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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Lots

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Speaker 1: of news overnight on a big tech and here to

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Speaker 1: break it down with us as Shia overday, She's a

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Speaker 1: Bloomberg gad Fly columnists covering all things technology. Uh, and

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Speaker 1: she writes triffic columns. You definitely should read them Bloomberg

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Speaker 1: dot Com slash god Fly Shira. I want to start

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Speaker 1: actually with a development where you have big technology companies,

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Speaker 1: namely Google and Facebook opposing a bill that was raised

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Speaker 1: in US Congress to prevent child sex trafficking, which seems

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Speaker 1: like not really that good of a thing to oppose,

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Speaker 1: because it seems like you should want to oppose child

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Speaker 1: sex trafficking. What's going on? Right? So there there's this

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Speaker 1: some bill circulating about ads on backpage dot com, which

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Speaker 1: is a website that is sometimes used for nefarious purposes.

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Speaker 1: And look the backdrop here why Google and Facebook are

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Speaker 1: opposing this and other measures and congresses. They are terrified

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Speaker 1: of UH having legal responsibility for what their users do

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Speaker 1: on their websites, and that can be child child sex

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Speaker 1: trafficking or can be if I UM have Beyonce's latest

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Speaker 1: album and post it on YouTube, right, Google doesn't want

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Speaker 1: legal responsibility for that music piracy either. But this also

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Speaker 1: raises a question of the access that government has to

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Speaker 1: prevent some of these nefarious activities that are conducted via

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Speaker 1: Google via Facebook. UM. If you know the company themselves

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Speaker 1: won't do it because they have are concerned about privacy,

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Speaker 1: does that open up the door to the government saying

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Speaker 1: we want to weigh in, we want to do that. Well,

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Speaker 1: I mean, I'll just stipulate that Google and Facebook do

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Speaker 1: not want child sex trafficking on their websites. That is

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Speaker 1: not good for anybody. It is illegal. They have large

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Speaker 1: groups of people that try to weed out this stuff

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Speaker 1: UM from popping up on on their websites and apps.

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Speaker 1: So it's not like they're doing nothing. It's again they're

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Speaker 1: trying to do something both because they want to be

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Speaker 1: responsible and it's in their interest to do so to

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Speaker 1: avoid UM regulation. Because that's what they're trying to prevent. Uh.

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Speaker 1: And the regulation they're trying to prevent is not because

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Speaker 1: of a child sex trafficking stuff, but it's for things

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Speaker 1: that are less nefarious. Again, um, piracy of music and videos,

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Speaker 1: things that happen more common, that are do not have

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Speaker 1: a negative consequences, but still have business ramifications for Google

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Speaker 1: and Facebook. When you say business ramifications, you mean they

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Speaker 1: still want to make a lot of money and they

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Speaker 1: don't want to take any responsibility for what goes on

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Speaker 1: their sites. Yes, they do not want to be in

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Speaker 1: a position where they are blocking people from posting stuff

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Speaker 1: because it might have a clip from Beyonce's latest music. Right. Um, okay,

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Speaker 1: so wait a minute here. The Internet was funded by

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Speaker 1: the US tax pair when you pay your cable or

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Speaker 1: your mobile bill, or any kind of bill that allows

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Speaker 1: you access, whether it's WiFi or lte, whatever you want

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Speaker 1: to talk about their attaxes in there, so we continue

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Speaker 1: to subsidize the very platform that they use in order

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Speaker 1: to make billions and billions of dollars selling ads to people. Right,

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Speaker 1: that's probably fair. I mean there, so they want but

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Speaker 1: they want to make all the money, Yes, I sure, Yes,

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Speaker 1: I mean they take a lot of risk of their

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Speaker 1: on their business too, and they're creating a lot of

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Speaker 1: Internet infrastructure that didn't exist before. But I hear what

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Speaker 1: you're saying, but it's like you know, being you know,

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Speaker 1: being able to have access to the public trunk system.

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Speaker 1: I mean, you used to have to have an FCC

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Speaker 1: license in order to And look, the interesting phenomenon that's

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Speaker 1: really happened in the last year or so is that

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Speaker 1: you're seeing um political figures on the left and on

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Speaker 1: the right, including people like Steve Bannon, making an argument

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Speaker 1: for regulating these companies like telephone companies, basically like regulated

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Speaker 1: monopolies like phone companies. And this is this is a

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Speaker 1: crucial point because you have people on the right like

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Speaker 1: Steve Bannon, and you have people on the left also saying,

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Speaker 1: you know what, these companies are getting too big and

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Speaker 1: a little bit frightening and we need to impose more regulations.

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Speaker 1: Does that make it more likely that there will be

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Speaker 1: some sort of anti trust movement or at least something

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Speaker 1: that would undermine some of the profitability of of these companies.

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Speaker 1: I think that's the biggest question for these Internet companies

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Speaker 1: is what is the regulation um and potential anti trust

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Speaker 1: or regulatory crackdown look like in coming years. I think

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Speaker 1: that's the biggest potential risk if you're Google or Facebook

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Speaker 1: or Amazon. So what are some of the ideas that

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Speaker 1: have been stipulated to with respect to what that kind

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Speaker 1: of regulates. Right, So there's the sort of Steve Bannon idea,

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Speaker 1: let's regulate these companies like utilities. Um. You know, there's

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Speaker 1: this interesting academic argument that's been making the rounds this

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Speaker 1: year about particularly around Amazon, applies to other companies too,

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Speaker 1: of basically looking at US anti trust law and saying

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Speaker 1: that this has become too narrowly focused on prices, on

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Speaker 1: whether you know, our companies so big that they have

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Speaker 1: the power to raise prices. If you look at a

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Speaker 1: company like Amazon, it's doing the opposite, right. So the

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Speaker 1: academic argument that's making the rounds, um, a leftist academic

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Speaker 1: argument is let's look at other aspects of how these

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Speaker 1: companies are abusing their power beyond pricing. Um, are they

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Speaker 1: squashing the ability of you know, smaller companies to compete

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Speaker 1: or to sell their companies on platforms like Amazon at

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Speaker 1: on the same terms as Amazon itself. So it's again

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Speaker 1: there's really thing things happening. I do not know if

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Speaker 1: anything is really going to happen, but I agree that

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Speaker 1: this kind of political and regulatory scrutiny is a huge

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Speaker 1: business risk for Internet companies. Sure, do you feel that

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Speaker 1: public utility commissions at the state level would like to

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Speaker 1: be responsible for setting the rules and regulations about access

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Speaker 1: to the Internet via these companies? I don't know. I

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Speaker 1: don't know what professional regulators want. I mean, I mean

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Speaker 1: regulators like to regulate. Well, let me just ask it

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Speaker 1: another way. Do you feel that these companies are public utilities?

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Speaker 1: I don't know. I don't know. I mean, if you

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Speaker 1: have a good argument, I mean, if you could, if

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Speaker 1: you if someone pulled the plug on your Facebook or

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Speaker 1: your Google, um, you'd miss them for sure, Okay, for sure.

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Speaker 1: But I don't know if that's the definition of a utility.

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Speaker 1: I'm not you know, I'm not going to try to

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Speaker 1: make legal Yeah, I don't know. Is the fairest answer? Interesting?

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Speaker 1: All right, Well, obviously this is not a topic that's

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Speaker 1: going away anytime soon. Um. Interesting how the intersection, as

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Speaker 1: you said, Lisa, business government, particularly when it comes to

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Speaker 1: the Internet. And we didn't even talk about the latest development,

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Speaker 1: which is that Google is investing in lift uh, and

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Speaker 1: they already have an investment in ubers. They're just you know,

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Speaker 1: going towards world domination that way. Yea. I wonder if

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Speaker 1: they'll pay taxes for using all those roads. Yeah. Um.

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Speaker 1: Shia Overday, thank you very much. Technology columnists for Bloomberg

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Speaker 1: gad Fly. Follow her on Twitter at Shira Overday. I'm

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Speaker 1: want to bring in Henry Peabody. He is a portfolio

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Speaker 1: manager at Eaton Vance, helping to manage more than three

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Speaker 1: hundred billion dollars. He is at the Harvard Science Lab

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Speaker 1: today in Boston. And Uh, Henry, thank you for being

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Speaker 1: with us. I wonder if you could begin by just

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Speaker 1: talking a little bit about the concept of liquidity and

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Speaker 1: how that plays into what you believe people experienced investors

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Speaker 1: and knowledgeable investors will do if, indeed, we do not

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Speaker 1: get an interest rate increase this year from the Federal Reserve. Well,

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Speaker 1: you know, liquidity, in our minds is not only what

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Speaker 1: the Federal Reserve and central banks provide to the market,

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Speaker 1: but it's also um a function of the ability to

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Speaker 1: get in and out of positions. And you know, when

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Speaker 1: we think about the markets and the risk potentially to

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Speaker 1: higher rates and really how crowded positioning has become UM

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Speaker 1: in index like products in core bond in rates and

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Speaker 1: duration UM. It's something to consider. And what we're seeing

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Speaker 1: today and over the past few days at least in

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Speaker 1: the credit markets has been a big flood into new issue,

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Speaker 1: which signals to us that there's a lot of demand

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Speaker 1: out there for relatively high quality paper, which when turned

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Speaker 1: the other way, UM, we're not really sure how the

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Speaker 1: market is going to behave and it's important to maintain

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Speaker 1: a bit of a defensive posture against that. So Henry, Uh,

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Speaker 1: you know, you're you're illuminating some issues that a number

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Speaker 1: of big investors have been talking about recently. Gallop Capital

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Speaker 1: chief executive officers said overnight in a Bloomberg television interview

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Speaker 1: in Asia that investors are not getting paid for the

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Speaker 1: risks they're taking, particularly in US boardinated debt. I'm wondering,

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Speaker 1: how do you maintain a defensive posture when you're seeing

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Speaker 1: this kind of flood of cash going into in particular

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Speaker 1: the highest quality paper, arguably pushing up values there more

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Speaker 1: than anywhere else. You know, you hit the nail, run

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Speaker 1: the head, and I think that what you need to

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Speaker 1: do is both maintain liquidity in the form of cash,

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Speaker 1: and don't forget the cost of holding that cash in

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Speaker 1: the form of drag or actually foregone income is relatively

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Speaker 1: low today. UM. The other thing you need to do

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Speaker 1: is stay very diversified. UM. There's a great opportunity today

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Speaker 1: to spread risk out among various asset classes and taking

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Speaker 1: manage your flexibility. UM. Diversifying to local denominated, emerging and

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Speaker 1: developed market debt depending on where you look, is an

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Speaker 1: attractive place. Diversifying into, for example, folding rate loans or

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Speaker 1: the high yield space when valuations are attractive, It's it's

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Speaker 1: good to spread those bets out because benchmark like strategies

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Speaker 1: have gone very far, and when the tide turns, you

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Speaker 1: need to know where that liquidity is going to be demanded,

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Speaker 1: who's demanding it, and what the net result on the

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Speaker 1: market is going to be. And it's it's wise to

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Speaker 1: stay clear of much of that risk. Here. I just

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Speaker 1: want to point out that you're eating vance Multi sector

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Speaker 1: income fund, which you help to oversee. It's about five

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Speaker 1: million dollar fund has performed better than ninety nine percent

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Speaker 1: of its peers over the past year to date and

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Speaker 1: including the past twelve months, so far this year, you're

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Speaker 1: up almost ten percent UM. Interesting that you're saying to

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Speaker 1: go more towards cash. What's your boldest bet right now?

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Speaker 1: Right now, the biggest level we have pulled is the

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Speaker 1: non dollar space, and that's responsible for roughly half of

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Speaker 1: that performance this year. UM. The dollar, you take, take, positioning,

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Speaker 1: you take valuation, UM, you think about the influence that

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Speaker 1: the U S has globally or or or sometimes lack

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Speaker 1: thereof UM growth in Asia and synchronized global growth, and

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Speaker 1: it all paints to our points to a weaker dollar. UM.

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Speaker 1: We've moved a long way, and we could very well pause.

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Speaker 1: But if you're able to look at individual countries across

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Speaker 1: the span of the globe, not necessarily allocate to those indices,

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Speaker 1: because as many of your guests point out, there's a

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Speaker 1: great deal of richness in some of those inducries and concentration.

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Speaker 1: But look at reform stories, look at Asian growth, look

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Speaker 1: at the lack of populism and Latin for example, and

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Speaker 1: you can get exposure to very positive fundamentals away from

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Speaker 1: US credit and interest rate risk. So that flexibility to

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Speaker 1: go across geographies and industries UM is fairly important in

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Speaker 1: fixed income where things are valued very dearly, Henry, do

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Speaker 1: you ever feel that you're whistling in the wind when

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Speaker 1: it comes to talking about individual bond issues in a

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Speaker 1: world where exchange traded funds and indexes seem to be

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Speaker 1: the flavor of the year. It seems it more and

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Speaker 1: more these days. However, UM, we're getting to the point

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Speaker 1: where we've shown with our results of active management as

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Speaker 1: a is a powerful tool in fixed income where opportunities

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Speaker 1: to differentiate yourself and take advantage of market and liquidity

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Speaker 1: conditions can be a real lever to pulse. So we've

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Speaker 1: shown that it works. UM. We also think that where

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Speaker 1: the market is now, with that flood of capital into

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Speaker 1: one way positioning UM is going to prove exceptionally beneficial

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Speaker 1: to investors when those positions are unwound. We don't want

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Speaker 1: to be in the way of a great deal of

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Speaker 1: capital looking for liquidity. Okay, so let's talk about that unwy.

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Speaker 1: First of all, how much have you boosted your cash

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Speaker 1: holdings recently? Uh? And and second of all, what would

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Speaker 1: prompt that kind of reversal of the crowded positions? So

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Speaker 1: we maintain UM, you know, roughly ten to fifteen percent

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Speaker 1: cash UM in the fund and it's been that way

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Speaker 1: for the recent past. And as for what might cause that,

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Speaker 1: looking historically, just look at, for example, the slope of

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Speaker 1: the euro dollar curve against funds, and you see that

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Speaker 1: the market tends to underappreciate the FED. That the market

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Speaker 1: tends to project current conditions in the future. And today

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Speaker 1: that's low ball, that's low rates, that's low inflation, that's

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Speaker 1: crowded positioning. We like to project that into the future. Collectively,

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Speaker 1: the market will underappreciate the FED. Now, we don't need

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Speaker 1: for hikes to get some ugly numbers in the tenure note.

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Speaker 1: The tenure note has a nine year duration, it trades

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Speaker 1: to twenty and it's traded in a hundred basis point

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Speaker 1: range over the past couple of years, so you don't

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Speaker 1: need much to get some negative numbers and the mark

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Speaker 1: the market is not appreciating what the FETE is saying.

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Speaker 1: Yellen wants to get the qui unlined up going before

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Speaker 1: she potentially loses office. That's a much harder thing to reverse,

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Speaker 1: so she wants her legacy to be that to be

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Speaker 1: starting to go. So when we see that move higher,

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Speaker 1: it's not gonna take much. We could see some of

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Speaker 1: this unlined. So right now I'm looking at a tenure

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Speaker 1: treasury yield of two point How high would it have

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Speaker 1: to go to it to cause some some serious pain

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Speaker 1: and which as a class is most vulnerable? UM. Hard

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Speaker 1: to judge how high it needs to go to cause pain. UM.

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Speaker 1: Probably I think there's probably some technical selling you know,

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Speaker 1: north of to something like that. As I speculate, UM,

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Speaker 1: the most vulnerable places are that high quality UM space.

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Speaker 1: You've seen a flood of of high quality new issuance

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Speaker 1: we've seen recent in recent days, focus on hold co issuance,

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Speaker 1: focus on Carrie trades, to focus on relative value instead

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Speaker 1: of total return preferred you know, coming to get some

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Speaker 1: equity treatments. This is very late credit cycle behavior. That

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Speaker 1: doesn't mean growth can extend things, but you're starting to

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Speaker 1: see behavior that shows UM that the market is getting

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Speaker 1: a bit on the extended side. So it's that high

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Speaker 1: quality area that is likely subject to some some some

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Speaker 1: negative signs and investor disappointment. Henry Peatbuddy, thank you so

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Speaker 1: much for joining us. We love talking with you. Henry

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Speaker 1: Peabody is a portfolio manager at Eaton Vance, which oversee

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Speaker 1: these three hundred billion dollars of assets and is based

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Speaker 1: in Boston. All right, let's turn our attention now to

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Speaker 1: the US dollar. Have ad buying dollars, selling treasures and

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Speaker 1: then waiting for the US Congress and the administration to

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Speaker 1: agree on tax cuts. Is that a strategy? Well, Vincent

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Speaker 1: Signerella are FX strategist for Bloomberg News, joins us here

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Speaker 1: in our studio eleven three oh, Vincent, So is that

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Speaker 1: the strategy that you see a lot of professionals employing. No,

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Speaker 1: not really the by dollar trade, the Trump trade that

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Speaker 1: has been um revised, shall we say, with the with

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Speaker 1: the excitement, they're trying to try, as David said, you're

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Speaker 1: trying to breathe some life in it. There's optimism everywhere.

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Speaker 1: There's a hopium going on in the market right now

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Speaker 1: that on September, we want to get a tax plan

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Speaker 1: that the Trump administration can put forward and get bipartisan support,

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Speaker 1: and we will see fiscal stimulus in two thousand eighteen,

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Speaker 1: early in two thousand eighteen. The reality of the situation is,

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Speaker 1: from what I've read of it so far, is there's

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Speaker 1: a very small chance this is going to be revenue neutral,

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Speaker 1: and without a revenue neutral budget, this will pass even

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Speaker 1: Mitch McConnell is said he will not vote for a

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Speaker 1: budget that is not revenue neutral. Will never get the

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Speaker 1: conservatives in the Republican Party on board, certainly won't get

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Speaker 1: the Democrats on board. The thing is dead in the water.

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Speaker 1: So we'll see this old reverse. Okay, So since we've

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Speaker 1: seen the Trump bet just totally destroyed earlier this year

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Speaker 1: with the dollar plunging uh the most for a period

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Speaker 1: on record in some in some ways, um, I just

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Speaker 1: have to wonder, you know, people, you start to get

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Speaker 1: conspiracy theorist saying that the dollar isn't going to be

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Speaker 1: used as a reserve currency as much, it's not as

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Speaker 1: much of a haven currency because of all the uncertainty.

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Speaker 1: We're not seeing that much of a surge in the

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Speaker 1: dollar on the heels of the yet another nuclear test

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Speaker 1: or another missile test anyway by North Korea. What's going

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Speaker 1: on here. The reason for that is that every time

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Speaker 1: we've seen the dollar rally and every time we have

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Speaker 1: seen a treasury sell off this year, it's been a

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Speaker 1: great trade to fade. So when you see the situation

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Speaker 1: in North Korea and there there's there's not the appetite

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Speaker 1: to buy dollars as there was before, because the trade

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Speaker 1: tends to revert and and it doesn't hold. So it's

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Speaker 1: a very very it has been a very very short

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Speaker 1: term game trade not a long term winner. As you

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Speaker 1: mentioned this year, it's been a horrible in response by

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Speaker 1: the debt. Yeah, I gotta move on just to ask

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Speaker 1: you this this and move away from the Pavlovian response concept.

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Speaker 1: You mentioned revenue neutral right, having to do with the

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Speaker 1: tax reform plan that may or may not actually get past.

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Speaker 1: How is it? Is it re election neutral as well?

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Speaker 1: I mean, because what I understand Mitch McConnell. You know

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Speaker 1: sentiment jarity leader, what he says, but you know all

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Speaker 1: these congressmen and women they have to run for re

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Speaker 1: election and the president is still popular in the districts

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Speaker 1: where a lot of these conservative Republicans represent. What if

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Speaker 1: we do get some kind of tax reform plan, what

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Speaker 1: does that do? Then you will see the doll rally

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Speaker 1: I mean, and you will see a sell off and

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Speaker 1: treasuries because there will be essentially a positive fiscal response

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Speaker 1: that will happen in two thousand and eighteen. And what

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Speaker 1: follows on that is the assumption then that given you'll

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Speaker 1: see fiscal stimulus that gives the Fed more room to

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Speaker 1: take rates. Now, okay, and I'm just wondering, do you

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Speaker 1: also see the possibility that companies will have to take

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Speaker 1: the money that they have been using for buy backs

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Speaker 1: and uh dividend increases and in order to get increased

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Speaker 1: productivity rather than hiring more people. They're going to invest

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Speaker 1: it in technology. They're gonna spend it on capital projects.

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Speaker 1: They may it depends on what their cost of capital is.

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Speaker 1: And that's the whole story about bringing money back overseas.

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Speaker 1: If you bring back money overseas, it has to be

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Speaker 1: cheaper than your current cost of capital. Otherwise it doesn't

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Speaker 1: pay to reinvest. I think that if the dollar does strengthen,

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Speaker 1: it's going to tank markets because if you think about it, uh,

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Speaker 1: there's exquies well yeah, equities, and wouldn't it also be um.

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Speaker 1: I mean, I don't know, I might might. Just I'm

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Speaker 1: just seeing all the leverage trades that have been built

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Speaker 1: on a week dollar, whether it's emerging markets, currency, emerging markets,

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Speaker 1: whether it's oil and gold and things that are priced

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Speaker 1: in the dollar. I mean, gold won't do well if

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Speaker 1: the dollar rise is no will emerging markets because a

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Speaker 1: lot of foreign A lot of the emerging market countries

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Speaker 1: have dollar denominated loans, so as the dollar increases, the

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Speaker 1: debt becomes more expensive. So e M tends not to

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Speaker 1: do well when the dollar relies. And also there's been

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Speaker 1: so much money that goes into local currency emerging markets

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Speaker 1: from hard currency investors, namely US investors. So if the

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Speaker 1: dollar strengthens, that means that those emerging market currencies weekend

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Speaker 1: and poof the go returns. Well, there wasn't There won't

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Speaker 1: be an incentive to go into e M if the

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Speaker 1: dollar strengthens, because you'll the dollar invested in assets will

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Speaker 1: will flourish. It'll be very interesting to see how this rolls. Vincent,

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Speaker 1: thank you so much, and can you can you give

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Speaker 1: us just really quickly what's your bet? I think it's

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Speaker 1: going to weaken to the year end the dollar. Yeah,

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Speaker 1: I don't like the odds of fiscal reform of passing,

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Speaker 1: and I think, um, I think there are other things

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Speaker 1: that are to hold the hand of the Fed. So

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Speaker 1: we're not going to see us and interest rates the

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Speaker 1: dollar higher. All right, Vincent sc Nerella, He is not

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Speaker 1: drinking the glass of opium. Vincent is our FX strategist

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Speaker 1: for Bloomberg. Well, there is a big, big question right

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Speaker 1: now among many investors, which is gold doesn't matter anymore?

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Speaker 1: Is it a haven asset? And should you be buying

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Speaker 1: it as a lot of people expect inflation to pick

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Speaker 1: up and are concerned about inflated asset prices. Here to

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Speaker 1: give us his view, as Frank Holmes. He is the

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Speaker 1: chief executive officer and chief investment officer of US Global Investors,

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Speaker 1: which is based in San Antonio, Texas, but he joins

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Speaker 1: US here in New York. Frank, you are bullish on gold, Gold,

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Speaker 1: Go gold? Why? Well, I think if you looked back

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Speaker 1: since this the two thousand, the year two thousand, gold

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Speaker 1: is far row perform the SMP five D, which shocks people. Uh.

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Speaker 1: And then there's these short term runs which we're experiencing again,

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Speaker 1: and that's predominantly because of negative real interest rates. And

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Speaker 1: whenever negative has explained to your listeners is whatever the

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Speaker 1: governments saying, bly, my bonds, my two year, my five

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00:22:16,640 --> 00:22:20,000
Speaker 1: year bonds. Take away the monthly CPI number gives you

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Speaker 1: a positive or negative real rate of return. And whenever

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Speaker 1: that is negative, gold goes up, dollar goes down. Whenever

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Speaker 1: it's positive, dollar goes up, gold goes down. So gold

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Speaker 1: is money for half of the world, and it shows

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Speaker 1: up in reserves, shows up a significant factor. China is

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Speaker 1: not gonna be floating a Wan bond and it's backed

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Speaker 1: by gold for them to make it, so the credibility internationally,

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Speaker 1: people don't want to turn they can remember just their paper.

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Speaker 1: They say, well, it's not gonna be collaterized with gold.

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Speaker 1: So I think that's that's important. Um. And the other

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Speaker 1: part is more a significant long term is the rise

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Speaker 1: and I call the love trade the rise of g

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Speaker 1: d P per capita in Hindia China, India affectually known

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Speaker 1: as the world's population. Their rising GDP has led to

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Speaker 1: a continuous and it comes in waves of buying for gifts.

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Speaker 1: They buy care of gold jewelry. Uh, it only has

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Speaker 1: a ten markup, so you get to wear your wealth.

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Speaker 1: Wearing your wealth, I guess wearing it on your sleeve

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Speaker 1: is as well. You know you mentioned there is this

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Speaker 1: idea about gold. But I'm wondering do people buy gold

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Speaker 1: as investments because they think the world is going to

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Speaker 1: come to an end or do they buy it because

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Speaker 1: they recognize something about the way that currencies operate. That

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00:23:36,840 --> 00:23:39,920
Speaker 1: make gold just a great investment that you can buy

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Speaker 1: and sell and make some money on. I think there's

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Speaker 1: there's two parties to that, and I think that as

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Speaker 1: I said earlier, that the biggest buyers that really shocks

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Speaker 1: you is the love trade, not the fear trade. The

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00:23:50,840 --> 00:23:53,920
Speaker 1: short term spurts and rallies is the fear trade. Uh.

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Speaker 1: And they're the more savvy currency players that are taking

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Speaker 1: a look at what are the factors will drive a

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Speaker 1: country's currency up or down, and they look at monetary policy,

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Speaker 1: they look at CPI numbers, and they look at fiscal policy.

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Speaker 1: So until there's really a pushback in fiscal policy that

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Speaker 1: is streamlining all these regulations globally that are taking place,

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Speaker 1: then you're going to have to live with cheap negative

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Speaker 1: interest race. Frank, when when did you get most bullish? Uh?

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Speaker 1: On gold? Well? I grew up in coming from Canada,

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Speaker 1: originally in Toronto. You study geology and mining at a

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Speaker 1: young age, and uh so I became fascinated on those

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Speaker 1: on those drivers at a young age. But I mean

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Speaker 1: as far as recent events, I mean, is there something

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Speaker 1: about what's going on right now that makes you bullish

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Speaker 1: on gold or are you just generally bullish on He's

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Speaker 1: Canadian exactly. I mean, it's in your Canadian flood. You

426
00:24:49,080 --> 00:24:52,240
Speaker 1: grew up learning about life hockey stick. Um. But I

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Speaker 1: think the thing is I've always mentioned is that people

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Speaker 1: should have a ten percent waiting in gold and rebalance

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Speaker 1: each year because there's inherent volatility with currencies, and that's

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Speaker 1: to protects you as an investor. So it's a form

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Speaker 1: of insurance. Some people would say that bitcoin is the

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Speaker 1: new gold with respect to that sort of uncorrelated asset

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Speaker 1: class that does not have the same kind of correlations

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Speaker 1: of some currencies. Do you agree, No, I think that

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Speaker 1: it's the most incredible exercise and crowdfunding. If you go

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Speaker 1: to TED talks, which have readers, I mean a hundred

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Speaker 1: eighty countries, two million people a day watch TED talks

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00:25:29,240 --> 00:25:34,280
Speaker 1: and the educational blockchain technology cryptocurrency, etherory and bitcoin. It's

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00:25:34,359 --> 00:25:37,040
Speaker 1: all over the world by very intelligent people are learning

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00:25:37,040 --> 00:25:40,120
Speaker 1: about this space and the crowdfunding that has taken place.

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Speaker 1: In the funding, I think it's got a control. There's

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Speaker 1: eight hundred I c o s uh. There's no corporate

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Speaker 1: governments with these these things. But the idea of bitcoin

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Speaker 1: and etherorium and ripple. Uh, and there's about ten of them,

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00:25:53,080 --> 00:25:56,040
Speaker 1: but in particularly Etherorium, which is a contract. I think

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00:25:56,040 --> 00:25:58,680
Speaker 1: they're very significant and we're very early like we were

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Speaker 1: in the Internet, of how you can do a transaction

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Speaker 1: and have a contract and you can basically move money

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Speaker 1: and you can do it every hour, uh twenty four seven.

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Speaker 1: Trade and stocks, the arbitrage with currencies when you go

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Speaker 1: here to Canada, the banks are going to charge from

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Speaker 1: four percent to twelve pc on your currency. It's gonna

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Speaker 1: cost you two percent. If someone came to you, Frank

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Speaker 1: and said, look, I buy your analysis. I think this

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Speaker 1: is something that I want to invest in, but I

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Speaker 1: don't want to lose my shirt. What would you recommend

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Speaker 1: that they do? Well, it's he just had to understand

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Speaker 1: it's very cutting edge, as very volatile, especially what Jimmy

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Speaker 1: Dan when he said, uh, the very aggressive statements that

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Speaker 1: they've made. Uh. He's a great leader as a CEO,

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00:26:43,920 --> 00:26:47,560
Speaker 1: he's a phenomenal job. But at the same time, their

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Speaker 1: bank and other banks have been charged and found in

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Speaker 1: court system for manipulating the price of gold. So you

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Speaker 1: hear from other people that write about this are saying, well,

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Speaker 1: they must be short or they have another. But how

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Speaker 1: would you invest? Is there a way to invest just quickly? Well,

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Speaker 1: I don't think there's a clear way where Hopefully I've

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Speaker 1: invested in a company is going to go public next week.

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Speaker 1: That's the first mining company, uh and it's with the

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Speaker 1: company called Genesis Mining, and it is a pure mind

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Speaker 1: and minds these uh mint coins new coins. I can

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Speaker 1: tell that mining is a theme, right. Mining goes from

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Speaker 1: gold to Frank has cuff links that's say buy and sell. Awesome,

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Speaker 1: you like that hunt. You know what the price of

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Speaker 1: gold was in two thousand, two hundred and seventy three

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Speaker 1: dollars announced today one dollars. Thanks very much, Frank Colmes.

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Speaker 1: He is the chief executive chiefs investment Officer of US

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Speaker 1: Global Investors based in San Antonio. Thanks for listening to

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Speaker 1: the Bloomberg P and L podcast. You can subscribe and

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00:27:46,200 --> 00:27:50,120
Speaker 1: listen to interviews at Apple Podcasts, SoundCloud or whatever podcast

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00:27:50,200 --> 00:27:53,640
Speaker 1: platform you prefer. I'm pim Fox. I'm on Twitter at

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00:27:53,840 --> 00:27:57,200
Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo wits one.

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Speaker 1: Before the podcast, you can always catch us worldwide it

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00:28:00,160 --> 00:28:09,400
Speaker 1: on Bloomberg Radiom