Will President Trump Prop Up the Stock Market? (w/ Raoul Pal & Dan Tapiero)
RAOUL PAL: Just to wrap up here. What's your view, the central banks and the fiscal stimulus, this is enough to generate a risk rally whether it's here or a little bit lower or whatever, that we generate a risk rally that goes on for a while. How do you see that the next call it three months playing out as your hunch? DAN TAPIERO: I guess this is my old time macro guy in me. When I see gigantic stimulus, when I hear unlimited as I mentioned before, I don't really-- and I hate even using this phrase, but I don't really want to fight the Fed, the market and may go down. I think it's probably a better bet to think that treasuries are going to go down to 20 bps and that some of these credit products I think will probably come down also in yield. To me, it's very clear, you should be long as much gold as you can, and proportionally also Bitcoin. I also have another thought that, look, Trump's popularity rating is near its high. It was low. I think just yesterday, it popped up to one of the highest approval ratings of his term. It's not maybe the highest. I still have this thought in the back of my mind that Trump is going to want things operating smoothly, the markets doing well into the election and I would not underestimate his power to do that. He's been the most responsive president in my life. Probably the only one that watches the S&P daily, understands interest rates and monetary policy, I think, in a pretty deep way and people may not agree, but in my experience, the other presidents just have not had his intuition. I think that that intuition on interest rates, and what the right setting should be comes from all those years in the real estate business. I'm thinking that things will hold up into the election. We may go down short term in a week or two, but look, we already know that unemployment next week will be-- we went 3.2 million. It's going to be 2 million, 1.5, 1 million. We know what the trajectory looks like. It's bad. Growth two months from now is going to be better than it is today. For sure. Growth six months from now will be better. I think he will do whatever he can artificially or not to keep the market up into the election. Then maybe afterwards, we have a problem because some of the problems reassert themselves. We had a moment of extreme panic. As I forwarded to you, and I think I said on Twitter, when the VIX is at 90, I'm not a buyer of the VIX. Even if it goes to 130, it's a bad risk reward bet as an investor. The only other time was '08, we got to 90 in the span of a week. That's enough. That's about as great a panic as I've ever seen and as fast a panic as I've ever seen in 30 years. That feeling of all assets are zero and frozen, there were a few days in a way where I felt that I felt that and so when I feel that, that and they respond, that's it. It's just that that was a gigantic trade. It happened, they responded, they responded faster and bigger than we've ever seen. It's not a great risk reward bet to play on something, as I always used to say, going back to the same well. I don't want to go back to the same well, meaning to go to the same thesis again. If I'm negative, I need some new information that's going to make me negative. I think look, the dollar, it had a massive spike up. It may have been the spike. It's coming down now. That might have been it, I don't know, but all of these things hitting an extreme point to be long the dollar last week into that high, to be long from there is to be long the VIX at 90. I'm not long the VIX at 90. It's still at 60 or something like that. I think we have a digestion period here, and that may not be enough red meat for you to be really happy about that. RAOUL PAL: I don't think I bought-- I don't think-- DAN TAPIERO: And still have your scenario. I don't know. RAOUL PAL: The point being that is none of us know. I'm at the same point. I closed all my shorts. I've got bond trades because I think bond yields go to zero. Then that's it. Yes, I'm long dollars still, I think it goes further, but that's it. That's a very liquid thing you can get out of in about 10 seconds. Other than that, I'm like you. I'm like, okay, we've got the first phase. Let's see what it's got now. DAN TAPIERO: Look, and you've covered brilliantly, and we're very public about it right into the teeth of the pain and fear. We know what that feels like. We know that that's usually it, especially when you have signs that are telling you that. RAOUL PAL: Yeah, it could be early. I actually think there's another leg down but exactly as you say, I'll leave that to somebody else. DAN TAPIERO: Yeah, I think so.