WEBVTT - Norges Bank CEO Nicolai Tangen Talks Tech-Driven Loss

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio.

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<v Speaker 2>News, and Place to Say.

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<v Speaker 3>The Norse Bank Investment Management CEO Nikolay tank and joins

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<v Speaker 3>us now for more. Nicolay, welcome back to the program.

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<v Speaker 3>So a lot has changed since we last spoke. Attitudes

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<v Speaker 3>towards US assets are starting to shift. I just wonder

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<v Speaker 3>how you and the team have started to think about that,

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<v Speaker 3>how you're debating that issue internally over in Norway.

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<v Speaker 2>Well, we have a very long term view on what

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<v Speaker 2>we do.

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<v Speaker 4>So you know, we are invested with roughly half the

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<v Speaker 4>fund in the US and we are here for the

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<v Speaker 4>very long term, so we have not made any major

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<v Speaker 4>adjustments lately.

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<v Speaker 3>So Nikolai, can I rid into that that you view

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<v Speaker 3>this as just a shock to the cycle and maybe

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<v Speaker 3>not a long term shock to the system.

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<v Speaker 4>Well, I think it's very very difficult to say it,

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<v Speaker 4>because when we make scenario analysis here, one of the

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<v Speaker 4>negative things that we see is that if you get

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<v Speaker 4>a disentanglement between the two major training blocks, that's really

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<v Speaker 4>really negative because it's slowed down.

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<v Speaker 2>Slows down growth, increases inflation and zone.

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<v Speaker 4>So it is potentially one of the really negative things

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<v Speaker 4>that can happen here. So I think the out look

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<v Speaker 4>for markets are very very uncertain, given.

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<v Speaker 1>That there has been a shift Nikolay to move at

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<v Speaker 1>least a little bit of assets about large acid allocators

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<v Speaker 1>out of the United States diversified to places like China,

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<v Speaker 1>to India to Europe. Why aren't you doing the same

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<v Speaker 1>and shifting to benchmarks that have a little bit more

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<v Speaker 1>exposure elsewhere.

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<v Speaker 4>Well, we actually are extremely well diversified already. You know,

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<v Speaker 4>we own one and a half percent of all the

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<v Speaker 4>listed equities in the world. In Europe we have more,

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<v Speaker 4>we have closed to three percent, and so in the

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<v Speaker 4>US we have one than a half percent, and we

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<v Speaker 4>also have the same in the rest of the world.

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<v Speaker 4>So I would say we are we are well diversified,

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<v Speaker 4>seventy percent equities, thirty percent bonds, and we also have

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<v Speaker 4>a very very good, really say portfolio which is coming

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<v Speaker 4>in really handy here.

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<v Speaker 1>Well, Nikola, you said previously this morning when you were

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<v Speaker 1>speaking to media and Oslo, that you will correct the

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<v Speaker 1>underweight to US stocks. So you are planning to reinvest

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<v Speaker 1>in US stocks even though you are surprised that we

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<v Speaker 1>haven't seen even more weakness. Why are you redeploying all

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<v Speaker 1>of the money that maybe has lost in terms of

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<v Speaker 1>benchmark allocation to US equities given some of these larger uncertainties.

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<v Speaker 4>Well, the kind of the increased medication to the US

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<v Speaker 4>is part of a program that we've been doing for

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<v Speaker 4>quite some time.

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<v Speaker 2>We still have some work to do here and that

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<v Speaker 2>we will continue to do.

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<v Speaker 4>And you know, we think the larger American companies are

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<v Speaker 4>just great long term investments, and so we are very

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<v Speaker 4>happy to be invested there.

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<v Speaker 5>What sectors can you give us a little bit of

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<v Speaker 5>a hint of specifically the sectors or the companies are

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<v Speaker 5>interested in the United States.

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<v Speaker 4>Well, we are quite index near in how we are

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<v Speaker 4>invested in the US. So we typically have large holdings

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<v Speaker 4>in the you know, in the big tech companies and

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<v Speaker 4>in all your large companies.

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<v Speaker 2>Really and we made you know, a lot of money

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<v Speaker 2>there over the last few years.

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<v Speaker 4>Of course, so far this year it's been it's been negative.

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<v Speaker 4>But when you look in comparison to the games we've

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<v Speaker 4>had the last year and the year before, we're.

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<v Speaker 2>Given back in a way surprisingly little.

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<v Speaker 5>I would say, what about defensive companies like Lockheed Martin,

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<v Speaker 5>is that going to be open for business? When it

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<v Speaker 5>comes to the cumber Well.

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<v Speaker 4>Fund, Well, we invest in a lot of different industries.

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<v Speaker 4>We have less exposure to the defense industry, but we

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<v Speaker 4>are in a lot of the defensing names as.

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<v Speaker 3>Well, Nikolai, one word you often use with us is

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<v Speaker 3>we are diversified. I just wonder if the meaning of

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<v Speaker 3>that word has shifted over time, particularly this year, the

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<v Speaker 3>treasury market is behaving in unpredictable ways. When the equity

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<v Speaker 3>market is falling, treasury markets have fall as well. In fact,

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<v Speaker 3>those two asset classes are training in.

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<v Speaker 2>Lockstep at the moment.

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<v Speaker 3>It's as if investors are treating all do dollargent on

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<v Speaker 3>its it as it's as one bucket. And I just wondered, Nicolay,

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<v Speaker 3>what that means for how you think about diversification this

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<v Speaker 3>year and beyond.

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<v Speaker 4>Yeah, there was sometimes when when this type of diversification

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<v Speaker 4>worked less well. We had the same type of situation,

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<v Speaker 4>you know, two three years ago, and so some years

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<v Speaker 4>it works, some years it doesn't. I think over time,

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<v Speaker 4>if you have a really long term time horizon, I

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<v Speaker 4>think it's the right positioning to have.

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<v Speaker 3>We've seen over the last month or so that some

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<v Speaker 3>investors were trying to understand whether what was happening in

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<v Speaker 3>the treasury market was just trades unwinding, some hedgephones, hedgephondes

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<v Speaker 3>blowing up, or Nicolay, whether it was a reassessment of

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<v Speaker 3>the safe haven status of the United States. Nicola I

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<v Speaker 3>was on your dashboard to have distinguished between one and

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<v Speaker 3>the other.

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<v Speaker 2>What do you think it was? What do you think

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<v Speaker 2>it is?

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<v Speaker 4>Well, I think it's a very very complicated question. I

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<v Speaker 4>don't think it's only one thing. I think it's a

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<v Speaker 4>cocktail of all the kind of things you.

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<v Speaker 2>Mentioned.

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<v Speaker 4>Now, so far this year, we've we have been neutral

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<v Speaker 4>to the US treasure market. We have not reduced or

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<v Speaker 4>increased positions, so we have certainly not to cause that move.

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<v Speaker 1>Do you have a sense, Nikolai, going forward of whether

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<v Speaker 1>we are entering a more inflationary period given some of

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<v Speaker 1>the deglobalization that we're seeing, some of the fissures and

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<v Speaker 1>some of the kinks that are emerging in the supply

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<v Speaker 1>chain system.

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<v Speaker 4>Yeah, I think we are potentially going into a more

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<v Speaker 4>inflationary situation. It is kind of a pretty obvious consequence

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<v Speaker 4>of higher tariffs, and of course inflation is really negative

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<v Speaker 4>of market, so I think that's potentially one of the

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<v Speaker 4>big risks that we are seeing. Just Now, interestingly, we

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<v Speaker 4>just yesterday released a podcast with Ken Rogoff, kind of

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<v Speaker 4>the world leading specialist I guess on inflation, and he's

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<v Speaker 4>also very worried about this particular fact.

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<v Speaker 1>Well, I guess just to build and what John was

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<v Speaker 1>asking about the idea of diverse vacation and you have

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<v Speaker 1>been about neutral on US bonds. There has been a

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<v Speaker 1>feeling that maybe diversification, especially in an inflationary environment, requires

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<v Speaker 1>some gold, requires some alternative assets that might be act

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<v Speaker 1>based funding, that have different streams of diversified revenues. Is

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<v Speaker 1>that your take on it that you just on the

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<v Speaker 1>margins want to pick up a little bit more gold

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<v Speaker 1>or diversify a little bit more in some of these

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<v Speaker 1>other asset classes.

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<v Speaker 4>Yeah, So we have a very strang mannight here from

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<v Speaker 4>the ministry, So we cannot buy gold, and I do

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<v Speaker 4>think gold sometimes has a bit difficult to understand what

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<v Speaker 4>the intrinsic value is of gold. We also don't do cryptocurrencies,

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<v Speaker 4>for instance, but when we look at alternative asseids, I

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<v Speaker 4>would say in a market like this, to have real estates,

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<v Speaker 4>that's very good. We have just under a thousand properties

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<v Speaker 4>around the world, you know, large holdings in Manhattan, Boston,

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<v Speaker 4>Washington and so on, and so I think that's going

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<v Speaker 4>to be a pretty good place to be going forward.

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<v Speaker 2>Nikola.

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<v Speaker 3>I appreciate your take at a difficult time. Thanks for

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<v Speaker 3>your time this morning, Nikolay Tangen there the Norway Wealth

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<v Speaker 3>fun CEO