Global Markets in Transition ft. Paul Hodges

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1:29Thank you so much.

1:40Welcome back to Real Vision. I'm Ash Bennington. Today, we're joined by Paul Hodges, Chairman of New Normal Consulting. Paul, welcome back to the show. Thank you, Ash. Great to be back. Well, it's great to have you here, Paul. I'm excited to talk about all the issues that I've been reading about in your reports, which I should say are available on Real Vision Marketplace. Paul, this is obviously a very interesting time in macroeconomics as well as politics. I'm excited to talk to you today about turning points, demography, as well as some central banking issues. Paul, big picture, 50 ,000-foot overview, where do you think we are right now?

2:18I think we are, at the moment, we've got, I know, a number of loyal viewers over the years who have been you know more or less interested in what we've been saying about demographics as well as the uh the general picture of what's what's going on what to buy what not to buy and so on and uh they've been very patient in that what we've been saying is these demographic changes are massive they will have a big moment but it's not quite yet it's the building right so So the important thing about today, Ash, is that I actually want to say, hang out there and say, this is when, this is the moment now that these demographic changes are really going to hit home.

3:01All right. So let's talk a little bit about that. Frame up the question of demography. How have you been looking at this issue? Well, we've been working on it for about 13 or 14 years. You'll remember in the early days, we got some kudos for forecasting the subprime crisis, even though most people told us we didn't know what we were talking about. It turned out surprisingly that we did. And as a result of that, we got invited to write a book. And we went into this question of the baby boomers. And the baby Boomers is a very simple story, really, that the Baby Boomers, I know in the States one says 1946 to 1964, across the Western world it's actually a bit broader, 1946 to 1970.

3:50And the important thing about the Baby Boomers is that they were the largest and the wealthiest generation in history. And there are two things that one needs to know about them. One is that they were a large generation and that they changed, therefore, everything. The second is that they have managed to get another 15 years of life expectancy. I know RFK won't like this, but when I say due to vaccines and so on, polio vaccines in particular, but all sorts of medical advances and, of course, better lifestyles, as we understood that. So these people are not now dying at pension age. you know they've always been around always been people living to 55 or 60 or 65 and so on but now life expectancy is 80.

4:42and if you look at the history of people spending patterns which is not about central banks or lending or anything else it's just how do people live up to 25 they go to college they're doing apprenticeships and so on they're basically living on their parents money and they may have a bit of their money, they may start working a bit early etc. 35 to 54 people like yourself, they are wealth creators. You're moving up in your career, you may be settling down, you may be having children and you're buying stuff for the first time. I moved out to the States, to Houston, Texas, a point where we had a one-year-old and we had another baby, a Texan I hate to say, but there you go, we have a Texan in the family and And we came out with one container load of furniture and we went back with two.

5:33Now, that's because we were in that wealth creator and we needed more stuff. It didn't really matter. In the UK, interest rates went to 15%. It didn't matter. The kids had grown up. They needed more clothes. We needed a bigger this and bigger that and so on. So you were on it. And what that really was, was if you think about my 1946 to 1970 definition, and you think about this 25 to 54 age bracket, and you can look it up on the Bureau of Labour Studies and their population, this is all their data, I'm not manipulating it at all. What you see is that the average baby boomer moved into the wealth creator generation a bit earlier, but in 1983.

6:15But by 1991, I think it was, all of the boomers, by 93, all of the boomers were in that wealth creator age. Now, central banks and Greenspan took credit for this oh i'm really clever i'm you know so on and the maestro but it was almost impossible to stop it because you've got all of us moving forward like this and we have to have this stuff okay we've got a bit of extra cash as well because things are going well but at that point we were not only creating demand but we were also creating supply and so the inflation was coming down it was a perfect world have you ever wanted to trade bitcoin but haven't dared try With Plus500 Futures, you can trade crypto without the hassle of opening a wallet.

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8:35Not sure if you're ready? Not a problem. Plus 500 gives you an unlimited risk-free demo account with charts and analytics tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit us.plus500.com to learn more. Trading and futures involves the risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. In 1999, Bill Clinton, remember Bill Clinton, actually did an announcement that the U.S. had paid off the budget deficit. and he said now what we need to do is to make sure that social security is fully funded because he actually did understand that the next stage was what we might call the perennials myself now the perennials are lovely people really nice people as you know ash and as we found when we went vip club and so on in mallorca in the summer but the important fact about us is we are a replacement society.

9:38So we didn't want to come, we didn't want to stay in the UK after Brexit, we didn't think that was going to be great, so we moved out to Portugal. And when we arrived, my wife said to me, oh I think we need a new sofa. And we had one of those husband and wife discussions for some time and eventually of course we bought the sofa. But the important thing is it was a replacement sofa, We didn't have to have it because suddenly we needed a sofa. And the point about the perennials, these over 55s, is that they are now the main source of population growth in the world, in the US, in the West, in China.

10:17so in other words when we think about the world population expanding which it is we normally think about it being as babies yes there are still babies being born of course but the main source of population growth is the perennials these aging boomers and the crucial thing is that from next year and that's why it's a when ash from next year all of the baby boomers will be in that perennials group so there is no chance of growth and instead what you have is this building debt that the central banks we all know you know paying a trillion a year in in the states now on interest costs and so on and if you look at what's happened in the markets you know since the Fed started cutting rates in September.

11:11Rates have gone down, policy rates have gone down three quarters of a percent. Actual rates in market rates, 10-year rates, which everything in the world prices off, 10-year rate has gone up about 0.85%. So one's gone down three quarters, one's gone up 0.85. And that is telling you, I think, that something quite dramatic is now happening in the markets. Explain that divergence in rates that you just described briefly. way well we've talked a bit in the past about it whether you're concerned as a lender with return on capital or return of capital up till now we've tended to sort of you know being you know lenders have tended to say oh i'll get a chase yield i'll go to munis i'll go to you know whatever get tax breaks and so on what we're seeing now i think and of course it may reverse a bit but the trend i think is now is now starting to become established is lenders are saying and this was before Trump so we can't blame Trump uh for this lenders are starting to say well hang on a moment U.S.

12:18interest costs are now at a level of a bit more than defense costs is this sustainable will if I lend to the states will I get my money back now that's an interesting question and as we know the states has defaulted in the past so it's not you know we can all say oh but you know needs must it's a question and so that's my my basic explanation that there are somewhere and also I would say secondly is that we have seen an awful lot of debt pumped up on our calculations for example in china 50 trillion dollars in the western world 25 trillion dollars uh right around around the the main the main economies uh and and so the question for those countries that's the uk switzerland japan or all these canada and so on is they've got this debt they've also got this influx of perennials so they're not now able to grow the economy in the way they were, how are they going to repay this debt?

13:29Hi, Raoul here. Listen, I think we've got until 2030 before the economic singularity arrives. Now, it might not be the exact date, but it's around then. So we have about six years to figure out how to unfuck our future. I've put together a report to help you called Prepare for 2030. It's going to help you take the first steps in that journey to make sure you're secure past 2030. So just click on the links below and start your journey now. Paul, I first became familiar with your work, I believe, in 2017, maybe 2018. And you're such an innovative thinker in the way that you look at global markets and the way that you look at macroeconomics.

14:09Of course, your work on chemicals is a forecasting mechanism, incredibly interesting. But this is a big shift for people to get their heads around, to think about these things from a demographic perspective, as well as the central banking perspective which we touched on here. I think many people can probably hear your work echoed in Raoul's thinking. I know you've been influential on him in terms of the way that he sees these demographic issues. So let me ask you this, Paul, what happens next? Where are we right now? You're saying essentially you have population growth for the first time coming toward the later half of people's years where they're not going to be as economically productive.

14:48People are retiring. This means transfer payments from people who are currently working in the labor markets to pensioners, retirees. What does that do to the broader macroeconomic landscape, and how might it affect markets going forward? Well, it's not the end of the world. It's easy to try and dismiss what I'm saying. It's always very doom and gloom, isn't it? I'm not saying that at all. what I'm actually saying is look this is a really significant probably the most major change in market dynamics that I've seen in my life and change is uncomfortable I understand that none of us like change we'd like everything to go on but change also creates opportunities and what it means I think and you can see early signs of there were actually quite developed signs in some areas of what we're talking about is we're moving away from products because frankly I've got all the stuff that I need I don't want anymore my wife says look why don't we get rid of some of this stuff you know isn't there anybody who'd like it and so on uh and at the same time we want services now I was talking to uh someone in Japan uh this morning and Japanese car companies we follow the car market the auto market very closely in uh 2020 uh Japan was Tokyo was meant to host the Olympics and Japanese car companies at that point were moving into self-driving cars.

16:18Now if you have the oldest population in the world with a median age of about 46, actually then self-driving cars becomes rather a good idea and unfortunately Toyota and Honda decided not to go forward. They decided they were going to stick with hybrids and so on instead but But you can see that what's happening with Waymo and with Cruise in the States is taking you down the path. And the reason for that, let me just sort of explain for a second, why are self-driving cars important? Well, if you're getting old and if you're living in a suburb and if your eyesight is going and you realise you didn't see that child when she ran out into the road and it was quite lucky that you missed her.

17:03You would like a self-driving car to be there. and you know taxis are all very well but they're not always reliable they're not always if you want to go somewhere now you may or may not get it depending but if you've got uber or lyft or bolt or one of those and they've got vast amounts of travel data stored on their computers they know that there's a demand to go from x to z at nine o 'clock in the morning they know there's a demand from go from z to a and so on and so forth and so they can position the self-driving cars and I think they're going to make a lot of money at it you know I think the market therefore for for autos is not going to be around selling more cars you know if you look back actually car sales auto sales in the states never would be going down for quite some time and there was a bit of recovery after COVID but it petered out as we write in this month's report um but what you are going to see I think is enormous interest I mean Waymo are doing a million rides a week now but And it's really, really starting to take up a million in the context of 325 million or something.

18:10Americans is not vast, I first say. But it's the start of an exponential curve. And these are the sort of things. I just used that as one example. There's probably 100 that we could come up with if we were having a discussion. Paul, let me throw this out here. And I know it's a little bit anecdotal, but it's something that I've observed in my life. These two trends in terms of products here, saying that the demand for products seems to be shrinking in a certain sense. I've noticed two things. The first is a pretty dramatic improvement in quality. If you have a Toyota Camry and it's got 25 ,000 miles on it, there's probably no need to replace it.

18:44And the second is it seems in some products to be a bit of a slowdown in innovation. This is fresh in my mind. I'm a big fan of Apple products. I was looking at the new iPhone 16 Pro Max yesterday online reviewing the specs. And I thought, well, this pretty much does the exact same thing that my iPhone 15 Pro Max does. Do I really need to upgrade this? Yeah. We made the same decision. But talk a little bit about that. In terms of this sort of slowing or decelerating demand for products, do we see a shift more towards services? How does that infect labor markets and the economy more broadly, in your view?

19:26We've obviously reached the same decision on the replacement phone that we were going to get. and I did get it because it was where my old iPhone 11 was wearing out so the battery was going and so on and so forth so I could have got a new but it was interesting that I don't know what it's like with with you Ash but I could get a I could get a new 15 for almost the price of a new battery for the 11 so you know I decided to go for progress what I think that what you're seeing here we've always said that sustainability which is an important factor in net zero and climate change and so on sustainability is about affordability and if you put those two thoughts together and you think about people retiring and they move therefore onto pensions and yes they may have some stocks and they may have you know other other sources of income and so on but they're not earning anymore and so having something that lasts longer is actually quite important to them and having the latest thing which was what it was like when they were 20 or 30 years younger isn't so important i mean i fall yeah i'm maybe transposing my own person when when cell phones came out i bought the newest phone cell phone every year because i was traveling a lot and every time i you know i got a new phone i got better better contact i could do more on email i could do more and so on and so forth you know the story but about 10 10 years or so ago um i'm still traveling quite a lot but actually i'm getting perfectly good email i'm getting perfectly good internet browsing i'm getting perfectly good camera perfectly good everything else so i i now only update when the thing starts to break um hence my 11 to 15 move and i think that's common and that's that i think is a very positive thing because it means we're using less of the world's resources and so on i think that's you know that that is a good thing uh we're helping to dampened down climate change, hopefully.

21:24But the main thing is it creates the space for what are the services that people want and that we're looking at... I'll give you a broad brush on this, Ash. What I think I'm really saying is that up till now, if you've been a manufacturer, a producer, it's been a supply-led thing. that you're you're you've got you know whoever's got supply you're going to do well if you remember the old general electric ge you know used to say as long as you've got uh cost in the in the you know the sort of lowest cost or the lowest of three cost you'll do well that's all you need to do is just have lowest cost you didn't think about who the customer but now now i think you are starting to become customer-led and I'll give you an example from COVID if you allow me to just talk about plastics for a moment if during COVID you were supplying plastic bags or plastic plastic wrappings or whatever if you were supplying restaurants and hotels your business stopped completely because they were all shut but if you were supplying supermarkets your business rocketed off off off now i'm not saying that covered was a perennial thing but i'm just saying for the first time plastics manufacturers realized it does actually matter who we're selling to and we need to think about this a bit whereas before it was just look you know you can have it but it's x bucks a kilo x bucks a pound or whatever so i think those are the sort of trends uh that we're starting to see now.

23:08Shifting gears here, one of the places where these questions and emotions have found an outlet, have found an expression, is in elections. Obviously, we've just had a very contentious election here in the United States. Talk about where you see markets and the broader economy headed due to the policy shifts that are coming down the pike. yeah i mean i think you know we we started to talk about geopolitics uh nearly 10 years ago in 2015 and the reason was that donald trump was running his first campaign and brexit uh was getting going you know uk wanted to leave um leave europe the european union and we we stuck our necks out relatively early and said for the kind of reasons that we're talking about we think trump will win and we think that um the uk will leave uh will leave the european union and these weren't in a word that wasn't on the basis of it's going to be economically better off it was on the basis of geopolitics that people didn't feel that society was going in the right direction or they wanted the change they didn't feel that their leaders were listening to them and now we then moved along from that so as you say we've just had Donald re-elected again and what you're seeing now is that what was a sort of I mean you could argue about whether he really thought he was going to get elected in 2015-2016 I suspect he probably didn't I don't think he did particularly so when he came in to the White House it was pretty disorganized and yes some things happened and so But there were also a lot of old style Bush, Shady, Romney kind of Republicans there, as they were called, the adults in the room.

25:05They said, no, Mr. President, you can't really do that. And so some things happened. But this time round, yes, I know that Trump has disavowed any linkage, but I don't think that the Project 2025 people spend all that time writing 922 pages of briefing for a new president in complete isolation. and i don't think if we look at trump's initial cabinet picks i don't think that we're seeing some random stuff here what everybody is saying and i have no reason to differ from them is he's priding loyalty over everything else now that says he wants to get his policies through and he will focus on them so if you think oh no he doesn't know how to do it or he'll change or it was only campaign stuff I'd say no I don't think so so that's the point really in reply there Ash that we are now seeing a this is part of my Trump is accidental to my to my case if you like but it certainly builds on it but here we are at this historic moment that all the boomers are now becoming perennials and we have a president in the United States who really is very aligned with a lot of what perennials are looking for.

26:29So let's talk about some of those policies. Where do you see the center of gravity of those policies? What are you most concerned about? What are you most optimistic about? One of the things that's gotten a lot of attention in economic circles, of course, is trade and tariffs. What are your views about the Trump administration's proposals in that space? Well, first of all, I think we have to believe them. I think we will see heavy tariffs. whether it's 60 % on China, whether it's 200 % on Mexico, 20 % or whatever, you know, I think there's room for discussion and so on. I think we'll also see waivers, because Trump is very transactional, as we know.

27:11And so we've already seen, you know, he doesn't like electric vehicles. But on the other hand, Elon Musk has just got permission to do his full self-driving, you know. And Elon Musk, of course has a very big investment in Shanghai and is his biggest EV factory there and I'm pretty sure that you know if you've put 120 130 million into the campaign and use Twitter to help the campaign and so on I'm sure that you kind of expect some reward and I'm sure that Trump will imagine that he needs to give you some reward and other people will probably do the same so I think that it will be a mixed bag if you like that if you can find something that Trump wants then he'll do a deal with you like TikTok for example he didn't want TikTok then he did want TikTok um you know so so there is that element to it but the the fundamental issue um you know and that's obviously going to you know there's a lot of noise around it is that we're going back to what I would describe as the pre-Reagan pre-Margaret Thatcher world in other words before 1979.

28:18Bit of a secret for you Ash, but I actually started work in the chemical industry 1978. Yes I was a child, I was five years old, absolutely wouldn't be allowed now, but and the thing about 1978 was that I was working for the biggest company in the UK, ICI, the second largest chemical company in the world same size as DuPont more or less and we sold in the UK where I was a sales rep and I was selling to Unilever and so on paint and resin everything we sold in the UK was produced in the UK we didn't import stuff we didn't export stuff because of tariffs because of capital controls if as a student before that I wanted to go abroad I had to go down to the post office with my passport and i was able to get out 50 pounds and my passport was stamped 50 pounds 100 bucks in money of the day and so and i you know i'm very interested to read what robert lightheiser the uh we assume is going to be the trade representative uh what he said representative during the past he was but but he's also being tipped i think to be the um and i saw an interview with him in the Wall Street Journal last week where he was not only talking about his views on trade and tariffs but he was also talking about the need for capital controls and so I think you know if you think about my my comment about interest rates and why people might be starting to get a teeny bit worried about whether they'll get repaid if you start talking about capital controls then you open up a debate that says you know Ash it was really great of you to lend me that money and I'd really appreciate it and I'd absolutely love to give it back to you but unfortunately the government won't give me permission but I'm sure as soon as they do I'll be able to come and I'll pay you of course now I'm not saying that's going to happen on January the 20th of course not but I'm saying if I'm a long-term big lender I'm starting to think about issues like that because I do believe as you asked me I believe we're going back to a world that wasn't about isn't about globalization we're going back to local for local now you'll say you know from an economic point of view but that's very inefficient and I'd agree with you my career was built on globalization you know there I was selling uh to the paint and resin industry three four years later I found myself in Houston you know being an oil trader how exciting was that I went back to do a job in Europe I almost immediately I was told no no go to Asia Pacific here are 12 business development people we want you to build a business around Asia Pacific where's Asia Pacific I said and you know I found it but you know globalization was my career so I'm not I'm not bitter and twisted at all what I'm just saying is I don't think we need globalization anymore because the boomers aren't buying stuff.

31:23And they would be the main source of demand if there was any. Let me raise a counterpoint here, and actually one that you touched on in terms of this idea of waivers. Many people close to the Trump administration, particularly folks on the economic side, have made this suggestion and said with regard to tariffs and shade, listen, you just don't understand Donald Trump. This is game theory. This is the man who wrote a book called Art of the Deal. He is negotiating from a very tough perspective. His view ultimately is to try and eliminate tariffs, but to have the threat of tariffs to use to negotiate better trade deals.

32:00People who are familiar with the framework that people in the Trump MAGA side of the economic worldview say, essentially, look, trade deals are great, but the United States has negotiated some terrible trade deals after the last 20 or 30 years. It's call it out the U.S. industrial base, the argument goes. And therefore, some tough negotiating tactics are needed. One of the things that is required in this view is the idea of negotiating with the idea of significant tariff walls being a possibility. But the goal, say people who float this thesis, is that ultimately they want to reduce those barriers, but to do it in a way that is favorable for the U.S.

32:40economy, particularly for U.S. producers and manufacturers. That's the view. yeah i've heard of you and you know you can't you can't dismiss it but i don't think that's the underlying issue ash what i think is the issue is that why did we go for globalization in the 80s and 90s because we had a lot of boomers and they were having babies and they needed lots of stuff and when the berlin wall came down in 1989 and when india came into what became world trade organization and then China and so on the deal was we'll get rid of a lot of low-paying nasty kind of jobs that we don't particularly want you know the textile industry in the Carolinas for example you know who wants to be doing that it's a horrible job and so on rare earth mining who wants to be digging rare earths we'll give all that to uh to China and uh you know maybe some other countries uh in Asia and they will get some jobs that will build up their economies that will kickstart their growth so there will be a market there and so on and we will get cheap goods and that was the deal and for a long time you know inflation was relatively low because of that but we weren't having to produce everything here I mean there was an interesting uh I've written a piece on the on the newsletter uh this week about smartphones and I was researching that and I found a discussion with Steve Jobs and Obama in 2010 or 2011 and Obama was saying why don't you bring back jobs to the states and because and and Jobs said those jobs aren't coming back you can't find Americans who want to work for a month for you know for 150 200 dollars and they won't work at weekends just to make some extra money and so on we can't do it if we had to pay American wages we couldn't make iPhones or iMacs or whatever so there was a very valid reason why this happened and as I say your your point could be right I'm you know who knows what what might happen but I think the fundamental issue today is if you don't need tariffs what we did what we've seen with China in the last 10 years is that China has abandoned the move that we always thought it was going to happen was that it came into WTO and the idea was it's going to grow its economy it will become more middle class it will become more democratic and it will move from being sort of manufacturing into you know use that money to grow its domestic market and so things will rebalance over a period of time but if you look at it today China's domestic consumption is incredibly low it's 37 percent of gdp by comparing it's almost half the level of domestic of consumption and so what what what beijing has done is it's focused on manufactured exports it's focused on give an example from apollo apollo looking at the russell 2000 say that 42 42 % of the Russell 2000 at the moment, almost a record level, don't have any earnings.

36:00Now think about that, 42 % of the largest index in the States, they don't have any earnings, they're zombies. Now, there'll always be new companies starting up who don't have any earnings because they're going to sell their new products and services, except that's probably 10 % through history, that's fine, but that's another 30 % who just can't make any money, And that's because they're being wiped out by China's low wage policies. And now that interest rates are going up, we're starting to see the pipsqueak, as someone used to say. And so this is another reason why I'm seeing a major shift. If we don't need to buy all this cheap stuff from China anymore, if we'd actually rather maintain some of our high paying jobs, well, why don't we invest in a policy that would do that?

36:49Which is where I see tariffs coming in. If Biden, for example, brought in 100 % tariffs on Chinese electric vehicles, 100%, Trump may go higher. But basically, he shut the market because he wants to retain auto jobs because they're relatively high paying and no country wants. Textiles, 20 years ago, they were low paying jobs. Nobody particularly bothered. But autos, excuse me, no, I'd like to keep those. Thank you very much. Yeah. So we'll talk a little bit more about the causes of this. And I promise we're going to get to the financial market positioning that you see potentially being beneficial during these times.

37:31But, you know, to your point, as you said, you essentially see in China versus the United States, almost reciprocal economies, production versus domestic consumption. Is there a solution for this in sight? Are you optimistic? Do you see rays of hope despite some of these challenging headwinds? I can be as naive as anyone. And when President Xi came into office in 2012, I was actually very optimistic because he'd arranged for the World Bank and China's main sort of think tank, state think tank, to produce a report called China 2030. And that basically laid out the path that I've just described, where China is now having got to a very good position in terms of manufacturing and so on, is now going to move away from a focus on manufacturing towards a focus on stimulating domestic consumption.

38:26What do I mean by that? Well, paying out proper pensions, having proper health care, having good education, allowing the 200 million or so people who've come in from the rural areas to actually take advantage of city services, because at the moment they're not allowed to do that. And so they're sort of living in shacks because they're not, they're there to work and they're allowed to work, but they're not allowed necessarily to have all the facilities and support that if you were a city driver, you know, living in Shanghai with residence rights, you'd be able to do. Now, I really thought that that would happen, but it hasn't.

39:01Instead, what they did was they boost, they created the biggest property bubble in history. So that in what they call the tier one city, Shanghai, Beijing, Shenzhen, that their house price to earnings ratios went to 45 or 50. Now, you and I would think that 15 in New York is pretty high. you know if you go back along well you know four was thought to be about the average so 15 in new york and 15 12 or so in london and so on these are pretty high numbers anyway they're pretty scary but 40 odd is very scary and that's what they did now of course as we know since 2021 it's been a series of bankruptcies and there was a piece i read uh in reuters uh last week where they were going around talking to people and there are people who bought unfortunately right at the top of the market and the value of their property is now down reuters said 45.5 percent now there's not no coming back from that and those people are of course scared now and that's the problem that local governments made their money made their they don't have local taxes and so on so made their money from selling land to developers and let's be realistic some of that money was then put in a red envelope and deposited in Macau as a little present and thank you very much indeed for doing that and contributed to the GDP meeting the GDP target for the city or for the province or whatever so it all aligned and Xi Jinping has found it impossible to break that cycle because so many people have got their fingers in the pie so it could have changed and it should have changed but it never did and that's the problem now you know we saw that last month month before uh you know first of all it was put out oh this big stimulus trillion dollars it's not not stimulus at all it's a refinancing and it's a refinancing of a relatively small part of the local government debt they've refinanced about 10 trillion uh renminbi was about 1.4 uh trillion uh dollars the imf says as a minimum the cost of the debt is not 10 it's 60 and it could be 70 so in other words they've only done 20 percent of the problem and and so i i think that But as I say, I am the great optimist, but I just don't see how China can get out of this.