YouSaid · the spoken record

Michael Drury

lines on the record: 121
first: 2024-08-26
most recent: 2024-08-26
sittings or episodes: 1
sources: podcast

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“It's things like that that tell you that you're slowing, but the idea that you're headed for recession, I think, is nonsense. In fact, my view because of this global economic view that I have is that it's impossible to have a recession in the United States without a much deeper recession someplace else, probably China because it's the factory floor. Or Europe because it's the global rust belt now. It's the Akron Cleveland of the world that's losing ground to China. Now China's losing ground too, Bangladesh, India, the Azin. It'd probably be in a lot more trouble except that there's revolution in Thailand, there's revolution in Bangladesh, there's political instability again in India. So that's helped them. Lose less than the United States would like them to be failing. China.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Exporting their gross model to people who are below them, and those people are loving it because it's cheaper, but it also means that those countries don't have that domestic washing machine industry to spool up to support. So how long this can go on for is one of the questions. Europe seems to be finally getting some traction. Europe's big. So if Europe gets some traction, that will help the Chinese be able to export their way out. The United States needs to keep growing. Retail sales suggests we are. I think two things I've heard the last week that it really resonated with me. One was Thomas Barkin at the Richmond that basically saying, look, we talk to people all the time and what they're telling us is they're not hiring and they're letting attrition clear people out, but they're not firing and they're not going to fire because it was so painful to get people hired that they don't want to be a firm that lets people.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“and insists on growing out of it by stealing your business. But that's what every business does, right? Is before you start laying off people, before you start really hitting the panic button. First, you see if you can just price your way out, right? Lower your prices so they're not thrilled with a weaker currency, but a weak currency helps and their currency is weaker against the dollar, but not necessarily against their other competitors. How are they winning on exports? Their exports are better. They just are. And cheaper? Yeah, they're better and cheaper. And partly because they have a massive domestic market that they were able to refine electric vehicles and refine small electronics in, refine phones and microwave ovens and washing machines, all of which are needed in Latin America and in developing Asia and etc.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Their export share is growing. Their export share is compared to the rest of the world. And they're already the largest trading country on the planet. So someone's got to go, right? Someone's got to be crowded out. It's Europe is the one who's getting crowded out. And that's why the European economy is struggling in having a difficult time, particularly Germany, where the competition is direct vehicles to vehicles, industrial materials, to industrial materials. And Japan's in a fair amount of trouble because they're competing directly with China for semiconductors, not the high-tech ones, the low-tech ones, that kind of thing. And so it's tough to have a competitor who's in trouble.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Go back to the discussion of 1987. If they're in a rut, it's really hard for Vietnam or Malaysia or Indonesia to boom away because they export so much into China. And frankly, the Chinese are exporting their way out of their problem by shipping to Indonesia, Malaysia, Philippines, et cetera. And it's undermining their own domestic economic growth. Slow China, especially a slow China that wants to grow by export, exports in China are growing somewhere around 7%. World economy is going somewhere around 3%. Both numbers are the 3% is real, but the inflation rate associated with goods is about zero, so it doesn't really matter. So if they want to export seven and the world is growing three, that's a problem.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“In China, in the general population, that they were actually vocal about it, they would do something about it. But there isn't. So who's vocal about it? American investors want to invest in China and can't see how they can make that work because the stocks are so cheap. Yeah. I mean, the entire market's beat up, but you need a lot of encouragement to go to China these days, and you're certainly not going to go if it doesn't look like the government's going to have you back and the government's not going to have your back, not the foreign investors back. So China, I think, stays stuck in a, for them, a rut.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Revolution that ended coat. I mean, the people went out in the streets in China and said, I'm not staying in the room anymore. And the party said, oh, okay, you're not staying in the room. Oh, it's over. Yeah. COVID's over. Why? Because the party's number one rule is to sustain the party. So if there was enough concern.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Does that make sense? So, I mean, it's not a recession because it's still growing. So, I mean, technically, the words, it feels like a recession to the people there because they're used to growth being so much faster. Trend growth in China these days is probably around five. So if you're two points below your potential, that'd be the same as if the US is growing zero in potential two. So it feels like a recession. And it sounds like it feels like a recession. Businesses are unhappy. Consumers are unhappy. The inflation rate's almost zero because there's just no economic activity going on. PPI is still in deflation. The currency is weak. I mean, it is all the earmarks of a bad economy. So why won't you stimulate it? Well, you stimulate if you re-elected, it's not an issue. You stimulate if there's people very upset. There's no righting in the streets in Japan right now. In China, I'm saying something about this. The white paper.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“I've got a question. So, in America, if we have a recession, generally real growth, inflation injustice growth, and in some cases nominal growth would be negative. But in China, GDP growth is so high. So in America, Would Chinese economy that's only growing at 3% could be called in recession or no? Do you even believe the data? Does that make sense?”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“That's where the United States was in 31, and Hoover wouldn't spend the money. He lost FDR1, FDR would spend the money, did spend the money, and 32, 33, 34 was a boon period from a bust. The boom period in the United States. Will Shijin Pink spend money? The answer appears to be no, and the answer appears to be no for two reasons one, Xi Jinping's not a capitalist. He's a party head. He's more interested in stability than he is in growth. He has a shrinking economy, he knows this, he has a shrinking population, he knows this. He's got a big housing problem, he knows this. He's just fine not rocking the boat and growing three, four, which is miserable by Chinese historical standards, but it's still faster than almost every place else on the planet.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“So I look at the world from a global sense. I don't believe there's a US economy, a European economy, a Japanese economy, a Chinese economy. I think they're all woven together and controlled by the multinationals who basically shop rules in the various constituencies to maximize their returns, because that's what they're supposed to do for their shareholders. So a year ago, manufacturing was at its bottom. It's recovered since then, but it's been a very halting recovery. And it's been halting because China won't stimulate. China's in a very bad place. They're in 1931. Really? The private sector has lost faith in the economy, it's scared of its own government, it's scared to put money to work, and so they're not a driver.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“One cut in September. It changed the world if they do? Only if it's the beginning of what the market's got priced in, which is seven or eight over the next year and a half. The first one's not going to matter. The second one's not going to matter because everyone expects those. If they're early or late, it doesn't really matter. The real issue is third, fourth, fifth, and we're not going to know if they're going to do that for months and months at this point because it'll take so much time to get diverse to it.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“And that's what happened with retail sales just this week, right? I mean, you had one and a half priced in, you got a strong retail sales number. They told you it was all going to be based on inflation and the economy. And so when the economy got too strong, bam, you take half a point out. You still think they're going to do one. Personally, I don't think they should, but it's not going to change the world if they do.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Pretty incredible because now, not only do we know when the Federal Reserve just hiked or cut interest rates or keeps them the same, but days before, in some cases weeks before, it's generally well understood and well known. I can't think of an FOMC meeting any recent years where the day before everyone in the market knew what was going to happen. In terms of that particular day, there was never a surprise hike. Maybe a few days before there was going to be a 75 basis point hike instead of a 50 basis point hike. But on Tuesday night, people were not shocked Wednesday morning or Wednesday afternoon.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“Back in the early 70s, both of it was early, you didn't know until the minutes that he had actually tightened. I mean, the desks would tell you. Yeah.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“And that's how you observed it this way. Wait a minute, the market tree. Did the Fed tighten? Maybe. And you didn't know until days later. And they never admitted it. I mean, it came out in the minutes or something like that, weeks later.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“JP Morgan comes out two days later and says three quarters of this is cleaned up. How do they know? How do they know that? I don't know. How do they know? Maybe they knew who is in trouble. Maybe they know the guy who is really in a bad place. But they can also tell just from market volatility Vaughl came back in. We're back under twenty again, et cetera. I mean, and it's not just the vault indicator. It's the VVIX. It's the options on the options, that kind of stuff. So, I mean, there's a lot more signals now as to the mechanics of what's going on in the financial markets. And so it's not the old days when Paul Volcker raised rates and you didn't know.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“So, this was a flash crash. I mean, it's not like the Japanese haven't been telling you for a while that they were going to do something with their interest rates. And it was not the interest rate. It was the yen. You were in a position, so if you were unhedged in the yen, it was 160 and the yen choked at 145. There goes your year. Yeah. There goes your job. So not that many people run hedged, but there are some. And so when you get caught in hole like that, it's very nasty for a short period of time.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“And not to say that that doesn't look at threats, volatility. I mean, the 25% sell-off in early 2022 was stocks and bonds. And it was a sell-off in bonds that was dangerous because that got into the banking system where the banks have a lot of treasuries and it exposed the whole SVB issue and et cetera. Just don't know. I mean, each one is an individual event and has to be evaluated on that basis. I mean, we've had flash crashes. Nobody says the bed's got to ease for a flash crash.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“And that may not be what you've got losses in because that price is plummeting. So you're selling winners from other places or you're just unloading anything that's peripheral. So like the other day, copper went down. I mean, Bitcoin went down. I mean, they've rebounded. Why? Because they weren't selling them because they didn't want. They were selling because they needed cash. They needed cash to cover either limit positions or open positions or just safety. So yeah, a deep shock in any one market will ripple through the whole system. And then the market wants the Fed to ease to bail that out. If it was SBB or if it was Lehman or if it was, they would. There's a threshold. It's not the stock market's down 5%. Even if it's in one day, it's still not stock market down 5%.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT
“So the unwinding of the Japanese carry trade happened a week ago. Had that same impact. That's why you see Vall go through the roof. Because there are guys who know they're in a trapped position. They know they got to do something about it. So they buy Vol at any price, out the door. Then they puke. Then the whole market explodes and they get back some of their money than the vault market. But I mean, they play these games and now they're played so fast by the algorithms that, I mean, crashes that took weeks to roll through the regular stock markets now roll through in three or four days because the algos all bounce back and forth off each other. But when you're in a trap like that, you got to sell what you can sell.”
2024-08-26 · Forward Guidance · Michael Drury on China's Trillion Dollar Secret and Why The U.S. Is Not Headed Imminently Into A Recession · IDENTIFIED FROM THE TRANSCRIPT