U.S. Economy + Global Market Update with David Young
He’s one of the most intelligent and articulate gentlemen that I have the pleasure to be able to work with. In fact, he is the founder and CEO of Anfield Capital. He spent a number of years at PIMCO, one of the larger, larger well-known money management firms in the world. He has an amazing background. He’s actually a Chartered Financial analysis designation.
He has an MBA with a concentration in finance from Paul’s merge School of Business at the University of California, Irvine, and degrees in Economics and Political Science from the University of California Irvine. He also taught finance and investment courses at the Palmer school, the Financial Times knowledge program and EU in the UK, and CFA exam preparation courses sponsored by the CFA Society of Orange County.
Watch the episode here
Brett:
I’m excited to have a repeat guest back on. He’s one of the most intelligent and articulate gentlemen that I have the pleasure to be able to work with. In fact, he is the founder and CEO of Anfield Capital. He spent a number of years at PIMCO, one of the larger, larger well-known money management firms in the world. He has an amazing background. He’s in fact a little bit more about David that you might have heard on the other episodes, he’s actually a Chartered Financial analysis designation. He has an MBA with a concentration in finance from Paul’s merge School of Business at the University of California, Irvine, and degrees in Economics and Political Science from the University of California Irvine. He also taught finance and investment courses at the Palmer school, the Financial Times knowledge program and EU in the UK, and CFA exam preparation courses sponsored by the CFA Society of Orange County, and so much more. Please welcome back to the show with me, David Young. David, how are you doing?
David:
Doing great, Brett. Good to be back. Hello, everyone.
Brett:
I’m doing well. Yeah, excited to have you back, and for those who want to hear more of David’s story, you can go back to the other episodes where we have, I think at least three or four now and this might be our fourth or fifth, and you can hear his entire story about overcoming false belief to the deferred sales trust his story about how to underwrite different risks and different things. But for this particular episode, we’re diving straight into our episode cuz we have a kind of a lot of content to cover today, and that’s the US economy global market update. But before we go there, David needs to read a disclosure. This is part of the industry that he’s in. please bear with us as he reads this disclosure right now.
David:
It’s very exciting. I hope everyone’s sitting down. Anfield Capital Management LLC is a registered investment adviser with the SEC Registration as an investment adviser does not imply a certain level of skill or training and no inference to the contrary should be made. This interview is for informational purposes only and does not constitute investment advice, an offer to sell, or a solicitation of an offer to buy any securities. While many of the thoughts expressed in this podcast are stated in a factual manner, the discussion reflects only Anfield Capital’s beliefs about the financial markets in which it invests portfolio assets at this time and may change at any time. The descriptions I make are in summary form are incomplete and do not include all the information necessary to evaluate any investment. Prospective investors are referred to our Form ADV 2A for a more detailed discussion of risk factors, which can be (a) found on the SEC’s Investment Adviser Public Disclosure website at: http://adviserinfo.sec.gov, or (b) provided upon request. Thank you.
Brett:
Thanks so much, David, and we’re gonna dive right into the US economy and global market update. I think it’s important, especially in these times to get clarity on what’s actually happening. There’s a lot of new stories, a lot of headlines on the internet, and let’s face it, sometimes it’s hard to get through what’s real, and what’s accurate, and so we’re actually gonna be sharing some slides today, and so if you’re not watching us on YouTube, this is an encouragement to subscribe to our YouTube channel and to be able to see this on video, if you’re listening to us on iTunes or Spotify, and but David will do his best to walk us through this. David, let’s maybe just kind of give the general take on the US economic economy and global market uptake, kind of give us that, and then when you’re ready to dive in a slide, just say, hey, Brett, ready to dive in?
David:
I’m truly unique, special at different times. I think that goes without saying been doing this for 3537 years, something like that, formally trained as an economist kind of turned into a money manager over over years, and I’ve never seen such a prolonged period of such a massive amount of government stimulus in all its various forms, low-interest rates, that’s a way of stimulating the economy. Obviously, other forms of outright checks being mailed and other forms of stimuli are exactly that. This is meant to stimulate growth, and there’s a whole lot of other things somewhat more technical. I won’t go into all of those but long story short, and remember, it doesn’t necessarily it’s not really just the COVID pair This is a backdrop, it really in some ways, there’s an overhang from the great financial crisis back in a kind of 2007, 8 largely over by 2009. A lot of the liquidity and the measures that were being taken then are generally similar to the measures being undertaken.
Now, different times different places different reasons, somewhat different times a different degree. But the point is, there is still I would argue an overhang a 10 year plus now overhang of excess liquidity going all the way back to the measures put in place during the great financial crisis, interest rates never really got back up to where they were kind of on average, over longer periods of time, again, sorts of more stimulus in the economy. Fast forward, we’re starting to really kind of really completely come out of that 10-year difficult period whammo, COVID only thing to do cut interest rates, suddenly, the economic man, our checks got to get this thing going, the engine cannot stop, or at least we had to restart it. Because we ourselves elected to kind of stop it, which is very, very unusual, in my experience in studying economic history for centuries, and in my own personal experience, I am not aware of a period when any government ever said, We will now shut down our economy, either materially or somewhat are you kind of completely for a while, it’s just never happened before. we are in uncharted territory, and by the way shutting down an economy, like shutting down a machine isn’t that hard. It’s starting it back up, that’s hard because you’re not really quite sure what’s going to happen, could start up just fine. No problem could be very problematic, and so it’s the restarting that was always going to be more challenging than the shutting down, and I think we’re all experiencing that now. But long story short, 10 to 12 years of excess liquidity in the system. Fast forward, here we are now more and more and more excess liquidity. That’s the overall environment that the global and the US economies are operating within, and it’s got some pretty profound implications, at least for now, and if we look out 6, 12, maybe 18 months, it’s very hard for us to see much past that, when I, I always try and find a vehicle to communicate this, and so the vehicle I chose not to log back in some public appearances was saying it is the easiest forecast that I’ve ever done in my career because it’s really pretty obvious what’s happening now what’s going to keep happening. I myself, therefore, in front of this audience did not give the forecast.
I basically talk them through making the forecast by asking questions and then early on, I told them, let me give you a hint, little hint to our game we’re playing the answer to every question that we’re going to ask is up. Up, government spending up, as you can see here, if you’re looking at the screen, by our red yellow green dials, we learned a long time ago, most people see things it’s fairly black and white color certainly help. We keep it really simple. Green, dial-up good. If the dial is on the red down bad. government spending, what’s the answer, everybody, up, consumer spending up investment spending up net exports, that’s a different topic, we’re exporting and importing. Normally, they’re negative for the US, and the fact that they’re not negative means that we’re importing less than we usually do relative to our exports. I don’t want to go down that path. But long story short, even on an expert basis, this is an up export basis, this is an up kind of number, and if we follow that theme through and go on to the next slide, which Brett is is a rolling over there employment up but slowing yellow to eyes means maybe like, like warming up or warming down but in neither state and so employment, the better part of the gains are behind this, but they’ll still be, a grind down in unemployment. That’s good housing up, talk to your friends, neighbors, go check out your house on Zillow. All right.
And even if we go down on a brand to the next slide, and then we’ll stop and in kind of summarize it all a little bit different interest rate world because of course, interest rates kind of are the opposite to what we think rates going down are good for bond prices, and good for investors rates going up against bad for bond prices. But ultimately, I would argue not necessarily bad for investors, because of course, well now you’re earning a higher yield on your fixed income and debt and other of those forms of investments. But the feds are on hold, interest rates keep wanting to push back up, they keep getting pushed back down, they keep getting pushed back up. that’s a tug of war. Inflation clearly trying to go higher, higher, higher, every now and again, we get information that kind of cools it off a little bit, but there’s clearly inflationary pressures bubbling and against the backdrop, underlying all this is one of the most important things, we look at corporate earnings, which are I mean, we’re literally setting records. Me of that is off of abnormally low numbers of six and 12 and 18 months ago, we all know what was happening 12 months ago, we were looking around wondering, is this ever going to end literally ever? A lot of that is measurement and timing differences. But corporate earnings and corporate America is doing a fantastic run a very, very strong earnings run, and so if we go then into the market forecast, and we’ll pause here for a moment this is a really good environment for everything but fixed-income investors, where I would argue you can still hold some debt, some fixed income, and your portfolio’s probably should, I think your situation. But we need to be thoughtful about how we’re going to own that fixed income. maybe I’ll stop there and summarize, as I did with this large group of really very high net worth private investors a few weeks back, everything on my dashboard, all my good gauges, they’re green, they’re up, up, up, up, and that’s very a good sign for risk assets, for real estate, for stocks for other investable forms of assets. This period, in our opinion, just an opinion will last for another 612 months, maybe a bit longer. There will be a reckoning out there, it can’t go on forever. But for right now. It’s really a very positive economic and market environment for investors.
Brett:
Thank you so much, David. There are a couple that I want to dive into that I think would be potentially on our listener’s minds. inflation seems to be the one that seems to be the most potentially devastating. But at the same time, seems like it’s not so nice. It seems like it’s going higher. again, headlines, maybe not all the data button, can you just kind of give us what’s actually happening with inflation and what your feel is in the next six to 12 months with that?
READ AND LISTEN TO OUR FULL EPISODE
Comments