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George Soros - 25 min interview on Bloomberg


VersaillesinNY
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  • 9 months later...

Looks like deflation is now a mainstreet thesis. I really doubt that the majority will be right on macro calls, so maybe its time to switch. When you look at inflation ex energy it doesn`t look that bad, so when oil prices normalize its possible that inflation picks up again.

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Looks like deflation is now a mainstreet thesis. I really doubt that the majority will be right on macro calls, so maybe its time to switch. When you look at inflation ex energy it doesn`t look that bad, so when oil prices normalize its possible that inflation picks up again.

 

Surely it could. But will it be a permanent pick up, or just a fluctuation around a downtrend? “The one big idea” Watsa has been talking for a while is that we will have a secular downtrend in inflation until this global deleveraging is over. We will see.

 

Cheers,

 

Gio

 

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Looks like deflation is now a mainstreet thesis. I really doubt that the majority will be right on macro calls, so maybe its time to switch. When you look at inflation ex energy it doesn`t look that bad, so when oil prices normalize its possible that inflation picks up again.

 

Surely it could. But will it be a permanent pick up, or just a fluctuation around a downtrend? “The one big idea” Watsa has been talking for a while is that we will have a secular downtrend in inflation until this global deleveraging is over. We will see.

 

Cheers,

 

Gio

 

And he's been absolutely right, year in and year out. We've seen an absolute collapse in inflation in the developed world - even in Japan where their currency has halved cannot seem to generate any inflation. He's been "wrong" about deflation so far in that appears he was a few years early, but he's been right on the money about a declining global trend in inflation.

 

It's just unfortunate that the trade was structured as inflation swaps instead of inflation floors. He might have made some serious money already had been the other way and he would've been able to build into deflation swaps at a lower rate. I guess hindsight is always 20/20, but it does seem strange that he'd structure the entire bet around negative inflation and not bet anything on declining inflation until much later.

 

Looks like deflation is now a mainstreet thesis. I really doubt that the majority will be right on macro calls, so maybe its time to switch. When you look at inflation ex energy it doesn`t look that bad, so when oil prices normalize its possible that inflation picks up again.

 

Hardly - breakevens are still pricing in positive inflation of over a percent a year for the next 10 years. That's hardly a "mainstreet" view for deflation. When breakevens get close to zero, or negative, then I'll be inclined to believe that deflation has become a mainstream thesis.

 

Equities are still near their peak and bonds are well off their lows - it's hard to say that deflation is priced in.

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  • 2 months later...

The End of China's Economic Miracle? (Complete)

 

NEW YORK, April 20, 2016 — Jamil Anderlini, Lucy Hornby, and Richard McGregor of the Financial Times, Orville Schell, and George Soros discussed how rising wages, labor shortages, and lesser returns on investment have contributed to China's economic slowdown. The panel discussion and Q&A session were accompanied by the presentation of a short documentary produced by the Financial Times: The End of China's Economic Miracle. (1 hr., 9 min.)

 

http://asiasociety.org/video/end-chinas-economic-miracle-complete

 

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The one big idea is deflation.

--Mr. Soros

 

Mr. Watsa has been saying this all along, hasn't he? ;)

 

Cheers,

 

Gio

 

I haven't studied all of Watsa's macro bets, but the 2 I know of don't really knock my socks off.  (1) SDOC investment.  Need I say more ;) (2) deflationary hedge.  I've been arguing with everyone about this recently.  Is the Fed really likely to sell off its mortgage-backed (etc) bond portfolio anytime soon, if ever?  Unlikely.  Is it likely to get most of that principal paid off?  Unlikely.  So we have monetization of private-sector debt which is likely to be followed by public-sector monetization if we make Dalio's MP3.  Both policies are inflationary, but it takes time for that inflation filter down the food chain to measures that appear in CPI.  Central banks are too smart nowadays not to take advantage of inflation IMO.  The power to inflate is the power to tax, and there aren't many sovereigns right now that don't need more tax revenue.

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