Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance an Apple podcast, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. Let's bring it
Speaker 1: down and proud about chief US economist and head of
Speaker 1: markets three sixty North America down this Wednesday, we'll hear
Speaker 1: from the President. We'll hear from Chaman Pal as well.
Speaker 1: If you kind of have a preview of one, what
Speaker 1: would you pick the chairman of the President? No, definitely,
Speaker 1: I think on the fete side, this is about as
Speaker 1: well telegraphed the meeting as we can get, so it
Speaker 1: should be a pretty sleepy wait and see a meeting
Speaker 1: so big. All eyes instead are on the President and
Speaker 1: how he's going to try and pitch his really ambitious
Speaker 1: plans on everything from infrastructure to taxes to climate. Dan,
Speaker 1: I love your your backdrop. You look like you're in
Speaker 1: the Endeavor space caps along your way to the stage
Speaker 1: this morning, Dan, I want to talk to you about
Speaker 1: the idea of we're retchinging up GDP expectations. Is GDP
Speaker 1: catching up with the zeitgeist? Are we behind and we're
Speaker 1: gonna have to catch up with a boom economy? Now?
Speaker 1: I think of recent forecasts really are cashing up. You know,
Speaker 1: we're calling for near double digit and so double digit
Speaker 1: two two and then near double digit two three. Uh,
Speaker 1: it's gonna be a great looking a couple of months.
Speaker 1: But as we're just saying earlier, the fett is pretty
Speaker 1: much said they're going to look past that um and
Speaker 1: I think market should should understand that as well. The
Speaker 1: real question is beyond the summer, after we get this
Speaker 1: reopening driven boost, you know, how long is this going
Speaker 1: to sustain? And so. And there's also a question of
Speaker 1: the inflationary aspects that we see. Tom was talking about
Speaker 1: how we're seeing copper searched the highest level since two
Speaker 1: thousand eleven. We're seeing crop prices in the United States
Speaker 1: sword to the highest in two thousand thirteen. How can
Speaker 1: we call this transitory? If this seems to have legs,
Speaker 1: if people seem to be saying that they could see
Speaker 1: prices continue to rise and at least not fall substantially
Speaker 1: from here. Yeah, I think that's the big question. Um.
Speaker 1: And definitely prices are going up. We saw really a
Speaker 1: strong March inflation print at zero point three percent month
Speaker 1: a month or four UM. But is this all pricing
Speaker 1: increases that are big one off driven by not just
Speaker 1: reopening but all the supply ten issues. You know, we
Speaker 1: we are hearing about semiconductor shortages of spreading beyond automobiles
Speaker 1: to all kinds of appliances that you know, is this
Speaker 1: gonna work itself out? Or is this actually going to
Speaker 1: change what I think to be the key thing here,
Speaker 1: which is expectations. Are people now going to start expecting
Speaker 1: more higher prices and then perhaps demanding higher wages depoplacy
Speaker 1: the story on sound of the labor market to the
Speaker 1: small wanting is in the airline situation, Tom, I just
Speaker 1: want to bring up some of the airlines right now. Dutch.
Speaker 1: Your Luftanza over in Germany leading nicely, a i g.
Speaker 1: The parent company of British Airways doing nicely as well.
Speaker 1: This conversation to this morning about the EU Commission President
Speaker 1: erslavon de Land speaking to the New York Times. Team
Speaker 1: up US travelers going into Europe. Maybe that travel can
Speaker 1: happen later this summer. She's just picking it up from
Speaker 1: John Ferrell. John, you've been out on this and I
Speaker 1: know we talked about Singapore, Hong Kong and other quarters
Speaker 1: or bubbles whatever they call it. John, do you think
Speaker 1: it's feasible? I mean, you're the only one of us
Speaker 1: three who's actually traveled. Well, I've got three things to
Speaker 1: say about this. Matt Miller brought up one of them
Speaker 1: earlier this morning. Can Verse Slavon de Land actually made
Speaker 1: this decision for the EU? One too? Can we actually
Speaker 1: have a system in place, some kind of vaccine passport
Speaker 1: certificate system in place that every country understands. And three
Speaker 1: look at the specific words Li Sir, that the EU
Speaker 1: commission leader actually used. She was talking about vaccines that
Speaker 1: were accepted in the EU but also accepted in the
Speaker 1: United States. Now, first engineer that because as far as
Speaker 1: I understand, astra zeneca is not approved in the US.
Speaker 1: So if you've had an astra zeneca vaccine and you
Speaker 1: live in Europe, can you travel to the US if
Speaker 1: that's going to be the agreement later this summer? Yeah?
Speaker 1: Is that the issue? Or is this just an issue
Speaker 1: to try to prevent the Chinese vaccinations for being applicable
Speaker 1: to some of these travel guidelines. And then of course
Speaker 1: there's a question from a health perspective, and we're gonna
Speaker 1: be getting that Daniel on. Just to wrap up with you,
Speaker 1: one question a lot of people have is how much
Speaker 1: can the US accelerate without the rest of the world
Speaker 1: joining the feed here given a fact that we're seeing
Speaker 1: the acceleration in India and Brazil, some of the fastest
Speaker 1: growing economies in the world, No, I think the acceleration
Speaker 1: is going to be broader based. Certainly the US is
Speaker 1: at the vanguard here, both in terms of vaccination kind
Speaker 1: of driven reopening hopes, uh and in terms of this
Speaker 1: whole spending um. But one of our key messages has
Speaker 1: been that Europe is not far behind in terms of vaccination.
Speaker 1: They're going to go through They're gonna they are, I believe,
Speaker 1: working out their supply chain issue this on fascination distribution.
Speaker 1: So they're gonna see a nice um reopening. Taking back
Speaker 1: to in our forecasts starting in point when you two,
Speaker 1: we have your brointh after in the US, So it's
Speaker 1: gonna be broader based um. And yeah, I think the
Speaker 1: again the question is how much, however, is it's going
Speaker 1: to be sustained as beyond the sharp end of the
Speaker 1: V shaped recovery. Um is are we gonna go back
Speaker 1: to the same kind of decades long authentification trends we've
Speaker 1: seen advanced economies prior to the pandemic? Or is this
Speaker 1: really the start of something new? Down it's gonna catch up,
Speaker 1: It's gonna see it down on that bamp pant right now.
Speaker 1: Richard has joints President the Council on Foreign Relations. My
Speaker 1: book of the summer last year and still hugely important,
Speaker 1: if not more so now, The World A brief introduction
Speaker 1: by the hardcover Hopefully you'll hit the head of the
Speaker 1: smart mouth adolescent when you say, shut up and read this.
Speaker 1: It is extremely important. The first hundred pages is truly classic.
Speaker 1: Highly highly recommend hosses The World, Richard hass I love
Speaker 1: what you people have done as you look back at
Speaker 1: our history and our concert of power in honor of
Speaker 1: John Williamson in a more collegial Washington consensus. How do
Speaker 1: we get from Williamson's Washington Consensus to a more rigid
Speaker 1: concert of power? Well, we can talk about it internationally.
Speaker 1: This is simply my thinking that current international arrangements are
Speaker 1: coming up short term and what we need to think
Speaker 1: of some ways of working with countries that are ideologically
Speaker 1: and politically and economically diverse from us, but we still
Speaker 1: have to work together, whether it's on climate change, or
Speaker 1: regulating cyberspace, or dealing with proliferation, you name it. Basically
Speaker 1: the defining challenges of this Europe and again right now
Speaker 1: there's a big gap between where we are and every
Speaker 1: single one of these domains and where we need to be.
Speaker 1: I got a monograph from the mail Richard hass the
Speaker 1: one Years of the Counsul and Foreign Relations. I'm going
Speaker 1: to read it cover to cover. It's actually really really
Speaker 1: interesting in the arch of a hundred years of the
Speaker 1: Council and Foreign Relations is our politics is every four years.
Speaker 1: That's not the case in China. How do we do
Speaker 1: a concert of power when we've got a four year
Speaker 1: time frame and President she has a many, many decade
Speaker 1: time frame. Fair enough, each country has it's not just
Speaker 1: its own system, as you say, but we have our
Speaker 1: own strengths and weaknesses. China's weakness is that it's very
Speaker 1: hard to challenge orthodoxy when their mistakes made such there
Speaker 1: was with the one child policies such as there's been
Speaker 1: with environmental policy. It's incredibly hard to correct those mistakes
Speaker 1: right now. China is committed in certain directions. We'll see
Speaker 1: how it works out, but there's there's repression at home.
Speaker 1: Can they be that repressive at home and still introduce
Speaker 1: new new ideas They're they're pushing out against the world,
Speaker 1: And the question is can they continue to benefit from
Speaker 1: economic inter action at the same time they're alienating much
Speaker 1: of the world by their more assertive foreign policy. Yes, us,
Speaker 1: we've got all our known mistakes are political weaknesses, are
Speaker 1: political division, and I think there's real questions about whether
Speaker 1: or how well we can perform over time. But taking
Speaker 1: a step back, the real question is whether the United
Speaker 1: States and China can figure out a way to find
Speaker 1: areas or pockets of cooperation against the backdrop of a
Speaker 1: competitive relationship that does not actually become conflictual. Although people
Speaker 1: are saying that the only way that the United States
Speaker 1: can truly do this is if it gets some sort
Speaker 1: of group of allies on board with it. In terms
Speaker 1: of how it counters China. Given your experience on your
Speaker 1: tenure at the State Department, your knowledge of the key
Speaker 1: people who are at play here, how is Biden doing
Speaker 1: with respect to unifying the allies, Well, it's gonna be tough.
Speaker 1: One is, we've heard ourselves by not getting involved in
Speaker 1: regional economic arrangements. That's an own goal, that's a major
Speaker 1: source of potential leverage. But I think in general that
Speaker 1: the instinct that the all doction of this president is
Speaker 1: to work with allies Japan, South Korea, India. I think
Speaker 1: we've heard ourselves with India by the slowness of our
Speaker 1: response on vaccines. India is more fundamentally somewhat reluctant to
Speaker 1: align itself against China. The Europeans, as you know, have
Speaker 1: kind of going their own way. Used to be China
Speaker 1: with their with their own economic and financial arrangements. So
Speaker 1: the rhetoric has been better in some ways than the
Speaker 1: reality of forging a common front against China. Richard, I'm
Speaker 1: glad that you brought up India because I've been thinking
Speaker 1: a lot about this. Why hasn't the US gone more
Speaker 1: aggressively into helping India Given the fact that the pace
Speaker 1: of vaccinations in the US has slowed, that the supply
Speaker 1: is pretty significant versus the population. How much has that
Speaker 1: set back the United States? And what is the push
Speaker 1: pull here in terms of why the US hasn't been
Speaker 1: more aggressive. Look, I've been railing on against this now
Speaker 1: for for weeks. This administration quite honestly, has been more
Speaker 1: America first, unchill essentially and its approach to vaccines than
Speaker 1: it ought to be. It makes no sense in terms
Speaker 1: of health because of the variance, and makes no health obviously,
Speaker 1: as you pointed out, strategically, how do we bring into
Speaker 1: your closer to us if we're not there for them
Speaker 1: at a crisis. Just yesterday belatedly United States began to
Speaker 1: move in that direction. But my guess is the administration
Speaker 1: but legitimately wants to make sure that Americans are vaccinated,
Speaker 1: and perhaps more questionably, has been worried about being attacked
Speaker 1: from the right over not taking care of Americans before
Speaker 1: it's helping the rest of the world, even though the
Speaker 1: fundament the point is when we help the rest of
Speaker 1: the world, we help ourselves. Ambassador has quietly at the
Speaker 1: end of your wonderful book The World, you have a
Speaker 1: trench in phrase war within countries. Boy, does that ring home?
Speaker 1: Where there's Chad and the death of their presidency supposedly
Speaker 1: on the front lines of their war with the Islamis extremists,
Speaker 1: or the war within America as well. How do we
Speaker 1: get out of our wars within countries? Tom, I don't
Speaker 1: know the answer to that question, but I think the
Speaker 1: answer to it will decide a lot of history. Take
Speaker 1: the United States, wait, for seventy five years, have been
Speaker 1: the principal architect and in some ways the general contractor
Speaker 1: of what organization in order have been in the world.
Speaker 1: But that's assumed that there was a sufficient degree of
Speaker 1: consensus in the United States that we could do what
Speaker 1: we're doing in the world. If that consensus is no
Speaker 1: longer there, if we don't have the bandwidth, the resources,
Speaker 1: the commonality of purpose to play that role in the world,
Speaker 1: history is going to move in a very different direction.
Speaker 1: And then something that the CFR has provide a great
Speaker 1: leadership on, as of course attentions between Armenia and Turkey
Speaker 1: and Mr Biden providing decade long and multiple president leadership
Speaker 1: to state I believe the I don't want to get
Speaker 1: in trouble here, but state the obvious of nineteen fifteen.
Speaker 1: What does President Biden in the Secretary of State signal
Speaker 1: with this historic decision. Two things. One is that this
Speaker 1: administration has placed human rights type consideration really high on
Speaker 1: the agenda, particularly compared to its predecessor. Second of all,
Speaker 1: it's a real sign just how far relations with Turkey
Speaker 1: have deteriorated, and over over decades we were reluctant to
Speaker 1: take this step. I was involved in these conversations myself
Speaker 1: at the State Department and elsewhere, And what essentially now
Speaker 1: is people are saying this relationship isn't that valuable with
Speaker 1: nan As a result, there is not a lot of downside.
Speaker 1: Just guess what, we've already got the downside, Richard, Just
Speaker 1: to sort of some up this around in the world
Speaker 1: in any days with Richard hases there is a question
Speaker 1: of which hotspot is the one we should be paying
Speaker 1: attention to the most right now. Originally it was China,
Speaker 1: the US and the Biden administration was going to be
Speaker 1: the key test. That seems to have faded a bit.
Speaker 1: Is that wrong or is that sort of the focus
Speaker 1: moved onward to another spot. Look, if you'd asked me
Speaker 1: that last week, I probably would have said something with
Speaker 1: Russian and Ukraine that seems to have come. I still
Speaker 1: think China in the US, though strategically the biggest hot
Speaker 1: spot There's any number of other places which could be problematic,
Speaker 1: but the single biggest fault line in the world is
Speaker 1: the United States and China and possibly over Taiwan. And
Speaker 1: the real question is can these two countries, the U.
Speaker 1: S And China continue to finesse the disagreement that they
Speaker 1: have successfully managed for forty years, but China seems to
Speaker 1: be getting inpatient and can we continue to prevent this
Speaker 1: from becoming a front page crisis. I don't know the
Speaker 1: answer to that. One of the issues at the moment
Speaker 1: of phone policy, maybe the issue Richard House is gonna
Speaker 1: catch up as always, He's gonna hear from your counsel
Speaker 1: on form relations. President. What we try to do here
Speaker 1: as surveillance is bringing you definitive authorities on whatever the
Speaker 1: topic is his hand. We can do that with g G.
Speaker 1: Grandville Johns Hopkins out of biology at Indiana University, out
Speaker 1: of chemistry at Memorial Sloan Cuttering in New York and
Speaker 1: holding court on security and immunology at the Johns Hopkins University. Gigi,
Speaker 1: thank you so much for joining us. You have done
Speaker 1: tours of duty and Delhi. You've done tours of duty
Speaker 1: in India. Take us away from the sanitized media shots
Speaker 1: to the reality of the horror we're seeing in India. Yes,
Speaker 1: I um, I mean it's really hard to describe and imagine. Um.
Speaker 1: But you know, India has a lot more capability than
Speaker 1: I think a lot of people realize. And the fact
Speaker 1: that that their hospitals are so overwhelmed speaks to just
Speaker 1: how many cases they have and how much of a
Speaker 1: humanitarian crisis is turning out to be. Tell us about
Speaker 1: the roads out of Delhi, the roads out of Mumbai.
Speaker 1: Certainly in my reading, it is an urban and rural
Speaker 1: disaster outside of the big cities. What does India look
Speaker 1: like in a horrific pandemic? So it's a lot there's
Speaker 1: a lot of rural spots in India, um. And it's uh,
Speaker 1: you know, in the cities are are crowded, more crowded
Speaker 1: than um. Well, I mean in New York you're used
Speaker 1: to but but most people in the US are not.
Speaker 1: And with every kind of traffic conveyance um that you know,
Speaker 1: for elephants, donkeys, motorcycles, it's it's a busy spot. Um.
Speaker 1: So I think there's a lot of in the air
Speaker 1: quality is probably not helping people at all either. Because
Speaker 1: that's always been a problem in world and in the
Speaker 1: in the city area. So um, yeah, it's it's not
Speaker 1: it's not good, and so it's really fantastic that the
Speaker 1: US is offering to help. Hopefully they will get other
Speaker 1: countries to contribute some humanitarian aid as well. The difference
Speaker 1: in the conversation that we're having around India and the
Speaker 1: rest of the world, including US and Europe this morning
Speaker 1: could not be starker. We're talking about a humanitarian crisis
Speaker 1: in India and we're talking about what travel might look
Speaker 1: like for people who want to go on vacation late
Speaker 1: to this summer between Europe and the United States. Dot
Speaker 1: to forgive me for having that conversation with you. Now
Speaker 1: to follow one from this one, what on Earth does
Speaker 1: travel look like this summer? I think, Um, if you're vaccinated,
Speaker 1: I think that you can be very confident that that
Speaker 1: you are are protected. But it's best to not try
Speaker 1: to try to not take your vaccine out for a spin.
Speaker 1: I mean, it would be really great to not have
Speaker 1: to use it to get infected. And so um, I
Speaker 1: think you know, if you can, if you can manage
Speaker 1: to avoid the kind of crowds and exposures to people
Speaker 1: who may be infected. That would be the best idea. Um,
Speaker 1: you know, I think it's going to be different for
Speaker 1: every family for what they what they do. But um,
Speaker 1: but you know, get vaccinated first and allow yourself time
Speaker 1: to build up immunity. Doctor. This interview with The New
Speaker 1: York Times for the European Commission President vonder Land got
Speaker 1: my attention for one reason. It was this line here.
Speaker 1: Because one thing is clear, all twenty seven member states
Speaker 1: will accept unconditionally all those who are vaccinated with vaccines
Speaker 1: that are approved by the e M A. Doctor. There
Speaker 1: are certain vaccines that have been approved in certain vaccines
Speaker 1: that have not been approved, And I just wonder a
Speaker 1: week and to have some kind of hierarchy of vaccines
Speaker 1: pretty much well established in the next couple of months. Yes, Um,
Speaker 1: that's inevitable when you have multiple products. Um. But I think, uh,
Speaker 1: you know, for for US citizens, I think it's our
Speaker 1: US people who are getting vaccinated in the US. Um,
Speaker 1: it's going to be less of an issue internationally because
Speaker 1: the two the two vaccines that most people are getting,
Speaker 1: and now with the Johnson Johnson they they will be acceptable.
Speaker 1: Dr Gronville, forgive me for being a bit dr doom here.
Speaker 1: But is this an epidemiological nightmare setting up that we
Speaker 1: have a certain level of vaccinations that's good but not great,
Speaker 1: not critical mass around the world, and people are starting
Speaker 1: to travel internationally at a time when you've got pockets
Speaker 1: of just burgeoning virus basically asking for mutations, for more
Speaker 1: variance and possibly even vaccine resistant strains. I mean, how
Speaker 1: much of an issue does this become as we enter
Speaker 1: the traveling season. Well, I mean, given how bad things
Speaker 1: have been over the last year, I'm not convinced that
Speaker 1: a lot of people have stopped traveling or stopped doing
Speaker 1: the things that they were supposed to be doing. So
Speaker 1: um I I um, I guess I'm I've been not
Speaker 1: My optimism is rooted in the fact that I think
Speaker 1: people have uh not been following all the things that
Speaker 1: people have been telling to do. Anyway, But I mean,
Speaker 1: there's nothing magical about any of these variants. You need to, um,
Speaker 1: we know how to stop your to stop getting it affected,
Speaker 1: you need to have a mask, you need to have
Speaker 1: good air quality, try and do social distancing. That is all.
Speaker 1: The vaccines are are an additional wonderful tool that will
Speaker 1: protect you but um, we just you know, we need
Speaker 1: to to keep with all of the messages and travel
Speaker 1: um is you know, I think it's it's something people
Speaker 1: have been doing and hopefully people can do it safely
Speaker 1: and we can have more engineered controls so that, um,
Speaker 1: you know, air quality can be better and reduce transmission.
Speaker 1: That said, do you think that there should be certain
Speaker 1: travel bands in place, or that it's advisable for certain
Speaker 1: countries to say, well, travelers from India and Brazil are
Speaker 1: our no goes for right now, or or things like that.
Speaker 1: I think vaccination campaigns should be ramped up, even them
Speaker 1: more than they are now. But because you're right, um,
Speaker 1: every every time somebody is infected, it's an opportunity for
Speaker 1: a variant to emerge, and thankfully all of the variants
Speaker 1: are covered right now by the vaccination. So um, we
Speaker 1: just need to keep boosting that up and borrow some
Speaker 1: trouble later when we might have to have a booster shot. Doctor.
Speaker 1: Thank you, it's gonna catch up. Come back soon, Dr Gronfell.
Speaker 1: That John's hulking sensea for the health security Sadia Scara,
Speaker 1: you do the diet check and I'll disrupt it. Come on, okay,
Speaker 1: I'll do the data check. Yields are up, the real
Speaker 1: yield negative zero point seven. Thank you. No one cares. Okay,
Speaker 1: no one cares. There we go, there's your data check
Speaker 1: on radio. And this morning all we care about is
Speaker 1: getting Detroitsky. We've bet a lot of talk about, including
Speaker 1: John and Lisa riveted by Gayski's bitcoin call. He is
Speaker 1: with sky Bridge in their co chief investment officer, Troy.
Speaker 1: The hedge funds are addicted to big technology. We've seen
Speaker 1: that through every cycle. I'm reading that hedge funds are
Speaker 1: doing better. What is the linkage of alternative investments to
Speaker 1: four or five big technology names. Yeah, you know, it's
Speaker 1: actually interesting you bring that up, Tom, because there has
Speaker 1: been rotation, particularly back into Facebook and Amazon, less so Apple. Uh.
Speaker 1: Many hedge funds went long growth coming out of the
Speaker 1: pandemic and then focus and switched their focus to cyclical
Speaker 1: recovery UM and now you see that moving back given
Speaker 1: that valuations have come down as much as they have,
Speaker 1: so certainly the dominance and the big five names will
Speaker 1: be more important the next three months than they were
Speaker 1: the last four. But if you drill down to a
Speaker 1: subsector within technology that we find very fascinating. We look
Speaker 1: through the holdings of our underlying managers, we find that
Speaker 1: semi conduct your equipment right now is particularly compelling because
Speaker 1: valuations are semi connector equipment application um because valuations are
Speaker 1: very reasonable, and those are both cyclical recovery stories and
Speaker 1: secular growth stories. And plus there's a play on the
Speaker 1: continued nationalization or divergence of the economy between the US
Speaker 1: and UH in China, because if you look at what
Speaker 1: happened to Intel, which lost its lead for a manufacturing
Speaker 1: of very thin films and and and very high high
Speaker 1: potency processors, you can't allow that to happen in semi
Speaker 1: connector fabrication equipment. So when we drill down into tech,
Speaker 1: we think that's a pretty compelling space that hedge funds
Speaker 1: are starting to rotate into right now. Troy, I'm doing
Speaker 1: my best Tom Kane impression today, and usually when I
Speaker 1: get the first question to a guest, they totally ignores
Speaker 1: it and stance with something else with no follow up.
Speaker 1: So I'm going to do that right now. But let's
Speaker 1: talk about bitcoin. Last time we spoke, you'd allowed that
Speaker 1: to grow into the holdings of your portfolio. Can you
Speaker 1: walk me through way you are now and what's driving
Speaker 1: things for you? Yea. So at the peak coming into
Speaker 1: this month, um was actually a little over fourteen percent,
Speaker 1: so that's dropped back down to thirteen and age given
Speaker 1: the obviously correction we're going through right now. But you know,
Speaker 1: as we spoke about last time, really there's three keys
Speaker 1: to our thesis. The first is, you know, hyper hyper
Speaker 1: hyper hyper hyper use monetary policy. Hyper loose monetary policy
Speaker 1: is what we did coming out of the crisis. Now
Speaker 1: we have five hypers in front of that. And m
Speaker 1: TO growth has been growing around eighteen percent in the
Speaker 1: US so far this year. The Fed will come up
Speaker 1: with a out with updated date on Tuesday to see
Speaker 1: how fast it grew in March. But given the continued
Speaker 1: expansion their balance sheet, we don't see that going below
Speaker 1: nominal GDP anytime soon. Obviously, the desire for every central
Speaker 1: bank continue to UH to debase their currency in budget
Speaker 1: deficits as far as the eye can see. So that's
Speaker 1: the macro case. It's hard to imagine a better macro
Speaker 1: environment for an alternative to fiat currencies. And then if
Speaker 1: you look at the micro case, and you saw this
Speaker 1: this morning with JP Morgan's announcement several weeks ago, with
Speaker 1: Morgan Stanley's announcement and obviously some of the institutional interests
Speaker 1: that started really in Q four. You know, we're going
Speaker 1: through a very similar adoption story to what we did
Speaker 1: with gold from really oh six to two thirteen, where
Speaker 1: the world went from you know, basically no gold to
Speaker 1: one to two to maybe three percent gold over time.
Speaker 1: And that that's very different this cycle than the last two. Um,
Speaker 1: we expect that to continue. And then thirdly, you know,
Speaker 1: you have the natural dynamics of the having cycle, right,
Speaker 1: and I think Mike talks about this well, Um, but
Speaker 1: when you cut new supply in half, if you just
Speaker 1: keep demand constant, prices are going higher. But when you
Speaker 1: cut new supply and half and demand increases substantially, obviously
Speaker 1: prices are going meaningfully higher. And so you know, we
Speaker 1: still think we're in the middle end eas of this
Speaker 1: poll market from bitcoint shock that wasn't meaningfully higher over
Speaker 1: the next three six nine months. UM, So we continue
Speaker 1: to maintain the position size where it is. That's what
Speaker 1: I wanted to tell you about Detroit, the maintaining the
Speaker 1: position size, just the perspective of the PM right now,
Speaker 1: how constantrates it? Do you want that bet to be
Speaker 1: within the wider portfolio? Your tolerance levels around the volatility?
Speaker 1: How do you make those decisions? Yeah, so, so look
Speaker 1: at and you have to look at near term correlation behavior,
Speaker 1: longer term correlation behavior. It's very important to juxtapose it
Speaker 1: against other assets in your portfolio. And so for instance,
Speaker 1: if you had a nine percent of your portfolio and
Speaker 1: go go growth, right, you know, high beta, mid cap
Speaker 1: small cap tech names, it might make less sense to
Speaker 1: have a thirteen fourteen percent position in bitcoin, who, in
Speaker 1: the majority of your portfolio, like US, is tied to
Speaker 1: the real economy, tied to distress, credit structure, credit more
Speaker 1: market neutral multi strategy or equity exposures convert a bond
Speaker 1: arbitrage which by definitions of multi or a market neutral strategy.
Speaker 1: You know, having a thirteen fourteen position percent position in
Speaker 1: bitcoin we think is appropriate at this stage of the
Speaker 1: cycle because that will UH slightly elevate our volatility. We
Speaker 1: expect volatility in the range of eight to twelve percent
Speaker 1: this year versus UH four to eight, which is our
Speaker 1: long term target. But we think that's one of the
Speaker 1: unique areas where you're getting paid for that volatility, right
Speaker 1: if you think of the nastac right now, because the
Speaker 1: asked that go up in the attendant fifteen percent this year,
Speaker 1: Yes it could, but you're going to experience more volatility
Speaker 1: than he certainly had or two A balls though, I
Speaker 1: should say, than the second quarter of last year. For instance.
Speaker 1: Queen Troy, you seem to be freezing up a little bit.
Speaker 1: I do want to get Perhaps we'll get you back
Speaker 1: to fantasy. We've lost he with some technical issues that well,
Speaker 1: we'll get Troy back on another time. This is the
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Speaker 1: Tom Keene, and this is Bloomberg