WEBVTT - Bloomberg Businessweek Weekend - January 5th, 2024 0:00:01.360 --> 0:00:05.680 This is Bloomberg business Week Inside from the reporters and 0:00:05.880 --> 0:00:09.440 editors who bring you America's most trusted business magazine, plus 0:00:09.520 --> 0:00:13.680 global business, finance and tech news. The Bloomberg Business Week 0:00:13.720 --> 0:00:18.640 Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio. 0:00:20.160 --> 0:00:23.000 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:23.480 --> 0:00:25.959 It is our first week of twenty twenty four and 0:00:26.320 --> 0:00:27.600 got to say it was a busy start to the 0:00:27.600 --> 0:00:30.960 new year for markets, with Federal Reserve meeting minutes being released. 0:00:31.000 --> 0:00:33.840 We also got the December jobs report. We also saw 0:00:33.880 --> 0:00:36.320 a risk off trade for much of the week on 0:00:36.440 --> 0:00:39.400 expectations at the Fed. Now we'll keep interest rates elevated 0:00:39.479 --> 0:00:41.800 for longer. We've heard this before, Tim. 0:00:41.680 --> 0:00:44.480 Perhaps not surprising then, as dak as a result taking 0:00:44.520 --> 0:00:46.599 the worst of it and so a head on the program, 0:00:46.760 --> 0:00:49.320 we'll examine both the bull and the bear case for 0:00:49.400 --> 0:00:53.120 the index's largest holding, the Ultimate megacap Apple. 0:00:53.400 --> 0:00:53.840 Indeed. 0:00:54.000 --> 0:00:57.400 Also ahead a wide ranging interview with arkinvest Kathy Wood, 0:00:57.720 --> 0:01:00.320 and you'll hear from Carnival CEO Josh Weinstein on what 0:01:00.400 --> 0:01:02.520 the cruise line can do for an encore on the 0:01:02.520 --> 0:01:05.319 heels of eight strong quarterly earnings to cap off twenty 0:01:05.360 --> 0:01:06.080 twenty three. 0:01:06.200 --> 0:01:09.279 Plus, our Bloomberg Pursuits team lays out the ultimate travel 0:01:09.280 --> 0:01:12.880 guide for the next twelve months, which spans destinations on 0:01:13.000 --> 0:01:16.640 six of the seven continents. Sorry no trips to Anthwerp. 0:01:16.720 --> 0:01:18.640 This is a story there, everybody. 0:01:18.920 --> 0:01:20.440 And the Caribbean as well. 0:01:20.480 --> 0:01:22.240 I'm already putting a list together overhere. I want to 0:01:22.280 --> 0:01:24.000 go all of that to come. We begin with the 0:01:24.080 --> 0:01:27.440 very first Bloomberg Big Take of twenty twenty four, covers everything, 0:01:27.520 --> 0:01:31.320 well almost everything, that Wall Street expects in the year ahead. 0:01:31.440 --> 0:01:34.120 The range everything from the mother of all rallies to 0:01:34.200 --> 0:01:36.800 a sell off for the ages. Talk about a standard 0:01:36.800 --> 0:01:37.520 deviation tip. 0:01:37.640 --> 0:01:39.360 For a look at the key takeaways from more than 0:01:39.360 --> 0:01:41.880 six hundred and fifty calls from the financial world, we 0:01:41.880 --> 0:01:45.520 welcome Bloomberg News Senior editor Sam Potter. And as a reminder, 0:01:45.600 --> 0:01:47.720 on our last trading day of twenty twenty three, our 0:01:47.720 --> 0:01:50.200 most read story on the Bloomberg terminal was about how 0:01:50.240 --> 0:01:53.680 Wall Street's Best and Brightest flopped once again in twenty 0:01:53.720 --> 0:01:56.840 twenty three. So our first question for Sam, what's the 0:01:56.920 --> 0:01:59.760 use in surveying Wall Street for what to expect in 0:01:59.760 --> 0:02:00.440 the new new year? 0:02:00.720 --> 0:02:02.400 Yeah, they really put me in a buying with that 0:02:02.840 --> 0:02:06.680 story at the end of last year. First, I should 0:02:06.720 --> 0:02:09.320 just say these are the investment outlooks that the biggest banks, 0:02:09.320 --> 0:02:12.640 the biggest asset managers and advisors put out every year. 0:02:12.639 --> 0:02:15.720 They start publishing the mid November. Many of them run 0:02:15.760 --> 0:02:19.240 to one hundred pages or more, containing all the wisdom 0:02:19.280 --> 0:02:22.760 and the forecasts for the year ahead. I've been putting these, 0:02:22.880 --> 0:02:25.120 I've been sort of collating the main calls for these 0:02:25.160 --> 0:02:27.440 for the last five years or so, five. 0:02:27.320 --> 0:02:28.160 Or six years. 0:02:28.480 --> 0:02:31.880 I've got to say it's interesting this time round because 0:02:31.880 --> 0:02:34.880 the dispersion there is dispersion is ever, but actually there's 0:02:34.919 --> 0:02:39.079 a fair fairly common consensus among most of the reports, 0:02:39.480 --> 0:02:42.800 which is, and it's a pretty sort of benign, middle 0:02:42.800 --> 0:02:44.600 of the road kind of view that we're going to 0:02:45.080 --> 0:02:47.600 the rate hikes that we've seen this past year or two, 0:02:47.720 --> 0:02:50.160 they're finally going to buy it. Economy are going to slow, 0:02:50.480 --> 0:02:54.320 and that will prompt a central bank pivot somewhere in midyear, 0:02:54.919 --> 0:02:56.720 which could pave the way for a bit of a 0:02:56.760 --> 0:03:01.760 recovery and modest kind of games for stocks and bonds 0:03:01.760 --> 0:03:05.119 are seen. So actually, most of the forecasts are sort 0:03:05.160 --> 0:03:08.760 of leaving around this fairly benign outlet. 0:03:08.639 --> 0:03:10.560 Does that, and that doesn't typically happen in terms of 0:03:10.639 --> 0:03:12.480 kind of a middle of the road thinking. You know, Sam, 0:03:12.480 --> 0:03:16.079 since you've done this, you know, for us a few 0:03:16.120 --> 0:03:20.000 times here at Bloomberg, is it more typically some extremes 0:03:20.520 --> 0:03:21.079 kind of all over. 0:03:21.160 --> 0:03:21.359 Yeah. 0:03:21.440 --> 0:03:24.360 So the reason, yes, the reason that that twenty twenty 0:03:24.360 --> 0:03:27.200 three was stood out so much and that my colleagues 0:03:27.200 --> 0:03:32.120 did that story last week was this time last year, 0:03:32.120 --> 0:03:36.040 everyone was very gloomy. They expected recession, and not a 0:03:36.080 --> 0:03:38.320 mild recession. A lot of people were predicting that it 0:03:38.360 --> 0:03:39.800 was going to be a very tough year as those 0:03:39.880 --> 0:03:44.200 rate hikes really grounded to the economy, and as it happened, 0:03:45.760 --> 0:03:48.520 the economy held up pretty well. You guys were just 0:03:48.560 --> 0:03:53.440 talking about that, and then an AI frenzy from nowhere 0:03:54.080 --> 0:03:58.800 stoked the stock market, and so everyone's forecasts were sort 0:03:58.800 --> 0:04:01.080 of torn up this time around. As I say, it's 0:04:01.080 --> 0:04:03.440 a very kind of I mean the words they use 0:04:03.480 --> 0:04:09.720 are like mild recession, a healthy slowdown, benign. It's the 0:04:09.800 --> 0:04:13.640 soft landing, right, it's the successful soft landing, which most 0:04:13.680 --> 0:04:15.960 of the calls say, not all of them, As we say, 0:04:16.200 --> 0:04:19.840 is there are still some outliers, but it's unusually kind 0:04:19.839 --> 0:04:21.960 of conservative. I guess this year it is. 0:04:22.000 --> 0:04:24.600 But there's also this section on risks that I wanted 0:04:24.600 --> 0:04:27.000 to highlight. Sam what were some of the risks or 0:04:27.040 --> 0:04:30.360 I guess what is the general theme that runs through 0:04:30.360 --> 0:04:33.240 the different the different banks when they talk about risk 0:04:33.320 --> 0:04:33.800 for this year. 0:04:34.360 --> 0:04:37.279 Well, there's the big and very obvious one, which is 0:04:38.200 --> 0:04:40.560 the election year ahead, which has been talked about quite 0:04:40.600 --> 0:04:43.920 a lot. I think it works out that more than 0:04:44.560 --> 0:04:46.760 a country is equating to more than half of the 0:04:46.760 --> 0:04:49.479 global economy, will be electing their leaders in the year 0:04:49.520 --> 0:04:53.080 ahead or are expected to, led of course by the 0:04:53.240 --> 0:04:57.440 United States. And at this point that is just too 0:04:57.520 --> 0:05:01.560 too tough to call. All the reports can all these 0:05:02.240 --> 0:05:06.360 poor strategists can do is say, you know, prepare for volatility. 0:05:06.640 --> 0:05:09.080 It's too early to say, we don't know what's going 0:05:09.080 --> 0:05:12.800 to happen. So the US election is really a big one. 0:05:12.960 --> 0:05:16.720 Inflation has it been vanquished? If it proved stickier than 0:05:16.760 --> 0:05:18.839 everyone expects, then that could be a bit of a 0:05:18.880 --> 0:05:23.159 surprise for the market. And also geopolitics. I think in 0:05:23.200 --> 0:05:27.040 the past three or four years it's been the unexpected 0:05:27.080 --> 0:05:30.080 that has derailed all the Wall Street courts. So the 0:05:30.160 --> 0:05:33.200 war in Ukraine and now we have these rail gaza 0:05:33.920 --> 0:05:37.920 so there is well, there is consensus, there's a lot 0:05:37.920 --> 0:05:42.200 of nervousness, and we see generally risks back to the downside. 0:05:42.680 --> 0:05:44.719 Yeah, I feel like the geopolitics one of the things. 0:05:44.760 --> 0:05:47.200 Last week it was so quiet. I mean every morning 0:05:47.240 --> 0:05:50.799 we'd come in and futures were like point zero three, 0:05:50.960 --> 0:05:54.040 Like it was like barely moved. We actually got unchanged 0:05:54.080 --> 0:05:57.080 a couple of times. It was just so quiet. But 0:05:57.560 --> 0:06:00.640 we were concerned about geopolitics, certainly as we started to 0:06:00.680 --> 0:06:03.760 see problems in the Red Sea, and you know, some 0:06:03.839 --> 0:06:06.440 of the big container shippers or the big you know, 0:06:06.480 --> 0:06:08.720 trading companies that are so important to moving stuff around 0:06:08.720 --> 0:06:11.080 in terms of our global supply chain saying I'm not 0:06:11.120 --> 0:06:14.200 going to do it Marisk you know again, I think 0:06:14.240 --> 0:06:16.479 today or in the last twenty four hours saying we're 0:06:16.480 --> 0:06:18.279 not going to send our ships through there. There's just 0:06:18.320 --> 0:06:20.960 too much risks. At this point, I do feel like 0:06:21.040 --> 0:06:24.360 it's kind of wild here, Sam, wild in a scary way. 0:06:24.440 --> 0:06:28.560 That we now have the Russia Ukraine warheaded for its 0:06:28.640 --> 0:06:31.400 third year, right, and then we now have the Middle 0:06:31.440 --> 0:06:35.280 East where it does feel like things are escalating, and 0:06:35.320 --> 0:06:38.039 that there's a lot of kind of hot points. People. 0:06:38.080 --> 0:06:40.520 Last week we're talking about one hundred, more than one 0:06:40.560 --> 0:06:43.719 hundred attacks like in the region, So maybe we are 0:06:43.600 --> 0:06:48.560 already in a third world war. If you had to say, 0:06:48.960 --> 0:06:52.000 you know, the biggest risk that maybe faces investors this 0:06:52.080 --> 0:06:53.600 year is it geopolitics. 0:06:54.160 --> 0:06:58.240 Well, funnily enough, geopolitics. I mentioned it after the election 0:06:58.360 --> 0:07:02.240 because that seems to be where it comes on the radar. Obviously, 0:07:02.560 --> 0:07:05.200 the US election in particular has a huge bearing on 0:07:05.279 --> 0:07:10.680 the geopolitics because the foreign policy of the respective candidates 0:07:10.720 --> 0:07:15.800 is likely to be quite different. Yeah, I think geopolitics, 0:07:15.840 --> 0:07:19.600 A lot of the view is that the Russia and 0:07:19.680 --> 0:07:23.000 Ukraine war is kind of a known element. Now, those 0:07:23.160 --> 0:07:26.640 energy shocks that we experienced in the early days of 0:07:26.680 --> 0:07:30.600 the war and not happening so much anymore. There are 0:07:30.640 --> 0:07:34.480 some rumblings, you know, if the Middle East escalates, obviously 0:07:34.520 --> 0:07:39.760 that can impact the energy sector. But yeah, a lot 0:07:39.800 --> 0:07:44.440 of I guess I don't know whether the strategists are 0:07:44.480 --> 0:07:47.280 just getting weary or but a lot of people saying, 0:07:47.720 --> 0:07:52.119 you know, in the long run, the markets look through 0:07:52.120 --> 0:07:54.640 these things, they look past these things, so don't worry 0:07:54.640 --> 0:07:57.640 about it. Too much. Far more important is the election. 0:07:58.000 --> 0:08:00.520 And actually one thing that we haven't mentioned this fiscal 0:08:00.600 --> 0:08:04.840 picture which is looming in the background in particularly in 0:08:04.880 --> 0:08:09.640 the US, because a lot of people are wondering if 0:08:09.680 --> 0:08:12.920 the US could keep spending the way it is and 0:08:12.920 --> 0:08:15.040 how that is going to feed into the election. 0:08:15.360 --> 0:08:17.720 One thing I wanted to ask is AI was such 0:08:17.760 --> 0:08:21.040 a big momentum play, if you will, and actually turned 0:08:21.040 --> 0:08:23.440 out to be fundamentally because we did see some strong 0:08:23.480 --> 0:08:26.160 numbers from Nvidia. Is there something else that kind of 0:08:26.240 --> 0:08:30.000 juices the markets? AI did it last year, those new 0:08:30.040 --> 0:08:33.000 class of weight loss drugs. Is there something in terms 0:08:33.040 --> 0:08:35.360 of a sector or trend? And just got about forty 0:08:35.400 --> 0:08:35.920 seconds here. 0:08:36.320 --> 0:08:38.760 AI still is where I would say to that. I mean, 0:08:38.840 --> 0:08:41.920 for the longest time, they all will talk ESG and 0:08:42.120 --> 0:08:44.360 green energy and things, but it never sort of catches 0:08:44.440 --> 0:08:47.600 firing the way AI did this year. So a lot 0:08:47.640 --> 0:08:50.439 of the outlooks are talking about the potential for AI 0:08:50.520 --> 0:08:54.600 to keep supercharging returns and it's going to play out 0:08:54.640 --> 0:08:56.160 they see as a theme that's going to run and 0:08:56.160 --> 0:08:59.440 around over the next couple of years. So AI still, 0:09:00.520 --> 0:09:03.679 But yeah, that's these things by their nature come out 0:09:03.720 --> 0:09:06.520 of the blue, right So if we knew the if 0:09:06.559 --> 0:09:09.240 I'd seen the magic ticket in these outlooks, I would well, 0:09:09.280 --> 0:09:12.240 I wouldn't be telling you guys. But come on, Sam, yeah, 0:09:12.360 --> 0:09:12.920 I would tell you. 0:09:12.960 --> 0:09:14.559 If I knew you would. 0:09:14.440 --> 0:09:15.319 Quit, you would make it. 0:09:16.880 --> 0:09:19.360 If Sam is an, Sam's not doing the outlook for 0:09:19.400 --> 0:09:22.559 twenty twenty five. We know he found the golden ticket. Okay, 0:09:22.640 --> 0:09:23.160 that's what we know. 0:09:23.360 --> 0:09:25.439 That is so true. Didn't somebody win? 0:09:25.559 --> 0:09:27.839 Was it in Michigan? 0:09:28.000 --> 0:09:30.240 Yeah, but I'm talking like, you know, more important than 0:09:30.240 --> 0:09:31.360 the lottery is like knowing. 0:09:31.160 --> 0:09:34.200 What the markets are exactly. Sam Potter, thank you so much. 0:09:34.240 --> 0:09:36.000 We know it is later out there in London, so 0:09:36.080 --> 0:09:37.960 we were so glad we could bring this story to everybody. 0:09:38.240 --> 0:09:41.240 Sam Potter, Bloomberg News Senior editor on zoom from London. 0:09:41.320 --> 0:09:42.040 This is Bloomberg. 0:09:44.280 --> 0:09:47.880 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:47.920 --> 0:09:51.280 live weekday afternoons from three to six Eastern Listen on 0:09:51.320 --> 0:09:55.360 Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, 0:09:55.640 --> 0:09:57.920 or watch us live on YouTube. 0:09:58.720 --> 0:10:01.560 The twenty twenty four rating year began with volatility for 0:10:01.600 --> 0:10:05.040 bitcoin investors. Early this past week, we saw the cryptocurrency 0:10:05.040 --> 0:10:07.720 briefly touch forty five thousand dollars for the first time 0:10:08.000 --> 0:10:11.720 since April of twenty twenty two, before retreating this on 0:10:11.760 --> 0:10:14.400 bets that the SEC will soon approve in exchange traded 0:10:14.440 --> 0:10:16.679 fund investing directly in the biggest token. 0:10:16.800 --> 0:10:19.240 Yes, indeed, we're watching the calendar now. One person who 0:10:19.240 --> 0:10:22.319 has long been confident in this development as Kathy Wood, 0:10:22.559 --> 0:10:26.120 the founder, CEO and CIO of our Investment Management. She 0:10:26.280 --> 0:10:28.800 joined me in our Bloomberg TV colleagues Katie Greifeld and 0:10:28.840 --> 0:10:32.240 Manas Crani on December twenty eighth for a wide ranging 0:10:32.320 --> 0:10:35.640 conversation starting with arcs move to sell off its remaining 0:10:35.679 --> 0:10:38.520 position in the gray scale Bitcoin trust based on the 0:10:38.600 --> 0:10:41.440 shrinking discount to its net asset value. 0:10:41.520 --> 0:10:46.280 We're as optimistic about bitcoin as we ever have been, 0:10:47.440 --> 0:10:53.600 but there are a few regulatory and tax uncertainties, and 0:10:54.240 --> 0:11:00.320 we had been waiting for the discount between GBTC and and. 0:11:00.520 --> 0:11:02.760 NAVE to narrow. 0:11:02.880 --> 0:11:05.319 It was as high as fifty percent at one point 0:11:05.400 --> 0:11:08.120 last year when there was great uncertainty around all of 0:11:08.120 --> 0:11:12.319 the turmoil in crypto generally, and now it's a single 0:11:12.400 --> 0:11:17.400 digit and there are now other products out there that 0:11:18.000 --> 0:11:21.360 we can use to gain exposure to bitcoin in this moment, 0:11:21.520 --> 0:11:24.480 and it's just a moment of uncertainty between now we 0:11:24.520 --> 0:11:29.480 think and January January eighth to tenth, somewhere in that 0:11:29.600 --> 0:11:33.600 range perhaps, but we will, out of an abundance of caution, 0:11:33.720 --> 0:11:35.079 didn't want to take any risk. 0:11:35.920 --> 0:11:38.000 And I mean, let's get a little bit specific here, 0:11:38.040 --> 0:11:41.400 because we're talking about the ARC Next Generation Internet ETF. 0:11:41.440 --> 0:11:42.240 The ticker there is. 0:11:42.280 --> 0:11:44.839 ARC W and I think we caught a lot of 0:11:44.880 --> 0:11:48.800 people's attentions is that you completely sold down your remaining 0:11:48.840 --> 0:11:52.320 stake of the Grayscale Bitcoin Trust instead on the same 0:11:52.400 --> 0:11:56.079 day you bought into the pro Shares Bitcoin Strategy ETF. 0:11:56.120 --> 0:11:59.600 Of course, that tracks bitcoin futures, it doesn't actually hold 0:11:59.760 --> 0:12:01.160 the physical bitcoin. 0:12:01.240 --> 0:12:02.720 Can you explain that shuffle? 0:12:02.760 --> 0:12:03.760 What was the thinking there? 0:12:04.160 --> 0:12:06.160 Sure a couple of things. 0:12:06.200 --> 0:12:10.839 First of all, Biddo the pro Shares is already approved. 0:12:10.960 --> 0:12:15.680 There's no regulatory uncertainty having to do with it. So 0:12:15.880 --> 0:12:20.320 we chose to maintain our exposure through Biddo for the 0:12:20.360 --> 0:12:24.240 time being. And as I mentioned before, there are some 0:12:25.120 --> 0:12:29.520 tax and regulatory uncertainties still as part of this process. 0:12:30.400 --> 0:12:33.440 We don't know exactly who's going to be approved, and. 0:12:34.920 --> 0:12:36.199 Whether they've met. 0:12:36.000 --> 0:12:40.400 All the criteria that the SEC has put before us. 0:12:40.679 --> 0:12:45.000 We know we have, but we don't know if others, 0:12:45.080 --> 0:12:47.040 including GBTC. 0:12:46.520 --> 0:12:48.360 Have, We just don't know. 0:12:49.880 --> 0:12:53.360 So again, out of an abundance of caution and gbt's 0:12:53.720 --> 0:12:57.760 discount again it was as much as fifty percent relative 0:12:57.800 --> 0:13:00.360 to NAV. So not only have we enjoyed this year 0:13:00.920 --> 0:13:05.120 the run in bitcoin itself, but we've had the nice 0:13:05.200 --> 0:13:06.679 closing of that discount. 0:13:06.720 --> 0:13:09.719 So it's been you know, double good news for us. 0:13:09.840 --> 0:13:12.000 When you've talked about January tenth, Kathy, I think in 0:13:12.040 --> 0:13:14.840 another report, is that possible, whether it's you or somebody 0:13:14.840 --> 0:13:17.840 else in terms of the first spot bitcoin ETF actually 0:13:17.880 --> 0:13:19.000 getting approval. 0:13:19.840 --> 0:13:23.680 Well, we think the probabilities have gone up because the 0:13:23.760 --> 0:13:29.120 SEC has been highly engaged compared to what was happening before. 0:13:29.160 --> 0:13:31.760 Before it was just denying. 0:13:31.280 --> 0:13:36.280 Approval, denying approval, and we just kept putting our filing 0:13:36.760 --> 0:13:43.199 in again, you know, try, try, ugged and determined, and 0:13:43.640 --> 0:13:46.199 so here we are. We think we're first in line, 0:13:46.240 --> 0:13:50.320 and that's why there is this January tenth deadline. But 0:13:50.520 --> 0:13:53.040 we like the idea that the SEC has been so 0:13:53.200 --> 0:13:56.040 engaged and it's not just with us, it's others as well. 0:13:56.080 --> 0:14:00.000 We think a number of a number of funds could 0:14:00.040 --> 0:14:01.120 be approved. 0:14:00.679 --> 0:14:01.600 At the same time. 0:14:02.440 --> 0:14:05.240 And they've been asking not only one set of questions, 0:14:05.280 --> 0:14:09.000 but follow up questions, and again that's a very good sign. 0:14:09.120 --> 0:14:11.720 Well, speaking of engagement, Oh go ahead, please, no, no, no, no. 0:14:11.840 --> 0:14:16.320 The last few questions have been very technical and so 0:14:16.640 --> 0:14:19.600 more der riguer. And you know, you'd expect them to 0:14:19.640 --> 0:14:22.640 be asking these questions as we head toward an approval. 0:14:23.040 --> 0:14:26.040 Now it's not one hundred percent certain, and so we 0:14:26.080 --> 0:14:26.840 want to make that. 0:14:26.720 --> 0:14:27.440 Clear as well. 0:14:28.360 --> 0:14:31.960 This is the SEC and we never know, you know, 0:14:32.120 --> 0:14:33.520 what might happen along the way. 0:14:33.640 --> 0:14:36.000 Regulators can be tricky, that's for sure. Hey, listen, you 0:14:36.040 --> 0:14:39.400 mentioned engagement. Let's talk about engagement with your funds overall 0:14:39.440 --> 0:14:42.680 and especially the ARC Innovation Fund up seventy two percent 0:14:42.760 --> 0:14:45.760 year to date, easily apt performing some of the major 0:14:46.160 --> 0:14:49.000 market benchmarks, still down sixty five percent from the high 0:14:49.000 --> 0:14:52.280 back in February of twenty twenty one. For you, though, 0:14:52.680 --> 0:14:54.560 a lot of critics. We bring up your name, we 0:14:54.600 --> 0:14:56.720 bring up ARC, and you have a lot of fans, 0:14:56.720 --> 0:14:58.400 and you have a lot of critics. There's a lot 0:14:58.440 --> 0:15:01.720 of discussion. Does it although a little bit like a 0:15:01.800 --> 0:15:02.920 victory lap this year. 0:15:03.640 --> 0:15:06.720 Well, you know, we are very happy that a couple 0:15:06.720 --> 0:15:11.320 of things have happened that this idea that interest rates 0:15:11.360 --> 0:15:16.480 were going to continue moving higher has been proven incorrect. 0:15:16.600 --> 0:15:19.640 And I think even the Fed, while there is that 0:15:19.680 --> 0:15:23.120 small possibility, even the Fed is now starting to talk 0:15:23.160 --> 0:15:25.360 about the other side of the interest rate move And 0:15:25.400 --> 0:15:28.840 so I do believe all we've seen so far is 0:15:28.880 --> 0:15:34.080 a reaction to that macro phenomenon or judgment call. We 0:15:34.160 --> 0:15:38.320 went through our flagship strategy and all of our strategies 0:15:38.600 --> 0:15:41.440 went through a very difficult time from February twenty one 0:15:41.520 --> 0:15:45.880 through December of twenty two, as interest rates, first of all, 0:15:46.280 --> 0:15:50.840 were presumed to move up or forecasts move up, and 0:15:50.880 --> 0:15:53.320 then when they did move up, so it was almost 0:15:53.360 --> 0:15:54.560 like a double discounting. 0:15:55.000 --> 0:15:56.760 And so we've seen the. 0:15:56.640 --> 0:16:02.120 First installment of the UH the correction there to the 0:16:02.240 --> 0:16:05.920 upside for our funds with this notion, and it's again 0:16:06.080 --> 0:16:09.480 the forecast that interest rates will come down. 0:16:09.640 --> 0:16:13.240 And you know, we would presume that if they do come. 0:16:13.120 --> 0:16:16.520 Down for the reasons we think they're going to come down, 0:16:16.840 --> 0:16:21.040 the most important one being deflation, then our funds will 0:16:21.360 --> 0:16:25.680 be in good shape because we are very Our companies 0:16:26.560 --> 0:16:32.240 thrive on deflation. Technologically enabled innovation is deflationary. 0:16:32.360 --> 0:16:33.600 So Kathy, a very good morning too. 0:16:33.640 --> 0:16:36.520 It's Manus, the first time we've met on So we're 0:16:36.520 --> 0:16:38.120 going to move to a deflationary environment. 0:16:38.120 --> 0:16:39.680 We'll come back to the big macrocoll in a moment. 0:16:39.800 --> 0:16:41.360 Just let's square it away before I talk to you 0:16:41.400 --> 0:16:44.400 about the flows in the funds, which is how much 0:16:44.560 --> 0:16:48.080 interest rate cuts do you presume? Are you forecasting? Leave 0:16:48.120 --> 0:16:50.560 the forecast of everybody else's side? Well, what do you 0:16:50.600 --> 0:16:52.120 what do you presume will happen next year? 0:16:52.240 --> 0:16:55.400 Well, we put up a chart in one of our 0:16:55.480 --> 0:16:59.000 in the Nose, which is a YouTube video that I 0:16:59.000 --> 0:17:04.000 do every every month Employment Friday. And in that chart 0:17:04.119 --> 0:17:10.680 you will find a ratio. It's the metals to gold ratio, 0:17:10.800 --> 0:17:14.600 so metals price to goal price, and there has been 0:17:14.720 --> 0:17:20.040 an extremely tight correlation between that ratio and long term 0:17:20.080 --> 0:17:24.919 interest rates. In October we published it or early November, 0:17:25.440 --> 0:17:29.359 and what you will see is that there was a 0:17:29.840 --> 0:17:33.439 very wide gap that had developed. The metals to gold 0:17:33.560 --> 0:17:37.240 ratio was near its low for the past twelve to 0:17:37.280 --> 0:17:43.040 fifteen years, and interest rates were at their highs five percent. 0:17:43.680 --> 0:17:47.240 The correlation if you just eyeballed that chart. The correlation 0:17:47.480 --> 0:17:51.520 suggested that rate should go to two percent. Now, maybe 0:17:51.560 --> 0:17:53.159 they won't go all the way to two percent, but 0:17:53.240 --> 0:17:57.199 we think that long term interest rates are way above 0:17:57.320 --> 0:18:00.000 where they're going to end because of defaise. 0:18:00.440 --> 0:18:01.840 Okay, well, let's we'll come back to that and see 0:18:01.880 --> 0:18:03.240 why that we get to the two percent level. I'm 0:18:03.240 --> 0:18:05.000 going to ask you about the flows into the funds, 0:18:05.040 --> 0:18:07.840 which is obviously you know, as Krol just said, you've 0:18:07.920 --> 0:18:09.560 got a bit of a victory lap going on at 0:18:09.560 --> 0:18:09.960 the moment. 0:18:10.000 --> 0:18:14.040 But this is the first year of outflows. Have those 0:18:14.119 --> 0:18:15.040 outflows stopped? 0:18:15.080 --> 0:18:17.119 You've had a great performance in the back part of 0:18:17.160 --> 0:18:21.640 this year. Have the outflows stopped and has that bleed stopped? 0:18:23.040 --> 0:18:26.960 Yes, Well, we were very gratified at our asset retention 0:18:27.320 --> 0:18:30.400 in twenty one and twenty two. In fact, we had 0:18:30.480 --> 0:18:34.000 net inflows if you combine both years of more than 0:18:34.080 --> 0:18:40.280 eighteen billion dollars and this year one, what might expect 0:18:40.680 --> 0:18:45.920 that those who averaged down into the very steep declines 0:18:45.960 --> 0:18:49.680 that we were seeing in twenty two especially might take 0:18:49.720 --> 0:18:53.280 some profits. So we have had I know, for our 0:18:53.320 --> 0:18:59.120 flagship strategy, it's roughly five hundred million dollars and outflows 0:18:59.160 --> 0:19:02.639 maybe for all of our strategies one point eight million, 0:19:02.760 --> 0:19:06.560 so maybe ten percent of the inflows that we enjoyed 0:19:06.800 --> 0:19:09.600 during twenty one and twenty two. So again, we're very 0:19:09.640 --> 0:19:16.000 gratified and grateful to our clients for the support that 0:19:16.040 --> 0:19:17.159 we continue to receive. 0:19:17.880 --> 0:19:19.720 So has the outflow stopped? 0:19:20.640 --> 0:19:24.879 We have had days of on balance very recently, yes, 0:19:25.720 --> 0:19:26.480 And I think. 0:19:26.320 --> 0:19:29.000 Part of this is many people do. 0:19:30.600 --> 0:19:33.600 Tax management towards the end of the year, and so 0:19:33.680 --> 0:19:39.920 some of the outflows might have been associated with clients 0:19:39.920 --> 0:19:42.760 who got in at a high cost base and we're 0:19:42.800 --> 0:19:44.480 just harvesting some tax losses. 0:19:44.520 --> 0:19:45.479 But I think we're through that. 0:19:46.400 --> 0:19:48.560 Do you find a little surprising, though, Kathy, considering the 0:19:48.640 --> 0:19:51.119 run up or do you I'm curious about the conversations 0:19:51.160 --> 0:19:53.320 you do have with investors considering the year that you're 0:19:53.359 --> 0:19:55.359 having and then to see those flows, it's got to 0:19:55.359 --> 0:19:56.160 be a little disheartening. 0:19:56.440 --> 0:19:58.920 Yeah, oh no, no, no, no, not at all. 0:19:59.280 --> 0:20:05.040 Actually, we put out a piece for Resolute, our distributor who, 0:20:06.240 --> 0:20:11.399 and we basically showed them if you rebalance our strategy 0:20:11.440 --> 0:20:14.200 when there have been big moves one way or the other, 0:20:14.600 --> 0:20:18.720 if you rebalance regularly or based on a rule like 0:20:19.200 --> 0:20:23.119 when the funds up fifteen percent relative to everything else, 0:20:23.280 --> 0:20:27.760 takes some profits. And what it showed that study showed 0:20:28.040 --> 0:20:32.160 that if you are disciplined that way, that over any 0:20:32.520 --> 0:20:38.439 rolling five year period, it is highly likely almost one 0:20:38.520 --> 0:20:41.080 hundred percent, I'm not quite sure if it's quite that high, 0:20:41.160 --> 0:20:46.159 but that you will beat the market, meaning as measured 0:20:46.160 --> 0:20:49.000 by the Nasdaq or the SMP over a rolling five 0:20:49.080 --> 0:20:52.800 year period. And so a lot of our funds are 0:20:52.800 --> 0:20:57.760 with advisors who are very sophisticated and responded somewhat perhaps 0:20:57.760 --> 0:21:02.240 in this tax management part of the year to that message. 0:21:02.720 --> 0:21:04.440 I feel like we can't talk. We have to talk 0:21:04.440 --> 0:21:06.520 about Tesla and Elon Muskin. I know you just had 0:21:06.520 --> 0:21:10.560 a conversation on Twitter X. This has been I think 0:21:10.560 --> 0:21:14.120 from day one, right in terms of you starting out 0:21:14.119 --> 0:21:16.760 that you've had this investment in Tesla, and I remember 0:21:16.760 --> 0:21:19.119 when we first talked and you were getting started, you 0:21:19.160 --> 0:21:21.640 talked about him being the next Thomas Edison and how 0:21:21.680 --> 0:21:25.960 his vehicles would turn the US economy upside down. Having 0:21:26.080 --> 0:21:29.240 said that, there's an evolution and the ev world has changed, 0:21:29.280 --> 0:21:31.880 how are you thinking it's still a top holding? How 0:21:31.880 --> 0:21:34.200