Speaker 1: Bloomberg Audio Studios, podcasts, radio news, and.
Speaker 2: I want to start there give considering the fact that
Speaker 2: you've talked about how the US is going to go
Speaker 2: bankrupt and how it's on our unsustainable fiscal path, are
Speaker 2: we seeing that priced in or is there still a
Speaker 2: reconing to come.
Speaker 3: Well, it's certainly behaving differently than it was for the
Speaker 3: last four decades.
Speaker 1: I mean, what we've seen is.
Speaker 3: In the last of fifteen years, there's been a number
Speaker 3: of corrections on the s and P five hundred, and
Speaker 3: in every single one of them, when the SMP goes
Speaker 3: down more than ten percent, the dollar indexed the trade
Speaker 3: weighted dollar index goes up. This time, the dollar went
Speaker 3: down when the SMP five hundred went down almost twenty percent.
Speaker 1: That's strange. Things are behaving differently.
Speaker 3: Usually, when the Fed starts cutting interest rates, rates.
Speaker 1: Across the yel curve go down.
Speaker 3: The ten year t y almost always goes up immediately
Speaker 3: following the first Fed rate cut, and then it keeps
Speaker 3: rallying for a while. This time, the tenure yield went up,
Speaker 3: and the yield curve is steepening. So I think what
Speaker 3: we have is recognition that the interest expense for the
Speaker 3: United States is untenable if we continue running a two
Speaker 3: point one trillion dollar budget deficit and we continue to
Speaker 3: have sticky interest rates. One thing that people fail to
Speaker 3: appreciate is how much the average treasury payment has gone up.
Speaker 3: The average yield, the average coupon on treasuries was below
Speaker 3: two percent. The entire treasury market, all thirty odd billion
Speaker 3: of it, you a resolved together.
Speaker 1: Some of them are old.
Speaker 3: You know, they were issued with higher interest rates, but
Speaker 3: it was below two percent. Now it's pushing four percent.
Speaker 3: And as long as bonds are maturing, and there's trillions
Speaker 3: and trillions of dollars of the maturing, a lot of
Speaker 3: them were issued back in you know, two thousand and nine, eighties,
Speaker 3: other time periods. Even if you just issued them in
Speaker 3: twenty nineteen. Some of these are starting to come doe.
Speaker 3: And they were issued with coupons of a quarter of
Speaker 3: a percent, and now it's four and a quarter of percent,
Speaker 3: so it's four hundred basis points higher. So this problem
Speaker 3: continues to build, and there's an awareness now that the
Speaker 3: long term treasury bond is not a legitimate flight to
Speaker 3: quality asset. It's not responding to lower interest rates. It's
Speaker 3: not really responding to an inflation rate which is now
Speaker 3: two and a half percent. Probably going to go higher
Speaker 3: on the inflation rate because the ones that are rolling
Speaker 3: off from a year ago, I mean the cumulative I
Speaker 3: think headline CPI that came out today it was a
Speaker 3: point one to eight, but the one that was rolling
Speaker 3: off I think was zero point one. And if you
Speaker 3: do the next two months, those three months together that quarter,
Speaker 3: the cumulative rise from a year ago is point one.
Speaker 3: So we're likely seeing the low point in near term inflation.
Speaker 3: So yeah, I think there's the reckoning is coming, is
Speaker 3: that we have to somehow figure out how we're going
Speaker 3: to deal with thirty seven trillion dollars. I mean, we're
Speaker 3: actually going to hit the thirty seven trillion number for real.
Speaker 3: It's still thirty six point nine to five trillion, but
Speaker 3: it's going up quickly.
Speaker 1: So yeah, there's going.
Speaker 3: To have to be some pretty creative thinking, and the
Speaker 3: market's starting to believe that. So the private previous group
Speaker 3: talked about the capital flows, and one of the reasons
Speaker 3: that the US is underperforming at this point is so
Speaker 3: much money came into the United States since say twenty
Speaker 3: fifteen or so or twenty oh five, and it's there
Speaker 3: was a net investment position. Foreigners were investing more in
Speaker 3: the US than the US was investing outside the country.
Speaker 3: To the tune of three trillion dollars. That was about
Speaker 3: fifteen seventeen years ago. It's now over twenty five trillion
Speaker 3: dollars is the net investment position, and the dollar is falling.
Speaker 3: So it's not inconceivable that some of that twenty five
Speaker 3: trillion dollars that came in over just a couple of
Speaker 3: not even.
Speaker 1: Two decades could go out.
Speaker 3: And so this is a moment where finally you had
Speaker 3: the setup where non US investment, even if you're a
Speaker 3: dollar based investor, you should be thinking about increasing your
Speaker 3: allocations to non dollar investments.
Speaker 1: And it's already working. It's already working. So there's so
Speaker 1: much to unpack there.
Speaker 2: I want to talk about the idea that there could
Speaker 2: be this twenty five trillion or some of it that
Speaker 2: was wait, exactly whatever it is, three trillion. You get
Speaker 2: trillions of dollars moving out of US assets. How high
Speaker 2: or what kind of behavior do you have to see
Speaker 2: in a thirty year bond.
Speaker 1: To like it? Again?
Speaker 2: Given the fact, even very vocal.
Speaker 3: I've I've been fit sure about this for a long time,
Speaker 3: and I've come to the idea that as the FED
Speaker 3: eases and when the economy really does weaken more than
Speaker 3: the treasure will continue to go up at the long end.
Speaker 3: And so for now we're very uninvolved in the long
Speaker 3: term treasury bond. But there will come a moment where
Speaker 3: you have to pivot because there's going to be a response,
Speaker 3: and I've got many ideas of what that response might be,
Speaker 3: but one of the leading candidates would be quantitative easy.
Speaker 3: So you get to a point where the rate is
Speaker 3: so uncomfortably high, what is that number, I'm going to
Speaker 3: guess six percent, where they say this is going to
Speaker 3: be something that we're going to be running a five
Speaker 3: trillion dollar budget deficit with all this bond issuance when
Speaker 3: we go into a recession, and so they'll pivot. I
Speaker 3: believe this is a sensible idea. There's other ideas too,
Speaker 3: but the leading candidate is they will announce quantitative easing
Speaker 3: on buying long term treasuries, and when they do, you
Speaker 3: have to you have to very quickly, and hopefully you
Speaker 3: do it the day before they announced it. But we
Speaker 3: don't have access to the day before stuff. That's that's
Speaker 3: for the primary broker dealers. But you would need to
Speaker 3: buy long term treasuries as much as you possibly could,
Speaker 3: because when that gets denounced, it will be just like
Speaker 3: when they announced buying corporate bonds in COVID, where all
Speaker 3: of a sudden the corporate bond market went from down
Speaker 3: twenty points to right back to where it started in
Speaker 3: just a matter of a few days.
Speaker 1: You could get a.
Speaker 3: Twenty point rally on the long bond if they announced
Speaker 3: that they're buying long band could that would be one
Speaker 3: hundred basis point drop.
Speaker 2: You said that if the Fed were to cut rates
Speaker 2: that might cause a selloff in thirty year treasuries.
Speaker 1: It's already happening.
Speaker 3: They started cutting rates September of twenty twenty three, and
Speaker 3: the long bond has gone up in yield significantly since
Speaker 3: then one hundred basis point Do.
Speaker 2: You think that will happen again?
Speaker 1: Well? Why not?
Speaker 3: I mean, it's a paradigm shift. We have a tremendous
Speaker 3: paradigm shift that's going on where money is not coming
Speaker 3: into the United States, where the long line is not
Speaker 3: a flight to quality asset. Gold suddenly is the flight
Speaker 3: to quality asset. People I think Costco is selling gold
Speaker 3: retail and they can't keep it in stock, you know.
Speaker 3: And gold has gone from it was living at eighteen
Speaker 3: hundred dollars an ounce not very long ago, and once
Speaker 3: it broke above two thousand, it was just straight up.
Speaker 1: And now it was basically a.
Speaker 3: Third of ten thousand, thousand, three hundred thirty three and
Speaker 3: thirty three cents.
Speaker 1: It was actually what I looked at yesterday.
Speaker 3: So it's I think gold is a real asset class.
Speaker 3: It's no longer for lunatic survivalists and wild speculators. It's
Speaker 3: viewed as an asset class. And central banks have been
Speaker 3: accumulating gold. Gold was so was stuck in the mud
Speaker 3: because for a decade or more central banks were selling
Speaker 3: it down.
Speaker 1: They've bought it all back, so you buy gold.
Speaker 3: I've owned gold since it was three hundred dollars, and
Speaker 3: I also owned some gold miners personally.
Speaker 1: But they bought it all back. It's amazing.
Speaker 3: They sold it at like three hundred, four hundred dollars
Speaker 3: and they're buying it back at three thousand dollars. See,
Speaker 3: central banks are not very good long term investors.
Speaker 2: Well maybe they could use advice from you. One thing
Speaker 2: that we've been hearing about in a number of the
Speaker 2: panels this morning has been about the corporate debt market.
Speaker 2: And one thing that I've gathered from talking with people
Speaker 2: at Double Line and reading your outlooks is that you've
Speaker 2: reduced your allocation to below.
Speaker 3: Investment grade credit systematically over a two year period.
Speaker 2: To the lowest level I believe since the inception of
Speaker 2: Double Line.
Speaker 1: That's right.
Speaker 3: We have higher quality portfolios today relative to strategy style
Speaker 3: at any time we run closed down funds that are leveraged.
Speaker 3: We have the lowest leverage of all time.
Speaker 1: We had.
Speaker 3: We had forty five percent leverage us versus net assets,
Speaker 3: and one of our funds were at seven and we're
Speaker 3: just we're there because we want to be a liquidity provider.
Speaker 3: When you get paid to be a liquidity provider and
Speaker 3: you're not. Now, the spreads are very uninteresting in the
Speaker 3: in the credit market, just as the valuation of the
Speaker 3: S and P five hundred is incredibly uninteresting.
Speaker 1: You know, when we had the big sell off in April.
Speaker 3: If we were like, yeah, we were kind of asleep
Speaker 3: at the switch.
Speaker 1: The market was really overvalued.
Speaker 3: We really shouldn't have We really should have been thinking
Speaker 3: more cautiously. Well, it's more overvalue today because the S
Speaker 3: and P five hundred is down one or two percent
Speaker 3: and earnings estimates have been cut significantly.
Speaker 1: So if you look at the.
Speaker 3: Forward pe, it's higher now than it was at the
Speaker 3: all time high back in February or early March.
Speaker 2: So what are you sort of anticipating?
Speaker 3: What kind of anticipat a great buying opportunity? I don't
Speaker 3: know when it's going to happen, but it's getting close.
Speaker 3: I feel that the environment feels a lot like nineteen
Speaker 3: ninety nine relative to AI. Is just mapover dot com
Speaker 3: for AI. I also think it feels a lot like
Speaker 3: two thousand and six, two thousand and seven. You know,
Speaker 3: it's funny. One of the hardest things to do in
Speaker 3: the investment business is to learn and fully appreciate how
Speaker 3: long everything takes to happen. It takes forever for the
Speaker 3: problems to actually show up, it takes forever to the
Speaker 3: defaults to finally arrive. But people anticipate changes with great enthusiasm,
Speaker 3: so AI, of course, was embraced with great enthusiasm. Electricity
Speaker 3: was all the rage back in nineteen hundred because people
Speaker 3: realized that electricity could change the world, and I think
Speaker 3: we can all agree electricity change the world in ways
Speaker 3: they're bigger than AI will change the world.
Speaker 1: In my opinion, electricity is like amazing. But there was
Speaker 1: a huge boom in.
Speaker 3: Electricity stocks in the first decade of the twentieth century.
Speaker 3: But electricity stocks boomed so much that their relative performance
Speaker 3: peaked versus the stock market excluding electricity stocks in nineteen eleven.
Speaker 3: If you own electricity stocks, you've been underperforming the non
Speaker 3: electricity stocks since nineteen eleven. That's a long time, and
Speaker 3: that's what happens. That happened with the dot coms too.
Speaker 3: That was the nineteen ninety nine thing. Sure, it turned
Speaker 3: out that some of those stocks were great investments, but
Speaker 3: that enthusiasm becomes very excessive. They see the possibilities, but
Speaker 3: it takes long time for the possibilities to arrive.
Speaker 1: It's taking a long time for the tariffs to arrive.
Speaker 2: So do you think that the tech stocks that have
Speaker 2: been not performing are going to lag behind in terms
Speaker 2: of the ninety nine performance? Sort of the corollary of
Speaker 2: all of the credit investments tied to the AI build
Speaker 2: out also.
Speaker 3: Momentum trade and momentum trades always overshoot on the upside,
Speaker 3: and then once the momentum is broken, the late comers
Speaker 3: to decide that their first loss is their best loss.
Speaker 1: And it turns into a seller's market.
Speaker 2: You talk about two thousand and six, two thousand and seven,
Speaker 2: that's a credit event. And when we took that poll
Speaker 2: that my colleague Danny was pointing to, private credit seemed
Speaker 2: to be the spot where people expect a faults to
Speaker 2: really pick up.
Speaker 1: Yeah, do you agree?
Speaker 2: Do you think that that's sort of the epicenter some risk?
Speaker 3: Sure, it's private credit is analogous to private credit today,
Speaker 3: is analogous to the CDO market in the mid part
Speaker 3: of the OS, where there's just tremendous issuance, there's a
Speaker 3: tremendous acceptance.
Speaker 1: There's all kinds of I was listening.
Speaker 3: Briefly to kind of private creditors panel here and there's
Speaker 3: a lot of there's a lot of phraseology that I
Speaker 3: heard that reminded me of CDO panels in two thousand
Speaker 3: and six, two thousand and seven. Just complexity, ill liquidity,
Speaker 3: I don't know, very large, you know, tensions between investor classes,
Speaker 3: these things. Private credit is extremely heavily invested in, you know,
Speaker 3: Harvard University.
Speaker 1: Who has a fifty three billion dollar endowment.
Speaker 3: Supposedly they had to come to the bond market twice
Speaker 3: because they couldn't have they did enough money. They have
Speaker 3: fifty three billion dollars and they can't pay They can't
Speaker 3: pay for repairs, they can't pay for operating expenses. They
Speaker 3: came to the bond market looking for a couple of
Speaker 3: two and a half billion dollars. I think they got
Speaker 3: one and a half billion dollars. And then they came
Speaker 3: back again. And I think it was last week it
Speaker 3: was announced that Harvard is thinking about selling some of their.
Speaker 1: Private equity interests at a discount.
Speaker 3: Obviously, because when you're when you're a forced seller, you're
Speaker 3: not going to your cost, and so there's a lot
Speaker 3: of over investment. When I speak to Rias, you know
Speaker 3: Peel that manage a kind of hire net worth retail
Speaker 3: money for the past three four years, the UH one
Speaker 3: of the very first questions, without exception, what about private credit?
Speaker 1: And I say, are you heavily invested in private credit? Yes?
Speaker 3: And everybody is, and I say, so, you know, what's
Speaker 3: the argument? And I was giving a speech down in
Speaker 3: Texas and the woman before me was from a fund
Speaker 3: that's very heavily involved in private credit, and she basically
Speaker 3: gave a sales pitch for private credit, and basically a
Speaker 3: three pointed sales pitch, none of which are the points
Speaker 3: really sell me. The first is that it's less volatile.
Speaker 3: It's a sharp ratio argument, so you know, and it's
Speaker 3: only we all know. It's only because they don't mark
Speaker 3: them to market. I mean, everybody knows that. So it's
Speaker 3: just like private private equity. It's S and P five
Speaker 3: hundred goes from one hundred to fifty. They mark their
Speaker 3: private equity down twenty points, and then they both recover
Speaker 3: over time, they both go up to one hundred.
Speaker 1: So look at that.
Speaker 3: They have the same return, but one had S ANDP
Speaker 3: had double the volatility. And then some that argument is
Speaker 3: not valid. It's they aren't marked to market. So you know,
Speaker 3: the next argument is somewhat valid. Historical performance. Private credit
Speaker 3: had some very good years. It was quite cheap, you know,
Speaker 3: five or seven years ago, and you use a historical
Speaker 3: argument that the performance is good, and it's true, but
Speaker 3: as we all know, as they say in the disclaimers
Speaker 3: at the commercials, you know, past performance is no guarantee
Speaker 3: of future results, and public credit I think has outperformed
Speaker 3: private credit for a few quarters.
Speaker 1: At least now, so it's already changing.
Speaker 3: So I think that there's a lot of overinvestment in
Speaker 3: private credit, and the liquidity is not very good, and
Speaker 3: I just don't think the excess reward is anything close
Speaker 3: to what it used to be. So I would view
Speaker 3: that as a place where there would be forced selling.
Speaker 3: Harvard could turn into a foreseller, and Harvard, you know,
Speaker 3: they at least used to have the best reputation. Yale
Speaker 3: had this great reputation for investing in private markets, and
Speaker 3: that lured in a lot of me too behavior because
Speaker 3: they were emulating the results of Yale. But there's once
Speaker 3: one university is in publicly acknowledging that they have liquidity problems.
Speaker 1: I've got news for you.
Speaker 3: If you have a cockroach in the kitchen, there's never
Speaker 3: one cockroach, so there's more.
Speaker 1: It's always it becomes systemic.
Speaker 3: It doesn't mean everybody's overinvested and overly locked up. But
Speaker 3: in two thousand and eight, I was raising lots of
Speaker 3: money for distressed mortgages, you know, the stuff that was
Speaker 3: defaulting like crazy. It got to such a price that
Speaker 3: it was just truly unbelievable. I mean, there were securities
Speaker 3: that were trading that life at one hundred had never
Speaker 3: really had much volatility, and they were being liquidated at
Speaker 3: prices of.
Speaker 1: Thirty cents on the dollar. And you could use.
Speaker 3: Assumptions that were just nobody believed would happen. You could say,
Speaker 3: seventy percent of these mortgages to fall and we recover
Speaker 3: thirty cents on the dollar, and it's a twenty four IRR.
Speaker 3: And I said this to the Stanford University Endowment, the
Speaker 3: head guy, and I said, I can prove to you
Speaker 3: that your worst case is going to be a twenty
Speaker 3: four IRR because I'm going to use you. Tell me
Speaker 3: what assumptions you think are absurdly punishing, and I'll use them.
Speaker 1: And you got twenty four ir at. Let me finish.
Speaker 3: And he says, I can't argue with you. You make a
Speaker 3: very compelling point, but I can't invest with you. And
Speaker 3: I said why, He said, I have no money. We're
Speaker 3: all locked up. We're getting called because everything's so cheap.
Speaker 3: Everyone's calling their money now. You know these are draw funds.
Speaker 3: Now we're calling your capital. And he said, I can't
Speaker 3: even make those capitol calls. And I said, come on,
Speaker 3: I really love Stanford Endowment. What a great name for
Speaker 3: the client list. Give me ten million dollars.
Speaker 1: I don't have ten million dollars. I have no money.
Speaker 1: These are large endowments and if they if they need money,
Speaker 1: they have to sell.
Speaker 3: You say markets. Everyone knows markets have fear and greed
Speaker 3: that drive them. And everyone knows that fear is stronger
Speaker 3: than greed when it really push comes to shove. But
Speaker 3: the actual strongest driver of investment behavior is need.
Speaker 1: Sometimes people need back.
Speaker 3: In nineteen ninety three, interest rates were perceived to be low,
Speaker 3: and I went to one of my university of endowment.
Speaker 1: It was the treasurer. It was their operating money, and he.
Speaker 3: Said, I just met with the president of the university
Speaker 3: and he says, I have to make six percent for
Speaker 3: the operating money. And he said, I told him it's
Speaker 3: impossible to get six percent without tremendous risk because treasury
Speaker 3: interest rates are at three And he said, wrong answer.
Speaker 3: You're going to get six percent. Just find out how
Speaker 3: you're going to do it. And of course, in nineteen
Speaker 3: ninety four, interest rates went way up, and everybody that
Speaker 3: had done that sort of thing like Orange County, California had.
Speaker 3: There was a very famous default of Orange County, California.
Speaker 1: And you know, so their need is very powerful.
Speaker 3: But it's bad enough when you make the determination, you say,
Speaker 3: I have this goal, the six percent goal, I need
Speaker 3: to make it.
Speaker 1: I'll give it a shot.
Speaker 3: But the other side of that is even more powerful
Speaker 3: when you're forced to sell. It doesn't matter what the
Speaker 3: price is. You don't have an option. If you have
Speaker 3: to sell to pay the bills.
Speaker 1: What are you going to do.
Speaker 2: If you're preparing for that kind of moment, are you
Speaker 2: sitting mostly in cash a little gold?
Speaker 1: No have.
Speaker 3: We manage a lot of other people's money, and a
Speaker 3: lot of it is in.
Speaker 1: The fixed income market.
Speaker 3: We're just protecting and waiting for much better opportunities.
Speaker 1: I think about it. You know, markets take the stairs up.
Speaker 3: In the elevator down, which means they go up faster
Speaker 3: than they go they go down faster than they go up.
Speaker 3: And so when it really when it really breaks, it's
Speaker 3: not down a couple of points, even what we saw
Speaker 3: in April, that's not a real break of the credit market.
Speaker 3: A real break the credit market is bonds drop thirty
Speaker 3: points and everyone thinks they're cheap, but they have to sell,
Speaker 3: so you have an opportunity at some point to buy
Speaker 3: bonds down. I don't know, let's just say it. Let's
Speaker 3: just say it's twenty five points. How your bonds yield
Speaker 3: about two and a half percent more than treasury bonds.
Speaker 3: So if it takes ten years for that twenty five
Speaker 3: point opportunity, you're going to break even.
Speaker 1: And it's not going to take ten years. It's not
Speaker 1: going to take five years. Leave. But the other the
Speaker 1: panel before me said, I think is true.
Speaker 3: I think twenty seven twenty eight are going to be
Speaker 3: are likely to be a window of tremendous opportunity because
Speaker 3: I think by then the treasury problem will be even
Speaker 3: more in focus than it is today, and I think
Speaker 3: that it'll weigh it'll weigh upon market behavior. We need
Speaker 3: we need to restructure a lot of things in our system.
Speaker 1: We need to restructure.
Speaker 3: We need to structure institutions, we need to restructure political parties,
Speaker 3: we need to restructure our finances. All these things are
Speaker 3: have been in place. It's the it's the waves of history,
Speaker 3: you know. Neil Howe calls of the fourth turning. He
Speaker 3: wrote a book called the fourth turning the mid nineties,
Speaker 3: predicting the credit crisis around two thousand and six using
Speaker 3: demography pretty good. And I know him pretty well and
Speaker 3: we talk about it and we have the same concepts,
Speaker 3: and that is that societies start with a pact. They
Speaker 3: have an economic system that produces things, and then they
Speaker 3: have so that's the means of production, and then they
Speaker 3: have the property relations that split up the rewards. And
Speaker 3: when it starts out, and this would be say right
Speaker 3: after World War two or after the Civil War, it
Speaker 3: starts out that everybody kind of buys into how the
Speaker 3: system works. But there's a fundamental problem with this kind
Speaker 3: of duality of proper relations and the means of production.
Speaker 3: Means of production change in revolutionary ways steam engine, radio, television, telephone, internet, AI,
Speaker 3: they're just explosions of innovation. But the proper relations they
Speaker 3: don't change very quickly.
Speaker 1: In fact, they're.
Speaker 3: Barely evolutionary in the way they change, because over time
Speaker 3: there's this becomes a wealth inequality.
Speaker 1: Which which of course we're in an extreme where the
Speaker 1: people that benefit from the.
Speaker 3: The property relations they don't want them to change because
Speaker 3: they're winning.
Speaker 1: So when you have tremendous.
Speaker 3: Concentration of wealth and power, the proper relations become calcified,
Speaker 3: and meanwhile the means of production are causing all kinds
Speaker 3: of disruption and to make intensifying the wealth inequality.
Speaker 1: And then suddenly the whole thing says, this doesn't work.
Speaker 3: We have to get the proper relations to a right
Speaker 3: place where this isn't a feudal system where there's the lords.
Speaker 1: And the serfs.
Speaker 3: But that's what we have, and so we need to
Speaker 3: rejigger all of this stuff. And the treasury debt problem,
Speaker 3: the interest expense unaffordability is another offshoot of all this.
Speaker 3: It's all the same thing is that we need institutions
Speaker 3: that people believe in.
Speaker 2: We're almost at a time and I can speak with
Speaker 2: you for an hour, but I want to finish with
Speaker 2: the idea that is this United States problem or is
Speaker 2: this a global problem? Can you hide by going to
Speaker 2: invest in places like say Europe or Japan?
Speaker 3: You can, You can hie to a certain extent. I
Speaker 3: don't think it could become immune. I think the way
Speaker 3: to invest in periods like this, I think are to
Speaker 3: go with long term themes, and a long term theme
Speaker 3: that I think is one of the most bankable and
Speaker 3: it might take in thirty years this will be a
Speaker 3: great success. And that is you should buy. You should
Speaker 3: invest in India because India has a similar profile today
Speaker 3: to where China was thirty five years ago when they
Speaker 3: had tremendous population, labor force visibility of labor force growth,
Speaker 3: tremendous problems, a gummed up legal system.
Speaker 1: Corruption all over the place. But those are things that
Speaker 1: can be fixed. And you see what China went from
Speaker 1: one twelfth.
Speaker 3: Of the US GDP to seventy eighty percent of US
Speaker 3: GDP and they certainly produce more goods in the United States,
Speaker 3: so in a certain sense they're bigger. Well, India has
Speaker 3: the same demographic outlook as China did then, and India
Speaker 3: has a benefit for supply chain being moved around, for
Speaker 3: manufacturing can come there. They're very technology, they're not they
Speaker 3: have a long history of being a significant society. So
Speaker 3: I don't know how long it's going to take, but
Speaker 3: that's one that you buy and you just do yourself
Speaker 3: a favor and don't open the statement because if you do.
Speaker 1: When there's trouble, you're going to sell it right because
Speaker 1: it'll be down thirty percent.
Speaker 3: So just just hold it for your for your grandchildren's
Speaker 3: college fund, and that'll work.
Speaker 1: So there are places to hide. But I think gold is.
Speaker 3: It's proven to be a source of growth. If you
Speaker 3: were a bitcoin person, I would recommend instead of being
Speaker 3: a bitcoin person, you would take the same unit of
Speaker 3: volatility by buying gold and leveraging it probably twice. See
Speaker 3: it's interesting that gold has outperformed.
Speaker 1: Bitcoin here today even though bitcoin's done very well, and for.
Speaker 3: The last twelve months, bitcoin has outperformed gold, but they're
Speaker 3: both up forty plus percent. Those are the places to be,
Speaker 3: and then dollar based investors should be investing in foreign currencies.
Speaker 1: The S and P five hundred has stopped outperforming.
Speaker 3: The MSCI Europe and it's underperforming in a major way
Speaker 3: on a year to day basis. And that took a
Speaker 3: while to happen, but things always take longer than people think.
Speaker 3: But it's happening in real time. And the next one
Speaker 3: will be selected emerging market equities as as the United States,
Speaker 3: because the emerging markets will have the same benefit broadly
Speaker 3: as India does most specifically. But you also win on
Speaker 3: the currency translation if you're a dollar based investor, so.
Speaker 1: We are for the first time in a long time, starting.
Speaker 3: To introduce foreign currencies into our funds, even ones that
Speaker 3: are owned by dollar based investors.
Speaker 1: We're not all in.
Speaker 3: We want to see the dollar break through a certain
Speaker 3: trend line and resistance lines and stuff like that, but
Speaker 3: we're pretty close.
Speaker 2: Jeffrey Gunlock of Double Line Capital, thank you so much.
Speaker 1: It's a pleasure speaking with you.