Russell Napier on the cold war between China and U.S. – prepare for paradigm shift. Deutsche Bank below 1992 levels – danger?
Russell Napier: Cold war between China & US – Prepare For Paradigm Shift
Q1 hedge fund letters, conference, scoops etc
Transcript
Welcome to the McAlvany any weekly commentary. I'm Kevin Orrick along with David McAlvany. It was get excited with our next guest Russell Napier. We've had him on a number of times but David before I ever had met Russell Napier or knew of him. You had me read a book called The Anatomy Of The Bear and it was one of the more amazing books of a man who curiously went back and looked at history to fully understand when a market is undervalued or overvalued. Actually it was more of a social commentary than it was a financial commentary.
As you know one of the things that I love about a book is The bibliography and the bibliography for The Anatomy Of The Bear was one of the richest resources I have ever come across in terms of financial and economic history and as it turns out Russell's interest in all things economic and financial in struggle is profound curating library mistakes there in Edinburgh Scotland teaching courses on the subject matter all over the world. There's a reason why that bibliography is so rich. There were many significant financial investments that I made into at part of my library after going through that bibliography Russell's a fascinating guy.
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I think within the next two or three years that will happen. Building space and having not only a wealth management offices in that new space but also accommodating the three four is five thousand volume library which like that in Edinburgh looks at the chronically of corporate governance economic history financial market gyrations going back to the beginning of recorded time. It's something I'm very passionate about and getting done here in the next few years.
As far as Russell's current writing and the things he's thinking on we're about to experience or we're experiencing something that really we haven't had since the 1960s and that's a major structural change to the way the world works and in particular a cold war between China and the US developing.
So when you think about the monetary system and what was Bretton Woods and what is now a free floating system we have been operating in a certain way and that's one of the things that we'll discuss with Russell today is the change in the structure of the global monetary system.
That and I hope you also cover Deutsche Bank as well with what's going on in Europe.
Well with us again on the weekly commentary is Russell Napier. Many of you know him as the author of The Anatomy of the bear. Some of you may not know him as the curator of the Library of mistakes but also teacher of the excellent series of courses there in Edinburgh and around the world relating to market financial history. I was in one of those classes in Edinburgh just a few years ago and fully intend to join him again at some point where my time allows and his offerings are accessible. So Russell thanks so much for joining us again. Delighted to be with you. Know there's two things that I'd love to cover with you and I kind of organize some questions around. First know the European parliamentary elections and some of the things that are important for us to keep in mind in terms of the structure and viability of the euro project. And then secondly I'd also like to look at some structural changes in Asia particularly in China and cold war between China and the US. So for several years we've seen the increase in populism across Europe and around the globe. And you've had centralization in the eurozone. That theme has now and in recent elections has been under pressure. We've got the recent parliamentary elections behind us. What are the markets telling us about the short term prospects of growth in Europe and the long term prospects for the euro project as a whole.
Yeah. So we are of course some very clear signals from markets sometimes markets don't give you clear signals of in the middle but on this subject they are very clear indeed. So a German 10 year bond yield is at an all time low but all done though by the way is minus 20 basis points per annum for a holder over 10 years. So that's very low indeed. The Danish tenure has gone to an all time low. That's also a negative number. The Dutch 10 years very very close to an all time low. The Swedish one is very close as well so categorically they're not building and growth and inflation. Another market which I think is fascinating is what you call me most is the tops market. We have those instruments for Europe as well. We have them for various countries around the world and according to the implied inflation rate in the country in the whole world we're the second lowest level of inflation for the next five years will be Italy Japan will be number one we'll be number two and Germany will be number three.
