WEBVTT - Traders Ready for CPI and Apple Partners with OpenAI 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:25.800 can also watch the show live on YouTube. 0:00:26.120 --> 0:00:27.640 Visit the Bloomberg. 0:00:27.200 --> 0:00:31.760 Podcast channel on YouTube to see the show weekday mornings 0:00:31.760 --> 0:00:35.000 from seven to ten am Eastern from our global headquarters 0:00:35.159 --> 0:00:39.000 in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen, and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:46.320 the Bloomberg Terminal, and the Bloomberg Business app. 0:00:46.760 --> 0:00:47.640 This is a joy. 0:00:47.880 --> 0:00:52.560 He is definitive in the world. A use of gold. 0:00:52.760 --> 0:00:56.560 James Steele joins now from HSBC. Really honored to have 0:00:56.640 --> 0:01:00.440 you in our studios. If we were to walk near 0:01:00.560 --> 0:01:04.240 our offices by the Ritz Carlton in Dubai, where Jumana 0:01:04.319 --> 0:01:07.360 Bertecci holds court, but if we go down by the 0:01:07.440 --> 0:01:11.280 canal in the old historic souks, where all of the 0:01:11.280 --> 0:01:16.160 Indian Ocean, all of Eurasia buys gold, what would be 0:01:16.240 --> 0:01:18.520 the mood in the souks of Dubai. 0:01:19.600 --> 0:01:21.240 Well, first of all, thank you for having me, Tom 0:01:21.440 --> 0:01:25.200 it's a real pleasure, I think, one of restraint. And 0:01:25.240 --> 0:01:27.640 now that we've seen such a big price rises, what 0:01:28.200 --> 0:01:31.800 has resonated through the physical side of things, And that's 0:01:31.840 --> 0:01:35.880 not hedge funds, that's not asset managers, portfolio managers. That's 0:01:35.920 --> 0:01:39.559 the people on the ground, rich and poor, buying gold. 0:01:39.640 --> 0:01:45.200 There's been a pullback. Bar demand is down. Physical coin 0:01:45.280 --> 0:01:48.280 demand is down. We know that because the premiums have 0:01:48.360 --> 0:01:52.920 come in. All the major mints are reporting somewhat lower demand, 0:01:53.200 --> 0:01:55.520 with exception of the Royal Mint, which has been a 0:01:55.560 --> 0:01:59.680 function of the election. So there's a trigger day demand 0:01:59.720 --> 0:02:03.320 for and coins, which we tend to see. If it 0:02:03.400 --> 0:02:06.440 ever looks in a democracy that the center left are 0:02:06.480 --> 0:02:08.560 going to win, there tends to be an increase in 0:02:08.600 --> 0:02:10.840 gold demand. But other than that, there's been there's been 0:02:10.880 --> 0:02:11.400 a pullback. 0:02:11.600 --> 0:02:13.160 I got to ask the question of the day. 0:02:13.400 --> 0:02:17.000 Is Fort Knox still like Goldfinger? Is Fort Knox still 0:02:17.000 --> 0:02:18.560 where we keep all our gold? 0:02:18.880 --> 0:02:22.320 This is where we keep our gold in the United States, 0:02:22.440 --> 0:02:26.000 And it has, to my knowledge, about thirty thousand highly 0:02:26.040 --> 0:02:28.040 trained troops guarding it. 0:02:29.080 --> 0:02:30.720 So it's like Goldfinger still. 0:02:31.680 --> 0:02:34.839 It is it is there, and and it's it's it's 0:02:34.880 --> 0:02:35.959 the country's gold. 0:02:36.000 --> 0:02:38.720 Like is a bar of gold set at Fort Knox 0:02:38.880 --> 0:02:41.600 for like sixty years or dare I say they've. 0:02:41.400 --> 0:02:42.880 Been it's been there, it's been. 0:02:42.919 --> 0:02:44.080 It's been there a long time. 0:02:45.880 --> 0:02:48.640 And Fort Knox is not at costco, Yes, exactly. 0:02:48.840 --> 0:02:51.680 The the you know, gold goes where the money goes. 0:02:52.320 --> 0:02:55.640 And in the inter war and post war period it 0:02:55.720 --> 0:02:59.440 came to the United States out of Europe. In the seventies, 0:02:59.480 --> 0:03:04.480 it went from the Advanced countries to the Middle East 0:03:04.520 --> 0:03:08.480 with oil, and now it's going to Asia. So and 0:03:08.520 --> 0:03:11.560 this is true for the last two thousand years, gold 0:03:11.600 --> 0:03:13.960 has followed where the money goes. 0:03:14.040 --> 0:03:16.240 Okay, talk to us about China. Can you tell us 0:03:16.360 --> 0:03:19.600 just give us a sense of demand for gold in China. 0:03:19.680 --> 0:03:20.280 That's what I've heard. 0:03:20.440 --> 0:03:22.040 I don't know anything about the gold business, but they 0:03:22.080 --> 0:03:25.800 say China. What's China mean for a gold demand? Who's 0:03:25.840 --> 0:03:26.400 buying gold? 0:03:26.480 --> 0:03:26.639 Well? 0:03:26.639 --> 0:03:29.640 I think you have to break it down into two components. 0:03:29.720 --> 0:03:33.280 One is central bank demand, the demand from the People's 0:03:33.320 --> 0:03:37.640 Bank of China, which, like all central bank demand, not 0:03:37.720 --> 0:03:41.000 just theirs, is somewhat opaque and we never get timely 0:03:41.080 --> 0:03:42.840 information generally speaking. 0:03:43.600 --> 0:03:44.440 And also. 0:03:45.840 --> 0:03:49.320 The demand outside of the People's Bank Now the demand 0:03:49.320 --> 0:03:52.160 outside of the People's Bank has been very good, but 0:03:52.240 --> 0:03:56.400 it's not necessarily because there's such devotees of gold. The 0:03:56.440 --> 0:04:00.440 property market is down, the equity markets are down, and 0:04:01.200 --> 0:04:03.840 most people in China don't quite have the same suite 0:04:03.840 --> 0:04:08.360 of investments, even at the most sophisticated end, at the 0:04:08.360 --> 0:04:12.840 professional investor end that we do, or British or American 0:04:12.880 --> 0:04:15.640 hedge funds have, et cetera, et cetera. So when both 0:04:15.720 --> 0:04:18.719 those things are down, gold is a winner by default, 0:04:19.400 --> 0:04:22.360 and that's what we've seen. I don't necessarily think it's 0:04:22.400 --> 0:04:24.840 because of a mad love affair with gold, and I 0:04:24.920 --> 0:04:28.480 suspect that when or if I suppose when, is more 0:04:28.800 --> 0:04:32.760 the question. The property market stabilizes, the equity markets they're stabilized, 0:04:33.120 --> 0:04:37.400 will get gold underfunded. Now the central bank buying is 0:04:37.520 --> 0:04:40.159 very different, and that's government buying. 0:04:40.520 --> 0:04:40.719 Now. 0:04:41.120 --> 0:04:44.560 They reported you might as well noticed the pullback in 0:04:44.600 --> 0:04:47.560 gold a few days ago. Last week, well, they reported 0:04:48.320 --> 0:04:54.760 unchanged gold reserves for the previous month. That did not 0:04:54.960 --> 0:04:58.040 mean that they've stopped buying. It just meant that they 0:04:58.040 --> 0:05:01.800 didn't buy that month. That was misinterpreted, I think by 0:05:01.839 --> 0:05:05.080 the market, and we got a very abrupt decline of 0:05:05.120 --> 0:05:09.240 seventy seven seventy nine dollars that day, But it wasn't 0:05:09.279 --> 0:05:13.039 a policy statement. They just said our gold reserves at 0:05:13.040 --> 0:05:14.760 the end of May were the same as they were 0:05:14.760 --> 0:05:17.279 at the end of April, and they had been accumulating 0:05:17.279 --> 0:05:20.040 gold every month for the previous eighteen months. 0:05:20.440 --> 0:05:21.440 So how about silver. 0:05:21.520 --> 0:05:24.239 Do we think about silver different because that's up twenty 0:05:24.279 --> 0:05:27.880 four percent this year? Is that just rising tides? Looking 0:05:27.880 --> 0:05:29.840 all boats for silvers or special you do. 0:05:29.839 --> 0:05:34.400 Tend to get a gold silver ratio that people will trade. 0:05:34.400 --> 0:05:36.320 And I remember in the old days down at the 0:05:36.320 --> 0:05:38.800 World Trade Center when I worked on the comes, when 0:05:38.839 --> 0:05:41.840 it was called that, I would see people look over 0:05:41.920 --> 0:05:44.120 at the silver booth and then back back to the 0:05:44.160 --> 0:05:47.800 gold and they would trade. That's exactly how it used 0:05:47.800 --> 0:05:53.960 to work. So the silver market's considerably less voluminous than 0:05:53.960 --> 0:05:56.719 the gold market, and so when you get a big 0:05:56.720 --> 0:05:59.960 moving gold, you generally get silver lifted. Now, the big 0:06:00.080 --> 0:06:03.240 difference between the two is that over fifty percent something 0:06:03.320 --> 0:06:06.800 like we estimate about fifty seven fifty eight percent of 0:06:06.839 --> 0:06:11.000 silver demand is not for bars or jewelry or coins 0:06:11.240 --> 0:06:12.080 the way it is for gold. 0:06:12.120 --> 0:06:12.600 Industrial. 0:06:12.680 --> 0:06:19.320 It's industrial exactly, and everything Now, even though we forecast 0:06:19.600 --> 0:06:23.560 rather sluggish industrial production growth this year, everything you need 0:06:23.680 --> 0:06:27.680 silverflo is growing at an above rate. So we think 0:06:27.760 --> 0:06:30.800 the silver demand industrial demand is moving at twice the 0:06:30.880 --> 0:06:33.400 rate of underlying industrial growth. 0:06:33.560 --> 0:06:36.720 There is a book that is like James Steele wrote 0:06:36.760 --> 0:06:42.039 the screenplay. It is William Silber Definitive of nineteen fourteen, 0:06:42.200 --> 0:06:45.400 when we took the gold standard from Britain. He literally 0:06:45.400 --> 0:06:49.520 describes the boat coming across the ocean where McAdoo said, 0:06:49.560 --> 0:06:53.360 it's our time and we became dominant. There's a content, 0:06:53.480 --> 0:06:57.360 there's a fear out there James Steele, that someday there's 0:06:57.400 --> 0:07:00.400 going to be a boat to China where they steal 0:07:00.480 --> 0:07:03.880 the gold standard from us. They deal they steal dollars, 0:07:03.880 --> 0:07:05.080 sovereigntry from us. 0:07:05.080 --> 0:07:07.800 How do you respond to it, Well, I think there's 0:07:07.920 --> 0:07:11.320 enough room for everybody. The United States is an enormously 0:07:11.920 --> 0:07:16.360 large economy. But I think what you're touching on is 0:07:16.360 --> 0:07:22.360 maybe this issue of dollar d dollarization, and that's been 0:07:22.440 --> 0:07:25.560 ascribed to some of the reasons that central banks, not 0:07:25.640 --> 0:07:29.560 just China, have been buying gold. No, we don't believe 0:07:29.600 --> 0:07:33.320 that there's going to be any loss of sovereignty for 0:07:33.400 --> 0:07:36.400 the US dollar as far as the world's reserve currency 0:07:36.440 --> 0:07:39.000 goes for the next ten twenty years, as far as 0:07:39.000 --> 0:07:42.280 you can see for reasons that would take an entire program, 0:07:42.320 --> 0:07:45.240 you and I could talk about it. But that's not 0:07:45.400 --> 0:07:48.200 to say that every single central bank in the world 0:07:48.640 --> 0:07:52.680 wants as many dollars as they do have. They may 0:07:52.720 --> 0:07:55.440 want to reduce their reserves by say sixty five percent 0:07:55.800 --> 0:07:57.920 to sixty two So what do you do with that 0:07:58.000 --> 0:08:01.120 three percent? Well, there's they're very limited as to what 0:08:01.160 --> 0:08:04.440 they can buy, both in fixed income and for currencies, 0:08:04.680 --> 0:08:06.400 and there may be a reason that they wouldn't want 0:08:06.400 --> 0:08:09.360 to buy the euro or the yen, and gold provides 0:08:09.400 --> 0:08:11.640 a perfect sweet spot of getting out of the dollar 0:08:11.880 --> 0:08:14.160 without going into something else. 0:08:14.240 --> 0:08:15.880 Well, this is where I wanted to go. It's like 0:08:15.920 --> 0:08:16.840 you read my script. 0:08:16.920 --> 0:08:22.560 Dennis Gartman, very different from James Steele, has nailed gold up. 0:08:22.880 --> 0:08:27.040 But he's also nailed it gold up in Japanese yen. 0:08:27.800 --> 0:08:31.640 And it's shocking what Gartman predicts if Japan doesn't get 0:08:31.680 --> 0:08:34.440 their act together and you don't see strong ye and 0:08:34.480 --> 0:08:37.640 you see continued week yen. Is there a linkage between 0:08:37.679 --> 0:08:41.600 James Steele's world of gold and currency that signals a 0:08:41.679 --> 0:08:43.600 huge opportunity in Europe. 0:08:44.200 --> 0:08:45.760 Well, I think you know much of that is the 0:08:45.800 --> 0:08:50.199 currency play as well. Yes, and exactly, And you take. 0:08:50.040 --> 0:08:51.920 It over to Jeremiah. I mean you guys are on 0:08:52.000 --> 0:08:52.920 speaking terms, right. 0:08:54.400 --> 0:08:57.200 I haven't spoken in a while, but we have done. 0:08:57.280 --> 0:08:59.280 I think I can't remember when. 0:08:59.200 --> 0:09:02.199 Talks daylight Steve Major, but Derren Myer, forget it. 0:09:02.240 --> 0:09:05.160 But they're they're both. They are both brilliant analysts. Say, 0:09:05.200 --> 0:09:08.960 I want to go on record as saying, but and 0:09:09.000 --> 0:09:10.720 that's what we've seen. That's one of the reasons that 0:09:10.760 --> 0:09:14.520 the physical demand for gold has weakened. If not only 0:09:14.559 --> 0:09:17.520 has gold gone up, but in Roupeat terms, for example, 0:09:17.600 --> 0:09:21.920 it's enormously expensive. So so yes, gold would be high 0:09:21.920 --> 0:09:25.319 in Japanese terms if the end we're to weaken. But 0:09:25.480 --> 0:09:29.120 but that's almost I don't want to quite say sophistry, 0:09:29.240 --> 0:09:30.800 but it's getting on. 0:09:30.760 --> 0:09:33.360 For we could say sophistry and survants. I don't know 0:09:33.360 --> 0:09:34.120 how to spell it. 0:09:37.080 --> 0:09:37.560 Exactly. 0:09:37.960 --> 0:09:41.280 Jim gl c O the Global Commodities Monitor, that's all 0:09:41.280 --> 0:09:44.480 I know about your business, commodities business. What's the trade 0:09:44.480 --> 0:09:46.520 that people want to talk to you most about these days? 0:09:47.960 --> 0:09:52.360 Well, trying to figure out a gold. One of the 0:09:52.720 --> 0:09:55.559 one of the interesting things is that I've just come 0:09:55.600 --> 0:09:57.920 back from Europe, and both in Europe and North America, 0:09:58.320 --> 0:10:02.640 the previous rallies have had a clear smoking gun. This 0:10:02.679 --> 0:10:05.440 one hasn't so much right, And that's what makes it 0:10:05.480 --> 0:10:08.559 so interesting because it's a couple of things. There's geopolitics 0:10:08.600 --> 0:10:10.800 going on as well. And one of the thing I 0:10:10.840 --> 0:10:13.160 just want to mention, and why it's so influential, is 0:10:13.200 --> 0:10:15.320 that you can come to me and you can say, Jim, 0:10:15.320 --> 0:10:17.319 what happens to gold? Usually when the FED cuts by 0:10:17.320 --> 0:10:20.920 fifty base points or when it increases but or when 0:10:20.960 --> 0:10:23.040 the dollar goes up this much or down this much. 0:10:23.679 --> 0:10:26.320 But Gaza is different from Ukraine, It's different from the 0:10:26.320 --> 0:10:29.360 South China Sea, its different from the Taiwan Straits, and 0:10:29.400 --> 0:10:34.160 so every geopolitical event may have a different impact on gold. 0:10:34.280 --> 0:10:35.240 You can't muddel it. 0:10:35.679 --> 0:10:39.160 Forty seconds left here, I'm asking for a friend. What's 0:10:39.240 --> 0:10:43.480 the markup on gold? It a fancy store in fifty 0:10:43.520 --> 0:10:44.880 seventh Street, like Tiffany. 0:10:45.600 --> 0:10:48.600 It's very very high. Thank you. It's good to know that. 0:10:49.120 --> 0:10:53.520 Why don't you say a double hundreds of percent plural? 0:10:53.559 --> 0:10:56.200 Well, you're paying, but you're paying for the artistry, and 0:10:56.240 --> 0:10:58.040 you're paying for the for the workmanship. 0:10:58.120 --> 0:10:59.800 You're not paying for the blue book, paying. 0:10:59.600 --> 0:11:01.480 For the you're paying for that too. 0:11:01.600 --> 0:11:02.640 But I mean, and. 0:11:02.600 --> 0:11:06.199 That's it's it's it's well worth it. It hasn't dimmed 0:11:06.640 --> 0:11:10.520 they demand at the high end. But it's one of 0:11:10.600 --> 0:11:15.040 the reasons the gold price doesn't doesn't change. And so 0:11:15.160 --> 0:11:18.240 whereas in Asia you'll see that the markup is very 0:11:18.360 --> 0:11:22.120 low and the price is changed rapidly in the shops. 0:11:22.160 --> 0:11:25.480 Interesting. This has been a pleasure. Please come in again. 0:11:26.040 --> 0:11:27.560 Thank you, Tom, Thank you for having me. 0:11:27.760 --> 0:11:32.000 James Steele with a question the definitive guy on fundamental 0:11:32.000 --> 0:11:35.400 Gold around this world from the Canal of Dubai to 0:11:35.520 --> 0:11:38.600 Asia to Fort Knax. I saw a Goldfinger like a 0:11:38.600 --> 0:11:41.840 while back. What a great movie. Still, I've never. 0:11:41.720 --> 0:11:44.680 Been anybody I try to play a concert, you. 0:11:44.679 --> 0:11:46.400 Know, I was, I was going to say, but I 0:11:46.440 --> 0:11:49.960 thought it would be a party political broadcast. Our vault 0:11:50.000 --> 0:11:53.120 is the second biggest vault in the American continent after 0:11:53.200 --> 0:11:53.800 Fort Knox. 0:11:56.160 --> 0:11:59.520 Wow, excuse me? Can I pray tell? Can I ask? 0:11:59.600 --> 0:12:01.560 Where is the HSBC vault? 0:12:01.600 --> 0:12:05.480 Yes, four fifty two Fifth Avenue. I could have taken 0:12:05.520 --> 0:12:06.520 you into it a couple of years. 0:12:06.520 --> 0:12:09.560 Ours taken notes. Thank you James always. 0:12:09.200 --> 0:12:12.160 Great, James till thank you so much, huge, huge, huge 0:12:12.200 --> 0:12:25.840 comments for James steal As there should be Virginia Mesanu 0:12:26.080 --> 0:12:29.960 joins us now, yes, global cio equity at Alian's what 0:12:30.000 --> 0:12:35.000 we really want to hear from her about this turmoil, Virginy. 0:12:35.160 --> 0:12:39.760 What happened is Charles de Gaulle's fifth Republic? Where did 0:12:39.760 --> 0:12:43.280 the middle go that Charles de gaud built out of 0:12:43.280 --> 0:12:44.080 World War Two? 0:12:45.800 --> 0:12:48.480 Well, I you know, it's it's really interesting and the 0:12:48.520 --> 0:12:53.160 results of the European elections were really shocking in a way, 0:12:53.200 --> 0:12:58.360 although not unexpected that I would say, you know, the 0:12:58.480 --> 0:13:03.240 quantum of that shift is really important. It's a bit 0:13:03.280 --> 0:13:08.360 of a uniform trend. You have Poland, Holland, France, Germany, Sweden, 0:13:08.400 --> 0:13:13.360 they've all moved towards more the far right. And of 0:13:13.400 --> 0:13:18.120 course the action that President Macrostecon calling for a snap 0:13:18.120 --> 0:13:25.120 election yesterday is is really important. Right, It's a bit 0:13:26.080 --> 0:13:30.920 but I think, yeah, he's got some good rationale for 0:13:31.040 --> 0:13:33.719 doing it, but it's going to be really interesting. 0:13:33.960 --> 0:13:34.400 Visionie. 0:13:34.400 --> 0:13:38.079 I think of a list of surveillance guests, including Madame Leguard, 0:13:38.559 --> 0:13:42.400 who have a transatlantic perspective. You're on that short list. 0:13:43.080 --> 0:13:47.520 Can the tensions, the political tensions of Europe carry over 0:13:47.840 --> 0:13:52.360 into America, in particularly to November of this year's election. 0:13:53.200 --> 0:13:57.720 Well, I think they are definitely linked in the sense 0:13:57.800 --> 0:14:01.760 that if you look at President Macon, he's done quite 0:14:01.840 --> 0:14:04.960 well on the economic front, the defense front, if you want, 0:14:05.080 --> 0:14:09.160 the diplomacy front. But some of the concerns that I've 0:14:09.240 --> 0:14:14.920 led the French electorate to move to the right, where 0:14:14.920 --> 0:14:21.760 domestic issues, issues of security, fear of the war, terrorist attacks, 0:14:21.920 --> 0:14:24.920 a lot of attacks on kids at school for example, 0:14:25.440 --> 0:14:30.120 immigration integration, you know, all those issues are important. And 0:14:30.160 --> 0:14:33.800 of course the far right party is more in support 0:14:33.920 --> 0:14:39.080 as Madame Lupinne and Bardella have made it public, more 0:14:39.120 --> 0:14:43.760 in support of Trump. And also there's definitely some links there, Paul, 0:14:43.800 --> 0:14:44.200 I think. 0:14:44.080 --> 0:14:45.080 We need to clear this up. 0:14:45.160 --> 0:14:48.560 I've had a lot of criticism about the use by 0:14:48.600 --> 0:14:50.080 Bloomberg a far right. 0:14:50.400 --> 0:14:52.840 We are not editorializing their folks. 0:14:53.240 --> 0:14:57.840 The parties are actually there's three, and they're actually called 0:14:58.280 --> 0:15:01.920 far right. When we say far right, that's the identifiable 0:15:02.080 --> 0:15:06.800 name of three of the fraction parties of the more 0:15:06.840 --> 0:15:09.239 conservative wing of French politics. 0:15:09.400 --> 0:15:11.160 VI Jinnie talk to us about when we think about 0:15:11.200 --> 0:15:13.320 over the last twenty four hours of the European Union 0:15:13.400 --> 0:15:15.880 and in France with the snap elections, how much of 0:15:15.880 --> 0:15:19.600 that is economics, how much are people concerned about their 0:15:19.640 --> 0:15:21.920 economic outlook, inflation and so on. 0:15:23.640 --> 0:15:27.040 Part of it is inflation, but I really think it's 0:15:27.080 --> 0:15:31.040 all about security, immigration and in a way a vote 0:15:31.080 --> 0:15:35.640 against green Green scene as a cost. It is really 0:15:35.640 --> 0:15:38.760 interesting if you see one of the biggest loser, of 0:15:38.760 --> 0:15:41.840 course is the Green Party. So I think that combined 0:15:41.880 --> 0:15:45.440 with the rising popularity of mister Bardella, the twenty eight 0:15:45.520 --> 0:15:49.960 year old, that if in fact there's a majority in 0:15:50.040 --> 0:15:56.560 the next elections for Madame Lupinn, he could become a 0:15:56.680 --> 0:16:00.000 very important part of the political life. And of course 0:16:00.080 --> 0:16:06.320 he's very untested. The President Macon had promoted Monsieur Taala 0:16:06.760 --> 0:16:10.560 as a younger if you want, politician, although older than Bordella, 0:16:11.080 --> 0:16:15.520 and in the recent debates around the key topics around 0:16:15.520 --> 0:16:19.480 electrification et cetera, it was very clear that mister Baldella 0:16:19.640 --> 0:16:22.680 was not really prepared for such a mandate. And I 0:16:22.720 --> 0:16:25.200 think that's the point that McCoy is trying to make. 0:16:25.680 --> 0:16:30.200 Bring them in and see how they will or will 0:16:30.240 --> 0:16:33.320 not be able to do as a big part of 0:16:33.360 --> 0:16:37.240 the government and hopefully influence in his mind the next 0:16:37.240 --> 0:16:40.640 elections in a couple of years in twenty seven. 0:16:41.000 --> 0:16:43.320 All right, So, Reginia, given all that backdrop here that 0:16:43.360 --> 0:16:45.640 we've seen over the last again couple of days coming 0:16:45.640 --> 0:16:49.400 out of Europe at alliance, how do you think about just, 0:16:50.080 --> 0:16:53.000 you know, allocating capital across the globe. I mean, how 0:16:53.000 --> 0:16:56.320 do you think that Europe versus the US versus is 0:16:56.400 --> 0:16:57.640 friends on sales. 0:16:57.560 --> 0:16:58.520 Friends on sales. 0:16:58.520 --> 0:16:59.120 That's simple. 0:17:00.120 --> 0:17:02.320 You might be able to buy it a bit cheaper. 0:17:02.680 --> 0:17:06.720 I mean, in general, the European markets are quite cheap. 0:17:07.560 --> 0:17:10.320 Of course, what you have supporting the markets is also 0:17:10.560 --> 0:17:15.280 the rate cuts taking place ahead of the FED. And 0:17:15.280 --> 0:17:17.320 of course what are the next ones? When are the 0:17:17.320 --> 0:17:20.399 next one? Is the big questions. You also have some 0:17:20.560 --> 0:17:26.919 interesting themes around electrification, around industrials and and and the 0:17:27.119 --> 0:17:30.400 energy transition. So we have not only the climate transition 0:17:30.520 --> 0:17:33.479 but also the energy transition given what's happening with Russia, 0:17:34.040 --> 0:17:37.360 and that is an important part of investment that I 0:17:37.440 --> 0:17:40.879 think is interesting for global investors. 0:17:41.160 --> 0:17:43.800 This has been very valuable Virginie Messina, who thank you 0:17:43.840 --> 0:17:47.560 so much with allions as we are audible towards the turmoil, 0:17:47.600 --> 0:17:48.640 the political. 0:17:48.200 --> 0:17:56.680 Turmoil in France. How do you go summer claudiate USC? 0:17:57.320 --> 0:17:59.440 I got to show up for class to do that. 0:17:59.480 --> 0:18:04.040 Will running us now with parchment from USA and distinguished 0:18:04.680 --> 0:18:07.800 at that as Lauren Goodwin, she strategius in New. 0:18:07.760 --> 0:18:08.720 York life as well. 0:18:08.800 --> 0:18:13.240 What was it like grinding and getting a deserved summicum 0:18:13.320 --> 0:18:15.840 laudie at USC? Were you the only one in class 0:18:15.880 --> 0:18:16.680 five days a week? 0:18:17.240 --> 0:18:19.639 Well, they just hold class on the lawn, right, you. 0:18:19.720 --> 0:18:22.040 Have to have economics on the law. 0:18:22.880 --> 0:18:25.280 Really a whiteboard that rolls on wheels. I still have 0:18:25.280 --> 0:18:27.280 one in my office. Actually it's a signature tree. 0:18:27.359 --> 0:18:28.160 They literally would. 0:18:28.160 --> 0:18:31.679 Roll the whiteboard out onto the lawn nose. 0:18:31.960 --> 0:18:33.639 But I did take a skateboarder class. 0:18:33.880 --> 0:18:36.760 You did take a skateboard to class. 0:18:37.600 --> 0:18:41.280 I took a snowshovel and I'm lucky I got home. Lauren, 0:18:41.720 --> 0:18:45.280 thanks for being with She worked for venerable firm. We've 0:18:45.320 --> 0:18:48.000 done too much of the parlor game today. On the FED, 0:18:48.640 --> 0:18:50.840 where's this fed going to be in a year or 0:18:50.880 --> 0:18:52.080 in six months? 0:18:52.359 --> 0:18:54.879 Do they have a plan or are they literally making 0:18:54.920 --> 0:18:56.600 it up? Report the report? 0:18:57.320 --> 0:19:01.280 I think that they're trying really hard to walk this 0:19:01.440 --> 0:19:05.280 tightrope between really where they sit right now, which is 0:19:05.280 --> 0:19:08.320 that the data are slowing. They believe they're restrictive, but 0:19:08.359 --> 0:19:10.440 they want to make sure that that doesn't turn into 0:19:10.480 --> 0:19:13.919 a policy mistake of being restrictive for too long. I 0:19:13.920 --> 0:19:16.520 think that the challenge that they face on the six 0:19:16.600 --> 0:19:18.960 to twelve month time horizon is that we're in a 0:19:19.200 --> 0:19:24.000 very capital intensive phase of economic activity. That's related to 0:19:24.080 --> 0:19:29.280 artificial intelligence, it's related to electrification and infrastructure. This is 0:19:29.359 --> 0:19:33.680 a policy environment but also a corporate spending environment that's 0:19:34.000 --> 0:19:37.040 constructive for economic activity, and that's going to be one. 0:19:37.040 --> 0:19:40.560 We're getting inflation closer to two percent. Allowing them to 0:19:41.160 --> 0:19:43.320 pull rates back to two and a half percent is 0:19:43.440 --> 0:19:44.320 just going to take time. 0:19:44.720 --> 0:19:47.159 So there's a lot of folks out there in academia 0:19:47.280 --> 0:19:49.879 and in practice in the marketplace that are saying the 0:19:49.880 --> 0:19:51.800 FED is missing the boat already. They need to be 0:19:51.840 --> 0:19:52.480 cutting rates. 0:19:52.800 --> 0:19:53.440 Now. 0:19:53.480 --> 0:19:54.560 What do you say to those folks? 0:19:55.880 --> 0:19:59.840 I tend to agree on the idea of the PI 0:20:00.280 --> 0:20:02.119 that the time may be now for the pivot, and 0:20:02.119 --> 0:20:06.159 that's because we are seeing not the aggregate economy, but 0:20:06.320 --> 0:20:11.000 areas of interest rate sensitive sectors, areas of lower income consumers, 0:20:11.400 --> 0:20:14.560 businesses that use banks or floating rate credit to borrow. 0:20:15.040 --> 0:20:17.520 And that's been the case that that turning point has 0:20:17.560 --> 0:20:20.240 been taking place over the past couple of years. And 0:20:20.320 --> 0:20:23.080 so if we are looking to soft land the economy, 0:20:23.080 --> 0:20:25.480 I think the evidence is in that inflation is moving 0:20:25.560 --> 0:20:28.439 reliably downward. That's something that's that's that's been clear to 0:20:28.480 --> 0:20:30.680 me over the last six months, and so I do 0:20:30.720 --> 0:20:33.159 think that if the FED we're looking to extend the 0:20:33.240 --> 0:20:34.760 cycle soon would. 0:20:34.520 --> 0:20:37.960 Be the time bring your economics over to investment a 0:20:38.040 --> 0:20:42.800 bond portfolio, in equity portfolio, do you need to set 0:20:42.800 --> 0:20:47.879 your actuarial assumption higher because of higher for longer or 0:20:47.920 --> 0:20:50.919 because of a new reset in our start? 0:20:51.400 --> 0:20:54.320 I believe that you do. Our star I believe has 0:20:54.359 --> 0:20:56.840 moved a bit higher as a result of this capital 0:20:56.880 --> 0:21:00.119 intensive stage of economic growth that we're in. And it's 0:21:00.160 --> 0:21:05.240 an environment where even in a traditional investor portfolio, you 0:21:05.960 --> 0:21:08.360 investors may be missing the point in the transition point 0:21:08.400 --> 0:21:08.879 we're looking at. 0:21:09.000 --> 0:21:11.520 Okay, so what an actual assumption If you're popping six 0:21:11.560 --> 0:21:13.879 percent and you're telling me I have to go to 0:21:13.960 --> 0:21:16.600 seven percent, that means I have to put more funding 0:21:17.480 --> 0:21:20.280 into my institutional or retail retirement account. 0:21:20.320 --> 0:21:21.160 Right, Yes, that's right. 0:21:21.840 --> 0:21:22.720 This is a big deal. 0:21:22.840 --> 0:21:23.560 I know. 0:21:23.600 --> 0:21:26.199 I mean, this is the government's way behind on this. 0:21:26.600 --> 0:21:30.000 There should be increased levels in four oh one ki R. Yeah, 0:21:30.080 --> 0:21:31.680 and pension and profit share. 0:21:31.480 --> 0:21:34.640 On the sweeney offsprings are all maxing album the full 0:21:34.640 --> 0:21:37.480 one kg and guarantee you that, Lauren, I love your 0:21:37.520 --> 0:21:40.400 notes here. You give us some high conviction ideas here. 0:21:40.680 --> 0:21:42.720 You say that equity valuations are high. A lot of 0:21:42.720 --> 0:21:46.239 folks believe that. All right, what do I deal? I'm 0:21:46.280 --> 0:21:47.560 not going to sell? Well, what do I do here? 0:21:47.880 --> 0:21:50.399 If I feel like equity valuations are high? What are 0:21:50.440 --> 0:21:51.119 my alternatives? 0:21:51.160 --> 0:21:53.199