Latest / Merryn Talks Money / Live From The Master Investor Show: Jim Mellon and Stephen Yiu

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Live From The Master Investor Show: Jim Mellon and Stephen Yiu · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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  Speaker 2: Welcome to Marin Talks Money, the podcast in which people
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  Speaker 2: who know the markets explain the markets. I am Maren's
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  Speaker 2: unset Web first Friday episode, we are bringing you an
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  Speaker 2: edited version of a panel I hosted last weekend at
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  Speaker 2: the Master Investors Show.
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  Speaker 3: This is the.
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  Speaker 2: UK's largest gathering for private investors. Happens every year. It
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  Speaker 2: was on April twenty fifth this year. I sat down
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  Speaker 2: with John Steppek, Jim Mellen, investor and chairman of the
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  Speaker 2: Bumbay Group, who you will have heard on this podcast before,
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  Speaker 2: and also Blue Whale manager Stephen You. We talked about
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  Speaker 2: all sorts of things spread AI, We talked about investing
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  Speaker 2: in the UK, We talked about the software, socks, everything,
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  Speaker 2: oh the yen as well. We talked a lot about
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  Speaker 2: the end. You need to listen, Hope you enjoy it
• 0:55
  Speaker 2: and make sure you are getting alerts for our new episodes.
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  Speaker 2: On Monday. We have a really good conversation coming out
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  Speaker 2: with Temple bars Ian Lance about the strategy behind the
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  Speaker 2: front amazing performance over the last five years. We're going
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  Speaker 2: to start just by setting the scene a little. Obviously,
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  Speaker 2: things don't look great. Things don't look great in the
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  Speaker 2: UK in all sorts of ways, and there's lots of
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  Speaker 2: parts about the US and the rest of the global
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  Speaker 2: economy that don't look great. Right on the way here,
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  Speaker 2: I was looking at a survey that showed that over
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  Speaker 2: fifty percent of Gen X wished they lived in the nineties.
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  Speaker 2: I quite wish I lived in the nineties. Who wish
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  Speaker 2: as they lived in the nineties?
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  Speaker 4: Cool that?
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  Speaker 2: Yeah, you know what? So, and let's start by just
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  Speaker 2: talking about what's going on here. John. You wrote a
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  Speaker 2: piece the other day in which he said that Rachel
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  Speaker 2: Reeves had a bit of bad luck because the UK
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  Speaker 2: economy was kind of picking up before the war, which
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  Speaker 2: I personally think is nonsense. But why don't you tell
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  Speaker 2: us a little bit what's going on in the UK
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  Speaker 2: economy and what our main problems are.
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  Speaker 5: Yeah, I mean, I think the main thing is we
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  Speaker 5: came into twenty twenty six whether say that interest rates
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  Speaker 5: were going to fall faster than expected, and that's because
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  Speaker 5: inflation was falling faster than expected, which was partly because
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  Speaker 5: Rachel Reeves kind of basically rigged the numbers in our
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  Speaker 5: last budget, which was at least better than the twenty
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  Speaker 5: twenty four budget, which was inflationary. Now it's really bad
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  Speaker 5: that we should be so dependent on the direction of
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  Speaker 5: interest rates, because that just highlights how the lack of
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  Speaker 5: resilience and the overall economy. But the point is things
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  Speaker 5: were going from not very good to a tiny bit
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  Speaker 5: less bad, and of course there was broken out and
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  Speaker 5: that's just turned everything upside down. Because we're already have
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  Speaker 5: a massive debt to GDP problem, it's about ninety five
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  Speaker 5: percent at the moment. There's no appetite for cutting public spending.
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  Speaker 5: There's also no acknowledgment that we're on the far side
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  Speaker 5: of the laugher cuve on very many areas of the
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  Speaker 5: tax take. Rising kind of high inflation also means we're
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  Speaker 5: not going to get the rate cuts that we were
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  Speaker 5: hoping for. That means mortgage rates have already show up
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  Speaker 5: by about a percentage point, which means that the housing market,
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  Speaker 5: I mean, which has been warbly for a long time,
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  Speaker 5: now seems to be a bit of a tipping point.
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  Speaker 5: Seeing a lot of talk about the fact that house
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  Speaker 5: prices haven't actually gone anywhere for about a decade. Prices
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  Speaker 5: in London are actually down.
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  Speaker 2: In normally massive real terms collapse. I finally, the focus
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  Speaker 2: that John and I have been making about the great
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  Speaker 2: half price crash is coming true. Ye in real terms
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  Speaker 2: rather than nominal.
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  Speaker 5: Definitely in real terms. But yeah, also, I mean, as
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  Speaker 5: you pointed out, in nominal terms, you know, being flat
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  Speaker 5: or actually having fallen over ten years is wild.
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  Speaker 3: And then you know, and on.
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  Speaker 5: Top of that, you know, we've got the we are
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  Speaker 5: extremely vulnerable to energy problems because we have a kind
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  Speaker 5: of somewhat irrational energy policy and have done for a
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  Speaker 5: long time. So yeah, So so we started off things
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  Speaker 5: looked as if they might get a bit better.
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  Speaker 3: But now now we've run into a better bit.
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  Speaker 2: I mean, there's there are so many problems. There's the
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  Speaker 2: whole of breadth of problems here, from political instability to
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  Speaker 2: everything else. But when it comes right down to it,
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  Speaker 2: the thing that causes political instability, the thing that causes
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  Speaker 2: all the other problems from which everything else stems, is
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  Speaker 2: this massive level of debt. So there is no way out.
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  Speaker 2: You can't increase welfare, you can't change anything, you can't
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  Speaker 2: introduce new policies it might be expensive. You can't invest
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  Speaker 2: in any infrastructure, you have nothing. So the real problem
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  Speaker 2: is the debt, and the only way out of that
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  Speaker 2: at this point is to grow your way out, I'm
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  Speaker 2: sure for inflate your So those are our choices. So
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  Speaker 2: we're going to come back to this. So, Jim, I
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  Speaker 2: know that when you look at the global economy, one
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  Speaker 2: of your main worries is exactly that in the US.
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  Speaker 2: You know, we sit here worrying about our level of debt,
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  Speaker 2: but in the US it's it's almost a different level.
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  Speaker 2: Certainly in absolute.
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  Speaker 3: Terms, yeah, it is.
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  Speaker 6: I might sually much more optimistic about the UK, I
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  Speaker 6: think than John. In terms of US debt, the situation
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  Speaker 6: is really out of control. Okay, So US government federal
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  Speaker 6: government debt is thirty nine trillion dollars. Some of that's
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  Speaker 6: intergovernmental a few billion, a few trillion.
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  Speaker 3: Rother so you can so not that off.
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  Speaker 6: But it's at an all time high, obviously, but it's
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  Speaker 6: also at an all time percentage high. It's higher now
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  Speaker 6: than it was at the end of the Second World War.
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  Speaker 2: When it had percentage in the US with ninety five.
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  Speaker 6: It depends on how you look at it, and I'm
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  Speaker 6: going to I'm going to explain there's more debt than
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  Speaker 6: just central government debt. It's about one hundred and thirty
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  Speaker 6: percent at the moment of GDP, and it compares to
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  Speaker 6: about ninety percent in the UK.
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  Speaker 3: However, on top of that, you've got state debt and
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  Speaker 3: which is.
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  Speaker 6: Pretty substantial, it's about fifteen to twenty percent of US states.
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  Speaker 6: On top of that, and then you've got consumer debt
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  Speaker 6: in the US, which again is.
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  Speaker 3: At an all time high of and.
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  Speaker 6: That's around eighteen trillion dollars at the moment. And then
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  Speaker 6: you have relatively small savings in the US. I've got
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  Speaker 6: the average the median as they call it, savings in
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  Speaker 6: the US is between five and eight thousand dollars. And
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  Speaker 6: a lot of people don't have any money in the
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  Speaker 6: United States, and they have a lot of debt. So
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  Speaker 6: the average American has one hundred and five thousand dollars
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  Speaker 6: of debt, of which twenty one thousand dollars is non
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  Speaker 6: mortgage debt, and that's much much more.
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  Speaker 3: Than we have here.
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  Speaker 6: The savings rate in the US is half the level
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  Speaker 6: of the UK. And despite the government here, and despite
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  Speaker 6: the level of government debt, the consumer in the UK
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  Speaker 6: is in remarkably robust shape, and corporations are generally in
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  Speaker 6: robust shape as well, so the situation in the US
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  Speaker 6: is really bad. The fiscal deficit, if you want me
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  Speaker 6: to just quickly rounding it off, the fiscal deficit is
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  Speaker 6: running at about six percent of GDP and it's getting bigger.
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  Speaker 6: And what's more, the UH there's no way in which
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  Speaker 6: they can cut government expenditures that are basically non discretionary,
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  Speaker 6: and with the war in Iran adding about a billion
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  Speaker 6: dollars a day in extra expenses, they're just racking up
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  Speaker 6: debt like a drunken sider. So my view is that
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  Speaker 6: the main pinch point in the world economy and where
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  Speaker 6: we're going to see the potential crash emerging, is not
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  Speaker 6: private credit, which is tiny and is largely institutionally owned.
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  Speaker 6: It's the US government debt, which will lead to some serious,
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  Speaker 6: I think, consequences for the world economy and obviously will
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  Speaker 6: result in a major devaluation of the US dollar, which
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  Speaker 6: is already falling. In two thousand and eight, the US
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  Speaker 6: represented about seventy percent of reserves around the world. Today
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  Speaker 6: the US dollar is about fifty seven percent of reserves,
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  Speaker 6: and it's going down fast. And one of the factors
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  Speaker 6: against that is that, of course, gold reserves at Central
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  Speaker 6: banks have been going up a lot in the last
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  Speaker 6: five years, as predicted by the three of us here.
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  Speaker 2: As predicted by all of us. Absolutely, and Jim, we
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  Speaker 2: weren't going to talk about this for that long, But
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  Speaker 2: I just want to pick this up. How does this
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  Speaker 2: move from some thing that we have been worrying about?
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  Speaker 2: You me, John, I don't know even if you've been
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  Speaker 2: worrying about American debt for decades, but the thrie of
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  Speaker 2: us have. How does this move from something we've been
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  Speaker 2: worrying about for ages that gets gradually worse and worse
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  Speaker 2: and worse and worse and worse into an actual crisis.
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  Speaker 3: Well, no one knows.
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  Speaker 6: And if I knew that, then I mean, I'm sure
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  Speaker 6: someone in the administration is already putting bets on that.
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  Speaker 6: But the fact of the matter is that we don't
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  Speaker 6: really know when it's it's going to happen.
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  Speaker 3: But the scale at which the US dollar is.
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  Speaker 6: The world economy is being de dollarized for lots of
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  Speaker 6: good reasons is very rapid, and I think that's one factor.
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  Speaker 6: The second is that you've got the US stock market
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  Speaker 6: at really very stretched valuations. The Cape Schiller is about
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  Speaker 6: just under forty and every time it's ever got to forty,
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  Speaker 6: there's been a subsequent major correction. You've got record levels
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  Speaker 6: of margin debt, and you've got the gamification of stock
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  Speaker 6: marketing investing in the United States, which is very dangerous.
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  Speaker 6: I mean, young people in the US are on their
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  Speaker 6: phones all the time on robin Hood or one of
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  Speaker 6: those predictor sites, and that has become a sort of
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  Speaker 6: national obsession and buckin to the speculation. And possibly in
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  Speaker 6: nineteen twenty nine, it's not looking good. And half of
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  Speaker 6: all US growth is basically and the growth is being
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  Speaker 6: generated by monetary expansion largely, and debt is the building
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  Speaker 6: of data centers. Yeah, and I'll have a few words
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  Speaker 6: to say about data centers, both now.
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  Speaker 3: And later on.
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  Speaker 2: You'll definitely said about data centers. So just be Are
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  Speaker 2: you talking about the UK economy and your thing later?
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  Speaker 2: I am, yeah, okay, So, but I do just want
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  Speaker 2: to distress the one thing that Jim said is that
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  Speaker 2: the UK household has deleveraged amazingly since the financial crisis
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  Speaker 2: has been extraordinary. So the UK household is actually an
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  Speaker 2: excellent shape. And if we were to buy some outbreak
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  Speaker 2: of miracles, get a series of good political policies in
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  Speaker 2: the UK, we'd be in quite good shape. It's just
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  Speaker 2: that hopes are relatively low for that bit. For that bit, Stephen,
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  Speaker 2: you you, I know you think about Macro abit, but
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  Speaker 2: you don't about all the time. You're a genuine old
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  Speaker 2: version stock picker. But when you think about what Jim
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  Speaker 2: has said, does that worry you?
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  Speaker 7: I think they're all interconnected. But of course, the way
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  Speaker 7: that we pick our investment is we take a bottom
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  Speaker 7: up approach. So even though in today's context we still
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  Speaker 7: have about maybe seventy percent investor into American businesses, but
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  Speaker 7: then when you look at the balance it strength or
• 10:23
  Speaker 7: the business model and everything pricing or even the margin.
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  Speaker 7: I mean, they are highly profitable and most of our
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  Speaker 7: holdings are not cash on the balance she it. So
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  Speaker 7: I think this always is ironic that the American government
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  Speaker 7: is probably in not a very good state, but then
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  Speaker 7: the companies that we invested into are actually in a
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  Speaker 7: very good state.
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  Speaker 2: Yeah, it would be just go up and up and up.
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  Speaker 2: Can I let's just pick up on what Jim said
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  Speaker 2: about data center Capex first, because I think we need
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  Speaker 2: to talk about that a bit. I mean, it is
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  Speaker 2: extraordinary that about half of American GDP growth at the
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  Speaker 2: moment comes from this one thing. Is this going to
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  Speaker 2: end in tears? Or is this justified buildout of infrastructure.
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  Speaker 7: So I think if people have followed Jim and myself,
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  Speaker 7: I think we take a very different view on this
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  Speaker 7: subject matter. I think our view today is still like
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  Speaker 7: we are probably at the early evenings of this AI
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  Speaker 7: super cycle, and at some point it's going to end.
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  Speaker 7: At some point it's going to end, and we're probably
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  Speaker 7: going to have more capacity that we have built on top.
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  Speaker 7: But I think one of the things that we have
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  Speaker 7: followed so far is the new applications that have been
• 11:25
  Speaker 7: coming out every other week, and recently we have seen
• 11:29
  Speaker 7: and frour Pickers come out with the mythofs which is
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  Speaker 7: a cybersecurity too.
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  Speaker 4: I think that's going to be quite game changing in
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  Speaker 4: a way.
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  Speaker 7: That is suddenly a lot of governments across the world
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  Speaker 7: at the same time enterprises would be embracing this, and
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  Speaker 7: then when you think about, okay, how do they embrace that,
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  Speaker 7: they will probably need to utilize some of the AI
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  Speaker 7: data center capacity in order to put this in place.
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  Speaker 7: So we are still being very encouraged by the things
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  Speaker 7: that are coming out today. Hence we do not think
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  Speaker 7: that we are at the end of this journey.
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  Speaker 4: At some point it's going to end.
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  Speaker 2: Of course, some point it's going to end, but there
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  Speaker 2: isn't a sense that. I mean, we've done a couple
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  Speaker 2: of podcasts recently on AI on LLMS in particular, talking
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  Speaker 2: about how maybe this is a full start, and the
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  Speaker 2: idea that you need these data centers and you need
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  Speaker 2: this constant laying up of compute is a little old fashioned,
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  Speaker 2: and in fact the new direction that AI is going
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  Speaker 2: in requires a different kind of infrastructure.
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  Speaker 3: That's right, Yep, Okay, that's right.
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  Speaker 2: So we don't need that, we don't need all the
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  Speaker 2: capex that, we don't need all the capeck, we don't
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  Speaker 2: need all the data centers.
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  Speaker 3: No, I think.
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  Speaker 7: I think the way that you see you think about
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  Speaker 7: this is obviously I think over the last year or so,
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  Speaker 7: we have.
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  Speaker 4: Two big scenario.
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  Speaker 7: One was a deep seat that came out from China
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  Speaker 7: last year, and then recently we have the Alphabet coming
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  Speaker 7: out with a way of optimizing data storage. Then you
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  Speaker 7: were thinking about, okay, then we don't need as much
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  Speaker 7: air this center, or compute or even memory. But of course,
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  Speaker 7: our view, which has been very consistent is that all
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  Speaker 7: these developments or advancement is going to lower the cost
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  Speaker 7: of trainings, lower the energy intensity, and it's going to
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  Speaker 7: increase the penetration and adoption and also expansion of the
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  Speaker 7: AI twos that we can embrace with.
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  Speaker 4: So hence that we actually think this is all very positive.
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  Speaker 4: I mean, unless you.
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  Speaker 7: Take the view that everything that we've seen in the
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  Speaker 7: AI today is the end of what we think about AI,
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  Speaker 7: then we probably have too much.
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  Speaker 4: Then we don't need more. But that's not the point.
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  Speaker 4: I think that that's not the reality.
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  Speaker 7: The reality is every time we say we're going to
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  Speaker 7: call it a stop, we see more things coming out.
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  Speaker 7: So that's why we think the AI.
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  Speaker 2: But you've moved away from investing in the big infrastructure spenders, right,
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  Speaker 2: that's not where your money is, so away from that
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  Speaker 2: into AI adjacent businesses.
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  Speaker 4: Yeah.
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  Speaker 7: So the way that we have done it over the
• 13:53
  Speaker 7: last two years or so is we have been avoiding
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  Speaker 7: the AI spenders or company that investing in to AI,
• 14:01
  Speaker 7: and we very much prefer to position ourselves into the
• 14:05
  Speaker 7: AI infrastructure companies, which are the companies that are receiving
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  Speaker 7: the investment. So we have a number of companies within
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  Speaker 7: the AI data center space like Vertive, which they do
• 14:16
  Speaker 7: the liquid cooling systems for air data center is very
• 14:19
  Speaker 7: energy intensive. We have a South Korean memory company called
• 14:22
  Speaker 7: high Next. We think we're going to see more machine
• 14:25
  Speaker 7: generated data than the entire human population has got on record.
• 14:30
  Speaker 7: Just think about the interaction that we would have with AI.
• 14:33
  Speaker 7: AI generating a lot of images, videos, a lot of
• 14:36
  Speaker 7: things that are coming out from AI.
• 14:38
  Speaker 4: Everything need to be archived.
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  Speaker 7: And then, last but not least, we recently added a
• 14:42
  Speaker 7: company called Lumentum, which is about eighty billion dollars market
• 14:46
  Speaker 7: cap company American and what they do is they do
• 14:48
  Speaker 7: fiber optics. So if you think about fiber optics is
• 14:51
  Speaker 7: something we're familiar with at home like broadband, etc. But
• 14:54
  Speaker 7: what we're going to see within the AIS data center
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  Speaker 7: is they are going to replace copper wires with fiber
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  Speaker 7: optics to transmit data. Because it's more energy efficient, is
• 15:04
  Speaker 7: going to be better for data transmission in terms of
• 15:07
  Speaker 7: efficiency as well.
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  Speaker 4: So I think in that.
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  Speaker 7: Sort of setting that the money that we are actually
• 15:15
  Speaker 7: going to receive as a shareholders rather than you take
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  Speaker 7: a speculative view about oh, we're investing the AI, which
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  Speaker 7: I agree with Jim that a lot of money is
• 15:24
  Speaker 7: going to be wasted, but I want the money to
• 15:27
  Speaker 7: be wasted with my companies as a shareholder.
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  Speaker 2: Quite right, Quite right, Jim, how are you invested in
• 15:56
  Speaker 2: this space?
• 15:57
  Speaker 6: Well, I would say, is I'm going to put money
• 15:59
  Speaker 6: into Stephen's fund. He's a great fund manager, but he
• 16:06
  Speaker 6: is fantastic.
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  Speaker 3: But let me just say this. What we've not talked about.
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  Speaker 6: Is the competition from China and Deep Seat, as Stephen
• 16:16
  Speaker 6: Well knows, can produce a million tokens for about a
• 16:19
  Speaker 6: tenth the price of Anthropic, And although they might not
• 16:22
  Speaker 6: be right at the cutting edge, they're good enough to
• 16:25
  Speaker 6: be highly competitive with the US models, and ultimately they'll
• 16:28
  Speaker 6: overtake the US models. And one of the key reasons
• 16:31
  Speaker 6: is because the energy costs in China and the availability
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  Speaker 6: of energy has got three times the amount of electricity
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  Speaker 6: as the United States, as an example, is much lower.
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  Speaker 6: So I think we should watch the Chinese competition very
• 16:43
  Speaker 6: very carefully, and the China models are going to be
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  Speaker 6: a very big factor I think in this whole AI thing.
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  Speaker 6: But let's look at AI generally. There are seven major
• 16:53
  Speaker 6: spending companies and they're all effectively like the railroads in
• 16:56
  Speaker 6: the eighteen sixties and eighteen seventies, so laying rail tracks
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  Speaker 6: in exactly the same direction, adjacent to each other, competing
• 17:06
  Speaker 6: ones ahead of one and the other ones not ahead
• 17:08
  Speaker 6: of the other, et cetera, et cetera. And they're absorbing
• 17:10
  Speaker 6: massive amounts of money. As Stephen just said, there is
• 17:14
  Speaker 6: no way there is sufficient money to keep them all
• 17:16
  Speaker 6: those seven going, and all the mags seven companies with
• 17:19
  Speaker 6: the exception of one, have moved to a position of
• 17:21
  Speaker 6: cash flow either neutrality when they were hugely cash flow
• 17:26
  Speaker 6: positive or negative, and there in debt. And that's a
• 17:29
  Speaker 6: real one that could be the trigger point for a
• 17:32
  Speaker 6: problem with the market. Let's just look at open Ai
• 17:36
  Speaker 6: all right. Open Ai needs six hundred billion dollars to
• 17:41
  Speaker 6: fund its supposed growth between now in twenty thirty.
• 17:45
  Speaker 3: That's only three years. There's no way they're going to
• 17:48
  Speaker 3: get six hundred billion dollars. And a lot of the
• 17:49
  Speaker 3: deals that are being done at the moment.
• 17:51
  Speaker 6: Is I invest in Steven's company by basically buying products
• 17:56
  Speaker 6: from here, and he invested in me. The circularity is
• 17:58
  Speaker 6: really huge in this industry. Ultimately that all collapses on itself.
• 18:02
  Speaker 6: So I completely understand why Steven's and the stocks he's in,
• 18:06
  Speaker 6: and I think he's a standing fund manager. But I
• 18:09
  Speaker 6: think if you look at the bigger picture, open AI
• 18:11
  Speaker 6: is going to go bust or it's going to have
• 18:12
  Speaker 6: to be absorbed by Microsoft.
• 18:13
  Speaker 3: Or one of these things.
• 18:14
  Speaker 6: In the face saving exercise, it's not going to be competitive,
• 18:18
  Speaker 6: and then you'll get one or two that will survive
• 18:21
  Speaker 6: and be competitive for the Chinese. But China is the
• 18:24
  Speaker 6: point at which no one makes any margin because the
• 18:28
  Speaker 6: involution of competition in China means that everyone will be
• 18:31
  Speaker 6: going to the lowest level, which is why you're not
• 18:33
  Speaker 6: investing in the user the ones you want to provide
• 18:36
  Speaker 6: the AI, but you're investing in the sort of bricks
• 18:39
  Speaker 6: and water companies and also in some uses of AI,
• 18:43
  Speaker 6: which I think will be exceptionally good. Speaking my own book, Robotics,
• 18:47
  Speaker 6: the best use of AI, the one that is we're
• 18:50
  Speaker 6: all going to be with a robot in the next
• 18:54
  Speaker 6: fifteen years in some form or other in our lives.
• 18:58
  Speaker 3: And this is China's, China's business, and.
• 19:01
  Speaker 2: It's going to solve our demographics problem as well, hasn't
• 19:04
  Speaker 2: it It will, and I also will relieve us all
• 19:07
  Speaker 2: of I mean, I won't have to do the hoovering
• 19:09
  Speaker 2: around the house.
• 19:10
  Speaker 3: I won't have to do the.
• 19:10
  Speaker 6: Dishes, I won't have to stack the dishwashing machine line
• 19:13
  Speaker 6: forced to do at the moment and empty it.
• 19:16
  Speaker 3: You know, it's about time I was free of all
• 19:18
  Speaker 3: these tree from your domestics.
• 19:21
  Speaker 2: I know, definitely time. But listen to Tim. I mean,
• 19:24
  Speaker 2: I agree with you on robotics. And you know, you know,
• 19:27
  Speaker 2: I've discussed this quite a lot, right And we've discussed
• 19:29
  Speaker 2: the demographic problem though, etc. Falling fertility rates, etc. And
• 19:34
  Speaker 2: we were happy to think that the huge rise of
• 19:36
  Speaker 2: robotics and the use of AI and robotics will solve
• 19:39
  Speaker 2: that problem for us. But then there are going to
• 19:41
  Speaker 2: be an awful lot of people with nothing to do.
• 19:43
  Speaker 2: And this is the question we get asked most on
• 19:45
  Speaker 2: the podcast, And if any of you came on the podcast,
• 19:47
  Speaker 2: the thing you would ask is what will my children
• 19:50
  Speaker 2: do once Jim's Utopia has arrived? Stephen and Jim's Utopia
• 19:55
  Speaker 2: combined a world full of robots doing absolutely everything, a
• 19:58
  Speaker 2: world of extraordinary abundance. I'm really looking forward to. It's
• 20:00
  Speaker 2: going to be marvelous. What will our children do? What
• 20:03
  Speaker 2: will ordinary people do in that world.
• 20:05
  Speaker 3: Are you asking me or yes.
• 20:06
  Speaker 2: I'm asking, well, I'm asking Stephen actually because I look answer.
• 20:11
  Speaker 7: I think it's early days to come to a conclusion
• 20:14
  Speaker 7: on this.
• 20:15
  Speaker 4: But there are many different scenarios.
• 20:17
  Speaker 7: I think my personal view in today's context is I
• 20:20
  Speaker 7: I probably think it's quite dark scenario that we are
• 20:23
  Speaker 7: taking ourselves into. And at some point we are going
• 20:26
  Speaker 7: to see some regulations from the government to say to
• 20:29
  Speaker 7: put a stop in terms of how quickly the technological
• 20:33
  Speaker 7: advancement through AI is going to reduce a lot of jobs,
• 20:37
  Speaker 7: opportunities and things that people could actually do.
• 20:40
  Speaker 4: So I think that would become like a friction.
• 20:43
  Speaker 7: So that is where we're going to see a plateauling
• 20:45
  Speaker 7: of where AI is going to take us. So but
• 20:48
  Speaker 7: without that, I think we could go into very dark places.
• 20:50
  Speaker 7: When you see even some of the big tech companies recently,
• 20:53
  Speaker 7: they have been making quite a lot of the redundancy
• 20:56
  Speaker 7: that they are the company who are the most advanced
• 20:58
  Speaker 7: in terms of theoping AI. Then you think about any
• 21:01
  Speaker 7: other companies who are yet to adopt AI, we could
• 21:04
  Speaker 7: see the same things. And obviously within the developed economies
• 21:08
  Speaker 7: that we have seen a lot of unemployment rate with
• 21:12
  Speaker 7: a younger generation is very difficult to pinpoint whether it
• 21:15
  Speaker 7: is economic uncertainties, economic economy uncertainty, or is that because
• 21:20
  Speaker 7: of AI.
• 21:21
  Speaker 2: Yeah, so yeah, it feels to me like so far
• 21:24
  Speaker 2: it's economic uncertainty that the UK in particular is definitely
• 21:27
  Speaker 2: in an employment recession, and that's to do with actual
• 21:29
  Speaker 2: recession as opposed to do with AI. That will probably change. Listen,
• 21:34
  Speaker 2: we should go back to investing. Sorry, Jim, I was.
• 21:36
  Speaker 6: Just going to say, I think that if you've got
• 21:38
  Speaker 6: a if you're a young person, that the best thing. Robobob,
• 21:41
  Speaker 6: my colleague as he's known is.
• 21:44
  Speaker 3: Uh, puts it quite well.
• 21:45
  Speaker 6: He says that you trained for the Olympics, You're you're healthy,
• 21:50
  Speaker 6: you're agile, you're thinking about you know your opponent and
• 21:54
  Speaker 6: all that sort of stuff, but you don't choose a
• 21:56
  Speaker 6: sport yet because no one knows what the sport will be.
• 21:58
  Speaker 3: I think that's quite a good way of putting it.
• 22:01
  Speaker 3: So personally, I think that the industries that will.
• 22:03
  Speaker 6: Be best for people will be those that require human
• 22:07
  Speaker 6: empathy and human interaction.
• 22:09
  Speaker 3: So social care is undervalued at the moment, maybe it
• 22:12
  Speaker 3: will be more highly valued in this world of robotics.
• 22:16
  Speaker 5: You know.
• 22:18
  Speaker 6: What you're doing, you two are doing, I think will
• 22:20
  Speaker 6: be You know that robots can't do that, and they.
• 22:23
  Speaker 3: Will never be. I can be able to replicate what
• 22:26
  Speaker 3: you're doing.
• 22:27
  Speaker 2: I asked AI a couple of weeks ago to produce
• 22:30
  Speaker 2: a podcast in the style of Merrin and John. It
• 22:32
  Speaker 2: was absolutely excellent. Of course I didn't tell you. I
• 22:37
  Speaker 2: don't want to unmind new confidence.
• 22:39
  Speaker 3: Yeah, so empathetic questions.
• 22:41
  Speaker 6: You know, being in the Trump administration, getting inside a
• 22:45
  Speaker 6: tips that's probably a good job to have as well.
• 22:47
  Speaker 3: So there are jobs out there.
• 22:50
  Speaker 2: Little let's talk it. Let's talk about something a little
• 22:52
  Speaker 2: bit more basic. One of the things that John and
• 22:53
  Speaker 2: I talk about a lot on the podcast, and that
• 22:56
  Speaker 2: our guest talk about a lot is the serial world
• 22:59
  Speaker 2: and the material world and how and we've done it
• 23:01
  Speaker 2: again here. We've talked about the ethereal world. We've talked
• 23:03
  Speaker 2: about robotics, talk about AI. We talked about data centers,
• 23:06
  Speaker 2: and we haven't mentioned the energy constraints and the resource
• 23:10
  Speaker 2: constraints that come with that. So John, we've talked a
• 23:14
  Speaker 2: lot about whether everyone should have a slightly higher present
• 23:17
  Speaker 2: of their portfolio in commodities than maybe they had even
• 23:19
  Speaker 2: five years ago.
• 23:20
  Speaker 5: Yeah, definitely, and I think that I mean, the around
• 23:23
  Speaker 5: more and all of this stuff also shows that the
• 23:25
  Speaker 5: world that we moved into is one where we're fracturing.
• 23:31
  Speaker 5: So the process of deglobalization, if you like, is still continuing,
• 23:36
  Speaker 5: and we're going to move into a world of kind
• 23:38
  Speaker 5: of distinct kind of blocks of interest and that means
• 23:42
  Speaker 5: more redundancy, which basically means that everyone needs to stockpile
• 23:47
  Speaker 5: more stuff, and that means the prices of stuff is
• 23:49
  Speaker 5: going to go up. So I think the resources has
• 23:53
  Speaker 5: got to be a sector that you're looking at during
• 23:55
  Speaker 5: this period, because you know, we've been through a very
• 23:57
  Speaker 5: disinflationary world and they were moving into consistently more inflationary
• 24:01
  Speaker 5: world and it's just going to be like that for
• 24:04
  Speaker 5: certainly up to a long period of time, regardless of
• 24:06
  Speaker 5: what happens with EI. And obviously EI is incredibly energy
• 24:10
  Speaker 5: intensive on energy.
• 24:12
  Speaker 2: Used to be a very enthusiastic investor in uranium.
• 24:14
  Speaker 3: Jim, Yes, it's a no brainer.
• 24:17
  Speaker 6: And we have with us today Nick Lawson, who's mister Uranium,
• 24:23
  Speaker 6: and his colleague Ben fine Gold, who's an absolute expert
• 24:26
  Speaker 6: on uranium. Seek them out, talk to them about uranium
• 24:28
  Speaker 6: stocks because there is a world shortage of uranium. All
• 24:33
  Speaker 6: I understand that four hundred kilos is going to be
• 24:35
  Speaker 6: liberated from Iran quite soon, but it's the key component
• 24:41
  Speaker 6: of nuclear power, and lots of nuclear power projects are
• 24:44
  Speaker 6: being developed at the moment, but particularly in China, there's
• 24:47
  Speaker 6: two hundred in planning or under construction. And guess how
• 24:50
  Speaker 6: many there are in the United States under construction at
• 24:53
  Speaker 6: the moment. Zero at least there are three in this country,
• 24:56
  Speaker 6: and we're going to have the SMRs as well.
• 24:58
  Speaker 3: So by uranium, I think it's an absolute no brainer.
• 25:01
  Speaker 2: Okay, no brainer investments. Stephen, how do you approach the
• 25:05
  Speaker 2: energy problem in their portfolio?
• 25:07
  Speaker 7: Yeah, so we do share the view that I think
• 25:09
  Speaker 7: at some point when if you follow the narrative within
• 25:12
  Speaker 7: the AI domain is ultimately we're going down to path
• 25:16
  Speaker 7: of the course of AI is going to be very
• 25:18
  Speaker 7: much related to the energy course in terms of per
• 25:20
  Speaker 7: token being generated and one stock that we one stock
• 25:25
  Speaker 7: that we have in the.
• 25:26
  Speaker 4: Finest Seman Energy.
• 25:28
  Speaker 7: So what they do is they do guest turbines and
• 25:30
  Speaker 7: obviously if you follow the domain between Seman Energy and
• 25:34
  Speaker 7: given Ova in the US, that they have been seeing
• 25:37
  Speaker 7: a lot of demand in terms of how guest turbine
• 25:40
  Speaker 7: is going to be using being used to power.
• 25:42
  Speaker 4: The AI data center. So that is where we get into.
• 25:45
  Speaker 7: But obviously we would like to invest more, but it's
• 25:48
  Speaker 7: just in the public domain. That's not too many companies
• 25:50
  Speaker 7: that we can look into.
• 25:51
  Speaker 2: You started off by saying by telling us how miserable
• 25:54
  Speaker 2: things are in the UK, and we pick that up
• 25:55
  Speaker 2: a little bit by saying, well, actually that there are
• 25:57
  Speaker 2: quite a few good things lurking around in the UK
• 26:00
  Speaker 2: economy that could come out with good policy. And we
• 26:02
  Speaker 2: also keep saying we sell on the port over and
• 26:04
  Speaker 2: over again, just by the UK. It's cheap everything. I'll
• 26:08
  Speaker 2: be fine. Do we stand by that even now?
• 26:11
  Speaker 3: I think we basically stand by it.
• 26:13
  Speaker 5: I mean, I don't think the fact that the UK
• 26:16
  Speaker 5: economy has kind of manage to struggle along so the
• 26:19
  Speaker 5: last few years without any obvious kind of consumer collapse,
• 26:22
  Speaker 5: you know. I mean, like you know, all of the
• 26:24
  Speaker 5: kind of company reports that are coming out, it's always
• 26:27
  Speaker 5: surprising how resilient the consumer is. And basically it's just
• 26:30
  Speaker 5: a good country in a decent state with crap governance.
• 26:36
  Speaker 5: I mean, it really is bad governance, you and and
• 26:39
  Speaker 5: across the board. I don't just mean labor. I'm not
• 26:41
  Speaker 5: picking on them. I mean they know the Tories were
• 26:43
  Speaker 5: in charge for fifteen years, fourteen years, and you know
• 26:46
  Speaker 5: they laid waste by kind of you know, you've got
• 26:49
  Speaker 5: restrictions on Simon French over at Panel Liberal has got
• 26:52
  Speaker 5: a good take on this and he calls it ration
• 26:55
  Speaker 5: pack Britain and basically energy is rationed, land, juice is rationed,
• 26:59
  Speaker 5: and the court the capital is too high and it's
• 27:02
  Speaker 5: all because of labor for regular ration. Yeah. Yeah, people,
• 27:06
  Speaker 5: you have employment, minimum wage, et cetera. So what we
• 27:09
  Speaker 5: need is a government that will unwind some of that stuff.
• 27:12
  Speaker 5: And that would really I guess put a rocket boost
• 27:15
  Speaker 5: under the economy.
• 27:16
  Speaker 2: Might be worth buying UK small cuts and just waiting.
• 27:19
  Speaker 5: Yeah, and I mean companies find a way, you know,
• 27:22
  Speaker 5: like you know in the early nineteen nineties when interest
• 27:25
  Speaker 5: rates shot up to fifteen percent of my dad tell
• 27:27
  Speaker 5: me about it, and companies still found a way to survive.
• 27:31
  Speaker 5: So they'll keep getting by. But yeah, we could do
• 27:35
  Speaker 5: with some recognition. The government needs to not get out
• 27:39
  Speaker 5: of the way so much. It's just unwind some of
• 27:41
  Speaker 5: the kind of notts that they've created over the years.
• 27:44
  Speaker 3: Yeah, I don't know if that will happen.
• 27:45
  Speaker 2: Okay, brilliant, Just before we finish, if you can only
• 27:49
  Speaker 2: invest in one thing, it can't be Bitcoin, it can't
• 27:51
  Speaker 2: be gold. What would it be, Steven Moribay, what I'm saying,
• 27:56
  Speaker 2: what your favor I know you're not allowed to have
• 27:57
  Speaker 2: favorites in your portfolio, but I also know you do.
• 28:00
  Speaker 2: What's your favorite?
• 28:01
  Speaker 7: So one of the interesting style which is I wouldn't
• 28:04
  Speaker 7: make this a stop tip, so stop tip just because
• 28:07
  Speaker 7: it could be quite nice. Is a South Korean memory company,
• 28:11
  Speaker 7: Go High Neex And one of the questions I got
• 28:13
  Speaker 7: asked before was, I mean it's gone up a lot
• 28:15
  Speaker 7: and is expensive. I mean the evaluation at the moment
• 28:18
  Speaker 7: is trading at four times p E ratio one year forward.
• 28:21
  Speaker 7: But it's probably gone up over one hundred percent in
• 28:23
  Speaker 7: the last six months. And they're going to do a
• 28:25
  Speaker 7: due listing in the US in the next few months,
• 28:27
  Speaker 7: so it could be quite interesting.
• 28:29
  Speaker 2: Brilliant, Thank you, Jim.
• 28:30
  Speaker 6: So banging the gong for years along with you and
• 28:33
  Speaker 6: John on gold and suddenly it's done what we expected
• 28:37
  Speaker 6: to and more. I've been banging the gong for a
• 28:40
  Speaker 6: couple of years on the Japanese yen as being the
• 28:42
  Speaker 6: most undervalued major financial asset in the world. Interest rates
• 28:46
  Speaker 6: are going up in Japan, there will go up further,
• 28:48
  Speaker 6: so that makes it more attractive. Japanese have a lot
• 28:51
  Speaker 6: of assets overseas. They're going to start repatriating that if
• 28:53
  Speaker 6: there's a problem in the United States, which I think
• 28:55
  Speaker 6: there will be. So the yen, which can take ten
• 28:58
  Speaker 6: years to depreciate by fifty percent but can double in
• 29:03
  Speaker 6: the space of six weeks, is my best bet for
• 29:06
  Speaker 6: you to put your money in for the next year
• 29:10
  Speaker 6: or so.
• 29:10
  Speaker 2: Okay, John, I'm guessing that you'd say that you've got
• 29:12
  Speaker 2: a double whammy by buying Japanese equities.
• 29:15
  Speaker 3: Well, yes, I was gonna say, yeah.
• 29:17
  Speaker 5: I think the Japanese jan is remarked Japines in there
• 29:20
  Speaker 5: condession than people think, and actually Japanese equities to do
• 29:24
  Speaker 5: well even if the young kind of strengthens.
• 29:26
  Speaker 2: For you, brilliant, we've gone over. Thank you so much
• 29:29
  Speaker 2: for being such a good audience, and thank you to my
• 29:31
  Speaker 2: wonderful panel, John, Tim Stephen, thank you.
• 29:34
  Speaker 5: Thank you.
• 29:38
  Speaker 2: Thanks for listening to this week's Marrindalks Money. If you
• 29:40
  Speaker 2: like our share rate, to review and subscribe whatever. You
• 29:42
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• 29:47
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• 29:50
  Speaker 2: John is John Underscore Steppeic. This episode was hosted by
• 29:54
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• 29:57
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• 30:00
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• 30:03
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