00:00Jan, we are asking everybody about the risks, and that's where we want to start with you.
00:04We're going to get to your hat, though, which says HODL, if you're just listening to us
00:08on Bloomberg Radio, and we're going to talk crypto.
00:12Risks out there for the market right now, what are they?
00:16I think our economy is actually concentrated in two areas, and one relates to this conference.
00:23One is obviously AI, where the tech industry is providing so much of the earnings of the
00:29overall market and the earnings growth, right, even despite the size, which has all of us
00:34shaking our heads.
00:36So tech, that's kind of obvious and well-discussed.
00:39Our economy, people talk about K-shape, and they usually care about the leg that's going
00:43down.
00:44We are such a rich country.
00:47I think there's a reflexology, a little bit, that if we have a big downturn in the market,
00:53that will pull the economy down.
00:54I mean, because the wealthy consumers are the ones that drive a lot of economic spending.
01:00And so that's the second risk, Tim, that I would see in the market.
01:05Is that why we haven't seen, Carol brought this point up earlier, and I thought it was
01:08really good.
01:09Given the challenges that we're seeing right now, higher yields, higher energy prices,
01:15concerns about a slowing economy, yet equity markets are through only 3% off their highs.
01:20Are we seeing that because of the people who do have the money in this country continuing
01:26to spend with gas prices higher, with energy prices higher?
01:31Is that why we're seeing the resilience?
01:32Yeah.
01:33Well, you know I like to focus on the big 10-year macro trends, right?
01:36And post-COVID, we had, if you look at monetary policy and fiscal policy, I call it two feet
01:42on the gas, both on monetary, right, zero interest rates, throwing money at everything, and two
01:48feet on the gas for fiscal policy, government spending.
01:51I think we're neutral-ish.
01:53I mean, everyone has an opinion on the Fed, but I think we're neutral-ish on monetary policy.
01:57I think we still have a foot on the gas when it comes to government spending, right?
02:01And that relates to debt and deficits.
02:04So I think, you know, that's why the economy is at full employment.
02:07Like, we're kind of in good shape.
02:09But you've been worried about the budget deficit for a long, long time.
02:13And I remember earlier in my career, every conversation, we brought it up, and then it
02:17just went away, and we were okay not talking about it.
02:21Now it's kind of front and center, and I feel like increasingly more and more people are
02:24talking about this is a major risk.
02:25How do you see it?
02:27I'm going to disappoint you, Carol.
02:29You're not worried?
02:30I'm one of the biggest bond bears.
02:32I know.
02:32I talk about it all the time.
02:34Yeah.
02:35But we know that timing in the markets is super hard.
02:37And so what I've been asking people at this conference is, when do you buy the 10-year?
02:42At 5%, 5.5%, 6%?
02:44At some point, and when people are so negative about bonds, the contrarian in me makes me
02:51want to go buy bonds.
02:52So, you know, that's, I'm a little bit more neutral.
02:55And I think, listen, at these yields, people were talking about, you know, muni yields on
03:00the long end of duration of high single digits.
03:03That's going to compete against equities and other parts of the portfolio.
03:06So, you know, probably long-term, listen, long-term bearish, long-term bull on gold,
03:13right?
03:1410 years out, it's the new global currency.
03:16But short-term, I kind of react against all the bearishness.
03:20Where do you think gold's then headed?
03:22We saw a couple of good strong years, last two years.
03:24I think it was up more than 50% last year.
03:26This year, it's a little bit not as, you know, investors seem so eager to go to move
03:31into gold.
03:32But where do you see it going?
03:33Well, Bitcoin and gold hit all-time highs last year.
03:35And I think they have effectively bottomed and are heading towards all-time highs again.
03:40Now, it may be a slow move.
03:42Yeah.
03:42Because there's a lot of consolidation.
03:43If you look at a five-year chart of gold, it looks like it just went up, you know, the
03:47Himalayan mountains.
03:48So it's got to reset, even though I think it's got that long-term bid.
03:52So even if it takes another year of going sideways.
03:55The other thing is, I tell people, gold is not driven by U.S. inflation.
04:00We're not a U.S.
04:01It doesn't dominate the world anymore.
04:03We're a global world.
04:04And global growth in Asia drives a lot of demand for gold.
04:09And this war is really bad for Asian growth, right?
04:13India in particular.
04:14So that's why it's not surprising that it's sort of struggling a little bit here.
04:18I want to go back to something that you said earlier.
04:21And we'll get back to more Bitcoin and gold in a minute.
04:23But you mentioned the deficit.
04:26And earlier today, Treasury Secretary Scott Besson was on Capitol Hill.
04:30He said that $5,000 checks will not affect the deficit.
04:34There are ways to do this without affecting the deficit.
04:36Is he right?
04:37You know, President Trump and Scott Besson are risk takers.
04:41And I think they're taking a lot of risks here.
04:44They're toying with the market.
04:45I mean, that's a flat-out silly statement.
04:47And he was there when Trump made the comment in Texas.
04:50And that really kind of – it's really undermining confidence and risking confidence.
04:56Because confidence is everything.
04:57That's what prices long-term interest rates.
05:00So, you know, I think that's not to be taken at face value.
05:04It's going to add to the deficit.
05:06Of course it is.
05:07Of course it is.
05:08And, look, I think at the end of the day, Americans know this when I speak to people at conferences.
05:15Welcome to – in the next five years, we're getting higher taxes and lower government spending.
05:19We just can't.
05:20We can't.
05:21It's not sustainable any other way is what you're saying.
05:23I mean, a Social Security loan, right, is going to run out of money in 32.
05:28So –
05:28I'm already paying higher taxes.
05:30Yeah.
05:30I'm just saying.
05:30You're not the only one.
05:31Yeah, I know.
05:32Listen, I'll share it with everybody.
05:34By the way, if you're estimating payments, today is September 15th.
05:36Just to remind everybody.
05:37Thanks, everybody.
05:37Thanks.
05:38You're welcome.
05:39It's also my anniversary.
05:40I'm going to think about that.
05:42Do you want to talk about the hat?
05:43I want to talk about the hat.
05:45HODL is what the hat says.
05:47You're HODLing.
05:47Yeah.
05:48Listen, VanEck's long-term macro view, the number one thing we think about is investors
05:53in alignment with investors.
05:55And so in our quarterly outlooks, we're very straightforward.
05:58We can be bullish or bearish.
05:59I was bearish Bitcoin coming into this year because of the four-year halving cycle.
06:03I said time to buy in Q2.
06:05And that's why I think – I'm wearing my hat again.
06:09HODL is our Bitcoin ETF.
06:10We were the first company to file for a Bitcoin ETF in 2017, long-term bullish.
06:16And, you know, even BlackRock is putting it into portfolios.
06:19So I don't think it's as crazy.
06:21It's a forgotten asset a little bit now, right?
06:24Really?
06:24Because the crypto world has changed so much.
06:26We don't talk about it as much.
06:27A lot of crypto bros moved on.
06:29What did they move on to?
06:30Data centers.
06:31No, sorry.
06:32Yeah, well, no, the PMs, like at VanEck, we moved into data centers, right?
06:36The Bitcoin miners shifted heavily into compute.
06:39But, no, I think there were a bunch of shiny objects, you know, Zcash.
06:44And people hate when I talk about stuff like that.
06:46There's concerns about quantum breaking Bitcoin, just like with other technologies.
06:50Look at the two recent examples of, let's say, vulnerabilities that we've seen.
06:56Yeah, yeah.
06:57I mean, those are more AI-related.
06:58But I think – anyway, so I think the risks are all in the Bitcoin.
07:01It started to rally, and that's looking juicy here to me.
07:04You know, we talk about AI a lot, and it's being talked a lot about at this conference.
07:08What do you think of where we are in that AI cycle specifically?
07:11I want to talk a little bit more about that.
07:12You guys sponsor the SMH.
07:13It's the biggest semiconductor ETF.
07:16It's up 50% year to date.
07:18Yeah.
07:19I have two comments.
07:20First of all, you know, as an asset manager, I don't know what people think we do,
07:24but that 26-year-old ruined my weekend.
07:26I had so many talks and reading blogs and everything going on social media.
07:30Like, you know, is AI going to kill the world?
07:32Because, you know, we're very – we have a lot of assets in SMH.
07:36We're a big NVIDIA shareholder, obviously.
07:38So, you know, what's the truth there?
07:40At the end of the day, I think that kind of fear-mongering is wrong.
07:45Why?
07:45And it's dangerous.
07:46Why is it wrong?
07:47I think – look, it's really weird.
07:49Like what Dario said, right, the CEO of Anthropica.
07:52Dario Amadei, yeah.
07:53Right, right.
07:53It was very responsible in his blog.
07:56And they're basically saying, for national security reasons, we can't hold back AI, right?
08:01There are wars going on in the Mideast.
08:03And neither China or the U.S. are going to hold back AI development.
08:06So it's almost silly to start, but any responsible company needs to have places, you know, protections in place.
08:13And so visibility, third-party monitors, Elon, you know, said, well, why don't we have our competitors act as a
08:21kind of compliance check,
08:23which I think is – the industry is having a healthy dialogue.
08:25And what Dario said is very responsible.
08:28I don't think it interferes with our IPO.
08:30So we're still overweight, you know, semis in the model portfolios.
08:33So just talk and not action, ultimately?
08:35I think that doomerism is that element where you just have to really understand, is Anthropic being a good corporate
08:42citizen?
08:43And, of course, they were on stage here.
08:44They're trying to partner with industry.
08:46It's not in their self-interest, Carol.
08:48Yeah.
08:49Right?
08:49To have one of these models go rogue, even in a minor way.
08:54That's true.
08:55Because it would throw cold water extremely on the entire industry, right?
08:58Yeah.
08:58I would say the last thing on AI –
09:00Just quickly.
09:00Ten seconds.
09:01Very quickly.
09:02NVIDIA forward earnings are drifting slowly lower.
09:05So I think the air is slowly coming out of the AI trade.
09:08That's my one indicator.
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