1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,839 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. In 7 00:00:33,880 --> 00:00:36,000 Speaker 1: the past few weeks, you've seen a little bit of 8 00:00:36,000 --> 00:00:40,360 Speaker 1: caution in equities, not so much in credit. In fact, 9 00:00:40,560 --> 00:00:44,720 Speaker 1: investors are earning close to the lowest extra premium to 10 00:00:44,840 --> 00:00:49,120 Speaker 1: own junk bonds in the US relative to treasuries since 11 00:00:49,280 --> 00:00:53,479 Speaker 1: two thousand and seven. Here to talk with us about 12 00:00:53,600 --> 00:00:57,080 Speaker 1: that and when this could potentially shift? Is Shriny Dulipla 13 00:00:57,400 --> 00:01:01,840 Speaker 1: Deep Dulipola correct that, okay, Chief investment officer and founder 14 00:01:01,880 --> 00:01:04,600 Speaker 1: of killden in Castle Asset Management in it New York. 15 00:01:04,720 --> 00:01:06,920 Speaker 1: Tremely thank you so much for being here. What do 16 00:01:06,959 --> 00:01:08,800 Speaker 1: you make of this? Why is there such a risk 17 00:01:08,840 --> 00:01:11,440 Speaker 1: on environment right now? First of all, thanks for having 18 00:01:11,440 --> 00:01:15,000 Speaker 1: me over, Lisa, It's great to be here. Um, you know, 19 00:01:15,040 --> 00:01:18,399 Speaker 1: I think this trend kind of started really um, you know, 20 00:01:18,440 --> 00:01:22,880 Speaker 1: post the financial crisis, when basically the global central banks. Um, 21 00:01:22,920 --> 00:01:26,840 Speaker 1: you know, effectively moved rates from what we're basically neutral 22 00:01:26,920 --> 00:01:29,000 Speaker 1: rates of around five percent all the way to like 23 00:01:29,040 --> 00:01:34,640 Speaker 1: negative interest rates and that level of liquidity in the market. Um, 24 00:01:34,680 --> 00:01:38,080 Speaker 1: just effectively caused this huge influence of fixed income assets 25 00:01:38,120 --> 00:01:41,479 Speaker 1: and as a corollary into the highal market. And that 26 00:01:41,520 --> 00:01:44,679 Speaker 1: has effectively been playing out to this day. UM. You 27 00:01:44,720 --> 00:01:50,600 Speaker 1: know obviously, UM, you know, the fed a tailwind doesn't 28 00:01:50,600 --> 00:01:53,920 Speaker 1: exist anymore. UM. And you know these types of the 29 00:01:54,280 --> 00:02:00,720 Speaker 1: type of changes occur, you know, they meander, tell there 30 00:02:00,800 --> 00:02:04,320 Speaker 1: is a final cathartic event that causes a shift to 31 00:02:04,360 --> 00:02:08,360 Speaker 1: current to happen. So at this time, UM, you know 32 00:02:08,440 --> 00:02:12,600 Speaker 1: it is you know, it's it's to me, it's very 33 00:02:12,680 --> 00:02:16,600 Speaker 1: very surprising that spreads are holding where they are. Um. Um, 34 00:02:16,639 --> 00:02:19,240 Speaker 1: my guests, if I had to say something positive about 35 00:02:19,240 --> 00:02:22,480 Speaker 1: the credit markets, what I would say is the fundamentals 36 00:02:22,560 --> 00:02:25,880 Speaker 1: underlying the market are actually pretty good. What about the negative? 37 00:02:26,760 --> 00:02:30,160 Speaker 1: I think the biggest negative is really valuations. UM. You 38 00:02:30,200 --> 00:02:33,000 Speaker 1: know you are so to kind of put numbers onto 39 00:02:33,040 --> 00:02:36,280 Speaker 1: kind of what you said at the beginning, uh hwyal 40 00:02:36,360 --> 00:02:38,880 Speaker 1: markets are trading at a spread of about three sixty 41 00:02:38,880 --> 00:02:43,240 Speaker 1: basis points over treasuries. That is, as you very well mentioned, 42 00:02:43,240 --> 00:02:45,919 Speaker 1: like close to the all time types, which was basically 43 00:02:46,000 --> 00:02:48,880 Speaker 1: back in two thousand and seven. The difference in two 44 00:02:48,919 --> 00:02:52,480 Speaker 1: thousand and seven and now is rather marked, the biggest 45 00:02:52,480 --> 00:02:55,720 Speaker 1: being you know, the corporations are no longer as loved 46 00:02:55,760 --> 00:02:58,520 Speaker 1: as they were back then. Uh. You know, you actually 47 00:02:58,560 --> 00:03:01,680 Speaker 1: have a pretty robust economy. Global economy is growing at 48 00:03:02,080 --> 00:03:04,040 Speaker 1: I think the last time I checked time a forecast, 49 00:03:04,080 --> 00:03:05,920 Speaker 1: they've been kind of they keep ticking it up. It's 50 00:03:06,080 --> 00:03:09,919 Speaker 1: about three point nine pc now. Uh. You know, investors 51 00:03:09,919 --> 00:03:12,360 Speaker 1: are no longer all that leveraged either. So back in 52 00:03:12,400 --> 00:03:14,639 Speaker 1: the day, you had banks that were very leveraged. You 53 00:03:14,720 --> 00:03:19,000 Speaker 1: had hetge funds that were carrying thirty times to one leverage. Um. 54 00:03:19,040 --> 00:03:21,639 Speaker 1: So those are the positives. And as a result, I 55 00:03:21,680 --> 00:03:25,000 Speaker 1: would expect, uh, you know, all in coupon yields for 56 00:03:25,160 --> 00:03:27,360 Speaker 1: corporates have also kind of gone down a lot, so 57 00:03:27,400 --> 00:03:29,959 Speaker 1: in terms of interest coverage, that the the the corporates 58 00:03:29,960 --> 00:03:33,440 Speaker 1: look reasonably healthy. Um and you know, because of the 59 00:03:33,480 --> 00:03:36,040 Speaker 1: underlying economy, I would say that the default rates will 60 00:03:36,080 --> 00:03:39,360 Speaker 1: be reasonably lower. So that's the positive, and that would 61 00:03:39,360 --> 00:03:42,760 Speaker 1: that would probably explain why spreads trade where they do. Okay, 62 00:03:42,800 --> 00:03:45,600 Speaker 1: I'm assuming there's a negative here now. I think the 63 00:03:45,600 --> 00:03:48,760 Speaker 1: biggest negative, as I said, is valuations. Um, you know, 64 00:03:48,800 --> 00:03:51,760 Speaker 1: at three d sixty basis points over treasuries, you're just 65 00:03:51,960 --> 00:03:55,560 Speaker 1: not getting paid enough. You own the one second, if 66 00:03:55,560 --> 00:03:57,320 Speaker 1: I were hearing you right now, I would say this 67 00:03:57,440 --> 00:04:00,320 Speaker 1: is a bullish person who sees very limited down side 68 00:04:00,800 --> 00:04:03,320 Speaker 1: because it seems like a positive backdrop. But a prop 69 00:04:03,360 --> 00:04:06,360 Speaker 1: with valuations would that be accurate? No, I would say, 70 00:04:06,440 --> 00:04:10,160 Speaker 1: I'm actually the absolute opposite. This is the most cautious 71 00:04:10,200 --> 00:04:12,960 Speaker 1: I have been about credit. Um, you know, for the 72 00:04:13,040 --> 00:04:15,880 Speaker 1: simple reason. So, like, let's just step back, Like, you know, 73 00:04:15,960 --> 00:04:18,760 Speaker 1: what is a bond. A bond has two components to it. 74 00:04:18,920 --> 00:04:22,040 Speaker 1: Bond has an interest rate component and a spread component. 75 00:04:22,040 --> 00:04:26,360 Speaker 1: The spread component is effectively the risk component. And what 76 00:04:26,400 --> 00:04:29,520 Speaker 1: we just discussed, the fundamentals that are good kind of 77 00:04:29,560 --> 00:04:32,799 Speaker 1: explained why the spread component is trading at all time types. 78 00:04:32,839 --> 00:04:34,800 Speaker 1: And I think at this point it's kind of capped. 79 00:04:35,520 --> 00:04:37,719 Speaker 1: This is the all time tights and sure enough, you know, 80 00:04:37,760 --> 00:04:41,599 Speaker 1: the fundamentals look good. But the bigger issue with credit 81 00:04:42,040 --> 00:04:46,360 Speaker 1: is the interest rate component. Over the last thirty five years, 82 00:04:46,520 --> 00:04:49,920 Speaker 1: we've seen nothing but this uninterrupted rally and treasuries, which 83 00:04:49,960 --> 00:04:54,400 Speaker 1: has been the biggest tailwind to owning high yield. We 84 00:04:54,760 --> 00:04:57,120 Speaker 1: As as a portfolio manager, I never really had to 85 00:04:57,120 --> 00:05:00,120 Speaker 1: think about rates as a risk. This is really the 86 00:05:00,160 --> 00:05:03,760 Speaker 1: first time in a very very long time that rate 87 00:05:03,839 --> 00:05:06,599 Speaker 1: component is the one that is going to basically be 88 00:05:06,640 --> 00:05:09,080 Speaker 1: the biggest risk for our market. So if I want 89 00:05:09,080 --> 00:05:12,320 Speaker 1: to expand a little more into it, you know, uh, 90 00:05:12,680 --> 00:05:16,760 Speaker 1: that that very simply speaking, why do I feel negative 91 00:05:16,800 --> 00:05:19,800 Speaker 1: about credit? High credit deals roughly around six and a 92 00:05:19,880 --> 00:05:23,599 Speaker 1: quarter percent three month libor yields to and a quarter 93 00:05:23,640 --> 00:05:28,880 Speaker 1: percent to two point You now actually have a tremendous 94 00:05:28,920 --> 00:05:34,160 Speaker 1: competition from cash substitute instruments for uh, you know, rather 95 00:05:34,200 --> 00:05:37,039 Speaker 1: than owning high yield. So I think the biggest risk 96 00:05:37,080 --> 00:05:40,400 Speaker 1: to high yield I feel is liquidity risk. Um. You know, 97 00:05:40,440 --> 00:05:44,119 Speaker 1: I think over the last five to six years, there's 98 00:05:44,160 --> 00:05:48,080 Speaker 1: been a big proliferation of passive money you know, long 99 00:05:48,160 --> 00:05:51,120 Speaker 1: only uh. You know, people talk a lot about ets. 100 00:05:51,160 --> 00:05:53,760 Speaker 1: They have small percentage of the market, but overall about 101 00:05:53,800 --> 00:05:57,839 Speaker 1: half the market has a daily liquidity to it um. 102 00:05:57,920 --> 00:06:01,120 Speaker 1: And as a result, I feel like the next crisis 103 00:06:01,240 --> 00:06:03,280 Speaker 1: is not going to be an OA type of crisis. 104 00:06:03,720 --> 00:06:05,600 Speaker 1: You know, we're not going to have a spike in default. 105 00:06:06,480 --> 00:06:10,559 Speaker 1: The big worry is what is that interest rate where 106 00:06:10,680 --> 00:06:14,120 Speaker 1: people actually start to say, you know what, I'm just 107 00:06:14,160 --> 00:06:16,000 Speaker 1: not getting paid enough to be in high yield and 108 00:06:16,040 --> 00:06:19,880 Speaker 1: I want to move out. If investor here's what you're saying, 109 00:06:19,960 --> 00:06:23,239 Speaker 1: and buys your thesis and agrees also with Jamie Diamond 110 00:06:23,240 --> 00:06:26,000 Speaker 1: in his annual literature Shareholders, in which he said that 111 00:06:26,120 --> 00:06:29,599 Speaker 1: interest rates may go higher and faster than people expect. 112 00:06:30,480 --> 00:06:35,279 Speaker 1: What do you do right now? I think, um, you 113 00:06:35,320 --> 00:06:38,640 Speaker 1: know a couple of things. So one of the things 114 00:06:38,640 --> 00:06:43,040 Speaker 1: you can do is effectively go into low duration instruments. Unfortunately, 115 00:06:43,279 --> 00:06:45,479 Speaker 1: one of the beautiful things about you know, this low 116 00:06:45,520 --> 00:06:48,040 Speaker 1: interest rate environment we've had in high yield, these companies 117 00:06:48,080 --> 00:06:51,360 Speaker 1: have been able to turn out their debt, so there's 118 00:06:51,400 --> 00:06:54,359 Speaker 1: not a lot of low duration instruments left. But I 119 00:06:54,400 --> 00:06:56,279 Speaker 1: think this is as good as it gets for the 120 00:06:56,400 --> 00:06:59,000 Speaker 1: for the medium term. For term loans, you know what 121 00:06:59,000 --> 00:07:01,520 Speaker 1: what used to be some thing. So if you are 122 00:07:01,600 --> 00:07:05,560 Speaker 1: talking about an environment where um, um, you know where 123 00:07:05,560 --> 00:07:07,920 Speaker 1: default rates are going to be low, um, you know 124 00:07:08,800 --> 00:07:11,800 Speaker 1: a lot of the term loans, higher quality term loans 125 00:07:11,840 --> 00:07:14,119 Speaker 1: that really did not afford you a good amount of yield, 126 00:07:14,560 --> 00:07:17,120 Speaker 1: actually pay you some some yield to own that those 127 00:07:17,160 --> 00:07:21,600 Speaker 1: those look fine. But more importantly, I think I don't 128 00:07:21,720 --> 00:07:25,120 Speaker 1: mean to be completely negative on corporate credit and high 129 00:07:25,200 --> 00:07:29,520 Speaker 1: yield um. What has happened as a result of a 130 00:07:29,560 --> 00:07:34,040 Speaker 1: lot of proliferation of indexed money into this into the 131 00:07:34,080 --> 00:07:38,080 Speaker 1: market is you now have a market which is bifurcated 132 00:07:38,120 --> 00:07:41,120 Speaker 1: between haves and have not the very liquid credit I 133 00:07:41,160 --> 00:07:45,160 Speaker 1: think I would avoid. But one has to also accept 134 00:07:45,200 --> 00:07:47,480 Speaker 1: that there is a small subset of the market which 135 00:07:47,480 --> 00:07:52,800 Speaker 1: focuses on mid cap corporate credit which is generally under 136 00:07:53,000 --> 00:07:56,640 Speaker 1: underappreciated and under owned, where you can find a lot 137 00:07:56,680 --> 00:07:58,920 Speaker 1: of value. And you know, I think on the long side, 138 00:07:59,000 --> 00:08:02,400 Speaker 1: that's kind of what we prefer are And this one 139 00:08:02,520 --> 00:08:04,360 Speaker 1: last thing a plug about what I do. What I 140 00:08:04,360 --> 00:08:06,600 Speaker 1: will say is this is as good an environment as 141 00:08:06,640 --> 00:08:08,760 Speaker 1: I have seen for long short credit managers. So you 142 00:08:08,800 --> 00:08:13,480 Speaker 1: can be risk neutral uh and really make what I 143 00:08:13,520 --> 00:08:16,360 Speaker 1: would consider to be well about market recurrens without taking 144 00:08:16,360 --> 00:08:18,560 Speaker 1: too much risk. I want to thank you very much 145 00:08:18,640 --> 00:08:21,040 Speaker 1: for coming in and sharing your experience and your knowledge. 146 00:08:21,200 --> 00:08:25,200 Speaker 1: Shrine Duli Pala, founder of the credit hedge fund KILL 147 00:08:25,320 --> 00:08:44,480 Speaker 1: Donnan Castle Asset Management much appreciated a hundred million people. 148 00:08:44,600 --> 00:08:47,640 Speaker 1: Can they be wrong? Well, they're spending a hundred dollars 149 00:08:47,960 --> 00:08:51,280 Speaker 1: a year in order to be Amazon Prime subscribers. Shira 150 00:08:51,400 --> 00:08:54,280 Speaker 1: O v Day, Bloomberg, gad Fly Technology Commus may in 151 00:08:54,360 --> 00:08:57,640 Speaker 1: dB one of them. Shira, what do you make of 152 00:08:57,720 --> 00:09:02,959 Speaker 1: this revelation that a hundred million in Prime subscribers are 153 00:09:03,000 --> 00:09:07,440 Speaker 1: filling the coffers of Amazon with ten billion dollars a 154 00:09:07,520 --> 00:09:11,760 Speaker 1: year for the privilege of shopping. So it wasn't really 155 00:09:11,800 --> 00:09:15,480 Speaker 1: surprised by the number, but I was surprised that Amazon 156 00:09:15,679 --> 00:09:18,920 Speaker 1: disclosed the number. So let me break that down. So, Amazon, 157 00:09:19,040 --> 00:09:23,000 Speaker 1: for more than a year now has been disclosing the 158 00:09:23,080 --> 00:09:27,560 Speaker 1: revenue it generates from Amazon Prime and its other subscription 159 00:09:27,720 --> 00:09:30,920 Speaker 1: products like Audible, um, subscription models and things like that. 160 00:09:31,360 --> 00:09:34,880 Speaker 1: And thanks to that number, which Amazon was essentially forced 161 00:09:34,880 --> 00:09:38,480 Speaker 1: to reveal because the SEC has been pressuring them to 162 00:09:38,559 --> 00:09:41,360 Speaker 1: disclose the number of Prime members and Amazon has refused 163 00:09:41,360 --> 00:09:44,920 Speaker 1: to do so until recently until it gave the revenue disclosure. 164 00:09:45,240 --> 00:09:46,800 Speaker 1: So An also have been able to kind of back 165 00:09:46,840 --> 00:09:50,360 Speaker 1: out the approximate number of Amazon Prime members and it's 166 00:09:50,400 --> 00:09:52,400 Speaker 1: been pretty close to a hundred million if you look 167 00:09:52,440 --> 00:09:54,679 Speaker 1: at the numbers. The question for me again is why 168 00:09:54,720 --> 00:09:59,120 Speaker 1: didn Amazon pick now, of all times to disclose finally, 169 00:09:59,400 --> 00:10:03,280 Speaker 1: after years of silence, how many prime members it really has? 170 00:10:03,679 --> 00:10:05,959 Speaker 1: And I'm curious to know the answer and don't have one. 171 00:10:06,240 --> 00:10:10,360 Speaker 1: Another number that Amazon disclosed that you wrote about is 172 00:10:10,360 --> 00:10:12,720 Speaker 1: one that is less talked about, and that is the 173 00:10:12,760 --> 00:10:15,920 Speaker 1: median salary of people who work for Amazon. It is 174 00:10:16,000 --> 00:10:18,920 Speaker 1: less than thirty dollars. What is this due to the 175 00:10:19,040 --> 00:10:23,880 Speaker 1: narrative that Amazon is creating high quality jobs around the country. Look, 176 00:10:23,920 --> 00:10:27,200 Speaker 1: I think it's a great question, and there's been questions 177 00:10:27,240 --> 00:10:29,320 Speaker 1: for a long time that a lot of the jobs 178 00:10:29,360 --> 00:10:32,120 Speaker 1: that Amazon has created, and to be fair, this company 179 00:10:32,160 --> 00:10:35,600 Speaker 1: has hired hundreds of thousands of people in the last 180 00:10:35,640 --> 00:10:37,800 Speaker 1: few years, but there's been a big question about whether 181 00:10:37,800 --> 00:10:41,400 Speaker 1: a lot of those jobs are quality lasting jobs. Right 182 00:10:41,720 --> 00:10:45,640 Speaker 1: in Amazon, Um, those package sorting centers or package warehouses 183 00:10:45,679 --> 00:10:49,200 Speaker 1: that are dotted across the country. Uh, there have been 184 00:10:49,960 --> 00:10:53,240 Speaker 1: you know, reports about bad job conditions and and and 185 00:10:53,400 --> 00:10:57,679 Speaker 1: low pay for long hours and other ill treatment of workers. 186 00:10:58,080 --> 00:11:03,160 Speaker 1: So yeah, the revelation that the median compensation of an 187 00:11:03,160 --> 00:11:07,360 Speaker 1: Amazon employee is less than twenty nine thousand dollars. Uh, 188 00:11:07,520 --> 00:11:12,520 Speaker 1: that's an interesting piece of that debate about whether Amazon 189 00:11:13,440 --> 00:11:16,720 Speaker 1: Amazon creates jobs that are good jobs. Sure, just the 190 00:11:16,760 --> 00:11:20,040 Speaker 1: back of the envelope estimate. If you have a hundred 191 00:11:20,200 --> 00:11:23,920 Speaker 1: million subscribers to Amazon Prime paying a hundred dollars a year, 192 00:11:24,000 --> 00:11:26,800 Speaker 1: that's ten billion. If you have a hundred and twenty 193 00:11:26,840 --> 00:11:30,120 Speaker 1: five million people for Netflix of paying a hundred and 194 00:11:30,120 --> 00:11:34,920 Speaker 1: twenty a year, that's about a fifteen billion. Spotify seven, 195 00:11:35,040 --> 00:11:38,800 Speaker 1: I believe it's seventy million subscribers paying what maybe a 196 00:11:38,840 --> 00:11:42,959 Speaker 1: hundred a year for Uh, let's call it a hundred 197 00:11:43,040 --> 00:11:47,120 Speaker 1: year for Spotify, that's another seven big that's thirty two 198 00:11:47,120 --> 00:11:51,120 Speaker 1: billion dollars for people to just get entertainment. Uh. Is 199 00:11:51,160 --> 00:11:56,920 Speaker 1: that enough to sustain the valuations of these businesses? Well, 200 00:11:57,360 --> 00:12:00,040 Speaker 1: I mean, look of those companies that you men s 201 00:12:00,160 --> 00:12:04,080 Speaker 1: and uh, you know, Amazon does not generate the biggest 202 00:12:04,160 --> 00:12:07,640 Speaker 1: chunk of its revenue from subscriptions, right That Prime is 203 00:12:07,720 --> 00:12:12,720 Speaker 1: sort of this genius idea that costco also uses, right, 204 00:12:12,720 --> 00:12:14,880 Speaker 1: where you pay a company for the privilege of spending 205 00:12:14,880 --> 00:12:18,320 Speaker 1: more money at the company throughout the year. Um, Amazon 206 00:12:18,360 --> 00:12:22,800 Speaker 1: Web services though, and things like advertising potentially for Amazon. Yeah, 207 00:12:22,800 --> 00:12:26,000 Speaker 1: fair enough. Um, you know, Netflix and Spotify are both 208 00:12:26,400 --> 00:12:29,960 Speaker 1: highly valued companies that exist only on subscriptions. And look, 209 00:12:30,240 --> 00:12:33,880 Speaker 1: the business model of cable and telecom companies is also 210 00:12:33,920 --> 00:12:36,360 Speaker 1: to sell subscriptions, and those are again some of the 211 00:12:36,480 --> 00:12:40,120 Speaker 1: largest UM and and companies in the world and also 212 00:12:40,160 --> 00:12:43,560 Speaker 1: highly profitable. So yeah, you can sell subscriptions to things, 213 00:12:43,600 --> 00:12:46,679 Speaker 1: whether it's entertainment or telecom services, and that is a 214 00:12:46,800 --> 00:12:49,760 Speaker 1: very viable business for a lot of companies. So, just 215 00:12:49,800 --> 00:12:52,439 Speaker 1: to put this new perspective, Amazon shares today up one 216 00:12:52,480 --> 00:12:55,599 Speaker 1: and a half percent, following gains in the past three sessions. 217 00:12:56,120 --> 00:12:59,240 Speaker 1: Not so happy over in Apple Lands, And I do 218 00:12:59,280 --> 00:13:01,160 Speaker 1: want to touch in this because this is catching a 219 00:13:01,160 --> 00:13:04,520 Speaker 1: lot of people's attention. Shares down more than two per cent, 220 00:13:04,920 --> 00:13:09,080 Speaker 1: and some people are attributing this to mounting concerns about 221 00:13:09,080 --> 00:13:13,439 Speaker 1: waning smartphone demand. We talked about this not frequently. Um, 222 00:13:13,640 --> 00:13:15,800 Speaker 1: why are people suddenly worried about this now because this 223 00:13:15,840 --> 00:13:20,319 Speaker 1: has been known forever. Yes, it's a it's a fair question. 224 00:13:20,360 --> 00:13:23,480 Speaker 1: I mean the there has been this kind of the 225 00:13:23,559 --> 00:13:28,240 Speaker 1: same exercise happened before Apple's last earnings report, which was 226 00:13:28,880 --> 00:13:32,360 Speaker 1: I think there was some over optimism about the sales 227 00:13:32,400 --> 00:13:35,800 Speaker 1: potentials of the iPhone ten and other new Apple devices. 228 00:13:36,000 --> 00:13:38,640 Speaker 1: And then you saw in the weeks before Apple reported 229 00:13:38,679 --> 00:13:41,480 Speaker 1: December quarter earnings that analysts started to pair back their 230 00:13:41,520 --> 00:13:45,000 Speaker 1: expectations and that turned out to be smart um. And 231 00:13:45,040 --> 00:13:48,079 Speaker 1: again we're seeing a very similar exercise this year. Look, 232 00:13:48,520 --> 00:13:51,360 Speaker 1: I think everyone in the investment world, if not inside 233 00:13:51,400 --> 00:13:54,680 Speaker 1: of the Cupertino headquarters of Apple, is coming to realize 234 00:13:54,720 --> 00:13:57,320 Speaker 1: that this is a new reality for Apple, which is 235 00:13:57,840 --> 00:14:00,680 Speaker 1: it's getting harder and harder for them to sell more 236 00:14:00,679 --> 00:14:03,840 Speaker 1: iPhones every year. If you look at the analyst estimates 237 00:14:03,880 --> 00:14:08,240 Speaker 1: of iPhone sales this year, they're expected to interrupt a 238 00:14:08,240 --> 00:14:10,800 Speaker 1: few percentage points. And remember this is a year when 239 00:14:11,800 --> 00:14:14,040 Speaker 1: a year ago everybody expected there to be this big 240 00:14:14,040 --> 00:14:16,760 Speaker 1: boon from the iPhone tan and other new devices that 241 00:14:16,800 --> 00:14:19,160 Speaker 1: come on the market. That's not going to happen. So 242 00:14:19,320 --> 00:14:22,440 Speaker 1: there's been this kind of re imagination of what Apple 243 00:14:22,480 --> 00:14:24,440 Speaker 1: really is. So it's not a company that is going 244 00:14:24,480 --> 00:14:28,480 Speaker 1: to rely on growth in unit sales of iPhones. Instead, 245 00:14:28,520 --> 00:14:30,520 Speaker 1: it's going to need to charge more for those devices, 246 00:14:30,600 --> 00:14:32,880 Speaker 1: is going to need to sell ancillary products like the 247 00:14:32,920 --> 00:14:35,680 Speaker 1: home pod and the air POD's headphones, and that's the 248 00:14:35,720 --> 00:14:38,320 Speaker 1: way that Apple is going to keep growing. Now that 249 00:14:38,680 --> 00:14:41,600 Speaker 1: the easy growth of I can just sell more iPhones 250 00:14:41,640 --> 00:14:44,960 Speaker 1: every year, that that story is over. So people are 251 00:14:44,960 --> 00:14:46,600 Speaker 1: waking up to that and they're getting a little bit 252 00:14:46,600 --> 00:14:50,280 Speaker 1: nervous or perhaps just setting some risk ahead of earning. Sarah, 253 00:14:50,920 --> 00:14:52,680 Speaker 1: thank you so much for being with us. We love 254 00:14:52,720 --> 00:14:56,080 Speaker 1: having you on Shara Ovida Bloomberg Gadfly columnists covering all 255 00:14:56,240 --> 00:15:00,880 Speaker 1: things tech, talking about what's going on with Amazon dot Com. 256 00:15:00,960 --> 00:15:05,040 Speaker 1: It was surprising how low the median salary was, less 257 00:15:05,080 --> 00:15:08,520 Speaker 1: than twenty nine dollars apiece, fifty nine times less than 258 00:15:08,560 --> 00:15:28,200 Speaker 1: what Jeff Bezos took home. Definitely interesting. The price of gold. 259 00:15:28,440 --> 00:15:31,280 Speaker 1: An ounce of gold right now will cost you about 260 00:15:32,280 --> 00:15:36,120 Speaker 1: and four dollars, But what will it cost you, let's say, 261 00:15:36,160 --> 00:15:38,920 Speaker 1: in the next twelve months. Here to help us understand 262 00:15:39,000 --> 00:15:41,400 Speaker 1: the ins and outs and the ups and downs of 263 00:15:41,400 --> 00:15:43,840 Speaker 1: gold is Frank Holmes. He is the chief executive and 264 00:15:43,880 --> 00:15:47,280 Speaker 1: the chief investment officer for US Global Investors. They are 265 00:15:47,280 --> 00:15:50,840 Speaker 1: based in San Antonio, Texas, but he joins us here 266 00:15:50,840 --> 00:15:53,200 Speaker 1: in our eleven three oh studios. Frank, always a pleasure. 267 00:15:53,200 --> 00:15:55,480 Speaker 1: Thanks for coming in. I want to just mention also 268 00:15:55,520 --> 00:15:58,120 Speaker 1: that you men helped to manage the Golden Precious Metals 269 00:15:58,320 --> 00:16:04,160 Speaker 1: Fund U s r X give us your outlook for gold. Well, 270 00:16:04,160 --> 00:16:06,680 Speaker 1: I think that gold has a high probability of hitting 271 00:16:06,680 --> 00:16:10,320 Speaker 1: fire this year. Uh. And the double combo with that, 272 00:16:10,400 --> 00:16:13,240 Speaker 1: with that fear trade is just a weaker dollar even 273 00:16:13,400 --> 00:16:16,960 Speaker 1: the rates have been rising, and that's helping actually fuel 274 00:16:17,080 --> 00:16:21,040 Speaker 1: global economic growth and as leading to this commodity boom 275 00:16:22,080 --> 00:16:24,920 Speaker 1: because you're getting this this great export of our high 276 00:16:25,000 --> 00:16:28,800 Speaker 1: end products and using of commodities. And the other part 277 00:16:28,840 --> 00:16:30,800 Speaker 1: of this is the love trade. And you find that 278 00:16:30,880 --> 00:16:34,360 Speaker 1: when which is six all demand for gold, and it's 279 00:16:34,480 --> 00:16:37,120 Speaker 1: highly correlated to the g d P per capita of 280 00:16:37,320 --> 00:16:41,320 Speaker 1: China and India and their GDP capita continues to rise. 281 00:16:41,760 --> 00:16:43,240 Speaker 1: And this is the year of the Dog, and there's 282 00:16:43,240 --> 00:16:49,000 Speaker 1: gonna be a lossle of gold puppies purchased. Coward, Okay, 283 00:16:49,040 --> 00:16:52,440 Speaker 1: so people are going to be purchasing gold puppies. Is 284 00:16:52,480 --> 00:16:54,400 Speaker 1: that the main driver here of the price of gold? 285 00:16:54,440 --> 00:16:57,960 Speaker 1: Because gold has been a very confusing asset class and 286 00:16:58,320 --> 00:17:01,360 Speaker 1: a lot of people have been expecting it to gain 287 00:17:01,400 --> 00:17:06,159 Speaker 1: as people I inflation. Now people are ratcheting back inflation expectations. 288 00:17:06,480 --> 00:17:09,159 Speaker 1: What's the main driver here, Well, the inflation is no 289 00:17:09,200 --> 00:17:12,240 Speaker 1: doubt and important issue because the concern is that if 290 00:17:12,280 --> 00:17:16,600 Speaker 1: you use factors to to look at the cost of inflation, 291 00:17:16,680 --> 00:17:19,320 Speaker 1: inflation is running at eight percent. If you use nineteen 292 00:17:19,359 --> 00:17:22,480 Speaker 1: eighty prices, inflation is pushing close to ten percent. So 293 00:17:22,560 --> 00:17:26,920 Speaker 1: there's an argument that inflation is actually understate it. And 294 00:17:27,000 --> 00:17:29,880 Speaker 1: we're just talking about this is the cost for cell 295 00:17:29,960 --> 00:17:33,520 Speaker 1: phones and mobile technology, all this stuff. It's really creeping 296 00:17:33,600 --> 00:17:36,400 Speaker 1: up much faster than two point seven percent or three 297 00:17:36,400 --> 00:17:40,320 Speaker 1: point one percent. So I think in the airlines industry, 298 00:17:40,359 --> 00:17:42,720 Speaker 1: one reason why I created jets because I saw my 299 00:17:42,760 --> 00:17:46,399 Speaker 1: options to fly had fallen by but my ticket prices 300 00:17:46,400 --> 00:17:51,720 Speaker 1: went up, and that's inflationary. So I think that inflation 301 00:17:51,840 --> 00:17:53,920 Speaker 1: is going to I believe the New York Fed has 302 00:17:53,960 --> 00:17:57,040 Speaker 1: a different inflationary number. It's higher than the CPI number, 303 00:17:57,320 --> 00:18:00,000 Speaker 1: and I think as people reassess this, the factors behind 304 00:18:00,040 --> 00:18:03,360 Speaker 1: ended inflation is probably running closer to over five. So 305 00:18:03,400 --> 00:18:06,760 Speaker 1: we actually have real negative interest rates under that scenario, 306 00:18:07,359 --> 00:18:11,000 Speaker 1: and that bodes well for a gold Frank, I want 307 00:18:11,000 --> 00:18:12,760 Speaker 1: to cast your mind back out on the movie you 308 00:18:12,880 --> 00:18:15,000 Speaker 1: call in nineteen I guess it was the mid nine 309 00:18:15,680 --> 00:18:19,640 Speaker 1: ninety six. There was something called e gold and it's 310 00:18:19,640 --> 00:18:22,520 Speaker 1: been written about as the precursor to cryptocurrencies. It was 311 00:18:22,560 --> 00:18:26,960 Speaker 1: basically a digital currency that was back by gold. Governments 312 00:18:26,960 --> 00:18:30,720 Speaker 1: around the world did not like this. Uh. In fact, 313 00:18:30,760 --> 00:18:33,359 Speaker 1: I believe there was even an application that was written 314 00:18:33,400 --> 00:18:37,280 Speaker 1: for the pomp pilot in order to track e gold. 315 00:18:37,520 --> 00:18:42,440 Speaker 1: Do you believe that the popularity of cryptocurrencies is having 316 00:18:42,440 --> 00:18:46,240 Speaker 1: a dampening effect, perhaps even temporarily on the on the 317 00:18:46,280 --> 00:18:49,280 Speaker 1: price of gold. No, I don't. I think what's really 318 00:18:49,320 --> 00:18:52,040 Speaker 1: important in my journey of going into that space. I'm 319 00:18:52,040 --> 00:18:55,600 Speaker 1: a chairman of high blockchain, first company mining these coins 320 00:18:56,040 --> 00:19:00,879 Speaker 1: in Sweden and Iceland. Uh. And I think that that 321 00:19:01,000 --> 00:19:04,440 Speaker 1: you saw five billion dollars last year go into these 322 00:19:04,440 --> 00:19:08,399 Speaker 1: new I c o s and that's speculative money. And 323 00:19:08,480 --> 00:19:11,399 Speaker 1: the regulatory world has basically said you cannot speculate in 324 00:19:11,440 --> 00:19:14,680 Speaker 1: the securities market. Uh. You want to speculate, go to casinos, 325 00:19:14,680 --> 00:19:18,240 Speaker 1: buy lottery tickets, to go to racetrack. So the millennials, 326 00:19:18,760 --> 00:19:21,200 Speaker 1: they want to speculate, and that's what that's money is. 327 00:19:21,280 --> 00:19:25,040 Speaker 1: It's really gone into speculation. Uh. And now there's a 328 00:19:25,080 --> 00:19:27,639 Speaker 1: crackdown taking place because some of the stuff was not 329 00:19:27,720 --> 00:19:31,000 Speaker 1: full true plane autonomy. Disclosure. But I really think that's 330 00:19:31,040 --> 00:19:34,280 Speaker 1: five billion dollars that never went into new expiration for 331 00:19:34,400 --> 00:19:38,320 Speaker 1: gold or new technology that normally would you see going 332 00:19:38,320 --> 00:19:42,040 Speaker 1: into the capital markets. I'm just wondering what would have 333 00:19:42,080 --> 00:19:46,760 Speaker 1: to happen for you to dramatically change your outlook on gold. Well, 334 00:19:46,840 --> 00:19:50,040 Speaker 1: first of all, stand back at fifty thou feet, get 335 00:19:50,040 --> 00:19:53,359 Speaker 1: an airplane. Gold is you know gold has always been 336 00:19:53,640 --> 00:19:56,959 Speaker 1: advocated ten percent, waiting rebalance each year. And why is that? 337 00:19:57,000 --> 00:20:01,040 Speaker 1: Since your two thousand gold is two times the appreciation 338 00:20:01,080 --> 00:20:04,119 Speaker 1: of the SMP five two times and last year it 339 00:20:04,160 --> 00:20:07,119 Speaker 1: was up, that's not bad. So I give you a 340 00:20:07,160 --> 00:20:09,320 Speaker 1: short term or long term. Gold is done what it's 341 00:20:09,320 --> 00:20:13,040 Speaker 1: supposed to do in an overall portfolio against currency volatility. 342 00:20:13,520 --> 00:20:16,359 Speaker 1: So from that end, until I see something else take place, 343 00:20:16,640 --> 00:20:19,520 Speaker 1: I don't think gold is a fourth most liquid UH 344 00:20:19,680 --> 00:20:22,800 Speaker 1: asset class trade in the world. I think that gold 345 00:20:22,840 --> 00:20:25,760 Speaker 1: has its place in a portfolio. But don't buy gold 346 00:20:25,760 --> 00:20:28,640 Speaker 1: to get rich. Yeah, you go and buy it for love, 347 00:20:28,720 --> 00:20:31,280 Speaker 1: for jewelry, or you buy for your portfolio because it 348 00:20:31,400 --> 00:20:35,600 Speaker 1: does mitigate volatility and it's a de risks overall portfolio. 349 00:20:36,080 --> 00:20:39,560 Speaker 1: What about investing in gold company in companies that have 350 00:20:40,040 --> 00:20:44,720 Speaker 1: royalty streams from gold. My favorite is a superior business model. 351 00:20:45,080 --> 00:20:46,960 Speaker 1: I mean, just think of it. Franko Nevada has the 352 00:20:47,040 --> 00:20:50,960 Speaker 1: royalties on Barrick and Newmont's assets in Nevada, and their 353 00:20:51,160 --> 00:20:53,840 Speaker 1: revenue per employee is a half a million dollars for 354 00:20:53,840 --> 00:20:58,120 Speaker 1: for simplicity, and Franque Nevada is twenty one million. I mean, 355 00:20:58,560 --> 00:21:01,439 Speaker 1: Goldman Sacks is one million to alors. So the efficiency 356 00:21:01,560 --> 00:21:04,960 Speaker 1: ratio is so high. They have very some do they 357 00:21:05,000 --> 00:21:07,760 Speaker 1: have a hit to book value. They pay more dividends FRANKL. 358 00:21:07,840 --> 00:21:10,439 Speaker 1: Nevada than all any other gold mining company in the world. 359 00:21:10,920 --> 00:21:14,919 Speaker 1: So it just goes to superior business model. All right, 360 00:21:14,960 --> 00:21:17,359 Speaker 1: We're gonna leave it there, Thanks very much, Frank Holmes. 361 00:21:17,640 --> 00:21:20,800 Speaker 1: He is the chief executive and the chief investment officer 362 00:21:20,880 --> 00:21:25,280 Speaker 1: for US Global Investors, managing the Gold and Precious Metals 363 00:21:25,280 --> 00:21:43,679 Speaker 1: Fund U s e r X. We have heard a 364 00:21:43,720 --> 00:21:49,520 Speaker 1: lot about possible sanctions on Russia. Will President Trump issue more? 365 00:21:50,040 --> 00:21:53,680 Speaker 1: Looks like perhaps not. To make some sense of all 366 00:21:53,680 --> 00:21:55,080 Speaker 1: of this back and forth, I want to bring in 367 00:21:55,160 --> 00:21:58,720 Speaker 1: Richard Kahn, managing partner at Eurasia Advisors, which is based 368 00:21:58,840 --> 00:22:03,080 Speaker 1: in New York, and Richard has vast technicles, working with 369 00:22:03,280 --> 00:22:06,920 Speaker 1: Russian businesses and Russian and US alliances, So he is 370 00:22:06,960 --> 00:22:10,720 Speaker 1: a perfect person awagh in on this. Uh does this matter? First? 371 00:22:10,760 --> 00:22:13,440 Speaker 1: I should ask should we even be talking about sort 372 00:22:13,480 --> 00:22:15,919 Speaker 1: of the will will the US or won't the US 373 00:22:16,240 --> 00:22:21,479 Speaker 1: add sanctions to Russia? Well? Thanks, Lisa. I think certainly 374 00:22:21,480 --> 00:22:23,800 Speaker 1: it should be on our minds because it goes to 375 00:22:23,840 --> 00:22:27,080 Speaker 1: the issues of how we view the Trump administration and 376 00:22:27,960 --> 00:22:32,320 Speaker 1: their relationship with Russia. Um. But I you know, in 377 00:22:32,359 --> 00:22:34,920 Speaker 1: my view, that's if you will, a side show to 378 00:22:35,000 --> 00:22:39,840 Speaker 1: the main events which relate to investigation looking for evidence 379 00:22:39,880 --> 00:22:43,639 Speaker 1: of interference and links and coordination with Russia, which is 380 00:22:43,680 --> 00:22:47,080 Speaker 1: what Mueller is looking at. Now. This is potentially, at 381 00:22:47,119 --> 00:22:52,960 Speaker 1: least in some people's mind, evidence of proclivity to favor 382 00:22:53,040 --> 00:22:56,360 Speaker 1: Russia and perhaps evidence that Russia remains in a position 383 00:22:56,359 --> 00:22:59,800 Speaker 1: to affect Trump. Just to be clear, the fact that 384 00:23:00,040 --> 00:23:03,600 Speaker 1: President Trump seemingly walked back what Nicki Haley had said 385 00:23:03,680 --> 00:23:06,920 Speaker 1: earlier about possible additional sanctions is that what you're talking about. 386 00:23:07,080 --> 00:23:09,800 Speaker 1: I am referring to that. It certainly plays into that narrative. 387 00:23:09,960 --> 00:23:12,879 Speaker 1: Of course, there may be other explanations for it, but 388 00:23:12,960 --> 00:23:16,199 Speaker 1: this is part of a pattern of Trump from the 389 00:23:16,280 --> 00:23:19,919 Speaker 1: very early stages of his campaign of making nice with 390 00:23:20,119 --> 00:23:23,800 Speaker 1: Putin and being unwilling to take on Russia as he 391 00:23:23,840 --> 00:23:27,760 Speaker 1: has taken on many other countries, particularly some of our allies. Richard, 392 00:23:27,760 --> 00:23:29,960 Speaker 1: I wonder if you could just give us the perspective 393 00:23:30,240 --> 00:23:32,960 Speaker 1: of what it's like to be in Russia at the 394 00:23:33,000 --> 00:23:35,800 Speaker 1: current moment. I mean, if you go online, you can 395 00:23:35,840 --> 00:23:39,600 Speaker 1: see a variety of photographs around the Internet showing a 396 00:23:39,600 --> 00:23:43,520 Speaker 1: lot of food that has been banned because of Russian 397 00:23:43,600 --> 00:23:47,720 Speaker 1: retaliation to Western sanctions. The food being banned is then 398 00:23:47,800 --> 00:23:51,520 Speaker 1: destroyed in landfills, and indeed, even the Russian cabinet is 399 00:23:51,560 --> 00:23:55,040 Speaker 1: said to consider a special agency in order to counter 400 00:23:55,240 --> 00:23:59,359 Speaker 1: foreign sanctions. What are the sanctions doing to the daily 401 00:23:59,440 --> 00:24:03,080 Speaker 1: lives of Russians and what do they hear about the 402 00:24:03,160 --> 00:24:05,520 Speaker 1: back and forth between because it's not just the United 403 00:24:05,560 --> 00:24:09,040 Speaker 1: States and sanctions, it's many other countries. Well, First, I 404 00:24:09,640 --> 00:24:11,960 Speaker 1: note the sort of the little joke that was making 405 00:24:12,000 --> 00:24:14,920 Speaker 1: a rounds a while back that Puttin and Medvede felt 406 00:24:14,920 --> 00:24:18,000 Speaker 1: really upset about, you know, being left out in connection 407 00:24:18,040 --> 00:24:20,520 Speaker 1: with Russian sanctions, so they decided to put sanctions on 408 00:24:20,600 --> 00:24:24,920 Speaker 1: Russia as well. Uh and uh, and that was accomplished. 409 00:24:25,000 --> 00:24:28,000 Speaker 1: Of course, I'm referring to what you just mentioned, which 410 00:24:28,080 --> 00:24:31,680 Speaker 1: is the restriction of imports into Russia, which is obviously 411 00:24:31,840 --> 00:24:35,960 Speaker 1: very harmful to to the Russian people themselves. Look, you know, 412 00:24:36,760 --> 00:24:40,600 Speaker 1: Russia is a very different structure in nation than than ours, 413 00:24:40,680 --> 00:24:44,280 Speaker 1: is very different history, Their relationship with their government is 414 00:24:44,400 --> 00:24:47,240 Speaker 1: totally different, and they you know, as a country, they 415 00:24:47,280 --> 00:24:50,720 Speaker 1: tend to think more in terms of supporting the state 416 00:24:51,160 --> 00:24:53,600 Speaker 1: and that that's sort of what the country is about, 417 00:24:53,760 --> 00:24:56,040 Speaker 1: rather than the more of a US model where we 418 00:24:56,560 --> 00:25:00,800 Speaker 1: these historically have viewed our public representatives as representing US 419 00:25:00,800 --> 00:25:04,240 Speaker 1: in the country being about the citizens. So they are 420 00:25:04,320 --> 00:25:08,320 Speaker 1: generally speaking very supportive of their government and the no 421 00:25:08,320 --> 00:25:11,159 Speaker 1: matter what is done in the West, the governments in 422 00:25:11,200 --> 00:25:14,000 Speaker 1: an ideal position due to its control of media, etcetera. 423 00:25:14,040 --> 00:25:16,840 Speaker 1: To present that as an attack on Russia, it's been 424 00:25:16,880 --> 00:25:20,280 Speaker 1: a constant theme in Russian history. So, you know, Russia 425 00:25:20,359 --> 00:25:22,520 Speaker 1: is now in a mode where, at least as I 426 00:25:22,560 --> 00:25:27,520 Speaker 1: see it, they're really often playing uh, tactics of a 427 00:25:27,600 --> 00:25:31,479 Speaker 1: rogue state. And I don't think that's something they wanted 428 00:25:31,640 --> 00:25:35,920 Speaker 1: to do back even even five six years or so ago. 429 00:25:36,359 --> 00:25:38,880 Speaker 1: But I think they're pretty firmly ingrained in that now, 430 00:25:38,920 --> 00:25:42,280 Speaker 1: and I do believe they're looking to at some point trade, 431 00:25:42,640 --> 00:25:45,120 Speaker 1: if you will, to leverage their gaining by playing that 432 00:25:45,200 --> 00:25:48,440 Speaker 1: role to perhaps over time get back into a more 433 00:25:48,440 --> 00:25:51,320 Speaker 1: normal relationship in the West. But from their perspective, both 434 00:25:51,359 --> 00:25:54,160 Speaker 1: the citizens and the government, they feel that we call 435 00:25:54,280 --> 00:25:56,119 Speaker 1: the tune here, that would be their way of looking 436 00:25:56,119 --> 00:25:59,440 Speaker 1: at it, that we've pushed them into this corner. Uh. 437 00:25:59,600 --> 00:26:02,600 Speaker 1: They see either you know, retaliation through interference and in 438 00:26:02,640 --> 00:26:05,640 Speaker 1: the election, trying to get people more amenable to better 439 00:26:05,680 --> 00:26:08,960 Speaker 1: relations with them as appropriate. Um, they're not going to 440 00:26:09,000 --> 00:26:11,240 Speaker 1: admit they did it, but certainly they know it well. 441 00:26:11,280 --> 00:26:13,359 Speaker 1: I do have to wonder. I mean, so the Moller 442 00:26:13,400 --> 00:26:17,480 Speaker 1: investigation and President Trump's relationship with Russia is one thing. 443 00:26:17,760 --> 00:26:21,399 Speaker 1: Arguably some events that have been much more important to 444 00:26:21,600 --> 00:26:24,360 Speaker 1: world peace is what's going on in Syria and Russia's 445 00:26:24,359 --> 00:26:28,879 Speaker 1: involvement there. Recently Russia saying that perhaps it will supply 446 00:26:29,000 --> 00:26:33,000 Speaker 1: Syria with state of the art air defense, which has 447 00:26:33,600 --> 00:26:38,439 Speaker 1: rung some alarms, Uh, particularly in Israel. How concerning is 448 00:26:38,480 --> 00:26:42,600 Speaker 1: all of this and Russia's involvement in the Syrian conflict. Look, 449 00:26:42,760 --> 00:26:44,800 Speaker 1: it's a huge problem. I just returned from a meeting 450 00:26:44,880 --> 00:26:48,800 Speaker 1: of the Crisis Group in UH in Berlin, where you know, 451 00:26:48,880 --> 00:26:51,560 Speaker 1: the subject of the Russia's involvement both in Syria and 452 00:26:51,600 --> 00:26:53,600 Speaker 1: in other parts of the world and the role they're 453 00:26:53,600 --> 00:26:56,159 Speaker 1: playing is is a big part of a conversation, as 454 00:26:56,200 --> 00:27:00,600 Speaker 1: well as the inability of the Trump admen Llustration to 455 00:27:00,640 --> 00:27:03,520 Speaker 1: interact in a manner that we in the US can 456 00:27:03,520 --> 00:27:07,680 Speaker 1: trust and be certain what their interests are. It dramatically 457 00:27:07,680 --> 00:27:11,520 Speaker 1: complicates the game and it's truly a frightening dynamic to have, 458 00:27:12,280 --> 00:27:15,080 Speaker 1: you know, our forces in such proximity with Russia with 459 00:27:15,800 --> 00:27:19,280 Speaker 1: different saber rattling. You know, Trump is engaged with that. Uh. 460 00:27:19,680 --> 00:27:22,280 Speaker 1: We have had instances, as you know, in the history 461 00:27:22,320 --> 00:27:27,080 Speaker 1: of the Cold War, where there were real risks of conflict, 462 00:27:27,080 --> 00:27:31,400 Speaker 1: including nuclear conflict, which were averted by individuals making key decisions. 463 00:27:31,400 --> 00:27:33,720 Speaker 1: There three or four instances of that. We don't want 464 00:27:33,720 --> 00:27:38,600 Speaker 1: to be in postures where we're enhancing the risk of conflict. 465 00:27:38,680 --> 00:27:42,640 Speaker 1: We should instead be you know, trying to minimize those situations. 466 00:27:42,720 --> 00:27:44,679 Speaker 1: And uh, you know, I don't have a sense that 467 00:27:44,720 --> 00:27:48,879 Speaker 1: Trump currently has a particular strategy in Syria. Uh. I 468 00:27:48,920 --> 00:27:53,040 Speaker 1: think it's generally a pr sort of play on his part. Uh, 469 00:27:53,320 --> 00:27:55,960 Speaker 1: So is it something I worry about, Yes, constantly having 470 00:27:55,960 --> 00:27:58,320 Speaker 1: that type of dynamic with all of our forces there 471 00:27:58,880 --> 00:28:00,720 Speaker 1: we already had, by the way, as you know, a 472 00:28:00,760 --> 00:28:04,879 Speaker 1: situation where we ended up killing two hundred Russians, you know, 473 00:28:04,920 --> 00:28:07,280 Speaker 1: when they attacked you know, one of our you know, 474 00:28:07,640 --> 00:28:10,040 Speaker 1: one of our bases. That was played down by both 475 00:28:10,040 --> 00:28:12,679 Speaker 1: the US and Russia. But I think most of us 476 00:28:12,680 --> 00:28:15,320 Speaker 1: would agree this is not a healthy situation, and we 477 00:28:15,359 --> 00:28:17,199 Speaker 1: want to have some adults in the room trying to 478 00:28:17,240 --> 00:28:20,080 Speaker 1: deal with that and take it out of domestic US politics. 479 00:28:21,000 --> 00:28:22,639 Speaker 1: I just also want to note that you are the 480 00:28:22,680 --> 00:28:27,040 Speaker 1: author of a new book. It is uh really about 481 00:28:27,640 --> 00:28:29,520 Speaker 1: a topic that many people are interested in. It is 482 00:28:29,560 --> 00:28:33,080 Speaker 1: called The Earthbound Parent, How and Why to raise your 483 00:28:33,200 --> 00:28:37,679 Speaker 1: Little Angels without religion. So congratulations on the production of 484 00:28:37,720 --> 00:28:40,920 Speaker 1: your of your new book about the science and uh 485 00:28:41,080 --> 00:28:44,680 Speaker 1: using that as part of an educational foundation. Thanks Pim. 486 00:28:44,720 --> 00:28:48,920 Speaker 1: It is tied into these very concepts of of the role, 487 00:28:48,960 --> 00:28:52,040 Speaker 1: if you will, of principle over loyalty m and how 488 00:28:52,040 --> 00:28:55,000 Speaker 1: that ties into religious upbringing. And so it does tie in, 489 00:28:55,000 --> 00:28:58,240 Speaker 1: if you will, with these political discussions. But at his heart, 490 00:28:58,360 --> 00:29:01,520 Speaker 1: it's a book that's you know, suggesting to parents in 491 00:29:01,560 --> 00:29:04,840 Speaker 1: a gentle way that they consider the benefits of raising children, 492 00:29:04,880 --> 00:29:08,640 Speaker 1: certainly without the supernatural, to be critical thinkers rather too 493 00:29:09,080 --> 00:29:12,360 Speaker 1: than embracing delusional concepts that can sort of set their 494 00:29:12,400 --> 00:29:14,560 Speaker 1: children in the wrong direction. I want to thank you 495 00:29:14,640 --> 00:29:16,960 Speaker 1: very much for joining us. Sir Richard Cohn is Managing 496 00:29:17,000 --> 00:29:21,560 Speaker 1: partner for Eurasia Advisers, joining us to talk about the Russia. 497 00:29:21,600 --> 00:29:24,440 Speaker 1: And once again, congratulations on the publication of your new book. 498 00:29:24,440 --> 00:29:27,040 Speaker 1: It is entitled The Earth Pound Parent, How and Why 499 00:29:27,080 --> 00:29:34,760 Speaker 1: to Raise Your Little Angels Without Religion. Thanks for listening 500 00:29:34,840 --> 00:29:37,720 Speaker 1: to the Bloomberg P and L podcast. You can subscribe 501 00:29:37,760 --> 00:29:41,320 Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever 502 00:29:41,400 --> 00:29:44,880 Speaker 1: podcast platform you prefer. I'm Pim Fox. I'm on Twitter 503 00:29:45,160 --> 00:29:48,680 Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo. It's 504 00:29:48,720 --> 00:29:51,760 Speaker 1: one before the podcast. You can always catch us worldwide 505 00:29:51,760 --> 00:30:00,440 Speaker 1: on Bloomberg Radio.