WEBVTT - Saxo’s 'Outrageous' Forecast Sees Trump Blowing Up the Dollar 0:00:03.080 --> 0:00:19.119 Bloomberg Audio Studios, Podcasts, Radio News. Welcome to Marin Talks Money, 0:00:19.120 --> 0:00:21.480 the podcast so much people who know the markets explain 0:00:21.560 --> 0:00:24.160 the markets. I'm Maren Sums at Web. This week, I'm 0:00:24.160 --> 0:00:27.400 speaking with John Hardy, chief macro strategist at Saxo Bank. 0:00:28.000 --> 0:00:30.280 Every year for at least the last two decades, Saxo 0:00:30.360 --> 0:00:34.280 Bank is released their annual Outrageous Predictions list, and today's guest, 0:00:34.320 --> 0:00:36.879 John Hardy, has been involved in those predictions since the 0:00:36.960 --> 0:00:38.200 list began? Is that right, John? 0:00:38.600 --> 0:00:40.800 Since the last began the year after the list began. 0:00:40.840 --> 0:00:43.520 I believe he began. Okay, cool enough, You've got big 0:00:43.520 --> 0:00:46.839 shoes to fill here, because we normally talk Justine Jacobson 0:00:46.880 --> 0:00:49.560 about this and he has now retired. I believe, yes, 0:00:49.840 --> 0:00:51.320 we'll trying to get seen on another time for it 0:00:51.400 --> 0:00:54.360 for a retirement debrief. Right for now, you're the guy 0:00:54.400 --> 0:00:56.120 you're gonna have to fill his shoes. Thanks so much 0:00:56.160 --> 0:00:56.920 for joining us today. 0:00:56.960 --> 0:00:58.840 I'll do my best. Thank you. I'm glad to be here. 0:00:58.920 --> 0:01:00.560 I'm feeling going to do pretty well. I have a 0:01:00.600 --> 0:01:03.040 list of these outrageous predictions in front of me, and 0:01:03.080 --> 0:01:04.600 we're not going to talk about all of them. Because 0:01:04.880 --> 0:01:06.720 listeners can go to your website right and have a 0:01:06.720 --> 0:01:09.679 look at them, the ones we don't talk about today. Sure, yeah, 0:01:10.840 --> 0:01:13.000 if you want to hear more about this, listeners, go 0:01:13.080 --> 0:01:14.840 look at the website and you can see the ones 0:01:14.880 --> 0:01:16.360 we don't talk about today. But we're going to get 0:01:16.360 --> 0:01:19.840 through quite a lot of them because they are relatively outrageous. 0:01:20.040 --> 0:01:22.240 So the first one, and I'm not going to do 0:01:22.280 --> 0:01:24.880 them in chronological order, but the first one is Trump 0:01:24.959 --> 0:01:28.880 two point zero blows up the US dollar. What's going 0:01:28.920 --> 0:01:29.319 to happen? 0:01:29.680 --> 0:01:33.240 Well, again, these are outrageous predictions. They're not our forecasts 0:01:33.280 --> 0:01:35.960 for the future. This is not our sort of baseline 0:01:36.240 --> 0:01:37.920 outlook for what's happen for are. 0:01:37.840 --> 0:01:40.440 You taking any further? If any of these things happen, 0:01:40.920 --> 0:01:43.720 you're going to call them forecast, not outrageous predictions, aren't you? 0:01:43.760 --> 0:01:46.039 If this actually happens next time we talk about it, 0:01:46.080 --> 0:01:47.840 you're going to say as a forecast. 0:01:48.280 --> 0:01:50.520 Well, no, I don't think so, because they've rarely come true, 0:01:50.520 --> 0:01:53.040 but occasionally they do. And that's the idea here, is 0:01:53.040 --> 0:01:55.760 to take some very serious issues that we see in 0:01:55.800 --> 0:01:58.720 the background, whether it's too political or financial markets otherwise, 0:01:58.800 --> 0:02:00.840 and say there's a pressing things going on. Maybe there's 0:02:00.840 --> 0:02:02.640 a lot of consensus in this case that Trump two 0:02:02.640 --> 0:02:05.320 point zero actually should mean a strong dollar. And what 0:02:05.360 --> 0:02:07.720 we're saying is maybe we have this wrong. There are 0:02:07.760 --> 0:02:10.280 ways that we could actually see this resulting in a 0:02:10.400 --> 0:02:13.280 much weaker dollar, I mean blows up, meaning of course 0:02:13.360 --> 0:02:15.360 it goes down, not that it goes up or in 0:02:15.360 --> 0:02:17.680 flights that it goes down the US dollar. 0:02:17.760 --> 0:02:19.000 Okay, so what's the mechanism. 0:02:19.320 --> 0:02:22.640 Yeah, well, the mechanism could be from just about any direction. 0:02:22.760 --> 0:02:25.960 But one of those is the sort of post Plaza 0:02:26.000 --> 0:02:29.440 Accord reality that we have economies now needing to act 0:02:29.440 --> 0:02:32.480 more in their self interest, a multipolar world. No longer 0:02:32.600 --> 0:02:36.560 the sort of global landscape of the US hegemony rules 0:02:36.600 --> 0:02:39.560 all into one global reserve currency to rule them all. 0:02:39.880 --> 0:02:44.120 But we have multiple currencies and multiple regions acting more 0:02:44.120 --> 0:02:46.119 in their self interest. And this has really been brought 0:02:46.120 --> 0:02:50.000 about from the US side because the global reserve dollars, 0:02:50.040 --> 0:02:52.519 the global reserve currency, is just not working for the 0:02:52.600 --> 0:02:55.000 US economy anymore, and so we have a much more 0:02:55.400 --> 0:02:58.480 self interested US and nationalist economics if you want to 0:02:58.480 --> 0:03:02.200 call it. The threat of terror US et cetera, and 0:03:02.360 --> 0:03:05.440 almost a weaponization and really it is a weaponization of 0:03:05.480 --> 0:03:08.160 the US dollar for those that don't want to play ball. 0:03:08.680 --> 0:03:11.720 And therefore, major trading partners, major powers in the world 0:03:11.800 --> 0:03:14.600 outside of the US will be seeking alternatives, and there 0:03:14.760 --> 0:03:17.480 they already are to a degree, but this will be 0:03:17.520 --> 0:03:19.800 something that could really pick up pace in twenty twenty five. 0:03:20.080 --> 0:03:22.200 And this has been discussed for so long that there's 0:03:22.240 --> 0:03:23.919 going to be an alternative to the US dollars that 0:03:23.960 --> 0:03:26.200 everyone's had it with always having to trade in dollars, 0:03:26.200 --> 0:03:29.040 and they're going to start trading in various different currencies. 0:03:29.040 --> 0:03:31.720 The bricks are going to create their own joint trading 0:03:31.760 --> 0:03:34.560 block exactly. These things have been this conversation has been 0:03:34.600 --> 0:03:37.240 around for ages. But there is the idea here there's 0:03:37.240 --> 0:03:40.240 a possibility that it is Trump's tariffs that could actually 0:03:40.240 --> 0:03:40.880 make it happen. 0:03:41.080 --> 0:03:44.480 Yeah, and it's kind of interesting. You see almost some 0:03:44.520 --> 0:03:48.240 foreshadowing of this when you have Trump saying, well, if 0:03:48.240 --> 0:03:50.280 the bricks current, if the bricks countries are going to 0:03:50.280 --> 0:03:52.800 seek to, you know, trade outside of the US dollar, 0:03:52.840 --> 0:03:54.440 We're going to slap one hundred percent tariffs on all 0:03:54.480 --> 0:03:57.320 of them. Well, it almost becomes a self fulfilling conclusion. 0:03:57.800 --> 0:04:00.560 If that is going to be the future of trade relationlationships. 0:04:00.760 --> 0:04:03.720 This kind of tit for tat a measure, So it's 0:04:03.760 --> 0:04:07.280 not a trivial thing to do to create a new currency. 0:04:07.720 --> 0:04:10.480 And of course the dollars days are not done, but 0:04:10.520 --> 0:04:12.960 it's a matter of degrees and a matter of perhaps 0:04:13.040 --> 0:04:15.600 rolling over and something new starting, rather than that this 0:04:15.640 --> 0:04:17.360 is something that's going to happen overnight. So I don't 0:04:17.360 --> 0:04:19.559 want to give the impression, even as an outrageous prediction, 0:04:19.640 --> 0:04:22.680 that we're talking about some kind of sudden end to 0:04:22.720 --> 0:04:26.400 the US dollar. It's about new potential currencies and ways 0:04:26.440 --> 0:04:27.680 to trade coming about. 0:04:27.880 --> 0:04:30.240 Yeah. But then there's a fascinating little bit in the 0:04:30.240 --> 0:04:33.279 middle of the summary of this where it says, while 0:04:33.360 --> 0:04:36.120 slashing deficits with the help of an Elon Musk run 0:04:36.120 --> 0:04:40.160 Department of Government Efficiency Efficiency or DOGE, and that implication 0:04:40.200 --> 0:04:41.120 that really is possible. 0:04:41.760 --> 0:04:44.520 Well, it's possible, certainly possible in theory. There's plenty of 0:04:44.600 --> 0:04:47.080 government bloat that could be attacked. But of course there 0:04:47.120 --> 0:04:49.360 are also political constituents that would not be happy to 0:04:49.360 --> 0:04:51.560 see their funding pulled. And I don't think we even 0:04:51.600 --> 0:04:54.480 necessarily need to see that to get a weeker dollar. 0:04:54.520 --> 0:04:57.400 But we have to remember that fiscal a weak fiscal 0:04:57.440 --> 0:05:00.200 impulse is also very negative for a US dollar, even 0:05:00.200 --> 0:05:02.600 if we don't go the route of the dollar weakening, 0:05:02.680 --> 0:05:06.839 because they inflate further deficits and the FED has to 0:05:06.839 --> 0:05:09.360 do some sort of new QE or something to keep 0:05:09.400 --> 0:05:13.560 the US treasury market from seizing up. If we have 0:05:13.760 --> 0:05:15.560 the dose suddenly coming in in a big way and 0:05:15.560 --> 0:05:18.080 cutting spending, that's also quite negative for the US dollar, 0:05:18.120 --> 0:05:19.280 also a negative for US growth. 0:05:19.400 --> 0:05:21.160 Yeah, I'm partly to do with this falling supply of 0:05:21.240 --> 0:05:24.400 US dollars. Yes, yes, Okay, Now let's go onto the 0:05:24.400 --> 0:05:27.200 potential market impact. Actually, I'm going to say it sounds 0:05:27.200 --> 0:05:30.279 pretty good. The crypto market quadruples to more than ten 0:05:30.320 --> 0:05:32.680 trillion dollars, and I think probably by crypto we're really 0:05:32.680 --> 0:05:34.880 talking about bitcoin, or are we talking about all types 0:05:34.920 --> 0:05:35.400 of crypto. 0:05:36.200 --> 0:05:37.960 It was just the crypto market in general. We don't 0:05:38.040 --> 0:05:40.240 like to talk specifics and we talk crypto. It's just 0:05:40.279 --> 0:05:43.080 not an area we like to make a big profile, 0:05:43.480 --> 0:05:45.039 cut a big profile in the market. So it's just 0:05:45.040 --> 0:05:47.360 a general idea that one of these alternatives could be 0:05:47.360 --> 0:05:49.960 the crypto space. And read that as you will. 0:05:50.040 --> 0:05:52.440 Interesting, you'll definitely get hate mail because almost everybody else 0:05:52.440 --> 0:05:55.320 who comes on this podcast likes to divide crypto into bitcoin, 0:05:55.760 --> 0:05:58.200 which is real, and crypto, which they considered to be 0:05:58.440 --> 0:06:01.760 less real. I'll set up for your hate mail director. 0:06:02.640 --> 0:06:05.560 So manages the USO oft falls twenty percent again major currencies, 0:06:05.560 --> 0:06:10.159 and thirty percent versus gold. The US economy continues to reflate, 0:06:10.240 --> 0:06:13.599 but wages keep up with goods inflation as production resources 0:06:13.720 --> 0:06:17.320 reshore to the US US exporters advantage. I mean it 0:06:17.360 --> 0:06:19.960 sounds great. Yeah, it sounds great for the US. 0:06:20.200 --> 0:06:21.960 It does sound good for the US, except there will 0:06:21.960 --> 0:06:25.000 be inflation. I think the key for this to be 0:06:25.080 --> 0:06:27.880 something that the US can can pull off, and there's 0:06:27.920 --> 0:06:30.880 so many ifs involved here would be potentially sort of 0:06:30.960 --> 0:06:33.480 selective inflation. I mean, the US is very well supplied 0:06:33.520 --> 0:06:36.120 in terms of energy from its own resources, from food. 0:06:36.560 --> 0:06:38.600 So if they're able to keep those key categories down, 0:06:38.680 --> 0:06:42.600 cost of living categories down in reasonable inflation levels relative 0:06:42.640 --> 0:06:44.640 to wages in particular, and people don't feel like they're 0:06:44.640 --> 0:06:48.039 getting poor from paycheck to paycheck, I think the US 0:06:48.160 --> 0:06:53.159 public could potentially not be too upset if some consumer goods, 0:06:53.440 --> 0:06:56.720 namely those produced in China and elsewhere are suddenly seeing 0:06:56.760 --> 0:06:58.960 much higher rates of inflation than those other costs of 0:06:59.040 --> 0:07:00.960 living related goods. 0:07:01.080 --> 0:07:03.000 Yeah, well, people don't mind inflation as long as their 0:07:03.000 --> 0:07:05.000 real income remains the same arises, right. 0:07:05.080 --> 0:07:07.120 Oh, real income in what category? Is the sort of 0:07:07.120 --> 0:07:08.560 the nuance I'm trying to introduce there? 0:07:08.560 --> 0:07:11.680 But yes, in general, yes, okay, Well we touched on energy, 0:07:12.360 --> 0:07:15.360 so let's go straight on to another outrage of prediction. 0:07:15.720 --> 0:07:20.200 Electrification boom ends Opek. Now it's about electrical vehicles. As 0:07:20.240 --> 0:07:23.440 electrical vehicles become more affordable, could oil rich Opek become 0:07:23.480 --> 0:07:25.920 irrelevant in twenty twenty five and find itself on the 0:07:25.960 --> 0:07:28.880 ash heap of history. Now this comes at a time 0:07:29.120 --> 0:07:31.400 when all of our newspapers are full of stories about 0:07:31.440 --> 0:07:34.800 how nobody wants to in EV and the manufacturers can't 0:07:34.840 --> 0:07:37.400 sell enough evs, and they'll all just worry about whether 0:07:37.440 --> 0:07:40.680 we can really phase out petrol and diesel cars, and 0:07:40.680 --> 0:07:43.120 whether it's really possible for the government to continue to 0:07:43.400 --> 0:07:46.880 find manufacturers for not selling enough evs, etc. So the 0:07:46.920 --> 0:07:49.680 general mood at the moment suddenly in the UK is 0:07:49.840 --> 0:07:52.120 really really anti EV. 0:07:52.640 --> 0:07:54.880 In the UK. Yes, and the UK you also have 0:07:54.960 --> 0:07:59.360 a terrible infrastructure for charging evs, and that is the 0:07:59.440 --> 0:08:02.520 key challenge. I think the evs themselves have gotten to 0:08:02.760 --> 0:08:05.960 incredible levels of range, and the efficiency of an EV 0:08:06.080 --> 0:08:09.400 is quite remarkable because it's so much better an energy 0:08:09.560 --> 0:08:13.120 source to use electricity rather than fossil fuels, because you're 0:08:13.120 --> 0:08:15.400 getting so much waste heat with fossil fuels relative to 0:08:15.440 --> 0:08:19.200 the efficiency to the kinetic needs to turn wheels with 0:08:19.480 --> 0:08:22.600 an electric motor. So for those countries where they build 0:08:22.600 --> 0:08:24.960 out the infrastructure, the transition can be quicker if you 0:08:25.040 --> 0:08:27.560 look at a Norway, et cetera. But I think the 0:08:27.640 --> 0:08:30.160 key point here is one of rate of change, and 0:08:30.240 --> 0:08:32.440 one of the biggest markets is China, where already they 0:08:32.480 --> 0:08:35.880 are going beyond fifty percent evs. Now, in terms of 0:08:35.880 --> 0:08:39.640 the new passenger vehicle mix, at some point the Tesla, 0:08:39.720 --> 0:08:44.480 Semi or other companies would be making for hauling for 0:08:44.559 --> 0:08:47.840 hauling goods, so transport vehicles as well as passenger vehicles. 0:08:48.400 --> 0:08:50.960 And we're just talking about at some point, possibly within 0:08:51.000 --> 0:08:53.640 a year, possibly two or three. We're at peak oil 0:08:53.760 --> 0:08:55.360 in terms of the demand side, Now that there's some 0:08:55.440 --> 0:08:58.160 kind of absolute geological limit that we've reached, but we're 0:08:58.200 --> 0:09:01.480 at a demand peak, and what does the exponential decline 0:09:01.520 --> 0:09:04.640 curve look like? And if your country is reliant on 0:09:04.679 --> 0:09:08.400 oil exports, do you break ranks, produce more now rather 0:09:08.480 --> 0:09:11.400 than later, perhaps make a long term supply deal with 0:09:11.440 --> 0:09:14.800 somebody else. It's not so much about OPEK really, which 0:09:14.880 --> 0:09:16.880 is in the text to me, This is more about 0:09:17.200 --> 0:09:22.760 the thought process around peak oil demand and electrification and 0:09:22.840 --> 0:09:23.520 what does it mean. 0:09:23.760 --> 0:09:25.880 Yeah, I find this one really interesting because it's one 0:09:25.880 --> 0:09:28.160 of those ones that I think would it would genuinely 0:09:28.200 --> 0:09:32.439 be one of those things that is very very unexpected, 0:09:32.440 --> 0:09:33.680 in that I think a lot of people who don't 0:09:33.679 --> 0:09:35.520 look very carefully at the energy market might think, well, 0:09:35.520 --> 0:09:37.800 that sounds that sounds entirely reasonable. That could easily happen. 0:09:37.840 --> 0:09:40.560 That's what I expect to happen. But in fact, of course, 0:09:40.720 --> 0:09:43.320 we know that even as demand for electricity rises at 0:09:43.320 --> 0:09:46.280 the moment, so does the demand for fossil fuels. So 0:09:46.320 --> 0:09:48.800 we're still thinking rising demand for fossil fuels globally, and 0:09:48.840 --> 0:09:52.080 eighty percent of energy use globally remains fossil fueled. And 0:09:52.120 --> 0:09:54.520 even in Scandinavian countries, where I think it is is 0:09:54.559 --> 0:09:56.960 in Norway, where the majority of new cars sold are 0:09:57.040 --> 0:09:59.520 now evs but nonetheless more than eighty percent of the 0:09:59.600 --> 0:10:02.880 cars on the road remain combustion engine cause. 0:10:02.800 --> 0:10:06.360 About seventy five percent. But although ninety percent now are 0:10:06.400 --> 0:10:09.240 are evs of new cars, and it's a very small 0:10:09.280 --> 0:10:11.120 it's a very small country, but you're right, and you 0:10:11.160 --> 0:10:13.200 do have to get into not just passenger vehicles but 0:10:13.240 --> 0:10:15.640 other vehicles. And it does take many years for the 0:10:15.679 --> 0:10:18.600 replacement to fully happen. But once those evs become more 0:10:18.640 --> 0:10:20.800 attractive to own and they're easy to charge, perhaps the 0:10:22.040 --> 0:10:26.640 replacement accelerates. This of course is this is outrageous, right, 0:10:26.679 --> 0:10:29.480 but we are need to consider what does this look 0:10:29.559 --> 0:10:32.200 like in terms of a handful of years when there's 0:10:32.200 --> 0:10:35.400 a process change and a mentality change for those that 0:10:35.440 --> 0:10:38.240 are exporting oil, especially when you have a US that 0:10:38.320 --> 0:10:42.240 has created essentially two Saudi Arabias of oil production, and 0:10:42.360 --> 0:10:44.120 the first in the shale gas patch and then in 0:10:44.120 --> 0:10:45.800 the shale oil patch. And it really is important to 0:10:45.800 --> 0:10:49.400 differentiate here on talking oil. We know that gas is 0:10:49.440 --> 0:10:51.520 still growing and this applies will probably grow for at 0:10:51.559 --> 0:10:53.920 least another decade or if not more. So, it really 0:10:53.960 --> 0:10:56.080 is the oil side of things that we're talking about. 0:10:56.120 --> 0:10:59.560 Oil and specifically used for transports that it's biggest current use. 0:11:00.120 --> 0:11:02.120 It's interesting, and you could have had another outrage of 0:11:02.160 --> 0:11:05.000 prediction on a similar vein suggesting that the price of 0:11:05.040 --> 0:11:07.200 oil is going to collapse because the supply of oil 0:11:07.240 --> 0:11:10.080 coming out form of the US under Trump two point 0:11:10.160 --> 0:11:11.600 zero would be so high. 0:11:12.040 --> 0:11:14.360 I think that's less likely because a lot of the 0:11:14.520 --> 0:11:17.120 new production that's been brought online in the US shale, 0:11:17.120 --> 0:11:20.120 and it's much easier by the nature of US shale 0:11:20.240 --> 0:11:24.760 many many small fields, many many small sources to turn 0:11:24.840 --> 0:11:28.480 up and turn down production, versus the large field model 0:11:28.480 --> 0:11:31.840 where that's not really feasible to so quickly and dynamically 0:11:31.880 --> 0:11:35.760 change the production rates. So, you know, without being oil 0:11:35.760 --> 0:11:37.840 industry expert, I think we do have a very different 0:11:38.200 --> 0:11:41.199 structure to how the supply and demand, how supply can 0:11:41.240 --> 0:11:44.280 respond to demand and price relatives to previous regime. 0:11:44.720 --> 0:11:47.280 Okay, well lit again, if you get down to read 0:11:47.280 --> 0:11:50.080 your wit at the bottom. One potential market impact sounds great, 0:11:50.600 --> 0:11:53.679 absolutely great. Crude ol slums and price, it's a boom 0:11:53.720 --> 0:11:57.120 for airlines, We'll get to travel more. Luxury travel booms. Right, 0:11:57.320 --> 0:12:00.440 chemical paint and time manufacture is free to logistics companies, 0:12:00.440 --> 0:12:03.679 they'll boom too. This sounds amazing. The market balance is 0:12:03.720 --> 0:12:06.680 out quickly, oil prices cyber to stabilize again. You know 0:12:06.760 --> 0:12:09.880 that's good. Higher cost suppliers, particularly North America's shut down 0:12:09.880 --> 0:12:13.040 expensive shale oil production. People won't complain about that too much, 0:12:13.040 --> 0:12:15.199 will they? And the only people who end up in 0:12:15.200 --> 0:12:17.959 a bad way are the Japanese car manufacturers who find 0:12:18.000 --> 0:12:20.280 themselves in a desperate race to catch up with some 0:12:20.400 --> 0:12:23.920 other ev plants. Will anybody else suffer badly from this? 0:12:23.920 --> 0:12:25.440 This is almost entirely good news. 0:12:25.600 --> 0:12:27.440 Well, some of the open countries themselves. 0:12:27.559 --> 0:12:29.840 The countries of course slightly forgotten about. 0:12:29.600 --> 0:12:34.480 That too, reliant on their oil revenues for for their 0:12:34.559 --> 0:12:36.199 for the national income. 0:12:35.840 --> 0:12:38.280 And they're all aware of that, right, All those countries 0:12:38.679 --> 0:12:41.000 all have been trying to diversify, move into different areas, 0:12:41.040 --> 0:12:42.880 and we see that across the Middle East for example. 0:12:43.200 --> 0:12:45.880 We're just talking about bringing awareness forward to this is 0:12:45.920 --> 0:12:48.120 happening sort of now, in the few years. It's not 0:12:48.200 --> 0:12:51.120 just about a thirty year generation forward effort. This is 0:12:51.200 --> 0:12:53.720 a process that starts more or less now. 0:12:54.120 --> 0:12:58.400 Well maybe okay, it's not you know, you're not expecting 0:13:00.240 --> 0:13:02.319 a chance it might happen. Okay, So we're going to 0:13:02.360 --> 0:13:06.800 stick with energy. So we've just discussed one outrageous prediction 0:13:06.920 --> 0:13:09.760 being that oil becomes very cheap, and so one type 0:13:09.760 --> 0:13:12.360 of energy becomes extremely cheap. And we move along to 0:13:12.400 --> 0:13:16.079 the next outrageous prediction, and it's the US imposes AI 0:13:16.320 --> 0:13:20.160 data center tax as power prices run wild. Now, I 0:13:20.240 --> 0:13:24.120 thought this one was really interesting because I noted it. Gosh, 0:13:24.120 --> 0:13:26.080 but eight nine months ago, maybe a bit longer, the 0:13:26.120 --> 0:13:31.120 EU started discussing taxing AI in order to prevent it 0:13:31.200 --> 0:13:33.280 using so much energy. Do you remember that? 0:13:33.880 --> 0:13:36.000 I do remember that. And you also saw a microcosm 0:13:36.080 --> 0:13:38.880 here and there with the bitcoin mining the type of 0:13:39.000 --> 0:13:43.280 energy resources or electricity resources, Yeah, that that requires. So 0:13:43.800 --> 0:13:45.920 this could be an issue when we're talking about the 0:13:46.240 --> 0:13:49.559 acceleration and build out of these AI data centers. Now, 0:13:49.559 --> 0:13:51.360 of course, if you're particularly large, you're going to need 0:13:51.400 --> 0:13:53.360 to find the agreement to hook up to the grid 0:13:53.400 --> 0:13:56.520 somewhere anyway before you can even get started. But at 0:13:56.520 --> 0:14:00.680 the same time, the AI linked demand is is growing, 0:14:01.440 --> 0:14:03.800 and you're seeing the likes of a Microsoft wanting to 0:14:03.840 --> 0:14:06.640 restart an old nuclear reactor in the US three Mile 0:14:06.720 --> 0:14:10.120 Island to get resources for a data center. There you 0:14:10.160 --> 0:14:13.680 see the Amazon's Googles Oracles of the World talking nuclear 0:14:13.880 --> 0:14:20.560 small nuclear, small module reactors with very nuclear power. Super interesting. 0:14:20.600 --> 0:14:23.160 But what about between now and you're five six when 0:14:23.160 --> 0:14:25.520 that thing is done right, you have that five to 0:14:25.560 --> 0:14:26.440 six years of growth. 0:14:26.440 --> 0:14:28.880 And some are saying, well, content Koreans build them very quickly. 0:14:31.440 --> 0:14:33.800 I think still think we're talking a few years before 0:14:34.040 --> 0:14:38.040 something is available in in size to to power these things. 0:14:38.080 --> 0:14:41.280 And if if the calculation requirements there's one estimate, is 0:14:41.480 --> 0:14:43.640 it doubles every hundred days, that's a lot of doublings 0:14:44.280 --> 0:14:46.720 per hont you know, times x num one hundred days. 0:14:47.360 --> 0:14:48.960 Where's the energy going to come from? I just find 0:14:49.000 --> 0:14:51.000 I think it's interesting to think if this demand does 0:14:51.040 --> 0:14:53.920 grow at that pace, it's going to start that baselet 0:14:53.960 --> 0:14:57.000 requirement is going to start interacting with peak requirements for 0:14:57.120 --> 0:15:00.000 households and basic industries, and there will be a compon 0:15:00.000 --> 0:15:02.720 inflict there and it could mean that we actually and 0:15:02.720 --> 0:15:05.160 it's to remind people in general, we still live in 0:15:05.160 --> 0:15:07.280 a world with physical limits. Maybe we in the days 0:15:07.320 --> 0:15:10.000 of starship and space we think we don't, but there 0:15:10.040 --> 0:15:12.640 are some some physical limits that could get a bit 0:15:12.640 --> 0:15:15.120 more pressing with ent to AI. 0:15:15.120 --> 0:15:18.680 Yeah, and you're right here this inspires popular outrageous household 0:15:18.680 --> 0:15:21.640 see the utility bill skyrocket, aggravated by the huge banks 0:15:21.680 --> 0:15:24.080 and power prices for electricity consumed at home during peak 0:15:24.080 --> 0:15:26.440 load periods in the evening. So this is in the 0:15:26.520 --> 0:15:29.280 US right where we expect they'll get absolutely furious if 0:15:29.280 --> 0:15:31.120 their utility bills go up. And here we are in 0:15:31.160 --> 0:15:33.000 the UK, we just sit here watching them go up 0:15:33.040 --> 0:15:34.520 and up and up and up. We're not out on 0:15:34.560 --> 0:15:35.640 the streets. What's wrong with us? 0:15:37.120 --> 0:15:40.360 There's some specific challenges that were from twenty twenty two 0:15:40.440 --> 0:15:44.960 that happened in the UK, and plus of the transfer 0:15:45.120 --> 0:15:48.400 of the energy system here partially reliable and renewable energy 0:15:48.440 --> 0:15:52.720 and that and that's where's the baseload? These are these 0:15:52.720 --> 0:15:56.240 issues are plaguing at times when the wind doesn't blow 0:15:56.520 --> 0:15:58.280 or the sun doesn't shine enough. You don't have the 0:15:58.520 --> 0:16:01.920 storage out there to power when those when those energy 0:16:01.960 --> 0:16:04.920 resources are are down or not producing it the capacity 0:16:04.960 --> 0:16:05.240 you need. 0:16:05.360 --> 0:16:08.960 Yeah, okay, so again this could this could be good news. Right, 0:16:09.080 --> 0:16:11.560 so you write again down to your potential market impact, 0:16:11.640 --> 0:16:14.840 and here this looks like unmitigated good news. You're such, 0:16:15.000 --> 0:16:16.920 you're such an optimist. 0:16:16.760 --> 0:16:18.360 Not for those that are investing in AI if they're 0:16:18.360 --> 0:16:19.080 held back from. 0:16:18.960 --> 0:16:22.640 The for long. A massive boom in US investment in 0:16:22.920 --> 0:16:26.160 power infrastructure companies like Floor is that I said, I 0:16:26.160 --> 0:16:30.000 don't know. Yeah, yeah right, I'm signing massive new construction deals. 0:16:30.200 --> 0:16:34.280 Tesla is accelerating, MEGAPAC gets increasing attention. Long term US 0:16:34.360 --> 0:16:37.240 natural gas price is more than double, then we get 0:16:37.240 --> 0:16:37.920 a bit of inflation. 0:16:38.240 --> 0:16:41.320 Yeah. If you look at US natural gas prices specifically, 0:16:41.440 --> 0:16:43.840 they've been so absurdly cheap for so long because the 0:16:43.880 --> 0:16:47.840 shale patch in the US has delivered at incredible rates 0:16:48.280 --> 0:16:51.040 and they've capped the ability to export it. So just 0:16:51.120 --> 0:16:54.000 a realistic market price for natural gas that's still cheap 0:16:54.080 --> 0:16:56.960 is double what it is now in the it starts 0:16:57.000 --> 0:16:59.360 to point out the natural gas pricing around the world 0:16:59.440 --> 0:17:02.040 is not flat. It's very, very, very differentiated depending on 0:17:02.080 --> 0:17:05.040 where you live, because it's a difficult product to ship. 0:17:05.160 --> 0:17:07.680 Has to be liquefied and that's very energy and cost 0:17:07.720 --> 0:17:09.880 intensive to do so, and then shipped around the world 0:17:09.880 --> 0:17:12.400 in these incredibly expensive, very high tech ships. 0:17:12.560 --> 0:17:15.399 Yeah. Well, the one very good thing that could come 0:17:15.440 --> 0:17:17.639 out of this, because we know that the people running 0:17:17.680 --> 0:17:20.160 AI data centers or setting them up. Except all these 0:17:20.160 --> 0:17:23.080 companies have big tech companies. They want huge amounts of money, 0:17:23.200 --> 0:17:26.080 and if they really want cheap energy fast, they may 0:17:26.160 --> 0:17:28.119 well push forward what we were just talking about the 0:17:28.119 --> 0:17:29.960 development of SMRs that can be put up in a 0:17:30.040 --> 0:17:33.200 hurry and use very I mean, they could really accelerate 0:17:33.320 --> 0:17:36.320 these and that would be amazing, for example, for the UK, 0:17:36.960 --> 0:17:39.320 because we could start with all the ridiculous offshore wind 0:17:39.320 --> 0:17:41.320 and all that expensive stuff and the solo that hardly 0:17:41.320 --> 0:17:43.680 ever works, and we can just take up SMRs around 0:17:43.680 --> 0:17:45.720 cities all around the country. Problem solved. 0:17:46.240 --> 0:17:48.680 Yes, let's do it. But let's see how easy and 0:17:48.760 --> 0:17:50.840 cheap that is. It sounds so easy, but it takes 0:17:50.840 --> 0:17:53.280 many years and then the designs are still in design phase. 0:17:53.480 --> 0:17:56.000 There are some designs that are complete, but these things 0:17:56.040 --> 0:17:59.000 are not available in large quality. Yeah numbers yet. 0:17:59.080 --> 0:18:01.320 I get that. But as we often say on this podcast, 0:18:01.320 --> 0:18:03.240 if anyone can do it, the tech bros can, So 0:18:03.359 --> 0:18:05.880 if they're under pressure, may happen faster than it might 0:18:05.920 --> 0:18:09.520 have otherwise. Okay, that's a good one. Before I choose more, 0:18:09.560 --> 0:18:10.560 you must have a favorite. 0:18:10.640 --> 0:18:12.280 Well, we already covered my favorite, which was a Trump 0:18:12.320 --> 0:18:14.000 two point o blows up the US dollar and the 0:18:14.000 --> 0:18:16.480 consensus is one way, and you want to be outrageous 0:18:16.480 --> 0:18:18.639 by saying, well, what about this or what about so 0:18:18.720 --> 0:18:21.400 if this doesn't turn out the way expect and expecting 0:18:21.400 --> 0:18:23.320 a strong dollars, having your cake and eating it too, 0:18:23.840 --> 0:18:25.480 and the other consequences we talked about. 0:18:25.560 --> 0:18:27.920 So yeah, all right, okay, let's move on to a video. 0:18:28.000 --> 0:18:31.399 Then in video, blis to twice the value of Apple. 0:18:31.640 --> 0:18:34.400 Now here's the thing. It's kind of outrageous to people 0:18:34.440 --> 0:18:36.879 who look at some market history to think that any 0:18:36.880 --> 0:18:39.400 stock could keep growing like that and could become so big, etc. 0:18:39.840 --> 0:18:41.760 But if you look at for example, in the UK, 0:18:41.840 --> 0:18:43.960 at the top by lists of retail investors, any of 0:18:44.000 --> 0:18:46.120 the platforms, video is always up there at the top. 0:18:46.440 --> 0:18:48.639 There's a lot of people out there who are expecting this. 0:18:48.760 --> 0:18:51.480 You don't think this is outrageous at all, who think 0:18:51.520 --> 0:18:55.119 this is exactly what should happen. It's been going up 0:18:55.160 --> 0:18:57.800