#074 Bob Elliott: The Regional Banking Crisis Is A Policy Problem

Bob Elliott (@BobEUnlimited), cofounder and CEO of Unlimited, which uses machine learning to create index replication ETFs of 2&20 style alternative investments like hedge funds, venture capital, and private equity, joins Julia La Roche on episode 74 for a deep dive into macro, the regional banking crisis, inflation dynamics, and more.

Prior to founding Unlimited, Bob was a Senior Investment Executive at Bridgewater Associates, where he served on the Investment Committee (G7) and created investment strategies across equities, fixed income, credit, exchange rates, and commodities, including many used in the flagship Pure Alpha fund. He also built and led Ray Dalio’s personal investment research team for nearly a decade. He’s the author of hundreds of Bridgewater’s widely read Daily Observations and directly counseled some of the world’s foremost policymakers and institutional investors on economic and investing issues.

Bob has also served as an advisor and executive at several startups, including CircleUp, an investment company focused on early-stage consumer brands. He revamped the investment strategy for the company’s $150mln venture funds leveraging big data approaches to improve decision-making. He was also the co-founder of GiveWell, a startup charity evaluator which now directs more than $500mln in annual contributions.

Bob holds a BA in History and Science from Harvard.

0:00 Intro

1:43 Welcome Bob Elliott 

2:27 Macro picture 

3:30 Many people haven’t experienced a typical macro cycle in their careers

4:48 Income-led cycle, not a credit-led cycle 

6:33 Areas that aren’t sensitive to rise in rates

9:33 Banking crisis 

9:54 Not like 2008

13:30 Not a credit problem. It’s a policy problem. 

16:00 The bank run issue 

19:00 We’ve entered a point in the crisis where the ineffective policy framework is creating the instability 

20:10 Bank runs are self-reinforcing 

21:00 Speculators creating sizable moves in banking stocks 

23:00 Best way to deal with banking crisis 

25:35 Impact from the Fed’s policies 

29:18 Commercial real estate risk 

32:55 Globalization 

36:16 Disconnect between the market and the Fed 

38:42 Higher for longer most probable 

40:20 Paths that align with the bond market pricing 

42:30 Likelihood of getting back to the 2% inflation target 

44:32 Inflation entrenchment 

46:20 Risk Fed faces with inflation 

47:46 Wage inflation 

48:50 Raising prices and not seeing demand destruction 

51:33 Teaching macro