WEBVTT - A Look At China's Tech Crackdown, Consumer Sentiment 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.120 at Bloomberg dot com slash podcast. Now we have with 0:00:22.200 --> 0:00:24.920 us one of the most respected names on the street 0:00:24.960 --> 0:00:30.040 when it comes to analyzing companies in terms of I 0:00:30.080 --> 0:00:34.120 guess um future cash flows, and he's done the pretty 0:00:34.159 --> 0:00:36.280 much the best as far as I can see across 0:00:36.320 --> 0:00:39.320 the industry in terms of his returns. Dan Ives joins 0:00:39.400 --> 0:00:42.159 us from web Bush Securities, where he's managing director of 0:00:42.200 --> 0:00:44.680 Equity Research. Dan, I'm gonna kind of rip up the 0:00:44.720 --> 0:00:46.640 script here because I know we want to talk about 0:00:46.640 --> 0:00:49.400 the China tech crackdown, and I definitely want to hit 0:00:49.400 --> 0:00:52.560 on Tesla as well in a moment, because Elon Musk 0:00:52.680 --> 0:00:56.240 is here with me, not with me personally and physically, 0:00:56.240 --> 0:00:59.080 but you know, within a twenty mile radius in Berlin 0:00:59.640 --> 0:01:01.560 at his Big A factory. But we just got a 0:01:01.560 --> 0:01:06.080 consumer sentiment number that um the U miss Director Richard 0:01:06.120 --> 0:01:09.840 curtain called stunning. The loss of confidence, he said, was stunning. 0:01:10.120 --> 0:01:12.720 He said over the past half century, the sentiment index 0:01:12.760 --> 0:01:17.000 has only recorded larger losses in six other surveys, and 0:01:17.080 --> 0:01:20.240 it's dropped the most since two thousand eleven. What is 0:01:20.280 --> 0:01:23.760 going on in the U S economy? OK, I think 0:01:24.080 --> 0:01:26.600 what we're starting to see really coming down of COVID, 0:01:26.680 --> 0:01:29.800 it's very uneven in terms of this recovery and and 0:01:29.840 --> 0:01:33.560 I think it really is cause almost more and more 0:01:33.560 --> 0:01:35.880 of a move to some of these safety blanket names, 0:01:35.959 --> 0:01:39.760 especially in tech by the large cab names, because investors 0:01:40.720 --> 0:01:43.399 right now they almost have a flashlight in a dark 0:01:43.400 --> 0:01:45.360 tunnel that they're still trying to figure out what the 0:01:45.400 --> 0:01:49.240 fundamental stories look like consumer as well as enterprised second 0:01:49.280 --> 0:01:52.040 half of the year, and and we continue weave this 0:01:52.120 --> 0:01:54.680 is going to be uneven, but you have to focus 0:01:54.680 --> 0:01:57.760 on the secular winners, and we've we've tech. It's still 0:01:57.800 --> 0:01:59.880 a risk on train a green light to intact and 0:02:00.040 --> 0:02:03.080 to your end. Dan, on that note, we're taking look 0:02:03.120 --> 0:02:05.400 at shares of Microsoft right some of the big tech 0:02:05.480 --> 0:02:08.640 companies that you cover that are trading at record highs, 0:02:08.680 --> 0:02:11.560 and I am curious how much of this is a 0:02:11.639 --> 0:02:16.040 defensive move wherewith yields falling, we like the discount cash 0:02:16.080 --> 0:02:21.480 flows or these valuations really justified in your opinion, Yeah, 0:02:21.480 --> 0:02:24.440 it's a great question. I think there's definitely a bit 0:02:24.480 --> 0:02:27.560 defensive on some of these tech names, like a Microsoft, 0:02:28.000 --> 0:02:30.560 But a lot of it really comes down to we 0:02:30.639 --> 0:02:33.880 are in the midst of a fourth in DSHA revolution. 0:02:33.960 --> 0:02:37.720 I mean two trillion of digital transformations spend on the 0:02:37.840 --> 0:02:40.000 enterprise and on consumer. When you look at what they're 0:02:40.040 --> 0:02:43.840 doing in Redmond, when the Delawad and the Charge, Microsoft 0:02:43.919 --> 0:02:46.280 continue to gain more and more share in the cloud, 0:02:46.840 --> 0:02:50.120 and that what we're seeing is just a further rereading 0:02:50.160 --> 0:02:53.400 of the stock from Microsoft, but you're seeing across the 0:02:53.400 --> 0:02:57.919 whole tech sphere in terms of names like Apple, names 0:02:57.919 --> 0:03:00.919 across cybersecurity and cloud because in so just starting realized 0:03:00.960 --> 0:03:02.839 this wasn't just to pull forward we've seen the last 0:03:02.840 --> 0:03:06.960 eighteen months. It's called first second inning of what really 0:03:07.000 --> 0:03:09.240 what's going to be a transformation in terms of the 0:03:09.280 --> 0:03:13.200 tech sector. You have a thousand dollar price target. I 0:03:13.200 --> 0:03:15.680 believe on Tesla you have as an outperform. You've done 0:03:15.760 --> 0:03:18.160 much better than your peers in terms of rating the 0:03:18.240 --> 0:03:22.320 stock with a nine percent return. Your peers average return 0:03:22.440 --> 0:03:31.400 is down. What is happening though, in terms of boosting production, 0:03:31.520 --> 0:03:35.720 in terms of getting out the solar cell business, in 0:03:35.880 --> 0:03:39.840 terms of you know, achieving all that he's promised, Like 0:03:39.920 --> 0:03:43.280 the mack truck, I guess it's an eighteen wheeler that 0:03:43.280 --> 0:03:44.920 he that he wants to bring out. I mean, can 0:03:44.960 --> 0:03:46.800 you really do all this stuff? Or does that not 0:03:46.920 --> 0:03:49.120 matter to you know, it's this kind of cashlow is 0:03:49.160 --> 0:03:53.080 also not matter to Tesla. Yeah, I think for right 0:03:53.080 --> 0:03:55.840 now in Tesla they almost have a high class problem 0:03:55.960 --> 0:04:00.000 because every car that they meet they sell. It's really 0:04:00.120 --> 0:04:03.000 more of a supply capacity issues, which is why he's 0:04:03.000 --> 0:04:05.480 in Berlin right now, and which is why there's such 0:04:05.480 --> 0:04:08.240 a focus on the build out of Berlin, having that 0:04:08.280 --> 0:04:11.800 flagpole in Europe instead of just shipping cars from China, 0:04:11.840 --> 0:04:16.240 which is a logistical disaster, as well as Austin. Because 0:04:16.360 --> 0:04:19.200 right now we're in the green title leave, we're just 0:04:19.320 --> 0:04:23.240 in the early stages of it. And Tesla when Musk 0:04:23.360 --> 0:04:25.800 is looking out, of course, we have cyber Truck talking 0:04:25.839 --> 0:04:29.160 about long haul talking as well. These are aspirations. I 0:04:29.240 --> 0:04:31.719 don't I don't think they're just aspirations. I think these 0:04:31.760 --> 0:04:34.920 are models that we will continue to see come out, 0:04:35.800 --> 0:04:39.400 But for now, for the street, it's about Model three, 0:04:39.440 --> 0:04:42.919 Model Y and of course the rebound in China for Tesla, 0:04:43.040 --> 0:04:45.719 that is what will continue driving stock A part of 0:04:45.720 --> 0:04:49.320 the overrang on Testa this year after Cinderella Story last year. 0:04:49.680 --> 0:04:54.120 It's more competition from GMS two v ws to the 0:04:54.160 --> 0:04:56.359 pure place and that's been I want to see the 0:04:56.360 --> 0:05:01.120 cyber truck what I want to see on the street, Dan, 0:05:01.279 --> 0:05:04.320 you know, speaking of China, go out there for us, 0:05:04.360 --> 0:05:07.760 but but go broader. I think what is fascinating is 0:05:07.800 --> 0:05:13.200 the rewriting that you've had to see on change it, 0:05:13.320 --> 0:05:15.520 you know, with a stroke of a pen. Beijing has 0:05:15.560 --> 0:05:17.880 told us in the last month that they can entirely 0:05:18.000 --> 0:05:21.479 change the rules. How do you evaluate that on a 0:05:21.560 --> 0:05:25.440 fundamental basis? With all the headline risk of China tech 0:05:25.480 --> 0:05:30.120 crackdown well right now and for investors not just in 0:05:30.160 --> 0:05:33.039 the US but globally, you really can't go in China 0:05:33.160 --> 0:05:36.400 tech here. I mean, the rules continue get changed, and 0:05:36.440 --> 0:05:38.919 it's really been a horror movie. You know, for investors 0:05:38.920 --> 0:05:42.039 in China tax factor more and more that money is 0:05:42.240 --> 0:05:46.160 routine to US tech, even though there's regulatory risk of 0:05:46.200 --> 0:05:50.159 course within the Beltway, this just doesn't compare the scale 0:05:50.160 --> 0:05:52.479 and scope of what Beijing is doing with this crackdown. 0:05:53.040 --> 0:05:56.200 And it's something where you know, if you own these 0:05:56.279 --> 0:05:58.960 names on Friday, you don't know what's going to happen 0:05:59.040 --> 0:06:01.960 Monday morning. And it's really the risk off in the 0:06:02.040 --> 0:06:04.919 China sectors. One. It's hard for us to look someone 0:06:05.400 --> 0:06:08.599 in the mirror and own some of these broader themes 0:06:08.600 --> 0:06:11.400 have regulatory risk, like to Baba's, the d d S 0:06:11.440 --> 0:06:15.600 and others. All right, thanks so much for joining us. 0:06:15.880 --> 0:06:19.160 Dan is always a pleasure to get you on and uh, 0:06:19.200 --> 0:06:21.760 I think you had a lot of insight for our investors, 0:06:21.800 --> 0:06:25.360 also for our listeners. Also point out to people that 0:06:25.400 --> 0:06:27.440 they can check out the A and our page for 0:06:27.560 --> 0:06:31.120 Dan Ives and just see um how he has crushed 0:06:31.160 --> 0:06:34.599 it in terms of picking stocks and setting targets. So 0:06:34.760 --> 0:06:38.080 always good to talk to web Bush Securities Managing Director 0:06:38.240 --> 0:06:42.000 Dan Ives. We're gonna continue to cover this massive drop 0:06:42.680 --> 0:06:46.400 in consumer sentiment for you. The you Miss index falling 0:06:46.400 --> 0:06:49.960 to a reading of seventy. We were looking for more 0:06:50.000 --> 0:06:57.680 than eighty. This is Bloomberg. Now. There is a lot 0:06:57.720 --> 0:07:01.120 going on in Washington. Despite the fact that I believe 0:07:01.200 --> 0:07:04.280 they're currently in recess. Um. They need to figure out 0:07:04.360 --> 0:07:07.320 if they're gonna pass this one point two trillion dollar 0:07:07.440 --> 0:07:09.960 spending bill before they look at the three and a 0:07:10.040 --> 0:07:15.480 half trillion dollar resolution moves or reconciliation moves or um. 0:07:15.520 --> 0:07:19.120 If they're gonna, I guess hold hostage is a bad term, 0:07:19.240 --> 0:07:22.640 but basically, um make sure they can get the reconciliation 0:07:23.320 --> 0:07:27.200 passed before they agree on the bipartisan bill. Nonetheless, it 0:07:27.200 --> 0:07:28.880 looks like we're gonna get a lot more money spent 0:07:28.960 --> 0:07:31.880 on infrastructure eventually, she tell Prasade Joins, a small and 0:07:31.920 --> 0:07:35.040 MidCap growth portfolio manager, as well as equity research analyst 0:07:35.160 --> 0:07:38.120 Jennison Associates to talk to us about where investors can 0:07:38.160 --> 0:07:41.000 take advantage if we do, and she tall this is 0:07:41.000 --> 0:07:44.200 an interesting market because it does look like there's gonna 0:07:44.200 --> 0:07:46.200 be a lot more money spent, at least for now. 0:07:46.320 --> 0:07:48.720 We do face the possibility of a fiscal cliff in 0:07:48.760 --> 0:07:51.000 the future, and there are supply chain issues that are 0:07:51.040 --> 0:07:54.120 really jamming things up a little bit. How do you 0:07:54.160 --> 0:07:58.239 see the investment environment? Well, it's great to be heroris 0:07:58.320 --> 0:08:01.320 to thanks for having me, so I guess what I 0:08:01.320 --> 0:08:05.040 would say on the Infrastructure Bill specifically, is I think 0:08:05.120 --> 0:08:07.480 it's meaningful that for the first time as you as 0:08:07.480 --> 0:08:10.000 you talked about things in DC, that we're actually able 0:08:10.040 --> 0:08:13.120 to get something done. Uh. It does show that we've 0:08:13.160 --> 0:08:19.680 got bipartisan support for investing in our own infrastructure. And 0:08:19.720 --> 0:08:23.680 I think there's some parts of that bill that are bipartisan. 0:08:23.680 --> 0:08:26.200 As I mentioned that, you know, whether it's UM investing 0:08:26.200 --> 0:08:30.040 in bridges and roads, high speed internet for rural communities, 0:08:30.680 --> 0:08:36.040 electric vehicle charging stations, etcetera. Having said that, you know, 0:08:36.440 --> 0:08:39.480 on our team, UM and even I think the markets 0:08:39.520 --> 0:08:43.400 are not really assuming that this will go through. There's 0:08:43.400 --> 0:08:45.760 still a lot of wood to chop UM from the 0:08:45.800 --> 0:08:49.800 House in terms of getting this passed. And we've maybe 0:08:49.800 --> 0:08:53.400 been burned once before on the promise of an infrastructure package. 0:08:53.400 --> 0:08:55.880 So I don't think we are getting in over our 0:08:56.000 --> 0:09:01.160 skis on this spending specifically. Having said that, so UM, 0:09:01.200 --> 0:09:04.960 I think that's a pandemic and just what we've seen 0:09:05.000 --> 0:09:07.520 in terms of the supply chain clunches that you mentioned, 0:09:08.080 --> 0:09:12.040 UM companies want to have their supply chains closer, and 0:09:12.080 --> 0:09:16.880 I think we're about to embark on a real onshoring, reshoring, 0:09:17.480 --> 0:09:22.360 capital investment renaissance. In this country. I hate to try 0:09:22.400 --> 0:09:27.000 to bring a a contrary opinion here, though it was 0:09:27.040 --> 0:09:30.439 interesting yesterday one of them was one of the first 0:09:30.440 --> 0:09:34.640 times I finally heard someone say, uh, except taxes have 0:09:34.760 --> 0:09:36.520 to go up if we're going to pay for all 0:09:36.559 --> 0:09:40.000 of this, and the markets haven't yet priced that in well, 0:09:40.120 --> 0:09:43.440 or growth could pay for it. Yes, if we can 0:09:43.520 --> 0:09:46.600 grow our way out of our debt. But if we can, 0:09:47.120 --> 0:09:49.160 you know, how are we are there are the markets 0:09:49.240 --> 0:09:52.560 prepared for potentially higher taxes in order to pay for this. 0:09:55.520 --> 0:09:58.000 I don't believe that the markets are ready for higher 0:09:58.040 --> 0:10:00.839 taxes now. Certainly the Biden and Is station is saying 0:10:00.920 --> 0:10:04.040 that there is enough pay force for the infrastructure bill 0:10:04.200 --> 0:10:06.640 by you know, some of the COVID relief funds and 0:10:07.559 --> 0:10:12.160 unused you know, assistance to the states, etcetera. But I 0:10:12.200 --> 0:10:15.680 think we know from I think the CBO scoring that's 0:10:15.760 --> 0:10:18.760 it's going to cost a lot of money. Um, And 0:10:18.800 --> 0:10:20.760 I don't think and you know, and I think that 0:10:21.320 --> 0:10:25.079 certainly some members of Congress are really resistant to increase 0:10:25.120 --> 0:10:29.160 in taxes, whether it's gas taxes, usage taxes, etcetera. So 0:10:29.440 --> 0:10:32.680 that almost seems like a non starter quite frankly, to 0:10:32.720 --> 0:10:36.520 pay for it. But um, you know, again, even without 0:10:36.960 --> 0:10:41.800 the one point two trillion UM, I think that the 0:10:41.800 --> 0:10:44.800 the you know, the doors open, the gates are open, 0:10:44.960 --> 0:10:47.120 and we're just going to see a lot more investment 0:10:47.200 --> 0:10:50.280 in the country, regardless of what happens in the US. 0:10:50.960 --> 0:10:55.439 You know, from from the government standpoint, you know, the 0:10:55.440 --> 0:10:58.839 the best way that the government throughout history you found 0:10:58.840 --> 0:11:01.040 to get out of debt is inflating their way out. 0:11:01.520 --> 0:11:04.120 As someone who looks at you know, especially small and 0:11:04.160 --> 0:11:11.160 MidCap stocks, what's your take on inflation. I so we've 0:11:11.240 --> 0:11:13.800 just come off of a second quarter earning season, and 0:11:13.920 --> 0:11:17.440 I can tell you almost universally, every single company is 0:11:17.480 --> 0:11:20.920 talking about inflation, and that inflation is are there in 0:11:20.960 --> 0:11:24.040 the form of raw materials, it's in the form of wages, 0:11:24.160 --> 0:11:28.400 it's in the form of freight and logistics, and and 0:11:28.640 --> 0:11:31.040 for some companies they can you know, pass it through 0:11:31.040 --> 0:11:34.400 to customers and whether that's consumers or whether that's you know, 0:11:34.440 --> 0:11:37.319 business to business customers. And so I do think that 0:11:37.360 --> 0:11:42.560 inflation is real. And you know what I'm perhaps a 0:11:42.600 --> 0:11:45.920 bit more concerned about is that the alleviation that many 0:11:45.960 --> 0:11:48.559 companies were hoping for in the back half of this 0:11:48.640 --> 0:11:53.680 year and into two seems to be maybe being pushed 0:11:53.720 --> 0:11:56.320 off to the right. And the reason I say that is, 0:11:56.559 --> 0:11:58.840 you know, the delta variant um. You know, for for 0:11:58.880 --> 0:12:02.319 certain companies that have supply chains still in Southeast Asia 0:12:02.320 --> 0:12:05.400 where plants are being shut down for weeks. Uh, you know, 0:12:05.440 --> 0:12:09.560 they're just not yet seeing the looseness in the supply 0:12:09.640 --> 0:12:12.160 chains that we would hope for. So I do think 0:12:12.200 --> 0:12:16.160 that inflation is there. I do believe that companies are 0:12:16.200 --> 0:12:20.000 going to price it through as much as possible, and 0:12:20.160 --> 0:12:26.400 it could, as you said, inflate the economy higher. All right, 0:12:27.160 --> 0:12:28.800 I think that's all we have time for unfortunately, but 0:12:28.840 --> 0:12:31.000 hopefully we can get you back Schtel, because it's fascinating, 0:12:31.440 --> 0:12:34.520 um to get your take on this, especially as you know, 0:12:34.600 --> 0:12:37.440 typically people come on here and talk only about the 0:12:37.440 --> 0:12:41.040 big cap stocks. UM. I guess in this market it's 0:12:41.080 --> 0:12:43.560 all about Mega tex, right, So it's great to hear 0:12:43.600 --> 0:12:46.760 from a small and MidCap growth portfolio manager. Sheetile Prasad 0:12:47.200 --> 0:12:51.520 from Jennison Associates talking to us about the expected impact 0:12:51.640 --> 0:12:56.520 of the infrastructure deal, the possibility of more taxes. I think, sadly, 0:12:56.600 --> 0:13:00.839 that's always almost an inevitability, um, right. So I mean 0:13:00.880 --> 0:13:03.319 sadly for those of us who don't like to pay taxes. Well, 0:13:03.360 --> 0:13:05.880 and with the evaluations, I think she had a good 0:13:05.880 --> 0:13:08.440 point of the markets might not be ready for and 0:13:08.480 --> 0:13:10.600 she had a good point. With the five fifty billion 0:13:10.640 --> 0:13:12.400 dollar bill, we're not looking at it, but with the 0:13:12.440 --> 0:13:14.760 three and a half trilling dollar bill, we could be 0:13:14.800 --> 0:13:17.400 looking at higher taxes. And it's just all a matter 0:13:17.440 --> 0:13:20.000 of how the markets can be prepared for that. Mad 0:13:20.640 --> 0:13:23.120 absolutely um, and I think that's one of the problems 0:13:23.120 --> 0:13:24.800 that a lot of Congress people have with it. Like 0:13:27.080 --> 0:13:29.440 James Rosst Joins, a ce IO and founding partner of 0:13:29.480 --> 0:13:34.080 Coast Capital and James Bitcoin. You know, everyone is calling 0:13:34.120 --> 0:13:36.080 for a crash at thirty grand and now we're back 0:13:36.120 --> 0:13:38.640 up at forty six thousand, three thirteen. What's going on? 0:13:40.600 --> 0:13:43.160 I nice to do, nice to be with you. Look, 0:13:43.200 --> 0:13:46.120 I really wouldn't call myself an expert on bitcoin. We 0:13:46.600 --> 0:13:49.959 really are focused on gold and gold miners where we 0:13:50.000 --> 0:13:52.240 have some very specific thoughts journey and so far as 0:13:52.320 --> 0:13:55.880 inflation is concerned. The problem we have with bitcoin is 0:13:56.360 --> 0:13:59.400 um It's adopted by a lot of people who really 0:13:59.440 --> 0:14:01.800 want to see go up, but there really are no 0:14:02.040 --> 0:14:05.080 natural buyers for it. I don't think over and above 0:14:05.120 --> 0:14:08.240 financial speculators, um. And there seems to be a lot 0:14:08.240 --> 0:14:11.120 of financial speculators, more than ever before, and the amount 0:14:11.160 --> 0:14:13.520 of capital in the hand of speculators is much greater 0:14:13.559 --> 0:14:16.040 than ever before. And you can probably blame very low 0:14:16.080 --> 0:14:20.120 interest rates for that. The problem with with Bitcoin rather 0:14:20.200 --> 0:14:24.800 than things like etherium or other coins is it's just flawed. 0:14:24.960 --> 0:14:29.440 It seems to us destined to be worth if not 0:14:29.600 --> 0:14:32.520 worth less, then worth certainly a lot less than where 0:14:32.520 --> 0:14:35.600 it is today, simply because you know, it's a very 0:14:35.640 --> 0:14:40.000 inefficient still mechanism for for the transfer of value from 0:14:40.000 --> 0:14:41.720 one person to another, which is what you need as 0:14:41.760 --> 0:14:44.880 a currency, and that is the store of value. You know. 0:14:45.120 --> 0:14:48.840 I just don't think that Bitcoin is the best blockchain 0:14:48.920 --> 0:14:52.160 based cryptocurrency will ever come up with. You know, Etherium 0:14:52.200 --> 0:14:56.520 is already a superior um platform um. And so why 0:14:56.520 --> 0:14:58.440 would I want to buy bitcoin when I know that, 0:14:59.240 --> 0:15:01.280 you know, and also at the point with a better 0:15:01.320 --> 0:15:05.840 technology is guaranteed to be developed, already has been developed, 0:15:05.840 --> 0:15:09.120 and let's all that bitcoin too or ethereum, and I 0:15:09.200 --> 0:15:13.080 know that something even better will be developed. Why does 0:15:13.120 --> 0:15:18.080 anybody want to buy gold? Uh? Well, people look a 0:15:18.160 --> 0:15:21.160 number of reasons. First of all, have you ever, you know, 0:15:21.240 --> 0:15:23.840 gone to a really nice dinner with you know, like 0:15:24.000 --> 0:15:27.120 like like you know, someone who were very nice jewelry 0:15:27.400 --> 0:15:30.120 and that makes a certain impact. Have you ever gone 0:15:30.120 --> 0:15:32.920 to Paris and marvel that how beautiful it is? And 0:15:32.960 --> 0:15:36.240 have you noticed how the rooftops are guilded? Have you 0:15:36.240 --> 0:15:39.600 you know, when you got married? What did you you know? 0:15:40.040 --> 0:15:42.520 If you if you are married, and and and anyone 0:15:42.520 --> 0:15:45.600 who's married has my sympathies man or woman. By the way, 0:15:46.520 --> 0:15:48.680 when you got married, what is the how did you 0:15:48.720 --> 0:15:52.720 convey your love? You know, gold is and has been 0:15:52.840 --> 0:15:58.160 and will doubtless remain the one that commodity that has 0:15:58.200 --> 0:16:00.160 been a store of value that has been chair is 0:16:00.560 --> 0:16:03.520 by people around the world for millennia and will continue 0:16:03.560 --> 0:16:06.600 to be. And guess what Central bankers who know a 0:16:06.600 --> 0:16:10.080 whole lot more about um um financing stores of value 0:16:10.240 --> 0:16:13.240 than than I do. Certainly you know, are not buying bitcoins. 0:16:13.240 --> 0:16:15.480 They're buying goal and they're maybe they're they're doing their 0:16:15.480 --> 0:16:17.880 best to outlaw bitcoin, you know. And I think that 0:16:18.000 --> 0:16:21.160 from never mind uhum the concerns that I just expressed, 0:16:21.160 --> 0:16:24.760 but from environmental concerns perspective, and also because central banks 0:16:24.800 --> 0:16:27.600 want to have an ever tight equip on their local economies. 0:16:27.800 --> 0:16:31.040 From that perspective as well, I think that they will 0:16:31.080 --> 0:16:33.880 want to see people certainly not adopt bitcoin or not 0:16:34.000 --> 0:16:38.440 adopt you know, these blockchain based currencies with which to 0:16:38.480 --> 0:16:41.240 conduct transactions in the countries. I mean and just yeah, 0:16:41.240 --> 0:16:45.440 there are so many hurdles that bitcoin, blockchain based currencies, uh, 0:16:45.480 --> 0:16:53.840 cryptocurrencies face. Um, but tas you know, you know, Matt's 0:16:53.880 --> 0:16:55.720 not going to be happy. I'm going to digress a 0:16:55.720 --> 0:16:59.560 little bit from bitcoin and blockchain. You mentioned inflation when 0:16:59.600 --> 0:17:02.360 you're talking talking about gold. We've had a lot of 0:17:02.400 --> 0:17:04.879 moves in the commodities as of late. You had lumber 0:17:04.960 --> 0:17:08.040 up and lumber down, copper up and copper down. What 0:17:08.200 --> 0:17:13.000 are the moves and commodities telling you about that inflation? Well, 0:17:13.080 --> 0:17:15.560 inflation is upon us and it's real. I have I 0:17:15.640 --> 0:17:18.359 have a lot of land in upstate New York that 0:17:18.400 --> 0:17:20.119 I bought a long time ago, and I have a 0:17:20.160 --> 0:17:22.399 lot of trees. And the prices that I'm getting for 0:17:22.600 --> 0:17:26.600 the offered, Um, I'm fancy myself and environmentally, so I'm 0:17:26.640 --> 0:17:29.520 not selling my trees, but the prices that I'm getting offered. 0:17:29.560 --> 0:17:31.959 You know, are are are getting to be very attractive. 0:17:32.280 --> 0:17:35.560 Um So, even now with lumber prices having come down, 0:17:35.560 --> 0:17:37.800 they're so meaningfully above stating what I'm getting offered is 0:17:37.800 --> 0:17:41.200 meaningfully above where where I was maybe about two years ago. Um. 0:17:41.680 --> 0:17:43.960 You know, I think that inflation is upon us. You 0:17:44.200 --> 0:17:48.280 come up, have the most important injection of money into 0:17:48.320 --> 0:17:51.919 global systems and not have it impact the prices of 0:17:52.000 --> 0:17:54.919 goods that are limited and supplying limited and production you 0:17:55.080 --> 0:17:58.160 just cannot. And here's where I think that gold, if 0:17:58.200 --> 0:18:00.439 I may have just finished up on that topic, is 0:18:00.440 --> 0:18:04.159 specifically interesting. Gold has been the barometer often creation for 0:18:04.200 --> 0:18:06.880 a long time. It certainly isn't acting like it now. 0:18:07.119 --> 0:18:08.800 And I think that that's because one of the main 0:18:08.880 --> 0:18:12.760 mechanisms of that clock currently is out of order. That 0:18:12.840 --> 0:18:16.360 mechanism being industry of demand for gold and consumer demands 0:18:16.400 --> 0:18:18.840 for gold. Seventy percent of the gold that is produced 0:18:18.880 --> 0:18:22.400 around the world goes into the jewelry market. People. Um uh, 0:18:22.400 --> 0:18:24.720 And you know I would, I mean give me I'm 0:18:24.760 --> 0:18:29.080 from you know, but like mostly women by gold, you know, 0:18:29.240 --> 0:18:31.679 to to as as as part of the way that 0:18:32.000 --> 0:18:34.520 you know to to basically in the form of jewelry 0:18:34.520 --> 0:18:36.439 which they like to wear, and you buy jewels and 0:18:36.440 --> 0:18:39.639 you wear jewelry when you're interacting with others. Um uh. 0:18:39.760 --> 0:18:44.439 And because of lockdowns still in effect. Um if not 0:18:44.600 --> 0:18:48.719 formally then at least personally around the world. You know, 0:18:48.960 --> 0:18:52.359 jewelry sales are down up to you know, depending on 0:18:52.400 --> 0:18:54.760 the geography year over year, right, And so I think 0:18:54.760 --> 0:18:56.480 that when we come out of this and people begin 0:18:56.560 --> 0:18:59.400 to circulate, you have a double whammy of It's it's 0:18:59.440 --> 0:19:01.080 a stounding if you think about it, that the gold 0:19:01.119 --> 0:19:05.040 price hasn't crashed, given the fact that like over fifty 0:19:05.400 --> 0:19:08.080 of sales going to a sector where demand is down 0:19:08.080 --> 0:19:11.479 like year over year. So we've been thinking about I've 0:19:11.480 --> 0:19:13.640 been thinking about getting a grill myself, but I wasn't 0:19:13.680 --> 0:19:15.480 able to get out and I might do it now. 0:19:16.000 --> 0:19:18.439 It's not just the women, you know, sometimes I like 0:19:19.200 --> 0:19:23.560 some big gold chains. You could pull it off, you know, 0:19:23.600 --> 0:19:26.000 maybe in Jesus with the ruby eyes. That's always a 0:19:26.000 --> 0:19:28.400 good look that never goes out of stop. But all 0:19:28.480 --> 0:19:32.360 joking aside, I mean, it's astounding to me. You can 0:19:32.480 --> 0:19:35.119 buy you can go to Subby's or Christy's or auction 0:19:35.160 --> 0:19:39.479 houses and you can buy big admittedly gaudy you know, 0:19:40.280 --> 0:19:43.440 gold jewelry or whatever, for like less than the cost 0:19:43.480 --> 0:19:46.080 of the actual medal um. And so I think that 0:19:46.119 --> 0:19:49.040 there's anyway with cold. I do think that the one 0:19:49.080 --> 0:19:51.320 part there are two things people don't think about. A 0:19:51.440 --> 0:19:54.359 jewelry demand down has been weighing, and we'll continue to 0:19:54.359 --> 0:19:56.600 weigh until we basically come out of this and decide, 0:19:56.800 --> 0:19:59.280 you know, and have her the immunity, or basically get 0:19:59.280 --> 0:20:01.439 to a point where we at to full circulation, whatever 0:20:01.480 --> 0:20:02.879 it is. I think they will get there over the 0:20:02.960 --> 0:20:04.880 next couple of years, and I'm not on the hurry 0:20:04.920 --> 0:20:06.800 for us to get there, because the longest gold prices 0:20:06.840 --> 0:20:08.800 the press that happier I am becau I'm buying amazing 0:20:08.840 --> 0:20:11.480 companies that I'm buying at two times cash you're buying 0:20:11.520 --> 0:20:15.399 the I'm buying miners at two times cash flow. But 0:20:15.440 --> 0:20:17.880 I'm assuming that I only get fifteen hundred pounds of coal. 0:20:18.320 --> 0:20:21.160 We're at eighteen hundred now at fifteen hundred, I'm buying 0:20:21.200 --> 0:20:23.640 them at two times cash flow. So but the other 0:20:23.680 --> 0:20:25.879 thing that people don't understand about gold is, you know, 0:20:26.000 --> 0:20:28.879 quite like bitcoin, although in the case of bitcoin it's artificial. 0:20:28.960 --> 0:20:31.160 In the case of goal. It's it's it's got made 0:20:31.560 --> 0:20:33.199 um if you believe in God. That's a whole lot 0:20:33.200 --> 0:20:39.760 of discussion perhaps for as getting dangerous. We're getting dangerous here. Look, 0:20:39.840 --> 0:20:41.880 by the time you talk about grills and heavy chains, 0:20:41.960 --> 0:20:45.360 you've already already waked right on tread on. Davis there soory, 0:20:45.359 --> 0:20:48.480 So I'm just following your cues. But with gold, what 0:20:48.560 --> 0:20:51.680 people don't understand is production of gold is declining around 0:20:51.720 --> 0:20:54.800 the world, is declined by fifty over the next ten years. 0:20:55.080 --> 0:20:56.800 For every ounce of gold that we're taking out of 0:20:56.840 --> 0:20:59.800 the ground. Were only discovering your point two ounces. So 0:21:00.200 --> 0:21:04.000 the companies that have long reserves, long mine life and 0:21:04.119 --> 0:21:08.520 safe jurisdictions, these are ever more precious assets whose prices 0:21:08.520 --> 0:21:11.200 and valuations have never been as low as they are today. 0:21:11.640 --> 0:21:13.960 It's it's a you know, so we're huper excited about 0:21:14.000 --> 0:21:16.280 the work we're doing in the space. It's a it's 0:21:16.320 --> 0:21:19.520 a technically very difficult space to get your hands around, 0:21:19.560 --> 0:21:22.200 thinking about five years to put together our internal due 0:21:22.200 --> 0:21:27.080 diligence competencies. But but avoid it's it's super attractive sector. James, 0:21:27.160 --> 0:21:29.600 go cross asset with me, and let's get away from 0:21:29.640 --> 0:21:31.320 some of the gold in the commodities and take a 0:21:31.320 --> 0:21:33.600 look at Europe. I think what always stands out to 0:21:33.640 --> 0:21:37.160 me is the lower valuations in Europe. And people come 0:21:37.240 --> 0:21:40.600 on the program and they say, yeah, but valuations are 0:21:40.640 --> 0:21:43.960 lower there for a reason. Some of that is the 0:21:44.080 --> 0:21:47.399 tilt towards cycle goals and value. As we know in 0:21:47.440 --> 0:21:50.120 the US you have more of a growth weaiting with 0:21:50.200 --> 0:21:53.920 this delta variant sort of creeping up. Do you buy 0:21:53.960 --> 0:21:56.880 Europe just because it's value cheaper or is it cheaper 0:21:56.920 --> 0:22:01.359 for reason? Well be the important question, you know, some 0:22:01.440 --> 0:22:03.720 of the most look we I've been investing in Europe 0:22:03.720 --> 0:22:06.440 for most of my for twenty five years now, um 0:22:06.560 --> 0:22:09.280