YouSaid · the spoken record

Sean Fielder

lines on the record: 74
first: 2022-05-19
most recent: 2022-05-19
sittings or episodes: 1
sources: podcast

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

“I think the goal does well when the status quo is threatened in some way, right? So if you can make 20% a year owning the S&P or the Nasdaq, if the Fed can pick the interest rate that it wants the 10-year to trade at and then set that price. If that whole financial architecture is really going to be unthreatened and unquestioned, then why own gold, right? And to the extent that you start to call some of that status quo into question, at the end of the day, you don't need people to really sell their stocks and bonds to buy gold. You just need one or two percent of the stocks and bonds to be sold to go into the gold market. So you're talking about an asset class that in its totality is 13, 14 trillion dollars.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And if you look at sort of the periods of explosive price action and gold, whether it's the entire decade of the 1970s or that month from April to August of 2020, and of course 2000 to 2007, 2009 to 2011 or through 2012, what is it about those periods that make it such a favorable and hospitable environment for gold to just like explode higher?”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Continuing rates of inflation that are north of 2%, a lack of ability or appetite on the part of central banks to bring that inflation out of the system, couple that with high levels of indebtedness, some questions about the sustainability of those high and rising levels of indebtedness, lack of appetite on the part of certainly here in the United States, both parties to control the deficits. That's all a recipe for that's monetary and fiscal dysfunction overlaid on one another in a way that we haven't really begun to solve.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Think it'll go higher. I think at some point the dollar will struggle with negative real rates. I think gold will look better in relationship to the developed market fiat currencies. I think it'll look better as a store of value. I think it'll look better given the level of indebtedness of the developed world and the monetary policy that has to be pursued in the developed world because of that level of indebtedness. And I think it'll get mainstreamed. So I would guess higher prices.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Well, we no longer get the question as to whether or not Bitcoin is just a better version of gold. So those have obviously disentangled. It seems like gold is not correlated with risk assets, so it's flattish this year. So you're seeing a real good store of value there. In terms of the flight to gold that you would have hoped that I would have hoped that we would have seen in this kind of environment, I go back to that kind of end of the London Gold Pool metaphor. So we're through March 1568, but we're not to August 71 yet. And so the fundamentals have changed, but really the market hasn't taken advantage of that yet.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Years there hasn't really been a party that's championed sound money. And so the politicking in the Fed has allowed basically the easy money advocates to gain ascendancy and really control the institution. And I think you're going to see that in the monetary policy. Kind of regardless of where the rhetoric is, that's really who you have in charge of the Fed. And so we're going to see, I think looser for longer and never really getting close to that line in terms of positive real rates.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so I suspect they continue to raise rates. Do they get to positive real rates? I suspect not. And look, monetary policy is political. So you had, you know, Lail Brainerd was the champion of the change in the Fed's monetary framework going back into the summer of 2020, where we moved the 2% cap on their inflation target to a 2% average over time. And then the idea that As we experience higher inflation rates on the back of that, we still go ahead and confirm her for vice chair is telling you kind of where the politics are, which is that you have kind of bipartisan support for easy money. And you've had that really since, I think, the confirmation of Janet Yellen in 2013 as Fed chair, where you had Senator Corker and others basically round up almost half of the Republicans to go along with her nomination. And for the last nine”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And you overlay that on very, very high levels of indebtedness and high levels in terms of equity valuations. And I think you have a real recipe for a lot of financial stress. And people, I think at this juncture, should be really changing how they're thinking about their investment portfolio and investing differently than they would have over the last decade. But my sense is it's still early and that hasn't really sunk in. And we're seeing that in terms of evaluations of whether it's gold, gold miners, EMP companies, you're not really seeing an appetite for those assets that you would expect given the changing underlying fundamentals.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Well, you know, Michael Border wrote a paper on the gold pool going back about four or five years ago. And the London Gold Pool was operated until March of 15th of 1968. And gold didn't really revalue until August of 71. So you had a little over a three-year period where the policy had changed, but then you didn't really have the revaluation that you would have expected from the changing underlying policy and fundamentals right away. It was, I think, a long three years. So I think we're kind of in that moment right now where the world's changed, the policies have changed. We can see the shift in the underlying fundamentals where you're going to have structurally higher inflation. You're going to move towards trading blocks, French shoring, deglobalization. So you no longer have that massive disinflationary force that we've had for the last decade plus.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“In terms of correcting asset prices to driver correction recession in the U.S. economy, but I don't think they'll really have the appetite to get anything close to meaningfully positive real rates, because I think the math just doesn't work. And then you overlay that on that, kind of the reduced appetite for foreigners to buy dollars, right, in terms of with the dollar index now 104, something like that on a trade-weighted basis, the arbitrage doesn't work any longer for the Japanese and it's no longer clear that given the expropriation of Russia's reserves that the Chinese and other countries that are going to have some potential conflict with the United States are going to want to own dollars in the same size that they would have historically. And so I think as you're starting to think through who's going to plug that trillion dollar gap, if the Fed's not going to do it, you can get to a conclusion that maybe rates here in the United States have to be high.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think they have a problem, is I don't think they're going to be able to get inflation under control without causing any recession. I think if you cause a recession and a big correction in financial asset prices given the debt to GDP in the United States, it's not clear that that then puts you on a sustainable path unless you have meaningfully really high nominal GDP growth in the United States because there's not an appetite to say cut spending and reduce reduced deficits into recession here in the United States. So I think they're really painted themselves into a corner. And so I think we'll see something similar to what we saw in 2018 when Powell tried to normalize and then had to back off. We're down now 20 plus percent in the NASDAQ year to date at 25% and 18% in the S&P. So it seems like they're very much on this kind of path that Bill Dudley laid out.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And how are you weighing the risks at this current juncture? Because a lot of analysts focusing on the American economy are very worried that the Federal Reserve will have to essentially cause a recession, tighten to the point that something breaks in order to break inflation. Is that a problem for emerging markets? Could it actually be good? Because for the first time in a very long time, U.S. inflation is actually higher than the rest of the world. How are you sort of thinking about this?”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Flashpoint for a lot of these markets and then a lot of the central banks are managing it in ways that are political. I mean, our central bank is political here, but their central banks are even, in the case of Turkey, would be a poster child for what has historically been a highly politicized central bank.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“You seem rate increases in general. And then you're seeing a lot of the emerging market economies are much less leveraged than, say, the developed world economies or the U.S. economy. So there's a lot more space to raise rates without breaking things. Real rates in a number of these economies are still negative. So even if you're taking rates up like, let's say in the case of Turkey, you can take rates up quite a bit before you'd get to anything approaching a real positive real rate if inflation is running at, I don't call it 50%, something like that. I think a lot of these currencies long term, it's not clear that there's a real constituency to own them other than people that want to foreigners that want to invest in businesses in those countries. Do people really want the LIRA exposure absent a very high real rate or a trade? The answer is probably not unless they actually live there. So I think that's kind of a perennial.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“I know in sort of a textbook 101 emerging market crisis is, let's say, the Federal Reserve hikes interest rates, it sucks capital from all around the globe to the dollar-based higher rates. And therefore, central banks of emerging market countries, they see a capital outflow, they have a choice to either devalue the currency or to deflate. So either raise rates and cause recession, perhaps you slow down the economy to keep capital back, or just let the currency depreciate. And I guess option door number three is capital control, as you alluded, perhaps Ghana, you said, had them as well. That would be, of course, more government, not central banks. But what sort of solutions are emerging market central banks choosing now? I know, for example, like Brazil, they've hiked interest rates a lot, but are a lot of emerging market following the example of Brazil or are some central banks not hiking?”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And then commodity based commodity heavy exports, especially copper that have done very well recently, all that you think would bode very well for Peruvian macro, then they have an election and elect an avowed communist and you've got another problem. The vagaries of investing in these markets, that's just the nature of frontier and emerging market investing.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so the cycle can be rough. I think starting back to your original premise, which EM is really underperformed developed markets for a decade. So you're talking about a starting point that's very dissimilar to say what you had at the start of the Asia crisis, right? Where you had a lot of froth and exuberant capital flows into emerging markets. So you're starting at a low point. That's not to say that it can't get worse. I would say that the experience is going to be varied, right? You're going to have some countries that are going to have more of a problem. Other countries that have been more responsible. And then the composition of those countries' GDP and their export base is also going to have a real effect in terms of how they experience this crisis. So something like Peru, you would say, low debt to GDP, responsible monetary policy, well-capitalized banking system.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“How big of a threat do you think monetary tightening is to emerging markets? Not necessarily the specific type of companies that you invest in of mining companies in West Africa, but just like emerging markets such as EEM, that ETF, let's say, really broad-based.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Printing press Negative real rates as these countries get more stressed in financial repression to trap the capital so you have a number of these countries will no longer have freely convertible capital accounts. So Ghana, Nigeria are good examples of that. So there's a lot of games they tend to play the more stress they get. But this part of the reason why assets in these countries are, I think, mispriced. They're not kind of on the list of most people's things most people want to own. I would say the Francophone West Africa, where we have a number of gold investments has been a really pleasant place to invest from a currency and inflation perspective because they've tied their currency to the FIFA to the euro and that peg has held for a number of years and so you've had free convertibility and moderate rates of inflation in francophone West Africa. That's kind of atypical of what you've seen in most frontier markets.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And the debts that these emerging markets countries have, how much of it typically is in the home country where they can just print money and pay it off versus it's in the dollar and they have to print money that will weaken against the dollar. And it's sort of this vicious cycle.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And how to the Federal Reserve right now is tightening monetary policy, it's projected to raise the Fed fund's interest rate to as high as over 3% trillions of its balance sheet is expected to roll off its balance sheet. How have prior, what have you learned from prior Federal Reserve hiking cycles or should I say tightening cycles? Maybe we can take 2018, the famous Powell Pivot, as well as perhaps 2014, which didn't involve, I don't think, any hiking at all, but merely the taper. I know caused a lot of distress in emerging markets and commodities and in particular currencies.”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Okay, that's really interesting that dollars, you know, the petrodollar system, oil is sold in dollars, but the input cost, if it's in an emerging market, is in that emerging market currency. So if that emerging market currency weakens, the input costs go down in dollar terms, but the output, what you're paid in dollar stays the same. So weakening currencies can actually be good for investing. Is that what I hear or no?”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“And Sean, how much do you follow macro? I know a lot of stock pickers like to focus on balance sheets, the companies, the profitability. They don't really focus on the macro, the Fed. What about you? Yes, so in that scenario, the Asian financial crisis, the currencies, the Asian currencies weakened tremendously against the dollar. So in dollar terms, investors lost a tremendous amount of capital. How would you see those issues playing out today with currencies?”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT
“Okay, and I want to draw a distinction here because the reason there are money managers is to generate alpha relative to some benchmark. And if there's a fund that's investing in technology, let's say, there maybe their benchmark is the Nasdaq 100. And they may have done well because the fund manager generated few points of alpha, but they also did well by just allocating passively to the Nasdaq 100. The types of sectors that you deal with, Sean, correct me if I'm wrong, could not be more different. They are by definition a stock picker's market because if you just look at the index indices, whether it's GDX or GDXJ, the junior gold miners or the exploration ETFs for oil, they've had a very, very bad past decade. Is that correct?”
2022-05-19 · Forward Guidance · Can Gold Withstand the Liquidity Drain? | Sean Fielder · IDENTIFIED FROM THE TRANSCRIPT