Jack Farley
@JackFarley96 • 90,049 subscribers
Co-founder of Monetary Matters Network: https://t.co/yANVgsTvJU
Videos
Out now - how Private Equity turned your retirement into a taxpayer backstop and what ACTUALLY happens when a life insurer fails (it's way worse than a bank) plus Lebron James/Guggenheim Private equity had its hands on about $23 billion of life insurance assets in 2009. That figure is now over 1 Trillion. Andrew Granato (UT Austin Law) & Pranjal Drall (Yale) argue in their new paper that this has built a system that socializes losses more sharply than federal deposit insurance does for banks. Banks pre-fund the FDIC every quarter, weighted by the risk they take. Life insurers pay nothing until a rival fails. Then the survivors are assessed based on premium volume, not risk, and in 44 states they recoup the cost through tax credits. Taxpayers foot the bill, and no one ever votes on it. Meanwhile, the asset side has changed. PE-owned insurers shift balance sheets out of investment-grade corporates and into private credit, affiliated loans, CLOs and ABS. Those assets get rated by agencies the insurer pays, sometimes via private letter ratings no one outside the regulator ever sees. Egan-Jones alone has vouched for roughly $40 billion of insurance debt. On the liability side, captive reinsurers in Bermuda let the parent escape US disclosure and capital rules, with reported leverage of 30-to-1 to 50-to-1. We also get into the run risk that "permanent capital" is supposed to rule out: funding agreement-backed notes with withdrawal rights, policy surrenders, and the Executive Life collapse. And we close on Guggenheim, Delaware Life and Clear Spring, where Mark Walter's insurers reported 3% of assets as affiliated when the corrected figure was 42%, including a loan to LeBron James, and he sold the Lakers to raise liquidity. Their fix include, tax opacity itself, ban private letter ratings, pre-fund guarantee funds on a risk-weighted basis, and make holding companies partially liable when their insurers fail. Out now on all podcast platforms. And to be clear PE funds do not directly "own" insurance rather the alternative asset management firms that does Private Equity / Private Credit also owns the insurance company (as in case of Apollo / KKR) or the alternative asset management firms has agreements such as Blackstone / Blue Owl.
Jack Farley37,028 views • 14 days ago
OUT NOW - these brothers generated returns double the S&P 500, here are the stocks they own now in robotics, SpaceX suppliers, optics/networking, and a data center turbine play no one's looking at. A few things Pernas Research thinks: -open AI weights are bullish*, actually -Upwork will thrive, not just survive, in AI era (literally opposite of what market's pricing in rn) -They like Tenable $TENB (cybersecurity): growth is about to accelerate and trades cheap to $PANW $CRWD etc -Meta's a bad long now (they owned from ~$90 to ~$700 btw) $META -Stablecoins aren't really "a thing": they prefer Wise and Remitly as crossborder money movement fintechs $RELY $WSE $WISE.L Apple Spotify YouTube Pernas Research (20% discount): Notes: "returns double since S&P 500" audited track record since 2017 of 32.19% gross pa vs SPX of 15.47% 20% discount is for quarterly subscription, discount lasts for one year *Dean & Deiya Pernas think open AI weights are bullish for AI infra (data centers, semis, hyperscalers, power, etc), not great for the actual LLM companies though
Jack Farley98,140 views • 1 month ago
OUT NOW- as seen by this legendary market technician selling his physical gold the DAY OF THE HIGH, it's fair to say that Milton W Berg CFA is good at identifying turning points. Here's what he thinks about Semis, Korea, Nasdaq and S&P 500... HE IS BULLISH ON ALL OF THEM RIGHT NOW. He sees strong evidence of a panic low in Semis and Korea on July 29, with greatest retail selling since 2022 in equities. In April he had over 30 buy signals with median projections from ~8200 to ~9800 on S&P 500 and that is still motivating his bullish outlook. So in my view he considers late March to be a bottom and for semis/Korea he thinks it is probable the lows will be tested but he is still long here. He thinks that gold top (January 28/29, he sold his physical on 29th and showed the receipt in this interview) could be a multi-year top in gold ie he is bearish on gold over a long term view but has traded precious metals bullishly recently (we discuss in interview). To sum up in MY VIEW he was quite bullish when we recorded August 10 but was very ready to change his mind at any moment if he sees different evidence in the market action. AN IMPORTANT NOTE: AS MILTON SAYS, EVERYONE WANTS HIM AND MARKET TECHNICIANS TO CALL TOPS BUT ACTUALLY, CALLING MARKET BOTTOMS IS FAR EASIER. SO HE HAS HIGHER CONFIDENCE IN CALLING LOWS THAN IN CALLING HIGHS, SO EVEN THOUGH HIS LEVEL OF CONVICTION NOW ON BULLISH SIDE IS MODERATE IT IS ACTUALLY HIGH COMPARED TO POTENTIAL TOP CALLS. Apple Spotify Milton Berg Edge
Jack Farley56,171 views • 1 month ago
WHY OIL ISN'T $200 (YET) DESPITE 1 BILLION BARRELS LOST: - massive refinery run cuts (9Mboed) -drawdowns: refined product storage + crude (SPRs) -demand destruction of refined products -"comatose" complacency among buyers -China not buying -hedge fund longs exhausted 1/3
Jack Farley86,352 views • 3 months ago
OUT NOW - I recorded my interview with Victor Haghani Victor Haghani before Situational Awareness Hedge Fund liquidated its public holdings, but Victor's answer about lessons learned from LTCM (Long Term Capital Management)'s unwinding in 1998 turned out to be eerily relevant. Those comments are at the beginning of this interview. The main topic of our conversation is his paper, "Who Killed The Random Walk?" where he argues that the excess source of volatility in stocks is from "Extrapolators" who extrapolate recent past returns to forecast future returns. A dangerous undertaking indeed. We also talk passive investing (its merits and potential risks) and why he forecasts a modest ~6% long-term return for U.S. equities, regardless of the current phenomenal earnings growth in the tech sector. Apple Spotify YouTube
Jack Farley38,495 views • 1 month ago
When I interviewed veteran commercial real estate (CRE) investor Anthony Dilweg, I expected him to say that the bearish headlines about CRE & office were overblown. Instead, he said the headlines weren't bearish enough, & made an analogy to the Titanic hitting the iceberg🚢 This shocking conversation, nearly two hours long, is now released in full. Here are some of the key claims from Dilweg (who in a former life played quarterback for the Green Bay Packers 🏈) on how he is viewing the CRE world: - The huge challenges CRE & office will have to contend with are WORSE than what CRE faced during the 2008 Great Financial Crisis - Office as an asset class is "structurally broken" as remote and hybrid work has caused demand to tank - As vacancy rates skyrocket, over a billion square feet of office asset class (20% of the asset class in the U.S.) will be obsolete over next 3-5 years - "Return to office" trend is vastly overstated. The CEOs may say Monday - Friday is stern policy but utilization rates reveal Tuesday-Thursday is the de facto norm - Banks are "completely overwhelmed" as CRE investors use threat of strategic default (i.e. turning keys back) to aggressively renegotiate their loans. Banks must contend with forbearance, restructuring, and extreme reduction in loan yields (350 basis point declines in loan yields are not unheard of) - The claim that impairments to office as an asset class are just in major cities (NYC, San Francisco, LA) is an overrated narrative. I say to Dilweg (whose 5.5 million square footage portfolio is located in Southeast U.S.) "so you are not quite in the eye of the storm" (I like to support my guests) and he corrects me and says "No, I am." - If Fed doesn't drastically cut rates, there will be tremendous pain felt throughout the entire CRE industry - Some banks are "behaving in an interesting way" and Dilweg speculates that FDIC & OCC might still be operating behind the scenes to prevent more bank failures - Private credit is on the margin replacing some bank financing, but terms are "very punitive" As usual, this interview is available on Forward Guidance podcast and on " Macro" YouTube channel Lastly, a big thank you to MetaMask 🦊 Portfolio for sponsoring today's episode Enjoy! 🔥
Jack Farley479,960 views • 2 years ago
The shipping squeeze on world's largest oil tankers has a primary cause and it is actually NOT the Iran War. Two years ago, a mysterious Korean billionaire predicted that Israel would attack Iran and started quietly buying Very Large Crude Carriers (VLCCs), Ed Finley–Richardson explains. After approaching the largest VLCC owners and making them "offers they couldn't refuse" (20% above market), he now controls a staggering 30-35%+ of (active compliant & bookable) VLCCs and started refusing to take cargoes unless firms paid him very expensive contracts. This has pushed VLCC rates to all-time highs BEFORE the Iran War, and has led to some analysts to say this this Korean billionaire-visionary was trying to "corner the market" in VLCCs (Ed acknowledges this term but does not use it himself). Now that the predictions of this man (Ga-Hyun Chung of SINOKOR) have come true, the VLCC market is at a critical juncture.... For the consequences in greater depth, not just on VLCCs but all tanker vessels, I recommend you watch Ed's full interview which is available below (some exceptionally unusual things are going on). For even more greater detail (much, much more), check out Ed's research service which includes his private X (Twitter) account. Discounted subscriptions are available to Monetary Matters subscribers until April 17th (7 days remain). Apple🔊 Spotify📽️ YouTube📽️ Misadventures in Shipping🚢
Jack Farley92,152 views • 5 months ago
How is seeing things: - The recession doomers need to stop taking their "crazy pills" - Stocks will "crush" bonds as record fiscal deficits reignite inflation - Nominal GDP growth will continue to be strong as long as the U.S. government continues to print 2 Trillion of "helicopter money" 🚁 - However, the 2023 disinflation will itself prove to be "transitory," and the Fed will cut interest rates by less than the market expects (currently ~6 cuts are priced in by end of 2024) - Recent easing of financial conditions (rally in rates, stocks, and credit) will boost economic activity, particularly the housing market - Fed is likely planning to taper quantitative tightening (QT), which means that the shrinking of the Fed's balance sheet will continue even longer, until the Fed's reserves approach the LCLoR (lowest comfortable level of reserves) - We also discuss the draining of the reverse repo facility (Joseph was publicly talking about this literally 3 years, now everyone is talking about it) and mortgage-backed securities (MBS) role in QT. I ask Joseph if fall in rates will cause MBS prepays to rise, he says (I'm paraphrasing) technically yes, but it will be a very mild effect As usual, this interview is available on Forward Guidance on all podcast apps and on " Macro" YouTube channel. Video version is now also available on Spotify Huge thank you to Public for sponsoring this interview! Enjoy 🔥
Jack Farley269,723 views • 2 years ago
Out now - how Luke Gromen is thinking about the current stress in the Treasury market: - Unless oil and/or the dollar goes down a lot, "the beatings will continue" in the bond market - The pain in bonds will continue & continue until there is a 2019-style spike except instead of in repo it's in the long-end of Western sovereign bond markets - This market meltdown will require - Federal Reserve intervention (rate cuts? QE? Repo?) in order to prevent market malfunction - America's Debt-to-GDP ratio is too high to stomach 5.5% rates... government needs to inflate the debt away by keeping rates below inflation, if the Fed sticks to this playbook it will have implications for hard assets such as gold & Bitcoin This is an early release on X - will go live on regular channels later Thursday (tomorrow) as usual Enjoy 🔥
Jack Farley289,069 views • 3 years ago
