Tracy and Joe Answer All Your Questions

0:00Markets move fast. Get the insights you need in 10 minutes with Barclays Brief, a podcast from Barclays Investment Bank. Each week, our experts analyse market themes, helping you anticipate what's next. Listen to Barclays Brief wherever you get your podcasts.

0:36and global events to economics and what's moving markets. I'm covering it all from London. And I'm in the EU's capital, Brussels. We have 3 ,000 journalists and analysts around the world to tell you what's happening, what it means and why it matters. It's more than just business headlines. From the price of your breakfast to global shifts in power, economics and money aren't just part of the story, they're often the driving force. So start your day with us on Bloomberg Daybreak Europe Edition for the news you need to know and the context to make sense of it. Find new episodes of Bloomberg Daybreak Europe Edition by 7 a.m.

1:10London time on Apple, Spotify or wherever you get your podcasts.

1:18Bloomberg Audio Studios. Podcasts. Radio. News.

1:33Hello and welcome to another episode of the All Thoughts Podcast. I'm Traci Allaway. And I'm Joe Weisenthal. Joe, it is the holiday season. I am very much looking forward to it. One reason I'm looking forward to it is because we always do an annual Ask Us Anything show. Yeah, you know, I think I liked it in the podcast. You know, it's really not about us. I mean, the show is about what we're interested in, but it really is about the perfect guests. But every once in a while, I suppose it's nice to sort of have the microphone turned in the other direction, so to speak. Yeah. The other thing I would say is we're already pretty accessible.

2:11There's a whole All Thoughts Discord that we're on. There's Twitter, obviously. There's instant messages on IB. And mostly we respond depending on how busy we are. So feel free to contact us there, too. But we did get some pretty interesting questions from a bunch of listeners. Yeah, and I like the fact that we can put, in many cases, listeners' voices on the air, bring back some of the old-time radio call-in shows, the likes of which I used to listen to when I was a young kid riding in the car with my dad. Call-in shows are Lindy. The call-in shows are definitely Lindy. All right, shall we start?

2:47Yeah, let's take a listen to some. John Lazaro, age 63, Berkeley, California. Sometimes, when you finish recording an episode, do you look at each other and say, this doesn't meet our standards and kill the episode? Or is it more like skiing? Once you commit to riding the chairlift, you commit to skiing down the mountain. Well, I can't ski. I'm the only Austrian in the world, possibly, who cannot ski. So we have killed episodes in the past. In fact, there's kind of a funny story where we did an episode, it really wasn't going very well. The guests seem very nervous and just sort of like, not at his top performance.

3:29And in the end, after we recorded, we told him, you know, we're just going to kill this episode. And he was actually really happy about that because he felt he hadn't done his best work either. And then the other thing I would say is, I actually think journalists should kill a lot more stories, we should be more selective. And if you think about the German word for reductor, reductor, it sounds a lot like redact, right? Which gives you, you know, some sense of what editors are supposed to be doing, which is taking away as opposed to adding. Yeah, it is very rare. We have, I mean, the number of episodes that we've fully recorded that we actually did not release, I think it's less than, you can count on one hand, right?

4:17It's not that many but there have been a few just for whatever reason the guest was not on their game or whatever it didn't work and uh i agree i agree with tracy i think we should do more in general i mean i think journalists as a whole should do more it's like just release the good stuff you know just release ones you're you're genuinely proud of i don't want to release anything anywhere when i can't say i'm really proud of this work and normally we are proud but occasionally it's like no what this is uh this is not awesome all right let's go on to the next one thanks joe Thanks, Tracy. I was really inspired by Joe's tweets on Moby Dick.

4:52So this question is for him. What did you read after Moby Dick? Thanks, guys. Thanks for listening. It's a very easy one because I was in such a mood to keep after reading Moby Dick. I didn't want to read anything besides Moby Dick. I sort of just thought about rereading it again, and I probably will sometime in the next year or two. But because I was in that mood, I read a book by the historian writer C.L.R. James, who wrote a book about Moby Dick. It was a book called Mariners, Renegades, and Castaways by C.L.R. James. And it basically made the argument that Herman Melville, with the Ahab character specifically, anticipated many of the pathologies of the 20th century, the rise of fascism, dictators, and so forth.

5:37All of the crises of sort of Western civilization that we experienced in the 20th century. Fantastic book, almost as good as Moby Dick itself. Also, I've been recommending two books to you. One of them is The Heart of the Sea, which is about the whale ship Essex, which is the ship that actually inspired Moby Dick. And then there's another one I'm reading just now called A Marriage at Sea. And it's about a couple who are out, you know, sailing around the world and their ship gets destroyed by a whale and they have to survive on like a little raft. I actually don't know if they survive yet. So I guess we'll find out.

6:15I promise I will read both of those in 2026. Both of them are excellent. I promise I'll read both. Let's hear the next question. Hi, gang. Long-time listener here. My name is Sturm. I'm 32, and I live in Puerto Rico. And I have a question for Joe. I know you're an efficient markets guy, but if EMH is true, how have portfolio managers accumulated such vast wealth?

6:41That's a really good question. I wonder about why the financial system overall exists. Why are people putting targets on prices and why are there pundits on TV and why is there financial TV and why is there trading and so forth? I still don't really know why the answer of why anyone has made any money. But my guess is that there are other services that people on finance provide other than high quality security selection. That whether it's like, okay, I don't really like know how to manage risk or whatever it is, or I'm anxious about the thought of investing, all kinds of things, I guess. You know, there probably are people who are able to obtain information that maybe counts as alpha.

7:24I don't know. I remain unsatisfied. I've asked this question myself. I don't fully know the answer. But my best guess intuitively is that within this world that we call finance, there are things that produce value other than sort of, you know, making good trades and so forth that maybe are harder to articulate and so forth. And thus, they are providing a valuable service on that front. But I agree. Counseling your customers. Yeah, counseling something. I don't know. But I mean, I would just add on to that, like, it seems just on the EMH stuff, it seems on On a simplistic level, if EMH was real, you would never get a bubble, right?

8:06This is what, yeah. And in fact, one of my favorite moments on the podcast was when we interviewed Eugene Fama, the father of the EMH idea. And I think I got him to say that like bubbles exist, right? Which I was surprised. Yeah. I know they really, they hate, like they really wrestle with it. Like this is their one thing. They hate this phenomenon. So they come up with all this stuff. But yeah, we will continue asking the question of why. Why do we exist? Why does financial media and coverage and pundits and all this stuff exist? We'll continue answering this question in 2026. Maybe we'll have an answer.

8:43Only the big questions. Why are we here? Why are we here? All right. Let's listen to the next question. Hi, I'm Max Niederman. I'm 19 and I live in San Francisco. Supposing that AI does end up being as transformative as people claim, where do you think the value that that creates will accrue? From their valuations and how people talk about it, at least in SF, it seems people expect the labs to capture a massive chunk of that value. On the other hand, the labs have never been profitable, and even then, hardware companies like NVIDIA and TSMC seem to trade at lower multiples despite being near monopolies with very good margins.

9:27So my question is this, when all things are sudden done, which parts of the supply chain will be commoditized and which will capture all the value? Yeah, I think that's a very fair question. And I think, you know, it's difficult to predict if tech at some point is going to produce the or invent the proverbial AI god, like this thing that solves all of our problems. I would be a little bit skeptical of that. It seems to me like it's going to be a productivity improvement kind of at the margin for now. So maybe you use it instead of Google search, you can use it to explain certain terms much more quickly.

10:09Some industries are probably going to use it to design new products. I know there's a lot of excitement around medicine. But where the value will accrue, I mean, some of the big tech companies are so expensive right now in the US. I keep describing this as the coffee pod theory of AI, which is some tech companies are choosing to basically produce the world's most expensive, sophisticated cappuccino machine. And they're saying that, you know, it produces the best coffee that you've ever had. And crucially, what they're doing is targeting a market for this machine, let's say it costs like$2 ,000.

10:53That's basically the entire world. And I'm not sure that approach works. And then, you know, some other companies are taking a very different strategy, and they're producing something that's relatively cheap and standardized, sort of like a coffee pod, coffee maker, and it's much cheaper. And again, targeting the total market of the world. And, you know, if you think about it that way, I kind of have a sense of where it's going. I really have no idea. You know, the one thing I'll say is, I think there is this view that, okay, AI can replace human labor, and therefore lots of workers are very vulnerable.

11:34And therefore, there is going to be this tremendous, like, it'll be this very, a force of inequality, so to speak, right? So it's going to be, there's going to be the model makers. And I think in this vision that you're asking about, these model makers, and they're going to make a fortune and the rest of us are going to have to get by on UBI or whatever, because the models have put us all out of work. And look, I think that's possible. The one thing I'll say, though, is that tech as a force for financial inequality, that's already been the story. We don't even need to talk about AI. With the existing tech giants that we've seen that have built over the last 15, 20 years out of San Francisco, we've already seen this incredible rush of sort of wealth and income, et cetera, to this fairly like small, you know, this one industry, this is very like, you know, very small, fairly small concentration of software engineers and executives and VCs and so forth.

12:30And as such, I do wonder, like, could it be that somehow it's like totally the opposite, that it goes in the other trajectory, and that really, it's sort of like a force for equality or something and that it ends up being a situation in which people were like capital itself is not as valuable as it used to be. I don't know. I just think we should possibly consider the idea that what people are predicting that will happen with AI is that what is literally just an extension of what we've already seen. And that to the extent that AI is something new, maybe that'll put us on a new trajectory. Thank you.

13:38or leading a business, the Barclays Brief podcast can help you make smarter decisions today. Stay sharp, stay briefed. Find Barclays Brief wherever you get your podcasts. This is Tom Keen inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter each and every business day. We bring you a recap of what happened overnight in Europe and Asia, the day's economic data and complete coverage of the US market open. We cover stocks, bonds, commodities, currencies, even crypto, all the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines.

14:19We do that with lengthy conversations with our expert guests, the smartest names in economics, finance investment, and international relations. We do all this live each and every weekday that bring you the best analysis in our daily podcast. Search for Bloomberg Surveillance on YouTube, Apple, Spotify, or anywhere else you listen. On the East Coast, listen at lunch, and on the West Coast, when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keen, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcasts. All right, let's take another question. Hi, Tracy and Joe.

15:02This is Jennifer, 30 calling from Seattle, long time, first time. This question is for Joe. Joe, what drew you to your interest in Chinese history, particularly its modern era? Have you ever considered going more back in time? I ask because I'm Chinese American with parents who've said very little about their lives during the Cultural Revolution and the 80s when the country started opening up. So I often learn through Joe's tweets and book recommendations. But I had also noticed in my last trip to China that the one historical figure cities pay the most homage to is not Mao or Deng Xiaoping, but actually Sun Yat-sen, who is the precursor to these leaders.

15:40Thanks. Love the show as always. So obviously we do a lot of contemporary China episodes and it sort of seemed like, you know, I should probably understand a little bit more about the history. I started with the ancient stuff. I was like, oh, I'm just going to go back and I'm going to read about the old dynasties and then I'll get to the present. And I sort of like, I found it a little bit hard. It wasn't grabbing my attention, the ancient stuff. But then I remembered a couple of years ago, we did an episode with Adam Posen at the Peterson Institute a couple of years ago at Jackson Hall. And he had just sort of mentioned offhand that he had read Ezra Vogel's biography of Don Chopin.

16:14And I was like, oh, maybe I'll just start there. That seems like more recent and tractable. And I can sort of slot that into my head into something. And I read that and I found it very, compelling, as Adam suggested. And I think that sort of set off like I think reading 20th century Chinese history helps me to some extent understand the present day. I've never read a Sun Yat-sen biography, but I'm very interested in one of the rare figures who is sort of revered in both Taiwan and mainland. And so therefore, someone who is an inspiration to both the nationalists and the communist, which is kind of weird.

16:51And he was like sort of a for, you know, a an early pioneer of land reform and so forth. So I think maybe that'll be another thing I aim to read in 2026, a good Sun Yat-sen biography. I really like the older Chinese history. I read a really good book. I can't remember the title now, but it was all about the Chinese bureaucracy and government system, how it used to be. And, you know, one of one of the most rigorous systems in the world, arguably you had to take this insane test to get the position. And I remember I also did a bunch of research around the sort of late 1800s, early 1900s, the fall of the imperial family and what it means for debt markets.

17:35That was a really fun story. Yeah, I should go back and read the ancient stuff as well. I'm going to add that to the 2026 list. Okay, let's take another question. Hi, Joe and Tracy. My name is Daniel Bestoff. I'm 26 years old and currently based in New York, where I'm doing my master's at Colombian Financial Economics. I'm a huge fan of the pod, and Spotify told me in the last year I was in the top half percent of listeners, and maybe now a first-time caller as well. My question is this. You have such a wide range of guests with very different backgrounds, and you cover an enormous amount of information.

18:10How much of that are you able to retain and naturally call back in everyday conversations or when you do follow-up episodes? And how much do you rely on note-taking or revisiting past episodes to connect your ideas over time? This is a really good question. This is a sort of journalistic process question. By the way, thank you for being in the top, top percentage of OddLots listeners. We appreciate that. Let's get coffee sometime. But going back to the question, you know, this is obvious, but it kind of depends on the guest. And if the guest says something memorable or something that you really think is insightful, I think we do retain some of that information.

18:52I used to retain a lot more when we were editing our own transcripts and publishing them. I really value transcripts, but it was just so much work and took forever. So we stopped doing it. We're hoping to come up with some sort of solution soon. And the biggest compliment I can pay a guest is saying that, like, I'm going to go back and read the transcript because there's so much knowledge there, so much information. I just have to absorb all of it. It was funny. I was at dinner the other night with someone and I said to them, have you ever actually learned anything from listening to a podcast?

19:29Because I do sometimes wonder if I ever remember anything. No, that's not totally true. I do. But I also sometimes wonder, setting aside podcasts and recall specific facts. I also have the same thing with books. You know, we were just talking about that Deng Xiaoping biography. And if someone was like, oh, Joe, you just spent three weeks of your life reading a biography of Deng Xiaoping. What did you learn? And I'd be like, he sort of opened up. And for a while he was sent down to work on a tractor factory. And then he opened up. And I was like, oh, did I really need to spend three weeks of my life to be able to recall three or four basic facts?

20:07I suppose that there are things that I don't know that I remember in my deep storage part of my memory that would come out in a conversation. But I do – going back to questions of like why are we all here and so forth, I do sometimes have these thoughts of like how much do we really learn and internalize and how much is it just fun to have these conversations? Sometimes we surprise ourselves. Yeah, right. Like sometimes we come up with some random fact that's kind of interesting that we learned from somewhere. Just on the note taking part of the question, we generally don't take notes in the interview.

20:44We might jot down like a word or two just to remember to come back and ask a follow up question. But yeah, mostly it's it's a genuine conversation between three people and we try to keep it as natural as possible. Hey, Joe and Tracy, AJ Toss here. I'm 37 years old and I'm from Lafayette, Louisiana. Go Cajuns. I have a question for you about Bitcoin. You guys have spoken about how the narrative around Bitcoin changes every cycle. And so I'd actually like to ask you to make a prediction whether you think there will be another cycle for Bitcoin where it way outperforms everything else. And assuming that it does, what would the narrative be this time?

21:30Thanks, guys. That is a really good question. So the narrative theory of Bitcoin is this idea that because Bitcoin is essentially nothing, it is able to transform itself into anything. So we've seen it go through these various cycles of transformation, reinventing itself. You know, in the beginning, it was supposed to be just a digital payment system. And there's the famous incident of the guy that bought a pizza and lost a lot of money that he otherwise would have gained. And then it kind of, you know, it turned into an inflation hedge. More recently, it's turned into a Trump vehicle. I actually had it.

22:14I had an idea for a narrative that comes next, but I'm blanking out on it. Totally. I feel really bad. You'll tweet it. Yeah, I'll tweet it. It was like two days ago. Oh, man. And I had this idea. And sorry, I'm very tired. It'll come back to you. It's the end of a busy season. It's been a busy season, busy year. Look, I have no, you know, I was like, oh, now I'm going to give the official odd lots for Bitcoin price target for 2026. No, I really have no idea. I don't have any idea if it'll outperform again. You know, of course, it has been pronounced dead several times, many times over the years.

22:50So perhaps that's always the reason to discount the idea of, OK, this time it's dead. That being said, you know, look, like the I thought one of the most compelling arguments that had of the various narratives over time, I thought one of the most compelling ones had been that it would be sort of this, you know, post sovereign money and therefore kind of like a digital gold safe haven. It has not been behaving like one in 2025. I mean, this is one of the most volatile years on memory from like a deglobalization and geopolitical standpoint. If you think there'd be one year where it's like, okay, people want some sort of money that is disconnected from governments, maybe this would be the year.

23:32Maybe they do, but they're choosing for gold. They're choosing the actual safe haven. Bitcoin, meanwhile, has underperformed US treasuries. So the U.S. Treasury is yet another safe haven that is outperforming Bitcoin in 2025. So I really don't know, but I do think that the poor performance in 2025 should be something of a concern. Again, people have always said, oh, it's a tech stock hedge. Well, tech stocks have had or tech stock proxy. Tech stocks have done great this year. So it hasn't even satisfied that requirement. And then the last thing I'll say is that there is a lot of, I think, legitimate enthusiasm about crypto, particularly in the realm of stable coins, getting back to maybe the original ideas Tracy mentioned of a payments platform.

24:17But all of that is happening on other chains besides Bitcoin. And so even if crypto becomes more of a thing in the financial system, it's not obvious, but it's possible, but it's certainly not obvious that Bitcoin would see any benefit from it. I do think, though, we shouldn't underestimate Bitcoin's ability to reinvent itself. And this actually took me a long time to realize. And, you know, you mentioned the obituaries for crypto. I wrote some of those, like, I think in 2012, I wrote one. Yeah, we've all learned our lesson. Mea culpa on that. We'll see what happens.

25:07Bloomberg Invest returns to New York on March 3rd and 4th, where the sharpest voices across banking, asset management, and private capital will discuss the forces reshaping finance. Powered by Bloomberg's Global Newsroom and data from the Bloomberg Terminal, this flagship summit will cover everything from AI-driven disruption and central bank policy shifts to the emerging risks and opportunities in private credit. Join the conversation and register today at bloomberglive.com slash invest. All right, let's take another question. Hello, Joe and Tracy. This is Cynthia from Vancouver, Canada. What is something the market seems really confident about that you think deserves more questioning or more nuanced discussion?

25:51You know, first of all, thanks, Cynthia, for calling in. The first thing that comes to my mind is I have been – I wrote about this recently in the Odd Lots newsletter. I am kind of surprised about how well-anchored market-based expectations for inflation have been because there is, I think, pretty legitimate – there's two things going on. One is the Fed hasn't missed its inflation target for years. And so there's perhaps reasons to think that just already that the Fed hasn't been as serious, about 2%, as it had been before. But then also, I do think there are good reasons to think that in the future, the Fed will not have the same capacity to target stable prices the way it used to due to politicization, due to the general sort of like populist trend in politics, which is not something distinct to the Trump administration.