I haven’t made a public statement yet, nor has Real Vision for that matter. But, for the last few weeks I have been working at Real Vision, the online financial media company led by Raoul Pal. Perhaps I will make it public in the coming few weeks. But I wanted to tell you what I am getting out of working with Raoul.
How I think of Real Vision
I actually don’t remember exactly how I heard about Raoul. But soon after I had, I got him on the TV show “Boom Bust” that I used to produce. Raoul is a former Goldman global macro and hedge fund guy. And I really liked the fact that he thought in global macro terms because that’s also how I think. And I found his commentary insightful.
Now, Real Vision is “on a mission to disrupt the whole damn system and change the face of financial media”. That’s our mission statement. And I am fully onboard with that. This is a platform that specializes in immersive, long-form content, not just the sound bites you hear on traditional TV financial media. And so, you get a much more granular perspective from a variety of different viewpoints, exactly what you want from a video-centric platform.
Real Vision actually started more in written form, but has since realized that video content is more compelling, especially for Millennials, who will soon become the dominant age cohort globally.
Media Disruption
You’ve read my posts on media disruption. And my general take here on TV is that traditional video media is dead. And that’s largely because it has a legacy infrastructure centered around TV, where it has to produce live content, irrespective of whether there is anything to say. And that means a lot of traditional video content is banal and unwatchable. Further, the pressing live TV format also means that a lot of the rest of it has a short-term orientation, geared toward the day-to-day minutiae that has no meaning from a global macro perspective.
Real Vision isn’t tied to live TV. And so, our platform has more flexibility about when and how to film content. That makes us more responsive to the needs of our audience. And it makes our content more ‘watchable’.
My role at Real Vision will be both behind the scenes as an editor and in front of the camera as a presenter. I am pretty excited about the opportunity. And already, I have seen and heard a lot of views that will aide me in producing better content for Credit Writedowns.
My take
The last post I wrote is predicated in part on what I am seeing now, both at Real Vision and elsewhere. I think what happened is that markets had become inured to central bank intervention. When Powell came onto the scene, he changed the narrative somewhat by accelerating the Fed’s tightening regime. And that had ‘hard money’ types overjoyed, thinking that he was ending the so-called Fed Put.
But now that the Fed has backpedaled, markets are trying to figure out what’s happening. And most of the people I see – including in my work at Real Vision – are talking about a “Powell Put”, thinking the Fed is simply reacting to market volatility. I think this is a very wrong way to look at it. And should the real economy turn up, these people will get caught out when the Fed resumes tightening.
Moreover, the flow of information I see coming through Real Vision suggests that the markets have become increasingly dominated by algorithmic trading vehicles as the bull market has run for nearly a decade. Machines are more adept at picking short-term gains in that environment. And macro strategies don’t carry any advantage on a risk-adjusted basis. This has crushed hedge fund alpha returns, and will mean a winnowing of the hedgie universe and a concentration of hedge fund resources into algo-style trading.
But algo vehicles are not necessarily adapted to policy regime shifts or economic regime shifts like the present global growth slowdown. And when the credit cycle shifts down more durably (as I suspect it is in the process of doing now), the artificial intelligence platforms will amplify volatility tremendously. That’s my view.
We’re not there yet. But we are approaching that point. And for me, this concentration of resources in programmed trading makes the likelihood of a financial crisis in 2020 and beyond that much greater.
In the meantime, I am greatly enjoying Real Vision and really appreciate the experience and information flow it provides me.