1 00:00:05,120 --> 00:00:09,280 Speaker 1: Welcome to the Bloombergs Surveillance Podcast. Hometim Keene along with 2 00:00:09,440 --> 00:00:13,080 Speaker 1: Jonathan Ferrill and Lisa A. Brown Witz Jaylie, we bring 3 00:00:13,119 --> 00:00:17,119 Speaker 1: you insight from the best an economics, finance, investment and 4 00:00:17,239 --> 00:00:23,320 Speaker 1: international relations, Fine Bloomberg Surveillance and Apple podcast, SoundCloud, Bloomberg 5 00:00:23,360 --> 00:00:29,160 Speaker 1: dot Com, and of course on the Bloomberg terminal. Let's 6 00:00:29,160 --> 00:00:32,159 Speaker 1: set the stage. We come into three. The consensus is 7 00:00:32,159 --> 00:00:34,199 Speaker 1: pretty clear. The first half is gonna be tough. We've 8 00:00:34,200 --> 00:00:36,160 Speaker 1: gotta pay the bill for the tightening of the last 9 00:00:36,159 --> 00:00:38,240 Speaker 1: twelve months. Got it. Second half is gonna be better. 10 00:00:38,400 --> 00:00:41,360 Speaker 1: You get a recovery. The year starts boom, everyone's wrong. 11 00:00:41,560 --> 00:00:43,760 Speaker 1: Then that's Stack one hundreds up about eight percent year 12 00:00:43,760 --> 00:00:47,160 Speaker 1: to day, the stocks fifty, the euro stocks fifty here 13 00:00:47,159 --> 00:00:49,440 Speaker 1: in Europe is up about nine percent year today. Max 14 00:00:49,520 --> 00:00:54,120 Speaker 1: Kenna of HSBC said, get on board. Max joins us. Now, Max, 15 00:00:54,120 --> 00:00:55,840 Speaker 1: I have to say once I new is coming to 16 00:00:55,880 --> 00:00:57,240 Speaker 1: London for a week. You were the man I wanted 17 00:00:57,280 --> 00:00:59,280 Speaker 1: to catch up with that note from a couple of 18 00:00:59,280 --> 00:01:01,680 Speaker 1: weeks ago, and I'll share the quote with our audience 19 00:01:01,760 --> 00:01:03,600 Speaker 1: just in case they missed it. So he bears the 20 00:01:03,600 --> 00:01:07,000 Speaker 1: whole of twenty two super underweight max underweight. Then you 21 00:01:07,040 --> 00:01:09,520 Speaker 1: said this to start twenty three having been staunched bear 22 00:01:09,560 --> 00:01:11,759 Speaker 1: so much of twenty two we think the consensus is wrong. 23 00:01:12,000 --> 00:01:14,040 Speaker 1: We see a variety of reasons to be less bearish 24 00:01:14,080 --> 00:01:16,720 Speaker 1: on risk assets in the first half. So let's talk 25 00:01:16,720 --> 00:01:18,240 Speaker 1: about what you see so far. Do you like what 26 00:01:18,319 --> 00:01:20,640 Speaker 1: you see so far? So far? I think yes, But 27 00:01:20,680 --> 00:01:22,200 Speaker 1: we've got to be honest and also say there has 28 00:01:22,240 --> 00:01:24,559 Speaker 1: been some you know, some easing also on the bond 29 00:01:24,600 --> 00:01:27,280 Speaker 1: side of things, right, So it's not just been cyclical strength, 30 00:01:27,280 --> 00:01:29,520 Speaker 1: but it's also been strength on the bond side of things. 31 00:01:29,560 --> 00:01:32,440 Speaker 1: So that has been taken pretty positively, I would say 32 00:01:32,480 --> 00:01:34,280 Speaker 1: by risk acters as well. That's part of the reason 33 00:01:34,319 --> 00:01:37,039 Speaker 1: also why the nastag was out performing, why growth and 34 00:01:37,120 --> 00:01:39,400 Speaker 1: text dogs were out of performing. Now, I do think 35 00:01:39,400 --> 00:01:42,000 Speaker 1: if we look at the consensus, right, I do think, look, 36 00:01:42,040 --> 00:01:45,400 Speaker 1: we've got very pessimistic expectations. I think everyone is saying, look, 37 00:01:45,560 --> 00:01:48,520 Speaker 1: earnings expectations are still too high. I don't disagree with that, 38 00:01:48,560 --> 00:01:51,520 Speaker 1: but I disagree with the sequencing. I disagree with the 39 00:01:51,560 --> 00:01:54,559 Speaker 1: timing right, because if we've got pretty much everyone agreeing 40 00:01:54,600 --> 00:01:56,840 Speaker 1: that age one is going to be tough if we've 41 00:01:56,880 --> 00:02:00,200 Speaker 1: got you know, economists agreeing like they've never agreed before. 42 00:02:00,240 --> 00:02:02,480 Speaker 1: Look at the Philadelphia Fed survey right on this, on 43 00:02:02,480 --> 00:02:05,720 Speaker 1: this recession probability that's on like as the highest in 44 00:02:05,840 --> 00:02:09,160 Speaker 1: fifty years. So we've got consensus agreeing on the probability 45 00:02:09,160 --> 00:02:11,760 Speaker 1: of a recession, on the factors driving it, and on 46 00:02:11,840 --> 00:02:15,160 Speaker 1: the timing. Now, what's the dime downside surprise? Then? Right? 47 00:02:15,240 --> 00:02:17,959 Speaker 1: What's the downside surprise to earnings? If you've seen a 48 00:02:18,040 --> 00:02:21,440 Speaker 1: queue for and now in Q one those earnings revisions 49 00:02:21,480 --> 00:02:25,040 Speaker 1: down what's particularly in the cyclicals, in consumer discrestion, in materials, 50 00:02:25,080 --> 00:02:28,600 Speaker 1: in the megacaptain, I T and communication services, so exactly 51 00:02:28,600 --> 00:02:30,880 Speaker 1: where we want to see them, what's the what's the 52 00:02:30,919 --> 00:02:33,919 Speaker 1: actual downside surprice? Now I would I would argue, look, 53 00:02:33,960 --> 00:02:36,200 Speaker 1: if we get an average recession, right, it's not going 54 00:02:36,240 --> 00:02:38,520 Speaker 1: to blow anyone's boats. It's not going to be like, 55 00:02:38,520 --> 00:02:41,200 Speaker 1: oh yeah, this is a massive surprise, you know, this 56 00:02:41,240 --> 00:02:43,000 Speaker 1: is this is why we need to get baris No, 57 00:02:43,160 --> 00:02:45,200 Speaker 1: not at all. Actually, what we need now is we 58 00:02:45,240 --> 00:02:49,120 Speaker 1: need to get something properly going wrong right well, and 59 00:02:49,160 --> 00:02:51,640 Speaker 1: we need to have something break. Then you can be barish. 60 00:02:51,720 --> 00:02:53,840 Speaker 1: You clearly thought it was upside risk. We've got a 61 00:02:53,840 --> 00:02:56,200 Speaker 1: squeeze right now, that's clear. I'm trying to work out 62 00:02:56,280 --> 00:02:58,800 Speaker 1: one of the durable tail with for this market. I 63 00:02:58,840 --> 00:03:00,760 Speaker 1: get it. Everything you've said had a lot of people 64 00:03:00,800 --> 00:03:03,480 Speaker 1: on board with it. What's durable about what we're saying. 65 00:03:03,840 --> 00:03:06,800 Speaker 1: I think it's still durable because sentiment and positioning is 66 00:03:06,840 --> 00:03:09,720 Speaker 1: still so, you know, so down beat. I mean, let's 67 00:03:09,720 --> 00:03:13,280 Speaker 1: not forget. We've just updated our sort of aggregatet real 68 00:03:13,320 --> 00:03:17,320 Speaker 1: money invested positioning study on Monday, and that still shows 69 00:03:17,639 --> 00:03:20,800 Speaker 1: underweight positions on aggregate in equities and in high yield credit. 70 00:03:21,080 --> 00:03:24,119 Speaker 1: That's normally not the case, right, That's historically been rarely 71 00:03:24,200 --> 00:03:27,399 Speaker 1: the case that you see outright underweight positions. You see 72 00:03:27,440 --> 00:03:28,720 Speaker 1: the same thing, right If you look at c t 73 00:03:28,840 --> 00:03:31,800 Speaker 1: A equity beaters, they're still down. Yes, they've gone up 74 00:03:31,800 --> 00:03:34,360 Speaker 1: a bit, but there's still on the in level terms, 75 00:03:34,360 --> 00:03:36,840 Speaker 1: still down. Look at equity beaters of u as equality 76 00:03:36,840 --> 00:03:40,640 Speaker 1: funds massively underweight, multi acid fund beaters are sort of average. 77 00:03:41,040 --> 00:03:43,440 Speaker 1: None of that is telling us, oh yeah, like everyone's 78 00:03:43,440 --> 00:03:45,840 Speaker 1: already gone bullish. And if anything, when we talk to 79 00:03:45,880 --> 00:03:48,160 Speaker 1: clients in the last of two three weeks, the biggest 80 00:03:48,160 --> 00:03:50,640 Speaker 1: pushback we've got was, well, I know that everyone else 81 00:03:50,720 --> 00:03:53,160 Speaker 1: is already bullish, Therefore I have to continue to be 82 00:03:54,280 --> 00:03:56,920 Speaker 1: let's break this up Equodi's versus credit and Star with equities, 83 00:03:57,200 --> 00:04:00,400 Speaker 1: Microsoft desmonic or rather after the close yesterday, how many 84 00:04:00,440 --> 00:04:02,960 Speaker 1: messages did you get saying look at Microsoft, you're runk. 85 00:04:03,240 --> 00:04:06,600 Speaker 1: What did you say back? Now? Look, I mean what 86 00:04:06,640 --> 00:04:09,160 Speaker 1: I would say is it's not the time yet to 87 00:04:09,240 --> 00:04:12,640 Speaker 1: go full on max overweight equities. Right with that, I agree, 88 00:04:13,120 --> 00:04:15,640 Speaker 1: But that is mostly very very tactical because look at 89 00:04:15,640 --> 00:04:17,920 Speaker 1: what's priceton for the FIT for the next two meetings. 90 00:04:18,160 --> 00:04:20,920 Speaker 1: We've got less than fifty basis points priced in into 91 00:04:20,960 --> 00:04:23,920 Speaker 1: FIT funds now cumulatively from the next two meetings. So 92 00:04:23,960 --> 00:04:26,040 Speaker 1: they're just gonna come out next week and say, look, 93 00:04:26,040 --> 00:04:29,919 Speaker 1: we're gonna go go, but we'll do another in March. Right, 94 00:04:29,960 --> 00:04:32,400 Speaker 1: they're going to guide us to towards that, And even 95 00:04:32,400 --> 00:04:35,560 Speaker 1: that would already be a slightly hawkish surprise, and that 96 00:04:35,560 --> 00:04:38,400 Speaker 1: would weigh on high multiple tech stocks and so on. Right, 97 00:04:38,440 --> 00:04:40,960 Speaker 1: it would weigh on valuations again, perhaps a bit of 98 00:04:40,960 --> 00:04:42,760 Speaker 1: a higher rates well, but a bit of higher real 99 00:04:42,839 --> 00:04:45,800 Speaker 1: rates than that means than weighing on multiples in tech, 100 00:04:46,240 --> 00:04:49,880 Speaker 1: so very tactically. I don't like equities like you know, 101 00:04:50,040 --> 00:04:53,800 Speaker 1: I'm not massively massively bullish on equities just yet. I 102 00:04:53,839 --> 00:04:57,400 Speaker 1: would say in a modeling through scenario right where you say, look, 103 00:04:57,440 --> 00:04:59,760 Speaker 1: it's gonna be not neither here or there, right, we 104 00:05:00,040 --> 00:05:02,760 Speaker 1: uddling through in terms of growth, slow grind lower rather 105 00:05:02,800 --> 00:05:05,760 Speaker 1: than really a swoshdown and the recovery and H two. 106 00:05:06,120 --> 00:05:08,720 Speaker 1: That means that credit, you know how yeld credit is fine. 107 00:05:08,800 --> 00:05:11,520 Speaker 1: Emerging market debt is fine. I G debt is fine. Right, 108 00:05:11,600 --> 00:05:14,400 Speaker 1: all of that you just turn over the carry. That's fine. Well, 109 00:05:14,440 --> 00:05:17,000 Speaker 1: let's talk about emerging markets, and let's talk about credit 110 00:05:17,160 --> 00:05:19,919 Speaker 1: emerging markets. I think it was more constandy investment management yesterday. 111 00:05:20,040 --> 00:05:22,720 Speaker 1: Get on board, They're not alone. That's quickly becoming consensus 112 00:05:22,760 --> 00:05:25,679 Speaker 1: em international outperforms. Can we talk about domestic US credit? 113 00:05:26,160 --> 00:05:29,200 Speaker 1: Triple C's City came out yesterday, and I have to 114 00:05:29,200 --> 00:05:31,719 Speaker 1: say it was a nuanced report, but the headline is 115 00:05:31,760 --> 00:05:33,680 Speaker 1: by Triple CS, how much risk do you want to 116 00:05:33,720 --> 00:05:35,680 Speaker 1: take in credit? Do you want to go right to 117 00:05:35,720 --> 00:05:37,719 Speaker 1: the bottom of the quality stack and get into high 118 00:05:37,760 --> 00:05:40,520 Speaker 1: yield in Triple CS? Yeah? I think that doesn't make sense. 119 00:05:40,520 --> 00:05:42,440 Speaker 1: To an extent. Right, if we look at triple Bees 120 00:05:42,760 --> 00:05:46,680 Speaker 1: versus single A's and we compare that against P. M. Myers, 121 00:05:47,120 --> 00:05:49,240 Speaker 1: there is actually much less weakness price. Then if you 122 00:05:49,240 --> 00:05:52,240 Speaker 1: look at triple cs versus double Bees, that looks you know, 123 00:05:52,240 --> 00:05:55,640 Speaker 1: it looks much fairer priced relative to where macro indicators on. 124 00:05:56,040 --> 00:05:58,279 Speaker 1: So there you could actually argue, well, the weakness as price, 125 00:05:58,360 --> 00:06:00,719 Speaker 1: particularly if you compare it right with then high yield, 126 00:06:00,920 --> 00:06:04,000 Speaker 1: that weakness is pretty much under price. So that's good, right, 127 00:06:04,279 --> 00:06:06,160 Speaker 1: it would be much worrying I think if we talk 128 00:06:06,240 --> 00:06:08,719 Speaker 1: about the macro side of things as well. One of 129 00:06:08,720 --> 00:06:11,279 Speaker 1: the pushbacks we got is I remember we had a 130 00:06:11,320 --> 00:06:13,440 Speaker 1: note doubt, and you know, people said, but look at 131 00:06:13,480 --> 00:06:15,679 Speaker 1: the I M look at the services or something. He orders, 132 00:06:15,680 --> 00:06:20,719 Speaker 1: it's forty credit with turn more constructive. Now. My answer 133 00:06:20,800 --> 00:06:24,120 Speaker 1: is very simple. I wouldn't turn constructive. It was if 134 00:06:24,160 --> 00:06:26,600 Speaker 1: it was still at fifty five or sixty, because then 135 00:06:26,640 --> 00:06:29,200 Speaker 1: now leading indicators would still point out and we'd say, 136 00:06:29,360 --> 00:06:32,159 Speaker 1: hey we've got another ten fifteen points lower. Be careful 137 00:06:32,279 --> 00:06:34,440 Speaker 1: now you're at forty five. I look at him like, well, 138 00:06:34,480 --> 00:06:37,039 Speaker 1: this is exactly what I wanted to see done. Right, 139 00:06:37,200 --> 00:06:39,480 Speaker 1: Let's get on Max Kenny, You make it sounds simple, 140 00:06:39,680 --> 00:06:41,760 Speaker 1: it's not. We've got a challenging year ahead of ahs 141 00:06:41,839 --> 00:06:54,960 Speaker 1: v C. Max Kenner there of HSPC has framed the 142 00:06:55,000 --> 00:06:57,920 Speaker 1: last twelve months. This is important. We've been wrestling worldwide 143 00:06:58,040 --> 00:07:00,400 Speaker 1: with inflation and central banks have made a move. The 144 00:07:00,480 --> 00:07:02,400 Speaker 1: u c B has gone to fifty, the Bank of 145 00:07:02,440 --> 00:07:04,880 Speaker 1: England's gone to three fifty, the Fellow Reserve has gone 146 00:07:04,920 --> 00:07:08,160 Speaker 1: to four fifty. The Bank of Japan, the b o J, 147 00:07:08,400 --> 00:07:11,440 Speaker 1: has done absolutely nothing. Is that going to change this year? 148 00:07:11,520 --> 00:07:13,800 Speaker 1: Jane Furley of Rabbit Bank alongside us and the beating 149 00:07:13,800 --> 00:07:15,880 Speaker 1: card of foreign Exchange, Jane, fantastic, the catch up with you. 150 00:07:15,960 --> 00:07:18,520 Speaker 1: Let's start there sub zero with the b J. Is 151 00:07:18,520 --> 00:07:20,520 Speaker 1: that going to change this year? You know it might, 152 00:07:21,040 --> 00:07:22,840 Speaker 1: but it might not. And I think that's the really 153 00:07:22,880 --> 00:07:25,440 Speaker 1: crucial here, crucial point here because if we saw, you know, 154 00:07:25,480 --> 00:07:28,240 Speaker 1: the meeting in January, it's all speculators all egging on 155 00:07:28,320 --> 00:07:30,160 Speaker 1: for a change in your curve control, and what do 156 00:07:30,200 --> 00:07:32,760 Speaker 1: they get? Nothing? And I think this is the risk 157 00:07:33,520 --> 00:07:35,280 Speaker 1: the market is now assuming that we're going to get 158 00:07:35,280 --> 00:07:37,960 Speaker 1: a replacement for Corroda in in April. Of course, as 159 00:07:37,960 --> 00:07:40,120 Speaker 1: he steps back and they're assuming that we're going to 160 00:07:40,200 --> 00:07:44,000 Speaker 1: get maybe a significant change in policy. We might get 161 00:07:44,040 --> 00:07:46,640 Speaker 1: a change in policy, but it may not be significant, 162 00:07:46,680 --> 00:07:49,320 Speaker 1: and that's the point. We might get another tweek two 163 00:07:49,320 --> 00:07:52,160 Speaker 1: your curve control. We may get an interest rate high. 164 00:07:52,240 --> 00:07:54,040 Speaker 1: We may not because if you look at the type 165 00:07:54,040 --> 00:07:55,920 Speaker 1: frame for the Bank of Japan, they're probably not going 166 00:07:55,960 --> 00:07:58,000 Speaker 1: to be hiking interest rates next year, when, for instance 167 00:07:58,000 --> 00:08:00,480 Speaker 1: of the FED could be easy in another central So 168 00:08:00,520 --> 00:08:02,120 Speaker 1: you know you've got a limited time frame. But then 169 00:08:02,160 --> 00:08:06,080 Speaker 1: you look at the fundamentals. At the fundamentals, yes, inflation 170 00:08:06,240 --> 00:08:09,120 Speaker 1: is above its target, but only because import prices are 171 00:08:09,160 --> 00:08:12,320 Speaker 1: not because it's domestically generated, which is the golden goose 172 00:08:12,440 --> 00:08:15,760 Speaker 1: for the Bank of Japan. And if Corona gets replaced, 173 00:08:15,800 --> 00:08:17,920 Speaker 1: as a very good chance that he gets replaced, maybe 174 00:08:17,920 --> 00:08:20,320 Speaker 1: by one of his deputies, maybe by somebody else from 175 00:08:20,320 --> 00:08:22,360 Speaker 1: the Bank of Japan, all of which have been supportive 176 00:08:22,440 --> 00:08:25,160 Speaker 1: of the very accommodative policies for a long time, so 177 00:08:25,440 --> 00:08:27,440 Speaker 1: disappointment could be coming. Well, let's pick up on what 178 00:08:27,480 --> 00:08:29,240 Speaker 1: you just said, is the replacement. I think that's what 179 00:08:29,560 --> 00:08:32,080 Speaker 1: everyone's attention. The fact that we have this final meeting 180 00:08:32,320 --> 00:08:35,400 Speaker 1: with Corona in March and then the handoff in April, 181 00:08:35,640 --> 00:08:39,600 Speaker 1: which chalice carries the most poison? Does Governor Corona handover 182 00:08:39,679 --> 00:08:42,640 Speaker 1: policy already sit on a path to move away from 183 00:08:42,679 --> 00:08:45,319 Speaker 1: your curve control and towards higher interest rates? Or is 184 00:08:45,320 --> 00:08:48,240 Speaker 1: he handover what there is right now? Which chalice carries 185 00:08:48,240 --> 00:08:50,360 Speaker 1: the most poison? I think it depends on the outcome 186 00:08:50,400 --> 00:08:53,000 Speaker 1: of the Spring wag Weight rounds, really, and you know 187 00:08:53,040 --> 00:08:55,480 Speaker 1: that the indicators are that, yes, the Spring ray Weight 188 00:08:55,640 --> 00:08:59,040 Speaker 1: rounds are going to bring some moderate increase in domestically 189 00:08:59,080 --> 00:09:01,600 Speaker 1: generated inflation age in plation, which is what they wanted 190 00:09:01,640 --> 00:09:05,120 Speaker 1: to see. And you know that could lay the framework 191 00:09:05,160 --> 00:09:07,600 Speaker 1: for a change in your co control and another tweak. 192 00:09:07,960 --> 00:09:10,200 Speaker 1: Will it lay the phonework for a change in interest 193 00:09:10,240 --> 00:09:12,559 Speaker 1: rate policy? You know that's a little bit further down 194 00:09:12,559 --> 00:09:14,480 Speaker 1: the line. I don't think we can make that decision yet. 195 00:09:15,320 --> 00:09:18,600 Speaker 1: But you know that the the the Corona might be 196 00:09:18,720 --> 00:09:21,040 Speaker 1: leading the Bank of Japan, but he leaves it with 197 00:09:21,040 --> 00:09:24,640 Speaker 1: a whole board, and that board won't necessarily be changed 198 00:09:24,720 --> 00:09:27,080 Speaker 1: that much. So I think there is not going to 199 00:09:27,120 --> 00:09:30,520 Speaker 1: be this massive change towards a very hawkish central bank. 200 00:09:30,720 --> 00:09:33,680 Speaker 1: You may get a slightly less dubbish central bank. The 201 00:09:33,679 --> 00:09:36,400 Speaker 1: perspective within the BOJ was that this was perhaps a 202 00:09:36,520 --> 00:09:40,080 Speaker 1: once in a generation opportunity to reset inflation and expectations higher. 203 00:09:40,480 --> 00:09:42,160 Speaker 1: He's been doing this now for ten years. I think 204 00:09:42,160 --> 00:09:44,040 Speaker 1: we all remember when he took this on back in 205 00:09:45,480 --> 00:09:49,840 Speaker 1: Does he leave walk away with any success whatsoever? I 206 00:09:49,880 --> 00:09:52,440 Speaker 1: think there is some success. I mean again that that 207 00:09:52,520 --> 00:09:54,640 Speaker 1: hurts back to that the whole Peter Pan issue, that 208 00:09:54,720 --> 00:09:57,000 Speaker 1: the whole psychological issue, that he thought that if you 209 00:09:57,040 --> 00:10:00,560 Speaker 1: would bring in an inflation target, people would assume inflation 210 00:10:00,640 --> 00:10:03,920 Speaker 1: might be higher and they would alter their spending behavior accordingly. 211 00:10:03,960 --> 00:10:05,880 Speaker 1: But as we know, that really has taken a very 212 00:10:05,880 --> 00:10:09,080 Speaker 1: long time. But you know, with inflation around the globe, 213 00:10:09,480 --> 00:10:11,920 Speaker 1: this perhaps has given a little bit of an inPulse 214 00:10:12,440 --> 00:10:15,440 Speaker 1: impetus into inflation. So there is a little bit here. 215 00:10:15,720 --> 00:10:18,920 Speaker 1: You've got the government of the Bank of Japan behind Coroda. 216 00:10:19,280 --> 00:10:21,920 Speaker 1: You've got the Prime Minister saying to fans, yeah, you know, guys, 217 00:10:22,000 --> 00:10:25,880 Speaker 1: you need to raise wages, and therefore you get what 218 00:10:25,920 --> 00:10:29,040 Speaker 1: they're looking for, which is a virtuous circle behind higher wages, 219 00:10:29,120 --> 00:10:32,960 Speaker 1: high domestic demand, higher profitability, etcetera. And there are some 220 00:10:33,080 --> 00:10:36,040 Speaker 1: glimmers of optimism that this might be coming but I 221 00:10:36,080 --> 00:10:38,760 Speaker 1: don't think there's a huge amount of confidence that they're 222 00:10:38,760 --> 00:10:41,439 Speaker 1: there yet, Hence the cautious take you've implied there could 223 00:10:41,480 --> 00:10:44,720 Speaker 1: be some disappointment Dolly's come back from one fifty subone 224 00:10:44,760 --> 00:10:48,240 Speaker 1: thirty about right now, push that through the ethics market 225 00:10:48,280 --> 00:10:50,240 Speaker 1: for me, where does that leave Dolly, Anne, I think 226 00:10:50,240 --> 00:10:52,440 Speaker 1: we can still see one in three months. Of course 227 00:10:52,480 --> 00:10:55,199 Speaker 1: we we are, assuming it was the dollar is weak 228 00:10:55,240 --> 00:10:57,360 Speaker 1: and that's perhaps a large part of that movement back 229 00:10:57,360 --> 00:11:00,319 Speaker 1: from one fifty, So you know, is possible, can say, 230 00:11:00,400 --> 00:11:02,720 Speaker 1: you know, there is the possibility of another movement, another 231 00:11:02,720 --> 00:11:05,679 Speaker 1: tweak in your curve control, maybe some indication that they 232 00:11:05,679 --> 00:11:07,719 Speaker 1: could move away from that in the months ahead. But 233 00:11:07,760 --> 00:11:10,119 Speaker 1: the problem is again is that the wind of opportunity 234 00:11:10,320 --> 00:11:13,280 Speaker 1: is quite short. So is possible, you know, maybe even 235 00:11:13,280 --> 00:11:15,640 Speaker 1: one six and in the middle of the year, But 236 00:11:15,720 --> 00:11:18,280 Speaker 1: I don't think we're going to be, you know, falling 237 00:11:18,640 --> 00:11:22,080 Speaker 1: hugely in Dolly. And you mentioned the U. S. Dollar. 238 00:11:22,120 --> 00:11:24,840 Speaker 1: I remember Tom, Lisa and I sitting here with you 239 00:11:24,920 --> 00:11:27,240 Speaker 1: maybe in September. I think it was back end of 240 00:11:27,320 --> 00:11:29,400 Speaker 1: September we were looking at cable at one oh three 241 00:11:29,720 --> 00:11:34,280 Speaker 1: fifty strong dollar Euro dollar ninety five something strong dollar. 242 00:11:34,360 --> 00:11:36,000 Speaker 1: It's all back away since then. I think it's been 243 00:11:36,040 --> 00:11:39,240 Speaker 1: a ten eleven move on the x y. I'm sitting 244 00:11:39,280 --> 00:11:42,000 Speaker 1: here this week trying to work out what's durable about 245 00:11:42,040 --> 00:11:44,520 Speaker 1: all of this, particularly for euro dollar. I know there 246 00:11:44,559 --> 00:11:46,520 Speaker 1: is a positive surprise. I know that we've got that 247 00:11:46,559 --> 00:11:48,840 Speaker 1: adjustment as we move away from the risk of recession. 248 00:11:49,320 --> 00:11:51,760 Speaker 1: What's durable about these tail winds that we're seeing start 249 00:11:51,800 --> 00:11:54,120 Speaker 1: to build? Well, you know, I think this is really 250 00:11:54,160 --> 00:11:56,160 Speaker 1: particularly interesting when you come to the Euro part of 251 00:11:56,400 --> 00:11:58,840 Speaker 1: euro dollar, because you know, the market has now priced 252 00:11:58,840 --> 00:12:02,080 Speaker 1: in a much better situation then was it was supposed 253 00:12:02,120 --> 00:12:04,360 Speaker 1: to be. We were supposed to be in recession for Germany, 254 00:12:04,440 --> 00:12:08,120 Speaker 1: and now we've got the Schultz the chancellor last week, 255 00:12:08,160 --> 00:12:11,080 Speaker 1: so no recession for Germany. We've got the governors of 256 00:12:11,120 --> 00:12:12,800 Speaker 1: the Bank of France, the governors at the Bank of 257 00:12:12,800 --> 00:12:16,160 Speaker 1: Italy saying, yeah, you know, our outlooks are improving. You 258 00:12:16,160 --> 00:12:18,480 Speaker 1: look at the performance of European stocks this year relative 259 00:12:18,520 --> 00:12:20,840 Speaker 1: to US, so that the market has been buying into 260 00:12:20,880 --> 00:12:23,640 Speaker 1: this far better than expected story for Europe, and we've 261 00:12:23,640 --> 00:12:25,679 Speaker 1: got euro dollar in a touching this week at at 262 00:12:25,760 --> 00:12:28,360 Speaker 1: one oh nine. I think the big question is how 263 00:12:28,440 --> 00:12:30,640 Speaker 1: much of that is priced in and how much further 264 00:12:30,720 --> 00:12:33,120 Speaker 1: can the Euro sort of dine out on on that story, 265 00:12:33,160 --> 00:12:35,960 Speaker 1: because you know, it looked this week at the Poms 266 00:12:36,000 --> 00:12:37,920 Speaker 1: the perms were like, oh, you know, they're not really 267 00:12:37,960 --> 00:12:40,000 Speaker 1: that good. There are still head winds coming and as 268 00:12:40,040 --> 00:12:42,480 Speaker 1: we move into the certainly into the summer and the autumn, 269 00:12:42,600 --> 00:12:44,560 Speaker 1: we could have another phase of the energy crisis. We 270 00:12:44,600 --> 00:12:46,320 Speaker 1: don't know how cold next winter is going to be, 271 00:12:46,360 --> 00:12:50,560 Speaker 1: so there are still head winds facing the Euro. And 272 00:12:50,720 --> 00:12:53,320 Speaker 1: the market now was quite long of the Euro, so 273 00:12:53,440 --> 00:12:56,199 Speaker 1: don't think it's going to be that easy to push 274 00:12:56,280 --> 00:12:59,000 Speaker 1: up to another leg. But of course a crucial element 275 00:12:59,040 --> 00:13:02,280 Speaker 1: of this is the honor and will the market continue 276 00:13:02,320 --> 00:13:05,559 Speaker 1: to disbelieve the FED guidance the interest rate outlet for 277 00:13:05,600 --> 00:13:07,559 Speaker 1: this year? So I've asked this question three times this week. 278 00:13:07,600 --> 00:13:09,439 Speaker 1: Maybe you've heard me ask it. Let's make it four. 279 00:13:09,559 --> 00:13:11,440 Speaker 1: Who hikes more this year the feed of the CP. 280 00:13:11,920 --> 00:13:13,800 Speaker 1: I have heard you asked that, and I have had 281 00:13:13,840 --> 00:13:15,160 Speaker 1: the answers, and I think you know what I'm going 282 00:13:15,200 --> 00:13:17,040 Speaker 1: to say too, because it's the same as everybody else. 283 00:13:17,200 --> 00:13:19,400 Speaker 1: You know that that the CP is likely to to 284 00:13:19,480 --> 00:13:22,040 Speaker 1: hike more. But the question really is is that in 285 00:13:22,080 --> 00:13:24,800 Speaker 1: the price now or not it's fourth or four and 286 00:13:24,840 --> 00:13:27,559 Speaker 1: that's an important question, that's for sure, Ji of Rabba Bank, 287 00:13:27,600 --> 00:13:29,160 Speaker 1: that's tasting the cash up with you here in London. 288 00:13:33,080 --> 00:13:35,000 Speaker 1: Let's get to it. If you're if you're in Global 289 00:13:35,040 --> 00:13:37,679 Speaker 1: Wall Street, this is with our question your interview of 290 00:13:37,760 --> 00:13:40,120 Speaker 1: the day. If you need to be optimistic, there's no 291 00:13:40,240 --> 00:13:42,760 Speaker 1: better place to be in a Deutsche Bank with their 292 00:13:42,800 --> 00:13:45,520 Speaker 1: chief global strategist and how to ask an allocation bank 293 00:13:45,520 --> 00:13:49,479 Speaker 1: from Charter. Mr Charter has made clear he is enthusiastic 294 00:13:49,640 --> 00:13:52,680 Speaker 1: and as it hasn't happened, he's simply moved his timeline out. 295 00:13:52,920 --> 00:13:56,360 Speaker 1: We're got an update this morning from BANKI Charter, Banky, 296 00:13:56,440 --> 00:14:01,040 Speaker 1: you're at fort hundred, no what it believes you. You've 297 00:14:01,120 --> 00:14:04,680 Speaker 1: never been this lonely in your storied career. Give us 298 00:14:04,720 --> 00:14:09,760 Speaker 1: the X access. When's the timeline when Schota Nirvana happens. So, actually, 299 00:14:09,840 --> 00:14:12,160 Speaker 1: what we have in terms of our outlook for this 300 00:14:12,400 --> 00:14:16,599 Speaker 1: year is really the rally in Q one, which we 301 00:14:16,760 --> 00:14:19,760 Speaker 1: think of as basically a continuation of the rally that 302 00:14:19,920 --> 00:14:24,400 Speaker 1: began late last year. I wouldn't necessarily describe it as 303 00:14:24,960 --> 00:14:28,680 Speaker 1: you know, sort of a bullish view on fundamentals. Uh, 304 00:14:29,680 --> 00:14:32,600 Speaker 1: the the basic driver of the rally in our view, 305 00:14:32,760 --> 00:14:36,680 Speaker 1: is really a positioning squeeze. As we know since late 306 00:14:36,760 --> 00:14:40,200 Speaker 1: April of last year, it's all really been about the 307 00:14:40,360 --> 00:14:44,239 Speaker 1: central banks. And if you look at our measures of positioning, 308 00:14:44,960 --> 00:14:48,800 Speaker 1: you know, the fundamental investors we call them the discretionary 309 00:14:48,880 --> 00:14:53,240 Speaker 1: equity investors, you know very quickly moved down to neutral 310 00:14:53,320 --> 00:14:56,280 Speaker 1: too slightly negative. What got squeezed as a result of 311 00:14:56,360 --> 00:15:00,600 Speaker 1: the last six months of last year is really systematic strategies. 312 00:15:00,680 --> 00:15:03,240 Speaker 1: Systematic strategies ned to follow the market. So to have 313 00:15:03,360 --> 00:15:07,080 Speaker 1: this big divide between systematic strategies, you know, two Z 314 00:15:07,280 --> 00:15:11,200 Speaker 1: scores below neutral, let alone where they most of the 315 00:15:11,400 --> 00:15:15,320 Speaker 1: slugged out on the CFS and Chase Well Fan Kompor 316 00:15:15,400 --> 00:15:19,200 Speaker 1: and technical analysis is adamant we made in October low 317 00:15:19,280 --> 00:15:22,600 Speaker 1: and the dal Jones industrial average. He's as bullish as 318 00:15:22,720 --> 00:15:25,880 Speaker 1: you are. So there's a short squeeze. We're squeezing out 319 00:15:25,920 --> 00:15:29,160 Speaker 1: the bloom. I get that. What's the then what after 320 00:15:29,280 --> 00:15:32,160 Speaker 1: we squeeze out the bloom for you? And Mr ran Kampora, 321 00:15:32,440 --> 00:15:35,000 Speaker 1: so you know we have our your end target, which yes, 322 00:15:35,120 --> 00:15:37,200 Speaker 1: I understand it looks bullish. I would say it's only 323 00:15:37,240 --> 00:15:40,240 Speaker 1: a little bit more than ten percent up from where 324 00:15:40,240 --> 00:15:42,960 Speaker 1: we've been recently. We see most of that happening basically 325 00:15:43,040 --> 00:15:46,080 Speaker 1: in Q one, and then we have basically, as you know, 326 00:15:46,360 --> 00:15:49,080 Speaker 1: a call for a recession in the US starting in 327 00:15:49,240 --> 00:15:53,120 Speaker 1: Q three, so second quarter, keeping in you know, in 328 00:15:53,280 --> 00:15:56,720 Speaker 1: line with the recession playbook. Historically we have the market 329 00:15:56,760 --> 00:16:01,120 Speaker 1: going sideways. So that's still we have if the recession 330 00:16:01,160 --> 00:16:04,720 Speaker 1: happens in Q three, Uh, pretty severe sell off which 331 00:16:04,720 --> 00:16:06,880 Speaker 1: would take us all the way down to thirty two fifty. 332 00:16:07,000 --> 00:16:09,640 Speaker 1: But I think you know, very important aspect of the 333 00:16:09,760 --> 00:16:12,200 Speaker 1: recession playbook to keep in mind if you're thinking about 334 00:16:12,280 --> 00:16:15,280 Speaker 1: twelve months is that equities, you know, pretty robustly bottom 335 00:16:15,320 --> 00:16:18,520 Speaker 1: about halfway through. So if we have a two quarter recession, 336 00:16:18,920 --> 00:16:21,760 Speaker 1: they will come all the way back basically in Q four. 337 00:16:21,920 --> 00:16:25,760 Speaker 1: And so my Q one target is my year end target. Yeah, 338 00:16:26,280 --> 00:16:28,960 Speaker 1: you said something pretty radical that it's all been about 339 00:16:29,000 --> 00:16:31,520 Speaker 1: the FED. It is not necessarily about some of these 340 00:16:31,560 --> 00:16:33,600 Speaker 1: other issues like earnings, which we keep getting in a 341 00:16:33,640 --> 00:16:35,880 Speaker 1: lot of people keep looking at. So how do you 342 00:16:35,960 --> 00:16:38,640 Speaker 1: push back against that? And how much do you expect 343 00:16:38,720 --> 00:16:41,560 Speaker 1: tech to continue to lead regardless of the up or 344 00:16:41,640 --> 00:16:44,560 Speaker 1: the down because of that macro play. Yeah, so a 345 00:16:44,760 --> 00:16:47,680 Speaker 1: tactically our call is to be you know, the rally 346 00:16:47,720 --> 00:16:50,720 Speaker 1: will be led by tech in the financials UH and 347 00:16:50,880 --> 00:16:53,520 Speaker 1: and and some of the consumer six goals where you know, 348 00:16:54,000 --> 00:16:57,480 Speaker 1: priced in of an average recession. I think it's UH 349 00:16:57,840 --> 00:17:04,080 Speaker 1: starts to make things pretty asymmetric. Um. You know, I'm 350 00:17:04,080 --> 00:17:06,479 Speaker 1: sorry I lost the last part of this is an 351 00:17:06,480 --> 00:17:10,600 Speaker 1: issue because right now we're looking to just because of me, 352 00:17:10,880 --> 00:17:12,800 Speaker 1: you know, this is an issue interesting issue because right 353 00:17:12,800 --> 00:17:14,760 Speaker 1: now I'm watching earnings and people are saying there's a 354 00:17:14,760 --> 00:17:17,920 Speaker 1: real fundamental shift underneath the market that you have tech 355 00:17:18,040 --> 00:17:19,959 Speaker 1: that's not necessarily going to lead in growth, even though 356 00:17:20,000 --> 00:17:23,359 Speaker 1: they now are leading in returns to simply because it 357 00:17:23,440 --> 00:17:26,040 Speaker 1: cuts etcetera. And I'm wondering whether you see that, whether 358 00:17:26,080 --> 00:17:28,480 Speaker 1: we're heading back to a different normal in terms of leadership, 359 00:17:28,560 --> 00:17:30,720 Speaker 1: or whether we're heading back to the same regime. It's 360 00:17:30,720 --> 00:17:32,720 Speaker 1: just sort of dependent on the FED. So you know, 361 00:17:32,760 --> 00:17:36,120 Speaker 1: in terms of earnings UH for the year as a whole, 362 00:17:36,359 --> 00:17:38,600 Speaker 1: you know, if you put in a recession in there 363 00:17:38,720 --> 00:17:40,720 Speaker 1: like we have, you know, we're talking about a hundred 364 00:17:40,760 --> 00:17:44,119 Speaker 1: and so the question is, you know, what happens if 365 00:17:44,200 --> 00:17:47,680 Speaker 1: the alternative, which is a very popular question given the 366 00:17:48,000 --> 00:17:51,760 Speaker 1: market price action, and it's more likely to go sideways 367 00:17:51,840 --> 00:17:54,680 Speaker 1: and even just start to recover. I think in terms 368 00:17:54,720 --> 00:17:57,800 Speaker 1: of thinking about earnings, you know, everybody talks always about 369 00:17:57,960 --> 00:17:59,920 Speaker 1: growth rates. I think it's also important to keep in 370 00:18:00,000 --> 00:18:02,919 Speaker 1: mind where the levels are. You know, equity evaluations come 371 00:18:02,960 --> 00:18:06,440 Speaker 1: off of levels, and and earnings have been running you know, 372 00:18:06,600 --> 00:18:10,720 Speaker 1: sort of well well above trend levels, and and and 373 00:18:10,960 --> 00:18:14,399 Speaker 1: and so you know, we have this issue where I mean, 374 00:18:14,440 --> 00:18:16,840 Speaker 1: even if you looked at real activity, you know, the 375 00:18:16,880 --> 00:18:19,680 Speaker 1: good side of the economy, it's essentially been going sideways 376 00:18:19,800 --> 00:18:25,520 Speaker 1: for two d Now you know SPX and what Mr 377 00:18:25,680 --> 00:18:28,680 Speaker 1: Chat has just said there, Lisa is religion to me? 378 00:18:29,400 --> 00:18:33,400 Speaker 1: Which is it financial? TV is addicted to change movements. 379 00:18:33,440 --> 00:18:37,120 Speaker 1: Stay with us Microsoft right now down under two thirties six, 380 00:18:37,280 --> 00:18:40,920 Speaker 1: that kind of stuff. He's looking at levels and this 381 00:18:41,160 --> 00:18:43,560 Speaker 1: is the bathtub story. You're looking at the water coming 382 00:18:43,600 --> 00:18:45,680 Speaker 1: in and out of the bathtub, or you're looking at 383 00:18:45,760 --> 00:18:49,159 Speaker 1: the level. Olivier Blanchard and his new monograph is on 384 00:18:49,240 --> 00:18:52,440 Speaker 1: the same page in economics has been from Chatta inequities. 385 00:18:52,760 --> 00:19:00,159 Speaker 1: Levels matter, the levels, the scale the mass of Microsoft matters. M. 386 00:19:08,880 --> 00:19:12,320 Speaker 1: William mcdonnaugh is founder, he's chief executive officer. They've got 387 00:19:12,359 --> 00:19:14,840 Speaker 1: a bunch of other titles for him and Element Funds. 388 00:19:15,400 --> 00:19:18,880 Speaker 1: What he is is one of the wisest people across 389 00:19:19,000 --> 00:19:23,080 Speaker 1: a span of this thing called wealth management, is managing 390 00:19:23,160 --> 00:19:27,000 Speaker 1: money and really really trying hard to do the hardest thing, 391 00:19:27,560 --> 00:19:30,200 Speaker 1: which is not lose money. We are thrilled that William 392 00:19:30,240 --> 00:19:33,680 Speaker 1: McDonagh can join us today. It's wrapped around Tesla, It's 393 00:19:33,680 --> 00:19:36,360 Speaker 1: wrapped around what Mr Musk is doing in these historic 394 00:19:36,920 --> 00:19:39,560 Speaker 1: Muskie and times, but there's about eight other things to 395 00:19:39,640 --> 00:19:42,639 Speaker 1: talk about as well. Well, thank you for joining us. 396 00:19:42,720 --> 00:19:45,920 Speaker 1: You really center and in your research note that the 397 00:19:46,080 --> 00:19:51,200 Speaker 1: Tesla cars are a trojan horse. So many people agree 398 00:19:51,280 --> 00:19:57,040 Speaker 1: with you on that. What does Mr Musk really up to? Well, 399 00:19:57,119 --> 00:19:59,000 Speaker 1: you know, let's look back to two thousand six when 400 00:19:59,080 --> 00:20:01,280 Speaker 1: Musk really kicked the thing off and and and his 401 00:20:01,400 --> 00:20:04,040 Speaker 1: kind of opening mandate for the company was build a 402 00:20:04,080 --> 00:20:06,800 Speaker 1: sports car, use the money to build an affordable car, 403 00:20:07,560 --> 00:20:09,960 Speaker 1: use the money to build a more affordable car, and 404 00:20:10,040 --> 00:20:13,639 Speaker 1: provide zero emissions power generations options to the world. Um, 405 00:20:13,880 --> 00:20:16,280 Speaker 1: he's following that. We need to listen to what he said, 406 00:20:16,640 --> 00:20:18,760 Speaker 1: and I think what we're gonna see from Tesla when 407 00:20:18,800 --> 00:20:21,479 Speaker 1: they report today, we might not see Musk. I think 408 00:20:21,480 --> 00:20:24,120 Speaker 1: they're starting to realize that maybe he isn't the optimal 409 00:20:24,240 --> 00:20:29,080 Speaker 1: person to do the SEC communications, much like Apple did 410 00:20:29,119 --> 00:20:30,960 Speaker 1: with Steve Jobs back in the day. Let's throw a 411 00:20:31,000 --> 00:20:33,719 Speaker 1: black turtleneck on this guy, Let's put him on stage, 412 00:20:34,040 --> 00:20:36,680 Speaker 1: let's talk about the cyber truck. Let's stop all these 413 00:20:36,720 --> 00:20:42,960 Speaker 1: communications with regulators that ain't his highest invest us that basically, 414 00:20:43,040 --> 00:20:46,440 Speaker 1: how much can you put him into? The back? Continues? 415 00:20:46,480 --> 00:20:48,639 Speaker 1: Will you when you say a trojan to horse for 416 00:20:48,840 --> 00:20:51,680 Speaker 1: the ev for the battery? Is this a positive for 417 00:20:51,800 --> 00:20:53,920 Speaker 1: the stock or a negative when you look at its 418 00:20:54,000 --> 00:20:57,920 Speaker 1: longer term market share and potential? Well, you know, I 419 00:20:57,960 --> 00:20:59,960 Speaker 1: was interested in what Julian just said, and I think 420 00:21:00,080 --> 00:21:02,720 Speaker 1: there's a broader war on Wall Street right now and 421 00:21:02,920 --> 00:21:05,720 Speaker 1: in a juxtaposition between the top line and the bottom line, 422 00:21:05,800 --> 00:21:07,840 Speaker 1: like what are we do being judged by these days? 423 00:21:07,920 --> 00:21:10,840 Speaker 1: We just came out of an environment where it was growth, growth, 424 00:21:10,920 --> 00:21:13,800 Speaker 1: growth at at all costs. I don't care what it 425 00:21:13,880 --> 00:21:17,040 Speaker 1: costs to acquire a user, get the user. And then 426 00:21:17,119 --> 00:21:18,879 Speaker 1: the tide went out and we saw that that probably 427 00:21:18,960 --> 00:21:21,160 Speaker 1: wasn't the right way to approach it, and now people 428 00:21:21,200 --> 00:21:23,880 Speaker 1: are repositioning their thoughts around, well, what's the bottom line, 429 00:21:23,920 --> 00:21:27,000 Speaker 1: what's the revenue, what's the ebit dot And when you 430 00:21:27,040 --> 00:21:29,560 Speaker 1: look at a company like Tesla, you know there's no 431 00:21:29,760 --> 00:21:32,560 Speaker 1: justification for it being a one point two trillion dollar company. 432 00:21:32,640 --> 00:21:35,000 Speaker 1: We have our perspectives on on why that happened, which 433 00:21:35,040 --> 00:21:37,439 Speaker 1: I'll share, But when you really look at their numbers, 434 00:21:37,520 --> 00:21:40,120 Speaker 1: you know they have less revenue than GM, than four 435 00:21:40,240 --> 00:21:44,200 Speaker 1: than VOLKSWAG and then BMW, but they have eight times 436 00:21:44,320 --> 00:21:47,560 Speaker 1: the market cap of Ford and GM. So what are 437 00:21:47,600 --> 00:21:49,359 Speaker 1: we really doing here? What are we really looking at? 438 00:21:49,440 --> 00:21:52,359 Speaker 1: We think investors played Tesla as a vehicle to get 439 00:21:52,440 --> 00:21:56,879 Speaker 1: exposure to EV adoption, But um, what our business charge, 440 00:21:56,960 --> 00:21:59,000 Speaker 1: our ticker on the New York Stock Change allows people 441 00:21:59,040 --> 00:22:01,600 Speaker 1: to do. It's just by the base metals that are 442 00:22:01,680 --> 00:22:06,320 Speaker 1: required for all EV, all solar and all the wind. Well, 443 00:22:06,440 --> 00:22:08,119 Speaker 1: but well, then what are you looking for in today's 444 00:22:08,160 --> 00:22:10,000 Speaker 1: Tesla earnings? Because your sound sounds like you've got a 445 00:22:10,080 --> 00:22:11,840 Speaker 1: very strong belief there are a lot of questions people 446 00:22:11,840 --> 00:22:14,440 Speaker 1: are gonna be asking about the discounts that recently elon 447 00:22:14,520 --> 00:22:17,920 Speaker 1: Musk and Tesla and stated in some of the vehicles. 448 00:22:17,960 --> 00:22:21,080 Speaker 1: What are you looking for to inform how much you 449 00:22:21,160 --> 00:22:23,840 Speaker 1: amp up your view? Yeah, I think that they're gonna 450 00:22:23,880 --> 00:22:25,440 Speaker 1: put their toe in the water a bit today. I 451 00:22:25,520 --> 00:22:27,359 Speaker 1: don't believe that they're gonna come heavy. You know, they 452 00:22:27,400 --> 00:22:29,440 Speaker 1: have announced that in March they're going to do their 453 00:22:29,480 --> 00:22:32,440 Speaker 1: first investor day and that you're going to brand that. 454 00:22:32,680 --> 00:22:34,680 Speaker 1: There has been talks that they're going to launch their 455 00:22:34,720 --> 00:22:37,680 Speaker 1: own investor platform that's going to allow for them to 456 00:22:37,800 --> 00:22:40,480 Speaker 1: engage directly with their investors, much like you've seen must 457 00:22:40,560 --> 00:22:43,399 Speaker 1: do with Twitter pulling. Do you think I should be 458 00:22:43,480 --> 00:22:45,359 Speaker 1: CEO or not? I think you're going to see more 459 00:22:45,400 --> 00:22:48,560 Speaker 1: engagement directly with the investors. The investors feel like they're 460 00:22:48,560 --> 00:22:51,280 Speaker 1: doing what they want to do. But if I'm Tesla 461 00:22:51,359 --> 00:22:53,680 Speaker 1: and I'm on the board of Teslau, I looked to 462 00:22:53,800 --> 00:22:56,119 Speaker 1: I'm putting him back in his corner and saying, go 463 00:22:56,280 --> 00:22:58,800 Speaker 1: stand next to the semi truck and let us report 464 00:22:58,840 --> 00:23:01,200 Speaker 1: the numbers and then let's do the fancy stuff and 465 00:23:01,280 --> 00:23:03,960 Speaker 1: the exciting stuff in March. Well, I got eight ways 466 00:23:04,040 --> 00:23:05,840 Speaker 1: to go here. Whant to get you on here in 467 00:23:06,280 --> 00:23:09,159 Speaker 1: Tesla and musk is is interesting. I want to go 468 00:23:09,400 --> 00:23:12,040 Speaker 1: to your experience not only with Bob Diamond, and we 469 00:23:12,160 --> 00:23:15,240 Speaker 1: thank Bob Diamond so much for coming on recently on 470 00:23:15,320 --> 00:23:17,760 Speaker 1: the death of Scott Minored. But I want to talk 471 00:23:17,800 --> 00:23:22,840 Speaker 1: to you Will about your stance in Florida and your 472 00:23:22,920 --> 00:23:27,359 Speaker 1: management of people's money, celebrity management, and that in this 473 00:23:27,640 --> 00:23:31,920 Speaker 1: thing called crypto, the Bitcoin losses have been taken, but 474 00:23:32,119 --> 00:23:35,520 Speaker 1: far more the upset of crypto right now, which is 475 00:23:35,680 --> 00:23:39,080 Speaker 1: tard and feathered. I believe one of your clients over 476 00:23:39,119 --> 00:23:42,640 Speaker 1: the years, Mr Brady, who throws footballs in Tampa, tell 477 00:23:42,720 --> 00:23:47,800 Speaker 1: me about the McDonough view on crypto. I think what 478 00:23:47,880 --> 00:23:50,160 Speaker 1: happened in crypto in the last kind of hundred days 479 00:23:50,760 --> 00:23:55,199 Speaker 1: is net positive for the industry um because it flushed 480 00:23:55,200 --> 00:23:57,639 Speaker 1: out a lot of the centralized players. It flushed out 481 00:23:57,680 --> 00:24:01,040 Speaker 1: a lot of the unregulated players. Which crypto needs to 482 00:24:01,359 --> 00:24:04,280 Speaker 1: have a barbell approach to success. It needs to have 483 00:24:04,480 --> 00:24:08,920 Speaker 1: pure decentralization that allows people globally to interact with it 484 00:24:09,320 --> 00:24:11,440 Speaker 1: in a fair way. And then it also needs to 485 00:24:11,480 --> 00:24:15,040 Speaker 1: have a heavily regulated on ramp that allows investors and 486 00:24:15,080 --> 00:24:17,800 Speaker 1: allows scale to come into the space and trust who 487 00:24:17,840 --> 00:24:20,080 Speaker 1: their counterparties are. And I think if both of those 488 00:24:20,080 --> 00:24:25,359 Speaker 1: things are accomplished blockchain has no end. How does the 489 00:24:25,600 --> 00:24:32,440 Speaker 1: United States use a regulatory reach internationally? Given the criminal 490 00:24:32,560 --> 00:24:37,520 Speaker 1: allegations within crypto? The U S is the on ramp 491 00:24:37,640 --> 00:24:40,879 Speaker 1: for all global financial systems, right, I mean, let's just 492 00:24:41,000 --> 00:24:43,920 Speaker 1: admit it. The volumes that come in through the US markets, 493 00:24:43,960 --> 00:24:46,960 Speaker 1: the volumes that trade on the US exchanges, this is 494 00:24:47,000 --> 00:24:49,920 Speaker 1: where the money comes from. Even if it isn't sourced here, 495 00:24:50,119 --> 00:24:53,160 Speaker 1: it's managed here. And so this is the on ramp 496 00:24:53,240 --> 00:24:55,560 Speaker 1: to crypto. That's how they can control it is by 497 00:24:55,600 --> 00:24:57,919 Speaker 1: saying we control how you get money into the system 498 00:24:58,200 --> 00:25:00,119 Speaker 1: and out of the system. And then the good thing 499 00:25:00,160 --> 00:25:03,800 Speaker 1: about these block chains is that they're very easily auditable. 500 00:25:04,560 --> 00:25:06,720 Speaker 1: And so once you're on that system and we know 501 00:25:06,800 --> 00:25:08,760 Speaker 1: who you were coming in, I can track what you 502 00:25:08,880 --> 00:25:11,680 Speaker 1: do while you're in there and then you come back out. 503 00:25:12,240 --> 00:25:14,720 Speaker 1: But do you have and with with your immense you know, 504 00:25:14,880 --> 00:25:18,480 Speaker 1: international perspective or your work at Golden SAX over the years, etcetera. 505 00:25:19,119 --> 00:25:22,680 Speaker 1: William I, I'm absolutely fascinated how a guy like you 506 00:25:23,040 --> 00:25:29,359 Speaker 1: feels Department of Justice or SEC can fix the international 507 00:25:29,560 --> 00:25:34,360 Speaker 1: regulation conundrum of crypto. How do you envision them moving forward? 508 00:25:35,080 --> 00:25:36,560 Speaker 1: I think they need to do it just like they've 509 00:25:36,600 --> 00:25:39,119 Speaker 1: done any other industry over the last one years. You 510 00:25:39,200 --> 00:25:40,760 Speaker 1: gotta punch it right in the face, and you've got 511 00:25:40,840 --> 00:25:43,320 Speaker 1: to address it and embrace it and really get to 512 00:25:43,480 --> 00:25:45,040 Speaker 1: know it and understand it. You know, some of the 513 00:25:45,080 --> 00:25:47,760 Speaker 1: times they've come out with statements have just shown that 514 00:25:47,840 --> 00:25:51,280 Speaker 1: they actually truly don't understand the underlying when I believe 515 00:25:51,400 --> 00:25:53,760 Speaker 1: that the majority of the real players and crypto embrace 516 00:25:53,880 --> 00:25:56,720 Speaker 1: that regulation because they know that that will open up 517 00:25:56,760 --> 00:25:59,800 Speaker 1: those floodgates for that institutional capital, and so they just 518 00:26:00,080 --> 00:26:01,879 Speaker 1: to really get people around the table that know what 519 00:26:01,960 --> 00:26:04,680 Speaker 1: they're talking about and put some regulation in plate. It 520 00:26:04,800 --> 00:26:08,359 Speaker 1: brings comfort to be clear here, Well, bitcoin fifteen to 521 00:26:08,440 --> 00:26:11,720 Speaker 1: twenty three thousand, are you considering it's appropriate in a 522 00:26:11,840 --> 00:26:16,119 Speaker 1: portfolio today? I always do, you know. I think bitcoin's 523 00:26:16,160 --> 00:26:19,280 Speaker 1: trading at year end was somewhat driven around the fact 524 00:26:19,359 --> 00:26:21,520 Speaker 1: that people tax lost harvest into the new year and 525 00:26:21,600 --> 00:26:23,359 Speaker 1: they realized that they can put a little bit away. 526 00:26:23,680 --> 00:26:26,560 Speaker 1: People don't realize that bitcoin isn't subject to wash rules, 527 00:26:26,840 --> 00:26:28,720 Speaker 1: So there's a lot of trading like that that occurs. 528 00:26:28,960 --> 00:26:30,560 Speaker 1: And then you've seen a lot of people leaning in 529 00:26:30,680 --> 00:26:33,520 Speaker 1: here in Q one because the FCX stuff and a 530 00:26:33,560 --> 00:26:35,920 Speaker 1: lot of bad stuff flushed out in Q four. I'm 531 00:26:35,960 --> 00:26:39,280 Speaker 1: not sure how much bad news can can continue to come. Well, 532 00:26:39,359 --> 00:26:42,000 Speaker 1: thank you so much, very candid there well William McDonald 533 00:26:42,080 --> 00:26:44,920 Speaker 1: with us from Element Funds Today. This is the Bloomberg 534 00:26:44,960 --> 00:26:49,280 Speaker 1: Surveillance Podcast. Thanks for listening. Join us live weekdays from 535 00:26:49,359 --> 00:26:52,720 Speaker 1: seven to ten am Eastern. I'm Bloomberg Radio and on 536 00:26:52,800 --> 00:26:57,080 Speaker 1: Bloomberg Television each day from six to nine am for 537 00:26:57,359 --> 00:27:02,240 Speaker 1: insight from the best in economics, finance, investment, and international relations. 538 00:27:02,760 --> 00:27:07,359 Speaker 1: And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, 539 00:27:07,600 --> 00:27:11,120 Speaker 1: Bloomberg dot com, and of course on the terminal. I'm 540 00:27:11,240 --> 00:27:13,879 Speaker 1: Tom Keene and this is Bloomberg