IN THIS EPISODE, YOU’LL LEARN:

• Ray Dalio’s thoughts on whether the Bond Market has ended it’s Bull Streak.
• Why Cash might be a great call option on all asset classes.
• Thoughts on the current conditions of Gold.
• What an economic reset is and how it applies to today’s market.
• Why the dollar is the primary reserve currency on borrowed time.

TRANSCRIPT

Preston Pysh  0:29  

All right, how’s everybody doing out there? This is Preston Pysh. I’m your host for The Investor’s Podcast, and as usual, I’m accompanied by my co-host Stig Brodersen out in Seoul, South Korea. Today, we have a guest that I know everybody is going to enjoy listening to because it’s the one and only Grant Williams from Real Vision TV. Grant comes with a wealth of information. He’s been at it for close to 30 years now. Is that right, Grant?

Grant Williams  0:56  

Just over, I’m afraid. I hate to admit it. 

Preston Pysh  1:00  

Grant has worked everywhere in the world. He has worked over in Tokyo. He was actually there for the 1989 colossal collapse. I don’t know how else you would describe it, Grant, but I’m sure it was pretty insane to experience. He was in the US during the 2000 Crash. He’s been interviewing literally the smartest and most profound investors around the world through Real Vision. We are just pumped to have you here.

Grant Williams  1:30  

It’s easy to sit in a chair and have every conversation that you have in your life with someone who’s smarter than you. It boasts charm for me.

Preston Pysh  1:37  

And here we are today. That’s perfect. All right, Grant, I really want to kick off the show here with just probably the hardest question that I think anyone could ask. I want to start off with this idea that billionaire, Ray Dalio, from Bridgewater [came up with]. 

He has a quote, and he literally came out with this quote just this month. He said, “We think there’s a significant likelihood that we have made the 30-year top in bond prices.” First, what do you think about that insanely bold claim? And what do you think are some of the key metrics for saying such a thing?

Grant Williams  2:15  

Okay, so you want to kick this off with making me disagree with Ray Dalio? Okay. Thank you. I do disagree with Ray in part, anyway. I certainly think it looks like that. We’ve seen the kind of downward move in bond markets that we haven’t seen for such a long time now. It has a lot of people spooked, and I can completely understand that. At the moment, we’re in this kind of weird post-Trump euphoria stage. Who could have seen that [happening] in the election if someone told you who was going to win?

I’ve said this a few times to people recently. We had an [unstable] market. Take equities, for example. It went down 5% and up 6% on the same news in 15 hours, and that’s an inherently unstable market. I think any of the moves that we see here are not necessarily long-term moves. It’s instability. It’s a sudden reintroduction of volatility into these markets. 

Our friend, Ray, made a great point about this recently. If you go back to 1994, which was by far the worst year we’ve had in the bond market, we saw a similar move. We saw a backup in bonds. We saw yields back up, and it looked really ugly. When you step back and look at it in the trend channel, it didn’t actually break that channel. And if you look at that channel now, the 10-year yield could go to 3%. We could still remain in this secular downtrend. 

Now, when I say I disagree with Ray in part, I think perhaps we’ve seen the talk in the corporate bond market. I think that’s where you might see the stress continue. I think everybody’s looking through a recession in the US. The talk of a recession seems to have gone off the table now. 

For some reason, I don’t understand if people think whatever Trump’s going to do, he’s going to be able to get it done before the US goes into recession. I think when that recession happens, and let’s face it, we’re long overdue. I think there’s one more big panic that will be coming into bonds, and I think it’ll be violent given what we’ve seen recently. 

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BOOKS AND RESOURCES

• Grant Williams’ Blog: Things That Make You Go Hmmm.
• Doug Nolan’s Blog: Credit Bubble Bulletin.
• Jim Rickard’s book, The New Case for Gold – Read reviews of this book.
• Liaquat Ahamed’s book, Lords of Finance – Read reviews of this book.
• Mervyn King’s book, The End of Alchemy – Read reviews of this book
• Related episode: Global Macro Economics w/ Grant Williams & Luke Gromen – TIP301.
• Related episode: Quantitative Tightening And Bitcoin W/ Grant Williams – TIP157.

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