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Speaker 1: M. This is Mesters in Business with Very Results on

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Speaker 1: Bloomberg Radio this weekend. On the podcast, I have an

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Speaker 1: extra special guest Strap yourself in for this one, Rebecca Patterson.

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Speaker 1: She has a fascinating career and a fascinating job. She's

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Speaker 1: the director of investment Research at investment Giant Bridgewater Associates.

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Speaker 1: She also sits on the investment committee with Ray Dalio

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Speaker 1: as well as the two co c i O s.

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Speaker 1: One of the more interesting and influential and powerful women

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Speaker 1: in the world of finance, and really just an incredible

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Speaker 1: breath and depth of knowledge. We talked about everything from

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Speaker 1: inflation to federal reserve policy, to crypto, to fiscal stimulus,

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Speaker 1: to China, to different sector rotations that take place at

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Speaker 1: various points in different economic segments. Really just an absolute

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Speaker 1: tutor force conversation about all of the things that are

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Speaker 1: driving the market now and not just hindsight, but actual

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Speaker 1: real time observations that turned out to be either right

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Speaker 1: or wrong. And she describes how they integrate this into

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Speaker 1: their investment process. Sometimes they look at the world and say, well,

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Speaker 1: we see these two things as the highest probability outcomes,

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Speaker 1: and so will position our portfolios to benefit if either

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Speaker 1: of these two disparate and probably mutually exclusive outcomes turn out,

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Speaker 1: it really is an intriguing and fascinating way to think

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Speaker 1: about the world, to look at history, to look at data,

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Speaker 1: and to come up with a defendable approach. I found

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Speaker 1: it absolutely fascinating, and I think you will as well. So,

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Speaker 1: with no further ado, my conversation with Bridgewater Associates Director

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Speaker 1: of Investment Research, Rebecca Patterson. This is Mesters in Business

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Speaker 1: with Very Renaults on Bloomberg Radio. My extra special guest

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Speaker 1: this week is Rebecca Patterson. She is the director of

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Speaker 1: investment Research at Hedge fund Giant Bridgewater Associates. Previously, she

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Speaker 1: was the chief investment officer at Bessemer Trust. What she

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Speaker 1: oversaw more than eighty five billion dollars in client assets.

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Speaker 1: She is also on the Council of Farm Relations and

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Speaker 1: a member of the Economic Club of New York. Rebecca Patterson,

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Speaker 1: Welcome to Bloomberg. Thank you, Barry. It's great to be here.

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Speaker 1: So you have a really interesting background that is not

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Speaker 1: the typical Wall Street research director or c I oh,

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Speaker 1: you you started as a local reporter in d C.

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Speaker 1: You worked for Dow Jones in the Wall Street journal,

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Speaker 1: Tell tell us a little bit about your journalism career

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Speaker 1: and how that led you to finance. Sure, so I'm

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Speaker 1: definitely an accidental banker. Didn't set out to have a

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Speaker 1: career in finance. I loved researching, I loved writing, I

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Speaker 1: loved connecting the dots. And so my first job at

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Speaker 1: my hometown paper, the St. Petersburg Times in Washington was

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Speaker 1: great because I got to do all those things, you know,

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Speaker 1: I got to see how policy goes from idea to

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Speaker 1: reality and maybe more importantly why uh. And then at

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Speaker 1: Dow Jones, one of my first assignments was writing the

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Speaker 1: daily foreign exchange column for The Wall Street Journal. And

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Speaker 1: I had studied currencies and during grad school at Johns Hopkins.

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Speaker 1: But obviously reality is very different from academia, and I

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Speaker 1: learned very quickly that to understand currencies you kind of

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Speaker 1: have to understand everything else, you know, trade and capital flows,

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Speaker 1: relative trends, and economies and markets psychology. Um so that

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Speaker 1: was great. That was a great education. I moved from

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Speaker 1: New York to London. With Dow Jones. It was still

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Speaker 1: covering effects but also politics and policy. In the mid nineties,

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Speaker 1: when JP Morgan reached out and said, hey, we read

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Speaker 1: your up in the paper. We think you get it

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Speaker 1: whatever it is, and we want to hire you. And

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Speaker 1: I told them, hey, I don't know anything about banking,

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Speaker 1: but they said I knew more than I realized, and

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Speaker 1: I could learn the rest. So I thought, well, why not, right,

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Speaker 1: why not try? And my first few years there were

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Speaker 1: challenging beyond belief, not just because I had a vertical

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Speaker 1: curve to get up, but the time I joined JP

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Speaker 1: Morgan in September, and Barry, you and I are both

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Speaker 1: old enough that you probably immediately know what I'm talking to. Bingo.

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Speaker 1: So my my first two years doing currency research for

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Speaker 1: the Investment Bank, I had the Asian currency crisis, yeah,

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Speaker 1: Russian rouble, and then as soon as we were getting

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Speaker 1: out of those, then we had the run up to

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Speaker 1: the Euro. You know, it launched in Jane and I

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Speaker 1: was one of those folks who were putting together these

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Speaker 1: calculators to understand what would be the conversion rate between

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Speaker 1: the Deutsch Mark and the Italian lira and the pasada

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Speaker 1: and it was so it was. It was quite an

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Speaker 1: education those first couple of years. But that's that's how

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Speaker 1: I got in the banking. I would they read my

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Speaker 1: stuff and thought I had it whatever it is. So

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Speaker 1: that's kind of interesting. You spent a long time at

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Speaker 1: JP Moore and you're there for about fifteen years global currency,

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Speaker 1: commodity desk trading, and then asset management chief strategists. How

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Speaker 1: do you work your way from currency to commodity to equity. Yeah,

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Speaker 1: so JP Morgan definitely helped me see the world and

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Speaker 1: get a better understanding of it. I feel like, you know,

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Speaker 1: you joined the military into the world. I joined the

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Speaker 1: bank and saw the world from from London. I moved

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Speaker 1: to Singapore in early I was still doing currency, but

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Speaker 1: now also fixed income research, and that was that was

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Speaker 1: a great experience to understand that even if all economies

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Speaker 1: and markets have the same drivers, how you think about

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Speaker 1: them is going to change a lot depending on how

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Speaker 1: the economy is made up. You know, I was just

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Speaker 1: getting the hang of Europe and suddenly I'm dealing with

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Speaker 1: remittance flows in the Philippines and reserve adequacy in South Korea.

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Speaker 1: Uh and it and so it was humbling, but it

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Speaker 1: was a great education. And I think I also learned

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Speaker 1: from that that you can use data from completely other

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Speaker 1: parts of the world to develop your view. So you know,

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Speaker 1: even today I look at new export orders from Taiwan

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Speaker 1: and Korea that gives me a leading indicator for US

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Speaker 1: industrial production. So you know, having that holistic take on

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Speaker 1: what's going on in the world can be really important.

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Speaker 1: To have the right views in a in one specific country.

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Speaker 1: Son inter market data can be effective if you're looking

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Speaker 1: in the right place and you're able to figure out

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Speaker 1: what the impact is going to be on an adjacent

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Speaker 1: or even unrelated market completely. So you know, for many years,

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Speaker 1: if you wanted to know what was going on with

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Speaker 1: German industrial production, you would look at Belgium because they

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Speaker 1: did a lot of the assembly of good that were

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Speaker 1: eventually sold out of Germany. Today, I think that's changed

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Speaker 1: a little bit and you look at some of the

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Speaker 1: Eastern European countries. But understanding those global supply chains, understanding

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Speaker 1: those linkages. Even back in the nineties when I was

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Speaker 1: getting going in this business, um, we're really important to do,

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Speaker 1: really really interesting, and then you end up getting scooped

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Speaker 1: up by Bessemer Trust where eventually become chief investment officer

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Speaker 1: running a lot of money. A lot of money. Yeah,

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Speaker 1: it is a lot of money. My my mom still

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Speaker 1: giggles a little bit when I when I mentioned that, um,

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Speaker 1: you know, at JP Morgan, I had gone from research

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Speaker 1: to running a trading desk. And I realized quickly I

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Speaker 1: liked running risk. I like touching the money. I was

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Speaker 1: doing that during O eight oh nine and and I

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Speaker 1: also learned about myself that I can handle the pressure

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Speaker 1: of of things not going up all the time. And

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Speaker 1: so I knew that was a direction I wanted to

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Speaker 1: go in and at JP Morgan. While I loved the firm,

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Speaker 1: opportunity wasn't there when I was ready. And when Bessemer

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Speaker 1: reached out and recruited me, I thought, all right, I

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Speaker 1: you know, I still have friends at JP Morgan, but

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Speaker 1: this is this is the moment to make the leap.

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Speaker 1: And and it was great. I the firm gave me

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Speaker 1: a ton of autonomy. I was able to develop new

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Speaker 1: solutions for clients, build a fantastic team. The clients themselves

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Speaker 1: are really interesting. I mean, you know about wealth today,

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Speaker 1: uh in the United States. Some some of the people

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Speaker 1: I was dealing with, you really thought about their portfolios

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Speaker 1: like you wouldn't endowment or pension and it's perpetual capital. Yeah,

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Speaker 1: the complexity is not insignificant. So that that was a

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Speaker 1: lot of fun. So you you end up on the

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Speaker 1: New York Federal Reserve Investor Advisor Committee. Tell us a

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Speaker 1: little bit about that experience and and who were the

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Speaker 1: people you met uh in that role. So I've always

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Speaker 1: been close with the New York Fed during my career.

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Speaker 1: I started out UH doing foreign exchange lessons for junior

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Speaker 1: central bankers and training, and then later on I was

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Speaker 1: on their foreign Exchange committee, and then I got uh

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Speaker 1: pushed into the Investor Advisory Committee, which you know, I

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Speaker 1: felt initially like the kid at the Thanksgiving table with

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Speaker 1: all the grown ups, because these were all the masters,

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Speaker 1: truly the masters of the universe. And and then me

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Speaker 1: and um, and I'm not trying to be self deprecating it,

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Speaker 1: that's how I felt. But we took turns presenting in

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Speaker 1: front of the New York Fed officials and then we

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Speaker 1: debate different topics. And I met Ray Dalio there and

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Speaker 1: after several meetings where you know, he saw me presenting

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Speaker 1: on a variety of topics, he saw me holding my

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Speaker 1: own against you know whoever. It was Jim Chano's Paul

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Speaker 1: Tutor Jones, Bill Ackman, et cetera. And Ray himself. He

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Speaker 1: came up and said, you know, maybe maybe we should

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Speaker 1: have you come work with us. And um, and that

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Speaker 1: was the beginning of a conversation that led me to

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Speaker 1: where I am today. So you joined Bridgewater in before

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Speaker 1: the pandemic. But I'm kind of intrigued by what the

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Speaker 1: process was like to get hired at a place like Bridgewater.

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Speaker 1: I gotta think it's more than just Ray saying, Hey,

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Speaker 1: I met this woman over at the New York Fed,

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Speaker 1: I like her, give her a job. Tell us what

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Speaker 1: the process was like to to actually work your way

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Speaker 1: to the offer from Bridgewater. Sure so, um, I joined

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Speaker 1: in January, but I was interviewing in nineteen And you know,

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Speaker 1: I think the process for a lot of folks is

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Speaker 1: even more um detailed, let's say, than than mine was.

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Speaker 1: My process was long. I met a lot of people.

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Speaker 1: I had to come up with ideas on how I

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Speaker 1: would allocate capital to this and that. I think the

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Speaker 1: most interesting piece of my interview though, and and and

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Speaker 1: kind of a good window into Bridgewater. Ray had asked

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Speaker 1: me to come join weekly morning meeting they have where

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Speaker 1: they talk about what's going on in the world. I thought, yeah,

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Speaker 1: that sounds great. I can learn about the people, see

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Speaker 1: what the discussions are like. And I showed up at

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Speaker 1: their office in Connecticut, stepped down at the table, several

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Speaker 1: dozen people in the room, and it's being videoed, and

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Speaker 1: Ray introduces me and says, okay, Rebecca, let's kick off

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Speaker 1: the meeting. You tell us for the next ten minutes

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Speaker 1: what you think is the most important thing to think

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Speaker 1: about in the world today. Okay, go right, go. And um,

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Speaker 1: I did not know that was coming. Fortunately I live

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Speaker 1: and breathe thinking about the markets, so I just launched

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Speaker 1: and did my thing. And then afterwards he said, okay,

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Speaker 1: everybody dot Rebecca. Now, for those of you who aren't

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Speaker 1: familiar with Bridgewater, dotting is a form of real time grading,

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Speaker 1: so we give feedback to each other all the time,

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Speaker 1: and one dot or grade doesn't make or break your career.

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Speaker 1: It's really the you know, this wonderful picture of you

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Speaker 1: that develops over time, sort of a George Sarah view

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Speaker 1: of you that evolves over time. But I had never

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Speaker 1: been dotted before, and suddenly all these people are whipping

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Speaker 1: out their computers and iPads and putting the little dots

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Speaker 1: next to my name, grading my insights. And and this

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Speaker 1: is how Bridgewater is it's radically transparent. I thought, Okay,

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Speaker 1: how do I feel about this? Because this will be

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Speaker 1: my life, and I'm kind of grateful it happened because

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Speaker 1: I realized that evening when I got home and I

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Speaker 1: was reflecting on it, I'm okay with it. I might

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Speaker 1: not always agree with every grade I get, but I

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Speaker 1: certainly prefer to know where I stand and not know UM.

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Speaker 1: I don't want people talking behind my back. I want

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Speaker 1: talking to my face. So so that really helped me

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Speaker 1: actually make the decision that I wanted to join the firm.

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Speaker 1: So let's explore this financial point is UM a little more.

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Speaker 1: How does this impact because I've never quite heard it

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Speaker 1: described the way you just did. So now you're at

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Speaker 1: Bridgewater and you go to these regular meetings or anybody

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Speaker 1: who's there, how does it affect regular conversations? How does

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Speaker 1: it affect presentations? Because I would imagine if every meeting,

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Speaker 1: every discussion group, there's a potential of being graded. Does

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Speaker 1: that affect how you present, how you behave, how you

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Speaker 1: think about and prepare for each meeting? Or is it

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Speaker 1: just an ongoing background sort of thing for me. I

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Speaker 1: don't want to speak for everyone in the firm. For me,

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Speaker 1: it becomes more of a this is in the background,

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Speaker 1: and it's a way just to get a regular check

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Speaker 1: in on how I'm doing and how people are perceiving

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Speaker 1: I'm doing. Where are there areas that I can improve?

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Speaker 1: But I would say, especially in the beginning and even now,

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Speaker 1: it's in the back of my mind and and maybe

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Speaker 1: it makes me that one extra degree more thoughtful about

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Speaker 1: how I'm going to present something. Um. But it certainly

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Speaker 1: doesn't slow you down. You can't let it right. You're

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Speaker 1: therearing enough hours in the day to worry about how

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Speaker 1: you get dotted. Um. So it's just it's a tool

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Speaker 1: really to help you think about what am I doing

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Speaker 1: well at Where areas that I might not see myself

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Speaker 1: that I can do better. So let's talk a little

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Speaker 1: bit about the research agenda at Bridgewater. How does that

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Speaker 1: get shaped and how does the research agenda affect the

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Speaker 1: investment strategy they That's a lot of questions, Verry, I'll

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Speaker 1: wrapped into one. Um. There's a couple of things about

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Speaker 1: Bridgewater and how we do research that I think are

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Speaker 1: fairly unique in the industry. One is just the depth

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Speaker 1: of research we do. I you know, I've been in

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Speaker 1: research and investing most of my adult life, and I've

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Speaker 1: never seen anything like it. And I think the reason

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Speaker 1: we take so long and go so deep on everything

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Speaker 1: to make sure we truly understand it and understand it

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Speaker 1: not just at a moment in time, but over cycles

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Speaker 1: and different economic environments. So we'll go back often fifty

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Speaker 1: years in our analysis, will look across countries to see

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Speaker 1: if something universally true. It doesn't just work here, but

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Speaker 1: it works in different places. And once we get that

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Speaker 1: level of confidence that we understand a cause effect linkage

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Speaker 1: and economies or markets, then we're going to create rules

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Speaker 1: if this happens, then that if if that happens, and

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Speaker 1: this will codify those rules, and those are going to

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Speaker 1: shape the investments we make. Once we understand the rules

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Speaker 1: of how the economic machine works, to borrow Ray Dalio's term,

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Speaker 1: then we put it into our systems and we can

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Speaker 1: afford to miss something. You know, not that we can't

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Speaker 1: pull it out of the systems and improve it, but

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Speaker 1: we don't want to be doing that, so we want

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Speaker 1: to make sure we get it right up front, and

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Speaker 1: that means doing this unbelievably deep amount of research upfront

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Speaker 1: to understand how the world works, So I say that's

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Speaker 1: pretty different about us. And and the other thing is

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Speaker 1: that because Ray has had this approach since he started Bridgewater,

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Speaker 1: So he founded the firm fifty years ago, coming up,

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Speaker 1: and he's always been doing the us figuring out is

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Speaker 1: what he thinks, testing it, writing down the rules, and

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Speaker 1: that lets him compound. So when inflation pops as it's

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Speaker 1: doing this year, we don't have to say, oh my gosh, okay,

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Speaker 1: it's been a while and go back to the seventies

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Speaker 1: and review that what did it mean? We already know that,

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Speaker 1: we've already studied that, we've tested it. So it frees

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Speaker 1: us up to spend our time in research looking at

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Speaker 1: what's different, Um, what's what's a new thing that maybe

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Speaker 1: we haven't captured in the past, Or what are we

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Speaker 1: getting wrong? I mean, unfortunately we don't get everything right,

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Speaker 1: and so if we get something wrong, we want to

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Speaker 1: understand why, what did we miss? Did we appreciate some

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Speaker 1: variable incorrectly or underappreciated, etcetera. So we we really focus

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Speaker 1: our research on those two things, what did we get

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Speaker 1: wrong and why? And let's fix it? And then what

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Speaker 1: are things evolving in the world today that are new

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Speaker 1: and maybe Barry I can give you one super quick

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Speaker 1: example of that. You know, when we think about equities,

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Speaker 1: we're always looking at all the buyers and sellers of

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Speaker 1: every athlet class, including equities, and we've seen in the

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Speaker 1: pandemic a huge increase in the amount of retail investing

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Speaker 1: we're seeing versus before the pandemic. Obviously, retail investors are

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Speaker 1: something we've always tracked. What's a little different today is

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Speaker 1: the amount of activity and options with retail investors, and

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Speaker 1: I think that's the result of changes in technology, changes

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Speaker 1: in cost, the ability of people to be able to

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Speaker 1: use options at a retail level. And so that's something

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Speaker 1: that we want to make sure we're capturing appropriately in

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Speaker 1: our thinking, and that will feed through into investments we

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Speaker 1: make if it becomes a material force driving the equity market.

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Speaker 1: So so let's stay with that because that's a really

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Speaker 1: interesting issue. I look at the surge of retail investors

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Speaker 1: as a bunch of board people stuck at home in

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Speaker 1: the first year of the pandemic, combined with all of

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Speaker 1: their favorite bedding alternatives like professional sports a dream. When

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Speaker 1: all that stuff was canceled, the one thing that wasn't

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Speaker 1: canceled was the stock market, and thanks to robin Hood,

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Speaker 1: they could trade for free and they could buy fractional shares,

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Speaker 1: so it didn't take a lot of money. Am I

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Speaker 1: grossly oversimplifying what you described? Or is that a key

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Speaker 1: factor in you know why suddenly the retail investor UH

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Speaker 1: seemed to surge in. I would agree with everything you

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Speaker 1: just said, and I would add one very important factor

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Speaker 1: that I'm sure you know of and you just didn't mention,

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Speaker 1: but I think we need to, which is that they

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Speaker 1: not only had the technological ability to do this, they

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Speaker 1: also had the financial ability. You know, it's I think

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Speaker 1: we'll probably talk about it later, but it is really

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Speaker 1: incredible the level of wealth at different socioeconomic cohorts that's

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Speaker 1: been created during the pandemic thanks to this massive, massive

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Speaker 1: surgeon liquidity from the said and fiscal transfers from the government.

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Speaker 1: So these folks, like you said, we're board locked at home,

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Speaker 1: but they also had this money. What are you gonna

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Speaker 1: do with it? And if I can't go see my

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Speaker 1: friends at a restaurant, I can't go to a sports game,

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Speaker 1: you know, here's here's something else I can do. And

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Speaker 1: by the way, a lot of them, I think made

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Speaker 1: some decent money over the last year and a half

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Speaker 1: or so, especially the earlier you were into playing with that,

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Speaker 1: the better you did post post lockdown. Um. But but

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Speaker 1: that's like a kind of one off thing. What are

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Speaker 1: the biggest drivers into your research? Is it fundamental economic data?

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Speaker 1: Are you really looking at corporate balance sheets, revenue and earnings,

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Speaker 1: or is it broader market data? Or is it all

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Speaker 1: those and more? All those and more? Again, That's when

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Speaker 1: I say the research we do is deeper than anything

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Speaker 1: I've ever seen. Um. You know, every time when I

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Speaker 1: get up in the morning and I read the financial press,

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Speaker 1: and I read my aggregators, and I look at my

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Speaker 1: Bloomberg screen and I see some snippets some little thing,

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Speaker 1: and I think, oh, that's interesting. I send it off

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Speaker 1: to a colleague on the equity team or the fixed

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Speaker 1: income team. Point five percent of the time they're like, oh, yeah,

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Speaker 1: we studied that X years ago. You know, it is

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Speaker 1: amazing the breath and depth of what we look at

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Speaker 1: to make sure we're capturing all the players, all the flows,

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Speaker 1: all the inputs that can affect economies and flow through

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Speaker 1: the markets. Um, it's really extraordinary. So you're also on

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Speaker 1: Bridgewaters Investment Committee with Bob Prince, Greg Jensen, and Ray Dalio.

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Speaker 1: Tell us what it's like working with with that group.

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Speaker 1: They sound like they can be an intimidating threesome right there. Well,

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Speaker 1: I think having my first job in Washington and having

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Speaker 1: to interview members of Congress and leaders, and then later

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Speaker 1: in a private bank, you know, working with CEOs and

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Speaker 1: people who owned hedge funds and former policymakers. You know,

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Speaker 1: you realize people are people, so you shouldn't be intimidated.

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Speaker 1: You should be respectful of everything they've achieved. So I

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Speaker 1: don't get intimidated, but I am respectful. I mean, these

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Speaker 1: people have created an amazingly successful company with with great

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Speaker 1: since inception returns and and so you know I listened

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Speaker 1: to them carefully, but you have to push back if

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Speaker 1: you don't agree, and it's expected. Um, you know, at

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Speaker 1: the end of the day, if if they get it

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Speaker 1: wrong because I didn't push back and we don't make

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Speaker 1: as much money as we could as that's my fault.

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Speaker 1: That's on me. But the meeting itself, Um, the investment

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Speaker 1: committee that we have, we started that about a year ago,

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Speaker 1: maybe a bit before because Ray as as I think

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Speaker 1: has been widely reported and the press has been transitioning

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Speaker 1: for some time UM less than the day to day

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Speaker 1: of the company and more into a mentor c I

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Speaker 1: O role. And and with that move, we felt we

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Speaker 1: needed to expand the group of key decision makers, and

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Speaker 1: so the Investment Committee was formed and it's it's a

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Speaker 1: place where we're going to review positions in the portfolio.

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Speaker 1: We're going to pose questions to each other and about positions,

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Speaker 1: new learnings, things that might be going against us. Do

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Speaker 1: we feel like it's a short term blip, a wiggle

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Speaker 1: in the market, or something that maybe we're missing and

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Speaker 1: we need to go dig into more. UM Again, what

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Speaker 1: makes it different from other investment committees I've been on

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Speaker 1: at JP Morgan or Bestsemer is just the bar to

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Speaker 1: get an idea into the portfolio is incredibly high. It

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Speaker 1: can it can take you several months to get through

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Speaker 1: the gauntlet to make sure you haven't missed anything before

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Speaker 1: an idea gets in the portfolio. So so let me

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Speaker 1: take a step back and ask you a broader question.

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Speaker 1: You've lived all over the world, You've worked all over

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Speaker 1: the world, You've traveled to I don't know fifty UM countries.

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Speaker 1: How does an impact how you think about long term

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Speaker 1: investing and the various strategies you want to bring to

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Speaker 1: back well being? Going all over the world again, and

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Speaker 1: we talked about this a little earlier. I try to

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Speaker 1: connect the dots, and so if I'm seeing, for example,

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Speaker 1: China's economy slowing down and policymakers are starting to react.

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Speaker 1: We we saw just recently a small cut in interest rates,

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Speaker 1: giving one more monetary stimulus. But if I'm seeing the

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Speaker 1: slowdown in China, immediately my mind goes not just the

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Speaker 1: first order consequence, which is how does this affect any

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Speaker 1: Chinese positions we have in the portfolio, but immediately second, third,

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Speaker 1: fourth order. So what does it mean for supply chains?

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Speaker 1: What countries? If we can't ship out of Chinese courts,

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Speaker 1: where do we ship it from? How does it affect

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Speaker 1: producers across emergin Asia? How does it affect commodities? How

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Speaker 1: does it affect inflation in the United States? How long

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Speaker 1: is this going to last? And then you have to

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Speaker 1: overlay the policy. If President she is thinking about the

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Speaker 1: fall and being um being proposed for a third term,

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Speaker 1: how is that going to factor into the policy response today?

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Speaker 1: What's already raced in and so going overseas I think

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Speaker 1: has helped me understand how all these different things connect.

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Speaker 1: You know, if if China slows down, that has a

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Speaker 1: lot of implications for Germany, it has implications for Italy,

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Speaker 1: it has people will say, well, I don't want to

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Speaker 1: have China my portfolio. You already do. You know, even

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Speaker 1: if you only owned US stocks and bonds, everything is integrated,

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Speaker 1: and so making sure you're thinking about how what happens

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Speaker 1: in one country affects the others is hugely important. People say, well,

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Speaker 1: we just focus on the big economies. Last year, Malaysia

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Speaker 1: had such an important role in chips in semiconductors because

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Speaker 1: it was one of the key countries that assembled these things,

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Speaker 1: and so the fact that they were under lockdown was

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Speaker 1: a major hindrance to that supply chain. You think about Taiwan,

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Speaker 1: you don't think about Malaysia, But you have to think

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Speaker 1: about every country and its role, not just the big guys.

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Speaker 1: So because Malaysia is lockdown, used car prices going higher

430
00:25:02,040 --> 00:25:05,040
Speaker 1: really really interesting. Let me ask you one more question

431
00:25:05,080 --> 00:25:11,000
Speaker 1: about how interconnected the world is. A year ago, we

432
00:25:11,119 --> 00:25:15,440
Speaker 1: saw some changes in China towards some of their um

433
00:25:16,040 --> 00:25:19,800
Speaker 1: tech companies and and the shift in the dynamic of

434
00:25:20,880 --> 00:25:26,000
Speaker 1: more equitable wealth being spread throughout throughout the country. Um

435
00:25:26,240 --> 00:25:30,320
Speaker 1: and from a US perspective, it looked like, hey, China

436
00:25:30,520 --> 00:25:34,440
Speaker 1: is really rattling the cages of some of their biggest

437
00:25:34,440 --> 00:25:41,160
Speaker 1: and most important companies, kinda in a more direct and

438
00:25:41,160 --> 00:25:44,960
Speaker 1: and frightening way than we saw in the US. If

439
00:25:45,000 --> 00:25:48,560
Speaker 1: you remember back in steen when when Donald Trump was

440
00:25:48,600 --> 00:25:52,320
Speaker 1: first elected, he was tweeting at companies and making threats,

441
00:25:52,960 --> 00:25:55,840
Speaker 1: but never went quite as far as we've seen in China.

442
00:25:56,320 --> 00:26:00,800
Speaker 1: How do you build a model that allows you to

443
00:26:00,840 --> 00:26:06,439
Speaker 1: incorporate really really challenging geopolitics like that. A lot of

444
00:26:06,440 --> 00:26:08,280
Speaker 1: people looked at that and kind of threw up their

445
00:26:08,280 --> 00:26:10,800
Speaker 1: hands and said, we we can't figure out what the

446
00:26:10,800 --> 00:26:12,880
Speaker 1: hell is going on in China? How do you deal

447
00:26:12,880 --> 00:26:17,399
Speaker 1: with such a complex and and really challenging set of circumstances.

448
00:26:18,000 --> 00:26:21,720
Speaker 1: So I agree there is there's a different level of

449
00:26:21,800 --> 00:26:25,520
Speaker 1: understanding around China than the US. I mean, most of

450
00:26:25,560 --> 00:26:28,680
Speaker 1: the capitol and the world that gets invested is in America.

451
00:26:29,240 --> 00:26:32,440
Speaker 1: You know, the bulk of banks are in America, the

452
00:26:32,440 --> 00:26:35,359
Speaker 1: bulk of analysts are in America, and so we understand

453
00:26:35,400 --> 00:26:39,199
Speaker 1: our system incredibly well. Someone from the outside looking at

454
00:26:39,200 --> 00:26:41,080
Speaker 1: the US could say, what the heck is going on

455
00:26:41,119 --> 00:26:44,280
Speaker 1: in the United States, What is the contested election, etcetera, etcetera.

456
00:26:44,720 --> 00:26:47,119
Speaker 1: What is there going to be more regulatory scrutiny in

457
00:26:47,119 --> 00:26:51,159
Speaker 1: the US around tech companies? We understand it as we

458
00:26:51,240 --> 00:26:56,360
Speaker 1: look at China. I think, honestly, given China's size today

459
00:26:56,480 --> 00:26:58,959
Speaker 1: and the fact that in our lifetimes there's a very

460
00:26:58,960 --> 00:27:01,479
Speaker 1: good chance it will be the largest economy in the world,

461
00:27:01,960 --> 00:27:04,920
Speaker 1: it will have a currency that's probably in the top three,

462
00:27:05,080 --> 00:27:07,840
Speaker 1: maybe five in the world in terms of trading volumes.

463
00:27:08,320 --> 00:27:11,200
Speaker 1: We need to develop that level of understanding with them

464
00:27:11,240 --> 00:27:14,000
Speaker 1: as well. And that is not just how their economy works,

465
00:27:14,040 --> 00:27:17,640
Speaker 1: but it's also the linkage between policy and the economy.

466
00:27:17,680 --> 00:27:21,679
Speaker 1: If you look at Chinese policymakers and what they say,

467
00:27:21,920 --> 00:27:26,120
Speaker 1: they one thing that's kind of beautiful is that, because

468
00:27:26,560 --> 00:27:30,680
Speaker 1: of their political system, what the policymakers say is usually

469
00:27:30,720 --> 00:27:34,080
Speaker 1: what happens um So if you're actually reading all their

470
00:27:34,119 --> 00:27:37,240
Speaker 1: speeches and watching them, you usually have a decent heads

471
00:27:37,320 --> 00:27:40,720
Speaker 1: up what's coming. Whereas in the United States, our policymakers

472
00:27:40,720 --> 00:27:42,560
Speaker 1: say a lot of stuff, but it doesn't mean it

473
00:27:42,600 --> 00:27:45,760
Speaker 1: becomes reality because it has to go through through Congress,

474
00:27:45,840 --> 00:27:49,280
Speaker 1: through the Supreme Court, etcetera. UM. In China, if you

475
00:27:49,359 --> 00:27:51,000
Speaker 1: wanted to see that there was going to be a

476
00:27:51,000 --> 00:27:53,480
Speaker 1: clamp down on the tech companies, you know, maybe you

477
00:27:53,520 --> 00:27:56,119
Speaker 1: didn't know the exact timing or the exact details, but

478
00:27:56,240 --> 00:27:59,800
Speaker 1: directionally they telegraphed that in advance. I even think about

479
00:28:00,000 --> 00:28:03,560
Speaker 1: twenty when China decided that they were going to have

480
00:28:03,560 --> 00:28:07,600
Speaker 1: more flexibility around the remimbi and the Chinese currency weekend.

481
00:28:08,119 --> 00:28:13,679
Speaker 1: I think it was August that year fairly yep and um.

482
00:28:13,880 --> 00:28:16,960
Speaker 1: And if you looked at the speeches they had been

483
00:28:17,000 --> 00:28:20,400
Speaker 1: giving months in advance, you would have known that something

484
00:28:20,480 --> 00:28:22,359
Speaker 1: was coming. Maybe not the day or the magnitude, but

485
00:28:22,400 --> 00:28:25,040
Speaker 1: you knew something was coming. Um. Just like today in

486
00:28:25,080 --> 00:28:27,240
Speaker 1: the in the United States. But said will say, hey,

487
00:28:27,320 --> 00:28:30,800
Speaker 1: we're thinking about tapering or we're thinking about quantitative tightening.

488
00:28:31,160 --> 00:28:34,120
Speaker 1: We know to read those tea leaves. I think, as

489
00:28:34,280 --> 00:28:36,919
Speaker 1: as global investors, we all need to get on the

490
00:28:36,920 --> 00:28:39,680
Speaker 1: bandwagon and get up the curve on China as well,

491
00:28:39,720 --> 00:28:41,959
Speaker 1: because the economy is going to continue to be a

492
00:28:42,000 --> 00:28:45,680
Speaker 1: major force for global markets. You can get there, you

493
00:28:45,760 --> 00:28:48,560
Speaker 1: just have to spend the time knowing who the important

494
00:28:48,600 --> 00:28:51,960
Speaker 1: policymakers are to follow and then start reading their speeches

495
00:28:52,000 --> 00:28:54,320
Speaker 1: a lot more carefully than I think most people do today.

496
00:28:55,960 --> 00:29:00,760
Speaker 1: So listening to you discuss inflation, I think you approached

497
00:29:00,800 --> 00:29:03,760
Speaker 1: it in a way very different from what I've been

498
00:29:03,800 --> 00:29:07,200
Speaker 1: hearing other people talk about. You said, quote, demand shock

499
00:29:07,480 --> 00:29:13,560
Speaker 1: is what's driving inflation. Explain demand shock. Sure, So when

500
00:29:13,560 --> 00:29:16,040
Speaker 1: we look at where we are today with inflation in

501
00:29:16,080 --> 00:29:19,440
Speaker 1: the United States, it's very easy to quickly go back

502
00:29:19,480 --> 00:29:23,160
Speaker 1: to the late nineteen sixties early nine seventies and say, okay,

503
00:29:23,640 --> 00:29:26,560
Speaker 1: you know high and rising inflation, high gas prices. Have said,

504
00:29:26,600 --> 00:29:31,080
Speaker 1: that's behind the curve. Yeah, okay, there are similarities that

505
00:29:31,120 --> 00:29:34,920
Speaker 1: are worth noting. But back then, what was driving the

506
00:29:35,000 --> 00:29:39,520
Speaker 1: high inflation were supply shortages. That was the key ingredients. Today,

507
00:29:39,960 --> 00:29:43,320
Speaker 1: obviously there's things on both side of the demand supply equation,

508
00:29:43,400 --> 00:29:46,520
Speaker 1: but the bigger deal is the surgeon demand which is

509
00:29:46,560 --> 00:29:49,680
Speaker 1: just overwhelming the supplies. So let me give you a

510
00:29:49,760 --> 00:29:52,640
Speaker 1: number here to make this feel more real. If you

511
00:29:52,720 --> 00:29:55,440
Speaker 1: look at the supply of goods for US consumers that

512
00:29:55,440 --> 00:29:58,280
Speaker 1: comes from around the world, so produced everywhere in the US,

513
00:29:58,360 --> 00:30:02,920
Speaker 1: at China, outside, et cetera. It's running about five above

514
00:30:03,000 --> 00:30:05,800
Speaker 1: where it was before the pandemics. So the supply of

515
00:30:05,880 --> 00:30:09,200
Speaker 1: goods has increased on net. But then look at the

516
00:30:09,200 --> 00:30:13,560
Speaker 1: demand side. The demand from US consumers today is about

517
00:30:13,640 --> 00:30:18,240
Speaker 1: twenty higher than the end of two thousand nineteen. And

518
00:30:18,520 --> 00:30:21,720
Speaker 1: you see similar patterns across a lot of things, whether

519
00:30:21,760 --> 00:30:26,680
Speaker 1: we're talking about industrial metals, where supplies today are high

520
00:30:26,760 --> 00:30:30,640
Speaker 1: but the demand is much higher. That's pushing down inventories. Ships.

521
00:30:30,680 --> 00:30:32,600
Speaker 1: We have more ships on the ocean today than we

522
00:30:32,600 --> 00:30:35,840
Speaker 1: did pre pandemic. But it's just not enough. Labor markets.

523
00:30:35,880 --> 00:30:38,600
Speaker 1: We've got no shortage of jobs today, we just have

524
00:30:38,680 --> 00:30:41,840
Speaker 1: such high demand for jobs. And so, yes, there are

525
00:30:41,840 --> 00:30:44,560
Speaker 1: supply constraints here and there. I'm not saying there aren't.

526
00:30:44,960 --> 00:30:47,280
Speaker 1: I'm just saying the bigger deal this time. And what

527
00:30:47,400 --> 00:30:50,840
Speaker 1: makes this so different from the nine seventies is this

528
00:30:51,040 --> 00:30:54,720
Speaker 1: absolute boom in demand. So let's let's stick with demand.

529
00:30:54,960 --> 00:30:58,600
Speaker 1: And another comment of yours was, quote, we're witnessing the

530
00:30:58,640 --> 00:31:03,719
Speaker 1: biggest monetary sti mulus outside of wartime unquote, referring to

531
00:31:03,760 --> 00:31:09,000
Speaker 1: the various Cares Act, the fiscal stimulus. Is that the

532
00:31:09,080 --> 00:31:11,880
Speaker 1: key driver of all this demand? Yeah, Well, it's the

533
00:31:11,920 --> 00:31:15,560
Speaker 1: one to punch of monetary and fiscal. So, Barry, when

534
00:31:15,600 --> 00:31:19,000
Speaker 1: you and I were mere children, Um, it was all

535
00:31:19,040 --> 00:31:22,040
Speaker 1: about interest rates, right. The FED was using short term

536
00:31:22,120 --> 00:31:25,600
Speaker 1: rates to to affect economic conditions. We'll call that monetary

537
00:31:25,680 --> 00:31:29,160
Speaker 1: policy one. And then in two thousand eight rates hit zero.

538
00:31:29,520 --> 00:31:32,680
Speaker 1: The FED needs to ease more, so then it starts

539
00:31:32,840 --> 00:31:36,800
Speaker 1: launching more quantitative easing, so we call that balance sheet

540
00:31:36,880 --> 00:31:40,360
Speaker 1: usage plus interest rates MP two. When we got to

541
00:31:40,400 --> 00:31:44,240
Speaker 1: the pandemic, okay, the FED went big and it went fast.

542
00:31:44,600 --> 00:31:48,120
Speaker 1: We cut rates, We did huge amounts of quantitative easy,

543
00:31:48,200 --> 00:31:51,680
Speaker 1: but it wasn't enough to fill the whole in incomes

544
00:31:51,720 --> 00:31:54,360
Speaker 1: that the pandemic meant when we shut down the economy,

545
00:31:54,800 --> 00:31:57,200
Speaker 1: and so fiscal had to play a bigger role. Fiscal

546
00:31:57,280 --> 00:32:01,360
Speaker 1: became the dominant policy, lever driving growth, and the FED

547
00:32:01,960 --> 00:32:05,480
Speaker 1: facilitated it. Obviously, the FED still independent, but the Fed,

548
00:32:05,560 --> 00:32:09,880
Speaker 1: by keeping yields low, by buying the bonds, was allowing

549
00:32:09,880 --> 00:32:13,480
Speaker 1: the government to borrow and spend like this. And so

550
00:32:13,720 --> 00:32:17,320
Speaker 1: we're in a world we call a day MP three. Um.

551
00:32:17,320 --> 00:32:20,520
Speaker 1: But what's important is that we not only filled the

552
00:32:20,560 --> 00:32:23,200
Speaker 1: income polls that were created by the pandemic, we over

553
00:32:23,280 --> 00:32:26,480
Speaker 1: filmed them. We started building little mountains. People are wealthier

554
00:32:26,520 --> 00:32:29,600
Speaker 1: today than they were before the pandemic. Balance sheets of

555
00:32:29,640 --> 00:32:32,960
Speaker 1: companies and households today are stronger than they were before

556
00:32:32,960 --> 00:32:36,280
Speaker 1: the pandemic. Um it's the fact that we have such

557
00:32:36,280 --> 00:32:40,240
Speaker 1: a strong economy today, all this excess savings that was

558
00:32:40,280 --> 00:32:43,880
Speaker 1: pumped into companies and households that's created the demand surge

559
00:32:44,280 --> 00:32:48,960
Speaker 1: that's then driving the inflation. So so many questions to

560
00:32:49,000 --> 00:32:52,520
Speaker 1: follow up with that. Let's let's start with the savings rate,

561
00:32:52,840 --> 00:32:55,000
Speaker 1: which I don't remember if this was a bridge water

562
00:32:55,120 --> 00:32:58,840
Speaker 1: chart or a sort somewhere else, but we've seen over

563
00:32:58,840 --> 00:33:02,800
Speaker 1: the past year and half, American savings rates or recordize

564
00:33:03,600 --> 00:33:09,480
Speaker 1: but slowly drifting down as they spend away um their cares, money,

565
00:33:09,520 --> 00:33:13,040
Speaker 1: they're extended, unemployment benefits, all the different cash that found

566
00:33:13,040 --> 00:33:18,040
Speaker 1: its way into households, and we're slowly approaching the pre

567
00:33:18,200 --> 00:33:22,640
Speaker 1: pandemic savings rate. Does does that mean that we're going

568
00:33:22,680 --> 00:33:27,160
Speaker 1: to see less of that demand push into inflation or

569
00:33:27,200 --> 00:33:30,160
Speaker 1: is there still enough dry powder that demand is going

570
00:33:30,200 --> 00:33:33,040
Speaker 1: to continue being a factor. So I think we're going

571
00:33:33,120 --> 00:33:37,080
Speaker 1: to see growth moderate this year from last year, which

572
00:33:37,120 --> 00:33:41,240
Speaker 1: should not surprise anyone. But even then, I think we

573
00:33:41,280 --> 00:33:48,160
Speaker 1: should expect to have real growth probably double or more potential,

574
00:33:48,520 --> 00:33:52,120
Speaker 1: and nominal growth still be incredibly strong even with that

575
00:33:52,280 --> 00:33:54,800
Speaker 1: excess savings rate coming down. For a couple of reasons.

576
00:33:55,280 --> 00:33:58,200
Speaker 1: I think one, we're starting to see early evidence that

577
00:33:59,080 --> 00:34:03,200
Speaker 1: the FIST school and monetary stimulus is now passing over

578
00:34:03,240 --> 00:34:05,760
Speaker 1: to the private sector, so people are starting to tap

579
00:34:05,800 --> 00:34:09,160
Speaker 1: their credit cards again. You're starting to see bank loans

580
00:34:09,239 --> 00:34:12,760
Speaker 1: picking up again, so the credit creation, which wasn't needed

581
00:34:12,800 --> 00:34:15,560
Speaker 1: for the last two years, that's now coming in to

582
00:34:15,760 --> 00:34:19,279
Speaker 1: fill the gap of that savings being spent. So that's one.

583
00:34:20,400 --> 00:34:23,000
Speaker 1: I think. Another support that we're going to see having

584
00:34:23,040 --> 00:34:26,879
Speaker 1: a bigger role this year will be CAPEX. So you've

585
00:34:26,920 --> 00:34:29,719
Speaker 1: seen because of the strong demand and you're getting the

586
00:34:29,960 --> 00:34:34,919
Speaker 1: self reinforcing flywheel of the economy going, companies have the

587
00:34:36,040 --> 00:34:39,280
Speaker 1: clarity looking ahead and they have the strong demand backdrop

588
00:34:39,320 --> 00:34:42,560
Speaker 1: that they're feeling more confident to make investments, and so

589
00:34:42,600 --> 00:34:45,160
Speaker 1: we're gonna see CAPEX not just in technology, but I

590
00:34:45,160 --> 00:34:47,600
Speaker 1: think broadly that's going to be a support for growth,

591
00:34:47,920 --> 00:34:50,840
Speaker 1: and that creates jobs, and the jobs create incomes, incomes

592
00:34:50,880 --> 00:34:54,279
Speaker 1: create spending. But then the third one is inventory rebuilding,

593
00:34:54,400 --> 00:34:57,160
Speaker 1: and we started to see that begin as well, but

594
00:34:57,239 --> 00:34:59,080
Speaker 1: I think that still has quite a ways to go.

595
00:34:59,760 --> 00:35:03,400
Speaker 1: So even though we're seeing the savings rundown, so that

596
00:35:03,520 --> 00:35:07,480
Speaker 1: support for growth running down, I think we're really transitioning

597
00:35:07,640 --> 00:35:10,920
Speaker 1: from this policy driven economy to a private sector driven

598
00:35:10,920 --> 00:35:14,560
Speaker 1: economy this year UM, which should in all the ways

599
00:35:14,600 --> 00:35:19,200
Speaker 1: I just described, keep growth very strong, albeit off the peaks.

600
00:35:20,520 --> 00:35:25,920
Speaker 1: Really really interesting. You referenced monetary and fiscal as a

601
00:35:25,960 --> 00:35:30,600
Speaker 1: one to punch kind of answers the question I was

602
00:35:30,640 --> 00:35:33,520
Speaker 1: gonna ask, but I'm gonna ask in anyway. We saw

603
00:35:33,560 --> 00:35:38,520
Speaker 1: a massive monetary stimulus h during and after the Great

604
00:35:38,560 --> 00:35:44,839
Speaker 1: Financial Crisis, but inflation remained very, very subdued, as did

605
00:35:45,560 --> 00:35:50,360
Speaker 1: g d P. So it really makes me wonder is

606
00:35:50,480 --> 00:35:55,400
Speaker 1: monetary policy alone going to be inflationary or does it

607
00:35:55,480 --> 00:36:00,279
Speaker 1: require the sort of fiscal stimulus that we saw in

608
00:36:00,360 --> 00:36:07,120
Speaker 1: the Cares Act to drive UM inflation levels higher. I

609
00:36:07,160 --> 00:36:10,640
Speaker 1: think what we're learning from two thousand eight and the

610
00:36:10,719 --> 00:36:15,760
Speaker 1: years following and then today is that with rates nearer

611
00:36:15,800 --> 00:36:21,200
Speaker 1: at the lower bound and quantitative easing effective, but it affects,

612
00:36:21,280 --> 00:36:23,840
Speaker 1: it flows through in different ways. Right. It's gonna affect

613
00:36:23,960 --> 00:36:28,160
Speaker 1: liquidity conditions, It's going to affect financial markets. The effect

614
00:36:28,160 --> 00:36:32,760
Speaker 1: on the real economy is second, is indirect secondary. So

615
00:36:32,960 --> 00:36:35,520
Speaker 1: I think we are learning that if you really want

616
00:36:35,600 --> 00:36:39,880
Speaker 1: to drive a sustained reflation and higher inflation, you have

617
00:36:40,000 --> 00:36:43,040
Speaker 1: to have the fiscal with the monetary and in after

618
00:36:43,080 --> 00:36:46,640
Speaker 1: two thousand eight two nine UM, we initially had some

619
00:36:46,640 --> 00:36:49,680
Speaker 1: fiscal stimulus, but it wasn't enough, and then it quickly

620
00:36:49,719 --> 00:36:52,200
Speaker 1: flipped into a fiscal drag when we had all the

621
00:36:52,239 --> 00:36:55,680
Speaker 1: budget fights, and so that that slowed down and undermined

622
00:36:55,719 --> 00:36:59,320
Speaker 1: the recovery. MM so let me ask the flip side

623
00:36:59,320 --> 00:37:02,799
Speaker 1: of the question about the demand shock. Let's talk about

624
00:37:02,840 --> 00:37:06,480
Speaker 1: the supply issues. In some areas, it seems like there's

625
00:37:06,480 --> 00:37:10,600
Speaker 1: a lot of shortages, whether it's semiconductors pushing into automobiles,

626
00:37:10,719 --> 00:37:13,560
Speaker 1: or we look at the amount of housing inventory ratio

627
00:37:13,719 --> 00:37:16,920
Speaker 1: to sales, is that record lows. It doesn't seem that

628
00:37:17,000 --> 00:37:21,279
Speaker 1: there's any supply there. And then add you you mentioned

629
00:37:21,640 --> 00:37:27,000
Speaker 1: the gap between demand and the logistics, whether it chips

630
00:37:27,120 --> 00:37:30,880
Speaker 1: or shipping containers leading there's not enough of those and

631
00:37:30,920 --> 00:37:35,160
Speaker 1: we've had all these different spot shortages. How significant are

632
00:37:35,200 --> 00:37:38,759
Speaker 1: all of these supply issues relative to that demand shock?

633
00:37:39,520 --> 00:37:43,400
Speaker 1: The supply issues are massive, and I don't mean to

634
00:37:43,560 --> 00:37:47,719
Speaker 1: underestimate the importance they're having on inflation, but I think

635
00:37:48,440 --> 00:37:51,279
Speaker 1: one way you can see that the demand is the

636
00:37:51,320 --> 00:37:55,279
Speaker 1: bigger deal than the supply is what's going on with

637
00:37:55,560 --> 00:37:59,600
Speaker 1: pricing and profit margins for US companies. Now this may

638
00:37:59,680 --> 00:38:03,000
Speaker 1: change going forward, but what we've seen to date is

639
00:38:03,040 --> 00:38:07,080
Speaker 1: that companies in the United States are the vast majority

640
00:38:07,080 --> 00:38:09,600
Speaker 1: of companies are able to pass on the higher input

641
00:38:09,680 --> 00:38:14,480
Speaker 1: costs true end prices to customers, and customers are still

642
00:38:14,520 --> 00:38:18,320
Speaker 1: spending UM. To me, that tells me that the strength

643
00:38:18,400 --> 00:38:22,640
Speaker 1: and demand is greater than the supply driven supply pressures.

644
00:38:22,719 --> 00:38:27,760
Speaker 1: If we were to see UM demand getting eroded UM,

645
00:38:27,800 --> 00:38:29,880
Speaker 1: that would tell me that the underlying support for the

646
00:38:29,920 --> 00:38:33,440
Speaker 1: economy that I've been describing that maybe I'm not measuring correctly,

647
00:38:33,880 --> 00:38:36,319
Speaker 1: that the supply issues are becoming the bigger deal. But

648
00:38:36,760 --> 00:38:39,120
Speaker 1: so far we haven't seen that happen. And then we're

649
00:38:39,160 --> 00:38:41,480
Speaker 1: spending a lot of time trying to understand how long

650
00:38:41,520 --> 00:38:44,480
Speaker 1: did the supply pressures laugh Obviously it's a little bit

651
00:38:44,480 --> 00:38:48,640
Speaker 1: different for different goods, etcetera. UM. I think I think

652
00:38:48,640 --> 00:38:51,480
Speaker 1: the hardest one, frankly, is going to be in the

653
00:38:51,600 --> 00:38:55,640
Speaker 1: US with labor um how do you get workers to

654
00:38:55,719 --> 00:38:58,080
Speaker 1: come back. I think we're going to have to have

655
00:38:58,160 --> 00:39:01,440
Speaker 1: higher wages, And then the question and those companies continue

656
00:39:01,440 --> 00:39:04,520
Speaker 1: to raise wages without it passing through into their profit

657
00:39:04,600 --> 00:39:07,719
Speaker 1: margins um And And the other one that I think

658
00:39:07,800 --> 00:39:10,160
Speaker 1: is really interesting about the US labor market today is

659
00:39:10,200 --> 00:39:13,680
Speaker 1: the retirees. And after the last non farm payroll report,

660
00:39:13,760 --> 00:39:16,640
Speaker 1: of course everyone was talking about it. But in the

661
00:39:16,680 --> 00:39:20,600
Speaker 1: past when we have layoffs and older workers got laid off,

662
00:39:20,640 --> 00:39:23,040
Speaker 1: they came right back to work like everyone else did.

663
00:39:23,800 --> 00:39:28,480
Speaker 1: This time, what's different is they're wealthier. They actually made

664
00:39:28,520 --> 00:39:32,440
Speaker 1: money during this recession, and so compared to past crises,

665
00:39:32,480 --> 00:39:35,799
Speaker 1: they have the financial ability to retire early and they're

666
00:39:35,840 --> 00:39:38,279
Speaker 1: doing it. So maybe a few of them come back

667
00:39:38,320 --> 00:39:40,239
Speaker 1: over the coming years. But I think we've seen a

668
00:39:40,320 --> 00:39:44,200
Speaker 1: structural shift in our labor supply um and that's going

669
00:39:44,239 --> 00:39:46,840
Speaker 1: to keep a pressure on wages, which could keep inflation

670
00:39:46,880 --> 00:39:50,239
Speaker 1: around longer. Then I think some people are forecasting right

671
00:39:50,239 --> 00:39:53,560
Speaker 1: now certainly than what's discounted in the market. Really really

672
00:39:53,600 --> 00:39:58,840
Speaker 1: interesting raises raises. The question, you know, people always talk about,

673
00:39:58,920 --> 00:40:01,799
Speaker 1: is the FED behind the or or not? I think

674
00:40:01,840 --> 00:40:05,840
Speaker 1: the more interesting question is, given all these other factors,

675
00:40:05,880 --> 00:40:10,399
Speaker 1: the fiscal stimulus, the labor market. Really, how much can

676
00:40:10,920 --> 00:40:16,000
Speaker 1: the FED slow inflation given all these other non monetary

677
00:40:16,040 --> 00:40:19,640
Speaker 1: factors short of causing a recession? I mean, is this

678
00:40:19,760 --> 00:40:23,080
Speaker 1: really the sort of thing that the FED is in

679
00:40:23,120 --> 00:40:26,239
Speaker 1: a position to do something about? I think the Fed

680
00:40:26,360 --> 00:40:28,319
Speaker 1: is is the only game in town if we're going

681
00:40:28,360 --> 00:40:31,279
Speaker 1: to try to lower inflation. I mean, President Biden the

682
00:40:31,320 --> 00:40:34,879
Speaker 1: administration are trying to do what they can to bring

683
00:40:34,880 --> 00:40:37,800
Speaker 1: down inflation because clearly it's hurting him in the polls.

684
00:40:38,080 --> 00:40:43,160
Speaker 1: But governments aren't really good at tightening fiscal and and

685
00:40:43,360 --> 00:40:47,200
Speaker 1: governments don't really like to hurt demand, so he'll do

686
00:40:47,440 --> 00:40:49,399
Speaker 1: things at the margin. But really it's going to come

687
00:40:49,440 --> 00:40:51,120
Speaker 1: down to the FED if we want to get inflation

688
00:40:51,200 --> 00:40:53,719
Speaker 1: under control, and then what is the FED trying to

689
00:40:53,800 --> 00:40:57,240
Speaker 1: do well? They want to make sure over a cycle

690
00:40:57,280 --> 00:41:00,760
Speaker 1: inflation is around two. They want to have a labor market.

691
00:41:01,000 --> 00:41:03,000
Speaker 1: They don't want to create a recession. They want to

692
00:41:03,040 --> 00:41:06,120
Speaker 1: engineer a soft landing. So how much tightening is the

693
00:41:06,200 --> 00:41:09,040
Speaker 1: right amount? And I don't envy them right now because

694
00:41:09,080 --> 00:41:11,880
Speaker 1: you still have a lot of question marks tied to

695
00:41:11,960 --> 00:41:16,400
Speaker 1: the pandemic about supplies, about how high wages go, um,

696
00:41:16,640 --> 00:41:19,439
Speaker 1: so I think the Fed is likely to do more

697
00:41:19,440 --> 00:41:21,600
Speaker 1: than what's priced into the curve right now. So we've

698
00:41:21,600 --> 00:41:25,040
Speaker 1: got about three hikes priced in for this year. That said,

699
00:41:25,080 --> 00:41:26,960
Speaker 1: I think there's still a good risk the FED will

700
00:41:27,080 --> 00:41:30,680
Speaker 1: lag economic conditions. So the result of all this will

701
00:41:30,719 --> 00:41:35,800
Speaker 1: be higher interest rates, but inflation that ends up higher

702
00:41:35,840 --> 00:41:37,879
Speaker 1: than what the market's discounting. And this is the one

703
00:41:38,040 --> 00:41:42,040
Speaker 1: very that just it blows my mind away. People are

704
00:41:42,080 --> 00:41:45,640
Speaker 1: really pricing in that the world looks very much like

705
00:41:45,760 --> 00:41:49,840
Speaker 1: pre pandemic very quickly within the next year to eighteen months,

706
00:41:50,360 --> 00:41:54,480
Speaker 1: inflation back close to two, growth back down towards potential levels.

707
00:41:55,280 --> 00:41:59,520
Speaker 1: And that could happen, but you would have to see

708
00:41:59,520 --> 00:42:01,680
Speaker 1: the FED tighten a lot more than it's priced in

709
00:42:01,800 --> 00:42:05,040
Speaker 1: to get there, I believe. And so is the Fed

710
00:42:05,120 --> 00:42:08,880
Speaker 1: going to tighten so much um or are they going

711
00:42:08,920 --> 00:42:11,840
Speaker 1: to tighten some and we're going to have inflation that's higher.

712
00:42:11,960 --> 00:42:15,160
Speaker 1: What we're doing with our portfolios positioning for both. We're

713
00:42:15,160 --> 00:42:18,560
Speaker 1: positioning for inflation that's higher than priced in, and we're

714
00:42:18,600 --> 00:42:21,440
Speaker 1: positioning for the FED to tighten more than is priced

715
00:42:21,480 --> 00:42:24,320
Speaker 1: in because we don't know exactly which what the Fed's

716
00:42:24,320 --> 00:42:27,080
Speaker 1: gonna do, how much quantitative tightening, how many rate heights,

717
00:42:27,080 --> 00:42:30,839
Speaker 1: what speed um. But we know something's coming, and so

718
00:42:31,239 --> 00:42:34,040
Speaker 1: we're going to position for both outcomes doing The amount

719
00:42:34,080 --> 00:42:36,320
Speaker 1: of each we get will depend on on what Chairman

720
00:42:36,400 --> 00:42:39,719
Speaker 1: Powell and the FMC decides. So so you have that

721
00:42:39,920 --> 00:42:44,160
Speaker 1: three body problem, that convexity that you can't tell what

722
00:42:44,600 --> 00:42:49,799
Speaker 1: each subsequent change, how it impacts the other factors. Hey,

723
00:42:49,800 --> 00:42:53,120
Speaker 1: if things begin to normalize, if O Macron collapses, if

724
00:42:53,120 --> 00:42:56,839
Speaker 1: the economy reopens more, if people are out doing what

725
00:42:56,920 --> 00:43:01,800
Speaker 1: they want to do, maybe we see more supply of housing,

726
00:43:02,040 --> 00:43:05,080
Speaker 1: people going back into the labor market. Maybe things do

727
00:43:05,239 --> 00:43:09,880
Speaker 1: normalize more quickly. But so many things have to happen

728
00:43:09,920 --> 00:43:12,880
Speaker 1: in such an order, and the subsequent the way the

729
00:43:12,920 --> 00:43:16,880
Speaker 1: billiard balls move around the table are all affected by

730
00:43:16,920 --> 00:43:19,360
Speaker 1: all the other billiard balls moving around the table. It

731
00:43:19,480 --> 00:43:22,839
Speaker 1: becomes really challenging to to map out with any high

732
00:43:22,840 --> 00:43:26,480
Speaker 1: degree of confidence what what's going to happen next. Is

733
00:43:26,600 --> 00:43:32,400
Speaker 1: that why you approach investing with Here are multiple scenarios,

734
00:43:32,400 --> 00:43:35,879
Speaker 1: and we're gonna position ourselves for all of them. Since

735
00:43:35,920 --> 00:43:38,120
Speaker 1: we don't know with any degree of confidence which one

736
00:43:38,200 --> 00:43:41,480
Speaker 1: is going to occur. I wouldn't say we'd position for

737
00:43:41,560 --> 00:43:44,920
Speaker 1: all of them. In this case, we're positioning for two

738
00:43:45,719 --> 00:43:49,480
Speaker 1: um because we think both aren't likely. You know, but

739
00:43:49,600 --> 00:43:53,120
Speaker 1: I hear what you're saying. If if emicron fades quickly

740
00:43:53,320 --> 00:43:57,799
Speaker 1: fingers crossed, and the world starts to normalize, you will

741
00:43:57,840 --> 00:44:00,320
Speaker 1: see less demand for goods more for sir. This is

742
00:44:00,360 --> 00:44:04,680
Speaker 1: relatively speaking, agreed, and that could bring down some goods prices.

743
00:44:04,920 --> 00:44:08,360
Speaker 1: UM supply chains opening up, I think that takes a while,

744
00:44:08,520 --> 00:44:11,040
Speaker 1: right Are you going to suddenly have more truckers on

745
00:44:11,080 --> 00:44:13,320
Speaker 1: the road. Are you suddenly going to be able to

746
00:44:13,360 --> 00:44:15,520
Speaker 1: get the stuff out of the ports in Los Angeles?

747
00:44:15,560 --> 00:44:18,160
Speaker 1: That's going to take time. I still think you'll have

748
00:44:18,239 --> 00:44:22,200
Speaker 1: upward pressure on wages. The housing one is interesting. You know,

749
00:44:22,280 --> 00:44:25,160
Speaker 1: if if oh macron fades and you can have more

750
00:44:25,200 --> 00:44:29,120
Speaker 1: construction workers out there, more supply of limber, of timber, etcetera.

751
00:44:29,640 --> 00:44:33,840
Speaker 1: But but what we're seeing right now is that, um,

752
00:44:34,000 --> 00:44:38,839
Speaker 1: you know, consumer prices don't capture housing very well, and

753
00:44:38,880 --> 00:44:41,800
Speaker 1: we think that rents and housing prices are going to

754
00:44:41,880 --> 00:44:44,040
Speaker 1: take a long time for the supply to catch up

755
00:44:44,040 --> 00:44:47,040
Speaker 1: with demand. So we see both wages and housing in

756
00:44:47,080 --> 00:44:52,000
Speaker 1: particular as pretty dicky. Upward pressures on demand on inflation.

757
00:44:52,120 --> 00:44:55,120
Speaker 1: Excuse me, and I think that's gonna last this year,

758
00:44:55,400 --> 00:44:57,960
Speaker 1: even if the world starts getting back to normal from

759
00:44:57,960 --> 00:45:03,120
Speaker 1: a pandemic perspective. Yeah, we um, we underbuilt single family

760
00:45:03,160 --> 00:45:06,680
Speaker 1: homes for like a decade following the housing boom and

761
00:45:06,719 --> 00:45:09,319
Speaker 1: bust in the mid two thousands, and now now we're

762
00:45:09,320 --> 00:45:13,960
Speaker 1: paying the price given all these things that you're describing,

763
00:45:14,040 --> 00:45:18,000
Speaker 1: the demand shock, the supply issues, the supply chain and

764
00:45:18,080 --> 00:45:23,720
Speaker 1: logistics problems, the FED not fully being priced in. Shouldn't

765
00:45:23,760 --> 00:45:26,760
Speaker 1: that have led us to see a huge move higher

766
00:45:26,760 --> 00:45:29,680
Speaker 1: in gold last year? Gold can't get out of its

767
00:45:29,719 --> 00:45:32,879
Speaker 1: own way? How do you explain that? So I've been

768
00:45:32,960 --> 00:45:38,600
Speaker 1: following gold since I got into investments and um, and

769
00:45:38,760 --> 00:45:41,200
Speaker 1: last year, you know, we did see a big rise

770
00:45:41,239 --> 00:45:45,000
Speaker 1: in golden and early twenty one, and then it gave

771
00:45:45,080 --> 00:45:47,279
Speaker 1: quite a bit back later in twenty one. I think

772
00:45:47,719 --> 00:45:52,680
Speaker 1: I'd probably boiled down gold lack of stronger performance given

773
00:45:52,680 --> 00:45:57,759
Speaker 1: inflation to two things. One would be inflation expectations, Right,

774
00:45:57,840 --> 00:46:01,960
Speaker 1: you want gold as a hedge again inflation, But if

775
00:46:01,960 --> 00:46:05,240
Speaker 1: you think inflation is I hate using this word anymore,

776
00:46:05,239 --> 00:46:08,120
Speaker 1: transitory and that we're going to go back to what's

777
00:46:08,160 --> 00:46:11,560
Speaker 1: discounted in a year or two years, then there might

778
00:46:11,640 --> 00:46:13,920
Speaker 1: have that might have affected how much demand there was

779
00:46:14,000 --> 00:46:17,719
Speaker 1: from that constituent for gold. I think the other big

780
00:46:17,760 --> 00:46:21,840
Speaker 1: deal is that while there wasn't obviously there is a

781
00:46:21,840 --> 00:46:24,600
Speaker 1: lot of ongoing inflation, there's also a lot of ongoing

782
00:46:24,680 --> 00:46:28,879
Speaker 1: nominal growth. And so if I'm thinking, Okay, I want

783
00:46:28,920 --> 00:46:32,040
Speaker 1: some inflation hedges in my portfolio, I could have gold,

784
00:46:32,320 --> 00:46:35,680
Speaker 1: or I could have cyclical commodities that will benefit not

785
00:46:35,760 --> 00:46:38,440
Speaker 1: just from inflation but also from greater demand. So what

786
00:46:38,560 --> 00:46:42,640
Speaker 1: we saw last year were cyclical commodities like oil, like

787
00:46:42,760 --> 00:46:47,560
Speaker 1: industrial metals, copper, etcetera. They did extremely well. They outperformed

788
00:46:47,560 --> 00:46:51,480
Speaker 1: gold by a lot. And then cyclical assets broadly, including

789
00:46:51,520 --> 00:46:55,320
Speaker 1: equities that could pass on the inflation to end end users,

790
00:46:55,480 --> 00:46:59,439
Speaker 1: they also outperformed. But I don't think this means gold

791
00:46:59,480 --> 00:47:02,680
Speaker 1: has lost its luster. I still believe gold is a

792
00:47:02,719 --> 00:47:06,360
Speaker 1: good diversifying position for a portfolio. I think it tends

793
00:47:06,400 --> 00:47:09,480
Speaker 1: to perform best at the tails, if you will, if

794
00:47:09,520 --> 00:47:13,959
Speaker 1: we have a deflationary recession, which is going to lead

795
00:47:13,960 --> 00:47:17,480
Speaker 1: to expectations for lower interest rates, than you want gold

796
00:47:17,600 --> 00:47:20,839
Speaker 1: to protect your portfolio. And then it's at the other

797
00:47:20,960 --> 00:47:23,719
Speaker 1: end of the extreme the other tail, when you have

798
00:47:23,920 --> 00:47:27,800
Speaker 1: overheating an economy and you're starting to see demand destruction,

799
00:47:27,840 --> 00:47:30,360
Speaker 1: at the same time you still see high inflation or

800
00:47:30,440 --> 00:47:33,000
Speaker 1: un anchored inflation. I think those are going to be

801
00:47:33,040 --> 00:47:35,560
Speaker 1: your sweet spots for golden in the middle. It doesn't

802
00:47:35,600 --> 00:47:37,960
Speaker 1: mean that gold won't do well. It's just that the

803
00:47:38,040 --> 00:47:42,520
Speaker 1: outcomes are more varied. Let's talk a little bit about

804
00:47:42,960 --> 00:47:45,920
Speaker 1: US and overseas investing. Here's another quote of yours. I

805
00:47:45,960 --> 00:47:49,680
Speaker 1: liked the US has been priced to outperform for the

806
00:47:49,760 --> 00:47:53,960
Speaker 1: next decade. Uh, what are the risks in that sort

807
00:47:53,960 --> 00:47:57,040
Speaker 1: of pricing? Well, we both know that people tend to

808
00:47:57,080 --> 00:48:01,520
Speaker 1: have a recency bias. So what has been happening. I

809
00:48:01,560 --> 00:48:03,759
Speaker 1: don't know what it is about human psychology, but we

810
00:48:03,840 --> 00:48:06,920
Speaker 1: just kind of assume it will continue. And look, the

811
00:48:07,040 --> 00:48:10,759
Speaker 1: US has outperformed for well over a decade now. It's

812
00:48:10,800 --> 00:48:13,400
Speaker 1: been one of the strongest growing economies in the world,

813
00:48:13,760 --> 00:48:18,440
Speaker 1: rising profit margins. The question is if we're priced to

814
00:48:18,480 --> 00:48:20,959
Speaker 1: do that again for the next decade. To your point,

815
00:48:21,000 --> 00:48:23,799
Speaker 1: what are the risks? Well, one thing we've seen is

816
00:48:23,840 --> 00:48:26,680
Speaker 1: that when you have a market outperformed for such a

817
00:48:26,719 --> 00:48:30,919
Speaker 1: long period, some of the tail winds often become headwinds.

818
00:48:31,440 --> 00:48:34,160
Speaker 1: In the case of the US today, think about what's

819
00:48:34,239 --> 00:48:39,040
Speaker 1: driven this performance. It's been beautifully rising profit margins, and

820
00:48:39,080 --> 00:48:42,799
Speaker 1: those profit margins has been have been helped by relatively

821
00:48:42,840 --> 00:48:46,160
Speaker 1: subdued wages, so more capital going to companies and workers.

822
00:48:46,640 --> 00:48:49,960
Speaker 1: It's been helped by falling tax rates. It's been helped

823
00:48:50,000 --> 00:48:54,680
Speaker 1: by falling regulations, less regulations. And when we think about

824
00:48:54,760 --> 00:48:59,080
Speaker 1: where we are today, UM, foreign exposure to US stocks

825
00:48:59,080 --> 00:49:01,759
Speaker 1: and bonds US asked, is that the highest it's been

826
00:49:01,840 --> 00:49:04,600
Speaker 1: since the mid nineteen eighties. So everyone's got the trade

827
00:49:04,640 --> 00:49:08,440
Speaker 1: on all these beautiful tail winds. Everyone's expecting it to continue.

828
00:49:09,239 --> 00:49:11,320
Speaker 1: When you look at what's happening today in the world,

829
00:49:11,600 --> 00:49:14,600
Speaker 1: you know the US is talking about greater regulation, and

830
00:49:14,800 --> 00:49:17,120
Speaker 1: globally we're talking about greater regulation for a lot of

831
00:49:17,120 --> 00:49:20,920
Speaker 1: these tech giants. UM, we are seeing rising wages and

832
00:49:21,000 --> 00:49:23,640
Speaker 1: more power, more capital going to the workers rather than

833
00:49:23,640 --> 00:49:27,000
Speaker 1: the company bottom line. We are talking about we'll see

834
00:49:27,000 --> 00:49:31,000
Speaker 1: what passes higher taxes for corporations, and so while we're

835
00:49:31,000 --> 00:49:33,239
Speaker 1: not sure yet exactly what will play out, we know

836
00:49:33,280 --> 00:49:36,200
Speaker 1: the risks are growing that these tail winds at a

837
00:49:36,200 --> 00:49:39,520
Speaker 1: minimum are reduced and at a maximum become major headwinds

838
00:49:39,520 --> 00:49:43,040
Speaker 1: for you list stocks, So that would be a major

839
00:49:43,120 --> 00:49:45,400
Speaker 1: point i'd make. Um. The other thing is, you know,

840
00:49:45,480 --> 00:49:48,919
Speaker 1: we we love history at Bridgewater, and we've gone back

841
00:49:49,000 --> 00:49:51,600
Speaker 1: and looked at every equity market for the last century

842
00:49:51,680 --> 00:49:55,000
Speaker 1: or so and said, how often do you see any

843
00:49:55,080 --> 00:49:57,600
Speaker 1: market in the world as kind of one of the

844
00:49:57,640 --> 00:50:03,520
Speaker 1: top for multiple decades the row and there are very, very,

845
00:50:03,600 --> 00:50:07,279
Speaker 1: very few precedents. Um US did great in the tents,

846
00:50:07,320 --> 00:50:09,840
Speaker 1: but it lagged in the two thousands. US did great

847
00:50:09,840 --> 00:50:11,799
Speaker 1: in the nineties, but it did really poorly in the

848
00:50:11,840 --> 00:50:14,960
Speaker 1: eighties versus Piers. So I'm not saying it can't be

849
00:50:14,960 --> 00:50:17,200
Speaker 1: different this time. Maybe the US will crush it again

850
00:50:17,239 --> 00:50:20,479
Speaker 1: in the next decade, but given the historical patterns, given

851
00:50:20,480 --> 00:50:23,120
Speaker 1: the growing risks, I think it makes a lot of

852
00:50:23,160 --> 00:50:26,200
Speaker 1: sense not to be overly concentrated in the US. Taking

853
00:50:26,200 --> 00:50:28,400
Speaker 1: a medium term view, not the next couple of months,

854
00:50:28,400 --> 00:50:30,319
Speaker 1: but the next three to five years, I would make

855
00:50:30,360 --> 00:50:33,560
Speaker 1: sure I had diversification in my portfolio. Makes makes a

856
00:50:33,560 --> 00:50:36,160
Speaker 1: lot of sense. Let's talk a little bit about, uh,

857
00:50:36,160 --> 00:50:40,520
Speaker 1: some of those risks. Your boss Ray Dalio mentioned that

858
00:50:40,640 --> 00:50:43,160
Speaker 1: about five percent of the U S stock market was

859
00:50:43,280 --> 00:50:47,759
Speaker 1: frothy and then I hear you subsequently say five, it's

860
00:50:47,800 --> 00:50:50,960
Speaker 1: closer to ten percent of the stock market is frothy. Uh,

861
00:50:51,040 --> 00:50:53,959
Speaker 1: and some folks would even say ten percent is conservative.

862
00:50:54,520 --> 00:50:58,480
Speaker 1: Tell us what you mean by frothy and how that

863
00:50:58,600 --> 00:51:01,480
Speaker 1: affects the rest of the market it Does it remain

864
00:51:02,239 --> 00:51:06,040
Speaker 1: its own little corner of frothy speculation or does that

865
00:51:06,080 --> 00:51:11,359
Speaker 1: tend to infect sentiment and impact everything else? Sure? Sure,

866
00:51:11,480 --> 00:51:17,640
Speaker 1: good questions. So, Um, we we know that bubbles can

867
00:51:17,680 --> 00:51:21,560
Speaker 1: create a bigger sell offs, right, not just the things

868
00:51:21,560 --> 00:51:24,160
Speaker 1: that had become bubbles, but to your point, spillover effects.

869
00:51:24,280 --> 00:51:27,480
Speaker 1: And so years ago we started developing what we call

870
00:51:27,560 --> 00:51:31,239
Speaker 1: bubble indicators to try to understand the ingredients that can

871
00:51:31,280 --> 00:51:33,920
Speaker 1: create a bubble and the risk of course that that

872
00:51:34,000 --> 00:51:36,759
Speaker 1: bubble pops. Um. I can't really get into all the

873
00:51:36,760 --> 00:51:39,920
Speaker 1: details of what's in it, but when we track the

874
00:51:40,000 --> 00:51:44,360
Speaker 1: companies today that meet those thresholds, I'd say it's between

875
00:51:44,400 --> 00:51:47,040
Speaker 1: ten and fient now of the U S stock market

876
00:51:47,600 --> 00:51:50,759
Speaker 1: that that hits those levels. And most of those companies

877
00:51:50,800 --> 00:51:55,360
Speaker 1: today are emerging technology firms that have not yet posted

878
00:51:55,400 --> 00:51:59,439
Speaker 1: any profits. Um liquidity has been a big, big part

879
00:51:59,600 --> 00:52:01,959
Speaker 1: of what's made them in a bubble, And we talked

880
00:52:02,000 --> 00:52:05,720
Speaker 1: about this earlier. Households that got stimulus put those savings

881
00:52:05,719 --> 00:52:10,200
Speaker 1: into the market. At the same time trading costs came down. Um.

882
00:52:10,239 --> 00:52:12,600
Speaker 1: But but what I'd say looking net forward is that

883
00:52:12,840 --> 00:52:16,160
Speaker 1: bubbles often so the seeds of their own demise. So

884
00:52:16,719 --> 00:52:19,040
Speaker 1: right now, for example, I think this is a good

885
00:52:19,040 --> 00:52:23,080
Speaker 1: one to be watching into this year because valuations on

886
00:52:23,120 --> 00:52:25,839
Speaker 1: these companies are off their highs, but they're still quite high.

887
00:52:25,880 --> 00:52:28,880
Speaker 1: It makes it more attractive for them to I P

888
00:52:28,960 --> 00:52:31,640
Speaker 1: O or two issue and right now, and we look

889
00:52:31,680 --> 00:52:34,319
Speaker 1: at where lock ups are ending and where we could

890
00:52:34,320 --> 00:52:36,600
Speaker 1: see supply coming in the market this year, it's about

891
00:52:36,680 --> 00:52:40,040
Speaker 1: four dred billion of equity coming to the market. Over

892
00:52:40,160 --> 00:52:43,400
Speaker 1: half of that is from the same set of frothy companies.

893
00:52:44,239 --> 00:52:46,359
Speaker 1: That's not a big number for the market as a whole,

894
00:52:46,560 --> 00:52:49,680
Speaker 1: but for this segment of the market, especially if it's

895
00:52:49,680 --> 00:52:52,840
Speaker 1: happening at the same time the FETE is pulling back liquidity,

896
00:52:53,000 --> 00:52:55,480
Speaker 1: this could be a big deal for those companies. And

897
00:52:55,520 --> 00:52:59,200
Speaker 1: then to your point, Berry, potentially looking for ripple effects

898
00:52:59,239 --> 00:53:01,640
Speaker 1: to to the auto market or at least those sectors

899
00:53:02,480 --> 00:53:05,960
Speaker 1: really really intriguing. Uh. We've been talking a lot about

900
00:53:06,040 --> 00:53:11,839
Speaker 1: FED liquidity. How much of FED liquidity is driving this frothiness. Well,

901
00:53:11,880 --> 00:53:14,240
Speaker 1: I think again it's the one to punch of fiscal

902
00:53:14,440 --> 00:53:18,760
Speaker 1: and FED that have been driving this UM. But what's

903
00:53:18,880 --> 00:53:23,839
Speaker 1: interesting is that the United States UM equity market sensitivity,

904
00:53:23,880 --> 00:53:27,680
Speaker 1: if you will, to liquidity conditions the way we measure it,

905
00:53:27,760 --> 00:53:30,759
Speaker 1: has increased pretty substantially over the last several years. We

906
00:53:30,800 --> 00:53:36,160
Speaker 1: would estimate today that about of all US companies are

907
00:53:36,239 --> 00:53:39,520
Speaker 1: highly sensitive to liquidity conditions, and that's up from a

908
00:53:39,560 --> 00:53:42,879
Speaker 1: little over twenty a few years ago. And what that

909
00:53:42,920 --> 00:53:46,040
Speaker 1: means is, you know, often we're talking about longer duration

910
00:53:46,480 --> 00:53:48,840
Speaker 1: equities where the cash flows are going out further in

911
00:53:48,880 --> 00:53:52,200
Speaker 1: the future. Often that's tech and growth companies. As the

912
00:53:52,239 --> 00:53:57,920
Speaker 1: FED starts pulling back interest rates and then quantitative tightening, ultimately, um,

913
00:53:58,040 --> 00:54:01,560
Speaker 1: these companies are going to be, we think, more vulnerable

914
00:54:01,600 --> 00:54:04,040
Speaker 1: when that happens. Now, that doesn't mean you can't get

915
00:54:04,040 --> 00:54:07,240
Speaker 1: a rotation in the equity market. People can reduce their exposure.

916
00:54:07,280 --> 00:54:09,200
Speaker 1: We're seeing that already in the beginning of the year.

917
00:54:09,239 --> 00:54:12,480
Speaker 1: People are reducing their exposure to these longer duration equities,

918
00:54:12,760 --> 00:54:15,680
Speaker 1: moving their money into shorter duration equities that are more

919
00:54:15,680 --> 00:54:19,880
Speaker 1: sensitive to cyclical conditions that can handle the rising inflation.

920
00:54:20,480 --> 00:54:22,919
Speaker 1: So that doesn't mean the US market overall goes down.

921
00:54:23,120 --> 00:54:25,919
Speaker 1: It could just be the intra market rotation we see.

922
00:54:26,320 --> 00:54:28,640
Speaker 1: But I think it also also sets us up for

923
00:54:28,760 --> 00:54:33,160
Speaker 1: markets overseas that are less sensitive to liquidity, more sensitive

924
00:54:33,160 --> 00:54:36,719
Speaker 1: to global growth, which one would assume if and when

925
00:54:36,920 --> 00:54:41,080
Speaker 1: the pandemic starts to fade UM, that that we should

926
00:54:41,080 --> 00:54:45,080
Speaker 1: see pretty good global growth, especially if China continues to stimulate,

927
00:54:45,480 --> 00:54:47,759
Speaker 1: and that could lead to some of these other markets

928
00:54:48,000 --> 00:54:53,319
Speaker 1: UM potentially significantly outperforming the US. So let's stay with

929
00:54:53,360 --> 00:54:58,879
Speaker 1: that topic of both sector rotation and global rotation. Let's

930
00:54:58,880 --> 00:55:04,319
Speaker 1: start with sectors. It sounds like you're less interested in

931
00:55:04,360 --> 00:55:06,920
Speaker 1: the big cap tech that's been kicking butt for so

932
00:55:07,000 --> 00:55:12,960
Speaker 1: many years, and looking at areas like consumer discretionary energy,

933
00:55:13,320 --> 00:55:18,040
Speaker 1: what what else do you think UM durable goods works

934
00:55:18,040 --> 00:55:22,040
Speaker 1: when you have that sort of cyclical rotation take place.

935
00:55:22,719 --> 00:55:24,880
Speaker 1: I mean I would I would agree with your list.

936
00:55:25,000 --> 00:55:27,040
Speaker 1: I would add one more to it that I would

937
00:55:27,040 --> 00:55:33,200
Speaker 1: be UM. I would be probably constructive on UM is

938
00:55:33,640 --> 00:55:35,960
Speaker 1: going to be finance and banking. And one thing I

939
00:55:36,080 --> 00:55:40,320
Speaker 1: just highlight there is what the FET is saying right now,

940
00:55:40,400 --> 00:55:43,400
Speaker 1: which again I think we're in this really interesting place

941
00:55:43,400 --> 00:55:47,319
Speaker 1: where the fet is experimenting suggest they're not putting enough

942
00:55:47,320 --> 00:55:50,160
Speaker 1: thought into it, because clearly they do. But they're saying

943
00:55:50,239 --> 00:55:53,799
Speaker 1: now that instead of doing rate hikes for a year

944
00:55:53,880 --> 00:55:57,560
Speaker 1: or so and then maybe considering starting to take the

945
00:55:57,640 --> 00:56:00,720
Speaker 1: liquidity out of the market by doing quantity tative tightening,

946
00:56:00,880 --> 00:56:03,080
Speaker 1: this time around there saying, well, maybe we're gonna start

947
00:56:03,160 --> 00:56:07,160
Speaker 1: quantitative tightening after just one rate hike. Um, why would

948
00:56:07,160 --> 00:56:09,680
Speaker 1: they do that, right? Why would they do this quantitative

949
00:56:09,680 --> 00:56:12,040
Speaker 1: tightening so early in the cycle. And when you read

950
00:56:12,120 --> 00:56:14,839
Speaker 1: the Fed minutes, there are two things getting highlighted by

951
00:56:14,840 --> 00:56:17,200
Speaker 1: some of the f O m C voters. One is

952
00:56:17,320 --> 00:56:20,120
Speaker 1: thanks and the other is the yield curve and the

953
00:56:20,160 --> 00:56:23,800
Speaker 1: tour related. You know, I think that having a flatter

954
00:56:23,920 --> 00:56:26,520
Speaker 1: yield curve, which is more likely if you just use

955
00:56:26,840 --> 00:56:30,800
Speaker 1: the short term interest rate tool, UM, it sends a signal.

956
00:56:30,880 --> 00:56:33,520
Speaker 1: And you already see lots of financial media saying, oh

957
00:56:33,600 --> 00:56:36,560
Speaker 1: my gosh, the yield curves flattening, we're pricing in a recession.

958
00:56:37,000 --> 00:56:39,680
Speaker 1: The Fed doesn't want to send that signal, so if

959
00:56:39,719 --> 00:56:42,560
Speaker 1: they can use quantitative tightening to try to help keep

960
00:56:42,560 --> 00:56:45,879
Speaker 1: the yield curve steeper. That's in their interests. The other

961
00:56:45,960 --> 00:56:48,520
Speaker 1: thing is that in the United States, are banking system

962
00:56:48,600 --> 00:56:51,759
Speaker 1: is so fundamental for the health of the overall economy

963
00:56:51,800 --> 00:56:53,799
Speaker 1: that they don't want to create any undue stress for

964
00:56:53,840 --> 00:56:57,520
Speaker 1: the banking system, and so having a steeper curve helps

965
00:56:57,560 --> 00:57:01,480
Speaker 1: banks profitability, which in turn helps them feel comfortable making loans.

966
00:57:01,960 --> 00:57:04,680
Speaker 1: More loans means the economy can pass over from the

967
00:57:04,680 --> 00:57:08,520
Speaker 1: public to the private sector successfully and boom, they engineer

968
00:57:08,640 --> 00:57:14,040
Speaker 1: beautiful soft landing. So that makes perfect sense. Talk about sectors.

969
00:57:14,080 --> 00:57:17,400
Speaker 1: The FED may use more quantitative tightenings to help keep

970
00:57:17,440 --> 00:57:19,840
Speaker 1: the curve as steep as they can. I'm not saying

971
00:57:19,880 --> 00:57:21,640
Speaker 1: it will be steep, but steeper than it would be

972
00:57:21,680 --> 00:57:23,800
Speaker 1: otherwise had the margin. I think that's probably good news

973
00:57:23,840 --> 00:57:25,840
Speaker 1: for the bank. So I would just add that once

974
00:57:25,960 --> 00:57:28,560
Speaker 1: the list you gave on the rotation, you know that

975
00:57:28,600 --> 00:57:30,880
Speaker 1: makes a whole lot of sense. So so let's go

976
00:57:30,960 --> 00:57:36,240
Speaker 1: global a little bit. Given how you describe China's policy

977
00:57:36,280 --> 00:57:40,720
Speaker 1: goals and and their stimulus shifting, we've we've seen them

978
00:57:40,840 --> 00:57:44,200
Speaker 1: very much move away from real estate as a key driver.

979
00:57:45,240 --> 00:57:48,360
Speaker 1: How investable is China today and what do you think

980
00:57:49,080 --> 00:57:52,280
Speaker 1: their policies are going to be in terms of how

981
00:57:52,400 --> 00:57:58,520
Speaker 1: they want to stimulate their economy. Um. So China is

982
00:57:58,760 --> 00:58:04,280
Speaker 1: trying to transition from having these boom bus cycles where

983
00:58:04,600 --> 00:58:08,160
Speaker 1: policymakers do a lot of stimulus and then growth surges again,

984
00:58:08,360 --> 00:58:13,160
Speaker 1: to having more stability over the medium term. Um, more

985
00:58:13,200 --> 00:58:17,160
Speaker 1: elongated cycles. But that means less stimulus and more fine

986
00:58:17,200 --> 00:58:21,800
Speaker 1: tuning stimulus along the way. When I think about where

987
00:58:21,840 --> 00:58:24,520
Speaker 1: growth is going there this year. Last year, one of

988
00:58:24,560 --> 00:58:28,840
Speaker 1: the big support for the economy was exports. Oh, Chinese

989
00:58:29,600 --> 00:58:34,400
Speaker 1: manufacturers were supplying all that demand that Americans and others had.

990
00:58:35,040 --> 00:58:38,200
Speaker 1: And if the world normalizes this year and we can

991
00:58:38,240 --> 00:58:42,160
Speaker 1: start using services more, exports, I would guess will still

992
00:58:42,200 --> 00:58:45,480
Speaker 1: stay strong because the economies are still very strong, but

993
00:58:45,600 --> 00:58:49,800
Speaker 1: it might moderate. So growth and exports not the same

994
00:58:49,840 --> 00:58:51,880
Speaker 1: engine of growth for China as they were last year.

995
00:58:52,360 --> 00:58:55,600
Speaker 1: So what fills in the gap? You know, the consumer

996
00:58:55,720 --> 00:59:00,320
Speaker 1: right now is soft, partly because of the property de

997
00:59:00,480 --> 00:59:03,160
Speaker 1: levering that the government wants to engineer to make sure

998
00:59:03,160 --> 00:59:07,360
Speaker 1: there's no bubble there, partly because of COVID lockdowns, and

999
00:59:07,640 --> 00:59:11,880
Speaker 1: it doesn't seem like the lockdowns are going away anytime soon. Um.

1000
00:59:11,920 --> 00:59:14,600
Speaker 1: The government doesn't want to do a huge amount of stimulus,

1001
00:59:15,360 --> 00:59:18,600
Speaker 1: but it needs to do something to get growth back

1002
00:59:18,640 --> 00:59:22,280
Speaker 1: up towards the target around five. So I would expect

1003
00:59:22,320 --> 00:59:25,720
Speaker 1: that you are going to see policymakers doing more stimulus.

1004
00:59:25,800 --> 00:59:28,960
Speaker 1: The question is how much when and is it going

1005
00:59:29,000 --> 00:59:32,000
Speaker 1: to be enough to get back to their target or

1006
00:59:32,120 --> 00:59:34,240
Speaker 1: is it is are we going to disappoint consensus. That's

1007
00:59:34,280 --> 00:59:36,760
Speaker 1: one of the big questions I'm trying to dig into

1008
00:59:36,960 --> 00:59:40,000
Speaker 1: right now with my team. Where does the growth come from?

1009
00:59:40,040 --> 00:59:42,840
Speaker 1: I mean, I'll give you just a lunar new year

1010
00:59:42,880 --> 00:59:45,840
Speaker 1: one to keep an eye on. UM. China has been

1011
00:59:45,880 --> 00:59:49,920
Speaker 1: the global leader on digital currency on CBBC's when we

1012
00:59:49,960 --> 00:59:53,200
Speaker 1: go into the crypto space, and they just put out

1013
00:59:53,240 --> 00:59:56,760
Speaker 1: a report over the weekend the briefing talking about the

1014
00:59:56,800 --> 01:00:00,440
Speaker 1: millions of crypto wallets that now exist in China. Uh,

1015
01:00:00,640 --> 01:00:03,240
Speaker 1: we've seen some little pilot tests of this. But here

1016
01:00:03,360 --> 01:00:05,880
Speaker 1: here's a fun one to get your head around. Could

1017
01:00:06,000 --> 01:00:12,240
Speaker 1: China do targeted fiscal stimulus soon through crypto UM they've

1018
01:00:12,240 --> 01:00:14,800
Speaker 1: done it on a small scale, but now that they're

1019
01:00:14,840 --> 01:00:18,360
Speaker 1: getting this out throughout the population, if they want to

1020
01:00:18,400 --> 01:00:20,680
Speaker 1: help the consumer and they want to do it in

1021
01:00:20,720 --> 01:00:24,320
Speaker 1: a very targeted, quick way, UM, this could be the

1022
01:00:24,480 --> 01:00:27,400
Speaker 1: true launch of the Chinese digital currency. I don't know

1023
01:00:27,440 --> 01:00:29,320
Speaker 1: if it will happen, but it's it's kind of a

1024
01:00:29,360 --> 01:00:31,000
Speaker 1: fun thing I think to keep an eye out for.

1025
01:00:31,080 --> 01:00:34,120
Speaker 1: It wouldn't surprise me, especially the way you could put

1026
01:00:34,840 --> 01:00:39,480
Speaker 1: very specific conditions on those sort of crypto wallets. You

1027
01:00:39,520 --> 01:00:42,400
Speaker 1: can get money out into the public and say hey,

1028
01:00:42,440 --> 01:00:45,640
Speaker 1: if you don't spend this within ninety days, it goes away.

1029
01:00:45,680 --> 01:00:48,919
Speaker 1: So that's your window to uh to to go out

1030
01:00:48,920 --> 01:00:52,000
Speaker 1: and buy this or use this, which is really intriguing.

1031
01:00:52,360 --> 01:00:56,480
Speaker 1: Before we get to crypto though, let's stay with international.

1032
01:00:56,680 --> 01:00:59,480
Speaker 1: Tell us what's going on in Europe. They they don't

1033
01:00:59,560 --> 01:01:01,480
Speaker 1: seem to be able to get out of their own way,

1034
01:01:01,560 --> 01:01:05,880
Speaker 1: or at least for the past decade have post Greek crisis,

1035
01:01:05,920 --> 01:01:10,160
Speaker 1: post all of that in nearly they just don't seem

1036
01:01:10,200 --> 01:01:15,840
Speaker 1: to have found their groove. Well. I do think this year,

1037
01:01:16,800 --> 01:01:19,320
Speaker 1: Barry could be a make or break for Europe. I

1038
01:01:19,360 --> 01:01:22,320
Speaker 1: think this is a hugely important year for Europe. And

1039
01:01:22,560 --> 01:01:26,320
Speaker 1: I say that because last year in the pandemic, they

1040
01:01:26,360 --> 01:01:30,280
Speaker 1: got the EU Recovery Funds launched, so the first real

1041
01:01:30,320 --> 01:01:34,600
Speaker 1: attempt at European wide fiscal transfers that money is still

1042
01:01:34,640 --> 01:01:38,080
Speaker 1: flowing through, particularly the countries like Italy and Spain. It's

1043
01:01:38,080 --> 01:01:40,800
Speaker 1: going to be a major support to growth UM. And

1044
01:01:40,840 --> 01:01:44,200
Speaker 1: they agreed during the pandemic that the fiscal rules they

1045
01:01:44,240 --> 01:01:48,120
Speaker 1: created when the Euro was launched have become completely irrelevant.

1046
01:01:48,320 --> 01:01:50,000
Speaker 1: You know, to say that a country should have a

1047
01:01:50,000 --> 01:01:54,800
Speaker 1: three percent budget deficit and debt GDP ratio, it's kind

1048
01:01:54,840 --> 01:01:57,400
Speaker 1: of silly today. No one has debt levels that low

1049
01:01:57,440 --> 01:02:01,840
Speaker 1: anymore anywhere UM practically, And so they're reviewing those rules

1050
01:02:01,960 --> 01:02:04,360
Speaker 1: right now as we speak, and in the coming months

1051
01:02:04,400 --> 01:02:07,200
Speaker 1: they're going to come out with revisions. The question is

1052
01:02:07,200 --> 01:02:11,120
Speaker 1: how much fiscal flexibility try to say that fast fiscal

1053
01:02:11,200 --> 01:02:14,760
Speaker 1: flexibility do they give the countries. One thing that's being

1054
01:02:14,760 --> 01:02:18,320
Speaker 1: discussed is saying, okay, anything you do for green investment

1055
01:02:19,000 --> 01:02:23,120
Speaker 1: won't count. That's interesting, right, So how much how much

1056
01:02:23,160 --> 01:02:26,560
Speaker 1: more growth could you get if they don't force austerity

1057
01:02:26,600 --> 01:02:28,240
Speaker 1: every time you come out of a crisis. So that

1058
01:02:28,280 --> 01:02:31,439
Speaker 1: would be one big deal to watch. The other one

1059
01:02:31,520 --> 01:02:34,640
Speaker 1: is Germany. So we have our new government, Angela Merkel

1060
01:02:34,720 --> 01:02:37,080
Speaker 1: has gone off into the sunset and we have all

1061
01:02:37,080 --> 01:02:41,920
Speaker 1: off um, all off coming in Choltz. And it seems

1062
01:02:41,920 --> 01:02:45,880
Speaker 1: that that coalition government is relatively more open to fiscal

1063
01:02:45,880 --> 01:02:49,200
Speaker 1: flexibility in Germany. That's a big deal. We don't know

1064
01:02:49,240 --> 01:02:52,160
Speaker 1: how much yet, but if Germany is willing to spend

1065
01:02:52,160 --> 01:02:54,600
Speaker 1: a little more, if Europe is willing to spend a

1066
01:02:54,600 --> 01:02:57,680
Speaker 1: little more, none of that is priced in at all

1067
01:02:58,000 --> 01:03:00,440
Speaker 1: two markets if you look at what Europe is expected

1068
01:03:00,480 --> 01:03:03,000
Speaker 1: to do for the next decade. So this could be

1069
01:03:03,080 --> 01:03:05,880
Speaker 1: the year. The last piece of the puzzle I'd mentioned

1070
01:03:05,960 --> 01:03:09,280
Speaker 1: quickly is Italy. So one of the things that has

1071
01:03:09,320 --> 01:03:12,720
Speaker 1: been meaningful during the pandemic is Mario drag becoming Prime

1072
01:03:12,760 --> 01:03:15,720
Speaker 1: Minister of Italy, which as one of the highest debt

1073
01:03:15,800 --> 01:03:19,480
Speaker 1: to GDP ratios in Europe after Greece. And and they

1074
01:03:19,520 --> 01:03:22,720
Speaker 1: just couldn't, to your point, get out of their own way. UM.

1075
01:03:22,760 --> 01:03:25,760
Speaker 1: In the coming two to three weeks UM, so it'll

1076
01:03:25,800 --> 01:03:29,640
Speaker 1: be early in early February it will become clear if

1077
01:03:29,640 --> 01:03:32,000
Speaker 1: Mario Drag will stay prime Minister or move into the

1078
01:03:32,040 --> 01:03:35,560
Speaker 1: presidency of Italy. I spent a year of graduate school

1079
01:03:35,600 --> 01:03:38,560
Speaker 1: and then sometime as a journalist in Italy when Berlasconi

1080
01:03:38,680 --> 01:03:43,240
Speaker 1: first ran for office. UM, it does matter what Drag does.

1081
01:03:43,720 --> 01:03:46,439
Speaker 1: If he stays as prime minister, I would be much

1082
01:03:46,440 --> 01:03:49,480
Speaker 1: more confident that Italy will continue to reform and get

1083
01:03:49,480 --> 01:03:53,040
Speaker 1: those recovery funds which will support growth and support sentiment

1084
01:03:53,120 --> 01:03:56,880
Speaker 1: towards e m U. If Drag becomes president and that

1085
01:03:57,360 --> 01:04:00,120
Speaker 1: leads to snap elections in Italy and more political well

1086
01:04:00,160 --> 01:04:03,520
Speaker 1: dysfunction and the reforms fall off and they no longer

1087
01:04:03,560 --> 01:04:06,600
Speaker 1: get the money, I worry that people will say up

1088
01:04:06,840 --> 01:04:09,440
Speaker 1: here we go again, and and then I think the

1089
01:04:09,520 --> 01:04:12,320
Speaker 1: risks are higher that we're back where we were pre

1090
01:04:12,440 --> 01:04:15,520
Speaker 1: pandemic for Europe and we're in that same boat. But

1091
01:04:15,600 --> 01:04:18,320
Speaker 1: I think the next few months actually are going to

1092
01:04:18,400 --> 01:04:20,520
Speaker 1: tell us a lot about the next decade for Europe.

1093
01:04:22,040 --> 01:04:24,919
Speaker 1: So since since we brought up crypto, let's let's talk

1094
01:04:24,960 --> 01:04:27,840
Speaker 1: a little bit about that. What are your thoughts of

1095
01:04:27,920 --> 01:04:33,520
Speaker 1: this as an investable asset class? Is it millennial gold?

1096
01:04:33,640 --> 01:04:35,920
Speaker 1: Is it digital gold? Is that part of the reason

1097
01:04:36,400 --> 01:04:41,120
Speaker 1: perhaps why gold has been under performing. Well, there's no

1098
01:04:41,480 --> 01:04:47,280
Speaker 1: great data yet to be able to prove that crypto

1099
01:04:47,520 --> 01:04:51,400
Speaker 1: is taking market share away from gold. The best we've

1100
01:04:51,440 --> 01:04:55,640
Speaker 1: been able to do is find filings by certain financial

1101
01:04:55,680 --> 01:04:59,640
Speaker 1: firms showing buying of crypto selling of gold within a

1102
01:04:59,680 --> 01:05:03,200
Speaker 1: certain window that gives us at least some anecdotal evidence

1103
01:05:03,240 --> 01:05:06,600
Speaker 1: that maybe that had happened somewhat last year. So it's

1104
01:05:06,640 --> 01:05:10,400
Speaker 1: possible that that you are seeing people saying I could

1105
01:05:10,440 --> 01:05:12,600
Speaker 1: own gold or crypto, which one do I want? And

1106
01:05:12,640 --> 01:05:15,080
Speaker 1: they're leaning a little bit more towards crypto, So I

1107
01:05:15,080 --> 01:05:17,520
Speaker 1: think it's possible we're seeing a little of that shift

1108
01:05:17,560 --> 01:05:21,560
Speaker 1: going on. When I think about crypto, I'm thinking about

1109
01:05:21,640 --> 01:05:25,600
Speaker 1: primarily from my client base, so very large institutional investors.

1110
01:05:26,160 --> 01:05:29,840
Speaker 1: Right now, aside from retail, the institutional space, it's mainly

1111
01:05:29,880 --> 01:05:34,360
Speaker 1: hedge funds, family offices. We aren't seeing many large institutions

1112
01:05:34,480 --> 01:05:38,680
Speaker 1: in it yet, I think primarily because the liquidity hasn't

1113
01:05:38,680 --> 01:05:40,960
Speaker 1: been there to put on a position in large size,

1114
01:05:41,480 --> 01:05:45,280
Speaker 1: and the regulatory ecosystem is largely non existent, at least

1115
01:05:45,280 --> 01:05:49,360
Speaker 1: in the State. I think both will change um as

1116
01:05:49,360 --> 01:05:51,960
Speaker 1: we get more regulations, and it's a matter of when

1117
01:05:51,960 --> 01:05:55,520
Speaker 1: not if. I think that will make people more comfortable

1118
01:05:55,600 --> 01:05:57,360
Speaker 1: to put a toe in the water, and as we

1119
01:05:57,440 --> 01:06:00,360
Speaker 1: get more volume that will create more liquidity. We should

1120
01:06:00,360 --> 01:06:04,360
Speaker 1: over time reduce volatility, so you'll get a positive um,

1121
01:06:04,360 --> 01:06:07,880
Speaker 1: a positive reinforcement kind of cycle going on there. The

1122
01:06:07,960 --> 01:06:10,720
Speaker 1: question to me again is when that happens. But for

1123
01:06:10,760 --> 01:06:14,240
Speaker 1: the moment you know the liquidity is improving, you can

1124
01:06:14,240 --> 01:06:16,920
Speaker 1: put a position on as a fairly large investor in

1125
01:06:16,960 --> 01:06:19,440
Speaker 1: a stress period, it's not clear liquidity is there if

1126
01:06:19,440 --> 01:06:21,520
Speaker 1: you want to get out. Um. I think that's a

1127
01:06:21,560 --> 01:06:24,440
Speaker 1: limiting factor. But I do think the space continues to

1128
01:06:24,560 --> 01:06:28,240
Speaker 1: evolve so quickly, and once we get the regulatory ecosystem

1129
01:06:28,240 --> 01:06:30,680
Speaker 1: in place, I think it it could be a pretty

1130
01:06:30,680 --> 01:06:35,520
Speaker 1: big deal for larger investors. Really really kind of intriguing.

1131
01:06:36,240 --> 01:06:40,960
Speaker 1: Talk more broadly about crypto as an investable asset. Is

1132
01:06:41,000 --> 01:06:44,560
Speaker 1: this more like a commodity or a currency or does

1133
01:06:44,600 --> 01:06:50,439
Speaker 1: this eventually evolve into an equity like asset class. Well,

1134
01:06:50,440 --> 01:06:53,400
Speaker 1: that's very that's part of the problem, right If you

1135
01:06:53,440 --> 01:06:57,080
Speaker 1: know in foreign exchange the space I know best. They're

1136
01:06:57,080 --> 01:07:00,680
Speaker 1: all currencies, different countries, different fundamentals, but they're all currencies.

1137
01:07:01,360 --> 01:07:04,400
Speaker 1: Crypto is so different from currencies, and that you have

1138
01:07:04,480 --> 01:07:07,480
Speaker 1: some crypto that that behave more like a currency, of

1139
01:07:07,600 --> 01:07:10,160
Speaker 1: some that behave like a commodity, of some that behave

1140
01:07:10,200 --> 01:07:14,000
Speaker 1: like securities. And as a result, the regulators in the

1141
01:07:14,120 --> 01:07:16,640
Speaker 1: US are debating a little bit who should be in

1142
01:07:16,720 --> 01:07:20,200
Speaker 1: charge and and so it's hard to get one body

1143
01:07:20,320 --> 01:07:23,560
Speaker 1: saying Okay, we're going to drive this forward. Um. And

1144
01:07:23,600 --> 01:07:26,200
Speaker 1: then they're pushing Congress to write some laws to help

1145
01:07:26,240 --> 01:07:29,480
Speaker 1: the regulators, and Congress is not making this their first priorities.

1146
01:07:29,520 --> 01:07:32,800
Speaker 1: So everything's a little stuck right there. Um. But I

1147
01:07:33,120 --> 01:07:36,040
Speaker 1: think it will continue to evolve. The crypto it's so

1148
01:07:36,200 --> 01:07:40,040
Speaker 1: interesting because they can use technology to serve different purposes.

1149
01:07:40,240 --> 01:07:42,240
Speaker 1: So I don't think you know when I when it

1150
01:07:42,280 --> 01:07:44,680
Speaker 1: first started, I thought, oh, it's just like new currencies.

1151
01:07:44,680 --> 01:07:47,280
Speaker 1: And so many of my old currency colleagues now work

1152
01:07:47,320 --> 01:07:50,520
Speaker 1: on cryptodesks and they're trading options on crypto and lending

1153
01:07:50,520 --> 01:07:53,240
Speaker 1: on crypto, just like we did with currencies back in

1154
01:07:53,320 --> 01:07:56,680
Speaker 1: the nineties. Um. But they they're very, very different from

1155
01:07:56,680 --> 01:07:59,080
Speaker 1: currency markets, and I think that's one of the challenges

1156
01:07:59,160 --> 01:08:04,120
Speaker 1: with developing the regulatory ecosystem. Huh. Really intriguing. We haven't

1157
01:08:04,160 --> 01:08:08,959
Speaker 1: really talked about politics at all, and given raise most

1158
01:08:09,000 --> 01:08:12,160
Speaker 1: recent book, I have to ask you, when you're doing

1159
01:08:12,360 --> 01:08:16,200
Speaker 1: your broad overview of the state of the economy, how

1160
01:08:16,280 --> 01:08:22,160
Speaker 1: do you contextualize things like partisan politics and tribalisms as

1161
01:08:22,160 --> 01:08:28,240
Speaker 1: a factor. Well, politics drives policy, and policy is going

1162
01:08:28,280 --> 01:08:31,519
Speaker 1: to influence the economy and markets. So I think you

1163
01:08:31,640 --> 01:08:35,080
Speaker 1: have to try to understand politics to the degree you

1164
01:08:35,160 --> 01:08:39,160
Speaker 1: can and again to the degree you can put probabilities

1165
01:08:39,320 --> 01:08:44,080
Speaker 1: around different policies becoming reality. So, for example, when President

1166
01:08:44,080 --> 01:08:47,040
Speaker 1: Biden has been pushing forward on different fiscal plans, we

1167
01:08:47,080 --> 01:08:50,240
Speaker 1: would try to spend time understanding, Okay, if this amount

1168
01:08:50,240 --> 01:08:54,439
Speaker 1: of money gets through government spending, what sectors would that

1169
01:08:54,520 --> 01:08:57,160
Speaker 1: feed through, What companies would that feed through, How would

1170
01:08:57,160 --> 01:08:59,880
Speaker 1: it flow through to households. Once the households get it,

1171
01:09:00,080 --> 01:09:01,960
Speaker 1: they save it, do they spend it? If they spend it,

1172
01:09:02,000 --> 01:09:04,559
Speaker 1: what do they spend it? So we created this whole

1173
01:09:04,640 --> 01:09:08,120
Speaker 1: process we called fiscal rivers to try to understand that

1174
01:09:08,240 --> 01:09:11,320
Speaker 1: so and and whether or not the policy gets through

1175
01:09:12,040 --> 01:09:14,439
Speaker 1: is going to depend a lot on the politics. Makes

1176
01:09:14,479 --> 01:09:19,080
Speaker 1: it a lot harder to forecast fiscal than monetary. Monetary

1177
01:09:19,160 --> 01:09:22,720
Speaker 1: is fairly rules based. Fiscal is political base. But we

1178
01:09:22,800 --> 01:09:25,080
Speaker 1: do follow it. We have an amazing team in house

1179
01:09:25,200 --> 01:09:28,360
Speaker 1: that does nothing but living and breathe politics all day long.

1180
01:09:28,439 --> 01:09:32,160
Speaker 1: God bless um. So it is a big part of

1181
01:09:32,200 --> 01:09:34,519
Speaker 1: what we do. But I agree with you, it's it's

1182
01:09:34,560 --> 01:09:39,400
Speaker 1: a lot more qualitative and and difficult to forecast with

1183
01:09:39,439 --> 01:09:41,960
Speaker 1: any confidence. So it's an input into what we do,

1184
01:09:42,040 --> 01:09:45,840
Speaker 1: but I certainly would never at Bridgewater anywhere else put

1185
01:09:45,840 --> 01:09:48,599
Speaker 1: a trade on just a political view. UM. So before

1186
01:09:48,640 --> 01:09:52,320
Speaker 1: I get to my favorite questions, I want to ask you, UM,

1187
01:09:52,360 --> 01:09:57,000
Speaker 1: a little bit of a curve ball question. Your vice

1188
01:09:57,080 --> 01:10:01,920
Speaker 1: chair of the Council of Economic Education, you're about to

1189
01:10:02,000 --> 01:10:05,320
Speaker 1: become chairperson of that council. Tell a little bit about

1190
01:10:06,000 --> 01:10:10,320
Speaker 1: what the Council for Economic Education is and what they do. Well.

1191
01:10:10,400 --> 01:10:13,040
Speaker 1: It gets back to the politics a little bit. You know,

1192
01:10:13,200 --> 01:10:18,519
Speaker 1: in the United States, UM, only half of the states

1193
01:10:18,800 --> 01:10:23,200
Speaker 1: require UM students in high school to take at least

1194
01:10:23,200 --> 01:10:27,360
Speaker 1: one course in economics. Only twenty one states require students

1195
01:10:27,360 --> 01:10:30,479
Speaker 1: to take a class in personal finance. And and so

1196
01:10:30,560 --> 01:10:32,800
Speaker 1: this is not a national government thing, it's a state

1197
01:10:32,880 --> 01:10:35,960
Speaker 1: government thing. But at the end of the day, if

1198
01:10:36,000 --> 01:10:40,600
Speaker 1: you have requirements, you get action. UM. If it's required,

1199
01:10:40,640 --> 01:10:43,519
Speaker 1: then you will get the courses. And and we have

1200
01:10:43,720 --> 01:10:47,840
Speaker 1: found clear evidence that the states that teach us, the

1201
01:10:48,120 --> 01:10:51,080
Speaker 1: students when they graduate are better prepared to think about

1202
01:10:51,160 --> 01:10:54,680
Speaker 1: college financing, to think about credit cards when they get

1203
01:10:54,680 --> 01:10:56,920
Speaker 1: to college, or or after high school when they get

1204
01:10:56,960 --> 01:11:00,680
Speaker 1: a job. And so, if it's in our countries economic

1205
01:11:00,840 --> 01:11:04,080
Speaker 1: and social interest to have a population that can make

1206
01:11:04,200 --> 01:11:09,519
Speaker 1: good personal finance and economic decisions. Um. And ultimately, gosh,

1207
01:11:09,560 --> 01:11:12,760
Speaker 1: wouldn't it be nice if all of our policymakers understood

1208
01:11:12,760 --> 01:11:16,040
Speaker 1: basic economics. Sometimes when I listened to the speeches on

1209
01:11:16,080 --> 01:11:19,040
Speaker 1: the hill, I have questions about a few of them. Um.

1210
01:11:19,120 --> 01:11:21,559
Speaker 1: And So that's what this group is doing. We're trying

1211
01:11:21,600 --> 01:11:26,600
Speaker 1: to advocate states to have requirements. We're trying to provide

1212
01:11:26,680 --> 01:11:30,680
Speaker 1: great programming for teachers so they can teach in the classroom,

1213
01:11:30,880 --> 01:11:34,440
Speaker 1: and we provide programming directly for the students in their families.

1214
01:11:34,479 --> 01:11:36,680
Speaker 1: The whole point is just to give people the basics

1215
01:11:37,120 --> 01:11:39,439
Speaker 1: so they can make good life decisions, which I think

1216
01:11:39,479 --> 01:11:42,360
Speaker 1: help them as people, but also feel fold through to

1217
01:11:42,400 --> 01:11:45,200
Speaker 1: the economy. And when you when you talk about content,

1218
01:11:45,240 --> 01:11:52,200
Speaker 1: you're really describing a financial curriculum for students. What what ages?

1219
01:11:52,280 --> 01:11:56,120
Speaker 1: What grades? Yeah, we're talking about kindergarten through high school?

1220
01:11:57,920 --> 01:12:00,840
Speaker 1: Yeah yeah, yeah, yeah, starting that, Yeah. What what does

1221
01:12:00,880 --> 01:12:02,960
Speaker 1: it mean to save? What does it mean to spend?

1222
01:12:03,320 --> 01:12:05,160
Speaker 1: How do you think about how much you should be

1223
01:12:05,200 --> 01:12:09,679
Speaker 1: able to spend? It makes the concepts easy to understand

1224
01:12:09,680 --> 01:12:11,559
Speaker 1: in the beginning, and then when you get to high school,

1225
01:12:11,560 --> 01:12:14,760
Speaker 1: obviously it gets it gets more complicated, but it's been

1226
01:12:15,040 --> 01:12:19,320
Speaker 1: it's been so rewarding to see some of the teachers. Um.

1227
01:12:19,360 --> 01:12:22,760
Speaker 1: We work with fifty thousand teachers and they in turn

1228
01:12:22,840 --> 01:12:27,200
Speaker 1: touch about five million students right now. UM, And just

1229
01:12:27,320 --> 01:12:29,960
Speaker 1: when you see the results and the difference it makes

1230
01:12:30,160 --> 01:12:33,519
Speaker 1: that these kids get it, they have confidence, Um, they

1231
01:12:33,560 --> 01:12:36,960
Speaker 1: know what they're doing. And again, you know, it seems

1232
01:12:37,000 --> 01:12:39,200
Speaker 1: like such a simple thing, but when you look at

1233
01:12:39,280 --> 01:12:43,000
Speaker 1: two thousand eight, two thousand nights, how overlevered people were

1234
01:12:43,479 --> 01:12:47,200
Speaker 1: stunding money, they didn't have slipping homes, and you just think, gosh,

1235
01:12:47,240 --> 01:12:50,479
Speaker 1: these are just such basic concepts and if we could

1236
01:12:50,479 --> 01:12:53,320
Speaker 1: just make people more educated about it, how much better

1237
01:12:53,360 --> 01:12:56,400
Speaker 1: off we'd all be. So that's what the programs about.

1238
01:12:57,240 --> 01:13:00,719
Speaker 1: Is there is there anything more shocking than that scene

1239
01:13:00,920 --> 01:13:05,280
Speaker 1: in the middle of The Big Short where one of

1240
01:13:05,280 --> 01:13:08,840
Speaker 1: the characters is talking to a woman UM in a

1241
01:13:08,880 --> 01:13:12,439
Speaker 1: strip club and she's a house flipper as well as

1242
01:13:12,439 --> 01:13:16,120
Speaker 1: a stripper, and he asked her about, wait, you have

1243
01:13:16,240 --> 01:13:18,960
Speaker 1: two mortgages and she's like, no, I have six. I

1244
01:13:19,000 --> 01:13:23,280
Speaker 1: have all these houses. And that's when he realizes exactly

1245
01:13:23,720 --> 01:13:29,839
Speaker 1: how overleveraged and completely oblivious uh, the U S consumer

1246
01:13:29,880 --> 01:13:34,160
Speaker 1: has become with with credit. Speaking of films, let's let's

1247
01:13:34,280 --> 01:13:38,960
Speaker 1: jump to our favorite questions, starting with tell us what

1248
01:13:39,080 --> 01:13:43,040
Speaker 1: you're streaming these days? What's keeping you entertained? Uh during

1249
01:13:43,080 --> 01:13:46,160
Speaker 1: lockdown on Netflix or Amazon Prime or or anything else

1250
01:13:46,200 --> 01:13:51,559
Speaker 1: that you're enjoying. Sure, um, so I don't watch TV

1251
01:13:51,680 --> 01:13:54,559
Speaker 1: as much as maybe I'd like to. But when I

1252
01:13:54,600 --> 01:13:58,320
Speaker 1: do watch, um, when I do watch stuff, you know,

1253
01:13:58,439 --> 01:14:00,880
Speaker 1: given that I spent a lot of my thinking about

1254
01:14:00,880 --> 01:14:02,880
Speaker 1: what could go wrong in the world, I want to

1255
01:14:03,240 --> 01:14:05,760
Speaker 1: make sure we don't miss risks. My life can get

1256
01:14:05,800 --> 01:14:08,920
Speaker 1: pretty dark, So when I watched TV, I'm usually not

1257
01:14:09,080 --> 01:14:12,639
Speaker 1: going for their murders and the crime shows. Um, ted

1258
01:14:12,760 --> 01:14:15,519
Speaker 1: Lasso would be my cup of tea. You know, something

1259
01:14:15,640 --> 01:14:20,479
Speaker 1: funny and well written. And I also love nature and history,

1260
01:14:20,560 --> 01:14:23,800
Speaker 1: So anytime there's a good new ken Burns documentary, I've

1261
01:14:23,840 --> 01:14:28,000
Speaker 1: got that on immediately. Good good, good, couple of recommendations.

1262
01:14:28,479 --> 01:14:31,360
Speaker 1: Let's talk about mentors. Who were the people who helped

1263
01:14:31,400 --> 01:14:36,320
Speaker 1: shape your early career. Well, my my first boughs out

1264
01:14:36,320 --> 01:14:39,000
Speaker 1: of college was a gentleman named Paul Tash. He ran

1265
01:14:39,080 --> 01:14:41,439
Speaker 1: the Washington bureau at the St. Petersburg Times when I

1266
01:14:41,520 --> 01:14:44,360
Speaker 1: was there. He um, he gave me enough rope to

1267
01:14:44,880 --> 01:14:47,719
Speaker 1: do some damage to myself, but didn't let me completely

1268
01:14:47,800 --> 01:14:50,600
Speaker 1: chew off the rope. UM. And you know, as a

1269
01:14:50,680 --> 01:14:53,479
Speaker 1: twenties something having a front page article in the Pulitzer

1270
01:14:53,520 --> 01:14:56,679
Speaker 1: Prize reading newspaper, that was thanks to him as much

1271
01:14:56,680 --> 01:14:59,240
Speaker 1: as anything. Um. There were a ton of people later

1272
01:14:59,280 --> 01:15:03,280
Speaker 1: on at jpm organ who helped me become a better researcher.

1273
01:15:03,320 --> 01:15:06,160
Speaker 1: But I think importantly also how to listen to clients.

1274
01:15:06,240 --> 01:15:09,280
Speaker 1: Jon Lois, who's who's still sort of a senior adviser

1275
01:15:09,360 --> 01:15:12,160
Speaker 1: there and writes research for them. He really stands out

1276
01:15:12,160 --> 01:15:13,960
Speaker 1: in my mind as someone who is there with me

1277
01:15:14,040 --> 01:15:18,280
Speaker 1: in London in that insanity and then and then all

1278
01:15:18,320 --> 01:15:21,000
Speaker 1: along the way and over the last decade one more

1279
01:15:21,000 --> 01:15:23,479
Speaker 1: I've mentioned, I've been very lucky to get to know

1280
01:15:24,120 --> 01:15:28,080
Speaker 1: former Treasury Secretary Bob Ruben mainly the Council of Foreign Relations,

1281
01:15:28,160 --> 01:15:30,479
Speaker 1: and UM, I don't know if he would think of

1282
01:15:30,560 --> 01:15:33,000
Speaker 1: himself as a mentor to me, but I would. You know,

1283
01:15:33,200 --> 01:15:36,040
Speaker 1: any time I've had a question for Bob, he's been

1284
01:15:36,040 --> 01:15:39,759
Speaker 1: there with really good sound advice, UM. And he's always

1285
01:15:39,760 --> 01:15:42,200
Speaker 1: gone out of his way to make me feel part

1286
01:15:42,280 --> 01:15:46,080
Speaker 1: of the group at Council events and dinners. Again, when

1287
01:15:46,320 --> 01:15:48,519
Speaker 1: those moments when you felt like the kid at the table,

1288
01:15:49,280 --> 01:15:51,040
Speaker 1: he made sure to make it clear to everyone at

1289
01:15:51,040 --> 01:15:53,600
Speaker 1: the table that I wasn't a kid, And I'm incredibly

1290
01:15:53,600 --> 01:15:58,320
Speaker 1: grateful for that. Really really interesting. Let's let's talk about reading.

1291
01:15:58,360 --> 01:16:00,240
Speaker 1: What are some of your favorite books and and what

1292
01:16:00,280 --> 01:16:02,400
Speaker 1: are you reading right now? Oh? I'd love to read.

1293
01:16:02,479 --> 01:16:04,880
Speaker 1: I mean, I spend half my day reading emails and

1294
01:16:04,920 --> 01:16:08,479
Speaker 1: research reports. But even then, um, after work, if I'm

1295
01:16:08,479 --> 01:16:12,880
Speaker 1: not watching something light or or entertaining, I'll pick up

1296
01:16:12,920 --> 01:16:15,800
Speaker 1: a book. I try to alternate between fiction and nonfiction.

1297
01:16:16,000 --> 01:16:19,960
Speaker 1: So I just finished Lincoln Highway by A. Mortal's I

1298
01:16:20,000 --> 01:16:22,400
Speaker 1: had loved Gentlemen in Moscow, and this is a very

1299
01:16:22,400 --> 01:16:25,680
Speaker 1: different book, but but equally well written. And then I

1300
01:16:25,800 --> 01:16:29,759
Speaker 1: just started raised new book on the Changing World Order, um,

1301
01:16:29,840 --> 01:16:33,639
Speaker 1: which somewhat depressing but very very good food for thought.

1302
01:16:33,880 --> 01:16:35,479
Speaker 1: And then I'd have to say one of my all

1303
01:16:35,520 --> 01:16:38,960
Speaker 1: time favorite books that if if people who are listening

1304
01:16:39,000 --> 01:16:43,000
Speaker 1: haven't read, they should is No Ordinary Time by Doris

1305
01:16:43,080 --> 01:16:46,880
Speaker 1: Kern's Goodwin. I am a huge fan of both FDR

1306
01:16:47,000 --> 01:16:50,440
Speaker 1: and Eleanor Roosevelt. I think they were both such incredibly

1307
01:16:50,479 --> 01:16:54,719
Speaker 1: important people in America and global history for different reasons.

1308
01:16:54,800 --> 01:16:56,920
Speaker 1: And I think that book captures a period of time

1309
01:16:56,960 --> 01:17:01,480
Speaker 1: in both those characters so well. Our final two questions,

1310
01:17:02,120 --> 01:17:05,040
Speaker 1: what advice would you give a recent college grad who

1311
01:17:05,120 --> 01:17:09,720
Speaker 1: was interested in a career in either research or investment

1312
01:17:09,760 --> 01:17:16,200
Speaker 1: in finance? Okay, um, I guess all right. Two things. One,

1313
01:17:17,120 --> 01:17:20,080
Speaker 1: be open minded. You know, I get so many young

1314
01:17:20,120 --> 01:17:22,960
Speaker 1: people coming to me saying, well, I either want to

1315
01:17:22,960 --> 01:17:25,280
Speaker 1: work at a top three investment bank or a top

1316
01:17:25,320 --> 01:17:28,439
Speaker 1: hedge funds and and I think there's just so many

1317
01:17:28,439 --> 01:17:32,560
Speaker 1: ways to get experienced. You know, there's treasury departments at companies,

1318
01:17:32,600 --> 01:17:37,719
Speaker 1: there's government positions, central bank opportunities, different countries, different cities.

1319
01:17:37,760 --> 01:17:40,120
Speaker 1: Not every good jobs in New York City by a

1320
01:17:40,120 --> 01:17:43,840
Speaker 1: long shot. So I think keep an open mind, take

1321
01:17:43,880 --> 01:17:47,240
Speaker 1: different paths. And I think in my case it's shown

1322
01:17:47,240 --> 01:17:49,800
Speaker 1: it's been an advantage later on. That would be one.

1323
01:17:49,960 --> 01:17:54,160
Speaker 1: I think. Secondly, quickly read read, read, read, read current events, history,

1324
01:17:54,280 --> 01:18:00,160
Speaker 1: academic papers, think tank papers. Don't just stick to social media. Um,

1325
01:18:00,200 --> 01:18:02,960
Speaker 1: I think you know, just knowing what's going on around you.

1326
01:18:03,280 --> 01:18:05,880
Speaker 1: Nothing against social media, but that shouldn't be your only source.

1327
01:18:06,680 --> 01:18:09,519
Speaker 1: So those would be my two pieces of advice. Um,

1328
01:18:09,560 --> 01:18:11,920
Speaker 1: I think those are both good pieces of advice. And

1329
01:18:12,000 --> 01:18:14,639
Speaker 1: our final question, what do you know about the world

1330
01:18:14,760 --> 01:18:18,920
Speaker 1: of finance and investing today that you wish you knew?

1331
01:18:19,640 --> 01:18:22,599
Speaker 1: You know years ago or so when you were first

1332
01:18:22,640 --> 01:18:25,920
Speaker 1: getting started. Oh my god, there's so much. Um. Well,

1333
01:18:26,120 --> 01:18:28,760
Speaker 1: the the thing that popped in my head very when

1334
01:18:28,760 --> 01:18:30,519
Speaker 1: you said that, as I wish I had known to

1335
01:18:30,560 --> 01:18:32,720
Speaker 1: tell my dad not to sell his Apple stock. That

1336
01:18:32,760 --> 01:18:36,000
Speaker 1: would have been good. But well, that's the time machine answer.

1337
01:18:36,120 --> 01:18:39,559
Speaker 1: I'm I'm really looking more of a what process, what

1338
01:18:39,680 --> 01:18:43,439
Speaker 1: insight would have been helpful earlier? Yes, this isn't This

1339
01:18:43,520 --> 01:18:47,840
Speaker 1: isn't back in time with Marty Okay, so I'd say

1340
01:18:47,880 --> 01:18:50,519
Speaker 1: maybe more like twenty years ago. But when I was

1341
01:18:50,560 --> 01:18:53,720
Speaker 1: an analyst sitting in Singapore JP Morgan and I was

1342
01:18:53,760 --> 01:18:57,240
Speaker 1: writing about the implications of China joining the w t O,

1343
01:18:58,439 --> 01:19:01,519
Speaker 1: I wish I had spent and more time pushing myself

1344
01:19:01,560 --> 01:19:05,719
Speaker 1: to think what could this be? And and I think

1345
01:19:06,360 --> 01:19:09,519
Speaker 1: fast forward to today. I try to do it more,

1346
01:19:09,720 --> 01:19:11,479
Speaker 1: but I think I should do it more. I think

1347
01:19:11,560 --> 01:19:15,280
Speaker 1: we should all spend more time thinking about those longer

1348
01:19:15,400 --> 01:19:20,080
Speaker 1: term things. Climate, technology, demographics, markets are so immediate, right,

1349
01:19:20,200 --> 01:19:24,760
Speaker 1: you have to have stuff on Bloomberg every second, every day,

1350
01:19:24,800 --> 01:19:27,200
Speaker 1: and there's so much in front of us, it's easy

1351
01:19:27,240 --> 01:19:30,320
Speaker 1: to forget these big structural things that are taking place

1352
01:19:30,360 --> 01:19:34,240
Speaker 1: behind the scenes but can be equally impactful. So I'd

1353
01:19:34,280 --> 01:19:38,280
Speaker 1: say to myself, dig into the big things, don't just

1354
01:19:38,479 --> 01:19:42,240
Speaker 1: focus on what's here. Now some really good answers. I'm

1355
01:19:42,240 --> 01:19:45,280
Speaker 1: going to sneak one more question in, and that is,

1356
01:19:45,880 --> 01:19:48,439
Speaker 1: so you lived in Singapore for a while, tell us

1357
01:19:48,479 --> 01:19:54,400
Speaker 1: about the food there all my foodie star for asking that,

1358
01:19:54,680 --> 01:19:58,040
Speaker 1: ha ha. So yeah, my husband and I both love

1359
01:19:58,120 --> 01:20:00,880
Speaker 1: to cook, both loved to eat, and and while New

1360
01:20:00,960 --> 01:20:03,920
Speaker 1: York is definitely a food mecca, I'd say if there

1361
01:20:04,000 --> 01:20:06,639
Speaker 1: is any one place in the world that's as good

1362
01:20:06,720 --> 01:20:09,800
Speaker 1: or maybe better than New York at Singapore, Um, the

1363
01:20:09,840 --> 01:20:13,880
Speaker 1: Asian food is is just uncomparable. But especially over the

1364
01:20:13,960 --> 01:20:16,559
Speaker 1: last decade or two, you now get every cuisine you

1365
01:20:16,600 --> 01:20:21,839
Speaker 1: can imagine. UM. So yeah, tough New York or Singapore.

1366
01:20:22,000 --> 01:20:24,519
Speaker 1: That's a tough call. Um. And anyone listening to this

1367
01:20:24,680 --> 01:20:29,080
Speaker 1: who likes dumpling, go go, go, go go. Rebecca, thank

1368
01:20:29,120 --> 01:20:31,120
Speaker 1: you for being so generous with your time. This has

1369
01:20:31,200 --> 01:20:35,920
Speaker 1: just been absolutely, absolutely fascinating. We have been speaking with

1370
01:20:35,960 --> 01:20:39,840
Speaker 1: Rebecca Patterson. She is the director of investment Research at

1371
01:20:40,040 --> 01:20:44,440
Speaker 1: Hedge fund Giant Bridgewater Associates. If you enjoy this conversation,

1372
01:20:44,720 --> 01:20:48,400
Speaker 1: well check out all of our previous UH interviews we've

1373
01:20:48,400 --> 01:20:50,679
Speaker 1: done over the past eight years. You can find those

1374
01:20:50,720 --> 01:20:55,640
Speaker 1: at iTunes, Spotify, all of your favorite podcast sources. We

1375
01:20:55,760 --> 01:20:58,880
Speaker 1: love your comments, feedback and suggestions right to us at

1376
01:20:59,640 --> 01:21:03,280
Speaker 1: m I B podcast at Bloomberg dot net. Sign up

1377
01:21:03,320 --> 01:21:06,200
Speaker 1: for my daily reads at Ridhalts dot com. Follow me

1378
01:21:06,240 --> 01:21:08,960
Speaker 1: on Twitter at Rid Halts. I would be remiss if

1379
01:21:08,960 --> 01:21:10,800
Speaker 1: I did not thank the crack team that helps us

1380
01:21:10,800 --> 01:21:15,559
Speaker 1: put these conversations together each week. Mohammed Ramaui is my

1381
01:21:15,720 --> 01:21:20,479
Speaker 1: audio engineer. Paris Walt is my producer. Atika val Bron

1382
01:21:20,600 --> 01:21:23,280
Speaker 1: is our project manager. Michael bat Nick is our head

1383
01:21:23,280 --> 01:21:26,920
Speaker 1: of research. I'm Barry Ridults. You've been listening to Masters

1384
01:21:26,920 --> 01:21:29,240
Speaker 1: and Business on Bloomberg Radio.