Saxo’s ‘Outrageous’ Prediction? Gold Will Top $3,000 in 2023

Pitchfort building more booksually the bloom Bed building. What favorite good about it too. Now, listen, this is our favorite time of year, you and I. We've been working together a long time and December always says something really special about it for us, Which is it? This is the time of year, It's the season for forecasts. That's when people start telling us what they think is going to happen next year, and we can make fun of them,

which really works, doesn't it. Yeah, it's basically the S and P will go up by seven s, devotake whatever it, and not bail last year. And we have the particular joy of looking at the forecast they made last year and comparing it to what really happened. Yeah, and it's always wrong, always wrong. That will come onto more of that, and when we get into the meat of the podcast,

I say, without without excellent guests today. But one of the things that people are starting doing is talking about their surprise predictions for next year, things you don't think will happen, that they think will happen. And very often I look at those, no thing, well, I wouldn't really surprise me at all. So one of the banks to come up with standard charge will come out with one this week, which is that over the next year the price of bitcoin may fall to five thou dollars. And

wasn't that a given? That surprised me with that surprise? You? No, I mean not at all. I mean I think one of the things with these surprise predictions is though usually things that kind of mainstream analyst feels an attain a bit controversial because it's a place move that it goes beyond seven of the way, and that's basically anything other

than that would be a surprise. But yeah, I mean, black coin form five thousan dollars isn't isn't I wouldn't say, But like kind of we out there, I mean, zero would be a surprise, but only because of the time frame. Zero within two or three years wouldn't be a surprise, will be a surprise because of the time frame. I mean, I still I know that me and you slightly kind of don't entirely. And that's when I still think backcoin

has got some kind of potential. But think think, but I just think it's very, very, very manor um because it's really too complicated to you. You've been on Twitter asking people for explanations, and you know what they say. They say, educate yourself, and then they send me reading this and I read all those books. In fact, I recommended those books to you in the first place. And reading those books didn't get me any further. It was

understanding what the use case is. And people keep telling me, you know that at the very very worst, even if nobody else used at all, it will be continued to be used by the criminal community, and that possibly work because you can only laun the money out of the black economy if you can laundrip via something that people in the non black economy use. And if we don't use bitcoing, then criminals can't use bit going because they can't launder it from their world to our world. Well, yeah,

because you know that anyone who's using missing something. No, no, I mean that that'st thing you are really. I mean, because you know that anyone who's using a bitcoin or ramp as a criminal, which is quite checking. You know. It's the way that I guess, like, I don't know who's going to sue you for that, but someone's going to. I haven't labeled anyone specifically. What would happen next year that everyone's going to think is surprised. Isn't going to

be a surprise to here? I actually think that, I mean, that's all this is a very important one. But I don't think that the UK is going to go in a devastating resisation. Nicely, thing is going to end up being a fairly kind of good place to have put your money this year when everyone was parany king about it. But it can be a good place to put your money and still have a devastating recession. These things aren't

necessarily match. I mean, we've written so many times over the years that there's no correlation between GDP and stock market performance that I mean, it's not going to do the GDP. But I still think that Britain is going to do better than everyone expects. I'm concerned because I have this horrible feeling that mild might be the new transitory. Well, I know it's jacky, it's chicky. My gut feeling is that it's not going to be as bad as people

think it's going to be. Um. I to think the energy prices are probably going to come down more than people expect. So it's actually kind of a believe or not. It's kind of an optimistic upside one. But that is that is going out there on the limb for me, because I'm not I'm gonna naturally bearish listen as you should know that I'm looking at John disapprovingly at the moment. Honestly,

I'm weathering, literally weathering here. John. Thank you so much for coming on and talking again, and listeners, I think you're gonna hear from again next tweet unless you get fined. Welcome to Marin Talks Money, the podcast in which people who know the markets explain the markets. I'm there in some st web this week. A conversation with Saxo Banks chief investment Officer Stean Jacobson, who joins with the banks ten outrageous predictions for twenty three. He does this every year,

lots of outrageous stuff. We've just had a John's outrageous predictions for next year, which relatively positive. However, I started my conversation with Stean with a look back at their predictions for this year and how they panned out. I think it's one of the better years. Although, as as you were well know, we actually don't set out trying to be right about anything. It's it's it's more a conversation story and more sort of a perspective of the

fat tales. But yeah, I think the one that probably cost the most money for the average investor is the prediction that there would be a face plant, and matter, I think we can safely say that one came through. Can we say that the young abandoned the platforms in protest against their mining of personal information for profit? Can we say that? Or can we just say the share price fell a lot where we can certainly say that later?

And I think as as you are as experienced as I am in doing this, it's uh not always that you get either the direction or the in result right. But sometimes you get the results right, and sometimes you get the arguments, right, But I think what we were trying to say last year was that a lot of people would be abandoning matter, and certainly in the Investor

did abandoned matter. And I also think to a lot of extent, the point that young people don't want to be part of it has shown up in of course, if nothing else, in the meta space, which was supposed to be populated by young people coming onto this virtual world. But I think the young people like me and maybe I'll talk for you as well, is figuring out that the reality the real world is hard in our uh, then also having to navigate a virtual world is probably

a little bit too much in the present conditions. It's absolutely true, neither of my children or on Facebook. So there you go. You win that one. What about the first one you had last year, the planned and fossil fuels gets a rain check. I mean, it's not formal, the putting a rain check on that plan, But it's definitely happening, isn't it. It's definitely happening, and it's uh.

I think it's become even more relevant today than it was last year, in the sense that if you think about what twenty three really meant of course Ukraine War was the starting point and to a last extent, a acceleration of the trench in place. Uh. You know, one year ago Germany had its free tier approach, which was to export to China, uh, depending on very low energy price from Russia and not having to pay off for its military. I would say all of those things has changed.

But what has really changed in particularly in Germany, of course, is a party like the Green Party of Protest moving in the energy space, is now fully on board on reopening nuclear power and on the case which is and this is the case globally that energy and re energy sourcing has become a number one priority for every single government around the world. So I think it's pretty faith to say, at a bare minimum that fossil energy is

still part of the solution. I don't think the green movement on the green voteness of the situation has disappeared. I don't think in terms of the latest cup that we are anywhere closer to getting the results we want. But certainly we all know, we all know now that we we need to think about energy as a strategic resource. Okay, well, that's two major successes. What of the others I think I will have maybe not an A plus, but we will have a B plus for calling inflation to the

level that we called it. I think we put in a unimaginable at the time level of if I'm not mistaken, twelve um fifteen, fifteen, Yeah, no, fifteen, US inflation reaches above fifteen cent home wage price spiral um. But in that that might not have happened this year, but it could easily happen next year. Yeah. And and the reason for the fifteen percent was really that was four was to peak in the nineteen seventies, So we were trying

to outdo whatever happened in the nineteen seventies. And I think, as you rightly allude to, I still think the game is on. Of course, the market right now, what whether you look at break even, two, five, ten, or thirties, they all think that it's going to to thirty five. Just as a side note, I think it's interesting whatever happens in the next thirty years. Apparently the market has dictated that inflation will be a two and thirty five two point thirty five basis point two undred thirty five

basis points inflation. But that's interesting in itself. But no, I don't think in any shape of form that the inflation story is over yet. It's interesting. It's real anchoring, isn't it. That's just everyone thinking, well, it'll go back to where it was. It's very much pious confirmation. But I also think it's a true reflection of central banks unimaginative models. The models is outdated, The model is not working with real time data, is not working with a

bottom up analysis. Is all macro, and we both know that macro is very good dinner conversation, but it's very difficult to predict. And I think they have remained with this transitory going back to normal all by itself. Apparently my energy is going to solve yourself. Supply change is going to solve yourself. Degol obsiation is going to solve yourself. And another note, I'm very pleased that everything just solve yourself. I think that is a great strategy. I would be

through the fould happen, wouldn't you certainly preferred? But I'm not. I have not I don't have enough hair to actually believe the things solved themselves. I do think they need some actionable and and and some good things to come out of it. As as I know. What I do think that there is a solution to this, and this is that you know, the energy crisis, the level of energy has forced ourselves to at least start considering that

we need to live in a productive society. I don't think it's fully transparent in politics, but I think it's very transparent when I talk to companies at a company level. They all understand that the margin in terms of into prices growing up, and the only way to counter that will be more productivity, which means better education, better products, better services. Do think that ultimately the higher prices will lead to lower prices, but driven by productivity, not by hoping,

not by praying, and certainly not by waiting. I think that's the most optimistic thing I've heard anyone. Yeah, given her, given her, bad productivity has been for so long, it's interesting the idea that productivity could be bad. Low productivity could be a function of energy being too cheap and

too abundant. I mean, that's what people offer say about labor costs and labor in the UK in particular, if you have a too much available of labor to lower price, you inhibit your own productivity gains the same idea or a journalist in of all places. Estonia asked me a great question earlier this year. He said, okay, stay enough gave If I gave you a magic one, what would you do with it? I think you're being a banker. He expected me to say, turn everything into gold. But

right then, and they're there, they're right there. In a moment, I actually realized that what I would want was that the marginal cost of energy would go to zero. That would facilitate desalinational water, vertical farming at scale. It would increase the computer powerability, will improve the ability of you know,

longevity and the like. So I think, if you think about it in that context of productivity, what is holding us back is actually the high level of energy prices and as the present non actionable, the non plan on dealing with this is driving the margin price of energy up, which means that, as you say, we are challenged on productivity. But the solution clearly is to get closer to a multi approach on energy, more basic investment, more basic research, and think about you know, as a as an analog.

You know, when we had the COVID starting, people was talking about three, four or five years before the vactually would be available, but throwing enough money added open sourcing it and then you may in the number one priority

created that productivity in vaccine. I don't see why we cannot do the same about energy, because clearly it is punitive to the consumers, is punity to the voters, and more importantly, is actually changing as we already discussed the energy security mix up, but also the way we think about society, and and and then the final note here, which I think is important one. I don't know where you're realized there's but of all assets which is traded

in the world are intangibles. So only ten percent after world's ass are tangibles. And I think you and I both know that energy SIT's intendable, uh you electricity, grid networks, it's intangibles. Your logistics, your last mild delivery is intangible. So what the world needs it's more tangible assets. More tangible assets translating into more real economy assets. And as we grow that, we will also massively grow with the productivity. So that's my back of an envelope. Two minutes macro

talk and protitivity. Okay, I'm going to make a quick challenge here on the vaccine that half the people who listen to this will make which is that Yeah, I know, I know, it's trying to develop another vaccines. It's just that we cancel the regulatary environment around most vaccines. If you cut the regular environment in place, surely would have taken just as long as any old vaccine. And then at I don't think the vaccine works right, And then

you have the full audience. But we'll leave that one, then, shall we um? Let me ask you one more question on on on last year's one of the ones I like to find interesting with new hypersonic tech, drive space race and the new Cold war. And you haven't mentioned that as being one of the ones that that you would give yourself a B plus it. But there is definitely a Cold war at least going on in space, isn't that. And the hypersonic webon was activated by the

Russians and and and everybody else. So yeah, that is maybe not a B, but then a a C C plus at least, but close to a B. Yeah. And I listened to a talk the other day that told me that we didn't really really have to worry about energy anymore because the cost of energy is effectively going to zero because we will be harvesting solar energy in space.

So that sounded nice. That's another optimistic mode. This is turning into be a very It almost become one of these coach sessions where people get uplifted and see the future better. Shall we take care of that by moving onto next year's predictions. Yeah, we can kill that quite quickly, next year's outrageous predictions. Um, and you title the whole thing the war anomy. So anyone who's feeling optimistic or kind of woman fuzzy from what we've been talking about

so fast stop right now. The whole thing is called the war economy. We just took through a little bit what you mean by that. Yes, so, as we have found that creating our rag of prediction has become more difficult because competing with the real world is very difficult, we sort of try to embed a red threat through the the different years version of the outrage prediction. This one comes with the side title of being the war economy.

And what we mean by the war economy is that if you think about what is going on politically, this serves to the activation of the bigger public hand which we got used to undercovered and which certainly politician likes to continue the backloading of actionable budget cards as you

see in the UK budget. The constant waiting for better times, are constantly waiting for inflation to come down is very much what you see during war periods all the way back to you know, three before christ there's been limitation on commodities, that's been price caps, that's been sourcing basically the government or the military dictating which resources, which energy groups, which people in society are more important to savee God, the they are uh the upkeep of both the constitutional

but also the border. So we think it's probably much easier to analyze what's going on in the world from from sort of a war economy. And we are not saying the world is at World War three or anything. We're saying if you think about it on the as you you indicate it yourself. If we talk about the war in space, if we talk about the war going on daily in terms of the Internet and and and and the darknet for sure, and what goes on in

those activities. I don't think I really want to know what's going on, but I'm pretty sure it's not a nice place. And I think the deglobalization has been accelerated. What we've seen is the two biggest political initiatives in the world right now is on the US side, the Chips Act, which is basically about re shoring technology and work and and and security back to the US, and in terms of China is the dual circlar The dual circle is really about reducing the export dependency going to

the domestic economy. And both of these of course placed to not only the deglobalization but also the the increase in alliance of being created. The new alliance in the world is between China and Russia, energy coming from Russia and technology going the other way out. So so all of these are bilateral cheating military priorities over what we talked about before, productivity equality and certainly also the green

agenda has been lost a little bit in this race. Okay, So here we are and what is obviously well to you anyway, I think to be as well not going to be a disinflation re environment for some time. Um, you haven't gotten here a specific outrageous prediction on inflation, but lots of the of the predictions kind of hang around that area. So one is that gold rockets to

three thousand dollars. The central banks fail on on inflation mandate, and we've we've slightly talked about why the central banks will fail on their inflation mandate because their target is very random in their midles are rubbish. Um, but is there a reason why that will send gold to three thousand dollars For people who don't believe in golds and inflation heads, of which there there are many, well, then

we just let them read history, right. It's one of the I would argue if you're an asset manager, and I presume this show talks to a lot of people either manage their own many or managed on behalf and other people. I think if you're on a pot for you today in sterling or euro dollars, you also need to run it in gold because that is your true purchasing power. So it's really not about inflation, is more

about your maintaining your purchasing power. But what will catapult gold to a higher level, of course, is all of the failings that we talked about, but maturely that the world continues as I indicated early on, to believe that inflation is going back to two to two and a half percent, and that is as I said, to five ten and thirty year forward dictated by the market says

we are going to be a two thirty five. I find that naive in a deglobalization world where we want to prior to strategy, we want to prioritize military, we want to prioritize keeping security at home, and we don't want to do reshoring. I don't necessarily understand why I know these things should be deflationary at a bare minimum, I don't even understand why that could get us back

to where we were before. That would mean that that will be you know, physical impulse when things closed down, it will mean that that will not be printing the money. So I think the market has a very naive attitude to the forward looking indicators. And I think this year, at least for me as a trader and as a as a chief, Investments has told me that the market has no transparency in terms of predicting inflation at all. It didn't work for them two years ago, it didn't

work one year ago, and it's not working now. So for me, it is more about you know, sensing and talking to companies see what is reported in terms of marching squeeze, and that process is much slower than the market likes. But what all of our goal will be the refuge in the world where we also have competing currencies.

I'm sure we're going to come to a minute. But one of the more outrageous things we're making claims on this year is, of course that's going to be an alternative to the to the mighty dollar, and that the basement that will happen to the dollar. Yeah, we'll come

back to that in a tick. And one of the other things that you say when you talk about inflation is that a good amount of inflation next year will be driven by China backing away from zero COVID policy and possibly been coming out within new vaccine, and the protests that we've seen recently in China suggest they may be closer to pivoting away from zero COVID than than

we might have thought even a few weeks ago. Yeah, I find it so much surprising, and I I shouldn't do but deem myself to be something of a China expert, having a great expulsure both work wise and and and and and in terms of ownership with my company to them, And it's pretty clear that they cannot reverse course back to a total lockdown. The twenty measures already placed seems to be extended, and it seems like the battle right now is really between the local government what not wanting

to actually translate what the Central Committee is saying. And this is merely because we are, of course in a face in China where a lot of political local leaders are outgoing and they don't want to take the responsibility. They want to leave that job to the incoming new caters that comes in. And I needs to see territory. So I think there is a bit of logistic which is the back burning, back on the back burner what

happened at a part of Congress. But I think, as you rightly say, I think it is almost inevitable they need to move to a higher genda because of course, one of the short comings on the short side in in China is obviously creating timman in jobs a year has been very difficult to use unemployees going through the roof. How do you do that if you're central planned economy, You restart the economy, you loosen up what we've seen on the property sector and and ultimately that stock market

is a closed circuit. There is no external balance, uh and open account against the outside world, so that market is just purely manipulated to to reflect what what the central party wants to to telegraph to you. Okay, So here we are with inflation much higher than anyone exactly miracles expects. And then number seven and this I think, if I mean, I think it's it's actually quite likely. It's the kind of thing that will really freak everybody out.

Widespread price controls introduced the camp official inflation. And I assume you meaning in most Western economies. Yeah, you know, you know, UK has had this history before, in the nineties, sixties and seventies, price control boards and the likes. We've seen it during World Wars. We've seen as I said before, we've seen it even among the Roman emperors before that

they dictate the price caps. And price caps is politically opportune, but of course it doesn't reduce the underlying problem, which is that we don't have enough great capacity. It is not able to actually secure a new investment. It certainly will not increase the amount of basic research that happens. And it's not opening up all the venues, which is

part of the solution. Instead, they will cap the prices, but they will increase the underlying demand and they will probably and I think from a number of companies that sits in the space of saving energy, they feel that right now all of the policy measures embedded into future policies is about making marginally cheaper energy and not about reducing the consumption that we do today. And I think

that is a story that will certainly change in twenty three. Yeah, you would say that we may see something like a new national Board for Prices and incomes being established in the UK and the U s I mean, someone incredibly nineteen seventies, I wondered you and were given given the existence already of wind full taxes and the like, can you see any possibility of the UK returning to dividend controls? Remember the days of dividend controls, when companies weren't allowed

to pay or dividends were limited. Is that is that enough? Another possibility? I asked, just because one of the great attractions of the UK market is it's yield, you know, very significantly higher than yield and where else double that at the US, etcetera. If that's at risk, we should worry, I think, I mean, you are already doing it. And you if you are wind full taxes on utilities, you are pricing out their ability to pay the dividend and be be a force of a stable portfolio in terms

of s allocations. So absolutely there will be on intensive consequences with it. So I think everything is on the table basically because you know, think about what's transpired in the UK. First you had you know, elssive fair budget and now you have an overly rigid tightening of the of the budgetary and mind you it's backload, but the intention is to create a very fiscal tight monetary policy.

And if you put that up against what it's need in the UK, which is to create new jobs, is to invest more in infrastructure, is to make sure that the health sexor get revitalized. Not necessarily by throwing more money, it was certainly making it better, work better, more and less. The red tape and the likes and and the whole you know, the last ten years of trying to put Londoners against the rest of the UK needs to stop.

I mean, it's one country, one nation that needs to and and which historically has been very good at coming through crisis is but right now the temptation for political side will be to go back to the nineties and sixties, sixties and seventies. I would not be surprised to see that the ultimate course of action here is to devalue Stirling massively and proactively in order to get some competitives

back in in that space. And and part of that will probably come with a increase price control, because you don't want that important inflation to to flare up again in in the UK economy. But I think you know the UK is now what we call a six seven eight economy. They have six percent deficit on the current account, seven percent budget deficit and eight percent inflation at a best of times, right, I mean this, this is the worst tecker in the world in terms of Western economy.

So in the UK and particularly I'm very in nervous about these pist controls. Well, I think we're doing a brilliant job of moving away from optimism. Thank you Stein. Let's appreciate it, shall we. We want to number eight um lots of people OPEC and China and India. They walk out of the I m F and they agreed

to trade with a new reserve asset. They give up on the dollar it's happening, is that it's it's again one of these things that the way it's frame it's it's slightly outrageous, but the underlying micro trend is absolutely what's going on. Uh. And I think, um, you know again, Russia has played at both a positive and negative lesson for for a number of countries outside the Western world, and that is that you can be uh, you can see punity of action in terms of access the dollar,

funding and ovall to the international monetary system. And and a lot of people saying, if if China is the biggest import of oil in the world, whide don't they and Russia and Brazil and and to some extent engineer imposts side as well, why don't they have a closed system off using a bothering or basket like currency as someone we suggest, and and through that way reduce the dependency on the US centric monetary policy and also of course the the ability to practically move money in and

out of the system. We know Russia gave up on using dollars was it three four years ago already? Uh? And we have seen Saudi Arabia astarney certainly after after they're very close relagship with Trump, but in the in the Barney stration has been on a on a cold path in terms of diplomatic negotiations between the two countries, and they are increasingly of course again also exporting the

other way out. Quitar and the likes and and Angy on the outside feels that they have and probably rightly so they need to play a bigger role and and need to play above their waight um in terms of the impact. So I don't think that's unlike the You can contest whether i'm IF is going to break down.

But I think the reason we use the IMF is also we wanted to signal that we think that the the supernational institution is very, very damaged by what's been going on since two thousand and eight, two US and nine. I don't think anyone uphold I MF or even the u N today as an institution with integrity and a

way forward for the world. I think there are a lot of people, at least in the political spectrum, but also among you know, people who wants to to be as you as you talk about being positive to sees these at more of a hindrance than the than the neccelerator of progress these days, because they have been backed down in conventional thinking in terms of the the c RT carbonimation, in terms of the international health plans, in

terms of the security of establishing some monitary system. My slight worry here, Steen is that all so far, most of the ones we've talked about, it does seem all too plausible, either very likely or underway already. And there's another one here that that I also think is all

too plausible in a good way. By the way, over the next years and l'st number ten, tax haven band kills private equity, that new taxes are introduced that really do as well the beginning of the end of the private equity industry, and in particular that in the US and hopefully in the UK as well, at the carried interest, that is tax does capital gains at the moment ends up being taxed. There's ordinary income which would push a

lot of the participants are in it for the carry out. No, yeah, but but you do you also understand it's it's quite a controversial call, obviously, because private equity is very much an intrinsic part of institution. Port forward is very much part of family offices. But what we're trying to say is that if if you and I am actually very positive, we can get to that ultimately. But but the absolutely we promise the the cliffhanger is we are going to

be positive ultimately. But but if you want to think of a world that works better, a world that is more productive, we need to stop making it. Uh. We need to stop allowing that people do things for tax reasons. People should do things for productivity reason. They should do it to be part of the solution, not being part of the problem. And a lot of people in a private the space will say, I look at how many jobs we have created, how many jobs we do support

by doing this. But I would argue, and I can't counterprove that I enaciate or form, but I will argue the capital argut too. Care of that. Before private equity existed, private equity, you know, has grown outside its scope in a sense that privately is supposed to be these investment that us very which is very difficult to put onto the public marketplace, and then there's a better protected, better

grown inside a private sphere of high risk capital. But these days they just pretty much sells companies to each other. And I think there is a number of bad examples of how the deals has been driven by tax events, not by by the the willingness or even to to to do a better job or create jobs or doing something. So I think in a world where we already started on a minimum tax in a CD, it's not unlike

the ou city also go to full full lengths. It says, uh, we need to have a philosophic discussion about why is

there countries in the world which only businesses two a vortex. Yeah, And if we were going to have a conversation about private equity and the way private equity works, would we also need to have a conversation about the way public markets work and the volume of regulation that appears to put people off wanting to be fully listed, and the you know, the rims and rims of rings of it, and the constant transparency that is required, which isn't theory good,

but which a lot of companies use as their reason for sticking private rather than going public. I agree. And what you're really seeing indirectly, and sorry if I or interpret your what you said here, but but you know, it's private equity, among other things, has made it so complicated and the amount of loops you have to jump through in order to to make a public market is no longer about having a great idea of securing capital for it. You need to look at the tech structure,

You need to look at the governance. You need to make sure that you know where does the money come from, where is it happening. So I think it's also to make things easier for the world. Let's break it down to what it is. It's capital. Stock market is as a popping market that racist capital for the industry and is primarily used for that we as investors go invested

in and take the risk of doing it. It's no longer about where we paid tax, is no longer about what what what our starting point is from a tax situation. Benefit is actually because we want to buy into a company who is part of the solution, which is productive and which is making money for its investors. So I think it's it's self fulfilling that if we reduce the complexity of taxes, we also reduce the complexity of doing I P O S and introduction and going into the

public space. Do you think if that would also involve a conversation about E s G overlays and E s G related regulations. Again, I think E s G has a lot of merit to it, but it's no one un you and I know, it's not defined by any accounting board. It's not something specific. It is a very loose, loose definition which everyone wants to be on board on.

And I think if you went through all the company listening foods, you know, S and P five, none of them can do e ees n G. A few of them could do, a lot of them wants to do, some of them can do S, and pretty much none of them do G in the classic sense of it. I mean Meja is a great example of a company which the complexity of the governance is worse than Hong Kong listing. Right, So it's um, yeah, we need we

need to slim down the the red tape. But slimming down the red tape also means the rules needs to be clear. Yeah, slim it down, make it clear and make it easier. Okay, there's one in here that I don't agree with you on at all, and I think is unbelievably unlikely, And I think you've just put in to tease some of us, right, which is number five. A country agrees to ban or meat production by twenty thirty,

you think, yeah, do you think that's possible. As you can probably tell, I didn't come up with that one, but I did not know. In the Netherlands, we know we had we do keep reading about the sort of bizarre business of the government compulsory purchasing farms in order to get closer to meeting their their climate change targets, etcetera.

But it still seems a little that But I see, you know, it really depends on on on your perspective here, because as the Sharon who wrote the piece rights, it's if you think about if you really want to reduce your too emission and going to a carp in neutrality,

you need to do things two things. You need to account for what you import one thing, and secondly we need to address the fact that agriculture and the feed start that we produce is a huge chunk of the total to you or two emission that we do do. So I don't think it's unlikely a country that being Sweden on the evilence is something similar, over the course of the next three or five years come up with a plan which it could start like something no no

meat is served in the public sector. Then ultimately it becomes you know, either with the high tax or or marginally changing. But I think if again, I don't know the edge of your children, but when I talk to my children and their friends or whatever, I mean, this whole plant based thing is is real. It is something that they want to achieve, even partly some of it is for health reason or some of the parties for

the for the carbon emission part of it. But but I do think that in a world that loves wokeness and being politically correct, and in a world where I which is one of my actual forecasts, where government's intervention and regulation is going to increase, not decrease, I think it's very likely what happened. So I have to disagree on the probability, but I'm probably, to be honest between privately, between you and me, I'm probably at a you know,

thirty to four likelihood, not at sixty to seventy. But but if you last young people on my team, they are probably a sixty. I have to tell you that this conversation isn't just between you and me exactly, but I know it's interesting. I mean, you know, I agree with you that when you talk to young people this is what you hear that they won't go plant based plant based, and that they worry about agriculture and the environment,

et cetera. But on the other hand, we know very well that most of the applied based meat substitutes simply aren't selling almost to eat them. It's much easier to talk about being plant based than to actually eat that heavily processed mark correct. But part part of that is

also technology not going through. I mean, as I'm told, you can have artificially generated chicken and the likes, and and then the price to market is too expensive right now, So maybe it's again, as for usual, just waiting for technology to make a breakthrough. And you're right that it's it's it's very much a product. It's it's a vision shorter of products, basically, right, it's a vision short of

a product that is exactly right. And I have actually spoken to several of the companies that make this kind of lab grown meat or attempting to make lab grown meat recently, and you know, I told it's very effective, just insanely expensive. But then I have this sort of

strange worry about it. If I wonder if if you would share that when you look at say vegetables that a growing hydroponically, everyone still says that tomato grown in soil still has a completely different taste and nutritional breakup to make up to a tomato grow purely and water, because soil contains magic, big, bigger parts on fine, I want to believe that, I want to believe that you know,

the way we farmed have some validity. But what's interesting, and I'll tell you something that right now the Danish we had an election, then we haven't formed a government, but a big chunk of the parliamentary conversation going on right now is exactly on how to treat the aguaculture sector. And then which is of course is a it's a

big export component. So basically what is the sort of the Social Democratic Party in the left leaning party wants to make the h the aguaculture sector more accountable and at a bareminhum have a plan to reduce the CEO two. So maybe maybe the answer to our Christian is one

technology and a vision with more products. But it's also the fact that as agriculture is forced to reduce is CEO two footprint, the availability and the scale of being able to actually feed the world becomes smaller, so we actual you need and it's driven towards this plan base, not because it's nice and it's it's vogue, simply because the world needs it to do. Don't forget this whole fertilizer crisis. I'm sure you've done some stuff and that as well that we had there is, you know, being

a pipe fline fire. I know for a fact that when you increase fertilizers by ten percent, you get ten

percent more growth. Right now, the world is operating at sixties off the fertilizer that they normally use, which means that the the you know, everything equal and when you come into the next season, there is a potential that we come up short in terms of the the the the number of products that we can use out of the agriculture productor Yeah, but I suppose what we must do is about we want positive listeners any second hour

missing positive. They have one more negative thing, which is that my concern would be with agriculture that we make the mistake that we made with energy of jumping the gun and thinking that we have technology in place for a transition before we do and ending up with not quite enough of the thing that we were you need extremely valid point, and that is the whole theme of the war economy, that you prioritize some action without actually following up with the tangibles, so to speak. Okay, right

here we go stein the optimism go go yeah. So in the market, as you know, there's a saying where if you need lower prices, you need higher prices. And I think if you look back at twenty two and look into twenty three, I think to some extent, the Russian did us a favor. I think the energy agenda and to talk about energy and the replaceing of energy and the revitalization of the nuclear power sector has moved more in the last six months than it moved in

the last twenty years. I think there is now a political platform to stand on to understand better and to mitigate some of the shortcomings that you just pointed out.

In the agriculture space, we talked about merely the fact that we have great aspirations, but we don't have to have we don't even have the physical intrastructure to deliver on that aspiration in terms of green transformation, and certainly not under a world where the monetary policy is tired and exhausted and where the handoff will be to fiscal and as we push on the fiscal we will move into more constraints shown by by this analogy to the

war economy. But what I'm saying here is, and I go back to that what I wanted to point out earlier, If you look at the tenable assets in the world, they constitute less than ten percent of the value. But imagine that we need more military spending. We need better infrastructure, better internet, better points, we need better energy grids, we need to do carbon cabling instead of aluminum cabling. If we move to that, we will of course go through

a period of sunken cost and initial investments. But what comes under the other side is a massive increase in productivity because I think the problem with the world over and under this uh, this subject of of dealing with crisis for increasing dead levels and pretending that's no inflation ary impact, has gone. That that is that needs to be gone, because if it's not, we're going to go back to the old ways two point three five inflation forever.

And you know, cost the capital being low. But right now, I think Goldman Sax last week came out of report that the average working cost of capital in the US has moved for six hundre basis to bor into eight d basis. Point, so understand this, and and we are now an environment where to actually borrow money and be profitable on the project you want to start up, you need to have a return on eight percent. That same threshold list than twenty four months ago was close to zero.

So we created a massive amount of capital investments and projects that had no in goal, no productivity embedded into it. But it was really about the amount of via balls. So I think when I go to universities, when I went to business school universities over the last year, they all tell me they just don't want to They just want to do an app and make a hundred million dollars. I think when I go to university in business school the two years from now, they want to be in

businesses that are part of the solution. And it's not going to be because we want to. Is not because we plan it, but simply we need to find productivity to reduce inflation. And when we get the productivity, we also get the new amounts of jobs. We also get better social balance, and we get governments that it's again then able to not not not feel like they are skating on ice, but they really are having a firm grip on the stomach and daring in the car properly.

So for me, the next five years, ten years is going to be the most productive, most interesting years in my career. And it's been a very long career already, simply because we are in the worst situation we've ever been. We are met by constraint after constraint. But as we are met by constraint, the ingenuity and the ability of both business and the microstructure to step up despite the heavy hand of government will be massive, in my opinion, fantastic.

So the rising cost of capital is a very good thing. Let me and I agree with you. By the way, let me just ask you quickly, what is it that you suggest to young people that they study now, or that what careers they go into. I'm always telling them to go into the fossil field industry because nobody else is and they'll make a fortune. What are you telling them? They look horrified. They look horrified, And then I try and explain that, you know, we need this stuff. It's

a good thing. We're going to need it for a decade to come. Someone someone's got to get it out of the ground, and you might as well do it properly. You've been teaching me. I pretend to know about the future, but one thing I am certain about is that the tangible world will be significantly lasher ten years from now. So my advice to any person in the world who wants to be about solution is to find a job or educate yourself in is in what I called the

tangible world. In the real world, this dream about creating platform scared being Amazon to deliver your underwear with the drone one day early is not going to solve any issues. But addressing the apprenticeships shortest that we have the skills of operating a machine, the skills of operating awater system, the skills of operating environmental issues, and all this is going to be part of solution. The money is going to be made, the job security is going to be

in the tangible world, not at the intangible world. So to some extent that that of course also entails mining and fossile and all these asset groups. And then I think it's going to be a huge reality wake up because when people start to focus on what is solutions instead of non solution, then it will change. And I give you a great example from the scanning a Wan world. So, after the two thousand and eight two tho nine crisis, the biggest union then Mike, the medical union, decided, and

this is interesting. They decided they were no longer in the business of keeping jobs, but they were in the business of creating jobs. In the following ten years, the metal units in Denmark not only had the highest marginal

increase in salaries, but also had the highest productivity. So I think sometimes it is as simply as that, as changing the world from one where we're trying to save god what we had yesterday and moving towards the world where we are changing the world to creating more jobs, less inequality, less carbon footprint, but also a world where there are more reality and less virtuality. Steve, thank you so much for joining us today. That was absolutely fascinating.

And now we know what our children should do. Children study engineering, and we know what we've got to look forward to. When I hugely appreciated it, and I have a horrible feeling, or are a good feeling that quite a lot of your predictions this year are going to come true, if not in twent three, but suddenly over the next five years. Thank you for joining us, Thank you for having me. Thank you everybody for listening to this week Marion Talks Money. We'll be back next week.

In the meantime. If you like our show, and I'm pretty sure you must do after that conversation, please head on over to Apple Podcasts or wherever it is that you listen to podcast, rate us, review us only well obviously, and subscribe to us. This episode was hosted by me

Marion Sumset Web. It was produced by Summer Sadi, Editing and sound designed by Blake Maple's Special thanks to Stein Jacobson and don't forget to sign up as well to my colleague John's topics newsletter Money Distilled when lots of things that we have discussed today will be discussed again. The link is in this show notes. Stein talked to you again next year. Thanks so much,