Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Welcome to the Marine Talks,
Speaker 1: Money market rap. What we talk about the biggest news
Speaker 1: in the markets this weekend? What is driving them? My
Speaker 1: Marine sums at Web UK Money editor at Large.
Speaker 2: I'm Joinstad, senior reports and author of them. I need
Speaker 2: to steal newsletter.
Speaker 1: All right, John, I've made a terrible mistake. I went
Speaker 1: on holiday.
Speaker 2: Yes, yes.
Speaker 1: I know, and not only did I leave you to
Speaker 1: all sorts of things about yourself and let's end, let's
Speaker 1: podcast alone. And I'm slightly concerned that someone might suddenly
Speaker 1: look around and go, why do we need her? He
Speaker 1: seems to do it just fine. But I'm hoping that
Speaker 1: won't happen. And you'll back me up if anyone says anything.
Speaker 2: You've seen them in here. I've lost in the last week.
Speaker 2: I think it's fairly safe to see that your job
Speaker 2: is safe.
Speaker 1: Yes, we just need to practice. You need to practice.
Speaker 1: Say things like I can't do it without her. She's vital,
Speaker 1: that kind of thing. Anyway. The problem is that while
Speaker 1: I've been away, so much has happened. So much has
Speaker 1: happened that I'm not even quite sure where I am anymore.
Speaker 2: It's been busy, yeah, a few weeks, but it mostly
Speaker 2: boils down to we guy borrowed too much money to
Speaker 2: bet on the I stalks and blew up his hedge fund.
Speaker 2: A hole load of South Koreans borrowed too much to
Speaker 2: bet on the ice stocks and blew up their stock market.
Speaker 2: But now everything's basically fine because everyone thinks that the
Speaker 2: Federal Reserve is biased towards cutting interest rates or at
Speaker 2: least keeping them where they are. And so now the
Speaker 2: market's getting all excited again because in their heads all
Speaker 2: the leverages out, which is not true at all. But
Speaker 2: this overheaning of the idea is kind of going to
Speaker 2: an extent. And meanwhile the feed is quite reluctant to
Speaker 2: these interest rates. And you've also got Scott Bessing, the
Speaker 2: US Treasury Secretary, trying to be basicly nudge Japan anti
Speaker 2: holding on into its US government debt and so keep
Speaker 2: intro streets kind of capped and hence easiest monetary policy campaigned.
Speaker 2: We you know, some people up, but we'll see if
Speaker 2: means everyone's excited. Oh yeah, and Ryan I ran.
Speaker 1: Back in politics.
Speaker 2: Yeah, okay, anyway, so that was a very gaalpeled No
Speaker 2: that was.
Speaker 1: That was a great summary. Word has happened. So basically
Speaker 1: everything is pretty much as it was when I left. Yeah, actually, yeah,
Speaker 1: the last two weeks are kind of irrelevant. Yeah, it's
Speaker 1: basically it's back to the exuberance. Back to exuberance, back
Speaker 1: to momentum, back to interest rates are going to stay low.
Speaker 1: Everything's going to be fine. Back to AI is the dream.
Speaker 1: Everyone's earnings are going to go berserk forever and it's
Speaker 1: going to brickichet out through the economy and we don't
Speaker 1: need to worry about anything until we are suddenly made extinct.
Speaker 2: Yeah, I see, Yeah, I think that's biasly it good
Speaker 2: business is usual business is you should go on holiday
Speaker 2: more often you come back.
Speaker 1: That's changed, everything has changed, and nothing has changed.
Speaker 2: I did feel so this this week. Guy Leonard ash
Speaker 2: and Berger I think was his name, But so he's
Speaker 2: he's ended up blowing up his hedge fund like the
Speaker 2: night before he gets married. And then, I mean, to
Speaker 2: be fair, he lived to fight another day. I mean,
Speaker 2: because he owns private steakes and all the big companies,
Speaker 2: but he also owned a load of public stuff and
Speaker 2: based on what happened is that he got kind of
Speaker 2: margin called because he borrowed too much. And then Ken Griffin,
Speaker 2: who is like a hedge fund tycoon and obviously a
Speaker 2: guy who's been around the block quite a lot, clearly
Speaker 2: said to him, Okay, son, I can buy your public
Speaker 2: equities off you, but you're going to have to give
Speaker 2: me them for a significant discount, presumable. That's what happened.
Speaker 2: So they did the deal, and he's fund has effectively survived.
Speaker 2: Apparently today he dropped another half a billion in one
Speaker 2: of the private companies and he's.
Speaker 1: So people are still giving him money and his new
Speaker 1: wife doesn't have cause to think she might have made
Speaker 1: a terrible mistake.
Speaker 2: No, no, no, I mean it need to be fair.
Speaker 2: If you can do something like that, you should do
Speaker 2: it in your twenties because that will stop you from
Speaker 2: doing it in your forties.
Speaker 1: Yeah, and the wedding venue still had all its bills paid.
Speaker 2: So everything, yeah exactly ends well, or is it?
Speaker 1: Or is it exactly? But the people you should worry
Speaker 1: about more. I had this conversation in another podcast earlier
Speaker 1: in the week. The people you should worry about it?
Speaker 1: Of course, it's the Korean retail investor caught up in
Speaker 1: a momentum rally in astoria is as old as market history,
Speaker 1: right over and over and over again. The retail investor
Speaker 1: ends up getting pulled into her she's momentum rally with
Speaker 1: borrowed money, they get a margin call, and it all
Speaker 1: collapses around them.
Speaker 2: On the one hand, there's all that personal responsibility stuff.
Speaker 2: On the other hand, you know, you kind of launch
Speaker 2: these two times leverage single stock ETFs a bull market,
Speaker 2: and you know, I I just think that sometimes the
Speaker 2: spade that's going against me a libertarian, I think guardriols
Speaker 2: are there for a reason, and if you're going to
Speaker 2: have them, then they should actually be imposed and play.
Speaker 2: The regulator should have at some point before these were launched, said,
Speaker 2: hang on a minute, this isn't a good idea.
Speaker 1: Yeah, I mean, it is definitely the case. You get
Speaker 1: caught in these momentum ranis towards the end and you
Speaker 1: do make permanent capital losses, don't you.
Speaker 2: Yeah, yeah, stuff.
Speaker 1: Doesn't necessarily come back. You don't get saved.
Speaker 2: And it's fine if you're you know, in your twenties
Speaker 2: and you can play make it back, But if you
Speaker 2: are in your forties or lost though somewhere on the
Speaker 2: retirement then that's a significant problem.
Speaker 1: The interesting one is gold, right, and that we'd be
Speaker 1: obviously we follow God relentlessly here and silver and having
Speaker 1: had a very torrent time falling off their highs, then
Speaker 1: I both bouncing back quite quite nicely. And I assume,
Speaker 1: as you said earlier, that's partly to do with interest rates.
Speaker 1: It's partly to do would you politics. I think central
Speaker 1: banks are still buying, So the current central bank has
Speaker 1: been buying, et cetera. So the story that we were
Speaker 1: hearing and telling at the beginning of the year remained
Speaker 1: basically intact.
Speaker 2: I was talking to Simon White, who's the Bloomberd macro
Speaker 2: strategies for one of the podcasts while You're Away, and
Speaker 2: he was kind of making the point and a degreebium
Speaker 2: that obviously gold had reached that it had become a
Speaker 2: momentum trade at the start of the year, so a
Speaker 2: lot of that needed to be blowing off anyway. But
Speaker 2: then you've got Iran breaking out, you get the fear
Speaker 2: that inflation's going to go up there for interest rates
Speaker 2: are going to go up, and you kind of notice
Speaker 2: that gold's basically unusually traded in the opposite direction at
Speaker 2: oil since the war's been going on. So I think
Speaker 2: that definitely this week that I mean, they kind of
Speaker 2: cease fire coming back and they play helped. But I
Speaker 2: do think it's this thing of people deciding that the
Speaker 2: Kevin Walsh fed is going to be an easy money wan.
Speaker 2: I mean, I mean a lot of that is on
Speaker 2: the basis I think more of their own kind of
Speaker 2: wishful thinking, our biases. I mean, I think they're very right,
Speaker 2: but I'm not sure where the kind of fool evidence
Speaker 2: for this is. But you know, it kind of seems
Speaker 2: to make sense, and everyone's happy with that story.
Speaker 1: So but that's a treasure. Ills are still high, aren't they.
Speaker 1: And that's the other thing that happened when I was away.
Speaker 1: So this sharp rise, relatively sharp rise in treasury ill Yeah,
Speaker 1: I mean.
Speaker 2: I think that. I guess I says one reason why
Speaker 2: why people are starting they make the easy money connection,
Speaker 2: because we've got Scott Person, the US equivalent of the
Speaker 2: Chancellor kind of going out to Japan and getting together
Speaker 2: with the Japanese Chancellor and saying we're not going to
Speaker 2: let the en get any weaker. And the whole US
Speaker 2: angle there is Japan's the largest foreign holder the US treasuries.
Speaker 2: If Japan is getting stressed about the n being way,
Speaker 2: which it is because the voters are starting to get
Speaker 2: irritated by inflation.
Speaker 1: Yeah, they didn't mind a little bit of inflation, but
Speaker 1: not too.
Speaker 2: Much, yeah, exactly, especially after being I mean, that's the
Speaker 2: other interesting about that is it shows just how agreeable
Speaker 2: mild deflation is for consumers. It might make everyone else miserable,
Speaker 2: but you know, the Japanese people have been pretty happy
Speaker 2: I think for the despite the lost decades and all
Speaker 2: the rest of it. But so getting back to the
Speaker 2: point about the weekend, if the Japanese need to defend
Speaker 2: the end, and one way to do it is to
Speaker 2: sell US treasuries, and of course what Besson's done, as
Speaker 2: he said, look, rather than selling the treasuries, you can
Speaker 2: use them as collateral with the FED to borrow US dollars,
Speaker 2: which you can then you know, sell and strengthen the
Speaker 2: end that way, and it means that you don't end
Speaker 2: up driving up the yield on US treasuries. So the
Speaker 2: fact that they're worried about that, I think is kind
Speaker 2: of tipping people back towards the kind of financial repression
Speaker 2: PAM argument against a positive of gold.
Speaker 1: I suppose speaking of financial oppression and you're you're a
Speaker 1: desperate desire for there to be more of it in
Speaker 1: the UK, right, or for people to be people to
Speaker 1: be forced to say thank you for their tax relief
Speaker 1: inside their rapids by buying, by buying appression, not quite
Speaker 1: financial oppression, but it's a similar it's a similar thing,
Speaker 1: you know, being forced to do particular things with your money.
Speaker 1: And I agree with you on this, by the way,
Speaker 1: I agree with you. I think it should happen, but
Speaker 1: it does fall under the wider umbrella of financial oppression
Speaker 1: every time you are and it's not quite forced, is it,
Speaker 1: but heavily nuts not doing something. It's a type of it.
Speaker 2: Doesn't know we're talking about pushing domestic savers money into
Speaker 2: the UK stock market and doing it by restricting tax breaks,
Speaker 2: are making them a bit less generous and a bit
Speaker 2: less widespread, or even just making better once for investing
Speaker 2: in the UK. But I think the difference for this,
Speaker 2: and that's the one person who changed my mind on this,
Speaker 2: with Simon French over at Panier Liborom who's quite often
Speaker 2: on a podcast, and this point was just that it
Speaker 2: would be one thing if everyone else did it the
Speaker 2: way we do it, but they don't. You know, it's
Speaker 2: kind of we've basically unilaterally disarmed and you can't really
Speaker 2: do that in a world where capital is kind of
Speaker 2: pretty free flowing still and then expect the not to
Speaker 2: be consequences. So if we want to have a stock
Speaker 2: market left and I do, I think increasingly, I really do,
Speaker 2: mean that's you need a source of long term domestic
Speaker 2: capital because otherwise it's just short term money and passive
Speaker 2: funds and private equity predators basically, and it's getting you know,
Speaker 2: I mean two stocks today, two fifty stocks today gone
Speaker 2: going pretty much on.
Speaker 1: The plus side. That means that fifty has been on
Speaker 1: the face of it very well.
Speaker 2: Absolutely, it's hit a new records.
Speaker 1: Silver linings, silver Linings.
Speaker 2: The good time of this is is kind of a
Speaker 2: win win for for private investors in the in the
Speaker 2: short term. But you know, you ow in the UK
Speaker 2: and if ends up just being an investment trust that's
Speaker 2: closing down and like we're dating it now, have been great, okay,
Speaker 2: so you you profit from the discount closing, but preferably
Speaker 2: it would be turned back into an actual machine that
Speaker 2: enables companies to grow and you know, rewards companies for
Speaker 2: long term value creation rather than just kicking them around
Speaker 2: based on short term moves elsewhere.
Speaker 1: Yeah, And what we'd really like to say, of course,
Speaker 1: is stamp duty being abolished so that you can trade
Speaker 1: equities tax free in the UK like you can pretty
Speaker 1: much everywhere else in the world. But it's a difficult
Speaker 1: political environment that that, isn't it, because people will will
Speaker 1: present that as a tax relief for the rich, getting
Speaker 1: that pretty much everyone in the UK is an equity
Speaker 1: investor via their defined contribution pension.
Speaker 2: Yeah, I mean I think the problem is with that
Speaker 2: is Yeah, that's purely calm because the actual amount of
Speaker 2: money is about bout three and a half billion nothing,
Speaker 2: and there is buttons and it's going to automatically get
Speaker 2: lower because the bigger companies, I mean, Astrosenic has already
Speaker 2: got a dual lesson in the US that effectively means
Speaker 2: nobody does actually have to pay that duty and you
Speaker 2: can see you know, other companies doing.
Speaker 1: That's bad happening with glen Core, isn't it.
Speaker 2: Well, I don't know if I mean, Glen's going to
Speaker 2: get a secondary lesson in Australia, and I guess I say,
Speaker 2: you're right, probably I probably could be. It couldn't.
Speaker 1: Yeah, everyone world, Well, yeah, why would you not? Why
Speaker 1: would you pay half a percent every time you buy
Speaker 1: and sell it and did in the UK and you
Speaker 1: could just do it somewhere else and not pay that.
Speaker 2: Yeah, And I mean I suppose that important thing is
Speaker 2: the more foots one hundred companies that do it. They
Speaker 2: are we are mostly the stamp duty comes from. I
Speaker 2: think Astra alone accounted for something like two hundred million
Speaker 2: out of the three point five billion, So it's going
Speaker 2: to be a diminishing take anyway. But yeah, the problem
Speaker 2: with doing it is that it looks lighter. Sorry, it's
Speaker 2: very easy to paint it as a tax cut for
Speaker 2: the rich, which of course it just isn't.
Speaker 1: That's like all politics in the UK, isn't it a
Speaker 1: politics comes.
Speaker 2: Well, you know it's kind of pathetic, isn't it? By
Speaker 2: storytelling and the like? You know, storytelling isn't true, which
Speaker 2: is the other big problem.
Speaker 1: Should we had done something positive?
Speaker 2: Oh no, it's always the demand for positivity. When when
Speaker 2: do we ever give you a positivity? Come on, I
Speaker 2: said that.
Speaker 1: Now I'm trying to think of something.
Speaker 2: Well, the Edinburgh Show is sold out and that's quite Yeah.
Speaker 1: Is that is very positive. You can come to the
Speaker 1: show as you can't come to the show if you
Speaker 1: haven't got a ticket, but you could conceivably come to
Speaker 1: the show if you do have a ticket, and then
Speaker 1: you can listen to us saying negative things in person.
Speaker 2: Yeah, but it's positive because there's an appetad for the
Speaker 2: wisdom of Adam Smith, even two hundred and fifty years later.
Speaker 1: Yeah, yeah, I see there are there's a waiting list
Speaker 1: for Thursday, and I think there's a waiting list for
Speaker 1: the Friday show for those who don't listen to our
Speaker 1: show all the time. We're talking about our show the
Speaker 1: Edinburgh Fringe, which is on for three days at the
Speaker 1: end of the month, where John and I chat with
Speaker 1: a variety of people about a variety of things, and
Speaker 1: it's a hood, it's a hood. There's a waiting list
Speaker 1: for a couple of days, and then I think there
Speaker 1: are a few tickets left for the Saturday if you rush. Well,
Speaker 1: there was six yesterday, but I imagine they're gone by now,
Speaker 1: but you know, you could give it a go.
Speaker 2: I mean, it's a positive. Do you think Oasis stale
Speaker 2: dynamic pricing is the way forward here. I mean, I'm
Speaker 2: not trying to, you know, goge the market control.
Speaker 1: But you know what would happen, John, You know what
Speaker 1: would happen right if we did dynamic pricing. It wouldn't
Speaker 1: long before Andy Burnham announced that we were making too
Speaker 1: much money and that we're gonna have to cap our
Speaker 1: ticket prices.
Speaker 2: So then you can say you were bringing great things
Speaker 2: to the actual North, the real North.
Speaker 1: Yeah, it's extraordinary, isn't it? From Manchester suddenly it became
Speaker 1: the North. I don't know anyway, that takes us off
Speaker 1: another rabbit hole, not starting on that one. Gonna have
Speaker 1: to stop anyway. So basically there, if we were to
Speaker 1: summarize the last two weeks, a lot happened, but in
Speaker 1: the end kind of nothing happened. Is that fair?
Speaker 2: Yeah?
Speaker 1: Excellent. Thanks for listening to this week's Marin Talks Money,
Speaker 1: Markets Rap. If you like our show, rate review and
Speaker 1: subscribe where every listen to podcasts. Also, be sure to
Speaker 1: follow me and John on ex or Twitter at marinas
Speaker 1: w and John Underscore Stuff. This episode was produced by Summersadi,
Speaker 1: Moses and Jennifer Seely. Questions and comments on this show
Speaker 1: and all Our shows are always welcome. Our show email
Speaker 1: is Merror Money at Bloomberg dot net