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An ‘Outrageous’ Prediction That American Capitalism Is Ending with Steen Jakobsen · Merryn Talks Money

• 0:00
  Speaker 1: John Marin, Happy New Year. I missed you how much
• 0:03
  Speaker 1: you too?
• 0:03
  Speaker 2: Happy New Year.
• 0:05
  Speaker 1: I'm happy New Year to our listeners. Very kindly. You
• 0:07
  Speaker 1: just I'll be with that now. Listen, John. This week
• 0:10
  Speaker 1: is an exciting week, or rather everybody thinks it's an
• 0:12
  Speaker 1: exciting week. Maybe it's a depressing week. I don't know.
• 0:14
  Speaker 1: It's the fortieth anniversary of the beginning of the calculation
• 0:18
  Speaker 1: of the FOOTSY one hundred. But but I want to
• 0:22
  Speaker 1: be absolutely clear. All the other columnists are saying that
• 0:27
  Speaker 1: the FOOTSY one hundred's birthday is January the third, But
• 0:30
  Speaker 1: I want to be absolutely clear. And I'm reading here
• 0:32
  Speaker 1: from our favorite book, John, The Stock Market by John Littlewood.
• 0:37
  Speaker 2: That's a book.
• 0:38
  Speaker 1: Ah. A landmark around this time was the launching on
• 0:42
  Speaker 1: thirteenth of February nineteen eighty four of the Financial Time
• 0:46
  Speaker 1: Stock Exchange one hundred Share Index FOOTSY one hundred or FOOTSIET,
• 0:50
  Speaker 1: as it is commonly called simple weighted index by equity
• 0:53
  Speaker 1: market capitalization of the largest one hundred companies. Forty one
• 0:57
  Speaker 1: hundred is displayed in real time at one minute. Thirteenth
• 1:01
  Speaker 1: February nineteen eighty four is its first day of dealing
• 1:04
  Speaker 1: from a base calculation of one thousand or third of
• 1:07
  Speaker 1: January nineteen eighty for so I want a nitpick. I
• 1:11
  Speaker 1: just want to be clear that you could argue about
• 1:14
  Speaker 1: whether the footsy fortieth foote one hundredth and fortieth birthday
• 1:18
  Speaker 1: was January the third or February the thirteenth. So we
• 1:20
  Speaker 1: have another whole round of writing about it in February.
• 1:24
  Speaker 2: Excellent recycle. All our columns are about six weeks.
• 1:27
  Speaker 1: Team, absolutely, And the exciting thing is that when it
• 1:31
  Speaker 1: came to the fortieth anniversary, I wrote a column, You
• 1:34
  Speaker 1: wrote a column, and John Author's wrote a column, all
• 1:37
  Speaker 1: of which were published on the same day Wednesday this week.
• 1:40
  Speaker 1: I know what I wrote in mind, tell me what
• 1:42
  Speaker 1: you wrote in yours. I'm a fan your fan.
• 1:45
  Speaker 2: Yes, a fan of Joint Author's for death and of yourself.
• 1:50
  Speaker 1: No, I'm a fan of John Author's as well. But
• 1:52
  Speaker 1: I'm a fan of the forty one hundred. I'm a
• 1:54
  Speaker 1: great fan of the forty one hundred. I wrote about
• 1:56
  Speaker 1: how we misjudge it because we don't think about dividends,
• 1:59
  Speaker 1: and you know, we forget that that that cash is
• 2:02
  Speaker 1: incredibly important and it just keeps coming long term cash
• 2:06
  Speaker 1: months after month, after month after month, and that cash
• 2:09
  Speaker 1: flow is incredibly undervalued. I think. So you know, I'm
• 2:13
  Speaker 1: a fan. I'm still theyer. Well, theoretically I.
• 2:17
  Speaker 2: Agree, and I do think that the foot seecrets a
• 2:20
  Speaker 2: bit of a bad press. One thing I would say,
• 2:23
  Speaker 2: and this is what I wrote in my column, is
• 2:25
  Speaker 2: that after two thousand and eight, there are boys a
• 2:27
  Speaker 2: turning point in that. You know, because people often talk about, oh, look,
• 2:32
  Speaker 2: the foot seat has barely moved since two thousand and
• 2:34
  Speaker 2: that's not correct. You know, if you include dividends and
• 2:37
  Speaker 2: all the rest of it, and you need to include
• 2:39
  Speaker 2: dividends because the foot Seas are high yielding index. That's
• 2:42
  Speaker 2: kind of the point of it. So if you want
• 2:45
  Speaker 2: to compare things, then you need to do that. And actually,
• 2:48
  Speaker 2: between nineteen and eighty four, in two thousand and eight,
• 2:50
  Speaker 2: it did fine. It was in the middle of the
• 2:53
  Speaker 2: pack for most of that time. It beat Japan consistently, obviously,
• 2:58
  Speaker 2: but also beat the US occasionally, and it kind of
• 3:00
  Speaker 2: beat the Europe and other stages. So it was perfectly
• 3:04
  Speaker 2: respectable index. And that's all in constant currency terms, by
• 3:09
  Speaker 2: the way, So he did fine. But since two thousand
• 3:12
  Speaker 2: and eight it has been a laggered even if you
• 3:14
  Speaker 2: you know, include dividends and all the rest of it.
• 3:18
  Speaker 2: And I think that's the element that I looked at
• 3:21
  Speaker 2: in my piece because it has had kind of a
• 3:24
  Speaker 2: rough time between then and now. And I suppose what
• 3:28
  Speaker 2: I think is that there are reasons to think that
• 3:32
  Speaker 2: the things that have been kind of holding it down
• 3:34
  Speaker 2: over that period are now reversing or have at least
• 3:37
  Speaker 2: run their course. So hopefully now there's cheap and that
• 3:41
  Speaker 2: the pound is cheap, does every reason for it to
• 3:44
  Speaker 2: you know, have a better forties than it did thirties.
• 3:48
  Speaker 1: What are those things that have run its course run
• 3:50
  Speaker 1: their course?
• 3:52
  Speaker 2: Well, there's the whole well two things basically. So there's
• 3:55
  Speaker 2: zero percent interest rates, which a sort of hammered I mean,
• 4:01
  Speaker 2: as I didn't mention this in the piece, But obviously
• 4:05
  Speaker 2: they make high yielding stocks less appealing because there's lots
• 4:07
  Speaker 2: say kind of growth stocks become more appealing. But it
• 4:11
  Speaker 2: also exploded the pension liabilities. So the corporate defined benefit
• 4:17
  Speaker 2: pension schemes two thousand and eight is the point at
• 4:20
  Speaker 2: which they kind of move away from equities just turned
• 4:24
  Speaker 2: into an absolute avalanche. And so all of these defined
• 4:28
  Speaker 2: benefit pension schemes, like that's the point at which they
• 4:33
  Speaker 2: you know, it had already been happening, but it kind
• 4:35
  Speaker 2: of really took off, the kind of move into gilts
• 4:37
  Speaker 2: and they move out of kind of UK stocks. But well,
• 4:41
  Speaker 2: now the point where there really aren't any more UK
• 4:45
  Speaker 2: equities to shed on the behalf of corporate define benefit
• 4:49
  Speaker 2: pension schemes.
• 4:50
  Speaker 1: And the other point to make about that, actually, and
• 4:52
  Speaker 1: we've talked about this before, and I do think it's
• 4:54
  Speaker 1: really interesting, is that as interest rates rise, the nominal
• 4:57
  Speaker 1: deficits on those pinch games full they move into surplus.
• 5:02
  Speaker 1: There's been a bit in the papers about that over
• 5:03
  Speaker 1: the last couple of months. It's suddenly these pensions games
• 5:05
  Speaker 1: that were horribly in deficit and there was a massive
• 5:08
  Speaker 1: lag on some of these big companies in the Footy
• 5:11
  Speaker 1: one hundred constantly having to shovel money into the into
• 5:14
  Speaker 1: their pension funds to keep them keep the show on
• 5:17
  Speaker 1: the road. Now they find they don't have to do
• 5:18
  Speaker 1: that anymore. So that should in lots with free uple
• 5:22
  Speaker 1: of cash for these companies.
• 5:23
  Speaker 2: Well exactly. I mean, there was a I can't remember
• 5:26
  Speaker 2: if we mentioned it in the podcast or not, but
• 5:27
  Speaker 2: there was a big one just before Christmas foot two
• 5:30
  Speaker 2: fifty company called Coats, and it basically was able to
• 5:34
  Speaker 2: pay off its pension deficit early becuse of the shift.
• 5:38
  Speaker 2: And now you know saying okay, so that means we're
• 5:41
  Speaker 2: going to have, you know, something like the region. I
• 5:44
  Speaker 2: can't remembers a big ten millionoids extra free cash flow
• 5:47
  Speaker 2: every year, which you know was a lot in the context.
• 5:51
  Speaker 2: So no, I mean, that's the other thing. So if
• 5:52
  Speaker 2: that's if that's changed, then companies are gonna have more
• 5:55
  Speaker 2: cash as well, and so they'll become more attractive. But
• 5:57
  Speaker 2: the point is the big, the big outflow from you
• 6:00
  Speaker 2: K equities is how at least one big factor in
• 6:04
  Speaker 2: that can't really go any further from here and prevails.
• 6:10
  Speaker 1: I did write a column about a decade ago saying
• 6:12
  Speaker 1: when when interest rates turn you should you should buy
• 6:15
  Speaker 1: all these companies with big punch in depth. That's obviously
• 6:18
  Speaker 1: about eight years too early on that one. I should
• 6:19
  Speaker 1: go and dig it up again. We can recycle that
• 6:21
  Speaker 1: one too. Well.
• 6:22
  Speaker 2: It's interesting, look because people forget that it was meant
• 6:25
  Speaker 2: to be emergency money tree policy, and then the emergency
• 6:28
  Speaker 2: just lasted for much longer than pretty much any one
• 6:32
  Speaker 2: thought it would.
• 6:33
  Speaker 1: It's not just about the fifty one hundred, by the way,
• 6:35
  Speaker 1: there's a lot of pieces out or coming out, and
• 6:38
  Speaker 1: more and more will come over the next few weeks.
• 6:40
  Speaker 1: About how cheap smaller companies are as well. And we've
• 6:43
  Speaker 1: talked about this before, but there's an interesting piece of
• 6:45
  Speaker 1: thematic research came out from Peel Hunt earlier this week
• 6:49
  Speaker 1: about just how cheap small companies are and about the
• 6:53
  Speaker 1: pace of M and A forty transactions in twenty twenty
• 6:56
  Speaker 1: three over one hundred million average premium paid percent, which
• 7:01
  Speaker 1: tells you how cheap so many UK smaller companies are.
• 7:04
  Speaker 1: And if you begin to see money flowing back in there,
• 7:06
  Speaker 1: you're going to see money flowing back into the UK
• 7:08
  Speaker 1: as a whole, and all this kind of thing. You know,
• 7:10
  Speaker 1: it's very very reflexive, isn't it, And that the more
• 7:13
  Speaker 1: money that flows out of the UK, they're more miserable,
• 7:15
  Speaker 1: it looks. And the more money flows out and the
• 7:17
  Speaker 1: more under performs and the more money flows out, et cetera,
• 7:20
  Speaker 1: and that can turn on a sixpence I mean, I'm
• 7:22
  Speaker 1: telling people at the moment, you know, if you think
• 7:24
  Speaker 1: that the UK can't turn fast, look at Japan. Which
• 7:27
  Speaker 1: looked absolutely miserable for so long, so long, so long,
• 7:31
  Speaker 1: so long, and then suddenly you're making ten percent a
• 7:33
  Speaker 1: year on it, you know, when it turns, it's very quick.
• 7:36
  Speaker 2: Yeah, it is quick. And I mean, I mean that
• 7:39
  Speaker 2: Pew point thing was actually quit and I hope not
• 7:41
  Speaker 2: because it's something like nearly a tenth of them market
• 7:46
  Speaker 2: by value just basically disappeared last year, and not in
• 7:51
  Speaker 2: falling places, but in transactions, which is I mean necessarily
• 7:55
  Speaker 2: that's a lot. I mean, in some ways, the whole
• 7:59
  Speaker 2: of the UK mark is looking like you know, an
• 8:02
  Speaker 2: investment trust, the sense of rundown, you know, and they
• 8:08
  Speaker 2: can't realize the actual value of the assets in this
• 8:12
  Speaker 2: massive fund and therefore they're just getting you know, noble
• 8:16
  Speaker 2: or chewed up. In other ways, Yeah, it's empting though.
• 8:19
  Speaker 1: They do pill and you have a little list of
• 8:21
  Speaker 1: things that might break the cycle. How do you get
• 8:24
  Speaker 1: fun flow up? What can break the cycle, And they
• 8:26
  Speaker 1: have a list of them. Increased upset by retail investors
• 8:28
  Speaker 1: that if a British icera appears, or there's some change
• 8:31
  Speaker 1: to capital gains tax or a change the dividend tax
• 8:33
  Speaker 1: on UK shares, those things don't seem that likely do
• 8:36
  Speaker 1: They Changes and allocations by pension funds and insurance companies
• 8:39
  Speaker 1: thanks to government and the centivization and regulatory change I
• 8:42
  Speaker 1: do enable a greater focus on performance rather than risk iming.
• 8:45
  Speaker 1: That may happen, not necessarily in a way that you
• 8:47
  Speaker 1: and I would approve of, but it may happen. An
• 8:50
  Speaker 1: increase in share buybacks, which may well happen when valuation
• 8:53
  Speaker 1: is very low and there is this tax difference between
• 8:56
  Speaker 1: capital gains and dividends makes sense that you might see
• 8:59
  Speaker 1: share buybacks going up. And then of course there is
• 9:01
  Speaker 1: the thing that we've been going on about for ages.
• 9:03
  Speaker 1: Would it be possible to cut the UK level of
• 9:07
  Speaker 1: stamp duty relative to other markets? It's incredibly high loights
• 9:10
  Speaker 1: for other markets don't have a stamp duty on equity
• 9:12
  Speaker 1: transactions at all. We do, and not low either. Changing
• 9:16
  Speaker 1: that could be a real change, And of course once
• 9:18
  Speaker 1: something changes, you may be goin to see the flows
• 9:21
  Speaker 1: done around. Then then, as I say, it could happen
• 9:23
  Speaker 1: very fast, both of the small caps and for the
• 9:25
  Speaker 1: poor old foots one hundred Yeah, I.
• 9:27
  Speaker 2: Mean teaching stamp duty and shares seems like a no brain.
• 9:32
  Speaker 2: I mean, it doesn't it doesn't raise that much overall,
• 9:36
  Speaker 2: and it's like it's not even some you'd really struggle
• 9:39
  Speaker 2: to make political capital oity of that by saying, oh,
• 9:42
  Speaker 2: you know, you're it's like a tax book for director.
• 9:45
  Speaker 2: I mean, really isn't you know? I don't really see
• 9:48
  Speaker 2: why we still got it. It's really quite a stupid tax.
• 9:52
  Speaker 1: Well, because you know something is something rich people? Yes,
• 9:58
  Speaker 1: that right, So there you go, everybody fifty one hundred.
• 10:02
  Speaker 1: Maybe it's his birthday this week, maybe it's his birthday
• 10:04
  Speaker 1: in a few weeks, who knows, but either way, it's
• 10:06
  Speaker 1: time to have a good look at it. I think
• 10:08
  Speaker 1: both John and I have written about that, and so
• 10:09
  Speaker 1: has John authors. So you know, get to Bloomberg and
• 10:12
  Speaker 1: start reading those things. Now, John, we promised that we
• 10:15
  Speaker 1: would from Mary to have how many weeks ago, was
• 10:18
  Speaker 1: to have a personal finance tip every week? So what
• 10:22
  Speaker 1: is it? Compatient? It's on you because I haven't got one.
• 10:26
  Speaker 2: Well, I know that this was a rash decision on apart,
• 10:29
  Speaker 2: but no, I just every knew the Karden shuance for
• 10:32
  Speaker 2: the and AFT. It's gone up an awful lot.
• 10:34
  Speaker 1: He's not telling you about the crashes.
• 10:37
  Speaker 2: I'm not going to even go there. It's gone on
• 10:41
  Speaker 2: an awful lot and it's not entirely my fault. I
• 10:45
  Speaker 2: would say, yeah, get go in the compartison, say it's
• 10:48
  Speaker 2: whenever you're renewing j shuance this year. Sometimes it's not
• 10:52
  Speaker 2: worth bothering with and you may find that you know
• 10:57
  Speaker 2: when you go on it that there's nothing there. But
• 11:00
  Speaker 2: I would suggest doing it because if you can cut
• 11:03
  Speaker 2: the policy, insurance is actually going to be watered this
• 11:05
  Speaker 2: year because coun shurance and potato has going up a lot,
• 11:09
  Speaker 2: partly because you know, infleetion card parts in fleetion in
• 11:12
  Speaker 2: card places, that sort of thing. So yeah, and do
• 11:15
  Speaker 2: it in good Yeah, now I would am I actually
• 11:17
  Speaker 2: did it be two days to spare this team for once,
• 11:20
  Speaker 2: which is actually just about enough. But doing do it
• 11:23
  Speaker 2: the day before he did.
• 11:24
  Speaker 1: Your taxes in such a good time as well. Welcome
• 11:29
  Speaker 1: to Meren Talks Money, the podcast in which people who
• 11:32
  Speaker 1: know the market is explain the markets. I'm Meren Sunset Web.
• 11:34
  Speaker 1: This week I look at Saxo banks out rageous predictions
• 11:37
  Speaker 1: for twenty twenty four. Steen Jakobsen, Saxa's chief investment officer,
• 11:40
  Speaker 1: joined me to walk through the eight strange predictions his
• 11:43
  Speaker 1: team has for this year. We started our conversation unpacking
• 11:46
  Speaker 1: this particular outrageous prediction the US will usher in the
• 11:50
  Speaker 1: end of capitalism with tax free government bonds.
• 11:55
  Speaker 3: So I think a lot of people would actually argue,
• 11:56
  Speaker 3: we already killed capitalism and there's nothing left to capitalism. Because,
• 12:00
  Speaker 3: of course, if you look sort of from a free
• 12:03
  Speaker 3: market perspective, you today, as you and I talk, we
• 12:06
  Speaker 3: have Japan, the world's third largest economy, have no price discovered,
• 12:11
  Speaker 3: so the upon market has come to a standstill. There's
• 12:13
  Speaker 3: no bid an office going on. There's really owned the
• 12:15
  Speaker 3: government that regulates the price, which to some extent feeds
• 12:20
  Speaker 3: into other assets in the case they are in the
• 12:22
  Speaker 3: k But let me take you through the argument we're
• 12:25
  Speaker 3: doing here, and is very much relates to twenty twenty three.
• 12:28
  Speaker 3: I think it's probably for the first time in our career,
• 12:30
  Speaker 3: the two of you to us that people are putting
• 12:34
  Speaker 3: question marks on the US debt and its ability to
• 12:38
  Speaker 3: be refinanced. So you know, in economics, fly Lingo, we
• 12:43
  Speaker 3: have a stock problem, which is the size of the debt,
• 12:45
  Speaker 3: and we have a flow problem, which is the ever
• 12:48
  Speaker 3: increasing new issues that we see clearly the reason we
• 12:52
  Speaker 3: hit five, twenty five, thirty five thirty in the ten
• 12:55
  Speaker 3: year was that the market simply said, en office or not,
• 12:58
  Speaker 3: we cannot continue to finance it. So if you can
• 13:01
  Speaker 3: look into twenty four and there's already a schedule for
• 13:04
  Speaker 3: issues of dead in the US, it's very, very very rich,
• 13:08
  Speaker 3: even compared to high issues this year. In other words,
• 13:11
  Speaker 3: there's going to be more demand on your money, the investors' money.
• 13:15
  Speaker 3: And if you extend that sort of argument and saying okay,
• 13:17
  Speaker 3: if the government is going to mitigate and create an
• 13:21
  Speaker 3: additional demand, maybe the one of the things that go
• 13:23
  Speaker 3: ahead and do is to make it tax free or
• 13:26
  Speaker 3: tax deductible in terms of these earnings. And if you
• 13:29
  Speaker 3: do do that, what is really happening. Let's assume we
• 13:32
  Speaker 3: have a primitive economy, there's only fixed income and equity market.
• 13:36
  Speaker 3: If you from the government saying okay, you can have
• 13:39
  Speaker 3: a return tax free in bonds, which everything being equal,
• 13:43
  Speaker 3: even with prices going nowhere is forty five percent, that
• 13:46
  Speaker 3: equates to with a fifty percent tax to eight to
• 13:50
  Speaker 3: ten percent return pretty much risk free against the stock market,
• 13:53
  Speaker 3: which is ended the year at an all time high.
• 13:56
  Speaker 3: What that will mean to us is that the amount
• 13:59
  Speaker 3: of capital going into the debt financing of the public
• 14:03
  Speaker 3: sector will increase in sight and scope, and as such,
• 14:06
  Speaker 3: of course that will take away money from the smaller
• 14:09
  Speaker 3: but far more appealing, at least to most investors, equity market.
• 14:13
  Speaker 3: And if you do do that, of course you are
• 14:15
  Speaker 3: similar to what is happening in Japan. You're really disrupting
• 14:18
  Speaker 3: the price discovery and the government is continuously having a
• 14:22
  Speaker 3: more heavy hand in terms of the running of the economy.
• 14:25
  Speaker 1: So isn't that just an extreme kind of financial repression?
• 14:28
  Speaker 3: It is, it is, That's another word for it. But
• 14:31
  Speaker 3: I think the end of capitalist is a better headline
• 14:33
  Speaker 3: because we actually need to discuss whether we know. But
• 14:36
  Speaker 3: I mean, you laugh, but think about it. We are
• 14:38
  Speaker 3: in a situation where regulation, vokeness, the eesg, all of
• 14:43
  Speaker 3: the frameworks that sits outside the actual clearing of prices
• 14:47
  Speaker 3: in the market is getting bigger and bigger. When I
• 14:50
  Speaker 3: started in banking as a trader, for every one trader
• 14:53
  Speaker 3: like me, there was about one and a half person
• 14:55
  Speaker 3: in back office and regulatory people. Now, as I said,
• 15:00
  Speaker 3: actually I'm one trader and I have about twenty five
• 15:02
  Speaker 3: thirty people. If I have to leave the organizational chaugancy.
• 15:06
  Speaker 3: So you know, the hand of the government is just
• 15:07
  Speaker 3: getting heavy and have it and most of its ability
• 15:12
  Speaker 3: to actually help the individual investor or making the market
• 15:15
  Speaker 3: a better place is actually going the opposite way in
• 15:18
  Speaker 3: terms of liquidity for the market.
• 15:20
  Speaker 1: Okay, And so basically your point is this inability to
• 15:24
  Speaker 1: discover prices in the correct way that tells us that
• 15:28
  Speaker 1: capitalism has come to an end and we now have
• 15:30
  Speaker 1: basically government run economies that we're getting close to that point.
• 15:35
  Speaker 3: Exactly. And you know, when you and I went to
• 15:38
  Speaker 3: school university, we learned one of the few principle that
• 15:42
  Speaker 3: actually works in economicsists that the marginals cost capital has
• 15:47
  Speaker 3: to be lower than the marginal cost market we return
• 15:50
  Speaker 3: on the capitol, and if you force the government hand higher,
• 15:53
  Speaker 3: we know that the government sector, both in GDP terms
• 15:56
  Speaker 3: but also in absolute productivity terms, is far less efficient
• 15:59
  Speaker 3: that the in the private market.
• 16:01
  Speaker 1: Yeah, okay, Well, I think we might leave that very
• 16:04
  Speaker 1: depressing one there and move on to one of your
• 16:11
  Speaker 1: predictions that seems to me to be something of a
• 16:13
  Speaker 1: triumph of capitalism, certainly a triumph for the corporate world,
• 16:18
  Speaker 1: and headline for it is world hit by major health
• 16:22
  Speaker 1: crisis is obesity. Drugs make people stop exercising. Well, so
• 16:28
  Speaker 1: you know, people were very keen on processed food. So
• 16:30
  Speaker 1: the corporate world may pile the processed food. We ate
• 16:32
  Speaker 1: all the process food, and then we're like, go, I
• 16:34
  Speaker 1: really want to be fat. So the pharmaceutical giants have
• 16:38
  Speaker 1: managed to create a drug that will mitigate the effects
• 16:42
  Speaker 1: of eating the food that they created in the first place.
• 16:44
  Speaker 1: Good thing or bad thing?
• 16:48
  Speaker 3: Yeah, that's the really what we ask you, and I'll
• 16:50
  Speaker 3: be very interesting in your personal opinion, but let me
• 16:53
  Speaker 3: take you through the argument here. What we're really asking
• 16:57
  Speaker 3: you is, as an investor and as an individual, is
• 17:01
  Speaker 3: it a society you want to live in where you
• 17:03
  Speaker 3: can buy a pill and then you don't have to
• 17:07
  Speaker 3: be responsible for the action of your life?
• 17:10
  Speaker 1: One?
• 17:10
  Speaker 3: Two don't we risk if we allow a pill to
• 17:14
  Speaker 3: be part of the healthcare treatment of obesity that we
• 17:20
  Speaker 3: in the process is doing people at this favor? One
• 17:23
  Speaker 3: because the social mobility everything being equals should be reduced. So,
• 17:27
  Speaker 3: in other words, people who already do not have access
• 17:30
  Speaker 3: to spoiling equipment at home or even a gym membership,
• 17:35
  Speaker 3: People who have to work two jobs to make instant meat.
• 17:41
  Speaker 3: People who have no ability to go down to the
• 17:43
  Speaker 3: local football club, the golf club, are going zoomba, dancing
• 17:47
  Speaker 3: or in any other shape or form sort of be
• 17:49
  Speaker 3: part of society. If we allow these people to be
• 17:52
  Speaker 3: able to sort of have a lower hearder rate in
• 17:55
  Speaker 3: terms of feeding themselves, in terms of eating junk foods
• 17:58
  Speaker 3: and everywhere with no consequences, I think we end up
• 18:01
  Speaker 3: in a situation where we are really not helping the course,
• 18:05
  Speaker 3: we're making it worse. Also, do remember that all of
• 18:08
  Speaker 3: the tests so far have shown that as soon as
• 18:11
  Speaker 3: you're off the pill, you will put on the same
• 18:13
  Speaker 3: amount of weight that you had the shred. So, in
• 18:15
  Speaker 3: other words, this pill is either for lifetime or it's
• 18:18
  Speaker 3: it's something that you need to a bed and all
• 18:21
  Speaker 3: together and really takes responsibility for your own life. The
• 18:24
  Speaker 3: other sort of part of the equation here is the
• 18:27
  Speaker 3: healthcare sector. The obesityitor eight in the US is closing
• 18:30
  Speaker 3: in on fifty percent of the population in Mexico is
• 18:33
  Speaker 3: above sixty. So if you sit there in a utility
• 18:36
  Speaker 3: function being a health official in those countries, of course
• 18:40
  Speaker 3: you're going to argue that you know, maybe this pill
• 18:42
  Speaker 3: right now is marginally too expensive to work. But if
• 18:45
  Speaker 3: the price came down by fifty percent or eighty percent,
• 18:47
  Speaker 3: maybe this is the way we're going to move forward.
• 18:50
  Speaker 3: We're going to prescribe this to most people who are
• 18:53
  Speaker 3: bees in the net process. We're going to reduce the
• 18:55
  Speaker 3: coded cost of the healthcare system. I personally and now
• 18:59
  Speaker 3: be in you view, but I personally think that you know,
• 19:02
  Speaker 3: of course the obesity drug interns of the cogitive Escuer
• 19:06
  Speaker 3: impacts has had as positive It's very costly though, and
• 19:10
  Speaker 3: as you say, the triumph of capitalism here being that
• 19:12
  Speaker 3: the valuation of these stocks is extremely elevated, and really,
• 19:18
  Speaker 3: in all things to be fair, they're really priced the
• 19:20
  Speaker 3: next ten years to perfection, so much so that most people,
• 19:25
  Speaker 3: in order to justify free his price will have to see,
• 19:28
  Speaker 3: especially in the US, that the healthcare carriers will have
• 19:31
  Speaker 3: to actually support this being under the insurance rate. So
• 19:36
  Speaker 3: you know, and if that does happen, of course there'll
• 19:38
  Speaker 3: be access to on it. Probably the production will follow,
• 19:40
  Speaker 3: so everyone expected to be on the pill cannot be
• 19:42
  Speaker 3: on a pill. And all of a sudden you see
• 19:44
  Speaker 3: McDonald's and coke consumption go through the roof, which is
• 19:47
  Speaker 3: really our provocative call here.
• 19:50
  Speaker 1: I'm slightly more optimistic about these drugs than you are,
• 19:53
  Speaker 1: I think. I mean, I look at it, and you know,
• 19:55
  Speaker 1: people always say, well, people have to stay responsibility for
• 19:57
  Speaker 1: their own lives, and people should each better, and people
• 19:59
  Speaker 1: told ex size more or whatever it is that you
• 20:01
  Speaker 1: want to say. But we've been saying that for decades,
• 20:04
  Speaker 1: and the obesity rates go up and up and up
• 20:06
  Speaker 1: and up and up. So at some point we have
• 20:07
  Speaker 1: to accept that it's not going to happen unless we
• 20:11
  Speaker 1: do something extraordinary and incredibly undemocratic to the food industry.
• 20:16
  Speaker 1: It simply isn't going to happen that fifty percent of
• 20:18
  Speaker 1: America is going to go Why I'm overweight and I'm
• 20:20
  Speaker 1: going to take control of my own life by changing
• 20:22
  Speaker 1: the way I eat and the way I exercise, because
• 20:24
  Speaker 1: you know, the diet, the diet look at the diet
• 20:26
  Speaker 1: book industry. Right, if it was possible for people to
• 20:29
  Speaker 1: want to take control of this stuff and then to
• 20:32
  Speaker 1: take control of it, that industry wouldn't even exist. So
• 20:35
  Speaker 1: I look at it slightly differently to you, and I
• 20:37
  Speaker 1: do buy the idea that if you could get a
• 20:40
  Speaker 1: cheaper version of this drug into the hands of the
• 20:45
  Speaker 1: large percent of the global population that is obese. Then
• 20:49
  Speaker 1: you do do something amazing to the health profile of
• 20:51
  Speaker 1: the global population. And not only that, I don't know
• 20:53
  Speaker 1: if you've been following it recently, you can see that
• 20:57
  Speaker 1: these drugs also change people's addictions to things. So they
• 21:01
  Speaker 1: saw people drinking alcohol, they seem to have an effect
• 21:04
  Speaker 1: on people's drug intake. Now imagine imagine a world without addiction.
• 21:08
  Speaker 1: What would that look like?
• 21:10
  Speaker 3: It's value read it. What I'm hearing is that you're
• 21:13
  Speaker 3: very assisted. You're really giving on on humankind. You're really
• 21:17
  Speaker 3: giving up the ability of people to control their own destiny,
• 21:20
  Speaker 3: which I think very much is in line with both
• 21:23
  Speaker 3: the political climate but also the accepted sort of consensus
• 21:27
  Speaker 3: the narrative of the world. I think definitely. I really
• 21:31
  Speaker 3: think the first derivative here would be a massive lack
• 21:34
  Speaker 3: of social social ability to climb through the ranks. If
• 21:38
  Speaker 3: you can't afford it already and you're going to get
• 21:39
  Speaker 3: a pill you were sentence to actually move of it,
• 21:41
  Speaker 3: it's going to get worse. So to me, it's an acceleration.
• 21:45
  Speaker 3: And in terms of the addiction to drugs, it's kind
• 21:47
  Speaker 3: of funny and I should be careful how I phrased it.
• 21:50
  Speaker 3: But none of my clients has been on the drug
• 21:52
  Speaker 3: has actually complained about the fact they lost their social
• 21:54
  Speaker 3: life while being on it, because simply the ability to
• 21:57
  Speaker 3: take a drink and go out for a bottle of
• 22:00
  Speaker 3: wine or a beer and going after dinners was actually
• 22:03
  Speaker 3: all but disappeared for them. So I'm not sure. I
• 22:06
  Speaker 3: think the truth is somewhere between your what i'll call,
• 22:11
  Speaker 3: you know, pessimistic and my pistimistic in your view view
• 22:15
  Speaker 3: of this, but we are not going to be predicting.
• 22:18
  Speaker 3: We're just saying, you know, there is a first derivative
• 22:20
  Speaker 3: and a second derivative on this so called miracle pill.
• 22:24
  Speaker 3: We don't think it's a miracle pill. We think it's
• 22:27
  Speaker 3: another addition to the way of life along the lines
• 22:31
  Speaker 3: of what you just argued. People will not be able
• 22:33
  Speaker 3: to change their life, and hence this is going to
• 22:35
  Speaker 3: end up with less social mobility, is going to end
• 22:37
  Speaker 3: up with people more people getting a bees, not less,
• 22:41
  Speaker 3: but shorter term.
• 22:42
  Speaker 1: Shorter term. If an awful lot of people take it,
• 22:44
  Speaker 1: let's say ten percent of the abast people in the
• 22:46
  Speaker 1: US take it, that's going to have a knock on
• 22:48
  Speaker 1: effect to the alcohol industry, to the fast food industry,
• 22:53
  Speaker 1: the process food industry. Absolutely, so you know we've been
• 22:57
  Speaker 1: I wrote a few months ago about the effect of
• 22:59
  Speaker 1: it have on the fast food industries when I saw
• 23:02
  Speaker 1: I saw how much less pizza people ate once they
• 23:05
  Speaker 1: started taking the drug.
• 23:07
  Speaker 3: No, no, I mean it's pretty clear. But I think
• 23:12
  Speaker 3: when we do these a ragious prediction. Of course, what
• 23:14
  Speaker 3: we're trying to force is a non linear concept. So
• 23:20
  Speaker 3: and I would argue, with no disrespect, that you are
• 23:23
  Speaker 3: giving me a liner version of it. So there would
• 23:25
  Speaker 3: be a mojor reduction in consumption of alcohol, production of
• 23:28
  Speaker 3: McDonald's meals being served. I'm saying that the wider consequences
• 23:32
  Speaker 3: here is that you lose social mobility, You lose the
• 23:36
  Speaker 3: ability to actually address the fact that people need to
• 23:39
  Speaker 3: be accountable. I would say, from a physical government point
• 23:41
  Speaker 3: of view, what I want the world to do in
• 23:43
  Speaker 3: terms of that, in terms of healthcare, in terms of
• 23:46
  Speaker 3: support for constitutions around the world, all of these aren't
• 23:50
  Speaker 3: you attack. But the only thing we do do is
• 23:52
  Speaker 3: to accept that it's going to get worse.
• 23:56
  Speaker 1: I would like like you to think that there were rational,
• 23:59
  Speaker 1: straight forward solutions to things. I would like to think that,
• 24:03
  Speaker 1: for example, back to debt, we've bet more careful around
• 24:06
  Speaker 1: our data in the UK and in the US, that
• 24:08
  Speaker 1: we could spend less, that we could manage our public
• 24:10
  Speaker 1: sectors on less money. And I'd like to think that
• 24:13
  Speaker 1: we could sat that the obse of the developed world
• 24:16
  Speaker 1: would be able to change their behaviors. But one thing
• 24:18
  Speaker 1: that you and I both know already is that that
• 24:20
  Speaker 1: isn't happening, hasn't happened for decades, and it's unlikely to happen,
• 24:25
  Speaker 1: So surely all we can do is mitigate it.
• 24:29
  Speaker 3: Yeah, I just acknowledge that we are in the final
• 24:32
  Speaker 3: inning of a pretended extent. I think twenty four very much,
• 24:35
  Speaker 3: because it's a very very clear election cycle that everything's
• 24:39
  Speaker 3: going to be way even worse in twenty four. But
• 24:42
  Speaker 3: I think ultimately the way and the evolution both economic
• 24:45
  Speaker 3: and socio economic factors happens is that we test this
• 24:48
  Speaker 3: to the limit. Basically, we break systems down to rebuild them.
• 24:52
  Speaker 3: So I think we are in the final inning. Not
• 24:55
  Speaker 3: just outrageously calling on that, but I think we're in
• 24:57
  Speaker 3: the final inning of a world where we are moving
• 25:01
  Speaker 3: towards the end game. We are in baseball analogy, we
• 25:04
  Speaker 3: are probably in the middle of the ninth inning, not
• 25:06
  Speaker 3: even at at the top of the ninth inning, and
• 25:08
  Speaker 3: I think in twenty four we moved to the bottom
• 25:10
  Speaker 3: of the ninth inning because all the elections that we
• 25:13
  Speaker 3: see in this year, in the election we're going to
• 25:14
  Speaker 3: see next year is going to be about anti stashment
• 25:16
  Speaker 3: and going away from Actually, like you say, it's going
• 25:19
  Speaker 3: to get worse. The accountability on both political parties but
• 25:23
  Speaker 3: also central banks and the individuals is going to be
• 25:25
  Speaker 3: less strenous, less demanding, and as such, we're going to
• 25:29
  Speaker 3: end up in a position where we're actually going nowhere.
• 25:31
  Speaker 1: So what happens in the endgames?
• 25:32
  Speaker 3: Team in the endgame, we end up with more beast
• 25:36
  Speaker 3: people on the pill. We end up in a situation
• 25:38
  Speaker 3: where where ultimately the US has to introduce YCC similar
• 25:42
  Speaker 3: to what Japan did. And I think we discussed this before.
• 25:45
  Speaker 1: You and I would you mind just explaining why cecil
• 25:48
  Speaker 1: clup control for one non experts.
• 25:50
  Speaker 3: Yeah, So what YILCA control means that the government and
• 25:53
  Speaker 3: in this case most likely the Center Bank the finn
• 25:57
  Speaker 3: Minister Finance, dictates what the price of money should be.
• 26:01
  Speaker 3: So there's no ability to rate to move up and
• 26:04
  Speaker 3: down dictated by the market, which creates an artificial stimulus
• 26:08
  Speaker 3: to the company to what we've seen in Japan. And
• 26:11
  Speaker 3: the point I'm trying to raise is that everything the
• 26:13
  Speaker 3: Bank Bank of Japan and Japan has done over the
• 26:15
  Speaker 3: last fifteen years has been repeated by the Western world
• 26:18
  Speaker 3: inside five to six years. So as often as as
• 26:21
  Speaker 3: we criticize the Japanese for what they're doing, we have
• 26:24
  Speaker 3: continued to do everything they ever done, including QE, which
• 26:28
  Speaker 3: was initiated of course first many years before the Western
• 26:31
  Speaker 3: world in Japan. So I think we know the future.
• 26:34
  Speaker 3: We can just look to Japan and that it's a
• 26:37
  Speaker 3: standstill economic model. Social mobility again very low. But the
• 26:42
  Speaker 3: fact is that Japan can afford it. Most of these
• 26:44
  Speaker 3: countries that come into this new crisis, or the Japanese
• 26:47
  Speaker 3: versus like the US, cannot afford it. So something needs
• 26:50
  Speaker 3: to break, and something is breaking already politically in my opinion,
• 26:52
  Speaker 3: and that's what the US election about in twenty four
• 26:55
  Speaker 3: and ultimately we will have a new capital structure and
• 26:58
  Speaker 3: re engagement off the market, say distributary of goods. But
• 27:01
  Speaker 3: we are one two years away from that breaking point.
• 27:04
  Speaker 3: But we move towards it, and right now we're celebrating
• 27:07
  Speaker 3: lower rage. We're celebrating that the inflation just seems to
• 27:10
  Speaker 3: have gone by the wayside. But underneath that is that
• 27:13
  Speaker 3: we are still imbalanced on energy, energy sufficiency, cybersecurity, defense spending,
• 27:20
  Speaker 3: social programs, as we just discussed. So the imbalance is
• 27:22
  Speaker 3: just increasing. It's like a pyramid which is standing on
• 27:25
  Speaker 3: his head instead of on a sort of the wider,
• 27:28
  Speaker 3: wider part of the pyramid itself. So it's in control
• 27:32
  Speaker 3: right now, but it's escalated to aalks higher volatility.
• 27:35
  Speaker 1: Okay, well, let's stick with the twenty twenty four presidential election,
• 27:41
  Speaker 1: and another of your outrageous predictions is that Robert F.
• 27:45
  Speaker 1: Kennedy Junior may win that election. Now here's the extraordinary things, Dean,
• 27:50
  Speaker 1: which is that last week's guest said that Robert F.
• 27:54
  Speaker 1: Kennedy Genior will change the conversation around the elections such
• 27:57
  Speaker 1: that we don't see either of Biden or Trump presidency.
• 28:01
  Speaker 1: It took us through how you see that conceivably happening.
• 28:05
  Speaker 3: It really comes from the success we had in calling
• 28:07
  Speaker 3: Trump winning over Clinton and calling the Brexit, which has
• 28:10
  Speaker 3: nothing to do with our intelligence or our ability to
• 28:13
  Speaker 3: predict the future. But we did realize in both cases
• 28:16
  Speaker 3: that missus Clinton was the most unelectable person ever in
• 28:19
  Speaker 3: the history of US elections. There was no way in
• 28:22
  Speaker 3: hell that there she was going to be voted into office,
• 28:24
  Speaker 3: which means which meant that Trump was more likely than
• 28:26
  Speaker 3: not actually to succeed simily. As you very well remember yourself.
• 28:31
  Speaker 3: The Brexit campaign, the Yes campaign in under the Brexit
• 28:35
  Speaker 3: was really talking down to people. They were really thinking
• 28:38
  Speaker 3: that the UK voters were stupid, you know, coming up
• 28:41
  Speaker 3: with numbers like you're going to lose and thirty three
• 28:44
  Speaker 3: pounds over the next ten years. And this is the
• 28:48
  Speaker 3: same people that can't predict the interest rate in the
• 28:50
  Speaker 3: next three hours. So they sort of lost it and
• 28:53
  Speaker 3: became an anti Steppens vote. It was never about the
• 28:56
  Speaker 3: EU in my opinion. If you fast forward that to
• 28:58
  Speaker 3: twenty four, you have on one side a president which
• 29:02
  Speaker 3: in the consensus of the market not my saying, but
• 29:05
  Speaker 3: is anti democratic. He's actually in court fighting the claim
• 29:10
  Speaker 3: that he is anti democratic. And you have a president
• 29:12
  Speaker 3: who are more likely than not to die on wilt
• 29:15
  Speaker 3: while in office or at least connective chief disabled, someone
• 29:22
  Speaker 3: that's probably thirty percent of the vote on each side,
• 29:25
  Speaker 3: which is fixed before we start the election, which means
• 29:27
  Speaker 3: that forty percent is undecided. Into the mix comes a
• 29:32
  Speaker 3: royal name in the US, maybe not to the young people,
• 29:35
  Speaker 3: where I think Kadashian is more famous than the Kennedy family,
• 29:38
  Speaker 3: but I think the Kennedy family comes with a royal brand,
• 29:41
  Speaker 3: and as someone as a candidate, as you probably discussed
• 29:45
  Speaker 3: last week, as well, a candidate who is actually for everything.
• 29:48
  Speaker 3: He's not against anything except war, which he wants to
• 29:51
  Speaker 3: reduce the US role in the in terms of the
• 29:53
  Speaker 3: global policing they do. He was an anti vaxxer. He
• 29:58
  Speaker 3: was very much looking for electoral reforms. He is very
• 30:04
  Speaker 3: much a guy who wants to go up against the
• 30:06
  Speaker 3: pharmaceutical and the healthcare system. As we discussed earlier. He's
• 30:11
  Speaker 3: a person who is populous in every shape or form
• 30:14
  Speaker 3: that you can imagine. There isn't really if I'm a
• 30:18
  Speaker 3: bit harsher, if I'm an economist or even a social economist,
• 30:23
  Speaker 3: I don't think there's really a lot in the program.
• 30:25
  Speaker 3: But the thing is he is less hated. He's less
• 30:29
  Speaker 3: not light than Biden and Trump. I mean Biden and
• 30:33
  Speaker 3: Trump has their own candidacy. But I can easily see that,
• 30:37
  Speaker 3: similar to your guest last week, that at a bit
• 30:39
  Speaker 3: minimum he becomes an impact. He will definitely hurt right
• 30:42
  Speaker 3: now Trump more than he's going to hurt Biden because
• 30:45
  Speaker 3: he appeals to the crime same awards. And secondly, you know,
• 30:50
  Speaker 3: the last time an independent ran with some success was
• 30:53
  Speaker 3: Josh Wallace in nineteen sixty seven. If I'm not mistaken,
• 30:55
  Speaker 3: he got to twenty eight percent of the vote. Similarly,
• 30:58
  Speaker 3: when Clinton won on the Austro Rusburiold only talied about
• 31:01
  Speaker 3: eight nine percent in the vote, but it was enough
• 31:04
  Speaker 3: to actually put Clinton in the seed and d Seed
• 31:07
  Speaker 3: and Detrow Bush the first. So you know, these guys
• 31:11
  Speaker 3: that come in from the part and independently can play
• 31:13
  Speaker 3: a role. He is a national name because of his
• 31:15
  Speaker 3: name Kennedy, and he is not someone that people feel
• 31:19
  Speaker 3: is part of the establishment. And I think the US election,
• 31:22
  Speaker 3: the upcoming UK election, the European European Commission election, EU
• 31:28
  Speaker 3: election that comes up, and all election that reached back
• 31:30
  Speaker 3: during twenty four I think will be driven by one
• 31:32
  Speaker 3: fact that one factory only. It is not going to
• 31:35
  Speaker 3: be on people selecting who they think is the right
• 31:38
  Speaker 3: person to be in office, they're going to de select
• 31:41
  Speaker 3: everyone else first before they get to their candidate. And
• 31:43
  Speaker 3: that is very much in line with what we saw
• 31:46
  Speaker 3: in the Netherlens, very much in line what we saw
• 31:47
  Speaker 3: in Brazil. What if in Argentina? And I think continuously
• 31:52
  Speaker 3: through this phase of a pretended extent into the final
• 31:56
  Speaker 3: inning here, I think that is the driver. People are
• 31:58
  Speaker 3: not voting for what they want, voting for what they
• 32:00
  Speaker 3: do not want, and that is far easier for people
• 32:03
  Speaker 3: to define because that could be one single thing that
• 32:06
  Speaker 3: they are anxious about.
• 32:08
  Speaker 1: Okay, So if you were to make a non outrageous
• 32:11
  Speaker 1: prediction about who would win the presidential election, who would
• 32:14
  Speaker 1: it be.
• 32:16
  Speaker 3: Biden? Simply because I think the power of the Kennedy
• 32:21
  Speaker 3: name is enough to take enough votes away from from Trump.
• 32:24
  Speaker 1: From Trump, so the most likely result is another Biden
• 32:29
  Speaker 1: presidenc Here. It seems extraordinary, doesn't it From the outside.
• 32:32
  Speaker 3: It does, And it's a classic case of what I
• 32:37
  Speaker 3: just outlined. It's not because people vote for him, it's because,
• 32:41
  Speaker 3: in this case, two other candidates is perceived to be worse.
• 32:45
  Speaker 3: And the UK election, it's tricky because of the the
• 32:49
  Speaker 3: electional system in the UK, where I think really the
• 32:53
  Speaker 3: key component is the Scottish vote, with I think, if
• 32:57
  Speaker 3: I'm not mistaking it's fifty five votes. I think they
• 33:00
  Speaker 3: can really make a difference, and they're probably going to
• 33:02
  Speaker 3: swing more toy than the overall national polls shold right now.
• 33:07
  Speaker 3: So I think it will be a Labor win, but
• 33:09
  Speaker 3: I don't think it will be outright as good as
• 33:11
  Speaker 3: people expect, simply because the way you have constructed the
• 33:15
  Speaker 3: election system in the UK so to some extent, too
• 33:19
  Speaker 3: many people will be anti labor for its history and
• 33:24
  Speaker 3: whether it's based in rational or our thought process is not,
• 33:29
  Speaker 3: it's really relevant. That will be specially interest that will
• 33:33
  Speaker 3: play a key role.
• 33:34
  Speaker 1: It's interesting, isn't it that, going back to Scotland that
• 33:37
  Speaker 1: the SMP over the last decade or so I've managed
• 33:39
  Speaker 1: to convince everybody that Scotland is a uniquely progressive and
• 33:43
  Speaker 1: left wing society, whereas in fact it's just split. If
• 33:47
  Speaker 1: you take out the SMP, it's just a split in
• 33:50
  Speaker 1: that kind of sense is the rest of the country,
• 33:53
  Speaker 1: and that.
• 33:54
  Speaker 3: Is exactly the point and very much vested in actually
• 33:58
  Speaker 3: being part of the UK and not be independent, which
• 34:01
  Speaker 3: of course, but you know as well as I do.
• 34:03
  Speaker 3: Fact doesn't matter in today's world.
• 34:06
  Speaker 1: They will matter again one day, right, Let's go one day,
• 34:11
  Speaker 1: one day. That's what you're worried about. Exactly. Let's go
• 34:13
  Speaker 1: back to we were talking about yield curve control, and
• 34:16
  Speaker 1: we were talking about about Japan, and you make a
• 34:20
  Speaker 1: great prediction here that Japan will have a seven percent
• 34:23
  Speaker 1: GDP growth, which you call lucky seven GDP growth, and
• 34:27
  Speaker 1: that is going to force the Bank of Japan to
• 34:29
  Speaker 1: abandon a real yield yield curve control, which you just
• 34:33
  Speaker 1: call it y CC. It's easier. How's that going to work?
• 34:39
  Speaker 3: Yes, I'm just back from Japan, and it's pretty clear
• 34:42
  Speaker 3: to me that given the opportunity, Bank of Japan and
• 34:45
  Speaker 3: the Ministry of Finance in Japan will slow walk the
• 34:48
  Speaker 3: normalization of the interested policy in Japan. They can simply
• 34:51
  Speaker 3: afford to pay the market price. You know, with wages
• 34:55
  Speaker 3: at four percent and inflation at three you know, the
• 34:58
  Speaker 3: real race in Japan should minus three hundred base point,
• 35:01
  Speaker 3: it should be plus one hundred or two hundred, and
• 35:04
  Speaker 3: it's not happening. Why it's not happening because of this
• 35:06
  Speaker 3: year control. So the artificially low industry Lucky seven addresses
• 35:11
  Speaker 3: the fact that the number seven is apparently a lucky
• 35:13
  Speaker 3: number in Japan, So we sort of provocatively said, how
• 35:16
  Speaker 3: about if phenomenal GDP reaches seven percent because of these
• 35:19
  Speaker 3: negative real rates they have, makes you know, the economy
• 35:24
  Speaker 3: overheat very start to rise, which they already have done.
• 35:28
  Speaker 3: And on top of that, I think Japan plays a
• 35:30
  Speaker 3: pretty central role in the re calibration of the semiconductor industry.
• 35:36
  Speaker 3: It's pretty clear that everyone on needs to, needs and
• 35:39
  Speaker 3: wants to get out of Taiwan over the next ten years.
• 35:42
  Speaker 3: One of the few places where you both have the
• 35:44
  Speaker 3: technology and the internal the logistics to do that and
• 35:48
  Speaker 3: replace it is in Japan. So your trend is on
• 35:51
  Speaker 3: top of being a top of the class in automation
• 35:53
  Speaker 3: and robot they're also now increasing seeing these heavy investments
• 35:57
  Speaker 3: into factories and semiconductor related industry. So I think Japan
• 36:03
  Speaker 3: could see a very big headline number which is asynchronic
• 36:06
  Speaker 3: to the rest of the world, probably twenty four. That
• 36:08
  Speaker 3: will put pressure on the upside on the interest rate
• 36:12
  Speaker 3: in Japan, and I think as an outrageous call, but
• 36:15
  Speaker 3: also as a real call, the biggest single event risk
• 36:19
  Speaker 3: we can look that we know of in twenty four
• 36:22
  Speaker 3: is actually if YCC is a bandonba banka Japan, that
• 36:26
  Speaker 3: will increase the norminal interest rate in the world buy
• 36:30
  Speaker 3: anywhere from twenty five basis point to a full percenter's
• 36:33
  Speaker 3: point if they let go. Because you know, as you know,
• 36:36
  Speaker 3: Japan is the biggest marginal buyer of debt in Europe,
• 36:39
  Speaker 3: in the DGZ countries and in the US.
• 36:42
  Speaker 1: Okay, So should we manically buy Japanese assets?
• 36:45
  Speaker 3: I think you have. You know, you have better than
• 36:48
  Speaker 3: a fifty to fifty chance that your currency rate is
• 36:51
  Speaker 3: going to be pulling for you and filling truly heavily.
• 36:54
  Speaker 3: So it's a little bit binary. Either you're going to
• 36:56
  Speaker 3: make twenty five percent of the currency or you're going
• 36:59
  Speaker 3: to make a decent return on just only the assets
• 37:02
  Speaker 3: for the balance of a year until they remove the
• 37:06
  Speaker 3: slow walking and started running to abandon it.
• 37:09
  Speaker 1: Okay, So we can be bullish on can we be
• 37:11
  Speaker 1: bullish on Japanese equity markets as well as bond markets?
• 37:14
  Speaker 3: I would say bond market I've given up on, and
• 37:16
  Speaker 3: I think every international rest have done the same. But
• 37:19
  Speaker 3: I would say I'm definitely into a market which is
• 37:22
  Speaker 3: running as hard it is right now it would not
• 37:24
  Speaker 3: be a silly idea to buy at yin calls against
• 37:28
  Speaker 3: the dollar as a protection. It's probably a much better
• 37:31
  Speaker 3: protection than buying a put on the stock market, because
• 37:34
  Speaker 3: if Japan becomes the catalyst for change in the monetary outlook,
• 37:39
  Speaker 3: it will have severe impact on the currency rate, and
• 37:41
  Speaker 3: to the extent that dollar in properly should trade one
• 37:45
  Speaker 3: hundred and not where it is today at one forty one.
• 37:49
  Speaker 1: Right, what next from your outrageous productions, Let's see oil
• 37:53
  Speaker 1: at one fifty. That's kind of interesting. How does oil
• 37:55
  Speaker 1: get one fifty in today?
• 37:56
  Speaker 3: There? Over the last few days we see in that Unfortunately,
• 38:02
  Speaker 3: the Middle East crisis seems to be opening on other
• 38:07
  Speaker 3: borders as well. There's been a dire warning from Israeli
• 38:11
  Speaker 3: towards his father in Libanon. We have also seen that
• 38:15
  Speaker 3: apparently the security apparatus now is telling Hamas out right,
• 38:20
  Speaker 3: that's serialy, what happened after the Olympics in nineteen seventy two.
• 38:24
  Speaker 3: We're going to go after, go after every single person
• 38:27
  Speaker 3: who's in the leadership of Hamas, wherever they are in
• 38:29
  Speaker 3: the world. So I think there is an escalation of
• 38:32
  Speaker 3: the rist premium potentially in terms of the Middle East.
• 38:35
  Speaker 3: On top of that, I think the OPEK is very
• 38:37
  Speaker 3: unhappy about their inability so far to actually to get
• 38:41
  Speaker 3: the market set that they are reducing production. Obviously the
• 38:44
  Speaker 3: market is skeptical because the compliance is pretty low. And
• 38:49
  Speaker 3: then you know, the third one, which is probably more
• 38:51
  Speaker 3: positive one is that if we believe all of the
• 38:54
  Speaker 3: interest rate that the market cuts, that the market is
• 38:56
  Speaker 3: pricing in, we could potentially look at ACCE raising in
• 38:59
  Speaker 3: the second half of next year, both on on inflation
• 39:01
  Speaker 3: but also on the on the growth side after seeing
• 39:05
  Speaker 3: a pretty poor first half of twenty two twenty twenty four.
• 39:08
  Speaker 3: So so I think, you know, if we go as
• 39:12
  Speaker 3: deep as icepect and indust rate, I think that there
• 39:14
  Speaker 3: will be some stimulus the impact coming from.
• 39:16
  Speaker 1: That, okay. And then the saudis by the the Champions
• 39:24
  Speaker 1: League champion leak exactly because I mean, it's.
• 39:29
  Speaker 3: Easy, it's easy to understand why, I mean, FIFA is
• 39:34
  Speaker 3: off for everything that has to do with money, right.
• 39:36
  Speaker 3: I don't think I'm going to get a get sued
• 39:38
  Speaker 3: for saying that, but but but you know, let me
• 39:41
  Speaker 3: take the through the story. So we know the Live
• 39:44
  Speaker 3: Golf Tour was was bought by the Saudis and a
• 39:48
  Speaker 3: lot of you know, American golfing particularly been asked why
• 39:51
  Speaker 3: why did you join the live Tour? I mean it's
• 39:53
  Speaker 3: it's an inferior tour in sporting terms, and you know,
• 39:58
  Speaker 3: whether you want or not, probably you're sanctioning some of
• 40:00
  Speaker 3: the things that go down in Saudi Arabia. And the
• 40:02
  Speaker 3: answer bag was very classical and what an Ignobank agent
• 40:06
  Speaker 3: to say. They say, listen, if someone came to offer
• 40:09
  Speaker 3: you ten times for salary and in the process making
• 40:12
  Speaker 3: sure that you were made whole for the next generation,
• 40:15
  Speaker 3: maybe next three generation, why would you take the money?
• 40:18
  Speaker 3: So really, again, what we are trying to provoke is
• 40:21
  Speaker 3: the thinking is theoretically, if the money is big enough,
• 40:25
  Speaker 3: is everything up for sale? I think personally unfortunately along
• 40:28
  Speaker 3: the lines we discuss a few childel already. I think
• 40:30
  Speaker 3: that is the case. There's a number of European clubs
• 40:34
  Speaker 3: that if Saudi and Fiver came to the masseat, why
• 40:37
  Speaker 3: don't we replace the Champions League with a format where
• 40:41
  Speaker 3: we tripped free, double the price money and we make
• 40:44
  Speaker 3: it a little bit more structure, you pay a little
• 40:46
  Speaker 3: bit less matches and the final and the semi finals
• 40:48
  Speaker 3: will be in the GCC. I think they will be
• 40:52
  Speaker 3: gained if nothing else, because they will argue simply to
• 40:55
  Speaker 3: the American golfers that they have the interest of their
• 40:58
  Speaker 3: supporters and their shareholders too hard.
• 41:01
  Speaker 1: All right? Is that that's slightly outside my terms of
• 41:04
  Speaker 1: reference anything anything to do with football. But I'm glad
• 41:07
  Speaker 1: we covered that one. Glad we covered that one. How
• 41:09
  Speaker 1: can we move on though, to AI? This is an
• 41:14
  Speaker 1: interesting one. Then tell us your predictions or sorry, outrageous
• 41:18
  Speaker 1: predictions around AI.
• 41:21
  Speaker 3: What Peter Gannery maigre Danlist did. He asked, a very
• 41:24
  Speaker 3: relevant question is what would have to happen for us
• 41:29
  Speaker 3: to give guardrails to AI or to stop the progress
• 41:34
  Speaker 3: into infinity and the user of the And he came
• 41:37
  Speaker 3: up with the answer, which I think is very classical.
• 41:39
  Speaker 3: He said, there needs to be a national security incident
• 41:42
  Speaker 3: for this to be stopped. In the process, we know
• 41:45
  Speaker 3: the EU Commissioner government will not be able to do it.
• 41:48
  Speaker 3: First if I need to find the political mandate, and
• 41:50
  Speaker 3: then the execution is difficult. But imagine, and this is
• 41:53
  Speaker 3: just imagine, but imagine the National Security Advisor was caught
• 41:57
  Speaker 3: on video and on tape and release emails delivering information
• 42:02
  Speaker 3: in a restaurant in Paris to his counterpart in China.
• 42:07
  Speaker 3: None of it being real, but all of it done
• 42:09
  Speaker 3: so well in deep fake that it would be very
• 42:12
  Speaker 3: very difficult for the National Security Agency and others to
• 42:15
  Speaker 3: figure out what was really going on. That would of
• 42:18
  Speaker 3: course raise the alert with them, and most likely are
• 42:21
  Speaker 3: not They will say one or two things first that
• 42:23
  Speaker 3: will immediately put a ban on O MAYI and Microsoft
• 42:27
  Speaker 3: and everyone else to share their databases outside the non
• 42:30
  Speaker 3: compliant parties that is not approved by the National Security
• 42:33
  Speaker 3: Service and Natural Intenergen Service. But on top of that
• 42:36
  Speaker 3: it raises and you know, the positive impairing of deep fake,
• 42:39
  Speaker 3: of course being I had my Dutch colleague the other
• 42:41
  Speaker 3: day sent me an analysis in Danish. He doesn't speak Danish,
• 42:45
  Speaker 3: but of course he used one of these AI deep
• 42:47
  Speaker 3: fake things. And so the positive age bag is you
• 42:50
  Speaker 3: can do it, and you can create sort of translation
• 42:53
  Speaker 3: and vite material. But the deep fike is that we
• 42:57
  Speaker 3: know it goes on already. I mean, imagine what goes
• 42:59
  Speaker 3: on in terms of intelligence service in terms of deep fike,
• 43:02
  Speaker 3: they said, and the other so I think this is
• 43:04
  Speaker 3: a real call. The only way we get controls on
• 43:07
  Speaker 3: AI is nice and security breaches.
• 43:09
  Speaker 1: That isn't particularly good for the AI industry and not
• 43:13
  Speaker 1: good for the bubble, for the stock prices, etc. Suddenly
• 43:17
  Speaker 1: that's exactly the kind of thing that we'll destroy that bubble.
• 43:20
  Speaker 3: Absolutely, and we are not saying is happening, and we're
• 43:23
  Speaker 3: just saying that deep fake in our opinion is to
• 43:25
  Speaker 3: think a bigger risk for this potential.
• 43:28
  Speaker 1: To have it all right. The last one that I
• 43:31
  Speaker 1: want to ask you about, because I mentioned in this
• 43:33
  Speaker 1: one is luxury demand collapsing as the EU goes robin
• 43:37
  Speaker 1: Hood introducing a wealth tax. And it's interesting we haven't
• 43:41
  Speaker 1: heard as much about wealth taxes over the last year
• 43:44
  Speaker 1: or so as we did in the previous few years
• 43:45
  Speaker 1: when there was endless conversation about wealth taxes in across
• 43:49
  Speaker 1: the EU, in the US, and also we talked a
• 43:51
  Speaker 1: lot about wealth taxes here, but it's a conversation that's
• 43:53
  Speaker 1: slightly petered out. So I'm interested to see it coming
• 43:57
  Speaker 1: back here in terms of a wealth tax on luck
• 44:00
  Speaker 1: good And there's been also lots of conversations of course
• 44:02
  Speaker 1: about you know, putting a higher rate of VAT on
• 44:04
  Speaker 1: luxury goods. So how do you define luxury? Will never
• 44:06
  Speaker 1: quite know which is the same kind of idea.
• 44:10
  Speaker 3: It's a great catch you have on it being less
• 44:13
  Speaker 3: relevant in the narrative last two years, and I think
• 44:16
  Speaker 3: that's simply because the fiscal dominance was allowed to run.
• 44:19
  Speaker 3: And don't forget, a wealth tax sits below one jealousy
• 44:25
  Speaker 3: as a psychological phenomena, but it also sits behind sort
• 44:28
  Speaker 3: of the published movement. Where a government is coming up
• 44:31
  Speaker 3: short on tax receipts, the best way to make a
• 44:35
  Speaker 3: most variant citation mark way of reigning in some more
• 44:40
  Speaker 3: tax re seed is to go out to the wide
• 44:41
  Speaker 3: department and say, listen, we're going to go after the rich.
• 44:44
  Speaker 3: And what is kind of super ironic is that Norway
• 44:47
  Speaker 3: right now is acting more like a communist country than
• 44:50
  Speaker 3: the richard country in the world. As you probably know,
• 44:53
  Speaker 3: Norway introduced a welfare tax which made I think about
• 44:56
  Speaker 3: two fifteen hundred of the richest people leave the country.
• 44:59
  Speaker 3: It's really unitative and maybe that is the maxim that
• 45:03
  Speaker 3: only only the risk can afford to be socialists. That
• 45:06
  Speaker 3: is playing out. But the but the story here simply is,
• 45:10
  Speaker 3: I mean, if we narrow it down, it's really government
• 45:12
  Speaker 3: coming off short on tax receipt. What is the easiest,
• 45:15
  Speaker 3: most popular, with the least amount of voter impact, maybe
• 45:19
  Speaker 3: even with a positive voter impact. That you can do
• 45:22
  Speaker 3: is of course, to tell the ninety nine percent quartile,
• 45:25
  Speaker 3: we're going to tax the rich more. The great irony
• 45:27
  Speaker 3: being there is zero tax revenue relevant in doing it.
• 45:30
  Speaker 3: But it's of course something that is perceived to be
• 45:33
  Speaker 3: doing something. Again in citation mark fair.
• 45:37
  Speaker 1: Yeah, and only the rich pay, and nobody thinks that
• 45:39
  Speaker 1: they're the rich somebody else who pays as tax exactly.
• 45:43
  Speaker 1: But two percent is quite high, and it's enough to
• 45:46
  Speaker 1: make people want to move very quickly.
• 45:49
  Speaker 3: I mean, it was at half a percent, and now
• 45:51
  Speaker 3: is that the two percent? And if and the problem
• 45:54
  Speaker 3: is that welfare tax is kind of unfair. If you
• 45:56
  Speaker 3: don't realize any money, you can end up as a
• 45:58
  Speaker 3: situation where you where and even if you lose money
• 46:01
  Speaker 3: here over year, you have to sell some of your
• 46:03
  Speaker 3: assets to keep your assets. That kind of doesn't make sense.
• 46:07
  Speaker 1: Yeah, it's interesting. I had a guest on a little
• 46:09
  Speaker 1: while ago who said that one of the things that
• 46:11
  Speaker 1: they never bought was luxury goods companies, not because they're
• 46:14
  Speaker 1: worried about wealth taxes, because they felt that if you
• 46:17
  Speaker 1: had any I to ESG, the majority of the large
• 46:23
  Speaker 1: clients of the wealth companies weren't people that you'd be
• 46:26
  Speaker 1: happy to pop under your S. So there is not
• 46:31
  Speaker 1: a reasonable sector to hold equities in.
• 46:36
  Speaker 3: No, I fully concurve it that makes sense to you, Yeah, absolutely,
• 46:40
  Speaker 3: I fully concur with that. The problem with eesn G
• 46:43
  Speaker 3: is no company is all three. So depending on whether
• 46:46
  Speaker 3: you go for the S or for the G or
• 46:48
  Speaker 3: for the E, you're going to end up with very
• 46:50
  Speaker 3: different economic environment. I mean, I don't think there's anyone
• 46:54
  Speaker 3: that claims that the META is very G. They may
• 46:59
  Speaker 3: claim they are E, but they are certainly not G
• 47:02
  Speaker 3: if you look at their capital, and certainly not S
• 47:05
  Speaker 3: and certainly not exactly. But nevertheless, if you find an
• 47:08
  Speaker 3: ETF that is green or est compliant, you'll very often
• 47:11
  Speaker 3: find MET in. So so you know, someone needs to
• 47:15
  Speaker 3: explain to me how that works.
• 47:17
  Speaker 1: I don't think anyone can. And we're beginning getting to
• 47:19
  Speaker 1: the getting to the point where people are beginning to
• 47:20
  Speaker 1: understand that, you know, the ESG are and the main
• 47:23
  Speaker 1: in conflict with each other, right, and.
• 47:25
  Speaker 3: Going back to you, I guess I think the point
• 47:27
  Speaker 3: really the super point here is that S and G
• 47:29
  Speaker 3: doesn't matter. Is only E that people are interested in.
• 47:32
  Speaker 3: We're driving the value of E. But S, you know
• 47:35
  Speaker 3: somewhat if it follows but gez no one monitors g stein.
• 47:40
  Speaker 1: Can I finish this conversation by asking you about your
• 47:43
  Speaker 1: non outrageous predictions for next year, looking into the rest
• 47:47
  Speaker 1: of this year, what is it that you actually expect
• 47:50
  Speaker 1: to happen? What do you see happening in stock markets?
• 47:53
  Speaker 1: For example?
• 47:54
  Speaker 3: So as you and I take this, the market is
• 47:57
  Speaker 3: full of conversation about the central banks, EASYB, Bank of
• 48:01
  Speaker 3: England and FED fighting the market. The market is saying
• 48:06
  Speaker 3: there will be more cuts than the central banks, and
• 48:08
  Speaker 3: a lot of people are telling me that they are
• 48:11
  Speaker 3: pricing in too much. I actually think this is the
• 48:13
  Speaker 3: other way around. I think it's too little. This priced then,
• 48:15
  Speaker 3: because the cutting interest that we've seen is really driving
• 48:20
  Speaker 3: by a subpar performance and inflation, we're still to see
• 48:24
  Speaker 3: the full impact on very high for very long. It's
• 48:27
  Speaker 3: into the economy. So I expect the next sort of
• 48:31
  Speaker 3: thing to happen is that we will maintain a low
• 48:33
  Speaker 3: interest rate, a lower growth but has become int Q
• 48:37
  Speaker 3: one next year, actually real rates with the pace of
• 48:40
  Speaker 3: which Favet is indicating will rise to three hundred and
• 48:42
  Speaker 3: twenty five three hundred and fifty basis point, and that
• 48:46
  Speaker 3: doesn't work. So if race are going down, they actually
• 48:49
  Speaker 3: going to go down more in order to get real
• 48:51
  Speaker 3: rays down to one hundred, two hundred and fifty. That
• 48:53
  Speaker 3: will be my number one focus on the positive side.
• 48:56
  Speaker 3: On the negative side, I go back to Bank of Japan.
• 48:58
  Speaker 3: Whatever Bank of Japan will have the outside impact on
• 49:03
  Speaker 3: the rest of the world. I don't think young people
• 49:06
  Speaker 3: in the market they fully understand the full impact on
• 49:09
  Speaker 3: the excess saving the assists in Japan and finances everything
• 49:13
  Speaker 3: for try finance in ships and factories to carritories in RN.
• 49:20
  Speaker 3: I mean, if that flow reverses back, it's something that
• 49:23
  Speaker 3: will impact all of us, whether we want it or not.
• 49:25
  Speaker 3: So pretty much more we need to on the risksite
• 49:28
  Speaker 3: needs to wake up to every day is checking the
• 49:30
  Speaker 3: dolly in rate and comments on the markets. But industry
• 49:33
  Speaker 3: going much lower than the market expect, and particularly now
• 49:37
  Speaker 3: that the market is saying, oh this is too much,
• 49:39
  Speaker 3: A wholeheartedly disagree. Actually, I think we need far far
• 49:42
  Speaker 3: lower real race in the US.
• 49:44
  Speaker 1: Okay, So where should the retail investor put their money.
• 49:47
  Speaker 1: Then do you think the ordinary investor.
• 49:50
  Speaker 3: In the UK is very simple I mean bias much
• 49:52
  Speaker 3: of two years and five years until the government buns
• 49:55
  Speaker 3: you can the Bank of England this week was very
• 49:58
  Speaker 3: slow in acknowledging what is going to happen and what
• 50:01
  Speaker 3: will happen. Is that because you had so it is
• 50:04
  Speaker 3: some chronic reason why you inflation went out, You're going
• 50:06
  Speaker 3: to have the same agin reason why it goes down.
• 50:08
  Speaker 3: So as we come into sort of all these things
• 50:10
  Speaker 3: running out regulatory and framework wise, in January February, we
• 50:15
  Speaker 3: would see a massive job in interest rate. I would
• 50:17
  Speaker 3: say there is a ten percent return which close to
• 50:20
  Speaker 3: zero risk in being long the bond market. That is
• 50:23
  Speaker 3: for the taking, and I think people should be the
• 50:25
  Speaker 3: at least fifty percent of that into it. And then
• 50:27
  Speaker 3: you need to address all the issues that we just
• 50:30
  Speaker 3: talked about in terms of what is the world's short
• 50:33
  Speaker 3: of the world is short of productivity, short of real
• 50:35
  Speaker 3: solution to the real economy, and find some stock desists
• 50:38
  Speaker 3: in that sector. You'll find if you buy stocks that
• 50:40
  Speaker 3: are sensitive to the global economic growth rate, you're probably
• 50:44
  Speaker 3: a risk. But your first part in act year should
• 50:46
  Speaker 3: be pretty okay for investors. But I think the best
• 50:50
  Speaker 3: asset is certainly risk graded but also also not at
• 50:52
  Speaker 3: risk wading it. And I think fixed income is the
• 50:55
  Speaker 3: way to play, and it'specially in the UK. Same for Europe.
• 50:58
  Speaker 3: Germany needs a significant or real rate. You a Jewish
• 51:02
  Speaker 3: needs to so whatever wherever you are, but particularly for
• 51:05
  Speaker 3: a UK investor, it's pretty clear to me they need
• 51:08
  Speaker 3: to be long, long, long fixed in cup.
• 51:11
  Speaker 1: Okay, Well that is a great place to end something,
• 51:15
  Speaker 1: something positive and proactive for our listeners to do. Stein,
• 51:19
  Speaker 1: thank you so much.
• 51:21
  Speaker 3: It's an actual pleasure. And I think I'm the most
• 51:23
  Speaker 3: positive person you've ever interview.
• 51:24
  Speaker 1: Just for the record, Yeah, you basically are. And it's
• 51:27
  Speaker 1: not that positive, John, What do you think of Steen?
• 51:39
  Speaker 1: I mean again, we spoke to Stein last year, right,
• 51:41
  Speaker 1: And you look at these things and they're supposed to
• 51:42
  Speaker 1: be outrageous predictions and you read your way through them
• 51:44
  Speaker 1: and you think, well, yeah, that could happen, that could happen.
• 51:47
  Speaker 2: Yeah, Stein's I mean, Stein's good value. And these predictions
• 51:51
  Speaker 2: always think are interesting. I mean a's always there's a
• 51:55
  Speaker 2: few that I think just won't happen. But that are
• 51:58
  Speaker 2: the other ones where you're thinking, they said that is
• 52:00
  Speaker 2: quite it's quite hard to make that sound outrageous without,
• 52:04
  Speaker 2: you know, tweaking some of the language to Trump. I mean,
• 52:07
  Speaker 2: the whole thing about the one I thought was the
• 52:10
  Speaker 2: and you mentioned this in the podcast, but the Robert
• 52:13
  Speaker 2: Kennedy thing about him? Can I steal in votes from Trump?
• 52:17
  Speaker 2: I mean, Peppa said basically the same thing just a
• 52:19
  Speaker 2: couple of weeks ago before Christmas, and that one feels
• 52:24
  Speaker 2: like quite a high possibility outcome.
• 52:31
  Speaker 1: Well it is. I mean Astin and I said, you know,
• 52:33
  Speaker 1: you look, you look at the current candidates for US president,
• 52:37
  Speaker 1: and you think, well, it's inconceivable, inconceivable that the you know,
• 52:40
  Speaker 1: greatest best dinner Democratic Capitalism on ASKUD once again elect
• 52:44
  Speaker 1: either Trump or Biden. So something else must happen. Surely
• 52:47
  Speaker 1: something else must happen.
• 52:49
  Speaker 2: Oh yeah, and I do. I think this. Teine's point
• 52:51
  Speaker 2: about people voting against someone rather than voting for someone
• 52:56
  Speaker 2: is a really good one, and it's really overlooked. And
• 52:59
  Speaker 2: I think one thing because lots of people seem convinced
• 53:02
  Speaker 2: that Trump's definitely going to win this team looming, but
• 53:04
  Speaker 2: they forget that last team learning was up against someone
• 53:07
  Speaker 2: even more unpopular, whereas if he hadn't been, then you know,
• 53:10
  Speaker 2: he probably nineteen then you know, maybe it's the same
• 53:14
  Speaker 2: as time.
• 53:14
  Speaker 1: Maybe, which brings us on to the end of capitalism
• 53:17
  Speaker 1: in the USA. And I did think this was really
• 53:19
  Speaker 1: interesting because you know, this is this is possible, very possible.
• 53:23
  Speaker 1: The US budget deficit is particularly high. The debt payments
• 53:27
  Speaker 1: are debt payments off the scale nuts, you know, the
• 53:31
  Speaker 1: amount of money that has to file out into debt payments.
• 53:34
  Speaker 1: So there should be or there will be intense pressure
• 53:37
  Speaker 1: to try and demand for US treasuries. And that's particularly
• 53:39
  Speaker 1: the case if one of his other predictions were to
• 53:42
  Speaker 1: come true. I Japanese have to have to avoid yel curve,
• 53:46
  Speaker 1: get rid of yel curve control, and you suddenly find
• 53:49
  Speaker 1: a pile of bond market money flowing back into Japan
• 53:51
  Speaker 1: and add mother bum markets, the US is going to
• 53:53
  Speaker 1: be in a whole part of trouble. They're going to
• 53:55
  Speaker 1: really need to get people into treasuries and so take
• 53:58
  Speaker 1: it making income from government bonds tech. It seems like
• 54:00
  Speaker 1: a pretty straightforward way to get even if it does
• 54:02
  Speaker 1: destroy capitalism.
• 54:04
  Speaker 2: Yeah, my one that should with this one is I'm
• 54:09
  Speaker 2: not sure how that would go down really in the US.
• 54:14
  Speaker 2: Why I think the well, because I think the US
• 54:17
  Speaker 2: is still you know, and then there's still quite an
• 54:21
  Speaker 2: entrepreneurial place. It's still got a sense of the idea
• 54:25
  Speaker 2: the private sector being crowded out by the public sector.
• 54:28
  Speaker 2: And I think that it's possible that a large enough
• 54:35
  Speaker 2: group of people would see through that two basically, you know,
• 54:39
  Speaker 2: be against the idea. But I mean, you know, that's
• 54:43
  Speaker 2: more sort of like hope place in my.
• 54:45
  Speaker 1: Own to say, look at you with your faith in
• 54:47
  Speaker 1: the in the people.
• 54:49
  Speaker 2: Well maybe maybe not the people, but the but the mentality.
• 54:53
  Speaker 2: I could totally see it happening almost anywhere else, but
• 54:56
  Speaker 2: I can see there being possibly sufficient objections to over there.
• 55:00
  Speaker 2: I don't I don't know, though. I mean, it's certainly
• 55:03
  Speaker 2: it's certainly not implausible, and it was scary. Actually He's right,
• 55:07
  Speaker 2: it would I mean, that would be you know, given
• 55:09
  Speaker 2: the where interest rates are anyway, and the fact there
• 55:13
  Speaker 2: is going to be a lot of competition for capital
• 55:15
  Speaker 2: all over the place. Yeah, you do have to kind
• 55:19
  Speaker 2: of think that that would be pretty damaging. But that's
• 55:23
  Speaker 2: what I'm you kind of hope that they would realize
• 55:25
  Speaker 2: it would be damaging because you can't. You can't if
• 55:28
  Speaker 2: you if you're killing the golden goose just so that
• 55:30
  Speaker 2: you can feature creditors for a bit longer. I'd have
• 55:33
  Speaker 2: thought the US would just be if you like arrogant
• 55:35
  Speaker 2: enough to think, well where the US, you know, we're
• 55:38
  Speaker 2: the only country. We're at the m M T is
• 55:41
  Speaker 2: feasibly you know, possible for a period of time.
• 55:44
  Speaker 1: So Stein was very end of times, wasn't he.
• 55:48
  Speaker 2: I mean, I like stayin, but it's sort of like
• 55:53
  Speaker 2: the only pretty much the only mainstream person or you know,
• 55:58
  Speaker 2: close to the mainstream person who's actually an austria An
• 56:00
  Speaker 2: economists and Austrian economists are basically always end times. And
• 56:04
  Speaker 2: I have a lot of sympathy for the Austrian view,
• 56:07
  Speaker 2: but like, I mean, one of the things that totally
• 56:09
  Speaker 2: does agree with me and Morton was the health thing
• 56:11
  Speaker 2: and the.
• 56:13
  Speaker 1: Anti into a bit of Audie body on that one.
• 56:16
  Speaker 2: Yeah, And I thought that just I was glad because
• 56:20
  Speaker 2: I was reading the transcript and I was thinking I
• 56:23
  Speaker 2: was getting kind of quite irritated. And then you came
• 56:25
  Speaker 2: back and basically mentioned all the points that I had mentioned,
• 56:28
  Speaker 2: which was this, this is the whole idea that it's
• 56:34
  Speaker 2: about kind of willpower and that anyone's I mean, these
• 56:37
  Speaker 2: these these pills are not side effect for you, Ei,
• 56:39
  Speaker 2: there is a high huddle rate to wanting to take
• 56:42
  Speaker 2: them in the first place, and nobody actually likes being
• 56:48
  Speaker 2: fat at the end of the day, John things, well, no,
• 56:53
  Speaker 2: it was just it's just another it's it's just a
• 56:56
  Speaker 2: very visible form of kind of weaknesses like if I,
• 57:00
  Speaker 2: you know, if I if I put on like a
• 57:03
  Speaker 2: pound every time I drank a glass of wine, then
• 57:05
  Speaker 2: I wouldn't be able to set in this chair, you know,
• 57:07
  Speaker 2: and if you know, the real problem all these other
• 57:10
  Speaker 2: addictions like gambling and smoking is that they don't show
• 57:13
  Speaker 2: on your body at least, you know, certainly not until
• 57:17
  Speaker 2: it's kind of very late in the day. And also
• 57:20
  Speaker 2: most of them have got a certain glamor about them,
• 57:22
  Speaker 2: and unfortunately having an issue with food doesn't. So I mean, yeah,
• 57:27
  Speaker 2: so I don't think a I don't think the people
• 57:30
  Speaker 2: are going to give up exercising because there is a
• 57:33
  Speaker 2: fat pill out there, because the consequences are taking it
• 57:37
  Speaker 2: are already pretty significant.
• 57:39
  Speaker 1: So no, that was why I disagreed with I thought
• 57:42
  Speaker 1: I thought you'd take more exercise because, as you white
• 57:45
  Speaker 1: as you is way, you're much more able to take exercise,
• 57:47
  Speaker 1: and people like exercise. But I suppose my issue with
• 57:50
  Speaker 1: it wasn't quite the same as yours. It's just that,
• 57:52
  Speaker 1: you know, we always tell people, or I certainly do
• 57:54
  Speaker 1: when I when I'm righting my columns and when I'm
• 57:56
  Speaker 1: arguing on people, I always said to them, you know,
• 57:59
  Speaker 1: I think you may want something to be like that,
• 58:02
  Speaker 1: but that's not the way it actually is. And we
• 58:05
  Speaker 1: have to work with the way things are rather than
• 58:08
  Speaker 1: the way that we want things to be. So Stein
• 58:11
  Speaker 1: wants people to get a gret, he wants them to diet,
• 58:14
  Speaker 1: he wants them to exercise, he wants them to do
• 58:16
  Speaker 1: the stuff he wants them to do. But we know
• 58:19
  Speaker 1: already that they're not going to do that. We know
• 58:21
  Speaker 1: this doesn't work. We've got decades of experience in learning,
• 58:25
  Speaker 1: but nagging people to go on a diet and nagging
• 58:28
  Speaker 1: them to exercise doesn't work because it's incredibly hard. I mean,
• 58:32
  Speaker 1: where does he think the diet the diet publishing industry
• 58:35
  Speaker 1: came from. If diets worked, there'd only be one diet book.
• 58:39
  Speaker 2: Yeah, and there's been no self help books. If people
• 58:41
  Speaker 2: want people who help themselves.
• 58:43
  Speaker 1: No self help books, absolutely, you just need the one.
• 58:47
  Speaker 1: So you can't. You can't work with how you want
• 58:51
  Speaker 1: people to be. You have to work with human nature.
• 58:53
  Speaker 1: And that's I think. But what these drugs do, and
• 58:56
  Speaker 1: so they seem to me to be a rather wonderful thing.
• 58:59
  Speaker 1: But you know, there you go. There's so many different
• 59:00
  Speaker 1: opinions on that particular one, but a lot of a
• 59:04
  Speaker 1: lot of what Stein wants his people to people and
• 59:08
  Speaker 1: economies and businesses and government to behave in a rational way.
• 59:12
  Speaker 1: And he sees, I think an end game where people
• 59:14
  Speaker 1: will behave in a rational way. And I'm not as
• 59:17
  Speaker 1: confident as him in that end game.
• 59:20
  Speaker 2: Well that that is the classic in Austrean perspective, that
• 59:25
  Speaker 2: you should be.
• 59:26
  Speaker 1: Sensible everyone Well, suddenly there will be a crisis. You
• 59:29
  Speaker 1: should be there will be a crisis, a horrible crisis,
• 59:32
  Speaker 1: an endgame that will make everybody see sense and then
• 59:35
  Speaker 1: things will be better. But we're bad at seeing well,
• 59:40
  Speaker 1: and there's another you just have to model through.
• 59:42
  Speaker 2: There is no end game. I think, I think all
• 59:45
  Speaker 2: end game thinking from you know, the stuff I do
• 59:48
  Speaker 2: of somethy with like the Austrian thing, to the stuff
• 59:50
  Speaker 2: I don't know, sympathy with like you know, but you
• 59:53
  Speaker 2: know we're all going to die play eminently because the
• 59:57
  Speaker 2: climate change is oppose to you don't be in hundreds
• 1:00:01
  Speaker 2: of years or something like that.
• 1:00:02
  Speaker 1: I try so hard not to get onto climate change
• 1:00:05
  Speaker 1: so hard.
• 1:00:06
  Speaker 2: No, sorry, sorry, that was that was Yeah, it was
• 1:00:09
  Speaker 2: probably a bad example. But what I mean is like
• 1:00:11
  Speaker 2: apocalypse thinking, isn't that help regardless of the truths that
• 1:00:15
  Speaker 2: are within both of those views? When in the Austrian views, right,
• 1:00:18
  Speaker 2: there are lots of things wrong with the way that
• 1:00:20
  Speaker 2: we've got our economy running, and you know, it feels
• 1:00:25
  Speaker 2: like we will get to some point where things have
• 1:00:28
  Speaker 2: to change again. But they won't end, They will just change.
• 1:00:31
  Speaker 3: You know.
• 1:00:31
  Speaker 2: It's like the world didn't end when Britain no longer
• 1:00:34
  Speaker 2: was the reserve currency. It just became something else. And
• 1:00:37
  Speaker 2: probably over time the US doll it won't be the
• 1:00:40
  Speaker 2: reserve currency anymore. It will be something else. But all
• 1:00:42
  Speaker 2: it will be is a change rather than I cannot
• 1:00:46
  Speaker 2: you know, awake up where we all suddenly start acting
• 1:00:49
  Speaker 2: in a sensible way.
• 1:00:51
  Speaker 1: So John and I we have a prediction, don't we, John?
• 1:00:53
  Speaker 3: For the year.
• 1:00:54
  Speaker 1: There's a lot of forecasts out there them and everyone's
• 1:00:57
  Speaker 1: making their predictions. Some are dramatic, some or not. But
• 1:00:59
  Speaker 1: John and I would like to predict another year of
• 1:01:02
  Speaker 1: muddle through. Is that fair, John? Yeah?
• 1:01:05
  Speaker 2: Actually, yeah, that's you. Yeah, definitely John.
• 1:01:08
  Speaker 1: One last thing I wanted to mention about Steen I
• 1:01:10
  Speaker 1: totally forgot, and apologies everyone I can letally forgot to
• 1:01:14
  Speaker 1: ask him about bitcoin or gold. So I did talk
• 1:01:17
  Speaker 1: to him briefly afterwards about whether he would have chosen
• 1:01:20
  Speaker 1: bitcoin or gold had I asked him the question at
• 1:01:22
  Speaker 1: the right time, And his answer was pretty simple. He
• 1:01:24
  Speaker 1: said if he was young, if he was below thirty,
• 1:01:27
  Speaker 1: he might have more of a think about bitcoin. But
• 1:01:30
  Speaker 1: we didn't really get into that, which is a shame
• 1:01:31
  Speaker 1: because I'd like to know why. However, his actual call
• 1:01:34
  Speaker 1: would be gold in a world, he says, with more
• 1:01:37
  Speaker 1: debt and less tangible asset to back it. I think
• 1:01:41
  Speaker 1: gold will fly when one cycle ends I hiking style
• 1:01:45
  Speaker 1: and another one starts golden commodities, So long gold for
• 1:01:48
  Speaker 1: the next ten years.
• 1:01:49
  Speaker 2: That makes sense, that's to us. I'm just wondering if
• 1:01:52
  Speaker 2: the reason't he thought that his younger self woul buy
• 1:01:54
  Speaker 2: bitcoin is because he thinks his younger self would be stupid.
• 1:01:57
  Speaker 1: I'm going to get a special hate mail email address
• 1:01:59
  Speaker 1: for you, John, I look forward to it. Thanks for
• 1:02:06
  Speaker 1: listening to this week's Maren Talks Money. We'll be back
• 1:02:09
  Speaker 1: next week. In the meantime. If you like our show,
• 1:02:11
  Speaker 1: rate review, and subscribe wherever you listen to your podcasts,
• 1:02:14
  Speaker 1: and please do talk about our podcast with your friends
• 1:02:16
  Speaker 1: as well. The more listeners the better. This episode was
• 1:02:19
  Speaker 1: hosted by me Maren Somerset Web. It was produced by Summersadi,
• 1:02:22
  Speaker 1: additional editing by Blake Maple's. A special thanks to Stein
• 1:02:25
  Speaker 1: Jacobsen and of course to John Stappack