YouSaid · the spoken record

Rebecca Patterson

lines on the record: 83
first: 2022-02-04
most recent: 2022-02-04
sittings or episodes: 1
sources: podcast

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“Just astonishing for asking that. Ha ha. So yeah, my husband and I both love to cook, both love to eat. And while New York is definitely a food mecca, I'd say if there was any one place in the world that's as good or maybe better than New York, it's Singapore. The Asian food is just uncomparable, but especially over the last decade or two, you now get every cuisine you can imagine. So it's tough. New York or Singapore, that's a tough call. And anyone listening to those who likes dumplings. Go, go, go, go, go.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm really looking more of a... Yes, this isn't back in time with Marty. Okay, so I'd say maybe more like 20 years ago, but when I was an analyst sitting in Singapore with J.P. Morgan and I was writing about the implications of China joining the WTO, I wish I had spent even more time pushing myself to think, what could this be? And I think fast forward to today, I try to do it more, but I think I should do it more. I think we should all spend more time thinking about those longer-term things, climate, technology, demographics. Markets are so immediate, right? You have to have stuff on Bloomberg every second, every day, and there's so much in front of us that it's easy to forget these big structural things that are taking place behind the scenes, but can be equally impactful. So I'd say to myself, dig into the big...”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“My God, there's so much. Well, the thing that popped in my head, Barry, when you said that, is I wish I had known to tell my dad not to sell his apple stock. That would have been good. Well, that's the time.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Okay, I guess, all right, two things. One, be open-minded. I get so many young people coming to me saying, well, I either want to work at a top three investment bank or a top hedge fund. And I think there's just so many ways to get experience. There's Treasury Departments at companies. There's government positions, central bank opportunities, different countries, different cities, not every good job is in New York City by a long shot. So I think keep an open mind, take different paths. And I think in my case, it's shown it's been an advantage later on. So that would be one. I think secondly, quickly, read, read, read, read, read, current events, history, academic papers, think tank papers don't just stick to social media. I think just knowing what's going on around you, nothing against social media, but that shouldn't be your only source.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Oh, I love to read. I mean, I spend half my day reading emails and research reports, but even then after work, if I'm not watching something light or entertaining, I'll pick up a book. I try to alternate between fiction and nonfiction. So I just finished Lincoln Highway by Immortal. I had love gentlemen in Moscow. And this is a very different book, but equally well written. And then I just started Ray's new book on the changing world order, which somewhat depressing, but very, very good food for thought. And then I'd have to say one of my all-time favorite books, that if people who are listening haven't read, they should is no ordinary time by Doris Kearns Goodwin. I am a huge fan of both FDR and Eleanor Roosevelt. I think they were both such incredibly important people in America and global history for different reasons. And I think that book captures a period of time.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know if he would think of himself as a mentor to me, but I would. Anytime I've had a question for Bob, he's been there with really good, sound advice. And he's always gone out of his way to make me feel part of the group at council events and dinners. Again, those moments when you felt like the kid at the table, he made sure to make it clear to everyone at the table that I wasn't a kid. And I'm incredibly grateful for that.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, my first boss out of college was a gentleman named Paul Tash. He ran the Washington Bureau of the St. Petersburg Times when I was there. He gave me enough rope to do some damage to myself, but didn't let me completely chew off the rope. And, you know, as a 20-something, having a front page article and the Pulitzer Prize-Renning newspaper, that was thanks to him as much as anything. There were a ton of people later on at JP Morgan who helped me become a better researcher, but I think importantly also how to listen to clients. Jan Lois, who's still sort of a senior advisor there and writes research for them, he really stands out in my mind as someone who was there with me in London in that 1997 insanity and then all along the way. And over the last decade, one more I'd mention I've been very lucky to get to know former Treasury Secretary Bob Rubin, mainly through the Council of Foreign Relations.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So I don't watch TV as much as maybe I'd like to, but when I do watch stuff, given that I spend a lot of my day thinking about what could go wrong in the world, I want to make sure we don't miss risk. My life can get pretty dark. So when I watch TV, I'm usually not going for the murders and the crime shows. Ted Lasso would be my cup of tea, something funny and well-written. And I also love nature and history. So anytime there's a good new Ken Burns documentary, I've got that on immediately.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“They know what they're doing. And again, it seems like such a simple thing. But when you look at 2008, 2009, how overlevered people were spending money they didn't have, flipping homes, and you just think, gosh, these are just such basic concepts. And if we could just make people more educated about it, how much better off we'd all be. So that's what the program's about.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we're talking about kindergarten through high school. Oh, really? Yeah. Yeah, yeah, yeah. Starting that young. What does it mean to save? What does it mean to spend? How do you think about how much you should be able to spend? Make the concept easy to understand in the beginning. And then when you get to high school, obviously it gets more complicated.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Finance and economic decisions. And ultimately, gosh, wouldn't it be nice if all of our policymakers understood basic economics? Sometimes when I listen to the speeches on the hill, I have questions about a few of them. And so that's what this group is doing. We're trying to advocate states to have requirements. We're trying to provide great programming for teachers so they can teach in the classroom. And we provide programming directly for the students and their families. The whole point is just to give people the basics so they can make good life decisions, which I think help them as people, but also fold through to the economy.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, it gets back to the politics a little bit. In the United States, only half of the states require students in high school to take at least one course in economics. Only 21 states require students to take a class in personal finance. And so this is not a national government thing. It's a state government thing. But at the end of the day, if you have requirements, you get action. If it's required, then you will get the courses. And we have found clear evidence that the states that teach this, the students, when they graduate, are better prepared to think about college financing, to think about credit cards when they get to college or after high school, when they get a job. And so if it's in our country's economic and social interest to have a population that can make good personal”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Monetary is fairly rule-based, fiscal is political based. But we do follow it. We have an amazing team in-house that does nothing but live and breathe politics all day long, and God bless. So it is a big part of what we do. But I agree with you. It's a lot more qualitative and difficult to forecast with any confidence. So it's an input into what we do. I certainly would never at Bridgewater or anywhere else put a trade on just a political view.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Politics drives policy and policy is going to influence the economy and markets. So I think you have to try to understand politics to the degree you can. And again, to the degree you can, put probabilities around different policies becoming reality. So, for example, when President Biden has been pushing forward on different fiscal plans, we would try to spend time understanding, okay, if this amount of money gets through, government spending, what sectors would that feed through? What companies would that feed through? How would it flow through to households once the households get it? Do they save it? Do they spend it? If they spend it, what do they spend it? So we created this whole process we called fiscal rivers to try to understand that. And whether or not the policy gets through is going to depend a lot on the politics. It makes it a lot harder to forecast fiscal than monetary.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Old currency colleagues now work on crypto desks and they're trading options on crypto and lending on crypto just like we did with currencies back in the 90s. But they're very, very different from currency markets. And I think that's one of the challenges with developing the regulatory ecosystem.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's part of the problem, right? In foreign exchange, the space I know best, they're all currencies, different countries, different fundamentals, but they're all currencies. Crypto is so different from currencies in that you have some crypto that behave more like a currency. You have some that behave like a commodity. You have some that behave like securities. And as a result, the regulators in the US are debating a little bit who should be in charge. And so it's hard to get one body saying, okay, we're going to drive this forward. And then they're pushing Congress to write some laws to help the regulators. And Congress is not making this their first priority. So everything's a little stuck right there. But I think it'll continue to evolve. Crypto is so interesting because they can use technology to serve different purposes. So I don't think when it first started, I thought, oh, it's just like new currencies. And so many of my...”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“You can put a position on as a fairly large investor. In a stress period, it's not clear the liquidity is there if you want to get out. I think that's a limiting factor, but I do think the space continues to evolve so quickly. And once we get the regulatory ecosystem in place, I think it could be a pretty big deal for larger investors.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, there's no great data yet to be able to When I think about crypto, I'm thinking about primarily for my client base, so very large institutional investors. Right now, aside from retail, the institutional space, it's mainly hedge funds, family offices. We aren't seeing many large institutions in it yet. I think primarily because the liquidity hasn't been there to put on a position in large size, and the regulatory ecosystem is largely non-existent, at least in the state. I think both will change as we get more regulations, and it's a matter of when, not if, I think that will make people more comfortable to put a toe in the water. And as we get more volume, that'll create more liquidity, which should over time reduce volatility. So you'll get a positive reinforcement kind of cycle going on there. The question to me, again, is when that happens. But for the moment, the liquidity is improving.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In Italy and more political dysfunction and the reforms fall off and they no longer get the money, I worry that people will say, oh, here we go again. And then I think the risks are higher that we're back where we were pre-pandemic for Europe and we're in that same boat. But I think the next few months actually are going to tell us a lot about the next decade for Europe.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The last piece of the puzzle I'd mentioned quickly is Italy. So one of the things that has been meaningful during the pandemic is Mario Draghi becoming Prime Minister of Italy, which has one of the highest debt-to-GDP ratios in Europe after Greece. And they just couldn't, to your point, get out of their own way. In the coming two to three weeks, so it'll be early in early February, it will become clear if Mario Draghi will stay prime minister or move into the presidency of Italy. I spent a year of graduate school and then some time as a journalist in Italy when Berlusconi first ran for office. It does matter what Draghi does. If he stays as prime minister, I would be much more confident that Italy will continue to reform and get those recovery funds, which will support growth and support sentiment towards EMU. If Draghi becomes president, and that leads to snap a”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Fiscal flexibility, try to say that fast. Fiscal flexibility, do they give the countries? One thing that's being discussed is saying, okay, anything you do for green investment won't count. That's interesting, right? So how much more growth could you get if they don't force austerity every time you come out of a crisis? So that would be one big deal to watch. The other one is Germany. So we have our new government. Angela Merkel has gone off into the sunset and we have Olaf coming in, Schultz. And it seems that that coalition government is relatively more open to fiscal flexibility in Germany. That's a big deal. We don't know how much yet, but if Germany is willing to spend a little more, if Europe is willing to spend a little more, none of that is priced in at all to markets if you look at what Europe is expected to do for the next decade. So this could be the year.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I do think this year, Barry, could be a maker break for Europe. I think this is a hugely important year for Europe. And I say that because last year in the pandemic, they got the EU recovery funds launched. So the first real attempt at European-wide fiscal transfers, that money is still flowing through, particularly to countries like Italy and Spain. It's going to be a major support to growth. And they agreed during the pandemic that the fiscal rules, they created when the euro was launched have become completely irrelevant. To say that a country should have a 3% budget deficit and 60% debt GDP ratio, it's kind of silly today. No one has debt levels that low anymore anywhere practically. And so they're reviewing those rules. Right now as we speak and in the coming months, they're going to come out with revisions. The question is how much...”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“China has been the global leader on digital currencies, on CBDCs, when we go into the crypto space. And they just put out a report over the weekend, a briefing, talking about the millions of crypto wallets that now exist in China. We've seen some little pilot tests of this, but here's a fun one to get your head around. Could China do targeted fiscal stimulus soon through crypto? They've done it on a small scale, but now that they're getting this out throughout the population, if they want to help the consumer and they want to do it in a very targeted, quick way, this could be the true launch of the Chinese digital currency. I don't know if it'll happen, but it's kind of a fun thing, I think, to keep an eye out for. It wouldn't surprise me.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of growth for China as they were last year. So what fills in the gap? The consumer right now is soft, partly because of the property delevering that the government wants to engineer to make sure there's no bubble there, partly because of COVID lockdowns. And it doesn't seem like the lockdowns are going away anytime soon. The government doesn't want to do a huge amount of stimulus, but it needs to do something to get growth back up towards its target around 5%. So I would expect that you are going to see policymakers doing more stimulus. The question is, how much, when, and is it going to be enough to get back to their target? Or are we going to disappoint consensus? That's one of the big questions I'm trying to dig into right now with my team. Where does the growth come from? I mean, I'll give you just a lunar New Year one to keep an eye on.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So China is trying to transition from having these boom bust cycles where policymakers do a lot of stimulus and then growth surges again to having more stability over the medium term, more elongated cycles, but that means less stimulus and more fine-tuning stimulus along the way. When I think about where growth is going there this year, last year one of the big supports for the economy was exports. Chinese manufacturers were supplying all that demand that Americans and others had. And if the world normalizes this year and we can start using services more, exports, I would guess, will still stay strong because economies are still very strong, but it might moderate. So growth in exports, not the same end.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That makes perfect sense. When you talk about sectors, the Fed may use more quantitative tightenings to help keep the curve as steep as they can. I'm not saying it will be steep, but steeper than it would be otherwise. And at the margin, I think that's probably good news for the bank. So I would just add that once the list you gave on the rotation”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the other is the yield curve, and the two are related. I think that having a flatter yield curve, which is more likely if you just use the short-term interest rate tool, it sends a signal, and you already see lots of financial media saying, oh my gosh, the yield curve's flattening. We're pricing in a recession. The Fed doesn't want to send that signal. So if they can use quantitative tightening to try to help keep the yield curve steeper, that's in their interest. The other thing is that in the United States our banking system is so fundamental for the health of the overall economy that they don't want to create any undue stress for the banking system. And so having a steep recurve helps banks profitability, which in turn helps them feel comfortable making loans, more loans means the economy can pass over from the public to the private sector successfully. And boom, they engineer a beautiful soft landing.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would agree with your list. I would add one more to it that I would be probably constructive on is going to be finance and banking. And one thing I'd just highlight there is what the Fed is saying right now, which again, I think we're in this really interesting place where the Fed is experimenting to suggest they're not putting enough thought into it because clearly they do, but they're saying now that instead of doing rate hikes for a year or so and then maybe considering starting to take the liquidity out of the market by doing quantitative tightening, this time around they're saying, well, maybe we're going to start quantitative tightening after just one rate hike. Why would they do that, right? Why would they do this quantitative tightening so early in the cycle? And when you read the Fed minutes, there are two things getting highlighted by some of the FOMC voters. One is banks.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Exposure, we're seeing that already in the beginning of the year. People are reducing their exposure to these longer duration equities, moving their money into shorter duration equities that are more sensitive to cyclical conditions that can handle the rising inflation. So that doesn't mean the U.S. market overall goes down. It could just be the intra-market rotation we see. But I think it also sets us up for markets overseas that are less sensitive to liquidity, more sensitive to global growth, which one would assume if and when the pandemic starts to fade, that we should see pretty good global growth, especially if China continues to stimulate. And that could lead to some of these other markets potentially significantly outperforming the U.S.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think again, it's the one two punch of fiscal and Fed that have been driving this. But what's interesting is that the United States equity market sensitivity, if you will, to liquidity conditions, the way we measure it, has increased pretty substantially over the last several years. We would estimate today that about 40% of all U.S. companies are highly sensitive to liquidity conditions. And that's up from a little over 20% a few years ago. And what that means is often we're talking about longer duration equities where the cash flows are going out further in the future. Often that's tech and growth companies. As the Fed starts pulling back interest rates and then quantitative tightening ultimately, these companies are going to be, we think, more vulnerable when that happens. Now that doesn't mean you can't get a rotation in the equity market. People can reduce their”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Into the market, at the same time trading costs came down. But what I'd say looking forward is that bubbles often sow the seeds of their own demise. So right now, for example, I think this is a good one to be watching into this year because valuations on these companies, they're off their highs, but they're still quite high. It makes it more attractive for them to IPO or to issue. And right now, when we look at where lockups are ending and where we could see supply coming in the market this year, it's about $400 billion of equity coming to the market. Over half of that is from the same set of frothy companies. That's not a big number for the market as a whole, but for this segment of the market, especially if it's happening at the same time, the Fed is pulling back liquidity. This could be a big deal for those companies and then to your point, Barry, potentially looking for ripple effects to the broader market.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, sure. Good questions. So we know that bubbles can create bigger sell-offs, right? Not just the things that had become bubbles, but to your point spillover effects. And so years ago, we started developing what we call bubble indicators to try to understand the ingredients that can create a bubble and the risk, of course, that that bubble pops. I can't really get into all the details of what's in it, but when we track the companies today that meet those thresholds, I'd say it's between 10 and 15% now of U.S. stock market that hits those levels. And most of those companies today are emerging technology firms that have not yet posted any profit. Liquidity has been a big, big part of what's made them in a bubble. And we talked about this earlier, households that got stimulus, put those savings.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that would be a major point I'd make. The other thing is we love history at Bridgewater and we've gone back and looked at every equity market for the last century or so and said, how often do you see any market in the world as kind of one of the top for multiple decades in a row? There are very, very, very few precedents. The U.S. did great in the 2010s, but it lagged in the 2000s. U.S. did great in the 90s, but it did really poorly in the 80s versus peers.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Falling regulations, less regulations. And when we think about where we are today, foreign exposure to U.S. stocks and bonds, U.S. assets is at the highest it's been since the mid-1980s. So everyone's got the trade on, all these beautiful tailwinds. Everyone's expecting it to continue. When you look at what's happening today in the world, the US is talking about greater regulation and globally we're talking about greater regulation for a lot of these tech giants. We are seeing rising wages and more power, more capital going to the workers rather than the company bottom line. We are talking about, we'll see what passes, higher taxes for corporations. And so while we're not sure yet exactly what will play out, we know the risks are growing that these tailwinds at a minimum are reduced and at a maximum become major headwinds for U.S. stocks.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“We both know that people tend to have a recency bias. So what has been happening, I don't know what it is about human psychology, but we just kind of assume it'll continue. And look, the U.S. has outperformed for well over a decade now. It's been one of the strongest growing economies in the world, rising profit margins. The question is, if we're priced to do that again for the next decade, to your point, what are the risks? One thing we've seen is that when you have a market outperform for such a long period, some of the tailwinds often become headwinds. In the case of the US today, think about what's driven this performance. It's been beautifully rising profit margins, and those profit margins have been helped by relatively subdued wages, so more capital going to companies and workers. It's been helped by falling tax rates. It's been helped by”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“If we have a deflationary recession, which is going to lead to expectations for lower interest rates, then you want gold to protect your portfolio. And then at the other end of the extreme, the other tail, when you have overheating an economy and you're starting to see demand destruction at the same time, you still see high inflation or unanchored inflation. I think those are going to be your sweet spots for gold. And in the middle, it doesn't mean that gold won't do well. It's just that the outcomes are more varied.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“If I'm thinking, okay, I want some inflation hedges in my portfolio, I could have gold, or I could have cyclical commodities that will benefit not just from inflation, but also from greater demand. So what we saw last year were cyclical commodities like oil, like industrial metals, copper, et cetera. They did extremely well. They outperformed gold by a lot. And then cyclical assets broadly, including equities that could pass on the inflation to end users, they also outperformed. But I don't think this means gold has lost its luster. I still believe gold is a good diversifying position for a portfolio. I think it tends to perform best at the tails, if you will.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I've been following gold since I got into investments. And last year, we did see a big rise in gold in 2020 and early 2021. And then it gave quite a bit back later in 2021. I think I'd probably boil down gold lack of stronger performance given inflation to two things. One would be inflation expectations, right? You want gold as a hedge against inflation, but if you think inflation is, I hate using this word anymore, transitory, and that we're going to go back to what's discounted in a year or two years, then there might have, that might have affected how much demand there was from that constituent for gold. I think the other big deal is that while there was, obviously, there is a lot of ongoing inflation, there's also a lot of ongoing nominal growth.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Consumer prices don't capture housing very well, and we think that rents and housing prices are going to take a long time for the supply to catch up with demand. So we see both wages and housing in particular as pretty sticky upward pressures on demand inflation. And I think that's going to last this year even if the world starts getting back to normal from a pandemic perspective.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I wouldn't say we'd position for all of them. In this case, we're positioning for two because we think both are likely. But I hear what you're saying. If Omicron fades quickly, fingers crossed and the world starts to normalize, you will see less demand for goods, more for services, relatively speaking, agreed. And that could bring down some goods prices. Supply chains opening up, I think that takes a while, right? Are you going to suddenly have more truckers on the road? Are you suddenly going to be able to get the stuff out of the ports in Los Angeles? That's going to take time. I still think you'll have upward pressure on wages. The housing one is interesting. If Omicron fades and you can have more construction workers out there, more supply of timber, et cetera. But what we're seeing right now is that, you know,”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we're positioning for the Fed to tighten more than is priced in because we don't know exactly what the Fed's going to do, how much quantitative tightening, how many rate hikes, what speed. But we know something's coming. And so we're going to position for both outcomes doing the amount of each we get will depend on what Chairman Powell and the FOMC decides.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The curve right now. So we've got about three hikes priced in for this year. That said, I think there's still a good risk the Fed will lag economic conditions. So the result of all this will be higher interest rates, but inflation that ends up higher than what the market's discounting. And this is the one barrier that just, it blows my mind away. People are really pricing in that the world looks very much like pre-pandemic very quickly within the next year to 18 months, inflation back close to 2%, growth back down towards potential levels. And that could happen, but you would have to see the Fed tighten a lot more than it's priced in to get there, I believe. And so is the Fed going to tighten so much? Or are they going to tighten some and we're going to have inflation that's higher? What we're doing with our portfolio is positioning for both. We're positioning for inflation that's higher than priced in.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the Fed is the only game in town if we're going to try to lower inflation. I mean, President Biden and the administration are trying to do what they can to bring down inflation because clearly it's hurting him in the polls. But governments aren't really good at tightening fiscal and governments don't really like to hurt demand. So he'll do things at the margin, but really it's going to come down to the Fed if we want to get inflation under control. And then what is the Fed trying to do? They want to make sure over cycle inflation is around 2%. They want to have a strong labor market. They don't want to create a recession. They want to engineer a soft landing. So how much tightening is the right amount? And I don't envy them right now because you still have a lot of question marks tied to the pandemic about supplies, about how high wages go. So I think the Fed is likely to do more than what priced in.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the other one that I think is really interesting about the U.S. labor market today is the retirees. And after the last non-farm payroll report, of course, everyone was talking about it. But in the past, when we had layoffs and older workers got laid off, they came right back to work, like everyone else did. This time, what's different is they're wealthier. They actually made money during this recession. And so compared to past crises, they had the financial ability to retire early and they're doing it. So maybe a few of them come back over the coming years, but I think we've seen a structural shift in our labor supply, and that's going to keep a pressure on wages, which could keep inflation around longer than I think some people are forecasting right now, certainly than what's discounted in the market.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“True end prices to customers, and customers are still spending. To me, that tells me that the strength in demand is greater than the supply-driven supply pressures. If we were to see demand getting eroded, that would tell me that the underlying support for the economy that I've been describing, that maybe I'm not measuring correctly, that the supply issues are becoming the bigger deal. But so far, we haven't seen that happen. And then we're spending a lot of time trying to understand how long do the supply pressures last. Obviously, it's a little bit different for different goods, et cetera. I think the hardest one, frankly, is going to be in the US with labor. How do you get workers to come back? I think we're going to have to have higher wages. And then the question is, can companies continue to raise wages without it passing through into their profit margins?”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The supply issues are massive, and I don't mean to underestimate the importance they're having on inflation, but I think one way you can see that the demand is the bigger deal than the supply is what's going on with pricing and profit margins for U.S. companies. Now, this may change going forward, but what we've seen to date is that companies in the United States are the vast majority of companies are able to pass on the higher input costs.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think what we're learning from 2008 and the years following, and then today is that with rates nearer at the lower bound and quantitative easing effective, but it affects, it flows through in different ways, right? It's going to affect liquidity conditions. It's going to affect financial markets. The effect on the real economy is indirect, secondary. So, I think we are learning that if you really want to drive a sustained reflation and higher inflation, you have to have the fiscal with the monetary. And after 2008, 2009, we initially had some fiscal stimulus, but it wasn't enough. And then it quickly flipped into a fiscal drag when we had all the budget fights.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think another support that we're going to see having a bigger role this year will be CapEx. So you've seen because of the strong demand and you're getting the self-reinforcing flywheel of the economy going, companies have the clarity looking ahead and they have the strong demand backdrop that they're feeling more confident to make investments. And so we're going to see CapEx not just in technology, but I think broadly, that's going to be a support for growth and that creates jobs and the jobs create incomes, incomes create spending. But then the third one is inventory rebuilding. And we started to see that begin as well, but I think that still has quite a ways to go. So even though we're seeing the savings run down, so that support for growth running down, I think we're really transitioning from this policy-driven economy to a private sector-driven economy this year, which should, in all the ways I just described,”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think we're going to see growth moderate this year from last year, which should not surprise anyone. But even then, I think we should expect to have real growth, probably double or more potential, and nominal growth still be incredibly strong, even with that excess savings rate coming down for a couple of reasons. I think one, we're starting to see early evidence that the fiscal and monetary stimulus is now passing over to the private sector. So people are starting to tap their credit cards again. You're starting to see bank loans picking up again. So the credit creation, which wasn't needed for the last two years, that's now coming in to fill the gap of that savings being spent. So that's one.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Today than they were before the pandemic. Balance sheets of companies and households today are stronger than they were before the pandemic. It's the fact that we have such a strong economy today, all this excess savings that was pumped into companies and households that's created the demand surge that's then driving the inflation.”
2022-02-04 · Masters in Business · Rebecca Patterson on Global Macro Investing (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source