The Fed to the Rescue (w/ Luke Gromen)

Luke Gromen, founder and president of Forest for the Trees, sees an investment opportunity in rising U.S. government deficits. He believes the Fed will be forced to step in with interest rate cuts and quantitative easing, and that this will drive the investment cycle over the medium term. He warns, however, that if the Fed abrogates its duty in the Treasury market as a buyer of last resort, the implications would be profound. Filmed on June 3, 2019 in New York.

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The Fed to the Rescue (w/ Luke Gromen)

Transcript:
ED HARRISON: Welcome to Investment Ideas. I'm your host, Ed Harrison. Today, we are talking to Luke
Gromen of FFTT.
The Fed is about to do some very funky things with interest rates going forward. Luke tells us what he
believes is going to happen later this year and how you should be positioned in terms of your investments
over the next six to 24 months as a result.
Luke Gromen, it's great to have you here back on Real Vision. And I'm looking forward to talking to you
about what's going on in the economy- both the real economy and also in the markets, especially because
of some of the volatility that we've been seeing. We spoke a little bit earlier before the interview and you
were saying that this is a great opportunity for the Fed to complete a pivot. Tell me- before we go into what
that pivot is going to be, what your investment idea is, given the outlook and why that is.
LUKE GROMEN: Yeah, the bottom line for my investment outlook is I think you want to be long risk with
a weaker dollar coming, weaker than expected. And I think long risk with a pivot towards value versus
growth pivot towards emerging markets versus US and we also like gold, Bitcoin as well.
ED HARRISON: We've had some guests- actually, we had one guest very specifically on the show who
had a somewhat bullish call on risk assets the way that you did. But I think his reasoning was probably a
lot different than your reasoning. Where are you coming from in terms of why you think this is the move to
take?
LUKE GROMEN: So, where we're coming from is, is we're seeing a number of things play out in markets
that are really the culmination of a number of factors we've been watching and writing about over the past
five years. And so, if we take a step back, about five years ago, global central bank stopped buying treasury
bonds, or stopped adding to their treasury bond portfolios on net. And what this ultimately did is forced the
global private sector to begin financing the US government. And ironically, you would think that would be
bad for the dollar. But what it actually started to do was squeeze out global dollar markets at that point.

[ioannislazaridis]

Luke is a reliable source of information and insights . Thank you Luke .

[Mikesorrento]

Equity markets now controlled 100% by Fed Reserve policy. 100%. No longer is market driven by corporate innovation, productivity, output, etc. No, it’s all about continuation of cheap money. Expect more QE. Expect some very difficult times ahead.

[MegaHowtoMan]

3 months after this video. The exact scenario played out in the repo Market. The FED is having to print money.

[kirstinstrand]

I think this man is on to something worth paying attention to, yes!

[philippe]

Ed H. is a former Boom Bust (RT) presenter. He is asking good questions.

[alexanderh]

This was one of the best interviews yet! It's actually really hard to argue against the case Mr. Gromen is presenting. And he explains very logically why he believes his investment thesis will hold ground by presenting good counterarguments against it as well.

[PaulRizzo]

I am from the future. This guy was 100% right.

[raymondrenfrowrayrentrib]

Thumbs up if you are here from Mike Maloney's insiders update 19

[nicolasallen]

The price of money is the interest rate you pay to borrow. The amount of money relative to GDP determines inflation. If the Fed sacrices control of the amount of money to keep control of the price of money then they keep control of interest rates and lose control of inflation.

[MetalBum]

This is why I buy phsyical silver and some gold... just a hedge against this happening in my lifetime--currency crisis or hyper inflation etc the rest is in stocks and real estate

[pmcfearson]

"Unless something happens to 75 million baby boomers" 😳 17:45

[iammm]

Luke Gromen perfectly hit the bull eye. After listing a few times, i hope there is a numberical evident on US bond to support your theory from different angle. still, very good argument, thank you.

[Aardvark]

Good Lord. Much of this interview is over my head, but I did understand Gromen's points that foreign investors are losing interest in buying US gubmint debt, and that may result in the Fed having to finance USG - in other words make the payments. Makes me think war's a comin'.

[TheOldEuropean]

What I keep from this interview, is that ultimately, the international markets for government debts, would almost be BEGGING for a HIGHER GOLD PRICE, just to get out of the current conundrum...

[greigsanderson]

This guy seems to know what he talking about.

[johnjones]

man thanks for the info. Your really good at explaining the fiasco

[travisdt]

18:05. do you think fed will cut rate? how they will make dollar more interested to invest?

[alacer]

Great interview with a unique thesis as far as I know. Others have mentioned the Fed is boxed in but not in the way outlined here and I wonder why? How long may the initial risk-on rally last - through elections?

[lianlight]

awesome interview... that got super heavy at the end, ooof

[hdpartssalessupernovaserie]

RE: 10:40...isn't the labour force participation rate at an all time low?