GRANT: MARKET DANGERS

September 11, 2015

Are dangerous cracks already appearing in the foundations of the world’s bond markets? In a rare interview, financial historian and bond market analyst James Grant, publisher of Grant’s Interest Rate Observer warns of the building investment fault lines.

WEALTHTRACK Episode #1212; Originally Broadcast on September 11, 2015

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Consuelo Mack Mathews Asia Next week is the next big deadline – of what seems an endless series of them – for the Federal Reserve to raise its short term interest rate from the record low zero percent mark, where it’s been since 2008.

As has happened before just about every other Federal Open Market Committee meeting in recent months, there seems to be all sorts of reasons to delay. This time the concerns are not just domestic.

Yes, consumer inflation in the U.S. is well below the Fed’s target of 2%, but the central bank’s other mandate to promote maximum employment is not that far off its goal. The unemployment rate is close to the Fed’s long term projections of around 5%.

This time, the Fed’s newer problems are largely foreign, even though they are hitting home. The recent, widely covered stock market sell off is being attributed in a large part to a slowdown in the world’s second largest economy, China, and the unexpected and sudden devaluation of its currency, the renminbi.

The blowback has been felt in other emerging markets as well, and commodity producing countries like Canada and Australia. There has also been disappointing growth in most European economies, the notable exception being Germany.

Mostly ignored by the mainstream press has been what’s happening in the currency markets which have seen dramatic declines versus the dollar over the past year. Just to name a few, the Russian ruble, the Mexican peso, the Turkish lira and Brazilian real have experienced double digit losses.

According to this week’s WEALTHTRACK guest James Grant, there are fault lines appearing in the world’s giant credit markets as well. Grant is Founder and Editor of Grant’s Interest Rate Observer, a twice monthly analysis of all things credit related including equity, real estate, currency and fixed income markets. It also includes thoroughly researched investment recommendations and condemnations!  Grant’s is considered a must read publication by top professional investors.

Grant is also a financial historian and an author of at least eight books, the most recent being “The Forgotten Depression: 1921: The Crash That Cured Itself”.

I began the interview by asking Grant why financial markets across the globe are becoming so unsettled, or as he put it – why “the world’s finances are in a fine mess.”

If you’d like to watch the show before it airs, it is available to our PREMIUM viewers on our website right now.  Also, exclusively online, we’ll share an additional EXTRA interview about Grant’s thoughts on why Bernie Sanders and Donald Trump have touched a nerve with the public and are generating so much such interest. Grant is also sharing an article he wrote about Trump’s business way back in 1990 when the Trump real estate “empire” was under severe financial stress. Then as now, in the businessman’s own words, “the show is Trump.”

As always, thank you so much for watching.  Have a great weekend and make the week ahead a profitable and productive one.

Best Regards,

Consuelo

P.S. Bloomberg Businessweek also has a fascinating article about Trump as its cover story this week.

CONSIDER OWNING A SMALL POSITION IN GOLD

  • One of worst investments in recent bull market
  • Appreciates in times of trouble
  • SPDR Gold Shares (GLD)

GLD Chart

GLD data by YCharts

GRANT: UNREQUITED LOVE

  • Invest in gold
  • Multi-year lows
  • Opposite of central bank rule
  • Legacy monetary asset
No stock mentions in this episode.
This transcript will be available soon. More information regarding WEALTHTRACK transcripts can be found here

James Grant from the WEALTHTRACK archives.

POLITICAL NERVE

Financial thought leader and historian James Grant believes there are economic reasons behind the unexpected appeal of presidential candidates Donald Trump  and Bernie Sanders. He explains why they have touched a popular nerve.

Grant also shares an insightful article he wrote about Trump in 1990 when Trump’s real estate business was under serious financial pressure.


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