Latest / Merryn Talks Money / Saxo’s ‘Outrageous’ Prediction? Gold Will Top $3,000 in 2023

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Saxo’s ‘Outrageous’ Prediction? Gold Will Top $3,000 in 2023 · Merryn Talks Money

0:00
Speaker 1: Well, John, hello again. We did a trailer for this
0:05
Speaker 1: podcast a little while ago in which I told all
0:07
Speaker 1: our loyal listeners not get excited about hearing from you
0:10
Speaker 1: all the time, because I wasn't gonna let you on
0:12
Speaker 1: very often. But there's been protests, and I think, actually,
0:16
Speaker 1: you're going to be on for almost every episode. We're
0:18
Speaker 1: going to have a little chat before we get into
0:21
Speaker 1: the meat of me talking to our guests. So so
0:24
Speaker 1: you know, that's nice, that's good. I'm glad that the
0:26
Speaker 1: Pitchfort building more booksually the bloom Bed building. What favorite
0:30
Speaker 1: good about it too. Now, listen, this is our favorite
0:35
Speaker 1: time of year, you and I. We've been working together
0:37
Speaker 1: a long time and December always says something really special
0:40
Speaker 1: about it for us, Which is it? This is the
0:44
Speaker 1: time of year, It's the season for forecasts. That's when
0:47
Speaker 1: people start telling us what they think is going to
0:50
Speaker 1: happen next year, and we can make fun of them,
0:53
Speaker 1: which really works, doesn't it. Yeah, it's basically the S
0:56
Speaker 1: and P will go up by seven s, devotake whatever it,
1:00
Speaker 1: and not bail last year. And we have the particular
1:02
Speaker 1: joy of looking at the forecast they made last year
1:04
Speaker 1: and comparing it to what really happened. Yeah, and it's
1:08
Speaker 1: always wrong, always wrong. That will come onto more of that,
1:10
Speaker 1: and when we get into the meat of the podcast,
1:12
Speaker 1: I say, without without excellent guests today. But one of
1:15
Speaker 1: the things that people are starting doing is talking about
1:17
Speaker 1: their surprise predictions for next year, things you don't think
1:21
Speaker 1: will happen, that they think will happen. And very often
1:24
Speaker 1: I look at those, no thing, well, I wouldn't really
1:26
Speaker 1: surprise me at all. So one of the banks to
1:28
Speaker 1: come up with standard charge will come out with one
1:30
Speaker 1: this week, which is that over the next year the
1:32
Speaker 1: price of bitcoin may fall to five thou dollars. And
1:36
Speaker 1: wasn't that a given? That surprised me with that surprise? You? No,
1:39
Speaker 1: I mean not at all. I mean I think one
1:41
Speaker 1: of the things with these surprise predictions is though usually
1:44
Speaker 1: things that kind of mainstream analyst feels an attain a
1:48
Speaker 1: bit controversial because it's a place move that it goes
1:51
Speaker 1: beyond seven of the way, and that's basically anything other
1:55
Speaker 1: than that would be a surprise. But yeah, I mean,
1:59
Speaker 1: black coin form five thousan dollars isn't isn't I wouldn't say,
2:02
Speaker 1: But like kind of we out there, I mean, zero
2:05
Speaker 1: would be a surprise, but only because of the time frame.
2:07
Speaker 1: Zero within two or three years wouldn't be a surprise,
2:10
Speaker 1: will be a surprise because of the time frame. I mean,
2:12
Speaker 1: I still I know that me and you slightly kind
2:16
Speaker 1: of don't entirely. And that's when I still think backcoin
2:20
Speaker 1: has got some kind of potential. But think think, but
2:25
Speaker 1: I just think it's very, very, very manor um because
2:29
Speaker 1: it's really too complicated to you. You've been on Twitter
2:32
Speaker 1: asking people for explanations, and you know what they say.
2:38
Speaker 1: They say, educate yourself, and then they send me reading
2:41
Speaker 1: this and I read all those books. In fact, I
2:43
Speaker 1: recommended those books to you in the first place. And
2:46
Speaker 1: reading those books didn't get me any further. It was
2:48
Speaker 1: understanding what the use case is. And people keep telling me,
2:52
Speaker 1: you know that at the very very worst, even if
2:54
Speaker 1: nobody else used at all, it will be continued to
2:56
Speaker 1: be used by the criminal community, and that possibly work
3:01
Speaker 1: because you can only laun the money out of the
3:03
Speaker 1: black economy if you can laundrip via something that people
3:07
Speaker 1: in the non black economy use. And if we don't
3:09
Speaker 1: use bitcoing, then criminals can't use bit going because they
3:11
Speaker 1: can't launder it from their world to our world. Well, yeah,
3:15
Speaker 1: because you know that anyone who's using missing something. No, no,
3:17
Speaker 1: I mean that that'st thing you are really. I mean,
3:19
Speaker 1: because you know that anyone who's using a bitcoin or
3:21
Speaker 1: ramp as a criminal, which is quite checking. You know.
3:26
Speaker 1: It's the way that I guess, like, I don't know
3:27
Speaker 1: who's going to sue you for that, but someone's going to.
3:30
Speaker 1: I haven't labeled anyone specifically. What would happen next year
3:35
Speaker 1: that everyone's going to think is surprised. Isn't going to
3:37
Speaker 1: be a surprise to here? I actually think that, I mean,
3:40
Speaker 1: that's all this is a very important one. But I
3:42
Speaker 1: don't think that the UK is going to go in
3:43
Speaker 1: a devastating resisation. Nicely, thing is going to end up
3:46
Speaker 1: being a fairly kind of good place to have put
3:49
Speaker 1: your money this year when everyone was parany king about it.
3:52
Speaker 1: But it can be a good place to put your
3:53
Speaker 1: money and still have a devastating recession. These things aren't
3:56
Speaker 1: necessarily match. I mean, we've written so many times over
3:59
Speaker 1: the years that there's no correlation between GDP and stock
4:01
Speaker 1: market performance that I mean, it's not going to do
4:03
Speaker 1: the GDP. But I still think that Britain is going
4:06
Speaker 1: to do better than everyone expects. I'm concerned because I
4:10
Speaker 1: have this horrible feeling that mild might be the new transitory. Well,
4:14
Speaker 1: I know it's jacky, it's chicky. My gut feeling is
4:19
Speaker 1: that it's not going to be as bad as people
4:24
Speaker 1: think it's going to be. Um. I to think the
4:28
Speaker 1: energy prices are probably going to come down more than
4:30
Speaker 1: people expect. So it's actually kind of a believe or not.
4:35
Speaker 1: It's kind of an optimistic upside one. But that is
4:40
Speaker 1: that is going out there on the limb for me,
4:42
Speaker 1: because I'm not I'm gonna naturally bearish listen as you
4:46
Speaker 1: should know that I'm looking at John disapprovingly at the moment. Honestly,
4:50
Speaker 1: I'm weathering, literally weathering here. John. Thank you so much
4:56
Speaker 1: for coming on and talking again, and listeners, I think
4:58
Speaker 1: you're gonna hear from again next tweet unless you get fined.
5:08
Speaker 1: Welcome to Marin Talks Money, the podcast in which people
5:11
Speaker 1: who know the markets explain the markets. I'm there in
5:14
Speaker 1: some st web this week. A conversation with Saxo Banks
5:17
Speaker 1: chief investment Officer Stean Jacobson, who joins with the banks
5:20
Speaker 1: ten outrageous predictions for twenty three. He does this every year,
5:25
Speaker 1: lots of outrageous stuff. We've just had a John's outrageous
5:28
Speaker 1: predictions for next year, which relatively positive. However, I started
5:32
Speaker 1: my conversation with Stean with a look back at their
5:35
Speaker 1: predictions for this year and how they panned out. I
5:38
Speaker 1: think it's one of the better years. Although, as as
5:42
Speaker 1: you were well know, we actually don't set out trying
5:44
Speaker 1: to be right about anything. It's it's it's more a
5:48
Speaker 1: conversation story and more sort of a perspective of the
5:52
Speaker 1: fat tales. But yeah, I think the one that probably
5:56
Speaker 1: cost the most money for the average investor is the
6:00
Speaker 1: prediction that there would be a face plant, and matter,
6:03
Speaker 1: I think we can safely say that one came through.
6:06
Speaker 1: Can we say that the young abandoned the platforms in
6:08
Speaker 1: protest against their mining of personal information for profit? Can
6:12
Speaker 1: we say that? Or can we just say the share
6:14
Speaker 1: price fell a lot where we can certainly say that later?
6:17
Speaker 1: And I think as as you are as experienced as
6:20
Speaker 1: I am in doing this, it's uh not always that
6:24
Speaker 1: you get either the direction or the in result right.
6:27
Speaker 1: But sometimes you get the results right, and sometimes you
6:29
Speaker 1: get the arguments, right, But I think what we were
6:32
Speaker 1: trying to say last year was that a lot of
6:34
Speaker 1: people would be abandoning matter, and certainly in the Investor
6:36
Speaker 1: did abandoned matter. And I also think to a lot
6:39
Speaker 1: of extent, the point that young people don't want to
6:42
Speaker 1: be part of it has shown up in of course,
6:45
Speaker 1: if nothing else, in the meta space, which was supposed
6:48
Speaker 1: to be populated by young people coming onto this virtual world.
6:52
Speaker 1: But I think the young people like me and maybe
6:54
Speaker 1: I'll talk for you as well, is figuring out that
6:57
Speaker 1: the reality the real world is hard in our uh,
7:00
Speaker 1: then also having to navigate a virtual world is probably
7:03
Speaker 1: a little bit too much in the present conditions. It's
7:06
Speaker 1: absolutely true, neither of my children or on Facebook. So
7:09
Speaker 1: there you go. You win that one. What about the
7:12
Speaker 1: first one you had last year, the planned and fossil
7:15
Speaker 1: fuels gets a rain check. I mean, it's not formal,
7:18
Speaker 1: the putting a rain check on that plan, But it's
7:20
Speaker 1: definitely happening, isn't it. It's definitely happening, and it's uh.
7:25
Speaker 1: I think it's become even more relevant today than it
7:27
Speaker 1: was last year, in the sense that if you think
7:30
Speaker 1: about what twenty three really meant of course Ukraine War
7:34
Speaker 1: was the starting point and to a last extent, a
7:37
Speaker 1: acceleration of the trench in place. Uh. You know, one
7:40
Speaker 1: year ago Germany had its free tier approach, which was
7:45
Speaker 1: to export to China, uh, depending on very low energy
7:49
Speaker 1: price from Russia and not having to pay off for
7:52
Speaker 1: its military. I would say all of those things has changed.
7:55
Speaker 1: But what has really changed in particularly in Germany, of course,
7:58
Speaker 1: is a party like the Green Party of Protest moving
8:01
Speaker 1: in the energy space, is now fully on board on
8:04
Speaker 1: reopening nuclear power and on the case which is and
8:09
Speaker 1: this is the case globally that energy and re energy
8:14
Speaker 1: sourcing has become a number one priority for every single
8:17
Speaker 1: government around the world. So I think it's pretty faith
8:20
Speaker 1: to say, at a bare minimum that fossil energy is
8:23
Speaker 1: still part of the solution. I don't think the green
8:26
Speaker 1: movement on the green voteness of the situation has disappeared.
8:30
Speaker 1: I don't think in terms of the latest cup that
8:32
Speaker 1: we are anywhere closer to getting the results we want.
8:36
Speaker 1: But certainly we all know, we all know now that
8:39
Speaker 1: we we need to think about energy as a strategic resource. Okay, well,
8:44
Speaker 1: that's two major successes. What of the others I think
8:49
Speaker 1: I will have maybe not an A plus, but we
8:52
Speaker 1: will have a B plus for calling inflation to the
8:54
Speaker 1: level that we called it. I think we put in
8:57
Speaker 1: a unimaginable at the time level of if I'm not mistaken,
9:02
Speaker 1: twelve um fifteen, fifteen, Yeah, no, fifteen, US inflation reaches
9:08
Speaker 1: above fifteen cent home wage price spiral um. But in
9:12
Speaker 1: that that might not have happened this year, but it
9:14
Speaker 1: could easily happen next year. Yeah. And and the reason
9:18
Speaker 1: for the fifteen percent was really that was four was
9:21
Speaker 1: to peak in the nineteen seventies, So we were trying
9:23
Speaker 1: to outdo whatever happened in the nineteen seventies. And I think,
9:26
Speaker 1: as you rightly allude to, I still think the game
9:30
Speaker 1: is on. Of course, the market right now, what whether
9:33
Speaker 1: you look at break even, two, five, ten, or thirties,
9:36
Speaker 1: they all think that it's going to to thirty five.
9:39
Speaker 1: Just as a side note, I think it's interesting whatever
9:41
Speaker 1: happens in the next thirty years. Apparently the market has
9:43
Speaker 1: dictated that inflation will be a two and thirty five
9:46
Speaker 1: two point thirty five basis point two undred thirty five
9:50
Speaker 1: basis points inflation. But that's interesting in itself. But no,
9:53
Speaker 1: I don't think in any shape of form that the
9:55
Speaker 1: inflation story is over yet. It's interesting. It's real anchoring,
9:58
Speaker 1: isn't it. That's just everyone thinking, well, it'll go back
10:01
Speaker 1: to where it was. It's very much pious confirmation. But
10:05
Speaker 1: I also think it's a true reflection of central banks
10:08
Speaker 1: unimaginative models. The models is outdated, The model is not
10:14
Speaker 1: working with real time data, is not working with a
10:17
Speaker 1: bottom up analysis. Is all macro, and we both know
10:20
Speaker 1: that macro is very good dinner conversation, but it's very
10:24
Speaker 1: difficult to predict. And I think they have remained with
10:27
Speaker 1: this transitory going back to normal all by itself. Apparently
10:31
Speaker 1: my energy is going to solve yourself. Supply change is
10:34
Speaker 1: going to solve yourself. Degol obsiation is going to solve yourself.
10:38
Speaker 1: And another note, I'm very pleased that everything just solve yourself.
10:41
Speaker 1: I think that is a great strategy. I would be
10:43
Speaker 1: through the fould happen, wouldn't you certainly preferred? But I'm not.
10:50
Speaker 1: I have not I don't have enough hair to actually
10:52
Speaker 1: believe the things solved themselves. I do think they need
10:54
Speaker 1: some actionable and and and some good things to come
10:58
Speaker 1: out of it. As as I know. What I do
11:00
Speaker 1: think that there is a solution to this, and this
11:02
Speaker 1: is that you know, the energy crisis, the level of
11:05
Speaker 1: energy has forced ourselves to at least start considering that
11:09
Speaker 1: we need to live in a productive society. I don't
11:11
Speaker 1: think it's fully transparent in politics, but I think it's
11:14
Speaker 1: very transparent when I talk to companies at a company level.
11:17
Speaker 1: They all understand that the margin in terms of into
11:20
Speaker 1: prices growing up, and the only way to counter that
11:23
Speaker 1: will be more productivity, which means better education, better products,
11:27
Speaker 1: better services. Do think that ultimately the higher prices will
11:32
Speaker 1: lead to lower prices, but driven by productivity, not by hoping,
11:36
Speaker 1: not by praying, and certainly not by waiting. I think
11:39
Speaker 1: that's the most optimistic thing I've heard anyone. Yeah, given her,
11:44
Speaker 1: given her, bad productivity has been for so long, it's
11:47
Speaker 1: interesting the idea that productivity could be bad. Low productivity
11:50
Speaker 1: could be a function of energy being too cheap and
11:53
Speaker 1: too abundant. I mean, that's what people offer say about
11:55
Speaker 1: labor costs and labor in the UK in particular, if
11:58
Speaker 1: you have a too much available of labor to lower price,
12:00
Speaker 1: you inhibit your own productivity gains the same idea or
12:05
Speaker 1: a journalist in of all places. Estonia asked me a
12:08
Speaker 1: great question earlier this year. He said, okay, stay enough
12:11
Speaker 1: gave If I gave you a magic one, what would
12:13
Speaker 1: you do with it? I think you're being a banker.
12:15
Speaker 1: He expected me to say, turn everything into gold. But
12:18
Speaker 1: right then, and they're there, they're right there. In a moment,
12:23
Speaker 1: I actually realized that what I would want was that
12:25
Speaker 1: the marginal cost of energy would go to zero. That
12:28
Speaker 1: would facilitate desalinational water, vertical farming at scale. It would
12:33
Speaker 1: increase the computer powerability, will improve the ability of you know,
12:38
Speaker 1: longevity and the like. So I think, if you think
12:41
Speaker 1: about it in that context of productivity, what is holding
12:44
Speaker 1: us back is actually the high level of energy prices
12:47
Speaker 1: and as the present non actionable, the non plan on
12:52
Speaker 1: dealing with this is driving the margin price of energy up,
12:55
Speaker 1: which means that, as you say, we are challenged on productivity.
12:59
Speaker 1: But the solution clearly is to get closer to a
13:03
Speaker 1: multi approach on energy, more basic investment, more basic research,
13:09
Speaker 1: and think about you know, as a as an analog.
13:12
Speaker 1: You know, when we had the COVID starting, people was
13:16
Speaker 1: talking about three, four or five years before the vactually
13:18
Speaker 1: would be available, but throwing enough money added open sourcing
13:22
Speaker 1: it and then you may in the number one priority
13:25
Speaker 1: created that productivity in vaccine. I don't see why we
13:29
Speaker 1: cannot do the same about energy, because clearly it is
13:32
Speaker 1: punitive to the consumers, is punity to the voters, and
13:36
Speaker 1: more importantly, is actually changing as we already discussed the
13:40
Speaker 1: energy security mix up, but also the way we think
13:42
Speaker 1: about society, and and and then the final note here,
13:45
Speaker 1: which I think is important one. I don't know where
13:47
Speaker 1: you're realized there's but of all assets which is traded
13:51
Speaker 1: in the world are intangibles. So only ten percent after
13:55
Speaker 1: world's ass are tangibles. And I think you and I
13:58
Speaker 1: both know that energy SIT's intendable, uh you electricity, grid networks,
14:02
Speaker 1: it's intangibles. Your logistics, your last mild delivery is intangible.
14:06
Speaker 1: So what the world needs it's more tangible assets. More
14:10
Speaker 1: tangible assets translating into more real economy assets. And as
14:14
Speaker 1: we grow that, we will also massively grow with the productivity.
14:17
Speaker 1: So that's my back of an envelope. Two minutes macro
14:20
Speaker 1: talk and protitivity. Okay, I'm going to make a quick
14:22
Speaker 1: challenge here on the vaccine that half the people who
14:25
Speaker 1: listen to this will make which is that Yeah, I know,
14:29
Speaker 1: I know, it's trying to develop another vaccines. It's just
14:32
Speaker 1: that we cancel the regulatary environment around most vaccines. If
14:37
Speaker 1: you cut the regular environment in place, surely would have
14:39
Speaker 1: taken just as long as any old vaccine. And then
14:41
Speaker 1: at I don't think the vaccine works right, And then
14:44
Speaker 1: you have the full audience. But we'll leave that one, then,
14:48
Speaker 1: shall we um? Let me ask you one more question
14:51
Speaker 1: on on on last year's one of the ones I
14:54
Speaker 1: like to find interesting with new hypersonic tech, drive space
14:58
Speaker 1: race and the new Cold war. And you haven't mentioned
15:00
Speaker 1: that as being one of the ones that that you
15:03
Speaker 1: would give yourself a B plus it. But there is
15:06
Speaker 1: definitely a Cold war at least going on in space,
15:09
Speaker 1: isn't that. And the hypersonic webon was activated by the
15:12
Speaker 1: Russians and and and everybody else. So yeah, that is
15:15
Speaker 1: maybe not a B, but then a a C C
15:17
Speaker 1: plus at least, but close to a B. Yeah. And
15:21
Speaker 1: I listened to a talk the other day that told
15:23
Speaker 1: me that we didn't really really have to worry about
15:26
Speaker 1: energy anymore because the cost of energy is effectively going
15:29
Speaker 1: to zero because we will be harvesting solar energy in space.
15:33
Speaker 1: So that sounded nice. That's another optimistic mode. This is
15:36
Speaker 1: turning into be a very It almost become one of
15:39
Speaker 1: these coach sessions where people get uplifted and see the
15:44
Speaker 1: future better. Shall we take care of that by moving
15:47
Speaker 1: onto next year's predictions. Yeah, we can kill that quite quickly,
15:54
Speaker 1: next year's outrageous predictions. Um, and you title the whole
15:58
Speaker 1: thing the war anomy. So anyone who's feeling optimistic or
16:02
Speaker 1: kind of woman fuzzy from what we've been talking about
16:04
Speaker 1: so fast stop right now. The whole thing is called
16:07
Speaker 1: the war economy. We just took through a little bit
16:10
Speaker 1: what you mean by that. Yes, so, as we have
16:13
Speaker 1: found that creating our rag of prediction has become more
16:16
Speaker 1: difficult because competing with the real world is very difficult,
16:19
Speaker 1: we sort of try to embed a red threat through
16:22
Speaker 1: the the different years version of the outrage prediction. This
16:27
Speaker 1: one comes with the side title of being the war economy.
16:31
Speaker 1: And what we mean by the war economy is that
16:33
Speaker 1: if you think about what is going on politically, this
16:36
Speaker 1: serves to the activation of the bigger public hand which
16:40
Speaker 1: we got used to undercovered and which certainly politician likes
16:44
Speaker 1: to continue the backloading of actionable budget cards as you
16:49
Speaker 1: see in the UK budget. The constant waiting for better times,
16:53
Speaker 1: are constantly waiting for inflation to come down is very
16:57
Speaker 1: much what you see during war periods all the way
16:59
Speaker 1: back to you know, three before christ there's been limitation
17:03
Speaker 1: on commodities, that's been price caps, that's been sourcing basically
17:09
Speaker 1: the government or the military dictating which resources, which energy groups,
17:13
Speaker 1: which people in society are more important to savee God,
17:17
Speaker 1: the they are uh the upkeep of both the constitutional
17:22
Speaker 1: but also the border. So we think it's probably much
17:25
Speaker 1: easier to analyze what's going on in the world from
17:27
Speaker 1: from sort of a war economy. And we are not
17:30
Speaker 1: saying the world is at World War three or anything.
17:32
Speaker 1: We're saying if you think about it on the as
17:35
Speaker 1: you you indicate it yourself. If we talk about the
17:38
Speaker 1: war in space, if we talk about the war going
17:40
Speaker 1: on daily in terms of the Internet and and and
17:43
Speaker 1: and the darknet for sure, and what goes on in
17:46
Speaker 1: those activities. I don't think I really want to know
17:48
Speaker 1: what's going on, but I'm pretty sure it's not a
17:50
Speaker 1: nice place. And I think the deglobalization has been accelerated.
17:55
Speaker 1: What we've seen is the two biggest political initiatives in
17:58
Speaker 1: the world right now is on the US side, the
18:01
Speaker 1: Chips Act, which is basically about re shoring technology and
18:05
Speaker 1: work and and and security back to the US, and
18:08
Speaker 1: in terms of China is the dual circlar The dual
18:11
Speaker 1: circle is really about reducing the export dependency going to
18:15
Speaker 1: the domestic economy. And both of these of course placed
18:19
Speaker 1: to not only the deglobalization but also the the increase
18:23
Speaker 1: in alliance of being created. The new alliance in the
18:25
Speaker 1: world is between China and Russia, energy coming from Russia
18:28
Speaker 1: and technology going the other way out. So so all
18:32
Speaker 1: of these are bilateral cheating military priorities over what we
18:38
Speaker 1: talked about before, productivity equality and certainly also the green
18:43
Speaker 1: agenda has been lost a little bit in this race. Okay,
18:47
Speaker 1: So here we are and what is obviously well to
18:49
Speaker 1: you anyway, I think to be as well not going
18:51
Speaker 1: to be a disinflation re environment for some time. Um,
18:56
Speaker 1: you haven't gotten here a specific outrageous prediction on inflation,
19:00
Speaker 1: but lots of the of the predictions kind of hang
19:04
Speaker 1: around that area. So one is that gold rockets to
19:09
Speaker 1: three thousand dollars. The central banks fail on on inflation mandate,
19:12
Speaker 1: and we've we've slightly talked about why the central banks
19:15
Speaker 1: will fail on their inflation mandate because their target is
19:18
Speaker 1: very random in their midles are rubbish. Um, but is
19:21
Speaker 1: there a reason why that will send gold to three
19:23
Speaker 1: thousand dollars For people who don't believe in golds and
19:26
Speaker 1: inflation heads, of which there there are many, well, then
19:29
Speaker 1: we just let them read history, right. It's one of
19:33
Speaker 1: the I would argue if you're an asset manager, and
19:36
Speaker 1: I presume this show talks to a lot of people
19:38
Speaker 1: either manage their own many or managed on behalf and
19:41
Speaker 1: other people. I think if you're on a pot for
19:43
Speaker 1: you today in sterling or euro dollars, you also need
19:46
Speaker 1: to run it in gold because that is your true
19:48
Speaker 1: purchasing power. So it's really not about inflation, is more
19:52
Speaker 1: about your maintaining your purchasing power. But what will catapult
19:56
Speaker 1: gold to a higher level, of course, is all of
19:58
Speaker 1: the failings that we talked about, but maturely that the
20:01
Speaker 1: world continues as I indicated early on, to believe that
20:05
Speaker 1: inflation is going back to two to two and a
20:07
Speaker 1: half percent, and that is as I said, to five
20:10
Speaker 1: ten and thirty year forward dictated by the market says
20:13
Speaker 1: we are going to be a two thirty five. I
20:16
Speaker 1: find that naive in a deglobalization world where we want
20:19
Speaker 1: to prior to strategy, we want to prioritize military, we
20:23
Speaker 1: want to prioritize keeping security at home, and we don't
20:27
Speaker 1: want to do reshoring. I don't necessarily understand why I
20:30
Speaker 1: know these things should be deflationary at a bare minimum,
20:33
Speaker 1: I don't even understand why that could get us back
20:35
Speaker 1: to where we were before. That would mean that that
20:38
Speaker 1: will be you know, physical impulse when things closed down,
20:41
Speaker 1: it will mean that that will not be printing the money.
20:43
Speaker 1: So I think the market has a very naive attitude
20:46
Speaker 1: to the forward looking indicators. And I think this year,
20:50
Speaker 1: at least for me as a trader and as a
20:52
Speaker 1: as a chief, Investments has told me that the market
20:56
Speaker 1: has no transparency in terms of predicting inflation at all.
21:00
Speaker 1: It didn't work for them two years ago, it didn't
21:02
Speaker 1: work one year ago, and it's not working now. So
21:04
Speaker 1: for me, it is more about you know, sensing and
21:07
Speaker 1: talking to companies see what is reported in terms of
21:10
Speaker 1: marching squeeze, and that process is much slower than the
21:13
Speaker 1: market likes. But what all of our goal will be
21:17
Speaker 1: the refuge in the world where we also have competing currencies.
21:21
Speaker 1: I'm sure we're going to come to a minute. But
21:23
Speaker 1: one of the more outrageous things we're making claims on
21:25
Speaker 1: this year is, of course that's going to be an
21:27
Speaker 1: alternative to the to the mighty dollar, and that the
21:30
Speaker 1: basement that will happen to the dollar. Yeah, we'll come
21:33
Speaker 1: back to that in a tick. And one of the
21:34
Speaker 1: other things that you say when you talk about inflation
21:36
Speaker 1: is that a good amount of inflation next year will
21:40
Speaker 1: be driven by China backing away from zero COVID policy
21:43
Speaker 1: and possibly been coming out within new vaccine, and the
21:46
Speaker 1: protests that we've seen recently in China suggest they may
21:48
Speaker 1: be closer to pivoting away from zero COVID than than
21:52
Speaker 1: we might have thought even a few weeks ago. Yeah,
21:54
Speaker 1: I find it so much surprising, and I I shouldn't
21:59
Speaker 1: do but deem myself to be something of a China expert,
22:02
Speaker 1: having a great expulsure both work wise and and and
22:06
Speaker 1: and and in terms of ownership with my company to them,
22:08
Speaker 1: And it's pretty clear that they cannot reverse course back
22:11
Speaker 1: to a total lockdown. The twenty measures already placed seems
22:14
Speaker 1: to be extended, and it seems like the battle right
22:17
Speaker 1: now is really between the local government what not wanting
22:20
Speaker 1: to actually translate what the Central Committee is saying. And
22:26
Speaker 1: this is merely because we are, of course in a
22:28
Speaker 1: face in China where a lot of political local leaders
22:31
Speaker 1: are outgoing and they don't want to take the responsibility.
22:34
Speaker 1: They want to leave that job to the incoming new
22:38
Speaker 1: caters that comes in. And I needs to see territory.
22:40
Speaker 1: So I think there is a bit of logistic which
22:42
Speaker 1: is the back burning, back on the back burner what
22:45
Speaker 1: happened at a part of Congress. But I think, as
22:48
Speaker 1: you rightly say, I think it is almost inevitable they
22:50
Speaker 1: need to move to a higher genda because of course,
22:53
Speaker 1: one of the short comings on the short side in
22:57
Speaker 1: in China is obviously creating timman in jobs a year
23:00
Speaker 1: has been very difficult to use unemployees going through the roof.
23:04
Speaker 1: How do you do that if you're central planned economy,
23:06
Speaker 1: You restart the economy, you loosen up what we've seen
23:08
Speaker 1: on the property sector and and ultimately that stock market
23:13
Speaker 1: is a closed circuit. There is no external balance, uh
23:18
Speaker 1: and open account against the outside world, so that market
23:21
Speaker 1: is just purely manipulated to to reflect what what the
23:24
Speaker 1: central party wants to to telegraph to you. Okay, So
23:29
Speaker 1: here we are with inflation much higher than anyone exactly
23:32
Speaker 1: miracles expects. And then number seven and this I think,
23:36
Speaker 1: if I mean, I think it's it's actually quite likely.
23:39
Speaker 1: It's the kind of thing that will really freak everybody out.
23:41
Speaker 1: Widespread price controls introduced the camp official inflation. And I
23:46
Speaker 1: assume you meaning in most Western economies. Yeah, you know,
23:50
Speaker 1: you know, UK has had this history before, in the nineties,
23:54
Speaker 1: sixties and seventies, price control boards and the likes. We've
23:57
Speaker 1: seen it during World Wars. We've seen as I said before,
24:00
Speaker 1: we've seen it even among the Roman emperors before that
24:04
Speaker 1: they dictate the price caps. And price caps is politically opportune,
24:09
Speaker 1: but of course it doesn't reduce the underlying problem, which
24:12
Speaker 1: is that we don't have enough great capacity. It is
24:15
Speaker 1: not able to actually secure a new investment. It certainly
24:18
Speaker 1: will not increase the amount of basic research that happens.
24:21
Speaker 1: And it's not opening up all the venues, which is
24:24
Speaker 1: part of the solution. Instead, they will cap the prices,
24:28
Speaker 1: but they will increase the underlying demand and they will
24:30
Speaker 1: probably and I think from a number of companies that
24:33
Speaker 1: sits in the space of saving energy, they feel that
24:36
Speaker 1: right now all of the policy measures embedded into future
24:40
Speaker 1: policies is about making marginally cheaper energy and not about
24:44
Speaker 1: reducing the consumption that we do today. And I think
24:48
Speaker 1: that is a story that will certainly change in twenty three. Yeah,
24:53
Speaker 1: you would say that we may see something like a
24:55
Speaker 1: new national Board for Prices and incomes being established in
24:58
Speaker 1: the UK and the U s I mean, someone incredibly
25:01
Speaker 1: nineteen seventies, I wondered you and were given given the
25:05
Speaker 1: existence already of wind full taxes and the like, can
25:08
Speaker 1: you see any possibility of the UK returning to dividend controls?
25:12
Speaker 1: Remember the days of dividend controls, when companies weren't allowed
25:15
Speaker 1: to pay or dividends were limited. Is that is that enough?
25:17
Speaker 1: Another possibility? I asked, just because one of the great
25:19
Speaker 1: attractions of the UK market is it's yield, you know,
25:23
Speaker 1: very significantly higher than yield and where else double that
25:26
Speaker 1: at the US, etcetera. If that's at risk, we should worry,
25:30
Speaker 1: I think, I mean, you are already doing it. And
25:32
Speaker 1: you if you are wind full taxes on utilities, you
25:36
Speaker 1: are pricing out their ability to pay the dividend and
25:38
Speaker 1: be be a force of a stable portfolio in terms
25:42
Speaker 1: of s allocations. So absolutely there will be on intensive
25:45
Speaker 1: consequences with it. So I think everything is on the
25:47
Speaker 1: table basically because you know, think about what's transpired in
25:51
Speaker 1: the UK. First you had you know, elssive fair budget
25:54
Speaker 1: and now you have an overly rigid tightening of the
25:57
Speaker 1: of the budgetary and mind you it's backload, but the
26:00
Speaker 1: intention is to create a very fiscal tight monetary policy.
26:04
Speaker 1: And if you put that up against what it's need
26:06
Speaker 1: in the UK, which is to create new jobs, is
26:08
Speaker 1: to invest more in infrastructure, is to make sure that
26:11
Speaker 1: the health sexor get revitalized. Not necessarily by throwing more money,
26:16
Speaker 1: it was certainly making it better, work better, more and less.
26:20
Speaker 1: The red tape and the likes and and the whole
26:24
Speaker 1: you know, the last ten years of trying to put
26:27
Speaker 1: Londoners against the rest of the UK needs to stop.
26:30
Speaker 1: I mean, it's one country, one nation that needs to
26:33
Speaker 1: and and which historically has been very good at coming
26:37
Speaker 1: through crisis is but right now the temptation for political
26:42
Speaker 1: side will be to go back to the nineties and sixties,
26:44
Speaker 1: sixties and seventies. I would not be surprised to see
26:47
Speaker 1: that the ultimate course of action here is to devalue
26:51
Speaker 1: Stirling massively and proactively in order to get some competitives
26:55
Speaker 1: back in in that space. And and part of that
26:58
Speaker 1: will probably come with a increase price control, because you
27:01
Speaker 1: don't want that important inflation to to flare up again
27:04
Speaker 1: in in the UK economy. But I think you know
27:08
Speaker 1: the UK is now what we call a six seven
27:10
Speaker 1: eight economy. They have six percent deficit on the current account,
27:15
Speaker 1: seven percent budget deficit and eight percent inflation at a
27:18
Speaker 1: best of times, right, I mean this, this is the
27:21
Speaker 1: worst tecker in the world in terms of Western economy.
27:25
Speaker 1: So in the UK and particularly I'm very in nervous
27:27
Speaker 1: about these pist controls. Well, I think we're doing a
27:29
Speaker 1: brilliant job of moving away from optimism. Thank you Stein.
27:32
Speaker 1: Let's appreciate it, shall we. We want to number eight
27:38
Speaker 1: um lots of people OPEC and China and India. They
27:43
Speaker 1: walk out of the I m F and they agreed
27:45
Speaker 1: to trade with a new reserve asset. They give up
27:49
Speaker 1: on the dollar it's happening, is that it's it's again
27:52
Speaker 1: one of these things that the way it's frame it's
27:55
Speaker 1: it's slightly outrageous, but the underlying micro trend is absolutely
27:58
Speaker 1: what's going on. Uh. And I think, um, you know again,
28:02
Speaker 1: Russia has played at both a positive and negative lesson
28:08
Speaker 1: for for a number of countries outside the Western world,
28:11
Speaker 1: and that is that you can be uh, you can
28:13
Speaker 1: see punity of action in terms of access the dollar,
28:16
Speaker 1: funding and ovall to the international monetary system. And and
28:20
Speaker 1: a lot of people saying, if if China is the
28:22
Speaker 1: biggest import of oil in the world, whide don't they
28:24
Speaker 1: and Russia and Brazil and and to some extent engineer
28:28
Speaker 1: imposts side as well, why don't they have a closed
28:30
Speaker 1: system off using a bothering or basket like currency as
28:34
Speaker 1: someone we suggest, and and through that way reduce the
28:37
Speaker 1: dependency on the US centric monetary policy and also of
28:41
Speaker 1: course the the ability to practically move money in and
28:45
Speaker 1: out of the system. We know Russia gave up on
28:48
Speaker 1: using dollars was it three four years ago already? Uh?
28:52
Speaker 1: And we have seen Saudi Arabia astarney certainly after after
28:56
Speaker 1: they're very close relagship with Trump, but in the in
28:59
Speaker 1: the Barney stration has been on a on a cold
29:02
Speaker 1: path in terms of diplomatic negotiations between the two countries,
29:07
Speaker 1: and they are increasingly of course again also exporting the
29:09
Speaker 1: other way out. Quitar and the likes and and Angy
29:13
Speaker 1: on the outside feels that they have and probably rightly
29:17
Speaker 1: so they need to play a bigger role and and
29:19
Speaker 1: need to play above their waight um in terms of
29:23
Speaker 1: the impact. So I don't think that's unlike the You
29:26
Speaker 1: can contest whether i'm IF is going to break down.
29:28
Speaker 1: But I think the reason we use the IMF is
29:31
Speaker 1: also we wanted to signal that we think that the
29:34
Speaker 1: the supernational institution is very, very damaged by what's been
29:40
Speaker 1: going on since two thousand and eight, two US and nine.
29:43
Speaker 1: I don't think anyone uphold I MF or even the
29:46
Speaker 1: u N today as an institution with integrity and a
29:50
Speaker 1: way forward for the world. I think there are a
29:52
Speaker 1: lot of people, at least in the political spectrum, but
29:55
Speaker 1: also among you know, people who wants to to be
29:58
Speaker 1: as you as you talk about being positive to sees
30:00
Speaker 1: these at more of a hindrance than the than the
30:03
Speaker 1: neccelerator of progress these days, because they have been backed
30:07
Speaker 1: down in conventional thinking in terms of the the c
30:12
Speaker 1: RT carbonimation, in terms of the international health plans, in
30:16
Speaker 1: terms of the security of establishing some monitary system. My
30:23
Speaker 1: slight worry here, Steen is that all so far, most
30:26
Speaker 1: of the ones we've talked about, it does seem all
30:28
Speaker 1: too plausible, either very likely or underway already. And there's
30:32
Speaker 1: another one here that that I also think is all
30:34
Speaker 1: too plausible in a good way. By the way, over
30:37
Speaker 1: the next years and l'st number ten, tax haven band
30:39
Speaker 1: kills private equity, that new taxes are introduced that really
30:43
Speaker 1: do as well the beginning of the end of the
30:46
Speaker 1: private equity industry, and in particular that in the US
30:50
Speaker 1: and hopefully in the UK as well, at the carried interest,
30:52
Speaker 1: that is tax does capital gains at the moment ends
30:55
Speaker 1: up being taxed. There's ordinary income which would push a
30:57
Speaker 1: lot of the participants are in it for the carry out. No, yeah,
31:01
Speaker 1: but but you do you also understand it's it's quite
31:03
Speaker 1: a controversial call, obviously, because private equity is very much
31:06
Speaker 1: an intrinsic part of institution. Port forward is very much
31:10
Speaker 1: part of family offices. But what we're trying to say
31:13
Speaker 1: is that if if you and I am actually very positive,
31:17
Speaker 1: we can get to that ultimately. But but the absolutely
31:22
Speaker 1: we promise the the cliffhanger is we are going to
31:25
Speaker 1: be positive ultimately. But but if you want to think
31:28
Speaker 1: of a world that works better, a world that is
31:30
Speaker 1: more productive, we need to stop making it. Uh. We
31:37
Speaker 1: need to stop allowing that people do things for tax reasons.
31:40
Speaker 1: People should do things for productivity reason. They should do
31:43
Speaker 1: it to be part of the solution, not being part
31:45
Speaker 1: of the problem. And a lot of people in a
31:48
Speaker 1: private the space will say, I look at how many
31:50
Speaker 1: jobs we have created, how many jobs we do support
31:52
Speaker 1: by doing this. But I would argue, and I can't
31:55
Speaker 1: counterprove that I enaciate or form, but I will argue
31:59
Speaker 1: the capital argut too. Care of that. Before private equity existed,
32:02
Speaker 1: private equity, you know, has grown outside its scope in
32:05
Speaker 1: a sense that privately is supposed to be these investment
32:08
Speaker 1: that us very which is very difficult to put onto
32:11
Speaker 1: the public marketplace, and then there's a better protected, better
32:14
Speaker 1: grown inside a private sphere of high risk capital. But
32:18
Speaker 1: these days they just pretty much sells companies to each other.
32:21
Speaker 1: And I think there is a number of bad examples
32:25
Speaker 1: of how the deals has been driven by tax events,
32:30
Speaker 1: not by by the the willingness or even to to
32:33
Speaker 1: to do a better job or create jobs or doing something.
32:37
Speaker 1: So I think in a world where we already started
32:39
Speaker 1: on a minimum tax in a CD, it's not unlike
32:41
Speaker 1: the ou city also go to full full lengths. It says, uh,
32:45
Speaker 1: we need to have a philosophic discussion about why is
32:48
Speaker 1: there countries in the world which only businesses two a vortex. Yeah,
32:54
Speaker 1: And if we were going to have a conversation about
32:56
Speaker 1: private equity and the way private equity works, would we
33:00
Speaker 1: also need to have a conversation about the way public
33:02
Speaker 1: markets work and the volume of regulation that appears to
33:07
Speaker 1: put people off wanting to be fully listed, and the
33:10
Speaker 1: you know, the rims and rims of rings of it,
33:12
Speaker 1: and the constant transparency that is required, which isn't theory good,
33:17
Speaker 1: but which a lot of companies use as their reason
33:20
Speaker 1: for sticking private rather than going public. I agree. And
33:24
Speaker 1: what you're really seeing indirectly, and sorry if I or
33:28
Speaker 1: interpret your what you said here, but but you know,
33:31
Speaker 1: it's private equity, among other things, has made it so
33:34
Speaker 1: complicated and the amount of loops you have to jump
33:38
Speaker 1: through in order to to make a public market is
33:41
Speaker 1: no longer about having a great idea of securing capital
33:44
Speaker 1: for it. You need to look at the tech structure,
33:46
Speaker 1: You need to look at the governance. You need to
33:48
Speaker 1: make sure that you know where does the money come from,
33:51
Speaker 1: where is it happening. So I think it's also to
33:53
Speaker 1: make things easier for the world. Let's break it down
33:55
Speaker 1: to what it is. It's capital. Stock market is as
33:58
Speaker 1: a popping market that racist capital for the industry and
34:01
Speaker 1: is primarily used for that we as investors go invested
34:04
Speaker 1: in and take the risk of doing it. It's no
34:06
Speaker 1: longer about where we paid tax, is no longer about
34:09
Speaker 1: what what what our starting point is from a tax situation.
34:12
Speaker 1: Benefit is actually because we want to buy into a
34:14
Speaker 1: company who is part of the solution, which is productive
34:17
Speaker 1: and which is making money for its investors. So I
34:19
Speaker 1: think it's it's self fulfilling that if we reduce the
34:24
Speaker 1: complexity of taxes, we also reduce the complexity of doing
34:28
Speaker 1: I P O S and introduction and going into the
34:30
Speaker 1: public space. Do you think if that would also involve
34:33
Speaker 1: a conversation about E s G overlays and E s
34:37
Speaker 1: G related regulations. Again, I think E s G has
34:41
Speaker 1: a lot of merit to it, but it's no one
34:43
Speaker 1: un you and I know, it's not defined by any
34:46
Speaker 1: accounting board. It's not something specific. It is a very loose,
34:50
Speaker 1: loose definition which everyone wants to be on board on.
34:53
Speaker 1: And I think if you went through all the company
34:56
Speaker 1: listening foods, you know, S and P five, none of
34:59
Speaker 1: them can do e ees n G. A few of
35:01
Speaker 1: them could do, a lot of them wants to do,
35:03
Speaker 1: some of them can do S, and pretty much none
35:05
Speaker 1: of them do G in the classic sense of it.
35:08
Speaker 1: I mean Meja is a great example of a company
35:10
Speaker 1: which the complexity of the governance is worse than Hong
35:13
Speaker 1: Kong listing. Right, So it's um, yeah, we need we
35:17
Speaker 1: need to slim down the the red tape. But slimming
35:20
Speaker 1: down the red tape also means the rules needs to
35:22
Speaker 1: be clear. Yeah, slim it down, make it clear and
35:25
Speaker 1: make it easier. Okay, there's one in here that I
35:28
Speaker 1: don't agree with you on at all, and I think
35:31
Speaker 1: is unbelievably unlikely, And I think you've just put in
35:34
Speaker 1: to tease some of us, right, which is number five.
35:37
Speaker 1: A country agrees to ban or meat production by twenty thirty,
35:41
Speaker 1: you think, yeah, do you think that's possible. As you
35:43
Speaker 1: can probably tell, I didn't come up with that one,
35:46
Speaker 1: but I did not know. In the Netherlands, we know
35:49
Speaker 1: we had we do keep reading about the sort of
35:51
Speaker 1: bizarre business of the government compulsory purchasing farms in order
35:55
Speaker 1: to get closer to meeting their their climate change targets, etcetera.
35:58
Speaker 1: But it still seems a little that But I see,
36:01
Speaker 1: you know, it really depends on on on your perspective here,
36:04
Speaker 1: because as the Sharon who wrote the piece rights, it's
36:07
Speaker 1: if you think about if you really want to reduce
36:10
Speaker 1: your too emission and going to a carp in neutrality,
36:14
Speaker 1: you need to do things two things. You need to
36:16
Speaker 1: account for what you import one thing, and secondly we
36:19
Speaker 1: need to address the fact that agriculture and the feed
36:22
Speaker 1: start that we produce is a huge chunk of the
36:26
Speaker 1: total to you or two emission that we do do.
36:29
Speaker 1: So I don't think it's unlikely a country that being
36:32
Speaker 1: Sweden on the evilence is something similar, over the course
36:35
Speaker 1: of the next three or five years come up with
36:36
Speaker 1: a plan which it could start like something no no
36:40
Speaker 1: meat is served in the public sector. Then ultimately it
36:43
Speaker 1: becomes you know, either with the high tax or or
36:46
Speaker 1: marginally changing. But I think if again, I don't know
36:50
Speaker 1: the edge of your children, but when I talk to
36:52
Speaker 1: my children and their friends or whatever, I mean, this
36:55
Speaker 1: whole plant based thing is is real. It is something
36:59
Speaker 1: that they want to achieve, even partly some of it
37:01
Speaker 1: is for health reason or some of the parties for
37:03
Speaker 1: the for the carbon emission part of it. But but
37:07
Speaker 1: I do think that in a world that loves wokeness
37:11
Speaker 1: and being politically correct, and in a world where I
37:16
Speaker 1: which is one of my actual forecasts, where government's intervention
37:19
Speaker 1: and regulation is going to increase, not decrease, I think
37:22
Speaker 1: it's very likely what happened. So I have to disagree
37:24
Speaker 1: on the probability, but I'm probably, to be honest between privately,
37:29
Speaker 1: between you and me, I'm probably at a you know,
37:32
Speaker 1: thirty to four likelihood, not at sixty to seventy. But
37:35
Speaker 1: but if you last young people on my team, they
37:37
Speaker 1: are probably a sixty. I have to tell you that
37:40
Speaker 1: this conversation isn't just between you and me exactly, but
37:45
Speaker 1: I know it's interesting. I mean, you know, I agree
37:47
Speaker 1: with you that when you talk to young people this
37:49
Speaker 1: is what you hear that they won't go plant based
37:52
Speaker 1: plant based, and that they worry about agriculture and the environment,
37:55
Speaker 1: et cetera. But on the other hand, we know very
37:57
Speaker 1: well that most of the applied based meat substitutes simply
38:01
Speaker 1: aren't selling almost to eat them. It's much easier to
38:03
Speaker 1: talk about being plant based than to actually eat that
38:06
Speaker 1: heavily processed mark correct. But part part of that is
38:09
Speaker 1: also technology not going through. I mean, as I'm told,
38:12
Speaker 1: you can have artificially generated chicken and the likes, and
38:16
Speaker 1: and then the price to market is too expensive right now,
38:19
Speaker 1: So maybe it's again, as for usual, just waiting for
38:21
Speaker 1: technology to make a breakthrough. And you're right that it's
38:25
Speaker 1: it's it's very much a product. It's it's a vision
38:29
Speaker 1: shorter of products, basically, right, it's a vision short of
38:31
Speaker 1: a product that is exactly right. And I have actually
38:33
Speaker 1: spoken to several of the companies that make this kind
38:35
Speaker 1: of lab grown meat or attempting to make lab grown
38:38
Speaker 1: meat recently, and you know, I told it's very effective,
38:40
Speaker 1: just insanely expensive. But then I have this sort of
38:43
Speaker 1: strange worry about it. If I wonder if if you
38:46
Speaker 1: would share that when you look at say vegetables that
38:49
Speaker 1: a growing hydroponically, everyone still says that tomato grown in
38:53
Speaker 1: soil still has a completely different taste and nutritional breakup
38:57
Speaker 1: to make up to a tomato grow purely and water,
39:01
Speaker 1: because soil contains magic, big, bigger parts on fine, I
39:05
Speaker 1: want to believe that, I want to believe that you know,
39:07
Speaker 1: the way we farmed have some validity. But what's interesting,
39:12
Speaker 1: and I'll tell you something that right now the Danish
39:15
Speaker 1: we had an election, then we haven't formed a government,
39:17
Speaker 1: but a big chunk of the parliamentary conversation going on
39:22
Speaker 1: right now is exactly on how to treat the aguaculture sector.
39:26
Speaker 1: And then which is of course is a it's a
39:28
Speaker 1: big export component. So basically what is the sort of
39:31
Speaker 1: the Social Democratic Party in the left leaning party wants
39:34
Speaker 1: to make the h the aguaculture sector more accountable and
39:38
Speaker 1: at a bareminhum have a plan to reduce the CEO two.
39:42
Speaker 1: So maybe maybe the answer to our Christian is one
39:45
Speaker 1: technology and a vision with more products. But it's also
39:48
Speaker 1: the fact that as agriculture is forced to reduce is
39:51
Speaker 1: CEO two footprint, the availability and the scale of being
39:57
Speaker 1: able to actually feed the world becomes smaller, so we
39:59
Speaker 1: actual you need and it's driven towards this plan base,
40:03
Speaker 1: not because it's nice and it's it's vogue, simply because
40:06
Speaker 1: the world needs it to do. Don't forget this whole
40:09
Speaker 1: fertilizer crisis. I'm sure you've done some stuff and that
40:11
Speaker 1: as well that we had there is, you know, being
40:14
Speaker 1: a pipe fline fire. I know for a fact that
40:16
Speaker 1: when you increase fertilizers by ten percent, you get ten
40:19
Speaker 1: percent more growth. Right now, the world is operating at
40:22
Speaker 1: sixties off the fertilizer that they normally use, which means
40:27
Speaker 1: that the the you know, everything equal and when you
40:29
Speaker 1: come into the next season, there is a potential that
40:32
Speaker 1: we come up short in terms of the the the
40:35
Speaker 1: the number of products that we can use out of
40:38
Speaker 1: the agriculture productor Yeah, but I suppose what we must
40:40
Speaker 1: do is about we want positive listeners any second hour
40:44
Speaker 1: missing positive. They have one more negative thing, which is
40:47
Speaker 1: that my concern would be with agriculture that we make
40:49
Speaker 1: the mistake that we made with energy of jumping the
40:52
Speaker 1: gun and thinking that we have technology in place for
40:55
Speaker 1: a transition before we do and ending up with not
40:58
Speaker 1: quite enough of the thing that we were you need
41:01
Speaker 1: extremely valid point, and that is the whole theme of
41:04
Speaker 1: the war economy, that you prioritize some action without actually
41:08
Speaker 1: following up with the tangibles, so to speak. Okay, right
41:13
Speaker 1: here we go stein the optimism go go yeah. So
41:20
Speaker 1: in the market, as you know, there's a saying where
41:23
Speaker 1: if you need lower prices, you need higher prices. And
41:26
Speaker 1: I think if you look back at twenty two and
41:28
Speaker 1: look into twenty three, I think to some extent, the
41:32
Speaker 1: Russian did us a favor. I think the energy agenda
41:35
Speaker 1: and to talk about energy and the replaceing of energy
41:38
Speaker 1: and the revitalization of the nuclear power sector has moved
41:42
Speaker 1: more in the last six months than it moved in
41:44
Speaker 1: the last twenty years. I think there is now a
41:47
Speaker 1: political platform to stand on to understand better and to
41:50
Speaker 1: mitigate some of the shortcomings that you just pointed out.
41:53
Speaker 1: In the agriculture space, we talked about merely the fact
41:56
Speaker 1: that we have great aspirations, but we don't have to
41:58
Speaker 1: have we don't even have the physical intrastructure to deliver
42:01
Speaker 1: on that aspiration in terms of green transformation, and certainly
42:05
Speaker 1: not under a world where the monetary policy is tired
42:10
Speaker 1: and exhausted and where the handoff will be to fiscal
42:14
Speaker 1: and as we push on the fiscal we will move
42:17
Speaker 1: into more constraints shown by by this analogy to the
42:21
Speaker 1: war economy. But what I'm saying here is, and I
42:24
Speaker 1: go back to that what I wanted to point out earlier,
42:26
Speaker 1: If you look at the tenable assets in the world,
42:28
Speaker 1: they constitute less than ten percent of the value. But
42:31
Speaker 1: imagine that we need more military spending. We need better infrastructure,
42:36
Speaker 1: better internet, better points, we need better energy grids, we
42:40
Speaker 1: need to do carbon cabling instead of aluminum cabling. If
42:45
Speaker 1: we move to that, we will of course go through
42:48
Speaker 1: a period of sunken cost and initial investments. But what
42:51
Speaker 1: comes under the other side is a massive increase in
42:54
Speaker 1: productivity because I think the problem with the world over
42:57
Speaker 1: and under this uh, this subject of of dealing with
43:03
Speaker 1: crisis for increasing dead levels and pretending that's no inflation
43:06
Speaker 1: ary impact, has gone. That that is that needs to
43:09
Speaker 1: be gone, because if it's not, we're going to go
43:11
Speaker 1: back to the old ways two point three five inflation forever.
43:14
Speaker 1: And you know, cost the capital being low. But right now,
43:17
Speaker 1: I think Goldman Sax last week came out of report
43:19
Speaker 1: that the average working cost of capital in the US
43:24
Speaker 1: has moved for six hundre basis to bor into eight
43:27
Speaker 1: d basis. Point, so understand this, and and we are
43:30
Speaker 1: now an environment where to actually borrow money and be
43:33
Speaker 1: profitable on the project you want to start up, you
43:36
Speaker 1: need to have a return on eight percent. That same
43:39
Speaker 1: threshold list than twenty four months ago was close to zero.
43:44
Speaker 1: So we created a massive amount of capital investments and
43:47
Speaker 1: projects that had no in goal, no productivity embedded into it.
43:52
Speaker 1: But it was really about the amount of via balls.
43:54
Speaker 1: So I think when I go to universities, when I
43:58
Speaker 1: went to business school universities over the last year, they
44:00
Speaker 1: all tell me they just don't want to They just
44:02
Speaker 1: want to do an app and make a hundred million dollars.
44:04
Speaker 1: I think when I go to university in business school
44:06
Speaker 1: the two years from now, they want to be in
44:09
Speaker 1: businesses that are part of the solution. And it's not
44:12
Speaker 1: going to be because we want to. Is not because
44:14
Speaker 1: we plan it, but simply we need to find productivity
44:18
Speaker 1: to reduce inflation. And when we get the productivity, we
44:22
Speaker 1: also get the new amounts of jobs. We also get
44:25
Speaker 1: better social balance, and we get governments that it's again
44:29
Speaker 1: then able to not not not feel like they are
44:33
Speaker 1: skating on ice, but they really are having a firm
44:35
Speaker 1: grip on the stomach and daring in the car properly.
44:39
Speaker 1: So for me, the next five years, ten years is
44:42
Speaker 1: going to be the most productive, most interesting years in
44:46
Speaker 1: my career. And it's been a very long career already,
44:49
Speaker 1: simply because we are in the worst situation we've ever been.
44:53
Speaker 1: We are met by constraint after constraint. But as we
44:57
Speaker 1: are met by constraint, the ingenuity and the ability of
45:01
Speaker 1: both business and the microstructure to step up despite the
45:04
Speaker 1: heavy hand of government will be massive, in my opinion, fantastic.
45:08
Speaker 1: So the rising cost of capital is a very good thing.
45:11
Speaker 1: Let me and I agree with you. By the way,
45:12
Speaker 1: let me just ask you quickly, what is it that
45:15
Speaker 1: you suggest to young people that they study now, or
45:18
Speaker 1: that what careers they go into. I'm always telling them
45:20
Speaker 1: to go into the fossil field industry because nobody else
45:22
Speaker 1: is and they'll make a fortune. What are you telling them?
45:26
Speaker 1: They look horrified. They look horrified, And then I try
45:29
Speaker 1: and explain that, you know, we need this stuff. It's
45:31
Speaker 1: a good thing. We're going to need it for a
45:32
Speaker 1: decade to come. Someone someone's got to get it out
45:35
Speaker 1: of the ground, and you might as well do it properly.
45:37
Speaker 1: You've been teaching me. I pretend to know about the future,
45:39
Speaker 1: but one thing I am certain about is that the
45:42
Speaker 1: tangible world will be significantly lasher ten years from now.
45:47
Speaker 1: So my advice to any person in the world who
45:50
Speaker 1: wants to be about solution is to find a job
45:52
Speaker 1: or educate yourself in is in what I called the
45:55
Speaker 1: tangible world. In the real world, this dream about creating
45:59
Speaker 1: platform scared being Amazon to deliver your underwear with the
46:02
Speaker 1: drone one day early is not going to solve any issues.
46:05
Speaker 1: But addressing the apprenticeships shortest that we have the skills
46:09
Speaker 1: of operating a machine, the skills of operating awater system,
46:13
Speaker 1: the skills of operating environmental issues, and all this is
46:17
Speaker 1: going to be part of solution. The money is going
46:19
Speaker 1: to be made, the job security is going to be
46:22
Speaker 1: in the tangible world, not at the intangible world. So
46:24
Speaker 1: to some extent that that of course also entails mining
46:28
Speaker 1: and fossile and all these asset groups. And then I
46:32
Speaker 1: think it's going to be a huge reality wake up
46:34
Speaker 1: because when people start to focus on what is solutions
46:38
Speaker 1: instead of non solution, then it will change. And I
46:41
Speaker 1: give you a great example from the scanning a Wan world. So,
46:43
Speaker 1: after the two thousand and eight two tho nine crisis,
46:46
Speaker 1: the biggest union then Mike, the medical union, decided, and
46:50
Speaker 1: this is interesting. They decided they were no longer in
46:52
Speaker 1: the business of keeping jobs, but they were in the
46:55
Speaker 1: business of creating jobs. In the following ten years, the
46:58
Speaker 1: metal units in Denmark not only had the highest marginal
47:02
Speaker 1: increase in salaries, but also had the highest productivity. So
47:06
Speaker 1: I think sometimes it is as simply as that, as
47:09
Speaker 1: changing the world from one where we're trying to save
47:12
Speaker 1: god what we had yesterday and moving towards the world
47:14
Speaker 1: where we are changing the world to creating more jobs,
47:18
Speaker 1: less inequality, less carbon footprint, but also a world where
47:21
Speaker 1: there are more reality and less virtuality. Steve, thank you
47:25
Speaker 1: so much for joining us today. That was absolutely fascinating.
47:28
Speaker 1: And now we know what our children should do. Children
47:30
Speaker 1: study engineering, and we know what we've got to look
47:33
Speaker 1: forward to. When I hugely appreciated it, and I have
47:35
Speaker 1: a horrible feeling, or are a good feeling that quite
47:38
Speaker 1: a lot of your predictions this year are going to
47:39
Speaker 1: come true, if not in twent three, but suddenly over
47:42
Speaker 1: the next five years. Thank you for joining us, Thank
47:46
Speaker 1: you for having me. Thank you everybody for listening to
47:54
Speaker 1: this week Marion Talks Money. We'll be back next week.
47:57
Speaker 1: In the meantime. If you like our show, and I'm
47:59
Speaker 1: pretty sure you must do after that conversation, please head
48:02
Speaker 1: on over to Apple Podcasts or wherever it is that
48:04
Speaker 1: you listen to podcast, rate us, review us only well obviously,
48:08
Speaker 1: and subscribe to us. This episode was hosted by me
48:11
Speaker 1: Marion Sumset Web. It was produced by Summer Sadi, Editing
48:14
Speaker 1: and sound designed by Blake Maple's Special thanks to Stein
48:18
Speaker 1: Jacobson and don't forget to sign up as well to
48:22
Speaker 1: my colleague John's topics newsletter Money Distilled when lots of
48:25
Speaker 1: things that we have discussed today will be discussed again.
48:28
Speaker 1: The link is in this show notes. Stein talked to
48:31
Speaker 1: you again next year. Thanks so much,