WEBVTT - Charting Bitcoin's Ascent 0:00:02.440 --> 0:00:05.640 Welcome to the Bloomberg Daybreak Asia podcast. I'm Doug Christner. 0:00:06.000 --> 0:00:09.040 On today's episode, we'll be looking at President Elect Trump's 0:00:09.160 --> 0:00:11.879 choice to lead the US Treasury. He is Scott Bessant 0:00:12.400 --> 0:00:14.600 of the Key Square Group. In a moment, we'll be 0:00:14.640 --> 0:00:19.240 speaking with David Aspell, co CIO at Mount Lucas Asset Management. 0:00:19.560 --> 0:00:22.400 But we want to begin with crypto, since last week's 0:00:22.480 --> 0:00:26.279 rally in bitcoin saw it flirting with one hundred thousand dollars. 0:00:27.160 --> 0:00:29.240 Joining us now for a closer look as Peter Chung, 0:00:29.640 --> 0:00:33.440 head of research at Presto Research, joining us from Hong Kong. Peter, 0:00:33.479 --> 0:00:35.360 thanks for making time to chat with us. Let me 0:00:35.400 --> 0:00:38.560 get your reaction to the fundamentals that have been driving 0:00:38.600 --> 0:00:41.760 the price action in a bitcoin lately. Give me your 0:00:41.760 --> 0:00:44.040 assessment on what's driving this rally. 0:00:44.400 --> 0:00:47.839 Yeah, I think this rally has been happening in two parts. First, 0:00:48.080 --> 0:00:51.239 is you know right after the election, when bitcoin was 0:00:51.280 --> 0:00:55.760 at around sixty seven sixty seven thousand dollars, it was 0:00:56.040 --> 0:01:01.040 in reaction to the election result, and it is part 0:01:01.080 --> 0:01:05.760 of a broad macro reflation trade. So that raised the 0:01:05.840 --> 0:01:08.520 big coeen price from sixty seven thousand to around ninety 0:01:08.560 --> 0:01:12.319 thousand and the second part is also related to Trump, 0:01:12.360 --> 0:01:15.800 but more crypto specific. I think the market is becoming 0:01:15.800 --> 0:01:20.320 more confident on Trump delivering on his pre crypto campaign 0:01:20.360 --> 0:01:25.640 promises based on the chatters around the key cabinet nominations, 0:01:26.600 --> 0:01:28.840 so I think they gave the market a confidence that 0:01:28.920 --> 0:01:33.839 the Trump has every intention to deliver on his campaign promises. 0:01:33.959 --> 0:01:36.280 There seems to be two parts to that story. One 0:01:36.560 --> 0:01:40.319 the idea of friendlier regulation, and the other seems to 0:01:40.319 --> 0:01:43.080 be this pledge to set up a national bitcoin stockpile. 0:01:43.160 --> 0:01:45.360 Which do you think is having a greater influence. 0:01:45.880 --> 0:01:50.200 I think more lately it's the idea of bigcoin strategic 0:01:50.640 --> 0:01:56.840 reservoir stockpile. I think the recent cabinet, the nominations, and 0:01:56.920 --> 0:02:00.120 especially the Scott Besson who just got nominated. I think 0:02:00.120 --> 0:02:03.280 he mentioned that, you know, everything is on the table 0:02:03.360 --> 0:02:08.840 with regard to bitcoin strategic reservo or stockpile. So the 0:02:08.880 --> 0:02:13.440 market is increasingly more confident that it could happen. I 0:02:13.480 --> 0:02:16.040 think the polling market is assigning something like a sixty 0:02:16.080 --> 0:02:19.799 percent probability to that, So I think that's been kind 0:02:19.800 --> 0:02:22.440 of the main thing in the last few days. 0:02:22.480 --> 0:02:24.520 I think, yeah, the other thing that we're hearing is 0:02:24.520 --> 0:02:28.440 that the transition team has been talking about the possibility 0:02:28.440 --> 0:02:32.320 of creating the first ever White House post dedicated to 0:02:32.919 --> 0:02:35.720 digital asset policy. It's kind of stunning. You were talking 0:02:35.800 --> 0:02:38.600 about everything that's happened since the election. I think that 0:02:38.960 --> 0:02:42.440 a lot of the US ETFs that invest directly in 0:02:42.520 --> 0:02:46.200 bitcoin have amassed about more than one hundred billion dollars 0:02:46.240 --> 0:02:49.600 in assets since launching back in January. Is this a 0:02:49.600 --> 0:02:51.440 trend that you expect to continue now? 0:02:51.760 --> 0:02:53.520 Yeah, I mean I think so. I think. 0:02:54.440 --> 0:02:58.680 I mean with the ETF, it basically has you know, 0:02:58.760 --> 0:03:02.079 paved the way much easier access to for the institutional 0:03:02.120 --> 0:03:06.480 investors to come in and make a long term investment. 0:03:07.480 --> 0:03:11.639 I mean, big CONTF has been around for actually two years, 0:03:12.040 --> 0:03:15.440 but before it was a futures based ETF which isn't 0:03:15.480 --> 0:03:18.400 really included for the long term investors. With the introduction 0:03:18.440 --> 0:03:21.480 of a spot ETF at the beginning of the year, 0:03:22.160 --> 0:03:24.239 which is far more efficient in terms of a tracking 0:03:24.320 --> 0:03:26.800 the underlying asset, uh, you know. 0:03:26.800 --> 0:03:29.959 That removes a lot of kind of entry. 0:03:29.760 --> 0:03:32.400 Barriers for many of the long term institutional investors. 0:03:32.440 --> 0:03:33.480 And now that. 0:03:33.480 --> 0:03:38.400 The you know, the the new president elect is giving 0:03:38.440 --> 0:03:41.560 far more credits to this asset class. With his pro 0:03:41.600 --> 0:03:45.480 crypto policies, I think many of the long term institutional 0:03:45.520 --> 0:03:48.360 investors who are kind of you know. 0:03:49.080 --> 0:03:51.080 Were a bit hesitant to prior to. 0:03:51.000 --> 0:03:53.280 This event, I think is more willing to take a 0:03:53.320 --> 0:03:55.200 look at this new emerging asset class. 0:03:55.240 --> 0:03:58.400 So pro crypto policies in the US, maybe we understand 0:03:58.400 --> 0:04:01.840 that to mean less regulation. Is that what is happening 0:04:01.880 --> 0:04:05.120 where you are in the Asia Pacific? I'm thinking, whether 0:04:05.160 --> 0:04:07.520 it's Hong Kong and Singapore, are you seeing a move 0:04:07.600 --> 0:04:10.240 to deregulate the crypto market A bit? 0:04:10.680 --> 0:04:14.680 Yeah, I'm a little headstunted using the word deregulation to 0:04:14.760 --> 0:04:17.440 describe what's happening right now. It's more I think the 0:04:17.440 --> 0:04:21.960 more accurate way of describing is a regulatory clarity, because 0:04:22.000 --> 0:04:26.240 I think previously what was happening was a lot of uh, 0:04:26.600 --> 0:04:29.719 you know, it was more policy driven, approached by the 0:04:30.040 --> 0:04:36.160 SEC through UHH through enforcement actions uh and some of 0:04:36.200 --> 0:04:39.200 them were you know, Ukraargia was not very lawful, uh 0:04:39.240 --> 0:04:44.919 and also very vague guidance from the regulatory agency. Going forward, 0:04:45.600 --> 0:04:47.400 you know, I think there's going to be more clear 0:04:47.480 --> 0:04:50.640 rulemaking by these regulatory bodies in the US and I 0:04:50.680 --> 0:04:54.200 think that's going to have an impact on the jurisdictions 0:04:54.200 --> 0:04:56.320 in Asia as well. I think many of the country, 0:04:56.360 --> 0:04:58.520 many of the governments in Asia has been kind of 0:04:58.680 --> 0:05:01.400 looking at U, you know, the US, and using that 0:05:01.440 --> 0:05:05.920 as a benchmark for their own regulatory framework. And now 0:05:05.960 --> 0:05:09.760 that the US is more in I guess in a 0:05:09.760 --> 0:05:13.360 position where they are willing to provide the further regulatory 0:05:13.640 --> 0:05:18.360 clarity through legislative process as well as you know, by 0:05:18.400 --> 0:05:21.480 having SEC who's more willing to work with the crypto industry. 0:05:22.120 --> 0:05:24.200 I think that's going to have an impact on the 0:05:24.240 --> 0:05:26.320 many of the governments in this part of the world. 0:05:26.560 --> 0:05:29.040 I found it to be very interesting last Wednesday, I 0:05:29.040 --> 0:05:32.000 think it was that a court in Shanghai rule that 0:05:32.160 --> 0:05:36.000 owning cryptocurrencies outright should not be against the law in China, 0:05:36.080 --> 0:05:40.080 but the government we know has argued recently that they 0:05:40.120 --> 0:05:42.800 are a threat to financial stability. What do you think 0:05:42.839 --> 0:05:46.359 this ruling means for crypto generally and especially in China. 0:05:47.080 --> 0:05:49.320 I think in China, I mean there's a lot of 0:05:49.360 --> 0:05:53.239 kind of misunderstanding on what the China or where China 0:05:53.279 --> 0:05:56.120 stands on crypto and blockchain. I think part of it 0:05:56.200 --> 0:05:59.279 is just lack of transparency, and part of it is 0:05:59.360 --> 0:06:03.120 kind of uh, you know, Chinese government uh not doing 0:06:03.160 --> 0:06:06.960 a very good pr job. I think what they were 0:06:07.000 --> 0:06:10.960 afraid uh so far is the fact that this is 0:06:11.000 --> 0:06:14.240 a very volatile asset class and therefore, uh, if you 0:06:14.400 --> 0:06:17.760 let the uneducated, the retail investors have a full access 0:06:17.760 --> 0:06:20.520 to this asset class, there could be a lot of. 0:06:20.560 --> 0:06:24.560 Uh uh you know, losses and uh you know, which. 0:06:24.440 --> 0:06:27.400 Could potentially lead to the social unrests and things like that. 0:06:27.560 --> 0:06:32.680 So uh, they were afraid of retail investors having access 0:06:32.720 --> 0:06:37.320 to full trading services provided by the crypto exchanges, and 0:06:37.360 --> 0:06:41.840 that's why they banned cryptic exchanges from operating on shore. Uh. 0:06:42.640 --> 0:06:44.279 But I think I don't know that that's not the 0:06:44.320 --> 0:06:45.720 same thing as you. 0:06:45.680 --> 0:06:50.120 Know, not allowing blockchain projects to be launched, for instance. 0:06:50.200 --> 0:06:52.200 That's why we still see many of the block change 0:06:52.480 --> 0:06:56.360 projects coming out of China. Uh. And also uh, that's 0:06:56.400 --> 0:06:59.800 why I think, uh, the as you mentioned, uh they 0:06:59.839 --> 0:07:03.120 want need to come out and clarify that the ownership 0:07:03.120 --> 0:07:07.000 of a crypto is not unlawful, because I think there 0:07:07.040 --> 0:07:09.200 was a lot of confusion maybe in the marketplace about 0:07:09.440 --> 0:07:11.240 where the government stands on that issue. 0:07:11.320 --> 0:07:14.400 So much of The conversation around bitcoin when it first 0:07:14.440 --> 0:07:18.160 emerged had to do with the underlying blockchain technology that 0:07:18.280 --> 0:07:21.680 distributed Ledger. One of the things that was discussed at 0:07:21.680 --> 0:07:23.160 the time is whether or not it could be a 0:07:23.240 --> 0:07:26.960 key source of future financial market innovation. Have we seen 0:07:27.960 --> 0:07:33.280 blockchain really become more broadly adopted in financial markets. Let's 0:07:33.320 --> 0:07:37.280 imagine some form of crypto, a cryptocurrency that could be 0:07:37.400 --> 0:07:41.040 used for transacting in markets. We haven't yet seen that though, 0:07:41.080 --> 0:07:41.360 have we? 0:07:41.880 --> 0:07:42.320 Yeah? So? 0:07:42.400 --> 0:07:45.760 I think the way to look at this is like this, 0:07:46.760 --> 0:07:49.560 there's a lot of experimentation going on in the crypto space. 0:07:50.000 --> 0:07:52.560 Some experiments have done better than others. The ones that 0:07:52.640 --> 0:07:57.640 have done better is obviously Bitcoin. Bigcoin's value proposition is 0:07:58.080 --> 0:08:01.440 someday becoming a currency, but it's not a currency that 0:08:01.480 --> 0:08:05.760 most people commonly understand. It's rather than a top down 0:08:05.920 --> 0:08:09.360 driven currency, it's a bottom up driven currency where people, 0:08:10.040 --> 0:08:13.360 over time comes consensus that this should be used as 0:08:13.360 --> 0:08:16.360 a currency. So it's a long process and usually the 0:08:16.360 --> 0:08:18.720 first thing that happens is it gets adopted by a 0:08:18.760 --> 0:08:21.320 store as a store of a value, and next as 0:08:21.320 --> 0:08:24.520 a medium of exchange, and lastly you need of account. 0:08:24.760 --> 0:08:26.920 We're going through the first stage right now, and Bitcoin 0:08:27.000 --> 0:08:29.800 has done extremely well on that front, especially with the 0:08:29.800 --> 0:08:33.040 introduction of ETF its adoption as a store of value 0:08:33.040 --> 0:08:37.280 has expanded dramatically. Now other cryptocurrencies still kind of at 0:08:37.320 --> 0:08:42.160 the experimentation stage, but the one increasing, one killer app 0:08:42.160 --> 0:08:45.360 that came out from outside Bitcoin is the stable coin, 0:08:45.720 --> 0:08:50.040 which runs on a smart contract platform like ethereum, for instance, 0:08:50.360 --> 0:08:52.679 and a stable coin right now market keap is twenty 0:08:52.760 --> 0:08:57.320 billion dollars and it's widely adopted, not just on the 0:08:57.600 --> 0:09:00.199 you know, amongst the crypto enthusiasts, but if you go 0:09:00.280 --> 0:09:04.599 to the emerging markets. It's a way for people in 0:09:04.640 --> 0:09:07.520 the emergent markets to access US dollars in the form 0:09:07.559 --> 0:09:10.240 of a stable coin because it's the currency they trust 0:09:10.320 --> 0:09:13.720 more than their own currency, because their own currency regime 0:09:13.760 --> 0:09:15.120 is a lot of times very unstable. 0:09:15.400 --> 0:09:17.720 So when I hear you use the term store of value, 0:09:17.760 --> 0:09:20.440 I think of a hedge against inflation. Do I have 0:09:20.520 --> 0:09:23.520 that right? And if so, is some of the price 0:09:23.600 --> 0:09:27.000 action that we have seen lately in bitcoin correlated in 0:09:27.040 --> 0:09:29.040 any way to FED policy? 0:09:29.960 --> 0:09:30.240 Yeah? 0:09:30.280 --> 0:09:32.640 So I think, yeah, when I say store of a value, 0:09:32.679 --> 0:09:35.480 you're right, it's inflation hedge, but more correct term would 0:09:35.520 --> 0:09:41.880 be debasement hedge because the word inflation sometimes is misunderstood. 0:09:41.920 --> 0:09:45.920 People think it's a CPI. CPI is only one of 0:09:45.960 --> 0:09:49.920 the metrics to measure the impact of inflation. But when 0:09:49.960 --> 0:09:52.520 you associate inflation with a CPI, people look at CPI 0:09:52.600 --> 0:09:54.280 and says, all CPI is going up, But how come 0:09:54.320 --> 0:09:57.480 bcoin is not is not going is not performing well. 0:09:58.280 --> 0:10:00.720 So that's why I don't want to use the word 0:10:00.800 --> 0:10:02.440 inflation edge. 0:10:03.040 --> 0:10:06.920 But and then when it the debasement hedge is you 0:10:06.920 --> 0:10:10.640 can only kind of see that over the very long term. 0:10:10.960 --> 0:10:11.400 Uh. 0:10:11.480 --> 0:10:14.200 You know, it's more about the durability of the purchasing power. 0:10:14.679 --> 0:10:18.120 So uh, it's some more kind of a long term 0:10:18.160 --> 0:10:21.640 oriented concept. Now when you you mentioned about the recent 0:10:21.840 --> 0:10:27.160 bitcoin movement around FAT policy, uh, and that's about I 0:10:27.200 --> 0:10:30.640 think that's you're talking about the price kind of actions 0:10:30.679 --> 0:10:34.679 surrounding how FED reacts, and that's a very short term 0:10:35.080 --> 0:10:36.079 driven movements. 0:10:36.520 --> 0:10:36.760 Uh. 0:10:36.800 --> 0:10:39.560 And in the short term driven movements, I. 0:10:39.600 --> 0:10:43.960 Think bitcoin behaves more like risk assets because there's an. 0:10:43.840 --> 0:10:44.559 Element of. 0:10:46.640 --> 0:10:50.400 The element of a network effect that needs to be 0:10:50.400 --> 0:10:54.160 accounted for because it's a bitcoin is essentially like a network, 0:10:54.640 --> 0:10:57.720 but in its very early stages, so all these stages 0:10:57.760 --> 0:11:02.440 of growth, so you might not notice this concept of 0:11:02.960 --> 0:11:06.880 debasement heads in the very short term price reactions of 0:11:06.920 --> 0:11:07.480 a bitcoin. 0:11:07.679 --> 0:11:11.000 What about the pr campaign that the industry is going 0:11:11.080 --> 0:11:14.920 to have to fight when you have situations like FTX 0:11:15.360 --> 0:11:20.120 or binance occur and the damage, the reputational damage that 0:11:20.240 --> 0:11:23.360 may have been inflicted on the industry. What type of 0:11:23.440 --> 0:11:26.800 campaign has to be put forward right now to dispel 0:11:27.920 --> 0:11:30.160 a lot of the concerns that people may have in 0:11:30.240 --> 0:11:31.559 adopting this technology. 0:11:32.320 --> 0:11:35.600 I think that's why this legislative process is very important. 0:11:36.080 --> 0:11:37.880 I mean, when you think about it, one of the 0:11:37.920 --> 0:11:43.400 reasons why we had FTX situation was there wasn't a 0:11:43.559 --> 0:11:50.240 proper legislations that governs the space, and the rulemaking was 0:11:50.360 --> 0:11:54.280 left very unclear at the time. If we had all 0:11:54.280 --> 0:11:59.200 the proper regulations and legislations in place that requires these 0:11:59.280 --> 0:12:04.559 exchanges register and make a disclosures, then I think a 0:12:04.600 --> 0:12:06.520 lot of these things could have been avoided. 0:12:07.480 --> 0:12:10.440 So I think that's the first step. And the fact 0:12:10.480 --> 0:12:14.079 that we have you know, the red sweep in. 0:12:14.040 --> 0:12:18.480 The US, and you know with a lot of lawmakers 0:12:19.240 --> 0:12:22.880 are who are pre crypto and who understands the technology. 0:12:23.520 --> 0:12:25.280 I think it's a very good news in terms of 0:12:25.400 --> 0:12:33.000 passing like rational and thoughtful legislations and policies that are 0:12:33.040 --> 0:12:35.920 based on the sound understanding of the technology. 0:12:36.120 --> 0:12:38.559 So we've been discussing a little bit here about your 0:12:38.679 --> 0:12:43.000 view on disruption of some of the traditional practices. When 0:12:43.040 --> 0:12:46.040 you look at out at twenty twenty five, how much 0:12:46.440 --> 0:12:48.480 larger will the market be in the year ahead. 0:12:49.160 --> 0:12:49.719 A lot of it. 0:12:49.679 --> 0:12:51.760 Will be still be driven by bitcoin, I think. I mean, 0:12:51.800 --> 0:12:53.760 when you look at the market cap of a crypto, 0:12:54.559 --> 0:12:57.439 you know, more than half of it is bitcoin e 0:12:57.559 --> 0:13:02.120 theorem is maybe another you know, twenty percent, you throw 0:13:02.160 --> 0:13:04.400 in stable coin, and then maybe that's another ten percent. 0:13:04.480 --> 0:13:07.360 So about good seventy five percent of the crypto market 0:13:07.360 --> 0:13:12.040 cap is driven by these three three asset classes. So 0:13:12.640 --> 0:13:16.120 I think the main driver will be from those three 0:13:17.360 --> 0:13:21.880 now from the remaining twenty five percent, you know, we 0:13:21.920 --> 0:13:25.520 could see something emerge as the kind of main growth 0:13:25.600 --> 0:13:27.920 driver for the crypto industry, but it's hard to predict 0:13:27.960 --> 0:13:29.760 what that may be. I mean, there's a lot of 0:13:29.920 --> 0:13:32.679 Like I said, it's a lot of there's a lot 0:13:32.679 --> 0:13:36.400 of experiments going on in the crypto right now, and 0:13:36.760 --> 0:13:40.240 there are some areas that I think are getting attention 0:13:40.400 --> 0:13:43.960 from you know, some of the vcs such as you know, 0:13:44.080 --> 0:13:48.840 decentralized infrastructure a network for instance, but it's very early 0:13:48.920 --> 0:13:52.600 days at the moment, so you know, rather than speculating 0:13:52.640 --> 0:13:56.040 on what can come out from that remaining twenty five percent, 0:13:56.280 --> 0:13:58.640 I think we can the better way of forecasting how 0:13:58.679 --> 0:14:00.439 big this industry is going to be, well, how big 0:14:00.480 --> 0:14:01.960 the market cap is going to be, is by looking 0:14:02.000 --> 0:14:05.320 at bitcoin, Andy Thereum and stable coin and see how 0:14:05.400 --> 0:14:08.280 much further growth these three categories can deliver. 0:14:08.600 --> 0:14:10.400 Peter will leave it there, Thank you so much for 0:14:10.440 --> 0:14:12.679 being with us. Peter Chung is head of research at 0:14:12.720 --> 0:14:15.760 Presto Research, joining us here from Hong Kong on the 0:14:15.800 --> 0:14:26.560 Daybreak Asia podcast. Welcome back to the Daybreak Asia Podcast. 0:14:26.560 --> 0:14:29.560 I'm Doug Krisner. Joining us now is David Aspell. He 0:14:29.680 --> 0:14:34.000 is the co CIO at Mount Lucas Asset Management, joining 0:14:34.080 --> 0:14:37.000 us from just outside of Philadelphia. David, thank you so 0:14:37.080 --> 0:14:39.080 much for joining us. If you don't mind, I'd like 0:14:39.120 --> 0:14:42.520 to begin with the President elect Trump's choice for Treasury Secretary, 0:14:42.560 --> 0:14:46.600 Scott Bessant, who, as you know, has tested experience in markets. 0:14:46.680 --> 0:14:49.680 He's the co founder of the hedge fund Key Square group. 0:14:50.080 --> 0:14:51.640 Do you want to weigh in on this, I mean, 0:14:51.840 --> 0:14:53.040 I'd like to get your reaction. 0:14:53.640 --> 0:14:56.200 Yeah, I mean, I think he's an excellent candidate. To 0:14:56.240 --> 0:15:01.160 be frank, he is an excellent pedigree. You know, he's 0:15:01.320 --> 0:15:03.680 spent a long time running macro hedge funds where you're 0:15:03.680 --> 0:15:10.640 intimately involved with macroeconomics, trade policy, and analyzing fiscal policy. 0:15:10.680 --> 0:15:12.120 I mean, I think he's excellent. He's got a lot 0:15:12.160 --> 0:15:12.680 to deal with. 0:15:12.800 --> 0:15:15.440 I would have thought in terms of the tariffs and 0:15:15.480 --> 0:15:19.160 the trade policy goals that the Trump administration has been 0:15:19.160 --> 0:15:22.000 talking about not to mention domestically, particularly if they're looking 0:15:22.040 --> 0:15:26.920 to reshape the federal workforce. But overall, he seems like 0:15:26.920 --> 0:15:29.680 an excellent candidate who's very well suited for the position. 0:15:29.840 --> 0:15:32.640 He seems to be a fiscal hawk, so that's less spending. 0:15:32.680 --> 0:15:35.160 The other thing that I've read in terms of his 0:15:35.280 --> 0:15:39.239 approach to tariffs is that they would be more gradual, 0:15:39.320 --> 0:15:42.120 maybe than the market had been anticipating. When you look 0:15:42.160 --> 0:15:46.000 at overall Trump economic policy, give me your reaction. What 0:15:46.040 --> 0:15:47.840 do you think it's going to do for markets going 0:15:47.880 --> 0:15:49.080 forward and the economy? 0:15:49.600 --> 0:15:50.760 Yeah, I don't know. 0:15:50.800 --> 0:15:54.840 I mean, these are trade and tariffs are really big 0:15:54.920 --> 0:15:59.280 important issues that the administration seems very keen that it 0:15:59.320 --> 0:16:02.800 wants to make meaningful change in the country, and they 0:16:02.880 --> 0:16:05.160 see that, they're okay breaking some eggs to make that on. 0:16:05.480 --> 0:16:07.400 It is a fascinating time. 0:16:07.440 --> 0:16:07.600 You know. 0:16:07.800 --> 0:16:09.360 We talked to a lot of investors and there's a 0:16:09.480 --> 0:16:11.800 range of expectations that you see coming out of election, 0:16:11.880 --> 0:16:14.280 where some people have their head in their hands and 0:16:14.360 --> 0:16:16.760 others are over joy that. You know, some people are 0:16:17.080 --> 0:16:20.080 very fearful of inflation due to tariffs and you know, 0:16:20.160 --> 0:16:23.960 runaway deficits and a falling dollar, and others are fearful 0:16:24.000 --> 0:16:26.440 of completely the other side of the equation on deflation 0:16:26.520 --> 0:16:30.680 and economic problem stemming from large government cuts and the 0:16:30.720 --> 0:16:34.880 tariffs hurting growth. So overall, I think it's going to 0:16:34.880 --> 0:16:37.600 be a fascinating time. You know, I'm I think they're 0:16:37.600 --> 0:16:42.400 going to pull it off. If I'm honest, I think that. 0:16:40.280 --> 0:16:42.120 It will go well. 0:16:42.480 --> 0:16:44.720 The next big event for markets probably is going to 0:16:44.720 --> 0:16:47.440 be the FED meeting in mid December. Right now, the 0:16:47.480 --> 0:16:51.320 swaps market indicates maybe fifty to fifty chance of a 0:16:51.400 --> 0:16:54.080 quarter point rate cut. Do you think that what we're 0:16:54.120 --> 0:16:57.480 hearing from the incoming administration is going to ultimately put 0:16:57.680 --> 0:17:00.440 the FED in a tight spot in twenty twenty five 0:17:00.720 --> 0:17:03.320 in terms of further rate cuts, given the risk of 0:17:03.720 --> 0:17:05.840 maybe stubborn inflation at the very least. 0:17:06.560 --> 0:17:07.040 Maybe. 0:17:07.240 --> 0:17:09.639 I mean, as I look at it now, the markets 0:17:09.640 --> 0:17:11.840 have oscillated this year, well the last couple of years 0:17:11.840 --> 0:17:15.840 really in oscillating from fears of recession where they've started 0:17:15.840 --> 0:17:18.520 to price in lots and lots of rate cuts, and 0:17:18.560 --> 0:17:20.960 then to a more milder period where the markets have 0:17:21.040 --> 0:17:23.440 got ahead of themselves in there two years around about 0:17:23.480 --> 0:17:27.640 four forty ish currently, which is a fairly reasonable spot 0:17:27.640 --> 0:17:30.239 that's pricing, you know, a couple of cuts likely, as 0:17:30.240 --> 0:17:32.800 you say half, there's a fifty percent chance of a 0:17:32.840 --> 0:17:33.480 cut after. 0:17:33.720 --> 0:17:36.720 In December, and then we'll see where it is after that. 0:17:38.160 --> 0:17:38.359 You know. 0:17:38.400 --> 0:17:40.480 The interesting thing is, you know the Fed has begun 0:17:40.560 --> 0:17:43.679 a cutting cycle. They've cut seventy five basis points, and 0:17:43.720 --> 0:17:47.760 after that initial shift lower mortgage rates are about seventy 0:17:47.800 --> 0:17:49.960 basis points higher than they were in the FED cut 0:17:50.280 --> 0:17:55.160 in September. And some of this is is some positivity 0:17:55.200 --> 0:17:58.560 I think that you know from the incoming administration that 0:17:58.840 --> 0:18:02.359 I think people are starting to price that you're going 0:18:02.359 --> 0:18:04.439 to see a shot in the arm for growth, and 0:18:04.480 --> 0:18:07.720 that the Tax Cuts and Jobs Act will be extended 0:18:07.760 --> 0:18:11.159 and we'll see possibly a deregulatory boost as well. So 0:18:11.600 --> 0:18:14.800 I think the Fed's in a pretty good position right now. 0:18:15.440 --> 0:18:18.919 The markets are not pricing masses of cuts, and if 0:18:18.960 --> 0:18:21.280 things do slay down, the FED is in a pretty 0:18:21.280 --> 0:18:24.120 good place to be able to cut rates to get 0:18:24.160 --> 0:18:25.280 activity going again. 0:18:25.440 --> 0:18:27.000 So I think the Fed's in an okay place. 0:18:27.280 --> 0:18:29.240 It's a holiday shortened week, as you know here in 0:18:29.240 --> 0:18:32.960 the US, markets will be closed on Thursday for Thanksgiving 0:18:33.680 --> 0:18:37.080 Black Fridays the next day. This is when we traditionally 0:18:37.160 --> 0:18:39.760 begin the holiday shopping season. And I was struck by 0:18:39.760 --> 0:18:43.200 the fact that the National Retail Federation is forecasting sales 0:18:43.240 --> 0:18:46.960 will reach nearly a trillion dollars. That would amount to 0:18:47.000 --> 0:18:49.880 a record nine hundred and two dollars per person. How 0:18:49.920 --> 0:18:53.160 do you assess the health of the American consumer right now? 0:18:53.200 --> 0:18:56.719 Will it equate to nearly nine trillion in holiday sales? 0:18:57.280 --> 0:19:00.600 I mean, the economy has some issues, and the economy 0:19:00.600 --> 0:19:04.359 employment growth is slowing, but mortgage rates are back to 0:19:04.400 --> 0:19:04.800 the highs. 0:19:04.840 --> 0:19:07.240 But in general, there's a lot that's going well. You 0:19:07.280 --> 0:19:09.440 know that the prime age employment is at twenty five 0:19:09.520 --> 0:19:10.040 year highs. 0:19:10.080 --> 0:19:14.480 Wage growth is very good, and inflation has come down bumpily. 0:19:14.520 --> 0:19:17.360 Oil prices aren't particularly high. 0:19:17.440 --> 0:19:19.480 So in a time when you've got good wages. 0:19:19.160 --> 0:19:21.920 And lots of people employed, I think it's a pretty 0:19:21.920 --> 0:19:25.040 good backdrop. And hopefully people will be you know, enjoying 0:19:25.080 --> 0:19:28.119 Thanksgiving turkeys and then going out and spending in. 0:19:28.119 --> 0:19:28.919 The run up to Cristmas. 0:19:29.080 --> 0:19:32.280 All right, So when you look at markets right now, 0:19:32.320 --> 0:19:35.120 I'm curious about the opportunities that you're seeing. 0:19:35.560 --> 0:19:41.679 Well, we run systematic strategies in currencies, commodities, and fixed income. 0:19:42.040 --> 0:19:45.800 I think generally these strategies tend to do real well 0:19:45.840 --> 0:19:48.240 when there's periods of volatility. And you know, if there's 0:19:48.240 --> 0:19:52.399 one thing that Trump Trump is, it's generally positive for volatility. 0:19:52.400 --> 0:19:54.520 And what you've done is add in Elon Musk, who's 0:19:54.960 --> 0:19:58.080 one man volatility machine. So it seems like there's lots 0:19:58.119 --> 0:19:59.919 of opportunities for us. You know, where the dollar go. 0:20:00.000 --> 0:20:03.840 This seems really interesting. Gold has been moving around all 0:20:03.840 --> 0:20:07.040 over the place, mainly straight up, but you know, still 0:20:07.040 --> 0:20:08.200 a half past couple of years, but. 0:20:08.119 --> 0:20:09.959 It had a bit of a swoon earlier on. 0:20:11.280 --> 0:20:14.320 So yeah, I see lots of opportunities around macro trading 0:20:14.320 --> 0:20:16.840 and and in the dollar in particular. 0:20:17.240 --> 0:20:20.520 I'm wondering if you're seeing opportunities around the volatility that 0:20:20.560 --> 0:20:22.800 we've seen in markets in China. At the end of 0:20:22.840 --> 0:20:25.400 the week, we're going to get the official PMI data 0:20:25.440 --> 0:20:28.160 sets for China. How do you feel about markets in Asia, 0:20:28.200 --> 0:20:30.040 but especially China. 0:20:31.160 --> 0:20:34.400 Obviously, they they've started to stimulate, and they've they've done 0:20:34.400 --> 0:20:37.280 that in a quite bumpy fashion. The economy is has 0:20:37.400 --> 0:20:40.600 slowing and has slowed and its continues to slow, and 0:20:41.000 --> 0:20:43.800 I imagine they're quite fearful of the incoming Trump administration 0:20:43.880 --> 0:20:50.320 given the talk around tariffs. The stimulus was initially received 0:20:50.320 --> 0:20:52.560 pretty well and then some of that initial spark has faded. 0:20:52.560 --> 0:20:53.400 I actually thought it was. 0:20:53.720 --> 0:20:57.720 What they did was very meaningful and is you know, 0:20:58.160 --> 0:21:00.159 it seems like they are very keen to do more, 0:21:00.160 --> 0:21:01.120 and they're likely to do more. 0:21:01.160 --> 0:21:02.840 But even without it, I mean, you're starting to. 0:21:02.760 --> 0:21:07.960 See some uptick in activity from the surveys there, and 0:21:08.400 --> 0:21:10.320 you know, some of the companies themselves are putting out 0:21:10.640 --> 0:21:13.280 quite positive statements. I think you're starting to see that 0:21:13.320 --> 0:21:15.920 inflection point. And if I was them and you saw 0:21:15.960 --> 0:21:19.119 the incoming Trump administration what they're talking about, and you 0:21:19.200 --> 0:21:22.320 knew what that you need to stimulate anyway that I 0:21:22.320 --> 0:21:25.080 think they would frontload some of that stimulus to get 0:21:25.119 --> 0:21:27.040 ahead of what might be coming down at them. 0:21:27.080 --> 0:21:30.320 So I thought what they've done is quite meaningful and powerful. 0:21:30.480 --> 0:21:32.760 If you look at markets in the Asia Pacific, I 0:21:32.800 --> 0:21:35.320 think there's no doubt that Japan was one of the 0:21:35.400 --> 0:21:37.879 bright spots for twenty twenty four. At the end of 0:21:37.920 --> 0:21:40.440