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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to

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Speaker 1: another episode of The Bots podcast.

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Speaker 2: I'm Tracy Allaway.

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Speaker 3: And I'm Joe Wisenthal.

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Speaker 2: Joe, do you remember, I think it was in twenty

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Speaker 2: twenty two everyone was talking about stagflation.

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Speaker 3: Yes, of course, because we had it right, because we

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Speaker 3: had markets were low, so people were talking about recession.

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Speaker 3: The FED was hiking interest rates aggressively, and inflation in

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Speaker 3: twenty twenty two was peaking. So it certainly seemed like

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Speaker 3: we could have had the combo right then for essentially

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Speaker 3: elevated inflation and some kind of recession.

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Speaker 2: Yes, And in fact, before we recorded this episode, I

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Speaker 2: went back and I looked at a Google trends chart

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Speaker 2: for the word stagflation, and like, the peak in twenty

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Speaker 2: twenty two is just amazing. And then it sort of

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Speaker 2: fell off because we definitely had inflation, we didn't necessarily

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Speaker 2: have lower economic growth. But I think now at the

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Speaker 2: tail end of twenty twenty four, some of that stagflation

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Speaker 2: talk is beginning to creep back into I guess the

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Speaker 2: economic discourse.

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Speaker 3: Yeah, a little bit. I mean what I would say

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Speaker 3: is I would agree with you. There seems to be

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Speaker 3: a couple things going on that are very confusing, to

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Speaker 3: say the least. But one is the sort of I

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Speaker 3: don't know if it's acceptance or reality that like inflation

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Speaker 3: has come down quite a bit, but maybe it's going

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Speaker 3: to keep bumping up against the ceiling, or maybe it's

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Speaker 3: going to keep like bouncing off the floor, so to speak.

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Speaker 2: Yeah, that last mile is going to be difficult still.

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Speaker 3: And then on some measures, the economy still seems good,

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Speaker 3: but you look at some of the pmiyes, issms, other

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Speaker 3: industrial measures, labor market measures, some seem to be slowing down.

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Speaker 3: So like, I still think this idea of like I

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Speaker 3: don't know if it's called stagflation, but this sort of

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Speaker 3: unpleasant combination of not great growth, not great real real growth,

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Speaker 3: and inflation that's still like at the higher end of

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Speaker 3: what people are comfortable with, feels like something that could

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Speaker 3: very plausibly be the case for a while.

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Speaker 2: It's definitely in the air. So we need to dig

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Speaker 2: into this particular argument. And who better to speak to

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Speaker 2: than Neuriel Rubini. He is, of course, the chief economist

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Speaker 2: and portfolio manager of the Atlas America Fund, which is

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Speaker 2: a new ETF that has just launched and He is

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Speaker 2: also the chairman and CEO of Rubini Macro Associates. Really

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Speaker 2: the perfect guest to do this type of macro with us. So, Nuriel,

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Speaker 2: welcome back to the show.

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Speaker 4: Good being with you today, see and Zoe.

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Speaker 2: Do you get the same sense that the the risk

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Speaker 2: of stagflation is starting to pick up again?

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Speaker 4: Certainly is one of the risks that have to consider.

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Speaker 4: And I think that the question and everybody is man

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Speaker 4: of course, is what would be the economic policies of

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Speaker 4: Trump and the impact on growth and inflation. If I

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Speaker 4: have to look ahead, I would say that some of

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Speaker 4: his policies actually could increase growth and reduce inflation, being

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Speaker 4: pro business in general, making those tax cut permanent, having

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Speaker 4: government efficiency, deregulating the economy, maybe even increasing the production

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Speaker 4: of fossil fuel, reducing the price of energy. Those go

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Speaker 4: in the direction of policies actually increase growth and reduce inflation.

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Speaker 4: But on the other side, there's a long list of

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Speaker 4: other policy that could be implemented. First of them, of course,

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Speaker 4: tariff protectionism, an economic war with China. Secondly draconia, restriction

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Speaker 4: to migration, if not mass deportation. Three unfunded tax cuts

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Speaker 4: and run away fiscal deficits for potentially in attempt to

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Speaker 4: weekend the dollar in a disorderly way. Five maybe trying

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Speaker 4: to interfere with the independence of the FAD. Now, if

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Speaker 4: the second set of policy were to be implemented, their

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Speaker 4: impact will be higher inflation over the time and lower

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Speaker 4: economic growth. So those sets of policy will be definitely

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Speaker 4: in the stockflationary direction.

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Speaker 3: There was an amazing summary by the way of the

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Speaker 3: two ways of thinking about paths, And I guess what's

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Speaker 3: striking listening to you sort of list off the two

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Speaker 3: columns is within trump Ism or within the Trump administration.

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Speaker 3: It feels like there are several competing camps so to speak,

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Speaker 3: and we don't really know how it's going to resolve.

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Speaker 3: But there are a lot of internal contradictions, whether on

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Speaker 3: personnel or ideology, and to some extent you just laid

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Speaker 3: out are sort of I don't know, maybe the fork

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Speaker 3: in the road, so to speak, of how things could go.

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Speaker 4: Yeah, you're absolutely right. There is a spectrum of positions

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Speaker 4: on the variety of economic issues. Some are truly protectionist,

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Speaker 4: Others like Scott bass And says we want to escalate

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Speaker 4: as a way of de escalating, and we're not going

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Speaker 4: to know until after, of course, inauguration, in which direction

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Speaker 4: the economic policy will go. I would say, however, the

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Speaker 4: following observation. I think that the potentially more stackflationary policy

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Speaker 4: will be constrained by several factors. One, of course, is

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Speaker 4: the choice of some of the economic advisors like Scot

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Speaker 4: Bass and understand markets and in as that if you

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Speaker 4: do things that are radically stackflationary, it will be bad

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Speaker 4: for the economy and bad for the market, so you're

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Speaker 4: going to try to push down against those. Secondly, I

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Speaker 4: think there'll be also significant impact of market discipline. If

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Speaker 4: you have run away budget deficits, migration restrictions, and tire

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Speaker 4: if that increase inflation, then the bond market digilant is

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Speaker 4: going to wake up expect that inflation will be higher,

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Speaker 4: rates will be higher, and then rising in bond deal

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Speaker 4: could lead to a correctional stock market. And if there's

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Speaker 4: one thing that Trump cares about is one the stock market.

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Speaker 4: We also cares about the bond market because high bond

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Speaker 4: deals imply high cost of borrowing and that's going to

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Speaker 4: be hurting the economy. I think the other constraint is

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Speaker 4: going to be, of course, the fact that the Fed

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Speaker 4: is still independent. If some of these policies were to

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Speaker 4: be pursued, the FED will likely cut next week in December,

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Speaker 4: may not cut again, or may cut much less than

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Speaker 4: the market are expecting next year. In an extreme scenario

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Speaker 4: in which inflation goes much higher, they could even increase

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Speaker 4: interest rates. And that's going to be So there is

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Speaker 4: both a market discipline and there's also FED discipline that

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Speaker 4: my constraint to some extent those stock preationary.

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Speaker 2: Policies, setting aside the Trump administration and what they might do,

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Speaker 2: and I realized that that's a big thing to set

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Speaker 2: aside right now. But the path of inflation, it has

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Speaker 2: come down from the peaks that we saw in twenty

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Speaker 2: twenty two. As Joe was talking about why did that happen?

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Speaker 2: In your opinion, because one of the you were one

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Speaker 2: of the few voices I remember in early twenty twenty

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Speaker 2: when the pandemic was just unfolding, that predicted inflation, and

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Speaker 2: you know it happened. But since then it has petered

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Speaker 2: out a little bit.

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Speaker 4: Yes, I mean, the reason why we had this burst

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Speaker 4: of inflation during and after COVID were both bad policies.

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Speaker 4: The amount of monetary, fiscal and credit zing exposts that

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Speaker 4: turned out to be way excessive given the size of

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Speaker 4: the economic shock, that was relatively temporary. But second there

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Speaker 4: was so bad luck. There were three negative aggregate supply

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Speaker 4: shocks that essentially reduced growth and increased inflation. One was

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Speaker 4: the impact of course of COVID on the supply of

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Speaker 4: labor and production of goods and on global supply chains.

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Speaker 4: The second was the impact of the brutal rush invasion

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Speaker 4: of Ukraine on commodity prices entry the kind of a

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Speaker 4: zero COVID policy of China that further restricted global supply chain.

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Speaker 4: So why inflation fell in part was, of course central

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Speaker 4: bank gave up on quantity easy normalized policy rates. But

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Speaker 4: if that was the case, we should have seen inflation

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Speaker 4: falling dramatically, but probably a much stronger slow down of

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Speaker 4: economic growth, maybe a recession the way most economist thought

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Speaker 4: about it. And instead we got the reduction inflation. But growth,

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Speaker 4: say in US as remain robust above potential twenty a

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Speaker 4: half percent in the last couple of years. So I

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Speaker 4: think in part we also got lucky, and lack was

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Speaker 4: the distree negative aggregate suppli show got reversed. First, we

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Speaker 4: had the end of COVID, so supply of libor increased,

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Speaker 4: we started producing goods and services. Supply chains got at

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Speaker 4: lays say, unstuck. The impact on commodity prices of the

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Speaker 4: invasion of Ukraine became ready US because there were new

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Speaker 4: sources of energy coming from Middle least US and so

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Speaker 4: on that went to Europe. And finally China gave up

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Speaker 4: on a zero COVID policy, so we got luck. And

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Speaker 4: on top of it, there was another set of actors

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Speaker 4: at least for the US that maintained growth strong. One

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Speaker 4: was that we had significant amount of migration documented or

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Speaker 4: otherwise people estimated maybe up to ten million people entered

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Speaker 4: in the United States in the last four years. That

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Speaker 4: increased the label supply, increase growth, and reduce some pressures

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Speaker 4: on wage inflation. Definitely right now. Politically, of course, migration

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Speaker 4: is a hot topic, but from economic point of view,

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Speaker 4: it increased growth and reduced inflation. And we had also

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Speaker 4: other physical stimulus that helped the growth from the Infrastructure Act,

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Speaker 4: the IRA and the Chips Act, and then we had

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Speaker 4: got Also of course AI revolution has led to significant

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Speaker 4: increasing capecs. So least for the United States, that think

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Speaker 4: was a combination of active factors that implied that inflation

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Speaker 4: file and growth remained robust, not so in other parts

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Speaker 4: of the world.

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Speaker 3: I want to talk a little bit more about the dollar,

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Speaker 3: and there are so many different ways that you can

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Speaker 3: begin a conversation or about thinking about the role of

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Speaker 3: the US dollar. You can think about the effects that

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Speaker 3: tariffs will have on inflation or the strength of the

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Speaker 3: US dollar relative to other currencies. You can think about

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Speaker 3: the central role that the government that the US dollar

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Speaker 3: plays in global trade and finance, and whether there are

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Speaker 3: possible rivals that are emerging. One of the things that

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Speaker 3: we saw recently from President Trump was a threat that

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Speaker 3: he put on his Truth Social Account against any of terror,

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Speaker 3: against any country that would attempt to form a rival

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Speaker 3: currency block, and the specifically mentioned the Bricks. I don't

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Speaker 3: know if the Bricks is a real thing or not.

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Speaker 3: It sometimes seems like a meme to me, but there

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Speaker 3: is an organization called the Bricks, and sometimes you see

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Speaker 3: headlines about dollar alternatives in the short to medium term.

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Speaker 3: Is there a real prospect of some other currency, the

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Speaker 3: Chinese un perhaps taking sizeable market share and global trade

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Speaker 3: from the US dollar.

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Speaker 4: Well, I would say for now, not yet. But the

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Speaker 4: dollarization process that could occur over time, and what could

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Speaker 4: trigger it was, of course, that we have rightly or

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Speaker 4: wrongly weaponized the dollar in the last few years for

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Speaker 4: national and security and foreign policy purposes, imposing a variety

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Speaker 4: of sanctions against a variety of strategic rivals of the

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Speaker 4: United States and the West. This isue about finding an alternative.

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Speaker 4: The dollar is complicated because you cannot essentially replace something

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Speaker 4: with nothing, and the question is what's the alternative to

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Speaker 4: US dollar for US actor treasure there Summers once jokingly said,

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Speaker 4: people don't like the dollar, but you know, Europe is

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Speaker 4: a museum, China as a prison, Japan is a nursing home,

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Speaker 4: and bitcoin so for now is an experiment. So there

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Speaker 4: is something of an happiness with the US dollar. But

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Speaker 4: for the time being, I would say the US dollar

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Speaker 4: is still dominant. And by the way, I would probably

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Speaker 4: argue that the Trump police is regarding the dollar a

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Speaker 4: little bit confused, because on one side, there is this

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Speaker 4: concern that a strong dollar has led to the industrialization,

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Speaker 4: loss of competitiveness, large trade, current account deficits people free

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Speaker 4: riding on the US So there is a sense I

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Speaker 4: would like a weaker dollar. But if you think about

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Speaker 4: policy and economic fundamentalals, tariffs will strengthen the dollar, and

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Speaker 4: threads of tariffs have led since selection to the dollar

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Speaker 4: becoming stronger. Trump says, I don't want other country to

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Speaker 4: unquote the dollar rise, and I'm going to impose tarif

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Speaker 4: on them if they do so. He wants to maintain

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Speaker 4: the role of the dollars a major global reserve currency.

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Speaker 4: If that's the case, demand for dollar ass remain high,

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Speaker 4: the dollar remains strong in terms of relative growth. The

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Speaker 4: US is doing stronger than Europe and other advanced economies

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Speaker 4: that just strengthen the dollar in terms of relative monetary

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Speaker 4: Police is probably given these differentials in growth and inflation,

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Speaker 4: the US or the FED is going to cut rate

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Speaker 4: less than other countries. Well, in Europe, the colomies we

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Speaker 4: can there'll be more cuts. And overall, given the productive

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Speaker 4: growth of the US, the boom of new technologies, AI,

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Speaker 4: you name it, capital flows are going into the United States.

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Speaker 4: So I think there is this dilemma that fundamentals and

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Speaker 4: police would suggest that the dollar is going to become stronger,

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Speaker 4: but than that objective of trying to reduce the trade

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Speaker 4: imbalance of the US to a weaker dollar unless you

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Speaker 4: have a big agreement on currency, is hard to fathom

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Speaker 4: how you're going to do it. There are some ideas

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Speaker 4: along those lines. Is going to be, to say, challenging.

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Speaker 2: This is something I completely agree with, and I think

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Speaker 2: I've said on the podcast before that it feels like

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Speaker 2: Trump doesn't know what type of dollar he wants because instinctively,

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Speaker 2: I think there's a sense that he wants to say

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Speaker 2: the dollar is strong. It sounds good when you can

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Speaker 2: say those types of things, and generally it means that

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Speaker 2: the US economy is doing well relative to others. But

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Speaker 2: if he's serious about boosting manufacturing and exports, then he

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Speaker 2: needs the weaker dollar. There's also that tension between decoupling

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Speaker 2: the US economy from the rest of the world, maybe

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Speaker 2: becoming more self reliant, and also wanting the dollar to

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Speaker 2: be at the center of a globalized financial se Are

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Speaker 2: there ways that the Trump administration could like kind of

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Speaker 2: thread the needle between those two different objectives.

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Speaker 4: No, it's not going to be easy because either you want,

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Speaker 4: you know, a weeker dollar to try to improve competitiveness,

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Speaker 4: reduce the trade balances and so on, but then the

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Speaker 4: dollar will left weaken. Or instead, if you want to

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Speaker 4: maintain the globals or currency roll of the dollar, then

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Speaker 4: the dollar is going to remain strong. And by the way,

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Speaker 4: the risk of doing an agreement to try to weaken

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Speaker 4: the dollar is that that could occur in a disorderly

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Speaker 4: way because if you do another people talking now about

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Speaker 4: a Mara lagoa agreement, because in the past agreements to

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Speaker 4: moved currencies were always in resorts like Breton Woods, Plaza,

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Speaker 4: over Come, David, you name it. So people think about

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Speaker 4: maybe getting together all major economies in mar Lago and

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Speaker 4: finding an agreement where europe Asian allies and others let

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Speaker 4: their currency appreciate the dollar weekend. But you know, if

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Speaker 4: people expect that from happening, then capital is going to

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Speaker 4: suddenly move out of the US because you're going to

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Speaker 4: have a massive capital loss time fifteen to twenty percent

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Speaker 4: on your dollar assets, and then you could have a

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Speaker 4: spike in long rates or you could have a correction

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Speaker 4: in US ecuity. So how do you engineer an orderly

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Speaker 4: weakening of the dollar without causing significant tightening of financial

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Speaker 4: condition that's also problematic. It's not going to be very

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Speaker 4: easy to be done. The other trade off that I

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Speaker 4: think it's complicated it's not just a weak or strong

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Speaker 4: dollars a currency role, but also your tariff policies, because

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Speaker 4: on one side, if you impose the tariffs, the dollar

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Speaker 4: is going to strengthen. And on the other side, also

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Speaker 4: if you're going to raise tariffs, you need revenues. But

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Speaker 4: raising tariffs, if it's very significant, it's going to be

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Speaker 4: highly inflationary. Now, some people within the Trump come say, well,

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Speaker 4: in twenty eighteen nineteen, when we increase the tariffs on China,

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Speaker 4: there was not significant increase in inflation because the RMB

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Speaker 4: depreciated and therefore import prices did not increase very much.

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Speaker 4: But suppose that you impose the tariffs and the currencies

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Speaker 4: of all your trading partners weekend, then you might not

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Speaker 4: get the inflationary burst of the tariff. That's correct, but

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Speaker 4: then you're not going to have an improvement of the

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Speaker 4: competitiveness of the United States, and therefore inflation is not

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Speaker 4: going to rise, but your trade deficit is going to

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Speaker 4: remain very large. Vice versa. If tarif are imposed and

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Speaker 4: the dollar does not strength another currency weekend, you might

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Speaker 4: get actually some improvement of your trade balance, but then

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Speaker 4: you'll have some inflational impact of this, so in all

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Speaker 4: these cases, there is not really a free lunch.

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Speaker 1: Yeah.

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Speaker 3: I want to actually dive further into this because a

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Speaker 3: lot of times when tariffs come up, one thing people

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Speaker 3: say is that, Okay, well it's a one off.

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Speaker 5: It's a one right.

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Speaker 3: The prices may go up at some point, but that

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Speaker 3: doesn't necessarily represent a new inflationary trend that say, the

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Speaker 3: FED would have to worry about. And perhaps that's true,

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Speaker 3: But it also occurs to me that if part of

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Speaker 3: the impulse here is to be less reliant on global

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Speaker 3: trading partners for say, various manufactured goods, and to have

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Speaker 3: more domestic building, et cetera of various things, this is

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Speaker 3: happening at a time of still high resource utilization already,

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Speaker 3: So the unemployment rate is at four point one percent,

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Speaker 3: There are already a lot there are shortages of industrial parts.

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Speaker 3: Yesterday we're recording this December third, by the way, yesterday

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Speaker 3: we got the ISM Manufacturing and it showed that electrical

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Speaker 3: components have now been in shortage for fifty straight months,

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Speaker 3: so over four years. So it seems to me that

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Speaker 3: regardless of you know, if you have this impulse to

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Speaker 3: build more here, et cetera, you're coming at it at

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Speaker 3: a time in which resources remain quite constrained.

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Speaker 4: I think your point is very correct and valid in

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Speaker 4: some sense. Actually, the US economy right now it's not

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Speaker 4: in a soft landing, maybe in a no landing zone

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Speaker 4: because growth has remained above potential and inflation has fallen.

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Speaker 4: But you know, core PC this year probably going to

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Speaker 4: be two point eightyve and two point nine percent, and

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Speaker 4: next year may still remain elevated, especially next year if

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Speaker 4: you impost tariff, if you do significant draconia restriction to migration,

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Speaker 4: if you have run away physical deficits, that's stimulate further demand.

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Speaker 4: And if you have, you know, a policy of trying

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Speaker 4: to weekend the dollar. So yeah, we live in an

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Speaker 4: economy is already no landing where resource constraints are significant.

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Speaker 4: Libor market is significantly tight, Goods market are also tight.

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Speaker 4: Imports can help you, But then if you're gonna restrict

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Speaker 4: the libor supply to migration restriction, you're gonna weaken the dollars.

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Speaker 4: You're going to impose tariff, You're gonna make those inflationtionary

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Speaker 4: pressure going higher, and then make trigger the fad than

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Speaker 4: having to act and stop cutting rates or maybe even

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Speaker 4: increase them over time.

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Speaker 2: I mean, the counter argument to the no landing idea

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Speaker 2: is that we have seen some signs as Joe mentioned

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Speaker 2: in the intro of the labor market softening, and even yesterday,

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Speaker 2: you know we already mentioned the ism, but we had

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Speaker 2: PMIS as well that also looked kind of sluggish. Is

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Speaker 2: there a possibility that the economy weaken significantly into twenty

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Speaker 2: twenty five?

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Speaker 4: Well, I would say that the risk of economy weakening

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Speaker 4: significant twenty twenty five will be one in which those

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Speaker 4: sets of staculationary policy are followed. If you really impose

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Speaker 4: massive tariffs, if you deport millions of people, if you

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Speaker 4: try the weekend the dollar, if you have a massive

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Speaker 4: physical deficit then lead to bond hills rising, crowding out

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Speaker 4: economic growth. You could be in a situation which growth

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Speaker 4: significantly slow downs and inflation goes higher. I think that's

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Speaker 4: definitely a risk. As I pointed out at the beginning, However,

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Speaker 4: there are sets of policies of trumpet are actually positive

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Speaker 4: for economic growth, and some of those policies will be implemented.

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Speaker 5: So if you had to.

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Speaker 2: Choose from like column A or column B, what would

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Speaker 2: be like the higher probability.

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Speaker 4: As of now, I would say that the impact on

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Speaker 4: growth for next year is going to be a wash

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Speaker 4: because on one side, definitely is pro business is going

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Speaker 4: to deregulate, There'll be some increase in capital spending, stock

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Speaker 4: market is strong, financial conditioner easy, So those are positive

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Speaker 4: for increasing growth. But then some of the other polices,

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Speaker 4: especially on labor market and tariff and protection is when

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Speaker 4: some increase in long rate are going to weaken economic growth.

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Speaker 4: So I think that the impact for growth next year

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Speaker 4: is that if this year we're growing, say two point

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Speaker 4: eight percent, next year we're going to still grow about

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Speaker 4: potential but less maybe two point four. But I don't

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Speaker 4: think there's going to be a massive slowdown unless it

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Speaker 4: goes really radical with the stackpreationary policies. However, on net

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Speaker 4: in an economy is already in a sight resource constraint

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Speaker 4: labor goods market otherwise that is more in a low

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Speaker 4: landing zone, where even before Trump was elected, the FED

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Speaker 4: was started to say, wait a moment, should we really

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Speaker 4: cut right as much as we promise? Given that growth

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Speaker 4: it seems to remain robust, that inflation remains more sticky

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Speaker 4: that in that world. In my view, inflation is going

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Speaker 4: to be on net staying high rather than going towards

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Speaker 4: the two percent targets. So I would say the net

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Speaker 4: impact on growth for the time being is a wash,

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Speaker 4: but the impact on inflation will probably be the inflation

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Speaker 4: is somehow higher, and that's going to impose something of

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Speaker 4: a dilemma for the FAT. Of course, there is a

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Speaker 4: tail risk that it goes fully stackflationary. But as I point,

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Speaker 4: are two major constraint. One is really market discipline. The

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Speaker 4: market would punish those policies and will have to reverse.

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Speaker 4: I mean, take an example in the UK, because there

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Speaker 4: was a physical STEAMUS was excessive. Then suddenly the pound collapse,

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Speaker 4: bond deals when higher, the pension crisis, and least trusts

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Speaker 4: Prime minister lost power in forty four days. Now that's

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Speaker 4: not going to happen in the United States. But I

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Speaker 4: think that people should not underestimate how market discipline can

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Speaker 4: really punish even a country like the United States. So

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Speaker 4: between the constrain of the FED being still independent and

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Speaker 4: the market discipline probably excessively stack, treasury policy would be

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Speaker 4: constrained next year.

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Speaker 3: So a mirror all of the extraordinary uncertainty you recently

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Speaker 3: at the end of November announced you have a new ETF,

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Speaker 3: the Atlas America Fund, and it looks very interesting. You know,

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Speaker 3: I think, like I want to get into what it is.

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Speaker 3: But I think, you know, when people think about, say

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Speaker 3: like a well diversified or all weather portfolio, and it

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00:24:19,280 --> 00:24:21,920
Speaker 3: sounds like we all want all weather portfolio because there's

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Speaker 3: just so much uncertainty right now, as you've been talking

403
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Speaker 3: about for the last several minutes, something that would thrive

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Speaker 3: and be stable amid all this uncertainty. You know, for

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Speaker 3: years people talked about the sixty forty portfolio, and it

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Speaker 3: had a certain I guess I would say intellectual elegance

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Speaker 3: to it, because the two legs of it generally produced

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Speaker 3: positive real returns, but also they had a sort of

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Speaker 3: natural hedging component against each other, and so usually if

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Speaker 3: stocks were going up at bonds were doing a little worse,

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Speaker 3: and then when your stocks would go down and the

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Speaker 3: boons were going up, work very beautifully for several years,

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Speaker 3: basically until twenty twenty one. And now I'm not sure

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Speaker 3: if people feel confident at all to go back into that,

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Speaker 3: and people come up with reasons why it's very there's

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Speaker 3: a lot of distrust about using bonds or a heavy

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Speaker 3: allocation of bonds as a good ballast for a portfolio.

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Speaker 3: What is the sort of before we get into the

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Speaker 3: specifics per se, what do you talk about sort of

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Speaker 3: like the intellectual or conceptual framework, but behind your approach,

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Speaker 3: which is to come up with a new sort of

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Speaker 3: diversification strategy that can work across cycles.

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Speaker 4: Yeah, the logic is as follows. I wrote the whole

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Speaker 4: book title Mega Threads where I argue that the air

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Speaker 4: of the Great Moderation where we had low growth and

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Speaker 4: low inflation, is over. Even the air of the cyclist

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Speaker 4: technotion that followed the past GFC period, where again growth

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Speaker 4: was law and there were these inflationary forces, is over.

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Speaker 4: And there are a variety of forces are going to

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Speaker 4: lead to stack inflationary pressures in the global economy, both

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Speaker 4: on the supply side and a demand on the supply side.

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Speaker 4: That I consider ten factors from geopolitical fragmentation to the globalization, protectionism,

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Speaker 4: French shoring, reshoring to agingle population restriction to migration, global

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Speaker 4: climate change, pandemics, cyber warfare, backlash against liberal democracy and

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Speaker 4: proliber fiscal policies, and potential gradual dedollarization. Now, all these

436
00:26:27,240 --> 00:26:32,439
Speaker 4: factors gradually over time reduce growth and increase inflation. And

437
00:26:32,480 --> 00:26:34,280
Speaker 4: on the demand side, we live in a world of

438
00:26:34,440 --> 00:26:38,160
Speaker 4: very larger private and public debts are going to become larger.

439
00:26:38,600 --> 00:26:41,320
Speaker 4: We're going to spend more on defence all over the world.

440
00:26:41,520 --> 00:26:43,960
Speaker 4: We're going to spend more on dealing with climate change.

441
00:26:44,119 --> 00:26:46,640
Speaker 4: We're going to spend more to deal with pandemics. We're

442
00:26:46,640 --> 00:26:48,639
Speaker 4: going to spend more because there's going to be a

443
00:26:48,640 --> 00:26:53,200
Speaker 4: disruption coming from AI robotic automation. We're going to spend

444
00:26:53,200 --> 00:26:55,840
Speaker 4: more because there are many people left behind. We need

445
00:26:55,840 --> 00:26:58,560
Speaker 4: the bigger social safety nets, so we spend more. We

446
00:26:58,600 --> 00:27:01,160
Speaker 4: have limits so much we can raise avenues, so structural

447
00:27:01,200 --> 00:27:04,520
Speaker 4: budget death is going to rise, and therefore they're being

448
00:27:04,560 --> 00:27:07,800
Speaker 4: incentive to wipe out the real value of nominal long

449
00:27:07,880 --> 00:27:12,159
Speaker 4: duration that through unexpected inflation. Now I'm not talking about

450
00:27:12,560 --> 00:27:16,560
Speaker 4: hyper inflation or even high inflation, not even double digits.

451
00:27:16,640 --> 00:27:19,800
Speaker 4: Let's assume for a moment that this supply and these

452
00:27:19,840 --> 00:27:24,080
Speaker 4: the main forces imply that over this decade inflation is

453
00:27:24,080 --> 00:27:27,000
Speaker 4: not a tool. Let's say five six percent, it is

454
00:27:27,119 --> 00:27:29,640
Speaker 4: very reasonable. We were at nine just two years ago.

455
00:27:29,640 --> 00:27:32,399
Speaker 4: And I think these forces over time are going to

456
00:27:32,520 --> 00:27:36,840
Speaker 4: essentially materialize, and the policies of Trump, some of them

457
00:27:36,920 --> 00:27:41,199
Speaker 4: exactly go along the same tackflationary direction of lower growth

458
00:27:41,480 --> 00:27:45,040
Speaker 4: and higher inflation that we described. So in that world,

459
00:27:45,359 --> 00:27:47,680
Speaker 4: think of it this way. Bond yial is ten years

460
00:27:47,800 --> 00:27:51,760
Speaker 4: right now aband four percent, but if inflation was six,

461
00:27:52,400 --> 00:27:55,320
Speaker 4: bond yills have to be at least eight six percent

462
00:27:55,400 --> 00:27:58,800
Speaker 4: for expected inflation and two for the real because in

463
00:27:58,800 --> 00:28:01,240
Speaker 4: the world of high debt and that it's the equlibrium

464
00:28:01,240 --> 00:28:03,920
Speaker 4: relong rate is not zero anymore, it's closer to two.

465
00:28:04,600 --> 00:28:08,480
Speaker 4: Suppose the bond yills go gradually from four to eight percent,

466
00:28:09,200 --> 00:28:12,720
Speaker 4: then a tenured treasury is going to lose thirty forty

467
00:28:12,760 --> 00:28:15,719
Speaker 4: percent of its value over time. And we saw what

468
00:28:15,760 --> 00:28:20,439
Speaker 4: happened in twenty twenty two. In twenty twenty two, sixty

469
00:28:20,520 --> 00:28:23,959
Speaker 4: forty did not work. It did not work because sixty

470
00:28:24,040 --> 00:28:27,520
Speaker 4: forty assumes that there is a negative correlation between the

471
00:28:27,560 --> 00:28:31,120
Speaker 4: price of stocks and the price of bonds. Risk one

472
00:28:31,200 --> 00:28:34,639
Speaker 4: and growth equity to well. Bond bills are higher, the

473
00:28:34,720 --> 00:28:37,399
Speaker 4: price is lower, so you make money on equities, you

474
00:28:37,480 --> 00:28:41,920
Speaker 4: lose money on bonds. Risk of recession. Equities go down,

475
00:28:42,200 --> 00:28:44,880
Speaker 4: bond bills fall, the price goes up, you make money

476
00:28:45,160 --> 00:28:48,120
Speaker 4: on the bond part of your portfolio. You lose on equity.

477
00:28:48,560 --> 00:28:53,280
Speaker 4: But that negative correlation assumes that inflation is low and stable.

478
00:28:53,880 --> 00:28:57,080
Speaker 4: When inflation is not low and stable is rising, then

479
00:28:57,160 --> 00:29:00,000
Speaker 4: what happens. Bond bills are higher and you lose money

480
00:29:00,160 --> 00:29:03,040
Speaker 4: on the bond component. And like to happening in twenty two,

481
00:29:03,440 --> 00:29:06,520
Speaker 4: and happened again even last year. When bond yials are

482
00:29:06,560 --> 00:29:11,320
Speaker 4: significantly higher, stock prices correct, and therefore you get a

483
00:29:11,440 --> 00:29:17,200
Speaker 4: positive correlation between bond prices and equity prices. Paradoxically, actually,

484
00:29:17,240 --> 00:29:20,600
Speaker 4: in twenty twenty two, a sm PIFA boundred fell by

485
00:29:20,840 --> 00:29:24,560
Speaker 4: fifteen percent, but the price of tenure treasury fell more

486
00:29:24,600 --> 00:29:27,720
Speaker 4: fell by twenty percent as tenure treasure yield went from

487
00:29:27,760 --> 00:29:30,400
Speaker 4: one to three and a half. So in a world

488
00:29:30,520 --> 00:29:34,240
Speaker 4: in which bond yields gradually could go from four to eight,

489
00:29:34,880 --> 00:29:39,040
Speaker 4: the traditional defensive asset in a sixty to forty portfolio,

490
00:29:39,160 --> 00:29:43,800
Speaker 4: this long duration treasury doesn't work anymore, and therefore this

491
00:29:43,920 --> 00:29:47,120
Speaker 4: is not an old weather portfolio. ATTF is something of

492
00:29:47,160 --> 00:29:51,280
Speaker 4: an alternative to the traditional defensive assets, and alternity to

493
00:29:51,360 --> 00:29:54,800
Speaker 4: the forty percent of the sixty forty is not the

494
00:29:54,880 --> 00:29:55,760
Speaker 4: sixty part.

495
00:29:55,840 --> 00:29:57,720
Speaker 3: So we're just working the four here, we're.

496
00:29:57,480 --> 00:30:00,400
Speaker 4: Working mostly on the forty. And the point is that

497
00:30:00,440 --> 00:30:02,640
Speaker 4: if you do believe the story, or even if you

498
00:30:02,680 --> 00:30:05,720
Speaker 4: assign a meaningful probability that inflation is going to be

499
00:30:05,720 --> 00:30:09,160
Speaker 4: gradually higher and nominal long bondials is got to be higher,

500
00:30:09,560 --> 00:30:13,440
Speaker 4: you have essentially twenty three million dollars of long duration

501
00:30:13,920 --> 00:30:18,160
Speaker 4: fixed income, mostly treasury, but also high grade high yield

502
00:30:18,520 --> 00:30:22,280
Speaker 4: or em THATTA is dominated dollars, and its significant gradual

503
00:30:22,360 --> 00:30:24,400
Speaker 4: rights in those bond yields is going to imply that

504
00:30:24,440 --> 00:30:27,840
Speaker 4: your defensive asset actually loses as much, if not more

505
00:30:27,880 --> 00:30:30,640
Speaker 4: than equities. So then you have to think in a

506
00:30:30,680 --> 00:30:35,760
Speaker 4: world of gradually higher inflation, which are the other alternative

507
00:30:35,840 --> 00:30:41,800
Speaker 4: asset that provide a hedge against inflation, against the basement

508
00:30:41,840 --> 00:30:48,400
Speaker 4: of your currency, against disuization, against the geopolitical risk, against

509
00:30:48,400 --> 00:30:52,479
Speaker 4: financial crisis, and against climate change. And the range of

510
00:30:52,560 --> 00:30:56,480
Speaker 4: assets that we have chosen for this ETF is one

511
00:30:56,520 --> 00:31:00,000
Speaker 4: that provides you a better hedge against those still risks

512
00:31:00,040 --> 00:31:03,600
Speaker 4: than traditional defensive masses like tenure treasury, and that's the

513
00:31:03,600 --> 00:31:05,400
Speaker 4: idea behind this new ETF.

514
00:31:05,800 --> 00:31:08,920
Speaker 2: Yeah, I find this ETF fascinating because it touches on

515
00:31:09,040 --> 00:31:13,000
Speaker 2: so many different themes. You know, obviously there's the macro

516
00:31:13,280 --> 00:31:16,800
Speaker 2: and the risk of inflation. There's portfolio construction in the

517
00:31:16,800 --> 00:31:19,680
Speaker 2: form of sixty forty, which you just discussed. But there's

518
00:31:19,680 --> 00:31:23,520
Speaker 2: also this idea of maybe creating a sort of like

519
00:31:23,920 --> 00:31:29,440
Speaker 2: dollar or US treasury alternative that is backed by real assets.

520
00:31:29,480 --> 00:31:31,440
Speaker 2: So you mentioned, you know, the stuff that could do

521
00:31:31,520 --> 00:31:34,760
Speaker 2: well in an inflationary environment and withstand some of those

522
00:31:34,760 --> 00:31:39,800
Speaker 2: big risks, stuff like gold, US property that is somewhat

523
00:31:39,840 --> 00:31:43,320
Speaker 2: climate resilient. So I guess in the northeast and short

524
00:31:43,400 --> 00:31:46,160
Speaker 2: term US treasuries where the rates will more or less

525
00:31:46,200 --> 00:31:50,120
Speaker 2: follow inflation. And one of the other interesting things about

526
00:31:50,120 --> 00:31:53,760
Speaker 2: this whole project is Atlas itself is based out of Dubai,

527
00:31:53,880 --> 00:31:56,760
Speaker 2: where there are you know, it's very close to some

528
00:31:56,960 --> 00:32:01,760
Speaker 2: very large pools of capital that have been investing in treasuries.

529
00:32:02,080 --> 00:32:04,479
Speaker 2: Talk to us more about that angle, this idea that

530
00:32:04,520 --> 00:32:07,360
Speaker 2: you could pitch it as a sort of treasury alternative

531
00:32:07,560 --> 00:32:09,640
Speaker 2: for some big investors.

532
00:32:09,680 --> 00:32:15,680
Speaker 4: Well, as I pointed out, any investor starting from institutional

533
00:32:15,720 --> 00:32:20,600
Speaker 4: investor large sobein well fund, private and public pension funds,

534
00:32:21,280 --> 00:32:26,560
Speaker 4: endowment foundations, let alone retail investors hold a sum allocation

535
00:32:27,400 --> 00:32:31,760
Speaker 4: of their portfolio in long term treasuries, and that's because

536
00:32:31,840 --> 00:32:37,240
Speaker 4: has been traditionally the safe defensive asset. Speaking about literally

537
00:32:37,280 --> 00:32:40,720
Speaker 4: twenty threellion dollar plus of debt and in the world

538
00:32:40,720 --> 00:32:45,320
Speaker 4: that I describe right now, the losses that occurred in

539
00:32:45,320 --> 00:32:48,600
Speaker 4: twenty twenty two or summer of last year when again

540
00:32:48,640 --> 00:32:50,959
Speaker 4: there was a spike in bond hills to five percent,

541
00:32:51,040 --> 00:32:53,640
Speaker 4: there was a correction equity will occur, So you're going

542
00:32:53,720 --> 00:32:57,760
Speaker 4: to lose money on the equity and on the bond

543
00:32:57,800 --> 00:33:01,360
Speaker 4: side of portfolio. That's why, by the way, even fancy

544
00:33:01,400 --> 00:33:05,320
Speaker 4: models like risparity, there are glorified versions of sixty forty

545
00:33:05,360 --> 00:33:08,920
Speaker 4: seventy thirty have not done very well. And therefore I

546
00:33:08,960 --> 00:33:11,920
Speaker 4: think there is a nervousness around the world. The large

547
00:33:11,920 --> 00:33:14,760
Speaker 4: pools of money that I have. The allocation to long

548
00:33:14,840 --> 00:33:18,680
Speaker 4: duration treasury is their concern about a variety of the

549
00:33:18,760 --> 00:33:24,040
Speaker 4: risks that I described, and they're thinking about alternative and

550
00:33:24,080 --> 00:33:27,200
Speaker 4: as you pointed out, the combination of the assets is

551
00:33:27,240 --> 00:33:32,080
Speaker 4: one exactly that does reasonably well actually in normal times

552
00:33:32,800 --> 00:33:36,479
Speaker 4: and is a convexity. So if some of these tailies

553
00:33:36,480 --> 00:33:39,200
Speaker 4: were to materialize, of course the return is going to

554
00:33:39,200 --> 00:33:42,280
Speaker 4: be much higher. So for example, you want to stay

555
00:33:42,320 --> 00:33:47,000
Speaker 4: completely away from long duration treasuries and instead you want

556
00:33:47,040 --> 00:33:51,040
Speaker 4: to be in short duration treasury whisually goes higher and

557
00:33:51,200 --> 00:33:54,120
Speaker 4: under the same price correction. If bond deals are going

558
00:33:54,160 --> 00:33:57,000
Speaker 4: to be higher, you want to be into tips that

559
00:33:57,080 --> 00:33:58,479
Speaker 4: of course are going to do well if there are

560
00:33:58,520 --> 00:34:04,600
Speaker 4: increases in an expected inflation. The allocation to gold is

561
00:34:04,600 --> 00:34:08,800
Speaker 4: a hedge bought against inflation and the basement of yet currency,

562
00:34:08,840 --> 00:34:13,680
Speaker 4: but there's also a hedge against potential di dollarization. If

563
00:34:13,719 --> 00:34:18,600
Speaker 4: you think about the only liquid foreign reserve acid that

564
00:34:18,719 --> 00:34:23,160
Speaker 4: cannot be seized. The last few years in Russia, in Iran,

565
00:34:24,520 --> 00:34:28,239
Speaker 4: North Korea, we've had massive sanctional financial and seize their

566
00:34:28,280 --> 00:34:31,680
Speaker 4: foreign assets. The only liquid acid that cannot be seized

567
00:34:31,840 --> 00:34:34,239
Speaker 4: not euros, not dollars. It's not the end. All of

568
00:34:34,239 --> 00:34:36,840
Speaker 4: those have been seased. There's going to be gold bullion.

569
00:34:36,960 --> 00:34:39,600
Speaker 4: If you old gold bullion, you're going to go and

570
00:34:39,640 --> 00:34:43,200
Speaker 4: be safe. And that's why for example, significant central banks,

571
00:34:43,200 --> 00:34:45,920
Speaker 4: not only of the strategic ralvas of the US, but

572
00:34:46,080 --> 00:34:48,359
Speaker 4: even of the fer enemies of the US. I've gone

573
00:34:48,360 --> 00:34:51,400
Speaker 4: into gold this year. The surge over forty percent in

574
00:34:51,440 --> 00:34:57,040
Speaker 4: gold prices is significantly driven by that geopolitical risk of

575
00:34:57,120 --> 00:35:01,239
Speaker 4: didollarization and diversification. You want to be in some allocation

576
00:35:02,080 --> 00:35:05,960
Speaker 4: for commodities, especially a commodity is because in the world

577
00:35:06,200 --> 00:35:09,200
Speaker 4: of climate change, the demand is going to be there,

578
00:35:09,239 --> 00:35:12,319
Speaker 4: but there'll be supply disruption. We have seen spikes in

579
00:35:12,320 --> 00:35:16,959
Speaker 4: commodity prices driven by climate change. And real estate traditionally

580
00:35:17,680 --> 00:35:21,720
Speaker 4: is a good hedge against moderate increases in inflation because

581
00:35:21,760 --> 00:35:24,960
Speaker 4: rents and other things can go higher, and in the

582
00:35:25,000 --> 00:35:28,560
Speaker 4: short run, real estate is a fixed supply. But because

583
00:35:28,560 --> 00:35:31,640
Speaker 4: of climate change, of course, lots of parts of North

584
00:35:31,640 --> 00:35:35,799
Speaker 4: America are going to have significant problems and asset dials

585
00:35:35,840 --> 00:35:39,319
Speaker 4: are going to be reduced. I mean many parts of Florida, Louisiana,

586
00:35:39,800 --> 00:35:43,160
Speaker 4: California not even a more insurable in terms of home insurance.

587
00:35:43,400 --> 00:35:46,160
Speaker 4: People have to move, and as they move, prices are

588
00:35:46,160 --> 00:35:49,000
Speaker 4: going to fall in the region where you have climate change,

589
00:35:49,000 --> 00:35:52,440
Speaker 4: and they're going to increase where you are having better climate.

590
00:35:52,520 --> 00:35:56,319
Speaker 4: And therefore some location is in real estate. But we

591
00:35:56,360 --> 00:36:00,680
Speaker 4: have data at the zip level for every zip level

592
00:36:00,960 --> 00:36:04,000
Speaker 4: county of the United States, and we look at each

593
00:36:04,000 --> 00:36:06,359
Speaker 4: one of the riads in North America. We see what's

594
00:36:06,360 --> 00:36:09,920
Speaker 4: our allocation two different region with a whole global climate

595
00:36:10,000 --> 00:36:13,040
Speaker 4: change map based on big data that allows us to

596
00:36:13,160 --> 00:36:15,520
Speaker 4: go into the reads that are going to be benefiting

597
00:36:15,800 --> 00:36:17,680
Speaker 4: from climate change as opposed to those who are going

598
00:36:17,719 --> 00:36:20,719
Speaker 4: to be hurt by climate change. So the combination of

599
00:36:20,800 --> 00:36:25,680
Speaker 4: assets that provides you know, solid returns with very low volatility,

600
00:36:26,000 --> 00:36:29,640
Speaker 4: and it's an alternative to the traditional defensive act.

601
00:36:29,920 --> 00:36:33,479
Speaker 3: Yeah, just looking through the holding of gold and short

602
00:36:33,600 --> 00:36:37,600
Speaker 3: term treasuries and tips and a short twenty year were

603
00:36:37,680 --> 00:36:40,959
Speaker 3: betting against the twenty year treasury and equinics and American Tower.

604
00:36:41,000 --> 00:36:44,120
Speaker 3: Interesting mix, right, I have one last question. Yeah, I'm

605
00:36:44,120 --> 00:36:46,759
Speaker 3: not going to ask you the obvious question. And one

606
00:36:46,760 --> 00:36:49,680
Speaker 3: thing I noticed in here there's no bitcoin ETF. But

607
00:36:49,680 --> 00:36:52,719
Speaker 3: I don't want to religate a bitcoin conversation because it's

608
00:36:52,719 --> 00:36:54,279
Speaker 3: the end and I don't want to have that. But

609
00:36:54,320 --> 00:36:57,600
Speaker 3: I do want to ask an adjacent question today, which

610
00:36:57,640 --> 00:37:01,359
Speaker 3: is that when you talk to overseas investors and talk

611
00:37:01,400 --> 00:37:05,320
Speaker 3: to people with high amounts of ultra high networth people

612
00:37:05,680 --> 00:37:08,360
Speaker 3: today in twenty twenty four, when you talk to them,

613
00:37:08,760 --> 00:37:12,040
Speaker 3: how seriously do they view setting aside your own views?

614
00:37:12,239 --> 00:37:15,640
Speaker 3: How seriously do they view bitcoin or crypto? Is some

615
00:37:15,760 --> 00:37:17,880
Speaker 3: component of the portfolio that they want to have.

616
00:37:18,719 --> 00:37:21,680
Speaker 4: You know, some people are opening up to the idea

617
00:37:21,760 --> 00:37:26,040
Speaker 4: of all the crypto acids, but those investors that are

618
00:37:26,080 --> 00:37:32,760
Speaker 4: looking safe for a safe aset that does well given

619
00:37:32,800 --> 00:37:35,279
Speaker 4: this tail risk, are not going to look at the

620
00:37:35,360 --> 00:37:38,759
Speaker 4: crypto acids. When the paradox of crypto acids is that

621
00:37:38,880 --> 00:37:43,640
Speaker 4: they were doing actually quite poorly when inflation was rising

622
00:37:43,719 --> 00:37:46,640
Speaker 4: and the fat was tightening, and they're doing better when

623
00:37:46,640 --> 00:37:50,359
Speaker 4: inflation is falling and the fat is easy. They're not

624
00:37:50,520 --> 00:37:54,440
Speaker 4: negatively correlated with equities actually that are kind of like

625
00:37:56,600 --> 00:37:59,760
Speaker 4: exactly exactly. So if you want if you want something

626
00:38:00,080 --> 00:38:03,520
Speaker 4: a substitute for the forty component, I would say the

627
00:38:03,560 --> 00:38:06,680
Speaker 4: combination of assets that we have considered and willok them

628
00:38:06,880 --> 00:38:13,040
Speaker 4: carefully gives you stable returns and reasonably high turns. If

629
00:38:13,080 --> 00:38:16,240
Speaker 4: you add any crypto asset, you add a huge amount

630
00:38:16,280 --> 00:38:19,600
Speaker 4: of volatility, and there's a wide range of investors that

631
00:38:19,640 --> 00:38:21,239
Speaker 4: don't want that type of volatility.

632
00:38:22,080 --> 00:38:24,680
Speaker 2: When we were first talking about the ETF, there was

633
00:38:24,760 --> 00:38:28,399
Speaker 2: some early discussion of maybe tokenizing it in some way.

634
00:38:28,520 --> 00:38:30,480
Speaker 2: Is that still a possibility.

635
00:38:30,800 --> 00:38:31,440
Speaker 5: Yes, it is.

636
00:38:32,920 --> 00:38:37,240
Speaker 4: The idea is that I do believe that actually tokeonization

637
00:38:37,560 --> 00:38:41,720
Speaker 4: of real and financial asset as some validity as opposed

638
00:38:41,719 --> 00:38:46,440
Speaker 4: to crypto assets are back by nothing vaporware, and I

639
00:38:46,480 --> 00:38:50,319
Speaker 4: think that the process of some degree of tachonization is

640
00:38:50,360 --> 00:38:53,879
Speaker 4: going to occur, and the benefit of tokenization will be

641
00:38:53,960 --> 00:38:58,600
Speaker 4: that these types of liquid acid ETF is not widely

642
00:38:58,600 --> 00:39:02,239
Speaker 4: available in aver of jurisdiction, especially in parts of the

643
00:39:02,320 --> 00:39:06,160
Speaker 4: world like the Global South where there is significant inflation.

644
00:39:06,280 --> 00:39:09,279
Speaker 4: The basement of FIAD currency, you could have something that

645
00:39:09,360 --> 00:39:13,480
Speaker 4: would actually have a stable store of value, still dollar rinked,

646
00:39:13,560 --> 00:39:17,239
Speaker 4: but gives you positive return, and it's going to be

647
00:39:17,400 --> 00:39:19,600
Speaker 4: a good hedg against some of those theories that are

648
00:39:19,640 --> 00:39:23,000
Speaker 4: facing So it'll be a way of eventually making it

649
00:39:23,040 --> 00:39:26,800
Speaker 4: available to many investors all over the world. But that'd

650
00:39:26,840 --> 00:39:31,200
Speaker 4: be stage two organization, not for the time makes the ATF.

651
00:39:31,280 --> 00:39:34,439
Speaker 2: Yes, So I have just one more question. And every

652
00:39:34,480 --> 00:39:38,640
Speaker 2: once in a while I get the urge to start

653
00:39:38,680 --> 00:39:42,759
Speaker 2: an ETF of some sort, maybe the odd thoughts ETF

654
00:39:42,800 --> 00:39:47,080
Speaker 2: that is full of like thematic related assets to the

655
00:39:47,120 --> 00:39:49,960
Speaker 2: stuff that we talk about on the podcast, and then

656
00:39:50,000 --> 00:39:52,879
Speaker 2: I never do it for obvious reasons. But what has

657
00:39:52,920 --> 00:39:58,960
Speaker 2: been the most challenging or unexpected part of launching this ETF.

658
00:40:00,080 --> 00:40:02,480
Speaker 4: You know, it takes a lot of work. You know,

659
00:40:02,800 --> 00:40:06,840
Speaker 4: you have to build a team, collaboration with Goldman Sacks.

660
00:40:06,840 --> 00:40:09,120
Speaker 2: Oh yeah, because this one's actively managed as well.

661
00:40:09,400 --> 00:40:13,560
Speaker 4: Yeah yeah, So you know, one thing is to write

662
00:40:13,600 --> 00:40:16,759
Speaker 4: about money, another thing is to manage it. You have

663
00:40:17,200 --> 00:40:19,960
Speaker 4: ideally P and L. But for me, it's a new

664
00:40:20,000 --> 00:40:23,200
Speaker 4: and interesting challenge. I've been an advisor to many financial

665
00:40:23,200 --> 00:40:26,680
Speaker 4: decisions over time. There's a big picture of view here

666
00:40:26,800 --> 00:40:33,040
Speaker 4: is that Seculuss technician is over Secluss technilious, inflation is rising.

667
00:40:33,719 --> 00:40:36,160
Speaker 4: So it's not just a little twist on a new idea,

668
00:40:36,640 --> 00:40:39,239
Speaker 4: but says there is a big asset class. It's the

669
00:40:39,320 --> 00:40:41,880
Speaker 4: defensive one. There's not going to be this safe acet

670
00:40:41,920 --> 00:40:44,400
Speaker 4: anymore in a world in which will be a variety

671
00:40:44,400 --> 00:40:46,560
Speaker 4: of new tail risks. We have to find a hedge

672
00:40:46,600 --> 00:40:48,920
Speaker 4: against it. So I think that is is going to

673
00:40:49,000 --> 00:40:51,920
Speaker 4: take time. It's not something's going to happen overnight. Is

674
00:40:51,960 --> 00:40:55,080
Speaker 4: a medium, long term story. But I do believe that

675
00:40:55,200 --> 00:40:57,960
Speaker 4: investors are getting nervous about the whole speries of things,

676
00:40:58,200 --> 00:41:01,080
Speaker 4: and I have to think about an alternative to traditional

677
00:41:01,160 --> 00:41:05,200
Speaker 4: But you know, making the idea design and get implementing

678
00:41:05,760 --> 00:41:08,879
Speaker 4: convincing people that that's the right thing to do takes

679
00:41:08,880 --> 00:41:11,719
Speaker 4: a lot of time and effort. Is hard work, all right.

680
00:41:11,800 --> 00:41:15,640
Speaker 2: Neurial Rubini truly the perfect guest to talk about stagflation

681
00:41:15,719 --> 00:41:17,480
Speaker 2: and some of the other big risks out there.

682
00:41:17,520 --> 00:41:34,400
Speaker 5: Thank you so much the great having me. Thanks so much, Joe.

683
00:41:34,440 --> 00:41:37,359
Speaker 2: It's always fun to catch up with Nuriel and see

684
00:41:37,400 --> 00:41:39,560
Speaker 2: how his thinking is kind of evolving and also how

685
00:41:39,560 --> 00:41:43,480
Speaker 2: he's putting some of the big picture like theories into

686
00:41:43,560 --> 00:41:44,680
Speaker 2: practice with the new et.

687
00:41:45,200 --> 00:41:45,920
Speaker 5: I love that chet.

688
00:41:45,960 --> 00:41:48,560
Speaker 3: I thought there was a fantastic chat with Muriel, and

689
00:41:48,600 --> 00:41:52,319
Speaker 3: I thought, a he does a really good job of

690
00:41:52,440 --> 00:41:56,520
Speaker 3: laying out what is very clearly the sort of for

691
00:41:56,640 --> 00:42:00,399
Speaker 3: better worse. Look, all presidents come in and have different factions, right,

692
00:42:00,520 --> 00:42:03,879
Speaker 3: that's not weird. Coalitions are coalitions and what they are,

693
00:42:03,920 --> 00:42:06,440
Speaker 3: and there's always tensions. But there do seem to be

694
00:42:06,520 --> 00:42:11,560
Speaker 3: some very interesting sharp divides within the broader tent of

695
00:42:11,560 --> 00:42:15,200
Speaker 3: trump Ism. There's this sort of traditional Wall Street quote

696
00:42:15,239 --> 00:42:18,399
Speaker 3: pro business unquote view, and then there is the sort

697
00:42:18,400 --> 00:42:24,399
Speaker 3: of much more nationalistic, anti immigration, anti free trade, stagflationary view,

698
00:42:24,440 --> 00:42:27,840
Speaker 3: and it's very unclear who what mix will win out.

699
00:42:27,840 --> 00:42:29,759
Speaker 2: You know, the other thing I like about Muriel is

700
00:42:29,760 --> 00:42:34,120
Speaker 2: he kind of like self catalogs. Yeah, wellness speaks like

701
00:42:34,239 --> 00:42:37,080
Speaker 2: number one, number two, number three, number four. The other

702
00:42:37,120 --> 00:42:39,920
Speaker 2: thing I was thinking, Okay, this has been emerging as

703
00:42:40,040 --> 00:42:42,960
Speaker 2: like a big talking point in a variety of our

704
00:42:43,000 --> 00:42:46,120
Speaker 2: conversations on the podcast now, and also you've written about it.

705
00:42:46,120 --> 00:42:48,240
Speaker 2: I've written about it to some extent, but the idea

706
00:42:48,239 --> 00:42:51,520
Speaker 2: of the market as a limiting factor on what's possible,

707
00:42:51,760 --> 00:42:55,200
Speaker 2: and part of me is a little bit nervous about

708
00:42:55,239 --> 00:42:58,600
Speaker 2: that one because it seems like maybe a big ask

709
00:42:58,800 --> 00:43:03,040
Speaker 2: for the market to police the new administration. But the

710
00:43:03,080 --> 00:43:06,120
Speaker 2: other thing I was thinking about was the importance.

711
00:43:05,640 --> 00:43:07,400
Speaker 5: Of growth in all of this.

712
00:43:07,560 --> 00:43:12,160
Speaker 2: Yeah, and like what becomes possible if the economy continues

713
00:43:12,239 --> 00:43:15,919
Speaker 2: to grow, Maybe that enables like some of the more

714
00:43:16,080 --> 00:43:19,680
Speaker 2: I don't want to say radical, but like creative ideas

715
00:43:19,719 --> 00:43:20,719
Speaker 2: from the administration.

716
00:43:20,920 --> 00:43:24,480
Speaker 3: Yeah, adventurism and heterodox and sort of yeah, for sure,

717
00:43:24,800 --> 00:43:27,200
Speaker 3: you know. I think also I really enjoyed hearing his

718
00:43:27,320 --> 00:43:29,920
Speaker 3: theory of a new safe haven because you do see

719
00:43:29,920 --> 00:43:32,920
Speaker 3: this like a lot of people's big holdings to bonds

720
00:43:32,920 --> 00:43:36,440
Speaker 3: got blown up over the last few years, and you think, okay, well, now,

721
00:43:36,440 --> 00:43:38,799
Speaker 3: they're yielding like I don't know, a few percent. Maybe

722
00:43:38,840 --> 00:43:40,480
Speaker 3: they it's a good time to step back in.

723
00:43:40,520 --> 00:43:42,680
Speaker 2: But the short end is already has made like a

724
00:43:42,719 --> 00:43:44,759
Speaker 2: little bit of a comeback recently.

725
00:43:44,320 --> 00:43:46,600
Speaker 3: A little bit. But like you know, there's a lot

726
00:43:46,600 --> 00:43:48,360
Speaker 3: of people who saying, why am I buying the twenty

727
00:43:48,400 --> 00:43:51,160
Speaker 3: year when the short end is yielding more or is

728
00:43:51,200 --> 00:43:54,640
Speaker 3: yielding about the same with much less duration. And so

729
00:43:54,680 --> 00:43:57,319
Speaker 3: that and then gold has obviously done phenomenally well the

730
00:43:57,520 --> 00:44:01,840
Speaker 3: last couple of years thinking about what makes real estate

731
00:44:02,000 --> 00:44:05,960
Speaker 3: a safe haven in the specific properties of like climate,

732
00:44:05,960 --> 00:44:09,319
Speaker 3: et cetera. Just some very interesting ideas. There are many

733
00:44:09,480 --> 00:44:12,000
Speaker 3: ETFs get that get launched all the time. Most of

734
00:44:12,040 --> 00:44:14,600
Speaker 3: them just sort of disappear. This will be one I

735
00:44:14,640 --> 00:44:15,680
Speaker 3: at least pay attention to.

736
00:44:15,880 --> 00:44:19,120
Speaker 2: Yeah, and the ticker I just realized is USAF, which

737
00:44:19,120 --> 00:44:19,880
Speaker 2: is kind of funny.

738
00:44:20,000 --> 00:44:20,440
Speaker 5: Yeah.

739
00:44:20,480 --> 00:44:21,600
Speaker 2: Anyway, shall we leave it there.

740
00:44:21,680 --> 00:44:22,399
Speaker 3: Let's leave it there.

741
00:44:22,680 --> 00:44:25,719
Speaker 2: This has been another episode of the Authlots podcast. I'm

742
00:44:25,760 --> 00:44:28,400
Speaker 2: Tracy Alloway. You can follow me at Tracy Alloway.

743
00:44:28,680 --> 00:44:31,320
Speaker 3: I'm Joe Wisenthal. You could follow me at the Stalwart.

744
00:44:31,760 --> 00:44:36,120
Speaker 3: Follow Nurial Rubini at Nuriel. Follow our producers Carmen Rodriguez

745
00:44:36,160 --> 00:44:39,000
Speaker 3: at Carman armand dash Ol Bennett at Dashbot and cal

746
00:44:39,080 --> 00:44:42,360
Speaker 3: Brooks at cal Brooks. Thank you to our producer Moses Onam.

747
00:44:42,560 --> 00:44:44,839
Speaker 3: From our odd Lags content, go to Bloomberg dot com

748
00:44:44,880 --> 00:44:47,279
Speaker 3: slash odd Lots, where we have transcripts, a blog and

749
00:44:47,320 --> 00:44:49,640
Speaker 3: a newsletter and you can chat about all of these

750
00:44:49,680 --> 00:44:52,720
Speaker 3: topics twenty four to seven in our discord with fellow

751
00:44:52,719 --> 00:44:55,480
Speaker 3: listeners Discord dot gg slash.

752
00:44:55,080 --> 00:44:57,560
Speaker 2: Out Lots and if you enjoy odd Lots, if you

753
00:44:57,680 --> 00:44:59,960
Speaker 2: like it when we catch up with Nurial Rubini, then

754
00:45:00,080 --> 00:45:03,840
Speaker 2: please leave us a positive review on your favorite podcast platform.

755
00:45:04,200 --> 00:45:07,560
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756
00:45:07,640 --> 00:45:10,960
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757
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758
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759
00:45:18,160 --> 00:45:20,880
Speaker 2: To do that, just find the Bloomberg channel on Apple

760
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761
00:45:23,400 --> 00:45:24,240
Speaker 5: Thanks for listening