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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in

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Speaker 1: Business with Barry Ritholts on Bloomberg Radio on the.

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Speaker 2: Latest Masters in Business podcast. An amazing conversation. I sit

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Speaker 2: down with Uri and Timer. He's the director of Global

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Speaker 2: Macro at Fidelity. They touch about fifty million separate clients.

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Speaker 2: What an amazing conversation. Urian has been started out in

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Speaker 2: fixed income before he became a market technician. Now Global

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Speaker 2: Macro is his beat, which means he covers everything the

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Speaker 2: US overseas, equity, bonds, commodities, economic data. I thought this

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Speaker 2: conversation was fascinating and I think you will also. What

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Speaker 2: a depth and breadth of knowledge. With no further ado

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Speaker 2: my conversation with Fidelities Urian timor ur Tim Welcome to Bloomberg.

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Speaker 3: Thank you very much, Arry.

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Speaker 2: I've been looking forward to this. I'd been consuming your

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Speaker 2: stuff for it feels like forever. I'm a big fan

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Speaker 2: of what you do. But before we get to your

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Speaker 2: work at Fidelity for the past three decades, let's talk

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Speaker 2: a little bit about your background. You get a bachelor's

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Speaker 2: and finance from BAPS in college. What was the original

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Speaker 2: career plan?

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Speaker 3: Well, so I was born and raised on the island

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Speaker 3: of Aruba in nineteen sixty two when Aruba was still

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Speaker 3: very small and sheltered, and as a Dutch citizen now

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Speaker 3: also an American citizen. But you know, generally the Dutch

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Speaker 3: kids would go to Holland to go to higher education.

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Speaker 3: But I was in love with the American culture. I

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Speaker 3: met many tourists on the Beach Show, and so I

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Speaker 3: wanted to go to the States and do the American thing.

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Speaker 3: And then my father, who was an importer of construction materials, etc.

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Speaker 3: He had contact in Boston. They said, okay, well you

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Speaker 3: should send your kid to BABSM because it's small, it

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Speaker 3: won't be overwhelmed as an international student. And I've always

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Speaker 3: wanted to be an architect. But then in the last

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Speaker 3: year before finishing high school, I'm like, I don't think

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Speaker 3: I'm good enough to be an architect, so let me

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Speaker 3: do business. And I figured, you know, there's always something

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Speaker 3: you can do with a business degree, and so I

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Speaker 3: studied finance with a minor in investments. And then you know,

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Speaker 3: I graduated with no work permit, right, So I was

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Speaker 3: in that place where you need to have obviously a

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Speaker 3: work permit. So back then I don't know if it's

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Speaker 3: still the case, but back then you got one year

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Speaker 3: practical training visa and then you had to go, you know,

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Speaker 3: get a real visa. And so I took literally the

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Speaker 3: only job that was offered to me in the United States.

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Speaker 3: So I applied to every Dutch company. I figured, at

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Speaker 3: least they'll have maybe some sentimental reasons to hire a

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Speaker 3: Dutch person. I could have worked in Holland, of course,

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Speaker 3: but I wanted to be in the States. So the

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Speaker 3: Dutch bank ABN, which later became ab and am Ro,

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Speaker 3: hired me. I went to New York into their corporate

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Speaker 3: banking credit program, in which I had zero interest. But

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Speaker 3: it's like, you know, this is the job.

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Speaker 2: But you eventually become pretty senior in the fixed income

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Speaker 2: group at ABM.

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Speaker 3: Yeah, so I was very lucky. And again, you know,

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Speaker 3: it's sort of if you take the job that's offered

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Speaker 3: to you and you make the best of it, you know,

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Speaker 3: you played a hand that's dealt And literally within a

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Speaker 3: few months, ABN set up a capital markets group because

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Speaker 3: you know, we were the primary dealer in New York,

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Speaker 3: together with Lacelle National Bank in Chicago for the HQ

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Speaker 3: in Amsterdam, which of course, was one of the world's

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Speaker 3: largest banks at the time and a very large treasury book,

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Speaker 3: and so I was the person who would execute the

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Speaker 3: trades for HQ. So I became a client of like

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Speaker 3: Solomon Brothers and Smith Varney and you know, you know, Goldman, Sachs,

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Speaker 3: et cetera. And so I got in to the Wall

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Speaker 3: Street game and I learned everything about fixed income, and

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Speaker 3: to this day, i'm you know, like, if you're either

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Speaker 3: a stock market person or a global macro person, having

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Speaker 3: a foundation in fixed income is so important.

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Speaker 2: It's so true. You say that some of my favorite

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Speaker 2: stock analysts began as bond analysts because they're concerned about

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Speaker 2: return of capital, not return on capital, and it focuses

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Speaker 2: them very much on staying away from the speculative nonsense.

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Speaker 2: And really it's been very consistent over the years. I

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Speaker 2: have a list of some favorite people in that space. So,

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Speaker 2: so you start out in fixed income, when did technical

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Speaker 2: analysis and becoming a CMT arise in your journey.

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Speaker 3: So I was at ABMM in New York for ten

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Speaker 3: years and so i'm you know, I'm there executing trades,

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Speaker 3: learning about the markets, watching my teller eighth and the

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Speaker 3: Bloombergs were still there were the quad screens with the

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Speaker 3: amber right, and you know, I just I've always been

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Speaker 3: a visual person, and so I started gravitating towards charts.

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Speaker 3: And you know, charts are kind of the mainstay of

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Speaker 3: what I do even now forty years later, forty years later.

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Speaker 3: And I like to write. I think I get that

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Speaker 3: from my dad, who's a great writer. And so I

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Speaker 3: always had this kind of urge to put pen to

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Speaker 3: paper and to show charts. And so I just started

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Speaker 3: writing a newsletter for the people in my universe at

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Speaker 3: the time, and you know, it would be like charts

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Speaker 3: from CQG cut out, taped onto a type report and

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Speaker 3: then facts to people like that's what the technology was

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Speaker 3: back then, and so it was al So that's how

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Speaker 3: it started. And then I ended up, you know, getting

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Speaker 3: the chart at Market Technician, although that may have been

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Speaker 3: during the Fidelity years.

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Speaker 2: So how did you go from ab and m RO

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Speaker 2: to Fidelity? When was that?

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Speaker 3: So the culture AB and m ROW. Not not to

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Speaker 3: spill any beans, but this is a long time thirty

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Speaker 3: years ago, thirty years ago, I didn't like where it

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Speaker 3: was going. So we ABN had a bank in Chicago,

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Speaker 3: and they saw what a profit center in New York was,

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Speaker 3: so they wanted to They wanted me to work for them,

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Speaker 3: become a commissioned salesman. And I'm like, it's like, not

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Speaker 3: what I do. And just coincidentally, at that time, Fidelity

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Speaker 3: came looking around looking for the most obscure job in

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Speaker 3: the world, a fixed income technical analyst. I mean, talk

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Speaker 3: about a narrow field, right. So that was in nineteen

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Speaker 3: ninety four. Around that time, you know, I was kind

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Speaker 3: of looking around and I had two major career highlights

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Speaker 3: within six months of each other, because in ninety four

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Speaker 3: I was approached by Paul Truder Jones's company, really and

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Speaker 3: so I had a meeting with Paul in his office

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Speaker 3: downtown New York with his giant Tolerate on the screen,

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Speaker 3: and we were looking at the bomb chart ninety four

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Speaker 3: to the bear market and.

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Speaker 2: He very famously had called the eighty seven crash before.

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Speaker 3: It was like, is that do you think that's a

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Speaker 3: fourth win? And we were having that conversation that was great,

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Speaker 3: and then you know, I was approached by Fidelity, and

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Speaker 3: I ended up going with Fidelity. But the last interview

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Speaker 3: of that process was with Ned Johnson.

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Speaker 2: Oh really, and so I was spent the founder.

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Speaker 3: I spent an hour with him in his office talking

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Speaker 3: about pokers, because I was hired to go into the

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Speaker 3: chart room. And at Fideliti, nobody got into the chart

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Speaker 3: room without Ned's blessing, right because.

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Speaker 2: And back then were they still doing charts by hand?

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Speaker 3: Yep. Amazing and so that so that anyway, so that's

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Speaker 3: how the fidelity career started, and it was it was

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Speaker 3: interesting because this is now early ninety five, and of

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Speaker 3: course ninety four was that bear market. We had the

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Speaker 3: so called tequila crisis in Mexico, and so the new

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Speaker 3: mandate from upstairs in ninety five was, we're not making

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Speaker 3: any duration bets. You just stick to your bottom up.

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Speaker 3: You know, you look at credits and like, I'm coming

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Speaker 3: in there as a technician and like, what am I

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Speaker 3: supposed to do? Now? Is nothing for me to do?

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Speaker 3: And so at that point I kind of reinvented myself

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Speaker 3: and became a multi multi asset and I went to

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Speaker 3: the equity side. And anyway, so that was the one.

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Speaker 2: When you say multi asset, I think you're the only

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Speaker 2: person in all of finance with the title director of

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Speaker 2: Global Macro Global means around the world macro means thirty

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Speaker 2: thousand foot view is everything out there in your jurisdiction

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Speaker 2: pretty much.

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Speaker 3: So I don't do security selection. You know, we have

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Speaker 3: armies of very downs up.

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Speaker 2: But you do stocks, bonds, all scrypto, commodities, gold.

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Speaker 3: You name it everything, but it's top down.

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Speaker 2: As well as economic data, interest rates, employment, etc.

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Speaker 3: And that's how I transitioned from being a technical strategist

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Speaker 3: to being more kind of multidisciplinary because I quickly learned

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Speaker 3: at Fidelity as I was roaming the halls pitching ideas

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Speaker 3: to portfolio marriage who generally are fundamentally oriented, right, I'm like,

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Speaker 3: you know, it's like I'm speaking a different language, right.

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Speaker 3: So Finelle has always had a lot of technical analysts

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Speaker 3: and the chart room, but I had to like reinvent

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Speaker 3: myself again and pivot towards at least speaking their language.

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Speaker 3: And like, you know, a chart is a chart, right.

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Speaker 3: It can just be a bar chart of the S

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Speaker 3: and P, or it could be of the pe ratio

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Speaker 3: or earnings or monetary policy. So I figured a chart

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Speaker 3: is a chart. I'm going to like weave a broader

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Speaker 3: approach to this, and that's where kind of I came

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Speaker 3: up with the title.

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Speaker 2: So whenever I see a technician and a fundamental analyst

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Speaker 2: having a discussion, somewhere along the line, someone says, look,

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Speaker 2: I'm a techno analyst. I'm just telling you what's going

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Speaker 2: on in the battle between supply and demand. It's up

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Speaker 2: to you to create a narrative around that. You tell

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Speaker 2: us what's going on. Fundamentally, I don't know, but I

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Speaker 2: could tell you who's winning the buyers or the sellas.

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Speaker 3: So the fundamentals tell you kind of the why, maybe

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Speaker 3: the what and the why, and the technicals tell you

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Speaker 3: kind of the when and the how much It helps

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Speaker 3: give you conviction. And generally speaking, we use technical analysis

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Speaker 3: like our equity pms do. Like they're obviously going to

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Speaker 3: have an idea about a company and what their long

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Speaker 3: term prospects are. But then our technical analysts will will say, okay,

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Speaker 3: well you've rated this stock a one, meaning strong buy,

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Speaker 3: but the chart looks like hell, Like you should be

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Speaker 3: aware that what's in what's happening is not the same

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Speaker 3: as what should be happening, and maybe it takes time,

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Speaker 3: but it's like it's a it's a second opinion, which

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Speaker 3: can be very helpful. And the other way around as well,

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Speaker 3: Like a chart looks amazing, but it gets a really

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Speaker 3: poor fundamental ranking. And we also have a quantitative team

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Speaker 3: that does a quant overlay as well.

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Speaker 2: So so we talked about global macro. I'm curious, you're

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Speaker 2: a Dutch citizen, originally born and raised in Aruba, now

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Speaker 2: a citizen in the US for the past twenty five years.

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Speaker 2: How does that international upbringing affect how you see the

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Speaker 2: entire world of assets.

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Speaker 3: Yeah, it's a great question. I do think that I've

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Speaker 3: been privileged to grow up in a very diverse environment.

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Speaker 3: Like if you look at old high school pictures, I'm

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Speaker 3: like maybe one of two white kids in there. Everyone

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Speaker 3: else is different shades, but so very very diverse. And

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Speaker 3: so I think and also just going to different countries

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Speaker 3: and learning different cultures or being exposed to them, I

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Speaker 3: think it's helped me, Like I view myself sort of

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Speaker 3: as a global citizen.

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Speaker 2: Well, you're a globe trotter. You're you're in the US,

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Speaker 2: you are in California, you're in New York, Boston, you're

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Speaker 2: going to where what's your next few stops? London?

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Speaker 3: I'm flying to London on Saturday. I'll be in Geneva

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Speaker 3: after that, and then.

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Speaker 2: We were just in late Geneva a year ago, spectacular.

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Speaker 3: And then actually we're going to Holland because my parents

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Speaker 3: are they live in the Hague. They're celebrating their seventieth

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Speaker 3: wedding out of vers so they're ninety one and ninety seven.

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Speaker 3: So we got three generations of Timor descending on the

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Speaker 3: Hague in about a week and a half. And I think,

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Speaker 3: what I feel at home in almost any place really

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Speaker 3: in the world. And you know, when it's hard to

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Speaker 3: understand what someone says because the English is not their

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Speaker 3: first language, you can kind of like you figure it

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Speaker 3: out because you just kind of used to this, you know,

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Speaker 3: this environment where everyone's coming from different places and and

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Speaker 3: like you know even now, like I run and a

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Speaker 3: totally separate topic, but I run a food camp at

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Speaker 3: burning Man and it's a very global camp. We have

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Speaker 3: ninety people. We're all cooked meals that we gift away

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Speaker 3: to the artists there. But we have like thirty Brazilians,

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Speaker 3: and we have like French and Swiss and Mexican people

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Speaker 3: and obviously Americans and that, like it's it's easy to

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Speaker 3: do because you're just used to having all these different

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Speaker 3: cultures in the same space.

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Speaker 2: So I'm kind of fascinated by the new I don't

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Speaker 2: love the earbuds that not comfortable in my ear, but

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Speaker 2: the new AI enabled instant translation that is star Trek

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Speaker 2: next level futuristic. I can see that saying, oh you

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Speaker 2: want to go to Japan or Korea or China, here

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Speaker 2: you go knock yourself out. That sort of technological innovation

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Speaker 2: is that turns that into a must have technology for sure?

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Speaker 2: How many languages do you speak?

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Speaker 3: I speak? Obviously, Dutch is my native language. English. I

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Speaker 3: used to be totally fluent in Spanish, but I've kind

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Speaker 3: of lost that. And then of course there is the

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Speaker 3: world language called Papiamento, which is what they speak in Aruba,

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Speaker 3: which is essentially kind of a Spanish Portuguese blend. But

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Speaker 3: if you don't know a word, you can just say

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Speaker 3: it in Dutch or English and it's completely acceptable.

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Speaker 2: Really fascinating. Coming up, we continue our conversation with you

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Speaker 2: and Temor, director of Global Macro at Fidelity, discussing various

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Speaker 2: asset classes, equities, bonds, commodities, alternatives. You're listening to Masters

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Speaker 2: in Business on Bloomberg Radio. I'm Barry Ridults. You're listening

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Speaker 2: to Masters in Business on Bloomberg Radio. My guest this

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Speaker 2: week Urian Temor, director of Global Macro at Fidelity. They

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Speaker 2: touch about sixteen trillion dollars in assets and have discretion

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Speaker 2: over six point four trillion. So we were talking about

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Speaker 2: what a globe trotter you are. Let let's trot around

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Speaker 2: the world and talk about various asset classes. Since you

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Speaker 2: began your career with bonds, let's let's start with bonds.

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Speaker 2: How do you see what's been going on with treasury

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Speaker 2: yields and anticipating not only the twenty five basis cut

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Speaker 2: point we had in September, but perhaps a couple more

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Speaker 2: this year and next.

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Speaker 3: Yeah, So treasury yields such an interesting market right now.

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Speaker 3: We've been stuck sort of between four and five percent

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Speaker 3: for a while for a while, and when we go

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Speaker 3: above four and a half, it's like nothing good happens,

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Speaker 3: Like the old fed model from the Greenspan Das comes

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Speaker 3: lurking back and it starts to wabble the stock market

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Speaker 3: because the bond yield and the equity yield are about

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Speaker 3: the same right now, And so that takes you back

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Speaker 3: to the eighties and and you know, mid nineties and

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Speaker 3: even the seventies and sixties where bonds to stocks were

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Speaker 3: positively correlated instead of negatively correlated. That happened that that began,

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Speaker 3: you know, during the Great Moderation era late nineties until

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Speaker 3: COVID basically, and so then in twenty twenty two, of

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Speaker 3: course the correlation flipped back to positive. It was rising

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Speaker 3: yields that caused the problem in the stock market. And

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Speaker 3: so there's a whole broader conversation about the sixty forty,

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Speaker 3: but just dealing with treasuries right now. So as you

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Speaker 3: get close to five, it really starts to freak the

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Speaker 3: stock market out, but also the bond buyers start to

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Speaker 3: emerge because there's value, right, I mean real.

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Speaker 2: Real ch yields over two and a half percent inflation.

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Speaker 3: The income is back into fixed income, right, but down

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Speaker 3: at four when you have a growth scare kind of

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Speaker 3: like I mean, I wouldn't say it's a growth scare, but.

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Speaker 2: There's more some nervousness and some life I hate the

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Speaker 2: word uncertainty, but there's a lack of clarity as to

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Speaker 2: how all these things taraffs, yield FMC plays out.

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Speaker 3: Yeah, so at four, generally I would be a better

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Speaker 3: seller than a buyer. But this question of you know,

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Speaker 3: fiscal dominance, you know clearly the administration wants to grow

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Speaker 3: out of the debt. I think that's the very overt

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Speaker 3: plan if you've listened to good Bessant.

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Speaker 2: Or they're pretty explicit about it.

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Speaker 3: And so they're trying to goose the economy and outrun

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Speaker 3: the debt because everyone knows you can't really cut the

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Speaker 3: debt very much because too much of the budget is

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Speaker 3: is not discretionary. And so that's the plan, and I

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Speaker 3: think it's basically it's a good plan because what are

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Speaker 3: the alternatives.

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Speaker 2: Right raising taxes and spending, which we know what the

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Speaker 2: odds of that.

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Speaker 3: Are, yes, But running kind of that fiscal train means

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Speaker 3: deficit spending, or at least that's part of it, and

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Speaker 3: that means more supply, and that could mean hire term

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Speaker 3: premium for long treasuries and we saw we've seen that,

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Speaker 3: right the term premium during the qa QE financial repression

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Speaker 3: days was like minus one fifty, which makes no sense,

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Speaker 3: right term a risk premium should always be positive, and

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Speaker 3: now it's plus sixty plus seventy, but historically it's been

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Speaker 3: plus one hundred and fifty or even more. And so

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Speaker 3: if the term premium mean reverts back to a normal

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Speaker 3: level positive level, because deficit spending and debt levels are rising,

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Speaker 3: you could easily least see a five handle on treasuries,

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Speaker 3: and a five handle on treasuries are not going to

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Speaker 3: sit well with equities. Like the equity marketing can go up,

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Speaker 3: earnings can drive the bus, but the pe gets under

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Speaker 3: pressure because the risk free acid is now competing with

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Speaker 3: the risky acid and they're offering the same yield.

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Speaker 2: So quick question on that. In the twenty tens, or

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Speaker 2: at least towards the end of the twenty tens, we

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Speaker 2: had an inverted yield curve for a while. What's the

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Speaker 2: impact of that on that term premium or lack thereof.

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Speaker 3: Yeah, so we had that very inverted yield curve. Obviously

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Speaker 3: it shouted recession and it didn't happen. And I think

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Speaker 3: the reason in hindsight was that the economy is just

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Speaker 3: less interest rates sensitive than it used to be. Right,

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Speaker 3: so everyone refired their mortgage in twenty twenty and twenty

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Speaker 3: one at sub three percent. That's also why the housing

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Speaker 3: market is frozen. But also if you look at the

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Speaker 3: big banks, right, why is a yield curve inversion. Typically

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Speaker 3: bad is because banks net interest margins goes upside down.

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Speaker 3: They borrow short land long, and so banks stopped lending

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Speaker 3: and you get a credit crunch and you get a recession.

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Speaker 3: But in this case, the large banks. You know, if

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Speaker 3: you notice your your deposit rate at the large megacenter

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Speaker 3: banks has not really gone up commensurate with the yield

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Speaker 3: on money market funds, right, So that deposit rate went

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Speaker 3: up to half a percent and is now coming back

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Speaker 3: down again. So for a large bank, the yield curve

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Speaker 3: not only was never inverted, it was extremely steep half

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Speaker 3: a percent funding. Right, If you're funding your loans on

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Speaker 3: deposits and you're paying half a percent on those deposits

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Speaker 3: and you can lend at seven or eight percent, you'll

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Speaker 3: do that all day long.

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Speaker 2: And yet at the same time, we've watched money markets

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Speaker 2: go five trillion, six trillion, seven trillion. It's become so

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Speaker 2: easy with your app to move money from Hey, I'm

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Speaker 2: going from Chase to swab, I'm going from city to Fidelity,

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Speaker 2: where I'm getting real yield. I wonder how much technology

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Speaker 2: plays a role in people. It used to be pain

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Speaker 2: in the neck. I'm getting quarter percent in my checking account.

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Speaker 2: But do I really want to write a check and

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Speaker 2: mail it out and wait.

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Speaker 3: For the Yeah, So you leave money at the bank

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Speaker 3: for convenience. You know, you got bills to pay. But

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Speaker 3: if you have extra cash, you're buying a CD or

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Speaker 3: money market fund or buying T deal, so what have you.

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Speaker 3: And it's a lot easier than it used to be.

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Speaker 3: And so now you've got seven trillion in money market funds,

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Speaker 3: which a lot of people actually think is money waiting

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Speaker 3: to be invested in the stock market. But I don't

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Speaker 3: think there's really a signal there because I think that

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Speaker 3: money came out of the banks and probably we'll go

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Speaker 3: back to the bank.

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Speaker 2: So some people have said, hey, as soon as the

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Speaker 2: Fed starts cutting rates, it'll a make the cost of

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Speaker 2: borrowing cheaper for corporate America as well as American households.

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Speaker 2: And b is going to scare some of that money away.

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Speaker 2: And it's got nowhere to go about equity fair narrative

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Speaker 2: for kind of a lot of wishful thinking.

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Speaker 3: It could be a combination of both. But if you

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Speaker 3: typically look at when money market fund assets swell like

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Speaker 3: it did during the pandemic, it's money coming out of

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Speaker 3: the stock market seeking a safe haven, and then when

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Speaker 3: the stock market recovers, the money goes back in the

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Speaker 3: stock market. That's not the pattern this year. The money

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Speaker 3: came out of the banks in part because of like

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Speaker 3: the Silicon Valley tobaccle.

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Speaker 2: Fhoe years, but also five hundred basis points of rate

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Speaker 2: hikes ex. Twenty twenty two.

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Speaker 3: So money markets went from zero to five and a

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Speaker 3: half and suddenly attracted and deposits went from zero to half.

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Speaker 3: You know, so money markets yielded ten x the bank deposit,

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Speaker 3: and so some of that may go to the stock market,

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Speaker 3: but I think, but it didn't come from the stock market.

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Speaker 3: Let me put it out.

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Speaker 2: So you noted something really interesting. I remember you wrote

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Speaker 2: in twenty twenty two bonds went from being a port

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Speaker 2: in the storm to the storm itself. Yes, so normally

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Speaker 2: we think of money leaving equity and going in the

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Speaker 2: safe harbor of money markets. Were we seeing money exiting

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Speaker 2: bonds and going to money markets? Is that what happened?

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Speaker 2: Was it a duration play.

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Speaker 3: From among sort of the typical investors. We have not

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Speaker 3: really seen an exodus at all, and I think part

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Speaker 3: of that is just the demographics of you know, the

401
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Speaker 3: baby boom, solving for income more so than growth. So

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Speaker 3: when you look at fun flows into fixed income, they've

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Speaker 3: remained strong, and they were strong at you know, one percent,

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Speaker 3: and they're strong at four percent. So I think that

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Speaker 3: is more of a structural trend than playing the markets,

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Speaker 3: if you will, Like I think the average investor is

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Speaker 3: not looking at okay, well real rates are now positive,

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Speaker 3: so let me do this. But they're solving for outcomes.

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Speaker 3: They're buying solutions based funds, like like our target date,

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Speaker 3: we'll have a certain amount of fixed.

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Speaker 2: I've just attracted so much money in four o one

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Speaker 2: k's over the past twenty years. It's amazing. So let's

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Speaker 2: talk a little bit about equities. I keep hearing people

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Speaker 2: complain about valuations, but if you stayed out of equities

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Speaker 2: due to elevated valuation, you miss most of this run

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Speaker 2: from the twenty thirteen breakout.

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Speaker 3: Yes, so, so the market obviously is very bifurcated. We

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Speaker 3: got the MAC seven, the cap weighted PE is you know,

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Speaker 3: twenty three twenty four. The equal weighted PE is eighteen.

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Speaker 3: So there's a very large gap there. You know, if

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Speaker 3: you look back at the mid to late nineties, which

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Speaker 3: is a kind of an analogous period to today. Right,

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Speaker 3: we had the ninety four stealth bear market when green

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Speaker 3: Span raised race three hundred basis points. Then he gave

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Speaker 3: back seventy five and we had a huge rally. And

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Speaker 3: it was also the start of the Internet boom, you know,

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Speaker 3: the Netscape IPO and it was like in ninety six.

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Speaker 3: So the post twenty twenty two period very analogous to

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Speaker 3: post nineteen ninety four, you know, soft landing, ease off,

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Speaker 3: the brakes, markets, markets rip, and then the post ninety

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Speaker 3: eight long term capital that you know, twenty two percent decline,

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Speaker 3: very robust recovery, and then green Span eases three times

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Speaker 3: into that recovery. We're seeing the same thing now. We

434
00:24:03,040 --> 00:24:07,439
Speaker 3: had a twenty one percent tariff tantrum, no recession, you know,

435
00:24:07,600 --> 00:24:10,919
Speaker 3: the kind of administration backed off very very strong, one

436
00:24:10,960 --> 00:24:14,520
Speaker 3: of the strongest ever recoveries from a twenty percent decline

437
00:24:14,560 --> 00:24:18,200
Speaker 3: other than nineteen ninety eight. And then now Powell's easing

438
00:24:18,200 --> 00:24:20,720
Speaker 3: into that. And so but the point is that that

439
00:24:20,920 --> 00:24:26,600
Speaker 3: period saw almost NonStop multiple expansion and that's what we've

440
00:24:26,600 --> 00:24:30,280
Speaker 3: seen since twenty twenty two. And you know, pees are

441
00:24:31,200 --> 00:24:35,480
Speaker 3: they have they are strong predictors of long term return.

442
00:24:35,600 --> 00:24:39,080
Speaker 3: So if you take a ten year cape ratio and

443
00:24:39,160 --> 00:24:42,280
Speaker 3: you regress that against ten year forward returns, you see

444
00:24:42,280 --> 00:24:46,760
Speaker 3: a very high you know, it explains the forward returns

445
00:24:46,960 --> 00:24:50,840
Speaker 3: very well. But over the near term, a high pe

446
00:24:51,080 --> 00:24:54,600
Speaker 3: has very little to say about the next year or two.

447
00:24:54,680 --> 00:24:58,119
Speaker 3: And this is because the market tends to be in

448
00:24:58,200 --> 00:25:02,560
Speaker 3: a rising trend. Momentum begins, that's momentum, and that's what

449
00:25:03,000 --> 00:25:05,679
Speaker 3: we're in. So it's it's a you know, it's a

450
00:25:05,720 --> 00:25:10,440
Speaker 3: tough game to time on the mean reversion of pees,

451
00:25:11,680 --> 00:25:14,280
Speaker 3: even though we know that historically it's between ten and

452
00:25:14,320 --> 00:25:17,000
Speaker 3: thirty and it does mean revert, but when the mean

453
00:25:17,000 --> 00:25:21,000
Speaker 3: reverse reversion starts and from what level, it's very very

454
00:25:21,000 --> 00:25:24,800
Speaker 3: difficult to do, especially during secular trends, which I think

455
00:25:24,840 --> 00:25:25,919
Speaker 3: we're very clearly in.

456
00:25:26,400 --> 00:25:29,639
Speaker 2: So so many different places to go with this. I

457
00:25:29,680 --> 00:25:32,800
Speaker 2: have a dozen questions. Maybe we'll go a little along

458
00:25:32,840 --> 00:25:36,720
Speaker 2: the segment and delve deeper into equities. I love the

459
00:25:36,840 --> 00:25:40,720
Speaker 2: concept of a secular bull market as opposed to a

460
00:25:40,760 --> 00:25:43,560
Speaker 2: cyclical but I think a lot of people don't really

461
00:25:43,640 --> 00:25:46,480
Speaker 2: understand the difference. Give us your definition of what is

462
00:25:47,080 --> 00:25:50,600
Speaker 2: a secular bull market. When this one began and why.

463
00:25:51,200 --> 00:25:54,560
Speaker 3: Yeah, So we have the market cycle, which is generally

464
00:25:54,640 --> 00:25:57,840
Speaker 3: driven by the business cycle. So you have a recession

465
00:25:57,880 --> 00:26:00,560
Speaker 3: and you have the early cycle recovery where things get

466
00:26:00,600 --> 00:26:04,040
Speaker 3: less bad, and of course the market is always anticipating that, right.

467
00:26:04,080 --> 00:26:06,920
Speaker 3: The market's always in price discovery, and this is why

468
00:26:07,040 --> 00:26:10,760
Speaker 3: at bottom's price will lead earnings, which is why the

469
00:26:10,800 --> 00:26:13,119
Speaker 3: pe always goes up in the first year of a

470
00:26:13,160 --> 00:26:16,080
Speaker 3: bull market, like it always does. And it doesn't make

471
00:26:16,119 --> 00:26:18,160
Speaker 3: sense on the surface. People are like, oh, this can't

472
00:26:18,200 --> 00:26:21,000
Speaker 3: be real. It's all pe driven. Where are the earnings all?

473
00:26:21,040 --> 00:26:24,280
Speaker 3: The market's just from running the earnings. Yeah, But then

474
00:26:24,320 --> 00:26:27,720
Speaker 3: there are the secular trends, and you know, if you

475
00:26:27,760 --> 00:26:31,280
Speaker 3: go back one hundred years, you can see them. You

476
00:26:31,280 --> 00:26:34,040
Speaker 3: can spot them very easily because the market has a

477
00:26:34,240 --> 00:26:37,959
Speaker 3: kind of central trend line plus ten percent nomenal plus

478
00:26:38,320 --> 00:26:41,640
Speaker 3: seven six and three quarters real. And if you run

479
00:26:41,680 --> 00:26:45,520
Speaker 3: a regression trend line against the total real return of

480
00:26:45,560 --> 00:26:48,800
Speaker 3: the SMP or some basket of stocks going back one

481
00:26:48,880 --> 00:26:51,560
Speaker 3: hundred and fifty years, it's like perfect. And then you

482
00:26:51,560 --> 00:26:54,400
Speaker 3: have the pendulum swinging above it and below it, so you.

483
00:26:54,400 --> 00:26:57,760
Speaker 2: Have very noisy but still the overall trend is being made.

484
00:26:57,920 --> 00:27:02,000
Speaker 3: But you have these supercycles where you're outperforming the trend line.

485
00:27:02,359 --> 00:27:04,959
Speaker 3: So the eighties and nineties was one of those. So

486
00:27:05,040 --> 00:27:07,520
Speaker 3: instead of a ten percent return, we got eighteen percent

487
00:27:07,560 --> 00:27:11,520
Speaker 3: returns for like eighteen years, the fifties and sixties, after

488
00:27:11,560 --> 00:27:14,400
Speaker 3: World War Two, the twenties, that was a truncated one.

489
00:27:14,400 --> 00:27:16,800
Speaker 3: But from twenty to twenty nine, boy, to that thing go.

490
00:27:18,000 --> 00:27:21,200
Speaker 3: And since nine is where I put it, other technicians

491
00:27:21,320 --> 00:27:24,240
Speaker 3: generally disagree with me. They think it was twenty thirteen.

492
00:27:25,520 --> 00:27:27,760
Speaker 3: When you look at the CAPE model, you look at

493
00:27:27,920 --> 00:27:31,280
Speaker 3: deviation from trend, you look at the slope of those

494
00:27:31,320 --> 00:27:34,399
Speaker 3: early trend lines. For me, it's nine, which puts it

495
00:27:34,400 --> 00:27:36,280
Speaker 3: a sixteen. And of course, and then you have the

496
00:27:36,280 --> 00:27:39,320
Speaker 3: secular bear markets, right, so the two thousand's was one,

497
00:27:40,000 --> 00:27:43,800
Speaker 3: the nineteen seventies very famous. Of course, nineteen thirties doesn't

498
00:27:43,800 --> 00:27:47,119
Speaker 3: mean it market necessarily goes down, but it's underperforming that

499
00:27:47,240 --> 00:27:50,480
Speaker 3: ten percent trend line, and generally, in real terms, it's

500
00:27:50,520 --> 00:27:53,439
Speaker 3: probably going down. And so that's kind of how I

501
00:27:53,600 --> 00:27:54,960
Speaker 3: define the secular trend.

502
00:27:55,200 --> 00:27:58,240
Speaker 2: So we are in agreement on so much stuff. I'm

503
00:27:58,240 --> 00:28:00,680
Speaker 2: going to circle back to nine and push back a

504
00:28:00,680 --> 00:28:04,040
Speaker 2: little bit. But you mentioned that first year, you get

505
00:28:04,040 --> 00:28:08,840
Speaker 2: a pe spike as the market anticipates improving earnings. One

506
00:28:08,840 --> 00:28:11,280
Speaker 2: of the things that's kind of fascinating is to see

507
00:28:12,080 --> 00:28:16,879
Speaker 2: how much of a bull mark it's gains are attributable

508
00:28:17,080 --> 00:28:21,760
Speaker 2: to not improving fundamentals, but multiple expansion. From eighty two

509
00:28:21,840 --> 00:28:24,600
Speaker 2: to two thousand, what was it, three quarters of the

510
00:28:24,600 --> 00:28:28,080
Speaker 2: games where multiple expansion. How much of that is psychology

511
00:28:28,160 --> 00:28:31,200
Speaker 2: and how much of that is just people getting on

512
00:28:31,280 --> 00:28:33,880
Speaker 2: board late as the market rallies.

513
00:28:34,359 --> 00:28:37,280
Speaker 3: It's it's both. But yeah, for instance, eighty two, the

514
00:28:37,320 --> 00:28:40,080
Speaker 3: PE was like seven, and in two thousand.

515
00:28:39,960 --> 00:28:41,800
Speaker 2: And what was the yield in eighty two.

516
00:28:41,760 --> 00:28:45,520
Speaker 3: It is double ditches almost twenty percent competition And then

517
00:28:45,560 --> 00:28:48,160
Speaker 3: in two thousand, yes, exactly, And in two thousand the

518
00:28:48,240 --> 00:28:52,360
Speaker 3: PE was thirty five using operating earnings. That was the

519
00:28:52,400 --> 00:28:55,680
Speaker 3: forward pe. Actually the trailing p was like forty five.

520
00:28:56,040 --> 00:28:58,320
Speaker 3: So that's a hell of a pendulum swing. Yeah, and

521
00:28:58,360 --> 00:29:02,880
Speaker 3: you know, obviously nineteen eighty two inflation was very high.

522
00:29:02,920 --> 00:29:06,200
Speaker 3: They yet the malaise of in the economy, bonds were

523
00:29:06,280 --> 00:29:09,880
Speaker 3: very competitive. Nobody wanted to pay for earnings.

524
00:29:10,080 --> 00:29:13,440
Speaker 2: The death of equities the years earlier on death business.

525
00:29:13,240 --> 00:29:16,760
Speaker 3: Death of equities, Yes, for sure, and then people become

526
00:29:16,840 --> 00:29:20,280
Speaker 3: more comfortable, and then they go from comfortable to confident,

527
00:29:20,400 --> 00:29:22,480
Speaker 3: and then it's like, yeah, I'm going to pay I'm

528
00:29:22,520 --> 00:29:26,280
Speaker 3: going to pay twenty or twenty five times these earnings.

529
00:29:26,280 --> 00:29:28,520
Speaker 3: And then of course then you have the growth the

530
00:29:28,880 --> 00:29:31,760
Speaker 3: growth stocks. So the late nineties obviously, where you know,

531
00:29:31,800 --> 00:29:34,240
Speaker 3: I used to call them the Janus twenty there was

532
00:29:34,280 --> 00:29:36,760
Speaker 3: a fund that was just the most docks and so.

533
00:29:36,760 --> 00:29:39,840
Speaker 2: I remember the Ryan net net An exactly.

534
00:29:40,280 --> 00:29:42,680
Speaker 3: And of course right now it's the mag seven formerly

535
00:29:42,760 --> 00:29:47,160
Speaker 3: known as the as the Thangs, and those are secular growers, right,

536
00:29:47,240 --> 00:29:49,520
Speaker 3: And there's a theme, right, it was Internet back then,

537
00:29:49,560 --> 00:29:53,120
Speaker 3: it's AI now, and people get onto the onto the

538
00:29:53,200 --> 00:29:55,520
Speaker 3: bandwagon and it's like, yeah, you know, I'll pay thirty

539
00:29:55,520 --> 00:29:58,720
Speaker 3: five times earnings for a company that is in this

540
00:29:58,840 --> 00:30:01,600
Speaker 3: space and is going to grow, so their earnings in

541
00:30:01,640 --> 00:30:05,520
Speaker 3: a secular way, not a cyclical way. And so it's

542
00:30:05,600 --> 00:30:10,560
Speaker 3: totally plausible and understandable. But at the end it goes

543
00:30:10,600 --> 00:30:13,200
Speaker 3: too far and I don't think we're anywhere close to that,

544
00:30:13,920 --> 00:30:16,120
Speaker 3: But then you start looking for signs of frost. But yeah,

545
00:30:16,120 --> 00:30:17,600
Speaker 3: but that's that's the pensulum swing.

546
00:30:17,800 --> 00:30:21,280
Speaker 2: So let's talk about nine and why so many of

547
00:30:21,320 --> 00:30:26,080
Speaker 2: your technical brethrens dated to twenty thirteen, which was when

548
00:30:26,840 --> 00:30:29,520
Speaker 2: all of the major industries broke out over their prior

549
00:30:29,640 --> 00:30:34,400
Speaker 2: training range. So the pushback IY here to nine is, well,

550
00:30:34,440 --> 00:30:37,280
Speaker 2: that's like dating the eighty two to two thousand bull

551
00:30:37,360 --> 00:30:41,440
Speaker 2: market to the lows in seventy three seventy four, and

552
00:30:41,480 --> 00:30:45,240
Speaker 2: you're still All you're doing over that period is recovering

553
00:30:45,760 --> 00:30:48,560
Speaker 2: the selloff twenty thirty. What we were down fifty six

554
00:30:48,560 --> 00:30:52,480
Speaker 2: to fifty seven percent from October seven to March o nine,

555
00:30:53,080 --> 00:30:55,760
Speaker 2: and then to get back to where you were in seven,

556
00:30:56,160 --> 00:30:59,640
Speaker 2: it took till twenty thirteen. So why nine as opposed

557
00:30:59,680 --> 00:30:59,920
Speaker 2: to thirty?

558
00:31:00,800 --> 00:31:06,360
Speaker 3: It's totally a legit argument. But I would say a

559
00:31:06,400 --> 00:31:09,760
Speaker 3: couple of things. One is this is not an exact science, right,

560
00:31:09,800 --> 00:31:13,480
Speaker 3: There's only been two or three or four secular.

561
00:31:13,240 --> 00:31:15,440
Speaker 2: Bull markets, right, small data sets.

562
00:31:15,240 --> 00:31:19,239
Speaker 3: Small data set, it's not a quant model. You have

563
00:31:19,280 --> 00:31:22,080
Speaker 3: to look at the chart at the slope. So I

564
00:31:22,200 --> 00:31:26,280
Speaker 3: date the secondar bull market from the fifties. I date

565
00:31:26,360 --> 00:31:30,000
Speaker 3: at forty nine, even though forty nine was not the low, right.

566
00:31:29,880 --> 00:31:32,560
Speaker 2: The low was six forty six.

567
00:31:33,680 --> 00:31:38,080
Speaker 3: But in forty nine something changed and the slope started

568
00:31:38,120 --> 00:31:42,080
Speaker 3: to you know, like the market found itself and that

569
00:31:42,160 --> 00:31:45,840
Speaker 3: trajectory started to really compound at double digits and you

570
00:31:45,960 --> 00:31:48,560
Speaker 3: broke out of that big shelf that was really from

571
00:31:48,800 --> 00:31:52,920
Speaker 3: twenty nine all the way to forty nine seventies. The

572
00:31:52,960 --> 00:31:55,719
Speaker 3: low was of course in seventy four October seventy four,

573
00:31:55,840 --> 00:31:58,960
Speaker 3: after forty eight percent bear market. We had some other

574
00:31:59,160 --> 00:32:02,040
Speaker 3: little cycles, but then in eighty two it took off.

575
00:32:02,320 --> 00:32:06,440
Speaker 3: There was a change in the fundamentals. You know, Vulcar

576
00:32:06,520 --> 00:32:10,520
Speaker 3: broke inflation. So and then you look at the case,

577
00:32:10,560 --> 00:32:13,280
Speaker 3: so then I get verification from the fundamentals. Then so

578
00:32:13,320 --> 00:32:16,840
Speaker 3: I look at the charts, and yes, I see the argument,

579
00:32:17,000 --> 00:32:21,760
Speaker 3: and I agreed it's a good point. But in nine

580
00:32:22,080 --> 00:32:26,120
Speaker 3: the market just went straight up after a decade of sideways.

581
00:32:26,640 --> 00:32:28,920
Speaker 3: In eighty two the market went straight up after a

582
00:32:28,960 --> 00:32:32,600
Speaker 3: decade of sideways. In forty nine, same thing, whether the

583
00:32:32,640 --> 00:32:35,560
Speaker 3: low was in or not. And of course, in real terms,

584
00:32:35,600 --> 00:32:38,200
Speaker 3: the eighty two low was below the seventy four low.

585
00:32:38,120 --> 00:32:39,880
Speaker 2: So course of inflation, you really felt.

586
00:32:39,920 --> 00:32:44,880
Speaker 3: So I want to get second opinions from the real

587
00:32:45,000 --> 00:32:48,240
Speaker 3: chart and from the fundamental So the cape model again

588
00:32:48,280 --> 00:32:50,800
Speaker 3: where you compare the ten year pe to the ten

589
00:32:50,880 --> 00:32:55,760
Speaker 3: year forward return looks very similar at the nine and

590
00:32:55,840 --> 00:32:58,440
Speaker 3: not similar at the thirteen when the market already had

591
00:32:58,440 --> 00:33:00,960
Speaker 3: a lot of momentum. And then the other thing. I

592
00:33:01,000 --> 00:33:04,120
Speaker 3: look at again that one hundred and fifty year regression

593
00:33:04,120 --> 00:33:08,760
Speaker 3: trend line of the real SMP, and so at the

594
00:33:08,920 --> 00:33:13,520
Speaker 3: at secular peaks, the market is about one hundred percent

595
00:33:13,760 --> 00:33:16,920
Speaker 3: above the trend line, and at secular troughs it's about

596
00:33:16,960 --> 00:33:20,840
Speaker 3: fifty percent below. So that point was in nine, it

597
00:33:20,920 --> 00:33:23,840
Speaker 3: was not in thirteen. So I look at like the

598
00:33:23,840 --> 00:33:27,120
Speaker 3: weight of the evidence from a multitude of indicators, and

599
00:33:27,160 --> 00:33:30,480
Speaker 3: again it's it's not an exact science. I'm not saying

600
00:33:30,520 --> 00:33:33,560
Speaker 3: I'm right there wrong, but that's for me. That's where

601
00:33:33,600 --> 00:33:33,960
Speaker 3: I get.

602
00:33:34,040 --> 00:33:36,560
Speaker 2: But you've been a whole lot more right than many

603
00:33:36,760 --> 00:33:37,400
Speaker 2: other pieples.

604
00:33:37,520 --> 00:33:42,200
Speaker 3: And it's interesting. So in nine, you know, I was

605
00:33:42,200 --> 00:33:45,080
Speaker 3: actually running a fund back then, kind of a global

606
00:33:45,080 --> 00:33:50,400
Speaker 3: micro fund, and I was like, the market was so depressed, right,

607
00:33:50,480 --> 00:33:53,400
Speaker 3: so remember March of nine, Sure of course, and I'm like,

608
00:33:53,480 --> 00:33:57,120
Speaker 3: you know, I want to be long, but what if

609
00:33:57,160 --> 00:34:00,240
Speaker 3: I'm wrong? And I'm like, at this point, if I'm wrong.

610
00:34:00,280 --> 00:34:02,320
Speaker 2: So what you're already down fifty cut in half?

611
00:34:02,320 --> 00:34:04,600
Speaker 3: Well, but at that point, the whole system is going

612
00:34:04,640 --> 00:34:09,760
Speaker 3: to collapse. So it's like, why not bet at that point?

613
00:34:10,920 --> 00:34:13,359
Speaker 3: And so, yeah, when is.

614
00:34:13,360 --> 00:34:16,480
Speaker 2: Down more than fifty percent in US market, it's not

615
00:34:16,560 --> 00:34:19,319
Speaker 2: a great entry point. I mean, that's one thing. But

616
00:34:19,800 --> 00:34:22,960
Speaker 2: I have to ask you a question about nine. So

617
00:34:23,000 --> 00:34:25,319
Speaker 2: I was looking through some of my old notes as

618
00:34:25,360 --> 00:34:29,400
Speaker 2: I was preparing for this, and I have I'm curious

619
00:34:29,440 --> 00:34:32,719
Speaker 2: as to your thoughts on some of the behavioral aspects,

620
00:34:33,120 --> 00:34:38,160
Speaker 2: including sentiment and bulbear ratios. I wrote something up in

621
00:34:38,200 --> 00:34:43,800
Speaker 2: October nine calling that recovery the most hated bull market

622
00:34:44,200 --> 00:34:48,560
Speaker 2: in market history. Markets went straight up. Everybody was miserable.

623
00:34:49,000 --> 00:34:52,200
Speaker 2: It's a headfake, it's a false breakout. This is all

624
00:34:52,239 --> 00:34:54,560
Speaker 2: going to be a disaster. And if you listen to

625
00:34:54,600 --> 00:34:57,400
Speaker 2: those people, you left a ton of money on the table.

626
00:34:57,680 --> 00:35:00,960
Speaker 2: What's your thought on that extra dam sentiment in one

627
00:35:01,040 --> 00:35:04,200
Speaker 2: direction or the other, and just what it means when

628
00:35:04,239 --> 00:35:06,480
Speaker 2: everybody hates a particular asset class.

629
00:35:06,520 --> 00:35:09,880
Speaker 3: It's obviously an opportunity because that means that everyone is

630
00:35:09,920 --> 00:35:13,480
Speaker 3: not on the same side of the boat, right And actually,

631
00:35:13,520 --> 00:35:13,879
Speaker 3: and what I.

632
00:35:13,840 --> 00:35:15,560
Speaker 2: Want, well, they're all on the room side.

633
00:35:16,040 --> 00:35:18,480
Speaker 3: But before I answered the rest of that, I want

634
00:35:18,960 --> 00:35:21,319
Speaker 3: what I was going to say earlier was when you

635
00:35:21,400 --> 00:35:25,560
Speaker 3: run the regression of the nine to present SMP, either

636
00:35:25,719 --> 00:35:29,120
Speaker 3: in real or nominal terms, and you run the same

637
00:35:29,160 --> 00:35:33,120
Speaker 3: regression from eighty two to two thousand, from forty nine

638
00:35:33,160 --> 00:35:36,880
Speaker 3: to sixty eight, it's exactly the same slope. And so

639
00:35:37,600 --> 00:35:40,760
Speaker 3: if in O nine I got bullish and in thirteen,

640
00:35:40,800 --> 00:35:43,319
Speaker 3: I'm like, yeah, now we've taken out the high. So

641
00:35:43,360 --> 00:35:46,319
Speaker 3: now we can say this bull market is confirmed. So

642
00:35:46,360 --> 00:35:49,400
Speaker 3: the thirteen for me is not the start, but it's confirmation.

643
00:35:50,120 --> 00:35:54,040
Speaker 3: But if I had looked at nothing else for the last,

644
00:35:54,160 --> 00:35:58,600
Speaker 3: for the next, you know, twelve years today, I would

645
00:35:58,600 --> 00:36:03,200
Speaker 3: be within ten percent of that slope having materialized. And

646
00:36:03,280 --> 00:36:06,440
Speaker 3: so again you're never going to do that on a

647
00:36:06,480 --> 00:36:09,040
Speaker 3: secular chart. You want to have weight of the evidence.

648
00:36:09,040 --> 00:36:12,879
Speaker 3: But it shows you how powerful that context can be

649
00:36:13,280 --> 00:36:17,520
Speaker 3: to just look at those different time frames and see

650
00:36:17,520 --> 00:36:19,480
Speaker 3: where they are, because it will keep you on the

651
00:36:19,520 --> 00:36:20,640
Speaker 3: right side of the market.

652
00:36:20,800 --> 00:36:25,040
Speaker 2: So last question on equities, given the forty nine to

653
00:36:26,040 --> 00:36:29,799
Speaker 2: sixty six rally, eighty two to two thousand and then

654
00:36:29,880 --> 00:36:35,240
Speaker 2: the nine forward, how much legs does this secular bull

655
00:36:35,280 --> 00:36:39,880
Speaker 2: market have? Can can this go another five, six, seven years?

656
00:36:40,160 --> 00:36:42,640
Speaker 2: And the other related question is how much of a

657
00:36:42,719 --> 00:36:47,120
Speaker 2: reset does that giant fiscal stimulus of twenty twenty one

658
00:36:47,239 --> 00:36:51,520
Speaker 2: twenty two build into into markets.

659
00:36:51,200 --> 00:36:54,240
Speaker 3: It's it's a great question. And so on the surface

660
00:36:54,280 --> 00:36:57,279
Speaker 3: of it, we're sixteen years in the last two were

661
00:36:57,440 --> 00:37:01,840
Speaker 3: eighteen years, but again sample size of two, like, you

662
00:37:01,880 --> 00:37:05,800
Speaker 3: can't go with that, right, But the CAPE model, again

663
00:37:05,840 --> 00:37:09,400
Speaker 3: which has been a very good long term model in

664
00:37:09,480 --> 00:37:13,280
Speaker 3: terms of the ten year Kagar for the Market, suggests

665
00:37:13,280 --> 00:37:17,680
Speaker 3: that the so the PE, the growth rate in the

666
00:37:17,760 --> 00:37:21,120
Speaker 3: PE peaked in nineteen for obvious reasons because it's a

667
00:37:21,160 --> 00:37:24,200
Speaker 3: ten year model. So nine rolls off and then you know,

668
00:37:24,280 --> 00:37:26,799
Speaker 3: you have that peak, and we've been holding steady at

669
00:37:26,840 --> 00:37:31,239
Speaker 3: around you know, fourteen fifteen percent ten year cagers. That

670
00:37:31,280 --> 00:37:34,640
Speaker 3: actually has another peak in about like twenty twenty six,

671
00:37:34,760 --> 00:37:39,400
Speaker 3: seven eight. My guess is that that acceleration will be

672
00:37:39,560 --> 00:37:42,560
Speaker 3: an AI bubble, or it could be where it's just

673
00:37:42,640 --> 00:37:44,680
Speaker 3: like you know, the AI boom, the mag seven, like

674
00:37:44,719 --> 00:37:47,320
Speaker 3: all of a sudden, everyone's buying companies with no earnings

675
00:37:47,320 --> 00:37:49,080
Speaker 3: because they're promising to be the next.

676
00:37:48,920 --> 00:37:50,719
Speaker 2: Killer app and that sort of things.

677
00:37:51,320 --> 00:37:55,480
Speaker 3: Yes, and my guess is that if we are heading

678
00:37:55,480 --> 00:37:58,760
Speaker 3: into a fiscally dominant era or we're in it already.

679
00:37:58,800 --> 00:38:02,520
Speaker 3: So we had five billion of helicopter money in twenty twenty,

680
00:38:03,040 --> 00:38:06,799
Speaker 3: we now have another five trillion dollar fiscal bill. If

681
00:38:06,840 --> 00:38:09,880
Speaker 3: the next Fed post Powell is going to be just

682
00:38:10,000 --> 00:38:15,280
Speaker 3: more doubvish than the economics suggest in order to fund

683
00:38:15,400 --> 00:38:18,760
Speaker 3: that help fund that debt, then you could see inflation

684
00:38:19,719 --> 00:38:22,839
Speaker 3: be structurally higher than two percent, maybe three to four.

685
00:38:23,600 --> 00:38:26,120
Speaker 3: And if that, and if the ten year yield at

686
00:38:26,120 --> 00:38:28,520
Speaker 3: that point goes to a five handle because the term

687
00:38:28,560 --> 00:38:32,240
Speaker 3: premium is back, you can easily see a scenario where

688
00:38:32,280 --> 00:38:36,680
Speaker 3: in a few years that FED model principle of rising

689
00:38:36,760 --> 00:38:41,040
Speaker 3: yiels bringing down the pe is going to be the

690
00:38:41,160 --> 00:38:44,440
Speaker 3: thing that flattens that secular slope. That doesn't mean like

691
00:38:44,440 --> 00:38:47,200
Speaker 3: a two thousands like bear market. It doesn't have to

692
00:38:47,239 --> 00:38:49,800
Speaker 3: mean that, but it could just be a flattening. Instead

693
00:38:49,800 --> 00:38:53,320
Speaker 3: of running at two x the ten year rate of change,

694
00:38:53,360 --> 00:38:55,920
Speaker 3: maybe you're at half x or something like that.

695
00:38:55,960 --> 00:38:59,480
Speaker 2: So generally speaking, when you see an elevated cape, it's

696
00:38:59,520 --> 00:39:03,240
Speaker 2: not a signal. It's really a signal lower your future

697
00:39:03,239 --> 00:39:05,399
Speaker 2: return expectations. Thing is going to be a little more,

698
00:39:05,800 --> 00:39:07,080
Speaker 2: a little less easy sledding.

699
00:39:07,200 --> 00:39:09,160
Speaker 3: Yes, I think the next ten years will be less

700
00:39:09,840 --> 00:39:12,160
Speaker 3: less robust than the last, but it doesn't mean they

701
00:39:12,200 --> 00:39:13,799
Speaker 3: have to be negative at all.

702
00:39:14,160 --> 00:39:17,080
Speaker 2: You mentioned the eighties into the nineties in the post

703
00:39:17,080 --> 00:39:20,000
Speaker 2: World War two era. It's kind of fascinated to look

704
00:39:20,040 --> 00:39:25,480
Speaker 2: at rolling fifteen year periods. The fifteen years following nine

705
00:39:25,560 --> 00:39:28,399
Speaker 2: is the third best fifteen year period in history. It's

706
00:39:28,440 --> 00:39:32,920
Speaker 2: really amazing. Coming up, we continue our conversation with Urian Timmor,

707
00:39:33,400 --> 00:39:39,040
Speaker 2: director of Global Macro at Fidelity, talking about crypto, gold,

708
00:39:39,160 --> 00:39:44,560
Speaker 2: commodity alternatives, and the state of the economy. I'm Barry Rihults.

709
00:39:44,600 --> 00:40:01,080
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm

710
00:40:01,120 --> 00:40:04,760
Speaker 2: Barry Rdults. You're listening to Masters in Business on Bloomberg Radio.

711
00:40:04,920 --> 00:40:08,040
Speaker 2: My extra special guests this week is uriean Temor. He

712
00:40:08,200 --> 00:40:12,440
Speaker 2: is the director of Global Macro at Fidelity Investments, the

713
00:40:12,840 --> 00:40:18,000
Speaker 2: giant firm helping to manage over sixteen trillion dollars in

714
00:40:18,040 --> 00:40:21,680
Speaker 2: client assets. So let's talk a little bit about the

715
00:40:21,719 --> 00:40:26,840
Speaker 2: current environment. You look at more than just stocks and bonds.

716
00:40:26,920 --> 00:40:29,360
Speaker 2: You look at a lot of economic data as well

717
00:40:29,640 --> 00:40:33,000
Speaker 2: and chart that. So how do you think where we

718
00:40:33,080 --> 00:40:36,239
Speaker 2: are in the current economic cycle? How do you describe

719
00:40:36,280 --> 00:40:38,720
Speaker 2: our location in the business cycle.

720
00:40:39,280 --> 00:40:45,840
Speaker 3: So generally speaking, the economy remains pretty solid. People are employed,

721
00:40:46,040 --> 00:40:50,080
Speaker 3: their wages are exceeding the inflation rate. At this point,

722
00:40:51,360 --> 00:40:53,760
Speaker 3: debt levels are not high, at least as a percent

723
00:40:53,800 --> 00:40:57,360
Speaker 3: of GDP. Right, So the household debt to GDP ratio

724
00:40:57,440 --> 00:40:58,920
Speaker 3: peaked during a financial.

725
00:40:58,560 --> 00:40:59,840
Speaker 2: Crisis, pretty modest.

726
00:41:00,239 --> 00:41:02,279
Speaker 3: It's yeah, it was one hundred percent of GDP. It's

727
00:41:02,360 --> 00:41:05,880
Speaker 3: now seventy. So there's a debt issue on the government's

728
00:41:05,880 --> 00:41:08,400
Speaker 3: balance sheet, but not in the household or even the

729
00:41:08,440 --> 00:41:09,279
Speaker 3: corporate balance sheet.

730
00:41:09,280 --> 00:41:13,040
Speaker 2: Even the government side. Isn't our debt to GDP ratio

731
00:41:13,120 --> 00:41:14,960
Speaker 2: like half of Japan something like that.

732
00:41:15,760 --> 00:41:18,680
Speaker 3: So about one hundred and twenty percent if it's just

733
00:41:18,719 --> 00:41:22,279
Speaker 3: the federal debt. If you add all other debt, it's

734
00:41:22,320 --> 00:41:27,280
Speaker 3: about two hundred and fifty. But it's comparable to other regions.

735
00:41:27,280 --> 00:41:30,040
Speaker 3: But certainly Japan gets the prize, and China as well,

736
00:41:30,280 --> 00:41:32,040
Speaker 3: just in terms of the growth rate of the debt.

737
00:41:32,200 --> 00:41:34,880
Speaker 2: China, oh, okay, not total, but yeah, China has been

738
00:41:34,920 --> 00:41:37,719
Speaker 2: growing debt and the Chinese provinces have been growing debt

739
00:41:37,719 --> 00:41:38,239
Speaker 2: at yeah.

740
00:41:38,400 --> 00:41:41,239
Speaker 3: And the Chinese numbers, of course, are can be a

741
00:41:41,280 --> 00:41:45,200
Speaker 3: little vague because the federal debt in China is not high,

742
00:41:45,560 --> 00:41:47,920
Speaker 3: but they have the four big policy banks that are

743
00:41:48,000 --> 00:41:50,879
Speaker 3: essentially providing liquidity, and so you have to add that,

744
00:41:51,120 --> 00:41:54,840
Speaker 3: and so China and Japan are the worst offenders. The

745
00:41:54,960 --> 00:41:58,640
Speaker 3: US is is on par with most kind of European

746
00:41:58,719 --> 00:42:04,160
Speaker 3: and other countries. But so anyway, so the economy looks

747
00:42:04,880 --> 00:42:07,560
Speaker 3: pretty good. But you know, one of the things that

748
00:42:07,640 --> 00:42:10,640
Speaker 3: COVID did was it sort of up ended a lot

749
00:42:10,680 --> 00:42:12,960
Speaker 3: of the things we think about when we look at

750
00:42:13,000 --> 00:42:15,839
Speaker 3: the at the economic cycle, at the business cycle. So

751
00:42:16,239 --> 00:42:19,160
Speaker 3: you know, of course we know what happened. The economy froze,

752
00:42:19,920 --> 00:42:22,719
Speaker 3: people got laid off, and then at least in the US,

753
00:42:22,800 --> 00:42:26,640
Speaker 3: the economy came back really fast, faster than in other places.

754
00:42:27,200 --> 00:42:30,160
Speaker 3: And the labor wasn't there right Baby boomers had checked out,

755
00:42:30,200 --> 00:42:32,960
Speaker 3: they left the labor force. Of course, the borders were closed,

756
00:42:33,360 --> 00:42:35,759
Speaker 3: and I remember, like I was doing a lot of

757
00:42:35,800 --> 00:42:38,359
Speaker 3: flying back to la at the time because I was

758
00:42:38,760 --> 00:42:42,359
Speaker 3: hiding in Santa Barbara because the office was closed. And

759
00:42:42,440 --> 00:42:45,800
Speaker 3: it's like like the counter at Jet Blue in Boston

760
00:42:46,600 --> 00:42:50,080
Speaker 3: was like they just did not have enough people. People

761
00:42:50,120 --> 00:42:52,919
Speaker 3: were coming back, like everyone was like, Okay, we're back,

762
00:42:53,000 --> 00:42:57,480
Speaker 3: but there wasn't The supply chains weren't there, and so

763
00:42:57,520 --> 00:42:59,879
Speaker 3: we had this very tight labor market that of course

764
00:43:00,040 --> 00:43:01,800
Speaker 3: we would hear about all the time here from the

765
00:43:01,920 --> 00:43:05,520
Speaker 3: jolt support to job openings for every job seeker, that

766
00:43:05,640 --> 00:43:08,799
Speaker 3: sort of thing, and that has been worked off over

767
00:43:08,800 --> 00:43:10,839
Speaker 3: the last few years. I think that was the goal

768
00:43:10,960 --> 00:43:13,920
Speaker 3: of the tightening policy, or part of the goal. So

769
00:43:13,960 --> 00:43:15,719
Speaker 3: when you look at the JOLT support or you look

770
00:43:15,760 --> 00:43:19,200
Speaker 3: at the U three jobless rate relative to NAHRUD, the

771
00:43:19,320 --> 00:43:23,480
Speaker 3: non accelerating rate of employment, everything is in balance, like

772
00:43:23,520 --> 00:43:24,959
Speaker 3: it's right at that zero line.

773
00:43:25,000 --> 00:43:27,520
Speaker 2: So they supply is that why we've kind of been

774
00:43:27,520 --> 00:43:30,920
Speaker 2: hanging around four to three four to two unemployment.

775
00:43:30,480 --> 00:43:33,319
Speaker 3: So no one's hiring, but not many people are looking for.

776
00:43:33,360 --> 00:43:35,520
Speaker 2: Jobs and not a lot of people getting laid off.

777
00:43:35,640 --> 00:43:38,760
Speaker 3: No, And so there's balance, right the job seekers versus

778
00:43:39,080 --> 00:43:42,919
Speaker 3: the job providers. But you look at that chart over

779
00:43:43,000 --> 00:43:46,759
Speaker 3: fifty years and you can see that there's a pendulum

780
00:43:46,800 --> 00:43:49,480
Speaker 3: swing of that business cycle. So we went from very

781
00:43:49,520 --> 00:43:53,840
Speaker 3: tight to neutral, and you know, like the inclination is

782
00:43:53,880 --> 00:43:55,600
Speaker 3: to look at that and it's like, well, every other

783
00:43:55,640 --> 00:43:59,200
Speaker 3: time that's happened. The next phase is contraction, and I

784
00:43:59,200 --> 00:44:01,719
Speaker 3: think that's what the market is saying. That's I think

785
00:44:01,800 --> 00:44:04,680
Speaker 3: what where the Fed's coming from now that they did

786
00:44:04,680 --> 00:44:08,040
Speaker 3: the twenty five. They're looking at the jobs dated, They're

787
00:44:08,040 --> 00:44:13,359
Speaker 3: looking at the revision, right the jobs report revisions eleven

788
00:44:13,400 --> 00:44:16,240
Speaker 3: thousand jobs, and they're like, Okay, you know, we should

789
00:44:16,320 --> 00:44:19,759
Speaker 3: we should build in some some cushion for that. And

790
00:44:19,800 --> 00:44:23,480
Speaker 3: so I think that's generally the vibe. But other than that, uh,

791
00:44:23,560 --> 00:44:25,399
Speaker 3: you know, we have a whole economics team that looks

792
00:44:25,440 --> 00:44:28,080
Speaker 3: at the business cycle and we're not really seeing a

793
00:44:28,120 --> 00:44:30,800
Speaker 3: lot of red flags other than that yellow flag.

794
00:44:30,840 --> 00:44:34,319
Speaker 2: If you how closely does the market cycle track the

795
00:44:34,360 --> 00:44:37,080
Speaker 2: business cycle? Because you know, I've heard it said so

796
00:44:37,120 --> 00:44:40,600
Speaker 2: many times the market is not the economy and vice versa.

797
00:44:40,680 --> 00:44:43,520
Speaker 2: And the old joke is the stock market is forecast

798
00:44:43,600 --> 00:44:47,040
Speaker 2: nine to the last four recessions. How do you see

799
00:44:47,480 --> 00:44:48,200
Speaker 2: that overlay?

800
00:44:49,160 --> 00:44:51,520
Speaker 3: There is of course a connection, right you look at

801
00:44:52,000 --> 00:44:55,399
Speaker 3: GDP growth and inventories. I mean, it's less about that

802
00:44:55,560 --> 00:44:59,840
Speaker 3: now than it was decades ago, the impact of monetary policy.

803
00:45:00,560 --> 00:45:03,239
Speaker 3: But you know, the markets are not the economy. There

804
00:45:03,320 --> 00:45:06,839
Speaker 3: is a reflection because if the economy grows, earnings are

805
00:45:06,840 --> 00:45:09,520
Speaker 3: going to grow, and then uh, you know, the market's

806
00:45:09,560 --> 00:45:12,399
Speaker 3: going to go up because price follows earnings. But there's

807
00:45:12,440 --> 00:45:16,200
Speaker 3: a sentiment equation in the stock market that of course

808
00:45:16,400 --> 00:45:18,960
Speaker 3: you don't have so much in the in the economic cycle,

809
00:45:19,560 --> 00:45:23,080
Speaker 3: and and you have the timing right, so the market

810
00:45:23,120 --> 00:45:25,840
Speaker 3: is always going to anticipate future changes.

811
00:45:25,920 --> 00:45:28,560
Speaker 2: So if you have a chart showing market's bottom eight

812
00:45:28,600 --> 00:45:32,480
Speaker 2: months below profits, so you can that's a huge lead

813
00:45:32,520 --> 00:45:33,960
Speaker 2: time eight months.

814
00:45:33,600 --> 00:45:36,640
Speaker 3: So you can be one hundred percent correct about the

815
00:45:36,640 --> 00:45:40,000
Speaker 3: economic cycle and be one hundred percent wrong about the

816
00:45:40,040 --> 00:45:44,080
Speaker 3: market because if it's already been reflected, and if it's

817
00:45:44,080 --> 00:45:48,719
Speaker 3: already has even over earned against that future signal, then

818
00:45:48,920 --> 00:45:52,480
Speaker 3: you're buying yesterday's news. But yeah, so the market generally

819
00:45:53,080 --> 00:45:57,360
Speaker 3: at bottoms will bottom two three quarters before earnings. That

820
00:45:57,440 --> 00:45:59,880
Speaker 3: happened during COVID, And I remember like it was yesterday,

821
00:46:00,520 --> 00:46:03,200
Speaker 3: because during COVID, you know, the market felt thirty five

822
00:46:03,239 --> 00:46:07,240
Speaker 3: percent February and March, then like late March at bottomed,

823
00:46:07,520 --> 00:46:10,279
Speaker 3: and I think and I think my June it was

824
00:46:10,280 --> 00:46:10,719
Speaker 3: at new.

825
00:46:10,680 --> 00:46:14,440
Speaker 2: Highs and sixty for the year from the lows, and

826
00:46:15,320 --> 00:46:15,879
Speaker 2: people like.

827
00:46:15,840 --> 00:46:18,919
Speaker 3: The economists had a cover saying this is divorced from

828
00:46:18,960 --> 00:46:22,640
Speaker 3: reality and everyone and so it's my job a to

829
00:46:22,719 --> 00:46:24,840
Speaker 3: have people not sell in the first place, to be

830
00:46:25,040 --> 00:46:27,520
Speaker 3: to be the long term investor. You know, the way

831
00:46:27,719 --> 00:46:30,720
Speaker 3: I always describe it is you're getting a really juicy

832
00:46:31,000 --> 00:46:34,880
Speaker 3: ten to eleven percent returned by investing in stocks. But

833
00:46:34,920 --> 00:46:38,279
Speaker 3: the price of admission is you got to endure some

834
00:46:38,360 --> 00:46:41,319
Speaker 3: volatility and if you can't stand the price, then you

835
00:46:41,360 --> 00:46:42,360
Speaker 3: don't get the reward.

836
00:46:42,520 --> 00:46:45,440
Speaker 2: How do you explain to clients? And I got a

837
00:46:45,440 --> 00:46:49,680
Speaker 2: million calls, man, this market has become disconnected from reality.

838
00:46:50,040 --> 00:46:51,680
Speaker 2: What's your explanation to that?

839
00:46:51,440 --> 00:46:55,000
Speaker 3: So that's what what happened. Happened after the financial crisis.

840
00:46:55,440 --> 00:46:58,560
Speaker 3: So price bottoms, the market bets on recovery, and it

841
00:46:58,600 --> 00:47:01,160
Speaker 3: could be wrong, right prices recovery doesn't mean the market

842
00:47:01,239 --> 00:47:04,280
Speaker 3: knows everything. And that's one thing where I sometimes disagree

843
00:47:04,320 --> 00:47:07,560
Speaker 3: with technicians who say market's always right. Well, the market's

844
00:47:07,560 --> 00:47:10,440
Speaker 3: not always right, but the market's always right in discounting

845
00:47:10,560 --> 00:47:13,560
Speaker 3: everything that's knowable. So it's right in that, But it

846
00:47:13,560 --> 00:47:17,200
Speaker 3: doesn't mean that that what it's discounting can't change, right,

847
00:47:17,200 --> 00:47:19,960
Speaker 3: And we saw this during the tariff tantrum in April.

848
00:47:20,520 --> 00:47:23,040
Speaker 3: Market was pricing in a left tail that never arrived

849
00:47:23,200 --> 00:47:25,920
Speaker 3: and now and then it had to unprice it. So

850
00:47:26,080 --> 00:47:29,960
Speaker 3: but so the market looks ahead and the market bottomed

851
00:47:29,960 --> 00:47:34,399
Speaker 3: in March of nine. Earnings didn't bottom until the third

852
00:47:34,480 --> 00:47:37,719
Speaker 3: or fourth quarter. Same thing during COVID March bottomed in

853
00:47:37,760 --> 00:47:41,040
Speaker 3: March of twenty twenty, earnings recovered third or fourth quarter.

854
00:47:41,600 --> 00:47:45,080
Speaker 3: And so you have so you can't look at the

855
00:47:45,120 --> 00:47:47,839
Speaker 3: news and say, how can the market be here when

856
00:47:47,880 --> 00:47:49,840
Speaker 3: the earnings or like people are dying.

857
00:47:49,960 --> 00:47:52,400
Speaker 2: So how did you explain this to clients? I'm curious.

858
00:47:52,680 --> 00:47:55,520
Speaker 3: I explained it exactly that way, that the price always

859
00:47:55,640 --> 00:47:58,880
Speaker 3: leads and you can't look at it in sort of

860
00:47:58,880 --> 00:48:03,439
Speaker 3: a linear way. Have to just you have to know

861
00:48:03,600 --> 00:48:09,000
Speaker 3: that at inflection points, the price action is going to

862
00:48:09,040 --> 00:48:12,200
Speaker 3: make no sense. And this is why people sell at

863
00:48:12,200 --> 00:48:15,800
Speaker 3: bottoms and buy a tops because they are they're trying

864
00:48:15,840 --> 00:48:18,759
Speaker 3: to understand the narrative, and the narrative is not the

865
00:48:18,800 --> 00:48:21,399
Speaker 3: one that is ruling the roost at the time.

866
00:48:21,680 --> 00:48:24,000
Speaker 2: One of the things that we found was useful was

867
00:48:24,040 --> 00:48:28,759
Speaker 2: explaining to clients that their life experience isn't market cap

868
00:48:28,840 --> 00:48:31,480
Speaker 2: weighted when you look at what's driving the big indexes.

869
00:48:32,080 --> 00:48:34,040
Speaker 2: It was back then it was the fang. Now we

870
00:48:34,080 --> 00:48:37,040
Speaker 2: call it the magnificent seven. But we did a calculation

871
00:48:37,200 --> 00:48:40,440
Speaker 2: and found out that if all the airlines, all the hotels,

872
00:48:40,680 --> 00:48:43,560
Speaker 2: all the local retailers, like just a run of the

873
00:48:43,600 --> 00:48:48,320
Speaker 2: worst businesses during the pandemic, if they just disappeared tomorrow,

874
00:48:48,600 --> 00:48:51,520
Speaker 2: was six percent of the S and P five hundred

875
00:48:52,000 --> 00:48:55,799
Speaker 2: and you know, or Apple or Microsoft. It's like, it's

876
00:48:55,840 --> 00:49:01,240
Speaker 2: amazing how our daily experience is so from what markets

877
00:49:01,239 --> 00:49:01,520
Speaker 2: are like.

878
00:49:01,760 --> 00:49:04,560
Speaker 3: And we had that during Brexit in twenty sixteen. I mean,

879
00:49:04,560 --> 00:49:07,600
Speaker 3: that was constantly the headlines, what about Brexit? Why is

880
00:49:07,640 --> 00:49:11,359
Speaker 3: the US market ignoring it? Well, because it's so realm

881
00:49:11,480 --> 00:49:16,720
Speaker 3: because the UK is three percent of SMP revenues, that's why.

882
00:49:16,880 --> 00:49:22,560
Speaker 2: So that raises really interesting question about the US versus

883
00:49:22,600 --> 00:49:25,160
Speaker 2: the rest of the world in terms of economic activities.

884
00:49:25,600 --> 00:49:27,880
Speaker 2: So the S and P five hundred just gets just

885
00:49:27,920 --> 00:49:32,640
Speaker 2: about half of its revenue from overseas. For most of

886
00:49:32,680 --> 00:49:36,880
Speaker 2: the past fifteen years, the US side of consumer spending,

887
00:49:36,920 --> 00:49:41,120
Speaker 2: business spending, government spending has been very supportive of the

888
00:49:41,120 --> 00:49:43,919
Speaker 2: domestic side of the S and P five hundred. Kind

889
00:49:43,920 --> 00:49:46,680
Speaker 2: of feels like that shifting a little bit. We're seeing

890
00:49:46,719 --> 00:49:49,239
Speaker 2: a little slow down on consumer spending, a little slow

891
00:49:49,320 --> 00:49:54,240
Speaker 2: down on economic activity here as Europe and Asia seem

892
00:49:54,320 --> 00:49:58,120
Speaker 2: to be starting to finding their footing after bad ten years.

893
00:49:58,400 --> 00:50:02,320
Speaker 2: Can we just pass off the without the SMP stumbling?

894
00:50:02,400 --> 00:50:03,520
Speaker 2: Is that? Is that possible?

895
00:50:04,120 --> 00:50:07,120
Speaker 3: It's possible, and it's actually happening right now. And this

896
00:50:07,160 --> 00:50:09,399
Speaker 3: is one of the areas that I'm most excited about

897
00:50:09,560 --> 00:50:13,479
Speaker 3: right now, is that this US bull market has become

898
00:50:13,520 --> 00:50:18,080
Speaker 3: a global bullmarket. You look at EM stocks, Chinese stocks, Europe, Japan,

899
00:50:19,200 --> 00:50:21,920
Speaker 3: and it's very exciting because you know, for many years,

900
00:50:22,000 --> 00:50:25,480
Speaker 3: right the US exceptionalism train has been running since twenty

901
00:50:25,920 --> 00:50:30,120
Speaker 3: fourteen fifteen, and the rest of the world was always

902
00:50:30,120 --> 00:50:34,800
Speaker 3: so tempting with its lower valuation. And I've had conversations,

903
00:50:35,120 --> 00:50:39,040
Speaker 3: you know, with our asset allocation pms for years saying

904
00:50:39,440 --> 00:50:41,600
Speaker 3: like yeah, I can, I can buy EPHO or EM

905
00:50:41,680 --> 00:50:45,759
Speaker 3: at fourteen times like Chief for a reason, though it's

906
00:50:45,800 --> 00:50:50,120
Speaker 3: Chief for a reason. The market's very efficient, but for

907
00:50:50,200 --> 00:50:53,160
Speaker 3: the but so the catalyst. So you need a catalyst

908
00:50:53,280 --> 00:50:57,680
Speaker 3: to make the mean reversion invaluation to trigger that. And

909
00:50:57,719 --> 00:50:59,920
Speaker 3: the catalyst is always going to be related to earnings.

910
00:51:00,360 --> 00:51:02,319
Speaker 3: Like if you look at the real to performance US

911
00:51:02,400 --> 00:51:06,160
Speaker 3: versus non US over the past ten years, it's exactly

912
00:51:06,160 --> 00:51:08,440
Speaker 3: the same as the reld of earning slide like it's

913
00:51:08,440 --> 00:51:11,239
Speaker 3: the same thing. So you need something to change on

914
00:51:11,280 --> 00:51:14,000
Speaker 3: the earning side, and that's changing. So we have, of

915
00:51:14,040 --> 00:51:17,200
Speaker 3: course a very concentrated market in the US and that

916
00:51:17,280 --> 00:51:21,600
Speaker 3: does pose risks, right, I mean, if those seven stocks

917
00:51:21,680 --> 00:51:24,600
Speaker 3: go down, guess what the SMP is going to go down.

918
00:51:24,719 --> 00:51:26,919
Speaker 3: Even if seventy percent of the stocks in the SMP

919
00:51:27,040 --> 00:51:30,000
Speaker 3: are going up. If you're an indexer, are you buying

920
00:51:30,000 --> 00:51:33,440
Speaker 3: an et an sby? You're not going to feel those

921
00:51:33,480 --> 00:51:37,759
Speaker 3: gains because those top seven stocks are taking the index down.

922
00:51:38,239 --> 00:51:40,680
Speaker 3: And so it was so for the last year or

923
00:51:40,680 --> 00:51:42,960
Speaker 3: so it was a question of how do you diversify

924
00:51:43,000 --> 00:51:46,279
Speaker 3: against concentration risk? Do you go down cap do you

925
00:51:46,280 --> 00:51:49,600
Speaker 3: buy the Russell two thousand? But now the answer is

926
00:51:49,640 --> 00:51:53,280
Speaker 3: easier because now you have a catalyst, a fundamental catalyst

927
00:51:53,320 --> 00:51:56,680
Speaker 3: that is causing the mean reversion to happen between US

928
00:51:56,719 --> 00:52:01,279
Speaker 3: and non US stocks. And where that's coming is that

929
00:52:01,440 --> 00:52:03,800
Speaker 3: So I'm a big fan of the discount cashlow model,

930
00:52:04,120 --> 00:52:07,480
Speaker 3: the DCF, which looks at not so much earnings but

931
00:52:07,520 --> 00:52:10,439
Speaker 3: the payout of earnings. So if you have earnings growth

932
00:52:10,480 --> 00:52:14,120
Speaker 3: at ten percent and seventy percent of those earnings are

933
00:52:14,160 --> 00:52:18,240
Speaker 3: being returned to shareholders as dividends or buybacks. The payout

934
00:52:18,560 --> 00:52:21,760
Speaker 3: is that seventy percent, and the payout ratio is seventy percent.

935
00:52:22,239 --> 00:52:25,480
Speaker 3: And for the US, it's always been a very dominating

936
00:52:25,520 --> 00:52:29,040
Speaker 3: scenario where the payout in the US is very strong

937
00:52:29,080 --> 00:52:31,560
Speaker 3: because of all the share buybacks we have here.

938
00:52:31,800 --> 00:52:34,080
Speaker 2: Where are we today with that? Are we still seeing

939
00:52:34,080 --> 00:52:36,799
Speaker 2: the same sort of share buybacks because it seems like

940
00:52:36,880 --> 00:52:39,640
Speaker 2: we haven't been hearing a lot of announcements, but that

941
00:52:39,680 --> 00:52:40,680
Speaker 2: doesn't mean it's not happen.

942
00:52:40,719 --> 00:52:43,520
Speaker 3: We don't hear a lot, but the buybacks are at

943
00:52:43,560 --> 00:52:47,160
Speaker 3: record HIGHS three hundred billion over the last twelve months,

944
00:52:47,600 --> 00:52:50,759
Speaker 3: and the payout ratio is seventy five percent for the

945
00:52:50,880 --> 00:52:54,080
Speaker 3: S and P. But guess what the payout for IFA,

946
00:52:54,160 --> 00:52:58,160
Speaker 3: which is non US developed stocks, the payout ratio is

947
00:52:58,200 --> 00:53:00,800
Speaker 3: also seventy five percent. It always used to be lower

948
00:53:00,840 --> 00:53:03,480
Speaker 3: because they don't do buybacks over there, they do dividends.

949
00:53:03,760 --> 00:53:07,120
Speaker 3: But now they're doing more buybacks, and the growth rate

950
00:53:07,200 --> 00:53:10,200
Speaker 3: in the payout itself over the last five years is

951
00:53:10,239 --> 00:53:13,560
Speaker 3: now higher in EFA than in the US, So you're

952
00:53:13,600 --> 00:53:18,680
Speaker 3: getting equal or superior or at least competitive fundamentals at

953
00:53:19,400 --> 00:53:22,279
Speaker 3: at a fraction of devaluation and that that is a

954
00:53:22,320 --> 00:53:25,360
Speaker 3: good that's a good deal. And so that's so finally

955
00:53:25,440 --> 00:53:29,000
Speaker 3: that that part is working where the pond that we're

956
00:53:29,040 --> 00:53:31,919
Speaker 3: fishing from is now broader, and for me, it kind

957
00:53:31,920 --> 00:53:34,960
Speaker 3: of it's it's a Barbell strategy. I don't want to

958
00:53:35,000 --> 00:53:37,240
Speaker 3: be short the Max seven because they can get bigger

959
00:53:37,600 --> 00:53:39,640
Speaker 3: and you don't want to miss out on that. But

960
00:53:39,840 --> 00:53:44,239
Speaker 3: rather than going down cap in the US, do a

961
00:53:44,280 --> 00:53:48,080
Speaker 3: barbelle of Max seven and non US stocks. Then you

962
00:53:48,120 --> 00:53:51,719
Speaker 3: can play the dollar with dollar weekening story. You can

963
00:53:51,760 --> 00:53:55,200
Speaker 3: get equally good fundamentals for a fifteen pe instead of

964
00:53:55,239 --> 00:53:58,239
Speaker 3: a twenty four pe. And to me, that's that's that's

965
00:53:58,280 --> 00:53:59,879
Speaker 3: a good that's a good thing right now.

966
00:54:00,040 --> 00:54:02,279
Speaker 2: So the last two things I want to talk to

967
00:54:02,320 --> 00:54:06,200
Speaker 2: you about in terms of the current environment are inflation

968
00:54:06,360 --> 00:54:09,000
Speaker 2: and sentiment. And I'm not sure how much of this

969
00:54:09,160 --> 00:54:12,960
Speaker 2: is related. You know, when we see the Michigan sentiment data,

970
00:54:13,360 --> 00:54:16,760
Speaker 2: it seems to be so awful and it just doesn't

971
00:54:16,760 --> 00:54:20,040
Speaker 2: feel like, is this really worse than the financial crisis,

972
00:54:20,120 --> 00:54:23,480
Speaker 2: worse than COVID, worse than the dot com implosion in

973
00:54:23,560 --> 00:54:25,640
Speaker 2: nine to eleven or worse than the eighty seven crash.

974
00:54:26,239 --> 00:54:30,279
Speaker 2: If you follow the sentiment data, it's saying, yes, just

975
00:54:30,320 --> 00:54:31,400
Speaker 2: doesn't feel that way.

976
00:54:31,840 --> 00:54:35,840
Speaker 3: No, it doesn't. And I think the sentiment data, obviously,

977
00:54:35,840 --> 00:54:40,759
Speaker 3: they're very bifurcated by political belief right, you know, And I've.

978
00:54:40,280 --> 00:54:41,920
Speaker 2: Seen those charts are really useful.

979
00:54:42,160 --> 00:54:44,520
Speaker 3: And I spend time on both coasts, and you know,

980
00:54:44,560 --> 00:54:47,800
Speaker 3: I was in at a dinner party in Montecito, California

981
00:54:48,040 --> 00:54:51,319
Speaker 3: a few weeks ago, and people were like, how can

982
00:54:51,440 --> 00:54:54,680
Speaker 3: everything look so good when we're like at the end

983
00:54:54,760 --> 00:54:57,040
Speaker 3: of the world type of thing? And then I'll be,

984
00:54:57,239 --> 00:54:59,000
Speaker 3: you know, in some other place and It'll be the

985
00:54:59,120 --> 00:55:02,720
Speaker 3: total opposite. But I think a lot of the sentiment

986
00:55:02,840 --> 00:55:06,840
Speaker 3: data are still driven by the inflation data. Like obviously

987
00:55:06,920 --> 00:55:10,360
Speaker 3: the inflation rate has come down to two point eight percent.

988
00:55:10,160 --> 00:55:12,440
Speaker 2: But everything remains more expensive that that.

989
00:55:12,520 --> 00:55:15,440
Speaker 3: You know, that COVID spike, you know, that has not

990
00:55:15,520 --> 00:55:17,640
Speaker 3: been unwound, and one of and that's one of the

991
00:55:17,680 --> 00:55:20,759
Speaker 3: things I worry about because not not to make a

992
00:55:20,800 --> 00:55:24,320
Speaker 3: comparison to the nineteen seventies, which obviously was the great

993
00:55:24,320 --> 00:55:28,000
Speaker 3: inflation long term, but during the fifties and sixties, inflation

994
00:55:28,160 --> 00:55:31,080
Speaker 3: was super low two percent, and then you to the

995
00:55:31,120 --> 00:55:33,799
Speaker 3: second half of the sixties, it started to creep up

996
00:55:34,200 --> 00:55:37,160
Speaker 3: and then it came back down. But in order to

997
00:55:37,400 --> 00:55:39,920
Speaker 3: for the average to be at two percent, if you

998
00:55:40,000 --> 00:55:42,840
Speaker 3: go to six percent, you then need to go below

999
00:55:42,880 --> 00:55:45,880
Speaker 3: too for the average to be two and we haven't

1000
00:55:45,920 --> 00:55:49,560
Speaker 3: done that. We went from two to nine to two

1001
00:55:49,600 --> 00:55:53,440
Speaker 3: point eight, and we're we never went below too. And

1002
00:55:53,800 --> 00:55:57,120
Speaker 3: if we, for some reason get another upswing and we're

1003
00:55:57,160 --> 00:56:00,799
Speaker 3: at three and four like that, five, your number is

1004
00:56:00,800 --> 00:56:03,680
Speaker 3: now going to be at four or five percent. And

1005
00:56:03,719 --> 00:56:05,560
Speaker 3: I think that's what's driving a lot of it is

1006
00:56:05,600 --> 00:56:08,600
Speaker 3: it certainly did during COVID, and it's things like food,

1007
00:56:08,680 --> 00:56:10,319
Speaker 3: right so you know, like the.

1008
00:56:10,320 --> 00:56:13,680
Speaker 2: Top beef prices are up. Egg prices have come back down,

1009
00:56:13,719 --> 00:56:15,120
Speaker 2: but beef prices have run away.

1010
00:56:15,160 --> 00:56:16,879
Speaker 3: So I think a lot of it has to do

1011
00:56:17,080 --> 00:56:20,480
Speaker 3: with that, because you know, people are employed, wages are

1012
00:56:20,719 --> 00:56:25,040
Speaker 3: are competitive right now, you know, employment rates four point

1013
00:56:25,120 --> 00:56:28,440
Speaker 3: three percent. But I think it's just that that cost

1014
00:56:28,480 --> 00:56:32,000
Speaker 3: of living. It just kind of like grinds and it's

1015
00:56:32,040 --> 00:56:33,560
Speaker 3: been grinding for five years now.

1016
00:56:33,640 --> 00:56:37,080
Speaker 2: So let's talk about that two percent target. You know,

1017
00:56:37,160 --> 00:56:42,440
Speaker 2: in the twenty tens, an era of concerns about deflation

1018
00:56:43,200 --> 00:56:46,520
Speaker 2: and monetary stimulus. Two percent seemed like a reasonable number.

1019
00:56:46,760 --> 00:56:49,680
Speaker 2: Is that still a reasonable number? Now? That and that

1020
00:56:49,800 --> 00:56:52,480
Speaker 2: was an upside target, right, You are at one percent

1021
00:56:52,520 --> 00:56:55,040
Speaker 2: aiming for two. Now we're at two and a half three,

1022
00:56:55,200 --> 00:56:59,799
Speaker 2: aiming back at two. Maybe in an era of fiscal stimulus,

1023
00:57:00,000 --> 00:57:02,200
Speaker 2: two and a half three percent makes more sense. I mean,

1024
00:57:02,239 --> 00:57:05,759
Speaker 2: I'm not a monetariust, but I don't know why the

1025
00:57:05,800 --> 00:57:08,160
Speaker 2: whole world changes except for our inflation.

1026
00:57:08,560 --> 00:57:13,360
Speaker 3: Yeah, there's nothing magical about two. Like if you go

1027
00:57:13,480 --> 00:57:17,200
Speaker 3: back one hundred and fifty years, again, the average inflation

1028
00:57:17,320 --> 00:57:20,480
Speaker 3: rate is like three percent two point eight. If you

1029
00:57:20,520 --> 00:57:25,120
Speaker 3: look at a distribution of equity pees and the inflation rate,

1030
00:57:25,680 --> 00:57:29,120
Speaker 3: the sweet spot is sort of one to four. So

1031
00:57:29,160 --> 00:57:31,920
Speaker 3: whether you're at three or two, like for the stock market,

1032
00:57:31,600 --> 00:57:34,360
Speaker 3: doesn't matter, like ten, ten to two.

1033
00:57:34,360 --> 00:57:36,440
Speaker 2: Like that, that that matters.

1034
00:57:37,600 --> 00:57:41,960
Speaker 3: And that distribution is interesting because obviously the higher the

1035
00:57:42,000 --> 00:57:44,920
Speaker 3: inflation rate goes, the lower the pe, which makes perfect

1036
00:57:45,000 --> 00:57:47,720
Speaker 3: sense because the inflation goes up, bond you'lls go up.

1037
00:57:47,760 --> 00:57:51,240
Speaker 3: Then the safe asset is very competitive with the risky asset.

1038
00:57:51,320 --> 00:57:52,480
Speaker 3: So why take the risk.

1039
00:57:52,360 --> 00:57:54,400
Speaker 2: Plus the cost of capitals up?

1040
00:57:55,240 --> 00:57:57,880
Speaker 3: If you go to the left tail deflation. There is

1041
00:57:57,960 --> 00:58:04,280
Speaker 3: really no correlation. Nobody likes deflation. So from that angle,

1042
00:58:04,600 --> 00:58:07,320
Speaker 3: two and a half is not a problem. Even three

1043
00:58:07,440 --> 00:58:09,680
Speaker 3: is not a problem. I think the Fed worries that

1044
00:58:10,200 --> 00:58:14,440
Speaker 3: if they were to ever admit that, you know, inflation

1045
00:58:14,680 --> 00:58:18,360
Speaker 3: expectations could get unanchored. But they went to the AIIT thing, right,

1046
00:58:18,440 --> 00:58:23,880
Speaker 3: the average inflation targeting, and actually that actually prevented them

1047
00:58:23,920 --> 00:58:27,000
Speaker 3: from raising rates when they should have back in twenty

1048
00:58:27,120 --> 00:58:28,280
Speaker 3: twenty one and two.

1049
00:58:28,560 --> 00:58:30,800
Speaker 2: They relate to the party to raise and they seem

1050
00:58:30,840 --> 00:58:32,360
Speaker 2: like they will relate to the party to cut it.

1051
00:58:32,560 --> 00:58:34,840
Speaker 3: Yeah, so their policy was we need to see the

1052
00:58:34,880 --> 00:58:38,400
Speaker 3: whites in the eyes of inflation before we raised rates,

1053
00:58:39,320 --> 00:58:42,520
Speaker 3: and by the time the whites of the eyes were visible,

1054
00:58:42,600 --> 00:58:44,680
Speaker 3: it was like too late. You know, inflation was at

1055
00:58:44,760 --> 00:58:48,800
Speaker 3: five going to nine. But so you know, it's a

1056
00:58:48,880 --> 00:58:52,120
Speaker 3: nuanced thing. But again, three percent is not going to

1057
00:58:52,120 --> 00:58:54,320
Speaker 3: be the end of the world. It just means bombs

1058
00:58:54,360 --> 00:58:58,080
Speaker 3: have a term premium and stock market is still fine.

1059
00:58:58,120 --> 00:59:00,640
Speaker 3: Maybe the pe is like seventeen and seid of nineteen,

1060
00:59:00,680 --> 00:59:02,840
Speaker 3: but like you know, if earnings are doing the heavy lifting,

1061
00:59:03,320 --> 00:59:05,880
Speaker 3: it doesn't matter. But again it's like, what will it

1062
00:59:05,920 --> 00:59:10,040
Speaker 3: take for the Fed to actually say that, or will

1063
00:59:10,040 --> 00:59:11,880
Speaker 3: they ever say it, or will we just have a

1064
00:59:11,920 --> 00:59:15,240
Speaker 3: post Powell FED that says, you know, instead of neutral

1065
00:59:15,240 --> 00:59:19,760
Speaker 3: being inflation plus one hundred, neutral is inflation. And you know,

1066
00:59:19,880 --> 00:59:21,760
Speaker 3: so there are three instead of four or something.

1067
00:59:22,200 --> 00:59:25,400
Speaker 2: So I see your charts everywhere. Not only are they

1068
00:59:25,400 --> 00:59:28,200
Speaker 2: all over social media, but you do regular chart packs.

1069
00:59:28,440 --> 00:59:31,920
Speaker 2: I love your monthly chart pack. I'm gonna flip open

1070
00:59:32,280 --> 00:59:36,200
Speaker 2: my laptop and let's look at some of your favorite

1071
00:59:36,320 --> 00:59:40,560
Speaker 2: charts and I'll make these available on YouTube and on

1072
00:59:40,600 --> 00:59:45,480
Speaker 2: the website when this posts. Let's start with market cycles,

1073
00:59:45,520 --> 00:59:49,200
Speaker 2: and what we see going back to around our birth

1074
00:59:49,600 --> 00:59:55,760
Speaker 2: date is just a series of long bull markets followed

1075
00:59:55,800 --> 01:00:00,800
Speaker 2: by shorter, shallower bear markets. Tell us about out this

1076
01:00:01,000 --> 01:00:04,280
Speaker 2: market cycle chart and what are the different shading means

1077
01:00:04,760 --> 01:00:07,280
Speaker 2: in blue and red? What's the significance of that?

1078
01:00:07,960 --> 01:00:12,080
Speaker 3: Yeah, So the shadings are is the valuation the five

1079
01:00:12,160 --> 01:00:13,040
Speaker 3: year cape ratio.

1080
01:00:13,160 --> 01:00:15,240
Speaker 2: When it has to get priced, it turns red, it

1081
01:00:15,240 --> 01:00:15,720
Speaker 2: turns red.

1082
01:00:15,800 --> 01:00:17,800
Speaker 3: Yeah, And so what the top part of the chart

1083
01:00:17,840 --> 01:00:21,120
Speaker 3: shows are the market cycles. So the green are you know,

1084
01:00:21,160 --> 01:00:23,760
Speaker 3: the bull markets, of course, cyclical bull markets. The red

1085
01:00:23,800 --> 01:00:25,880
Speaker 3: are the bear markets. And you can see as we

1086
01:00:26,200 --> 01:00:29,200
Speaker 3: as we talked about earlier, they're really it's pretty rare

1087
01:00:29,280 --> 01:00:31,840
Speaker 3: for a fifty percent draw down. There's only been really

1088
01:00:31,880 --> 01:00:34,840
Speaker 3: a couple of them. And so what this shows is

1089
01:00:34,840 --> 01:00:37,880
Speaker 3: that the current bull market, as strange as it or

1090
01:00:37,920 --> 01:00:40,840
Speaker 3: as unusual as it has felt for many people, actually

1091
01:00:40,880 --> 01:00:45,960
Speaker 3: is pretty garden variety, right. Eighty eight percent gain over

1092
01:00:46,280 --> 01:00:49,600
Speaker 3: thirty five months, so it's pretty pretty average. But then

1093
01:00:49,720 --> 01:00:52,520
Speaker 3: when you look at the bottom panel, it shows the

1094
01:00:52,640 --> 01:00:57,320
Speaker 3: relative the percentage of stocks out performing the index, and

1095
01:00:57,360 --> 01:01:01,000
Speaker 3: now you see something pretty unusual, some we've only seen

1096
01:01:01,240 --> 01:01:04,120
Speaker 3: a few times in history, and that is, of course

1097
01:01:04,400 --> 01:01:07,560
Speaker 3: the concentration effect of the mag seven than before that

1098
01:01:07,680 --> 01:01:11,760
Speaker 3: the thanks and it is the market is as concentrated

1099
01:01:11,800 --> 01:01:14,720
Speaker 3: as it was in the late nineties and the early

1100
01:01:14,800 --> 01:01:18,520
Speaker 3: to mid seventies, which was the original nifty to fifties period.

1101
01:01:19,000 --> 01:01:23,640
Speaker 3: And so you know, for an indexer, I guess it

1102
01:01:24,000 --> 01:01:27,040
Speaker 3: doesn't matter. For an active manager, active investor, it does,

1103
01:01:27,080 --> 01:01:30,000
Speaker 3: But even for an indexer it does because the largest

1104
01:01:30,000 --> 01:01:32,880
Speaker 3: stocks are getting bid up, whether they deserve it or not.

1105
01:01:33,120 --> 01:01:35,680
Speaker 3: Of course they're large because they deserve to be generally,

1106
01:01:35,720 --> 01:01:38,919
Speaker 3: but it shows you how narrow the market has been

1107
01:01:39,560 --> 01:01:43,439
Speaker 3: during this cycle. And so it's it's just a way

1108
01:01:43,480 --> 01:01:46,280
Speaker 3: of describing kind of where we are. So you get

1109
01:01:46,320 --> 01:01:48,600
Speaker 3: the cyclical on the top and the bottom speaks more

1110
01:01:48,600 --> 01:01:49,240
Speaker 3: to the secular.

1111
01:01:49,360 --> 01:01:53,280
Speaker 2: Huh. Really interesting. So let's talk about debt dynamics, which

1112
01:01:53,320 --> 01:01:57,440
Speaker 2: shows the change in federal debt versus what.

1113
01:01:58,720 --> 01:02:02,080
Speaker 3: So what this charge show and it's a very simple chart,

1114
01:02:02,600 --> 01:02:06,560
Speaker 3: but I think it speaks volumes. Is that during COVID

1115
01:02:06,640 --> 01:02:09,360
Speaker 3: we kind of, I think, entered the fiscal lead dominant

1116
01:02:09,400 --> 01:02:14,320
Speaker 3: era where debt financing or deficit spending becomes a very

1117
01:02:14,440 --> 01:02:18,640
Speaker 3: major tool, which is definitely different from the financial crisis,

1118
01:02:18,680 --> 01:02:21,520
Speaker 3: when we actually had austerity. After the financial crisis with

1119
01:02:21,560 --> 01:02:24,960
Speaker 3: the Tea party movement, now we have the opposite. And

1120
01:02:25,320 --> 01:02:30,720
Speaker 3: in the initial years after that fiscal expansion started, the

1121
01:02:30,760 --> 01:02:32,800
Speaker 3: FED was actually doing a lot of the heavy lifting

1122
01:02:32,880 --> 01:02:36,240
Speaker 3: by putting those bonds, or not those bonds, but putting

1123
01:02:36,240 --> 01:02:38,720
Speaker 3: bonds on its balance sheet, so you could see the

1124
01:02:38,840 --> 01:02:43,520
Speaker 3: rise in debt is largely accommodated by an expanding balance sheet.

1125
01:02:44,240 --> 01:02:46,840
Speaker 3: Since that time, since twenty twenty two, the fed's gone

1126
01:02:46,880 --> 01:02:50,360
Speaker 3: into quantitative tightening mode where it's drinking its balance sheet,

1127
01:02:50,720 --> 01:02:52,800
Speaker 3: but the debt just keeps going up. So the debt

1128
01:02:52,840 --> 01:02:56,320
Speaker 3: is now up about fourteen trillion in the last five years,

1129
01:02:57,320 --> 01:02:59,600
Speaker 3: and only about two and a half of that is

1130
01:02:59,640 --> 01:03:03,000
Speaker 3: sort of been absorbed by the FED. So I put

1131
01:03:03,040 --> 01:03:06,240
Speaker 3: two and two together and say, Okay, if that purple

1132
01:03:06,280 --> 01:03:09,560
Speaker 3: eye at the top just keeps going up, who's going

1133
01:03:09,600 --> 01:03:12,320
Speaker 3: to buy this? Right? Who's going to buy the debt?

1134
01:03:12,360 --> 01:03:17,880
Speaker 3: And will the FED be forced back into playing a

1135
01:03:17,880 --> 01:03:20,680
Speaker 3: bigger role in kind of mopping up that supply? And

1136
01:03:20,720 --> 01:03:22,040
Speaker 3: that's the fiscal dominance.

1137
01:03:22,080 --> 01:03:25,080
Speaker 2: Then that's a little bit of modern monetary theory, is

1138
01:03:25,120 --> 01:03:27,000
Speaker 2: that the FED can just buy up all the debt

1139
01:03:27,000 --> 01:03:30,160
Speaker 2: and there's no constraints whatsoever. SOMA stands for.

1140
01:03:30,080 --> 01:03:32,960
Speaker 3: What system open market account.

1141
01:03:32,600 --> 01:03:34,880
Speaker 2: So that's what the FED has on its balance sheet.

1142
01:03:35,120 --> 01:03:37,960
Speaker 2: So that went up since the financial crisis, and it's

1143
01:03:38,000 --> 01:03:39,440
Speaker 2: come down since twenty eight.

1144
01:03:39,960 --> 01:03:42,000
Speaker 3: It's the part of the Fed's balance sheet that is

1145
01:03:42,040 --> 01:03:43,720
Speaker 3: sort of the quy part, if you will.

1146
01:03:44,360 --> 01:03:47,400
Speaker 2: So let's talk a little bit about equity, supply and demand.

1147
01:03:47,440 --> 01:03:49,760
Speaker 2: What are we looking at this chart back to nineteen

1148
01:03:49,880 --> 01:03:54,760
Speaker 2: eighty six? Is this simply liquidity driven or what's going

1149
01:03:54,800 --> 01:03:55,520
Speaker 2: on here? So?

1150
01:03:55,600 --> 01:03:58,480
Speaker 3: I think this is and not a lot of people

1151
01:03:58,520 --> 01:04:00,440
Speaker 3: talk about this, but I think This is one of

1152
01:04:00,480 --> 01:04:06,160
Speaker 3: the fundamental drivers of the current secular bullmarket era. And

1153
01:04:06,200 --> 01:04:09,280
Speaker 3: so you can see on the chart I started the

1154
01:04:09,280 --> 01:04:12,200
Speaker 3: clock at the bottom in O nine, which again I

1155
01:04:12,280 --> 01:04:15,280
Speaker 3: believe is the start of the secular bullmarket. And I

1156
01:04:15,320 --> 01:04:19,120
Speaker 3: look at just the supply and demand of equities just

1157
01:04:19,200 --> 01:04:24,160
Speaker 3: from within the corporate America structure, so not investor flows,

1158
01:04:24,200 --> 01:04:27,960
Speaker 3: but how much were there in IPOs and secondary issues

1159
01:04:28,000 --> 01:04:31,640
Speaker 3: and it's a couple of trillion. How much was share

1160
01:04:31,680 --> 01:04:34,120
Speaker 3: buybacks and how much was M and A and share

1161
01:04:34,120 --> 01:04:36,800
Speaker 3: buybacks and M and A have something in common in

1162
01:04:36,840 --> 01:04:40,400
Speaker 3: that it's corporates buying shares of other corporates and those

1163
01:04:40,400 --> 01:04:44,040
Speaker 3: shares get retired, right, So that's the demand for shares.

1164
01:04:44,720 --> 01:04:46,400
Speaker 3: And what you see is if you look at the

1165
01:04:46,440 --> 01:04:51,280
Speaker 3: supply demand ratio like it's very unbalanced, like it's the

1166
01:04:51,440 --> 01:04:54,880
Speaker 3: demand far exceeds the supply. And to me, this has

1167
01:04:54,960 --> 01:04:59,200
Speaker 3: been one of the important drivers for driving returns in

1168
01:04:59,280 --> 01:05:02,400
Speaker 3: the secular bowl market. And there's no signs that this

1169
01:05:02,480 --> 01:05:05,360
Speaker 3: is this is letting up. And so when when when

1170
01:05:05,360 --> 01:05:07,960
Speaker 3: we think about what inning is the secular bull market in,

1171
01:05:08,120 --> 01:05:10,520
Speaker 3: when is it going to end? And why? This is

1172
01:05:10,560 --> 01:05:12,320
Speaker 3: one of the things I look at It's just you know,

1173
01:05:12,360 --> 01:05:15,640
Speaker 3: when when you're retiring far more shares and you're issuing,

1174
01:05:16,200 --> 01:05:18,680
Speaker 3: it's like the you know, markets are going to go up,

1175
01:05:18,760 --> 01:05:19,720
Speaker 3: all else being equal.

1176
01:05:19,800 --> 01:05:24,480
Speaker 2: What's so surprising about this is how relatively insignificant the

1177
01:05:24,560 --> 01:05:27,840
Speaker 2: retail flows us there. It's it's just the opposite of

1178
01:05:27,840 --> 01:05:31,320
Speaker 2: how so many people describe it. Coming up, we continue

1179
01:05:31,320 --> 01:05:35,280
Speaker 2: our conversation with Urie and Timor, director of Global Macro

1180
01:05:35,360 --> 01:05:41,720
Speaker 2: at Fidelity, discussing various asset classes equities, bonds, commodities, alternatives.

1181
01:05:42,320 --> 01:05:59,280
Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm

1182
01:05:59,280 --> 01:06:02,960
Speaker 2: Barry Redult. You're listening to Masters in Business on Bloomberg Radio.

1183
01:06:03,120 --> 01:06:06,240
Speaker 2: My extra special guest this week is Urian Timor. He

1184
01:06:06,360 --> 01:06:10,720
Speaker 2: is the director of Global Macro at Fidelity Investments, the

1185
01:06:11,000 --> 01:06:16,160
Speaker 2: giant firm helping to manage over sixteen trillion dollars in

1186
01:06:16,240 --> 01:06:21,600
Speaker 2: client assets. Let's talk about US fundamentals versus EFA fundamentals.

1187
01:06:22,000 --> 01:06:26,720
Speaker 2: So this looks at various market data, buybacks, dividends, et cetera.

1188
01:06:28,200 --> 01:06:29,800
Speaker 2: Tell us what this jart is showing us.

1189
01:06:29,880 --> 01:06:32,640
Speaker 3: Yes, So we were talking about earlier about there finally

1190
01:06:32,680 --> 01:06:36,000
Speaker 3: being a catalyst for non US stocks to compete with

1191
01:06:36,200 --> 01:06:39,760
Speaker 3: the with the MAC seven driven US stock market and

1192
01:06:39,800 --> 01:06:41,960
Speaker 3: so on the left, I show the earnings line for

1193
01:06:42,000 --> 01:06:46,000
Speaker 3: the SMP the payout so that the share of earnings

1194
01:06:46,400 --> 01:06:51,520
Speaker 3: being returned quote unquote to shareholders shareholder yield as dividends

1195
01:06:51,840 --> 01:06:55,120
Speaker 3: and buybacks. And then at the bottom you see the

1196
01:06:55,640 --> 01:06:59,200
Speaker 3: payout ratio again either as dividends in the yellow buybacks

1197
01:06:59,240 --> 01:07:02,560
Speaker 3: in the purple, and you can see the payout has

1198
01:07:02,720 --> 01:07:06,600
Speaker 3: risen very nicely, almost a double since five years ago.

1199
01:07:07,080 --> 01:07:10,280
Speaker 3: Payout ratio is about seventy five percent, so very bullish

1200
01:07:10,280 --> 01:07:15,040
Speaker 3: fundamentals like you. You know, those fundamentals deserve a high

1201
01:07:15,080 --> 01:07:19,120
Speaker 3: pe right because not only is the earnings growing, but

1202
01:07:19,200 --> 01:07:22,840
Speaker 3: they're being returned to shareholders, which of course is worth

1203
01:07:22,920 --> 01:07:25,240
Speaker 3: more than if you're not getting them back. It's just

1204
01:07:25,280 --> 01:07:28,840
Speaker 3: the present value of future cash flows. But what's changed

1205
01:07:28,920 --> 01:07:31,720
Speaker 3: just in the last few years is that for IFA

1206
01:07:31,800 --> 01:07:36,360
Speaker 3: again which is the MSCI Non US Developed Index, you

1207
01:07:36,440 --> 01:07:39,000
Speaker 3: see an even better growth rate in the payout and

1208
01:07:39,040 --> 01:07:41,000
Speaker 3: you see a more than double yeah, and you see

1209
01:07:41,040 --> 01:07:45,240
Speaker 3: an equally robust payout ratio again of about seventy five percent.

1210
01:07:45,680 --> 01:07:48,800
Speaker 3: So the rest of the world is really competitive now,

1211
01:07:49,200 --> 01:07:51,440
Speaker 3: despite the fact that this is such a Max seven

1212
01:07:51,560 --> 01:07:55,400
Speaker 3: heavy market, and so this is just a very exciting

1213
01:07:55,880 --> 01:07:58,960
Speaker 3: time because you can actually you don't have to make

1214
01:07:59,000 --> 01:08:01,960
Speaker 3: that make or break binary decision like you're either in

1215
01:08:02,040 --> 01:08:05,720
Speaker 3: these big stocks or you're left behind. There are other

1216
01:08:05,800 --> 01:08:07,439
Speaker 3: places to get those returns down.

1217
01:08:07,680 --> 01:08:11,960
Speaker 2: What's so fascinating about this chart is how inverted the

1218
01:08:12,080 --> 01:08:15,680
Speaker 2: ratio of buybacks to dividends is. In the US forty

1219
01:08:15,680 --> 01:08:18,640
Speaker 2: five percent a shareholder yield as buybacks thirty percent or

1220
01:08:18,680 --> 01:08:22,680
Speaker 2: divinends that flips. In Europe it's forty seven percent, or

1221
01:08:22,680 --> 01:08:26,800
Speaker 2: divinends only twenty seven percent or buybacks or I should say, epha,

1222
01:08:26,920 --> 01:08:28,920
Speaker 2: not just Europe, although a lot of it seems to

1223
01:08:28,920 --> 01:08:32,479
Speaker 2: be concentrated in Europe. How much of that is just

1224
01:08:32,560 --> 01:08:35,879
Speaker 2: driven by tax policy and regulations.

1225
01:08:36,400 --> 01:08:39,400
Speaker 3: I think it's largely culture. It's just you know, and

1226
01:08:39,560 --> 01:08:43,519
Speaker 3: Europe is more of a value market, right so it's

1227
01:08:43,560 --> 01:08:47,360
Speaker 3: really like the banks are really running the show right now,

1228
01:08:47,800 --> 01:08:50,320
Speaker 3: and so the US it's more the growthy stocks, so

1229
01:08:50,360 --> 01:08:52,320
Speaker 3: they don't want to so, you know, dividends are kind

1230
01:08:52,320 --> 01:08:54,559
Speaker 3: of like a sacred contract, if you will, like it

1231
01:08:54,600 --> 01:08:58,240
Speaker 3: takes a lot for dividends to be cut. So I

1232
01:08:58,240 --> 01:09:00,800
Speaker 3: think Europe and Japan is just generally been more of

1233
01:09:01,200 --> 01:09:04,280
Speaker 3: a value driven and the culture has been more Okay,

1234
01:09:04,720 --> 01:09:06,320
Speaker 3: we're going to earn so much and you're going to

1235
01:09:06,400 --> 01:09:09,840
Speaker 3: get that back as dividends. But especially the Japanese and

1236
01:09:09,880 --> 01:09:14,800
Speaker 3: also the Europeans are getting much more with the shareholder

1237
01:09:14,960 --> 01:09:19,800
Speaker 3: culture now in terms of unlocking value and returning those

1238
01:09:19,880 --> 01:09:23,000
Speaker 3: as buyback. So it's they're getting there. They're starting to

1239
01:09:23,000 --> 01:09:23,519
Speaker 3: play the game.

1240
01:09:24,320 --> 01:09:28,960
Speaker 2: Last few questions before we get to our favorite questions.

1241
01:09:29,479 --> 01:09:31,880
Speaker 2: You have a section in the chart book about the

1242
01:09:32,000 --> 01:09:37,040
Speaker 2: post sixty forty world. I've heard people say the old

1243
01:09:37,080 --> 01:09:42,320
Speaker 2: sixty forty is now fifty thirty twenty or fifty thirty ten,

1244
01:09:42,640 --> 01:09:45,960
Speaker 2: five five tell us what you think of as the

1245
01:09:46,000 --> 01:09:47,880
Speaker 2: post sixty forty world.

1246
01:09:48,000 --> 01:09:50,200
Speaker 3: So I look at it. I call it the sixty

1247
01:09:50,280 --> 01:09:56,200
Speaker 3: twenty twenty. So the sixty forty paradigm worked like a

1248
01:09:56,280 --> 01:09:59,799
Speaker 3: charm right from the late nineties until the early twenty twenties.

1249
01:10:01,200 --> 01:10:04,080
Speaker 3: And you know, sixty percent s and p forty percent

1250
01:10:04,240 --> 01:10:08,640
Speaker 3: Bloomberg AG so the investment grade bond index and you

1251
01:10:08,760 --> 01:10:12,200
Speaker 3: got a nine percent CAGAR against the nine percent vault,

1252
01:10:13,040 --> 01:10:15,400
Speaker 3: and like, what's not the like about that? Right during

1253
01:10:15,439 --> 01:10:17,640
Speaker 3: that time, inflation was like two and a half, so

1254
01:10:17,680 --> 01:10:22,840
Speaker 3: you've got a very attractive real return with really moderate volatility.

1255
01:10:23,880 --> 01:10:27,519
Speaker 3: But the whole premise of that paradigm was that the

1256
01:10:27,560 --> 01:10:31,240
Speaker 3: forty was insurance against the sixty. So the sixty, of

1257
01:10:31,240 --> 01:10:34,519
Speaker 3: course is always the anchor, that's where the compounding is,

1258
01:10:35,560 --> 01:10:38,200
Speaker 3: and the forty would be your port in the storm.

1259
01:10:39,120 --> 01:10:41,879
Speaker 3: I think that's now changed. So twenty twenty two obviously

1260
01:10:42,120 --> 01:10:44,920
Speaker 3: was a return to the old FED model days where

1261
01:10:45,040 --> 01:10:49,320
Speaker 3: rising yields uh take you know, take take the mojo

1262
01:10:49,400 --> 01:10:52,880
Speaker 3: out of the stock market. To put it mildly, the

1263
01:10:52,920 --> 01:10:55,680
Speaker 3: good news is that bonds, of course now are a

1264
01:10:55,760 --> 01:11:00,559
Speaker 3: viable asset. They generate a positive real yield, but their

1265
01:11:00,600 --> 01:11:04,120
Speaker 3: correlation is now positive against equities instead of negative. So

1266
01:11:04,640 --> 01:11:06,960
Speaker 3: when I think about the post sixty to forty world,

1267
01:11:07,120 --> 01:11:10,120
Speaker 3: I'm less worried about the sixty, Like we can add

1268
01:11:10,160 --> 01:11:13,480
Speaker 3: more international in the sixty, and like we were just discussing,

1269
01:11:13,960 --> 01:11:16,040
Speaker 3: but what do we do about the forty? If the

1270
01:11:16,080 --> 01:11:18,880
Speaker 3: forty can be the cause of problems rather than the

1271
01:11:18,920 --> 01:11:22,600
Speaker 3: solution to problems, and especially if we end up with

1272
01:11:22,680 --> 01:11:26,439
Speaker 3: a higher term premium, then bonds are not going to

1273
01:11:26,479 --> 01:11:29,439
Speaker 3: be as safe as they used to be. So then

1274
01:11:29,479 --> 01:11:31,479
Speaker 3: I get into kind of okay, I'm going to take

1275
01:11:31,520 --> 01:11:33,479
Speaker 3: some share from the bonds. It doesn't have to be

1276
01:11:33,560 --> 01:11:36,760
Speaker 3: twenty like. Again, this is not investment advice, but back

1277
01:11:36,800 --> 01:11:40,040
Speaker 3: at the envelope stuff, and you know, maybe some cash

1278
01:11:40,120 --> 01:11:42,760
Speaker 3: strategies are more competitive if we're not going to go

1279
01:11:42,840 --> 01:11:45,000
Speaker 3: back to the zero interest rate days, which I don't

1280
01:11:45,000 --> 01:11:50,360
Speaker 3: think we are. Gold are the proven anti bond over history, right.

1281
01:11:50,400 --> 01:11:51,760
Speaker 3: They don't produce a cash.

1282
01:11:51,479 --> 01:11:54,120
Speaker 2: Flow thirty seven hundred bucks as we speak.

1283
01:11:53,880 --> 01:11:57,839
Speaker 3: But when bonds do poorly, gold really shines no pun intended.

1284
01:11:58,200 --> 01:12:00,160
Speaker 3: And then you got to throw bitcoin in there is

1285
01:12:00,240 --> 01:12:03,960
Speaker 3: kind of the wanna be exponential gold. And then other

1286
01:12:04,360 --> 01:12:10,719
Speaker 3: strategies like alternatives, right, managed futures, equity, long short, private credit,

1287
01:12:11,680 --> 01:12:14,400
Speaker 3: you know, all of those kind of alpha rather than

1288
01:12:14,479 --> 01:12:15,840
Speaker 3: beta strategies you have.

1289
01:12:15,960 --> 01:12:17,519
Speaker 2: You have tips in there as well.

1290
01:12:17,439 --> 01:12:21,960
Speaker 3: Yeah, tips high yield. Uh. You know markets or asset

1291
01:12:22,040 --> 01:12:26,240
Speaker 3: classes that are not negatively correlated, but they're not positively

1292
01:12:26,240 --> 01:12:29,240
Speaker 3: correlated as well. So when you look at kind of

1293
01:12:29,880 --> 01:12:34,400
Speaker 3: the sharp ratios versus the correlation not just to the sixty,

1294
01:12:34,439 --> 01:12:36,600
Speaker 3: but especially to the forty, right, because I want to

1295
01:12:36,640 --> 01:12:38,400
Speaker 3: hedge more against the forty than the sixties.

1296
01:12:38,479 --> 01:12:39,960
Speaker 2: I was going to say, this doesn't look like a

1297
01:12:40,080 --> 01:12:43,160
Speaker 2: yield chase, This looks like a diversifier. Is that the thinking?

1298
01:12:43,320 --> 01:12:46,080
Speaker 3: Yeah? Yeah, And actually, if you go down one chart,

1299
01:12:46,640 --> 01:12:49,040
Speaker 3: I think, yeah, right there, look at that. So I

1300
01:12:49,080 --> 01:12:54,440
Speaker 3: want high sharp ratios or high sortino ratios, and and

1301
01:12:54,439 --> 01:12:57,400
Speaker 3: and assets that are uncorrelated. Then you get into you

1302
01:12:57,439 --> 01:13:01,160
Speaker 3: get into the BCom commodities, you get into gold. Bitcoin

1303
01:13:01,520 --> 01:13:06,400
Speaker 3: is not quite uncorrelated, but all the old strategies are uncorrelated.

1304
01:13:06,880 --> 01:13:09,439
Speaker 3: And so to me that is sort of the next

1305
01:13:09,680 --> 01:13:10,880
Speaker 3: sixty forty.

1306
01:13:11,040 --> 01:13:14,640
Speaker 2: Really really fascinating. Last question before we get to our favorites.

1307
01:13:15,360 --> 01:13:18,160
Speaker 2: You look at so many charts each week. You identify

1308
01:13:18,320 --> 01:13:22,040
Speaker 2: trends before a lot of people do. What are investors

1309
01:13:22,520 --> 01:13:27,560
Speaker 2: not talking about but perhaps should be? What topics? Assets, geographies,

1310
01:13:27,680 --> 01:13:30,400
Speaker 2: data points? What do you think is getting overlooked? But

1311
01:13:30,400 --> 01:13:33,320
Speaker 2: it's really worth investors time to pay attention.

1312
01:13:33,080 --> 01:13:36,000
Speaker 3: To one ass a class, and we just talked about

1313
01:13:36,040 --> 01:13:40,519
Speaker 3: it that I think generally is seen as a side

1314
01:13:40,520 --> 01:13:44,200
Speaker 3: show the way bitcoin used to be. It's no longer

1315
01:13:44,240 --> 01:13:48,000
Speaker 3: a side show. For sure is actually gold because.

1316
01:13:47,760 --> 01:13:51,120
Speaker 2: For even at thirty seven hundred bucks, it's well, people

1317
01:13:51,160 --> 01:13:52,560
Speaker 2: still think of it as a sideshow.

1318
01:13:53,400 --> 01:13:58,840
Speaker 3: I think institutions do. Right, So regular retail investors as

1319
01:13:58,880 --> 01:14:01,439
Speaker 3: I call them, you know, you can buy gold or

1320
01:14:01,479 --> 01:14:03,680
Speaker 3: some other gold etf and like you know, I own

1321
01:14:03,760 --> 01:14:06,240
Speaker 3: it in my portfolio, and so there, I think. There

1322
01:14:06,240 --> 01:14:08,360
Speaker 3: it's part of the conversation. But when you think about

1323
01:14:09,200 --> 01:14:15,200
Speaker 3: like large endowments, institutional investors, even mutual funds, like you

1324
01:14:15,240 --> 01:14:18,479
Speaker 3: need a special wrapper in your mutual fund to own

1325
01:14:18,520 --> 01:14:20,759
Speaker 3: physical gold, like you need to go to the SEC

1326
01:14:20,840 --> 01:14:24,360
Speaker 3: and get approval, and so you know, gold has been

1327
01:14:24,439 --> 01:14:28,160
Speaker 3: sort of dormant for so long until recently that is like, yeah,

1328
01:14:28,240 --> 01:14:30,120
Speaker 3: I don't really want to go through this trouble to

1329
01:14:30,160 --> 01:14:32,839
Speaker 3: buy something that doesn't have a cash flow, can't be valued,

1330
01:14:33,400 --> 01:14:37,080
Speaker 3: requires special regulatory approvals, and then all of a sudden

1331
01:14:37,120 --> 01:14:41,040
Speaker 3: it starts to run like it is now everybody. And

1332
01:14:41,479 --> 01:14:45,840
Speaker 3: so so I think that's the story. So in ironically,

1333
01:14:45,920 --> 01:14:49,519
Speaker 3: because bitcoin as has obviously come well after gold as

1334
01:14:49,560 --> 01:14:53,080
Speaker 3: a kind of a store value hard money asset. In

1335
01:14:53,120 --> 01:14:55,559
Speaker 3: a way, gold is kind of like where bitcoin was

1336
01:14:56,040 --> 01:15:00,240
Speaker 3: ten years ago or five years ago, where okay, Bitcoin's interesting,

1337
01:15:00,240 --> 01:15:02,320
Speaker 3: but I don't understand it. I don't feel like spending

1338
01:15:02,320 --> 01:15:05,240
Speaker 3: one hundred hours on this. It's a bubble, it's a scam,

1339
01:15:05,400 --> 01:15:08,240
Speaker 3: it's a pet rock. And gold is like if it

1340
01:15:08,320 --> 01:15:11,120
Speaker 3: keeps going the way it is, and I suspect it will,

1341
01:15:11,840 --> 01:15:16,080
Speaker 3: like the endowments are like okay, Like people are asking

1342
01:15:16,120 --> 01:15:18,960
Speaker 3: me about this. I need to like really like figure

1343
01:15:19,000 --> 01:15:21,760
Speaker 3: out how do we not how do we buy it?

1344
01:15:21,800 --> 01:15:24,360
Speaker 3: You can buy it, of course, but it's always been

1345
01:15:24,400 --> 01:15:27,240
Speaker 3: a dismissed asset. Let me put it that way.

1346
01:15:27,280 --> 01:15:29,120
Speaker 2: Among I mean, that's what I grew up with. It

1347
01:15:29,200 --> 01:15:32,479
Speaker 2: was kind of mocked by the equity people. Depends on

1348
01:15:32,520 --> 01:15:34,400
Speaker 2: the length of the chart you look at. You could

1349
01:15:34,479 --> 01:15:39,280
Speaker 2: show a trailing multi decade period where gold has outperformed

1350
01:15:39,320 --> 01:15:42,240
Speaker 2: the S and P. So if you look at gold

1351
01:15:42,240 --> 01:15:46,000
Speaker 2: as in a secular bull market, I'm not asking for

1352
01:15:46,040 --> 01:15:50,240
Speaker 2: a forecast, but what's within the range of possible numbers

1353
01:15:50,280 --> 01:15:53,519
Speaker 2: gold could run to from thirty seven hundred up from

1354
01:15:53,640 --> 01:15:57,240
Speaker 2: the low two thousands in early what do we peak

1355
01:15:57,280 --> 01:16:00,240
Speaker 2: in like twenty fourteen and then twenty nineteen.

1356
01:16:00,040 --> 01:16:03,120
Speaker 3: Something and it was like two hundred and sixty that

1357
01:16:03,760 --> 01:16:04,240
Speaker 3: I remember.

1358
01:16:04,280 --> 01:16:07,519
Speaker 2: In the nineteen y when GLD first came out, I

1359
01:16:07,520 --> 01:16:09,439
Speaker 2: want to say gold was about four to thirty four

1360
01:16:09,520 --> 01:16:12,000
Speaker 2: forty I remember talking about it on TV and getting

1361
01:16:12,080 --> 01:16:13,160
Speaker 2: laughed at by it ankers.

1362
01:16:13,560 --> 01:16:16,320
Speaker 3: So I once saw a chart that actually Paul Too

1363
01:16:16,479 --> 01:16:19,559
Speaker 3: or Jones created a streaking of fall where he compared

1364
01:16:20,040 --> 01:16:25,400
Speaker 3: the above ground value of gold or the value of

1365
01:16:25,439 --> 01:16:29,840
Speaker 3: above ground gold and compared it to the value of

1366
01:16:30,040 --> 01:16:33,080
Speaker 3: M two, and they're.

1367
01:16:32,840 --> 01:16:33,960
Speaker 2: Trying to track each other.

1368
01:16:34,000 --> 01:16:38,280
Speaker 3: The chart concluded that when the money supply grows too fast,

1369
01:16:39,880 --> 01:16:43,040
Speaker 3: gold takes market share. So hard money takes market share

1370
01:16:43,120 --> 01:16:47,160
Speaker 3: from soft money, from fiat money, and at certain extremes,

1371
01:16:47,200 --> 01:16:51,639
Speaker 3: like in the seventies and other periods of thirties gold

1372
01:16:51,840 --> 01:16:54,080
Speaker 3: the value gold would go all the way up or

1373
01:16:54,120 --> 01:16:57,400
Speaker 3: beyond the value of M two. And so right now

1374
01:16:57,760 --> 01:17:02,680
Speaker 3: M two is about twenty three trillion gold plus bitcoin

1375
01:17:03,160 --> 01:17:06,479
Speaker 3: is also about twenty three trillion, So in that sense,

1376
01:17:06,520 --> 01:17:11,040
Speaker 3: it's come a long way to take that market share.

1377
01:17:11,640 --> 01:17:14,000
Speaker 3: And now it's a question of does M two, either

1378
01:17:14,000 --> 01:17:17,320
Speaker 3: globally or in the US continue to grow at an

1379
01:17:17,360 --> 01:17:20,000
Speaker 3: above average pace. So the average pace is about six

1380
01:17:20,040 --> 01:17:24,880
Speaker 3: percent nominal, about two three percent real. So I do

1381
01:17:24,960 --> 01:17:29,160
Speaker 3: think a lot of the gains are in already, but

1382
01:17:29,280 --> 01:17:32,559
Speaker 3: it will it will naturally overshoot, as these cycles always do.

1383
01:17:32,680 --> 01:17:35,160
Speaker 3: So That's kind of how I would how I would

1384
01:17:35,160 --> 01:17:37,280
Speaker 3: measure it. So if the money supply goes the thirty

1385
01:17:37,280 --> 01:17:40,160
Speaker 3: trillion gold and bitcoin could be thirty five trillion, and

1386
01:17:40,400 --> 01:17:43,080
Speaker 3: obviously gold is a large part of that, Bitcoin is

1387
01:17:43,080 --> 01:17:46,719
Speaker 3: about two trillion, and then you convert that to a price.

1388
01:17:46,760 --> 01:17:48,880
Speaker 3: But that's kind of how I think about the valuation

1389
01:17:49,000 --> 01:17:50,800
Speaker 3: signe really fascinating.

1390
01:17:51,320 --> 01:17:54,280
Speaker 2: Tell us about your mentors who helped shape your career.

1391
01:17:56,840 --> 01:18:02,160
Speaker 3: Definitely Net Johnson, because when I came in to Fideli

1392
01:18:02,200 --> 01:18:04,720
Speaker 3: in ninety five, I'd been in you know, in New

1393
01:18:04,800 --> 01:18:10,840
Speaker 3: York for ten years, didn't really have mentors, and so he,

1394
01:18:12,320 --> 01:18:15,519
Speaker 3: you know, Fideli has a very strong corporate culture, let's

1395
01:18:15,520 --> 01:18:18,920
Speaker 3: put it that way, and especially around uh, you know,

1396
01:18:20,000 --> 01:18:23,080
Speaker 3: the way we approach long term investments. We're obviously a

1397
01:18:23,120 --> 01:18:26,240
Speaker 3: long term investor, but so he he was like the

1398
01:18:26,360 --> 01:18:29,640
Speaker 3: last person I spoke to before I got hired. And

1399
01:18:29,680 --> 01:18:32,439
Speaker 3: then in those formative years, I worked in the chart

1400
01:18:32,479 --> 01:18:35,599
Speaker 3: room and I would spend hours per week with with Ned,

1401
01:18:35,680 --> 01:18:38,240
Speaker 3: like he would just come down really and uh and

1402
01:18:38,479 --> 01:18:41,200
Speaker 3: hours per week and we would just pour over charts,

1403
01:18:41,240 --> 01:18:44,639
Speaker 3: like we have these huge charts on the wall Florida ceiling.

1404
01:18:44,760 --> 01:18:47,840
Speaker 3: You know, like forty foot wide, like a daily chart

1405
01:18:47,920 --> 01:18:52,080
Speaker 3: of the of whatever the dow and it would be

1406
01:18:52,120 --> 01:18:55,000
Speaker 3: computer generated. But then because we don't want to print

1407
01:18:55,040 --> 01:18:57,760
Speaker 3: a whole new forty foot sheet every week, just you

1408
01:18:57,880 --> 01:19:00,400
Speaker 3: fill it in by hand, and and you know, just

1409
01:19:00,439 --> 01:19:04,360
Speaker 3: the oral tradition, the oral history. So he was looking

1410
01:19:04,400 --> 01:19:06,799
Speaker 3: at the chart and none he was say okay, well

1411
01:19:06,840 --> 01:19:09,040
Speaker 3: like and he would go from right to left and

1412
01:19:09,080 --> 01:19:12,040
Speaker 3: say okay, you know then and we'd end up like

1413
01:19:12,080 --> 01:19:14,760
Speaker 3: in nineteen sixty eight and he's telling me about the

1414
01:19:14,760 --> 01:19:17,760
Speaker 3: glamour stocks and this and that, and I'm like, wow,

1415
01:19:17,840 --> 01:19:20,200
Speaker 3: this is like gold right, like you don't you know,

1416
01:19:20,840 --> 01:19:24,800
Speaker 3: And so he would have this encyclopedic memory. But also

1417
01:19:24,920 --> 01:19:30,040
Speaker 3: just the way the information was displayed semilog skills. The

1418
01:19:30,120 --> 01:19:34,200
Speaker 3: chart room has like museum quality lighting, how you display,

1419
01:19:34,920 --> 01:19:39,800
Speaker 3: how you visualize you know, data, And so that he

1420
01:19:39,840 --> 01:19:43,040
Speaker 3: instilled that culture, you know, we call it kaizen kind

1421
01:19:43,040 --> 01:19:47,840
Speaker 3: of just gradually improving and having you know, compounding isn't

1422
01:19:47,920 --> 01:19:50,160
Speaker 3: just for investing, right, it's just in our day to

1423
01:19:50,240 --> 01:19:54,080
Speaker 3: day stuff. You do something consistently right, it's going to

1424
01:19:54,120 --> 01:19:55,960
Speaker 3: make an impact. And when I look back at my

1425
01:19:56,240 --> 01:19:59,680
Speaker 3: forty years and I'm not going anywhere. But like to

1426
01:19:59,760 --> 01:20:03,439
Speaker 3: me that that Kaisen has has really played a role

1427
01:20:03,720 --> 01:20:08,080
Speaker 3: in my relationships in my work, and and I think

1428
01:20:08,120 --> 01:20:09,840
Speaker 3: a lot of that just came from him.

1429
01:20:10,439 --> 01:20:13,640
Speaker 2: Really really interesting. Let's talk about books. What are some

1430
01:20:13,680 --> 01:20:15,200
Speaker 2: of your favorites? What are you reading now?

1431
01:20:16,080 --> 01:20:19,639
Speaker 3: So, I I hate to admit it, but i don't

1432
01:20:19,680 --> 01:20:22,919
Speaker 3: read a lot of finance books because I'm very interested

1433
01:20:22,960 --> 01:20:24,640
Speaker 3: in having.

1434
01:20:24,439 --> 01:20:28,680
Speaker 2: Balanced between right and left. Bright I've all read Reminiscence

1435
01:20:28,880 --> 01:20:31,240
Speaker 2: of a Stock Operator. I'm more curious as to what

1436
01:20:31,280 --> 01:20:31,880
Speaker 2: else you're reading.

1437
01:20:32,720 --> 01:20:37,960
Speaker 3: I will say that during COVID I read, uh, this

1438
01:20:38,439 --> 01:20:41,320
Speaker 3: huge tomb called The History of the Federal Reserve by

1439
01:20:41,360 --> 01:20:45,200
Speaker 3: Alan Meltzer. Because you know, I've looked at so many charts,

1440
01:20:45,240 --> 01:20:50,840
Speaker 3: you've read the reports of like you know, financials, but

1441
01:20:50,920 --> 01:20:54,000
Speaker 3: I went like that book. It was like this blow

1442
01:20:54,040 --> 01:20:57,280
Speaker 3: by blow using the FED minutes and all these you know,

1443
01:20:58,720 --> 01:21:02,919
Speaker 3: correspondence to see how the FED handled the financial repression

1444
01:21:02,960 --> 01:21:06,559
Speaker 3: of the forties. And so that was fascinating. Although most

1445
01:21:06,600 --> 01:21:09,799
Speaker 3: people would say, well that sounds really boring, but as

1446
01:21:09,840 --> 01:21:14,120
Speaker 3: a as a consumer of the data, just to see, okay,

1447
01:21:14,160 --> 01:21:16,479
Speaker 3: you know, like wherever it was at the FED would

1448
01:21:16,479 --> 01:21:19,439
Speaker 3: go to the Treasury, and they were playing games like

1449
01:21:19,479 --> 01:21:22,720
Speaker 3: the Treasury would issue bonds below market and then the

1450
01:21:22,760 --> 01:21:25,280
Speaker 3: auction would fill and then knowing that the FED would

1451
01:21:25,320 --> 01:21:27,599
Speaker 3: have to mop up the supply. Like all of that

1452
01:21:27,640 --> 01:21:30,800
Speaker 3: stuff was just really really fascinating. And you know, and

1453
01:21:30,840 --> 01:21:36,280
Speaker 3: we see the interference with politics and money monetary policy today,

1454
01:21:37,080 --> 01:21:39,559
Speaker 3: but it's nothing new. Like in the sixties, both Nixon

1455
01:21:39,560 --> 01:21:41,240
Speaker 3: and Kennedy were equally guilty.

1456
01:21:41,479 --> 01:21:44,200
Speaker 2: It seems a little more overt it's public today. It

1457
01:21:44,280 --> 01:21:46,920
Speaker 2: used to be sort of cloak room sort of thing.

1458
01:21:47,040 --> 01:21:52,160
Speaker 3: Yes, So that was one but the most interesting recent

1459
01:21:52,200 --> 01:21:55,000
Speaker 3: book I've read was it's called rock Me on the Water,

1460
01:21:56,360 --> 01:22:01,840
Speaker 3: and it's a book about music, TV and movies during

1461
01:22:01,840 --> 01:22:05,520
Speaker 3: the early seventies and how la was like the epicenter

1462
01:22:06,160 --> 01:22:10,040
Speaker 3: of American culture. So you had like the Laurel Canyon

1463
01:22:10,120 --> 01:22:15,160
Speaker 3: folks of modern musicians, and he had these groundbreaking TV shows,

1464
01:22:15,240 --> 01:22:17,360
Speaker 3: right because we were coming out of the straight jacket

1465
01:22:17,400 --> 01:22:20,519
Speaker 3: of the sixties conformists, like no one dared to make

1466
01:22:20,560 --> 01:22:24,920
Speaker 3: a show that that like challenged the status quo. And

1467
01:22:24,960 --> 01:22:27,639
Speaker 3: then you had like Mash and you know, Mary Tyler

1468
01:22:27,760 --> 01:22:31,040
Speaker 3: Moore owned the Family, and then the movies like Taxi Driver,

1469
01:22:32,080 --> 01:22:35,200
Speaker 3: and as a you know, as a I think I'm

1470
01:22:35,240 --> 01:22:37,120
Speaker 3: kind of gen X but on the border of gen

1471
01:22:37,280 --> 01:22:41,840
Speaker 3: X and baby boom. Yeah. And so growing up, you know,

1472
01:22:42,520 --> 01:22:46,280
Speaker 3: formative years in the seventies in Aruba, but consuming American

1473
01:22:46,320 --> 01:22:49,200
Speaker 3: pop culture, right, we would sit down every night watching like,

1474
01:22:49,320 --> 01:22:52,519
Speaker 3: you know, Wide World of Sports and Mary Tyler Moore

1475
01:22:52,600 --> 01:22:55,400
Speaker 3: and and although show Rocked Me on the Water, Rocked

1476
01:22:55,400 --> 01:22:58,760
Speaker 3: Me on the Water, and it's just like, so it's

1477
01:22:58,800 --> 01:23:02,040
Speaker 3: fascinating to read about the things that we lived through

1478
01:23:02,120 --> 01:23:03,640
Speaker 3: as kids, as teenagers.

1479
01:23:03,960 --> 01:23:07,040
Speaker 2: But then like, yeah, you know that was so amazing.

1480
01:23:08,200 --> 01:23:10,920
Speaker 2: Let's talk about streaming. What are you watching or listening

1481
01:23:11,000 --> 01:23:11,719
Speaker 2: to right now?

1482
01:23:12,880 --> 01:23:16,400
Speaker 3: We are binge watching The Bear. So I'm a I'm

1483
01:23:16,439 --> 01:23:18,519
Speaker 3: an avid cook, you know, like I said, I run

1484
01:23:18,560 --> 01:23:22,479
Speaker 3: a food camp at burning Man and that's that's and

1485
01:23:22,680 --> 01:23:24,840
Speaker 3: we tend to be late to shows. And then we

1486
01:23:24,840 --> 01:23:25,760
Speaker 3: we just watched like.

1487
01:23:25,800 --> 01:23:32,480
Speaker 2: Four seasons cook worked in restaurants. It just rings so true.

1488
01:23:34,040 --> 01:23:37,880
Speaker 2: I got to ask you a crazy question. You're a cook,

1489
01:23:38,280 --> 01:23:40,519
Speaker 2: What pots do you like? What knives do you like?

1490
01:23:41,439 --> 01:23:46,639
Speaker 3: I use the all clad I have. I have two places.

1491
01:23:46,640 --> 01:23:48,920
Speaker 3: I have a gas stove in Santa Barbara and an

1492
01:23:49,000 --> 01:23:50,519
Speaker 3: induction stove in Boston.

1493
01:23:50,880 --> 01:23:53,799
Speaker 2: You know, I came this close to putting an induction

1494
01:23:53,920 --> 01:23:58,000
Speaker 2: stove in my primary residence, but we had just gotten gas,

1495
01:23:58,360 --> 01:24:00,000
Speaker 2: and so of course we ran with gas.

1496
01:24:00,120 --> 01:24:03,800
Speaker 3: Yeah. I will run with gas anytime. Induction is good.

1497
01:24:03,840 --> 01:24:09,040
Speaker 3: It's very precise, yes, but I like the organic, kind

1498
01:24:09,040 --> 01:24:14,880
Speaker 3: of tactile dimension of gas. But so all clad and

1499
01:24:15,960 --> 01:24:22,360
Speaker 3: the German knives, what's it called Gusdorff, I forget, And

1500
01:24:22,560 --> 01:24:25,960
Speaker 3: my go to knife is a tenant chef's knife, not

1501
01:24:26,120 --> 01:24:28,519
Speaker 3: the really high one, but the medium one. So the

1502
01:24:28,520 --> 01:24:32,719
Speaker 3: medium one is thick enough to like smash on garlic,

1503
01:24:33,280 --> 01:24:35,720
Speaker 3: but not so thick that you don't feel connected, you

1504
01:24:35,760 --> 01:24:38,920
Speaker 3: don't have the road field of the knife on the

1505
01:24:38,920 --> 01:24:39,519
Speaker 3: cutting board.

1506
01:24:39,600 --> 01:24:44,760
Speaker 2: So so I'm jonesing for this shun knife. I keep

1507
01:24:44,800 --> 01:24:49,280
Speaker 2: seeing and they're just exorbitant. And we gave someone a

1508
01:24:49,320 --> 01:24:56,120
Speaker 2: gift of the Stanley Tucci healthy nonstick, supposedly the old

1509
01:24:56,200 --> 01:24:59,400
Speaker 2: nonstick is not good, and she loves it. She's been

1510
01:24:59,720 --> 01:25:02,080
Speaker 2: wo baiting going out and getting a set for it.

1511
01:25:02,120 --> 01:25:03,960
Speaker 2: Like it's rare you give someone a gift and they're like,

1512
01:25:04,040 --> 01:25:06,320
Speaker 2: oh my god, this is amazing. The only to choose

1513
01:25:06,320 --> 01:25:09,439
Speaker 2: one of my heroes really have you watched this show

1514
01:25:09,439 --> 01:25:12,360
Speaker 2: in Italy? I had to stop because it just makes

1515
01:25:12,400 --> 01:25:14,840
Speaker 2: me want to eat even after dinner. You want to go,

1516
01:25:15,000 --> 01:25:15,880
Speaker 2: you want to go eat that.

1517
01:25:16,040 --> 01:25:20,719
Speaker 3: That's my my guilty pleasure. On TikTok's Little Food Clips.

1518
01:25:21,640 --> 01:25:23,200
Speaker 3: And I don't even have to have the sound on.

1519
01:25:23,320 --> 01:25:25,920
Speaker 3: It's just, you know, because I kind of know what

1520
01:25:26,040 --> 01:25:29,439
Speaker 3: works with recipes, so I don't need a recipe, but

1521
01:25:29,520 --> 01:25:33,320
Speaker 3: I just need someone to visualize an approach. And so

1522
01:25:33,400 --> 01:25:36,120
Speaker 3: a lot of the things I cook today are from TikTok.

1523
01:25:36,280 --> 01:25:39,439
Speaker 2: Oh, no kidding, Oh that's amazing. All right? Our final

1524
01:25:39,640 --> 01:25:43,360
Speaker 2: two questions, what sort of advice would you give a

1525
01:25:43,360 --> 01:25:48,720
Speaker 2: recent college grad interested in a career in technical analysis,

1526
01:25:48,840 --> 01:25:50,920
Speaker 2: fixed income or just investing?

1527
01:25:51,240 --> 01:25:57,439
Speaker 3: Generally, be open minded, be humble. You know the true

1528
01:25:57,439 --> 01:26:00,519
Speaker 3: heroes of mine in our business, including that job. You

1529
01:26:00,520 --> 01:26:03,040
Speaker 3: know he's no longer with us, of course? Was that

1530
01:26:03,640 --> 01:26:06,080
Speaker 3: just humility? Right? I'll talk to Will dan Off, who

1531
01:26:06,160 --> 01:26:07,240
Speaker 3: runs three hundred billion.

1532
01:26:07,400 --> 01:26:08,000
Speaker 2: I love Will.

1533
01:26:08,080 --> 01:26:11,680
Speaker 3: He's the humblest guy you'll ez you'll ever meet, And

1534
01:26:12,080 --> 01:26:15,320
Speaker 3: there's no room for big egos, like no matter how

1535
01:26:15,400 --> 01:26:17,840
Speaker 3: important you are, like I have no time for that, right,

1536
01:26:17,920 --> 01:26:21,320
Speaker 3: So stay humble, don't figure out. Don't think you've or

1537
01:26:21,400 --> 01:26:23,800
Speaker 3: you've figured it all out when at the age of

1538
01:26:23,800 --> 01:26:26,719
Speaker 3: twenty five, you know, be a learner and be ready

1539
01:26:26,760 --> 01:26:29,040
Speaker 3: to reinvent yourself. I've had to do it a number

1540
01:26:29,080 --> 01:26:33,559
Speaker 3: of times at Fidelity, either as planned or as not planned,

1541
01:26:33,600 --> 01:26:36,200
Speaker 3: and you just got to roll with the punches. And

1542
01:26:36,479 --> 01:26:39,080
Speaker 3: like I said, the first job I had I was

1543
01:26:39,200 --> 01:26:40,960
Speaker 3: like the last job I was interested, but I took

1544
01:26:41,000 --> 01:26:42,160
Speaker 3: it because it was the only job.

1545
01:26:42,240 --> 01:26:45,040
Speaker 2: You know, And our final question, what do you know

1546
01:26:45,120 --> 01:26:48,479
Speaker 2: about the world of investing today? You wish you knew

1547
01:26:48,840 --> 01:26:51,880
Speaker 2: forty years ago or so when you were first getting started.

1548
01:26:52,240 --> 01:26:56,599
Speaker 3: That markets go through cycles and it always comes back,

1549
01:26:56,640 --> 01:26:59,840
Speaker 3: not always quickly, but you know, every time the market

1550
01:27:00,160 --> 01:27:02,880
Speaker 3: was down twenty plus percent, it's like the end of

1551
01:27:02,920 --> 01:27:06,679
Speaker 3: the world, and it's like totally different from every other time,

1552
01:27:06,800 --> 01:27:10,800
Speaker 3: and this is like such a crisis. But then you know,

1553
01:27:10,880 --> 01:27:13,160
Speaker 3: I've now been through like twelve bear markets in my

1554
01:27:13,280 --> 01:27:16,559
Speaker 3: career and it's like, yeah, whatever, like nothing shocks me anymore.

1555
01:27:16,840 --> 01:27:19,480
Speaker 3: Of course, I'm maybe in a better place because I've

1556
01:27:19,560 --> 01:27:23,960
Speaker 3: earned my wealth. I'm not still building it, but it's

1557
01:27:24,040 --> 01:27:27,120
Speaker 3: just you know, take take take a step back, look

1558
01:27:27,160 --> 01:27:30,679
Speaker 3: at the bigger picture, make sure your portfolio is where

1559
01:27:30,720 --> 01:27:33,840
Speaker 3: it should be in terms of risk and goals. And

1560
01:27:33,960 --> 01:27:36,719
Speaker 3: don't be your own worst enemy by selling at the bottom.

1561
01:27:36,760 --> 01:27:39,559
Speaker 3: You know, call someone like have them talk you off

1562
01:27:39,560 --> 01:27:40,280
Speaker 3: the ledge first.

1563
01:27:40,360 --> 01:27:43,320
Speaker 2: You know, thank you Urian for being so generous with

1564
01:27:43,400 --> 01:27:47,560
Speaker 2: your time. We have been speaking with Urian Timor, Director

1565
01:27:47,680 --> 01:27:52,440
Speaker 2: of Global Macro at Fidelity Investments. If you enjoy this conversation,

1566
01:27:52,640 --> 01:27:54,920
Speaker 2: well check out any of the five hundred and sixty

1567
01:27:54,960 --> 01:27:58,400
Speaker 2: three we've done over the past eleven and a half years.

1568
01:27:58,800 --> 01:28:02,960
Speaker 2: You can find those that Bloomberg iTunes, Spotify, YouTube, or

1569
01:28:03,000 --> 01:28:06,400
Speaker 2: wherever you get your favorite podcasts. Be sure to check

1570
01:28:06,439 --> 01:28:09,879
Speaker 2: out my new book How Not to Invest The ideas,

1571
01:28:09,960 --> 01:28:13,120
Speaker 2: numbers and behavior that destroy wealth and how to avoid

1572
01:28:13,160 --> 01:28:17,439
Speaker 2: them How Not to Invest at your favorite bookstore. I'd

1573
01:28:17,439 --> 01:28:19,559
Speaker 2: be remiss if I did not thank the Crack team

1574
01:28:19,600 --> 01:28:24,000
Speaker 2: that helps put these conversations together each week. Alexis Noriega

1575
01:28:24,040 --> 01:28:28,360
Speaker 2: and Anna Luke are my producers. Sean Russo is my researcher.

1576
01:28:28,760 --> 01:28:32,760
Speaker 2: Sage Bauman is the head of podcasts. I'm Barry Ridholts.

1577
01:28:33,000 --> 01:28:43,600
Speaker 2: You're listening to Masters in Business on Bloomberg Radio.