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$20.0
US real GDP ($tril) 2015-2019 trend line
$19.5
$19.0
$18.5
$18.0
$1 tril gap
$17.5
$17.0
15 16 17 18 19 20
As of September 2020.
2
Unemployment rate still 3.5% higher than 2019
16%
Civilian Unemployment Rate
14%
12%
10%
8%
6%
4%
2%
0%
15 16 17 18 19 20
As of September 2020.
3
Capacity utilization still 8% below 2019
85%
Capacity Utilization: Total Industry
80%
75%
70%
65%
60%
15 16 17 18 19 20
As of September 2020.
4
Yet why are most markets up?
5
Markets in 2020 dominated by money supply
6
Monetary policy in 2020
First time in 90 years the government is using a three
pronged approach to increasing money supply
7
$3 tril stimulus leads to $4 tril increase in federal debt
$28.0
US total federal debt ($tril)
$27.0
$24.0
$23.0
Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20
As of 11/30/2020.
Source: Treasury.gov
8
Fed almost doubles its enormous balance sheet in 2020
$7.5
Total Fed Assets on Balance Sheet ($tril)
$7.0
$6.5 Nevermind!
$6.0 Buy $3 tril
$5.5 more bonds
$5.0
$4.5
$4.0
Unwind
portfolio
$3.5
15 16 17 18 19 20
As of November 2020.
9
Historically low short, long rates, negative real rates
2.5%
3 month interst rate 10 year interst rate 10 year real rate
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20
As of 11/27/2020.
10
Explosion of money supply in the economy
$6.0
US M1 Money Stock ($tril)
$5.5
Up 40% in 8
$5.0 months!
$4.5
$4.0
$3.5
$3.0
Jan 17 Jul 17 Jan 18 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20
As of October 2020.
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Money supply didn’t translate to economic inflation
40%
Personal Saving Rate
35%
30%
Inflation <1% in
25%
2020 because of
20% high savings rate
15%
10%
5%
0%
Jan 17 Jul 17 Jan 18 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20
As of September 2020.
12
Money printing, high savings, low rates = asset bubbles?
Bitcoin price
$19,000
$17,000
$15,000
Quadruples!
$13,000
$11,000
$9,000
$7,000
$5,000
Jan 20 Mar 20 May 20 Jul 20 Sep 20 Nov 20
As of 11/30/2020.
Source: Coinbase
13
Sustained low rates create bubbles, rising rates kill them
$25,000 3.5%
Bitcoin price 2 year interest rate (right)
3.0%
$20,000
2.5%
$15,000 2.0%
$10,000 1.5%
1.0%
$5,000
0.5%
$0 0.0%
Jan 17 Jul 17 Jan 18 Jul 18 Jan 19 Jul 19 Jan 20 Jul 20
As of 11/30/2020.
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Disclosures
Ple a se re ad the following disclosures as t h e y p r o v ide i m p or t ant i n form a t ion a n d c ont e xt . A d d i t ional i n for m a tion i s a v a i la ble
u p on r e q u e st e x c ep t w h ere t h e p r o priet a r y n a t u re o f t h e i n form a t ion p r e clud es i t s d i sse m i na tion.
T his ov erview is confidential and for infor m a tiona l p u r pose s o nly a n d s h o uld n o t b e r e lied u p on a s a p r e d ict ion o f f u t ur e
ma rk e t pe rforma nce o r Co n voy man a g e m e nt p e r f o rm a nce . I t i s n o t a n o f f e r t o s e l l o r t h e s o l i c it a t i on o f a n o f f e r t o b u y t h e
s e c u ritie s o r o t h e r i ns t r um e nt s m e n t ioned . P o r t f olio a l loca t ions s h o wn o n t h is s i t e a r e f o r i llustra tive pu rpose s o nly a n d
m a y n o t r e f l e c t t h e a c t u a l o r c u rren t i m p le m e n t a t i on o f o u r s t r a t e g y . T he p e r f orm a nce p r o v ide d i s g r o s s o f m a n a g e m e nt f e e s
a n d i n c l ude s t h e r e i n v e s t m e n t o f a l l i n t e r e s t, gains, and losse s. No re pre sentation is b e i ng m a d e t h a t a n y a c c ount w ill o r i s
likely to achiev e re turns simila r t o t h o s e s h o wn. P a s t p e r f orm a nce i s n o t ne cessarily indicativ e of future re sults.
P e r f o rm a nce a s o f t h e c u rrent m o n th i s e st i m a t e d a n d s u b j e c t t o c h a n g e . R e t u rn a n d r i s k e x p e ct a tions s h o wn h e r e a r e b a s e d
o n C o n v oy a n a l y s is a n d r e a s o na b le p e o ple m a y d i s a g r e e w i th t h e a ssu m p t i ons u se d a n d e x p ect a t ions d e v e loped t h e r e f r o m
a n d t h e r e i s n o g u a r a n t e e t h e e x p e ct a t ions s h o wn c a n b e a c hieve d. T h e e x pectations are conside red hy pothetical and are
su b j e ct i nh e rent l i m it a t ions.
15