WEBVTT - VanEck CEO Jan Van Eck Talks Market Catalysts

0:00:02.520 --> 0:00:06.960
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.760 --> 0:00:07.920
<v Speaker 2>John.

0:00:08.000 --> 0:00:09.640
<v Speaker 3>Great to have you back with us. There is a

0:00:09.640 --> 0:00:13.560
<v Speaker 3>lot coming out investors. There is this laundry list. What's

0:00:13.840 --> 0:00:16.880
<v Speaker 3>most important to you when you think about the investment

0:00:16.960 --> 0:00:19.640
<v Speaker 3>environment and what shapes your strategy right now?

0:00:20.520 --> 0:00:24.400
<v Speaker 2>Well, I'm just sicking keying off of this monetary policy discussion.

0:00:24.560 --> 0:00:27.640
<v Speaker 2>I just have to say that the big piano hanging

0:00:27.680 --> 0:00:30.200
<v Speaker 2>over our heads to me is a federal budget deficit.

0:00:30.680 --> 0:00:32.640
<v Speaker 2>And since I saw you last, we actually got some

0:00:32.640 --> 0:00:36.159
<v Speaker 2>pretty good news for fiscal twenty five that as a

0:00:36.240 --> 0:00:40.040
<v Speaker 2>percent of GDP, the budget deficit had fallen from six

0:00:40.080 --> 0:00:42.839
<v Speaker 2>and a half percent to five point nine percent. I've

0:00:42.880 --> 0:00:45.120
<v Speaker 2>been focusing very much on the year that we just

0:00:45.159 --> 0:00:49.480
<v Speaker 2>started on October first, because I think, you know, that's

0:00:49.560 --> 0:00:52.479
<v Speaker 2>the big risk, right the FED. You know, the federal

0:00:52.520 --> 0:00:55.840
<v Speaker 2>government has to borrow or pay a trillion dollars a

0:00:55.920 --> 0:00:58.920
<v Speaker 2>year as sure, the FED governor, you know, affects that.

0:00:59.040 --> 0:01:01.800
<v Speaker 2>But what the Marcus think matters a lot too. And

0:01:01.840 --> 0:01:04.959
<v Speaker 2>if we can reduce that pressure by having better finances,

0:01:05.000 --> 0:01:07.440
<v Speaker 2>that's really good news for the market, I think.

0:01:07.560 --> 0:01:11.400
<v Speaker 3>But that's not an argument for having not an independent FED, right,

0:01:11.440 --> 0:01:14.160
<v Speaker 3>you still want to Fed. No, No, that does monetary

0:01:14.200 --> 0:01:17.240
<v Speaker 3>policy according to inflationary pressures and labor pressure.

0:01:17.360 --> 0:01:20.480
<v Speaker 2>Right, but what what you know, these the wonky economists

0:01:20.480 --> 0:01:23.039
<v Speaker 2>on Wall Street don't want is to have so much

0:01:23.160 --> 0:01:26.399
<v Speaker 2>debt that you basically are forcing the FED to use

0:01:26.440 --> 0:01:29.919
<v Speaker 2>something like Japan did yield curve control or some really

0:01:29.959 --> 0:01:35.039
<v Speaker 2>extraordinary measures that would really be unwelcome. So, you know,

0:01:35.080 --> 0:01:37.840
<v Speaker 2>we can talk about the personalities and everything, but right now,

0:01:37.880 --> 0:01:40.759
<v Speaker 2>the direction of movement is good compared to coming into

0:01:40.800 --> 0:01:43.360
<v Speaker 2>the year where we had a lot of fiscal concerns

0:01:43.400 --> 0:01:45.280
<v Speaker 2>and the FED chair would have had a lot more

0:01:45.319 --> 0:01:45.920
<v Speaker 2>on this plate.

0:01:46.160 --> 0:01:49.000
<v Speaker 1>You when you were on with us last it was

0:01:49.040 --> 0:01:51.120
<v Speaker 1>about a month ago. It was just before the government shutdown,

0:01:51.120 --> 0:01:52.800
<v Speaker 1>and we asked you about whether or not a government

0:01:52.840 --> 0:01:55.559
<v Speaker 1>shutdown actually matters to markets. Well, here we are.

0:01:55.840 --> 0:01:57.840
<v Speaker 3>A month later, and it's amazing.

0:01:57.960 --> 0:02:00.000
<v Speaker 1>It is amazing. I mean, it's the second longest shutdown

0:02:00.360 --> 0:02:04.520
<v Speaker 1>in history entering you know, it's it's remarkable to see.

0:02:04.640 --> 0:02:06.840
<v Speaker 1>Do you you said it didn't matter, right, Do you

0:02:06.920 --> 0:02:07.520
<v Speaker 1>stand by it?

0:02:07.640 --> 0:02:09.720
<v Speaker 2>Yeah? I mean I don't think that there's any evidence

0:02:09.760 --> 0:02:13.120
<v Speaker 2>that has mattered. I think what's really worrisome though, is

0:02:13.160 --> 0:02:14.560
<v Speaker 2>the fact that what.

0:02:14.480 --> 0:02:18.119
<v Speaker 3>The dysfunctional government. You have a Washington of the government

0:02:18.600 --> 0:02:19.760
<v Speaker 3>that isn't working.

0:02:19.520 --> 0:02:23.079
<v Speaker 2>That they don't care, right, neither party really cares if

0:02:23.120 --> 0:02:25.600
<v Speaker 2>something bad is happening, if they feel like the other

0:02:25.639 --> 0:02:28.359
<v Speaker 2>party can get the blame. And again, you know, I

0:02:28.360 --> 0:02:31.080
<v Speaker 2>mean I only talk about the debt problem, but you

0:02:31.080 --> 0:02:33.760
<v Speaker 2>know that's really what we all worry about at the end, Like,

0:02:33.800 --> 0:02:36.640
<v Speaker 2>well we never solve social security? Will we cut Social

0:02:36.639 --> 0:02:39.839
<v Speaker 2>Security payments in twenty thirty three like we're scheduled to? Yeah,

0:02:39.880 --> 0:02:43.480
<v Speaker 2>I mean, you know, those are the longer term concerns.

0:02:44.360 --> 0:02:46.720
<v Speaker 3>When you look at this market environment. The other things

0:02:46.720 --> 0:02:48.560
<v Speaker 3>that are coming, and these are obviously the ones that

0:02:48.600 --> 0:02:51.120
<v Speaker 3>we just talked about, are super super big. But I

0:02:51.160 --> 0:02:53.560
<v Speaker 3>do think about our focus on you know, these mag

0:02:53.639 --> 0:02:56.440
<v Speaker 3>seven earnings. We get a big drop this week and

0:02:56.480 --> 0:03:00.320
<v Speaker 3>we'll learn once again whether these AI investments are off.

0:03:00.400 --> 0:03:01.920
<v Speaker 3>Last time around, we saw it with Medow and some

0:03:01.960 --> 0:03:05.520
<v Speaker 3>of the other big hyperscalers that these investments seem to

0:03:05.919 --> 0:03:08.680
<v Speaker 3>make sense at this point the AI trade.

0:03:08.720 --> 0:03:11.400
<v Speaker 2>Where are you on that it's going to AI? We

0:03:11.440 --> 0:03:15.600
<v Speaker 2>have a compute shortage that's very visible to the whole world.

0:03:16.440 --> 0:03:19.400
<v Speaker 2>And you know what's really interesting, I did some research

0:03:19.440 --> 0:03:22.400
<v Speaker 2>on this since we last talked, and open ai is

0:03:22.520 --> 0:03:25.600
<v Speaker 2>really emerging as the giant in this area. So they

0:03:25.600 --> 0:03:30.760
<v Speaker 2>have eight hundred million monthly active users. The next biggest, Gemini,

0:03:30.919 --> 0:03:34.040
<v Speaker 2>has four hundred and fifty but much more interesting. So,

0:03:34.160 --> 0:03:39.320
<v Speaker 2>your average website is now getting basically traffic coming from

0:03:39.320 --> 0:03:42.800
<v Speaker 2>the AI chats somewhere between let's call it one percent

0:03:42.840 --> 0:03:45.600
<v Speaker 2>at the low end and seventeen percent at the high end.

0:03:46.240 --> 0:03:49.120
<v Speaker 2>Of the traffic that's going to your average website like

0:03:49.160 --> 0:03:51.320
<v Speaker 2>the Bloomberg website or the van k website.

0:03:51.320 --> 0:03:52.320
<v Speaker 3>We're not average million.

0:03:55.640 --> 0:03:59.200
<v Speaker 2>I can't believe I said that. But of that traffic,

0:03:59.640 --> 0:04:04.120
<v Speaker 2>open is generating over ninety percent of that traffic. They

0:04:04.120 --> 0:04:08.400
<v Speaker 2>are completely dominating the other mag seven companies when it

0:04:08.440 --> 0:04:12.080
<v Speaker 2>comes to you know that now on the flip side,

0:04:12.280 --> 0:04:13.800
<v Speaker 2>they are trying to build out a ton of this

0:04:13.920 --> 0:04:16.680
<v Speaker 2>compute and they don't have the money, right. All the

0:04:16.720 --> 0:04:20.080
<v Speaker 2>other hyperscalers have a lot of revenue not public right,

0:04:20.160 --> 0:04:22.440
<v Speaker 2>and the revenue is only forty to fifty billion, so

0:04:22.600 --> 0:04:24.920
<v Speaker 2>and they want to spend hundreds of billions on compute.

0:04:24.960 --> 0:04:27.760
<v Speaker 2>So that's the one thing that I look at as

0:04:27.800 --> 0:04:30.960
<v Speaker 2>a potential weakness in this AI trade. But otherwise we've

0:04:30.960 --> 0:04:35.280
<v Speaker 2>got at least two calendar years of demand to deal with.

0:04:35.400 --> 0:04:39.240
<v Speaker 1>So you're not seeing ghosts of the late nineties tech

0:04:39.279 --> 0:04:39.800
<v Speaker 1>crash here.

0:04:40.640 --> 0:04:43.240
<v Speaker 2>As I said, the only vulnerability I see isn't this

0:04:43.279 --> 0:04:46.760
<v Speaker 2>sort of systemic thing. It's one company that's spending a

0:04:46.760 --> 0:04:49.320
<v Speaker 2>ton of money and so far they've been able to

0:04:49.360 --> 0:04:51.400
<v Speaker 2>raise it. Everyone else has got the revenue to cover

0:04:51.440 --> 0:04:54.160
<v Speaker 2>their spend, right, I mean, they've got the cash flow, and.

0:04:54.080 --> 0:04:56.400
<v Speaker 1>I'm sure in opening I can keep raising money. It

0:04:56.440 --> 0:04:58.960
<v Speaker 1>seems like there's plenty of demand or maybe even do

0:04:59.400 --> 0:05:01.120
<v Speaker 1>are you are you doing chat GPT right now?

0:05:01.200 --> 0:05:01.360
<v Speaker 2>Kara?

0:05:01.480 --> 0:05:04.599
<v Speaker 3>No, no no, I was actually no, no, no no, I've.

0:05:04.480 --> 0:05:05.560
<v Speaker 1>Just grabbed my phone.

0:05:05.600 --> 0:05:07.760
<v Speaker 3>I did describe my phone, which is such a no

0:05:07.760 --> 0:05:11.239
<v Speaker 3>noe when you're on air. Lisa Bramowitz, who we all

0:05:11.920 --> 0:05:15.080
<v Speaker 3>she's incredible on surveillance on the TV side, and she

0:05:15.080 --> 0:05:17.200
<v Speaker 3>said the Max seven stocks have accounted for almost half

0:05:17.240 --> 0:05:19.159
<v Speaker 3>of the S and P five hundred and fifteen percent

0:05:19.160 --> 0:05:23.039
<v Speaker 3>game this year. Microsoft, Alphabet, Amazon Meta expected to post

0:05:23.040 --> 0:05:25.280
<v Speaker 3>a combined three hundred and sixty billion CAPEX in their

0:05:25.320 --> 0:05:28.279
<v Speaker 3>current fiscal years and nearly four hundred and twenty billion

0:05:28.400 --> 0:05:33.479
<v Speaker 3>next year So what I'm just wondering is the market

0:05:33.760 --> 0:05:36.000
<v Speaker 3>we've talked about that we feel like in the earning

0:05:36.080 --> 0:05:40.520
<v Speaker 3>season we're seeing breath expand. But again, these companies are

0:05:40.560 --> 0:05:42.719
<v Speaker 3>still so important right to the trade.

0:05:42.800 --> 0:05:45.040
<v Speaker 2>Yeah, they're really I mean, we want to ask ourselves

0:05:45.080 --> 0:05:47.040
<v Speaker 2>why do they have such a high percent of the

0:05:47.080 --> 0:05:49.039
<v Speaker 2>S and P five hundred and we have an answer

0:05:49.240 --> 0:05:52.760
<v Speaker 2>because their profit dynamos. Not only is the revenue going up,

0:05:52.760 --> 0:05:56.160
<v Speaker 2>but they're caught their employee bases are flat if it's

0:05:56.279 --> 0:06:01.159
<v Speaker 2>not shrinking, so rising revenue, flat costs because one of

0:06:01.160 --> 0:06:03.720
<v Speaker 2>the big beneficiars obviously are software companies.

0:06:04.440 --> 0:06:05.839
<v Speaker 1>We have thirty seconds on gold.

0:06:05.960 --> 0:06:07.280
<v Speaker 3>This is where you are going to go there?

0:06:07.320 --> 0:06:07.480
<v Speaker 2>Yeah?

0:06:07.800 --> 0:06:08.960
<v Speaker 1>Is that where you were going to going to go?

0:06:09.240 --> 0:06:12.960
<v Speaker 1>Com so down eight percent from its peaks, from its peak,

0:06:13.520 --> 0:06:14.080
<v Speaker 1>further to go?

0:06:14.440 --> 0:06:17.240
<v Speaker 2>Yeah, twenty percent correction in the bull market would be

0:06:17.279 --> 0:06:17.920
<v Speaker 2>my base case.

0:06:17.960 --> 0:06:19.480
<v Speaker 1>That's your call. Thirty five dollars?

0:06:20.040 --> 0:06:22.240
<v Speaker 3>Yes, okay, still not a bad year, right.

0:06:22.560 --> 0:06:24.880
<v Speaker 2>Great, great year. I think the question is, you know,

0:06:24.920 --> 0:06:28.039
<v Speaker 2>everyone's impatient already looking at their phones and during interviews,

0:06:28.440 --> 0:06:32.160
<v Speaker 2>the question is how long does gold consolidate? Right?

0:06:32.520 --> 0:06:33.640
<v Speaker 3>We're the goodness of the show.

0:06:34.000 --> 0:06:37.680
<v Speaker 2>Twelve A whole twelve months of consolidation would bore the market.

0:06:38.040 --> 0:06:40.599
<v Speaker 2>So we may have one of those situations, but still

0:06:40.640 --> 0:06:43.080
<v Speaker 2>I you know, we like it long term, you know,

0:06:43.160 --> 0:06:44.039
<v Speaker 2>for the next decade.

0:06:44.279 --> 0:06:46.400
<v Speaker 3>Always fund when you join us, come back soon again.

0:06:47.240 --> 0:06:49.440
<v Speaker 3>Jan van Ki is, of course, chief executive officer of

0:06:49.480 --> 0:06:51.080
<v Speaker 3>venex joining us here in studio.