1 00:00:14,040 --> 00:00:17,520 Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast. 2 00:00:17,600 --> 00:00:20,080 Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg, 3 00:00:20,239 --> 00:00:23,720 Speaker 1: now Maldonna Higher across asset reporter with Bloomberg, and this 4 00:00:23,800 --> 00:00:27,360 Speaker 1: week on the show. Well, as you probably know by now, 5 00:00:27,400 --> 00:00:30,720 Speaker 1: the stock market fell into a nasty bear market last year, 6 00:00:30,800 --> 00:00:34,000 Speaker 1: with the SMP five hundred dropping about twenty five percent 7 00:00:34,120 --> 00:00:37,000 Speaker 1: from its high in January to it's low in October. 8 00:00:37,560 --> 00:00:40,280 Speaker 1: But since then that October low has actually held and 9 00:00:40,320 --> 00:00:43,440 Speaker 1: the index has gained more than ten percent. That's led 10 00:00:43,479 --> 00:00:46,440 Speaker 1: some to speculate that maybe the worst is over and 11 00:00:46,520 --> 00:00:48,879 Speaker 1: we're actually at the beginning of a new bowl market. 12 00:00:49,320 --> 00:00:52,640 Speaker 1: Well not so fast, says this week's guests. There's likely 13 00:00:52,680 --> 00:00:55,440 Speaker 1: more pain ahead and you'll probably want to listen to 14 00:00:55,520 --> 00:00:57,480 Speaker 1: him because he happens to be one of the most 15 00:00:57,480 --> 00:01:01,120 Speaker 1: well known and experienced investors around and he knows a 16 00:01:01,200 --> 00:01:05,560 Speaker 1: thing or two about spotting bubbles. But first, let's stock socks. Yes, first, 17 00:01:05,640 --> 00:01:09,720 Speaker 1: let's suck sucks with our guests, who I know, especially 18 00:01:09,880 --> 00:01:12,080 Speaker 1: terminal readers, they love to hear from him. They want 19 00:01:12,080 --> 00:01:14,959 Speaker 1: to know what he's thinking. It's Jeremy Grantham, He's the 20 00:01:15,000 --> 00:01:19,640 Speaker 1: co founder and long term investment strategist of GMO. Thank 21 00:01:19,680 --> 00:01:23,040 Speaker 1: you so much for joining us. You're welcome, pleasure. We're 22 00:01:23,080 --> 00:01:26,320 Speaker 1: really happy to have you. So you and I actually 23 00:01:26,520 --> 00:01:28,600 Speaker 1: just so readers are aware. You and I spoke a 24 00:01:28,640 --> 00:01:30,680 Speaker 1: couple of weeks ago. We talked about some of these things, 25 00:01:30,959 --> 00:01:34,480 Speaker 1: and I was hoping you could maybe just start with 26 00:01:35,400 --> 00:01:39,800 Speaker 1: you warning about a plunge in the stock market for 27 00:01:40,040 --> 00:01:43,160 Speaker 1: twenty twenty three. How do your views align with what 28 00:01:43,200 --> 00:01:46,319 Speaker 1: we've seen so far this year, and maybe layout for 29 00:01:46,400 --> 00:01:51,240 Speaker 1: our listeners what you're predicting for the remainder of the year. Yeah. No, 30 00:01:51,360 --> 00:01:57,280 Speaker 1: it's doing fine. It behaving traditionally. My last paper was 31 00:01:57,320 --> 00:02:01,520 Speaker 1: called after a time out, back to the meat Grinder, 32 00:02:02,480 --> 00:02:05,640 Speaker 1: and well, l is a vegetarian German. You gotta watch. 33 00:02:05,680 --> 00:02:08,920 Speaker 1: Do you want to hear that? No, it's meant to 34 00:02:08,960 --> 00:02:14,800 Speaker 1: sound painful and brutal. And the idea was that I, personally, 35 00:02:15,760 --> 00:02:20,600 Speaker 1: I'm a great respect of January as an unusual month. 36 00:02:20,680 --> 00:02:24,440 Speaker 1: And what January does is it tends to be pretty 37 00:02:24,520 --> 00:02:28,680 Speaker 1: kind to small small cap and value. Indeed, more than 38 00:02:28,680 --> 00:02:31,359 Speaker 1: one hundred percent of all the small cap effect so 39 00:02:31,400 --> 00:02:35,799 Speaker 1: called has occurred in January for the last one hundred years. 40 00:02:36,480 --> 00:02:40,040 Speaker 1: So it's huge for small and value. But it's also 41 00:02:40,760 --> 00:02:44,440 Speaker 1: has this rather more complicated thing, and that is it 42 00:02:44,480 --> 00:02:47,880 Speaker 1: does very well for stocks that got utterly hammered the 43 00:02:47,960 --> 00:02:54,080 Speaker 1: year before. That's pretty obvious. What happens. You lose forty fifty, sixty, 44 00:02:54,120 --> 00:02:58,480 Speaker 1: seventy or so, you take your losses to reap the 45 00:02:58,800 --> 00:03:02,000 Speaker 1: tax loss effect, and then you have the money in 46 00:03:02,000 --> 00:03:05,480 Speaker 1: your hand, and you have a year end bonus, Christmas 47 00:03:05,520 --> 00:03:09,919 Speaker 1: bonus and so on, and you look out into the 48 00:03:09,960 --> 00:03:15,120 Speaker 1: new year. You can you can see them as bargains 49 00:03:15,120 --> 00:03:18,720 Speaker 1: sat down a lot, in this case the growth stocks, 50 00:03:18,760 --> 00:03:20,600 Speaker 1: and so you buy it. So I was kind of 51 00:03:20,840 --> 00:03:25,679 Speaker 1: fearful of that were the Grantham Foundation cut back its 52 00:03:25,840 --> 00:03:29,120 Speaker 1: short position in NASDEK. Didn't eliminate it, by the way, 53 00:03:30,360 --> 00:03:34,480 Speaker 1: but it cut it back in honor of the January rally. 54 00:03:34,880 --> 00:03:38,600 Speaker 1: And we look back at what happened in two thousands. 55 00:03:38,640 --> 00:03:42,400 Speaker 1: There are only a handful of great bubbles that look 56 00:03:42,480 --> 00:03:45,440 Speaker 1: like this one, and the one that looks most like 57 00:03:45,560 --> 00:03:49,360 Speaker 1: it is the great tech bubble of two thousand and 58 00:03:49,600 --> 00:03:53,800 Speaker 1: During two thousand, the blue chips continued to go up, 59 00:03:55,120 --> 00:03:58,360 Speaker 1: and they shot the dot coms, and then they shot 60 00:03:58,400 --> 00:04:00,760 Speaker 1: the junior growth stocks, and then the meat im growth stocks, 61 00:04:00,760 --> 00:04:04,720 Speaker 1: and finally the great ciscos of that era. And by 62 00:04:04,760 --> 00:04:08,400 Speaker 1: the end of the year, the NAS deck was down, 63 00:04:10,080 --> 00:04:13,200 Speaker 1: and a lot of the growth stocks, because the NAZ 64 00:04:13,240 --> 00:04:15,120 Speaker 1: deck is a little more diverse by a lot of 65 00:04:15,160 --> 00:04:18,200 Speaker 1: the growth stocks were probably down about an average of 66 00:04:18,480 --> 00:04:23,479 Speaker 1: fifty or sixty. It was a blood and that pretty 67 00:04:23,560 --> 00:04:28,480 Speaker 1: much sums up what happened to highly speculative speculative stops 68 00:04:28,560 --> 00:04:32,560 Speaker 1: last year. Don't you think I mean they were They 69 00:04:32,560 --> 00:04:39,600 Speaker 1: were taking all manner of grief. Kathy woods portfolio was 70 00:04:39,680 --> 00:04:45,200 Speaker 1: down I don't know sixty so and so what happened 71 00:04:45,279 --> 00:04:49,080 Speaker 1: in two thousand and one. January two thousand and one 72 00:04:49,240 --> 00:04:53,000 Speaker 1: was up twelve percent, led by the specs that had 73 00:04:53,000 --> 00:04:56,400 Speaker 1: been wiped out the previous year. This seems, you know, 74 00:04:56,760 --> 00:04:59,320 Speaker 1: so boring as to hardly be worth commenting on, but 75 00:04:59,520 --> 00:05:05,320 Speaker 1: that is a exactly what happened this year. And one 76 00:05:05,320 --> 00:05:08,560 Speaker 1: of the proofs is if you take the Order of 77 00:05:08,680 --> 00:05:12,280 Speaker 1: Horror last year and flipped it, that is precisely the 78 00:05:12,400 --> 00:05:16,800 Speaker 1: Order of Heroics this year. And I own one of 79 00:05:16,800 --> 00:05:21,240 Speaker 1: these by accident. Eight years ago. The biggest investment I 80 00:05:21,360 --> 00:05:26,320 Speaker 1: ever made was in quantum escape, brilliant research enterprise doing 81 00:05:26,360 --> 00:05:29,360 Speaker 1: solid state battery work, but it doesn't have a product 82 00:05:29,440 --> 00:05:31,520 Speaker 1: yet and won't for a couple of years and so on. 83 00:05:31,839 --> 00:05:34,440 Speaker 1: So it was right at the top of the list. 84 00:05:34,480 --> 00:05:40,479 Speaker 1: And it did utterly, brilliant, brilliantly in twenty twenty, and 85 00:05:41,040 --> 00:05:44,400 Speaker 1: it came out at ten as a spack four times 86 00:05:44,440 --> 00:05:48,080 Speaker 1: my money. Yeah, not bad over eight years, not great, 87 00:05:48,160 --> 00:05:50,679 Speaker 1: but pretty good. And then it went to one hundred 88 00:05:50,720 --> 00:05:55,000 Speaker 1: and thirty one fifty two billion dollars for a second 89 00:05:55,040 --> 00:05:58,440 Speaker 1: bigger than General Motors or Samsung as a battery company, 90 00:05:59,080 --> 00:06:01,560 Speaker 1: no sales over venues for a few years to come. 91 00:06:02,040 --> 00:06:04,880 Speaker 1: It had become a meme stock, but I was too 92 00:06:04,880 --> 00:06:07,440 Speaker 1: close to it and too heavily involved to really see that. 93 00:06:07,640 --> 00:06:12,479 Speaker 1: I understood the meme stocks, and I thought this was 94 00:06:12,480 --> 00:06:16,839 Speaker 1: pretty impressive at one hundred and thirty fifty two times 95 00:06:16,920 --> 00:06:20,400 Speaker 1: my money. And suddenly I had a holding that was 96 00:06:20,440 --> 00:06:22,960 Speaker 1: worth six hundred and twenty five million, far and away 97 00:06:23,000 --> 00:06:26,520 Speaker 1: the biggest, I mean by more than ten times the 98 00:06:26,520 --> 00:06:30,800 Speaker 1: biggest holding I ever had, probably twenty five times the biggest. 99 00:06:31,320 --> 00:06:33,279 Speaker 1: And then it started to decline, and it was the 100 00:06:33,320 --> 00:06:35,680 Speaker 1: first one to decline. Why not that's how the great 101 00:06:35,680 --> 00:06:39,359 Speaker 1: bubbles start. By the way, they don't start with Coca Cola. 102 00:06:39,400 --> 00:06:43,160 Speaker 1: They start with the craziest, most advanced stock, and that 103 00:06:43,279 --> 00:06:49,120 Speaker 1: was Quantum Scale. It started down in December twenty twenty. 104 00:06:50,080 --> 00:06:52,680 Speaker 1: Early in twenty twenty one, the meme stocks joined it, 105 00:06:52,880 --> 00:06:58,800 Speaker 1: and Cathy Woods's portfolio got into step, and they all 106 00:06:58,839 --> 00:07:02,839 Speaker 1: started to go down. Everyone said, well, it's a great ballmarkt. 107 00:07:02,839 --> 00:07:05,440 Speaker 1: The SMP was going up, but anyone who won't stops 108 00:07:06,160 --> 00:07:10,920 Speaker 1: news differently, and they went down handsomely. And then into 109 00:07:11,240 --> 00:07:15,240 Speaker 1: twenty twenty two they continued to go down, and by 110 00:07:16,120 --> 00:07:20,120 Speaker 1: December twenty twenty two, Quantum Escape was five point one. 111 00:07:20,120 --> 00:07:22,760 Speaker 1: Now this is pretty a pretty good trip. Comes at ten, 112 00:07:23,480 --> 00:07:26,160 Speaker 1: goes to one hundred and thirty one, and it's now 113 00:07:26,240 --> 00:07:29,840 Speaker 1: five point one in December of last year. So what 114 00:07:29,880 --> 00:07:32,680 Speaker 1: did it do in January? Yeah, that led the way, 115 00:07:32,800 --> 00:07:36,200 Speaker 1: went up one hundred and twenty percent, not bad for 116 00:07:36,520 --> 00:07:39,640 Speaker 1: four or five six weeks, and then right behind it 117 00:07:39,880 --> 00:07:43,200 Speaker 1: at Kathy Woods's portfolio, I don't know, up forty percent, 118 00:07:44,000 --> 00:07:47,600 Speaker 1: and then the meme stops thirty forty fifty sixty percent 119 00:07:47,720 --> 00:07:50,320 Speaker 1: rallies all the way down the line. It was it 120 00:07:50,360 --> 00:07:52,960 Speaker 1: was perfect. It was almost too good to be true. 121 00:07:53,080 --> 00:07:58,480 Speaker 1: It was eerie in its orderliness. Anyway, that's what happens, 122 00:07:58,920 --> 00:08:04,240 Speaker 1: and it didn't stop the decline. In two thousand and one, 123 00:08:05,160 --> 00:08:07,720 Speaker 1: they had a brilliant twelve percent January. The year was 124 00:08:07,760 --> 00:08:14,520 Speaker 1: down twenty The nasdack, which had been down in two thousand, 125 00:08:15,440 --> 00:08:20,080 Speaker 1: went down twenty percent the following year and thirty percent 126 00:08:21,480 --> 00:08:24,640 Speaker 1: in two thousand and two. That is what happens in 127 00:08:24,680 --> 00:08:28,680 Speaker 1: the great bubbles. They have wonderful rallies. They can have 128 00:08:28,800 --> 00:08:32,680 Speaker 1: spectacular January rallies because they have more tax lost selling 129 00:08:32,679 --> 00:08:37,680 Speaker 1: than any other situation. And this has been following the 130 00:08:37,800 --> 00:08:42,560 Speaker 1: lead of two thousand perfectly. Cheremy, I wonder um. First off, 131 00:08:42,559 --> 00:08:44,640 Speaker 1: I heard those sirens coming. I thought the bulls had 132 00:08:44,679 --> 00:08:47,000 Speaker 1: sent some some police to pick Cheremie up there for 133 00:08:47,040 --> 00:08:50,640 Speaker 1: a minute. I don't know where. But you're still I 134 00:08:50,679 --> 00:08:55,679 Speaker 1: didn't even I didn't even hear I think, but well, 135 00:08:55,720 --> 00:09:00,160 Speaker 1: that parallel to the dot com bubble, do you think, well, 136 00:09:00,160 --> 00:09:02,760 Speaker 1: that go from peak all the way to trough? Because 137 00:09:03,600 --> 00:09:06,200 Speaker 1: you know, I don't have a chart in front of me, 138 00:09:06,240 --> 00:09:09,240 Speaker 1: but I believe the bottom wasn't until two thousand and three, right, 139 00:09:09,240 --> 00:09:12,800 Speaker 1: So you know, the bottom was in late two thousand 140 00:09:12,880 --> 00:09:14,920 Speaker 1: and two, two thousand and two, Okay, but that would 141 00:09:14,920 --> 00:09:18,000 Speaker 1: still mean we've got, you know, quite a long you know, 142 00:09:18,040 --> 00:09:22,080 Speaker 1: the forget about the Y access, that X access has 143 00:09:22,120 --> 00:09:24,199 Speaker 1: got quite a bit of runway left till the bottom. 144 00:09:24,280 --> 00:09:27,240 Speaker 1: Is that? Is that how you're thinking about it? Yeah? 145 00:09:27,520 --> 00:09:30,760 Speaker 1: Mostly the great bubbles when they break, they take a 146 00:09:30,760 --> 00:09:36,200 Speaker 1: long time. There there's an exception, but they typically take 147 00:09:36,600 --> 00:09:39,720 Speaker 1: a couple of years, three years, and every now and 148 00:09:39,760 --> 00:09:42,400 Speaker 1: then they get rid of it in a real hurry. 149 00:09:42,480 --> 00:09:46,000 Speaker 1: But my guess was this was going to be a long, 150 00:09:46,440 --> 00:09:49,760 Speaker 1: a long one. The buy into the idea that stocks 151 00:09:49,840 --> 00:09:54,520 Speaker 1: only go up, and the amount of speculative craziness that 152 00:09:54,640 --> 00:09:59,880 Speaker 1: was set in train by the by the COVID supplement 153 00:10:00,200 --> 00:10:05,679 Speaker 1: payments meant the individual participation was actually off the scale, 154 00:10:06,280 --> 00:10:09,640 Speaker 1: bigger than two thousand, bigger than the dot com And 155 00:10:09,720 --> 00:10:12,440 Speaker 1: so this looked like it would have a whole lot 156 00:10:12,440 --> 00:10:15,920 Speaker 1: of by the dip from day one, and it's had 157 00:10:15,960 --> 00:10:18,680 Speaker 1: a lot of by the dip. But but two thousand 158 00:10:18,920 --> 00:10:23,720 Speaker 1: had some wonderful rallies and even in nineteen twenty nine 159 00:10:24,520 --> 00:10:28,880 Speaker 1: it rallied almost forty five percent off the lows of 160 00:10:28,960 --> 00:10:36,000 Speaker 1: twenty nine until April of nineteen thirty. Hell of a 161 00:10:36,080 --> 00:10:39,360 Speaker 1: rally must have made people feel that the worst was over. 162 00:10:39,600 --> 00:10:42,040 Speaker 1: And then it rolled over and went down, as you know, 163 00:10:43,240 --> 00:10:47,640 Speaker 1: infinitely almost down well over eighty percent on the SMP, 164 00:10:47,880 --> 00:10:51,800 Speaker 1: and most of the speculative index went down ninety five 165 00:10:51,840 --> 00:10:55,360 Speaker 1: give or take anyway. Let's hope we don't go there, 166 00:10:55,960 --> 00:10:59,600 Speaker 1: but it just gives you an idea. Great bear markets 167 00:10:59,640 --> 00:11:04,120 Speaker 1: can have wonderful rallies. Great bear markets can take their time. 168 00:11:04,920 --> 00:11:08,120 Speaker 1: And we have a very very recent one where quite 169 00:11:08,120 --> 00:11:12,400 Speaker 1: a few players in today's market experience two thousands and 170 00:11:12,480 --> 00:11:16,240 Speaker 1: it went on for three painful years, and and and 171 00:11:16,400 --> 00:11:19,840 Speaker 1: the housing bust, you know, was a quick one, but 172 00:11:20,400 --> 00:11:24,040 Speaker 1: not that quick, you know, it took over a year 173 00:11:24,559 --> 00:11:28,800 Speaker 1: of pretty steady declines. So my guess is this one 174 00:11:28,960 --> 00:11:32,640 Speaker 1: will not bottom until deep into next year. Well so, 175 00:11:32,920 --> 00:11:35,840 Speaker 1: h three straight years of losses, do you think? I 176 00:11:35,880 --> 00:11:38,920 Speaker 1: do think? I think there is a biting chance that 177 00:11:39,000 --> 00:11:41,440 Speaker 1: this year will not be down that much, and a 178 00:11:41,600 --> 00:11:43,640 Speaker 1: very good chance, as I said in my letter, that 179 00:11:45,440 --> 00:11:52,320 Speaker 1: that through April it might easily be up. And that's 180 00:11:52,720 --> 00:11:56,080 Speaker 1: the presidential cycle, right, yeah, yeah, talk talk to us 181 00:11:56,080 --> 00:12:01,480 Speaker 1: about that. I don't think many people quite appreciate that signal. No, 182 00:12:02,240 --> 00:12:05,760 Speaker 1: you don't have many professionals talking about presidential cycles. It 183 00:12:05,840 --> 00:12:08,640 Speaker 1: sounds too simple. It doesn't sound like something you could 184 00:12:08,720 --> 00:12:13,240 Speaker 1: charge a good feed for. The January effects and the 185 00:12:13,360 --> 00:12:18,240 Speaker 1: January rally jitter. These are considered far too simple to 186 00:12:18,280 --> 00:12:21,800 Speaker 1: talk about, and it's probably why they work so well. 187 00:12:22,440 --> 00:12:26,440 Speaker 1: Our first account at DMO forty five years ago involved 188 00:12:26,520 --> 00:12:29,920 Speaker 1: both the January effect and the presidential cycle. It would 189 00:12:29,920 --> 00:12:32,480 Speaker 1: worked for forty five years before that, and it's worked 190 00:12:32,520 --> 00:12:36,439 Speaker 1: for the forty five years of dmo's career. And we 191 00:12:36,520 --> 00:12:40,520 Speaker 1: typically have not used it, however, for the same reason 192 00:12:40,559 --> 00:12:43,319 Speaker 1: that no one else does. But it's been a pet 193 00:12:43,320 --> 00:12:47,440 Speaker 1: of mind forever. The presidential cycle is about as simple 194 00:12:47,480 --> 00:12:50,920 Speaker 1: and straightforward and as understandable as anything in the stock market. 195 00:12:51,360 --> 00:12:56,160 Speaker 1: What it says is that administrations like to be reelected 196 00:12:56,720 --> 00:13:01,319 Speaker 1: and they like to help their party. So you worked out, eventually, 197 00:13:02,600 --> 00:13:06,240 Speaker 1: what is it that appeals to the elector. It's the 198 00:13:06,480 --> 00:13:10,120 Speaker 1: state of the labor market in the sixth month run 199 00:13:10,200 --> 00:13:14,520 Speaker 1: up to the election. Anything that happens before that is forgotten. 200 00:13:14,640 --> 00:13:17,640 Speaker 1: You can be brilliant for the first two years, terrible 201 00:13:17,679 --> 00:13:21,640 Speaker 1: for year three, and your toast. It really doesn't matter. 202 00:13:21,760 --> 00:13:24,800 Speaker 1: It's the run up to the election for six months now. 203 00:13:24,960 --> 00:13:27,600 Speaker 1: The economy, as we've all discovered over and over again, 204 00:13:28,600 --> 00:13:31,480 Speaker 1: it's a kind of lagging instrument. You kick it and 205 00:13:31,559 --> 00:13:34,320 Speaker 1: it takes a year or so before it says out. 206 00:13:34,640 --> 00:13:40,400 Speaker 1: So you better start stimulating quite a bit before the 207 00:13:40,440 --> 00:13:42,600 Speaker 1: six months running up to the election. You want to 208 00:13:42,640 --> 00:13:46,920 Speaker 1: get the labor market improving. You want to start when 209 00:13:48,240 --> 00:13:53,360 Speaker 1: the presidential cycle effect starts, which is October, approximately October 210 00:13:54,440 --> 00:13:59,520 Speaker 1: of the second year, last October through April of this year. 211 00:14:00,440 --> 00:14:10,480 Speaker 1: That window of eight months, seven months is what it takes, 212 00:14:10,559 --> 00:14:13,680 Speaker 1: because that gives you a little over a year to 213 00:14:13,800 --> 00:14:16,640 Speaker 1: have it grind through and then start pushing up on 214 00:14:16,679 --> 00:14:20,680 Speaker 1: the labor market. And would you believe that that's exactly 215 00:14:20,760 --> 00:14:24,080 Speaker 1: what happens since nineteen thirty two, This is not yesterday. 216 00:14:24,160 --> 00:14:29,840 Speaker 1: Since nineteen thirty two, those seven months have equalled the 217 00:14:29,960 --> 00:14:33,280 Speaker 1: remaining forty one months of the presidential cycle. Don't believe me. 218 00:14:33,440 --> 00:14:36,000 Speaker 1: Check it take you a while, but it's worth it. 219 00:14:36,680 --> 00:14:42,160 Speaker 1: Those seven months therefore have seven times the monthly power 220 00:14:42,840 --> 00:14:47,240 Speaker 1: of the rest of the cycle. Seven times. Wow. So 221 00:14:47,400 --> 00:14:51,400 Speaker 1: what is happening this time? Would you believe since October 222 00:14:51,400 --> 00:14:55,920 Speaker 1: the first markets up decently. My guests, through April it 223 00:14:55,960 --> 00:15:01,640 Speaker 1: will stay up. I know that unexpected bears that Morgan 224 00:15:01,720 --> 00:15:05,280 Speaker 1: Stanley and so on are talking about Apelli immediate decline 225 00:15:05,520 --> 00:15:10,920 Speaker 1: that may occur, but my guest, it's hard to get 226 00:15:10,920 --> 00:15:16,600 Speaker 1: this market really down until we get rid of April. 227 00:15:17,520 --> 00:15:22,760 Speaker 1: And as the old saying goes selling may and go 228 00:15:22,840 --> 00:15:26,480 Speaker 1: away and don't come back to a labor day, the 229 00:15:26,560 --> 00:15:30,840 Speaker 1: old kind of nineteen twenties saying goes back. It's the 230 00:15:30,880 --> 00:15:33,560 Speaker 1: midst of time about the stock market. And this is 231 00:15:33,640 --> 00:15:35,920 Speaker 1: part of the reason it works, because in year three 232 00:15:36,160 --> 00:15:41,800 Speaker 1: it really really works. And after April you're on your own. 233 00:15:42,000 --> 00:15:45,960 Speaker 1: It's a kind of normal market through the election, and 234 00:15:46,000 --> 00:15:49,680 Speaker 1: then year one and two typically our tough years where 235 00:15:49,800 --> 00:15:54,120 Speaker 1: a sensible administration recycles to keep the whole thing going 236 00:15:54,280 --> 00:15:59,000 Speaker 1: again the next time. You take some pain when it 237 00:15:59,040 --> 00:16:02,080 Speaker 1: doesn't matter political in order to be able to stimulate 238 00:16:02,120 --> 00:16:05,440 Speaker 1: when it does matter in year three. So that's what 239 00:16:05,520 --> 00:16:09,640 Speaker 1: I think is going to happen. That's the timeout. Those 240 00:16:09,640 --> 00:16:15,200 Speaker 1: two influences together created my point about the time up. 241 00:16:15,360 --> 00:16:18,600 Speaker 1: After a timeout, back to the meat grind. It now 242 00:16:19,560 --> 00:16:26,640 Speaker 1: all of the original problems rising rates, relatively slow burning inflation, 243 00:16:26,800 --> 00:16:31,680 Speaker 1: intractable inflation. It's always intractable, bearing down on the market. 244 00:16:31,720 --> 00:16:35,920 Speaker 1: The war, of course, like many wars, doesn't easily go 245 00:16:36,000 --> 00:16:40,480 Speaker 1: away either. So we and COVID has a long reach. 246 00:16:41,280 --> 00:16:43,760 Speaker 1: We have a lot of little bottle on e effects 247 00:16:43,800 --> 00:16:48,400 Speaker 1: that are still echoing through the system, and it brings 248 00:16:48,400 --> 00:16:55,120 Speaker 1: it up, brings up another important theory of mind, and 249 00:16:56,560 --> 00:16:58,600 Speaker 1: that is our next paper, which will be called the 250 00:16:58,680 --> 00:17:02,680 Speaker 1: Long Term is Now. Because we have been harping on 251 00:17:02,840 --> 00:17:07,639 Speaker 1: long term problems sometimes for fifteen twenty years, like climate change, 252 00:17:07,680 --> 00:17:10,520 Speaker 1: one day will bite you. It'll be a huge influence 253 00:17:10,560 --> 00:17:14,560 Speaker 1: on your portfolio. The growth rate of the economy is 254 00:17:14,600 --> 00:17:19,080 Speaker 1: slowing down steadily. It will eventually start to impact profit margins. 255 00:17:19,119 --> 00:17:21,960 Speaker 1: One day. We're running out of resources. Whether you like 256 00:17:22,040 --> 00:17:27,960 Speaker 1: it or not, We're going to have rolling series of 257 00:17:28,000 --> 00:17:31,760 Speaker 1: shortages and bottlenecks in resources. And finally we're running out 258 00:17:31,760 --> 00:17:35,360 Speaker 1: of people. And we're running out of people even faster 259 00:17:35,480 --> 00:17:39,439 Speaker 1: than I picked up ten years ago. It seems to 260 00:17:39,480 --> 00:17:43,480 Speaker 1: be accelerating now. If you run out of people, that 261 00:17:43,680 --> 00:17:46,560 Speaker 1: means you run out of labor. It feels inflationary, doesn't it. 262 00:17:46,960 --> 00:17:49,680 Speaker 1: Do you run out of resources. You run out of 263 00:17:49,760 --> 00:17:53,080 Speaker 1: cheap copper and you run out of cheap lithium, it 264 00:17:53,080 --> 00:17:59,280 Speaker 1: feels inflationary, and if COVID is hanging around, it feels inflationary. 265 00:17:59,320 --> 00:18:03,800 Speaker 1: If you're deglobalizing global trade. Some of the reasons for 266 00:18:03,920 --> 00:18:08,840 Speaker 1: doing that security are really very good reasons. But deglobalizing 267 00:18:09,000 --> 00:18:13,840 Speaker 1: is an inefficient, inflationary process. Anything that's inefficient tends to 268 00:18:13,920 --> 00:18:17,800 Speaker 1: push out the prices. Compared to a world where if 269 00:18:17,800 --> 00:18:21,400 Speaker 1: you are globalizing, you're outsourcing your jobs to the cheapest 270 00:18:21,400 --> 00:18:23,960 Speaker 1: pool of money and the cheapest pool of workers in 271 00:18:24,000 --> 00:18:28,000 Speaker 1: the world. When you're onsourcing, you're doing the reverse. Great 272 00:18:28,000 --> 00:18:30,920 Speaker 1: for the workers as long over the due, but it's 273 00:18:30,960 --> 00:18:35,480 Speaker 1: not great for profit margins, and it's not great or inflation. 274 00:18:36,080 --> 00:18:38,280 Speaker 1: So I think all of these long term factors are 275 00:18:38,320 --> 00:18:42,000 Speaker 1: beginning to buy this will make this particular down leg 276 00:18:42,520 --> 00:18:47,280 Speaker 1: more dangerous and perhaps worse than we anticipated, and perhaps 277 00:18:47,359 --> 00:18:56,400 Speaker 1: make it go on the long So before we get 278 00:18:56,480 --> 00:18:59,679 Speaker 1: to more of those long term factors that you were 279 00:18:59,680 --> 00:19:01,800 Speaker 1: just about when you and I spoke a couple of 280 00:19:01,800 --> 00:19:04,760 Speaker 1: weeks ago, you said, the range of problems we have 281 00:19:05,040 --> 00:19:08,119 Speaker 1: right now is greater than it usually is. And obviously 282 00:19:08,160 --> 00:19:11,160 Speaker 1: you have decades of experience. So it is it those 283 00:19:11,200 --> 00:19:13,560 Speaker 1: things that you you were just talking about, the war 284 00:19:13,720 --> 00:19:18,000 Speaker 1: in Ukraine and some of the supply chain issues that 285 00:19:18,040 --> 00:19:21,200 Speaker 1: we're still that are still lingering. Is that what you're 286 00:19:21,520 --> 00:19:24,760 Speaker 1: you're referencing or what is it about the current times 287 00:19:24,800 --> 00:19:29,920 Speaker 1: that's so different or difficult? It's those two things coupled 288 00:19:30,000 --> 00:19:36,359 Speaker 1: with global politics, the Cold War coming back and the 289 00:19:36,440 --> 00:19:44,600 Speaker 1: deglobalizing that we will we are embarking on. And compounding 290 00:19:44,640 --> 00:19:48,439 Speaker 1: that is, the running out of resources, running out of people, 291 00:19:48,840 --> 00:19:55,480 Speaker 1: and climate change are all biting into that equation, interacting 292 00:19:55,520 --> 00:19:59,399 Speaker 1: with it, making it worse. And in that sense, you 293 00:19:59,440 --> 00:20:03,080 Speaker 1: could not have at a worse time. And all of 294 00:20:03,080 --> 00:20:06,399 Speaker 1: this is occurring on the down leg of one of 295 00:20:06,440 --> 00:20:10,400 Speaker 1: the great bubbles breaking. They have never been very good 296 00:20:11,080 --> 00:20:13,679 Speaker 1: two thousand. By the way, it was a very benevolent 297 00:20:13,720 --> 00:20:16,480 Speaker 1: bubble in that sense. It didn't have a savage recession. 298 00:20:16,880 --> 00:20:19,840 Speaker 1: It didn't have any wars, it didn't have any deglobalizing, 299 00:20:19,960 --> 00:20:23,800 Speaker 1: It wasn't running out of anything. The nazteck went down 300 00:20:23,840 --> 00:20:26,680 Speaker 1: eighty two percent, the SMP went down fifty percent. There 301 00:20:26,840 --> 00:20:30,080 Speaker 1: was a recession. There was a huge recession after nineteen 302 00:20:30,080 --> 00:20:33,399 Speaker 1: twenty nine, there was a huge recession after the nifty 303 00:20:33,480 --> 00:20:36,760 Speaker 1: fifty run up of nineteen seventy two, and there was 304 00:20:36,960 --> 00:20:39,159 Speaker 1: the biggest bubble of all time. By the way, is 305 00:20:39,280 --> 00:20:45,359 Speaker 1: Japan who did a duel bubble in land real estate 306 00:20:45,440 --> 00:20:51,160 Speaker 1: and the stomacht in picking in nineteen eighty nine. And 307 00:20:51,280 --> 00:20:53,560 Speaker 1: what was that followed by? It was followed by twenty 308 00:20:53,640 --> 00:20:55,919 Speaker 1: last years. If you look at the fifty years in 309 00:20:56,000 --> 00:21:00,280 Speaker 1: Japan before nineteen eighty nine, it was like Para guys, 310 00:21:00,320 --> 00:21:02,560 Speaker 1: one of the fastest growing countries on the planet, if 311 00:21:02,600 --> 00:21:04,800 Speaker 1: not the fastest. And then you look at the thirty 312 00:21:04,880 --> 00:21:10,600 Speaker 1: years since then, they have barely grown that That double 313 00:21:10,720 --> 00:21:17,399 Speaker 1: barreled bubble and the land was the biggest bubble in history. 314 00:21:17,400 --> 00:21:19,560 Speaker 1: It was worse than the Tulip bubble. It was worse 315 00:21:19,600 --> 00:21:22,960 Speaker 1: than the Sausa bubble. It was the biggest, most spectacular 316 00:21:23,000 --> 00:21:25,400 Speaker 1: bubble of all time. And the land under the Empress 317 00:21:25,440 --> 00:21:29,720 Speaker 1: Palace really did sell for more than California. I mean, 318 00:21:29,720 --> 00:21:32,960 Speaker 1: it was valued at more than the entire state of California. 319 00:21:33,040 --> 00:21:37,960 Speaker 1: It was crazy. It was more than ten times downtown Manhattan, 320 00:21:38,119 --> 00:21:43,440 Speaker 1: in downtown Tokyo, and you pay a high price, and 321 00:21:43,560 --> 00:21:46,320 Speaker 1: happily this bubble is not as bad as that, but 322 00:21:46,440 --> 00:21:51,959 Speaker 1: it has more ancillary and negatives coming in. And the 323 00:21:52,000 --> 00:21:55,520 Speaker 1: first phase of a bubble is pretty simple. You take 324 00:21:55,560 --> 00:21:58,040 Speaker 1: out the pin for whatever reason. All you have to 325 00:21:58,080 --> 00:22:00,600 Speaker 1: do is convince people that it's not pared ice forever, 326 00:22:00,960 --> 00:22:03,119 Speaker 1: which is what they believe at the top of the bubble, 327 00:22:03,400 --> 00:22:06,200 Speaker 1: and so it goes down pretty fast. Leg one always 328 00:22:06,240 --> 00:22:09,399 Speaker 1: has a terrific rally, and then it gets into the 329 00:22:09,480 --> 00:22:13,960 Speaker 1: much more complicated phase three, which is the fundamentals. The 330 00:22:13,960 --> 00:22:18,800 Speaker 1: fundamentals have been artificially inflated by crazy optimism and by 331 00:22:19,200 --> 00:22:22,880 Speaker 1: a long drawn out perfect economy, and all of that 332 00:22:23,359 --> 00:22:26,760 Speaker 1: is turning against you. And the question is how bad. 333 00:22:27,000 --> 00:22:31,000 Speaker 1: Is it going to be mild like two thousand, Is 334 00:22:31,000 --> 00:22:34,760 Speaker 1: it going to be tragic like nineteen twenty nine. Is 335 00:22:34,800 --> 00:22:37,000 Speaker 1: it going to be long and drawn out like Japan? 336 00:22:38,440 --> 00:22:41,800 Speaker 1: Is it going to be very painful? Indeed, like the 337 00:22:41,880 --> 00:22:47,320 Speaker 1: housing bubble that will need unprecedented daylight. It's bad news. 338 00:22:47,359 --> 00:22:49,199 Speaker 1: You don't want to mess with bubbles. I hold it 339 00:22:49,240 --> 00:22:52,800 Speaker 1: against the Federal Reserve. Of course, they created an environment, 340 00:22:52,960 --> 00:22:55,959 Speaker 1: pushed up the price of all assets, all every asset 341 00:22:56,000 --> 00:23:00,199 Speaker 1: on the planet, and then they step back as just 342 00:23:00,280 --> 00:23:03,920 Speaker 1: something to do with them when these bubbles eventually break, 343 00:23:05,080 --> 00:23:08,159 Speaker 1: as they have done in two thousand and the housing 344 00:23:08,160 --> 00:23:10,760 Speaker 1: bubble of two thousand and six, two thousand and seven, 345 00:23:11,560 --> 00:23:14,480 Speaker 1: and oh my god, no one could have seen this coming. 346 00:23:15,160 --> 00:23:19,160 Speaker 1: These events they stick out of the database like him 347 00:23:19,160 --> 00:23:24,080 Speaker 1: Alayan peaks out of a playing Guys, do not kid yourself. 348 00:23:24,119 --> 00:23:27,040 Speaker 1: You couldn't miss nineteen twenty nine, You couldn't miss nineteen 349 00:23:27,080 --> 00:23:30,879 Speaker 1: seventy two. You could not possibly miss two thousand, thirty 350 00:23:30,880 --> 00:23:34,399 Speaker 1: five times earnings. Anyone knows that thirty five times earnings 351 00:23:34,480 --> 00:23:36,960 Speaker 1: is pretty high. The previous high in nineteen twenty nine 352 00:23:37,000 --> 00:23:40,760 Speaker 1: it was twenty one times. Thirty five is significantly higher 353 00:23:40,800 --> 00:23:43,520 Speaker 1: than twenty one. In Japan, it actually got to sixty 354 00:23:43,520 --> 00:23:47,439 Speaker 1: five times earnings, of course, the biggest one in history. Well, Jeremy, 355 00:23:47,560 --> 00:23:50,280 Speaker 1: let me let me interrupt real quickly, because you did 356 00:23:50,280 --> 00:23:53,159 Speaker 1: mention the FED policy and the role it played in 357 00:23:53,280 --> 00:23:56,159 Speaker 1: creating this bubble. So just to bring that into the 358 00:23:56,160 --> 00:23:59,719 Speaker 1: present tense, you know, this week Jerome Palets testified before Congress. 359 00:23:59,760 --> 00:24:02,960 Speaker 1: He was a little bit more hawkish than you know, 360 00:24:03,000 --> 00:24:06,360 Speaker 1: the markets had expected, or at least the market response 361 00:24:06,400 --> 00:24:11,280 Speaker 1: to it suggests that he surprised markets with his hawkishness. 362 00:24:11,800 --> 00:24:14,440 Speaker 1: You know, the thinking is now the FED funds rate 363 00:24:14,440 --> 00:24:16,879 Speaker 1: could get as high as five and a half six percent. 364 00:24:18,080 --> 00:24:21,880 Speaker 1: Talk to us about what pal is doing. Is he 365 00:24:22,000 --> 00:24:26,240 Speaker 1: being aggressive enough? Not aggressive enough? Um? And will it work? 366 00:24:26,440 --> 00:24:28,840 Speaker 1: You know, will we he? You know this, the Fed 367 00:24:28,880 --> 00:24:32,800 Speaker 1: alone be able to normalize inflation or or all those 368 00:24:32,840 --> 00:24:37,800 Speaker 1: other things that you're talking about, deglobalization, a lack of 369 00:24:37,840 --> 00:24:41,520 Speaker 1: resources of course not No, they don't have that kind 370 00:24:41,560 --> 00:24:46,199 Speaker 1: of pilot. They yeah, well they can mess around with interest, right. 371 00:24:46,359 --> 00:24:50,560 Speaker 1: They have hardly gotten anything right since Alan Green's been 372 00:24:50,840 --> 00:24:54,639 Speaker 1: first arrived. Paula Boca knew what he was doing, but 373 00:24:54,720 --> 00:24:59,600 Speaker 1: since then it's been a long continuous horror ship. They've 374 00:24:59,640 --> 00:25:02,840 Speaker 1: engaged in policies to drive up the prices of assets, 375 00:25:03,040 --> 00:25:08,680 Speaker 1: other things being even, and create spectacular overpriced bubbles. They 376 00:25:08,720 --> 00:25:11,960 Speaker 1: then break, because that's what bubbles have to do. They 377 00:25:12,080 --> 00:25:17,200 Speaker 1: simply break of their own extreme overpricing, and we pay 378 00:25:17,240 --> 00:25:21,119 Speaker 1: a very tough price. And then the Fed racist to 379 00:25:21,160 --> 00:25:25,960 Speaker 1: the rescue. Oh dear, the wreckage of two thousand. They 380 00:25:26,040 --> 00:25:28,840 Speaker 1: came in and they prevented it, the SMP from going 381 00:25:28,880 --> 00:25:31,000 Speaker 1: down more than fifty percent, which it would have done. 382 00:25:31,600 --> 00:25:37,879 Speaker 1: They with moral hazard, lots of aggressive language, and reduction 383 00:25:38,040 --> 00:25:43,160 Speaker 1: in rates. They managed to curtail that at fifty. They 384 00:25:43,200 --> 00:25:47,440 Speaker 1: couldn't stop a recession. They didn't stop the nazdec going 385 00:25:47,440 --> 00:25:50,040 Speaker 1: down eighty two. They threw the kitchen sink at it. 386 00:25:50,880 --> 00:25:55,600 Speaker 1: And then what happened to Bananche? He's facing a housing bubble, 387 00:25:55,800 --> 00:25:59,040 Speaker 1: he says, Oh, the US housing has never declined. It 388 00:25:59,080 --> 00:26:01,840 Speaker 1: never had it isn't ever had a bubble before. It 389 00:26:01,960 --> 00:26:05,879 Speaker 1: didn't have to decline. It was famously diversified between California 390 00:26:05,960 --> 00:26:09,240 Speaker 1: going up and Florida going down, etc. Or vice versa. 391 00:26:10,400 --> 00:26:13,040 Speaker 1: And then he said, the US housing market merely reflects 392 00:26:13,080 --> 00:26:16,479 Speaker 1: the strong US economy. The US housing market has a 393 00:26:16,480 --> 00:26:19,320 Speaker 1: long historical record. You could measure it. It was a 394 00:26:19,320 --> 00:26:22,919 Speaker 1: three segment event, which is the kind of event in 395 00:26:22,960 --> 00:26:26,520 Speaker 1: a normal series that would occur every hundred years. And 396 00:26:26,680 --> 00:26:29,639 Speaker 1: all his staff could see that. No one apparently plucked 397 00:26:29,720 --> 00:26:32,720 Speaker 1: up the courage to tell him, so he could apparently 398 00:26:32,800 --> 00:26:36,639 Speaker 1: believe that the housing market was unremarkable. The housing market 399 00:26:36,680 --> 00:26:40,120 Speaker 1: back then was beautifully well behaved as a bubble. It 400 00:26:40,200 --> 00:26:43,879 Speaker 1: went up and then it came down in a beautiful 401 00:26:44,240 --> 00:26:49,120 Speaker 1: round trip, symmetrical, perfect, The best one I ever saw 402 00:26:49,240 --> 00:26:52,359 Speaker 1: so were three years up, three years down. They sucked 403 00:26:52,400 --> 00:26:54,720 Speaker 1: in an extra three or four people to owning houses, 404 00:26:54,760 --> 00:26:58,320 Speaker 1: three or four percent of the public. It went from 405 00:26:58,320 --> 00:27:01,240 Speaker 1: a normal sixty two percent sixty five or six the 406 00:27:01,280 --> 00:27:05,159 Speaker 1: first time in history. And then painfully for the marginal buyers, 407 00:27:05,160 --> 00:27:07,520 Speaker 1: that went all the way back to sixty one sixty two. 408 00:27:07,960 --> 00:27:10,159 Speaker 1: The housing market went all the way back to trend 409 00:27:10,280 --> 00:27:14,200 Speaker 1: and actually overcorrected, which is typical for two or three years. 410 00:27:14,600 --> 00:27:17,800 Speaker 1: That's a lot of pain. It was all their fault, 411 00:27:18,040 --> 00:27:20,760 Speaker 1: and why would we believe that they know what they're doing. 412 00:27:21,119 --> 00:27:24,640 Speaker 1: And then they stoked the fire again, and this time 413 00:27:24,680 --> 00:27:27,600 Speaker 1: it's real estate. It went to a higher multiple family 414 00:27:27,640 --> 00:27:31,120 Speaker 1: income for a house than the housing bubble in late 415 00:27:31,400 --> 00:27:35,119 Speaker 1: late last year, after the biggest year in history twenty 416 00:27:36,000 --> 00:27:43,200 Speaker 1: the last year, the biggest move including the housing bubble, forestry, farming, 417 00:27:43,920 --> 00:27:48,639 Speaker 1: fine art, you name it, bonds of course, legendary, the 418 00:27:48,680 --> 00:27:52,680 Speaker 1: lowest rates in the history of economics, and the stock 419 00:27:52,760 --> 00:27:58,439 Speaker 1: market way back up. Why would they do this? It's 420 00:27:58,480 --> 00:28:02,120 Speaker 1: always the same. They always break and everyone says, oh, 421 00:28:02,160 --> 00:28:05,359 Speaker 1: it's fine this time. It never has been. Everyone says 422 00:28:05,359 --> 00:28:07,119 Speaker 1: there won't be a hard landing, it will be a 423 00:28:07,119 --> 00:28:11,000 Speaker 1: soft landing. None of the great psychological bubbles have ever 424 00:28:11,080 --> 00:28:16,200 Speaker 1: had anything other than an ordinary recession or a savage recession. 425 00:28:16,840 --> 00:28:20,120 Speaker 1: There are normal ones and there are terrible ones. There 426 00:28:20,119 --> 00:28:23,760 Speaker 1: are no soft landings in my little universe of super 427 00:28:23,760 --> 00:28:29,879 Speaker 1: bubbles that you can see statistically as easy as pie. 428 00:28:30,160 --> 00:28:33,240 Speaker 1: So why don't more people see them? Because it's not 429 00:28:33,400 --> 00:28:37,880 Speaker 1: good for business. The commercial understanding is you're always bullish 430 00:28:37,920 --> 00:28:41,760 Speaker 1: and that maximizes your money. Why Morgan Stanley is so 431 00:28:42,040 --> 00:28:45,440 Speaker 1: verish this time? And a little bit of Goldman sence 432 00:28:45,600 --> 00:28:49,120 Speaker 1: on this is actually perplexing me. It's as if someone 433 00:28:49,160 --> 00:28:55,000 Speaker 1: hasn't read them chapter two of the Banking Investing Commercial 434 00:28:55,480 --> 00:29:00,920 Speaker 1: Maximizing your Bumbits Manual. It has gone miss. It's bothering 435 00:29:00,960 --> 00:29:04,040 Speaker 1: you that, you know, the contrarian view seems to be 436 00:29:04,080 --> 00:29:07,680 Speaker 1: the consensus these days, right, Yeah, it bothers me. I 437 00:29:08,080 --> 00:29:10,280 Speaker 1: do know as a historian that once in a while, 438 00:29:11,080 --> 00:29:15,040 Speaker 1: almost everybody gets things right. It doesn't last long, but 439 00:29:15,120 --> 00:29:17,920 Speaker 1: it does happen from time to time, just enough to 440 00:29:18,120 --> 00:29:23,200 Speaker 1: bamboozle contrary and I am certainly expecting that this is 441 00:29:23,240 --> 00:29:26,720 Speaker 1: one of those relatively rare occasions when almost anyone with 442 00:29:27,000 --> 00:29:31,560 Speaker 1: the brain is being pretty bearish because, as they say, 443 00:29:31,680 --> 00:29:35,880 Speaker 1: almost to a man, they say, the current stock prices 444 00:29:36,000 --> 00:29:40,200 Speaker 1: do not reflect the high probability of profits coming down, 445 00:29:41,320 --> 00:29:44,479 Speaker 1: and that is part of the story. And they're not 446 00:29:44,600 --> 00:29:48,000 Speaker 1: even looking at the long term is now. They are 447 00:29:48,080 --> 00:29:52,040 Speaker 1: not looking at all those longer term factors that we 448 00:29:52,040 --> 00:29:57,000 Speaker 1: were talking about before. They're not looking really at the 449 00:29:57,080 --> 00:30:02,120 Speaker 1: long term problems with the climate change and resource shortages 450 00:30:02,200 --> 00:30:06,239 Speaker 1: and above all people shortages. This people thing, you know, 451 00:30:06,320 --> 00:30:09,760 Speaker 1: it's massive, it's happening so fast. Jeremy, can I ask 452 00:30:09,800 --> 00:30:15,000 Speaker 1: you then, when you foresee a US recession because obviously 453 00:30:15,040 --> 00:30:17,120 Speaker 1: a lot of the data that we've seen coming in 454 00:30:17,160 --> 00:30:21,200 Speaker 1: has been very, very strong. And we're taping this podcast 455 00:30:21,240 --> 00:30:25,200 Speaker 1: before the job's number comes out for February, but a 456 00:30:25,280 --> 00:30:28,080 Speaker 1: lot of people are expecting a really hot number once again. 457 00:30:29,760 --> 00:30:33,800 Speaker 1: Economics complicated, lots of cross currents, lots of leaves and 458 00:30:33,880 --> 00:30:38,080 Speaker 1: lots of flags. And I have tried to avoid spending 459 00:30:38,080 --> 00:30:41,440 Speaker 1: too much time over analyzing the short term data. First 460 00:30:41,440 --> 00:30:44,320 Speaker 1: of all, they change it two or three times. Secondly, 461 00:30:44,520 --> 00:30:47,120 Speaker 1: it's never as important as you think. The things that 462 00:30:47,160 --> 00:30:52,320 Speaker 1: really matter are the broad sweeps of events, the forming 463 00:30:52,320 --> 00:30:54,640 Speaker 1: of the great bubbles, the breaking of the Great Bubbles, 464 00:30:54,760 --> 00:30:59,000 Speaker 1: et cetera, the rising of inflation, the falling of the inflation. 465 00:31:00,200 --> 00:31:04,920 Speaker 1: This ridiculous concentration on the nuances of the Federal Reserve, 466 00:31:05,120 --> 00:31:10,800 Speaker 1: who never get anything right. Why would we believe and 467 00:31:11,040 --> 00:31:15,240 Speaker 1: exaggerate every little nuance? The market rows up, the market 468 00:31:15,320 --> 00:31:18,960 Speaker 1: ralls down. It is all ridiculous posts. It is really ridiculous. 469 00:31:19,520 --> 00:31:23,160 Speaker 1: Try and concentrate on them. You saying that makes me 470 00:31:23,200 --> 00:31:28,000 Speaker 1: feel better about my my everyday angst. You've got confirmation rong, Yeah, 471 00:31:28,040 --> 00:31:31,760 Speaker 1: I can, I can shill a little. Journalists have a 472 00:31:31,920 --> 00:31:36,400 Speaker 1: terrible job. You have to come up with a reason 473 00:31:36,440 --> 00:31:38,880 Speaker 1: why the market goes up or down on a daily basis, 474 00:31:40,520 --> 00:31:43,760 Speaker 1: which would if you've got it right, we'd have to 475 00:31:43,800 --> 00:31:49,400 Speaker 1: burn you as a witch. I mean utterly impossible. Creative, 476 00:31:49,480 --> 00:31:52,800 Speaker 1: creative writing. You think that's h yeah, yeah, I mean 477 00:31:52,840 --> 00:31:56,280 Speaker 1: it's filling up space. Actually it doesn't ac create us. 478 00:31:56,320 --> 00:31:59,160 Speaker 1: There every argument for why the market goes up has 479 00:31:59,200 --> 00:32:17,920 Speaker 1: been used for rick dumes and going down. Jeremy, I 480 00:32:18,000 --> 00:32:20,360 Speaker 1: wanted to get back to that notion of climate change. 481 00:32:20,400 --> 00:32:23,240 Speaker 1: I know you've been spending a lot of your time 482 00:32:24,040 --> 00:32:27,360 Speaker 1: studying the issue, but I want to talk to you 483 00:32:27,440 --> 00:32:30,480 Speaker 1: about it from the role of the investment industry. Obviously, 484 00:32:30,520 --> 00:32:34,360 Speaker 1: there's been a big backlash against the notion of ESG 485 00:32:34,720 --> 00:32:39,360 Speaker 1: you know, investing through the lens of environmental, social and 486 00:32:39,440 --> 00:32:43,959 Speaker 1: government governance issues. Uh, you know, some on the right 487 00:32:43,960 --> 00:32:47,320 Speaker 1: wing really want to do away with that whole strategy 488 00:32:47,480 --> 00:32:50,120 Speaker 1: of investing. How do you think about it? Is there 489 00:32:50,160 --> 00:32:54,760 Speaker 1: a role for investing to actually mitigate climate change if 490 00:32:54,800 --> 00:32:57,600 Speaker 1: it's done properly, or is it you know, a marketing 491 00:32:57,600 --> 00:33:00,560 Speaker 1: gimmick for for Wall Street to extract higher fee to 492 00:33:00,600 --> 00:33:03,080 Speaker 1: make people feel good about the way they're spending their 493 00:33:03,440 --> 00:33:07,000 Speaker 1: investment money. All about you from my point of view 494 00:33:07,120 --> 00:33:13,240 Speaker 1: is humans are not great at these things. We've been 495 00:33:13,320 --> 00:33:17,320 Speaker 1: bred over millions of years, like every other organism, to 496 00:33:17,400 --> 00:33:22,320 Speaker 1: be incredibly short term and incredibly aggressive to grow and 497 00:33:22,480 --> 00:33:26,800 Speaker 1: multiply period And anything that gets in my way gets 498 00:33:26,800 --> 00:33:32,160 Speaker 1: trampled on. And capitalism is very much kind of an 499 00:33:32,160 --> 00:33:37,280 Speaker 1: extension of survival of the fits. It's very much an 500 00:33:37,320 --> 00:33:41,240 Speaker 1: extension of the natural process, and that's probably why it's 501 00:33:41,240 --> 00:33:47,120 Speaker 1: worked pretty well. And capitalism does millions of things brilliantly well. 502 00:33:47,920 --> 00:33:51,000 Speaker 1: I mean, balancing the complexities of supply and demand is 503 00:33:51,040 --> 00:33:56,160 Speaker 1: beyond well. Maybe who in a few years artificial intelligence 504 00:33:56,200 --> 00:33:58,240 Speaker 1: will be up to it. But that is why the 505 00:33:58,400 --> 00:34:01,880 Speaker 1: central governments had such a hard time. It's infinitely complicated. 506 00:34:02,640 --> 00:34:10,319 Speaker 1: The problem is capitalism does not do those things that 507 00:34:10,400 --> 00:34:13,959 Speaker 1: aren't in its immediate self interest. If it's long term, 508 00:34:14,719 --> 00:34:17,439 Speaker 1: get round to it in a couple of years, if 509 00:34:17,480 --> 00:34:22,080 Speaker 1: it's the commons, If it's something that I'm not getting 510 00:34:22,160 --> 00:34:26,440 Speaker 1: charged for and I'm inflicting my pollution on someone else, 511 00:34:28,000 --> 00:34:30,080 Speaker 1: why would I stop doing that out of the goodness 512 00:34:30,080 --> 00:34:35,080 Speaker 1: of my heart? You know, try and maximize your short 513 00:34:35,200 --> 00:34:40,279 Speaker 1: term gains is what runs capitalism, and it's what makes 514 00:34:40,280 --> 00:34:44,080 Speaker 1: it efficient. Most of the time. It only does these 515 00:34:44,160 --> 00:34:47,200 Speaker 1: few things badly. It does not deal with with the 516 00:34:47,440 --> 00:34:51,360 Speaker 1: climate change. It cannot deal with climate change. It cannot 517 00:34:53,400 --> 00:34:56,480 Speaker 1: act out of the goodness of its heart to forego 518 00:34:56,640 --> 00:35:02,440 Speaker 1: profits in the interest the collective grand children. It's pretty 519 00:35:02,440 --> 00:35:07,080 Speaker 1: bizarre actually that everything is career risk in life. You know, 520 00:35:07,120 --> 00:35:11,680 Speaker 1: you're protecting your job, you're protecting your firm, protecting its image. 521 00:35:12,600 --> 00:35:17,560 Speaker 1: Very few people can actually say what they really want 522 00:35:17,600 --> 00:35:22,560 Speaker 1: to say, what is really symbol and straightforward that we're 523 00:35:22,920 --> 00:35:28,200 Speaker 1: all caught up in in basically protecting something or other 524 00:35:29,440 --> 00:35:35,040 Speaker 1: and when when it comes to climate change, we're really 525 00:35:35,080 --> 00:35:38,480 Speaker 1: not interested in anything other than looking good. We want to, 526 00:35:38,640 --> 00:35:42,279 Speaker 1: for the lowest possible price, be seen to be the 527 00:35:42,360 --> 00:35:45,839 Speaker 1: most civic minded. We are not going to give up 528 00:35:45,920 --> 00:35:51,399 Speaker 1: anything out of altruism. We can't capitalize in general, can't 529 00:35:51,400 --> 00:35:54,839 Speaker 1: spell the word altruism or patients by the way, they 530 00:35:54,880 --> 00:36:00,319 Speaker 1: want quick response, they want profits, and climate change is 531 00:36:00,360 --> 00:36:04,600 Speaker 1: not their cup of tea. However, dang heavens. Along with 532 00:36:04,760 --> 00:36:10,319 Speaker 1: being a short term aggressive, grow while you can species, 533 00:36:10,360 --> 00:36:15,480 Speaker 1: we are very creative, very inventive, and so we have 534 00:36:15,960 --> 00:36:21,799 Speaker 1: a terrific record in dealing with new inventions, coming up 535 00:36:21,840 --> 00:36:25,480 Speaker 1: with new solutions. If we make it through climate change, 536 00:36:25,880 --> 00:36:30,360 Speaker 1: and I use the word if deliberately, there's a decent 537 00:36:30,480 --> 00:36:34,800 Speaker 1: chance that this will be existential, that it will remove 538 00:36:35,040 --> 00:36:40,040 Speaker 1: a reasonably stable global civilization before it's finished. But if 539 00:36:40,120 --> 00:36:43,719 Speaker 1: we make it, it'll not be because we're altruistic and 540 00:36:43,840 --> 00:36:47,120 Speaker 1: we see our civic duty. It's because it will be 541 00:36:47,160 --> 00:36:51,360 Speaker 1: good for business. It's because the inventions of wind, solar 542 00:36:51,480 --> 00:36:56,799 Speaker 1: and storage are simply going to be much cheaper than 543 00:36:56,880 --> 00:37:02,680 Speaker 1: burning fossil fuels, and we will gradually replace everything and 544 00:37:02,800 --> 00:37:08,040 Speaker 1: it will pay. We will have silent electric helicopters that 545 00:37:08,080 --> 00:37:10,840 Speaker 1: are getting you there at one third the running cost 546 00:37:10,880 --> 00:37:13,680 Speaker 1: and half the maintenance cost, and so on and so forth. 547 00:37:14,200 --> 00:37:19,040 Speaker 1: And the technology improvements are merciless. They grind ahead, and 548 00:37:19,160 --> 00:37:23,400 Speaker 1: today's battery constraint will not last, and they will have 549 00:37:23,880 --> 00:37:26,960 Speaker 1: twice the power to weight ratio, and with a little 550 00:37:26,960 --> 00:37:30,239 Speaker 1: bit of what based on the latest and greatest ideas, 551 00:37:30,880 --> 00:37:33,680 Speaker 1: perhaps even four times the power to weight ratio. So 552 00:37:33,760 --> 00:37:39,000 Speaker 1: we'll be able to fly perhaps even to Chicago before 553 00:37:39,040 --> 00:37:42,920 Speaker 1: this is finished, and all transportation will be electrified, and 554 00:37:42,960 --> 00:37:48,040 Speaker 1: we will have plenty of cheap green energy before this 555 00:37:48,320 --> 00:37:51,840 Speaker 1: is over. If we can just hold the global society 556 00:37:52,200 --> 00:38:00,160 Speaker 1: together and withstand the shark to food and immigration of 557 00:38:00,680 --> 00:38:05,520 Speaker 1: climate change and terrible weather and so on, that's that's 558 00:38:05,520 --> 00:38:08,080 Speaker 1: a big if, Jeremy, that's a big if. That sounds 559 00:38:08,120 --> 00:38:10,879 Speaker 1: like Unfortunately, it is a big if, and there's nothing 560 00:38:10,960 --> 00:38:13,480 Speaker 1: we can do about it. And we phrase we framed 561 00:38:13,480 --> 00:38:16,040 Speaker 1: this issue as the race of our lives, that the 562 00:38:16,120 --> 00:38:20,840 Speaker 1: bad news is getting worse at an accelerating rate. We're 563 00:38:20,840 --> 00:38:25,200 Speaker 1: actually still putting up carbon dioxide particles at an accelerating rate, 564 00:38:25,239 --> 00:38:29,120 Speaker 1: although it's just beginning to flatten out now. And the 565 00:38:29,120 --> 00:38:32,000 Speaker 1: good news is that I think the technology is moving 566 00:38:32,040 --> 00:38:35,920 Speaker 1: at an accelerating rate. No one fifteen years ago thought 567 00:38:35,920 --> 00:38:39,040 Speaker 1: the cost of wind, solar and storage would be it's 568 00:38:39,120 --> 00:38:43,120 Speaker 1: lower than building a coal plant. Today, almost everywhere in 569 00:38:43,160 --> 00:38:46,839 Speaker 1: the world, and in most places with decent wind or sun, 570 00:38:47,560 --> 00:38:54,600 Speaker 1: you can build and operate wind and solar cheaper than 571 00:38:54,680 --> 00:38:57,920 Speaker 1: you could operate a coal plant if you were given it, 572 00:38:58,040 --> 00:39:01,720 Speaker 1: built and ready to go. In other words, the full 573 00:39:01,920 --> 00:39:05,160 Speaker 1: total cost of building and running a solo plant is 574 00:39:05,239 --> 00:39:09,280 Speaker 1: less than the day to day operating cost of digging 575 00:39:09,280 --> 00:39:11,880 Speaker 1: the coal, shipping it, and burning it. Wow, that's remarkable. 576 00:39:12,000 --> 00:39:14,400 Speaker 1: That is that is amazing. Well, that sounds like a 577 00:39:14,560 --> 00:39:17,480 Speaker 1: nice little teaser of your next note, so we look 578 00:39:17,520 --> 00:39:19,360 Speaker 1: forward to that, and we'll have to have you back 579 00:39:19,880 --> 00:39:24,160 Speaker 1: to discuss that when it comes out. Vildonna. Jeremy there 580 00:39:24,160 --> 00:39:26,600 Speaker 1: reminded me of a good Homer Simpson quote. You know. 581 00:39:27,360 --> 00:39:32,040 Speaker 1: It's that beer is the cause of and solution to 582 00:39:32,360 --> 00:39:34,840 Speaker 1: all of life's problems. And it sounds like capitalism is 583 00:39:34,920 --> 00:39:38,080 Speaker 1: very similar to jeremy the cause of and solution to 584 00:39:38,239 --> 00:39:42,000 Speaker 1: all of our problems. Perhaps, but Jeremy, really really great 585 00:39:42,000 --> 00:39:43,719 Speaker 1: to hear your thoughts. I feel like we could go 586 00:39:43,719 --> 00:39:45,560 Speaker 1: on for two or three hours. So I hope you 587 00:39:45,680 --> 00:39:48,640 Speaker 1: do come back some day and unpack some of these 588 00:39:49,080 --> 00:39:52,719 Speaker 1: issues further. But before we let you go, we've got 589 00:39:52,719 --> 00:39:55,319 Speaker 1: to do our tradition Vildanna. I'm gonna go first with 590 00:39:55,719 --> 00:39:58,960 Speaker 1: the craziest thing I saw this week. It's from Stephen 591 00:39:59,040 --> 00:40:06,200 Speaker 1: Balaban and it's about a perpetual bearer bond. Now I'll 592 00:40:06,239 --> 00:40:08,520 Speaker 1: tell you what that is, because your eyes are starting 593 00:40:08,520 --> 00:40:12,880 Speaker 1: to fog up there. That So a perpetual guy. A 594 00:40:12,960 --> 00:40:15,719 Speaker 1: perpetual bond is a bond that pays interest every year 595 00:40:15,760 --> 00:40:18,960 Speaker 1: but never actually repays the principle bearer bond is an 596 00:40:18,960 --> 00:40:22,240 Speaker 1: old fashioned bond where whoever owns the paper and presents 597 00:40:22,239 --> 00:40:26,400 Speaker 1: it to the UH the bond issue where gets that payment. 598 00:40:26,719 --> 00:40:34,240 Speaker 1: So Yale University has a perpetual bearer bond issued by 599 00:40:34,280 --> 00:40:38,959 Speaker 1: a Dutch agency that basically dug the canals in UH 600 00:40:39,120 --> 00:40:44,680 Speaker 1: sixteen forty eight. Sixteen forty eight, Jeremy, a perpetual bear 601 00:40:44,800 --> 00:40:48,160 Speaker 1: bond from the Dutch government owns this bond. Yale owns 602 00:40:48,160 --> 00:40:51,480 Speaker 1: this bond. They are still collecting payments on this bond 603 00:40:51,520 --> 00:40:55,239 Speaker 1: from sixteen forty eight. The bond was actually written on 604 00:40:55,360 --> 00:40:58,839 Speaker 1: goat skin. Oh, but they filled up. You know, every 605 00:40:58,840 --> 00:41:01,200 Speaker 1: time they issue, they pay the payment they market on 606 00:41:01,239 --> 00:41:03,319 Speaker 1: the bond, so they ran out of space. So there's 607 00:41:03,440 --> 00:41:06,560 Speaker 1: a piece of paper now that the folks at Yale 608 00:41:07,160 --> 00:41:10,719 Speaker 1: every few years take to the Dutch Water Agency and 609 00:41:11,120 --> 00:41:15,320 Speaker 1: get and get their payment clip their coupon. Basically. So, Jeremy, 610 00:41:15,360 --> 00:41:17,960 Speaker 1: I hate to tell you, but you're now a contestant 611 00:41:18,000 --> 00:41:21,120 Speaker 1: on a game show. We call the prices precise and 612 00:41:21,200 --> 00:41:24,399 Speaker 1: the question is what do you think the interest rate 613 00:41:25,000 --> 00:41:28,880 Speaker 1: on that sixteen forty eight Dutch bond pays to Yale? 614 00:41:30,080 --> 00:41:32,640 Speaker 1: And if it helps, I'll tell you that the current 615 00:41:32,719 --> 00:41:36,280 Speaker 1: Dutch ten year yield is about three percent. It doesn't 616 00:41:36,280 --> 00:41:39,239 Speaker 1: help at all. I didn't think it would. But this 617 00:41:39,320 --> 00:41:43,319 Speaker 1: was issued in sixteen forty eight. It's a compliment complicate things. 618 00:41:43,360 --> 00:41:48,600 Speaker 1: They actually rescheduled it. They redid the yield on it 619 00:41:49,160 --> 00:41:52,120 Speaker 1: shortly after it was issued, so it's not the original yield. 620 00:41:52,120 --> 00:41:57,080 Speaker 1: It was changed. But you have to guess what four 621 00:41:57,120 --> 00:41:59,239 Speaker 1: in a quarter? Four and a quarter? Oh, okay, I'm 622 00:41:59,239 --> 00:42:01,960 Speaker 1: glad you went for I was going to say something higher, 623 00:42:02,000 --> 00:42:05,840 Speaker 1: but I'll go with three percent. Yeah, you think I 624 00:42:05,920 --> 00:42:08,719 Speaker 1: was tipping my hand there with the correct answer is 625 00:42:08,760 --> 00:42:12,320 Speaker 1: two and a half percent, but they did the original 626 00:42:12,400 --> 00:42:14,799 Speaker 1: rate was five percent, So maybe Jeremy's looking at that 627 00:42:14,920 --> 00:42:16,799 Speaker 1: that chart, So how much have they baked in over 628 00:42:16,840 --> 00:42:20,960 Speaker 1: the year five percent? So the story says, Um, a 629 00:42:21,000 --> 00:42:24,360 Speaker 1: few years ago, one guy from Yale went and collected 630 00:42:24,400 --> 00:42:28,000 Speaker 1: twelve years of interest on the bond. You know what? 631 00:42:28,080 --> 00:42:32,120 Speaker 1: His payment was one hundred and fifty three dollars. Oh no, 632 00:42:33,800 --> 00:42:35,319 Speaker 1: So I don't know why it's worth the flight to 633 00:42:35,400 --> 00:42:38,360 Speaker 1: go over there. But Jeremy, if I'm showing a perpetual 634 00:42:38,360 --> 00:42:39,840 Speaker 1: bond at two and a half for you a buyer, 635 00:42:42,920 --> 00:42:49,080 Speaker 1: so I know I'm an issue. Yeah, that's smart, smart, right, great, 636 00:42:49,840 --> 00:42:52,600 Speaker 1: all right, that's a good one. You like that one. 637 00:42:52,640 --> 00:42:55,480 Speaker 1: I think that's the craziest thing I've seen all year. Actually, yeah, 638 00:42:55,480 --> 00:42:57,480 Speaker 1: you're set, you're you don't you never have to come 639 00:42:57,560 --> 00:42:59,919 Speaker 1: up with another one. Um, I'll go, I'll go next. 640 00:43:00,120 --> 00:43:03,920 Speaker 1: This is a Bloomberg story. New York, New Jersey signed 641 00:43:04,000 --> 00:43:07,520 Speaker 1: a sister city that doesn't exists. Its sister city, I know, 642 00:43:07,560 --> 00:43:09,279 Speaker 1: but it's not markets related, So I didn't go with it. 643 00:43:09,520 --> 00:43:12,480 Speaker 1: Then what I'm going with? And Jeremy actually brought up 644 00:43:12,520 --> 00:43:15,520 Speaker 1: he brought up the you know, in the future, maybe 645 00:43:15,520 --> 00:43:18,880 Speaker 1: having silent helicopters driving around for cheap. But we have 646 00:43:18,920 --> 00:43:21,400 Speaker 1: a Bloomberg story that says Elon Musk is so busy 647 00:43:21,520 --> 00:43:26,040 Speaker 1: his private jet is taking thirteen minute flights, and we 648 00:43:26,280 --> 00:43:29,120 Speaker 1: lay out all of these different flights he's taken. I 649 00:43:29,160 --> 00:43:32,799 Speaker 1: think it's over the last year, and just it's so 650 00:43:32,920 --> 00:43:37,600 Speaker 1: counterteen minute flights. Yes, from like that's like the Kardashians 651 00:43:37,600 --> 00:43:41,040 Speaker 1: do that, don't they from one side of yeah, but 652 00:43:41,160 --> 00:43:44,279 Speaker 1: it's so counter to his ethos or to his you 653 00:43:44,320 --> 00:43:49,600 Speaker 1: know climate, yeah, clean en, yeah, clean energy. Thirteen minute 654 00:43:49,640 --> 00:43:52,839 Speaker 1: flights and he he has taken out of all the billionaires, 655 00:43:52,880 --> 00:43:56,640 Speaker 1: he takes the most number of flights. Wow, if that 656 00:43:56,880 --> 00:44:02,719 Speaker 1: was electric, if everything under two hundred miles was electric, 657 00:44:03,320 --> 00:44:07,120 Speaker 1: we probably wouldn't even bother to say that. Yeah, exactly right. 658 00:44:07,200 --> 00:44:10,399 Speaker 1: It doesn't use It only uses about twice to gasoline 659 00:44:11,000 --> 00:44:18,600 Speaker 1: equivalent of the taxi ride, right, and quite remarkable. Anyway. 660 00:44:19,160 --> 00:44:24,480 Speaker 1: The thing is, if you value your time at a 661 00:44:24,600 --> 00:44:30,560 Speaker 1: hundred times average, then of course these things make a 662 00:44:30,600 --> 00:44:33,919 Speaker 1: lot of sense. Right, He's running five companies, right, He's 663 00:44:33,960 --> 00:44:38,520 Speaker 1: going from yah from the Yahoo I'm having a senior 664 00:44:38,560 --> 00:44:45,440 Speaker 1: movement from Twitter headquarters to to Tesla's plant, and anyway, 665 00:44:45,880 --> 00:44:48,399 Speaker 1: it is a couldn't Jeremy. It's pretty close though, So 666 00:44:48,600 --> 00:44:50,759 Speaker 1: maybe that's what I'm thinking. I get to give you 667 00:44:50,840 --> 00:44:56,480 Speaker 1: my weirdest little next. Okay, Well, we spent a lot 668 00:44:56,480 --> 00:45:01,360 Speaker 1: of time working this out, and we think that the 669 00:45:01,440 --> 00:45:04,839 Speaker 1: parts pamillion in the atmosphere that have risen from two 670 00:45:04,840 --> 00:45:07,560 Speaker 1: eighty to a current four twenty will peak at about 671 00:45:07,560 --> 00:45:10,080 Speaker 1: five twenty five five fifty, and we have to get 672 00:45:10,080 --> 00:45:12,840 Speaker 1: it back to two eighty, and that will mean the 673 00:45:12,880 --> 00:45:18,000 Speaker 1: removal of three trillion tons of CO two has to 674 00:45:18,040 --> 00:45:21,520 Speaker 1: be removed one day, let's say, over the next hundred years. 675 00:45:21,560 --> 00:45:23,680 Speaker 1: And if we get it down to fifty dollars, which 676 00:45:23,719 --> 00:45:26,440 Speaker 1: we will fifty dollars a ton, that is one hundred 677 00:45:26,440 --> 00:45:31,240 Speaker 1: and fifty trillion dollars to remove the CO two after 678 00:45:31,400 --> 00:45:35,759 Speaker 1: we have gotten to carbon neutral to zero carbon, what 679 00:45:35,800 --> 00:45:38,880 Speaker 1: are our chances that is equal to one percent of 680 00:45:38,960 --> 00:45:45,719 Speaker 1: GDP globally smoothed out over the next hundred years. Wow. Well, 681 00:45:45,719 --> 00:45:48,120 Speaker 1: if we get some goat skin and issue a perpetual 682 00:45:48,160 --> 00:45:51,479 Speaker 1: bond at two and a half, that's it. That would 683 00:45:51,480 --> 00:46:00,600 Speaker 1: papers They would take a lot of goats though, and 684 00:46:00,719 --> 00:46:03,879 Speaker 1: that would not be environmentally, that would not be all right. 685 00:46:05,560 --> 00:46:09,239 Speaker 1: Jeremy Grantham of GMO, what a absolute treat to hear 686 00:46:09,280 --> 00:46:11,880 Speaker 1: your thoughts. And like I said, we could go on 687 00:46:11,960 --> 00:46:13,600 Speaker 1: for hours, so I hope you do come back. It 688 00:46:13,640 --> 00:46:16,040 Speaker 1: was It was really an honor and APPROPLI it was fun. 689 00:46:16,320 --> 00:46:18,319 Speaker 1: Thank you for having me. Thank you so much for 690 00:46:18,400 --> 00:46:28,399 Speaker 1: joining us What Goes Up. We'll be back next week 691 00:46:28,680 --> 00:46:30,240 Speaker 1: and so then you can find us on the Bloomberg 692 00:46:30,320 --> 00:46:33,759 Speaker 1: Terminal website and app or wherever you get your podcasts. 693 00:46:34,400 --> 00:46:36,000 Speaker 1: We'd love it if you took the time to rate 694 00:46:36,040 --> 00:46:39,040 Speaker 1: and review the show on Apple Podcasts so more listeners 695 00:46:39,040 --> 00:46:41,400 Speaker 1: can find us. And you can find us on Twitter, 696 00:46:41,760 --> 00:46:46,080 Speaker 1: follow me at reag Anonymous. Bildona Hirich is at Bildanna Hirech. 697 00:46:46,760 --> 00:46:51,279 Speaker 1: You can also follow Bloomberg Podcasts at Podcasts. What Goes 698 00:46:51,360 --> 00:46:54,399 Speaker 1: Up is produced by Stacy Wong. Thanks for listening, See 699 00:46:54,400 --> 00:47:02,319 Speaker 1: you next time. That that you mean