WEBVTT - Neil Dwane Discusses Global Investment (Podcast) 0:00:02.279 --> 0:00:06.840 This is Masters in Business with Barry Ridholtz on Boomberg Radio. 0:00:07.480 --> 0:00:10.280 This week on the podcast, I have an extra special guest. 0:00:10.760 --> 0:00:14.360 His name is Neil Dwayne and he is the global 0:00:14.440 --> 0:00:20.640 investment strategist for Alian's Global Investors, which is the part 0:00:20.720 --> 0:00:24.880 of Alien's Proper. They own a number of different properties, 0:00:25.440 --> 0:00:28.680 Alien's Global Investors and Pimco being two of the largest 0:00:29.160 --> 0:00:32.960 uh This is really quite a fascinating conversation if you 0:00:33.040 --> 0:00:37.840 are at all interested in what makes the global economy tick, 0:00:38.320 --> 0:00:42.040 what the impact of central banks has been and will 0:00:42.080 --> 0:00:44.680 likely be in the future, what's going to take place 0:00:44.720 --> 0:00:49.160 with Brexit, and why the rise of Asia in general 0:00:49.200 --> 0:00:52.920 and China in particular is going to be so important 0:00:53.280 --> 0:00:56.480 to the world over the next three to five decades. 0:00:57.080 --> 0:01:01.600 You will absolutely find this to be a fascined inning conversation. So, 0:01:01.800 --> 0:01:09.959 with no further ado, my conversation with Alians is Neil Dwayne. 0:01:11.080 --> 0:01:14.480 My special guest this week is Neil Dwayne. He is 0:01:14.560 --> 0:01:18.640 the global strategist with Alians Global Investors. He's also a 0:01:18.720 --> 0:01:22.800 portfolio manager. And you've been with Alliance since two thousand 0:01:22.800 --> 0:01:26.520 and one. But your background is that of a portfolio manager. 0:01:26.600 --> 0:01:31.000 How did you make that journey from actually running money 0:01:31.080 --> 0:01:34.280 to being more of a global market analyst. Well, I 0:01:34.319 --> 0:01:36.720 suppose the way I looked at it, I've always been 0:01:36.760 --> 0:01:40.319 an investor since uh since the late eighties, UM and 0:01:40.360 --> 0:01:42.840 I got a tremendous career opportunity to run the European 0:01:42.840 --> 0:01:46.760 equity business for Alliance in Frankfurt. So I commune was 0:01:46.840 --> 0:01:48.680 two thousand and one and two thousand two. Yes, so 0:01:49.160 --> 0:01:50.560 I'd work for the phone for a year. This is 0:01:50.560 --> 0:01:53.560 when Alliance merged with Dresna, and so we started to 0:01:53.560 --> 0:01:55.920 put together all the asset management businesses. This is a 0:01:55.960 --> 0:01:59.200 lot of giant components that Dresner Pimco. So you know 0:01:59.240 --> 0:02:01.360 we have been a you know, a set of for 0:02:01.680 --> 0:02:03.800 a fund s, A company has been created out of 0:02:03.840 --> 0:02:06.240 a set of boutiques around the around the world, A 0:02:06.360 --> 0:02:09.639 serial acquirer. Well, yes, I think we haven't. We We 0:02:09.800 --> 0:02:12.800 started like a lot of firms buying teams rather than 0:02:12.800 --> 0:02:16.080 buying businesses, because you often don't need everything else that 0:02:16.120 --> 0:02:18.440 comes with the business if you already have the infrastructure. 0:02:18.919 --> 0:02:20.679 But so for me, it was a career opportunity to 0:02:20.720 --> 0:02:23.680 become a CEO lead a hundred and thirty investors. But 0:02:23.800 --> 0:02:27.000 having done it, for thirteen years. I needed a new challenge, 0:02:27.040 --> 0:02:29.960 bared to be honest, and so I chat to my boss. 0:02:30.000 --> 0:02:31.800 I mean some people say, if you're Board of London, 0:02:31.800 --> 0:02:34.280 your board of life. Well after after thirty years, I 0:02:34.320 --> 0:02:35.920 can tell you I was bored of Frankfurt. I know 0:02:36.000 --> 0:02:38.560 that might sound slightly disloyal, but I needed a new 0:02:38.600 --> 0:02:41.880 challenge and we decided to try and help Alliance get 0:02:41.880 --> 0:02:44.440 its message out. We needed an investor to start talking 0:02:44.440 --> 0:02:46.960 to clients, talking to people like yourself, so that we 0:02:47.000 --> 0:02:49.720 could cross the divide and help our clients understand how 0:02:49.760 --> 0:02:52.160 to look at the risks in the portfolios and how 0:02:52.160 --> 0:02:54.399 to think about the returns they were looking. So that's 0:02:54.440 --> 0:02:56.520 my job now is I travel the world trying to 0:02:56.520 --> 0:03:00.400 help clients navigate the markets. So you're located in the London, 0:03:00.400 --> 0:03:04.359 now is that correct? How does the entire UK asset 0:03:04.440 --> 0:03:08.280 management industry compared to the United States, Because there are 0:03:08.320 --> 0:03:12.760 two very distinct styles of doing business that there are, 0:03:12.919 --> 0:03:15.520 although funny enough, I would say they're very similar. You 0:03:15.520 --> 0:03:17.679 know that there's a there's a big retail business which 0:03:17.720 --> 0:03:19.680 is very domestically biased, so you know, when you're in 0:03:19.680 --> 0:03:21.480 the US or they want to know about is the 0:03:21.560 --> 0:03:24.240 NASDAC and the SMP five hundred and what's happening with 0:03:24.280 --> 0:03:26.639 the mini bonds the UK is the same about UK 0:03:26.639 --> 0:03:30.560 equities and UK property And what you're referring to is universal. 0:03:30.680 --> 0:03:34.720 The home country bias, yes, exists everywhere, does even in 0:03:35.400 --> 0:03:39.160 even in countries like Australia where there's such a tiny 0:03:39.200 --> 0:03:42.680 percentage of the global equity market, and yet when you 0:03:42.680 --> 0:03:47.280 look at Australian's portfolios, it's disproportionately Australian. The same with US, 0:03:47.320 --> 0:03:50.320 the same with UK. Do you try and dissuade people 0:03:50.400 --> 0:03:53.240 from that home bias? Um? I suppose I try. I 0:03:53.520 --> 0:03:56.640 think on the equity side that the home biases is 0:03:57.160 --> 0:04:00.280 hard to deflect simply because if you own fires, you're 0:04:00.280 --> 0:04:02.520 by you own a global company anywhere in facts listed 0:04:02.560 --> 0:04:05.400 in the US. Is that is maybe the challenging dynamic. 0:04:05.720 --> 0:04:07.920 But I think as we think about the world in 0:04:07.960 --> 0:04:09.960 the next twenty or thirty years, I mean, one of 0:04:09.960 --> 0:04:11.760 the themes I'm talking to clients about is the rise 0:04:11.760 --> 0:04:15.000 of Asia, because whatever we think about President Trump and 0:04:15.080 --> 0:04:17.920 his trade policy, the next four and a half billion 0:04:18.000 --> 0:04:20.159 emerging people are going to be out of Asia. They're 0:04:20.160 --> 0:04:22.560 not in the US or in Europe, We've we've emerged, 0:04:23.040 --> 0:04:25.680 we've over leveraged, we've over consumed. The growth is not 0:04:25.760 --> 0:04:27.800 going to come from the West. And if and if 0:04:27.800 --> 0:04:30.919 you look at from a valuation perspective, we're recording this 0:04:31.000 --> 0:04:35.640 late in the US. Is let's be generous and call 0:04:35.680 --> 0:04:39.600 it fully valued. Yes, emerging markets tend to be less expensive. 0:04:39.640 --> 0:04:43.080 In China seems fairly cheap. Yes, and I would definitely 0:04:43.120 --> 0:04:45.560 agree with that. What coming back to your earlier question, though, 0:04:45.560 --> 0:04:47.839 I think the challenge I have when I talked to 0:04:48.160 --> 0:04:51.279 UK or US institutions is I tend to feel that 0:04:51.440 --> 0:04:54.239 many of them as now quite I would say risk averse. 0:04:54.680 --> 0:04:59.080 They're managing their liabilities, they're not optimizing their returns, Whereas 0:04:59.080 --> 0:05:01.720 I think when you talk a retail clients, you know 0:05:01.800 --> 0:05:03.599 that they're in the game to make money. You know, 0:05:03.640 --> 0:05:05.080 they don't want to be in the markets when they're 0:05:05.080 --> 0:05:06.680 going down. They want to be in the stocks when 0:05:06.680 --> 0:05:09.560 they're going up, and so they're looking for something completely 0:05:10.080 --> 0:05:12.960 completely different. So so it's the audiences I think are 0:05:13.000 --> 0:05:15.760 now much the same. I think you you with your 0:05:15.800 --> 0:05:18.480 four oh one K, you're probably as as as institutional 0:05:18.560 --> 0:05:21.040 as as cowpers would be. You know, you're looking at 0:05:21.080 --> 0:05:22.359 how do I get from A to B in the 0:05:22.400 --> 0:05:24.839 next ten years before I retire? How much money do 0:05:24.880 --> 0:05:27.120 I need? What risk can I tolerate? What draw downs? 0:05:27.160 --> 0:05:29.159 It's exactly how I think the big pension funds are 0:05:29.160 --> 0:05:31.120 thinking about it now. Now. The only question I have 0:05:31.240 --> 0:05:33.880 is who trades more frequently cowpers or the average for 0:05:33.920 --> 0:05:37.000 all one key participant. I honestly can't answer that question. 0:05:37.080 --> 0:05:39.640 What do you know? I'm not sure I can answer 0:05:39.680 --> 0:05:41.719 it either. What I What I would say, though, is 0:05:41.800 --> 0:05:46.640 I think, um, the trading has really started to hurt 0:05:46.680 --> 0:05:51.400 the markets. Even some of our longest and largest sovereign 0:05:51.440 --> 0:05:54.840 wealth funds now have a rolling twelve month performance horizons. 0:05:54.880 --> 0:05:57.120 So when you say trading, do you mean the high 0:05:57.200 --> 0:06:00.760 frequency traders or do you mean just the tendency to 0:06:00.920 --> 0:06:03.839 trade more than they're used to. People just have this tremendous, 0:06:04.160 --> 0:06:07.760 tremendous tendency to trade, And I think investment. You know, 0:06:07.800 --> 0:06:09.680 when we think about the decision you and I would 0:06:09.680 --> 0:06:11.080 have made when we were younger to buy a house, 0:06:11.560 --> 0:06:13.320 you weren't sitting there thinking, well, I might flip it 0:06:13.320 --> 0:06:16.080 in three months time. You're going I'm going to live here, 0:06:16.440 --> 0:06:18.159 you know, I hope it's a good investment. I hope 0:06:18.160 --> 0:06:20.440 it goes up in price and and that all goes 0:06:20.520 --> 0:06:22.200 up in value. But even if it doesn't, you have 0:06:22.240 --> 0:06:24.680 someplace to exactly can you say the same thing about 0:06:24.720 --> 0:06:27.520 an equity portfolio. Well, I think actually in the end 0:06:27.560 --> 0:06:29.560 you can. But I I sense, you know, one of 0:06:29.600 --> 0:06:32.480 the big journeys that's changed, and it's accelerated post of 0:06:32.520 --> 0:06:35.320 financial crisis has been I think we I talked to 0:06:35.400 --> 0:06:37.880 more and more traders now and fewer and fewer investors, 0:06:38.400 --> 0:06:40.680 And I think that's the same with corporate management. Corporate 0:06:40.680 --> 0:06:42.760 management is not investing for the next ten years, so 0:06:42.839 --> 0:06:46.400 investing for the next three three years whilst their incentive 0:06:46.400 --> 0:06:48.200 plans are at work. So when you say you speak 0:06:48.240 --> 0:06:53.440 to more traders than investors, is that because there are 0:06:53.440 --> 0:06:56.800 more traders out there or are people who are formally 0:06:56.880 --> 0:07:02.440 investors now have a tendency for shorter holder periods, more turnover, 0:07:03.120 --> 0:07:07.320 just more activity. Despite everything we hear about indexing. Yes, 0:07:07.400 --> 0:07:11.880 I think people's investment time horizons have really shortened. Um, 0:07:12.000 --> 0:07:14.960 they don't want to sort of win by just holding 0:07:15.000 --> 0:07:17.080 something that goes up and down like a rising tide 0:07:17.080 --> 0:07:19.520 and eventually travels. They want to get out if it's 0:07:19.520 --> 0:07:21.960 going to fall, and then get back in. And I 0:07:22.000 --> 0:07:24.800 think that makes this really really tricky for us as investors, 0:07:24.840 --> 0:07:28.360 because I would say the view of the world that 0:07:28.400 --> 0:07:30.720 I'm talking to clients about is obvious for the next 0:07:30.720 --> 0:07:33.360 five or ten years, but for the next five or 0:07:33.400 --> 0:07:35.480 ten weeks. You know, I have as little clue as 0:07:35.480 --> 0:07:38.080 anybody else you'll interview about what will drive the markets, 0:07:38.640 --> 0:07:40.600 and yet clients that's what clients are looking for. And 0:07:40.640 --> 0:07:43.520 I called I suppose I see that of spurious accuracy 0:07:43.960 --> 0:07:47.560 quite quite fascinating. There was a quote, Neil in one 0:07:47.600 --> 0:07:51.920 of your recent research pieces that I found intriguing, and 0:07:52.040 --> 0:07:56.680 you wrote, quote, the American dream is still alive, just 0:07:56.800 --> 0:07:59.360 not in America. Tell us what you meant by that? 0:07:59.760 --> 0:08:02.560 What I think when when we were sort of tapping 0:08:02.560 --> 0:08:08.120 into the momentum behind President Trump's or Canada Trump's campaign, 0:08:08.680 --> 0:08:11.440 you know, it was about making America great again. And 0:08:11.840 --> 0:08:14.680 I think one of the one of the appeals that 0:08:14.760 --> 0:08:17.040 he had to many parts of the American electorate was 0:08:17.120 --> 0:08:20.240 that it felt like the world was passing them by. 0:08:20.360 --> 0:08:22.560 They were able to watch, you know, what the Kardashians 0:08:22.600 --> 0:08:25.200 are doing on Twitter and and other things, but they 0:08:25.200 --> 0:08:28.280 couldn't live the same lifestyle because the opportunities were not 0:08:28.680 --> 0:08:33.160 operating offering themselves inside the US economy. But that's an 0:08:33.160 --> 0:08:36.560 opportunity set of two or three. You know, for the 0:08:36.600 --> 0:08:39.240 average American. Are they really thinking if only I could 0:08:39.400 --> 0:08:42.360 endorse products? Is is that really the appeal or is 0:08:42.400 --> 0:08:46.960 it something more fundamental? Well, well, I think it's actually elemental. Um. 0:08:47.240 --> 0:08:49.559 I think that That's why I think politics is under 0:08:49.600 --> 0:08:51.680 a lot of pressure across the West at this moment 0:08:51.679 --> 0:08:54.760 in time, because people feel they take for granted that 0:08:54.880 --> 0:08:57.040 fridges are cheap and TVs are cheap, and you know, 0:08:57.120 --> 0:09:00.160 the lifestyle has since since the Night in seven has 0:09:00.160 --> 0:09:02.680 has become more affordable. But now they're not getting a 0:09:02.679 --> 0:09:04.600 pay rise. Some of them are not even getting a job. 0:09:04.640 --> 0:09:08.000 And so the ability now for I think young Americans 0:09:08.040 --> 0:09:11.560 to earn more than their parents is the lowest percentage 0:09:11.559 --> 0:09:15.040 in first generation. That's not going to the Whereas I 0:09:15.080 --> 0:09:17.080 think when you go to somewhere and I can only 0:09:17.240 --> 0:09:19.480 what I normally do is tell clients to travel around 0:09:19.480 --> 0:09:21.760 Asia and particularly to go to China, but don't go 0:09:21.800 --> 0:09:24.600 to Shanghai or Beijing, go and see the panda bears 0:09:24.600 --> 0:09:27.599 in cheng Do or or the Terragotta warriors in Cheanne. 0:09:27.760 --> 0:09:29.880 The people who take you there, the people who drive 0:09:29.920 --> 0:09:34.560 you there, um, they work hard, they want to educate 0:09:34.600 --> 0:09:36.760 their kids, they want to get rich. That's what I mean. 0:09:37.000 --> 0:09:40.480 Very entrepreneurs. They're very, very entrepreneurial. And so I think 0:09:40.520 --> 0:09:42.920 that's probably what America felt like around the turn of 0:09:42.920 --> 0:09:45.880 the century. People had a can do act a century 0:09:46.960 --> 0:09:48.800 and not to be not to be a wise guy, 0:09:48.880 --> 0:09:52.079 but turn of the nineteenth century, turn of the twentieth century, 0:09:52.360 --> 0:09:55.280 I think to turn of the twentie you know, I 0:09:55.320 --> 0:09:57.640 just think, you know, when America suddenly really got go. 0:09:57.760 --> 0:10:00.720 You think about um, World War One, you know, America 0:10:00.760 --> 0:10:03.319 barely had a navy, and you know, within two years 0:10:03.400 --> 0:10:05.839 you've built the biggest navy in um, you know, the 0:10:05.880 --> 0:10:08.280 world had ever seen. And that's despite the British being 0:10:08.320 --> 0:10:10.720 the naval power of of that time. And I just 0:10:10.760 --> 0:10:13.240 think there was that can do attitude, that can do spirit, 0:10:13.320 --> 0:10:16.559 that teamwork. I sense that that's moved to Asia now. 0:10:16.920 --> 0:10:20.480 That's quite fascinating. When when we look at you mentioned 0:10:20.520 --> 0:10:25.120 a lot of people, a lot of the US electorate 0:10:25.480 --> 0:10:30.040 might have been left behind. It's very very specific when 0:10:30.120 --> 0:10:33.240 when we talked about the economic recovery, but it's not 0:10:33.360 --> 0:10:38.400 evenly distributed. Depending on where you live, your education level, 0:10:38.600 --> 0:10:43.960 and what industry sector you're in, you're either enjoying a 0:10:44.080 --> 0:10:47.560 robust recovery or no recovery at all. It is the 0:10:47.640 --> 0:10:51.240 United States the only country that suffers from that sort 0:10:51.240 --> 0:10:54.880 of bipolar There are some very very lucky halves, and 0:10:54.920 --> 0:10:57.079 there are a whole bunch of half not or an participant. 0:10:57.400 --> 0:10:59.440 I think the West suffers across the board with that. 0:10:59.480 --> 0:11:02.360 I think they The country that doesn't is Japan, where 0:11:02.400 --> 0:11:05.800 society has been much more even so, it's interesting, very 0:11:05.880 --> 0:11:07.920 one of the themes I'm talking to our clients about 0:11:07.920 --> 0:11:10.280 at the moment is inequality. And you might say, well, 0:11:10.280 --> 0:11:12.120 what's I got to do with investment and and and 0:11:12.200 --> 0:11:15.000 asset management? Well, it's got a time. Well, but the 0:11:15.000 --> 0:11:17.040 thing is, I think we may have been making the 0:11:17.080 --> 0:11:20.800 world less equal because if I incentivize you against your 0:11:20.800 --> 0:11:22.920 share price and that's the only thing that makes you 0:11:23.040 --> 0:11:25.880 rich as a manager, then that's all you care about. 0:11:25.960 --> 0:11:29.199 That's the goal you manage, and that makes the world 0:11:29.280 --> 0:11:32.600 more and more unequal. Are you a believer in the 0:11:32.600 --> 0:11:36.040 theory of short termism that a lot of corporate management 0:11:36.400 --> 0:11:39.439 is so focused on their stock price they're not making 0:11:39.520 --> 0:11:43.320 longer term investments. Definitely, because I think, not only I think, 0:11:43.400 --> 0:11:45.960 and it's clear in the US that I think this. 0:11:45.960 --> 0:11:48.600 This addiction now to share buy backs, borrowing money from 0:11:48.600 --> 0:11:52.960 the credit markets. History has always shown management by their 0:11:52.960 --> 0:11:55.240 stock at the worst prices. They never buy them when 0:11:55.280 --> 0:11:58.520 nobody wants it, I really cheat, they buy it right 0:11:58.559 --> 0:12:00.240 at the top of the market. And I think that's 0:12:00.280 --> 0:12:03.760 what we've been seeing throughout two thousand, sixteen, seventeen and eighteen, 0:12:03.800 --> 0:12:07.760 and it's a uniquely US phenomenon. And the other thing, 0:12:08.200 --> 0:12:10.360 just wrapping in the inequality theme, just so you can 0:12:10.400 --> 0:12:13.200 see where I'm trying to go with it, is Yes, 0:12:13.240 --> 0:12:16.320 the short share buy backs are incentivizing the CFO to 0:12:16.559 --> 0:12:19.080 borrow money and leverage the balance sheets and are potentially 0:12:19.160 --> 0:12:22.440 under invest limiting the longer term growth prospects of the 0:12:22.520 --> 0:12:25.559 of the company going forwards. But who's the biggest seller 0:12:25.679 --> 0:12:30.160 of US equities. It's the management management. So we're to 0:12:30.240 --> 0:12:33.000 blame for this because we have over incentivised them in 0:12:33.080 --> 0:12:36.480 one way. And when we do, when we've done quite 0:12:36.480 --> 0:12:40.160 a lot of work on sustainability and this inequality theme. 0:12:40.920 --> 0:12:43.240 What is interesting and it's funny. I'm here at Bloomberg. 0:12:43.280 --> 0:12:48.000 Family owned companies do it better. They know they're passing 0:12:48.040 --> 0:12:50.760 on the franchise to their children or to their grandchildren. 0:12:50.840 --> 0:12:53.000 So what do they do. They make sure it's invested. 0:12:53.040 --> 0:12:55.200 They make sure the roofs working, They make sure the 0:12:55.240 --> 0:12:57.360 central heating is there so that when they pass it 0:12:57.360 --> 0:13:00.720 onto their children, their children then are running for their children. 0:13:00.760 --> 0:13:03.000 They never sit there hat thinking how do I maximize 0:13:03.040 --> 0:13:06.199 returns for my share option scheme? The fascinating thing about 0:13:06.200 --> 0:13:08.400 to share buy backs, and I can talk about that forever. 0:13:09.320 --> 0:13:12.840 A It's the result of a nine nineties Clinton era 0:13:13.400 --> 0:13:19.000 attempt to limit C suite executives compensation, and they put, 0:13:19.280 --> 0:13:22.079 you know, a hard dollar limit and do as much 0:13:22.120 --> 0:13:24.440 stock options as you want. Didn't work out the way 0:13:24.480 --> 0:13:27.719 they expected. I agree with you about stock options, but 0:13:27.920 --> 0:13:31.000 and buy backs. But every time I bring it up, 0:13:31.080 --> 0:13:33.800 all my quant friends say the same thing. Hey, when 0:13:33.800 --> 0:13:35.920 we look at the world of companies that do buy 0:13:35.920 --> 0:13:39.680 backs versus companies that don't, buy backs outperform the companies 0:13:40.080 --> 0:13:43.200 that don't. How do we how do we justify being 0:13:43.240 --> 0:13:47.400 negative on buy backs when they actually help performance well? 0:13:47.440 --> 0:13:49.760 I think, I think maybe what we're going to find 0:13:50.040 --> 0:13:52.800 is that it helps performance in the short term, but 0:13:52.920 --> 0:13:57.040 at the consequence of significant underinvestment, the loss of productivity. 0:13:57.400 --> 0:14:00.160 You know, when you and I think maybe outside siliconly 0:14:00.160 --> 0:14:02.760 about all the industries where America has kind of stopped 0:14:03.080 --> 0:14:06.320 being a world leader, and I'm thinking traditional manufacturing, some 0:14:06.400 --> 0:14:08.559 of these, some of these type of areas, it's because 0:14:08.600 --> 0:14:11.000 actually there was no R and D. There's no capital, 0:14:11.040 --> 0:14:15.600 equipment investment, and and the pushback I get is Apple 0:14:15.679 --> 0:14:18.080 spends billions of dollars on R and D, as does 0:14:18.120 --> 0:14:21.360 all these other companies. I couldn't possibly agree with you more. 0:14:21.400 --> 0:14:24.600 I think you're absolutely right. I would much rather than 0:14:24.680 --> 0:14:27.720 see a company d I p O on I p 0:14:27.840 --> 0:14:29.520 O I don't know if there's even a word like that. 0:14:29.800 --> 0:14:32.120 I would rather see the money. If you're going to 0:14:32.200 --> 0:14:35.240 return capitalist shareholders, give people dividends and let them spend 0:14:35.240 --> 0:14:38.320 the money on what they want after you've exhausted all 0:14:38.360 --> 0:14:41.120 your R and D options. Look at General Motors. They 0:14:41.200 --> 0:14:44.080 bought ten billion dollars worth of stock while all their 0:14:44.080 --> 0:14:49.400 competitors were creating new electronic cars, building infrastructures, filing a 0:14:49.400 --> 0:14:52.680 whole bunch of patents. To me, it's unconscionable that a 0:14:52.760 --> 0:14:57.160 company in as competitive a market as gm is would 0:14:57.160 --> 0:15:00.800 waste a penny buying backstock when their technical argically behind 0:15:01.000 --> 0:15:03.800 all everybody else out there. Let's talk a little bit 0:15:03.840 --> 0:15:07.080 about what's been going on around the world with you 0:15:07.200 --> 0:15:13.760 mentioned popularism and the political changes that income inequality has wrought. 0:15:14.280 --> 0:15:17.520 What do you see happening in Brexit, because from across 0:15:17.600 --> 0:15:20.760 the ponds, it looks like, Wow, I thought we had 0:15:20.840 --> 0:15:24.800 some issues that seems to be just completely mayhem from 0:15:24.800 --> 0:15:28.600 our perspective. Um Barry, You're absolutely right. I mean, there's 0:15:28.600 --> 0:15:31.480 no doubt. I think for the last two years everyone 0:15:31.600 --> 0:15:35.920 has been very confused about how Brexit would work out. 0:15:36.120 --> 0:15:39.600 Hard Brexit, soft Brexit, no Brexit. It's like a Dr 0:15:39.680 --> 0:15:42.080 Seuss book. It is a part of the fact we 0:15:42.120 --> 0:15:45.760 have always said there can be no soft Brexit. Brexit 0:15:46.000 --> 0:15:48.840 is a hard you know, whether we crash out or 0:15:48.840 --> 0:15:51.000 whether we leave with a deal, that both of them 0:15:51.040 --> 0:15:54.320 are hard outcomes. There isn't any sort of cuddly toy 0:15:54.400 --> 0:15:56.400 way of getting from from A to B. And we're 0:15:56.400 --> 0:16:00.000 already seeing all sorts of negative ramifications for Brexit. ESPEC 0:16:00.000 --> 0:16:02.560 actually in London. I don't know how the rest of 0:16:02.600 --> 0:16:05.480 the country is feeling it. But when we look at 0:16:05.600 --> 0:16:09.680 where companies are relocating, when we look at people, especially 0:16:09.840 --> 0:16:14.640 executives and professionals relocating to to Paris, relocating to Frankfort, 0:16:15.400 --> 0:16:17.080 you're right there in the thick of it. What what 0:16:17.160 --> 0:16:21.400 do you see going on pre Brexit? Well, I think 0:16:21.760 --> 0:16:23.840 what I would say is, because there's this drop dead 0:16:23.920 --> 0:16:26.200 date of March the twenty ninth, two thousand and nineteen, 0:16:26.560 --> 0:16:29.560 the dynamic is we're getting closer to a point where companies, 0:16:29.560 --> 0:16:32.440 including Alliance Global investors have to decide do we need 0:16:32.480 --> 0:16:35.040 to change anything inside of our operating business model to 0:16:35.080 --> 0:16:37.480 stay legal in France or see, if you had a 0:16:37.560 --> 0:16:40.160 headquarters it would be a problem, but since you don't 0:16:40.160 --> 0:16:43.240 absolutely um and actually, because we're smaller in the UK 0:16:43.320 --> 0:16:44.960 that we are in Europe, it's less of a problem 0:16:45.000 --> 0:16:46.880 for us than some of our larger competitors who are 0:16:46.880 --> 0:16:50.000 based in London. But what I what what I would 0:16:50.000 --> 0:16:52.400 get over And I think this comes to the populist side. 0:16:52.480 --> 0:16:55.040 You know that's in the US is as as you've seen, 0:16:55.120 --> 0:16:57.400 you know with your recent elections, including the mid terms, 0:16:57.600 --> 0:17:00.080 America is divided. The way the UK is divide I 0:17:00.120 --> 0:17:05.560 did over Brexit of the population. All I can tell 0:17:05.600 --> 0:17:08.800 you is two years on, it's still Is that a fact? 0:17:08.840 --> 0:17:11.920 Because I keep hearing there's two interesting things I keep hearing. 0:17:12.359 --> 0:17:15.600 One is if we have a second referendum. People have 0:17:15.800 --> 0:17:19.080 learned that they were lied to in the first referendum, 0:17:19.320 --> 0:17:22.440 that a lot of the scare tactics about how much 0:17:22.480 --> 0:17:24.679 money was being sucked out of national health system, and 0:17:25.240 --> 0:17:27.600 people realize there was a lot of nonsense. They were 0:17:27.600 --> 0:17:31.119 fed that all you need is one or two or 0:17:31.160 --> 0:17:34.560 three other populations change your vote, and they're talking like 0:17:34.640 --> 0:17:38.040 five or might swing. But then I hear the court 0:17:38.119 --> 0:17:41.000 the data you give and you're not the first. We're 0:17:41.400 --> 0:17:45.199 convinced that the vote would still be identical. We're all 0:17:45.280 --> 0:17:48.960 virtually the same, So so the country is still divided. 0:17:49.119 --> 0:17:53.840 What I would say is the dynamic that is that 0:17:54.000 --> 0:17:56.920 is at work, is that it was a dreadful election 0:17:57.000 --> 0:17:58.720 that might might ring a few bells with you here 0:17:58.760 --> 0:18:02.959 in the US. That tone, the tone on both sides 0:18:03.080 --> 0:18:05.760 was awful. Um and I think with the Bank of 0:18:05.800 --> 0:18:08.120 England coming out with a very very you know, doomsday 0:18:08.160 --> 0:18:11.520 scenario of the world post Brexit, we're back in Project 0:18:11.520 --> 0:18:14.040 Fear territory, which simply annoys the half of the country 0:18:14.040 --> 0:18:17.640 who don't buy the Project Fear story. Now, the other 0:18:17.760 --> 0:18:23.439 interesting thing I read recently was um, and I know 0:18:23.520 --> 0:18:27.639 how our court system works. On that fully cargnizant of 0:18:27.640 --> 0:18:31.720 how your system works. But an advisor to somebody in 0:18:31.720 --> 0:18:34.920 the High Court said, hey, if the House of Lords 0:18:35.160 --> 0:18:39.400 decides to vote against Brexit, they're allowed. They're now bound 0:18:39.560 --> 0:18:43.040 by a nine non binding resolution, which was what effectively 0:18:43.040 --> 0:18:46.200 the reverendum was. UM, yes and no. I mean basically, 0:18:46.240 --> 0:18:49.880 the Houses of Commons that the MPs that we vote 0:18:49.920 --> 0:18:53.239 for get a second chance. So if if they approve it, 0:18:53.240 --> 0:18:55.600 the House of Lord says no, it comes back to 0:18:55.640 --> 0:18:58.200 the Commons that the Commons then have the final vote. 0:18:58.600 --> 0:19:01.399 So how do they need a super majority on just 0:19:01.400 --> 0:19:04.240 just a majority? So I think the scenario that we're 0:19:04.280 --> 0:19:07.880 facing at the moment is Theresa May's deal looks great 0:19:07.960 --> 0:19:11.719 from a European perspective, and that's why it's probably not 0:19:11.760 --> 0:19:13.840 going to pass in the House of Parliament. Now let 0:19:13.840 --> 0:19:16.480 me jump in and ask you, are the Europeans going 0:19:16.520 --> 0:19:20.480 to give anybody anything better than a terrible deal? Otherwise 0:19:20.520 --> 0:19:24.240 they'll encourage other members. So you've answered your own questions, Barry. 0:19:24.240 --> 0:19:26.239 They're not going to offer us a better deal. So 0:19:26.280 --> 0:19:29.960 it's this terrible deal or a hard no deal Brexit. Yes, 0:19:30.000 --> 0:19:32.600 but the key for me is is a hard no 0:19:32.800 --> 0:19:35.399 deal are you going to w t O rules? And 0:19:35.400 --> 0:19:37.320 then the ability to pick up the phone to President 0:19:37.320 --> 0:19:39.640 Trump and say hey, can we catch the next BA 0:19:39.800 --> 0:19:42.520 plane to the US and do a deal is of 0:19:42.640 --> 0:19:45.320 much greater upside to the UK than this deal with 0:19:45.359 --> 0:19:48.080 Theresa May. But you need a change of leadership. So 0:19:48.119 --> 0:19:51.720 I think for international investors like yourselves, the calibration is 0:19:51.840 --> 0:19:55.960 can the Conservative Party change leader if Theresa May's deal 0:19:56.080 --> 0:19:59.800 is thrown out and not face a general election. But 0:20:00.000 --> 0:20:02.760 because the way the way I try to, if I'm honest, 0:20:02.800 --> 0:20:06.520 answer the Brexit question is Brexit is nothing compared to 0:20:06.640 --> 0:20:10.400 the election of a Jeremy Corbyn led labor government. Let's 0:20:10.440 --> 0:20:13.280 talk a little bit about some things going on in technology. 0:20:13.760 --> 0:20:17.160 I was intrigued again. This comes from something you published recently. 0:20:17.760 --> 0:20:23.160 You said that a new tech cold war could disrupt 0:20:23.240 --> 0:20:27.280 the global economy. Explain well, I I believe that whilst 0:20:27.320 --> 0:20:30.760 trade has all the headlines and the President's policy on 0:20:30.840 --> 0:20:34.960 tariffs is clearly disrupting many of the large traded goods 0:20:35.000 --> 0:20:37.840 areas of the of the global economy. I think there's 0:20:37.880 --> 0:20:42.760 a Washington Washington consensus building that China has been cheating 0:20:42.920 --> 0:20:47.119 on tech. Bloomberg itself launched a huge piece that showed 0:20:47.160 --> 0:20:49.119 that there were chips on some of the motherboards that 0:20:49.160 --> 0:20:51.520 are being used this week. Yes, absolutely, and that was 0:20:51.600 --> 0:20:53.399 you know, but I think that goes to the hardest 0:20:53.480 --> 0:20:56.480 Apple and Amazon there was. They all pushed back and 0:20:56.480 --> 0:21:00.439 said it wasn't correct. But I think Bloomber stood by 0:21:00.440 --> 0:21:02.560 the business, and I think you have You're absolutely right 0:21:02.600 --> 0:21:05.560 to do so, because when you look outside the headlines 0:21:05.560 --> 0:21:08.720 that everyone's focused on on trade, you're actually seeing Washington 0:21:08.720 --> 0:21:13.720