mining companies will fall by the wayside. But, you know, the BHPs and the Rios of this world, they're fine.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Yes, certainly the US is, I guess, if they don't, if China doesn't have infrastructure growth from infrastructure in real estate, it has to be exports or consumption. And I think they're really starving the banking system of credit to real estate firms. At the same time, they're just funneling it to any firm that needs capital that's not a real estate firm. So I think it's probably a good time to apply for a Chinese bank loan if you're not a real estate developer. And it's a very bad time if you are a real estate developer. But yeah, the question is just, it's enough. Do you have a view whether you have a position or not? Do you have a leaning of bullish or bearish on the Chinese equity market? Because it would be interesting to me if you're bearish on the Chinese equity market and yet you are bullish on mining stocks which sell a lot of the market.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“All the retail stores are flooded with Chinese made socks and underpants and t shirts and goodness knows what. I mean, there's no other, you know, we don't need any more of that stuff. What's the next product category that they're going to? Infiltrate, well, you know, maybe it's EVs, but governments are becoming much more protectionist about that.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“And then you reach the limits of that growth. And in the case of Indonesia and Malaysia and those, there was that massive crisis in 1997 and things really fell apart. But I just think you can still have a situation where growth comes off the boil and slows without necessarily a sort of crisis like that. And I think that's what China is going through. If you think of the pace of growth in import or export penetration that China achieved from 20 years ago, from when it entered the world trade organization, 24 years ago, whatever it was, tremendous growth, tremendous growth in exports to the US, to Europe. And that growth is over now, partly because we're becoming more protectionist. But anyway, you know, we don't have, you know, that.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Well, not the bus like that. I'm thinking of economists. Well, yeah, South Korea had a tough time as well. But yeah, they have those boom time, that industrialization period when the economy really, really grows extremely quickly.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Takes on some of the debt from the local government or from the bails out the banks, it does something big like that, but there doesn't seem to be any sign of that happening anytime soon. So for me, I think it's just more of the same, you know, growth continuing to slow. And that wouldn't be, you know, when you look at developing Asian economies, if you look at the cycles that say, for example, South Korea or Taiwan took, you know, as they these economies industrialized in 60s, 70s, 80s, you know, and growth was really, really strong. And then they kind of went ex-gross and growth dropped down to a more normal level. China is sort of following in the footsteps about two or three decades behind. Think it's almost inevitable that growth continues to slow in China.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Banks, yep, and the banks, and the real estate is just going down and down. I mean, what it's been something like 13 months of price declines in these Chinese house price indices, 13 consecutive months year over year, the drops are significant. The real estate developers, the bonds are trading at ridiculously distressed levels if they haven't, if they're not in some sort of administration anyway being worked out. So the whole situation is really bad and the consumers have had, or households have invested in the real estate market as a place to park their wealth. So it's bad all round. You know, I don't know how the Chinese government or the PBOC can provide stimulus. I think the only way is like I said, the central government.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Think they're going to have a tough time. I think I don't think they're going to see a 5% growth rate again for some time. It's just the problems are that the central government debt, you know, the central government doesn't want the debt to GDP is very, very low and they like it that way. And all the excess debt is in local governments, which are the ones that provide most of the financing for infrastructure projects and everything else.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Massive portfolio with a bit of this and a bit of that, and offset it with something. And, you know, I'm trying to find the really clean expressions of a. Particular macro outcome and not have too many different expressions of that trade. You just got to find the, you know, one way that you think is going to work the best and choose that to invest in or short or however you're going to do it. Maybe it's through the option market. Maybe it's through credit. However you want to do it. But you don't want to have too many different flavors of the same trade.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Getting out of their dollars into gold, and it's like I said, you know, the retail pumps out hasn't really gone nuts with this trade. So I do think that that could have more to run. But to some extent, it's a different flavor of the same trades that I have on now. You know, I'm short the dollar against sterling. I'm short treasurers because I think inflation has reached a low point. I do think the Fed will cut. which makes the carrying cost on gold that much less. But do I want another headache by being long gold? Well, not really right now. You know, I had some fun with gold, I think, in 2019, but I haven't really messed around with it recently. Of course, I missed this whole recent rally. But other trades know, you know, it's like, I try to be very selective. I'm not one of these guys that has a”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Well, God, yeah, I do. It's quite interesting. If you look at the retail participation in gold is almost non-existent, you know, just by looking at the ETF, the gold ETF. Yeah, the AUM is, you know, all this rally has been driven by mainly Chinese, but central bank purchasers this year. The Chinese have gone nuts with it. And I get that. I get that. They're sitting on a whole... You know, they've got a whole load of treasuries, a whole load of dollars, and they want to diversify away from that. It's, you know, if you're selling stuff to the US, you're going to be paid in dollars. There's no getting away from that. Okay, you want to do something with those dollars. Well, you know, you can stick them in rubles if you like, but gold seems like a much more sensible option. And that's what the Chinese are doing.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Had one yet, yeah. It's like I said at the start of the year, you know, the sofa futures that went a bit offside at the end of last year, a bit offside in January, you know, the pricing almost 7 25-bit rate cuts, something like, you know, 170 basis points were priced in once they got down to 80 basis points. That was a really good, decent amount of profit. That trade contributed about 10% to this year's P&L. And the banks roughly the same amount, you know, around 10% the European banks. And then I've given some money back on other lower conviction trades. So my portfolio is up about. Just over 19% for the year to date.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“No. If it was 10 out of 10 in 2022, when I think about the kind of notional size I had on at the time, this is about imposition-wise, it's about a 3 out of 10. But in terms of my conviction, it's more like a six out of 10. But I just don't have it on in that much size just yet. I want to get this payroll print out of the way. If this payroll print isn't horrible, then I know I'll be selling into a low, but that's what I'm going to do.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“No, no. And to be honest with you, Jack, every, you know, I've always said this every year there is really only probably one or two good trades a year to do. And when you see them at the time, they do look like 10 out of 10 trades. You know, they do look really great like at the start of 2022 going short of treasuries. I mean, that was just the most fantastic opportunity. But you get these opportunities once or twice a year and the rest of the year, you know, you're trying things. You're trying trades that are maybe a seven out of ten. And if they work, that's great. And if they don't work, you know, I tend to cut them quite quickly. So it's not, you know, it's not a high conviction trade. It's just, you know, it looks like a reasonable opportunity right now. I've got more of a conviction on the rates trades.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“For the mining stocks, I just first of all think, you know, I looked at the base metal prices. You know, they picked up from the lows about a month or so ago. And they bounced from a low that they've visited, I don't know, two or three times over the past year or so. And it just seems to me like all the bad news on China has been priced in. Listen, this is a cautious, small, long position. And I don't have much tolerance for losses on it. So it's not, you know, this is not a 10 out of 10 sort of trade.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“The same with the European markets, you know, the FTSE has a 4% dividend yield. What is it on the S&P? 1.8 or something less than the Nasdaq. So, you know, every year you're putting away this 4%. It builds up. And so like I said, it hasn't done that badly on a total return basis. That said, you know. It's not the kind of thing that's going to make you loads of money. It's great, I think, for private investors, tuck some money away each month in an index tracking fund is reasonably safe and secure with a decent dividend yield. It's great. It's never gonna, you know, really... Your socks off with upside performance, it's just, it is just a plodder of an index.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“I'm still quite constructive on growth in the Eurozone as I was at the end of last year. But the bank's trade, I suppose I got quite lucky with the timing. I got in at the end of last year and they just took off this year. And, you know, I'm not greedy. You know, they've rallied about 20% since I described the trade in my daily note. That's enough, 20% in seven or eight months. It's fine. I just took the money and ran when it comes to UK stocks. You're right. When you look at the index, you look at the FTSE, you look at the S&P, put them on the chart together. FTSE looks like it's just sucked forever. And to some extent, that's true. But if you look at it on a total return basis from 2020, so, you know, taking the dividends and reinvesting them in the index, it hasn't done so.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“You're right, they've been cheap for a long time, and I've seen so many analyst presentations saying, you know, now's the time to get into the European banks. And I'd always been skeptical because they'd been wrong so many times in the past. Time, you know, at this time, it really seemed right, it really did seem right, especially with policy rates where they were and with growth picking up. And at the time, I mean, you know, growth in the Eurozone has been positive for the last couple of quarters after, again, five, six quarters of stagnation. I actually thought growth would be even stronger because real incomes in the Eurozone, like in the UK had been crushed by high inflation. Well, real incomes are rising at a healthy clip now. in the Eurozone.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Okay, let's start with the European banks. First of all, you've got to bear in mind that the interest on reserves, that the ECB was paying, you know, there was this negative interest on excess reserves. On overnight reserves was a tax on the banks. It was really a tax on the banks. And that was a massive drag on performance. Plus, you know, if you look at net interest margins in this super low rates environment, they were being crushed. Well, that ended some time ago, obviously with the ECB putting the deposit rate much higher. Interest margins widened out. The capital ratios of the banks have been built up dramatically over the last decade and a bit since the sovereign debt crisis. European banks were in great shape. And from a valuation perspective,”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Yes, yes, plus, plus, of course, you know, we've got economic growth. I mean, we had. Five quarters of virtual stagnation prior to the start of this year and now the economy is back on its feet. So I think sterling was bashed really hard after Brexit and then bashed again from the budget fiasco. But things are much more stable now and I think there's no reason for people to fear investing in the UK well once we get this labour, this next labour budget out the way anyway.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“So you're bullish on the pound sterling, your home currency because you think the UK economy, real, real growth will just be strong and the Bank of England won't cut rates so more attractive for capital to money will flow into UK net net as other central banks cut interest rates more.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“Mini crisis. I mean, we, you know, we voted to exit the EU. We had the Brexit thing that did a lot of damage. We had the Liz Truss budget fiasco. That did a lot of damage. But hopefully those kind of issues are in the past. And now, you know, it's like I said, we've got a stable government. Consumer income is growing again. I really think that we're in pretty good shape.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“GDP growth in the first half of the year was running at an average of, I think, something like 2.5% or so in the first half of this year. So the economy is doing pretty well. I think the Bank of England won't Lower As fast as the US even, even though they've got a head start, I don't think we'll see a cut from the Bank of England in September. I think the next cut will come in November. And if you look at yield spreads, real yield spreads. So, you know, you take 10-year inflation link guilts and 10-year tips and everything. The UK looks or just nominal, nominal spreads. The UK sterling looks in better shape. We had in the UK we had A series of”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“And when it comes to currencies, I am long sterling. And I do think that sterling, as a country now, the UK... Almost certainly has the most stable political situation in the G7, let's face it, the rest of you guys, it's pretty unstable. If you look at the labor market, I mean, we've got issues with our labor market data here in the UK as well, but the unemployment rate ticked down from 4.4 to 4.2% at the latest reading can't rely on it. The survey response rates from the labor market. Questionnaires have been pretty low, but that survey's being revamped. That's all we've got to go on. If you look at wage growth now far exceeds inflation for a while, wage growth, you know, people. We were being screwed by the cost of living crisis, but now wage growth is far above inflation, so real incomes are on the up and up. Our PMIs are pretty strong”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“I think when I came on your show last time, I did speak about the European banks and I had a pretty substantial position in European banks, but I got out of that. They did really well. I'm out of that now. I've just taken a small position in mining stocks, European mining stocks, well, they're mainly UK mining stocks. And that's a very non consensus trade. These are deep value stocks. They really are. These miners can earn money with iron ore at the current prices easily and plenty of money. Dividend yields are high, the valuations are incredibly low. The big risk is further slow down in China. But I think the rest of the global economy is strong enough to support the valuations where they are. I'm not going to run that a long way. If that goes much more offside, I'm going to get out of that.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT
“To tell you, I had been very doubtful about. US equities that the earnings growth would come through to support the valuations that these stocks are on. But I've got to be honest, they have, you know, and every time I've implied volatility was incredibly, incredibly low. So you could buy some short dated puts, really not waste a lot of money. And occasionally maybe there'd be a bit of a pullback, you get a payout. That trade has been much more difficult. Since we had that carry trade unwind, which I really thought was a bit of a storm in the teacup, implied volatility is much higher. There are less opportunities to just buy some cheap downside puts and maybe make a fast buck if the market pulls back.”
2024-09-05 · Forward Guidance · There Will Be No Recession | Jonny Mathews · IDENTIFIED FROM THE TRANSCRIPT