Economics & Growth | Monetary Policy & Inflation
Podcast Transcript: Mustafa Chowdhury on Fed Policy, US Industrial Policy and Housing Risks
- By Bilal Hafeez
- Sign-up to discuss on Slack
- 40 min read
This is an edited transcript of our podcast episode with Mustafa Chowdhury, published 1 September 2023. Mustafa is a rates guru and member of the research team at Macro Hive. Before this, Mustafa was the Head of Rates, FX, and Derivatives at Voya Investments, where he helped manage $40 billion of assets. Prior to that, he was a Managing Director and Head of US Rates and MBS Strategy at Deutsche Bank. And in the 1990s, he was Co-head of Asset-Liability Management at Freddie Mac, where he was responsible for managing one of the world’s largest fixed income derivatives portfolios and trading desks. In this podcast, we discuss why the Fed still needs to hike rates, whether the Fed’s inflation target should change, whether r-star matters, and much more. While we have tried to make the transcript as accurate as possible, if you do notice any errors, let me know by email.
Introduction
Welcome to Macro Hive Conversations With Bilal Hafeez. Macro Hive helps educate investors and provide investment insights for all markets, from equities to bonds to FX. For our latest views, visit macrohive.com. Before I start my conversation, I have three requests. First, please make sure to subscribe to this podcast show on Apple, Spotify, or wherever you listen to podcasts, give some nice feedback and let your friends know about the show. My second request is that you sign up to our free weekly newsletter, which contains market insights and unlocked content. You can sign up for that at macrohive.com/free.
Finally, and my third request is that if you are a professional or institutional investor, do get in touch with me. We have a very high-octane research and analytics offering that includes access to our world-class research team, our model portfolio, trade ideas, machine learning models, and much, much more. You can email me at bilal@macrohive.com or you can message me on Bloomberg for more details.
Now onto this episode’s guest, Mustafa Chowdhury. He’s a true rates guru and comes with over 30 years of experience in the industry and at Macro Hive, we’re very lucky to have him as part of our research team. Now, before Macro Hive, Mustafa was the head of rates, FX and derivatives at Voya Investments where he helped manage $40 billion of assets. Prior to that, he was a managing director and head of US rates and MBS Strategy at Deutsche Bank. And in the 1990s, he was co-head of Asset Liability Management at Freddie Mac where he was responsible for managing one of the world’s largest fixed income derivatives portfolios and trading desks. Now onto our conversation. So greetings Mustafa, it’s great to have you back on the podcast.
Mustafa Chowdhury (01:38):
Great to be back, Bilal.
Why the Fed Still Needs to Hike Rates
Bilal Hafeez (01:40):
Now let’s get straight into it. And we recently had the Jackson Hole meeting for all the key Fed personnel, so gives us an excuse to talk about the Fed and Fed policy. So what’s your current view on where we are in the Fed cycle?
Mustafa Chowdhury (01:54):
I think the Fed will do a November hike. Since the Jackson Hole meeting markets have actually gradually pricing the November hike, at this point about 75% probability. We went into the Jackson Hole with something like 40% probability. So market is also starting to price that and Powell, we didn’t expect a huge amount of information in the Powell speech, but it did show a little bit of a bearish, little bit of a hawkish tone. Not much slight bit of a hawkish tone in his speech, especially when he was talking about it.
There’s still some pain and suffering left to get to the inflation target and he really wants to get to the 2% target still, not changing the target anytime soon. So there is a little hawkish tone to this because the market’s slowly pricing in November hike. So there is a November hike coming. My own belief is that they will have to hike more later.
Should Fed Inflation Target Change?
Bilal Hafeez (03:06):
And one of the things, there’s been a noticeable shift amongst the Fed where they now start to talk more about real policy rates that the real policy rate using some measure of CPI, forward-looking measures of CPI is around 2%. So policy on that simple metric is tight and then there’s some notion of what the neutral rate is and they say that current policy rates are above the neutral rate. Do you have thoughts about this shift from nominal to real policy rates and this idea of the neutral rate?
Mustafa Chowdhury (03:37):
I think there’s some discussion lately about this whole targeting range instead of one single target and especially a range of CPI between two to 3%. Recently, economists like Jason Parman, et cetera, have been suggesting that the Fed gradually move to that, doesn’t have to announce anything. Once they get below 2% then change it to a range target rather than a point target.
But this has been an old discussion. I don’t think it’s anything new. Year after year, decade after decade is range versus point because inflation forecasting is very hard. A point doesn’t really mean anything. It’s actually the right thing to do. It’s so hard that it’s probably not even forecastable, which we feel good about throwing out a forecast here and there, but in reality it’s not really forecastable.
Of course some forecasts … We see some forecasts are right, some forecasts are wrong, but on average you won’t find much forecasting ability in terms of point inflation. So that makes sense. But Feds been talking about this type of average, et cetera, for a while. Right before this breakout inflation, there was a lot of discussion about targeting average inflation. Williams had a very technical paper on that from 2018 and Feds actually when they revisited their policy framework, the Fed had a listening tool a couple of years ago and in that they did adopt the average inflation target and that didn’t work out very well for them.
Does R-Star Matter?
Bilal Hafeez (05:25):
What about the neutral, the R-star conversation? Jackson Hole, there wasn’t really much conversation if at all about R-star, but people in the market are talking more and more about has R-star gone up and as a result that will then mean that the Fed will have to raise rates by more going forward because the equilibrium rate, the equilibrium growth rate you could say, is higher than before. Do you have thoughts on that?
Mustafa Chowdhury (05:48):
R-star is an abstract concept, so that’s why Powell doesn’t like to talk about it because it’s not something you can talk about in an official communication. There’s a lot of difference in opinion on that. The very moderate types, like Williams, recently gave a speech at the Federal Reserve where he said R-star is still 0.5 and hasn’t really changed pre- and post-COVID.
But if you think about just the difference in the fiscal policy, the amount of spending, without any modelling, it makes sense to believe that the equilibrium real interest rate in the United States have gone up. And if you look at how the real interest rates, all these models that can come up with a variety of results. So I wouldn’t trust any model output on R-star. I can come up with any kind of model with some time during parameter or all sorts of parameterization.
But reality is that the real rates have moved up and most of the rate moves that we have been seeing since late last year have been real rate moves because the break-evens have been fairly constant. And so the question is did the real rates move because the equilibrium real rates has gone up or it’s just … Which is equivalent to saying that the Fed will stay at this high-rate levels for a long time.
It’s possible. A couple of reasons. One of them is of course the fiscal spending has been really large. That we already have observed, but we also have in the future there are geopolitical events that are anticipated that could push inflation much higher than we have today. If you listen to the Biden administration’s industrial policy outlook moving a lot of production within the US or nearshoring, it means a lot of spending within US and a lot of construction.
We see that right now in the industrial construction activities. That data is shooting up but it can expand in other sectors of the economy. So I think that just the geopolitics, nearshoring, onshoring, et cetera, tells me that long-term equilibrium interest rate should be higher in the US, not necessarily elsewhere. That’s one.
The other thing that’s very interesting is that if you look at Eurozone versus US and look at the real rate differential in ten-year for example, that differential is sort of a regime change. It used to be 50ish basis points differential between US 10-year real rate and real bonds rate. Then it moved to about a hundred basis points. Now it’s almost 200 basis point difference. So the bond market is starting to differentiate and these are not short-term movement, it’s a sort of long. We’ve been having a steady, 170, 180 basis point differential between real bond rate and real US treasury rate.
So I think that you can explain the differences in the economy, difference in the sheer size of the fiscal policy, sheer size of the industrial policy probably can explain that difference. So yes, I think that equilibrium real rates are higher, but it’s the US rates, real rates are now just on a roll. Now it’s US treasuries are going higher, and I think now we have moved to a new regime where technicals are just pushing it higher. So yes, equilibrium real rates have gone up and we’ll have eventually embed models, et cetera, will justify any number in the future with one model or another. However, it has to be higher just because of that. But the supply now will be the new one, the new variable.
Worries About US Debt and Deficits, QT and Auctions
Bilal Hafeez (10:17):
Actually, you mentioned supply there, many people in the market have started to talk about how is this the reckoning, the day of reckoning for the Fed or for the Treasury? The US Treasury debt levels are high, deficits large. We’ve had some auctions, debt auctions of the Treasury in the US over the last month or two where they haven’t gone as well as expected you could say. So do you think that part of this rise in interest rates like long-term interest rates in the US is due to a sub concern or risk premier coming into the market around debt worries or is that misplaced?
Mustafa Chowdhury (10:51):
No, it’s not misplaced. I think it is. We have a sort of this mini regime change last three, four weeks that auctions have started to tail. We are not in the US used to auctions failing persistently. So I think that we have sort of started to saturate in terms of supplying in the 30 years especially. We saw that in the 20-year sector as well and one of the 10-year auction as well has a little bit of failing happening.
So it’s a persistent phenomenon. I think bunch of things have happened at the same time. One is that the QT. We had a banking problem and then the Fed had to pause the QT a little bit and instead it pumped … It had to buy a lot of securities from the market. So we had a mini QE from March to May and then QT resumed and when it resumed, it started running off more of the longer-term notes and bonds as opposed to before it was mostly bills because the bill runoff is kind of done and then the notes and bonds.
So when a 10-year note runs off it was a 10-year note originally, but when they run off, it run off at zero duration. So you got that runoff and then the Treasury is supplying a pretty massive volume of both bills and notes, so you don’t have any demand from the Fed point of view because of the QT and the supply is going up. So we are probably at an inflexion point where 10-year has started, 10-year, 20-year, 30-year has started to go a little faster than before.
Bilal Hafeez (13:02):
Actually it’s a valid point that you make around the regional bank crisis where the Fed defected to QE and so maybe we mistook the stabilisation or the lowering bond yields and as like, oh the end of the bond cycle, but actually it was just QE came back and now that QE is gone, suddenly US yields have gone back up.
Mustafa Chowdhury (13:21):
Correct and QT, now QT came back but not in bills but notes and bonds so that, it bites a little bit more. It was confusing because we had markets, if you look at where the 10-year real rates are today, it’s not too far below where it was in October, November last year. So market had established where the equilibrium rate was for almost eight, nine months now.
In between we had ups and downs for lots of misleading reasons. The Japanese, a lot of confusion about BOJ, yield curve control, the market was expecting a January yield curve control, but the BOJ didn’t deliver that. Then we had massive January payroll number in the US, probably an error, but it completely put the market offside.
We had some of these Silicon Valley Bank and other bank issues, so there was a lot of volatility in between. But if you look at mid-May this year and late, early November last year, 10-year real rates and 10-year nominal rates are about in the same place. And so it was all noise and now it was all noise and now we are adding supply. So yes, supply is going to be a factor going forward.
Why Is US Economy So Strong?
Bilal Hafeez (14:43):
And in terms of the strength of the US economy, what’s your sense on that?
Mustafa Chowdhury (14:47):
Strong. I don’t understand why it’s such a surprise for the Fed, the fact that it’s so strong. The hike that they have done and if you look at the US mortgage rate last week it was at 7.3%. The hike that it has done, the 7.3% mortgage rate should hurt the economy, hurt consumers. It’s like the largest thing in a homeowner’s financial statement, whether it’s an income expenditure or largest thing in their balance sheet.
And 7.3% mortgage rate has not affected the US homeowners. The hikes seem to not hurt the households in the US so it only hurt the firms. The firms are starting to see margin compression.
Firms will start to lay off people eventually, maybe not as much initially, but eventually the monetary policy transmission will happen through firms. But right now, the one transmission mechanism which is through houses are not happening because homeowners are still facing two-and-a-half to three-and-a-half percent interest rate for the largest item on their balance sheet. And homeowners are the housing, the consumers households and the largest part of the US economy, something like 70% of the US economy is consumption. So that’s not changing.
Bilal Hafeez (16:25):
So in some ways what you’re saying is that one of the most effective ways for interest rates to impact the economy isn’t really working in the US because of the nature of the US mortgage market is such that people can lock into low rates for 30 years and so it doesn’t really matter what the Fed does?
Mustafa Chowdhury (16:43):
Yeah, it just doesn’t matter. It matters very little, a lot less than it used to. Not only that the mortgage rates are not affecting the households, the households leverage it also a lot less than the last hiking actually 2004, ’05, ’06 hiking cycle how debt ratio is significantly lower than it used to be. So monetary policy is not having the same effect that it had in the last serious long hiking cycle.
Understanding US Housing
Bilal Hafeez (17:14):
But presumably new entrant to the housing market would be affected. So someone entering the housing market to buy a new house would have to pay that much higher mortgage rate so there should be some impact in purchases presumably, house purchases or construction, those sorts of sectors?
Mustafa Chowdhury (17:31):
It is having an effect, and these are all having misleading effects. These are changes in the structure. One of them is that the existing homeowners are not feeling the effect of the hike, but the new potential homeowners are really affected. If you look at the affordability index of US homes is less affordable than even 1974 was … 1994, ’93, ’94 was when we are less affordable than this.
So this is a serious problem because new … And eventually it will bite, but not in a traditional way but in a different way. That housing construction is definitely slowing down. The liquidity of the homeownership market is going lower and lower and liquidity is key in homeownership in the US. And then liquidity in the mortgage market is also declining. We see that in the spread between primary and secondary mortgage rates because there is so little mortgages are created, financial institutions are reducing the personnel, laying off a lot of people who are in the mortgage origination side of their business.
And so the overall liquidity in homeownership, whether it’s financing or whether it’s in actual home transactions, all of that are going lower. And liquidity of homeownership, either financing or homes is key to American homeownership growth. So it will in the long-term be very negative. And one of the misleading signals is the home builders’ stocks.
If you look at home builders’ stocks, they have performed better than the AI stocks this year in the US and you wonder what’s happening. And the story is that existing home supply is dwindled to practically zero. So new home builders will have a lot of business because the only way you can own a home is by building a new home. But if you look at the actual financials of the home builders, their revenue has gone up a lot in this year in the first quarter and the second quarter financials.
But that’s because the price of new homes has gone up. The number of new homes that they’re building is absolutely unchanged, actually starting to decline. So it’s puzzling because you look at the superficial equity prices of home builders, it gives you a wrong impression about the state of the housing market, state of residential investments, all of that just because of some sort of a distortion that has happened through the lock-in effect.
And now even the new construction in multifamily which was growing, it also started to flatten out. So that’s maybe where you might see significant effect on the labour market as well from the construction side. But at the same time, the CHIPS Act has triggered sub construction in the manufacturing, chips factories and et cetera. So we see some of that hiring there, but eventually it might be affected by that.
But there’s a lot of distortion that’s happening that’s keeping the consumer very strong, spending retail sales strong, consumer credit extremely strong, consumer’s ability to take car loans, credit card loans, all of that has gone up because their balance sheets are strong. So that’s why US economy is separating from rest of the advanced world.
Bilal Hafeez (21:25):
And the way you described the housing market, it does sound like eventually these higher mortgage rates will bite because of its impact on new home buyers. So is this an issue of there’s a lag or do you think that the Fed will need to raise rates even more in order to have a larger impact?
Mustafa Chowdhury (21:51):
Raising rates even more will not do. It will make this differential even bigger because the manufacturing will be hit really hard. We’ll start to see small banks start to get hurt by this. But consumer, the large scale, big part of the economy, which is the consumers may not be hurt with higher rates, but that is exactly what Fed will do.
Fed will see that the consumers are not cracking and so Fed will come back and hike in 2024. And especially rental inflation goes back higher and some other sectors, they still see inflation persistence. The last mile which is between three to two could be a very slow winding process for them. So they might hike, but hike will only differentiate the economy between firms and consumers bigger and the renters versus homeowners bigger.
But there is another huge negative long run for the US economy is that the turnover of households, there’s a certain minimum amount of turnover in a healthy economy. People need to move from one state to another. There is some mobility that’s consistent with a certain growing economy and what we have done, we’ve frozen people in their homes. And so they’ll reduce the mobility of the economy, which might also hurt in the long-term in terms of flexibility of the labour market.
Investors Are Overestimating Upside Risks to JGB Yields
Bilal Hafeez (23:28):
That’s a great, great point there. Now I did want to pivot to some other countries as well. You mentioned earlier BOJ, YCC. What are your thoughts on the BOJ?
Mustafa Chowdhury (23:38):
It’s clear now and whether have saw this be more than the market has that equilibrium for the 10-year JDB is not 1%, it’s way below that. And so he was comfortable turning it from a hard target at 0.5 and moving the hard target at one. And the market refuses to go too much from where it was before the tweet that they announced.
Key is the short end. Remember Japan still has a negative short-term interest rates while the rest of the world has increased to positive levels. So the quantitative difference in terms of the front end rate difference is large, but the qualitative difference is also huge and negative in Japan versus large positive elsewhere in the world. Japan is having a very large influence and one of them is just it made for one of the largest holder of US treasuries or buyers or generally US assets have been Japanese insurance companies, pension funds, et cetera.
And now all of them find it very unattractive to buy US assets just because the heavy cost is now very unattractive back in Japan. So the biggest thing was if there is any sign that they will change the short-term interest rate for minus 0.10 and I didn’t feel that they’ll do, but it was clear to me from where the panel discussed at Jackson Hole last weekend that there is no plan to change the front end. And if the front end doesn’t change, then the drop in JDBs, forward drop in JDBs will remain very steep. And so hedging costs will be very large for Japanese to buy any foreign bonds, especially the US.
So the demand for Japanese JDBs will be quite strong and we see that and we see that also in the GPYs. Today we touched 147, we actually exceeded 147. We’ve come back a little bit now. We did go above 147 sometime in the morning today. So the story is that, and I think that where that stayed, that clicked in my mind that maybe there will be not a significant effect from China to the US.
And we see significant, call it deflation in the export prices in China. Japan, Korea and Taiwan are key export destination from China and all three of them have significant decline, significant deflation in export prices going into those countries. And I think where the fees that also some transmission of deflation from China into Japan. So he’s not comfortable and there are models … In my mind, whenever somebody talks about model, they’re talking about pre option because you can tweak an inflation forecasting model in 20 different ways and they get 20 different results.
But the fact that he keeps talking about it, basically he’s uncomfortable about the inflation transmission from China. He’s not uncomfortable about the next one year whether they will sustainably be able to go stay about 2% despite the fact that they’re observing inflation is now higher.
Thoughts on China
Bilal Hafeez (27:39):
And also, you mentioned China there. What’s your view on China?
Mustafa Chowdhury (27:42):
China is very, very interesting what’s happening. There is the economy part of it, the growth, et cetera. And there is the financial side of it. On the financial side, the big news is the Country Garden and it’s a shocker because Country Garden was in China the most solid financially among the developers and really large with projects all over China and mostly in tier three and tier four towns. I remember travelling in China and seeing the small towns and villages. You will be amazed how many big high rises under construction that you see just from the train window, not the big cities like Shanghai, but the small towns.
And this is where Country Gardens market has been and suddenly, they had solid financial statements until the end of last year and suddenly there has been a freezing since probably February. You see that in the second quarter financials, but it probably started sometime earlier. That the demand for their homes has suddenly gone down. If you remember the context of the Chinese housing, the whole de-leveraging was triggered by the Central Government in China, but they established in 2020 what they call three deadlines because the government thought that their economy has become too dependent on real estate and so wanted to somehow clamp down on leverage in real estate.
So they established some rules on leverage and one of the three lead lines did really hurt the developers and that was that the advances they received from homeowners for apartment construction could not be used as a collateral for getting loans. So they had to establish the ratio of the debt to assets to be less than 70% excluding the deposits from the potential homeowners. And that used to be a key financing vehicle for the developers. So initially it hurt. We saw Ever Grande in trouble and there are a lot of others having not satisfied that 70% target of the three lead lines to start to … when Ever Grande actually went into trouble and being in the process of being resolved.
But on all these, Country Garden was with flying colours. Their customers are different. The product small city and that’s where sudden decline in demand has frozen their revenues and so they are not able of paying their lenders, they can potentially, they’re renegotiated with their domestic lenders and also the offshore lenders. So I don’t think there is a potential for contagion for US subprime type contagion from these.
I think there is an element of conflict between the Central Government and local government in figuring these de-leveraging because the Central Government thinks or knows that the local governments are funding itself through developers, sort of like a hidden leverage. Developers, local governments and trust companies help the local governments run a much bigger budget than they should have based on their known financing, known revenues. And local government then finance infrastructure, very large infrastructure projects within their areas.
So it’s all government. A big part of this government-to-government. You got the federal government, you have the local government and developers are a vehicle for local governments to sell land and get revenue that they don’t get from taxes. So a lot of it is public sector allocation of debt. There’s enough capacity, the debt capacity in the Central Government, but there’s a debt, excessive debt in the local government.
So if they can find a mechanism to transfer from local governments to Central Governments, they can resolve it. So it depends on what does the Central Government want to do, whether to take on that debt. They have offered this swap facilities to some local governments where local governments can swap their debt with the Chinese Central Governments, but it’s not large scale. So we’ll see. There’s a lot that will happen.
I don’t think it’s necessarily an oversight because China has been well known to let a sector die without doing anything. They have done it to the remote education sector. They have done a lot through the consumer, a lot of the technology platform companies. So it wouldn’t surprise me if they let the real estate sector at least leverage decline or the leverage to be more explicit.
Bilal Hafeez (34:12):
So the offshore essentially is a much slower China from a growth perspective, no contagion necessarily to the rest of the world and low inflation deflationary dynamics within China that could impact the Northern Asian economies.
Mustafa Chowdhury (34:29):
I think that there will still be effect on inflation in Japan and Korea and potentially Taiwan as well, but not necessarily the real sector in the economy. But China, we still have most forecasts around 5%. There’s few street houses have lowered it below 4%. Below 5%, but it’s not 3% or 4% yet. But it’s yet to be seen. This frozen demand for apartments that has been happening for the last three months, whether that is intentional, whether that is going to persist for a while, is yet to be seen.
Favourite Trades
Bilal Hafeez (35:14):
Yeah. And if we round off with some of your positioning, how you are positioning these markets, your trades as an investor or when you speak to investors. I know you speak to lots of the top macro people in the world. What are you saying in terms of how to position in this regime?
Mustafa Chowdhury (35:28):
The big position should be the differentiation between the US and the rest of the world. US is a different item. It has a consumer leverage is significantly lower than it used to be. So what we are used to about US households is very different from today’s US household. Not only that the monetary policy is not working on them.
So despite historic hike, US households are strong and will remain very strong, while other central banks having to somewhat follow the US in terms of monetary policy has a totally different household balance sheet. And so they hurt their economy in a very big way to catch up with the US. And UK, you got Eurozone, the same thing. We’re going to see, if you look at Eurozone real rate, let’s say bonds, 10-year real rates still around zero. Where US is almost 2% and that difference is now big and will be bigger. A lot of our trades are related to that.
Bilal Hafeez (36:46):
Take a short US rates, long bonds or long-
Mustafa Chowdhury (36:49):
Long bonds.
Bilal Hafeez (36:51):
Yeah, with JDBs.
Mustafa Chowdhury (36:52):
Against that.
Bilal Hafeez (36:53):
So basically you’re playing for higher US yields versus Europe or even Asia?
Mustafa Chowdhury (36:58):
Right. Correct.
Bilal Hafeez (36:59):
So it’s rate divergence?
Mustafa Chowdhury (37:01):
Because Europe doesn’t have any significant capacity to raise rates after one or two and then they will have to stop. Fed doesn’t have to stop. In 2024, they define inflation still robust. They can come and do another 200 without any problem and the same with Japan. So we’ll see that divergence trade become big driving one and then divergence trade has related trade like volatility is coming back in the long end of the curve.
During this whole zero rate policy, the long rates have been very, very low volatility. But now volatility is coming back in that sector, so long optionality in five-year, five-year, three-year, five-year, three-year, 10-year, we like it a lot as a large thematic rate in the US and not clear whether it’s same applied in Europe.
And the other is that we still have some pricing of cuts for next year. The chance of that actually happening is in my mind minuscule. If there is still positive carry to one-year, one-year or positive carry in two years being short, the two-year, the market should keep doing that. And that two-year has sold off a lot and now we are two-year real rated but 3.2%, which is just unbelievable how much it has sold off. But there is more room for way more selloff as well just as the cuts get priced out of the yield curve.
So a lot of yield curve trades out there. I’m not sure the US equity had done really well, probably because the economy, initially it was AI and et cetera, et cetera, but now it’s across the whole spectrum of equities within even like Russell 2000, which is the smaller companies are starting to go higher. Some of it is maybe that the consumers still have a lot of wealth and they can still buy through their pension funds, through 401K, et cetera.
So index buyers motivated by all the AI now as the index buyers are in the bid for all the other equities have gone up a lot. But if the supply in the long end of the treasuries remain robust like that and start to have a significant effect in the long end treasuries, then I think it will slow down the equity markets at some point, at some level of treasuries. And I think that 10-year probably can easily go to four-and-a-half from here. So still room for being short there.
Books
Bilal Hafeez (40:16):
Yeah. Okay. That’s great. It’s very clear. I did want to round off with just the personal question. I like to ask all my guests, I love reading books. Have you read any good books of late?
Mustafa Chowdhury (40:29):
Yeah. It’s not related to the bond market or any markets, but I just finished the book Bengali Harlem. It’s written by Vivek Bald. It’s about the experience of immigrants from Indian subcontinent coming in the late 1800s to the US. There was a flow of immigrants to the US from the Indian subcontinent in the 1800s. There’s not much written history about it, and this topic always interest me a lot.
And some of this, I often, when I travel in countries, I talk to people from different places and ask them about what was their journey? In Italy from the people from Bangladesh so the travel, walked across Albania to come to Italy. Or people who took boats across the Mediterranean to get to Italy. Portugal used the US crossing the Darien Gap, crossing across Mexico to get here. This drive amazes me that how much drive these people have to get to places where they have opportunities. And this story is about this people coming from South Asia and this book catalogues individual’s stories in cargo ships from places in Calcutta or Bombay and arriving in New York.
Their experience was just fascinating to me. In those days from you grew up in some village out there and then suddenly you decide you will go so far away. So the story of the drives coming to the US then going to Atlanta City or New Orleans, Philadelphia in the 1800s, starting business there. That’s just amazing stories. The book catalogues some of these stories. One of them was just fascinating to me. There was a gentleman who’s from 1880 or 1870s. He came from the place, coastal village in Bangladesh, well in British India in those days, went to Calcutta, bordered a ship with a basket, a trunk full of trinkets that he hoped to sell, came on a ship to via South Africa to New York.
And when he was at Ellis Island, the immigration officer didn’t like him. So he was put back on the ship and then he instead of going back to India, he went back to South Africa in Cape Town. He sold his trinkets in Cape Town, then hopped on another ship to come back to New York. And I’m talking about 1800s when there were no aeroplanes. Came back to New York and this second time he made it. The persistence story of immigrants journey and persistence is just amazing. And it’s by Vivek Bald. It’s a book called Bengali Harlem.
Bilal Hafeez (43:39):
That sounds great. I’ve never heard of that book before. It sounds fascinating, so I’ll make sure I’ll read that one. And I imagine other listeners will want to read it too. Now finally, what’s the best way for people to follow your views?
Mustafa Chowdhury (43:51):
I think I tweet on and off, often actually. And we have the Macro Hive weekly and Macro Hive pieces. Macro Hive website is another place to follow. And also on Twitter.
Bilal Hafeez (44:06):
Yeah. Or X or well, I don’t know how to call it now, Twitter X or XX or whatever it is.
Mustafa Chowdhury (44:10):
So confusing.
Bilal Hafeez (44:16):
Yeah, with that, thanks a lot, Mustafa. That was really, really helpful. A great tour of the world and a tour of markets and I look forward to continuing to follow your work.
Mustafa Chowdhury (44:26):
Great, Bilal.
Bilal Hafeez (44:27):
Great. Thanks, Mustafa. Thanks for listening to the episode. Please subscribe to the podcast show on Apple, Spotify, or wherever you listen to podcasts. Leave a five-star rating and a nice comment and let other people know about the show. We’d be very, very grateful. Finally, sign up for our free newsletter @macrohive.com. We’ll be back soon so tune in then.