L2 Capital Podcast #02: Chat with Jim Grant – Interest rates and opportunities

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 talks to Jim Grant, the famous founder and publisher of Grant’s Interest Rate Observer, a respected capital markets publication that began in 1983. Grant is the author of several books, including The Forgotten Depression: 1921: The Crash That cured itself “.


The start of the conversation is about the strong numbers coming from the United States: unemployment rate and GDP acceleration, for example. Asked about expectations about what will happen in 2019, Jim Grant exposes his views which are always remarkable and very thoughtful and defies market consensus. He talks about the current policies of the US central bank and what they have caused: major distortions and rising asset prices.


Taking into account a potential deflation in the horizon, Jim believes the US will not take the same path as Japan. He also talks about the atypical conditions in the world of finance: expressive increases in stock prices and artificially low interest rates. Another issue that he explains is the inflation of asset prices only, considering the fact that many dollars injected by the FED have not yet reached the real economy.


Does he see any recessions approaching? What would be the impact of this on emerging markets? Jim Grant discusses the subject extensively. After presenting some alarming data, he admits there is more risks in the markets right now than potential returns – even though he sees no recession on the horizon. Grant also comments on where we can find yield at the moment, and gives us a specific example with promising results.


Then Jim comments on gold and what needs to happen to bring its price up: the loss of trust in the fiduciary currency and the institution of central banks. He presents some ways to look at the gold market and points out suggestions to investors. Jim also talks about uranium and how he believes 2019 will be the year for investors in this commodity.


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