L2 Capital

In this episode, Marcelo talks to Russell Napier, co-founder of the ERIC (Electronic Research Interchange) and creator of the course "A Practical History of Financial Markets". He was also considered the No. 1 strategist in the 1990s and wrote the very famous book "Anatomy of the Bear."

After talking about ERIC, which is a website for institutional investors to buy independent market research, Russell rationalizes about his recent Financial Times article "Cracks are opening in the global monetary system" which has caused controversy by stating that the current economic situation is not the end of a cycle, but something much greater.

When Marcelo asks what will happen going forward, Russsell Napier talks about the global monetary system and how emerging markets should pay attention to the relationship between China and the United States, not only with regard to the trade dispute but also with regard to the exchange rate and the impact that this could have on the world.

During the conversation, he also points out his views on transactions outside the US dollar system. According to him, this issue is much more related to geopolitics than economics. So the conversation goes on to another subject: deflation. Russell believes that the world is moving towards deflation and explains what needs to happen to prevent it from occurring, fearing that we have to face a worse situation than the one in 2008.

When asked about valuations of financial assets, Russell Napier talks about what happened from 2014 to today: assets in the United States have risen while those in the rest of the world have fallen.

He also believes we are at the beginning of a bear market and draws attention to the changing supply and demand dynamics of US government bonds.

So what are the risks to emerging markets? The problem, according to Russell, is that there are emerging markets with vulnerable economies. He also explains how geopolitical changes can be negative for many countries.

Other issues discussed in the podcast are Japanese assets and how China-US relations pose the greatest risk to markets. Napier also draws a parallel between Risk Parity, popularized by Ray Dalio and Bridgewater, and Portfolio Insurance.

While not optimistic about the setting, Russell Napier ends the conversation by suggesting some investment to our listeners.

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The L2 Capital Podcast focuses on potential opportunities in the market, and brings to you industry leaders and intelligent conversation about their respective areas of expertise.

In this episode, Marcelo speaks to the famous editor and founder of Grant’s Interest Rate Observer, Jim Grant, who has been writing in this publication focused in the Capital Market since 1983 and has also written books, such as The Forgotten Depression.

The conversation starts on the strong numbers coming from the Unites States: unemployment rates, the fiscal stimulus, and also the strong GDP, for instance. Questioned about the prospects on what is probably going to happen in 2019, Jim Grant says he believes the essential narrative today is about the growth of interest rates and its consequences. He talks about what the current FED policies and what they have wrought: great distortions and the pricing of assets.

Looking back on what the FED did in the years of 2007 to 2009, Jim Grant highlights the need to do its best to raise the interest federal fund rates. However, he believes that the USA won't follow Japan's steps. Jim also talks about the anomalous condition in the world of finance: it has rising equity values and very low interest rates. Another issue that he explains is the asset price inflation, considering the fact that a lot of the dollars of federal reserve has been locked up.

Does he see a recession going forward? What would be the impact for emerging markets? Jim Grant explains why there's a tendency for the contraction of credit. After presenting some concerning information, he admits there's more risk than happiness in financial matters - even though he doesn't see a recession coming. Jim Grant also says where we can find yield at the moment, and gives a very specific example that clarifies a lot. 

After that, Jim explains about gold and what would make it go up: the loss of confidence in the institution of managed currencies and the federal reserves. He presents some ways of looking at gold market and points out an implicit suggestion for investors. After teaching us all about how things are not as they seem, Jim also talks about uranium and how 2019 will be the year for uranium investors and brings an opportunity he sees in the markets right now based on a question about the risks that we have right now. 

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The L2 Capital Podcast focuses on potential opportunities in the market, and brings to you industry leaders and intelligent conversation about their respective areas of expertise.

In this first episode, Marcelo had the pleasure to talk to legendary investor Rick Rule, CEO at Sprott, Canadian company that works as a global investment and asset management focused in natural resources and precious metals.

The first discussion with Rick Rule is about the uranium bull market, after a long period of bear market, when the metal was being sold for half the price of its production cost. The investor describes the rising process of the uranium rise in the market, highlighting the astonishing numbers that show it, until the disaster in Fukushima, which decreased the prices and the booming market, but also created the situation that led to the bull market in uranium market today. Rick Rule compares the situation in the present with the one we had 15 years ago, and answers a question about the mining stocks that didn't go up as the uranium.

About the future, Rick Rule analyses how the USA is dealing with the fact that they produce less than 3% of its uranium demand, and how China and Russia are causing impact in the space. According to him, the competition will take place between those countries and also Korea and Taiwan. Then, the investor makes prediction of what may happen in the future, including the competition for African assets.

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