WEBVTT - Markets Wrap: SpaceX Returns to Earth, UK Sheds More Stocks 0:00:02.759 --> 0:00:14.320 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.160 --> 0:00:20.319 Welcome to the Marin Trogs Money Market Wrap. But we 0:00:20.320 --> 0:00:22.439 talk about the biggest news in the markets this weekend. 0:00:22.520 --> 0:00:25.160 What is driving them? I am Maren sum Zai, Web 0:00:25.280 --> 0:00:26.840 UK Money Editor at Large. 0:00:27.280 --> 0:00:29.880 No, I'm joint Staviic Senior Reportered at Bloomberg and author 0:00:29.960 --> 0:00:31.360 of the Money Distilled newsletter. 0:00:32.760 --> 0:00:35.879 Right, John, there is a lot going on which is 0:00:35.880 --> 0:00:38.600 outrageous really, given that it's holiday time and both of 0:00:38.680 --> 0:00:41.479 us are, you know, back and forth from glamorous destinations. 0:00:41.880 --> 0:00:44.519 You shouldn't shouldn't be having to talk about who's going 0:00:44.560 --> 0:00:46.000 to be the next chancellor of the UK. 0:00:46.280 --> 0:00:51.840 Again, this is nine I think in Sam in French 0:00:51.840 --> 0:00:54.840 we're seeing in something like ten years more. 0:00:54.760 --> 0:00:56.279 Chancellors than prime ministers. 0:00:58.560 --> 0:00:59.760 So do we care? 0:01:00.760 --> 0:01:04.720 Can you drag up any interest? Does it matter? Is 0:01:04.760 --> 0:01:06.400 it more of the same? I'll tell you the only 0:01:06.440 --> 0:01:09.080 thing that matters is it is not Ed Miliband. 0:01:10.680 --> 0:01:11.440 If that's the key. 0:01:11.720 --> 0:01:14.000 If it's not Ed Miliband, we just get more of 0:01:14.040 --> 0:01:17.200 the miserable same. It is Ed Miliband, we get a 0:01:17.280 --> 0:01:20.920 nasty shifter to the left and more net zero blah 0:01:21.040 --> 0:01:24.480 and yep one Michaels will be a little upset. The 0:01:24.480 --> 0:01:26.080 rest of the world would look at us with even 0:01:26.120 --> 0:01:27.600 more eye rolling than usual. 0:01:28.240 --> 0:01:31.080 Yeah, I think that's basically it were The only thing 0:01:31.160 --> 0:01:34.560 I would say is well, a couple one. It's interesting 0:01:34.600 --> 0:01:36.800 because I actually think part of this is because there 0:01:36.840 --> 0:01:40.679 was a Bloomberg survey read out and it came back 0:01:40.880 --> 0:01:42.840 and I think it was not yesterday, but the day 0:01:42.880 --> 0:01:46.679 before the results and Ed miller Band was deemed the 0:01:46.760 --> 0:01:49.880 least market friendly chancellor, and not until then he was 0:01:49.920 --> 0:01:54.480 the absolute top favorite, including among people who a chat 0:01:54.520 --> 0:01:56.240 to who know about this stuff. They would sort of 0:01:56.240 --> 0:01:58.960 tell me Ed miller Bands doing for chancellor, that's what I. 0:01:58.880 --> 0:02:02.520 Had too, absolutely nail down fixed in stone or fixed 0:02:02.560 --> 0:02:04.040 in Edstone. 0:02:04.360 --> 0:02:09.079 Yes, yes, And then suddenly this story comes out in 0:02:09.120 --> 0:02:13.240 Bloomberg and well they ought to suddenly shift dramatically and 0:02:13.280 --> 0:02:15.720 it looks as if we're going to get Chavana Mahmoud 0:02:15.840 --> 0:02:18.880 for chancellor instead. And again, as you say, the only 0:02:18.919 --> 0:02:21.280 thing we know is that she's not as left wing 0:02:21.280 --> 0:02:24.960 as Ed mellerbound. And that's been enough to actually it 0:02:25.000 --> 0:02:27.880 did give Gilts and the pound a little bit of 0:02:27.919 --> 0:02:32.000 a boost yesterday. I'm usually very very careful about attributing 0:02:32.040 --> 0:02:35.399 these things to politics, but everything else was down and 0:02:35.560 --> 0:02:38.040 gelts in the pound were up, and it looks as 0:02:38.040 --> 0:02:40.480 if it probably was something to do with a bit 0:02:40.560 --> 0:02:41.799 of relief on that front. 0:02:42.080 --> 0:02:45.160 Yeah, but you know what, John, Yes, I think that's 0:02:45.240 --> 0:02:48.160 absolutely terrifying. Shall I tell you why? Yeah, because that 0:02:48.240 --> 0:02:52.800 market pulled market pul survey from Bloomberg told us something 0:02:53.480 --> 0:02:57.119 so obvious that it is beyond the bounds of all 0:02:57.200 --> 0:03:02.839 reason that anyone in the government could possibly have not known. 0:03:02.880 --> 0:03:06.280 It could not have understood that Ed Miliband would be 0:03:06.520 --> 0:03:11.480 the least market friendly contender. Not new news, not something 0:03:11.520 --> 0:03:14.000 you'd have to look at any survey to know. So 0:03:14.040 --> 0:03:18.440 how can it possibly be that the results of a 0:03:18.560 --> 0:03:22.680 survey showing that Ed Miliband would be the considered the 0:03:22.760 --> 0:03:27.000 least market friendly chancellor for the UK could be new 0:03:27.080 --> 0:03:32.440 news too an incoming prime minister when it is not 0:03:32.520 --> 0:03:35.800 new news to anybody else. And that for me is 0:03:35.840 --> 0:03:40.680 quite scary and boats really badly for the next few years. 0:03:40.960 --> 0:03:43.400 We thought that is Marrian, and I think you're really 0:03:43.480 --> 0:03:46.480 this boy was donning at the other big point about 0:03:46.560 --> 0:03:49.720 it is, how can this stuff he already not be 0:03:49.800 --> 0:03:52.920 kneeled down and be if he was going to go 0:03:53.120 --> 0:03:56.760 with them, then it should have been an anticipation of 0:03:56.880 --> 0:03:59.360 a negative reaction from the markets, and then have a 0:03:59.440 --> 0:04:01.520 think about how he was going to deal with that. 0:04:01.640 --> 0:04:06.000 It shouldn't, I mean, the only rational thing that you 0:04:06.040 --> 0:04:07.920 can say about it into once. I don't even believe this, 0:04:07.960 --> 0:04:10.880 because I think most of them are too narcissistic to 0:04:11.080 --> 0:04:13.480 not see these things until they're in their face. But 0:04:13.720 --> 0:04:17.800 one thing you could say is maybe Bundum needed an 0:04:17.800 --> 0:04:21.520 excuse not to appoint Mill the band, and then he 0:04:21.640 --> 0:04:24.440 gets the excuse in the form of something like this, 0:04:24.560 --> 0:04:26.720 Oh look, I was going to hire you, but now 0:04:26.720 --> 0:04:28.080 the headlines are all saying that you would be a 0:04:28.160 --> 0:04:31.239 terrible chancellor. And that's you know, it's not me, it's 0:04:31.360 --> 0:04:34.040 it's the you know, bond market or whatever. 0:04:34.600 --> 0:04:39.240 But that even wash that's even already got the it's 0:04:39.320 --> 0:04:43.200 no me, might be yea and it's not even prime 0:04:43.200 --> 0:04:43.800 minister yet. 0:04:44.320 --> 0:04:46.320 Yes, that just put you right back to where Kure 0:04:46.360 --> 0:04:48.160 Starmer was a year ago. 0:04:49.000 --> 0:04:52.760 It doesn't matter how you interpret this shift, assuming it 0:04:52.839 --> 0:04:54.640 is a shift. I mean they're not done yet, right 0:04:55.640 --> 0:04:59.320 a shift. There is no way whatsoever to interpret this 0:04:59.440 --> 0:05:02.680 positive beyond the fact that if he's not Chancellor, well, 0:05:02.720 --> 0:05:05.240 I mean that's a minor positive, but it doesn't you 0:05:05.279 --> 0:05:11.480 can't interpret it positively in terms of the way Burnham 0:05:11.560 --> 0:05:13.560 is thinking and the way he is likely to manage 0:05:13.600 --> 0:05:16.640 going further. And you know, prove me wrong the future please. 0:05:17.200 --> 0:05:19.920 Oh yeah, yeah, I'd love to be wrong. But there's 0:05:20.240 --> 0:05:23.240 the ultimate hedge, as if we're wrong, then things get better. 0:05:23.760 --> 0:05:26.640 And if we're right, then the only consolation that you 0:05:26.680 --> 0:05:28.599 get to see I told you so, along with the 0:05:28.640 --> 0:05:29.599 rest of the population. 0:05:30.800 --> 0:05:33.479 So all right, moving on, John, because my head's going 0:05:33.560 --> 0:05:36.160 to explode. Moving on. There are a couple of other 0:05:36.200 --> 0:05:37.880 things we wanted to talk about, right. We wanted to 0:05:37.920 --> 0:05:40.520 talk about SpaceX being back to its IPO price, which 0:05:40.560 --> 0:05:44.200 is really depressing for the entire team because regular listeners 0:05:44.240 --> 0:05:47.960 will know that my profits on my vast space position 0:05:48.120 --> 0:05:50.200 were to be used to buy the team summer drinks 0:05:50.320 --> 0:05:53.719 and now there are no profits, so no summer drinks. 0:05:54.160 --> 0:05:56.400 Sorry guys, sorry summers summer Moses. 0:05:56.400 --> 0:05:59.000 Sorry Moses, I mean we need to buy your drink 0:06:00.080 --> 0:06:01.200 is negative from here? 0:06:01.600 --> 0:06:05.920 Yes, yes, yes, it's on you and I'll have the Bollinger. 0:06:06.040 --> 0:06:06.720 Thanks very much. 0:06:08.360 --> 0:06:10.840 Well, hope it's been how file it falls that may 0:06:10.920 --> 0:06:12.440 even to that you never. 0:06:12.360 --> 0:06:15.200 Know, right even Okay, So back to my papers, and 0:06:15.240 --> 0:06:16.560 one of the things that you and I've worried about 0:06:16.640 --> 0:06:18.800 for a long time now is that these big i 0:06:18.920 --> 0:06:22.560 pos might be a negative marker for the market, might 0:06:22.600 --> 0:06:25.280 give us some kinds of top. There were a variety 0:06:25.320 --> 0:06:28.520 of studies, studies reports when the when the IPOs were 0:06:28.520 --> 0:06:31.600 first announced. But the giant sucking sounders and money goes 0:06:31.640 --> 0:06:33.480 out of other parts of the market to go into 0:06:33.520 --> 0:06:36.520 the IPOs and then of course maybe slides back out 0:06:36.520 --> 0:06:38.599 again to go into other things. So there's there's a 0:06:38.640 --> 0:06:41.640 lot going on in the market, and that this first 0:06:41.800 --> 0:06:47.159 i PO is not an immediate success is a worry. Yeah. 0:06:47.400 --> 0:06:50.839 And it's interest because the most recent high for the 0:06:50.960 --> 0:06:52.640 US markets that both the S and P and that 0:06:52.760 --> 0:06:54.920 is like was the second to June and the space 0:06:55.080 --> 0:06:56.920 X I p O or was the eleventh of June. 0:06:57.040 --> 0:06:59.040 That doesn't mean they're not going to make new highs, 0:06:59.080 --> 0:07:01.760 but it is kind of interesting in that if this 0:07:01.800 --> 0:07:05.120 did prove to be the top, it wouldn't be an 0:07:05.200 --> 0:07:09.360 astonishing thing to happen. It's also I think it's just 0:07:09.400 --> 0:07:12.640 it's a useful reminder as much as anything else that 0:07:13.480 --> 0:07:21.880 you shouldn't outsource your investment thoughts or views to the 0:07:21.920 --> 0:07:27.000 market price itself, because you know, before SpaceX launched, slots 0:07:27.000 --> 0:07:29.920 of people thought, actually this, this looks kind of expensive, 0:07:30.080 --> 0:07:33.040 and it was kind of expensive, and then it shoots 0:07:33.120 --> 0:07:35.640 up on the day and everyone thinks, of God, maybe 0:07:35.680 --> 0:07:38.800 everyone else knows something I don't, and so the temptation 0:07:39.000 --> 0:07:41.120 is then to try and pile in or try and 0:07:41.160 --> 0:07:44.920 make a quick buck or whatever. But history shows that IPOs, 0:07:44.960 --> 0:07:47.720 even long term successful ones, do tend to drop below 0:07:47.720 --> 0:07:51.080 their IPO price at some point within the first year. 0:07:51.920 --> 0:07:54.120 Average down, average down eight percent. 0:07:53.920 --> 0:07:57.000 Right, and that's one of things like Facebook and Google. 0:07:57.040 --> 0:07:59.960 Here we're not talking things that you know, hit the dark. 0:08:00.680 --> 0:08:04.160 So this is perfectly normal ip behavior and all on 0:08:04.240 --> 0:08:08.240 this day. But also more importantly I think is that well, yeah, 0:08:08.320 --> 0:08:11.680 I mean SpaceX was overplaced to ploic stell is overplaced 0:08:11.760 --> 0:08:16.760 at this level, and you should didn't feel underppreciately buy 0:08:16.800 --> 0:08:18.080 something just because it's going up. 0:08:19.280 --> 0:08:20.920 I mean, I suppose it does make sense if you 0:08:20.960 --> 0:08:23.080 think about it, which we do try to do, don't 0:08:23.120 --> 0:08:26.040 We think about things good for an IPO to end 0:08:26.040 --> 0:08:28.200 its first year down, because when do you bring something 0:08:28.200 --> 0:08:29.960 to an IPO and you think you can get the 0:08:30.120 --> 0:08:33.600 absolute maximum top price for it. On the whole idea 0:08:33.640 --> 0:08:35.640 of the the olden days, there was an idea that 0:08:35.640 --> 0:08:37.720 you should leave something on the table. You shouldn't bring 0:08:37.720 --> 0:08:40.199 it to market that its peak price. You to leave 0:08:40.240 --> 0:08:42.400 something on the table for the public market investors. But 0:08:42.679 --> 0:08:44.920 I think there's days are gone. So when you bring 0:08:44.960 --> 0:08:46.960 your company to market, you do it when you think 0:08:46.960 --> 0:08:49.280 you can get the maximum for it. So it makes 0:08:49.320 --> 0:08:51.360 complete sense that it would then end the year slightly 0:08:51.400 --> 0:08:54.120 off a percent makes sort of intuitive sense. Yeah, it's 0:08:54.120 --> 0:08:58.079 a sales market, it's a seller's market. Right. Just as 0:08:58.120 --> 0:08:59.600 we look at this kind of thing, I think, oh, well, 0:08:59.600 --> 0:09:02.080 things very little topy and these giant hypos might change 0:09:02.080 --> 0:09:06.480 some things, et cetera. We then get a half yearly 0:09:06.600 --> 0:09:10.520 letter from Terry Smith, manager of the fund Smith Equity Fund, 0:09:10.600 --> 0:09:13.720 which is boys that had a nasty time recently. So 0:09:13.920 --> 0:09:16.920 I don't know. Wow, now well, look I'm just looking 0:09:17.120 --> 0:09:19.320 at the chart of the performance of this fund, Smith 0:09:19.400 --> 0:09:21.200 Equity Fund, which I know a lot of listeners in 0:09:21.280 --> 0:09:23.560 the UK will be in because Terry Smith, the very 0:09:23.720 --> 0:09:28.480 well known manager. Here now it is let me see 0:09:28.600 --> 0:09:32.080 here fun Smith Equity Fund from the first of January 0:09:32.080 --> 0:09:34.040 this year at the end of June this year down 0:09:34.160 --> 0:09:39.720 three percent, MSc Wild World Index up eleven percent, and 0:09:39.760 --> 0:09:43.760 of course other things up a lot more. That's inception. Okay, 0:09:43.760 --> 0:09:45.520 we have to say this because you know, lesbian and 0:09:45.600 --> 0:09:49.160 let's be nicer. Since since inception the fund is still 0:09:49.240 --> 0:09:53.360 up thirteen percent annualized and MSCI World up twelve and 0:09:53.400 --> 0:09:57.559 a half percent annualized, so you know, okay, but probably 0:09:57.600 --> 0:10:00.679 not quite what people expected when they brought into the 0:10:00.760 --> 0:10:04.520 hype around this. Now here's interesting, well, I hope it's 0:10:04.559 --> 0:10:10.080 interesting to people. What Terry Smith always said that he 0:10:10.120 --> 0:10:13.240 would do is to buy good companies, don't overpay for 0:10:13.280 --> 0:10:17.040 those companies, and then do nothing to sit and wait. 0:10:17.200 --> 0:10:20.040 And theoretically that should really work. Going We're both down 0:10:20.040 --> 0:10:22.560 with that, arn't we, John By great companies, don't overpay 0:10:22.600 --> 0:10:24.760 for them and then sit around and wait, because investing 0:10:24.840 --> 0:10:27.680 is our long term game, but it has not been 0:10:27.760 --> 0:10:31.480 working in this environment of the shift to passive because 0:10:31.520 --> 0:10:34.520 what really works in this environment is momentum investing, not 0:10:34.960 --> 0:10:39.160 long term quality slash value investing. Right, So he is 0:10:39.240 --> 0:10:41.880 now beginning to backtrack in this letter, is it's worth reading. 0:10:41.880 --> 0:10:43.600 By the way, I'm going to put the link into 0:10:43.640 --> 0:10:45.560 the show notes so you. 0:10:45.480 --> 0:10:46.360 Can read it. 0:10:46.360 --> 0:10:50.240 It's a public letter, and he talks about the way 0:10:50.320 --> 0:10:54.960 that Pascifists conquered the world and that possibly one needs 0:10:55.000 --> 0:10:58.120 to adjust one's investing process as a result. And what 0:10:58.400 --> 0:11:01.960 Terry is going to do is to change his holding 0:11:02.080 --> 0:11:04.160 periods as opposed to or anything else. So still buy 0:11:04.240 --> 0:11:08.400 good companies, still don't overpay, but the third leg needs 0:11:08.400 --> 0:11:10.520 to change. So if you look at their portfolio turnover, 0:11:10.600 --> 0:11:12.200 it's gone up a lot, and I think quite rightly 0:11:12.240 --> 0:11:15.200 points out in a world where share prices sometimes may 0:11:15.240 --> 0:11:17.720 have twenty thirty percent a day, even in very big stocks, 0:11:17.960 --> 0:11:20.240 buy and hold kind of doesn't work anymore. 0:11:20.800 --> 0:11:24.319 It's a shricky one, isn't it? Because I actually sympathize 0:11:24.320 --> 0:11:31.120 overall his view and the passive highs tounned markets spent 0:11:31.440 --> 0:11:35.679 a momentum market, and this has been the case for 0:11:35.880 --> 0:11:40.400 a long time now, certainly longer than reversion of the 0:11:40.480 --> 0:11:46.160 mean with investors can handle. I think it's also interesting though. 0:11:46.480 --> 0:11:48.000 The one thing I would say, and I can see 0:11:48.000 --> 0:11:51.480 why obviously he doesn't want to go there, but he 0:11:51.559 --> 0:11:55.400 and neck Train, another big retail face and fund manager 0:11:55.400 --> 0:11:57.440 that have a sort of similar style, which is this 0:11:58.040 --> 0:12:02.679 focus on quality thing. And you know, from the investment 0:12:02.720 --> 0:12:05.520 point of view that respect them both. They both explained 0:12:05.520 --> 0:12:08.640 their ideas very well, They're very good at communicating with investors, 0:12:09.360 --> 0:12:12.120 and obviously they both have excellent long term track records. 0:12:12.280 --> 0:12:14.079 I think it is also fair to say that their 0:12:14.720 --> 0:12:17.960 style kind of went out of fashion, and partly that 0:12:18.400 --> 0:12:24.840 was for I would argue reasonably predictable reasons, because a 0:12:24.880 --> 0:12:29.960 lot of this stopped in twenty twenty one after the 0:12:29.960 --> 0:12:33.520 the kind of basically the kind of COVID ultra zero 0:12:34.160 --> 0:12:43.160 interest rates backdrop ended interest rates went up, and most 0:12:43.200 --> 0:12:45.880 of those stocks then got demolished, and a lot of 0:12:45.920 --> 0:12:47.840 them are also the kinds of stocks that then got 0:12:47.880 --> 0:12:52.240 further hit in the software as a service apocalypse as 0:12:52.240 --> 0:12:55.199 they called it, as an AI is going to take 0:12:55.240 --> 0:13:01.120 all that business. So I feel that there is there's 0:13:01.160 --> 0:13:04.120 a lot of sense and sticking to one strategy it 0:13:04.280 --> 0:13:06.240 makes a lot of sense. But I do think that 0:13:06.240 --> 0:13:09.800 that was perhaps a tourning point at which an act 0:13:09.880 --> 0:13:13.920 of manager, even when we are long term ultra long 0:13:14.000 --> 0:13:16.600 term take on things. Might have wanted to look at 0:13:16.600 --> 0:13:20.040 what was changing about the backdrop and then reconsider the 0:13:20.200 --> 0:13:26.199 portfolio within those parameters. But maybe that's unfair. 0:13:27.440 --> 0:13:30.920 Maybe that's unfair. But it's interesting, isn't it. I Mean, 0:13:31.200 --> 0:13:33.960 when we were talking about what we were going to 0:13:34.000 --> 0:13:35.960 talk about today, you said, well, there's a lot of 0:13:35.960 --> 0:13:40.439 turning points out there, and seeing someone like Terry Smith, 0:13:40.440 --> 0:13:43.920 who's been so clear and so firm in his view 0:13:44.040 --> 0:13:48.160 and his investing style for so long, to start to 0:13:48.160 --> 0:13:52.760 make changes in it makes me feel a little contrarian. 0:13:53.679 --> 0:13:55.880 I mean, yeah, I mean there is an element of 0:13:55.920 --> 0:14:02.240 capitulation here as well. Yeah, and obviously, well that goes 0:14:02.240 --> 0:14:04.880 to all the other signs that we are very toppy 0:14:05.120 --> 0:14:08.560 at the moment. I think the problemly all of the 0:14:08.600 --> 0:14:14.200 top signs is that well it is working out when 0:14:14.240 --> 0:14:16.680 the dominoes finally going to fall over, Like what is 0:14:16.679 --> 0:14:19.160 the straw that breaks the camel's back, because there's been 0:14:19.600 --> 0:14:21.480 a lot of them and a lot of them going 0:14:21.560 --> 0:14:24.840 back years now, you know, no, just minds. 0:14:25.480 --> 0:14:27.360 Yeah, but we do really need there's a turning point 0:14:27.400 --> 0:14:30.120 in the UK stock market because the other thing is 0:14:30.120 --> 0:14:32.360 that we got to talk about is the ongoing demise 0:14:32.400 --> 0:14:36.280 of the UK stock market closing down sale continues. I'm 0:14:36.320 --> 0:14:38.440 afraid I'm not sure who it was. You wrote closing 0:14:38.480 --> 0:14:43.600 down sales continuous on Twitter and somebody wrote underneath it, 0:14:43.640 --> 0:14:45.600 at least this time we won't have to turn the 0:14:45.720 --> 0:14:48.760 lights out, which, of course there's a reference to our 0:14:50.440 --> 0:14:53.080 rather rickety electricity grid and the fact that the lights 0:14:53.120 --> 0:15:12.480 might just turn themselves out. I thought it was quite funny. Well, George, George, excellent. Anyway, John, 0:15:12.480 --> 0:15:14.520 I'm going demise of the UK don't market We've lost 0:15:14.520 --> 0:15:15.520 another company, haven't we? 0:15:16.000 --> 0:15:18.120 Yeah, I mean, so there was a bid for road Talk, 0:15:18.280 --> 0:15:22.400 which is an engineer and all means. I don't know 0:15:22.520 --> 0:15:25.720 very much about road Talk. It's a bit familiar name 0:15:25.760 --> 0:15:27.880 to me. Low I believe it was set up in Bath. 0:15:28.840 --> 0:15:30.880 As soon as we know part of that tweet. I 0:15:30.920 --> 0:15:33.880 got an awful lot of older city heads kind of 0:15:34.480 --> 0:15:36.320 reply and say, no, I remember that that was one 0:15:36.320 --> 0:15:38.360 of the first stalks I ever covered kind of thing. 0:15:39.480 --> 0:15:42.040 She's got a long history of being here and but yeah, 0:15:42.080 --> 0:15:44.920 it is just the latest one to get kind of 0:15:45.000 --> 0:15:47.760 spiped up. And I think the other interesting thing is 0:15:47.800 --> 0:15:52.080 that this week I was writing about this and money distilled. Hey, 0:15:52.080 --> 0:15:54.840 Barrett red Row, the house builder. I know that you're 0:15:54.880 --> 0:15:59.040 not your favorite sector for very acceptable reasons, but just. 0:15:58.960 --> 0:16:04.360 Go to look at the hard sand house builders. I 0:16:04.400 --> 0:16:06.600 hate them for the hideous houses that they build, and 0:16:06.640 --> 0:16:09.320 I hate them for not trying. But I do understand 0:16:09.320 --> 0:16:11.680 that the right number. I'm just difficult, but I still 0:16:11.840 --> 0:16:14.960 don't think that these houses have to be quite this hideous. 0:16:15.080 --> 0:16:17.960 I think this is fair. But the reason they bring 0:16:17.960 --> 0:16:20.840 it up is because basically one of their big shareholders 0:16:20.840 --> 0:16:22.680 said to them, look, you need to buy back your 0:16:22.720 --> 0:16:25.120 own shares because no one else is going to, you know, 0:16:25.480 --> 0:16:29.800 appreciate what a you know, good good quality in terms 0:16:29.840 --> 0:16:32.720 of profitability, long term business you've got. And so they've 0:16:32.760 --> 0:16:37.880 started doing that, and it's just adding to the whole 0:16:37.960 --> 0:16:42.800 sense that nobody these things are just lying around unappreciated 0:16:43.320 --> 0:16:46.800 on the supermarket shelf until someone where an eye for 0:16:46.840 --> 0:16:51.440 a bargain comes along and takes them, or the management themselves. 0:16:52.960 --> 0:16:53.400 Compass. 0:16:53.640 --> 0:16:56.760 Yeah, thats exactly stick to ekes track. They kind of 0:16:57.040 --> 0:17:02.800 the value themselves if you like. So I don't know 0:17:03.480 --> 0:17:09.000 if there is a turning point, because regardless of how 0:17:09.080 --> 0:17:12.200 much to be buying this drum nobody seems to be paying. 0:17:11.960 --> 0:17:13.119 The time interested. 0:17:13.400 --> 0:17:17.640 Yeah, I know, which is fine from a short term 0:17:17.640 --> 0:17:18.959 point of view. At the end of the day, if 0:17:18.960 --> 0:17:21.879 you can invest in these stocks, then you'll get the 0:17:21.920 --> 0:17:25.200 takeover premium or you'll get to be the last person 0:17:25.280 --> 0:17:28.480 owning the last share outstanding, so you make money that way. 0:17:28.680 --> 0:17:32.119 It's just not great for the long term healthy the economy, 0:17:32.480 --> 0:17:36.919 if our equity market specifically, because London's cattle markets as 0:17:36.920 --> 0:17:39.800 a whole are fine, there's nothing wrong with them, but 0:17:39.920 --> 0:17:45.399 this bit is just dying on his backside, and I 0:17:45.480 --> 0:17:48.240 think we should try to stop that from happening. 0:17:50.080 --> 0:17:53.600 Okay, well, we should try and to be feder ritual raves. 0:17:53.760 --> 0:17:55.760 This is one thing she did slightly get and she 0:17:56.040 --> 0:17:59.280 was trying at least in a regular environment. Let's see 0:18:00.640 --> 0:18:05.640 it is focused on comes up with on a similar subject. 0:18:05.920 --> 0:18:08.919 We have for years, John, our favorite favorite markets. You 0:18:08.960 --> 0:18:11.119 and I've been Japan and the UK, and you know, 0:18:11.200 --> 0:18:12.960 Japan has kind of come good. The UK has come 0:18:13.000 --> 0:18:15.320 a little good, but not that good. Has just discussed. 0:18:15.800 --> 0:18:19.160 But Japan is really interesting because the only thing we've 0:18:19.160 --> 0:18:22.480 talked about a lot on this podcast is financial repression 0:18:22.800 --> 0:18:26.679 and return of the extent to which governments might, in 0:18:26.760 --> 0:18:31.040 our great age of debt, demand that domestic investors bring 0:18:31.080 --> 0:18:35.119 their capital home to help out with either national infrastructure 0:18:35.240 --> 0:18:38.199 or investing in the domestic bond market to make it 0:18:38.200 --> 0:18:41.200 look less rubbish, et cetera. And we're now seeing something 0:18:41.440 --> 0:18:48.040 happening in Japan. Nothing set yet, but the Finance Minister 0:18:48.080 --> 0:18:51.400 Kata Yamastan, we're speaking earlier this week about how one 0:18:51.480 --> 0:18:56.120 might encourage local investors, including Japan's whooping great government pension fund, 0:18:56.359 --> 0:19:01.040 to consider bringing money home and investing in themes stick assets. 0:19:01.280 --> 0:19:04.760 And it's interesting that this has shifted since twenty fourteen 0:19:04.880 --> 0:19:07.239 or so, when there was a much higher level of 0:19:07.320 --> 0:19:10.679 Japanese assets held inside Japan than under Abasan. There was 0:19:11.240 --> 0:19:14.320 a shift in as it started to flow abroad. And 0:19:14.400 --> 0:19:16.840 in one way that's been great. Very cheap yen has 0:19:16.880 --> 0:19:19.800 been brilliant for the Japanese exporters in the manufacturing sector 0:19:20.040 --> 0:19:22.800 dat in an age when you know physical AI, robotics, etc. 0:19:23.000 --> 0:19:26.160 It's all been marvelous. But now there is talk about 0:19:26.240 --> 0:19:30.120 trying to bring some of that money home, which would 0:19:30.160 --> 0:19:32.080 be kind of interesting. And Deutsche Bank have done a 0:19:32.080 --> 0:19:35.119 little blog on this looking at what might happen, and 0:19:35.240 --> 0:19:37.359 suggesting that at the maximum the amount of money that 0:19:37.440 --> 0:19:39.359 might be brought back would amount of about ten percent 0:19:39.400 --> 0:19:41.480 of GDP. It should be something of a game changer 0:19:41.520 --> 0:19:41.919 for the end. 0:19:42.359 --> 0:19:44.760 Yeah, and I think this really has both paying attention 0:19:44.880 --> 0:19:49.840 to because I mean, obviously the semmetery as the in 0:19:49.960 --> 0:19:54.000 twenty tweyelve, as you say, that's where then playmnster sins 0:19:54.080 --> 0:19:56.239 or RB can they say it will basically we need 0:19:56.280 --> 0:19:58.919 to do something about this and started a policy. It's 0:19:58.920 --> 0:20:02.000 a little bit deliberately being the end amongst other things. 0:20:03.600 --> 0:20:05.960 And that was Bien was at the strongest end. And 0:20:06.080 --> 0:20:08.720 as you say, twenty fourteen, the GPF, the big pension 0:20:08.760 --> 0:20:11.560 fund started the increased the amount of foreign assets that 0:20:11.560 --> 0:20:15.400 they could own. And so yeah, if they flip that around, 0:20:15.600 --> 0:20:17.480 because it did have a big effect, they'll have a 0:20:17.520 --> 0:20:23.159 big effect in the opposite direction. There's obviously the concerns 0:20:23.200 --> 0:20:26.520 that the yen carry trade, which is basically borrowing money 0:20:26.560 --> 0:20:30.120 and yen and investing in elsewhere, if that suddenly reverses 0:20:30.160 --> 0:20:31.680 and a whole load of money could come out of 0:20:31.760 --> 0:20:35.719 various assets, including you know, hot tech stocks. But I 0:20:35.720 --> 0:20:37.159 think the other thing, and I don't know if this 0:20:37.280 --> 0:20:40.880 was in the Deutsche study or not, but they said 0:20:40.880 --> 0:20:44.720 that the most vulnerable asset was probably French sovereign bonds 0:20:46.600 --> 0:20:51.040 and that would be interesting to watch given that vulnerable. Yeah, 0:20:51.040 --> 0:20:54.320 I mean frances is the only reason that France is 0:20:55.440 --> 0:20:57.359 not on the front pages all the time in the 0:20:57.400 --> 0:21:01.280 way that Britain has been is because inflation is slightly 0:21:01.320 --> 0:21:03.680 lower in the Eurozone as a whole. But also France 0:21:03.760 --> 0:21:07.080 is effectively underwritten by you know, the European Central Bank, 0:21:07.160 --> 0:21:11.120 which is Germany basically, and so that's you know, it's 0:21:11.200 --> 0:21:13.960 it's kind of debt isn't isn't being subject to quite 0:21:13.960 --> 0:21:17.960 the same pressures. But if if this happens and you've 0:21:17.960 --> 0:21:22.480 also then got you know, again a very panicky looking 0:21:23.000 --> 0:21:26.440 French political situation next year, I don't think it'd be 0:21:26.480 --> 0:21:28.800 going too far to say that you start getting worries 0:21:28.840 --> 0:21:32.520 about the kind of Eurozone again kind of erupting in 0:21:32.680 --> 0:21:34.880 the you know, headlines and all the rest of it. 0:21:35.400 --> 0:21:40.840 So yeah, I think this, this this suggestion is actually 0:21:40.920 --> 0:21:44.240 quite consequential, and I'd imagine they will follow up on it. 0:21:45.280 --> 0:21:49.240 I don't think it's worth saying that, as I think 0:21:49.280 --> 0:21:52.760 a lot of people have pointed out that the the 0:21:52.800 --> 0:21:55.359 government pigeon Fund does not fall under the Ministry of 0:21:55.400 --> 0:21:59.800 Finance technically nothing to do with the Finance minister Cutma 0:22:00.080 --> 0:22:03.359 but but but, but it all falls onder the same 0:22:03.359 --> 0:22:05.120 thing in the end, and the pension Fund falls under 0:22:05.119 --> 0:22:08.080 the Ministry of Health, Labor and Welfare. But it's all 0:22:08.080 --> 0:22:10.080 part of the same government, all part of the same system. 0:22:10.440 --> 0:22:12.960 And we know that the government has influence over pretty 0:22:13.000 --> 0:22:15.200 much everything. I mean, the Bank of Japan is famously 0:22:15.280 --> 0:22:17.879 not quite independent, et cetera. So I don't think the 0:22:17.920 --> 0:22:20.880 fact that it's not directly cut Umiston's responsibility would make 0:22:21.359 --> 0:22:23.879