Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Hi John, Hi, listen.
Speaker 1: We're talking in the middle of the week, and there's
Speaker 1: been a lot of fuss over the last few weeks,
Speaker 1: a lot of volatility, lots of seteria lots we're talking
Speaker 1: about bear markets, lots of people complaining about their four
Speaker 1: O n ks, et cetera, et cetera. So I have
Speaker 1: just had a quick look and guess that's for me. Okay,
Speaker 1: over the last twelve months. What's the change in the
Speaker 1: S and P five hundred?
Speaker 2: Okay, so it's not going to be connection toory. We
Speaker 2: call it about six seven percent actually.
Speaker 1: Over seven percent up. Also over seven percent up the
Speaker 1: last twelve months. Yes, yes, I'm going to double check
Speaker 1: that in real time for you, okay, because I have
Speaker 1: access to a Bloomberg terminal, and here we are. NASADAC
Speaker 1: Composite Index year to date not so good, down twelve
Speaker 1: point two seven percent over the last twelve months, plus
Speaker 1: seven point ninety three percent. So if you are just
Speaker 1: an ordinary person who doesn't trade in and out all
Speaker 1: the time, isn't just directly watching finance Telly, et cetera,
Speaker 1: you have eight percent more money if you're invested in
Speaker 1: the US than you did twelve months ago. Can we
Speaker 1: just say this is all a great, big clus fair
Speaker 1: nothing or is that a little simplastic.
Speaker 2: It's a little bit simplistic, but it's not, hye simplastic,
Speaker 2: you know when you think about it, you know, yeah,
Speaker 2: I mean it's a good watch.
Speaker 1: Yes, But also what it tells you is that that
Speaker 1: you know returns last year we're absurd and the American
Speaker 1: aquity market was ludicrously expensive and ludicrously concentrated at the
Speaker 1: end of our year, and it moved much too far,
Speaker 1: much too fast. And so even after everything's happened so far,
Speaker 1: this year just will be up. And twelve months ago
Speaker 1: told you that what happened towards the end of last
Speaker 1: year was slightly not.
Speaker 2: Yeah, definitely, And I mean that's place the whole point.
Speaker 2: But TROMP being a catalyst for shifting things over the
Speaker 2: years towards everything else which we knew was going to happen.
Speaker 1: Time it. We just couldn't time it.
Speaker 2: Yeah, you just needed a push, and Toomp's been the push,
Speaker 2: and I suspect that's still going to carry you Oin.
Speaker 1: Yeah, I mean it's going to come up and down.
Speaker 1: I mean as we are speaking today. We are speaking
Speaker 1: on Wednesday. By the way, then as I is up
Speaker 1: over four percent as we speak, So you know, you
Speaker 1: get this this huge volatility. But I think we still
Speaker 1: suspect overall that there is a great rotation underway from
Speaker 1: very expensive stock to cheapest stocks. And we have got
Speaker 1: our main podcast this week out on Friday is with
Speaker 1: a value Investor, which is really interesting in the context
Speaker 1: of this great rotation out of expensive the cheaper markets.
Speaker 2: Well, for once, yeah, if you do it often enough.
Speaker 1: And the other thing, John, that you and I have
Speaker 1: been that for twenty five years and twenty five twenty
Speaker 1: five years.
Speaker 2: Yeah, yeah, it's suning like that had a field sketched
Speaker 2: twenty twenty five years.
Speaker 1: Hey, the gold price at the gold price, I don't know, Harry.
Speaker 1: We are do the gold price up in dollar terms
Speaker 1: forty percent over the last year alone, down little today
Speaker 1: because everything else is going up because it is the
Speaker 1: greatest portfolio insurance of all time. Yes, you're doing up
Speaker 1: the direction, et cetera. But nonetheless there's been a phenomenal
Speaker 1: run and we're just going to enter it into our
Speaker 1: we told you so section.
Speaker 2: Well, thanks, So, what I think we can definitely put there,
Speaker 2: especially seeing his late twenty five years ago. Everyone said,
Speaker 2: what idiots, and you had actually been bettered buying gold
Speaker 2: twenty five years ago within the S and P. I
Speaker 2: mean that is striking. And I including reinvested dividends so
Speaker 2: that you could have bought golden. You wouldn't even have
Speaker 2: had to reinvest the dividends because there aren't any.
Speaker 1: I just sit there expect that's what you did, isn't it, John, Yeah.
Speaker 2: Just a law effort. Well, I wish it's what I did.
Speaker 1: Any We don't always do what we recommend anyway, So
Speaker 1: here we are, gold price up a lot, and gold price,
Speaker 1: you know, you would expect if the chales over the
Speaker 1: last few months continues, if we continue to have doubt
Speaker 1: about the America, about the global monetary system, about the dollar,
Speaker 1: about incoming global recession, et cetera, you would think to
Speaker 1: yourself or the gold price will continue to go up.
Speaker 1: But I think we both slightly feel it's moved a
Speaker 1: long way, very fast, and there could be a little
Speaker 1: bit of a correction in here.
Speaker 2: Yeah, and I think, well, there's a number of things.
Speaker 2: I mean, it was on the front cover of the
Speaker 2: Ft today and yeah, I mean again, there's no sheath
Speaker 2: on the Ft, but gold's one of those, cause golds
Speaker 2: a slightly more obscure asset. You have to watch the
Speaker 2: more financial peoples than the normal peoples because the gold's
Speaker 2: never given me in the front cover of the Times.
Speaker 2: But as the stock market may be at some point,
Speaker 2: if it could actually is hard enough. But as far
Speaker 2: as gold goy is, if you see it on the
Speaker 2: front cover of the Ft, there's probably a big contrat
Speaker 2: and indicator and that means it's come too far, too fast.
Speaker 2: Bitcoin's the same, And I said, to be fair, I
Speaker 2: remember twenty seventeen high in bitcoin. It was on the
Speaker 2: front Covery Money Week, which I was editing at the time,
Speaker 2: and even when I looked to the cover, I thought
Speaker 2: the top of the market signal you have become your
Speaker 2: own What's night? And then it was absolutely was. So
Speaker 2: the more obscure the aid, the more you have to
Speaker 2: sort of downgrade your your cover expectations. But I think
Speaker 2: for gold, sentiment wise, that's a tell. And also you
Speaker 2: have to go we have got when you've been watching
Speaker 2: an asset for that for as long as we have,
Speaker 2: and you're starting to feel a tiny bit kind of hegy.
Speaker 2: I don't think it's the mega top. I think we'd
Speaker 2: have to see a few other things happen. For me,
Speaker 2: you think it was the absolute top, but I think
Speaker 2: that it's probably due a breather.
Speaker 1: But then there is a possibility there the gold mineer
Speaker 1: is might catch up a bit.
Speaker 2: Yeah, I mean you would think so. And silver, Well,
Speaker 2: the interesting is silver's going up today, which I think
Speaker 2: is probably more to do with the fact that everyone
Speaker 2: is feeling relieved the Trump isn't in the fire, you know. Yeah,
Speaker 2: and it's tariffs. I think it's silver. There's an element
Speaker 2: of silver that goes up alongside the economic growth, and
Speaker 2: that bit has been crushed by recent events, which is
Speaker 2: one reason why it's departed so far from gold. So
Speaker 2: we might see silver catch up as well.
Speaker 1: And you'd expect gold miners to lag a bit with you,
Speaker 1: because it's not just gold going up, it's gold going
Speaker 1: up and staying up that matter.
Speaker 2: Yeah, yeah, I mean, although they are still they're really
Speaker 2: lagging it. And I mean I think that's partly to
Speaker 2: do with the fact that they've been such a reliable
Speaker 2: capital incinerators for such a long time that people just
Speaker 2: really need.
Speaker 1: To capital andcinerated. If you run a gold mining company,
Speaker 1: please send your head now direct.
Speaker 2: To John and John. You have used, don't you?
Speaker 1: Independent central banks? And we've talked about this a lot
Speaker 1: over over the years. Or central banks ever genuinely independent?
Speaker 1: Should they be independent? And in fact there's whole central
Speaker 1: bank independence. I think it's kind of you anyway.
Speaker 2: Yeah, it's just a it's a convenient fag leaf. It
Speaker 2: was fine in the nineties and the two thousands and
Speaker 2: actually the tens because the central banks were doing exactly
Speaker 2: what the government wanted them to do. Any keeping rates low. Yeah,
Speaker 2: nobody felt uncomfortable about it. If it was happy enough
Speaker 2: about it. Well, yeah, they should really should have been
Speaker 2: higher while China was exportant inflation around the world. They
Speaker 2: should have leaned against that. Then we wouldn't have got
Speaker 2: the acid bubble in the house place bubble, and everyone
Speaker 2: would be less measurable. Now because that's I do they say,
Speaker 2: the fact the house place has been too.
Speaker 1: High central bankers also, Director John, Please, But we had
Speaker 1: all that period where it looked like independent central banks
Speaker 1: were an absolutely fabulous idea, the great moderation, low interest rates,
Speaker 1: low inflation. We had the hero central bankers, Greenspan, et cetera.
Speaker 2: The Plunge Protection Team, lunch Protection team.
Speaker 1: And when we look back now, you and I said,
Speaker 1: at the time, of course, fell andre I told you so.
Speaker 1: But you when you look back now, you can say, well,
Speaker 1: this was simply a function of deflation being exported from
Speaker 1: out of China. And we don't really know if independent
Speaker 1: central banking is any good at what it's supposed to do.
Speaker 2: We don't really know.
Speaker 1: If the models work. We don't really know if independent
Speaker 1: technocrats do a better job of interest rate fiddle than governments.
Speaker 2: Yeah, and I don't thinks even that. I think it's
Speaker 2: more the doint. Basically, you've got the if you're in central,
Speaker 2: if you're an independence is contingent or in someone giving
Speaker 2: the tea, then you're not independent. You're just not independent.
Speaker 2: So it only lasts for as long as they're happy
Speaker 2: for it to do. And I mean Arthur Bond's in
Speaker 2: the eighteen seventies with elected nexton is a classic example.
Speaker 2: And it's the same thing. No, I mean, you know
Speaker 2: I should if if Trump wants to say Lane not
Speaker 2: get a depot, he will find a way. He doesn't
Speaker 2: have to do it. I fire on them, and would thought.
Speaker 2: I thought that there are other ways to get around
Speaker 2: any resistance. But the point is that whenever the kind
Speaker 2: of politics and the central bank, the politics and the
Speaker 2: technical as pomp heads, the politicians are going to win
Speaker 2: one we had another. So I think that the idea
Speaker 2: of central bank independence is really just it's just a mirage.
Speaker 2: It's like the two percent inflation target is sort of
Speaker 2: it's what for a yo and then stops working and
Speaker 2: you find something else.
Speaker 1: Okay, we're going to stop at that, John, because I
Speaker 1: can feel your hobby host is rising to.
Speaker 2: This or note.
Speaker 1: Thanks for listening to this week's Marin Talk's Money Debrief.
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