00:00Markets feeling the push and pull of a lot of different factors.
00:03Ken Griffin's certainly concerned about how investors are seemingly viewing gold as a safer asset than the U.S. dollar.
00:08Is this a concern you share?
00:10You know, not fully, because I think if you look at the dollar in, you know,
00:15there's always sort of a stock versus a flow that I think you have to approach for any asset class.
00:19I would, you know, keep the dollar and forex in that where, you know, coming into this year,
00:23positioning in U.S. dollars and that currency relative to most of the world was quite strong.
00:29So some of it, I think, is sort of a hedge against some of the geopolitical risk premium that is now put on the United States,
00:35but also maybe just taking a little bit of a step away from everything U.S.
00:40And we can see that reflected in equity markets.
00:42You can see that reflected in some reflected in some fixed income markets.
00:45I don't think it's this, you know, Armageddon like shift away from the dollar.
00:48But I do think that there is something to be said about some of the trends maybe that are being initiated or put into place now,
00:55whether it's questions around things like Fed independence or it's questions around, you know,
01:00corporate earnings in the U.S. and how strong they're going to be for the bulk of the U.S.,
01:05not just a slim number of companies in the tech space or anything that's being touched by AI.
01:09So I do think that it's valid.
01:10But I also think that the correction that we've seen in the dollar, I wouldn't extrapolate it into it's going to be this sort of epic turnaround in the currency.
01:18I think there needs to be a lot more that happens until that becomes the case.
01:21What do you make, though, of the run-up in gold, which for, you know, go back a few years, you couldn't touch it for a long time and nobody wanted to touch it.
01:28But yet it's been pretty substantial this year.
01:30It's always interesting because, you know, gold as this asset class, it's hard to compare it to a lot of things because, you know, it doesn't earn anything.
01:37It's really just the price moves that's going to, you know, dictate everything.
01:40So it's really just an indicator of sentiment is how we look at it.
01:42So I like to use it as a sentiment gauge.
01:44But it's interesting, too, because it's not like it's happened, the surge that we've seen this year, it hasn't happened in conjunction with an overly defensive trade in the U.S. equity market.
01:55If you look at the traditional defensives.
01:57How do you explain that?
01:58Exactly.
01:59So I do think that it could be currency related where there is a little bit of a fear, like Ken was mentioning, about the dollar maybe losing some of that status as its haven.
02:09But there's so much data to back up that that's not the case.
02:12The BIS just released its triennial survey of Forex and looking at, you know, the share that the dollar has in the world of, you know, everything from foreign transactions, cross-border transactions, all the way to central bank holdings and, you know, global debt, global equity.
02:26The dollar is still, you know, top dog.
02:28So I think that that's where the stock versus flow comes into it and where you could see something like gold, you know, from the sentiment perspective, clearly it's getting caught up in such a strong momentum trade.
02:36And momentum is a powerful factor, very powerful in equity markets, very powerful in other asset classes.
02:40One last question on gold before we move to another big momentum trade this year.
02:45Are you suggesting investors buy gold in some form or another?
02:49You know, we don't have formal calls on gold itself.
02:52I think from a...
02:53You can make one right now if you want.
02:55From the average investor's perspective, and it's tough because we've got millions of clients.
02:58So to give some sort of blanket recommendation for a client is always a hard thing to do, especially for us.
03:03But we're talking about metals and mining and different things more broadly than we have in a long time.
03:08Yeah, for sure.
03:09I think that certainly diversification in other asset classes, and I think this also speaks to...
03:14To me, I back this up several years where you look at something like fixed income has become now a very serious asset class for a lot of people who are looking for yield.
03:22Who, if you've been in the market for a long time, you know, 20 plus years, there was a long period where you couldn't get any yield.
03:29For a younger investor who has just entered markets in the past several years, you're stepping into an environment where there are so many more options and so many more opportunities.
03:36I think that something like gold fits into that in terms of what is your set of options that exists.
03:42So for a younger investor, I think it's, you know, somebody who's newer to this, I think it's a great, you know, world to look at where you can see that there are all these options.
03:49But even for somebody who's been in markets for a long time, investing for a while, you're now starting to see that there are other things that work, not just a U.S. equity story, for example.
03:56You know what really works?
03:57Is it AI, Carol?
03:58Maybe.
03:59Well, it's worked so far, and that's the question and really where we want to go to with Kevin.
04:03I saw you post earlier today this graphic from the Financial Times.
04:06He was actually like, Carol, come over and look at this.
04:09I said, come look at this, and then I sent it to the whole team, and then I retweeted it.
04:13Not that I know.
04:13I retweeted it.
04:14Here we are.
04:14I said, we got to get Kevin on the program.
04:16But it's basically, it's this, you know, if you were to take a whiteboard, and OpenAI is at the center of the whiteboard, you connect every company, investment, relationship with OpenAI.
04:26And the list is long.
04:28Microsoft, Oracle, NVIDIA, Core, we've been, Thropic, Meta, Amazon, Google, Broadcom, and more.
04:32And it talks about the interconnected relationships, investing, customer, partner.
04:37Some of these are multiple relationships.
04:39We used the term yesterday a lot, circular financing, and sort of concerns about what happened in the 90s with the dot-com boom, then bust.
04:48Is this time different?
04:50Yeah, it's fine.
04:50You know, someone sent the meme to me.
04:52It's the power cord plugged into itself, you know, powering itself.
04:56Don't do that, by the way.
04:56Do not do that.
04:57Not a good thing.
04:58But, you know, but the whole question about that picture is, well, where is the power coming from, and if it's just plugged into itself.
05:04We did a version of this for those who are watching on radio.
05:06Like, just OpenAI kind of at the center of the world when it comes to the money flows around AI.
05:11I do, I mean, and I know we talked a little bit about this sort of circular vendor financing the last time I was with you guys, but I think there are, you do need to, you know, anytime you bring in the discussion of the tech bubble in the late 90s and then the early 2000s after, I think we always need to keep in mind that no two cycles are the same.
05:27No two expansions, no two recessions.
05:29You know, the tech recession was so unique in nature where that actual economic recession, the data, was not that bad during the recession.
05:37The economy still contracted, but if you look at the drawdown in GDP, it wasn't that bad.
05:41I like to think of it as a recession in the stock market because you had, you know, epic declines in the NASDAQ, the NASDAQ 100, the S&P.
05:49So do you, I think that there's a risk to it now?
05:52Well, yeah, I mean, you've got the top 10 stocks in the S&P 500 that are 41% of the index.
05:56So by definition and mathematically, you're putting more weight and more sway in those companies if they do move significantly.
06:04An example, like today with some of the tech stocks that have started to move, you know, as we've gone throughout the session.
06:09So that in and of itself is a risk from a concentration standpoint.
06:12What we've been telling clients is if you're not comfortable with that volatility, both to the upside and the downside, then figure there are ways to distance yourself from that AI epicenter, getting away from things that are power related, getting away from things that are tech related.
06:25But that's not necessarily something that anybody can time.
06:28So, you know, being invested throughout the tech sector over multiple decades has really paid off.
06:33But it comes with a lot of, you know, dips in that roller coaster along the way.
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