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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along

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Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best an economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal and the Bloomberg Business App. Julie Norman

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Speaker 1: joins us from University College London UCL Professor Norman, thank

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Speaker 1: you so much for joining Surveillance today. How are they

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Speaker 1: different from every other terrorist group out there?

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Speaker 2: Yeah, well, nice to be with you Tom here on

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Speaker 2: a surveillance I would say the Houtis are a different

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Speaker 2: kind of group. They're a militant group that's really been

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Speaker 2: gaining power in Yemen for the last ten years. They

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Speaker 2: orchestrated a coup back in twenty fourteen that launched a

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Speaker 2: sort of civil war in Yemen. So they control a

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Speaker 2: big swath of the country, including the capital. So they

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Speaker 2: operate almost as a current government there in many ways,

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Speaker 2: and so they're a little bit different in that regard,

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Speaker 2: and I would say they also operate pretty independently. They

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Speaker 2: get a lot of backing from Iran in terms of

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Speaker 2: weapons and intelligence, but they make a lot of their

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Speaker 2: own decisions and a lot of their own calls. And

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Speaker 2: I think not.

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Speaker 1: Now Julian Damien wants to get in here. He's got

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Speaker 1: the elbows up like he's with the Tampa Bay Buccaneers.

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Speaker 1: But Julia, I got to ask you before we go

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Speaker 1: to the Damien Sasa her show. Triangulate Israel's challenge on

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Speaker 1: the northern border has Belah on the West Bank is

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Speaker 1: just a mess. I'll leave that up to you. And

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Speaker 1: in Gaza, of course it's Hamas. I mean the terrorist

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Speaker 1: front on a three front war? Is that accurate? Israel

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Speaker 1: now has a three front war?

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Speaker 2: Well, I would say the region is definitely escalating, and

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Speaker 2: as you noted, there's a lot of hostile actors, especially

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Speaker 2: on the northern border with Hasbelah. I think traditionally that

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Speaker 2: has been the biggest concern for Israel. That's where they

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Speaker 2: see the most existing threat. And I would say Hasbola

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Speaker 2: is the group that's probably most strongly linked to Iran,

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Speaker 2: so that's where that concern has been. The West Bank,

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Speaker 2: I would say, is unrest in a little bit different

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Speaker 2: kind of way, but there's definitely instability. There a lot

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Speaker 2: of that to do more with the political situation, and

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Speaker 2: then of course again these attacks from the Hucies and

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Speaker 2: in the Red Sea. So regionally things are certainly on

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Speaker 2: the edge of a knife, as we say, but I

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Speaker 2: would say there's a lot of efforts to keep things

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Speaker 2: as contained as possible, and we see that both from

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Speaker 2: the US and honestly from Iran right now as well.

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Speaker 3: Well, Julie, I want you to parse for us the

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Speaker 3: impact on the global economy from what's going on than

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Speaker 3: Bob elvindeb and you know, we've got Russian oil tankers

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Speaker 3: coming south through the Red Sea. We've got you know,

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Speaker 3: gas from cutter that's supposed to be heading north toward Europe.

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Speaker 3: What's the impact of global inflation and specifically European inflation.

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Speaker 2: Yeah, well, obviously, I mean this waterway. I think it's

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Speaker 2: estimated about a third of shipping container traffic goes through

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Speaker 2: the Red Sea, about ten to twelve percent of global trade.

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Speaker 2: So if you have that full waterway completely at risk,

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Speaker 2: it's going to have a very quick effect on prices,

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Speaker 2: and especially on energy prices. As you noted, even ships

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Speaker 2: that are trying to go through. Their insurance has gone

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Speaker 2: up substantially, So this is going to hit markets. And

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Speaker 2: again this is all all UoS areas to follow those numbers,

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Speaker 2: even more than mine. But I can just say this

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Speaker 2: will have been effect. It's already having effect to the

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Speaker 2: extent that the houtis have already succeeded in that regard

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Speaker 2: in terms of destabilizing markets, keeping up one on edge.

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Speaker 3: So talk to us about some of these ships that

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Speaker 3: we're hearing running the gauntlets after these US mornings from

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Speaker 3: the combined maritime forces. You know, I think we've had

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Speaker 3: one hundred and fourteen vessels as the number, including oil tankers,

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Speaker 3: bulk carries, container ships, all still traveling through the street

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Speaker 3: despite the warnings. I mean, what do you make of that?

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Speaker 2: Well, I would say, as you noted, there's such a

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Speaker 2: volume and there have obviously been dozens of attacks. That's

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Speaker 2: obviously extremely significant. But I think many are just saying,

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Speaker 2: look an overall risk of us being able to get through.

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Speaker 2: We still think this is worth it for many shipping

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Speaker 2: companies and for corporations to add the extra I think

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Speaker 2: ten to twelve days to go south around the keeping

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Speaker 2: good hope in Africa is just not something that we're

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Speaker 2: able to do right now, so they're willing to take

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Speaker 2: that risk. But we'll see if that continues.

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Speaker 1: Julie. One final question, extremely important and of course widely

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Speaker 1: noted on Team Surveillance. Is your Baltimore Orioles merch sitting

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Speaker 1: behind you in your store, David Rubinstein to buy the

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Speaker 1: Baltimore Oriols, would that be constructive for the team?

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Speaker 2: Well, I can say that my co director Thomas Gift

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Speaker 2: is very much excited about this, So we're both hoping

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Speaker 2: that goes through and we're excited to see what it

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Speaker 2: means for those and.

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Speaker 1: That of course means you can come back to Julie Norman,

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Speaker 1: thank you so much, and folks, that's what surveillance is about.

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Speaker 1: It is wonderful to start strong here in the middle

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Speaker 1: of January with Claudia Sam Academic Economists of the Year.

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Speaker 1: Maybe she'd blush, she say, oh no, please tell him

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Speaker 1: stop it. But the fact is she had a huge

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Speaker 1: impact here on the measurement of our gloom nationwide, and

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Speaker 1: she nailed it.

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Speaker 4: She says, we are.

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Speaker 1: Not in recession. Claudia Sam joins us with all of

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Speaker 1: our work over the years, the Federal Reserve. How distant

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Speaker 1: is recession?

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Speaker 4: Doctor, Some.

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Speaker 5: Recession is always something that we should be on the

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Speaker 5: lookout for. I mean, a lot of other things go

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Speaker 5: wrong in the economy, but absolutely a recession. We're not

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Speaker 5: in a recession, and a recession is not on the horizon.

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Speaker 5: So we are on the path to getting inflation back

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Speaker 5: to two percent and keeping unemployment low.

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Speaker 1: I mean, I look, Claudia, it's the better than good

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Speaker 1: economies out there, and certainly the stock market is talking

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Speaker 1: about this. Every central bank is ex post by definition,

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Speaker 1: how far behind is your own power in the FED?

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Speaker 5: Well, central banks seem to excel at being behind the curve.

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Speaker 5: I don't think in this case it's going to be

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Speaker 5: a big problem. Frankly, the markets, in my opinion, are

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Speaker 5: getting a little too quick to think the Fed is

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Speaker 5: going to cut. I don't think a March cut unless

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Speaker 5: we get really good inflation reads. I just they're little

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Speaker 5: c conservative. They do not want to mess this up.

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Speaker 5: I mean, frankly, I don't want them to mess this

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Speaker 5: up either. We need inflation under control. Is just the

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Speaker 5: longer they wait, the greater the risk is that something

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Speaker 5: breaks in markets. I do expect them to cut by say,

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Speaker 5: may I think, and then it's going to get going

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Speaker 5: like rates are going to be lower by the end

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Speaker 5: of the year.

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Speaker 1: Claudia sam with us here a really important economic discussion

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Speaker 1: to get the day starter. We are with you commercial

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Speaker 1: free in this hour. We think interactive brokers for their

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Speaker 1: swort among others on car play coming up on YouTube,

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Speaker 1: Damien Sasaar and for Paul Sweeney, Damien Sasaur to doctor.

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Speaker 3: Some Yeah, no, I mean, doctor sm I mean you

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Speaker 3: have to tell me. I mean, Barkley's just came out

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Speaker 3: this morning and they actually moved their path for the

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Speaker 3: FED up. They're looking for a cut in March. You know,

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Speaker 3: talk to us about what it would take for the

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Speaker 3: FED to cut in March.

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Speaker 5: The data are there right when I say what the

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Speaker 5: Fed should do, the Fed frankly probably should have cut

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Speaker 5: in December, but absolutely by March. The inflation data are there.

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Speaker 5: What I look to is the psychology and the past

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Speaker 5: at the FED. The big miss under Arthur Burns that

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Speaker 5: nobody wants to make are cut too early, and Franklin

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Speaker 5: under Arthur Burns there was the extra piece of caving

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Speaker 5: to Nixon. And then there's another part that just these

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Speaker 5: the head of the FMCS. They were all there in

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Speaker 5: the seventies, like they knew how bad this was. I

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Speaker 5: just think that adds this extra layer of caution.

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Speaker 3: Now, Claudia, that is so important to look at the

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Speaker 3: human elements in this. I mean the FOMC members, they

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Speaker 3: are human, They are people, and they are going to

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Speaker 3: make decisions based on their own personal experiences. But you know,

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Speaker 3: I just really have to kind of double down on that.

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Speaker 3: I mean, the markets are really priced for an early cut.

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Speaker 3: I mean just unbelievable. Let's talk about what may or

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Speaker 3: may not happen. We thinking June July here, I mean,

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Speaker 3: what are your thoughts?

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Speaker 5: They can't if the data keep coming in as they

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Speaker 5: are and as they frankly are likely to come in,

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Speaker 5: if they kept get past May without a cut, it's

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Speaker 5: just going to be like, Wow, what reality are you

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Speaker 5: living in? They could have enough cover to get to

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Speaker 5: March and signal it strongly. We could get another Herbal

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Speaker 5: cut from j Powell like we did in December, right,

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Speaker 5: Like it doesn't have to all come through the past.

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Speaker 3: Through to financial conditions exactly.

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Speaker 1: Yeah, So.

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Speaker 5: I hope markets are right. I think it absolutely would

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Speaker 5: be time to be cutting in March, and I just

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Speaker 5: I don't trust the FED in the sense that, you know,

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Speaker 5: because there's a headline.

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Speaker 1: Stop the show, stop the show not you know, you know,

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Speaker 1: we're getting modeling up YouTube right now, Damien, don't you.

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Speaker 4: Think sharing chare Echos.

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Speaker 1: Some some full coal of I don't trust the Fed.

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Speaker 1: That'll get her the next job as government effed damiens

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Speaker 1: save her ask one more question.

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Speaker 3: Of doctor, doctor sm I mean, we are, we're channeling

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Speaker 3: a little bit of chare Echos here in terms of

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Speaker 3: you know, hitting UNFED credibility, right, But I don't want

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Speaker 3: to go there. I really just want to think about,

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Speaker 3: you know, what's going on in the Middle East, right,

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Speaker 3: and what is the sort of impact that that might

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Speaker 3: have on the inflation calculus heading into March. Right, you

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Speaker 3: would think with a three to four week delay from

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Speaker 3: freight rates doubling or whatever, it would be tripling even

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Speaker 3: you know that just as the end of February and

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Speaker 3: the March meetings approaching, it's just going to be really,

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Speaker 3: really tough for the FED to cut in the face

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Speaker 3: of that.

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Speaker 5: Now at this point, anything that throws sand in the

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Speaker 5: gears is going to slow the FED down. Any kind

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Speaker 5: of uncertainty. Geopolitics are always a wildcard, and frankly they're

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Speaker 5: a lot more of a wildcard right now an election year.

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Speaker 5: There's a lot going on in the world, not all

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Speaker 5: good actors, and that anything. The Fed can grab on

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Speaker 5: you because they don't want to get it wrong right.

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Speaker 5: They don't want to cut and have to reverse, so

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Speaker 5: they're going to want to be so sure, and if

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Speaker 5: things are happening, they're not going to be so sure.

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Speaker 1: One question here, fifteen degrees in Washington day, did Puffy

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Speaker 1: make it through the evening? Did you take Puffy for

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Speaker 1: the obligat catwalk in the ice cold?

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Speaker 5: She loves the snow. She hasn't been out yet this morning.

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Speaker 5: As soon as I get off, she'll get to go

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Speaker 5: play in the snow.

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Speaker 1: Your cat report today with Claudia's Puffy the cat in

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Speaker 1: the depths of a Washington winter as well Doctor some

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Speaker 1: of course of the sum rule in her own consultancy,

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Speaker 1: what we do is economics, finance, investment in international relations,

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Speaker 1: and someone in the economics racket who folds all this

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Speaker 1: in together. The synthesis of all this is Julia Coronado,

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Speaker 1: iconic at BMP parry By years ago with a terrific

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Speaker 1: slower GDP call within the Great Financial Crisis now at

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Speaker 1: Macro Policy Perspectives, Doctor Coronado, thank you so much for

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Speaker 1: joining as well. How far behind is Jerome paw.

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Speaker 6: Well?

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Speaker 7: I think not terribly far behind, but he does. They

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Speaker 7: will have some catching up to do as the year unfolds. Inflation.

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Speaker 7: What the data are showing us is that this notion

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Speaker 7: that the last leg of inflation is the hardest just

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Speaker 7: isn't materializing. Yes, CPI, the CPI core was a little

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Speaker 7: firmer into some than it had been in the prior

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Speaker 7: six months, but it looks like the PCE, which is

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Speaker 7: the Fed's preferred gauge, is going to be on the

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Speaker 7: softer side. So they're effectively at target on a six

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Speaker 7: month base on the.

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Speaker 1: Great observations I saw here. I'm gonna go to ed

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Speaker 1: Yard Denny on this. You know, I'm so well out

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Speaker 1: of Yell Economics and iconic at CJ. Lawrence years ago

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Speaker 1: and Juliet Coronado, Doctor Yard Denny would say, look, take

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Speaker 1: out shelter. I mean, I mean, Danian, you're looking at

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Speaker 1: something down at Coral Gables, aren't you? Like six thousand

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Speaker 1: square feet?

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Speaker 3: That's exactly right.

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Speaker 4: I mean out of reach, that's right, that's right.

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Speaker 3: That well, look, I mean, you know, Julia, for me

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Speaker 3: when I really need to ask you, is this does

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Speaker 3: geopolitical risk even matter anymore? I mean, let's be clear.

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Speaker 3: Since October the seventh Israel Hamas, I mean, equities are

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Speaker 3: up the dollars a week or spins of tightened oil

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Speaker 3: prices are down. I mean who cares?

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Speaker 7: Yeah, Well, I mean geopolitical risks are notoriously difficult to

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Speaker 7: you know, quote unquote price because we don't know what

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Speaker 7: the impact is. Economies are very resilient. They tend to

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Speaker 7: function throughout a lot of disruptions. Right, So will this

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Speaker 7: be a material disruptor to have shipping, you know, re

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Speaker 7: routed around Africa at least temporarily? Will these skirmishes turn

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Speaker 7: into something that's a broader conflict that interrupts global commerce

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Speaker 7: that remains to be seen? And right now the market

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Speaker 7: is saying probably not.

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Speaker 1: Well, get back to Damien's coral gables. Look see that

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Speaker 1: he's doing. Ed Jar Denny says, doctor Coronatto. You've taken

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Speaker 1: out shelter and we're there. I mean, we coping towards

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Speaker 1: a goods and service sector disinflation. Where I have FED rulebook,

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Speaker 1: does it say you have to halt accommodative policy because

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Speaker 1: of shelter. I don't see that in my textbooks.

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Speaker 7: No, it's not in the textbook. And we also know

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Speaker 7: it's not just that shelter is the thing that's keeping

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Speaker 7: it up. It's also that the leading indicators of shelter,

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Speaker 7: of which we have now multiple private sector sources of

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Speaker 7: market rents, and they're telling us that rent growth will moderate.

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Speaker 7: We don't know exactly the timing or the magnitude, but

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Speaker 7: we know that a year from now that shelter inflation

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Speaker 7: is very very likely to be lower than it is.

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Speaker 7: So not only is it the thing holding things up,

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Speaker 7: we also know the direction of travel with some degree

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Speaker 7: of confidence, so I think that that is going to be,

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Speaker 7: you know, moving. In March, we have their first rate cutting.

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Speaker 1: Julia, this accommodation.

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Speaker 4: I mean, I've never heard of this.

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Speaker 1: It's like a older Julia.

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Speaker 3: Well, doctor Coronado's obviously been looking at the same thing.

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Speaker 3: I have the wedge, the CPI versus PCE wedge, the differential,

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Speaker 3: and whether or not that's enough, Julia for the FED

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Speaker 3: to cut in March? What do you think I think.

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Speaker 7: It will be You know, again, we have some data.

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Speaker 7: We've got December data, We're going to get January and

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Speaker 7: some February data before we get to that meeting. And

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Speaker 7: I think if the data continue to show what it

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Speaker 7: has been showing, and that is what we expect we

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Speaker 7: were never in the last leg as the hardest camp,

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Speaker 7: If that continues to be confirmed by the data, then

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Speaker 7: I do think it will be enough. So January's early,

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Speaker 7: but they can leave the door open, you know, sort

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Speaker 7: of signal and neutral stands that they're you know, just

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Speaker 7: as likely to cut as to hike. And then in March,

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Speaker 7: you know, again data confirming things. I think they'll be

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Speaker 7: ready to go by then.

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Speaker 3: You know, Julie. Also, if you look at the winners

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Speaker 3: and losers since the pandemic really started, and I'm thinking

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Speaker 3: just currencies here, it's been a carry story, right. You've

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Speaker 3: got these high yielding the Brazils, the Mexicos, all their

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Speaker 3: currencies have outperformed, and it's the low hilders on the

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Speaker 3: other side. You know, my question for you is this,

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Speaker 3: I mean, what is the best way to monetize all

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Speaker 3: this embedded carry on offer? If all these central banks

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Speaker 3: are expected to cut this year. I mean, what's the

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Speaker 3: best place, what's the best way to do that?

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Speaker 7: That is a great question. And of course, as you know,

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Speaker 7: we've got multiple you know, we've got a lot of

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Speaker 7: volatility globally in terms of the central banks, like in

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Speaker 7: Latin America that were ahead of the curve and raise

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Speaker 7: rates a lot further and faster and are now in

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Speaker 7: cutting mode.

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Speaker 1: Uh.

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Speaker 7: And so there's going to be a lot of divergences

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Speaker 7: and rates and a lot of capital moving and trying

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Speaker 7: to answer the question, I don't have the magic answer.

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Speaker 7: I do think the dollars likely to remain strong despite

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Speaker 7: bed cutting, because I think other central banks are going

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Speaker 7: to get in on the act as the year.

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Speaker 1: Ill day man, doctor Cornado's getting her PhD at Texas.

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Speaker 1: Since then, she's never said to me, Tom, that's a

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Speaker 1: great question. It's never once happened. Never one damian as over.

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Speaker 3: The last questions, Well, let's go back to Miami, Julia,

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Speaker 3: I mean, should I be buying down there? I mean, look,

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Speaker 3: it's scale. I mean, I'm just kidding, but seriously, I

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Speaker 3: just while I do have you here, I mean, look

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Speaker 3: at the curve today, You've got rates kind of backing

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Speaker 3: up here six pips across the curve. You know, what

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Speaker 3: are your expectations here on duration? You know, should investors

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Speaker 3: begin to start, you know, kind of getting long tixt

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Speaker 3: income US treasuries again or or is there a better

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Speaker 3: entry point coming?

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Speaker 7: Well, I think the curve is there is a great,

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Speaker 7: great way to frame it because you know, if the

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Speaker 7: economic resilience that has kept us out of a recession

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Speaker 7: so far persists. In other words, we're in a better

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Speaker 7: productivity environment. Yes, and the neutral rate might be higher.

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Speaker 7: So is four percent high on the tenure?

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Speaker 8: Maybe?

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Speaker 4: Maybe not.

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Speaker 7: What I would expect to see is the FED sort

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Speaker 7: of acknowledges progress on inflation and begins a cutting campaign.

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Speaker 7: Is that we won't have an inverted curve for much.

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Speaker 1: And that is we would uninvert We got to run.

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Speaker 1: That's a mystery, Doctor cornetto frames out seriously, folks, this

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Speaker 1: new productivity in the study of it, that is a

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Speaker 1: theme for the next not only year, but two years

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Speaker 1: as well. Julia Carnattle micropolicy Perspectives. He has led the

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Speaker 1: way with sound essays, including his work in his management company,

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Speaker 1: but particularly as podcast masters in business. We have two

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Speaker 1: wonderful podcasts Joe Wisen Thought, Tracy Laway, Odlots, and Barry

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Speaker 1: Ritholt's Master's and Business where he does common sense stuff

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Speaker 1: and then he beautifully explains the wonkishness. We are now

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Speaker 1: going to talk to one b Ridtholts about investor incompetence

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Speaker 1: is He interviews David Dunning the University of Michigan on

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Speaker 1: something called the Dunning Kruger Effect, the most important podcast

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Speaker 1: of the year for everybody who missed the recovered bull

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Speaker 1: market out of the pandemic? Barry, what did you learn

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Speaker 1: from David Dunning about how I went down in the

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Speaker 1: pandemic and I didn't recover because I was scared?

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Speaker 9: So David Dunning is this psychologist who's been working at

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Speaker 9: University of Michigan for years and years and years, and

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Speaker 9: one of his very first published papers with his colleague,

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Speaker 9: a grad student named Krueger, looked at at what the

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Speaker 9: psychologists call metacognition. For those of us who prefer it

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Speaker 9: in plain English, metacognition is how good are we at

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Speaker 9: analyzing our own skill set?

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Speaker 2: No?

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Speaker 9: Do well?

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Speaker 4: Well?

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Speaker 9: It turns out that metacognition is a skill unto itself

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Speaker 9: that improves as the underlying skill improves also, so it's

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Speaker 9: easier to understand with a sports metaphor than it is, Oh,

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Speaker 9: please with an investigation. All right, So I'm not a golfer,

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Speaker 9: but I have lots of friends who are golfers. And

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Speaker 9: you could put an amateur duffer at the first tee,

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Speaker 9: and you could put a pro up next to him,

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Speaker 9: and they'll both hit a shot off the first tee,

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Speaker 9: and you know, the amateur takes a swing, makes good

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Speaker 9: contact that goes about two hundred and fifty yards straight

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Speaker 9: down the fairway, and the amateur things to himself, Hey,

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Speaker 9: I'm a natural athlete.

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Speaker 4: How hard is golf?

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Speaker 9: I'm really good at this. I'm gonna I'm gonna keep,

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Speaker 9: you know, playing the professional. The ball lands five feet

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Speaker 9: past the amateur and he says, decent swing. Didn't rotate

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Speaker 9: my hips fast enough, didn't follow through, didn't keep my

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Speaker 9: head down, and had I done those things, this would

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Speaker 9: have been a three hundred yard drive instead of a

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Speaker 9: two hundred.

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Speaker 1: Sober to the investment world, there's so many people listening

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Speaker 1: here to Bloomberg surveillance on carplaying YouTube, and they're saying

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Speaker 1: to themselves, I missed the bullmarket. And so much of

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Speaker 1: it is about skill set, isn't it that?

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Speaker 9: It's so Dunning describes this as a two part decision

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Speaker 9: making process, and we all understand the first decision. Hey,

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Speaker 9: I'm gonna either put money into stocks into bonds, I'm

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Speaker 9: gonna take money out, I'm gonna put it into cash.

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Speaker 9: That's the decision we all focus on. But the Dunning

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Speaker 9: Kruger effect asked the second question, which is how how

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Speaker 9: What is the basis for the first decision? How strong

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Speaker 9: is it? How based in reality is it? And how

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Speaker 9: much confidence should we have in the probability that the

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Speaker 9: process behind that initial decision making is a good one.

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Speaker 9: And a lot of this comes back to not mere

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Speaker 9: over optimism, but the difference between skill and luck and

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Speaker 9: the ability to identify what were the factors that drove

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Speaker 9: this outcome and was it random or you know, if

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Speaker 9: someone said, hey, I'm gonna buy bitcoin at sixteen thousand,

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Speaker 9: it runs to forty five thousand. Were they lucky or

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Speaker 9: you know, because I could show you could have bought

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Speaker 9: bit point at sixteen and it went to eight. So

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Speaker 9: there are all sorts of different things. What is behind

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Speaker 9: the decision making?

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Speaker 1: I mean, cut any were some breaking news on Apple Computer.

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Speaker 1: This is before the Supreme Court, and this is the

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Speaker 1: app store battle with a company called Epic. The Supreme

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Speaker 1: Court rejects Apple Computers request for Epic app store review.

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Speaker 1: Apple must change app store rules bar developer links. This

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Speaker 1: is about opening up the app store side, which is

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Speaker 1: a huge margin maker for Apple, and that stock trays

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Speaker 1: down two percent, down three dollars forty cents right now, Damian,

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Speaker 1: I'm so sorry.

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Speaker 3: No, no, I mean, folks, when I wanted to ask you, Barry,

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Speaker 3: I mean, look what we're talking about. In for our audience,

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Speaker 3: they all know this. We're talking about behavioral finance, right,

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Speaker 3: We're talking about signaling from the markets. And so for me,

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Speaker 3: you know, you're a porfolio manager. You allocate, like just

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Speaker 3: how much weight do you place on behavioral indicators as

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Speaker 3: opposed to other things like valuation and growth and earnings

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Speaker 3: forecasts and such.

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Speaker 9: Oh, it's the single biggest factor that determines the success

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Speaker 9: of individual investors, not necessarily professional investors, although there's increasing

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Speaker 9: amounts of evidence to say the professionals in a whole

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Speaker 9: lot better than the amateurs in full prey to the

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Speaker 9: same mistakes. But but you know, if I flip on surveillance.

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Speaker 9: In the morning, I'm gonna hear conversations about inflation and

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Speaker 9: elections and geopolitics and the economy and GDP and employment,

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Speaker 9: none of which is within the control of the individual investor.

435
00:22:15,880 --> 00:22:20,040
Speaker 9: What is in control of the individual investor are Let's

436
00:22:20,080 --> 00:22:23,920
Speaker 9: just start with the big three. First, your allocation. Are

437
00:22:23,920 --> 00:22:25,119
Speaker 9: you in cash? Are you in stocks?

438
00:22:25,119 --> 00:22:25,800
Speaker 1: Are you in bonds?

439
00:22:25,880 --> 00:22:26,000
Speaker 2: Right?

440
00:22:26,920 --> 00:22:32,480
Speaker 9: Second, your behavior what you do around those items? Do

441
00:22:32,600 --> 00:22:37,920
Speaker 9: you consume bad research reports and make panic decisions? And

442
00:22:38,000 --> 00:22:41,240
Speaker 9: lastly your patients. So, you know, investing is a long

443
00:22:41,359 --> 00:22:44,800
Speaker 9: term process, but humans exist in the here and now.

444
00:22:44,840 --> 00:22:47,800
Speaker 9: We live minute a minute, and yet we're making investments

445
00:22:47,840 --> 00:22:51,240
Speaker 9: for decades at a time. And so what sort of

446
00:22:52,200 --> 00:22:53,360
Speaker 9: impulse control.

447
00:22:53,040 --> 00:22:53,359
Speaker 1: Do you have?

448
00:22:53,440 --> 00:22:56,800
Speaker 9: What sort of patients do you engage in? You know,

449
00:22:56,960 --> 00:23:00,400
Speaker 9: if you look at this mutual fund versus a me fund,

450
00:23:00,440 --> 00:23:04,600
Speaker 9: the CTF versus at atf half of percentage point gain

451
00:23:04,680 --> 00:23:07,320
Speaker 9: here or there, does it make a difference if you

452
00:23:07,560 --> 00:23:11,240
Speaker 9: panic out? I can't tell you how many people panicked

453
00:23:11,240 --> 00:23:13,919
Speaker 9: out in the summer of twenty twenty two.

454
00:23:14,840 --> 00:23:15,840
Speaker 1: Again, just as the.

455
00:23:15,760 --> 00:23:19,840
Speaker 9: Market, well, you know, I know the triple Old cash

456
00:23:19,880 --> 00:23:25,720
Speaker 9: fund has done well recently. Now that money markets percent right,

457
00:23:25,760 --> 00:23:28,440
Speaker 9: but but you've you know, the old cash fund has

458
00:23:28,520 --> 00:23:30,160
Speaker 9: wildly underperformed.

459
00:23:30,280 --> 00:23:31,760
Speaker 4: Thank you stops.

460
00:23:32,240 --> 00:23:35,600
Speaker 9: And the data that's the data point that makes me

461
00:23:36,280 --> 00:23:40,280
Speaker 9: like just fall off my chair is when people panic

462
00:23:40,400 --> 00:23:44,040
Speaker 9: out of the market during a draw down, thirty percent

463
00:23:44,119 --> 00:23:47,920
Speaker 9: of them never return to equities. And that's just shocking.

464
00:23:48,200 --> 00:23:50,240
Speaker 1: There's going to be with us a lot in twenty

465
00:23:50,320 --> 00:23:50,720
Speaker 1: twenty four.

466
00:23:50,720 --> 00:23:50,840
Speaker 2: Beer.

467
00:23:50,880 --> 00:23:53,320
Speaker 1: I got one final question. This is Off brad Stone's

468
00:23:53,320 --> 00:23:58,159
Speaker 1: illuminating interview with mister Nadell of Microsoft Today and Davos.

469
00:23:58,200 --> 00:24:01,520
Speaker 1: Somebody in Microsoft, you know, it's got the edge, it's AI,

470
00:24:01,680 --> 00:24:04,520
Speaker 1: it's to the moon, et cetera, et cetera. What do

471
00:24:04,560 --> 00:24:07,879
Speaker 1: you tell clients that have been fortunate enough to find

472
00:24:07,920 --> 00:24:09,600
Speaker 1: a gain in Microsoft?

473
00:24:10,840 --> 00:24:14,240
Speaker 9: You know, anybody who's been sitting in Microsoft for any

474
00:24:14,320 --> 00:24:18,280
Speaker 9: length of time has a massive amount of capital gains.

475
00:24:18,320 --> 00:24:22,000
Speaker 9: And unless it's in a qualified account, it means Uncle

476
00:24:22,040 --> 00:24:24,439
Speaker 9: Sam is your partner for about twenty three percent of

477
00:24:24,440 --> 00:24:27,840
Speaker 9: those gains. So if someone someone says, hey, I want

478
00:24:27,880 --> 00:24:33,159
Speaker 9: to sell this and replace it into company X, be

479
00:24:33,280 --> 00:24:36,119
Speaker 9: aware you're starting at a twenty three percent deficit. Just

480
00:24:36,160 --> 00:24:38,879
Speaker 9: to get to break even. Something is going to have

481
00:24:38,920 --> 00:24:41,960
Speaker 9: to outperform Microsoft by what you're going to pay in

482
00:24:42,000 --> 00:24:42,960
Speaker 9: capital gains.

483
00:24:43,400 --> 00:24:45,360
Speaker 4: Now, if it's.

484
00:24:45,280 --> 00:24:48,239
Speaker 9: Half your portfolio, if it's swollen up, so it's you know,

485
00:24:48,359 --> 00:24:52,000
Speaker 9: a reckless concentration, well then you work out a plan

486
00:24:52,080 --> 00:24:55,240
Speaker 9: and say, let's work out of this over time. But

487
00:24:55,520 --> 00:24:57,960
Speaker 9: for someone who's got four or five six percent of

488
00:24:57,960 --> 00:25:00,879
Speaker 9: their portfolio and Microsoft, I don't know when it's going

489
00:25:00,920 --> 00:25:02,600
Speaker 9: to end. You don't know when no one is going

490
00:25:02,640 --> 00:25:03,520
Speaker 9: to end. There's just no.

491
00:25:03,480 --> 00:25:04,880
Speaker 4: Reason to tap out, Barry.

492
00:25:04,920 --> 00:25:09,440
Speaker 1: We're going into registration on the reckless concentration. Fun very riddles.

493
00:25:09,440 --> 00:25:12,880
Speaker 1: Thank you so much. Christmaster's in Business just a terrific

494
00:25:12,960 --> 00:25:16,440
Speaker 1: value add podcast. There's there's episodes I don't.

495
00:25:16,240 --> 00:25:16,880
Speaker 6: Even under scan.

496
00:25:27,280 --> 00:25:29,199
Speaker 8: Let's kick off the conversation with Ken roge Off, the

497
00:25:29,200 --> 00:25:33,160
Speaker 8: Harvard professor and former IMF Chief Economists. Good morning, professor, Hey,

498
00:25:33,200 --> 00:25:34,600
Speaker 8: good morning or good afternoon.

499
00:25:35,200 --> 00:25:35,760
Speaker 5: Thank yeah.

500
00:25:35,880 --> 00:25:38,040
Speaker 8: Let's go with good afternoon, and let's talk about what's

501
00:25:38,040 --> 00:25:40,400
Speaker 8: happening in the global economy. You write a fantastic piece

502
00:25:40,400 --> 00:25:42,800
Speaker 8: in the Guardian just before Christmas. You followed up with

503
00:25:42,840 --> 00:25:46,399
Speaker 8: a piece in Project Syndica about the global economy not

504
00:25:46,480 --> 00:25:48,520
Speaker 8: being out of the woods. Can you just tease some

505
00:25:48,560 --> 00:25:50,040
Speaker 8: of that out for us just to begin.

506
00:25:50,520 --> 00:25:53,320
Speaker 4: Well, there seems to be this consensus here in Davos,

507
00:25:53,400 --> 00:25:56,560
Speaker 4: but I'd also say more broadly in the state, it's that,

508
00:25:57,080 --> 00:25:59,040
Speaker 4: you know, it's not going to be as good as

509
00:25:59,400 --> 00:26:02,760
Speaker 4: twenty twenty, which was surprisingly good, but it's not going

510
00:26:02,800 --> 00:26:06,600
Speaker 4: to be bad. Inflation is going to come down soft landing,

511
00:26:06,880 --> 00:26:10,400
Speaker 4: and there seems to be very little understanding that. There's

512
00:26:10,440 --> 00:26:12,920
Speaker 4: a lot of volatility around that. And if you look

513
00:26:12,920 --> 00:26:16,800
Speaker 4: at the geopolitical situation. Forget about Trump, which we were

514
00:26:16,840 --> 00:26:20,960
Speaker 4: talking about, but the geopolitical situations like nothing I've seen

515
00:26:21,040 --> 00:26:25,160
Speaker 4: in my professional lifetime. I mean, we've gone exactly where

516
00:26:25,200 --> 00:26:27,720
Speaker 4: we are in Cold War two, but we're in Cold

517
00:26:27,800 --> 00:26:30,400
Speaker 4: War two. Could get to be a hotter Cold War

518
00:26:30,440 --> 00:26:33,840
Speaker 4: two than it was, and that's very destabilizing. We think

519
00:26:33,840 --> 00:26:35,840
Speaker 4: what the seventies were like. I mean, part of that

520
00:26:36,160 --> 00:26:38,000
Speaker 4: of course was to break up of bread and woods,

521
00:26:38,000 --> 00:26:42,400
Speaker 4: but it was also you know, around geopolitical instability, and

522
00:26:42,480 --> 00:26:45,040
Speaker 4: so that you know, I think there's a lot of

523
00:26:45,080 --> 00:26:47,399
Speaker 4: volatile It's not all bad. I mean, we could have

524
00:26:47,960 --> 00:26:51,080
Speaker 4: a good year, but that's really hanging over our head.

525
00:26:51,280 --> 00:26:53,560
Speaker 10: As a market participant, what do you do with you

526
00:26:53,600 --> 00:26:54,600
Speaker 10: don't know what you don't know.

527
00:26:54,760 --> 00:26:56,000
Speaker 4: You don't know about the volatility.

528
00:26:56,040 --> 00:26:58,600
Speaker 10: What do you do with, Hey, a president Trump coming

529
00:26:58,640 --> 00:26:59,520
Speaker 10: in two point zero?

530
00:27:01,119 --> 00:27:05,240
Speaker 4: Okay, well they're two suffarate. What one's a lot of volatility.

531
00:27:05,280 --> 00:27:09,119
Speaker 4: You know, there's extreme volatility. So I don't know. But no,

532
00:27:09,240 --> 00:27:12,080
Speaker 4: I mean I think volatility probably is not good for

533
00:27:12,760 --> 00:27:17,720
Speaker 4: you know, risky assets in general. That's what we teach

534
00:27:17,760 --> 00:27:20,560
Speaker 4: in economics. Anyway, If there's a chance that the Red

535
00:27:20,560 --> 00:27:24,200
Speaker 4: Sea gets closed down for six months and it adds

536
00:27:24,240 --> 00:27:27,119
Speaker 4: to inflation and the prices of everything, even if you

537
00:27:27,160 --> 00:27:29,960
Speaker 4: believe at the other side it might be smooth, AI

538
00:27:30,160 --> 00:27:33,560
Speaker 4: kicks in eally and growth is good, our models say

539
00:27:33,680 --> 00:27:36,359
Speaker 4: the prices should be lower in that case than that.

540
00:27:36,600 --> 00:27:39,159
Speaker 4: You know, But I mean, I have no idea how

541
00:27:39,200 --> 00:27:42,760
Speaker 4: to interpret the market. It seems very sanguine. Even when

542
00:27:42,760 --> 00:27:45,120
Speaker 4: I say, look at things like oil prices, I don't

543
00:27:45,119 --> 00:27:47,159
Speaker 4: get it. I mean, why isn't there more of a

544
00:27:47,200 --> 00:27:50,399
Speaker 4: premium built in? They, you know, just think this is

545
00:27:50,440 --> 00:27:53,320
Speaker 4: going to be over in a week, because at least

546
00:27:53,400 --> 00:27:57,760
Speaker 4: the political scientists I talk to, you know, say, if

547
00:27:57,800 --> 00:28:00,800
Speaker 4: you look at Ukraine, if you look at what's going

548
00:28:00,840 --> 00:28:03,880
Speaker 4: in the middle East. If it's the same next year,

549
00:28:03,960 --> 00:28:06,639
Speaker 4: that's like the good outcome. You know that it's very risky.

550
00:28:06,800 --> 00:28:10,360
Speaker 6: Well, so for oil vessels have been able to get

551
00:28:10,400 --> 00:28:12,320
Speaker 6: through the red seat. A lot of it has been

552
00:28:12,440 --> 00:28:15,720
Speaker 6: consumer goods those vessels. Is it hitting someone's bottom line

553
00:28:15,720 --> 00:28:17,600
Speaker 6: at this point and that can increase inflation?

554
00:28:18,400 --> 00:28:22,159
Speaker 4: Well, I mean the questions what's next if it picks up?

555
00:28:22,160 --> 00:28:25,359
Speaker 4: Where's it going there? Certainly, I think shipping rates have

556
00:28:25,440 --> 00:28:28,040
Speaker 4: gone way up, right. I mean that eventually hits something

557
00:28:28,080 --> 00:28:31,400
Speaker 4: that's you know, only a component of what you pay.

558
00:28:31,480 --> 00:28:34,359
Speaker 4: But we're sort of in a volatile stage. It's not

559
00:28:34,400 --> 00:28:37,560
Speaker 4: that what's happening is going to make inflation flow through

560
00:28:37,640 --> 00:28:40,200
Speaker 4: the roof. It's sort of what happens X. You say

561
00:28:40,200 --> 00:28:43,840
Speaker 4: the same thing about Russia and Ukraine. I mean, I

562
00:28:43,960 --> 00:28:46,680
Speaker 4: you know, I support Ukraine. I've worked with the Ukrainians.

563
00:28:46,720 --> 00:28:48,480
Speaker 4: But it's not been a good year. I don't know

564
00:28:48,480 --> 00:28:50,520
Speaker 4: what else to say about it. Well, and you know,

565
00:28:50,760 --> 00:28:54,120
Speaker 4: there are risks of something getting worse and how that

566
00:28:54,200 --> 00:28:58,400
Speaker 4: feeds into markets and how that feeds into prices and everything.

567
00:28:58,560 --> 00:29:01,400
Speaker 10: So you don't buy that the sort of lull of

568
00:29:01,480 --> 00:29:04,160
Speaker 10: thirteen million plus barrels of oil per day of the

569
00:29:04,240 --> 00:29:06,280
Speaker 10: US that are being pumped can really offset all of

570
00:29:06,320 --> 00:29:07,360
Speaker 10: that geopolitical risk.

571
00:29:07,960 --> 00:29:10,360
Speaker 4: Well, it has, I mean it's been a factor, but

572
00:29:10,480 --> 00:29:13,120
Speaker 4: up to a point, right, I mean, you know, it

573
00:29:13,160 --> 00:29:16,360
Speaker 4: depends on it doesn't upset all the geopolitical risk because

574
00:29:16,360 --> 00:29:19,320
Speaker 4: it's not just about oil prices, it's about other commodities,

575
00:29:19,360 --> 00:29:23,479
Speaker 4: it's about investments, it's about many many global supply chains,

576
00:29:23,520 --> 00:29:24,400
Speaker 4: many money. Thanks.

577
00:29:24,640 --> 00:29:27,880
Speaker 8: We started the program this morning this afternoon by talking

578
00:29:27,920 --> 00:29:30,120
Speaker 8: about what was about to happen in the United States

579
00:29:30,120 --> 00:29:32,280
Speaker 8: and how Europe as a continent would respond to it.

580
00:29:32,800 --> 00:29:35,440
Speaker 8: What strikes me early on in the World Economic Forum

581
00:29:35,480 --> 00:29:37,600
Speaker 8: is the absence of a conversation about what on earth

582
00:29:37,600 --> 00:29:40,680
Speaker 8: Europe is doing for itself, how broken the German growth

583
00:29:40,720 --> 00:29:43,840
Speaker 8: model is, how it's been totally exposed over the last

584
00:29:43,920 --> 00:29:48,200
Speaker 8: let's say two years, energy with Russia, the fractures with China,

585
00:29:48,200 --> 00:29:50,200
Speaker 8: and where the United States stands on that, and maybe

586
00:29:50,240 --> 00:29:52,560
Speaker 8: the ability or willingness of the United States to provide

587
00:29:52,560 --> 00:29:55,720
Speaker 8: defense support if we do get the former president back

588
00:29:55,720 --> 00:29:58,440
Speaker 8: in the White House. What is the European growth model

589
00:29:58,520 --> 00:30:00,920
Speaker 8: going to be and what does that discussions sound like

590
00:30:00,920 --> 00:30:01,280
Speaker 8: to you?

591
00:30:01,560 --> 00:30:03,600
Speaker 4: So, I mean that's a really good question. So a

592
00:30:03,640 --> 00:30:07,240
Speaker 4: conversation I've had with many Europeans here is are you

593
00:30:07,360 --> 00:30:10,320
Speaker 4: planning to do anything for your own defense? Do you

594
00:30:10,400 --> 00:30:14,400
Speaker 4: realize that even if Biden wins, it's not clear we're

595
00:30:14,400 --> 00:30:18,320
Speaker 4: going to be able to project defense fending at the

596
00:30:18,360 --> 00:30:21,720
Speaker 4: same level. If there's two theaters, much less three theaters,

597
00:30:22,200 --> 00:30:25,560
Speaker 4: you aren't. As far as I understand that Europe has

598
00:30:25,640 --> 00:30:30,320
Speaker 4: depleted its stocks of munitions, Russia has built up its

599
00:30:30,360 --> 00:30:34,959
Speaker 4: war machine, Europe not really. That's just one example. And

600
00:30:35,000 --> 00:30:37,120
Speaker 4: I think you're asking about the European growth model and

601
00:30:37,240 --> 00:30:41,920
Speaker 4: especially Germany, and you know, maybe my perception of watching

602
00:30:42,000 --> 00:30:45,239
Speaker 4: this for a long time is that Germany was the

603
00:30:45,280 --> 00:30:47,400
Speaker 4: sick man of Europe when I was at the IMF,

604
00:30:47,680 --> 00:30:51,440
Speaker 4: that was the line, that was the headline of the economist.

605
00:30:51,680 --> 00:30:55,720
Speaker 4: That was the two thousand, the early two thousand, and

606
00:30:56,280 --> 00:31:00,680
Speaker 4: then they reinvented themselves with the you know forms that

607
00:31:00,720 --> 00:31:07,280
Speaker 4: they did that were made a little bit more easier

608
00:31:07,320 --> 00:31:11,000
Speaker 4: to fire workers and things like that, and then they've

609
00:31:11,120 --> 00:31:15,240
Speaker 4: undone everything with pensions and everything. I mean, they've gone

610
00:31:15,240 --> 00:31:18,480
Speaker 4: to a much more French style model, and they're getting

611
00:31:18,560 --> 00:31:21,840
Speaker 4: French style you know, growth rates, and at the same

612
00:31:21,920 --> 00:31:26,479
Speaker 4: time China may not be the export destination that it was.

613
00:31:27,120 --> 00:31:29,760
Speaker 4: The electric vehicles are coming from China instead of the

614
00:31:29,800 --> 00:31:33,040
Speaker 4: other ways around. So I mean, I'm a believer in

615
00:31:33,120 --> 00:31:36,760
Speaker 4: Germany that they the East Germany was successful under the

616
00:31:36,840 --> 00:31:40,200
Speaker 4: Russian that they were the most successful of the Soviet bloc.

617
00:31:40,640 --> 00:31:43,520
Speaker 4: They will reinvent themselves, but it's not happening in the

618
00:31:43,600 --> 00:31:48,920
Speaker 4: current administration. And so more broadly in Europe, you know,

619
00:31:49,200 --> 00:31:51,800
Speaker 4: there's definitely a question of what their growth model is.

620
00:31:52,280 --> 00:31:54,200
Speaker 4: And they a little bit like a deer caught in

621
00:31:54,200 --> 00:31:58,000
Speaker 4: the headlights here of the Russia on one side, the

622
00:31:58,120 --> 00:32:03,640
Speaker 4: US probably in rich from Europe. If it's Trump because

623
00:32:03,680 --> 00:32:06,600
Speaker 4: he's retreating from everything, if it's Biden because he's trying

624
00:32:06,600 --> 00:32:09,160
Speaker 4: to spread himself too thin one way or the other,

625
00:32:09,520 --> 00:32:11,880
Speaker 4: you know less in Europe, what are you doing about it?

626
00:32:11,920 --> 00:32:13,560
Speaker 4: And I just get blank stares.

627
00:32:14,200 --> 00:32:15,720
Speaker 6: So they don't have an answer yet. What about the

628
00:32:15,840 --> 00:32:18,880
Speaker 6: US growth model and the deficit in the United States

629
00:32:19,200 --> 00:32:21,160
Speaker 6: that they're running and the next ten years or so

630
00:32:21,240 --> 00:32:24,240
Speaker 6: we'll be paying more on interest payments than our defense bills.

631
00:32:24,640 --> 00:32:27,720
Speaker 4: So I believe, and I said this last year when

632
00:32:27,720 --> 00:32:31,760
Speaker 4: I visit you, that the era where interest rates are

633
00:32:31,880 --> 00:32:35,600
Speaker 4: zero and everything's free is over. We never should have

634
00:32:35,640 --> 00:32:38,959
Speaker 4: thought everything was free. Interest rates fell off a cliff

635
00:32:39,000 --> 00:32:41,360
Speaker 4: after the financial crisis. If you look at the long

636
00:32:41,480 --> 00:32:44,360
Speaker 4: history of interest rates and real interest rates as I have,

637
00:32:44,880 --> 00:32:48,400
Speaker 4: We've had periods where it's been low before, but they end.

638
00:32:48,400 --> 00:32:51,360
Speaker 4: We've had periods worth high before, but they end. And

639
00:32:51,440 --> 00:32:54,080
Speaker 4: I think we're much more on trend now in where

640
00:32:54,160 --> 00:32:58,480
Speaker 4: interest rates are. If that's the case, then there's a

641
00:32:58,480 --> 00:33:01,120
Speaker 4: lot more adjusting to do. And there seems to be

642
00:33:01,360 --> 00:33:05,120
Speaker 4: zero political appetite in Washington. The only time they can

643
00:33:05,240 --> 00:33:08,760
Speaker 4: kind of get things under control is when there's a

644
00:33:08,800 --> 00:33:11,880
Speaker 4: divided government and they can't agree on anything, and they can't.

645
00:33:12,080 --> 00:33:15,840
Speaker 4: But I mean, certainly, if you get the Democrats sweeping

646
00:33:15,840 --> 00:33:18,560
Speaker 4: into office in a bigger way than last time, you

647
00:33:18,640 --> 00:33:22,000
Speaker 4: know what's going to happen. And Trump will run deficits too.

648
00:33:22,000 --> 00:33:24,120
Speaker 4: I mean, I hate to predict anything he's going to

649
00:33:24,240 --> 00:33:27,840
Speaker 4: do because the whole problems he's completely unpredictable. But you know,

650
00:33:27,880 --> 00:33:30,440
Speaker 4: there's no appetite for that, and I think what is

651
00:33:30,440 --> 00:33:32,160
Speaker 4: the endgame to that? The end games? We're going to

652
00:33:32,160 --> 00:33:35,560
Speaker 4: get these bouts of inflation like we had, and that's

653
00:33:35,640 --> 00:33:38,040
Speaker 4: not an end in itself, because then the bouts of

654
00:33:38,040 --> 00:33:42,320
Speaker 4: inflation eventually feed into interest rates, and we don't believe

655
00:33:42,400 --> 00:33:44,960
Speaker 4: that inflation's going back to two percent, and it's a

656
00:33:45,000 --> 00:33:48,440
Speaker 4: bad cycle. We've seen this movie before based on that.

657
00:33:48,640 --> 00:33:50,920
Speaker 10: Given the fact that everyone's expecting the Fed to cut rates,

658
00:33:50,960 --> 00:33:53,080
Speaker 10: possibly if you believe the market six times this year,

659
00:33:53,600 --> 00:33:55,640
Speaker 10: what do you think is sort of the end place

660
00:33:55,880 --> 00:33:57,200
Speaker 10: for this rate cutting cycle.

661
00:33:58,280 --> 00:34:00,560
Speaker 4: I mean, I think we end up and a half

662
00:34:00,600 --> 00:34:03,240
Speaker 4: percent at the very end of this rate cutting cycle,

663
00:34:03,400 --> 00:34:07,560
Speaker 4: something like that, and you know, long term rates at

664
00:34:07,800 --> 00:34:10,680
Speaker 4: four to four or five, you know, something like that

665
00:34:10,719 --> 00:34:16,360
Speaker 4: in the very long run. But you know, we're I

666
00:34:16,400 --> 00:34:19,040
Speaker 4: think what happens in the next year, the six rate cuts,

667
00:34:19,480 --> 00:34:22,560
Speaker 4: that's a pipe dream. If we have a soft landing,

668
00:34:22,640 --> 00:34:25,600
Speaker 4: that's not happening. We'll get two or three. But there

669
00:34:25,680 --> 00:34:28,359
Speaker 4: is a chance. I've said, the one thing we can

670
00:34:28,400 --> 00:34:32,040
Speaker 4: probably be sure of is that whatever the consensus is

671
00:34:32,360 --> 00:34:34,600
Speaker 4: here and not just here, it's going to be wrong.

672
00:34:34,880 --> 00:34:37,920
Speaker 4: And if we get a deep recession, and definitely it

673
00:34:37,960 --> 00:34:39,719
Speaker 4: could happen. How is it going to happen, I don't know,

674
00:34:39,880 --> 00:34:43,200
Speaker 4: but twenty five percent chance it happens. Well, they will

675
00:34:43,239 --> 00:34:47,160
Speaker 4: cut rates a lot not six times. They could cut rates,

676
00:34:47,239 --> 00:34:50,440
Speaker 4: you know, fifteen times. I'm doing the math right, but

677
00:34:50,640 --> 00:34:54,040
Speaker 4: a lot of times, you know too. If that happens,

678
00:34:54,080 --> 00:34:57,080
Speaker 4: they're going to drive interest rates to one percent, So

679
00:34:57,360 --> 00:35:00,400
Speaker 4: that could be built into that six rate cards.

680
00:35:00,560 --> 00:35:03,600
Speaker 8: Possibly Again, this was great, Fantastic's not the wake with you,

681
00:35:03,760 --> 00:35:06,280
Speaker 8: as I Professor Ken Ragoff of Harvard.

682
00:35:06,800 --> 00:35:10,640
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683
00:35:10,760 --> 00:35:14,960
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00:35:15,239 --> 00:35:18,719
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00:35:18,840 --> 00:35:23,400
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00:35:23,400 --> 00:35:27,440
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00:35:31,600 --> 00:35:33,160
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