The Grant’s Conference

I spoke with several people who attended the Grant’s Interest Rate Observer Conference (“Grant’s”) — a regular event well regarded for the quality of the presentations and the intellectual heft — this is an overview of their take on the event:

Byron Wien started the conference with his 10 Unexpected Surprises. I would not call him Uber-Bullish, but the consensus was the better world was highly complacent.

Steve Galbraith was unimpressive — he’s smooth, but lacked intellectual heft. Anecdotal tales of Silicon Valley does not make for a good form of Macro analysis.  The basis for his bullishness was the “the deeper the drop, the steeper the rise” thesis. (I find it unpersuasive).

With the uber bullish ex-Morgan Stanley strategists portion of the show done, we moved to the brains behind the  John Paulson’s hedge fund, Paolo Pellegrini. He was cerebral, complex and professorial. No slides, just speaking from his notes.

After his presentation, which was sort of uber-macro level, Grant asked him what do you like/not like long and short term.  Pellegrini said, “long term, I don’t want to own USD-denominated debt, or US equities.” In a throw away line, he said “Short term, I think the market crashes.” It was almost an aside.

Jim Grant and David Rosenberg debated Treasuries. Jim is very bearish on the dollar, and there for does not like Treasuries here. David was the bond bull.  Our crowd of admittedly bearish attendees (though i would not describe the conference attendees that way) thought David’s argument was  more compelling in terms of mustering facts to back it.

Rosenberg officially, I guess, “won” the debate, based on a count of hands before and after.  John Dizard of the FT moderated, fyi.

A manager from the Brazilian fund Dynamo did a presentation, which mostly focused on the macro backdrop, but ended with a  look at several stocks.  The last was Banco Itau, and they noted at the end as follows, which was news to me:

Statutory directors, board members, and controlling shareholders of Brazilian banks have their entire net worth at stake if their banks fail.  All their personal assets are frozen for the duration of the liquidation process and may be used to cover any shortfall.

Fascinating stuff . . .

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