1 00:00:05,989 --> 00:00:09,189 Speaker 1: Hello, this is Copi Time, a podcast series on markets 2 00:00:09,189 --> 00:00:12,739 Speaker 1: and economies from DBS Group Research. I'm Tim Mubek, chief economist, 3 00:00:13,060 --> 00:00:17,899 Speaker 1: welcoming you to our 171st episode. Today, we will head 4 00:00:17,899 --> 00:00:21,189 Speaker 1: to Washington DC to get an insider's view of what's 5 00:00:21,190 --> 00:00:24,899 Speaker 1: taking place there in banking and finance, and then widen 6 00:00:24,899 --> 00:00:28,389 Speaker 1: the lens to some global trends. Timothy Adams is currently 7 00:00:28,389 --> 00:00:31,790 Speaker 1: president and CEO of the Institute of International Finance. Prior 8 00:00:31,790 --> 00:00:32,750 Speaker 1: to joining the IIF, 9 00:00:33,139 --> 00:00:35,689 Speaker 1: Tim served as managing director of the Lindsey Group, an 10 00:00:35,689 --> 00:00:39,580 Speaker 1: economic advisory firm. Previously he served as Undersecretary of US 11 00:00:39,580 --> 00:00:42,650 Speaker 1: Treasury for International Affairs. He also served as Chief of 12 00:00:42,650 --> 00:00:46,299 Speaker 1: Staff to both Treasury Secretaries, Paul O'Neill and John Snow. 13 00:00:46,619 --> 00:00:49,099 Speaker 1: Tim Adams, a warm welcome to COVID Time podcast. 14 00:00:49,779 --> 00:00:51,540 Speaker 2: Yeah, it's so great to be with you. I know 15 00:00:51,540 --> 00:00:54,479 Speaker 2: it's warmer there than it is here. It's a chilly, 16 00:00:54,700 --> 00:00:57,659 Speaker 2: snowy day here in the nation's capital. I, 17 00:00:57,740 --> 00:00:59,939 Speaker 1: I, I gathered that. I'm actually heading to London in 18 00:00:59,939 --> 00:01:03,259 Speaker 1: a few hours' time. I think the chill from the US, 19 00:01:03,340 --> 00:01:07,339 Speaker 1: literal and metaphorical, has sort of spilled over into UK 20 00:01:07,339 --> 00:01:08,440 Speaker 1: and Europe as well. 21 00:01:08,980 --> 00:01:12,059 Speaker 2: Yeah, I'm in Europe next week. Uh, uh, yes, bring 22 00:01:12,059 --> 00:01:14,760 Speaker 2: a coat and a hat. It's winter here and there 23 00:01:14,760 --> 00:01:15,330 Speaker 2: as well. 24 00:01:15,730 --> 00:01:16,500 Speaker 1: Yeah, absolutely. 25 00:01:16,819 --> 00:01:19,510 Speaker 1: Um, Tim, I was kind of joking with you before 26 00:01:19,510 --> 00:01:21,389 Speaker 1: we started the podcast that there are so many things 27 00:01:21,389 --> 00:01:23,849 Speaker 1: to talk about that we could spend many, many hours. 28 00:01:24,269 --> 00:01:26,669 Speaker 1: So my key struggle in this conversation would be to 29 00:01:26,669 --> 00:01:30,830 Speaker 1: keep things narrow and not ramble on and drag you 30 00:01:30,830 --> 00:01:33,569 Speaker 1: into all sorts of tangents. So I'll try to discipline 31 00:01:33,569 --> 00:01:35,589 Speaker 1: myself as much as I can, and I'd like to 32 00:01:35,589 --> 00:01:39,550 Speaker 1: bring our conversation or start our conversation by talking about 33 00:01:39,550 --> 00:01:42,510 Speaker 1: the latest development in the world of central banking, the 34 00:01:42,510 --> 00:01:46,389 Speaker 1: nomination of Kevin Warshch as the next Fed chair, some thoughts. 35 00:01:47,419 --> 00:01:49,430 Speaker 2: Yeah, well, uh, uh, Kevin's a dear friend of mine. 36 00:01:49,470 --> 00:01:51,949 Speaker 2: I was just communicating with him yesterday. I've known him 37 00:01:51,949 --> 00:01:55,150 Speaker 2: for 25 years. We were colleagues when I was at 38 00:01:55,150 --> 00:01:58,669 Speaker 2: Treasury and he was at the Fed, uh, and when 39 00:01:58,669 --> 00:02:01,069 Speaker 2: we were in, we served in Bush 43 together, he 40 00:02:01,069 --> 00:02:02,599 Speaker 2: was at the White House and I was at Treasury. 41 00:02:02,690 --> 00:02:04,069 Speaker 2: So I'm, I'm a huge fan. I think it was 42 00:02:04,069 --> 00:02:06,930 Speaker 2: a great choice. I thought that's where the president would go. 43 00:02:07,279 --> 00:02:10,759 Speaker 2: Uh, Kevin is a very politically savvy guy. He's a 44 00:02:10,758 --> 00:02:14,720 Speaker 2: good communicator. He certainly served on the Fed board while 45 00:02:14,720 --> 00:02:18,100 Speaker 2: as governor during a crisis time under Ben Bernanke. 46 00:02:18,550 --> 00:02:21,550 Speaker 2: So he gets the institution, he gets the issues. He 47 00:02:21,550 --> 00:02:24,229 Speaker 2: spent the last 15 years with Stan Drunke Miller, you know, 48 00:02:24,389 --> 00:02:27,948 Speaker 2: better understanding and fully understanding how markets function globally, and 49 00:02:28,038 --> 00:02:30,550 Speaker 2: I can't think of anyone better to study under than Stan. 50 00:02:30,600 --> 00:02:33,050 Speaker 2: He's one of the world's best hedge fund managers, one 51 00:02:33,050 --> 00:02:36,229 Speaker 2: of the best records, and ironically, Scott Besson also worked 52 00:02:36,229 --> 00:02:39,130 Speaker 2: for the Secretary of the Treasury, also worked for, for Stan. 53 00:02:39,190 --> 00:02:43,288 Speaker 2: So you see, uh, Stan's world, uh, uh, you know, uh, 54 00:02:44,179 --> 00:02:45,948 Speaker 2: shaping US policy. 55 00:02:46,399 --> 00:02:48,919 Speaker 2: I think Kevin, uh, he'll get confirmed, you know, we've 56 00:02:48,919 --> 00:02:51,820 Speaker 2: just got to get through this really ridiculous issue with, 57 00:02:51,839 --> 00:02:56,559 Speaker 2: with Jay Powell and this Department of Justice investigation, which is, I, I, 58 00:02:56,639 --> 00:02:58,880 Speaker 2: I think a waste of time. But we'll get through it. 59 00:02:58,919 --> 00:03:00,350 Speaker 2: I think the White House will find a way to 60 00:03:00,350 --> 00:03:03,668 Speaker 2: walk away from it. Kevin will get confirmed and, you know, 61 00:03:03,720 --> 00:03:05,720 Speaker 2: he'll be in the job by by mid-year. 62 00:03:06,270 --> 00:03:09,850 Speaker 2: Now, he has a huge job ahead of him. He's got, uh, he's, 63 00:03:10,270 --> 00:03:13,149 Speaker 2: he's never been a CEO, he's never been in the 64 00:03:13,149 --> 00:03:16,788 Speaker 2: chair seat before and so he's got to first build 65 00:03:16,788 --> 00:03:19,729 Speaker 2: consensus around his most immediate table, which is the board. 66 00:03:20,508 --> 00:03:22,089 Speaker 2: And there are 3 individuals who 67 00:03:22,479 --> 00:03:28,440 Speaker 2: Uh, uh, are on that board who will be skeptical, right? Uh, Barr, Jefferson, 68 00:03:28,508 --> 00:03:31,080 Speaker 2: and Cook, and now, uh, so he's got to bring 69 00:03:31,080 --> 00:03:34,080 Speaker 2: them along. He's got to also build good ties with 70 00:03:34,080 --> 00:03:36,440 Speaker 2: Chris Waller and Mickey Bowman, who are wonderful, dear friends 71 00:03:36,440 --> 00:03:38,720 Speaker 2: of mine as well. And I think that that's a, 72 00:03:38,800 --> 00:03:41,119 Speaker 2: that's a given, and then Steve Moran, who's going to 73 00:03:41,119 --> 00:03:41,740 Speaker 2: stay on. 74 00:03:42,005 --> 00:03:44,404 Speaker 2: So he's got to build consensus around the board. He's 75 00:03:44,404 --> 00:03:48,085 Speaker 2: got to convince possible detractors that, uh, that he has 76 00:03:48,085 --> 00:03:50,164 Speaker 2: a vision and he has a way forward. 2, then 77 00:03:50,164 --> 00:03:52,725 Speaker 2: you've got the broader FOMC and you've got a tremendous 78 00:03:52,725 --> 00:03:55,125 Speaker 2: number of really smart people sitting around the table. Many 79 00:03:55,125 --> 00:03:58,085 Speaker 2: of you, you know, and I know many friends of 80 00:03:58,085 --> 00:04:00,274 Speaker 2: mine sitting around there. So you got to build a 81 00:04:00,274 --> 00:04:01,205 Speaker 2: consensus there. 82 00:04:01,630 --> 00:04:03,039 Speaker 2: And then you've got to decide what do you want 83 00:04:03,039 --> 00:04:06,380 Speaker 2: to do about the organization. He's, he, Kevin has made 84 00:04:06,750 --> 00:04:10,949 Speaker 2: real number of pronouncements about re-engineering the models, bringing in 85 00:04:10,949 --> 00:04:13,820 Speaker 2: different economists, rethinking. I, I think it's a good idea 86 00:04:13,820 --> 00:04:16,519 Speaker 2: to kick the tires a bit, maybe bring in different perspectives, 87 00:04:16,600 --> 00:04:19,640 Speaker 2: maybe ask yourself, is there too much groupthink? I think 88 00:04:19,640 --> 00:04:24,669 Speaker 2: stress testing the organization is fair. I think every, every new, uh, 89 00:04:24,678 --> 00:04:27,679 Speaker 2: Fed chair who comes in does that. That will take time. 90 00:04:27,760 --> 00:04:30,440 Speaker 2: I wouldn't worry about that immediately. I think that's a. 91 00:04:30,950 --> 00:04:33,779 Speaker 2: Two year process, not, you know, a two month process, 92 00:04:34,149 --> 00:04:37,349 Speaker 2: but his biggest short term problem or challenge is keeping 93 00:04:37,350 --> 00:04:39,690 Speaker 2: the President of the United States, you know, off his back. 94 00:04:40,109 --> 00:04:42,899 Speaker 2: And you heard the president yesterday already in a joke 95 00:04:42,899 --> 00:04:44,790 Speaker 2: he made at the Alfalfa Club, which is kind of 96 00:04:44,790 --> 00:04:49,428 Speaker 2: a white tie, uh, really elite dinner here in Washington, 97 00:04:49,670 --> 00:04:51,630 Speaker 2: that he would sue Kevin if he didn't cut rates. 98 00:04:51,709 --> 00:04:54,510 Speaker 2: So he's got to keep the president happy, uh, while 99 00:04:54,510 --> 00:04:57,290 Speaker 2: he also has to ensure that he defends the, the, 100 00:04:57,350 --> 00:04:58,469 Speaker 2: the institution. 101 00:04:58,809 --> 00:05:01,579 Speaker 2: And the integrity and the independence of the institution, it's 102 00:05:01,579 --> 00:05:04,238 Speaker 2: going to be tough. Uh, rates are going to come down. 103 00:05:04,369 --> 00:05:06,290 Speaker 2: I think he'll find a way forward. I think he'll 104 00:05:06,290 --> 00:05:09,899 Speaker 2: build a consensus, but then he's just got to navigate 105 00:05:09,899 --> 00:05:14,299 Speaker 2: between market's expectation, the integrity of the institution, as well 106 00:05:14,299 --> 00:05:17,200 Speaker 2: as a president who's got 3 more years left and 107 00:05:17,459 --> 00:05:19,659 Speaker 2: is not shy about expressing his opinion. 108 00:05:21,059 --> 00:05:22,738 Speaker 1: So I want to talk to you a little bit 109 00:05:22,738 --> 00:05:26,178 Speaker 1: about the vision aspect that you said. It's not entirely 110 00:05:26,178 --> 00:05:27,450 Speaker 1: clear to me, and it seems to be the market 111 00:05:27,450 --> 00:05:30,820 Speaker 1: is also sort of understanding or struggling to understand the 112 00:05:30,820 --> 00:05:33,940 Speaker 1: vision that Warsh would bring because we've seen him. 113 00:05:34,410 --> 00:05:38,450 Speaker 1: Speak very hawkishly during the Obama years and subsequently, and 114 00:05:38,450 --> 00:05:42,019 Speaker 1: then we've seen him talk very dovishly in recent years. 115 00:05:42,329 --> 00:05:47,078 Speaker 1: So the politicization of the rhetoric versus, you know, the 116 00:05:47,079 --> 00:05:51,049 Speaker 1: sort of the independent thinking of Warsh as somebody, you know, 117 00:05:51,130 --> 00:05:53,529 Speaker 1: who would chair the Fed in a sort of, you know, 118 00:05:53,760 --> 00:05:57,029 Speaker 1: neutral manner, I mean, where do you think this stands up? 119 00:05:58,488 --> 00:06:02,609 Speaker 2: Well, he's going to be a pragmatist. I think whatever philosophical, uh, 120 00:06:02,730 --> 00:06:06,489 Speaker 2: you know, tendency he harbors, I think you check them 121 00:06:06,488 --> 00:06:09,329 Speaker 2: at the front door when you walk in. The institution 122 00:06:09,329 --> 00:06:13,130 Speaker 2: itself will influence you. It's a, no matter, and I've 123 00:06:13,130 --> 00:06:14,920 Speaker 2: seen a lot of people go in there as Fed 124 00:06:14,920 --> 00:06:17,529 Speaker 2: governors all the time. They all have strong convictions. They're 125 00:06:17,529 --> 00:06:19,209 Speaker 2: going to do A, B, and C. And then once 126 00:06:19,209 --> 00:06:20,609 Speaker 2: you're inside the walls. 127 00:06:21,140 --> 00:06:23,609 Speaker 2: The doors close and you're with your colleagues and staff, 128 00:06:23,940 --> 00:06:27,260 Speaker 2: you become uh a little bit more institutionalized and Kevin 129 00:06:27,260 --> 00:06:29,820 Speaker 2: at heart is an establishment figure, right? He's not a 130 00:06:29,820 --> 00:06:32,769 Speaker 2: bomb thrower, although, you know, he gave some pretty aggressive speeches, 131 00:06:32,859 --> 00:06:35,820 Speaker 2: but that was more performative just to show that he's 132 00:06:35,820 --> 00:06:38,540 Speaker 2: an independent thinker and that he has the chops, intellectual 133 00:06:38,540 --> 00:06:40,859 Speaker 2: chops to run the place. I think he's gonna be 134 00:06:40,859 --> 00:06:42,859 Speaker 2: very pragmatic. I think he's gonna look at the facts 135 00:06:42,859 --> 00:06:44,859 Speaker 2: in front of him. Then, as I said, you've got 136 00:06:44,859 --> 00:06:45,419 Speaker 2: to build consensus. 137 00:06:45,799 --> 00:06:47,200 Speaker 2: Right? You've got to be able to get the votes 138 00:06:47,200 --> 00:06:49,640 Speaker 2: around the table. So you gotta find consensus. He's got 139 00:06:49,640 --> 00:06:52,239 Speaker 2: to be a listener. You're, you're a chair, but you're 140 00:06:52,238 --> 00:06:54,480 Speaker 2: more of a prime minister than a president. You really 141 00:06:54,480 --> 00:06:58,118 Speaker 2: are surrounded by, you know, a large number of very 142 00:06:58,119 --> 00:07:00,000 Speaker 2: smart people who've already been at this. So there's a 143 00:07:00,000 --> 00:07:02,600 Speaker 2: bit of a Kevin's done it, but it's been 15 years. 144 00:07:02,880 --> 00:07:05,200 Speaker 2: So you got a learning curve. So I think you've got, 145 00:07:05,320 --> 00:07:08,160 Speaker 2: he'll be pragmatic. I think he's gonna have to figure 146 00:07:08,160 --> 00:07:09,859 Speaker 2: out how to get rates where. 147 00:07:10,329 --> 00:07:13,130 Speaker 2: They need to be in the short-term, put all the 148 00:07:13,130 --> 00:07:17,410 Speaker 2: other institutional stuff aside, keep the president off his back 149 00:07:17,410 --> 00:07:22,130 Speaker 2: over the short-term, uh, and then philosophy, philosophy will evolve 150 00:07:22,130 --> 00:07:24,290 Speaker 2: over time, but I think in the near term, it's 151 00:07:24,290 --> 00:07:25,369 Speaker 2: just pragmatism. 152 00:07:26,690 --> 00:07:30,250 Speaker 1: Now you are predicting that under Warsh, rates would come 153 00:07:30,250 --> 00:07:33,760 Speaker 1: down further and he would find a way to, you know, 154 00:07:34,089 --> 00:07:37,890 Speaker 1: bring the governors along with, I'm assuming, you know, a 155 00:07:37,890 --> 00:07:41,170 Speaker 1: good deal of, you know, sort of intellectual exercise. But 156 00:07:41,170 --> 00:07:43,570 Speaker 1: my question to you, I want to move away from 157 00:07:43,570 --> 00:07:46,440 Speaker 1: trying to parse what Mr. Warsh thinks and what you think. 158 00:07:46,609 --> 00:07:48,970 Speaker 1: Do you think the US economy is in dire need 159 00:07:48,970 --> 00:07:50,010 Speaker 1: of lower interest rates? 160 00:07:50,690 --> 00:07:55,570 Speaker 2: No, no, I don't. I think, uh, but, uh, I 161 00:07:55,570 --> 00:07:59,049 Speaker 2: understand the president most certainly does and wants lower rates and, 162 00:07:59,250 --> 00:08:01,690 Speaker 2: you know, and I don't know that the president fully 163 00:08:01,690 --> 00:08:04,529 Speaker 2: appreciates the yield curve and maybe lower rates, you know, 164 00:08:04,690 --> 00:08:06,170 Speaker 2: at the short end of the curve, but you pay 165 00:08:06,170 --> 00:08:07,839 Speaker 2: for it at the long end of the curve, and frankly, 166 00:08:08,000 --> 00:08:10,209 Speaker 2: the longer the curve is what matters most. If you 167 00:08:10,209 --> 00:08:12,869 Speaker 2: think about housing, which we need to build more housing, 168 00:08:12,929 --> 00:08:15,230 Speaker 2: we need, we need a more vibrant housing market here. 169 00:08:15,720 --> 00:08:18,970 Speaker 2: And in terms of just uh long term funding. Although 170 00:08:18,970 --> 00:08:21,208 Speaker 2: US government funding is pretty short term these days, so 171 00:08:21,209 --> 00:08:23,410 Speaker 2: we can set the deficit aside for a moment. No, 172 00:08:23,450 --> 00:08:25,450 Speaker 2: I don't think so, but I think Kevin's gonna make 173 00:08:25,450 --> 00:08:29,649 Speaker 2: the case that we have this AI revolution, he already has, 174 00:08:29,769 --> 00:08:33,750 Speaker 2: and I think that's what he's gonna hang his hat on, that, uh, 175 00:08:33,760 --> 00:08:36,539 Speaker 2: we have an AI revolution that's going on that that 176 00:08:36,539 --> 00:08:39,130 Speaker 2: allows you on the supply side and, and a huge 177 00:08:39,130 --> 00:08:40,090 Speaker 2: investment led. 178 00:08:41,729 --> 00:08:47,249 Speaker 2: growth trajectory, all this very narrowly focused investment led. 179 00:08:47,659 --> 00:08:51,880 Speaker 2: And that that allows you to lower rates without creating, uh, 180 00:08:51,979 --> 00:08:55,869 Speaker 2: you know, inflationary pressures, and I think, you know, there's 181 00:08:55,869 --> 00:08:58,590 Speaker 2: a worry that labor markets could deteriorate a bit and 182 00:08:58,590 --> 00:09:01,229 Speaker 2: could you get ahead of that, you know, this past year, 183 00:09:01,270 --> 00:09:04,109 Speaker 2: 2025 was the worst year for labor markets in a 184 00:09:04,109 --> 00:09:07,949 Speaker 2: non-recessionary period for, you know, since 2003, and as you saw, 185 00:09:08,030 --> 00:09:11,549 Speaker 2: we lost 75,000 manufacturing jobs. I think that has less 186 00:09:11,549 --> 00:09:14,960 Speaker 2: to do about monetary policy than structural policy, but nonetheless, 187 00:09:15,190 --> 00:09:16,590 Speaker 2: we always look to the Fed to. 188 00:09:17,190 --> 00:09:20,189 Speaker 2: Solved lots of problems, which is one of Kevin's complaints, right? 189 00:09:20,239 --> 00:09:24,109 Speaker 2: It has been that the Fed's remit or mandate had 190 00:09:24,109 --> 00:09:27,949 Speaker 2: expanded over the years. They had, as well as the 191 00:09:27,950 --> 00:09:30,789 Speaker 2: many other institutions, the IMF and, you know, central bankers 192 00:09:30,789 --> 00:09:33,699 Speaker 2: got involved in lots of issues, and that's for a 193 00:09:33,700 --> 00:09:35,108 Speaker 2: different conversation. 194 00:09:35,489 --> 00:09:37,409 Speaker 2: So he, you know, at one point he's gonna try 195 00:09:37,409 --> 00:09:40,809 Speaker 2: to narrow the focus, you know, strict central banking. At 196 00:09:40,809 --> 00:09:43,449 Speaker 2: the same time he's gonna bring in all these extraneous factors, 197 00:09:43,489 --> 00:09:47,679 Speaker 2: which is the economy is transforming and revolutionizing, and we 198 00:09:47,679 --> 00:09:51,049 Speaker 2: need to be cognizant of that, a la Alan Greenspan 199 00:09:51,049 --> 00:09:52,049 Speaker 2: in the 1990s. 200 00:09:53,289 --> 00:09:56,250 Speaker 1: Right, so, I guess that's where my biggest sort of 201 00:09:56,250 --> 00:10:00,010 Speaker 1: sense of uncertainty comes, which is uh Wursch has been 202 00:10:00,010 --> 00:10:03,030 Speaker 1: on the record saying that, you know, lower rates are warranted, 203 00:10:03,039 --> 00:10:04,809 Speaker 1: and to the points that you made, that there could 204 00:10:04,809 --> 00:10:07,729 Speaker 1: be a productivity led revolution going on and this inflationary 205 00:10:07,729 --> 00:10:09,289 Speaker 1: impulse are just around the corner. 206 00:10:09,400 --> 00:10:11,080 Speaker 1: So we don't have to worry about that. But at 207 00:10:11,080 --> 00:10:13,400 Speaker 1: the same time, again, to your point that he has 208 00:10:13,400 --> 00:10:15,959 Speaker 1: sort of accused the Fed of having mission creep and 209 00:10:15,960 --> 00:10:18,919 Speaker 1: using the balance sheet operations, the QE to try to 210 00:10:18,919 --> 00:10:22,119 Speaker 1: accomplish all those things that it should not have. How 211 00:10:22,119 --> 00:10:25,700 Speaker 1: does one cut rates and do QT at the same time? 212 00:10:26,179 --> 00:10:29,830 Speaker 2: Yeah, you can't, and that's the problem. He's pretty out 213 00:10:29,830 --> 00:10:32,989 Speaker 2: on over his skis on the balance sheet. And again, 214 00:10:33,039 --> 00:10:36,030 Speaker 2: I think it's, it's about being pragmatic. You gotta walk 215 00:10:36,030 --> 00:10:38,189 Speaker 2: in the door, you gotta build a consensus, you gotta 216 00:10:38,190 --> 00:10:41,369 Speaker 2: show that you, you know, you can lead the organization. 217 00:10:42,070 --> 00:10:44,030 Speaker 2: And you've got to find a way to get some 218 00:10:44,030 --> 00:10:46,869 Speaker 2: easing in conditions just so the president gets off your back. 219 00:10:46,979 --> 00:10:48,699 Speaker 2: The worst, the worst thing for Kevin, the worst thing 220 00:10:48,700 --> 00:10:51,390 Speaker 2: for the institution, frankly, is if the president spends the 221 00:10:51,390 --> 00:10:54,950 Speaker 2: next two years just banging away on both Kevin and 222 00:10:54,950 --> 00:10:58,989 Speaker 2: the institution, that it doesn't serve anyone's purpose. So, it's 223 00:10:58,989 --> 00:11:02,429 Speaker 2: a balancing act, and I think Kevin does believe that 224 00:11:02,710 --> 00:11:06,949 Speaker 2: he can get rates down and do so without jeopardizing 225 00:11:06,950 --> 00:11:10,130 Speaker 2: price stability or or the integrity of the of the Fed. 226 00:11:10,640 --> 00:11:14,819 Speaker 2: We're gonna see, you know, he's a very savvy, very smart, 227 00:11:15,000 --> 00:11:18,239 Speaker 2: sophisticated player, and so he's got a message to the president, 228 00:11:18,320 --> 00:11:20,119 Speaker 2: he's got a message to markets, he's got a message 229 00:11:20,119 --> 00:11:22,119 Speaker 2: to his colleagues at other central banks. I'm doing a 230 00:11:22,119 --> 00:11:24,789 Speaker 2: tour through Europe next week, seeing many of his colleagues. 231 00:11:25,210 --> 00:11:28,599 Speaker 2: So it's, it's a huge, huge challenge, but he's a 232 00:11:28,599 --> 00:11:31,440 Speaker 2: pretty savvy, he's a smart guy, and I, I think, uh, 233 00:11:31,520 --> 00:11:33,619 Speaker 2: I think he starts off with an enormous amount of credibility. 234 00:11:34,869 --> 00:11:37,659 Speaker 1: That's good to know, Tim. He also has to worry 235 00:11:37,659 --> 00:11:40,728 Speaker 1: about that other big audience, which is the bond market. 236 00:11:41,590 --> 00:11:45,270 Speaker 1: Let's go with the prognostication that, you know, he will 237 00:11:45,270 --> 00:11:47,349 Speaker 1: cut rates and he will do it in a somewhat 238 00:11:47,349 --> 00:11:50,989 Speaker 1: credible manner, as you pointed out, he and Scott Bassenda 239 00:11:50,989 --> 00:11:53,228 Speaker 1: probably are on the same wavelength, so we can expect 240 00:11:53,229 --> 00:11:57,069 Speaker 1: some degree of monetary fiscal coordination, especially with regards to 241 00:11:57,070 --> 00:11:59,090 Speaker 1: dealing with this enormous debt now. 242 00:11:59,849 --> 00:12:03,460 Speaker 1: Let's go fast forward 9 months. The Fed has cut 243 00:12:03,460 --> 00:12:06,840 Speaker 1: a couple, maybe even 3 more times since Warsh became 244 00:12:07,140 --> 00:12:12,530 Speaker 1: Fed chair. Market doesn't like it. The AI-led revolutionary disinflation 245 00:12:12,530 --> 00:12:16,059 Speaker 1: impulse may be more of a 2028 or 2029 phenomenon, 246 00:12:16,169 --> 00:12:19,140 Speaker 1: not a 26, 2027 phenomenon, and the yield curve starts 247 00:12:19,140 --> 00:12:24,200 Speaker 1: to steepen. What would these two gentlemen do in terms 248 00:12:24,200 --> 00:12:26,340 Speaker 1: of dealing with that problem? 249 00:12:27,229 --> 00:12:29,869 Speaker 2: Yeah, that's good, and, and that's, that's probably if it 250 00:12:29,869 --> 00:12:32,270 Speaker 2: were me and I were sitting over there, and that 251 00:12:32,270 --> 00:12:34,309 Speaker 2: would be what would keep me up at night is 252 00:12:34,309 --> 00:12:36,190 Speaker 2: now you got yourself in this box, how do you 253 00:12:36,190 --> 00:12:39,619 Speaker 2: get out? He would need, uh, he would need cooperation 254 00:12:39,619 --> 00:12:42,510 Speaker 2: with his Treasury Secretary to give him political cover. He 255 00:12:42,510 --> 00:12:45,890 Speaker 2: would have to sound more hawkish. And ultimately you're gonna 256 00:12:45,890 --> 00:12:48,070 Speaker 2: have to, and this town needs to focus on our 257 00:12:48,070 --> 00:12:52,070 Speaker 2: fiscal trajectory, which is harrowing and unsustainable, and no one 258 00:12:52,070 --> 00:12:52,848 Speaker 2: seems to care. 259 00:12:53,369 --> 00:12:56,679 Speaker 2: And so maybe, maybe that's the jolt or no one 260 00:12:56,679 --> 00:12:59,729 Speaker 2: cares until the long end backs up, mortgage rates go 261 00:12:59,729 --> 00:13:01,390 Speaker 2: up and voters start complaining, right? 262 00:13:02,869 --> 00:13:06,030 Speaker 2: Maybe that's what we need in order to jolt the 263 00:13:06,030 --> 00:13:10,179 Speaker 2: political class into focusing more on deficit reduction because right 264 00:13:10,179 --> 00:13:14,229 Speaker 2: now it just doesn't exist. We tinker around the edges, 265 00:13:14,710 --> 00:13:17,429 Speaker 2: but we're, let's see, I just did the math this morning. 266 00:13:17,549 --> 00:13:22,539 Speaker 2: We spent $1.267 trillion on interest in the public debt 267 00:13:22,539 --> 00:13:27,468 Speaker 2: over the last year, and that's $3.5 billion per day, right? 268 00:13:27,549 --> 00:13:28,700 Speaker 1: 5% of GDP per day, 269 00:13:29,190 --> 00:13:29,369 Speaker 2: yeah. 270 00:13:30,020 --> 00:13:33,099 Speaker 2: So, you know, it's not sustainable. We're at 120% of 271 00:13:33,099 --> 00:13:35,340 Speaker 2: GDP if you look all in, if you look just 272 00:13:35,340 --> 00:13:38,460 Speaker 2: debt held by the public, it's 100%. But we're an 273 00:13:38,460 --> 00:13:41,820 Speaker 2: aging population, we're spending more on defense, and, you know, 274 00:13:41,940 --> 00:13:43,489 Speaker 2: it just doesn't work, it doesn't work for a lot 275 00:13:43,489 --> 00:13:47,539 Speaker 2: of places. So maybe that's an opportunity for the fiscal 276 00:13:47,539 --> 00:13:50,219 Speaker 2: side of the, of this house to try to do more, 277 00:13:50,299 --> 00:13:52,840 Speaker 2: at least signal to do more. They're not ready for that, 278 00:13:53,340 --> 00:13:55,580 Speaker 2: but a backup in rates does have a bit of 279 00:13:55,580 --> 00:13:59,219 Speaker 2: a silver lining that maybe it, it focuses the political class. 280 00:14:00,289 --> 00:14:04,830 Speaker 1: Tim, assuming that the Republicans and maybe some Democrats cannot 281 00:14:04,830 --> 00:14:08,210 Speaker 1: come to some sort of a fiscal consolidation path and 282 00:14:08,210 --> 00:14:11,010 Speaker 1: the market starts to revolt, could we then head into 283 00:14:11,010 --> 00:14:13,969 Speaker 1: the world of financial repression, a la, say, India in 284 00:14:13,969 --> 00:14:17,770 Speaker 1: 1970s and 1980s, which is force banks to hold more bonds, 285 00:14:17,969 --> 00:14:20,510 Speaker 1: get the Fed to forget about QT, start doing QE, 286 00:14:20,849 --> 00:14:23,669 Speaker 1: or even like the Japanese example of yield curve control. 287 00:14:23,969 --> 00:14:26,000 Speaker 1: Could we see the US head into that sort of 288 00:14:26,000 --> 00:14:26,969 Speaker 1: unorthodox path? 289 00:14:27,570 --> 00:14:30,690 Speaker 2: You know, that's a great question. I could see most 290 00:14:30,690 --> 00:14:32,690 Speaker 2: certainly the President of the United States saying all those 291 00:14:32,690 --> 00:14:35,330 Speaker 2: things are great. He loves price controls, and there are 292 00:14:35,330 --> 00:14:38,809 Speaker 2: people around him that like price controls, and I'm sure he, uh, he, 293 00:14:38,849 --> 00:14:41,330 Speaker 2: the president, wouldn't think twice about calling up the GIP 294 00:14:41,330 --> 00:14:43,369 Speaker 2: CEOs and saying, hey, could I sell you a few 295 00:14:43,369 --> 00:14:46,489 Speaker 2: more treasuries to hold? So yes, could that come out 296 00:14:46,489 --> 00:14:48,849 Speaker 2: of the White House? Most certainly, anything could come out 297 00:14:48,849 --> 00:14:52,010 Speaker 2: of this White House, right? Cap on interest rates on 298 00:14:52,010 --> 00:14:53,830 Speaker 2: credit cards that just popped out of nowhere. 299 00:14:54,200 --> 00:14:58,469 Speaker 2: Uh, would Scott Besset and the more adults in the room, uh, 300 00:14:58,799 --> 00:15:01,070 Speaker 2: sign on? I don't know. I, I, I doubt it. 301 00:15:01,140 --> 00:15:03,559 Speaker 2: So you could see some tension within the administration. The 302 00:15:03,559 --> 00:15:07,940 Speaker 2: president is out, uh, you know, fielding lots of different 303 00:15:08,119 --> 00:15:11,640 Speaker 2: provocative ideas, and then the secretary is going to have 304 00:15:11,640 --> 00:15:14,359 Speaker 2: to walk it back from the markets and then. 305 00:15:14,690 --> 00:15:17,489 Speaker 2: Then ultimately the Fed might have to reverse course and 306 00:15:17,489 --> 00:15:20,739 Speaker 2: prove its mettle. If the markets lose confidence in this, 307 00:15:20,830 --> 00:15:25,000 Speaker 2: in this institution, the Fed's institution is uh, it's integrity, it's, 308 00:15:25,330 --> 00:15:30,409 Speaker 2: it's bona fides and uh price stability, then getting that 309 00:15:30,409 --> 00:15:32,520 Speaker 2: back will be hard, and that's where I think Kevin's 310 00:15:32,520 --> 00:15:34,960 Speaker 2: got a real challenge. How do you, how do you 311 00:15:34,969 --> 00:15:37,960 Speaker 2: keep the markets happy and confident that you've, you're the 312 00:15:37,960 --> 00:15:40,809 Speaker 2: right guy and you're gonna protect price stability at the 313 00:15:40,809 --> 00:15:42,770 Speaker 2: same time you got the president, you know, breathing down 314 00:15:42,770 --> 00:15:44,010 Speaker 2: your neck on a daily basis. 315 00:15:44,900 --> 00:15:48,500 Speaker 1: And to your point that Scott Besson, who has dealt 316 00:15:48,500 --> 00:15:51,460 Speaker 1: with the bond market in his professional career, may not 317 00:15:51,460 --> 00:15:54,020 Speaker 1: get along with those things, so. 318 00:15:54,630 --> 00:15:56,229 Speaker 1: I mean, again, I mean, I'm just trying to sort 319 00:15:56,229 --> 00:16:00,190 Speaker 1: of game out the possible scenarios here. Could we then 320 00:16:00,190 --> 00:16:04,349 Speaker 1: see the tension between, you know, two appointed, you know, 321 00:16:05,210 --> 00:16:09,570 Speaker 1: top secretaries or one chairman and one secretary and the president, and, 322 00:16:09,580 --> 00:16:11,750 Speaker 1: and then could we see things like what we saw 323 00:16:11,750 --> 00:16:15,390 Speaker 1: in Trump 1.0, you know, resignations or firings and things 324 00:16:15,390 --> 00:16:15,950 Speaker 1: like that. 325 00:16:17,169 --> 00:16:20,330 Speaker 2: Yeah, yeah, that's, that's a great question. This, this administration 326 00:16:20,330 --> 00:16:22,989 Speaker 2: is very different than 1.0. This is, this administration is 327 00:16:22,989 --> 00:16:28,039 Speaker 2: much more cohesive and they're all, they're all deeply on 328 00:16:28,039 --> 00:16:29,710 Speaker 2: board with the president, so. 329 00:16:30,179 --> 00:16:32,260 Speaker 2: I, I think what happens, there's not really much of 330 00:16:32,260 --> 00:16:36,700 Speaker 2: an internal policymaking process. There's no deputies's process. It gets 331 00:16:36,700 --> 00:16:39,780 Speaker 2: played out in social media more than anything. I think 332 00:16:39,780 --> 00:16:43,690 Speaker 2: what you could see is the president tabling lots of ideas, uh, 333 00:16:43,780 --> 00:16:46,059 Speaker 2: the secretary trying to back, you know, walk them back, 334 00:16:46,539 --> 00:16:48,940 Speaker 2: lots of public discourse and the behind the scenes and 335 00:16:48,940 --> 00:16:50,159 Speaker 2: trying to fix the problem. 336 00:16:50,729 --> 00:16:53,359 Speaker 2: Uh, and then Kevin's gonna get sort of stuck in 337 00:16:53,359 --> 00:16:56,250 Speaker 2: the middle. Uh, I don't think the secretary's going anywhere. 338 00:16:56,289 --> 00:16:58,559 Speaker 2: I think he likes his job. I think he's here for, 339 00:16:58,809 --> 00:17:01,969 Speaker 2: for the foreseeable future. So I don't know, it, it's 340 00:17:01,969 --> 00:17:06,629 Speaker 2: unlike Trump 1.0 where many of those officials, the president 341 00:17:06,930 --> 00:17:08,650 Speaker 2: didn't have a lot of confidence in, he didn't think 342 00:17:08,650 --> 00:17:12,530 Speaker 2: they were loyalists. All these people seem pretty darn loyal. 343 00:17:12,930 --> 00:17:15,130 Speaker 2: So it would take a high bar for him to 344 00:17:15,130 --> 00:17:16,829 Speaker 2: start pushing people out the door. 345 00:17:17,630 --> 00:17:21,800 Speaker 1: OK. Nobody's going to resign. They will carry out what 346 00:17:21,800 --> 00:17:23,699 Speaker 1: we have sort of, you know, gamed out, which is 347 00:17:23,920 --> 00:17:27,550 Speaker 1: first cut rates if those curves steepen do financial repression. 348 00:17:27,989 --> 00:17:29,979 Speaker 1: But Tim, there's no free lunch. Something's got to give, 349 00:17:30,000 --> 00:17:31,180 Speaker 1: and I guess that will be the dollar. 350 00:17:32,640 --> 00:17:34,969 Speaker 2: Yeah, there is no free lunch. All those towns operates 351 00:17:34,969 --> 00:17:37,280 Speaker 2: on the idea that there is one, right? And that's 352 00:17:37,280 --> 00:17:39,699 Speaker 2: what you hear on tariffs, and I love the Wall 353 00:17:39,699 --> 00:17:42,270 Speaker 2: Street Journal editorial page today came back, sort of picked 354 00:17:42,270 --> 00:17:47,119 Speaker 2: apart the president's points on tariffs, you know, some we're 355 00:17:47,119 --> 00:17:50,290 Speaker 2: in a world where facts don't seem to matter anymore, uh, 356 00:17:50,609 --> 00:17:53,349 Speaker 2: and so it really is trying to figure out the truth. 357 00:17:54,790 --> 00:17:56,949 Speaker 2: And uh, you know, to your point, I think there 358 00:17:56,949 --> 00:18:00,708 Speaker 2: is a belief that certainly in the political dominant political 359 00:18:00,709 --> 00:18:03,409 Speaker 2: class in this town, it's a free lunch until there isn't. 360 00:18:03,859 --> 00:18:06,890 Speaker 2: And when there isn't, whether it's on, you know, uh, 361 00:18:06,900 --> 00:18:11,909 Speaker 2: deficit spending or geopolitical saber rattling, something is going to 362 00:18:11,910 --> 00:18:15,339 Speaker 2: go wrong somewhere along the way, and, uh, and then 363 00:18:15,339 --> 00:18:17,069 Speaker 2: it remains to be seen how they're gonna react to it. 364 00:18:17,219 --> 00:18:20,310 Speaker 2: But so far they've been incredibly lucky. Uh, everything is 365 00:18:20,310 --> 00:18:21,170 Speaker 2: priced to perfection. 366 00:18:22,010 --> 00:18:24,339 Speaker 2: Will it stay that way forever? And my history says 367 00:18:24,339 --> 00:18:24,949 Speaker 2: it won't. 368 00:18:26,579 --> 00:18:30,129 Speaker 1: If indeed the dollar is the pressure valve and has 369 00:18:30,130 --> 00:18:35,040 Speaker 1: substantial downside, again, it seems to me that given what 370 00:18:35,040 --> 00:18:37,790 Speaker 1: Scott Besant has said recently and you hear it from 371 00:18:37,900 --> 00:18:40,060 Speaker 1: the likes of Stephen Maran all the time, that a 372 00:18:40,060 --> 00:18:43,180 Speaker 1: weak dollar is actually a solution to the US's current deficit, 373 00:18:43,660 --> 00:18:48,599 Speaker 1: perpetual current deficit issue, or restoring manufacturing competitiveness, and so on. 374 00:18:48,939 --> 00:18:52,129 Speaker 1: So is this going to be the first administration in 375 00:18:52,130 --> 00:18:55,819 Speaker 1: a very, very long time to actually guide the dollar lower? 376 00:18:56,650 --> 00:18:57,290 Speaker 2: Great question. 377 00:18:58,390 --> 00:18:59,989 Speaker 2: I think if you were asked Donald Trump that question, 378 00:19:00,030 --> 00:19:01,669 Speaker 2: he'd say, yes, I want a weaker dollar. I like 379 00:19:01,670 --> 00:19:04,869 Speaker 2: a weaker dollar. You know, that's, that's his mindset, and 380 00:19:04,869 --> 00:19:07,920 Speaker 2: there's some people in this administration. I think Scott Besset 381 00:19:08,469 --> 00:19:11,790 Speaker 2: is smart enough to know that if you overplay the, 382 00:19:11,910 --> 00:19:14,270 Speaker 2: I'm gonna steer it in a direction, you could lose 383 00:19:14,270 --> 00:19:17,339 Speaker 2: control and then, uh, and you lose your credibility. So 384 00:19:17,339 --> 00:19:19,910 Speaker 2: he was pretty quick to come out last week and say, no, 385 00:19:19,949 --> 00:19:21,250 Speaker 2: I have a strong dollar policy. 386 00:19:22,689 --> 00:19:24,969 Speaker 2: And I will say last year he spoke at our event. 387 00:19:25,050 --> 00:19:26,649 Speaker 2: He called me up and said, you know, I want 388 00:19:26,650 --> 00:19:30,530 Speaker 2: to speak at the IF spring meetings we did, and 389 00:19:30,530 --> 00:19:33,280 Speaker 2: he spoke about his commitment to the Bretton Woods institutions, 390 00:19:33,290 --> 00:19:35,449 Speaker 2: and he said, look, the first question you should ask 391 00:19:35,449 --> 00:19:38,949 Speaker 2: me is about the dollar, and I did, and he said, reaffirm. So, 392 00:19:39,089 --> 00:19:41,290 Speaker 2: I think what you're gonna have again is this tension 393 00:19:41,290 --> 00:19:45,449 Speaker 2: between 1500 Pennsylvania Avenue and 1600 Pennsylvania Avenue. 1500 is 394 00:19:45,449 --> 00:19:49,290 Speaker 2: where the the Secretary of the Treasury building is. 395 00:19:49,810 --> 00:19:53,939 Speaker 2: And the president probably pushing for a weaker dollar and 396 00:19:53,939 --> 00:19:56,099 Speaker 2: Scott trying to figure, the secretary trying to figure out 397 00:19:56,099 --> 00:19:58,660 Speaker 2: how to modulate that in a way where it doesn't 398 00:19:58,660 --> 00:20:03,198 Speaker 2: sound like that they're giving up on a strong dollar, which, 399 00:20:03,260 --> 00:20:06,300 Speaker 2: which means nothing and everything. It depends on the administration. 400 00:20:06,859 --> 00:20:09,699 Speaker 2: And for us, it was always a commitment that we 401 00:20:09,699 --> 00:20:15,140 Speaker 2: wouldn't use the the currency for be neighbor policy policy. 402 00:20:15,219 --> 00:20:17,619 Speaker 2: It really was, we have a flexible exchange rate for 403 00:20:17,619 --> 00:20:20,020 Speaker 2: a reason, it goes up, it goes down, markets determinate, 404 00:20:20,140 --> 00:20:22,359 Speaker 2: you know, flows push it one way, push it another, 405 00:20:22,380 --> 00:20:26,099 Speaker 2: relative growth, relative inflation, relative productivity, but we're not gonna 406 00:20:26,099 --> 00:20:28,859 Speaker 2: use it uh to gain market share for beggar the neighbor. 407 00:20:29,300 --> 00:20:32,660 Speaker 2: And that's what Besson's gonna have to say. Look, it's gonna, it, 408 00:20:32,739 --> 00:20:36,589 Speaker 2: it depreciates, it's a normal course of business. It was overvalued, 409 00:20:37,140 --> 00:20:38,859 Speaker 2: you know, you can ask him, they'll trot out a 410 00:20:38,859 --> 00:20:40,920 Speaker 2: number of people, say it's too high for too long, 411 00:20:41,540 --> 00:20:43,859 Speaker 2: but he'll have to say, but that our goal is 412 00:20:43,859 --> 00:20:46,780 Speaker 2: not to weaken it to the point that it's a 413 00:20:46,780 --> 00:20:49,688 Speaker 2: policy lever or a tool. And then the question is, 414 00:20:49,770 --> 00:20:52,540 Speaker 2: do the markets believe him? And I don't know, it 415 00:20:52,540 --> 00:20:53,239 Speaker 2: remains to be seen. 416 00:20:54,069 --> 00:20:56,228 Speaker 1: Ah, Tim, I had the pleasure of attending that event 417 00:20:56,229 --> 00:20:59,310 Speaker 1: and you did a fantastic job interviewing the secretary. Uh, 418 00:20:59,469 --> 00:21:02,109 Speaker 1: I basically, if I remember correctly, when you had asked 419 00:21:02,109 --> 00:21:04,790 Speaker 1: him the question, he said that for me, strong dollar 420 00:21:04,790 --> 00:21:08,260 Speaker 1: means that the US remains an attractive place for investors 421 00:21:08,260 --> 00:21:09,109 Speaker 1: from all over the world. 422 00:21:09,415 --> 00:21:12,564 Speaker 1: Meaning even if the dollar's value moves around a bit, 423 00:21:12,655 --> 00:21:15,295 Speaker 1: as long as the US stock market, US bond market 424 00:21:15,295 --> 00:21:19,294 Speaker 1: is desirable, that's what a strong dollar policy means. And 425 00:21:19,295 --> 00:21:22,614 Speaker 1: I sort of understand what he was trying to get at, that, 426 00:21:22,675 --> 00:21:25,525 Speaker 1: you know, as long as US assets remain attractive, even 427 00:21:25,525 --> 00:21:27,405 Speaker 1: if it sort of moves around a bit here and there, 428 00:21:27,614 --> 00:21:32,214 Speaker 1: it doesn't matter. But if it goes a lot under 429 00:21:32,214 --> 00:21:35,885 Speaker 1: those financial repression scenarios that I'm sort of fearing might materialize, 430 00:21:36,214 --> 00:21:38,813 Speaker 1: then to your point, it can go disorderly. 431 00:21:39,130 --> 00:21:40,910 Speaker 1: And I don't think that's going to be good for 432 00:21:40,910 --> 00:21:42,030 Speaker 1: US asset markets at all. 433 00:21:43,060 --> 00:21:45,540 Speaker 2: No, and that's always the challenge sitting in the corner 434 00:21:45,540 --> 00:21:48,680 Speaker 2: office at the at the Treasury Department is how do you, 435 00:21:48,859 --> 00:21:51,459 Speaker 2: how do you ensure some stability, even if there are, 436 00:21:51,619 --> 00:21:54,089 Speaker 2: even if the direction is seen, it's not only for 437 00:21:54,089 --> 00:21:56,619 Speaker 2: the dollar, but, you know, the yen, there's always a 438 00:21:56,619 --> 00:22:01,040 Speaker 2: variety of currencies that there's a question about uh volatility 439 00:22:01,040 --> 00:22:05,079 Speaker 2: and is it disorderly, and so you're always worried about the, 440 00:22:05,160 --> 00:22:08,260 Speaker 2: the need for some sort of signaling, either rhetorical signaling 441 00:22:08,260 --> 00:22:10,760 Speaker 2: or some sort of market intervention, which is always, 442 00:22:12,079 --> 00:22:15,449 Speaker 2: The last course, uh, uh, intervention, you really don't want 443 00:22:15,449 --> 00:22:17,410 Speaker 2: to do it unless you have to because you know 444 00:22:17,410 --> 00:22:19,879 Speaker 2: you can't push it where the markets don't want it 445 00:22:19,880 --> 00:22:23,750 Speaker 2: to go. So I, I do think this administration believes, 446 00:22:24,329 --> 00:22:27,198 Speaker 2: and it's not inconsistent with previous administrations, that if you 447 00:22:27,199 --> 00:22:29,688 Speaker 2: do everything right, you know, as one secretary used to 448 00:22:29,689 --> 00:22:30,209 Speaker 2: say that. 449 00:22:30,609 --> 00:22:33,000 Speaker 2: Uh, Capital's a coward. It goes where it's treated well 450 00:22:33,000 --> 00:22:34,959 Speaker 2: and it leaves where it's treated badly, that if you create, 451 00:22:35,069 --> 00:22:38,979 Speaker 2: if you create the right enabling environment, you will attract capital. 452 00:22:39,280 --> 00:22:41,119 Speaker 2: Now the president sort of takes a more of a 453 00:22:41,119 --> 00:22:43,560 Speaker 2: strong arm approach, which is we're gonna do trade deals 454 00:22:43,560 --> 00:22:45,188 Speaker 2: and you're gonna invest in the United States whether you 455 00:22:45,189 --> 00:22:48,380 Speaker 2: like it or not, but I think Besset believes that 456 00:22:48,520 --> 00:22:54,238 Speaker 2: with deregulation, uh, lower energy prices, uh, that, you know, 457 00:22:54,520 --> 00:22:57,760 Speaker 2: with more pro-business environment, and there is a more pro-business environment, 458 00:22:57,800 --> 00:22:58,810 Speaker 2: you have got, um. 459 00:22:59,579 --> 00:23:03,219 Speaker 2: You've got, uh, animal spirits in the boardrooms, that's for sure. The, the, 460 00:23:03,339 --> 00:23:06,260 Speaker 2: the business environment is pretty positive that that in itself 461 00:23:06,260 --> 00:23:09,650 Speaker 2: will attract capital, and I think it is. I do 462 00:23:09,650 --> 00:23:11,859 Speaker 2: hear a lot of concern around the world about investing 463 00:23:11,859 --> 00:23:15,020 Speaker 2: in the US. I think it's more sentiment than, than 464 00:23:15,020 --> 00:23:18,479 Speaker 2: anything else, but if you just look on sheer fundamentals, 465 00:23:18,979 --> 00:23:22,219 Speaker 2: it's a pretty good story, and I think they're, they're 466 00:23:22,219 --> 00:23:24,939 Speaker 2: banking that they, they can keep telling their story, especially 467 00:23:24,939 --> 00:23:26,520 Speaker 2: if you get an AI revolution. 468 00:23:26,949 --> 00:23:31,060 Speaker 2: And you get more investment-led growth. I think they think 469 00:23:31,520 --> 00:23:32,800 Speaker 2: they've got a really good story to 470 00:23:32,800 --> 00:23:33,119 Speaker 2: tell. 471 00:23:33,770 --> 00:23:36,708 Speaker 1: But Tim, you know, it is absolutely remarkable that 2025, 472 00:23:37,050 --> 00:23:39,530 Speaker 1: I mean, talk about price to perfection, the kind of 473 00:23:39,530 --> 00:23:42,569 Speaker 1: excitement that the AI space generated, and all these big 474 00:23:42,569 --> 00:23:45,969 Speaker 1: deals we heard, the open AIs of the world raising 475 00:23:45,969 --> 00:23:49,729 Speaker 1: money in the Middle East and Japan and elsewhere. Despite 476 00:23:49,729 --> 00:23:53,329 Speaker 1: all that, FDI on aggregate, you know, declined in the 477 00:23:53,329 --> 00:23:57,280 Speaker 1: US in 2025, because there's a lot of paralysis and 478 00:23:57,280 --> 00:24:00,329 Speaker 1: confusion about, you know, how certain the policy environment under 479 00:24:00,329 --> 00:24:01,810 Speaker 1: this tariff will be. 480 00:24:02,810 --> 00:24:04,869 Speaker 1: Tim, I can tell you one thing sitting here in 481 00:24:04,869 --> 00:24:07,609 Speaker 1: Singapore is that a 15% tariff, and even if there's 482 00:24:07,609 --> 00:24:10,829 Speaker 1: like a 5, 10% downside, it still doesn't make sense 483 00:24:10,829 --> 00:24:14,530 Speaker 1: to move manufacturing away from China or Malaysia into the 484 00:24:14,530 --> 00:24:18,760 Speaker 1: US 30% is not sufficient a wedge. So I guess, 485 00:24:18,810 --> 00:24:22,280 Speaker 1: you know, even more like favorable tax policy, tax policy, 486 00:24:22,329 --> 00:24:24,569 Speaker 1: and to your point of lower energy prices, a wide 487 00:24:24,569 --> 00:24:27,810 Speaker 1: range of things are needed, but most importantly, certainty, which 488 00:24:27,810 --> 00:24:29,170 Speaker 1: seems to be woefully lacking. 489 00:24:29,959 --> 00:24:32,688 Speaker 2: Yeah, you, you're, you're absolutely right. I've always been skeptical 490 00:24:32,689 --> 00:24:36,410 Speaker 2: of this manufacturing renewal. First of all, the US economy 491 00:24:36,410 --> 00:24:40,889 Speaker 2: is a manufacturing powerhouse already. It's a $2.9 trillion manufacturing economy, 492 00:24:40,969 --> 00:24:43,930 Speaker 2: which if it were its own economy, the manufacturing sector 493 00:24:43,930 --> 00:24:45,879 Speaker 2: with its own economy would be the eighth largest economy 494 00:24:45,880 --> 00:24:49,469 Speaker 2: in the world. So, and it's larger than the next 495 00:24:49,469 --> 00:24:53,660 Speaker 2: five manufacturing sectors combined. So it's a, it's a, it's a, 496 00:24:53,930 --> 00:24:59,069 Speaker 2: despite the rhetoric, the hollowing out, it's, it, it's a powerhouse. 497 00:24:59,630 --> 00:25:02,680 Speaker 2: But I do think to, uh, to move production here 498 00:25:02,680 --> 00:25:05,879 Speaker 2: and I talked to producers around the world, I especially 499 00:25:05,880 --> 00:25:08,179 Speaker 2: talked to people in the auto industry because I like autos, 500 00:25:08,280 --> 00:25:11,159 Speaker 2: but nothing to do with my day job, but, uh, 501 00:25:11,319 --> 00:25:13,800 Speaker 2: it's expensive. You've got a whole host of other costs 502 00:25:13,800 --> 00:25:17,160 Speaker 2: you have to consider. It's about the durability of the 503 00:25:17,160 --> 00:25:20,280 Speaker 2: policy regime. You don't, if you're gonna build a factory 504 00:25:20,280 --> 00:25:24,060 Speaker 2: here with a 40 year, uh, productive life, you don't 505 00:25:24,359 --> 00:25:27,119 Speaker 2: do that based on the next 36 months, right? 506 00:25:28,079 --> 00:25:30,719 Speaker 2: I, I talked to some people in the aluminum smelting business. 507 00:25:30,800 --> 00:25:35,989 Speaker 2: Aluminum is, is essentially electricity play, right? So you can build, uh, 508 00:25:36,079 --> 00:25:38,438 Speaker 2: it takes 7 years to build a smelter here in 509 00:25:38,439 --> 00:25:41,919 Speaker 2: the United States, uh, and, uh, it's useful life for 510 00:25:41,920 --> 00:25:45,900 Speaker 2: 40 years. But if the electricity prices are 3x what 511 00:25:45,900 --> 00:25:50,478 Speaker 2: the Canadians can charge given their hydroelectric power, you're, you're not. 512 00:25:50,594 --> 00:25:55,175 Speaker 2: Competitive, right? And so, and then the, the, the downstream 513 00:25:55,864 --> 00:25:58,954 Speaker 2: purchasers are uncompetitive as well. So, I think there's a 514 00:25:58,954 --> 00:26:04,275 Speaker 2: lot of caution about, uh, outside the tech, the tech 515 00:26:04,275 --> 00:26:06,073 Speaker 2: space and, you know, the data centers. I think there's 516 00:26:06,074 --> 00:26:08,155 Speaker 2: a lot of caution. I think there's a lot of 517 00:26:08,155 --> 00:26:11,343 Speaker 2: announcements the president keeps spouting that aren't really real. I 518 00:26:11,344 --> 00:26:14,635 Speaker 2: think it's mostly PR, uh, and we just saw it 519 00:26:14,635 --> 00:26:19,114 Speaker 2: in manufacturing construction last year, which was weaker in 25 520 00:26:19,114 --> 00:26:19,974 Speaker 2: and 24. 521 00:26:20,859 --> 00:26:23,069 Speaker 2: So I, I agree with you. I think it's tough 522 00:26:23,069 --> 00:26:26,179 Speaker 2: to get people, firms to move here with a 40 523 00:26:26,180 --> 00:26:30,020 Speaker 2: year horizon without a greater sense of the sustainability, durability 524 00:26:30,020 --> 00:26:32,640 Speaker 2: of an appropriate supportive policy regime. 525 00:26:33,780 --> 00:26:36,540 Speaker 1: Tim, we were sort of, you know, talking about the 526 00:26:36,540 --> 00:26:39,020 Speaker 1: US dollar, and although I sort of breached my promise, 527 00:26:39,099 --> 00:26:40,540 Speaker 1: I took you on a tangent. I just want to 528 00:26:40,540 --> 00:26:43,489 Speaker 1: come back to the dollar question. In addition to, you know, 529 00:26:43,619 --> 00:26:45,500 Speaker 1: where the dollar goes, there is this issue of the 530 00:26:45,500 --> 00:26:47,709 Speaker 1: weaponization of the dollar, and this is something that 531 00:26:48,420 --> 00:26:51,540 Speaker 1: Regimes in the last 10 years, Biden or Trump, you know, 532 00:26:51,739 --> 00:26:54,339 Speaker 1: have repeatedly done that, whether it is, you know, seizing 533 00:26:54,339 --> 00:26:59,250 Speaker 1: the reserves of Central Bank of Afghanistan or Russia or 534 00:26:59,300 --> 00:27:03,339 Speaker 1: SWIFT related sanctions for companies dealing with entities listed companies 535 00:27:03,339 --> 00:27:08,060 Speaker 1: and so on. So is this serious damage? Is this 536 00:27:08,060 --> 00:27:12,540 Speaker 1: going to substantially, almost like a permanent basis, reduce the 537 00:27:12,540 --> 00:27:13,978 Speaker 1: desirability of holding the dollar? 538 00:27:15,729 --> 00:27:17,729 Speaker 2: I hear it, I hear it, I hear it everywhere 539 00:27:17,729 --> 00:27:21,369 Speaker 2: I go, right? Every complaint, and as we rewire and 540 00:27:21,369 --> 00:27:24,409 Speaker 2: rethink of what the payment rails of the 21st century 541 00:27:24,410 --> 00:27:30,319 Speaker 2: look like, uh, tokenize deposits, tokenize assets, uh, you know, 542 00:27:30,569 --> 00:27:34,849 Speaker 2: distributed ledger, uh, technology that is employed by central banks 543 00:27:34,849 --> 00:27:37,770 Speaker 2: for central bank money and commercial bank money in terms 544 00:27:37,770 --> 00:27:41,050 Speaker 2: of cross-border payments. The world is changing rapidly. 545 00:27:42,280 --> 00:27:45,270 Speaker 2: And what you do see are certain jurisdictions looking to 546 00:27:45,270 --> 00:27:49,550 Speaker 2: build their own systems either cross border or within regions, 547 00:27:49,660 --> 00:27:52,359 Speaker 2: you see it in in in uh in Asia. 548 00:27:53,160 --> 00:27:57,339 Speaker 2: To look for ways to avoid clearing through US institutions 549 00:27:57,339 --> 00:28:00,599 Speaker 2: and using the dollar. It's really hard to do, you know, 80% 550 00:28:00,599 --> 00:28:04,459 Speaker 2: of commodities are still priced in dollars, 90% of FX 551 00:28:04,760 --> 00:28:08,599 Speaker 2: transactions are still a dollar-based. You know, it's still a 552 00:28:08,599 --> 00:28:11,000 Speaker 2: large capital market, you're still a quarter of the of 553 00:28:11,000 --> 00:28:14,300 Speaker 2: the global economy, still 60% of global reserves, and the next, 554 00:28:15,069 --> 00:28:17,880 Speaker 2: the next reserve currency is probably the euro and a 555 00:28:17,880 --> 00:28:18,500 Speaker 2: third of that. 556 00:28:18,920 --> 00:28:21,719 Speaker 2: So there's an embedded network effect which is really hard 557 00:28:21,719 --> 00:28:25,280 Speaker 2: to dislodge, but yes, from a sentiment perspective, I hear 558 00:28:25,280 --> 00:28:29,119 Speaker 2: it everywhere I go. We want to avoid the long 559 00:28:29,119 --> 00:28:32,270 Speaker 2: reach of US government and we're looking for ways to 560 00:28:32,270 --> 00:28:35,400 Speaker 2: do it. And over time, over time, I think you 561 00:28:35,400 --> 00:28:40,680 Speaker 2: will see jurisdictions finding ways to circumnavigate the US. I 562 00:28:40,680 --> 00:28:42,699 Speaker 2: just don't think it's the next 3 to 5 years. 563 00:28:43,910 --> 00:28:48,579 Speaker 1: Right. Um, but, uh, is there a way, a more 564 00:28:48,579 --> 00:28:53,880 Speaker 1: constructive engagement, uh, by the next administration can codify that 565 00:28:54,420 --> 00:28:56,339 Speaker 1: dollar will not be weaponized in the future or we've 566 00:28:56,339 --> 00:28:57,739 Speaker 1: just passed a gun on that one. 567 00:28:58,650 --> 00:29:01,349 Speaker 2: Oh well, that's, so that's a great question. I think 568 00:29:01,359 --> 00:29:06,680 Speaker 2: what happens, sanctions are really, uh, a really attractive tool, right? 569 00:29:06,739 --> 00:29:11,349 Speaker 2: It's a non-kinetic way of, of expressing and, and, uh, 570 00:29:12,089 --> 00:29:13,459 Speaker 2: exercising US power. 571 00:29:14,150 --> 00:29:18,229 Speaker 2: And so it is really tough to walk away once you've, 572 00:29:18,300 --> 00:29:23,989 Speaker 2: and you've seen it from the, you know, every administration, Bush, Obama, uh, uh, Biden, Trump, 573 00:29:24,229 --> 00:29:27,329 Speaker 2: it's pretty hard to give up that tool in your toolbox. 574 00:29:27,589 --> 00:29:31,630 Speaker 2: I do think you could have a rhetorical approach that 575 00:29:31,630 --> 00:29:34,430 Speaker 2: is a little bit more understanding of the concerns around 576 00:29:34,430 --> 00:29:36,988 Speaker 2: the world and, and have a high threshold of when 577 00:29:36,989 --> 00:29:39,790 Speaker 2: you're gonna use that tool. Uh, I think that would 578 00:29:39,790 --> 00:29:41,829 Speaker 2: be helpful. Right now there's a sense they'll use it 579 00:29:41,829 --> 00:29:43,530 Speaker 2: whenever they want, however they want. 580 00:29:44,089 --> 00:29:47,920 Speaker 2: And that seems in many jurisdictions reckless. That's not my 581 00:29:47,920 --> 00:29:50,250 Speaker 2: description per se, but I do hear it. But that 582 00:29:50,250 --> 00:29:52,530 Speaker 2: you could walk that back a bit. But I don't 583 00:29:52,530 --> 00:29:55,609 Speaker 2: think that any future administration's going to give up the 584 00:29:55,609 --> 00:29:58,988 Speaker 2: capacity or the leverage as long as it it exists. 585 00:29:59,689 --> 00:30:03,270 Speaker 1: Alright, so it will remain weaponized. Um, about 8 months ago, 586 00:30:03,489 --> 00:30:03,969 Speaker 1: the Genius 587 00:30:03,969 --> 00:30:04,170 Speaker 2: Act, 588 00:30:05,170 --> 00:30:06,050 Speaker 2: let me just add to that. 589 00:30:07,020 --> 00:30:09,739 Speaker 2: An interesting episode in the last couple of weeks, uh, 590 00:30:09,939 --> 00:30:13,859 Speaker 2: Secretary Besset was out for dinner and, uh, they were 591 00:30:13,859 --> 00:30:16,079 Speaker 2: in somehow, uh, some. 592 00:30:17,229 --> 00:30:20,550 Speaker 2: advocacy group got wind of it and showed up at 593 00:30:20,550 --> 00:30:25,250 Speaker 2: the restaurant and uh made a big fuss. Uh, it was, 594 00:30:25,510 --> 00:30:27,670 Speaker 2: you know, it's all, all, it's on YouTube, you can 595 00:30:27,670 --> 00:30:31,670 Speaker 2: find it. Uh, and it was about sanctions and this, 596 00:30:31,729 --> 00:30:33,369 Speaker 2: the group that was, and I don't know, I didn't 597 00:30:33,369 --> 00:30:35,459 Speaker 2: never heard of the group who were shouting at him 598 00:30:35,459 --> 00:30:38,699 Speaker 2: over his dinner about the use of sanctions and it 599 00:30:38,699 --> 00:30:41,189 Speaker 2: had killed 600,000 children around the world or something. 600 00:30:41,599 --> 00:30:45,160 Speaker 2: It's the first time I'd ever heard protesting about US sanctions. 601 00:30:45,400 --> 00:30:46,959 Speaker 2: There's a lot of things you could protest about in 602 00:30:46,959 --> 00:30:50,959 Speaker 2: the United States right now, but I thought that was 603 00:30:50,959 --> 00:30:54,640 Speaker 2: an interesting data point. Uh, and so maybe that's to 604 00:30:54,640 --> 00:30:57,920 Speaker 2: your point as well. There is concern about the aggressive 605 00:30:57,920 --> 00:31:01,280 Speaker 2: use of weaponizing the dollar, and, and if enough of 606 00:31:01,280 --> 00:31:05,800 Speaker 2: this happens, then you may see over time some sensitivity 607 00:31:05,800 --> 00:31:07,550 Speaker 2: to how it's used and where it's used and under 608 00:31:07,550 --> 00:31:08,520 Speaker 2: what circumstances. 609 00:31:09,069 --> 00:31:11,390 Speaker 1: That's fascinating to hear that. I'm really glad that, you know, you, 610 00:31:11,520 --> 00:31:15,359 Speaker 1: you added that insight. Thank you for that. So related 611 00:31:15,359 --> 00:31:20,550 Speaker 1: to the dollar, 8 months ago, stable genius Act, stable coins, 612 00:31:20,599 --> 00:31:21,599 Speaker 1: and at that moment, 613 00:31:21,969 --> 00:31:24,729 Speaker 1: There was like breathless commentary that this is soon going 614 00:31:24,729 --> 00:31:28,510 Speaker 1: to become like a $1 trillion market. It will disintermediate 615 00:31:28,510 --> 00:31:34,630 Speaker 1: countries that don't pursue serious FX stabilization policy. It would democratize, 616 00:31:35,170 --> 00:31:39,130 Speaker 1: you know, movement of currency around the world. It doesn't 617 00:31:39,130 --> 00:31:41,530 Speaker 1: seem to be that big of a game changer. Am 618 00:31:41,530 --> 00:31:42,689 Speaker 1: I speaking too soon? 619 00:31:44,349 --> 00:31:47,390 Speaker 2: Well, there's certainly ambitions in this town about the future 620 00:31:47,390 --> 00:31:52,520 Speaker 2: of stablecoins and their use globally, and there is um 621 00:31:54,060 --> 00:31:58,989 Speaker 2: Yeah, you know, the, the, you can't really spend time with, uh, 622 00:31:59,000 --> 00:32:03,739 Speaker 2: with US officials that isn't often mentioned, right? And and 623 00:32:03,739 --> 00:32:07,420 Speaker 2: also members of Congress who, who are enthusiastic. So, in 624 00:32:07,420 --> 00:32:10,800 Speaker 2: the tech sector, so you have this, you know, this, uh, 625 00:32:11,020 --> 00:32:16,140 Speaker 2: melding of the Silicon Valley types, venture capital types, US 626 00:32:16,140 --> 00:32:16,540 Speaker 2: government officials. 627 00:32:16,619 --> 00:32:20,319 Speaker 2: Officials and some members of Congress who have cheerleaded this, 628 00:32:20,420 --> 00:32:23,140 Speaker 2: and it is pretty transformed. The US Congress hasn't done 629 00:32:23,140 --> 00:32:26,369 Speaker 2: much this in this term, but they did pass the 630 00:32:26,369 --> 00:32:28,780 Speaker 2: Genius Act and they're looking at something called the Clarity Act, 631 00:32:28,810 --> 00:32:34,060 Speaker 2: which will give greater, greater structure when more specific role 632 00:32:34,060 --> 00:32:36,459 Speaker 2: of the SEC versus CFTC and the host of other 633 00:32:36,459 --> 00:32:39,160 Speaker 2: things which is being debated in Washington this week. 634 00:32:40,140 --> 00:32:43,540 Speaker 2: I think this administration thinks, and many in this town 635 00:32:43,540 --> 00:32:46,359 Speaker 2: think that this is the future, this is just the beginning, 636 00:32:46,660 --> 00:32:48,459 Speaker 2: and they're going to continue pushing it. 637 00:32:48,930 --> 00:32:51,319 Speaker 2: And the, as you know, the US has the chair 638 00:32:51,319 --> 00:32:53,930 Speaker 2: of the G20 this year, the chair of the G7 639 00:32:53,930 --> 00:32:57,329 Speaker 2: next year, and this is a topic on the G20 640 00:32:57,329 --> 00:33:00,449 Speaker 2: agenda from the US perspective that they hope to push. 641 00:33:00,560 --> 00:33:06,569 Speaker 2: They hope to export this, uh, this, uh, regulatory regime 642 00:33:06,569 --> 00:33:08,959 Speaker 2: to other countries. Now, I've talked to lots of other 643 00:33:08,959 --> 00:33:13,390 Speaker 2: countries including Singapore, uh, the MAS as you know, incredibly smart, 644 00:33:13,569 --> 00:33:14,890 Speaker 2: one of the best in the business, and. 645 00:33:15,270 --> 00:33:19,699 Speaker 2: There's a lot of, yeah, we'll we'll we'll think about it, um, but, um, 646 00:33:19,709 --> 00:33:23,869 Speaker 2: probably not. So I think there's a real tough sales 647 00:33:23,869 --> 00:33:26,660 Speaker 2: job this administration has in front of it. That doesn't 648 00:33:26,660 --> 00:33:29,540 Speaker 2: mean there aren't jurisdictions who say, oh, the Genius Act 649 00:33:29,540 --> 00:33:32,709 Speaker 2: looks great, let's take it, let's import it, let's pass it, 650 00:33:33,000 --> 00:33:36,170 Speaker 2: and let's replicate the stablecoin world. 651 00:33:36,640 --> 00:33:38,650 Speaker 2: And I think, I think you will see some of 652 00:33:38,650 --> 00:33:41,540 Speaker 2: that coming. Is it gonna be a $1 trillion.02 trillion dollars, 653 00:33:41,619 --> 00:33:43,969 Speaker 2: $3 trillion dollar market? I don't know, but it's gonna 654 00:33:43,969 --> 00:33:46,010 Speaker 2: be larger than what it is, but I think there 655 00:33:46,010 --> 00:33:50,430 Speaker 2: are limits. We're more focused on how do you tokenize 656 00:33:50,880 --> 00:33:54,709 Speaker 2: assets and and central bank and commercial bank money. 657 00:33:55,349 --> 00:33:58,209 Speaker 2: I think that's limitless and it's within the current system 658 00:33:58,209 --> 00:34:00,449 Speaker 2: and it includes the central banks, and I think it's 659 00:34:00,449 --> 00:34:05,119 Speaker 2: very difficult to have a new payment system unless the 660 00:34:05,119 --> 00:34:07,209 Speaker 2: central banks are part of it. You can remember the 661 00:34:07,209 --> 00:34:11,689 Speaker 2: DM and Libra exercise by Meta. I think if you 662 00:34:11,689 --> 00:34:14,669 Speaker 2: don't have central bankers as a part of the discussion. 663 00:34:15,239 --> 00:34:20,419 Speaker 2: You are, you face real constraints. Now, the, the libertarian 664 00:34:20,419 --> 00:34:22,719 Speaker 2: tech bros will say, who cares? It's this, you know, 665 00:34:22,790 --> 00:34:24,520 Speaker 2: we're gonna burn down the world, you know, down with 666 00:34:24,520 --> 00:34:29,040 Speaker 2: the central banks. This is about liberation. Yeah, until, you know, you, 667 00:34:29,159 --> 00:34:32,198 Speaker 2: you start having money laundering problems and you've got a 668 00:34:32,199 --> 00:34:33,620 Speaker 2: whole host of other challenges. 669 00:34:34,090 --> 00:34:38,389 Speaker 2: So yes, the, the genius X that coins is huge here. 670 00:34:38,800 --> 00:34:42,989 Speaker 2: It's talked about daily. I think it has some upside potential. 671 00:34:43,050 --> 00:34:45,709 Speaker 2: I think there are limitations. I think more is happening. 672 00:34:46,010 --> 00:34:48,790 Speaker 2: I think there's alternative systems that I think are more 673 00:34:48,850 --> 00:34:50,739 Speaker 2: durable and larger. 674 00:34:51,850 --> 00:34:53,969 Speaker 1: Tim, I'm just going to share my personal thought on 675 00:34:53,969 --> 00:34:57,370 Speaker 1: this issue is that, and this draws on a conversation 676 00:34:57,370 --> 00:35:00,509 Speaker 1: I had with BISS Augustin Carstens a few years ago, 677 00:35:00,770 --> 00:35:03,290 Speaker 1: and Augustin said to me that, you know, stablecoins are 678 00:35:03,290 --> 00:35:05,879 Speaker 1: a 500 year old idea because the Dutch East India 679 00:35:05,879 --> 00:35:08,330 Speaker 1: Company used to have copper backed coins that they would, 680 00:35:08,409 --> 00:35:11,090 Speaker 1: you know, issue, and that lasted for a while, but 681 00:35:11,090 --> 00:35:11,179 Speaker 1: then 682 00:35:11,229 --> 00:35:13,149 Speaker 1: They started, you know, reducing the amount of copper that 683 00:35:13,149 --> 00:35:15,299 Speaker 1: they were backing it with, and once that word got out, 684 00:35:15,350 --> 00:35:18,699 Speaker 1: the whole thing collapsed. His basic point was that unless 685 00:35:18,699 --> 00:35:22,379 Speaker 1: you have airtight governance, these sort of, you know, asset-backed 686 00:35:22,379 --> 00:35:26,469 Speaker 1: currencies don't work very well, and we've seen that through, 687 00:35:26,580 --> 00:35:29,500 Speaker 1: you know, history, and I sort of thought of that 688 00:35:29,500 --> 00:35:32,020 Speaker 1: when Genius Act got passed because it was very light 689 00:35:32,020 --> 00:35:36,189 Speaker 1: on regulation, and that, in my view, is the original 690 00:35:36,189 --> 00:35:39,469 Speaker 1: sin that if you don't have super tight governance at 691 00:35:39,469 --> 00:35:40,469 Speaker 1: the very inception. 692 00:35:40,899 --> 00:35:43,020 Speaker 1: People around the world would have a hard time using 693 00:35:43,020 --> 00:35:45,739 Speaker 1: it because they feel that, you know, any private company 694 00:35:45,979 --> 00:35:49,560 Speaker 1: can come up with very uh loosely regulated issuance of 695 00:35:49,860 --> 00:35:52,138 Speaker 1: uh stable coins and we don't really know how well 696 00:35:52,139 --> 00:35:53,699 Speaker 1: it's governed. What are your thoughts on 697 00:35:53,699 --> 00:35:54,159 Speaker 1: that? 698 00:35:54,830 --> 00:35:57,760 Speaker 2: Without question, I think governance is a huge issue unless 699 00:35:58,469 --> 00:36:01,580 Speaker 2: Unless you want to use it because of governance light, right? And, 700 00:36:01,629 --> 00:36:04,129 Speaker 2: and I agree with you, Augustine's, we, we used to, 701 00:36:04,260 --> 00:36:06,270 Speaker 2: the Romans used to cut the edges of the, you know, 702 00:36:06,350 --> 00:36:09,310 Speaker 2: the silver, and it was silver washed rather than, yes, 703 00:36:09,790 --> 00:36:14,109 Speaker 2: history is replete with examples of the, of, of the 704 00:36:14,110 --> 00:36:16,709 Speaker 2: debasement of, of currencies and just because it's on a 705 00:36:16,709 --> 00:36:19,479 Speaker 2: blockchain doesn't mean it's not subject to the same laws 706 00:36:19,479 --> 00:36:21,100 Speaker 2: of gravity, right? 707 00:36:21,580 --> 00:36:25,199 Speaker 2: Uh, I just think there is a market out there. Uh, 708 00:36:25,409 --> 00:36:28,780 Speaker 2: how large I don't know. We need to better understand 709 00:36:28,780 --> 00:36:30,120 Speaker 2: what it looks like in a stressed environment. 710 00:36:31,070 --> 00:36:34,229 Speaker 2: Andrew Bailey is the chair of the FSB and also 711 00:36:34,229 --> 00:36:36,229 Speaker 2: his role at the Bank of England, certainly looking at this. 712 00:36:36,310 --> 00:36:39,830 Speaker 2: The BIS you mentioned Augustine, Pablo De Costa, and the 713 00:36:39,830 --> 00:36:43,070 Speaker 2: current BIS crowd certainly looking at this. And then there's 714 00:36:43,070 --> 00:36:47,549 Speaker 2: the issue about the impact in emerging markets where there 715 00:36:47,550 --> 00:36:52,189 Speaker 2: may be banks that are where there's semi-dollarized emerging markets. 716 00:36:52,629 --> 00:36:55,629 Speaker 2: Might you see deposit flight in a stressed environment out 717 00:36:55,629 --> 00:36:58,830 Speaker 2: of banks into stablecoins, and is that. 718 00:36:59,280 --> 00:37:04,239 Speaker 2: Exacerbate financial instability in emerging markets and might it happen 719 00:37:04,239 --> 00:37:07,479 Speaker 2: with a speed that we've never quite witnessed before, like 720 00:37:07,479 --> 00:37:11,919 Speaker 2: as in minutes rather than hours or days. So I 721 00:37:11,919 --> 00:37:14,719 Speaker 2: think all these bare and it's and we're spending a 722 00:37:14,719 --> 00:37:17,540 Speaker 2: tremendous amount of time here thinking through all these scenarios 723 00:37:18,040 --> 00:37:22,719 Speaker 2: simply because it is now becoming much more uh widely 724 00:37:22,719 --> 00:37:25,080 Speaker 2: circulated and many of our firms are interested. 725 00:37:26,169 --> 00:37:29,009 Speaker 1: Absolutely, and I, I got to, you know, tip my hat. 726 00:37:29,080 --> 00:37:31,129 Speaker 1: I mean both you guys at IAF as well as 727 00:37:31,129 --> 00:37:33,509 Speaker 1: the BIS, I think they're doing really, really important work. 728 00:37:33,770 --> 00:37:37,169 Speaker 1: Sometimes it is at the private sector and multilateral level, 729 00:37:37,250 --> 00:37:39,659 Speaker 1: you want the leadership because the governments are going to 730 00:37:39,659 --> 00:37:42,569 Speaker 1: follow very narrow objectives of their own country or own 731 00:37:42,570 --> 00:37:46,409 Speaker 1: national interests. But since you mentioned the phrase financial stability 732 00:37:46,409 --> 00:37:49,209 Speaker 1: several times, so let me sort of ask you about that. 733 00:37:49,760 --> 00:37:52,120 Speaker 1: We're having this conversation at a time that we have 734 00:37:52,120 --> 00:37:56,000 Speaker 1: seen rather anomalous developments, you know, gold heading to 5500 735 00:37:56,000 --> 00:38:00,340 Speaker 1: and then crashing a bit, although it's still exceptionally pricey. 736 00:38:00,500 --> 00:38:03,800 Speaker 1: Same with silver. We're seeing the sort of the AI 737 00:38:03,800 --> 00:38:06,560 Speaker 1: stock massive rally over the last couple of years and 738 00:38:06,560 --> 00:38:11,330 Speaker 1: some correction going on. Does this give you circa 2000 739 00:38:11,330 --> 00:38:13,639 Speaker 1: or circa 2008 vibes, or do you think this is 740 00:38:13,639 --> 00:38:17,100 Speaker 1: a much better founded upcycle in asset prices? 741 00:38:17,600 --> 00:38:20,560 Speaker 2: Mhm. Well, my job is to worry, and whenever we 742 00:38:20,560 --> 00:38:23,439 Speaker 2: start talking about the end of the business cycle, it 743 00:38:23,439 --> 00:38:27,839 Speaker 2: makes me very nervous. I still have my pets.com pups pup. 744 00:38:29,110 --> 00:38:31,549 Speaker 2: I have it at home as a reminder in in 745 00:38:31,550 --> 00:38:36,549 Speaker 2: January of 2000, uh, Pets.com dominated the Super Bowl advertising. 746 00:38:36,610 --> 00:38:38,889 Speaker 2: It was uh had a market cap that exceeded all 747 00:38:38,889 --> 00:38:43,219 Speaker 2: the other individual industrial companies. And in March, you know, 748 00:38:43,510 --> 00:38:46,529 Speaker 2: the NASDAQ popped in by October, they were bankrupt. So, 749 00:38:46,830 --> 00:38:49,830 Speaker 2: things can move pretty fast. It's interesting, I just look 750 00:38:49,830 --> 00:38:52,729 Speaker 2: at metals. I'm on a foundation board, we met Tuesday night. 751 00:38:53,239 --> 00:38:56,049 Speaker 2: And uh I was, I was one of the ones 752 00:38:56,050 --> 00:38:58,850 Speaker 2: that 6 months ago had suggested selling out of gold 753 00:38:58,850 --> 00:39:01,250 Speaker 2: because I thought it, it was time to sell, and 754 00:39:01,250 --> 00:39:03,449 Speaker 2: some of my colleagues were chiding me that we should 755 00:39:03,449 --> 00:39:05,969 Speaker 2: have ridden that horse longer, and I thought, look, you 756 00:39:05,969 --> 00:39:08,049 Speaker 2: can't get greedy, and I don't get it. I think 757 00:39:08,050 --> 00:39:10,638 Speaker 2: we're looking at it, if you look at gold, any 758 00:39:10,639 --> 00:39:14,409 Speaker 2: historical ratios were there, and silver is an oddity because 759 00:39:14,409 --> 00:39:15,750 Speaker 2: it's an industrial metal. 760 00:39:16,229 --> 00:39:18,350 Speaker 2: And we've seen massive swings just today. I think we're 761 00:39:18,350 --> 00:39:23,070 Speaker 2: down 15%. Bitcoin is down to below 70,000. So a 762 00:39:23,070 --> 00:39:25,179 Speaker 2: lot of these things make me very nervous. My, uh, 763 00:39:25,310 --> 00:39:27,469 Speaker 2: my children, I've tried to get them to build their 764 00:39:27,469 --> 00:39:30,110 Speaker 2: own portfolios, and they've been calling me this week and 765 00:39:30,110 --> 00:39:32,870 Speaker 2: I said, look, just be really conservative. Go for value stocks, 766 00:39:33,189 --> 00:39:36,550 Speaker 2: look for companies that blue chip dividend paying, look for 767 00:39:36,550 --> 00:39:39,350 Speaker 2: companies that can get you through the cycle and just 768 00:39:39,350 --> 00:39:41,989 Speaker 2: don't get greedy. Things are priced to perfection and maybe 769 00:39:41,989 --> 00:39:44,428 Speaker 2: it all works out, you know, the AI space is 770 00:39:44,429 --> 00:39:45,530 Speaker 2: so remarkable. 771 00:39:46,040 --> 00:39:48,610 Speaker 2: And, but there's also a tremendous amount of hype, and 772 00:39:48,610 --> 00:39:50,888 Speaker 2: I just don't, I don't know, you know, I don't 773 00:39:50,889 --> 00:39:52,529 Speaker 2: know if one of these firms or two of these 774 00:39:52,530 --> 00:39:55,560 Speaker 2: firms will end up looking like the BlackBerry of, of, 775 00:39:55,679 --> 00:39:58,560 Speaker 2: you know, the AI world and you have some new 776 00:39:58,560 --> 00:40:00,888 Speaker 2: technology that comes out of China or somewhere else where 777 00:40:00,889 --> 00:40:04,439 Speaker 2: you can do 85% of what the LLMs can do at, 778 00:40:04,530 --> 00:40:05,750 Speaker 2: you know, 5% of the cost. 779 00:40:06,610 --> 00:40:09,739 Speaker 2: And that the business model for some of these entities 780 00:40:09,739 --> 00:40:12,800 Speaker 2: that are going to borrow and spend hundreds of billions 781 00:40:12,800 --> 00:40:16,239 Speaker 2: of dollars, that that business model sort of disappears overnight 782 00:40:16,239 --> 00:40:18,419 Speaker 2: and then you've got, you've got a challenge because this 783 00:40:18,699 --> 00:40:23,639 Speaker 2: market is very narrowly focused, very intense, very narrowly focused, 784 00:40:23,689 --> 00:40:27,658 Speaker 2: as you know, it's 87 or 8 companies, and it's 785 00:40:27,659 --> 00:40:32,340 Speaker 2: very focused on a particular aspect of investment. I would, 786 00:40:32,419 --> 00:40:34,540 Speaker 2: I would feel better if it were more broad-based. 787 00:40:35,290 --> 00:40:37,929 Speaker 1: Right. Uh, so, I guess you and I should both 788 00:40:37,929 --> 00:40:39,570 Speaker 1: welcome the fact that we're actually seeing a bit of 789 00:40:39,570 --> 00:40:41,888 Speaker 1: a rotation as opposed to just a brutal sell-off that 790 00:40:41,889 --> 00:40:44,529 Speaker 1: people are getting into the value of stock. So they're 791 00:40:44,530 --> 00:40:45,600 Speaker 1: listening to your advice, Tim. 792 00:40:46,090 --> 00:40:48,969 Speaker 2: Yeah, well, I hope I'd, I'd like to see this 793 00:40:48,969 --> 00:40:50,389 Speaker 2: broaden out, widen a bit. 794 00:40:51,139 --> 00:40:53,979 Speaker 2: Become much more durable, but there's no doubt there's a 795 00:40:53,979 --> 00:40:57,459 Speaker 2: technological transformation going on. I was just looking at some 796 00:40:57,459 --> 00:40:59,699 Speaker 2: videos of some of the new humanoid robots. They were 797 00:40:59,699 --> 00:41:03,219 Speaker 2: all over Davos, but uh I found one this morning 798 00:41:03,219 --> 00:41:05,929 Speaker 2: that can wash the dishes, do your laundry, and walk 799 00:41:05,929 --> 00:41:08,138 Speaker 2: your dog, uh, which is pretty nice given. 800 00:41:08,229 --> 00:41:10,199 Speaker 2: How cold it is here. I could have someone walk me, 801 00:41:10,219 --> 00:41:13,780 Speaker 2: but there's no doubt that there's a technological revolution that's 802 00:41:13,780 --> 00:41:16,620 Speaker 2: happening before our very eyes. But there's no doubt that 803 00:41:16,629 --> 00:41:19,229 Speaker 2: firms will survive and others won't, as we saw in 804 00:41:19,229 --> 00:41:22,229 Speaker 2: the 1990s, right? Think about all the search engines that 805 00:41:22,229 --> 00:41:25,489 Speaker 2: existed in 1996, right, that didn't exist four years later. 806 00:41:26,070 --> 00:41:28,389 Speaker 2: And so out of that, some of these companies will 807 00:41:28,389 --> 00:41:31,569 Speaker 2: be the next Google and Amazon's and some won't be around. 808 00:41:32,439 --> 00:41:37,159 Speaker 1: I confess using Lycos and Excite and all those search 809 00:41:37,159 --> 00:41:43,159 Speaker 1: engines back in those days. Tim, we've largely focused on 810 00:41:43,159 --> 00:41:47,959 Speaker 1: the US. You run Institute of International Finance, and, and 811 00:41:47,959 --> 00:41:51,959 Speaker 1: you produce very, very good data on capital flow. I'm 812 00:41:51,959 --> 00:41:56,389 Speaker 1: an avid consumer of your capital tracker report and the 813 00:41:56,389 --> 00:41:57,620 Speaker 1: data that comes up with it. 814 00:41:57,919 --> 00:42:01,610 Speaker 1: Um, let's, uh, sort of leave the US aside for 815 00:42:01,610 --> 00:42:04,770 Speaker 1: a second and just talk about global flows trends, and 816 00:42:04,770 --> 00:42:07,770 Speaker 1: from your vantage point of IAF, what's your sense? Have 817 00:42:07,770 --> 00:42:11,350 Speaker 1: we survived the worst? Have we been stress tested pretty well? 818 00:42:11,610 --> 00:42:12,939 Speaker 1: Is the outlook OK? 819 00:42:13,449 --> 00:42:15,610 Speaker 2: Well, as you know, we are global, we have offices 820 00:42:15,610 --> 00:42:18,629 Speaker 2: around the world, including a wonderful office there in downtown Singapore, 821 00:42:19,010 --> 00:42:21,609 Speaker 2: just a few blocks away. We just did a big 822 00:42:21,610 --> 00:42:24,649 Speaker 2: event in Beijing a week ago. We had a team 823 00:42:24,649 --> 00:42:27,409 Speaker 2: out that was, uh, across China for an entire week. 824 00:42:27,800 --> 00:42:30,959 Speaker 2: So we spend our time in many, many different countries 825 00:42:30,959 --> 00:42:34,638 Speaker 2: around the world. Uh, so let's think about, um, off 826 00:42:34,639 --> 00:42:37,259 Speaker 2: to Europe, you said you were going as well. Uh, 827 00:42:37,610 --> 00:42:39,718 Speaker 2: Europe is an interesting story. I saw the German numbers 828 00:42:39,719 --> 00:42:42,469 Speaker 2: out this morning, better than expected. A lot of spending, uh, 829 00:42:42,479 --> 00:42:46,080 Speaker 2: occurring in Germany. A lot of spending's gonna occur across 830 00:42:46,080 --> 00:42:49,159 Speaker 2: the continent in terms of defense spending. We're, we actually 831 00:42:49,159 --> 00:42:50,159 Speaker 2: just launched a whole working. 832 00:42:50,254 --> 00:42:54,334 Speaker 2: Group on how defense spending will occur, how it's coordinated, 833 00:42:54,405 --> 00:42:57,215 Speaker 2: what it means for financial institutions, what are the risks, 834 00:42:57,294 --> 00:43:00,675 Speaker 2: what are the upsides. Everywhere I've been in the last 835 00:43:00,895 --> 00:43:06,604 Speaker 2: 90 days, uh, discussion about defense spending, is, is in, 836 00:43:06,635 --> 00:43:10,645 Speaker 2: in national security has come up from Greenland to, you know, to, 837 00:43:10,844 --> 00:43:11,854 Speaker 2: to Poland, right? 838 00:43:12,570 --> 00:43:15,689 Speaker 2: So Europe has great challenges. They have, it's like the 839 00:43:15,689 --> 00:43:20,489 Speaker 2: US aging population, uh, challenging demographics, social safety net, which 840 00:43:20,489 --> 00:43:23,000 Speaker 2: is incredibly expensive. They're going to spend more on defense. 841 00:43:23,449 --> 00:43:27,760 Speaker 2: They desperately need institutional change. They need a a a 842 00:43:27,889 --> 00:43:29,500 Speaker 2: a a economy-wide. 843 00:43:29,685 --> 00:43:32,125 Speaker 2: Capital markets so they can better intermediate capital, get it 844 00:43:32,125 --> 00:43:35,084 Speaker 2: out of savings accounts that have zero returns and build 845 00:43:35,084 --> 00:43:37,364 Speaker 2: an equity culture. So they all know what to do 846 00:43:37,364 --> 00:43:39,324 Speaker 2: and I'm gonna repeat next week what they need to 847 00:43:39,324 --> 00:43:40,885 Speaker 2: do and they're gonna tell me they know what to do. 848 00:43:40,925 --> 00:43:44,725 Speaker 2: It's really not, you know, Mario Draghi's done a good 849 00:43:44,725 --> 00:43:47,925 Speaker 2: job about life. It's all about execution and maybe some 850 00:43:47,925 --> 00:43:51,004 Speaker 2: of this can sort of inch ahead over time, probably 851 00:43:51,004 --> 00:43:53,524 Speaker 2: need some governance reform. So, I'm. 852 00:43:54,139 --> 00:43:55,620 Speaker 2: I'm, I'm somewhat. 853 00:43:56,899 --> 00:44:00,419 Speaker 2: Optimistic about Europe, but not overly so, I think certainly 854 00:44:00,419 --> 00:44:02,219 Speaker 2: there's a lot of spending that's gonna happen, it's gonna 855 00:44:02,219 --> 00:44:06,350 Speaker 2: keep dragging them along. One thing I have seen about, 856 00:44:07,669 --> 00:44:09,750 Speaker 2: The Gulf in Asia, and I spent a lot of 857 00:44:09,750 --> 00:44:12,850 Speaker 2: time in the GCC in December. 858 00:44:13,840 --> 00:44:18,719 Speaker 2: Is the interest in the Gulf, in ASEAN in Asia generally, 859 00:44:18,840 --> 00:44:22,080 Speaker 2: the interest in ASEAN countries in the Gulf, in in 860 00:44:22,090 --> 00:44:25,719 Speaker 2: in in Africa, and it's part of my theme of 861 00:44:25,719 --> 00:44:28,580 Speaker 2: the world is rewiring itself. You know, we used to, 862 00:44:28,719 --> 00:44:32,000 Speaker 2: we used to optimize for efficiency, now I think we're 863 00:44:32,000 --> 00:44:34,979 Speaker 2: optimizing for resiliency, and I think there's a lot of 864 00:44:35,340 --> 00:44:37,379 Speaker 2: investors in terms of capital flows are looking. 865 00:44:37,780 --> 00:44:40,819 Speaker 2: They're not leaving the US, but they're looking for alternatives 866 00:44:40,820 --> 00:44:44,580 Speaker 2: and they're, they're, um, looking for ways to diversify from 867 00:44:44,580 --> 00:44:47,820 Speaker 2: the US. So, you know, many of our GCC firms 868 00:44:47,820 --> 00:44:50,500 Speaker 2: have been were in Singapore in September, they're going to 869 00:44:50,500 --> 00:44:54,239 Speaker 2: Hong Kong, the ASEAN countries are in in the Gulf. 870 00:44:54,370 --> 00:44:57,649 Speaker 2: Throw in India and Africa, you have this, this arc 871 00:44:57,649 --> 00:45:00,570 Speaker 2: that goes like, you know, also throw in Europe that 872 00:45:00,570 --> 00:45:04,250 Speaker 2: goes from the GCC across India into Asia, and I'll 873 00:45:04,250 --> 00:45:06,209 Speaker 2: throw in Australia. I've got to go there in a 874 00:45:06,209 --> 00:45:08,649 Speaker 2: few weeks. I think that's the future. I think it's 875 00:45:08,649 --> 00:45:14,049 Speaker 2: incredibly dynamic. You got 500 million middle class consumers. Uh, 876 00:45:14,330 --> 00:45:17,090 Speaker 2: I think it's an enormous amount of upside potential. 877 00:45:17,689 --> 00:45:19,570 Speaker 2: And a tremendous amount of investment. So I think the 878 00:45:19,570 --> 00:45:24,549 Speaker 2: world is rewiring itself that makes me somewhat bullish about 879 00:45:24,550 --> 00:45:28,169 Speaker 2: that arc that I just described, uh, and then I 880 00:45:28,169 --> 00:45:30,270 Speaker 2: think more generally, EMs, 881 00:45:30,820 --> 00:45:35,259 Speaker 2: Those with good policy regimes attract capital and those who 882 00:45:35,260 --> 00:45:38,199 Speaker 2: don't don't, right? And there's good stories to be told 883 00:45:38,199 --> 00:45:42,259 Speaker 2: on a heterogeneic individual basis. We've got a huge number 884 00:45:42,260 --> 00:45:44,939 Speaker 2: of elections in Latin America and you see right of 885 00:45:44,939 --> 00:45:48,020 Speaker 2: center governments coming in, we're just in Costa Rica this 886 00:45:48,020 --> 00:45:48,760 Speaker 2: past week. 887 00:45:49,080 --> 00:45:52,239 Speaker 2: Uh, and you may see better policy regimes going forward 888 00:45:52,239 --> 00:45:54,280 Speaker 2: and maybe depending on what happens in Venezuela, you have 889 00:45:54,280 --> 00:45:58,479 Speaker 2: a model of transitioning from, you know, three decades of 890 00:45:58,479 --> 00:46:02,719 Speaker 2: bad policy to maybe something better. So I'm optimistic that we'll, 891 00:46:03,050 --> 00:46:07,860 Speaker 2: we'll end up with a world that's better distributed, more diversified, less. 892 00:46:08,389 --> 00:46:11,770 Speaker 2: Dependent on the US consumer, the consumer last resort, and 893 00:46:11,770 --> 00:46:16,830 Speaker 2: ultimately less dependent on China as the supplier of capital 894 00:46:16,830 --> 00:46:19,370 Speaker 2: goods and consumer goods around the world. That's the next 895 00:46:19,629 --> 00:46:22,189 Speaker 2: piece that needs to evolve, and I think, I think 896 00:46:22,189 --> 00:46:25,620 Speaker 2: it will over time. So I'm optimistic about a more balanced, 897 00:46:25,659 --> 00:46:29,790 Speaker 2: diversified global economy. It's heterogeneic, but I'm very excited about 898 00:46:29,790 --> 00:46:33,229 Speaker 2: this GCC to the ASEAN arc, as I call it. 899 00:46:33,820 --> 00:46:37,179 Speaker 1: Well, we, we are too. Uh, finally, Tim, uh, you 900 00:46:37,179 --> 00:46:41,540 Speaker 1: were at Davos. Mark Carney gave quite the speech. It's 901 00:46:41,540 --> 00:46:46,100 Speaker 1: resonated around the corridors of non-superpower countries around the world. 902 00:46:46,219 --> 00:46:48,100 Speaker 1: What did you make of it and what do you 903 00:46:48,100 --> 00:46:49,779 Speaker 1: think of its call? 904 00:46:50,719 --> 00:46:52,949 Speaker 2: Yeah, uh, Mark is a great friend. We would have 905 00:46:52,949 --> 00:46:55,600 Speaker 2: known each other for years and, um, I sent him 906 00:46:55,600 --> 00:46:58,040 Speaker 2: a nice handwritten note when I got back. I saw 907 00:46:58,040 --> 00:46:59,949 Speaker 2: him give the speech. I thought it was spot on. 908 00:47:00,000 --> 00:47:02,839 Speaker 2: I think it was a wake-up call. Uh, Mark's always, 909 00:47:03,040 --> 00:47:05,399 Speaker 2: you know, he was a hockey player and, and, uh, 910 00:47:05,439 --> 00:47:07,320 Speaker 2: as a young guy and played he was on the 911 00:47:07,320 --> 00:47:10,209 Speaker 2: hockey team at Harvard. Yeah, so the the adage is, uh, 912 00:47:10,320 --> 00:47:13,089 Speaker 2: you always, uh, you want to be where the puck's going, right? 913 00:47:13,159 --> 00:47:15,179 Speaker 2: I think Mark's always where the puck is going. 914 00:47:15,610 --> 00:47:18,129 Speaker 2: And I think it was an important wake-up call for 915 00:47:18,129 --> 00:47:20,830 Speaker 2: he described them as middle powers. I don't know if 916 00:47:20,830 --> 00:47:22,449 Speaker 2: I like that phrase, but I, I, I don't have 917 00:47:22,449 --> 00:47:25,520 Speaker 2: a better term that the world has changed, the old 918 00:47:25,520 --> 00:47:28,399 Speaker 2: order is gone. I don't know what comes next. I've 919 00:47:28,399 --> 00:47:29,010 Speaker 2: talked to. 920 00:47:29,939 --> 00:47:36,770 Speaker 2: A number of theorists, political scientists, historians, uh, uh, authors 921 00:47:36,770 --> 00:47:40,929 Speaker 2: over the past few weeks, uh, and everyone's got a 922 00:47:40,929 --> 00:47:43,928 Speaker 2: different sort of view of is this transition to something new, 923 00:47:44,090 --> 00:47:48,090 Speaker 2: some new equilibrium, geopolitical equilibrium, or are we just gonna 924 00:47:48,090 --> 00:47:50,529 Speaker 2: wander through the wilderness for the next 30 or 40 925 00:47:50,530 --> 00:47:52,750 Speaker 2: or 50 years? I don't know the answer to that. 926 00:47:52,969 --> 00:47:55,929 Speaker 2: I just know what we had is gone, and every 927 00:47:55,929 --> 00:47:58,290 Speaker 2: country now needs to figure out how to. 928 00:47:59,439 --> 00:48:02,779 Speaker 2: Defend itself, how to optimize its own national security, how 929 00:48:02,780 --> 00:48:08,360 Speaker 2: to develop new alliances, new friends, new supply chains. It's 930 00:48:08,360 --> 00:48:11,199 Speaker 2: a bit of a, it's a bit of a, you know, 931 00:48:11,290 --> 00:48:13,959 Speaker 2: a dog eat dog world out there, and I think 932 00:48:13,959 --> 00:48:15,870 Speaker 2: Mark's view was we're not going to be left behind. 933 00:48:15,919 --> 00:48:20,189 Speaker 2: We've got enormous resources, where we have enormous innovation, ingenuity, 934 00:48:20,239 --> 00:48:22,679 Speaker 2: and we're going to be, we're we're not gonna, we're 935 00:48:22,679 --> 00:48:25,199 Speaker 2: not the US and we're not China, but we can 936 00:48:25,199 --> 00:48:26,139 Speaker 2: certainly find. 937 00:48:26,770 --> 00:48:29,600 Speaker 2: New markets, new alliances, and new places, new business, we're 938 00:48:29,600 --> 00:48:33,530 Speaker 2: gonna share every value, and I think that re-scrambling is 939 00:48:33,530 --> 00:48:37,049 Speaker 2: happening and will happen for months, if not many years, 940 00:48:37,129 --> 00:48:38,149 Speaker 2: maybe decades to come. 941 00:48:39,139 --> 00:48:41,678 Speaker 1: I, I call it the global anti-bullying campaign. 942 00:48:43,219 --> 00:48:46,090 Speaker 2: It is, well, I hear it everywhere I go. And I, if, if, if, 943 00:48:46,169 --> 00:48:49,300 Speaker 2: you know, your listeners haven't read the speech, the Mark's 944 00:48:49,300 --> 00:48:51,819 Speaker 2: speech that they should, I think it really is, here's 945 00:48:51,820 --> 00:48:53,949 Speaker 2: where we are. It, it, we, you know, you can't 946 00:48:53,949 --> 00:48:57,530 Speaker 2: cry over it is what it is, right? De-emotionalize it, 947 00:48:57,780 --> 00:49:00,949 Speaker 2: just move on. It's, it's, uh, just be pragmatic. Well, 948 00:49:01,100 --> 00:49:03,939 Speaker 2: I'll finish where I started. Be pragmatic and figure out 949 00:49:03,939 --> 00:49:06,000 Speaker 2: how to build resiliency in the system. 950 00:49:06,629 --> 00:49:10,189 Speaker 2: Uh, and defend your interests, and then, uh, and we'll 951 00:49:10,189 --> 00:49:14,860 Speaker 2: see what happens and hopefully some new order evolves that is, 952 00:49:15,639 --> 00:49:19,199 Speaker 2: you know, that is promotes prosperity and peace and that 953 00:49:19,199 --> 00:49:20,580 Speaker 2: we're all better off for it. 954 00:49:21,120 --> 00:49:24,000 Speaker 1: Yeah, absolutely, uh, Tim, this was such a great conversation. 955 00:49:24,360 --> 00:49:25,699 Speaker 1: Can't thank you enough for your time. 956 00:49:26,830 --> 00:49:28,429 Speaker 2: Thank you very much for having me. I always look 957 00:49:28,429 --> 00:49:30,939 Speaker 2: forward to, you do fabulous work. I read everything you write. 958 00:49:31,370 --> 00:49:32,790 Speaker 2: So thank you for having me. I look forward to 959 00:49:32,790 --> 00:49:33,399 Speaker 2: coming back. 960 00:49:33,750 --> 00:49:36,189 Speaker 1: Brilliant. Uh, thanks to our listeners as well. Uh, this 961 00:49:36,189 --> 00:49:39,399 Speaker 1: podcast was produced by Ken Delridge at Spice Studios. Violet 962 00:49:39,399 --> 00:49:42,479 Speaker 1: Lee and Daisy Sharma provided additional assistance. Kobe time is. 963 00:49:42,584 --> 00:49:46,214 Speaker 1: Information only and does not constitute any investment advice. All 964 00:49:46,215 --> 00:49:49,705 Speaker 1: 171 episodes of the series are available on YouTube and 965 00:49:49,705 --> 00:49:53,424 Speaker 1: on all major platforms, including Apple and Spotify. For our 966 00:49:53,425 --> 00:49:55,425 Speaker 1: research content and webinars, you can find them all by 967 00:49:55,425 --> 00:49:58,524 Speaker 1: Googling DBS Research Library. Have a great day.