This is a panel of 5 plus a moderator.
Panelist Gene Epstein (economics editor of Barron's) - does not see a recession on the way. Sees a muddle through.
Chris Casey (Managing Director, WindRockWealth Management) thinks that the flattening of the yield curve and would not be surprised to see a recession in the near term.
Adrian Day (President, Adrian Day Asset Management)does not see a stock bubble, certainly not on the basis of valuations, and also because cocktail party chatter is not back to mania territory.
Keith Weiner (CEO monetary metals) does not trust the yield curve because the bond markets are so distorted by the CB's. All he can be sure of in the flat yield spread is that bank earnings are getting crushed. The other spread he sees is the one between junk debt and equity for the associated shares…some of those are widening and that spells trouble.
A.D. "we are building up for an enormous crisis in the bond amrkets…but maybe not for a couple of years."
G.E. We'll get an inverted yield curve when Yellen decides to put the short term interest rate back up over 1%-2% and that will certainly skewer the stock market. But that day is not imminent. Also sees no bubbles. Houses are high, but not that high. Stocks are high, but not that high. Maybe later we'll see bubbles there, possibly later, but not now, and not for a while.
Justin Mohr (moderator) "What do Austrians think of the velocity of money?"
Robert Murphy (Research Fellow, The Independent Institute) - Austrians do not even like thinking in these terms…rather speak in terms of demand to hold money, so velocity is not the right thing to measure or track.
C.C. velocity is an indication of value, possibly, but not of demand. The Fed is wrong to focus on and try to manage towards velocity.
G.E. Thinks also that velocity is a blind alley.
J.M. "What do negative interest rates mean and how is it even possible?"
K.W. If you run an enterprise that destroys capital you should be out of business and soon. Negative interest rates are merely an invitation to scale up and destroy capital as quickly as possible. A gold standard forces interest rates to remain positive and to reflect market values. In a paper system, however, we are disenfranchised. If you don't like your bank's interest rates, and you pull your money out and spend it on something else (like a rare corvette) nothing happens because that seller puts the money right back in the bank. So there's no impact on the bank. I think the Swiss Franc is done as a currency based on the Swiss interest rates structure. Negative rates out to 50 years means that capital destruction is happening all across the Swiss economy and therefore the currency is being destroyed.
G.E. It's not irrational to pay a government to store your money if your only other options are a mattress or safe deposit box. But negative rates are punishing and force people into risks.
J.M. "Adrian, what's your advice to people who may feel they have missed out on the run in gold and silver this year?"
A.D. I am extremely bullish in gold over the long term. The uncertainty in Europe is very good for gold. Another reason for being bullish on gold is that there's really very little money into gold so far. Retail and institutional money is mostly not yet interested in gold. An awful lot of money on the sidelines still. The spring pullback is missing and that's because people are eager to get in.
G.E. gold's main value is based on confidence, or lack thereof, in the ability of the monetary authorities to control things. Was very surprised that gold pulled back so violently from the $1900 mark given everything that's happening in the economy and elsewhere?
A.D. well, gold was in bubble territory and had moved up very dramatically towards the end. Once that started to fall the fall fed upon itself. And standard commodity lags led to too much gold being produced in 2013 through 2015. Gold predicted to be between $1400 and $1500 by year end.
K.W. Hold on there…The thing that makes gold different is that virtually all of the gold mined is still around as potential supply under the right conditions and the right price. The amount mined is tiny compared to that stock. So mine output is not especially useful. My method is to look a the spread between futures and spot to strip out the effect of speculators to derive a 'fundamental' demand outlook. Those current fundamentals have gold somewhere around $1100 an ounce an silver at $13.
C.C. negative interest rates are incredibly bullish for gold. The statistics on negative bonds are eye popping and very constructive for gold.
Q from audience - "What should I invest in today…should I avoid bonds?"
A.D. I especially like the business that lend to other businesses. Dividend paying BDC's And my favorite is Aeries Capital (Ticker ARCC) …currently yielding over 11%