Live from the FTWeekend Festival in London

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0:36Pushkin. First of all, for the avoidance of doubt, this is water. Just so that you know. So let me tell you what's going to happen today. I'm Katie Martin. This is my associate, Rob Armstrong. Together, we are the Unhedged podcast. It goes out twice a week, and we try and talk about markets and finance and economics for normal people as well as for finance people. What's going to happen today is we're going to do a live recording. Someone at the back has promised me that someone else is going to press the buttons to make sure that it's all recorded beautifully, and it will very much sound different to how it normally does.

1:15Please laugh out loud at our jokes, even if they're not funny. That's Rob's jokes. Yes. Yes. Cheer, laugh, don't worry if your dog starts barking. It's all good. We want it to sound different. I'll save a little bit of time at the end for questions and then we'll do our usual long short, which Rob has not prepared for. It's true. But it's going to be fine. Planning is for wimps. So that's what's going to happen. Like I say, please laugh at the appropriate time. So, ha, ha, ha. Good practice. Right, I'm going to hope someone at the back has pressed the right button. Otherwise, we're screwed.

2:06Hello, everybody, and welcome to the Unhedged podcast live at the FT Weekend Festival in London.

2:18This is fun. This is different. I'm Katie Martin. I'm a markets columnist at the FT. I've been let out of the basement at FT Towers to a marquee in the grounds of Kenwood House in London. This is not my normal part of town. I'm very much a fish out of water up here. But there are real humans in the audience. Real humans. Say hello. I'm joined, as usual, by Rob Armstrong, who has escaped from the oppressive regime of the USA to come back to civilization. Rob, how are you finding London? I love it here. I lived here for five years. It's very good to be back. There is another tent over there called the Big Ideas Tent, and I'm a little hurt we're not in there.

3:03We're in the Little Ideas Tent. We're small ideas. Small ideas, convincingly made. So, Rob, when people talk to me about our podcast, they say a few things. They say, first of all, they're glad it's short, which I'm not quite sure how to take, to be honest. Secondly, they're surprised that we're not in the same room or that we can't really see each other. I can't see you at all. No, you're in London, I'm in New York, and it's, yeah, just boats passing. Yeah, exactly. But the other thing that people say is that we seem to really get along. Yes, which is an illusion we've worked very hard to create.

3:41The reality is that we cannot stand each other, but we are obliged for contractual reasons to be here today and make a podcast recording. So let's just make the most of it. Grit your teeth, Martin. So we're talking about beyond the taco trade, what's next for investors? Rob, first of all, the taco trade is your single greatest contribution. That was my 15 minutes of fame. We're on like minute 36 here. So I haven't been famous for another 15 minutes. Stretch this out. Yeah. For people who were lucky enough to miss this whole phenom. Tell us about the taco trade. So the taco trade, taco stands for Trump always chickens out.

4:23And this was an idea that I developed just to have a shorthand in the column for the fact that particularly early in this presidency, Trump would make a big noisy announcement and there would be gnashing of teeth and tearing of hair. And then he would essentially say, just kidding. And everything would go back to normal and markets would plunge. Then he would say, just kidding. And they would come roaring back. And this pattern recurred so much that I needed a shorthand way to refer to it. And this phrase, taco, broke containment, got out of the lab, escaped to Wall Street and from Wall Street to White House press conferences and so forth.

5:01Yes. And to like TikTok and stuff. All of a sudden people were making songs about the taco trade. Yeah. This was all like both gratifying and embarrassing. But what what I get now is trolls calling up saying, well, who's making jokes now? Yeah. Right. That Trump doesn't chicken out. But I actually don't believe this to be true. My view is that everybody else chickened out. So for me, the taco thesis was Trump is actually a nihilist. right? Because he doesn't care about anything. If he's challenged in any significant way, either by markets or by the great market of politics or by television, he'll back off because he doesn't care about the substance of the policies.

5:48He doesn't stand for anything. Right. But what I have discovered is that in the case of the markets and the case of politics and the case of everything else, everyone else just gives the guy all the rope he wants. So there's nothing as it were to chicken out from. There is some chickening out. I think there's been significant chickening out on the tariffs. He's gotten down to the level that the world can accept at 15 % ish with a few exceptions. Right. So he has sensed which way the wind is blowing there and come back to a certain level. But in general, markets have just written him off. The bond vigilantes with a few exceptions that we'll discuss.

6:28Gone. Equity markets. Say whatever you want, crazy man. Nothing he says can bother the equity markets globally. A lick. And this is an amazing thing. I don't know how to explain that. I don't know how to think about that as a phenomenon where the market back in finance school is a risk pricing mechanism. And it feels a bit like it's broken in a way. Either that or we, in fact, have Trump derangement syndrome. And we have exaggerated how damaging he is. And the wisdom of the market is telling us, calm down. Yeah. So there's a number of things that I wrote this in a column recently. Like, if you got into a time machine and you were able to tell an investor in 2025, you know, if you'd said a year ago, buy now, we'd have this absolute mishmash of a tariff policy that is based mostly on his personal preferences right now, right?

7:23He's got some sort of row with India and with Switzerland. So he's slapping these random tariffs on people. He is trying to stage a hostile takeover of the Federal Reserve. He is monkeying about with economic data, on which a little bit in a sec. And the markets are like, well, I guess this is fine. Like, I just, I don't understand it. I just don't, you know, and I talk to investors about like, why are you so relaxed about this? And they say, well, corporate earnings are OK. And I'm like, really? Well, we've discussed on the podcast in all markets, as we've discussed more than once, Katie, there is Chuck Prince syndrome.

8:04For those of you who don't know, Chuck Prince was the CEO of Citibank who said in 2007, when confronted with some obvious fact about how it was all a house of cards in the U.S. housing industry, said, well, when the music's playing, you got to dance. And so if you're a professional investor, you're not paid to not be invested. For anybody whose job it is to manage your money, there is a professional risk in them not investing it and instead saying, let's be cautious and hide under the table. So that is over everything. But there is something more than that going on that I'd like to kind of poke at.

8:39And I don't know really where it comes from. So from where you normally sit in the States, do you feel like the sort of right wing commentaria, you know, right wing news media, do they look at the fact that markets are doing well as a validation of his policies? Is it making him worse? I think it's not exercising a restraining influence in the way that it should. I was surprised in the case of the Fed when he went after Lisa Cook, who is, for those of you who don't know, an American Fed governor, who he basically went through her dirty laundry until he found an accusation against her and has, you know, has basically blackmail, attempting to blackmail her out of work.

9:20I thought we would see a stronger response in rate markets to that. Now, as we talked about on the last podcast, I think this is a very important point. Part of the lesson we've learned is that Fed independence, the idea that the administration doesn't get to have a fiddle with interest rate policy in the United States, has always been a bit of a fiction. Yeah. And you start thinking, whoa, there's got to be a law that says Trump can't have a fiddle in this way. No, not really. And then you end up saying this terrible phrase, democratic norms, which sounds so, like, he's violated democratic norms.

10:01And it's like, what's a democratic norm? He's violated the sort of the good chat principle. The spirit of it, the good chat principle, but there's nothing else. And I'm just consistently surprised that rate markets, with one important exception, are not taking the threat seriously that he will effectively control rate-setting policy in the United States, set rates too low, inflation will explode, and markets will crash. Here's my question to you, Rob Armstrong. Yes. Why has inflation not exploded already? And why is it that the U.S. economy, like, what is so great about you guys that means that you can withstand all of this stuff?

10:40And I will also say, like, everyone knows it's really bad to focus on one individual piece of data because it's childish, it's silly, it's a way for you to confirm your priors. Nonetheless, we're childish, silly people who like confirming our priors. And I noticed that the jobs data from the US on Friday was pretty weak, actually. Is the economic impact of this dalliance with tariffs actually starting to kick in now? It's not just tariffs. It's tariffs and immigration. You know, the unemployment rate, it's all relative to the population. right and trump has had a fiddle with the population through immigration so you have to figure out about the job creation side on one side and then the how many people are there number on the other side of the equation and it's like you can look at the last two jobs reports where there's not a lot of extra jobs and you might be able to say there's just less people right and there's going to be less jobs when there's less people yeah and we don't really know how many less people there are for various other reasons, that equation isn't quite clear.

11:49The two sides of that or the numerator and the denominator are both a bit vague. So yes, I think the bad business sentiment, for example, we saw several months ago in April may only be showing up in the job data now. And that's about how long bad vibes take to turn into not hiring people. Yeah. Right. There's a sort of natural delay in that process. But when you see these surveys of companies in the States and, you know, tell us about yourself. How are you feeling about the world? They pretty reliably say this absolutely sucks. You keep deporting my staff. Yes. I don't understand what's going on with tariffs.

12:29The inflation that is happening right at the beginning of my production chain is out of control. This is all awful. Again, it's quite difficult to square that off with the fact that markets are just doing great. I think that's true. But also in the last however many years, and this came up on other panels today, actually, like moaning at people who call you on the phone and asking you how you feel is just a phenomenon that has gotten momentum in the world. Right. Like part of the reason is in Trump is in office in the first place is people feel the world is quite crazy and unpleasant to begin with.

13:03And so I wonder if the sentiment data, the survey data we have both about individuals and about companies isn't as high quality as it once was. But we haven't gotten the answer to the mystery. Maybe you have a theory about this. I have a couple. Why are equity markets so buoyant, especially in the United States? Yeah. Well, I think a lot of it comes down to the thing that we're bored to the back teeth of talking about, which is that the U.S. is really good at tech. Yes. And that U.S. tech is still making boatloads of money. Yes. Nvidia, biggest company in the world,$4.4 something trillion. It's got money coming out of its ears.

13:38Yes, all of them do. All the top 10 tech companies. Just unbelievable. They could be the best 10 companies in the history of companies. Yeah. You know, in terms of their profitability and, you know, all of that stuff. Yeah. And that remains true. I was talking to an investor just the other day, you know, about all of this stuff. And he was saying, look, for me, it's not about which country I invest in. I just invest in the companies that are making the most money and they just happen to be in the US. Yes, for historical reasons. Yeah, yeah. So there's kind of, for a lot of people, there's no getting around it.

14:11I still think that over time, the more money that comes into markets in future, less of that will flow into the US over time than it has done historically. But I don't think anyone's going to sell US. This is how I was going to frame the question. There was this moment in April after the batshit presentation in the Rose Garden with the poster board. Yeah. Right. When everybody was like, the whole world is a machine that is designed to accumulate excess savings and send them to America. Yeah. And the crazy man with the poster board in the Rose Garden is going to break that machine. right and so all the excess savings in the world from Europe from Japan etc are gonna start going somewhere else and that trade lasted about a week and a half it was great it was great it was there was a great ten days when people like what about European stocks maybe you should buy Japanese stocks and then it was like ten days later like nah fuck it and it literally is the machine of the machinery of the world, the financial wiring of the world is set up so people's savings globally literally are wired to come to America.

15:26And it's like the force of habit just keeps the flows coming in this direction. And there's a lot of structural reasons for this. We talked on the show about how there is an insuperable barrier to European state savings staying in Europe. And that is the fact that it's 28 financial jurisdictions and it doesn't work. Nobody's sending their money to Mississippi either. They're sending it to America. And as long as the state of European financial integration is at the state it's now, the money's going to go to America because the option B is Switzerland plus Italy plus Germany plus... I keep telling you Switzerland is not in the EU.

16:11Okay, fine. You always bring this one up as an example. It's surrounded. It's a captive. So it's like that is an example of how the world is wired up to send the money to America because it's too much of a pain in the ass to send it to Europe. And until that stops being true, that's where the money's going to go. Yeah, so that's another reason. And I also think, I think the tech reason is right. There's also, of course, vibes, right? AI vibes, powerful. So you can't like markets are, you know, the classic line is the Ben Graham line. Markets are a voting machine in the short term and a weighing machine in the long term.

16:57And the thing is, they're like a weighing machine twice every 10 years. and the rest of the time overshoot and undershoot. And we just happen to be in good vibes about stocks time, right? And not even a crazy president who makes everybody feel bad is enough to kill enthusiasm once it works its way up into a lather. That said, this is still one of the worst years for U.S. stocks in comparison to the rest of the world since 2009. So I will grant you that US stock markets have rebounded very handily since April. But they're still lagging the rest of the world. OK, it's time to switch from equities and switch to the part of the market that is freaking out, which is the gold market.

17:47Yeah. And if we really wanted to make money, we'd be selling little slivers of gold at this thing. But gold, so at$2 ,200, I remember talking to gold people when gold was$2 ,200 an ounce. And people were like,$2 ,200 is demand destruction. People in India and China stopped buying it at$2 ,200. It's not going anywhere. And what are we at now? $3 ,600 and some crazy insane. So whatever gold is, that market is going bananas right now. And traditionally, when gold does really well is not, as is often thought when there's high inflation. Now that is, I don't know where that even came from. That is not true.

18:27Gold is a terrible inflation hedge. It is a good hedge when everybody thinks everything is going to hell. Yeah. And so why is the equity market happy? But the gold market, it's literally never been better. We've had the best two years in the gold market I think we've ever had. Yeah. So that is telling you somewhere in the world fear is registering. You do have to look quite carefully at the bond market. But it is there in the sense that very short-term bonds are in quite heavy demand. And that's because people think that interest rates are going to be cut by the Federal Reserve. But long-term interest rates are picking up.

19:03Yeah, the 30-year bond. Or at least they're not falling in the way that they normally would. So that gap is getting bigger between the two. And that's the market's way of saying, look, we think you're going to be asking us to buy an awful lot of these bloody bonds. Yeah. And we think there's a risk that you politicize the Fed and it doesn't work very well in future. And that you're going to let inflation run riot just so you can pull down your borrowing costs. I think the 30-year bond is really important. Everybody talks in markets, for those of you who are not hopeless nerds, the 10-year bond is what everybody talks about most of the time.

19:32That's kind of the benchmark rate for everything. 10-year U.S. bond is the benchmark for everything. The 30-year bond is a slightly weird product that basically exists to sell to pension funds and to insurance companies. Because they have long-term liabilities. They have to match to a long-term asset. That's why 30-year bonds exist. It's because insurance companies and pension funds need them. Right? And those bonds are falling in price. And the message that's sending may be the few people in financial markets whose actual job it is to think far into the future, which is insurance portfolio managers and pension managers saying, actually, we have a little bit of a problem here.

20:13But it may not be Trump. It may just be the fact that every government in the developed world is up to its ears in debt. Well, that's the other thing. one of the reasons why we all need to worry about Trump politicizing the Fed is that if that ends up spooking the bond market, then that pushes up borrowing costs in the US. And then, thanks very much, American chums, that completely nukes the guilt market. So UK borrowing costs pick up. Everyone's borrowing costs pick up because the US government bond market is a bit like the US stock market in the sense that it is just several multiples bigger than anything else on earth, possible exception of the Japanese government bond market, but that kind of doesn't count.

20:53But it just means that you are, you personally, Rob Armstrong, you're exporting problems to the rest of the world. Do you think anyone in the administration gives even half of a shit about that? I mean, A, no. B, it is very important to remember that to the degree the United States makes a mess of things, that will be much worse for the rest of the world than it will be for the United States, for the reasons I just explained. This is just, and part of what the market is telling us is it literally is, if you think that the United States is on a self-destructive path, the smartest thing to do might be to buy United States assets, because they are the most liquid and they are the easiest to sell when things go bad.

21:40it's the biggest market it's the strongest economy it's by most measures the largest economy it's weird like we're going to start the fire and we're going to be the place you run as the world burns and that is wildly unfair but it's just a plain fact right yeah because for reasons you point out if our bond market has a crisis it is 100 guaranteed that as a result of that crisis the UK bond market will have a much worse crisis. Because it's less liquid, there's less natural buyers, it's going to be worse everywhere else. Yeah, and we're still only a few years out from that time when Liz Truss blew up the market, which still hangs over the gilts market.

22:22I noticed that she's going around on the radio saying she didn't blow up the bond market. This podcast is a Liz Truss free zone, I'm just saying. Yeah, have we had a call from her? I'm a little hurt about that. she hasn't offered herself up for interview as far as I'm aware. That's a whole other story. But I was talking to a gilts investor the other night about the UK government bond market, and he was, like, bitching and moaning about Rachel Reeves and the UK government, and it's all a mess over here. And I was like, cool. What happens if reform get in at the next election? And he basically spat out his wine and was like, it's game over.

23:01because the beauty of the US is that you are able to elect nutcases and get away with it because you operate the world's biggest reserve currency, because people buy US when there's some sort of problem, even if it's a US problem. We can't do that. And so in the event that we were to elect reform as the next government of the UK, she says, clutching her chair and reaching for a drink, then we're in very serious trouble. We can't do the same thing as you do. You know, it's true. And I think that's part of the reason that we're seeing markets being as resilient as they are. I also think and I'm not trying to toot my own horn or my own taco, as the case may be.

23:44I do think that people believe or have caused themselves to believe that Trump will pull back before he does the very, very stupid thing that he's making. And he says, I want to bring interest rates down by 2%. Percentage points, I should say. You could argue that they're half a percentage point too high. If he takes control of the Fed and brings interest rates down to 1%, that's going to be a really bad decision. And I think there is a belief that he always will pull back. It will be a bad decision. But I think initially, U.S. stocks would probably go up. And it would be a bit like the analogy I always use in these situations.

24:25is a little bit like wetting yourself at the North Pole, right? You feel really warm and lovely for a little minute. Yeah, yeah. And then you freeze to death. Yeah, and then you freeze to death. And that's kind of what you've got coming your way, I suspect. Yeah, I think that's right. I mean, it's scary. I mean, I guess the other thing is there may be a brute fact about timing here, which is whatever happens, well, not whatever happens, Mostly whatever happens, it's somebody else in three and a half years. Is it? That leads me on to my next question. What is the thing you think that makes the great American public, that makes markets say, OK, enough, done, we're out?

25:11Is it something like cancelling the midterms? Is it something like declaring himself president for life? I've written about this before. there's a slight feeling that we're all sort of being it's the boiling frog idea right we're in this pot and again we're lovely and warm isn't this fantastic it's getting hotter and hotter and one day we think we are now cooked frogs so you've seen the president of the united states get directly involved in american corporations okay yeah and it's so we're so far from the republicanism of 20 years ago that it's like a distant star uh we've seen a direct a very naked and direct assault on the federal reserve what would be enough right what would be enough i hope everybody in the audience is thinking of the big event uh i i think a massive attack a change of interest rates to one percent will do it markets will first pee their pants, then freeze to death.

26:14If we have unnaturally low interest rates, that is enough. I mean, I'm very interested in, and I say this not because I wish anyone ill, but because the president is 80 years old, that what happens if he becomes unwell, right? Does the spell break? If you just say he has to recuperate for a couple of weeks, you know and there's somebody else running the country trump has these magical talents does the spell break yeah when he is a bed yeah you know is vanceism a thing i mean the that that you know if you are suspicious of the president's agenda you console yourself with the idea that it's trump's personality that holds the whole thing together and i you know i write about money i don't write about politics but i don't think you can have a you can just put a vance in I think Trump has magical talents that can't be replicated by anyone else in his group.

27:10As you say, you write about money, you don't write about politics. But as the token American here, please account for the Democrats. What are they doing? What's Congress doing? Yeah, where is anybody? I mean, this is the important point is that, I mean, this brings us back in a full circle back to the beginning of our conversation. The question is not, does Trump always chicken out? The question is who else is going to show up with something else? And that has not happened. And the most likely candidate to show up and do something is not the Democrats. It's not Congress. It's the bond market. And the bond market is not showing up.

27:48And have we learned something about the bond market that we didn't know? And about the world from the bond market that we didn't know? Is the bond market telling us that the American presidency actually isn't that important? Right? That this stuff, you know, maybe the bond market is actually wise. and that's a going possibility. Yeah. I'll tell you another thing that I think might spook the market that I just thought of is I was talking about this in another session earlier today at the festival. There's an awful lot of key man risk around your boy Scott Besson in Treasury. Yes. And it's a little bit like if you look at Turkey, Turkish monetary policy has been a total bimfire for a number of years.

28:26It's come slightly more in line now. But through that process, your man was Mehmet Simsek, the economy minister. Yeah, he was. He's the guy that the markets could say to themselves, they talk themselves into trusting him. There is a grown up in the room. There is a grown up. There's only one, but there is a grown up and it's this one guy. Now, Scott Besson, I understand from people who've worked with him in the past, he's the real deal. He really understands macro. He says some stuff in the public domain that's sort of, you know, ass kissing of the president that strikes me as just wild and out there, but he knows what matters to the bond market and what matters to stocks investors.

29:04What if anything were to happen to Scott Besson? Yeah, I mean, specifically getting fired. I think this would be a significant market event. I think you would see markets move. I mean, we've talked about this on the show. The whole point about markets that have reached a high level is by definition, the thing that cracks them is not the thing you're expecting. Yeah. Right? This is what people talk about when they say markets are dynamic. That literally the fact that people are worried about something makes that thing less dangerous to markets because the market changes shape. Yeah. Money moves around.

29:42So what is the unexpected event, right? That, and literally we can talk about it here and stop it from happening. Yeah. Almost like magic, you know? So if we talk about something bad happening to Scott Besson, that means he'll still be around. We've just restored him to health. But the point is, there's always some awful surprise. And to use a phrase I've already overused, the spell is broken. And you don't see it happening. It's a Bear Stearns hedge fund that you've never heard of. Yeah. It's a whole financial product. It's the Thai bot. Yeah, it's the Thai bot. Like, who even, you know, there was a market for the Thai bot.

30:17And suddenly, it's on. Yeah. Right, right. It's a big trade on Russian bonds. Who is trading, you know, what is this stuff? and so I think you have a moment of fragility which means we're exposed to a surprise speaking of a moment of fragility that exposes us to surprise should we get some questions from the audience yes we shall if you have a question please raise your hand someone will come around with a handheld mic there's someone in the front brave man in the front row hi uh thank you big fan. So my question is, you've spoken a lot about, you know, doom and what could happen to markets, you know, if we do eventually, you know, take into account the risks that Trump is causing and geopolitics is causing.

31:04I want to kind of flip that on its head a bit and ask, is there anything that is causing you to be optimistic in this current market? And what would that be other than, you know, a myth of AI productivity gains that we hear about a lot? Okay, there's a lot of things. I think the US economy, and you can talk about the UK and the European economy, I think the US economy is showing remarkable resilience. I think there's nothing, I'm not in the doomer crowd about recession. I think corporate America, it's growing a little, the profits aren't great, but they're good. The consumer is solid. Like the basic framework, putting like crazy asset markets aside, the basic economic framework in the United States is functioning quite well under a certain amount of distress.

31:58And so I think that makes me feel good. And I would add one more thing. No, Takeda, you go. I'm sorry. You're making the Rob is interrupting me face. So I have to stop now. It's like just my actual face.

32:13I think that would be good and bad. I think it's actually quite a dangerous scenario in which like maybe Trumpism is great actually. Yeah. And maybe that encourages other countries around the world to try the same thing. I don't think other countries can do this as successfully as the US can. So I think, you know, if we get to the end of Trump's time, in office and actually the stock market has added, you know, 50 % and companies are ripping, that would inspire other governments around the world to try the same thing. And I don't, I don't look forward to that. I'm still vaguely optimistic, despite all of the evidence that Europe might finally get its act together, you know, and make its financial markets more cohesive.

32:58I think everybody understands the argument for doing that, but my God, takes a long time making quite the meal out of it there was another brilliant and important point that i wanted to make to you that i have now forgotten but i can come back thanks for that any other questions from the audience the gentleman here have you got a mic on you yep thank you so like advice that hearing like personal finance put the money in like the s &p global tracker yeah let's sit there make money do you think that people need to be building skills beyond doing that in a world where like Trump seems like you don't really know what he's going to do next?

33:37Can I back the US to sort of give me good money into my pension? Or do I have to start really thinking other areas, learning about new things in this kind of world? Well, we don't and can't give investment advice. And all of our ideas are rubbish. If you mark them to market, we have a very poor record. Nonetheless, sticking money in a tracker as opposed to buying individual stocks has to be the way forward. What we've seen with Trump quite recently, and we touched on this briefly, is he picks winners and losers. If you turn up at the Oval Office with a block of gold and give it to the president, as Tim Cook of Apple actually did in real life, then good things happen to you.

34:22The flip side of that is Trump decided one day, because he'd been watching Fox News that Intel had to fire its chief executive and then he decided to buy a 10 % stake in the company. I mean, it's all over the top. So if you try and pick individual companies, you have Trump risk on those individuals. On top of just general equity risk. But the long-term evidence is that if you put your money in the US, you will laugh all the way to the bank in your retirement. This is actually something that's been a challenge for me. And again, I'm not qualified to give advice on personal finance, But what's been a challenge for me as a person who's been investing for call it 20 years or 25 years is that it has been a one way bet on the United States.

35:04Like all your very reasonable decision to diversify to European stocks and Japanese stocks and emerging market stocks. That's been a mistake for 20 years. It really has been. You would have just been better off sticking with the United States. And I think you have to remember that life is longer than 20 years. and that the advice about diversification across the globe is still pretty good advice. You know what I mean? I think you have to believe that we lived in an anomalous period. You're making the face. I'm sorry. I'm making the face. The other point there is that for a long time, it has made a lot of sense for global investors to buy U.S.

35:43and really not think anything about it. And that's because the U.S. stock market has gone up. But it's also because, broadly speaking, the dollar has gone up too. If the dollar keeps going down, then the US stock market is going to have to work that much harder to make it make sense for you. We made a mistake not talking about the dollar already. It's going down. It's going down. And that's a very interesting picture. And there is a lot of reason to think, by the way, that the White House wants it down. The main reason being they say it once in a while, which is one of the clues I've been following.

36:14And that speaks right immediately to the question that we've been investing into a strong dollar regime that may be over and may be over on purpose. And that's very, that's an important thing to think about. Right now I have to do a thing where I have to say for the sake of our audio recording that we're going to take a very short break. None of you people are to leave, but we're going to take a very short break on the recording so that we can go to a quick ad and then go to long short.

36:50Speaking of alternatives, PGM's monthly podcast discussing trends and strategies in alternative investing. We've seen a lot of growth in the evergreen structures. They have become the most dominant structure within alternatives, supplanting the traditional 3C7 QP closed-end fund. And we think that demand will continue, and that's making all more accessible to wealth. hear the full conversation on P. Jim's podcast, Speaking of Alternatives. Thank you for not leaving. We're back. We're back. We're back. We're back. Yay. Okay. Now it is time for Long Short, that part of the show where we go long, a thing we love, or short, a thing we hate, that Rob had totally forgotten about until I mentioned it to him just now.

37:39Okay, I'm going to go short gold. controversial call i think and it's a long-term call it's a terrible idea yeah that's what i'm saying alan lives his dog hello is barking at me i think 10 years from today the real return on gold is going to be about like the return on cash maybe worse like three month treasuries or whatever i think and it's gone like this, where in a moment of frenzy... It's a podcast. Okay, yeah. That doesn't work. That's me pointing up. I think that the history of the gold price tells you something that people never talk about, which is there are bubbles in the gold price. Yeah.

38:24And I think we're getting into one. It's become a momentum trade among hedge funds, right? Like, it's being treated like a tech stock. And people don't know this. people always talk about, well, I have bought Krugerrands and everything's been fine. But if you bought gold in 1984, 2004, you had like a third less money than you did. So gold has long deserts of terrible returns, not correlated to inflation. And I think we're going to get into that in the next 10 years. Okay. So help you. That is yours. I'll tell you what mine is. We've actually been working reasonably hard all day. and I don't know about you, but I have not had a drink.

39:06So I am long a nice glass of champagne, which I think I have earned. We all deserve. The dog too. Unhedged is produced by Trina Menino and edited by Brian Erstad. Our executive producer is Jacob Goldstein. Topher Forhears is the FT's acting co-head of audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn, and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30-day free trial is available to everyone else. Just go to ft.com slash unhedged offer. I'm Katie Martin. Thanks for listening.

40:02Thank you.