1 00:00:06,030 --> 00:00:09,799 Speaker 1: Hello, this is COI Time, a podcast series on markets 2 00:00:09,800 --> 00:00:13,130 Speaker 1: and economies from DBS Group Research. I'm Teri, chief economist, 3 00:00:13,420 --> 00:00:17,819 Speaker 1: welcoming you to our 144th episode. This is the year's 4 00:00:17,819 --> 00:00:21,299 Speaker 1: last podcast. Now, we have a tradition. We end the 5 00:00:21,299 --> 00:00:24,010 Speaker 1: year with Dr. Komal Sri Kumar, president of Shri Kumar 6 00:00:24,010 --> 00:00:27,500 Speaker 1: Global Strategies, based in Santa Monica, California. He's a senior 7 00:00:27,500 --> 00:00:29,940 Speaker 1: fellow at the Milken Institute and previously spent over two 8 00:00:29,940 --> 00:00:33,060 Speaker 1: decades with the Trust Company of the West, known as 9 00:00:33,060 --> 00:00:34,339 Speaker 1: TCW in most Circle. 10 00:00:34,970 --> 00:00:38,250 Speaker 1: Working on investment strategy and asset allocation, I find it 11 00:00:38,250 --> 00:00:41,729 Speaker 1: delightful to review the year with Shri and then look 12 00:00:41,729 --> 00:00:43,888 Speaker 1: forward to the next year. And if you have been 13 00:00:43,889 --> 00:00:45,990 Speaker 1: to this podcast in the past, you know how a 14 00:00:45,990 --> 00:00:49,130 Speaker 1: student insightful his views can be. Shri, welcome back to 15 00:00:49,130 --> 00:00:49,880 Speaker 1: COVID time. 16 00:00:50,610 --> 00:00:52,689 Speaker 2: Thank you very much, Jor. Good to be back with 17 00:00:52,689 --> 00:00:53,330 Speaker 2: you again. 18 00:00:53,750 --> 00:00:56,060 Speaker 1: I'm so glad to have you back and I'm glad 19 00:00:56,060 --> 00:00:59,819 Speaker 1: that we now have this tradition of ending the year together. Sri, 20 00:01:00,509 --> 00:01:04,059 Speaker 1: let's get right to it. Take stock of 2024, your 21 00:01:04,059 --> 00:01:08,500 Speaker 1: views on the US economy, markets, fiscal position, and the Fed. 22 00:01:08,540 --> 00:01:09,900 Speaker 1: And of course you may also want to comment on 23 00:01:09,900 --> 00:01:10,839 Speaker 1: the elections. 24 00:01:11,459 --> 00:01:15,209 Speaker 2: Sure. Let's see. Let's start with the overall US economy. 25 00:01:15,220 --> 00:01:19,018 Speaker 2: The US economy was much stronger than I had anticipated. 26 00:01:19,819 --> 00:01:22,509 Speaker 2: And I, along with a whole lot of others, had 27 00:01:22,510 --> 00:01:25,629 Speaker 2: thought that, uh, the sky-high interest rates that we have 28 00:01:25,629 --> 00:01:32,419 Speaker 2: had since 2022 would, um, result eventually in a recession. 29 00:01:33,029 --> 00:01:36,779 Speaker 2: But what I think, not just I, what the majority 30 00:01:36,779 --> 00:01:40,190 Speaker 2: of the analysts failed to take into account was the 31 00:01:40,190 --> 00:01:43,709 Speaker 2: fact that the amount of stimulus that was created on 32 00:01:43,709 --> 00:01:46,870 Speaker 2: the monetary and fiscal side in the United States was 33 00:01:46,870 --> 00:01:48,150 Speaker 2: so immense. 34 00:01:48,980 --> 00:01:53,680 Speaker 2: That even high interest rates, 40 year high levels were 35 00:01:53,680 --> 00:01:58,750 Speaker 2: not sufficient to bring inflation down. We are seeing retail sales, 36 00:01:58,800 --> 00:02:02,190 Speaker 2: for example, continuing to remain very strong. That's a reflection 37 00:02:02,190 --> 00:02:07,720 Speaker 2: of US consumers. And Tuesday morning, Washington DC time will 38 00:02:07,720 --> 00:02:11,110 Speaker 2: be the retail sales number will come out, the latest one. 39 00:02:11,919 --> 00:02:14,770 Speaker 2: And the expectation is that it's going to be very 40 00:02:14,770 --> 00:02:19,139 Speaker 2: strong as well. So the US economy has remained very strong, 41 00:02:19,809 --> 00:02:23,190 Speaker 2: but you talked about fiscal deficit more. That is where 42 00:02:23,190 --> 00:02:27,850 Speaker 2: you have the fiscal deficit, which continued to rise both 43 00:02:27,850 --> 00:02:31,649 Speaker 2: in dollar terms as and as a percentage of GDP. 44 00:02:32,610 --> 00:02:37,369 Speaker 2: Uh, I learned when I began my career in 1978, 1979. 45 00:02:38,080 --> 00:02:43,369 Speaker 2: That the so-called safe maximum ratio for the debt to 46 00:02:43,369 --> 00:02:45,080 Speaker 2: GDP was 50%. 47 00:02:46,699 --> 00:02:51,660 Speaker 2: The United States is running at 120%. We have France, 48 00:02:51,740 --> 00:02:53,859 Speaker 2: which is running at 110%. 49 00:02:54,770 --> 00:02:57,910 Speaker 2: Even Germany, which used to be a great country known 50 00:02:57,910 --> 00:03:03,419 Speaker 2: for its fiscal, um, uh, rectitude, now has again the 51 00:03:03,419 --> 00:03:07,250 Speaker 2: situation is totally out of control. Uh, so the point 52 00:03:07,250 --> 00:03:12,130 Speaker 2: here is, we have talked about that causing a problem 53 00:03:12,130 --> 00:03:15,398 Speaker 2: for the United States, but the fiscal deficit is very large, 54 00:03:15,570 --> 00:03:20,049 Speaker 2: dangerously high, but it has not caused a problem yet. 55 00:03:20,788 --> 00:03:23,729 Speaker 2: And the reason I would say, and again, since I'm 56 00:03:23,729 --> 00:03:26,929 Speaker 2: speaking to you in the heart of Asia, Timor, I 57 00:03:26,929 --> 00:03:29,199 Speaker 2: would say the reason is we had thought the Chinese 58 00:03:29,199 --> 00:03:32,529 Speaker 2: renminbi Yan would by now be an effective competitor. 59 00:03:33,399 --> 00:03:36,119 Speaker 2: Or that the Europeans would get their act together and 60 00:03:36,119 --> 00:03:41,339 Speaker 2: a common currency, the euro would be dominated. Neither has happened, 61 00:03:41,600 --> 00:03:44,960 Speaker 2: and both of them are actually very weak in the 62 00:03:44,960 --> 00:03:48,039 Speaker 2: in the last several months, and I don't expect that 63 00:03:48,039 --> 00:03:51,960 Speaker 2: to change. So the dollar got a reprieve, the fiscal 64 00:03:51,960 --> 00:03:55,279 Speaker 2: deficit could run at a high level because there was 65 00:03:55,279 --> 00:03:58,169 Speaker 2: no alternative to the dollar. So in other words, 66 00:03:58,660 --> 00:04:02,259 Speaker 2: You talk about teaching a class, and very many students 67 00:04:02,259 --> 00:04:05,699 Speaker 2: are performing very poorly in terms of grade, but I 68 00:04:05,699 --> 00:04:08,330 Speaker 2: can still turn out to be the best students because, 69 00:04:08,339 --> 00:04:11,330 Speaker 2: not because I'm great, but because the others are much worse. 70 00:04:11,899 --> 00:04:15,639 Speaker 2: So that's what we are going through. Now, I don't 71 00:04:15,639 --> 00:04:18,380 Speaker 2: want to leave the topic of fiscal deficit yet. Go 72 00:04:18,380 --> 00:04:22,540 Speaker 2: to 2025. Will this continue? I don't think it can. 73 00:04:23,269 --> 00:04:27,229 Speaker 2: Because the, you're going to have enormous amount of borrowing 74 00:04:27,230 --> 00:04:29,738 Speaker 2: requirement on the part of the treasury. 75 00:04:30,440 --> 00:04:34,469 Speaker 2: And even though Janet Yellen will stop being the Treasury 76 00:04:34,470 --> 00:04:38,479 Speaker 2: Secretary on January 20th, we have Scott Besant, a former hedge, 77 00:04:38,850 --> 00:04:43,729 Speaker 2: fudge fund manager who's the designate to take over. There's 78 00:04:43,730 --> 00:04:47,649 Speaker 2: nothing much that he can do immediately, other than try 79 00:04:47,649 --> 00:04:51,329 Speaker 2: to infuse some confidence, but he cannot change the numbers. 80 00:04:52,079 --> 00:04:54,760 Speaker 2: So it is going to be very difficult for that 81 00:04:54,760 --> 00:04:59,119 Speaker 2: to happen, and my concern is if the tariffs are 82 00:04:59,119 --> 00:05:02,359 Speaker 2: increased at the same time as the fiscal deficit is 83 00:05:02,359 --> 00:05:03,229 Speaker 2: very large. 84 00:05:04,140 --> 00:05:07,660 Speaker 2: The the tariffs are going to do two things. One, 85 00:05:08,230 --> 00:05:10,899 Speaker 2: they are going to cause the prices to go up 86 00:05:10,899 --> 00:05:14,988 Speaker 2: for US consumers and therefore, the US inflation rate will 87 00:05:14,988 --> 00:05:19,868 Speaker 2: go higher up. I have repeatedly said that inflation is 88 00:05:19,869 --> 00:05:23,589 Speaker 2: down only temporarily, it's going to pick up again and 89 00:05:23,589 --> 00:05:26,989 Speaker 2: it's starting to happen. It's going to be pronounced in 90 00:05:26,988 --> 00:05:28,829 Speaker 2: 2025 in my mind. 91 00:05:29,510 --> 00:05:32,959 Speaker 2: And if that happens, the US Treasury 10 year yield 92 00:05:32,959 --> 00:05:36,018 Speaker 2: will again start to go up. I'm worried about it's 93 00:05:36,019 --> 00:05:38,260 Speaker 2: hitting 5% again on the 10 year. 94 00:05:39,420 --> 00:05:42,779 Speaker 2: Uh, and if that happens and the tariffs are imposed, 95 00:05:42,820 --> 00:05:48,219 Speaker 2: even if it is not, uh, 60% or higher on China, 96 00:05:48,299 --> 00:05:52,820 Speaker 2: for example, if it has increased significantly, and I think 97 00:05:52,820 --> 00:05:56,178 Speaker 2: Trump has to do that because after threatening all the countries, 98 00:05:56,260 --> 00:05:59,399 Speaker 2: he can't just walk away and say, OK, now I'm president, 99 00:05:59,559 --> 00:06:01,820 Speaker 2: I'm not going to do it. That's not going to happen. 100 00:06:01,859 --> 00:06:03,459 Speaker 2: He has to impose something. 101 00:06:04,130 --> 00:06:08,100 Speaker 2: And when he does that, not only is inflation going 102 00:06:08,100 --> 00:06:11,459 Speaker 2: to pick up, the dollar is going to become very strong, 103 00:06:11,670 --> 00:06:14,029 Speaker 2: the bond yields are going to rise, and that's going 104 00:06:14,029 --> 00:06:15,829 Speaker 2: to be negative for the economy. 105 00:06:16,859 --> 00:06:19,738 Speaker 2: And that in turn brings us to the Federal Reserve. 106 00:06:20,369 --> 00:06:22,730 Speaker 2: Sorry to be long-winded, but you are, no, not at all, 107 00:06:23,920 --> 00:06:24,880 Speaker 2: not at all to your question. 108 00:06:25,589 --> 00:06:30,070 Speaker 2: Um, I think the Federal Reserve policy under Jerome Powell 109 00:06:30,070 --> 00:06:31,549 Speaker 2: has been irresponsible. 110 00:06:32,480 --> 00:06:38,779 Speaker 2: Uh, in 2020, we uh had the beginning of COVID in, uh, February, 111 00:06:38,920 --> 00:06:40,070 Speaker 2: March of that year. 112 00:06:41,000 --> 00:06:45,100 Speaker 2: And at that time, the Federal Reserve's balance sheet was 113 00:06:45,100 --> 00:06:49,970 Speaker 2: about $4 trillion and it was already 5 times the 114 00:06:49,970 --> 00:06:52,769 Speaker 2: level of what it was when I, when, on what 115 00:06:52,769 --> 00:06:56,250 Speaker 2: I call Lehman Day, September 15, 2008. 116 00:06:57,089 --> 00:07:00,820 Speaker 2: So it went from $800 billion to $4 trillion and 117 00:07:00,820 --> 00:07:06,238 Speaker 2: by March of 2022, 2 years later, it was $9 trillion. 118 00:07:07,130 --> 00:07:11,760 Speaker 2: That's what I call the height of irresponsibility. When you 119 00:07:11,760 --> 00:07:15,450 Speaker 2: have COVID, to cure it, you need a vaccine. You 120 00:07:15,450 --> 00:07:18,690 Speaker 2: cannot increase the money supply and hope that everybody will 121 00:07:18,690 --> 00:07:22,250 Speaker 2: get well because the Federal Reserve's balance sheet has doubled. 122 00:07:23,130 --> 00:07:25,760 Speaker 2: That's what he did at the same time, the interest 123 00:07:25,760 --> 00:07:30,640 Speaker 2: rates were brought down to zero. There was $900 billion 124 00:07:30,640 --> 00:07:34,730 Speaker 2: of fiscal stimulus in the final months of the Trump administration, 125 00:07:35,279 --> 00:07:39,769 Speaker 2: and another $1.9 trillion in the first months of the 126 00:07:39,769 --> 00:07:45,399 Speaker 2: Biden administration. So $2.8 trillion plus zero interest rates, plus doubling. 127 00:07:46,250 --> 00:07:47,420 Speaker 2: Of the Fed balance sheet. 128 00:07:48,290 --> 00:07:52,309 Speaker 2: So no wonder inflation hit a 40-year high, uh, because 129 00:07:52,309 --> 00:07:55,829 Speaker 2: you would expect that all of that would happen. And 130 00:07:55,829 --> 00:07:58,410 Speaker 2: that is what we are fighting. And when the interest 131 00:07:58,410 --> 00:08:01,709 Speaker 2: rates started to come down, they said, oh, the Fed 132 00:08:01,709 --> 00:08:05,299 Speaker 2: has brought the inflation rate down, but it should never 133 00:08:05,299 --> 00:08:06,549 Speaker 2: have gone to that level. 134 00:08:07,339 --> 00:08:11,600 Speaker 2: And now that he's easing up, he's ignoring the lessons 135 00:08:11,600 --> 00:08:14,239 Speaker 2: of 1973 to 1979. 136 00:08:14,859 --> 00:08:20,730 Speaker 2: When we had a very pliant Federal Reserve chairman under 137 00:08:20,730 --> 00:08:24,730 Speaker 2: Arthur Burns, and who did what was required by Richard 138 00:08:24,730 --> 00:08:28,649 Speaker 2: Nixon to, I, I say, I've written saying the monetary 139 00:08:28,649 --> 00:08:32,489 Speaker 2: policy followed the dictates of the political cycle rather than 140 00:08:32,489 --> 00:08:33,690 Speaker 2: the needs of the economy. 141 00:08:34,739 --> 00:08:38,518 Speaker 2: And of course, we had sky-high inflation, and you had 142 00:08:38,518 --> 00:08:41,439 Speaker 2: to have a very severe recession to bring it back. 143 00:08:41,768 --> 00:08:46,528 Speaker 2: So those are my concerns for 2025. Uh, it appears 144 00:08:46,528 --> 00:08:50,328 Speaker 2: as a Wednesday afternoon, uh, Washington DC time. 145 00:08:51,590 --> 00:08:54,190 Speaker 2: You're going to have again another rate cut. 146 00:08:54,979 --> 00:08:59,030 Speaker 2: The first rate cut, which happened in September, was expected 147 00:08:59,030 --> 00:09:04,020 Speaker 2: to be 5025 basis points, turned out to be 50. 148 00:09:04,510 --> 00:09:05,869 Speaker 2: Why is he doing that? 149 00:09:06,799 --> 00:09:10,609 Speaker 2: I have a theory, and I feel very strongly about it. 150 00:09:10,940 --> 00:09:14,250 Speaker 2: I think the Federal Reserve is very much a political entity, 151 00:09:14,380 --> 00:09:18,059 Speaker 2: even though Trump, uh even though Powell keeps repeating that 152 00:09:18,059 --> 00:09:19,349 Speaker 2: he's apolitical. 153 00:09:20,049 --> 00:09:24,280 Speaker 2: And the reason why he keeps repeating it is because 154 00:09:24,280 --> 00:09:27,440 Speaker 2: he just, that it's not true. So he has to 155 00:09:27,440 --> 00:09:31,119 Speaker 2: keep repeating it because he probably doesn't believe it himself. 156 00:09:31,969 --> 00:09:36,218 Speaker 2: So, 50 basis points without any reason, another 25, and 157 00:09:36,219 --> 00:09:38,409 Speaker 2: he's going to do 25 more. 158 00:09:39,400 --> 00:09:42,799 Speaker 2: And then there is a talk of passing in January. 159 00:09:43,929 --> 00:09:46,460 Speaker 2: Is it because Trump is going to come into office 160 00:09:46,460 --> 00:09:48,169 Speaker 2: and he doesn't want to oblige him? 161 00:09:49,059 --> 00:09:51,940 Speaker 2: We're not clear what it's all about and why he's 162 00:09:51,940 --> 00:09:53,099 Speaker 2: doing what he's doing. 163 00:09:54,909 --> 00:09:59,140 Speaker 1: So let's talk about that intersection of Fed policy and politics, 164 00:09:59,190 --> 00:10:02,330 Speaker 1: because if it was Jerome Powell's, you know, 165 00:10:02,929 --> 00:10:06,880 Speaker 1: Explicit or implicit desire to help the political cycle, it 166 00:10:06,880 --> 00:10:11,109 Speaker 1: didn't work, Sri. The point that you made that when 167 00:10:11,280 --> 00:10:13,750 Speaker 1: policy should have been tighter, it was not as tight, 168 00:10:14,119 --> 00:10:17,829 Speaker 1: basically caused the cost of living prices that afflicts Americans today. 169 00:10:18,190 --> 00:10:20,869 Speaker 1: Actually, a week before the US elections, I traveled through 170 00:10:20,869 --> 00:10:24,510 Speaker 1: San Francisco, DC, New York. I asked about 50 people 171 00:10:24,510 --> 00:10:26,989 Speaker 1: who's going to win, and I was not exactly in 172 00:10:26,989 --> 00:10:29,789 Speaker 1: the red state heartland, you know, these are liberal towns, 173 00:10:29,830 --> 00:10:33,059 Speaker 1: and 46 out of 50 said Trump would win, and 174 00:10:33,409 --> 00:10:35,069 Speaker 1: which was itself, you know, it was kind of shocking 175 00:10:35,070 --> 00:10:37,150 Speaker 1: to me because looking at the polls, it seemed like 176 00:10:37,150 --> 00:10:40,109 Speaker 1: a 50/50 outcome, but 46 out of 50 people that 177 00:10:40,109 --> 00:10:42,358 Speaker 1: I asked said Trump would win and by and large 178 00:10:42,359 --> 00:10:44,669 Speaker 1: they said it's because of cost of living. 179 00:10:45,210 --> 00:10:49,479 Speaker 1: So, by having an accommodating policy, by trying to stretch 180 00:10:49,479 --> 00:10:53,439 Speaker 1: out the cycle, if the Fed's desire was to keep 181 00:10:53,440 --> 00:10:55,270 Speaker 1: the Democrats in power, that didn't work out. 182 00:10:56,219 --> 00:10:59,609 Speaker 2: It did not, it did not help. Uh, that may 183 00:10:59,609 --> 00:11:02,919 Speaker 2: well have been the reason why he did it, but, uh, 184 00:11:02,929 --> 00:11:05,849 Speaker 2: now we are going into the political sphere, uh, which 185 00:11:05,849 --> 00:11:08,729 Speaker 2: I'm not an expert to talk about, but there were 186 00:11:08,729 --> 00:11:15,520 Speaker 2: various other areas such as talking about, uh, discrimination, equality, 187 00:11:15,609 --> 00:11:18,959 Speaker 2: and whether it was coming from the Democrats or the Republicans. 188 00:11:19,369 --> 00:11:22,609 Speaker 2: But what I think the elections missed is that the 189 00:11:22,609 --> 00:11:26,010 Speaker 2: cost of living, as you said, very correctly so, uh, Tor. 190 00:11:26,539 --> 00:11:30,500 Speaker 2: That turned out to be the single overwhelming topic. Even 191 00:11:30,500 --> 00:11:34,750 Speaker 2: on the economic side, the Biden campaign and then the 192 00:11:34,750 --> 00:11:39,450 Speaker 2: Kamala Harris campaign subsequently said, look, we have actually done 193 00:11:39,450 --> 00:11:41,579 Speaker 2: a lot in terms of economic growth. 194 00:11:42,530 --> 00:11:45,989 Speaker 2: But that did not match the fact that the inflation 195 00:11:45,989 --> 00:11:49,630 Speaker 2: had also gone up substantially. That was the dominating issue 196 00:11:49,919 --> 00:11:52,598 Speaker 2: in the voters' minds rather than what was happening in 197 00:11:52,599 --> 00:11:56,719 Speaker 2: terms of uh economic growth. And the reason is the following. 198 00:11:57,450 --> 00:12:02,218 Speaker 2: The economic growth and the unemployment rate being low benefits 199 00:12:02,219 --> 00:12:04,820 Speaker 2: a whole lot of different people, but on the other hand, 200 00:12:04,979 --> 00:12:09,979 Speaker 2: inflation is pernicious, and it affected people in the low 201 00:12:09,979 --> 00:12:14,260 Speaker 2: and middle income groups. The higher income groups couldn't care 202 00:12:14,260 --> 00:12:17,820 Speaker 2: less in high inflation, but I'm invested in the stock 203 00:12:17,820 --> 00:12:21,989 Speaker 2: market and stocks went up even more. So I'm doing fine, 204 00:12:22,119 --> 00:12:22,700 Speaker 2: thank you. 205 00:12:23,510 --> 00:12:26,489 Speaker 2: But the lower income groups do not have it, and 206 00:12:26,489 --> 00:12:29,209 Speaker 2: that is where I think the, uh, they made a 207 00:12:29,210 --> 00:12:32,489 Speaker 2: serious mistake in terms of the judgment that they made 208 00:12:32,489 --> 00:12:32,890 Speaker 2: on it. 209 00:12:34,020 --> 00:12:37,369 Speaker 1: She also for me, one big takeaway has been when 210 00:12:37,369 --> 00:12:39,940 Speaker 1: you and I talk about the rate of inflation, we're 211 00:12:39,940 --> 00:12:42,780 Speaker 1: talking about a 12 month change in prices, but the 212 00:12:42,780 --> 00:12:45,059 Speaker 1: people that I spoke with in the context of cost 213 00:12:45,059 --> 00:12:47,539 Speaker 1: of living seem to be thinking about the cumulative inflation 214 00:12:47,539 --> 00:12:51,219 Speaker 1: over the last 4 years, that they feel the prices 215 00:12:51,219 --> 00:12:53,978 Speaker 1: are up 40%. They don't quite understand when I say, well, 216 00:12:54,020 --> 00:12:56,700 Speaker 1: inflation is down a lot, they say, no, prices are 217 00:12:56,700 --> 00:12:58,289 Speaker 1: up 40% in the last 4 years. 218 00:12:58,750 --> 00:12:58,989 Speaker 2: Right. 219 00:12:59,469 --> 00:13:02,130 Speaker 2: That that to me, it makes a lot of sense. 220 00:13:02,530 --> 00:13:05,728 Speaker 2: And you and I are not low income earners. We 221 00:13:05,729 --> 00:13:09,650 Speaker 2: are relatively well off. But even when I go to 222 00:13:09,650 --> 00:13:13,419 Speaker 2: the grocery store, and then I say, buy just a 223 00:13:13,419 --> 00:13:16,799 Speaker 2: gallon of milk and bring it home, or a dozen 224 00:13:16,799 --> 00:13:20,450 Speaker 2: eggs and bring it home, and you see that suddenly 225 00:13:20,450 --> 00:13:24,159 Speaker 2: the gallon of milk here is, we are talking about 226 00:13:24,489 --> 00:13:27,848 Speaker 2: 6 $7 US dollars for half a gallon. 227 00:13:28,150 --> 00:13:32,130 Speaker 2: And you gasp, saying, boy, this is not the way 228 00:13:32,130 --> 00:13:36,929 Speaker 2: it used to be until about 2018, 2019. So it 229 00:13:36,929 --> 00:13:41,080 Speaker 2: is clear that people do compare the price level today 230 00:13:41,080 --> 00:13:45,039 Speaker 2: with the price level five years ago. And the reason is, 231 00:13:45,330 --> 00:13:49,289 Speaker 2: for most people, that income levels have not increased by 232 00:13:49,289 --> 00:13:53,289 Speaker 2: the same percentage. And that's why, uh, that, that, that 233 00:13:53,289 --> 00:13:54,969 Speaker 2: is a very important comparison. 234 00:13:56,489 --> 00:13:59,890 Speaker 1: 3, you touched upon the fiscal issue and I want 235 00:13:59,890 --> 00:14:01,409 Speaker 1: to go back to that. I want to connect the 236 00:14:01,409 --> 00:14:06,049 Speaker 1: fiscal issue with banks to some extent. The US has 237 00:14:06,049 --> 00:14:10,729 Speaker 1: massive issuance needs going forward, and when they issue long 238 00:14:10,729 --> 00:14:13,750 Speaker 1: duration bonds, banks are a big holder of that bond, 239 00:14:13,929 --> 00:14:16,369 Speaker 1: those bonds, and we saw last year in the regional 240 00:14:16,369 --> 00:14:18,809 Speaker 1: banking crisis episode that when you hold a lot of 241 00:14:18,809 --> 00:14:22,500 Speaker 1: long duration assets in an inflationary tight monetary policy environment, 242 00:14:22,809 --> 00:14:24,260 Speaker 1: the system can trip up a lot. 243 00:14:24,859 --> 00:14:29,099 Speaker 1: Now we had that crisis in early 2023. Silicon Valley 244 00:14:29,099 --> 00:14:31,419 Speaker 1: Bank and a few other banks. We saw the Fed 245 00:14:31,419 --> 00:14:34,659 Speaker 1: come up with very robust response by creating more lending 246 00:14:34,659 --> 00:14:39,000 Speaker 1: windows and treating those bonds and par value and averted 247 00:14:39,000 --> 00:14:40,859 Speaker 1: that crisis to some extent other than a couple of 248 00:14:40,859 --> 00:14:43,940 Speaker 1: banks going under and being forced to merge. Now when 249 00:14:43,940 --> 00:14:46,130 Speaker 1: I look at the data stream, what I find strange 250 00:14:46,130 --> 00:14:47,419 Speaker 1: is that since then, 251 00:14:48,489 --> 00:14:52,159 Speaker 1: The US financial sector hasn't necessarily gone short duration. It 252 00:14:52,159 --> 00:14:54,520 Speaker 1: still remains long duration, and we have all these large 253 00:14:54,520 --> 00:14:58,960 Speaker 1: banks which are still saddled with a lot of large 254 00:14:58,960 --> 00:15:03,200 Speaker 1: duration debt. So why haven't we seen the duration risk 255 00:15:03,200 --> 00:15:04,640 Speaker 1: come down, because I would have thought that would have 256 00:15:04,640 --> 00:15:08,840 Speaker 1: been the key response to the crisis. And going back 257 00:15:08,840 --> 00:15:12,000 Speaker 1: to the fiscal issue, if indeed people should be worried 258 00:15:12,000 --> 00:15:15,090 Speaker 1: about long duration exposure, then how will the US fund itself? 259 00:15:15,309 --> 00:15:17,210 Speaker 1: Should it, would it only issue at the short end? 260 00:15:18,340 --> 00:15:21,419 Speaker 2: Uh, here, let's first, you have 2 or 3 issues 261 00:15:21,419 --> 00:15:24,580 Speaker 2: embedded in your question, so let me start out with 262 00:15:24,580 --> 00:15:26,179 Speaker 2: the banking crisis first. 263 00:15:27,010 --> 00:15:31,049 Speaker 2: Uh, they did again a study of it, um, under 264 00:15:31,049 --> 00:15:34,609 Speaker 2: the vice chairman for regulation, he actually went through it 265 00:15:34,609 --> 00:15:37,489 Speaker 2: and came up with the conclusion that the banks made 266 00:15:37,489 --> 00:15:38,729 Speaker 2: a serious error. 267 00:15:39,590 --> 00:15:43,390 Speaker 2: But my conclusion is very different. If I were, if 268 00:15:43,390 --> 00:15:46,650 Speaker 2: I had been the chairman and CEO of Silicon Valley Bank, 269 00:15:47,539 --> 00:15:50,409 Speaker 2: And I heard day in and day out the chairman 270 00:15:50,409 --> 00:15:53,929 Speaker 2: of my Federal Reserve telling me that inflation is transitory. 271 00:15:55,219 --> 00:15:59,940 Speaker 2: And I, and, and 2021, you're talking about 10-year treasury 272 00:15:59,940 --> 00:16:03,489 Speaker 2: is going just about 2% or lower than 2%. 273 00:16:04,450 --> 00:16:07,330 Speaker 2: As the CEO of Silicon Valley Bank, I should go 274 00:16:07,330 --> 00:16:07,919 Speaker 2: and buy it. 275 00:16:09,070 --> 00:16:11,830 Speaker 2: Because I believe my Fed chairman, and if he says 276 00:16:11,830 --> 00:16:14,500 Speaker 2: that the 10 year yield is going to go down 277 00:16:14,500 --> 00:16:17,710 Speaker 2: to 1% because inflation is transitory. 278 00:16:18,869 --> 00:16:23,190 Speaker 2: And I buy during a period of transitory high inflation. 279 00:16:23,960 --> 00:16:26,570 Speaker 2: And I'm going to get a huge capital gain when 280 00:16:26,570 --> 00:16:28,809 Speaker 2: inflation and bond yields go down. 281 00:16:29,659 --> 00:16:33,369 Speaker 2: Except that the Federal Reserve Chairman was wrong, inflation was 282 00:16:33,369 --> 00:16:36,409 Speaker 2: not transitory, and the 10 year yield went as high 283 00:16:36,409 --> 00:16:42,530 Speaker 2: as 5%. So they ran into huge losses. Now, what 284 00:16:42,530 --> 00:16:44,849 Speaker 2: happened in response to that? 285 00:16:45,820 --> 00:16:49,590 Speaker 2: The regulators essentially stepped in, as you pointed out, and 286 00:16:49,590 --> 00:16:53,340 Speaker 2: prevented that from becoming an overall crisis for the economy. 287 00:16:53,989 --> 00:16:58,059 Speaker 2: They stopped quantitative tightening that had been taking place. 288 00:16:58,859 --> 00:17:03,140 Speaker 2: And took the balance sheet of the Federal Reserve overnight, 289 00:17:03,469 --> 00:17:06,410 Speaker 2: took it back to where it was about six months earlier, 290 00:17:06,510 --> 00:17:11,189 Speaker 2: till about September or October of 2022, uh, and they 291 00:17:11,189 --> 00:17:13,300 Speaker 2: did that in March of 2023. 292 00:17:14,329 --> 00:17:18,640 Speaker 2: So you lost some uh important and valuable time. What 293 00:17:18,640 --> 00:17:23,130 Speaker 2: was the other thing that happened? People who had unlimited 294 00:17:23,130 --> 00:17:27,800 Speaker 2: amount of deposits in the failing banks were made good 295 00:17:28,170 --> 00:17:32,979 Speaker 2: by the federal government, by the taxpayer. Why? They should 296 00:17:32,979 --> 00:17:36,599 Speaker 2: have borne the loss of anything over the insured amount 297 00:17:36,599 --> 00:17:41,209 Speaker 2: of $250,000 US dollars. They did not because the Fed 298 00:17:41,209 --> 00:17:42,989 Speaker 2: didn't want an overall crisis. 299 00:17:43,430 --> 00:17:47,719 Speaker 2: But this is how they quote unquote solve the problem. 300 00:17:48,000 --> 00:17:50,119 Speaker 2: You throw money at the whole issue. 301 00:17:50,780 --> 00:17:54,329 Speaker 2: And therefore, the problem goes away only that it will 302 00:17:54,329 --> 00:17:56,930 Speaker 2: come back again next time because you haven't learned any 303 00:17:56,930 --> 00:17:58,170 Speaker 2: lesson from it. 304 00:17:59,089 --> 00:18:03,969 Speaker 2: Lehman Brothers, 2008, we threw money into it. Ben Bernanke 305 00:18:03,969 --> 00:18:08,089 Speaker 2: started quantitative easing, which he said was a temporary measure. 306 00:18:08,939 --> 00:18:11,650 Speaker 2: You believe it's temporary when it was, it goes from 307 00:18:11,650 --> 00:18:16,208 Speaker 2: 800 billion to several trillion under his watch, that's supposed 308 00:18:16,209 --> 00:18:18,520 Speaker 2: to be temporary. We are never going to go back 309 00:18:18,520 --> 00:18:22,410 Speaker 2: to that level. So that is what is happening with 310 00:18:22,410 --> 00:18:26,060 Speaker 2: respect to the banking side. I'm very concerned for 2025. 311 00:18:26,829 --> 00:18:29,709 Speaker 2: And the reason I'm concerned is you have a new issue, 312 00:18:29,839 --> 00:18:34,948 Speaker 2: the commercial real estate issue, for where the major lenders 313 00:18:34,949 --> 00:18:39,458 Speaker 2: are small and medium-sized banks are the big uh percentage 314 00:18:39,459 --> 00:18:43,079 Speaker 2: of their portfolios go to commercial real estate. 315 00:18:44,209 --> 00:18:48,250 Speaker 2: So, and there again, people still haven't gone back to offices. 316 00:18:48,300 --> 00:18:52,530 Speaker 2: The demand for office space has gone down substantially, and 317 00:18:52,530 --> 00:18:55,599 Speaker 2: that is going to be a problem for banks' portfolios. Now, 318 00:18:56,089 --> 00:18:59,500 Speaker 2: what you had another, I said you had several questions embedded. 319 00:18:59,569 --> 00:19:02,209 Speaker 2: I'm going to go to another one. Why did they 320 00:19:02,209 --> 00:19:04,839 Speaker 2: not reduce the duration? And the reason is, 321 00:19:05,760 --> 00:19:09,750 Speaker 2: We, I, I'm a failing bank. I was, and then 322 00:19:09,750 --> 00:19:13,790 Speaker 2: what I do gradually is that instead of keeping those 323 00:19:13,790 --> 00:19:18,589 Speaker 2: assets where I bought bonds at treasury, say, treasury bonds 324 00:19:18,589 --> 00:19:21,989 Speaker 2: at low interest rate, I'm going to move them into 325 00:19:21,989 --> 00:19:26,349 Speaker 2: a long-term investment portfolio away from a trading portfolio. 326 00:19:27,069 --> 00:19:29,369 Speaker 2: And if I do that, I don't have to recognize 327 00:19:29,369 --> 00:19:30,219 Speaker 2: the loss. 328 00:19:31,810 --> 00:19:34,239 Speaker 2: In my mind, the loss is a, is a loss. 329 00:19:34,390 --> 00:19:37,849 Speaker 2: Accounting doesn't, I don't care about accounting. You're holding an 330 00:19:37,849 --> 00:19:41,209 Speaker 2: asset which has gone down in value, you better recognize it. 331 00:19:42,500 --> 00:19:45,520 Speaker 2: Now, that's not what happened. They moved it in, so 332 00:19:45,520 --> 00:19:48,389 Speaker 2: you have a lot of the assets which are sitting 333 00:19:48,390 --> 00:19:51,359 Speaker 2: in long-term issues and they have a loss which they 334 00:19:51,359 --> 00:19:52,439 Speaker 2: don't have to declare. 335 00:19:53,339 --> 00:19:58,069 Speaker 2: And therefore, the incentive for the banks to reduce the 336 00:19:58,069 --> 00:20:03,550 Speaker 2: duration simply goes away. So the regulations are such that 337 00:20:03,550 --> 00:20:06,939 Speaker 2: they encourage the banks to take undue amount of risk 338 00:20:07,550 --> 00:20:10,020 Speaker 2: and not to cut it down. That is what has happened. 339 00:20:10,270 --> 00:20:12,670 Speaker 2: Now come over to the fiscal side. You said that 340 00:20:12,670 --> 00:20:17,319 Speaker 2: was the last part of your question. The fiscal side again, is, 341 00:20:17,430 --> 00:20:19,339 Speaker 2: as I said, is irresponsible? 342 00:20:20,500 --> 00:20:23,829 Speaker 2: If they had followed the rules and they tried to 343 00:20:23,829 --> 00:20:26,670 Speaker 2: issue the same amount of bonds, so in other words, 344 00:20:26,709 --> 00:20:29,540 Speaker 2: if a 10-year bond is maturing, if you issue another 345 00:20:29,540 --> 00:20:33,109 Speaker 2: 10-year bond, and you're paying a much higher interest rate 346 00:20:33,109 --> 00:20:36,109 Speaker 2: to borrow for 10 years or 30 years, you will 347 00:20:36,109 --> 00:20:39,540 Speaker 2: learn a lesson, and therefore, you will be cutting back 348 00:20:39,540 --> 00:20:40,750 Speaker 2: on your fiscal deficit. 349 00:20:41,849 --> 00:20:46,040 Speaker 2: On the other hand, uh, the Treasury and Janet Yellen, 350 00:20:46,489 --> 00:20:50,689 Speaker 2: what they did was to finance it in short-dated issues. 351 00:20:51,589 --> 00:20:55,050 Speaker 2: And we have a lot of short-dated these treasury issues 352 00:20:55,050 --> 00:20:59,329 Speaker 2: coming due in 2025. And she says that there's nothing 353 00:20:59,329 --> 00:21:02,280 Speaker 2: wrong in it. I was not manipulating the interest rate, 354 00:21:02,329 --> 00:21:05,010 Speaker 2: and this is what we were doing in terms of 355 00:21:05,010 --> 00:21:08,079 Speaker 2: reducing the amount of risk that we have to run. 356 00:21:08,729 --> 00:21:11,530 Speaker 2: That again is a time bomb. It is just waiting. 357 00:21:12,579 --> 00:21:15,329 Speaker 2: It's the same thing. I used to be critical of 358 00:21:15,329 --> 00:21:20,290 Speaker 2: Turkey when they could not find a long-term capital flows 359 00:21:20,290 --> 00:21:24,020 Speaker 2: or foreign direct investments coming in, they would borrow short 360 00:21:24,020 --> 00:21:28,250 Speaker 2: term and 6 month, 9 month paper, and when there 361 00:21:28,250 --> 00:21:32,369 Speaker 2: was a crisis, they would turn tail, go away, and 362 00:21:32,369 --> 00:21:36,020 Speaker 2: cause a new devaluation of the Turkish lira. That is 363 00:21:36,020 --> 00:21:38,609 Speaker 2: again the risk that we run on the US side. 364 00:21:40,670 --> 00:21:44,550 Speaker 1: Um, so let's go a little further on that issue, 365 00:21:44,560 --> 00:21:46,400 Speaker 1: since we are talking about the risk on the balance 366 00:21:46,400 --> 00:21:49,680 Speaker 1: sheet of financial sector and the CRE issue you just 367 00:21:49,680 --> 00:21:50,468 Speaker 1: brought up as well. 368 00:21:51,189 --> 00:21:55,719 Speaker 1: So you're talking about a scenario in which the tenure 369 00:21:55,719 --> 00:22:01,109 Speaker 1: heads above 5%. Given the existing facilities that the Fed has, 370 00:22:01,189 --> 00:22:03,280 Speaker 1: as well as that little trick you talked about that 371 00:22:03,280 --> 00:22:05,310 Speaker 1: if you keep it, take it away from your trading book, 372 00:22:05,520 --> 00:22:07,930 Speaker 1: you don't have to mark the market. Isn't the system 373 00:22:07,930 --> 00:22:10,760 Speaker 1: capable of handling tenure at 5%? 374 00:22:11,849 --> 00:22:16,489 Speaker 2: Are you saying is, is the system capable of handling? Yeah, yeah, 375 00:22:16,689 --> 00:22:20,770 Speaker 2: the system is capable of handling it, but the political 376 00:22:20,770 --> 00:22:26,169 Speaker 2: consequences are what are not acceptable. Namely, if you have 377 00:22:26,170 --> 00:22:30,890 Speaker 2: that go to 5%, the mortgage rate, which finally they 378 00:22:30,890 --> 00:22:33,729 Speaker 2: are struggling to bring it down and people being able 379 00:22:33,729 --> 00:22:34,889 Speaker 2: to buy houses. 380 00:22:35,479 --> 00:22:38,910 Speaker 2: Because it's politically important for the administration to say more 381 00:22:38,910 --> 00:22:42,310 Speaker 2: people are able to buy the home for the first time. 382 00:22:42,959 --> 00:22:46,479 Speaker 2: They are now not able to. The housing affordability has 383 00:22:46,479 --> 00:22:51,189 Speaker 2: gone down substantially. And if the mortgage rate once again 384 00:22:51,599 --> 00:22:57,438 Speaker 2: goes to, say, 7.5%, because the 10-year yield goes to 5%, uh, 385 00:22:57,479 --> 00:22:59,399 Speaker 2: you have a political issue on your hand. 386 00:23:00,859 --> 00:23:04,579 Speaker 1: So related to that, Shri, there's a lot of talk 387 00:23:04,579 --> 00:23:08,250 Speaker 1: about how since the global financial crisis, US households and 388 00:23:08,250 --> 00:23:12,030 Speaker 1: corporates have been leveraged. Today, income growth is strong on 389 00:23:12,030 --> 00:23:15,250 Speaker 1: the household side and earnings are strong on the corporate side, 390 00:23:15,500 --> 00:23:18,979 Speaker 1: and therefore, debt service ratios are manageable even though interest 391 00:23:18,979 --> 00:23:22,300 Speaker 1: rates are high. So what's your assessment of the balance 392 00:23:22,300 --> 00:23:24,459 Speaker 1: sheet of US households and corporates? 393 00:23:25,640 --> 00:23:30,000 Speaker 2: The balance sheet, um, the New York Fed recently had 394 00:23:30,000 --> 00:23:34,339 Speaker 2: a study showing that they are not very concerned about 395 00:23:34,339 --> 00:23:38,640 Speaker 2: the overall balance sheet, um, of the US households. 396 00:23:39,459 --> 00:23:43,069 Speaker 2: And that is correct in the sense that if you 397 00:23:43,069 --> 00:23:46,989 Speaker 2: look at the totality of US residents. 398 00:23:48,420 --> 00:23:53,140 Speaker 2: They've all benefited from the run-up in equity prices, the 399 00:23:53,140 --> 00:23:56,929 Speaker 2: run-up in house prices. When you put them both together, 400 00:23:57,180 --> 00:24:01,140 Speaker 2: your debt did not increase as much and therefore, your 401 00:24:01,140 --> 00:24:04,849 Speaker 2: numbers look pretty good in terms of the household, uh, 402 00:24:05,609 --> 00:24:07,218 Speaker 2: network position. 403 00:24:08,619 --> 00:24:12,099 Speaker 2: But the problem that I see is not in the aggregate, 404 00:24:12,469 --> 00:24:15,500 Speaker 2: but I try to break it down and look underneath. 405 00:24:15,910 --> 00:24:19,819 Speaker 2: The real issue comes with two, there are two problems. One, 406 00:24:20,030 --> 00:24:23,500 Speaker 2: if you look at the Gini coefficient of income inequality, 407 00:24:23,670 --> 00:24:27,550 Speaker 2: that has worsened in recent years. It started with the 408 00:24:27,550 --> 00:24:32,709 Speaker 2: Bernanke decision to reduce interest rates to 0 or near 409 00:24:32,709 --> 00:24:34,359 Speaker 2: 0 after 2008. 410 00:24:35,209 --> 00:24:38,389 Speaker 2: And therefore, the low-income groups who could not afford to 411 00:24:38,390 --> 00:24:41,949 Speaker 2: invest in equities, uh, found that they could not get 412 00:24:41,949 --> 00:24:47,060 Speaker 2: enough uh interest income. Retired people were also hurt because 413 00:24:47,060 --> 00:24:50,510 Speaker 2: retired people are taught that they should be in safer assets. 414 00:24:51,270 --> 00:24:54,369 Speaker 2: They were hurt as well. So now what has happened 415 00:24:54,369 --> 00:24:59,329 Speaker 2: is with the new situation, you again have the low 416 00:24:59,329 --> 00:25:03,969 Speaker 2: income people being hurt by the high prices and the 417 00:25:03,969 --> 00:25:06,968 Speaker 2: fact that the interest rates are being brought down and 418 00:25:06,969 --> 00:25:10,979 Speaker 2: they cannot afford homes. So I think that is where 419 00:25:10,979 --> 00:25:14,290 Speaker 2: I think the issue is going to continue to be 420 00:25:14,290 --> 00:25:17,208 Speaker 2: something that the Trump administration will have to face. 421 00:25:19,290 --> 00:25:20,790 Speaker 1: And the corporate balance sheet. 422 00:25:21,560 --> 00:25:24,569 Speaker 2: Uh, 00, no, sorry, let me finish one more before 423 00:25:24,569 --> 00:25:25,849 Speaker 2: coming to the corporate balance sheet. 424 00:25:26,619 --> 00:25:29,709 Speaker 2: So on the household side, and this is again, then 425 00:25:29,709 --> 00:25:32,589 Speaker 2: we make the transition to banks and corporations. 426 00:25:33,800 --> 00:25:37,708 Speaker 2: On the household side, I said the aggregate is not worrisome. However, 427 00:25:37,800 --> 00:25:40,380 Speaker 2: there are two problems. The one problem is 428 00:25:41,140 --> 00:25:44,989 Speaker 2: That the income distribution, as I mentioned, has worsened. 429 00:25:46,040 --> 00:25:48,969 Speaker 2: And the people at the lower level of income are 430 00:25:48,969 --> 00:25:53,520 Speaker 2: incurring more debt. They don't have equities to support them. 431 00:25:53,849 --> 00:25:56,729 Speaker 2: And so you have a situation where low and middle 432 00:25:56,729 --> 00:26:01,369 Speaker 2: income groups, the household balance sheet has worsened. 433 00:26:02,869 --> 00:26:07,030 Speaker 2: Not in the totality, but if you disaggregate the income 434 00:26:07,030 --> 00:26:10,920 Speaker 2: groups that has worsened. That's one issue. The second problem 435 00:26:10,920 --> 00:26:16,109 Speaker 2: is some components of the debt, particularly auto loans, credit 436 00:26:16,109 --> 00:26:20,520 Speaker 2: card loans, they have increased and the delinquencies on credit 437 00:26:20,520 --> 00:26:24,228 Speaker 2: card debt has increased substantially. And that is going to 438 00:26:24,229 --> 00:26:27,349 Speaker 2: be a factor also for banks to take into account 439 00:26:27,670 --> 00:26:29,030 Speaker 2: in 2025. 440 00:26:29,680 --> 00:26:34,829 Speaker 2: The expectation was Fed would successfully lower interest rates so sharply, 441 00:26:34,979 --> 00:26:38,770 Speaker 2: bring it down again, inflation will be down to 2%, 442 00:26:39,060 --> 00:26:42,229 Speaker 2: and therefore, uh, you won't have a problem and you, 443 00:26:42,260 --> 00:26:44,540 Speaker 2: you will be able to pay your credit card debt. 444 00:26:45,530 --> 00:26:47,969 Speaker 2: What I think we are going to find is that 445 00:26:47,969 --> 00:26:51,400 Speaker 2: the Fed's ability to cut rates is going to be diminished. 446 00:26:52,180 --> 00:26:56,619 Speaker 2: Inflation is likely to pick up, which means credit cards, 447 00:26:56,699 --> 00:26:59,849 Speaker 2: the average credit card interest rate I was looking at 448 00:26:59,849 --> 00:27:03,939 Speaker 2: in the last two days is determined to be 24% 449 00:27:03,939 --> 00:27:09,050 Speaker 2: per year. Wow. So why do you borrow 24% per year? 450 00:27:09,119 --> 00:27:13,579 Speaker 2: Because you have a credit limit. Nobody asks you questions 451 00:27:13,579 --> 00:27:15,819 Speaker 2: as long as you run up to that limit. 452 00:27:16,280 --> 00:27:18,670 Speaker 2: And people are running up and when they run up 453 00:27:18,670 --> 00:27:21,670 Speaker 2: to that limit, they are not able to make payments 454 00:27:21,670 --> 00:27:25,310 Speaker 2: on a monthly basis. That's where the other issue is 455 00:27:25,310 --> 00:27:29,469 Speaker 2: that 2025, it will become an important issue for the 456 00:27:29,469 --> 00:27:31,069 Speaker 2: Trump administration to face. 457 00:27:34,469 --> 00:27:38,969 Speaker 1: And uh on the duration exposure as far as the 458 00:27:38,969 --> 00:27:41,089 Speaker 1: US corporations are concerned, I mean, I talk about both 459 00:27:41,089 --> 00:27:44,329 Speaker 1: in terms of, you know, equity and credit that companies 460 00:27:44,329 --> 00:27:47,869 Speaker 1: seem to have, uh, you know, ability to pay decent dividends, 461 00:27:48,010 --> 00:27:51,569 Speaker 1: their earnings are good, and their leverage uh doesn't seem 462 00:27:51,569 --> 00:27:56,050 Speaker 1: to be particularly high. So unlike say the 2007, 2008 463 00:27:56,050 --> 00:27:58,530 Speaker 1: episode when we came into the crisis with high corporate leverage, 464 00:27:58,800 --> 00:28:01,609 Speaker 1: this time, at least from that perspective, systemic risk seems 465 00:28:01,609 --> 00:28:02,639 Speaker 1: to be more manageable. 466 00:28:03,439 --> 00:28:06,879 Speaker 2: Systemic risk in the corporate side is very much manageable. 467 00:28:06,939 --> 00:28:10,760 Speaker 2: I would agree with you completely. Uh, one key provision 468 00:28:10,760 --> 00:28:15,479 Speaker 2: here is, it is based upon their equity valuations and 469 00:28:15,479 --> 00:28:17,649 Speaker 2: equity markets remaining very high. 470 00:28:18,790 --> 00:28:23,149 Speaker 2: If that, again, gets damaged in some way, and especially 471 00:28:23,150 --> 00:28:26,989 Speaker 2: because high interest rates, high bond yields turn out to be, 472 00:28:27,150 --> 00:28:32,698 Speaker 2: to be uh a headwind for equities and corporate balance sheets, 473 00:28:33,109 --> 00:28:35,030 Speaker 2: then you have a new problem developing. 474 00:28:36,469 --> 00:28:39,540 Speaker 1: Yeah, absolutely. I just want to take a little side 475 00:28:39,540 --> 00:28:42,260 Speaker 1: through here because we're talking about corporate balance sheet. Uh 476 00:28:42,260 --> 00:28:46,010 Speaker 1: you had earlier mentioned the CRE issue. The other thing 477 00:28:46,010 --> 00:28:48,020 Speaker 1: that I would like you to talk about is the 478 00:28:48,020 --> 00:28:49,380 Speaker 1: whole private market side. 479 00:28:49,790 --> 00:28:53,930 Speaker 1: The debt, private credit leverage loans. There's a lot going 480 00:28:53,930 --> 00:28:56,369 Speaker 1: on that is not part of the public market picture, 481 00:28:56,699 --> 00:29:00,739 Speaker 1: and I sometimes wonder whether the regulators or even the 482 00:29:00,739 --> 00:29:04,949 Speaker 1: market pricing mechanism is catching all the risks that is 483 00:29:04,949 --> 00:29:06,729 Speaker 1: shaping up in the private side of the business. 484 00:29:07,650 --> 00:29:10,290 Speaker 2: Uh, no, private side of the business is a completely 485 00:29:10,290 --> 00:29:14,140 Speaker 2: new world. Uh, I, it is not picked up by 486 00:29:14,140 --> 00:29:15,250 Speaker 2: the equity market. 487 00:29:15,989 --> 00:29:19,890 Speaker 2: And as long as the public equity prices continue to 488 00:29:19,890 --> 00:29:23,209 Speaker 2: remain high, that also supports the private equity side. 489 00:29:24,000 --> 00:29:27,560 Speaker 2: Because anything, uh, any leverage seems to be manageable. 490 00:29:28,439 --> 00:29:34,439 Speaker 2: Um, but the valuations on the public market, depending on 491 00:29:34,439 --> 00:29:39,119 Speaker 2: how you measure it, uh, the S&P future, uh, earnings is, uh, 492 00:29:39,239 --> 00:29:43,229 Speaker 2: multiple is about 27 or 28 times a historic high. 493 00:29:43,959 --> 00:29:47,760 Speaker 2: And at that level, the private equity clearly is going 494 00:29:47,760 --> 00:29:50,430 Speaker 2: to be damaged as well if there is a correction 495 00:29:50,430 --> 00:29:51,560 Speaker 2: in the stock market. 496 00:29:53,900 --> 00:29:57,890 Speaker 2: So I think the private equity issues are more hidden. 497 00:29:58,339 --> 00:30:01,540 Speaker 2: That's why you don't talk about it. Second, I don't 498 00:30:01,540 --> 00:30:06,660 Speaker 2: know that the regulators have the ability or astuteness to 499 00:30:06,660 --> 00:30:09,380 Speaker 2: catch it, what's going on on the private equity side. 500 00:30:11,430 --> 00:30:15,290 Speaker 1: I also see, you know, so many private debt deals 501 00:30:15,290 --> 00:30:19,260 Speaker 1: which are extraordinarily large and also you see companies sort 502 00:30:19,260 --> 00:30:23,770 Speaker 1: of deferring their IPOs more and more maybe because of 503 00:30:23,770 --> 00:30:27,319 Speaker 1: regulatory stringency, but also because they can just go to, 504 00:30:27,640 --> 00:30:30,170 Speaker 1: you know, a small club of private investors and everybody's 505 00:30:30,170 --> 00:30:32,959 Speaker 1: raising funds together and the international investors get together. 506 00:30:33,219 --> 00:30:37,050 Speaker 1: I mean, it's pretty extraordinary. I, you probably saw overnight 507 00:30:37,050 --> 00:30:42,400 Speaker 1: Shri Masayushi's son and Trump jointly announcing $100 billion of investment. 508 00:30:42,530 --> 00:30:45,000 Speaker 1: It is all privately funded. There is no public element funded, 509 00:30:46,489 --> 00:30:49,239 Speaker 2: and he's going to do that over the next few years. 510 00:30:49,569 --> 00:30:53,530 Speaker 2: It is good for Trump as he, as a as 511 00:30:53,530 --> 00:30:57,079 Speaker 2: a something publicity point as he prepares to assume office. 512 00:30:57,890 --> 00:31:00,949 Speaker 2: But you just have to wonder at those huge numbers 513 00:31:00,949 --> 00:31:03,750 Speaker 2: and if you would actually be able to accomplish it. 514 00:31:04,500 --> 00:31:07,369 Speaker 2: It's one thing to promise that it is quite another 515 00:31:07,369 --> 00:31:08,680 Speaker 2: one to actually deliver. 516 00:31:09,439 --> 00:31:13,849 Speaker 1: Given So's track record, I have my doubts as well. Um, Sri, 517 00:31:14,089 --> 00:31:16,489 Speaker 1: at the beginning of this conversation, you were taking stock 518 00:31:16,489 --> 00:31:18,689 Speaker 1: of 2024 and you were talking about inflation, but then 519 00:31:18,689 --> 00:31:22,449 Speaker 1: you added that for 2025, you are worried that inflation 520 00:31:22,449 --> 00:31:25,290 Speaker 1: has bottomed out and there are upside risk. Now those 521 00:31:25,290 --> 00:31:28,890 Speaker 1: upside risks, in addition to what you have talked about tariff. 522 00:31:29,479 --> 00:31:32,810 Speaker 1: Would you have been concerned regardless of the presidential election outcomes, 523 00:31:32,959 --> 00:31:35,800 Speaker 1: even under a Harris presidency, would you have seen upside 524 00:31:35,800 --> 00:31:37,239 Speaker 1: risk to inflation in 2025? 525 00:31:38,439 --> 00:31:43,369 Speaker 2: I, um, let's take the campaign promises at face value. 526 00:31:43,780 --> 00:31:46,699 Speaker 2: We don't know, of course, whether Kamala Harris would have 527 00:31:46,699 --> 00:31:49,180 Speaker 2: done what she promised and if Trump is going to 528 00:31:49,180 --> 00:31:51,979 Speaker 2: do what he promised, but I'm just, you have to 529 00:31:51,979 --> 00:31:54,180 Speaker 2: make some assumption, and I'm going to say they are 530 00:31:54,180 --> 00:31:56,819 Speaker 2: going to be close to 100% of what they promised. 531 00:31:57,670 --> 00:32:00,949 Speaker 2: So, uh, on the Kamala Harriss side, there was going 532 00:32:00,949 --> 00:32:04,989 Speaker 2: to be a lot more subsidies given for low income groups, 533 00:32:05,079 --> 00:32:08,869 Speaker 2: people to buy their first home. It's all very noble, 534 00:32:09,310 --> 00:32:11,540 Speaker 2: but the question is, where do you get the cash 535 00:32:11,790 --> 00:32:15,400 Speaker 2: to make all those payments? And on the Trump side, 536 00:32:15,569 --> 00:32:19,189 Speaker 2: he's again talking about a whole lot of, uh, tax cuts. 537 00:32:19,930 --> 00:32:23,099 Speaker 2: And many of them are going to land at higher 538 00:32:23,099 --> 00:32:26,099 Speaker 2: income levels and similar to what happened with the December 539 00:32:26,099 --> 00:32:30,420 Speaker 2: 2017 tax cut, which again went to the higher income 540 00:32:30,420 --> 00:32:31,380 Speaker 2: groups mostly. 541 00:32:32,209 --> 00:32:36,280 Speaker 2: Uh, so in both cases, I think the deficit would 542 00:32:36,280 --> 00:32:41,170 Speaker 2: have remained high, would go even higher, assuming they followed 543 00:32:41,170 --> 00:32:46,280 Speaker 2: through on their campaign promises, but the Harris deficit would 544 00:32:46,280 --> 00:32:49,239 Speaker 2: have been smaller than the Trump deficit. 545 00:32:51,140 --> 00:32:53,979 Speaker 2: Uh, but both deficits would be higher than where they 546 00:32:53,979 --> 00:32:54,569 Speaker 2: are today. 547 00:32:58,180 --> 00:33:02,800 Speaker 2: So the issue then becomes, you have to say, perhaps 548 00:33:02,800 --> 00:33:06,160 Speaker 2: Trump will not give all the fiscal goodies that people 549 00:33:06,160 --> 00:33:09,640 Speaker 2: hope to get. Uh, if you don't assume that this 550 00:33:09,640 --> 00:33:13,560 Speaker 2: is just a horrible situation on the deficit side, what 551 00:33:13,560 --> 00:33:16,119 Speaker 2: can happen to bond yields, what can happen to the 552 00:33:16,119 --> 00:33:17,439 Speaker 2: US dollar as a result? 553 00:33:19,930 --> 00:33:23,160 Speaker 1: Right. Um, so should we, just to stay with that 554 00:33:23,160 --> 00:33:25,400 Speaker 1: thread a little longer, uh, the thing that I've been 555 00:33:25,400 --> 00:33:28,839 Speaker 1: tracking the last few months is that goods inflation, by 556 00:33:28,839 --> 00:33:31,880 Speaker 1: and large, OK, supply chains have normalized. 557 00:33:32,319 --> 00:33:35,709 Speaker 1: Energy prices are stable, but it's a services side where 558 00:33:35,709 --> 00:33:39,020 Speaker 1: we see quite a bit of stickiness, if you will, 559 00:33:39,119 --> 00:33:45,430 Speaker 1: from financial services to restaurants to recreation. Those prices seem 560 00:33:45,430 --> 00:33:47,869 Speaker 1: to be sticky and then of course, you know, home 561 00:33:47,869 --> 00:33:50,949 Speaker 1: renovation prices and so on. So while goods prices have 562 00:33:50,949 --> 00:33:52,989 Speaker 1: come down, there is this other part of the economy, 563 00:33:53,030 --> 00:33:55,150 Speaker 1: the services side, which seems to show a lot of stickiness. 564 00:33:55,489 --> 00:34:00,400 Speaker 1: So with 2025 in mind, um, tariff, who knows, you know, 565 00:34:00,479 --> 00:34:05,160 Speaker 1: whether he'll do 60% or not, but on immigration, I 566 00:34:05,160 --> 00:34:07,738 Speaker 1: think it's pretty clear that there'll be a lot of 567 00:34:07,739 --> 00:34:11,790 Speaker 1: crackdown and deportation. Do you see a strong link between 568 00:34:12,199 --> 00:34:15,600 Speaker 1: undocumented worker crackdown and service inflation? 569 00:34:16,790 --> 00:34:21,429 Speaker 2: Uh, I, I do. I think undocumented workers in particular 570 00:34:21,429 --> 00:34:24,100 Speaker 2: parts of the country, California being one of them. 571 00:34:25,018 --> 00:34:29,928 Speaker 2: Um, benefits immensely from undocumented workers being there. 572 00:34:30,938 --> 00:34:35,498 Speaker 2: And the question is, uh, the deportation that is being threatened, 573 00:34:36,108 --> 00:34:40,788 Speaker 2: how seriously would it be done? For instance, Trump said 574 00:34:40,789 --> 00:34:44,668 Speaker 2: in a very recent interview, uh, the so-called dreamers, the 575 00:34:44,668 --> 00:34:48,348 Speaker 2: kids who were brought as children, and they don't even 576 00:34:48,349 --> 00:34:51,269 Speaker 2: know their home countries of their parents because they've never 577 00:34:51,268 --> 00:34:54,348 Speaker 2: been there. They are all English speaking. They don't even 578 00:34:54,349 --> 00:34:57,938 Speaker 2: speak to the extent they're Hispanic, they don't even speak Spanish. 579 00:34:58,750 --> 00:35:01,879 Speaker 2: And those people are very much American in terms of 580 00:35:01,879 --> 00:35:03,959 Speaker 2: their behavior and their attitude. 581 00:35:04,959 --> 00:35:09,020 Speaker 2: And he has said more recently, they need to be protected. 582 00:35:09,610 --> 00:35:13,129 Speaker 2: So clearly it is, if you look at the, so 583 00:35:13,129 --> 00:35:16,759 Speaker 2: that part, um, and already there is a going back 584 00:35:16,760 --> 00:35:19,408 Speaker 2: in terms of how much the deportation would be done. 585 00:35:20,370 --> 00:35:26,699 Speaker 2: And secondly, uh, the case about birth citizenship by birth. 586 00:35:27,409 --> 00:35:32,260 Speaker 2: And the idea is that you just because your mother 587 00:35:32,260 --> 00:35:36,100 Speaker 2: came across the border, came into the United States, and 588 00:35:36,100 --> 00:35:38,810 Speaker 2: delivered the baby on the US side of the border 589 00:35:39,020 --> 00:35:41,419 Speaker 2: doesn't mean I'm going to allow you to be a 590 00:35:41,419 --> 00:35:42,020 Speaker 2: US citizen. 591 00:35:43,120 --> 00:35:48,389 Speaker 2: That again goes against constitutional provisions in the United States. 592 00:35:48,639 --> 00:35:50,840 Speaker 2: It is going to be contested. It is going to 593 00:35:50,840 --> 00:35:54,479 Speaker 2: be going up the level of courts. And even with 594 00:35:54,479 --> 00:35:57,959 Speaker 2: the conservative majority in the Supreme Court that Trump has 595 00:35:57,959 --> 00:36:01,839 Speaker 2: instituted from his first term, it's not clear that that 596 00:36:01,840 --> 00:36:05,479 Speaker 2: kind of a situation can persist. In other words, it's 597 00:36:05,479 --> 00:36:08,560 Speaker 2: not clear that the Supreme Court would support that. 598 00:36:09,320 --> 00:36:13,399 Speaker 2: So there are uncertainties. I am guessing that to a 599 00:36:13,399 --> 00:36:18,000 Speaker 2: large extent the deportation is going to be, it's a 600 00:36:18,000 --> 00:36:23,520 Speaker 2: great campaign team, but it may lose when it comes 601 00:36:23,520 --> 00:36:28,149 Speaker 2: to actual implementation. Similar to the border wall, and remember, 602 00:36:28,520 --> 00:36:31,500 Speaker 2: Trump was going to have a wall from end of 603 00:36:31,500 --> 00:36:35,110 Speaker 2: border to end of border along Mexico, and I think 604 00:36:35,110 --> 00:36:36,959 Speaker 2: it's probably now a few feet. 605 00:36:37,510 --> 00:36:40,870 Speaker 2: Is all that was, that was built uh during his 606 00:36:40,870 --> 00:36:41,339 Speaker 2: term 607 00:36:41,340 --> 00:36:43,100 Speaker 1: and then Mexico was going to pay for it. 608 00:36:43,429 --> 00:36:45,830 Speaker 2: Mexico was going to pay for it and of course they, 609 00:36:46,110 --> 00:36:49,629 Speaker 2: they used some very colorful terms in explaining that they 610 00:36:49,629 --> 00:36:50,899 Speaker 2: were not going to pay for it. 611 00:36:53,080 --> 00:36:57,800 Speaker 1: Absolutely. Uh, Shri, I um have been reading articles about 612 00:36:58,129 --> 00:37:02,169 Speaker 1: where the undocumented workers um are mostly in the US 613 00:37:02,169 --> 00:37:06,840 Speaker 1: in which sectors. So of course, you know, agriculture, construction, uh, 614 00:37:06,850 --> 00:37:09,290 Speaker 1: basic services, we all know, but one of the most 615 00:37:09,290 --> 00:37:10,479 Speaker 1: dynamic part of the US 616 00:37:10,544 --> 00:37:12,134 Speaker 1: The economy in the last 5 years has been the 617 00:37:12,135 --> 00:37:14,804 Speaker 1: delivery economy, you know, all these DoorDash and so on. 618 00:37:15,094 --> 00:37:17,294 Speaker 1: And I'm reading that, you know, undocumented workers play a 619 00:37:17,294 --> 00:37:21,094 Speaker 1: big role in supporting the delivery economy, and that is 620 00:37:21,094 --> 00:37:24,104 Speaker 1: why extremely low cost of, you know, sending even the 621 00:37:24,104 --> 00:37:25,895 Speaker 1: tiniest thing from one part of town to the other 622 00:37:25,895 --> 00:37:28,254 Speaker 1: part of the town can be done. So if indeed 623 00:37:28,254 --> 00:37:30,774 Speaker 1: there is a big crackdown, that is one more area 624 00:37:30,774 --> 00:37:33,495 Speaker 1: which wasn't an issue in the past, could become an 625 00:37:33,495 --> 00:37:35,764 Speaker 1: issue in terms of prices of delivery going up. 626 00:37:36,199 --> 00:37:41,209 Speaker 1: Um, she, uh, just in general, um, financial market outlook, 627 00:37:41,669 --> 00:37:46,689 Speaker 1: the last 4.5, 5 weeks since Trump's election, we've seen 628 00:37:46,689 --> 00:37:50,739 Speaker 1: the financial markets go strength to strength. Uh, a lot 629 00:37:50,739 --> 00:37:54,860 Speaker 1: of stocks are doing very well. The expectation is on 630 00:37:54,860 --> 00:37:57,339 Speaker 1: the back of deregulation and tax cuts, you know, financial 631 00:37:57,340 --> 00:37:58,780 Speaker 1: sector will continue to benefit. 632 00:37:59,040 --> 00:38:02,340 Speaker 1: Uh, in the, in the coming years. Uh, so your 633 00:38:02,340 --> 00:38:04,780 Speaker 1: take on financial markets, especially with the context, you had 634 00:38:04,780 --> 00:38:07,699 Speaker 1: already mentioned this before, that the valuations are extremely high. 635 00:38:10,370 --> 00:38:14,580 Speaker 2: Oh, my take on the market, um, clearly, um, 636 00:38:15,360 --> 00:38:19,199 Speaker 2: If there are 21 positive and one negative, the positive 637 00:38:19,199 --> 00:38:23,320 Speaker 2: is going to be coming from the deregulation move. There 638 00:38:23,320 --> 00:38:27,678 Speaker 2: are regulations which are going to be um unraveled in 639 00:38:27,679 --> 00:38:30,639 Speaker 2: the Trump administration. Some of them may happen even in 640 00:38:30,639 --> 00:38:32,000 Speaker 2: his first month in office. 641 00:38:32,939 --> 00:38:36,870 Speaker 2: And so we, you were talking about, uh, Tesla benefiting 642 00:38:36,870 --> 00:38:40,830 Speaker 2: and uh Bitcoin benefiting. Again, it is all going to 643 00:38:40,830 --> 00:38:44,319 Speaker 2: come from less regulation and then the ability for you 644 00:38:44,320 --> 00:38:48,020 Speaker 2: to be able to pay with Bitcoin, which will increase 645 00:38:48,790 --> 00:38:51,509 Speaker 2: its attractiveness for investors and so on. 646 00:38:52,290 --> 00:38:55,370 Speaker 2: So to some extent, that is going to be a 647 00:38:55,370 --> 00:38:59,350 Speaker 2: big positive overall. The negative side, I think, is going 648 00:38:59,350 --> 00:39:04,340 Speaker 2: to come from interest rates. And my concern is that, uh, 649 00:39:04,350 --> 00:39:10,179 Speaker 2: the basic, uh, industries, basic setup such as housing, um, 650 00:39:10,550 --> 00:39:15,239 Speaker 2: prices of essentials may suffer if you have, uh, the, 651 00:39:15,270 --> 00:39:17,620 Speaker 2: the 10-year treasury go to 5%. 652 00:39:18,139 --> 00:39:22,110 Speaker 2: And if you have home prices continuing to increase and 653 00:39:22,110 --> 00:39:24,070 Speaker 2: the mortgage rate remaining elevated. 654 00:39:25,000 --> 00:39:29,290 Speaker 2: Um, home prices remaining high is not going to be 655 00:39:29,290 --> 00:39:33,479 Speaker 2: solved by what the Democratic campaign suggested, namely giving money 656 00:39:33,479 --> 00:39:36,520 Speaker 2: to the people to buy their first home. That will 657 00:39:36,520 --> 00:39:39,129 Speaker 2: only cause home prices to go up even further. 658 00:39:40,030 --> 00:39:44,179 Speaker 2: What you need is more supply of houses, and that is, 659 00:39:44,510 --> 00:39:46,879 Speaker 2: that is not uh seem to be in the cards 660 00:39:46,879 --> 00:39:51,070 Speaker 2: anytime soon. So my point is there are lots of 661 00:39:51,070 --> 00:39:54,409 Speaker 2: headwinds as well in addition to the positives that are 662 00:39:54,409 --> 00:39:57,629 Speaker 2: there with respect to deregulation that has been promised. 663 00:39:58,479 --> 00:40:01,919 Speaker 2: Uh, so, but given the fact that you have such 664 00:40:01,919 --> 00:40:05,949 Speaker 2: a high valuation for the overall market, I would look 665 00:40:05,949 --> 00:40:08,989 Speaker 2: for some of, some stocks at least to be hit 666 00:40:09,239 --> 00:40:11,638 Speaker 2: in the 1st 6 months of the Trump administration. 667 00:40:12,800 --> 00:40:17,209 Speaker 1: I, I fully, fully concur. OK, so related to that scenario, 668 00:40:17,500 --> 00:40:18,819 Speaker 1: your view on the dollar. 669 00:40:20,270 --> 00:40:25,760 Speaker 2: Uh, we talked about the dollar not having any competition, uh, 670 00:40:26,100 --> 00:40:29,699 Speaker 2: not the renminbi yuan, not the euro, not, not the 671 00:40:29,699 --> 00:40:33,219 Speaker 2: UK pound sterling. Uh, so I think the dollar in 672 00:40:33,219 --> 00:40:38,050 Speaker 2: the short term, short term, especially if the tariffs are imposed, 673 00:40:38,620 --> 00:40:42,780 Speaker 2: I can see that going from 105, 106 on the 674 00:40:42,780 --> 00:40:47,689 Speaker 2: euro to parity or even less than parity. Um. 675 00:40:48,090 --> 00:40:52,469 Speaker 2: The issue here is, as we talk Tor, many of 676 00:40:52,469 --> 00:40:58,219 Speaker 2: those other countries have severe political problems. Look at what happened. 677 00:40:58,510 --> 00:41:03,270 Speaker 2: The Canadian dollar is at a long time low, and 678 00:41:03,270 --> 00:41:07,509 Speaker 2: again on Monday, uh, in the, in North America, we 679 00:41:07,510 --> 00:41:13,189 Speaker 2: had the Deputy Prime Minister and Finance minister resign, Christia Freeland. 680 00:41:13,820 --> 00:41:18,139 Speaker 2: And she in turn said, criticized the Prime Minister pretty 681 00:41:18,139 --> 00:41:20,580 Speaker 2: scathingly in her resignation letter. 682 00:41:21,790 --> 00:41:25,300 Speaker 2: Germany is without a government. The government just fell, and 683 00:41:25,300 --> 00:41:29,179 Speaker 2: it's not clear that they can form one. France is 684 00:41:29,179 --> 00:41:32,009 Speaker 2: borrowing at interest rates comparable to Greece. 685 00:41:33,010 --> 00:41:37,129 Speaker 2: And the 10 year yield uh for France has shot up. 686 00:41:37,820 --> 00:41:41,080 Speaker 2: And while the government fell last week, I don't think 687 00:41:41,080 --> 00:41:44,600 Speaker 2: France can have another government. So the euro is going 688 00:41:44,600 --> 00:41:47,159 Speaker 2: to be weak because of its innate problems. 689 00:41:47,959 --> 00:41:51,300 Speaker 2: The Chinese economy has issues which, as you know very 690 00:41:51,300 --> 00:41:54,100 Speaker 2: well from your Asian base, uh, that is not going 691 00:41:54,100 --> 00:41:57,580 Speaker 2: to go away anytime soon. I think the renminbi in 692 00:41:57,580 --> 00:42:01,060 Speaker 2: term is likely to be weakening with respect to the 693 00:42:01,060 --> 00:42:01,810 Speaker 2: US dollar. 694 00:42:02,459 --> 00:42:05,929 Speaker 2: So I see a period of, and if, and again, 695 00:42:06,020 --> 00:42:09,300 Speaker 2: if uh tariffs are imposed, that's going to be very 696 00:42:09,300 --> 00:42:13,020 Speaker 2: positive for the dollar. Positive being defined as strengthening. 697 00:42:13,909 --> 00:42:17,129 Speaker 2: And if that's the case, you're looking for a stronger 698 00:42:17,129 --> 00:42:21,540 Speaker 2: dollar in 2025, I would say stronger at least for 699 00:42:21,540 --> 00:42:23,879 Speaker 2: the first half of 2025. 700 00:42:24,850 --> 00:42:27,370 Speaker 2: Then you just, I, I'm not going to make a 701 00:42:27,370 --> 00:42:31,250 Speaker 2: forecast beyond the first half because it all depends on how, what, 702 00:42:31,330 --> 00:42:35,928 Speaker 2: how the policies change. Now, does Trump then not impose 703 00:42:35,929 --> 00:42:39,569 Speaker 2: the tariffs and then he goes back on them? And 704 00:42:39,570 --> 00:42:42,560 Speaker 2: if Germany and France, do they get their act together 705 00:42:42,560 --> 00:42:45,250 Speaker 2: in the second half of the year and push the 706 00:42:45,250 --> 00:42:51,850 Speaker 2: euro from parity toward again 108 $109 US dollars per euro. 707 00:42:52,209 --> 00:42:55,229 Speaker 2: Perhaps that would, those things would be very positive if 708 00:42:55,229 --> 00:42:55,879 Speaker 2: that happened. 709 00:42:57,100 --> 00:43:00,649 Speaker 1: Uh, we, you and I don't coordinate on work, but 710 00:43:00,649 --> 00:43:03,520 Speaker 1: on this issue we are like 100% aligned. I also 711 00:43:03,520 --> 00:43:06,290 Speaker 1: think that 2025 is a year of two halves, so 712 00:43:06,290 --> 00:43:13,129 Speaker 1: to speak, you will see almost uninterrupted Trump trades manifesting 713 00:43:13,129 --> 00:43:15,719 Speaker 1: in the first half or maybe the first quarter at least. 714 00:43:15,929 --> 00:43:18,330 Speaker 1: And after that, all bets are off with respect to 715 00:43:18,330 --> 00:43:20,850 Speaker 1: the dollar and then the US interest rates because 716 00:43:21,209 --> 00:43:24,659 Speaker 1: There are certain internal inconsistencies in the Trump model, which 717 00:43:24,659 --> 00:43:27,089 Speaker 1: right now nobody cares about, and he gets a free pass, 718 00:43:27,290 --> 00:43:30,159 Speaker 1: but then as those internal inconsistencies come to the fore, 719 00:43:31,010 --> 00:43:33,939 Speaker 1: then I think some of these trades would be far 720 00:43:33,939 --> 00:43:36,330 Speaker 1: more challenging. But you're right, it's really hard to predict 721 00:43:36,330 --> 00:43:38,560 Speaker 1: the next 6 months, let alone the next 12 months. 722 00:43:39,010 --> 00:43:41,570 Speaker 1: Um we've spent a lot of time talking about the 723 00:43:41,570 --> 00:43:43,489 Speaker 1: US and I'm glad that, you know, you brought the 724 00:43:43,489 --> 00:43:47,610 Speaker 1: discussion to the international for with the respect to Canada. 725 00:43:48,080 --> 00:43:51,870 Speaker 1: Ah, Germany and France. Let's talk a bit about Asia 726 00:43:52,080 --> 00:43:55,799 Speaker 1: and then perhaps EM as an asset class. Ari, it's 727 00:43:55,800 --> 00:43:58,830 Speaker 1: not been great. Ah, although Indian stocks have done pretty well, 728 00:43:59,000 --> 00:44:02,139 Speaker 1: but by and large investors basically invest in DM these days. 729 00:44:02,320 --> 00:44:05,679 Speaker 1: EM gets very little love. Any chance of that turning 730 00:44:05,679 --> 00:44:06,810 Speaker 1: around in 2025? 731 00:44:08,250 --> 00:44:12,409 Speaker 2: Uh, if the US dollar, uh, remains very strong, there are, 732 00:44:12,419 --> 00:44:15,709 Speaker 2: of course, two issues here. On the positive side for 733 00:44:15,709 --> 00:44:19,729 Speaker 2: emerging markets, uh, the US trade balance worsens. 734 00:44:20,659 --> 00:44:23,760 Speaker 2: But the, the emerging markets are going to be able 735 00:44:23,760 --> 00:44:26,659 Speaker 2: to export more to the United States. 736 00:44:27,379 --> 00:44:31,029 Speaker 2: But Trump has also threatened that if that happens, he's 737 00:44:31,030 --> 00:44:34,069 Speaker 2: going to impose a tariff on them, which again would 738 00:44:34,070 --> 00:44:37,389 Speaker 2: cut back. So I would say that net net, it 739 00:44:37,389 --> 00:44:40,709 Speaker 2: is going, looks like a negative year for emerging markets. 740 00:44:41,580 --> 00:44:46,620 Speaker 2: Uh, especially Asian countries which are so dependent on exports 741 00:44:46,620 --> 00:44:48,199 Speaker 2: rather than domestic consumption. 742 00:44:49,280 --> 00:44:52,439 Speaker 2: Uh, so I think 2025 is going to be a 743 00:44:52,439 --> 00:44:59,840 Speaker 2: year of countries with a significant domestic base benefiting at 744 00:44:59,840 --> 00:45:03,239 Speaker 2: the expense of those who are exporters. So what are 745 00:45:03,239 --> 00:45:06,000 Speaker 2: some of them? India again is a country with a 746 00:45:06,000 --> 00:45:09,879 Speaker 2: huge domestic consumption base. Indonesia is a country with a 747 00:45:09,879 --> 00:45:13,639 Speaker 2: large population, and it has, it can develop its domestic 748 00:45:13,639 --> 00:45:14,719 Speaker 2: consumption demand. 749 00:45:15,479 --> 00:45:19,760 Speaker 2: On the other hand, uh, Korea, Japan, China are all 750 00:45:19,760 --> 00:45:20,959 Speaker 2: export dependent. 751 00:45:21,739 --> 00:45:26,719 Speaker 2: And China has another problem, demographic, with the population getting 752 00:45:26,719 --> 00:45:30,510 Speaker 2: older and therefore not demanding as much as young people do. 753 00:45:31,469 --> 00:45:34,469 Speaker 2: You have an issue with how much they can depend 754 00:45:34,469 --> 00:45:37,949 Speaker 2: on putting the uh products into foreign markets. 755 00:45:38,649 --> 00:45:44,199 Speaker 2: And their, their key um trade partner, Germany is in trouble, 756 00:45:44,530 --> 00:45:47,610 Speaker 2: and the United States is threatening tariffs on China. So 757 00:45:47,610 --> 00:45:51,799 Speaker 2: I think overall, those areas look to be uh difficult 758 00:45:51,800 --> 00:45:54,530 Speaker 2: ones on Asia because of their export dependence. 759 00:45:55,540 --> 00:45:58,138 Speaker 2: There are a few countries, sorry, were you going to 760 00:45:58,139 --> 00:46:00,699 Speaker 2: say something? No, no, go ahead, please. There are a 761 00:46:00,699 --> 00:46:05,259 Speaker 2: few countries in Latin America which have special characteristics which 762 00:46:05,260 --> 00:46:08,979 Speaker 2: help them shine. Mexico because of its location. 763 00:46:09,929 --> 00:46:13,830 Speaker 2: And the fact that very often, um, Mexico is used 764 00:46:13,830 --> 00:46:16,610 Speaker 2: as a base as a substitute for China that has 765 00:46:16,610 --> 00:46:22,250 Speaker 2: been positive. On the other hand, Chinese products come through Mexico, 766 00:46:22,820 --> 00:46:25,219 Speaker 2: and a lot of goods which are thought to be 767 00:46:25,219 --> 00:46:30,929 Speaker 2: Mexican actually have Chinese components in them, which infuriates Trump 768 00:46:30,929 --> 00:46:32,979 Speaker 2: that that is happening and that's why. 769 00:46:33,419 --> 00:46:37,300 Speaker 2: He had this shouting match between Trump on the one 770 00:46:37,300 --> 00:46:41,709 Speaker 2: hand and Claudia Scheinbaum, the new Mexican president on the other. 771 00:46:42,550 --> 00:46:47,429 Speaker 2: Um, so that, despite that, if they reach an amicable settlement, 772 00:46:47,629 --> 00:46:49,629 Speaker 2: Mexico can very well benefit from it. 773 00:46:50,409 --> 00:46:54,239 Speaker 2: Uh, um, let's see, and then the other second country 774 00:46:54,239 --> 00:46:57,320 Speaker 2: I would mention, uh, in a positive light is Brazil. 775 00:46:58,239 --> 00:47:00,780 Speaker 2: This is a country I've been traveling to for the 776 00:47:00,780 --> 00:47:02,850 Speaker 2: last almost 45 years. 777 00:47:03,629 --> 00:47:07,669 Speaker 2: And you never write Brazil off. It's a country with 778 00:47:07,669 --> 00:47:13,229 Speaker 2: a huge population, very sophisticated bureaucracy, as well as a 779 00:47:13,229 --> 00:47:17,549 Speaker 2: business sector, very knowledgeable. And even when they go into crisis, 780 00:47:17,629 --> 00:47:20,750 Speaker 2: they come out of it. And so they can adapt 781 00:47:20,750 --> 00:47:25,270 Speaker 2: to global situation, so that they might do well. Brazil 782 00:47:25,270 --> 00:47:29,870 Speaker 2: has developed uh actually links with China, and China uh 783 00:47:29,870 --> 00:47:31,469 Speaker 2: into as an export market. 784 00:47:31,969 --> 00:47:35,529 Speaker 2: And uh Brazil may be a beneficiary along with Mexico, 785 00:47:35,780 --> 00:47:40,819 Speaker 2: but uh India because of population, Brazil, Mexico because of 786 00:47:40,820 --> 00:47:46,179 Speaker 2: uh the special characteristics, but overall emerging markets, uh, doesn't 787 00:47:46,179 --> 00:47:48,540 Speaker 2: look like a winning deal for 2025. 788 00:47:49,379 --> 00:47:52,928 Speaker 1: Ah, Sri, what about Brazil's neighbor, which always goes from 789 00:47:52,929 --> 00:47:55,009 Speaker 1: crisis to crisis, but right now seem to be having 790 00:47:55,010 --> 00:47:57,439 Speaker 1: a pretty decent moment, Argentina. 791 00:47:57,889 --> 00:47:58,010 Speaker 2: Yeah, 792 00:47:58,209 --> 00:48:01,479 Speaker 2: no, when you, when you said the neighbor, I said 793 00:48:02,040 --> 00:48:05,169 Speaker 2: Tur is obviously not talking about Uruguay. He has to 794 00:48:05,169 --> 00:48:08,090 Speaker 2: be talking about. It has to be the bigger one. 795 00:48:08,949 --> 00:48:12,209 Speaker 2: I, I'm both, I'm very impressed. 796 00:48:12,889 --> 00:48:17,560 Speaker 2: And uh I was in Argentina about 2 months ago, 797 00:48:18,050 --> 00:48:21,760 Speaker 2: very impressed by the changes that are taking place, um, 798 00:48:22,050 --> 00:48:26,239 Speaker 2: and the policies instituted by instituted by Javier Mille, uh, 799 00:48:26,250 --> 00:48:26,969 Speaker 2: the president. 800 00:48:28,360 --> 00:48:32,350 Speaker 2: Those are the positives. Uh, the positives come from the 801 00:48:32,350 --> 00:48:37,219 Speaker 2: fact that he has been very rigid in terms of not, uh, 802 00:48:37,310 --> 00:48:44,379 Speaker 2: printing money to justify any expenditure. And the people, I think, 803 00:48:44,439 --> 00:48:48,429 Speaker 2: genuinely think he's an honest guy, and there was a 804 00:48:48,429 --> 00:48:52,189 Speaker 2: lot of corruption in prior administrations, which the people believe 805 00:48:52,189 --> 00:48:54,870 Speaker 2: does not continue in the Malay side. 806 00:48:55,719 --> 00:49:00,229 Speaker 2: So those are the positives and the International Monetary Fund, 807 00:49:00,439 --> 00:49:06,750 Speaker 2: your former employer, uh, they are very supportive of the Malay, uh, thing. 808 00:49:06,780 --> 00:49:10,259 Speaker 2: After all, it's a huge debtor to the IMF. They 809 00:49:10,260 --> 00:49:14,820 Speaker 2: better be supportive, but, uh, rather than blindly supporting, which 810 00:49:14,820 --> 00:49:18,379 Speaker 2: is what the IMF used to do before, they are 811 00:49:18,379 --> 00:49:20,739 Speaker 2: currently in the process of supporting them. 812 00:49:21,120 --> 00:49:24,889 Speaker 2: And essentially hoping that Malay wins, and I hope the 813 00:49:24,889 --> 00:49:25,719 Speaker 2: same thing too. 814 00:49:26,500 --> 00:49:29,419 Speaker 2: The negatives come from the fact that there are a 815 00:49:29,419 --> 00:49:32,379 Speaker 2: whole lot of extraneous things that he uses which have 816 00:49:32,379 --> 00:49:36,250 Speaker 2: nothing to do with the economy or monetary or fiscal policy, 817 00:49:36,780 --> 00:49:41,658 Speaker 2: namely calling the president of Colombia names and calling the 818 00:49:41,659 --> 00:49:44,419 Speaker 2: prime minister of Spain as a communist. 819 00:49:45,419 --> 00:49:49,089 Speaker 2: and he started a fight with neighboring Brazil and then 820 00:49:49,090 --> 00:49:51,260 Speaker 2: it had to be resolved very quickly. 821 00:49:52,090 --> 00:49:55,259 Speaker 2: Uh, he does all of that, but the question is, 822 00:49:55,330 --> 00:49:58,290 Speaker 2: I sometimes say, why do you do that? The people 823 00:49:58,290 --> 00:50:01,370 Speaker 2: are not going to, your popularity is not going to 824 00:50:01,370 --> 00:50:04,169 Speaker 2: go up because you call somebody a communist outside of 825 00:50:04,169 --> 00:50:04,779 Speaker 2: your country. 826 00:50:05,709 --> 00:50:07,790 Speaker 2: Uh, so I think it is a part of the 827 00:50:07,790 --> 00:50:12,428 Speaker 2: personality that he's, again, full of energy and he has 828 00:50:12,429 --> 00:50:16,419 Speaker 2: to say something on every, every different uh concept. 829 00:50:17,229 --> 00:50:21,090 Speaker 2: But to the extent he sticks with the economics, and 830 00:50:21,090 --> 00:50:26,330 Speaker 2: so far his popularity has risen. Inflation has come down 831 00:50:26,330 --> 00:50:30,370 Speaker 2: very sharply, and even though people are finding that their 832 00:50:30,370 --> 00:50:34,800 Speaker 2: wages did not increase as much as population as the inflation, 833 00:50:35,610 --> 00:50:38,129 Speaker 2: they're willing to give him time. They say, here is 834 00:50:38,129 --> 00:50:41,530 Speaker 2: an honest guy who's trying to improve the situation. We 835 00:50:41,530 --> 00:50:44,050 Speaker 2: have had 70 years of a fiscal mess. 836 00:50:44,760 --> 00:50:47,959 Speaker 2: And it's not going to be cured overnight, so let's 837 00:50:47,959 --> 00:50:51,040 Speaker 2: give him more time. So that, all of that part 838 00:50:51,040 --> 00:50:55,280 Speaker 2: is good. Uh, the issue then, then becomes, can you 839 00:50:55,280 --> 00:50:56,000 Speaker 2: stick with it? 840 00:50:57,040 --> 00:51:01,280 Speaker 2: And he did not get diverted by other extraneous issues 841 00:51:01,280 --> 00:51:03,520 Speaker 2: and focus on the economy. That's what I'd like him 842 00:51:03,520 --> 00:51:04,070 Speaker 2: to do, 843 00:51:04,719 --> 00:51:08,040 Speaker 1: right? And also just to maintain that you're not just him, 844 00:51:08,050 --> 00:51:10,320 Speaker 1: but the entire administration remains clean because that seems to 845 00:51:10,320 --> 00:51:14,959 Speaker 1: be something that the Argentinians really are fed up with. Um, Sri, 846 00:51:15,080 --> 00:51:21,300 Speaker 1: a final question on the flavors of the moment crypto, gold, 847 00:51:21,479 --> 00:51:24,600 Speaker 1: and AI stocks. Where do these things sit in your 848 00:51:24,600 --> 00:51:25,879 Speaker 1: asset allocation distribution? 849 00:51:27,030 --> 00:51:31,739 Speaker 2: Um, I am very old fashioned, so I, I would 850 00:51:31,739 --> 00:51:35,899 Speaker 2: explain my bias with respect to crypto. Even when the 851 00:51:35,899 --> 00:51:39,860 Speaker 2: Federal Reserve policy is something that I do not like 852 00:51:39,860 --> 00:51:43,500 Speaker 2: and I don't like the policy, I still think money 853 00:51:43,500 --> 00:51:46,219 Speaker 2: should be created by a central authority. I need to 854 00:51:46,219 --> 00:51:48,259 Speaker 2: be able to touch it. I need to be able 855 00:51:48,260 --> 00:51:48,899 Speaker 2: to feel it. 856 00:51:49,699 --> 00:51:52,729 Speaker 2: And so I'm not a believer in crypto that I'm not, 857 00:51:52,800 --> 00:51:56,719 Speaker 2: I'm not going to talk in terms of what might do. Yes, 858 00:51:57,080 --> 00:52:00,709 Speaker 2: they can get a jump up due to the Trump policies, 859 00:52:00,959 --> 00:52:04,439 Speaker 2: but I'll be really watching to see how far the 860 00:52:04,439 --> 00:52:05,399 Speaker 2: run-up goes. 861 00:52:06,239 --> 00:52:09,870 Speaker 2: Uh, you mentioned gold. Uh, I'm a big fan of gold, 862 00:52:10,120 --> 00:52:14,760 Speaker 2: and the reason is that as currencies are being debased 863 00:52:14,760 --> 00:52:15,469 Speaker 2: right now. 864 00:52:16,219 --> 00:52:19,580 Speaker 2: The dollar can appreciate, we talked about the dollar becoming 865 00:52:19,580 --> 00:52:22,350 Speaker 2: very strong, but it becomes very strong with respect to 866 00:52:22,350 --> 00:52:23,948 Speaker 2: other paper currencies. 867 00:52:25,070 --> 00:52:28,560 Speaker 2: On the other hand, all paper currencies are losing value 868 00:52:28,560 --> 00:52:30,709 Speaker 2: because everybody is, uh, 869 00:52:31,510 --> 00:52:35,178 Speaker 2: Misusing the currency issuance, uh, ability. 870 00:52:35,939 --> 00:52:40,750 Speaker 2: So I think gold has a, a significant upward move still, 871 00:52:41,399 --> 00:52:46,270 Speaker 2: and rather than be between 2600 and 2700 an ounce, 872 00:52:46,879 --> 00:52:49,040 Speaker 2: I can see it very quickly going up to the 873 00:52:49,040 --> 00:52:53,320 Speaker 2: 3000 level, uh, and being sustained, uh, about that. 874 00:52:54,120 --> 00:52:59,069 Speaker 2: Now, if the, if the markets believe, especially on the 875 00:52:59,070 --> 00:53:02,750 Speaker 2: Fed's side, that interest rates are not going to be 876 00:53:02,750 --> 00:53:06,350 Speaker 2: cut any, any further or that interest rates can even 877 00:53:06,350 --> 00:53:10,909 Speaker 2: be increased, that's going to bring uh the gold price 878 00:53:10,909 --> 00:53:12,310 Speaker 2: down somewhat. 879 00:53:13,040 --> 00:53:16,219 Speaker 2: But the political side of it clearly is to be 880 00:53:16,219 --> 00:53:20,939 Speaker 2: uh profligate on the monetary policy side. And that I 881 00:53:20,939 --> 00:53:24,419 Speaker 2: think is going to be uh boosting the value of 882 00:53:24,419 --> 00:53:25,820 Speaker 2: gold longer term. 883 00:53:27,120 --> 00:53:31,600 Speaker 1: Um, profligacy on the monetary side, uh, are you suggesting 884 00:53:31,600 --> 00:53:36,320 Speaker 1: that QT will end soon, even if the Fed can't 885 00:53:36,320 --> 00:53:37,919 Speaker 1: bring inflation down to 2%? 886 00:53:38,790 --> 00:53:42,580 Speaker 2: They have already talked about ending quantitative tightening. 887 00:53:43,659 --> 00:53:48,149 Speaker 2: And um the person who the uh the president of 888 00:53:48,149 --> 00:53:50,709 Speaker 2: the Dallas Fed, who used to be the person at 889 00:53:50,709 --> 00:53:55,149 Speaker 2: the New York Fed managing that situation, she has clearly 890 00:53:55,149 --> 00:53:59,859 Speaker 2: indicated that that may be coming. Powell has also suggested that. 891 00:54:00,469 --> 00:54:03,719 Speaker 2: So I had, so in other words, it's now at 892 00:54:03,719 --> 00:54:06,459 Speaker 2: about 7.2, 7.3 trillion. 893 00:54:07,350 --> 00:54:10,800 Speaker 2: And they are, you would think that they should take 894 00:54:10,800 --> 00:54:13,719 Speaker 2: it back to the pre-COVID level of 4 trillion, if 895 00:54:13,719 --> 00:54:17,080 Speaker 2: not to the Lehman Brothers level of 800 billion, but 896 00:54:17,080 --> 00:54:19,959 Speaker 2: no chance. It's not going to go anywhere there. I 897 00:54:19,959 --> 00:54:23,790 Speaker 2: think you will be lucky if it goes to 6.5 trillion, 898 00:54:23,840 --> 00:54:26,120 Speaker 2: and we are going to consider that a victory and 899 00:54:26,120 --> 00:54:30,469 Speaker 2: we are not going to um do quantitative tightening anymore. 900 00:54:30,840 --> 00:54:35,760 Speaker 2: That also militates against the dollar and it also creates 901 00:54:35,760 --> 00:54:37,010 Speaker 2: more demand for gold. 902 00:54:37,590 --> 00:54:39,750 Speaker 2: Because you know that there is going to be a 903 00:54:39,750 --> 00:54:43,299 Speaker 2: lack of discipline on the side of uh the Fed policy. 904 00:54:44,719 --> 00:54:48,449 Speaker 1: Right, so basically for our followers and listeners, don't fight 905 00:54:48,449 --> 00:54:50,520 Speaker 1: the Trump trade in the near term, but be very 906 00:54:50,520 --> 00:54:53,659 Speaker 1: careful uh once the sugar rush goes away because from 907 00:54:53,659 --> 00:54:55,939 Speaker 1: the dollar to the interest rates, lots of volatility could 908 00:54:55,939 --> 00:54:56,620 Speaker 1: be in the offing. 909 00:54:57,379 --> 00:54:59,689 Speaker 2: That is very well put, I would agree with that. 910 00:55:00,719 --> 00:55:03,649 Speaker 1: Shri, uh, this has been fantastic as always. Thank you 911 00:55:03,649 --> 00:55:05,500 Speaker 1: so much for your time and insights, and I want 912 00:55:05,500 --> 00:55:07,820 Speaker 1: to wish you and your family happy holidays and a 913 00:55:07,820 --> 00:55:08,709 Speaker 1: happy new year. 914 00:55:09,219 --> 00:55:11,620 Speaker 2: Thank you very much. I wish you a happy holidays 915 00:55:11,620 --> 00:55:14,060 Speaker 2: as well and all the best to you and the 916 00:55:14,060 --> 00:55:15,859 Speaker 2: family in 2025, Jamo. 917 00:55:16,489 --> 00:55:19,479 Speaker 1: Thank you very much and thanks to our listeners and 918 00:55:19,479 --> 00:55:22,360 Speaker 1: viewers as well. Kobe Time was produced by Ken Delbridge 919 00:55:22,360 --> 00:55:26,350 Speaker 1: at Sly Studios. Violet Lee and Daisy Sharma provided additional assistance. 920 00:55:26,639 --> 00:55:29,620 Speaker 1: It is for information only and does not represent any 921 00:55:29,620 --> 00:55:33,560 Speaker 1: trade recommendations. All 144 episodes of the podcast are available 922 00:55:33,560 --> 00:55:37,790 Speaker 1: on YouTube and on all major podcast platforms, including Apple 923 00:55:37,790 --> 00:55:41,760 Speaker 1: and Google and Spotify. As for our research publications, webinars, 924 00:55:41,770 --> 00:55:43,639 Speaker 1: and live streams, you can find them all by Googling 925 00:55:43,639 --> 00:55:46,199 Speaker 1: Devious Research Library. Have a great day.