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Speaker 1: This is Masters in Business with Barry Ridholts on Bloomberg Radio.

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Speaker 1: This week on the podcast, I have a special guest.

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Speaker 1: His name is Dr Edyard Danny and I've known him

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Speaker 1: for a long time. He has been putting out research

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Speaker 1: for decades. I always find is data driven commentary to

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Speaker 1: be very very interesting. He's he's a realist when it

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Speaker 1: comes to looking at the markets, looking at the economy,

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Speaker 1: and figuring out uh the relationship between the two. UH.

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Speaker 1: He also has a degree of infamy on Wall Street.

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Speaker 1: He's essentially the person who invented the phrase bond vigilantes

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Speaker 1: and talked about the role of the bond market in

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Speaker 1: keeping policymakers honest. UH. And he also includes UH movie

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Speaker 1: reviews and in his weekly commentary he writes daily but

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Speaker 1: we get a weekly film review, which is always charming.

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Speaker 1: I find his work to be very interesting and somewhat

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Speaker 1: unique amongst the economists of the world. So, with no

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Speaker 1: further ado, my interview with Dr Eduardney. I'm Barry Ridhults.

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Speaker 1: You're listening to Masters in Business on Bloomberg Radio. My

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Speaker 1: special guest today is Dr Edyard Denny. He is president

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Speaker 1: and chief investment strategist at your Denny research. He has

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Speaker 1: a long and storied career on Wall Street, beginning in

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Speaker 1: the early days where he was chief economist at such

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Speaker 1: August firms as E. F. Hutton and then later Prudential Securities.

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Speaker 1: He eventually became chief investment strategist at giant German investment

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Speaker 1: house Deutsche Bank. Uh. This was many years ago. He

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Speaker 1: worked at the Federal Reserve in both Washington, d C.

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Speaker 1: And New York City. He has a new book out,

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Speaker 1: Predicting the Markets, a professional autobiography. Dr Edyard Denny. Welcome

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Speaker 1: back to Bloomberg. Very thank you so much. So let's

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Speaker 1: start at the early parts of your career. You worked

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Speaker 1: at the FED, both both at the New York Fed

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Speaker 1: and the Federal Reserve in d C. And then you

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Speaker 1: transition to Wall Street. What was that changeover like? It

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Speaker 1: was pretty smooth? Quite quite honestly, Um, I was at

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Speaker 1: the Federals or Bank of New York for a little

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Speaker 1: over a year. Uh. Part of that, I basically finished

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Speaker 1: my PhD dissertation now at the Federal Reserve Board for

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Speaker 1: a few months. So I don't want to give you

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Speaker 1: the impression that I had a long stint down in Washington,

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Speaker 1: but I spent the year at the Federals Bank in

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Speaker 1: New York, and then I got a call from a

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Speaker 1: headhunter UM who placed economists and banks, and I said,

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Speaker 1: would you be interested in taking a job at E. F. Hutman.

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Speaker 1: I jumped at it because I I did actually want

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Speaker 1: to go to Wall Street. I didn't want to stay

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Speaker 1: in government when I was a kid. Well, wax nostalgic

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Speaker 1: here when I was a kid. I just have such

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Speaker 1: a vivid recollection of the E. F. Hunting commercials and

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Speaker 1: I'll put a link up to this on on the

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Speaker 1: post about this. They were seminal, they were there was

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Speaker 1: nothing else like. They were a premier firm. What what

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Speaker 1: was it like in those days at such an Olvis

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Speaker 1: farm like EF. Well, I I felt that, you know,

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Speaker 1: I was set for life. I mean moving into the

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Speaker 1: EF Hunton back then. Uh it was a premier firm,

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Speaker 1: not just in retail but also in the institutional field.

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Speaker 1: Just a very very classic firm. UH modern offices down

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Speaker 1: on State Street. And Uh, I kept pinching myself. I

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Speaker 1: couldn't believe that I landed at this great firm, and

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Speaker 1: I just was looking forward to being there for the

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Speaker 1: rest of my life. Uh. And then and then I

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Speaker 1: started talking to some of my new colleagues, and I

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Speaker 1: know some of the older ones had kind of a

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Speaker 1: resume where they'd worked at different firms, and I couldn't

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Speaker 1: understand why they jumped around so much. And uh lo

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Speaker 1: and behold, my resume kind of looks the same way. Now,

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Speaker 1: you know. That's how you how you get a new position,

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Speaker 1: a new pay, raise, more stock options. That and sometimes

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Speaker 1: these firms don't don't stay in business. Well, Hutton ended

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Speaker 1: up merging with Hutton. Yeah, but that's because Hutton had

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Speaker 1: some legal issues, to put put it mildly, and so

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Speaker 1: they got taken over by Jarson. But I left about

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Speaker 1: a year before that happened. Uh. And then I went

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Speaker 1: over to Prudential Bach at the time because George Ball

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Speaker 1: was the head of Hutton and he went to Prudential Bach.

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Speaker 1: Very famous person on Wall Street? Is it? Is it?

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Speaker 1: I'm trying to think of who would be the equivalent

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Speaker 1: of George Ball today. He was He was a star,

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Speaker 1: definitely was a star. Could you could we say he

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Speaker 1: was the Jamie Diamond of the Year or is that

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Speaker 1: going to I think that might be going a little

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Speaker 1: bit too far. I mean Jamie Diamond is in a

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Speaker 1: class of his own. But Ball was, you know, master

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Speaker 1: the universe back then. And how did you end up

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Speaker 1: working your way to Deutsche Bank, which was then was

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Speaker 1: a giant bank in German und a little bit of

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Speaker 1: actually Actually from Prudential, I went over to UH. C J.

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Speaker 1: Lawrence at Hyman, who's you know, the all time great

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Speaker 1: star in our business, particularly as an economist, decided to

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Speaker 1: go off on his own and presently created I S

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Speaker 1: I Group, which turned out to be a very very

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Speaker 1: successful firm. But he also created a opening at UH.

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Speaker 1: I have to thank Himan for creating an opportunity to

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Speaker 1: c J. Lawrence and UH. For me, c J. Lawrence

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Speaker 1: was an opportunity to really focus much more on working

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Speaker 1: with institutional investors. I had a great experience with the

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Speaker 1: Prudential and working with retail investors, but CJ. Lawrence is just,

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Speaker 1: you know, it's it's nice to change careers within careers,

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Speaker 1: as long as the it's not nothing too radical. And

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Speaker 1: c J. Lawrence itself was a very classy firm in

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Speaker 1: that area. And then from launch you ended up at

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Speaker 1: Deutsche Well. C J. Lawrence was owned by Morgan Grenfeld.

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Speaker 1: When I went over there and more, and Grenfeld was

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Speaker 1: owned owned by Deutsche Bank, and there was all sorts

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Speaker 1: of regulatory reasons why Deutsche Bank couldn't get into the

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Speaker 1: investment business. But those regulations changed and eventually C. J.

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Speaker 1: Lawrence's name disappeared and it just became a series of

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Speaker 1: things like Deutsch Deutsche Bank Securities and and and the like.

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Speaker 1: So I I I stayed in the same office, and

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Speaker 1: you know, the firm's name changed around me. So you

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Speaker 1: trained as an economist, how do you affect that transition

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Speaker 1: to market strategist? There were investment strategy Well, you know, UH,

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Speaker 1: life as UH is full of opportunities and you just

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Speaker 1: have to kind of hope that they come your way

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Speaker 1: or or make the opportunities come here away. What happened

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Speaker 1: at Deutsche Bank Secure Aries is that the Jim Moltz,

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Speaker 1: who was my mentor in many ways he was a strategist,

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Speaker 1: that was the economist. I was providing economic data information

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Speaker 1: to him and he translated into marketable action ideas and

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Speaker 1: of course had his own ideas. But Jim moltwent over

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Speaker 1: enjoyed the I s I you enjoined at Hyman and

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Speaker 1: so they did replace Jim with Tom Galvin, who was

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Speaker 1: the auto analyst, and he did a great job for

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Speaker 1: a couple of years as a strategist, but then he

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Speaker 1: decided to go off to the by side and manage money.

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Speaker 1: So there was just opening and I just jumped out

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Speaker 1: and I said, hey, guys, you know, I'd be more

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Speaker 1: than happy to do two jobs and pay me a

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Speaker 1: little bit more, and I'll do economics and strategy, and

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Speaker 1: somehow or other they agreed agreed to that. So when

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Speaker 1: did the movie reviews come into your research? Because you're

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Speaker 1: fairly amongst many things you're you're somewhat infamous for including

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Speaker 1: movie film reviews. Well, you're a commented I joke around

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Speaker 1: that the reason I do movie reviews is in case

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Speaker 1: this career doesn't work out. In this in case this

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Speaker 1: job doesn't work out, I could always become a movie reviewer, right,

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Speaker 1: But my wife and I have always enjoyed going to movies,

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Speaker 1: and uh, I guess really it was in the early

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Speaker 1: nineties when I moved to C. J. Lawrence. We'd have

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Speaker 1: these Monday morning conferences with the salesforce relating to them

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Speaker 1: what I thought, what Jim Maltz thought on the strategy side, Right,

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Speaker 1: I thought on the economics side, and I just started saying, hey,

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Speaker 1: by the way, I saw the following a movie on Friday,

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Speaker 1: and UH, I'd say a couple of comments about it,

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Speaker 1: whether I like them or not. And more often than that,

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Speaker 1: I try to, especially once I started writing these things up,

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Speaker 1: I try to relate it to UH to the markets.

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Speaker 1: But two thousand and four is the first one I

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Speaker 1: actually have on the website. So when they go back

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Speaker 1: quite a ways, this book is filled with all sorts

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Speaker 1: of quotes that I really enjoy. I'm going to start

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Speaker 1: with a long one, and let's have you comments on it. Economists,

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Speaker 1: especially of the pessimistic persuasion, rarely pay attention to technological developments.

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Speaker 1: Yet these developments regularly transformed the course of human history.

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Speaker 1: Human nature may not change much over time, but technology

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Speaker 1: often does, does so in ways that profoundly impact human societies,

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Speaker 1: their economies, and financial markets. So first, why don't economists

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Speaker 1: pay attention to technology? And and then secondly, why have

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Speaker 1: you found it to be such an attractive area? I

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Speaker 1: guess a lot of them don't view it as being

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Speaker 1: part of their job setting, their job description. Um, they

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Speaker 1: tend to be fairly narrowly focused on whatever it is

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Speaker 1: that they choose to focus on and a graduate school,

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Speaker 1: so they're either microeconomists or macro economists or monetary economists,

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Speaker 1: and um, you know, I'm not too up to date

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Speaker 1: on what they're teaching in grad school these days, but

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Speaker 1: I don't think they're are really any courses that focus

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Speaker 1: on how technology impacts economies impacts the way uh uh

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Speaker 1: economies evolve, which is kind of bizarre because when you

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Speaker 1: think about one of the first economists was Mauthis, and

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Speaker 1: Mauthis predicted that they be food shortages and what he

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Speaker 1: didn't anticipate was technological innovation and agriculture. Um, clearly he

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Speaker 1: misunderstood the rate of change and innovation. Yeah, and not

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Speaker 1: then you also have to understand or try to think

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Speaker 1: about how human beings respond to technological innovations. So again

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Speaker 1: going back to the Malthusian uh dire warnings. Uh So,

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Speaker 1: as uh technology improved the ability of agriculture defeat everybody,

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Speaker 1: you didn't really need anybody to be out in the

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Speaker 1: fields anymore. You needed far fewer workers. So you saw

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Speaker 1: tremendous urbanization. And guess what, when people go to cities,

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Speaker 1: they have fewer kids. So all this concerns that populations

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Speaker 1: will grow faster than the food supply just totally blew

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Speaker 1: up because technology cured the problem. But you know, economists,

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Speaker 1: you know I I went back recently and I looked

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Speaker 1: at Samuelson's classic textbook on economics, which is what most

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Speaker 1: most economics students study when they first get into the field.

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Speaker 1: And if you go back to you know, this first book,

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Speaker 1: I think in the mid forties, and look at the

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Speaker 1: latest one, which is written by Samuel Lynn and Nordhouse,

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Speaker 1: you'll see that they define economics as, uh, the study

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Speaker 1: of how you allocate scarce resources optimally. And I was

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Speaker 1: the radiant after and I kind of added this to

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Speaker 1: my book after I've written most of it. I said, no,

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Speaker 1: that's not really true. When when something is scarce, guess

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Speaker 1: what entrepreneurs come in and they figure out new technologies

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Speaker 1: to make things less scarce or to substitute for the

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Speaker 1: scarce areas. And micro economics actually teaches that, you know, uh,

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Speaker 1: there's no such concept of there's no such thing a scarcity.

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Speaker 1: Something is scarce, as the price goes up, you can

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Speaker 1: still get it, you just gotta pay a higher price

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Speaker 1: for it. And that encourages entrepreneurs to come in and

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Speaker 1: figure out how to lower that. My favorite example is

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Speaker 1: in New York City, if you want the helicab, it

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Speaker 1: used to be next to impossible when you wanted it,

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Speaker 1: and then uber came along and suddenly there are cars everywhere.

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Speaker 1: And by the way, the value of that medallion at

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Speaker 1: four millions because it's eleven cents. That's it. That scarcity

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Speaker 1: led to a technological innovation. Absolutely, it's so so that

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Speaker 1: really raises the question, why are we missing technology from

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Speaker 1: our economic textbooks. Why hasn't the dismal set figured this out? Well,

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Speaker 1: you know, economics started out being called political economy, uh,

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Speaker 1: and which included philosophy, included economics, included history. It was

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Speaker 1: a broad ranging, uh, study of human nature and how

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Speaker 1: it interacts with the environment, and technology was was part

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Speaker 1: of that. And somewhere along the way economics became very

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Speaker 1: stratify stratisfied. I think I would I blame Keynes for

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Speaker 1: a lot a lot and uh, you know, when Keens

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Speaker 1: invented macro economics, that meant that anybody who didn't study

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Speaker 1: macroeconomics was kind of a micro economist. And it's kind

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Speaker 1: of divorced the study of economics from reality. In my opinion,

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Speaker 1: it became too theoretical. And yet Keynes was a very

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Speaker 1: savvy investor. He understood how economics interacted, which leads me

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Speaker 1: to another quote from the book. Investing is in a

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Speaker 1: moral pursuit. It's not about right or wrong, good or evil,

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Speaker 1: it's about bullish or bearish. Well, uh, I guess it

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Speaker 1: was when when Obama got elected. Um, there were there

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Speaker 1: were a lot of policies that were being discussed that

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Speaker 1: I I thought were just much too interventionist in the economy.

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Speaker 1: And uh I, um, I was sort of politically biased

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Speaker 1: in my writing. And one of my accounts kicked me

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Speaker 1: in the butt and said, you know, I don't pay

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Speaker 1: you to do Fox News. I don't pay you, you know,

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Speaker 1: for your political views. I pay you for what you've

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Speaker 1: done in the past, which is kind of seem clearly

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Speaker 1: where the signal is and away from the noise and

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Speaker 1: a lot of politics as noise. Absolutely, and uh it

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Speaker 1: kind of like brought me to my senses and being

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Speaker 1: an entrepreneurial capitalist realizing that this guy's an important account,

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Speaker 1: I started to realize, you know, I mean, basically the

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Speaker 1: market was telling me this is not what you really

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Speaker 1: need to be doing. What you need to be doing

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Speaker 1: is focusing on is it bullish or bearish? That is

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Speaker 1: it good or bad. Don't be a policy don't criticize

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Speaker 1: the policy makers. Tell me what they're gonna do. By

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Speaker 1: the way, that's my pet theory for why so many

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Speaker 1: hedge funds have been underperforming the past decade. They thought

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Speaker 1: they were sitting in think tanks when they were actually

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Speaker 1: managing of people's money, and we got distracted. That's right.

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Speaker 1: So I tell people I'm not a preacher. I don't

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Speaker 1: do good or bad. I don't do uh right or wrong.

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Speaker 1: I'm an investment strategist. I do bullish or bearish, and

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Speaker 1: sometimes you can let your political views. If you let

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Speaker 1: your political views get no way, you could be bearish

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Speaker 1: and miss a great bullmarket, no no doubt about it.

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Speaker 1: One last quote, I'll go out on a limb and

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Speaker 1: predict there will be another financial crisis in our lifetimes. However,

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Speaker 1: like previous ones, it will offer great opportunity for buying stocks. So, so,

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Speaker 1: how soon is the next financial crisis coming? And at

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Speaker 1: what levels should we be well? So, those are all great,

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Speaker 1: great questions, and I'm not going to pretend that I

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Speaker 1: have clairvoyance to tell you exactly when these things are

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Speaker 1: gonna occur. But you know, over the past forty years,

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Speaker 1: I've observed that recessions happen, uh, and very often they're

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Speaker 1: preceded by a financial crisis. And what's happened in the

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Speaker 1: past is um credit was too easily available, and it

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Speaker 1: was too cheape, and uh, people gotta get caught up.

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Speaker 1: And how smart they were, I mean bull you know,

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Speaker 1: bull markets make a lot of people very smart. Um

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Speaker 1: borrowed a lot of money and then uh, suddenly we

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Speaker 1: got an inflationary boom. The fan had to step on

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Speaker 1: the brakes and uh low and behold, a lot of

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Speaker 1: debtors just couldn't keep making their payments and the whole

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Speaker 1: thing came on glued. And history is full of this.

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Speaker 1: I mean, it's just, uh, it's a traditional boom bust cycle. Um.

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Speaker 1: So let's let's look a little closer at the boom

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Speaker 1: bust cycle and the two thousands. At least before the crisis,

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Speaker 1: you had easy credit and cheap money. Correct. Today we

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Speaker 1: have not so easy credit and money was cheap, but

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Speaker 1: it's getting a little less cheap. Where are we in

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Speaker 1: that long term boom bust cycle. Well, I'm you know,

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Speaker 1: I always like to think a little bit outside the box.

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Speaker 1: But but but always uh stimulated by what the data

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Speaker 1: is telling me. And uh what what the data is

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Speaker 1: telling me, What the experience of the past few years

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Speaker 1: tells me is maybe just maybe we could have rolling

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Speaker 1: recessions that kind of roll through different industries at different times.

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Speaker 1: So didn't we just have a pretty severe recession and

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Speaker 1: the energy and commodity space in two thousand and The

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Speaker 1: answer rhetorical question, The answer is yes, it was very severe.

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Speaker 1: The amazing thing is how quickly we came out of

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Speaker 1: it in two thousand and sixteen. And that's because one

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Speaker 1: of the big differences between the current environment and the

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Speaker 1: nineteen thirties is that in the nineteen there's no such

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Speaker 1: thing as distressed asset funds that we're looking to buy

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Speaker 1: things that fifty cents on the dollar. Now there are,

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Speaker 1: so when things fall apart, there's money that just kind

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Speaker 1: of pours in to buy these things really cheap, and

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Speaker 1: that kind of keeps the system from really imploding completely.

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Speaker 1: We just had a recession. We're probably still in a

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Speaker 1: recession in the shopping malls and the retailing industry, and

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Speaker 1: we're seeing how that industry is restructuring itself. Uh um,

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Speaker 1: So that may be the way things continue to unfold.

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Speaker 1: So I don't want to say there will never be

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Speaker 1: a recession again, but we may just have these kind

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Speaker 1: of rolling recessions without the kind of the gut wrenching

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Speaker 1: six eighteen month downturn that we have experienced during the

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Speaker 1: past forty years that I've been in looking at things.

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Speaker 1: The economy is that bulkanized that you could getting narrow

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Speaker 1: energy or commercial real estate recession and it doesn't spill

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Speaker 1: over to the rest of the broad economy. Well that

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Speaker 1: you know, maybe I'm showing my inherent optimism and kind

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Speaker 1: of aiming in that direction. I mean, clearly, uh you know,

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Speaker 1: given current events, if we have a trade war. In

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Speaker 1: my book, I do write about the Great Depression, and

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Speaker 1: I do believe that the Great Depression was at least

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Speaker 1: triggered by the trade wars, by the and all that. So,

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Speaker 1: you know, I mean, it's certainly conceivable to have a

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Speaker 1: economy wide global recession. I want to talk a little

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Speaker 1: bit about com oddities and and what you describe as

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Speaker 1: your favorite indicator, but I have to start with a

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Speaker 1: quote of yours the best or or a quote that

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Speaker 1: you write in the book, The best cure for high

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Speaker 1: commodity prices is high commodity prices, obviously referring to market

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Speaker 1: forces either bringing more supply on or or reducing demands.

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Speaker 1: So from that, why do you come to the conclusion

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Speaker 1: that raw industrial spot price index is the best of

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Speaker 1: all economic indicators. Well, commodity markets are probably the most

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Speaker 1: competitive markets. They're also very efficiently organized. We have we

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Speaker 1: have some pretty good institutions where these things are traded

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Speaker 1: where uh they're they're self regulating to a large extent.

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Speaker 1: So the exchanges have a long history of being very

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Speaker 1: honest brokers between supply and suppliers and demanders of commodities.

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Speaker 1: You're in user consumers. These aren't like speculative maybe I

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Speaker 1: want to own stops or not. These are people who

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Speaker 1: are actually buying commodities and using them in and that's

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Speaker 1: that's that's right. Um. By the way, is as a

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Speaker 1: side note here that I'm not convinced that some that

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Speaker 1: commodities really should be viewed as an asset class because

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Speaker 1: I think that, uh, mostly the commodities do have end

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Speaker 1: users that actually want to use them as opposed to

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Speaker 1: just kind of stockpile them. Commodities don't really have d

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Speaker 1: and E. They don't have dividends that they don't have earnings,

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Speaker 1: so they're they're a different kind of animal. But would

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Speaker 1: you say the same about gold, because I know the

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Speaker 1: emails from the goldbugs are about to start. Yeah, well, look,

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Speaker 1: i'm I'm gold is a unique commodity. It's the only

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Speaker 1: one that I know of that that has its own

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Speaker 1: fan club. And they call that they called gold bugs.

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Speaker 1: And I say that respectfully. I don't say that, you know, Uh,

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Speaker 1: I just don't do gold. I I need dividends, I

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Speaker 1: need earnings. I have nothing against owning some golden portfolio.

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Speaker 1: Most strategist will tell you, you know, sure, go ahead

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Speaker 1: and on some gold. But that's I've had some good calls,

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Speaker 1: a few good calls and and and gold, but you know,

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Speaker 1: nothing that stands out in any meaningful way. But to

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Speaker 1: your question about the c rb ROW Industrials um, it's

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Speaker 1: it's an index that's been around since the fifties and uh,

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Speaker 1: first monthly, then weekly, now daily, and I found that

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Speaker 1: it's very highly correlated with global economic activity and therefore

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Speaker 1: also US economic activity because the US matters, UH so much,

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Speaker 1: so I watch it on a on a daily basis

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Speaker 1: for an indication of what the global economy is doing.

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Speaker 1: It's got thirteen raw industrials. It does not have a oil,

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Speaker 1: it does not have lumber, which I think both those

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Speaker 1: commodities have their own unique supplied demand characteristics. And I

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Speaker 1: like the divided by initial unemployment claims, and I call

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Speaker 1: that the boom bust barometer. So raw spot price index

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Speaker 1: divided by initial unemployment claims. So that's that's become a

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Speaker 1: weekly indicator. And what's the signal that, hey, a recession

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Speaker 1: is coming. Well, it's really a coincident indicator. But it's

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Speaker 1: available weekly, so you know, I don't have to wait

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Speaker 1: for some of the monthly data. UM. So, for example,

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Speaker 1: the CRB raw industrials and next took a dive in

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Speaker 1: the second half of two thousand fourteen and two thousand

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Speaker 1: and fifteen, signaling that something was happening in the global economy.

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Speaker 1: It was getting weaker UH. And then it hit a

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Speaker 1: bottom in early two thousand sixteen, and UH alerted me

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Speaker 1: that global economic activity was improving. And then I started

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Speaker 1: to see it in some of the indicators that we

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Speaker 1: use for forecasting corporate earnings, and it all sort of

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Speaker 1: kind of came together earlier this year, and we're recording

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Speaker 1: this in April, you had said, I think inflation is dead.

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Speaker 1: So what do you mean by that and what is

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Speaker 1: it suggest to bond investors? Going, well, it's it's not

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Speaker 1: a a new mantra for me. I've been basically of

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Speaker 1: that opinion since UH for forty years of my uh

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Speaker 1: my career. I mean, it wasn't dead in the late

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Speaker 1: seventies when I started my career, but when Vulcar adopted

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Speaker 1: UH monetary policy UH procedures that led to interest rates

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Speaker 1: going straight up, I concluded that he would in fact

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Speaker 1: break the back of inflation. And the amazing thing, the

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Speaker 1: remarkable thing was how quickly inflation came down once policy

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Speaker 1: really aimed at bringing it down. And I was I've

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Speaker 1: been a disinflationist, which means it doesn't mean falling prices,

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Speaker 1: means that the price inflation, the rate of inflation comes down.

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Speaker 1: And I've been a disinflationist throughout my entire career. And

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Speaker 1: maybe at some point I need to just you know,

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Speaker 1: let go the Cliver victory art or well, you know,

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Speaker 1: I hope in my next forty years, God willing or

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Speaker 1: you know what, what whatever part of that, I continue

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Speaker 1: to uh be employed the way I am. And um, yeah,

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Speaker 1: I think inflation what I've learned is it's not a

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Speaker 1: monetary phenomenon. With all due respect to Milton Friedman, I mean,

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Speaker 1: by now we should all just empirically realize, clearly, clearly,

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Speaker 1: it's not a monetary phenomenon. I'm not gonna tell you

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Speaker 1: it's not at all related to what the central banks

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Speaker 1: are doing. But if anybody had told us that the

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Speaker 1: central banks are gonna pile on the kind of liquidity

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Speaker 1: they've put into the system since two thousand and eight,

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Speaker 1: we would have all said, by now, inflation should have

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Speaker 1: been soaring. I didn't inflation hyper inflation. Um, I mean

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Speaker 1: I didn't see what the central banks were gonna do.

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Speaker 1: And I guess if you told me that, I might

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Speaker 1: have turned into a reflationist. But I think what's uh,

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Speaker 1: what's continuing to work is what's worked for the past

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Speaker 1: forty years is globalization, global competition, and that's obviously under

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Speaker 1: some stress here with the trade tensions. UM. Technological innovation,

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Speaker 1: as we discussed earlier, is a is very uh powerful

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Speaker 1: and bringing prices down, and then aging demo graphics, people

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Speaker 1: getting older. Older societies I think tend to be less

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Speaker 1: inflation prone. Let's talk a little bit about the early

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Speaker 1: days of your career. You got to Wall Street. You

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Speaker 1: mentioned we were in the middle of a very recessionary period. Uh,

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Speaker 1: we had stagflation, we had high oil prices, we had

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Speaker 1: an oil embargo. Stocks essentially went nowhere, and we were

426
00:25:23,760 --> 00:25:26,600
Speaker 1: coming out of the worst recession since the Great Depression.

427
00:25:27,080 --> 00:25:30,320
Speaker 1: What was it like to start your career in that environment. Well,

428
00:25:30,320 --> 00:25:34,000
Speaker 1: with the benefit of hindsight, how is remarkably lucky? I mean,

429
00:25:35,000 --> 00:25:36,840
Speaker 1: but up is that the thing? Well? Yeah, I mean

430
00:25:36,880 --> 00:25:39,679
Speaker 1: the seventies were awful, and I was in graduate school,

431
00:25:39,760 --> 00:25:41,960
Speaker 1: so you know what, what what did I know? I know,

432
00:25:42,000 --> 00:25:46,520
Speaker 1: I was studying theories and u uh, taking courses, and

433
00:25:46,560 --> 00:25:49,560
Speaker 1: what was happening in the real world really didn't matter

434
00:25:49,600 --> 00:25:51,360
Speaker 1: all that much to me, except for the fact that

435
00:25:51,800 --> 00:25:54,440
Speaker 1: I had to wait in the long gasolene lines in

436
00:25:54,560 --> 00:25:58,920
Speaker 1: nineteen seventy nine. So clearly we all experienced the angst

437
00:25:58,960 --> 00:26:03,320
Speaker 1: of high inflation and two energy shocks in seventy three

438
00:26:03,320 --> 00:26:05,680
Speaker 1: and seventy nine. But you know, I landed on Wall

439
00:26:05,720 --> 00:26:09,159
Speaker 1: Street in nineteen seventy eight. So kind of in the

440
00:26:09,240 --> 00:26:12,560
Speaker 1: thick of of all the misery and all the barishness

441
00:26:13,200 --> 00:26:17,320
Speaker 1: and um low and behold, I started to kind of

442
00:26:17,320 --> 00:26:20,840
Speaker 1: see the light early on in my career that maybe

443
00:26:20,920 --> 00:26:23,480
Speaker 1: Volker would break the back of inflation, and if he did,

444
00:26:24,000 --> 00:26:26,399
Speaker 1: that could bring bond deals down. So I started to

445
00:26:26,400 --> 00:26:30,080
Speaker 1: talk about what I called the hat size bond yields

446
00:26:30,320 --> 00:26:35,000
Speaker 1: when they were over ten percent. Uh and uh. Also

447
00:26:35,320 --> 00:26:38,520
Speaker 1: in the early eighties turned the bullish on stocks along

448
00:26:38,560 --> 00:26:41,800
Speaker 1: with my mentor back then on the strategy side was

449
00:26:41,880 --> 00:26:47,160
Speaker 1: Greg Smith at first Study if Hunt, then at Prudential.

450
00:26:47,240 --> 00:26:50,600
Speaker 1: So I mean forty years. During the past forty years,

451
00:26:50,640 --> 00:26:54,399
Speaker 1: the stock markets basically gone from a thousand to twenty

452
00:26:54,440 --> 00:26:58,639
Speaker 1: six thousand, maybe back down to five thousand. The bond

453
00:26:58,680 --> 00:27:02,640
Speaker 1: deal has dropped from well over ten two around three

454
00:27:02,680 --> 00:27:05,119
Speaker 1: percent now it got as lows one and a half percent.

455
00:27:05,680 --> 00:27:08,680
Speaker 1: So I count myself just you know, I just kind

456
00:27:08,680 --> 00:27:12,760
Speaker 1: of lucked out be have forty years of my prime

457
00:27:14,119 --> 00:27:17,920
Speaker 1: focus during bull markets, great bull markets and bonds and stocks.

458
00:27:18,280 --> 00:27:22,560
Speaker 1: You're credited with creating the term bond vigilantes. Why did

459
00:27:22,560 --> 00:27:24,200
Speaker 1: you come up with that and what did you mean

460
00:27:24,200 --> 00:27:26,239
Speaker 1: by Yeah? I'll probably be on my tombstone. You know

461
00:27:26,359 --> 00:27:30,800
Speaker 1: that anytime the bond yield goes up anywhere on the

462
00:27:30,800 --> 00:27:33,320
Speaker 1: planet Earth, I get a call from somebody in the

463
00:27:33,359 --> 00:27:38,040
Speaker 1: media saying, you know, the bond vigiliantes back. So when

464
00:27:38,400 --> 00:27:40,600
Speaker 1: Greek bond deals were going up, I actually got some

465
00:27:40,680 --> 00:27:43,959
Speaker 1: calls from Greece asking me if the bond vigilantes had

466
00:27:44,000 --> 00:27:46,879
Speaker 1: decided to take a vacation and UH in Greece and

467
00:27:46,920 --> 00:27:51,440
Speaker 1: cause some trouble over there. But in three UM bond

468
00:27:51,440 --> 00:27:54,199
Speaker 1: deals were starting to go up. There's a fear that

469
00:27:54,240 --> 00:27:57,919
Speaker 1: inflation was going to come back, and I guess i uh.

470
00:27:58,320 --> 00:28:01,480
Speaker 1: I was trying to defend my disinflation scenario, said, don't

471
00:28:01,520 --> 00:28:04,520
Speaker 1: worry about it. If inflation comes back, if if the

472
00:28:04,560 --> 00:28:06,800
Speaker 1: Fed doesn't deal with it, then the markets will deal

473
00:28:06,800 --> 00:28:08,840
Speaker 1: it with The bond market will will deal with it.

474
00:28:08,920 --> 00:28:12,160
Speaker 1: I recently sort of segued that into the dal vigilantes

475
00:28:12,520 --> 00:28:15,800
Speaker 1: within the context of the trade tiff that's going on.

476
00:28:16,240 --> 00:28:19,920
Speaker 1: So let's let's move into equity. Since you brought it up,

477
00:28:20,840 --> 00:28:23,880
Speaker 1: a lot of people are saying US equities are expensive,

478
00:28:24,000 --> 00:28:27,760
Speaker 1: especially relative to emerging markets. Where are we in the

479
00:28:27,840 --> 00:28:33,040
Speaker 1: broader market cycle, and do you think stocks are expensive here. Well, again,

480
00:28:33,080 --> 00:28:36,480
Speaker 1: looking over the past forty years, I've come to the

481
00:28:36,480 --> 00:28:41,560
Speaker 1: conclusion that what causes bear markets is obvious. It's uh,

482
00:28:41,640 --> 00:28:47,000
Speaker 1: it's recessions. Um. We had one bear market that was

483
00:28:47,000 --> 00:28:49,880
Speaker 1: not caused by recession. But with the benefit of hindsight,

484
00:28:49,920 --> 00:28:52,480
Speaker 1: I think it's almost like a flash crash, which I'm

485
00:28:52,480 --> 00:28:54,280
Speaker 1: sure it's at all occurred sort of in one day,

486
00:28:54,720 --> 00:28:58,160
Speaker 1: turned out to be a great buying opportunity, but certainly

487
00:28:58,200 --> 00:29:02,040
Speaker 1: there were some pretty nasty recessions in the past forty years.

488
00:29:02,480 --> 00:29:05,400
Speaker 1: Benefit of hindsight, if you had the stomach for it

489
00:29:05,440 --> 00:29:08,520
Speaker 1: and stayed with it, you'd be still very well off.

490
00:29:08,960 --> 00:29:10,920
Speaker 1: The problem we all have, of course, is you know,

491
00:29:10,960 --> 00:29:12,920
Speaker 1: when I was just starting out, I didn't have a

492
00:29:12,920 --> 00:29:15,920
Speaker 1: lot of money, and I couldn't possibly anticipate the kind

493
00:29:15,920 --> 00:29:18,720
Speaker 1: of bull markets we had. But to get to to

494
00:29:18,800 --> 00:29:22,760
Speaker 1: the present, UM, stocks are not cheap. They're not cheap

495
00:29:22,800 --> 00:29:25,280
Speaker 1: in the United States. UH. About A lot of that

496
00:29:25,480 --> 00:29:30,160
Speaker 1: is um because the so called fang stocks are very expensive.

497
00:29:30,960 --> 00:29:34,800
Speaker 1: Take those out, and UH stocks are sort of fairly valued. UH.

498
00:29:34,920 --> 00:29:38,640
Speaker 1: Factor in that inflation is low and interest rates are low. UH.

499
00:29:38,720 --> 00:29:41,800
Speaker 1: Then I think you can also argue that stocks are

500
00:29:41,840 --> 00:29:47,720
Speaker 1: not grossly overvalued. H Warren Buffett has got the famous

501
00:29:47,760 --> 00:29:51,360
Speaker 1: Buffet ratio looking at market cap of the SMP five

502
00:29:51,840 --> 00:29:56,120
Speaker 1: to g d P, and it's back to the highs

503
00:29:56,200 --> 00:29:58,960
Speaker 1: of two thousand, right before the market took a took

504
00:29:58,960 --> 00:30:02,760
Speaker 1: a dive. But Buffets pointing out that he's not paying

505
00:30:02,800 --> 00:30:05,760
Speaker 1: that much attention to the ratio because inflation and interest

506
00:30:05,840 --> 00:30:08,719
Speaker 1: rates are so low. You know. I guess the answer

507
00:30:08,800 --> 00:30:11,520
Speaker 1: about where we are in the cycle is when will

508
00:30:11,520 --> 00:30:13,960
Speaker 1: the next recession occur? If we continue to have these

509
00:30:14,040 --> 00:30:17,040
Speaker 1: rolling recessions, and maybe we will continue to have a

510
00:30:17,120 --> 00:30:21,360
Speaker 1: very elongated, very maybe the longest expansion ever, and I

511
00:30:21,400 --> 00:30:23,680
Speaker 1: think people will therefore would be willing to continue to

512
00:30:23,720 --> 00:30:27,240
Speaker 1: pay relatively high multiples as long as earnings are growing.

513
00:30:27,680 --> 00:30:31,720
Speaker 1: And we just got this huge booster two earnings from

514
00:30:31,760 --> 00:30:34,760
Speaker 1: the from the from the tax cuts. So I don't

515
00:30:34,800 --> 00:30:37,000
Speaker 1: know exactly when the next barre market is going to occur.

516
00:30:37,120 --> 00:30:39,400
Speaker 1: I don't think we're gonna have a recession in two

517
00:30:39,440 --> 00:30:45,000
Speaker 1: thousand and eighteen, this year or next year is possible

518
00:30:45,640 --> 00:30:48,680
Speaker 1: that that's that's a fair that's a fair, but but

519
00:30:48,680 --> 00:30:50,440
Speaker 1: but everything is you know, I mean, you gotta keep

520
00:30:50,440 --> 00:30:53,760
Speaker 1: your wits about you. I mean this, this trade issue

521
00:30:53,920 --> 00:30:56,960
Speaker 1: is UH is a significant one, but I I'm I'm

522
00:30:57,000 --> 00:31:00,440
Speaker 1: on the side that believes that this too shall pass.

523
00:31:00,480 --> 00:31:03,479
Speaker 1: So you're looking at these as pronouncements that get walked

524
00:31:03,480 --> 00:31:07,640
Speaker 1: back and cooler heads prevail, or a trade war is

525
00:31:07,680 --> 00:31:09,520
Speaker 1: in that right now, I view had more as war

526
00:31:09,880 --> 00:31:13,960
Speaker 1: war of words, yes, than than tweets. You have tweets,

527
00:31:14,200 --> 00:31:18,920
Speaker 1: that's right, that's rather than an outright trade war. And

528
00:31:19,200 --> 00:31:22,200
Speaker 1: the fact that the United States is now finding that

529
00:31:22,600 --> 00:31:26,959
Speaker 1: both Japan and the European Union is joining in UH

530
00:31:26,960 --> 00:31:32,600
Speaker 1: basically attacking China for unfair practices, particularly with regards to technology.

531
00:31:33,280 --> 00:31:37,880
Speaker 1: I think is a is a positive development technology. I

532
00:31:37,920 --> 00:31:40,480
Speaker 1: think there's something tip of the idea that trade isn't

533
00:31:40,520 --> 00:31:43,280
Speaker 1: just about trade. There's a national security issues of course.

534
00:31:43,480 --> 00:31:46,600
Speaker 1: UM we've already seen a number of Chinese takeovers of

535
00:31:46,720 --> 00:31:51,680
Speaker 1: US corporations, UM prevented because of security concerns. Well, that's

536
00:31:51,720 --> 00:31:55,920
Speaker 1: become you know, because of because technology does have such

537
00:31:55,960 --> 00:32:00,200
Speaker 1: an impact on national security. Trade is no longer are

538
00:32:00,240 --> 00:32:03,960
Speaker 1: just about you know, trading corn for silk or something

539
00:32:04,000 --> 00:32:07,680
Speaker 1: like that. There's there there are issues that do bring

540
00:32:07,760 --> 00:32:11,440
Speaker 1: in some political considerations. So one of the things I

541
00:32:11,480 --> 00:32:14,720
Speaker 1: find fascinating about you. A lot of people who came

542
00:32:14,800 --> 00:32:19,720
Speaker 1: of age as investors during the nineties seventies, they seem

543
00:32:19,840 --> 00:32:23,960
Speaker 1: to be scarred by it. They have PTSD, they're terrified

544
00:32:24,000 --> 00:32:28,479
Speaker 1: of inflation, they're terrified of recessions. You seem to have

545
00:32:28,560 --> 00:32:32,120
Speaker 1: emerged from that era with nary a scratch on you.

546
00:32:33,040 --> 00:32:35,240
Speaker 1: What do you attribute that too, and and why do

547
00:32:35,280 --> 00:32:38,560
Speaker 1: you think you're outlooked differ so much from your peers

548
00:32:38,600 --> 00:32:44,760
Speaker 1: of that that same era. Well, it's possible that you know,

549
00:32:44,840 --> 00:32:47,920
Speaker 1: I I am very dated dependent. You know, the feed

550
00:32:47,960 --> 00:32:51,920
Speaker 1: always says they're very data dependent. I'm very empirical, and

551
00:32:51,920 --> 00:32:53,960
Speaker 1: and that's sort of the way I look at things.

552
00:32:55,160 --> 00:32:57,400
Speaker 1: I think a lot of a lot of people are

553
00:32:58,200 --> 00:33:01,040
Speaker 1: seem to be what it to the theories UH, and

554
00:33:01,360 --> 00:33:04,520
Speaker 1: then try to stress the data to fit that. So

555
00:33:04,560 --> 00:33:08,440
Speaker 1: I think, you know, in the nineteen seventies, UH, a

556
00:33:08,440 --> 00:33:11,440
Speaker 1: lot of people got conditioned to the I d that

557
00:33:11,560 --> 00:33:17,280
Speaker 1: inflation is a problem that was created by central bankers

558
00:33:17,320 --> 00:33:20,120
Speaker 1: and would continue to be created by central bankers. There's

559
00:33:20,120 --> 00:33:24,440
Speaker 1: a lot of fears that deficits UH would lead to

560
00:33:24,440 --> 00:33:28,240
Speaker 1: to ruin and um, look, I'm a conservative fellow I

561
00:33:28,280 --> 00:33:31,760
Speaker 1: don't like deficits. I don't like central banks. I call

562
00:33:31,840 --> 00:33:35,600
Speaker 1: them central monetary planners running amuck. But again, I'm not

563
00:33:35,640 --> 00:33:38,680
Speaker 1: a preacher. You know, I'm not saying you know right

564
00:33:38,800 --> 00:33:41,320
Speaker 1: or wrong. I'm saying what what what are we actually saying?

565
00:33:41,880 --> 00:33:45,400
Speaker 1: And what I guess what I sensed is that there's

566
00:33:45,480 --> 00:33:49,120
Speaker 1: more to to our economy than just policymakers. There's a

567
00:33:49,120 --> 00:33:51,920
Speaker 1: lot of entrepreneurs, a lot of businesses, a lot of workers.

568
00:33:52,440 --> 00:33:56,520
Speaker 1: And uh, one of my kind of pitches when I

569
00:33:56,640 --> 00:34:00,280
Speaker 1: visit a council get worried about policies, said, look, well

570
00:34:00,280 --> 00:34:04,560
Speaker 1: we've done despite Washington, right, And that's that's That's kind

571
00:34:04,560 --> 00:34:07,840
Speaker 1: of helped me focus on the importance of understanding that

572
00:34:07,880 --> 00:34:10,160
Speaker 1: the people get up in the morning and they go

573
00:34:10,239 --> 00:34:12,840
Speaker 1: to work, and they want to work. They want to

574
00:34:12,840 --> 00:34:15,440
Speaker 1: make money, they want to create something. And uh, you

575
00:34:15,480 --> 00:34:17,960
Speaker 1: know I see that, especially now that I'm an entrepreneurial

576
00:34:18,000 --> 00:34:22,680
Speaker 1: capitalist myself. I have my own firm, and um, every day,

577
00:34:22,239 --> 00:34:24,880
Speaker 1: I want to stay in business and I want to

578
00:34:24,880 --> 00:34:28,440
Speaker 1: grow my business. And and that's completely independent of what

579
00:34:28,480 --> 00:34:31,399
Speaker 1: policymakers do. I mean, if they get my way, I'll

580
00:34:31,400 --> 00:34:33,800
Speaker 1: do the best I can to to run my business

581
00:34:33,880 --> 00:34:36,239
Speaker 1: with the policies that that I have to deal with.

582
00:34:36,719 --> 00:34:41,960
Speaker 1: So we've talked a bit about technology and the Malthusians. Um,

583
00:34:42,000 --> 00:34:44,879
Speaker 1: what do you think of the fear that we see

584
00:34:44,920 --> 00:34:49,080
Speaker 1: among some economists that technology and robotics is going to

585
00:34:49,200 --> 00:34:52,440
Speaker 1: take away everybody's jobs and we'll soon all of us

586
00:34:52,440 --> 00:34:54,600
Speaker 1: will be unemployed and it'll just in the Amazon. In

587
00:34:54,640 --> 00:34:58,640
Speaker 1: the book, I I addressed that issue kind of under

588
00:34:58,880 --> 00:35:02,000
Speaker 1: subbetting of Bray of a a New World. And uh, another

589
00:35:02,719 --> 00:35:06,560
Speaker 1: section is called ice Spartacus, the uh the idea that, uh,

590
00:35:06,600 --> 00:35:09,239
Speaker 1: you know, androids are going to be doing all all

591
00:35:09,280 --> 00:35:11,440
Speaker 1: the dirty work for us, and one of them will

592
00:35:11,600 --> 00:35:15,000
Speaker 1: rise up I Spartacus, and you know, everybody will the

593
00:35:15,000 --> 00:35:20,000
Speaker 1: the androids will revolt and uh launch of revolution against

594
00:35:20,040 --> 00:35:23,400
Speaker 1: the humans. Japan is a good example. Japan's kind of

595
00:35:23,480 --> 00:35:25,719
Speaker 1: sort of a leading indicator for the rest of us.

596
00:35:25,800 --> 00:35:30,439
Speaker 1: They're geriatric and aging society. Their unemployment is extremely low,

597
00:35:30,520 --> 00:35:34,400
Speaker 1: They've got what appears to be actually a shortage of workers,

598
00:35:34,400 --> 00:35:38,239
Speaker 1: and yet probably they're were the most robotized automated economies

599
00:35:38,840 --> 00:35:42,359
Speaker 1: in the world. The demography on a global basis, we're

600
00:35:42,400 --> 00:35:44,480
Speaker 1: just you know, we're we're sort of on the road

601
00:35:44,520 --> 00:35:47,960
Speaker 1: to self extinction. Fertility rates have collapsed around the world,

602
00:35:47,960 --> 00:35:50,919
Speaker 1: with the only exception being India and Africa, and those

603
00:35:50,920 --> 00:35:54,560
Speaker 1: two may changes. Urbanization continues. We were ahead of Europe

604
00:35:54,600 --> 00:35:56,200
Speaker 1: for a long time here in the United States, and

605
00:35:56,239 --> 00:35:59,719
Speaker 1: we've sort of fallen into that. Yeah, you know, fraction

606
00:35:59,760 --> 00:36:04,800
Speaker 1: of percentage fertility rate in the US exactly so. And

607
00:36:04,800 --> 00:36:07,400
Speaker 1: and the labor force growth because of the aging of

608
00:36:07,440 --> 00:36:10,920
Speaker 1: the baby boomers. We really are seeing around the world

609
00:36:11,120 --> 00:36:15,600
Speaker 1: with a few exceptions, that working age populations are really declining,

610
00:36:16,080 --> 00:36:19,000
Speaker 1: and so we actually need robotics and automation to do

611
00:36:19,080 --> 00:36:21,040
Speaker 1: things that we don't have people to do. What about

612
00:36:21,080 --> 00:36:23,480
Speaker 1: skilled immigration? Do we want to pull the best and

613
00:36:23,520 --> 00:36:29,239
Speaker 1: brightest from around the world or how immigration historically has

614
00:36:29,280 --> 00:36:32,279
Speaker 1: always been a source of economic growth. As a matter

615
00:36:32,280 --> 00:36:36,480
Speaker 1: of fact, I would attribute some of the surprising growth

616
00:36:36,480 --> 00:36:38,720
Speaker 1: in Europe over the past couple of years to the

617
00:36:38,760 --> 00:36:42,400
Speaker 1: to the Median people that uh migrated from Africa in

618
00:36:42,440 --> 00:36:44,600
Speaker 1: the Middle East to Europe. I mean a lot of

619
00:36:44,719 --> 00:36:46,600
Speaker 1: us looked at us, Oh, this is gonna be terrible.

620
00:36:46,600 --> 00:36:49,399
Speaker 1: I mean, the mix of cultures is going to be horrendous.

621
00:36:49,480 --> 00:36:51,799
Speaker 1: And by the way, it hasn't been pretty I mean

622
00:36:51,800 --> 00:36:55,160
Speaker 1: the crime rates have gone up, but still you know,

623
00:36:55,239 --> 00:36:58,399
Speaker 1: Germany's economy is absolutely booming, and I would say that

624
00:36:58,760 --> 00:37:02,200
Speaker 1: it's just another example that sometimes uh, I mean, historically

625
00:37:02,320 --> 00:37:04,960
Speaker 1: migration has been a source of growth. Can you stick around?

626
00:37:04,960 --> 00:37:07,040
Speaker 1: I have a charm more questions for you. We have

627
00:37:07,160 --> 00:37:10,640
Speaker 1: been speaking with Dr Eduard Any of your Danny research

628
00:37:11,239 --> 00:37:14,680
Speaker 1: UH and author of the new book Predicting the Markets,

629
00:37:14,760 --> 00:37:19,160
Speaker 1: a professional autobiography. If you enjoy this conversation, be sure

630
00:37:19,200 --> 00:37:21,359
Speaker 1: and stick around for the podcast extras. Will you keep

631
00:37:21,360 --> 00:37:25,160
Speaker 1: the tape rolling and continue to discuss all things markets.

632
00:37:25,560 --> 00:37:29,680
Speaker 1: We love your comments, feedback and suggestions right to us

633
00:37:29,840 --> 00:37:33,839
Speaker 1: at m IB podcast at Bloomberg dot net. You can

634
00:37:33,880 --> 00:37:36,520
Speaker 1: follow me on Twitter at Ridhults. Check out my daily

635
00:37:36,560 --> 00:37:40,520
Speaker 1: column on Bloomberg View dot com. I'm Barry Riholts. You're

636
00:37:40,600 --> 00:37:57,480
Speaker 1: listening to Masters in Business on Bloomberg Radio. Welcome to

637
00:37:57,480 --> 00:38:00,479
Speaker 1: the podcast. Thank you Ed for doing this. Been looking

638
00:38:00,480 --> 00:38:04,200
Speaker 1: forward to to going over UM the book and some

639
00:38:04,239 --> 00:38:07,040
Speaker 1: other stuff. I've been getting your research for a long

640
00:38:07,040 --> 00:38:11,000
Speaker 1: time and I always find it um quite fascinating. But

641
00:38:11,080 --> 00:38:13,840
Speaker 1: I have to start with a question about the book.

642
00:38:14,600 --> 00:38:18,520
Speaker 1: So you crank out a lot of material every day,

643
00:38:18,960 --> 00:38:21,120
Speaker 1: I could tell you read a lot, you write a lot.

644
00:38:21,920 --> 00:38:24,440
Speaker 1: What was your process like for writing the book, and

645
00:38:24,480 --> 00:38:27,480
Speaker 1: how challenging was it on top of everything else you

646
00:38:27,520 --> 00:38:29,359
Speaker 1: do well in some ways, I've been writing the book

647
00:38:29,400 --> 00:38:32,560
Speaker 1: for forty years, right, because it's you know, and and

648
00:38:32,560 --> 00:38:34,799
Speaker 1: in the book I point out I I really didn't

649
00:38:34,840 --> 00:38:37,160
Speaker 1: have to do much research because that's what I've been

650
00:38:37,200 --> 00:38:40,000
Speaker 1: doing for the past forty years. But still getting three

651
00:38:40,440 --> 00:38:44,359
Speaker 1: words out one word. I'd tell you that I didn't

652
00:38:44,400 --> 00:38:46,160
Speaker 1: know I had it in me. I mean when I

653
00:38:46,200 --> 00:38:48,200
Speaker 1: put it all together, I couldn't believe how much I

654
00:38:48,200 --> 00:38:50,360
Speaker 1: had written. It's you know, the book is six d

655
00:38:50,520 --> 00:38:54,279
Speaker 1: pages long, and uh so, I guess forty years years,

656
00:38:54,320 --> 00:38:57,120
Speaker 1: you know, I had things to say and I wanted

657
00:38:57,160 --> 00:38:59,480
Speaker 1: to write them down. So it's it's kind of like

658
00:39:00,000 --> 00:39:01,799
Speaker 1: and play the piano. But I guess it's kind of

659
00:39:01,840 --> 00:39:04,600
Speaker 1: like sitting the piano and saying and being a composer

660
00:39:04,600 --> 00:39:06,560
Speaker 1: and say, I don't know what I'm possibly going to

661
00:39:06,600 --> 00:39:09,640
Speaker 1: compose and suddenly just comes to you. But once I

662
00:39:09,760 --> 00:39:14,320
Speaker 1: once I organized the book under once I organized the

663
00:39:14,360 --> 00:39:16,480
Speaker 1: structure of the book, and it's all every chapter is

664
00:39:16,480 --> 00:39:18,920
Speaker 1: about predicting, you know. I started with predicting the past

665
00:39:19,320 --> 00:39:23,520
Speaker 1: kind of reviewing, uh, a quick overview of things, then

666
00:39:23,560 --> 00:39:28,000
Speaker 1: predicting bonds and stocks. Once I did that, it uh,

667
00:39:28,640 --> 00:39:32,319
Speaker 1: it was a pretty fast effort. So a lot of

668
00:39:32,320 --> 00:39:34,760
Speaker 1: it was written actually from the summer of two thousand

669
00:39:34,880 --> 00:39:37,760
Speaker 1: and six to the summer of two thousand and seven,

670
00:39:38,280 --> 00:39:43,000
Speaker 1: and obviously at nights and on the weekends um uh.

671
00:39:43,040 --> 00:39:46,840
Speaker 1: And sometimes when I had some gaping holes and what

672
00:39:46,920 --> 00:39:49,080
Speaker 1: I needed to put it in the book, I'd uh

673
00:39:49,560 --> 00:39:51,919
Speaker 1: put it in my my daily write it up there

674
00:39:51,960 --> 00:39:54,120
Speaker 1: and think about it, research it and then throw it

675
00:39:54,120 --> 00:39:57,600
Speaker 1: into the book. Quite quite interesting. And how long did

676
00:39:57,600 --> 00:39:59,240
Speaker 1: it take you to write this other than the forty

677
00:39:59,320 --> 00:40:01,759
Speaker 1: years to absolutely well, I I the bulk of the

678
00:40:01,760 --> 00:40:04,000
Speaker 1: book was written from two thousands suwhere in two thousand

679
00:40:04,080 --> 00:40:07,160
Speaker 1: sixteen to the summer of two thousand seventeen. So let's

680
00:40:07,200 --> 00:40:09,680
Speaker 1: talk a little bit about index funds. You know, they

681
00:40:09,760 --> 00:40:13,719
Speaker 1: had been invented around the time your career started, but

682
00:40:13,840 --> 00:40:18,040
Speaker 1: they really haven't captured the popular imagination like they have

683
00:40:18,360 --> 00:40:21,640
Speaker 1: since the financial crisis. What do you think about the

684
00:40:21,719 --> 00:40:25,839
Speaker 1: role of index funds in in an investor's portfolio and

685
00:40:25,880 --> 00:40:30,680
Speaker 1: to what would you attribute this sudden recognition that hey,

686
00:40:30,760 --> 00:40:36,000
Speaker 1: this is cheap, easy and efficient. Well, I think it's uh,

687
00:40:36,080 --> 00:40:40,160
Speaker 1: you know, the the media made it clear that this

688
00:40:40,239 --> 00:40:43,239
Speaker 1: is an alternative way. I think also a lot of

689
00:40:43,880 --> 00:40:48,360
Speaker 1: stockbrokers started to promote the idea that, you know, the

690
00:40:48,400 --> 00:40:51,080
Speaker 1: individual investor could could buy indexes. And by the way,

691
00:40:51,120 --> 00:40:53,719
Speaker 1: a lot of institutional accounts, when they want to be

692
00:40:54,040 --> 00:40:59,040
Speaker 1: uh long technology will maybe just buy an index uh

693
00:40:59,200 --> 00:41:03,480
Speaker 1: that monitors technology or has technology stocks. So I think

694
00:41:03,480 --> 00:41:07,880
Speaker 1: it just kind of fed on itself. And uh, here

695
00:41:07,920 --> 00:41:11,000
Speaker 1: we are with an et F I just about anything

696
00:41:11,040 --> 00:41:14,799
Speaker 1: that you can trade on the planet Earth. And you've

697
00:41:14,840 --> 00:41:17,040
Speaker 1: been doing this long enough where you've gotten a number

698
00:41:17,080 --> 00:41:20,080
Speaker 1: of things very right. Uh. What are the things that

699
00:41:20,120 --> 00:41:22,560
Speaker 1: you've gotten wrong that stand out in your mind? And

700
00:41:22,880 --> 00:41:26,120
Speaker 1: what lessons did you take from those? Well, I think

701
00:41:26,160 --> 00:41:29,160
Speaker 1: in our last conversation you asked me about why two

702
00:41:29,239 --> 00:41:35,040
Speaker 1: K and uh you know two thousand uh in nine

703
00:41:35,640 --> 00:41:39,839
Speaker 1: I uh uh started to focus on on why two

704
00:41:39,880 --> 00:41:43,200
Speaker 1: K is a potential problem. And this is a good

705
00:41:43,200 --> 00:41:46,400
Speaker 1: example of I uh you shouldn't mess around with subjects

706
00:41:46,400 --> 00:41:50,000
Speaker 1: that you don't fully understand. And uh you know, I'm

707
00:41:51,000 --> 00:41:53,239
Speaker 1: I like technology, I use it a lot, but I

708
00:41:53,440 --> 00:41:57,840
Speaker 1: uh I used to I used to uh, I studied

709
00:41:57,880 --> 00:42:01,279
Speaker 1: assembler programming, but I'm not a codeer, so um, but

710
00:42:01,400 --> 00:42:04,319
Speaker 1: we could we could make the defense for you that Hey,

711
00:42:04,400 --> 00:42:08,279
Speaker 1: you helped draw attention to a potential problem, and a

712
00:42:08,320 --> 00:42:11,360
Speaker 1: lot of time and resources were thrown at that problem,

713
00:42:11,400 --> 00:42:15,480
Speaker 1: which made it considerably smaller. Well, I was at the

714
00:42:15,560 --> 00:42:20,480
Speaker 1: time very publicly monitoring what corporations were saying in their

715
00:42:21,160 --> 00:42:25,279
Speaker 1: uh SEC filings about how much they were spending, and

716
00:42:25,360 --> 00:42:27,799
Speaker 1: it really added up to about fifty billion dollars. So

717
00:42:29,000 --> 00:42:32,040
Speaker 1: you know, I obviously was concerned about a problem that

718
00:42:32,160 --> 00:42:35,320
Speaker 1: corporations were concerned about. But the fact of the matter

719
00:42:35,440 --> 00:42:38,680
Speaker 1: is they dealt with it and nothing happened. And so

720
00:42:38,719 --> 00:42:40,919
Speaker 1: when nothing happened, I was a little bit embarrassed because

721
00:42:40,920 --> 00:42:44,000
Speaker 1: I thought it could lead to a recession. Benefit of

722
00:42:44,080 --> 00:42:46,880
Speaker 1: hindsight I should have I think I had the right issue,

723
00:42:47,160 --> 00:42:50,279
Speaker 1: but declared victory. I was. I was right for the

724
00:42:50,320 --> 00:42:55,120
Speaker 1: wrong reason. Benefits benefit of hindsight would really happened is

725
00:42:55,160 --> 00:42:58,959
Speaker 1: corporations went on a technology spending boom and used white

726
00:42:58,960 --> 00:43:01,719
Speaker 1: two ks and excuse us to get all the brand

727
00:43:01,840 --> 00:43:06,200
Speaker 1: used hardware and software. And then when the millennium recurrent,

728
00:43:06,280 --> 00:43:09,239
Speaker 1: all that spending just dried up, and the whole thing

729
00:43:09,320 --> 00:43:13,440
Speaker 1: just kind of imploded with It's pretty easy, with the

730
00:43:13,480 --> 00:43:16,560
Speaker 1: benefit of the hindsight to look at those March two

731
00:43:16,640 --> 00:43:21,479
Speaker 1: thousand UM earnings mrs and conference calls as oh, all

732
00:43:21,600 --> 00:43:26,120
Speaker 1: that spending in was pulled forward. Maybe you pulled five

733
00:43:26,200 --> 00:43:29,319
Speaker 1: years with the spending forward, and that's what led to

734
00:43:29,520 --> 00:43:35,439
Speaker 1: a dearth and and suddenly even reasonably priced stocks became

735
00:43:35,560 --> 00:43:38,160
Speaker 1: very pricey. On the test side, didn't didn't take a

736
00:43:38,239 --> 00:43:41,359
Speaker 1: lot to watch those profits disappear. UM. There was one

737
00:43:41,360 --> 00:43:45,799
Speaker 1: other question I wanted to ask ask you about the

738
00:43:45,840 --> 00:43:51,160
Speaker 1: bond vigilante term. Where where did the idea that there

739
00:43:51,160 --> 00:43:55,240
Speaker 1: were certain players in the bond market that would either

740
00:43:55,480 --> 00:43:59,319
Speaker 1: punish the FED or at least use their portfolios as

741
00:43:59,360 --> 00:44:02,680
Speaker 1: a way to draw it tension to the threat of inflation.

742
00:44:03,160 --> 00:44:07,480
Speaker 1: Where where did that come from? It's kind of unexpected. Well,

743
00:44:07,520 --> 00:44:10,600
Speaker 1: you know, I I back then I was writing UM

744
00:44:11,239 --> 00:44:14,880
Speaker 1: a weekly now right a daily, and uh you know,

745
00:44:16,040 --> 00:44:19,400
Speaker 1: I always find that, Uh, I feel a responsibility. If

746
00:44:19,400 --> 00:44:21,239
Speaker 1: I want to sit down and write something, I want

747
00:44:21,239 --> 00:44:24,920
Speaker 1: people to read it. Uh So I try to read it,

748
00:44:24,920 --> 00:44:27,440
Speaker 1: write it in a way that makes it interesting, and

749
00:44:27,600 --> 00:44:31,200
Speaker 1: uh you know, I'm constantly coining. You know, I coined

750
00:44:31,200 --> 00:44:34,600
Speaker 1: that hat sized body of Ie D and the bondage Lineyes,

751
00:44:34,680 --> 00:44:37,000
Speaker 1: was just something I put into I think it was

752
00:44:37,080 --> 00:44:40,400
Speaker 1: July piece. They just kind of got a life of

753
00:44:40,440 --> 00:44:43,400
Speaker 1: its own, suddenly kind of caught on. I was I

754
00:44:43,440 --> 00:44:46,959
Speaker 1: was looking for a film derivation that it came from

755
00:44:47,040 --> 00:44:51,319
Speaker 1: some posse going after yeah, yeah, no, no, no, such

756
00:44:51,520 --> 00:44:54,440
Speaker 1: no such luck in that particular case. But you know,

757
00:44:54,480 --> 00:44:58,279
Speaker 1: and then in the early nineties, the Clinton administration basically

758
00:44:58,719 --> 00:45:02,920
Speaker 1: paid homage to the bondage Gilantes. Uh, when Clinton's advisers

759
00:45:02,920 --> 00:45:05,200
Speaker 1: told them, you know, you can't do that because the

760
00:45:06,000 --> 00:45:09,120
Speaker 1: bond folks won't let you get away with it. Robert Reuben, Right,

761
00:45:10,560 --> 00:45:14,640
Speaker 1: car Carville, I think what was the famous quote something

762
00:45:14,680 --> 00:45:17,880
Speaker 1: that you know from Reborn? I want to be reborn

763
00:45:17,880 --> 00:45:21,840
Speaker 1: as a you know, uh, it is a bond vigilanty,

764
00:45:21,960 --> 00:45:25,759
Speaker 1: but you know, a bond got or whatever. And so

765
00:45:25,880 --> 00:45:29,759
Speaker 1: you've been on both sides of the research aisle as

766
00:45:29,800 --> 00:45:34,080
Speaker 1: both an economist and a strategist. How do those roles

767
00:45:34,120 --> 00:45:36,799
Speaker 1: differ and how does that affect the sort of work

768
00:45:36,840 --> 00:45:39,480
Speaker 1: you do each day? Well? They really, uh, there really

769
00:45:39,480 --> 00:45:41,239
Speaker 1: should be one and the same. It's kind of goes

770
00:45:41,280 --> 00:45:47,799
Speaker 1: back to our conversation earlier about how academics and professionals, uh,

771
00:45:48,960 --> 00:45:51,240
Speaker 1: the nature of things is, we we tend to become

772
00:45:51,360 --> 00:45:56,840
Speaker 1: very uh uh segmented and very kind of confined to

773
00:45:57,960 --> 00:46:02,239
Speaker 1: viewing what we do, uh, very narrowly. Uh. Fortunately for me,

774
00:46:02,280 --> 00:46:05,760
Speaker 1: I was able to uh segue from economics into investment

775
00:46:05,760 --> 00:46:08,840
Speaker 1: strategy and and and and make them sort of the

776
00:46:08,880 --> 00:46:14,400
Speaker 1: same the same subject really because people, some people say

777
00:46:14,440 --> 00:46:18,000
Speaker 1: that predicting the economy and protecting the stock market are

778
00:46:18,040 --> 00:46:22,880
Speaker 1: too totally different. Well, I just wrote a book that

779
00:46:22,920 --> 00:46:25,440
Speaker 1: it says the opposite that you know, you you want

780
00:46:25,440 --> 00:46:28,120
Speaker 1: to understand the economy, and you want to understand the

781
00:46:28,120 --> 00:46:31,080
Speaker 1: financial markets, and you want to appreciate how the to

782
00:46:31,719 --> 00:46:37,640
Speaker 1: interact markets can affect policy. Uh, policies can affect effect markets. Um.

783
00:46:37,920 --> 00:46:43,800
Speaker 1: Economic events cause people to change the way they they

784
00:46:43,920 --> 00:46:47,160
Speaker 1: view markets. So I think they're very much one and

785
00:46:47,239 --> 00:46:49,600
Speaker 1: the same. So in other words, you're not going to

786
00:46:49,760 --> 00:46:53,480
Speaker 1: get your economic forecast wrong, but your market forecast right.

787
00:46:53,960 --> 00:46:56,120
Speaker 1: If if you're getting one right, you should get the

788
00:46:56,120 --> 00:46:59,239
Speaker 1: other right, and shot one wrong, you're probably gonna have

789
00:46:59,280 --> 00:47:02,239
Speaker 1: problems in the other you should, But I mean it's

790
00:47:02,360 --> 00:47:05,600
Speaker 1: I mean, it's conceivable that you could get an economic

791
00:47:06,000 --> 00:47:10,800
Speaker 1: scenario right overall, um, and you have still miss the markets.

792
00:47:10,840 --> 00:47:15,839
Speaker 1: But I think, uh, it's for starters. It's always get

793
00:47:15,960 --> 00:47:18,600
Speaker 1: good to get the economy right. Uh. And if you

794
00:47:18,600 --> 00:47:21,719
Speaker 1: can do that, and I found historically getting inflation right,

795
00:47:21,719 --> 00:47:27,080
Speaker 1: it's been paramount paramount, So so everything comes down to

796
00:47:27,120 --> 00:47:30,680
Speaker 1: the right inflation forecast. Inflation gets you the economy right.

797
00:47:30,719 --> 00:47:32,480
Speaker 1: It also gets you the FED right, and then it

798
00:47:32,520 --> 00:47:36,120
Speaker 1: gets you the markets from markets evaluation right. Uh, I

799
00:47:36,160 --> 00:47:39,000
Speaker 1: mean right now, if I'm gonna be just dead wrong

800
00:47:39,040 --> 00:47:42,160
Speaker 1: in place, you would make an amazing comeback and suddenly

801
00:47:42,200 --> 00:47:46,200
Speaker 1: all these deficits that we're looking at become a real concern. Worse,

802
00:47:46,480 --> 00:47:49,920
Speaker 1: much worse. Uh well, interest rates will be a lot

803
00:47:50,040 --> 00:47:52,520
Speaker 1: higher and uh, deficits will be so it will be

804
00:47:52,520 --> 00:47:55,520
Speaker 1: a completely different scenario. But hey, look, if I have

805
00:47:55,600 --> 00:47:57,520
Speaker 1: to change my views, I'll do that. I mean again,

806
00:47:57,560 --> 00:48:00,080
Speaker 1: I'm I'm not stuck to theory. I'm not stuck to

807
00:48:00,400 --> 00:48:04,800
Speaker 1: uh right or wrong. I'm I just do bullush or bearish. Huh.

808
00:48:05,040 --> 00:48:07,960
Speaker 1: That's quite fascinating. Um. There was one of the questions

809
00:48:08,000 --> 00:48:12,000
Speaker 1: I wanted to ask you about the market cycle, and

810
00:48:13,440 --> 00:48:16,160
Speaker 1: you you almost addressed it before. What I want to

811
00:48:16,200 --> 00:48:20,480
Speaker 1: bring it back to this. So here we are. The

812
00:48:20,560 --> 00:48:23,280
Speaker 1: market made its lows in March O nine, it made

813
00:48:23,360 --> 00:48:29,480
Speaker 1: new highs and uh, the economy continues to expand. However,

814
00:48:29,560 --> 00:48:34,719
Speaker 1: we're starting to see the average job creation slide a

815
00:48:34,719 --> 00:48:37,080
Speaker 1: little bit. You go back five years and we were

816
00:48:37,120 --> 00:48:40,160
Speaker 1: doing two fifty a month, and then tune a quarter

817
00:48:40,239 --> 00:48:43,680
Speaker 1: into twenty. Now we're on on track to doing UM

818
00:48:43,760 --> 00:48:47,040
Speaker 1: something like one sixty five a month. And we're recording

819
00:48:47,080 --> 00:48:54,040
Speaker 1: this after a disappointing hundred and ten thousand UM scenario.

820
00:48:55,280 --> 00:48:59,840
Speaker 1: Is the economy cooling off? What does this mean for inflation?

821
00:49:00,120 --> 00:49:03,120
Speaker 1: What does this mean for stock markets? Well, and in

822
00:49:03,160 --> 00:49:06,200
Speaker 1: the past, when the unemployment rate was this slow, we

823
00:49:06,239 --> 00:49:09,200
Speaker 1: would have a boom. I mean, companies would scramble to

824
00:49:09,320 --> 00:49:12,640
Speaker 1: higher workers, to be paying much higher wages, they'd be

825
00:49:12,680 --> 00:49:16,160
Speaker 1: expanding their capacity, and inflation would take off. The FED

826
00:49:16,200 --> 00:49:20,480
Speaker 1: with tight than you have a recession. Uh, the old days,

827
00:49:20,520 --> 00:49:23,759
Speaker 1: the old days. Right now, we've got a very tight

828
00:49:23,840 --> 00:49:27,040
Speaker 1: labor market, but we're not seeing wage inflation take off.

829
00:49:28,080 --> 00:49:29,640
Speaker 1: I think that seems to be the key to a

830
00:49:29,680 --> 00:49:34,640
Speaker 1: lot of future issues. Look, both both policy and I'm

831
00:49:34,680 --> 00:49:37,200
Speaker 1: I'm I'm sixty eight. I just wrote a book about

832
00:49:37,239 --> 00:49:40,040
Speaker 1: the past forty years, and I hope to write another

833
00:49:40,040 --> 00:49:42,399
Speaker 1: book about the next forty years or twenty years or whatever.

834
00:49:44,320 --> 00:49:48,400
Speaker 1: I'm granted, but I haven't had a pay increase in

835
00:49:48,480 --> 00:49:53,120
Speaker 1: about ten, maybe twenty years. There's a lot of baby

836
00:49:53,120 --> 00:49:56,680
Speaker 1: boomers that made a lot of money in their careers

837
00:49:56,880 --> 00:50:00,160
Speaker 1: from you know, I'm making a lot more money out

838
00:50:00,200 --> 00:50:02,880
Speaker 1: that I was making when I was first starting the business.

839
00:50:03,360 --> 00:50:05,440
Speaker 1: But the reality is, I think there's a lot of

840
00:50:05,440 --> 00:50:10,040
Speaker 1: baby boomers just aren't retiring and they're not getting paid

841
00:50:10,040 --> 00:50:13,280
Speaker 1: increases because they're getting paid enough, and in some cases,

842
00:50:13,600 --> 00:50:16,520
Speaker 1: uh their pay is going down because but they still

843
00:50:16,520 --> 00:50:19,040
Speaker 1: want to work. Uh So, how much of this is

844
00:50:19,080 --> 00:50:23,200
Speaker 1: just a hangover from the Great Financial Crisis and a

845
00:50:23,280 --> 00:50:26,359
Speaker 1: loss of people feel like, Hey, I lost a good

846
00:50:26,400 --> 00:50:29,720
Speaker 1: couple of years before and after that, I can't retire.

847
00:50:29,760 --> 00:50:33,440
Speaker 1: I have to keep working. I think that's well, I

848
00:50:33,440 --> 00:50:35,200
Speaker 1: think we're well past that. I think people that are

849
00:50:35,239 --> 00:50:37,160
Speaker 1: working now. I think a lot of baby boomers that

850
00:50:37,160 --> 00:50:40,200
Speaker 1: are still working really do want to work. Um So,

851
00:50:40,239 --> 00:50:42,560
Speaker 1: this isn't I have to work because I need to.

852
00:50:42,719 --> 00:50:45,799
Speaker 1: This is Hey, I like working and it gives me

853
00:50:46,680 --> 00:50:49,080
Speaker 1: not a purpose. I think some people are living longer

854
00:50:49,120 --> 00:50:53,040
Speaker 1: and uh, you know, some people can retire and play

855
00:50:53,080 --> 00:50:57,440
Speaker 1: golf and tennis and uh go travel around the world.

856
00:50:58,320 --> 00:51:01,160
Speaker 1: I personally can't do that. I mean, I need to

857
00:51:01,160 --> 00:51:03,960
Speaker 1: be working, I need to be thinking, keep keep keep

858
00:51:04,000 --> 00:51:07,359
Speaker 1: my mind going. I love this business because I don't

859
00:51:07,360 --> 00:51:09,960
Speaker 1: know if any business that kind of keeps you so

860
00:51:10,320 --> 00:51:12,879
Speaker 1: focused on current events and thinking about how the world

861
00:51:12,880 --> 00:51:16,840
Speaker 1: actually works. So so let's let's stay with the issue

862
00:51:16,880 --> 00:51:19,640
Speaker 1: of wages. You said your wages. Have your personal wages

863
00:51:20,080 --> 00:51:24,719
Speaker 1: flat for a decade. I'm not complaining, but but lots

864
00:51:24,800 --> 00:51:28,080
Speaker 1: of people's wages have been flat for several decades. Well,

865
00:51:28,280 --> 00:51:31,120
Speaker 1: what does this mean? They're real wages? Yeah, there there's

866
00:51:31,120 --> 00:51:33,000
Speaker 1: a there's a section in the book where I focus

867
00:51:33,040 --> 00:51:36,640
Speaker 1: on predicting the consumers and predicting demography, in which I

868
00:51:36,840 --> 00:51:41,800
Speaker 1: I think I may I convinced myself that the notion

869
00:51:41,920 --> 00:51:46,000
Speaker 1: that real incomes have been stagnant, uh for the past

870
00:51:46,080 --> 00:51:49,120
Speaker 1: fifteen years. It just doesn't jibe with with with with

871
00:51:49,200 --> 00:51:51,960
Speaker 1: the data. Uh. Now, when you say the data, I

872
00:51:52,040 --> 00:51:54,959
Speaker 1: want to really get into this little bit. I don't

873
00:51:54,960 --> 00:51:57,680
Speaker 1: have any doubt that the quality of life for people

874
00:51:57,719 --> 00:52:02,440
Speaker 1: has gone up significantly even as their wages have remained well.

875
00:52:02,480 --> 00:52:09,560
Speaker 1: That's the flat earth concept is based entirely on a

876
00:52:09,640 --> 00:52:14,760
Speaker 1: series that's produced annually by the Census Bureau on money income,

877
00:52:15,280 --> 00:52:18,399
Speaker 1: where they ask people about their money income. They don't

878
00:52:18,440 --> 00:52:22,200
Speaker 1: ask them about uh, non money sources of income, so

879
00:52:22,360 --> 00:52:26,040
Speaker 1: entitling programs social securities in there but not medicare not

880
00:52:26,200 --> 00:52:31,040
Speaker 1: medicaid UM. There's just a huge discrepancy between personal income,

881
00:52:31,280 --> 00:52:36,319
Speaker 1: which is available monthly. But the problem is where when

882
00:52:36,360 --> 00:52:39,320
Speaker 1: you look at median, the census data is a median.

883
00:52:39,760 --> 00:52:41,960
Speaker 1: I can't give you a median and personal income. I

884
00:52:41,960 --> 00:52:44,960
Speaker 1: can give you an a mean, I can give you

885
00:52:45,040 --> 00:52:47,319
Speaker 1: an average, but I can't give you that you know

886
00:52:47,960 --> 00:52:50,160
Speaker 1: the family in the middle. But when you look at

887
00:52:50,160 --> 00:52:54,719
Speaker 1: the average, it's it's up like in real terms over

888
00:52:54,760 --> 00:52:58,160
Speaker 1: the per household UM. And by the way, I believe

889
00:52:58,200 --> 00:53:02,800
Speaker 1: household is the best measure for measuring standard of living.

890
00:53:02,880 --> 00:53:05,239
Speaker 1: My kids have a great standard of living. I wish

891
00:53:05,280 --> 00:53:09,680
Speaker 1: I lived as well as they did. Uh, But the

892
00:53:10,960 --> 00:53:15,759
Speaker 1: data for average real incomes is up. Like whether use

893
00:53:15,840 --> 00:53:19,319
Speaker 1: personal income, If use average hourly earnings, UH, you're you're

894
00:53:19,360 --> 00:53:22,720
Speaker 1: up about as much. So I think there's for some reason,

895
00:53:22,760 --> 00:53:26,080
Speaker 1: there's been this focus on this one data series. And

896
00:53:26,280 --> 00:53:30,000
Speaker 1: Trump mentioned it when when he was running for president,

897
00:53:30,080 --> 00:53:33,680
Speaker 1: that people's earnings have stagnated. The data just doesn't show

898
00:53:33,719 --> 00:53:35,920
Speaker 1: that consumption is at an all time record high, no

899
00:53:36,600 --> 00:53:39,840
Speaker 1: doubt about that, and son the stores closed consumption continues

900
00:53:39,840 --> 00:53:42,520
Speaker 1: to rise. Yeah, yeah, So how much of that is

901
00:53:42,640 --> 00:53:46,400
Speaker 1: healthcare spending and how much of that is um goods

902
00:53:46,400 --> 00:53:49,640
Speaker 1: and services that aren't related. It's really all of the above,

903
00:53:50,160 --> 00:53:52,239
Speaker 1: you know, I mean, standards are living have gone up

904
00:53:53,160 --> 00:53:57,360
Speaker 1: across the board. So if there was one area that

905
00:53:57,360 --> 00:54:00,960
Speaker 1: that you had one magic wish to fix in the

906
00:54:01,040 --> 00:54:05,000
Speaker 1: economy and public policy and what have you, what would

907
00:54:05,000 --> 00:54:07,480
Speaker 1: that be? Because I know you think about these things

908
00:54:07,600 --> 00:54:14,200
Speaker 1: long and hard. Well, um, you know, I I'd like

909
00:54:14,280 --> 00:54:19,920
Speaker 1: to believe the supply siders that you cut taxes and

910
00:54:20,000 --> 00:54:23,919
Speaker 1: you're gonna get a lot more work and a lot

911
00:54:23,960 --> 00:54:26,480
Speaker 1: more income and it will kind of pay for itself.

912
00:54:27,840 --> 00:54:30,440
Speaker 1: I sent some skepticism on your part in the way

913
00:54:30,480 --> 00:54:33,480
Speaker 1: you framed that. Well, it's it's it's faith based economics,

914
00:54:34,040 --> 00:54:38,960
Speaker 1: you know, and it hasn't. It always unleashes some animal spirits,

915
00:54:38,960 --> 00:54:41,680
Speaker 1: but it rarely pays. It never seems to pay for. Well,

916
00:54:41,680 --> 00:54:46,239
Speaker 1: that's because uh, you know, maybe the policy the politicians

917
00:54:46,320 --> 00:54:48,279
Speaker 1: used that as an excuse is like, well, we can

918
00:54:48,280 --> 00:54:51,640
Speaker 1: go ahead and increase entilement programs and uh not means

919
00:54:51,680 --> 00:54:56,000
Speaker 1: test them and not worry about all these pensions. Uh

920
00:54:56,080 --> 00:55:00,440
Speaker 1: you know, I mean school teachers are basically strike in

921
00:55:00,520 --> 00:55:04,680
Speaker 1: some states because they're not getting paid enough, uh, where

922
00:55:04,760 --> 00:55:07,359
Speaker 1: they literally have had no raises for tanks. And then

923
00:55:07,400 --> 00:55:11,120
Speaker 1: we have to we have a situation in Flint, Michigan,

924
00:55:11,120 --> 00:55:14,319
Speaker 1: where the water supply has been polluted and a lot

925
00:55:14,360 --> 00:55:19,400
Speaker 1: of that is because we we have this amazing concept

926
00:55:19,440 --> 00:55:23,080
Speaker 1: that you're entitled to retire. Uh and if you're a

927
00:55:23,160 --> 00:55:26,520
Speaker 1: municipal worker, allowed to retire at a very early age,

928
00:55:27,000 --> 00:55:30,960
Speaker 1: and those bills are extremely expensive. It's one thing for

929
00:55:31,080 --> 00:55:33,879
Speaker 1: cops who take their life into their hands every time

930
00:55:33,880 --> 00:55:36,279
Speaker 1: they go to work, and the same with firemen, but

931
00:55:36,680 --> 00:55:40,600
Speaker 1: when you have clerical workers with these very generous pension funds,

932
00:55:40,640 --> 00:55:44,080
Speaker 1: although well, it's it's it's it's generally yeah, exactly, I

933
00:55:44,080 --> 00:55:49,200
Speaker 1: mean it's uh. I agree that an individual basis, people

934
00:55:49,239 --> 00:55:54,319
Speaker 1: who have risk risky professions, but you know, a lot

935
00:55:54,360 --> 00:55:56,760
Speaker 1: of a lot of municipal workers when they retire early,

936
00:55:56,840 --> 00:56:00,759
Speaker 1: get another job, and they get another pension, and maybe

937
00:56:00,800 --> 00:56:03,439
Speaker 1: we should consider that come back when you're sixty five,

938
00:56:03,480 --> 00:56:05,120
Speaker 1: and then we'll pay you the pension at that point.

939
00:56:06,000 --> 00:56:07,560
Speaker 1: I don't want to get a lot of people mad

940
00:56:07,560 --> 00:56:10,880
Speaker 1: at me here. But it's too late, I guess across

941
00:56:10,920 --> 00:56:14,240
Speaker 1: the line. But that is that is not a radical

942
00:56:15,239 --> 00:56:19,840
Speaker 1: philosophy that you're saying. And also, lots of these pension

943
00:56:19,880 --> 00:56:26,719
Speaker 1: funds they're wildly undefunded and it's questionable, that's right. I mean,

944
00:56:27,520 --> 00:56:31,879
Speaker 1: while a lot of uh, principal workers who retired years ago,

945
00:56:31,960 --> 00:56:35,920
Speaker 1: I've done extremely well. I think I think we're getting

946
00:56:35,960 --> 00:56:38,600
Speaker 1: to the point where the pension funds just the money

947
00:56:38,640 --> 00:56:41,200
Speaker 1: is just not there, and people have been made promises

948
00:56:41,239 --> 00:56:43,800
Speaker 1: that can't be delivered. Right, Charlie Elise has been running

949
00:56:43,800 --> 00:56:46,040
Speaker 1: about this for a while. I know I only have

950
00:56:46,120 --> 00:56:48,719
Speaker 1: you for a finite amount of time, So let me

951
00:56:48,760 --> 00:56:53,000
Speaker 1: get to some of my favorite questions. Um tell us

952
00:56:53,040 --> 00:57:00,000
Speaker 1: the most important thing that people don't know about you? Well, um,

953
00:57:00,000 --> 00:57:03,080
Speaker 1: there are a lot of things that are too personal

954
00:57:03,200 --> 00:57:06,640
Speaker 1: to to share, obviously, so I've only uh, that's why

955
00:57:06,680 --> 00:57:09,560
Speaker 1: I wrote a professional autobiographer. You know. It's it is

956
00:57:09,680 --> 00:57:13,560
Speaker 1: very professional. Uh and uh, I don't uh, I don't

957
00:57:13,560 --> 00:57:16,600
Speaker 1: say anything bad about anybody. I don't have any grudges

958
00:57:16,920 --> 00:57:21,160
Speaker 1: that that I settled in the book. I know grudges, No, not, No,

959
00:57:21,200 --> 00:57:27,200
Speaker 1: I've six hundred pages, not a single not a single thing. Um.

960
00:57:27,240 --> 00:57:29,760
Speaker 1: I would say what they don't mean not. What they

961
00:57:29,760 --> 00:57:31,480
Speaker 1: don't know about me is I'm working on my second

962
00:57:31,520 --> 00:57:34,560
Speaker 1: book already already they already. God, it took me like

963
00:57:34,680 --> 00:57:37,680
Speaker 1: five years before I can even think, well, this this

964
00:57:37,920 --> 00:57:40,800
Speaker 1: is the this book. I is the book that I

965
00:57:40,800 --> 00:57:44,240
Speaker 1: I had to write just because I you know, I've

966
00:57:44,320 --> 00:57:46,600
Speaker 1: learned so much over forty years. Just not to do

967
00:57:46,640 --> 00:57:50,880
Speaker 1: it was it would be a shame. The book I'm

968
00:57:50,920 --> 00:57:52,560
Speaker 1: working on now is the one I want to write.

969
00:57:52,920 --> 00:57:56,680
Speaker 1: It's more philosophical, It's more more about what I've learned

970
00:57:56,680 --> 00:58:02,720
Speaker 1: philosophically about about things. And it's called the the Theft

971
00:58:02,760 --> 00:58:08,160
Speaker 1: of Nations, a trademark that before someone grabs it well

972
00:58:09,120 --> 00:58:11,880
Speaker 1: with book titles, there's already that already there anybody who

973
00:58:12,000 --> 00:58:13,840
Speaker 1: us there already is a book of that. But it's uh,

974
00:58:14,000 --> 00:58:18,560
Speaker 1: basically the capitalist ideal and its corruption. Capitalism makes so

975
00:58:18,640 --> 00:58:23,240
Speaker 1: much sense, entrepreneurial capitalism. I'm an entrepreneurial capitalist. It makes

976
00:58:23,240 --> 00:58:26,920
Speaker 1: so much sense that it benefits consumers, and consumers are

977
00:58:26,960 --> 00:58:29,880
Speaker 1: the only class that we really should care about. So

978
00:58:30,080 --> 00:58:33,480
Speaker 1: why does it constantly get corrupted? Why why can't we

979
00:58:33,520 --> 00:58:37,680
Speaker 1: stick with it? And so that's what they don't know

980
00:58:37,720 --> 00:58:41,280
Speaker 1: about because I'm writing another book. That's that's interesting. Tell

981
00:58:41,360 --> 00:58:45,080
Speaker 1: us about some of your early mentors you're already mentioned, uh,

982
00:58:45,200 --> 00:58:48,440
Speaker 1: Mr Smith? Who else were? Well? Again? Greg Smith and

983
00:58:48,960 --> 00:58:52,640
Speaker 1: Jim Maltz were my mentors on the investment strategy side.

984
00:58:52,720 --> 00:58:56,320
Speaker 1: But my role model I never worked with him was

985
00:58:56,400 --> 00:59:00,120
Speaker 1: Henry Kaufman Henry Coffin. It was the chief economy that

986
00:59:00,600 --> 00:59:03,560
Speaker 1: Solomon Brothers highly regarded in the seventies, helped to save

987
00:59:03,640 --> 00:59:07,440
Speaker 1: New York City, Right, Yeah, I think I believe so. Um.

988
00:59:07,480 --> 00:59:12,040
Speaker 1: But when I was a graduate student, UM, I was

989
00:59:13,200 --> 00:59:19,520
Speaker 1: impressed by how he had taken economics and you use

990
00:59:19,600 --> 00:59:22,280
Speaker 1: that for a very successful career on Wall Street, And

991
00:59:22,320 --> 00:59:25,440
Speaker 1: that's very much appealed to me. Uh And in a

992
00:59:25,480 --> 00:59:27,960
Speaker 1: lot of the ways he looked at things using a

993
00:59:27,960 --> 00:59:31,960
Speaker 1: flow of funds approach is kind of the way I started. UM.

994
00:59:32,000 --> 00:59:34,840
Speaker 1: But I developed my own tools that worked better for

995
00:59:34,880 --> 00:59:37,439
Speaker 1: me than the ones who worked for him. Who who

996
00:59:37,480 --> 00:59:45,720
Speaker 1: else influenced your approach to economics and investment. Well, I

997
00:59:45,720 --> 00:59:48,960
Speaker 1: I think that's it. I mean it's not really Uh

998
00:59:49,000 --> 00:59:50,640
Speaker 1: it's one and the same. It's kind of one and

999
00:59:50,680 --> 00:59:53,880
Speaker 1: the same. Tell Us about some of your favorite books

1000
00:59:53,960 --> 01:00:01,360
Speaker 1: be the fiction nonfiction market related? Yeah? You know? Uh

1001
01:00:01,480 --> 01:00:04,640
Speaker 1: I yes, Uh I like history a lot of quite

1002
01:00:04,640 --> 01:00:09,960
Speaker 1: a bit. Uh And because uh I am so involved

1003
01:00:10,040 --> 01:00:12,960
Speaker 1: and fascinated by but what I do for a living,

1004
01:00:13,040 --> 01:00:15,200
Speaker 1: my my day job, I read a lot of stuff

1005
01:00:15,200 --> 01:00:18,000
Speaker 1: that's that's relevant to to that. So I really like

1006
01:00:18,080 --> 01:00:23,800
Speaker 1: reading biographies, autobiography. So I really enjoyed um Ben Bernanke's

1007
01:00:24,000 --> 01:00:28,919
Speaker 1: uh book The Courage to Act. Um. You know, there's

1008
01:00:28,960 --> 01:00:34,200
Speaker 1: been books written by and about Alan Greenspan. Um, so

1009
01:00:34,240 --> 01:00:37,000
Speaker 1: those have been some of my relatively recent reads. And

1010
01:00:37,720 --> 01:00:41,840
Speaker 1: Turbulence was that spans age age of turbulence. Uh. I

1011
01:00:41,920 --> 01:00:46,440
Speaker 1: also um like uh watching watching movies. But I I've

1012
01:00:46,480 --> 01:00:49,760
Speaker 1: started to really get into some of these uh docu dramas.

1013
01:00:49,800 --> 01:00:54,320
Speaker 1: And there's uh there's one about the men who uh

1014
01:00:55,960 --> 01:01:00,160
Speaker 1: kind of overcame the American Frontier. It's about frontiersman. It's

1015
01:01:00,160 --> 01:01:06,600
Speaker 1: fascinating how a few individuals really sort of opened up

1016
01:01:06,920 --> 01:01:12,080
Speaker 1: the American continent. They unfortunately, uh, displaced a lot of

1017
01:01:12,920 --> 01:01:15,360
Speaker 1: native tribes here and uh there was a lot of

1018
01:01:15,360 --> 01:01:19,960
Speaker 1: wars that we're just in. Massacres were awful but fascinating.

1019
01:01:20,160 --> 01:01:23,400
Speaker 1: Uh to watch some of the docu dramas. What excites

1020
01:01:23,440 --> 01:01:29,000
Speaker 1: you about the markets right now? Well, I would say

1021
01:01:29,040 --> 01:01:34,400
Speaker 1: that the drama is always exciting. I mean it was

1022
01:01:34,440 --> 01:01:37,880
Speaker 1: getting kind of dull there in two thousand and seventeen.

1023
01:01:40,480 --> 01:01:45,680
Speaker 1: It was a day with volatility and yeah, and and

1024
01:01:45,840 --> 01:01:49,240
Speaker 1: um I was you know, I mean for me it

1025
01:01:49,320 --> 01:01:51,320
Speaker 1: was it was fortunate because I could focus on my

1026
01:01:51,360 --> 01:01:55,600
Speaker 1: book without having to suddenly scramble to learn about something

1027
01:01:55,640 --> 01:01:58,320
Speaker 1: that was occurring. And now all of a sudden, I'm

1028
01:01:58,360 --> 01:02:01,480
Speaker 1: scrambling to kind of you would have I know about

1029
01:02:01,480 --> 01:02:04,600
Speaker 1: trade and uh those kind of issues. So the I

1030
01:02:04,640 --> 01:02:07,960
Speaker 1: mean Trump right now is a fascinating character. I mean

1031
01:02:08,200 --> 01:02:09,920
Speaker 1: I love him or hate him again, I don't do.

1032
01:02:10,200 --> 01:02:13,120
Speaker 1: He's not boring. He's not boring, right, I canantee you that. Yeah,

1033
01:02:13,160 --> 01:02:16,080
Speaker 1: I mean sometimes I just you know, he really should

1034
01:02:16,120 --> 01:02:21,000
Speaker 1: have just stop tweeting. He should have like gone gone

1035
01:02:21,000 --> 01:02:23,720
Speaker 1: and take a vacation after the tax cut and just

1036
01:02:23,800 --> 01:02:26,080
Speaker 1: kind of winged it until the mid term elections. But

1037
01:02:26,120 --> 01:02:30,200
Speaker 1: he just can't. He can't stop, he can't compulsive, There's

1038
01:02:30,240 --> 01:02:33,520
Speaker 1: no doubt about it. I'm shocked that he finally came

1039
01:02:33,560 --> 01:02:35,920
Speaker 1: out and said something about Stormy Daniels because he had

1040
01:02:35,960 --> 01:02:39,400
Speaker 1: been radio silent on that for while the whole thing

1041
01:02:39,520 --> 01:02:43,080
Speaker 1: was unfolding. You know, he is something had to come

1042
01:02:43,080 --> 01:02:49,200
Speaker 1: out eventually. Well again, I think, you know, we live

1043
01:02:49,240 --> 01:02:52,760
Speaker 1: in interesting times. We always do. And you know saying

1044
01:02:52,760 --> 01:02:56,080
Speaker 1: a president that you know, one month can give you

1045
01:02:56,360 --> 01:03:00,840
Speaker 1: extraordinary bullish policies of cutting taxes and and one a

1046
01:03:00,880 --> 01:03:03,880
Speaker 1: month or two later start to talk about protectionism, and

1047
01:03:03,920 --> 01:03:08,360
Speaker 1: suddenly that's extremely bearish, it's wild, it's it makes for

1048
01:03:08,600 --> 01:03:11,000
Speaker 1: very interesting times. Let me push back on that a

1049
01:03:11,120 --> 01:03:14,760
Speaker 1: touch because I have I have friends who are investors

1050
01:03:15,320 --> 01:03:20,200
Speaker 1: on both sides of the aisle, and collectively they seem shocked,

1051
01:03:20,760 --> 01:03:25,800
Speaker 1: shocked to discover gambling going on. He's been talking, he

1052
01:03:26,000 --> 01:03:31,960
Speaker 1: campaigned like who is what did they think? Well, he's

1053
01:03:32,000 --> 01:03:34,360
Speaker 1: just kidding. What's unusual about him is he's going through

1054
01:03:34,360 --> 01:03:37,040
Speaker 1: a checklist. And you know, I mean if you go

1055
01:03:37,480 --> 01:03:40,760
Speaker 1: and read his speech on his campaign speech on trade,

1056
01:03:41,240 --> 01:03:42,920
Speaker 1: it's all he's just going through this. This is it

1057
01:03:43,080 --> 01:03:46,600
Speaker 1: he's he's doing it. That's why I'm always surprised when

1058
01:03:46,600 --> 01:03:50,240
Speaker 1: people say, well, the market wasn't prepared for this. Really,

1059
01:03:50,280 --> 01:03:53,600
Speaker 1: did you not see eighties six speeches where this exact

1060
01:03:53,640 --> 01:03:55,960
Speaker 1: thing was laid out. Well, you know, we we kind

1061
01:03:55,960 --> 01:04:00,120
Speaker 1: of got who kind of got slow and lazy in

1062
01:04:00,160 --> 01:04:02,920
Speaker 1: two thousands seventeen. I mean, I guess that he came

1063
01:04:02,960 --> 01:04:05,760
Speaker 1: after healthcare and that fell apart, so everybody figured that

1064
01:04:06,120 --> 01:04:09,440
Speaker 1: that was much harder though, when everybody taking a taking

1065
01:04:09,440 --> 01:04:13,040
Speaker 1: an entitlement away is very challenged. But the result was

1066
01:04:13,080 --> 01:04:15,880
Speaker 1: everybody figured that his agenda was dead, that he couldn't

1067
01:04:15,920 --> 01:04:18,240
Speaker 1: get anything through, and all of a sudden, we're all

1068
01:04:18,240 --> 01:04:22,520
Speaker 1: we're mostly on vacation, and December twenty two we pass

1069
01:04:22,560 --> 01:04:28,280
Speaker 1: this amazing tax tax legislation. And by the way it's

1070
01:04:28,440 --> 01:04:31,400
Speaker 1: ultimate impact, it's kind of confusing. It may already actually

1071
01:04:31,720 --> 01:04:35,480
Speaker 1: be depressing New York and California and other other places

1072
01:04:35,520 --> 01:04:40,439
Speaker 1: where high tax states, high high abductible states are. We

1073
01:04:40,480 --> 01:04:43,680
Speaker 1: probably find that whatever stimulus it provides to some people

1074
01:04:44,000 --> 01:04:47,160
Speaker 1: are offset by the tax increases to others. I just

1075
01:04:47,200 --> 01:04:50,160
Speaker 1: read that California, if it was a country, has now

1076
01:04:50,200 --> 01:04:53,760
Speaker 1: become the sixth largest economy in the world doesn't seem

1077
01:04:53,760 --> 01:04:57,440
Speaker 1: to be really having that bed of an effect. Although

1078
01:04:57,440 --> 01:04:59,680
Speaker 1: we really haven't seen the tax rep everything we're doing

1079
01:04:59,720 --> 01:05:05,080
Speaker 1: now for April fifteen, we won't really feel the tax

1080
01:05:05,160 --> 01:05:09,000
Speaker 1: hit until I don't, yeah, until I personally don't know

1081
01:05:09,040 --> 01:05:10,400
Speaker 1: what my texts are going to be in two thousand

1082
01:05:10,400 --> 01:05:13,320
Speaker 1: and eighteen, other than they're gonna be higher because you're

1083
01:05:13,320 --> 01:05:17,280
Speaker 1: in New York resident you actually live. Yeah, we're next

1084
01:05:17,280 --> 01:05:21,720
Speaker 1: to you, we're one town apart. Um. Let's talk about

1085
01:05:22,320 --> 01:05:24,080
Speaker 1: what you do for fun? What what do you do

1086
01:05:24,160 --> 01:05:25,880
Speaker 1: to relax? What do you do when you're out of

1087
01:05:25,880 --> 01:05:30,320
Speaker 1: the office too? Just sort of kicked back. My wife

1088
01:05:30,360 --> 01:05:34,360
Speaker 1: and I like to go see a movie every Friday night,

1089
01:05:34,440 --> 01:05:38,080
Speaker 1: so I'm not sure what she's gonna she She usually

1090
01:05:38,120 --> 01:05:41,400
Speaker 1: is the one who picks them so and I review them.

1091
01:05:41,480 --> 01:05:43,520
Speaker 1: What what has been the tell us the last three

1092
01:05:43,560 --> 01:05:47,320
Speaker 1: movies you saw? Well, the one that sticks side is

1093
01:05:47,320 --> 01:05:49,880
Speaker 1: actually the one that I won an Academy Award for

1094
01:05:49,960 --> 01:05:51,600
Speaker 1: something I'm not I don't recall what it was, but

1095
01:05:51,640 --> 01:05:54,400
Speaker 1: it wasn't for this Pictures called get Out. You know

1096
01:05:55,320 --> 01:05:59,320
Speaker 1: it's it's it's a comedy, it's sort of am it's

1097
01:05:59,360 --> 01:06:02,200
Speaker 1: it's it's a strange movie. It's a movie about a

1098
01:06:02,240 --> 01:06:07,120
Speaker 1: fellow who goes uh visits his girl girlfriend and uh

1099
01:06:09,000 --> 01:06:12,360
Speaker 1: his girlfriend's parents, and there's just something totally odd about

1100
01:06:12,360 --> 01:06:16,160
Speaker 1: the whole situation and everything suggests that he should just

1101
01:06:17,000 --> 01:06:19,120
Speaker 1: get the hell out of there as quickly as possible,

1102
01:06:19,560 --> 01:06:21,680
Speaker 1: and he just doesn't get the message. And I kind

1103
01:06:21,680 --> 01:06:23,480
Speaker 1: of try to relate that to the market is like,

1104
01:06:23,840 --> 01:06:27,960
Speaker 1: you know, sometimes just look around you. Uh. But in

1105
01:06:28,120 --> 01:06:30,360
Speaker 1: terms of what I really enjoy I like to play

1106
01:06:30,400 --> 01:06:34,160
Speaker 1: tennis quite a bit. But really yeah. But but but

1107
01:06:34,280 --> 01:06:36,240
Speaker 1: the problem is when I play with my wife, she's

1108
01:06:36,320 --> 01:06:39,560
Speaker 1: very competitive and I'm not, so she's always beating me.

1109
01:06:39,840 --> 01:06:44,480
Speaker 1: But I don't really get upset about that. But I

1110
01:06:44,520 --> 01:06:47,000
Speaker 1: think she's mad that I don't try to be more competitive.

1111
01:06:47,400 --> 01:06:49,800
Speaker 1: But I just do it for the exercise. It's a

1112
01:06:49,840 --> 01:06:51,880
Speaker 1: great sport. I've come to it late in life, and

1113
01:06:51,960 --> 01:06:54,640
Speaker 1: you know, it's fun. It's it's fun. It's um. When

1114
01:06:54,640 --> 01:06:58,080
Speaker 1: I started playing the next quarter over there are these

1115
01:06:58,080 --> 01:07:01,240
Speaker 1: four guys they have to be a hundred years old

1116
01:07:01,680 --> 01:07:05,919
Speaker 1: and there they play every week and they're great. That's

1117
01:07:05,920 --> 01:07:08,760
Speaker 1: the crazy thing is you don't have to run around

1118
01:07:08,800 --> 01:07:11,600
Speaker 1: like other sports you basically just have to be aware

1119
01:07:11,640 --> 01:07:16,480
Speaker 1: of where like playing basketball or well, I got my

1120
01:07:16,520 --> 01:07:19,560
Speaker 1: wife killed my basketball career in my late thirties. I

1121
01:07:19,640 --> 01:07:22,080
Speaker 1: rolled my ankle, came home and I was like, yeah,

1122
01:07:22,080 --> 01:07:26,880
Speaker 1: you're done. And that tends out to be pretty pretty accurate. Um,

1123
01:07:26,920 --> 01:07:31,080
Speaker 1: have you seen Ready Player one? That the book was wonderful,

1124
01:07:31,360 --> 01:07:34,320
Speaker 1: It just came out. I'm looking forward to to seeing

1125
01:07:34,360 --> 01:07:38,800
Speaker 1: that with my Mark tonight. I don't know how Spielberg

1126
01:07:39,080 --> 01:07:42,280
Speaker 1: is gonna take this. The whole film is essentially in it.

1127
01:07:42,400 --> 01:07:48,160
Speaker 1: The whole book is essentially exists in in a alternative world,

1128
01:07:49,000 --> 01:07:53,720
Speaker 1: cyberspace world, and there's an ongoing internal dialogue for the

1129
01:07:53,760 --> 01:07:56,120
Speaker 1: main character. It'll be interesting to see how he how

1130
01:07:56,120 --> 01:07:59,600
Speaker 1: he did that. What sort of advice would you give

1131
01:07:59,680 --> 01:08:03,600
Speaker 1: to a millennial or recent college graduate who said, hey,

1132
01:08:03,680 --> 01:08:08,280
Speaker 1: Dr Ed I'm thinking about going into market strategy or economics.

1133
01:08:08,520 --> 01:08:10,360
Speaker 1: Oh god, I mean you just set me up for

1134
01:08:10,600 --> 01:08:13,680
Speaker 1: for a commercially or read my book. I mean that's

1135
01:08:13,920 --> 01:08:19,479
Speaker 1: you know, throughout my career, I've had people ask me,

1136
01:08:19,560 --> 01:08:21,559
Speaker 1: you know what, what, what is there one book that

1137
01:08:21,600 --> 01:08:24,760
Speaker 1: they should read or that they should have their interns

1138
01:08:24,800 --> 01:08:29,479
Speaker 1: read really understand the markets? And uh, I think I

1139
01:08:29,479 --> 01:08:32,320
Speaker 1: had to write the book partly that to say, well,

1140
01:08:32,360 --> 01:08:35,599
Speaker 1: read my book that that's your answer. That's my answer

1141
01:08:35,640 --> 01:08:38,760
Speaker 1: is it's all in its crass commercialism, that it is

1142
01:08:38,800 --> 01:08:40,960
Speaker 1: what it is. It's all in there, and and tell

1143
01:08:41,040 --> 01:08:44,240
Speaker 1: us something you know about the world of markets investing

1144
01:08:44,320 --> 01:08:47,920
Speaker 1: in economics today that you wish you knew forty years

1145
01:08:47,920 --> 01:08:52,320
Speaker 1: ago when you were first starting. Well, I think this

1146
01:08:52,439 --> 01:08:57,880
Speaker 1: idea of just stay laser focused on bullet that you

1147
01:08:57,880 --> 01:09:01,760
Speaker 1: know that that well we really have to do in

1148
01:09:01,800 --> 01:09:07,280
Speaker 1: our business is just is it is focused on other events. Uh,

1149
01:09:07,320 --> 01:09:12,240
Speaker 1: policies our bullish or bearish, and that's just not at

1150
01:09:12,240 --> 01:09:14,080
Speaker 1: the macro level. That's you know, you can be looking

1151
01:09:14,479 --> 01:09:18,160
Speaker 1: at at companies as well, and you can be critical

1152
01:09:18,200 --> 01:09:21,400
Speaker 1: of management and the stock goes up anyways, and you

1153
01:09:21,439 --> 01:09:23,720
Speaker 1: have to really try to figure out what is it

1154
01:09:23,800 --> 01:09:27,000
Speaker 1: that the markets focus that's important to the market. Uh

1155
01:09:27,120 --> 01:09:32,040
Speaker 1: so don't it's it's I just I learned the wisdom

1156
01:09:32,080 --> 01:09:34,720
Speaker 1: of old adages like don't fight the market, let the

1157
01:09:34,720 --> 01:09:38,280
Speaker 1: trend be your friend. The best cure for high commodity

1158
01:09:38,320 --> 01:09:41,880
Speaker 1: prices is high commodity prices. You know, that's why they're

1159
01:09:41,920 --> 01:09:46,639
Speaker 1: old adages, because guys like me uh after a while,

1160
01:09:46,960 --> 01:09:50,880
Speaker 1: appreciate just how how much you wisdom. There's there. Well,

1161
01:09:50,920 --> 01:09:53,080
Speaker 1: this has been fascinating. Thank you so much, Ed, I

1162
01:09:53,080 --> 01:09:57,640
Speaker 1: appreciate your time. We have been speaking with Dr rd

1163
01:09:57,680 --> 01:10:01,479
Speaker 1: any of your any research an author of the new

1164
01:10:01,520 --> 01:10:06,439
Speaker 1: book Predicting the Market's a professional autobiography. If you enjoy

1165
01:10:06,560 --> 01:10:09,000
Speaker 1: this conversation, be sure and look up an Inch or

1166
01:10:09,080 --> 01:10:13,280
Speaker 1: down an Inch on Apple iTunes, overcast, SoundCloud, wherever you

1167
01:10:13,320 --> 01:10:15,800
Speaker 1: find your favorite podcasts, and you could see any of

1168
01:10:15,840 --> 01:10:19,840
Speaker 1: the other two hundred or so such conversations we've had.

1169
01:10:20,439 --> 01:10:24,519
Speaker 1: We love your comments, feedback and suggestions right to us

1170
01:10:24,560 --> 01:10:27,760
Speaker 1: at m IB podcast at Bloomberg dot net. You can

1171
01:10:27,840 --> 01:10:31,000
Speaker 1: check out my daily column on Bloomberg dot com. Follow

1172
01:10:31,040 --> 01:10:34,120
Speaker 1: me on Twitter at rid Halts. I would be remiss

1173
01:10:34,160 --> 01:10:36,679
Speaker 1: if I did not think our crack staff who helps

1174
01:10:36,720 --> 01:10:41,439
Speaker 1: to put together this conversation each week. Michael Batnick is

1175
01:10:41,520 --> 01:10:45,799
Speaker 1: my head of research. Taylor Riggs is our producer slash booker.

1176
01:10:46,520 --> 01:10:52,160
Speaker 1: Medina Partwana is our audio engineer slash producer. I'm Barry Ridhults.

1177
01:10:52,320 --> 01:10:56,040
Speaker 1: You've been listening to Masters in Business on Bloomberg Radio.

1178
01:11:00,479 --> 01:11:01,800
Speaker 1: Take the tent int