What To Buy – When To Buy – When To Sell
We aim to expand potential for excellence in financial decision making by offering readers a wide range of possible outcomes to consider along with meaningful probabilities and analysis. We offer a combination of philosophy, method, scope and sharpness of thought, which is without parallel in the world of investment and more broadly financial advice.
The fundamentals of our insights
Our principles of analysis are built around the idea that monetary forces, and their potentially out sized influence on market signalling, is the number one factor to continuously assess.We do not plod through the Fed’s and other central bank’s press releases and statements. Nor do we adopt the pseudo-science of simple monetarism and pretend that the behaviour of a given monetary aggregate holds the secrets of the future. Our approach to monetary inflation is rooted in the Austrian School of Economics with Dr. Brendan Brown sharing in the research work of the Mises Institute as a Senior Fellow. Today’s monetary environment is one where there has been massive monetary base expansion and distortion, including central banks paying interest on reserves often at above market rates. It is our belief that many of the current central bank monetary prescriptions about how money affects the economy and markets are false.
Financial history laboratory
We aim to expand potential for excellence in financial decision making by drawing on an expertise in financial history, distilled from Dr. Brendan Brown’s original publications. Regarding inflation scenarios: we offer our views of recent periods of high inflation, including the greatest peacetime inflation of the 1970s, to assess likely inflationary outcomes going forward. Brendan Brown’s long career as a writer, chief economist, and author of over 10 books on finance, economics, and financial history, brings our clients insights whose breadth is unlikely to be matched elsewhere in the universe of investment advice.
Analyzing both consumer and asset inflation
In our monetary analysis we recognize that monetary inflation has two main features – consumer price inflation and asset price inflation. Much of the conventional analysis which makes its way into the media concerns consumer price inflation – and this is fostered in part by the dominant inflation targeting of central banks. Here we make profound efforts to understand the second feature- asset inflation. Our approach towards this has been developed according to the published works and articles of Dr. Brendan Brown. The most telling characteristic of asset inflation is an extensive corruption of rationally-based price-signalling in asset markets. Evidence of corruption is often found in buzz about “hunt for yield” and “momentum strategies” all alongside the wonders of leverage.
Economics IS political
Economics was originally described as political economy for good reason. Economic outcomes can be understood only in the context where political and geo-political forces form an integral part of the analysis.At Monetary Scenarios we seek to keep out the noise of day-to-day news commentary, focusing instead on the unasked yet big questions which will likely shape market and economic outcomes. We do not wait until the eve of a general election to discuss its possible impact. Monopoly capitalism and cronyism are part of our everyday environment. And we do not subscribe to the blithe view often heard that geo-politics rarely impact markets except at crisis points.
China monetary and credit danger
We recognize China as a key element over the past quarter century in the spread of global monetary inflation, especially asset inflation. We also acknowledge the large and growing risks this now presents to financial markets. At Monetary Scenarios, therefore, we draw on decades of our own research experience in our ongoing analysis of Chinese monetary, credit and foreign exchange markets. This is all set against a perilous geo-political backdrop where competing domestic economic and political interests within nations may well continue to drive foreign policy.
Central banks as tax collectors
Here at Monetary Scenarios our monetary analysis includes in-depth consideration of political content. Central bank independence of government is also viewed as a dying myth.Central banks now collect vast amounts of monetary taxation – whether in the form of monetary repression tax or inflation tax. We rigorously seek to uncover these camouflaged taxes and their implications for asset market prices. Under conditions of asset inflation there are widespread illusions about how these taxes can be avoided. At Monetary Scenarios we dismantle these and other monetary illusions.
A cure to the curse of our time
When Keynes famously pronounced that “in the long run we are all dead”, he may have consciously let the genie out of the bottle. Short-termism whether in political or financial decision making seemed to be vindicated. Governments often find justification for whatever course seems best suited to winning the next election with seemingly little regard for long run economic and political consequences.Dangerously, financial markets often adopt a similar short-run philosophy with little incentive to either consider where present consensus might be wrong or avoid chasing momentum.No-one can deny that luck runs exist, some may seem indefinite. But the long run can and often does short-circuit into the present. Readers of Monetary Scenarios should trust our analysis here will go to every length to avoid sacrificing meaningful long-term analysis.
Our crystal ball is richly coloured
We would all like to have access to a service which can forecast the future with 100 per cent accuracy. In realistic rather than fantasy mood we know that is not in the nature of the world – uncertainty is the essence. The most rational and best way to cope with financial market uncertainty is to avoid speculation or a search for the unattainable. Better advised to seek out the best probabilistic vision – meaning the insightful drawing up of scenarios and assigning these scenarios probabilities.Of importance to us at Monetary Scenarios is the identification of speculative story-telling in financial markets. The contagious spread of these stories is a key component of the asset price inflation process, as highlighted in the work of behavioural finance theorists. Hence, we aim to recognize any new, fast spreading narrative, alerting our clients to its potential to move markets irrespective of its own merit. By the same token, we regard it as critical to assess when the contagious spread of a narrative has peaked and begun to reverse.
Investment Themes Under Observation
1. Direction of consumer prices2. How and when does the tremendous asset inflation turn to asset deflation3. Appropriate fiscal and monetary comparisons with Japan and terminally depressed interest rates4. The ECB’s massive balance sheet expansion sewing the seeds of high inflation and a second debt crisis5. The path of China’s monetary and credit inflation6. Growth of monopoly capitalism and its ever-changing impact on equity markets7. Competition between existing fiat monies, gold, and crypto assets and its impact on economic and financial outcomes
Dr. Brendan Brown
PartnerEconomicsBrendan Brown is senior fellow at Hudson Institute and senior fellow at Mises Institute. He is a columnist for Nikkei Veritas and a frequent guest on Bloomberg TV and Radio.As a leading monetary economist his areas of special expertise include the Federal Reserve and its influences on global monetary conditions, Austrian monetary tradition, European monetary integration, Japanese monetary issues, the global flow of capital and international financial history. Dr. Brown has developed techniques of market analysis during a long career in international financing including the role of chief economist at Mitsubishi (UFJ) Financial Group (NYSE: MUFG) based in London.He has published and co-authored many books on international financial topics including most recently (2020) “Europe’s Century of Crises Under Dollar Hegemony” (Palgrave) and (2018) “The Case Against 2 percent inflation” (Palgrave). His academic research is also published in journal articles.He received a PhD (University of London), MBA (University of Chicago). MSc (London School of Economics), and MA (University of Cambridge)
PartnerMarket StrategyKeith Altman joins Monetary Scenarios from Berlin having spent several years advising both individuals and institutions on global capital markets. As a macro enthusiast and commentator, Mr. Altman has always enjoyed writing and publicly sharing original ideas in the belief that transparency and integrity are necessary parts of helping clients achieve long-term financial success. Over many years, Keith maintained a close working relationship with Brendan Brown starting with their collaboration at Mitsubishi UFJ Securities USA where they jointly held seminars and meetings with key clients. Before moving to Germany, Keith spent the first twelve years of his career in New York as a member of various institutional fixed- income sales teams. Mr. Altman graduated cum laude from Union College where he earned a bachelor’s degree in economics in 1998. While at Union, Mr. Altman was a member of the Omicron Delta Epsilon International Honors Society in Economics and was a Joseph Ushkow Scholarship Recipient in recognition of scholastic achievement and leadership in enrichment of campus life.