Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Yeah exactly. And of course,
Speaker 1: those higher oil prices just feeding into the inflationary narrative.
Speaker 1: So let's get more on that now with Jeffrey Cleveland.
Speaker 1: He's chief economist at Peyton and Regal. So, Jeff, I
Speaker 1: don't know how much of Lisa and Ice conversation you
Speaker 1: just heard there, but talking about the inflationary forces at
Speaker 1: work in this economy, do you think that central banks,
Speaker 1: like the FED or underestimating it? Still? I know, I
Speaker 1: don't think so. I think this is, you know, very
Speaker 1: difficult topic and popular talkic topic among investors. But um,
Speaker 1: and there's a lot of noise. So, but you have
Speaker 1: to go back to taking in and maybe a longer
Speaker 1: term perspective commodity prices. The price of oil, for example,
Speaker 1: doesn't tend to give forecasters such as ourselves a good
Speaker 1: lead on where inflation will be in you know, a
Speaker 1: year's time, and I think central banks know that, you know,
Speaker 1: and they're taking that into consideration. Although this is really
Speaker 1: dangerous to say, these are I think the four this
Speaker 1: time is different for most dangerous words in the economics profession.
Speaker 1: The idea here that we have oil prices that are
Speaker 1: climbing at a time when supplies might not naturally increase
Speaker 1: to compensate this. The business case has changed in an
Speaker 1: era that's trying to decarbonize. How much does that change
Speaker 1: the pack drop for you? You know, it does, It's
Speaker 1: a it's a factor. But I think I always come
Speaker 1: back to Okay, when you're talking about inflation, you're talking
Speaker 1: about a general increase in all prices, right, You're you're
Speaker 1: not just talking about particular sectors. And if you know,
Speaker 1: what we're seeing is driven more by the supply side,
Speaker 1: which is the case in a lot of areas. We
Speaker 1: did our our chart of the we for example, on
Speaker 1: natural gas prices on Friday, and you know, there are
Speaker 1: some very interesting supply side stories there that I think
Speaker 1: explain a big chunk of the move. If it's coming
Speaker 1: from the supply side, I don't think that's inflation. That's
Speaker 1: really the key. It's it's something you know, idiosyncratic, and
Speaker 1: it seems like, you know. The difficulty right now is
Speaker 1: we have a bunch of these types of stories piling
Speaker 1: up all at once, right, So you have you have
Speaker 1: the crude oil stories, you have natural gas, we have
Speaker 1: bottlenecks and all kinds of areas. I attribute that this
Speaker 1: is just a very unique macro environment. Um. But I
Speaker 1: still would caution investors from jumping to the conclusion that
Speaker 1: we're going to have a persistent inflation from here. Um.
Speaker 1: I think you can fall back on some pretty good
Speaker 1: reliable indicators. One we got on Friday, for example, in
Speaker 1: the US in that Personal Income and Spending Report, the
Speaker 1: Dallas Fed tabulates the trimmed me um PC. It's an
Speaker 1: alternative core inflation measure, and it's hanging in there right
Speaker 1: around two percent year over year. And I think that's
Speaker 1: where when the dust settles on all of this, we
Speaker 1: will we will see consumer prices right around that two
Speaker 1: to three range. Well. And a huge question within this, Jeffrey,
Speaker 1: is how much wages are rising to meet higher prices
Speaker 1: on pretty much everything you can think of at the
Speaker 1: pump at the grocery store on your holiday gifts. We
Speaker 1: obviously have the jobs report coming up on Friday. I
Speaker 1: would argue it's going to be a pretty big one,
Speaker 1: given September is supposed to be the month where kids
Speaker 1: are back at school, those additional unemployment benefits have rolled off.
Speaker 1: It's supposed to be the great return to the labor market.
Speaker 1: Do you think that actually materialized. I'm a little skeptical.
Speaker 1: I think, you know, we saw a very weak August
Speaker 1: report that was driven in large part the slowdown and
Speaker 1: leisure in hospitality. I don't know, you know, just anecdotally
Speaker 1: walking around Los Angeles, for example, if we saw a
Speaker 1: big surgeon hiring in the month of September, I think
Speaker 1: we're still under the you know, the weight of the
Speaker 1: pandemic of the variant, at least of the September data.
Speaker 1: So maybe that story will have to wait for in
Speaker 1: the fall. I hope full that uh, I'm wrong and
Speaker 1: in the labor marks at back bounce back much more quickly.
Speaker 1: On the wage question, though, that that you brought up,
Speaker 1: I think it's a really essential one and the only
Speaker 1: thing I could say I would urge investors um again
Speaker 1: to look at the Atlanta fed wage tracker, and you
Speaker 1: can break down the different categories by you know, income level,
Speaker 1: by hourly versus non hourly workers, and I think what
Speaker 1: you'll find is we are seeing wage pressure, no doubt,
Speaker 1: but it is confined mostly to UM you know, the
Speaker 1: lower wage tiers of the spectrum. So definitely seen a
Speaker 1: lot of upside pressure there on wages that is UM
Speaker 1: that is you know that affects businesses, that affects small
Speaker 1: and medium sized businesses. Yes, But if you look at
Speaker 1: the broader wage trends UM. You can look at a
Speaker 1: median you know, wage growth, it's still running three to
Speaker 1: four for an um UM. Nothing worrisome in terms of
Speaker 1: wage price spirals. So I think investors again that we're
Speaker 1: we're trying to look out a year from now and
Speaker 1: and understand where inflation might be. The wage data is
Speaker 1: not telling us a worrisome longer term story. If you
Speaker 1: recall the nineties, I'm sure you do write we had
Speaker 1: five or six percent medium wage growth and we still
Speaker 1: had moderate inflation right around two to three. So you
Speaker 1: can even see wage growth take up from here, which
Speaker 1: I hope it does, and and still not have a
Speaker 1: runaway inflation story, which really raises the issue Jeffrey, of
Speaker 1: how much is being priced in that is that I
Speaker 1: dread using this word because I will get hate males
Speaker 1: tag inflation and how much this is just sort of
Speaker 1: a new reflationary trade that basically have gone past the
Speaker 1: peak reflation and we're now heading into a normalization. And frankly,
Speaker 1: it is choppy with higher prices. It sometimes uh than growth,
Speaker 1: and and sort of this mismatch in how things come
Speaker 1: back online. How you distinguish between those two scenarios which
Speaker 1: are very different, with one not leading to an expansion,
Speaker 1: the other one leading to an expansion that's just more
Speaker 1: tempered when you speak with your fellow with your your
Speaker 1: fellow members of paid and regal. Yeah, I think you're right.
Speaker 1: We did see growth peak in the second quarter. We
Speaker 1: definitely saw slower growth in the US in the third quarter.
Speaker 1: We've shaved our our GDP estimant for the full year
Speaker 1: now too. We started at seven point four for we're
Speaker 1: down to five point five, so we've shaved growth. So
Speaker 1: growth has sload. Is it stagflation though? I don't think so.
Speaker 1: I think it's really tough to do this, But there's
Speaker 1: so much noise right now. Growth slowing to you know,
Speaker 1: for the year five and a half percent. To me,
Speaker 1: that's not stagflation. The reason you have to go back,
Speaker 1: I think to answer your questions directly, why, what's what's
Speaker 1: causing this? You know, we think it is pandemic related.
Speaker 1: We think it is bottlenecks on the supply side that
Speaker 1: have knocked down our growth estimates, and some of that
Speaker 1: we will we will get payback on in two we think.
Speaker 1: So it's it's not a more you know, worried. Where
Speaker 1: we would get more worried, I guess on the growth
Speaker 1: front is if it was demand had swumped off, and
Speaker 1: that's not really what you know, we think we're seeing here.
Speaker 1: Demands you know, particularly from sumers and households will remain
Speaker 1: very very strong, we think um throughout this rest of
Speaker 1: the year and into two UM. So it's it's not
Speaker 1: a demand flump type story. It's you know, it sees
Speaker 1: idiosyncratic supply side things that are holding back growth. So
Speaker 1: that that's one part of it. Just discerning okay, what
Speaker 1: is driving the slowdown that we're seeing. And then the inflation,
Speaker 1: you know, is inflation and remain elevated um, you know,
Speaker 1: on a sustain basis more than a couple of quarters.
Speaker 1: And we think the answer, again, as as I labored already,
Speaker 1: is no, So we don't. I can't put myself in
Speaker 1: the stagflation camp quite yet. All right, Jeffrey, I want
Speaker 1: to ask you you were talking about all the noise
Speaker 1: that's out there. There certainly has been a lot of
Speaker 1: noise down in Washington, d C. I know that's pretty
Speaker 1: much always the case, but it seems like it's gotten
Speaker 1: a lot louder as of late. You have the ongoing
Speaker 1: question mark around the dead ceiling, you have discussions around
Speaker 1: the infrastructure package really at a stalemate now in October
Speaker 1: thirty one deadline. How would it change your view on
Speaker 1: the U. S. Economy if we don't see that trillions
Speaker 1: of dollars in longer term economic expending materializing. Well, I
Speaker 1: think we will get something done. I can't tell you
Speaker 1: when it's impossible to figure that out, but I don't
Speaker 1: think it's going to be the three and a half
Speaker 1: trillion so to the extent it And it does seem,
Speaker 1: you know, when you look at the headlines and market movements,
Speaker 1: market is sort of fixated on that three and a
Speaker 1: half trillion dollar number, and that could disappoint UM some
Speaker 1: investors if we don't get it, um, you know, I don't.
Speaker 1: I don't think we're going to get that that number
Speaker 1: for us though, the big fiscal pulse already happened. You know,
Speaker 1: we're already on the other side of it. You look
Speaker 1: at transfers to households, you can look at you know,
Speaker 1: quarter over quarter UM those were actually down in the
Speaker 1: second quarter relative to a year ago because we saw
Speaker 1: this huge surgeon in spending. Our transfer as the household
Speaker 1: that's done and for us that that's really the more
Speaker 1: critical question. UM. Households. Fortunately, you know, they're they're being
Speaker 1: you know, they're going back into employment. They still have
Speaker 1: pretty ample savings, so that will be good. But the
Speaker 1: big party in terms of the fiscal side, I think
Speaker 1: it's done. So that's I think something to keep in
Speaker 1: mind for investors to you know, the death ceiling is important. Well,
Speaker 1: you know, I guess we're playing, um a game of
Speaker 1: brinksmanship here and it probably lasts you know, into mid
Speaker 1: October membe later. Ultimately, we think that does get resolved,
Speaker 1: perhaps something similar to what we saw in I think
Speaker 1: the other Washington story though, is the FED, the FED board,
Speaker 1: the possible departure of Jerome Powell, and then two other
Speaker 1: spots that look like they're going to open up, and
Speaker 1: that could change, that could change. I think what that
Speaker 1: gives you is a little a more dubbish FED um
Speaker 1: And if that's right, that is more important I think
Speaker 1: for for markets for risk assets than you know, the
Speaker 1: death ceiling or you know, I hate to say it
Speaker 1: to my political strategist, but I think that will the
Speaker 1: FED will ultimately be more important than the size of
Speaker 1: the fiscal UH build the budget that ultimately ultimately they
Speaker 1: get decided on monetary policy for the win. Thank you
Speaker 1: so much, Jeffrey Cleveland, he's chief a anonymists at Payton
Speaker 1: and Regal. There is, of course the big elephant in
Speaker 1: the room for anyone who covers markets right now. It
Speaker 1: is inflation. What your viewpoint on it will determine much
Speaker 1: of how you position for it. However, which way is
Speaker 1: up in the air in terms of depending on who
Speaker 1: you speak with. We're going to speak right now with
Speaker 1: Efan Devit, chief investment officer at Monida with twenty seven
Speaker 1: point four billion dollars of assets under management. Even before
Speaker 1: we get into your inflation call, how do you use
Speaker 1: this to shape what you want to buy. Inflation is
Speaker 1: something we look at always as a part of the
Speaker 1: factors that drive where our portfolio should be positioned. Our
Speaker 1: goal is that our client portfolios should be resilient too
Speaker 1: many risks, in particular inflation. So we look at the
Speaker 1: different components of that portfolios, such as equities and real assets,
Speaker 1: and want to ensure that we have enough diversification into them,
Speaker 1: because some have explicit linkage to inflation, such as real
Speaker 1: assets and real estate, and then some have de fact
Speaker 1: um positive correlation to inflation, such as equities. Well, let's
Speaker 1: talk about some of those equities. The NASAC one hundred
Speaker 1: is now down two percent on the day. We can
Speaker 1: maybe attribute some of that too higher yields. How do
Speaker 1: you think about technology in the place it does or
Speaker 1: does not have in your portfolio right now? Technology will
Speaker 1: always be a huge components for our portfolio, particularly because
Speaker 1: many clients will have exposure to large cap stocks, and
Speaker 1: quite frankly, the Fangs have really comprised such a large
Speaker 1: percentage and increasingly large percentage of those large cap portfolios.
Speaker 1: So it is a lynch pin, and we actually saw
Speaker 1: that they performed very well. Obviously, we spoke your earlier
Speaker 1: guests about to stay at home stocks and how they
Speaker 1: really were quite resilient throughout the COVID crisis, and any
Speaker 1: time there's a crisis of confidence, they do seem to rebound.
Speaker 1: So technology will always have a huge component there. We
Speaker 1: do let look to have balanced portfolios across the course,
Speaker 1: across growth and value. But the fact that with technology
Speaker 1: and interest rates, if anybody does use a DCS valuation,
Speaker 1: as interest rates rise, well that will make the future
Speaker 1: earnings looked up at st and technology. So that seems
Speaker 1: to be part of the correlation that we're seeing. What
Speaker 1: do you how do you view the sort of decline
Speaker 1: that we saw last week that's carrying over to today.
Speaker 1: Is this the beginning of something bigger or is this
Speaker 1: a blip that you want to dig in and kind
Speaker 1: of start buying. I do think it is not the
Speaker 1: beginning of something bigger, because what we're seeing is a
Speaker 1: tremendous amount of assets on the sidelines. They've been sitting
Speaker 1: there waiting to get exposure to equities. And what we
Speaker 1: see is at every time there is a correction and
Speaker 1: equity markets or even just just a blip, as you say,
Speaker 1: or just crisis of confidence. It doesn't last very long.
Speaker 1: And that's the real phenomenon of the current cycle, is
Speaker 1: that none of these adjustments last for very long. Because
Speaker 1: there's such a large amount of money on the sidelines
Speaker 1: looking to go in. Why where do the sentiments dip
Speaker 1: come from? Certainly there's a lot of backdrop now in
Speaker 1: terms of both geopolitical concerns we're looking globally, we've seen
Speaker 1: the specter of a large scale default. There's a political gridlock. Again.
Speaker 1: The news on the virus seems to be moderating, and
Speaker 1: that probably is has not really factored into to send months,
Speaker 1: but certainly that the tech news you mentioned earlier around Facebook,
Speaker 1: that is just a reminder of the ability for regulatory
Speaker 1: twip flash to occur, not just in China, but also here. Well,
Speaker 1: I'm so glad you brought up China because we continue
Speaker 1: to watch the evergrand saga unfold day by day by day,
Speaker 1: and it's that's sprinkling not the only issue you have
Speaker 1: to worry about there. You have the ongoing regulatory crackdown,
Speaker 1: you have a broader slow down and economic growth. How
Speaker 1: do you think about China right now and the risk
Speaker 1: that it poses. Certainly we've had to completely rethink how
Speaker 1: we think about China as a source of risk. There
Speaker 1: is even a suggestion among some commentators that China has
Speaker 1: become uninvestable. Such has been the frequency of these negative
Speaker 1: surprises that we've seen time and time again. It seems
Speaker 1: every week there is a negative surprise. What I would
Speaker 1: say is that China is only going to be a
Speaker 1: portion of an emerging markets allocation, and even emerging markets
Speaker 1: is only a portion of a non US allocation. So
Speaker 1: it really is quite risk controlled within a portfolio. And
Speaker 1: as for whether that is sustained as that portion, well
Speaker 1: that really remains to be seen. Certainly, the risk reward
Speaker 1: has changed dramatically, and what we can see for China
Speaker 1: is just as it was first in and first as
Speaker 1: of the pandemic. It can certainly be a harbinger for
Speaker 1: the concerns that would perhaps be more global and the
Speaker 1: ever ground is a great example. And then some traders
Speaker 1: in this market have never seen at any kind of
Speaker 1: a large scale default of that nature. The last time
Speaker 1: we saw it was an O eight, and many people's
Speaker 1: whole careers have been built in so eight. So that
Speaker 1: simply is a reminder of just the specter of a
Speaker 1: large scale default, what it can look like, and how
Speaker 1: it can it can ripple through the system, not just
Speaker 1: for other real estate developers, but for banks financial institutions
Speaker 1: as well. It is a salutary reminder, I believe, of
Speaker 1: some of the risks that can actually be there bubbling
Speaker 1: onto the surface. Are you more concerned about the financial
Speaker 1: risk here or the economic risk of a slowdown in
Speaker 1: China percolating through the entire ecosystem, through the supply chain
Speaker 1: disruptions and other sort of transmissions that are more insidious
Speaker 1: and slow moving. Certainly, I would say that the impact
Speaker 1: of a slowdown a it's going to be less felt
Speaker 1: over here. The US has been the engine of developed
Speaker 1: market markets for some time, and I don't see a
Speaker 1: slow down in China as really having tremendous round applications. Here,
Speaker 1: We've already had a significant change in the trade conditions,
Speaker 1: and that is it's likely to persist. So I don't
Speaker 1: see that the US is particularly dependent on China. But
Speaker 1: certainly China does affect the fortunes of the surrounding emerging markets,
Speaker 1: and for that reason, any slow down there would just
Speaker 1: be poor for global growth alright. Efan devit Cio of
Speaker 1: Monetta giving us her market outlook and her take on
Speaker 1: inflation at least of the China story. Getting a little
Speaker 1: bit more interested today when you talk about the trade
Speaker 1: narrative that even just brought up. We obviously got some
Speaker 1: harsher words out of the Biden administration. We're waiting for
Speaker 1: the US trade representative to speak, uh later on today,
Speaker 1: but basically saying they're not holding up their end of
Speaker 1: the bargain when it comes to be as one deal.
Speaker 1: And right now we are looking at markets that are
Speaker 1: going deeper into the red. And just now, Gayley is
Speaker 1: you just pointed out a headline crossing the New York
Speaker 1: City says that end of school staff is vaccinated following
Speaker 1: the mandate that went to effect today. The teachers had
Speaker 1: to be at least have gotten their first shot, otherwise
Speaker 1: they could be put on leave, and they're saying that
Speaker 1: they've got in compliance. Interesting to see, really, you know,
Speaker 1: being sort of on the precipice of this debate of mandates. Yeah, absolutely,
Speaker 1: and you're seeing it play out so differently in different
Speaker 1: states and different sectors where there have been more legal
Speaker 1: challenges to this. But it's pretty remarkable the jump we
Speaker 1: have seen in vaccination rates as soon as a mandate
Speaker 1: goes into place. Some of the hospital systems had vaccination
Speaker 1: rates around and now they're also in the nineties as well,
Speaker 1: now that you've put people's jobs on the line. So
Speaker 1: it is something that is working, even for all of
Speaker 1: the debate that's around it. And this really translates into
Speaker 1: just where we are and coming out of the pandemic
Speaker 1: and how this translates to a market call as we
Speaker 1: do seem to be on the downward swing in the
Speaker 1: number of cases and hospitalizations. Ryan Jacob has to evaluate
Speaker 1: this along with the FED, along with debt ceiling debate,
Speaker 1: along with all of the mess uh in Washington, d C.
Speaker 1: And beyond all the way to China, a c i
Speaker 1: O of the Jacob Internet Fund talking here with us.
Speaker 1: And the reason Ryan why I say that is because
Speaker 1: you kind of have to dovetail a rates call a
Speaker 1: global macroeconomic picture with your view on tech. More than ever,
Speaker 1: how do you sort of gauge this connection between rates
Speaker 1: and the tech sector. Well, I do think we're a
Speaker 1: bit in the minority and that we're not that concerned
Speaker 1: about higher rates for our particular portfolios. Whether it's the
Speaker 1: et F of the mutual funds because we tend to
Speaker 1: focus on smaller MidCap tech companies. UH. In terms of
Speaker 1: the large higher interest rates, we're really seeing more of
Speaker 1: an impact on the large and mega cab technology companies
Speaker 1: that quite frankly, we'll have more difficult time overcoming the
Speaker 1: headwind of higher rates in terms of revenue and earnings
Speaker 1: growth more of the companies We focus on our higher
Speaker 1: growth companies and should be about to overcome it. Basically, Well,
Speaker 1: there's the rates headwind. There's also a China headwind for technology.
Speaker 1: Ryan and I was looking through some of the holdings
Speaker 1: of your fun and saw that Ali Baba Intencent are
Speaker 1: in there. How worried are you about that crackdown that's
Speaker 1: happening in China. Does that make you want to rethink
Speaker 1: some of those holdings. Well, we have been shareholders in
Speaker 1: Chinese companies for over fifteen years now, so we've seen
Speaker 1: a lot of highs and lows. Admittedly, this is probably
Speaker 1: one of the low points that we've seen in terms
Speaker 1: of um, you know, what's happening in China and the
Speaker 1: ramifications for these companies. H And admittedly we had cut
Speaker 1: back our positions considerably. They're probably two of our smallest
Speaker 1: positions at this point, um, and quite frankly, until conditions
Speaker 1: improve or we see it, uh, you know, I doubt
Speaker 1: will increase our allocations. What type of technology companies are
Speaker 1: you seeing as the greatest opportunity at a time when
Speaker 1: we already have priced in some of the shift to
Speaker 1: working from home, where we already have priced in some
Speaker 1: of the Internet prowess of the likes of Google and
Speaker 1: Facebook and sort of the dominance that they have, are
Speaker 1: what types of tech should we be looking for? Well,
Speaker 1: that is the biggest challenge this year. Which companies can
Speaker 1: build on the success of last year, uh, and which
Speaker 1: companies will have a fall offer kind of come off
Speaker 1: a bit of a sugar high in terms of the
Speaker 1: impact of their business. And so the companies we're focusing
Speaker 1: on are the ones where broader adoption has been accomplished
Speaker 1: and now we've see an acceleration and that's that's what
Speaker 1: we've seen across our portfolio. So, um, you know, there's
Speaker 1: a host of names that really fall in that category,
Speaker 1: but it's a very very tricky environment. Well, give us
Speaker 1: some of those names, Ryan, Can you get specific which
Speaker 1: companies in particular, are most fascinating to you right now? Well,
Speaker 1: you know one of the companies, it's one of our
Speaker 1: larger positions. Optimized r X basically has electronic health record,
Speaker 1: advertising and communication services. So this is something that the
Speaker 1: drug companies were very interested in pre COVID. Once COVID
Speaker 1: hit and sales reps could no longer go out no
Speaker 1: more industry conferences or events, they allocated more money to
Speaker 1: digital and across different platforms. Optimized benefited from that, and
Speaker 1: then I think when a lot of the drug companies
Speaker 1: realized the returns they were getting from these investments. Uh,
Speaker 1: they've been basically accelerating ever since, even even with the
Speaker 1: prospect of going back to more traditional methods to advertise
Speaker 1: their products. UM and optimizes seeing that the bump last
Speaker 1: year and now an acceleration in their pipeline this year, Ryan,
Speaker 1: before I let you go, when you take a step back,
Speaker 1: everyone wants to be a tech company. McDonald's wants to
Speaker 1: be a tech company. Who doesn't want to say that
Speaker 1: they are on the cutting edge of what's next. How
Speaker 1: do you parse out what actually fits with your band aid?
Speaker 1: It's a great question, um, because every company incorporates tech
Speaker 1: and it's it's very it's not an experimental part of
Speaker 1: their budget. It's poor to what they do. So um,
Speaker 1: it's becoming harder and harder. The fund is the Jacob
Speaker 1: Internet Fund, the mutual fund, but now every you know
Speaker 1: that was launched over twenty years ago and things have
Speaker 1: changed and involved and h it is a constant challenge.
Speaker 1: It actually widens the investment universe for us. So actually
Speaker 1: in some ways it's been helpful. Alright, Ryan Jacob ce
Speaker 1: io of the Jacob Internet Fund talking to us about
Speaker 1: all things technology, Thank you so much. Kind of right now,
Speaker 1: I want to shift to one area that has been hot,
Speaker 1: and that has been commodities. And the interesting thing is
Speaker 1: that we have seen stock sell off, we've seen bond
Speaker 1: sell off in the past month. The one outlier has
Speaker 1: been oil. What has not been an outlier gold. It
Speaker 1: still is not acting materially as a hedge. Perhaps it's
Speaker 1: up a little bit today, but in general has not.
Speaker 1: What gives when can this act as a traditional hedge
Speaker 1: against volatility? Ashraf Rizve probably is wondering at the same
Speaker 1: thing and probably has an answer, Chief executive officer and
Speaker 1: founder of Gilded, joining us here in h New York
Speaker 1: right now, Ashrof, can you give us a sense of
Speaker 1: the dynamic behind gold and why it hasn't benefited from
Speaker 1: the risk off feel in both stocks and bonds over
Speaker 1: the past month. Sure, thanks for having me on the program. UM.
Speaker 1: I think gold is is caught in this UM comparison
Speaker 1: of is it inflation? UM. I think most people believe
Speaker 1: that we are seeing inflation, whether it's transitory or not.
Speaker 1: UM the impact of potentially real interest rates going up
Speaker 1: with the taper UM. Physical demand of course has been increasing,
Speaker 1: but the dollar has been strengthening as well. So the
Speaker 1: combination of these four factors it's kind of gotten golden
Speaker 1: a bit of a quagmire where it can't decide whether
Speaker 1: it's really going up or down. That being said, I
Speaker 1: think we know that historically it has over long periods
Speaker 1: of time done very well UM, whether it's an inflation
Speaker 1: environment or in a even in a deflation environment, particularly
Speaker 1: now that we're suffering through this UH significant increase in
Speaker 1: debt that's happening all across the world by governments. So
Speaker 1: you see a case for holding gold here at least
Speaker 1: in the long or term. How does what you do
Speaker 1: it guild in it guilded enable people to own gold. Yeah,
Speaker 1: that's a great question. I think the key here is
Speaker 1: that gold has as an asset class been difficult to homee.
Speaker 1: So what we've really focused on is how can we
Speaker 1: make physical gold ownership functional? And so that really means
Speaker 1: making it digital, mobile, and usable. So let's leverage twenty
Speaker 1: one century technology, a smartphone, a mobile mobile device, a
Speaker 1: mobile app, and blockchain to be able to provide that
Speaker 1: physical ownership direct to you in a nice easy way
Speaker 1: where you can be the direct owner of the property
Speaker 1: rather than a fractional banking system where it's an IOU
Speaker 1: where you can leverage it to be able to do
Speaker 1: things like not only buy and sell, but even in
Speaker 1: certain countries, were already able to send or gift and
Speaker 1: and then be able to do other things for example
Speaker 1: or ultimately a return or be able to borrow lend
Speaker 1: against it as well. Sure, if how much is this?
Speaker 1: If you can't beat them, join them? Basically people saying
Speaker 1: that bitcoin was taking over for gold because people didn't
Speaker 1: want to have to store the thing and they wanted
Speaker 1: to have some sort of store of value, how much
Speaker 1: is it saying Okay, we get that, we get that
Speaker 1: all right, But well, we'll give you the benefits of that,
Speaker 1: but we'll give you the absolute reality of gold, which is,
Speaker 1: you know, last of the test of time. Yeah. I
Speaker 1: think it's a great question. Um. Ease of use is
Speaker 1: always paramount, and I believe that one of the things
Speaker 1: that's happened with digital assets is they have made it
Speaker 1: easier for people to access. Physical gold has been hard
Speaker 1: for people to access, and so I think we're making
Speaker 1: it easier by making a digital mobile and usable. And
Speaker 1: most importantly, perhaps is that that marketplace is huge. It's
Speaker 1: a twelve trillion dollar marketplace, probably the single most widely
Speaker 1: held asset in the world. Billions of people own it,
Speaker 1: most every major central bank does. So it's really time
Speaker 1: to bring it into the twenty first century rather than
Speaker 1: just being what a lot of people have claimed, which
Speaker 1: is that it's a it's a very expensive paperweight. But
Speaker 1: by baking it making it twenty century, we can make
Speaker 1: it usable for everyone and very functional. Yeah. You know, Astrov,
Speaker 1: a lot of bitcoin bowls call bitcoin digital gold, but
Speaker 1: you are actually literally doing digital gold over at Guilden.
Speaker 1: That is Ashraf Risbee. He is the CEO and founder
Speaker 1: of Gilded talking to us about gold, which, yes, Lisa,
Speaker 1: she's smiling of a really expensive paperweight. We now don't
Speaker 1: have paper to even wait down because everything is digital anyway.
Speaker 1: I mean, it just sort of talks about the other era. Yeah,
Speaker 1: who even needs pens anymore. It's a brave new world
Speaker 1: where people don't need gold to hedge against anything. Gold, though,
Speaker 1: is getting a little bit of a bit to day
Speaker 1: on a day when the markets are down. Thanks for
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
Speaker 1: listen to interviews with Apple Podcasts or whatever podcast platform
Speaker 1: you prefer. I'm Matt Miller, I'm on Twitter at Matt
Speaker 1: Miller three, and I'm fall Sweeney. I'm on Twitter at
Speaker 1: pt Sweeney. Before the podcast, you can always catch us
Speaker 1: worldwide at Bloomberg Radio.