Jeremy Grantham's Market Meat-Grinder

the index has gained more than ten percent. That's led some to speculate that maybe the worst is over and we're actually at the beginning of a new bowl market. Well not so fast, says this week's guests. There's likely more pain ahead and you'll probably want to listen to him because he happens to be one of the most well known and experienced investors around and he knows a

thing or two about spotting bubbles. But first, let's stock socks. Yes, first, let's suck sucks with our guests, who I know, especially terminal readers, they love to hear from him. They want to know what he's thinking. It's Jeremy Grantham, He's the co founder and long term investment strategist of GMO. Thank you so much for joining us. You're welcome, pleasure. We're really happy to have you. So you and I actually just so readers are aware. You and I spoke a

couple of weeks ago. We talked about some of these things, and I was hoping you could maybe just start with you warning about a plunge in the stock market for twenty twenty three. How do your views align with what we've seen so far this year, and maybe layout for our listeners what you're predicting for the remainder of the year. Yeah. No, it's doing fine. It behaving traditionally. My last paper was called after a time out, back to the meat Grinder,

and well, l is a vegetarian German. You gotta watch. Do you want to hear that? No, it's meant to sound painful and brutal. And the idea was that I, personally, I'm a great respect of January as an unusual month. And what January does is it tends to be pretty kind to small small cap and value. Indeed, more than one hundred percent of all the small cap effect so called has occurred in January for the last one hundred years.

So it's huge for small and value. But it's also has this rather more complicated thing, and that is it does very well for stocks that got utterly hammered the year before. That's pretty obvious. What happens. You lose forty fifty, sixty, seventy or so, you take your losses to reap the tax loss effect, and then you have the money in your hand, and you have a year end bonus, Christmas bonus and so on, and you look out into the

new year. You can you can see them as bargains sat down a lot, in this case the growth stocks, and so you buy it. So I was kind of fearful of that were the Grantham Foundation cut back its short position in NASDEK. Didn't eliminate it, by the way, but it cut it back in honor of the January rally. And we look back at what happened in two thousands.

There are only a handful of great bubbles that look like this one, and the one that looks most like it is the great tech bubble of two thousand and During two thousand, the blue chips continued to go up, and they shot the dot coms, and then they shot the junior growth stocks, and then the meat im growth stocks,

and finally the great ciscos of that era. And by the end of the year, the NAS deck was down, and a lot of the growth stocks, because the NAZ deck is a little more diverse by a lot of the growth stocks were probably down about an average of fifty or sixty. It was a blood and that pretty much sums up what happened to highly speculative speculative stops last year. Don't you think I mean they were They

were taking all manner of grief. Kathy woods portfolio was down I don't know sixty so and so what happened in two thousand and one. January two thousand and one was up twelve percent, led by the specs that had been wiped out the previous year. This seems, you know, so boring as to hardly be worth commenting on, but that is a exactly what happened this year. And one of the proofs is if you take the Order of Horror last year and flipped it, that is precisely the

Order of Heroics this year. And I own one of these by accident. Eight years ago. The biggest investment I ever made was in quantum escape, brilliant research enterprise doing solid state battery work, but it doesn't have a product yet and won't for a couple of years and so on. So it was right at the top of the list. And it did utterly, brilliant, brilliantly in twenty twenty, and it came out at ten as a spack four times my money. Yeah, not bad over eight years, not great,

but pretty good. And then it went to one hundred and thirty one fifty two billion dollars for a second bigger than General Motors or Samsung as a battery company, no sales over venues for a few years to come. It had become a meme stock, but I was too close to it and too heavily involved to really see that. I understood the meme stocks, and I thought this was pretty impressive at one hundred and thirty fifty two times

my money. And suddenly I had a holding that was worth six hundred and twenty five million, far and away the biggest, I mean by more than ten times the biggest holding I ever had, probably twenty five times the biggest. And then it started to decline, and it was the first one to decline. Why not that's how the great bubbles start. By the way, they don't start with Coca Cola. They start with the craziest, most advanced stock, and that was Quantum Scale. It started down in December twenty twenty.

Early in twenty twenty one, the meme stocks joined it, and Cathy Woods's portfolio got into step, and they all started to go down. Everyone said, well, it's a great ballmarkt. The SMP was going up, but anyone who won't stops news differently, and they went down handsomely. And then into twenty twenty two they continued to go down, and by December twenty twenty two, Quantum Escape was five point one.

Now this is pretty a pretty good trip. Comes at ten, goes to one hundred and thirty one, and it's now five point one in December of last year. So what did it do in January? Yeah, that led the way, went up one hundred and twenty percent, not bad for four or five six weeks, and then right behind it at Kathy Woods's portfolio, I don't know, up forty percent, and then the meme stops thirty forty fifty sixty percent rallies all the way down the line. It was it

was perfect. It was almost too good to be true. It was eerie in its orderliness. Anyway, that's what happens, and it didn't stop the decline. In two thousand and one, they had a brilliant twelve percent January. The year was down twenty The nasdack, which had been down in two thousand, went down twenty percent the following year and thirty percent in two thousand and two. That is what happens in

the great bubbles. They have wonderful rallies. They can have spectacular January rallies because they have more tax lost selling than any other situation. And this has been following the lead of two thousand perfectly. Cheremy, I wonder um. First off, I heard those sirens coming. I thought the bulls had sent some some police to pick Cheremie up there for

a minute. I don't know where. But you're still I didn't even I didn't even hear I think, but well, that parallel to the dot com bubble, do you think, well,

that go from peak all the way to trough? Because you know, I don't have a chart in front of me, but I believe the bottom wasn't until two thousand and three, right, So you know, the bottom was in late two thousand and two, two thousand and two, Okay, but that would still mean we've got, you know, quite a long you know, the forget about the Y access, that X access has got quite a bit of runway left till the bottom. Is that? Is that how you're thinking about it? Yeah?

Mostly the great bubbles when they break, they take a long time. There there's an exception, but they typically take a couple of years, three years, and every now and then they get rid of it in a real hurry. But my guess was this was going to be a long,

a long one. The buy into the idea that stocks only go up, and the amount of speculative craziness that was set in train by the by the COVID supplement payments meant the individual participation was actually off the scale, bigger than two thousand, bigger than the dot com And so this looked like it would have a whole lot of by the dip from day one, and it's had

a lot of by the dip. But but two thousand had some wonderful rallies and even in nineteen twenty nine it rallied almost forty five percent off the lows of twenty nine until April of nineteen thirty. Hell of a rally must have made people feel that the worst was over. And then it rolled over and went down, as you know, infinitely almost down well over eighty percent on the SMP, and most of the speculative index went down ninety five give or take anyway. Let's hope we don't go there,

but it just gives you an idea. Great bear markets can have wonderful rallies. Great bear markets can take their time. And we have a very very recent one where quite a few players in today's market experience two thousands and it went on for three painful years, and and and the housing bust, you know, was a quick one, but not that quick, you know, it took over a year of pretty steady declines. So my guess is this one will not bottom until deep into next year. Well so,

h three straight years of losses, do you think? I do think? I think there is a biting chance that this year will not be down that much, and a very good chance, as I said in my letter, that that through April it might easily be up. And that's the presidential cycle, right, yeah, yeah, talk talk to us about that. I don't think many people quite appreciate that signal. No, you don't have many professionals talking about presidential cycles. It

sounds too simple. It doesn't sound like something you could charge a good feed for. The January effects and the January rally jitter. These are considered far too simple to talk about, and it's probably why they work so well. Our first account at DMO forty five years ago involved both the January effect and the presidential cycle. It would worked for forty five years before that, and it's worked

for the forty five years of dmo's career. And we typically have not used it, however, for the same reason that no one else does. But it's been a pet of mind forever. The presidential cycle is about as simple and straightforward and as understandable as anything in the stock market. What it says is that administrations like to be reelected and they like to help their party. So you worked out, eventually,

what is it that appeals to the elector. It's the state of the labor market in the sixth month run up to the election. Anything that happens before that is forgotten. You can be brilliant for the first two years, terrible for year three, and your toast. It really doesn't matter. It's the run up to the election for six months now. The economy, as we've all discovered over and over again, it's a kind of lagging instrument. You kick it and it takes a year or so before it says out.

So you better start stimulating quite a bit before the six months running up to the election. You want to get the labor market improving. You want to start when the presidential cycle effect starts, which is October, approximately October of the second year, last October through April of this year. That window of eight months, seven months is what it takes, because that gives you a little over a year to have it grind through and then start pushing up on

the labor market. And would you believe that that's exactly what happens since nineteen thirty two, This is not yesterday. Since nineteen thirty two, those seven months have equalled the remaining forty one months of the presidential cycle. Don't believe me. Check it take you a while, but it's worth it. Those seven months therefore have seven times the monthly power of the rest of the cycle. Seven times. Wow. So what is happening this time? Would you believe since October

the first markets up decently. My guests, through April it will stay up. I know that unexpected bears that Morgan Stanley and so on are talking about Apelli immediate decline that may occur, but my guest, it's hard to get this market really down until we get rid of April. And as the old saying goes selling may and go away and don't come back to a labor day, the old kind of nineteen twenties saying goes back. It's the

midst of time about the stock market. And this is part of the reason it works, because in year three it really really works. And after April you're on your own. It's a kind of normal market through the election, and then year one and two typically our tough years where a sensible administration recycles to keep the whole thing going again the next time. You take some pain when it doesn't matter political in order to be able to stimulate when it does matter in year three. So that's what

I think is going to happen. That's the timeout. Those two influences together created my point about the time up. After a timeout, back to the meat grind. It now all of the original problems rising rates, relatively slow burning inflation, intractable inflation. It's always intractable, bearing down on the market. The war, of course, like many wars, doesn't easily go away either. So we and COVID has a long reach.

We have a lot of little bottle on e effects that are still echoing through the system, and it brings it up, brings up another important theory of mind, and that is our next paper, which will be called the Long Term is Now. Because we have been harping on long term problems sometimes for fifteen twenty years, like climate change, one day will bite you. It'll be a huge influence on your portfolio. The growth rate of the economy is

slowing down steadily. It will eventually start to impact profit margins. One day. We're running out of resources. Whether you like it or not, We're going to have rolling series of shortages and bottlenecks in resources. And finally we're running out of people. And we're running out of people even faster than I picked up ten years ago. It seems to be accelerating now. If you run out of people, that means you run out of labor. It feels inflationary, doesn't it.

Do you run out of resources. You run out of cheap copper and you run out of cheap lithium, it feels inflationary, and if COVID is hanging around, it feels inflationary. If you're deglobalizing global trade. Some of the reasons for doing that security are really very good reasons. But deglobalizing is an inefficient, inflationary process. Anything that's inefficient tends to

push out the prices. Compared to a world where if you are globalizing, you're outsourcing your jobs to the cheapest pool of money and the cheapest pool of workers in the world. When you're onsourcing, you're doing the reverse. Great for the workers as long over the due, but it's not great for profit margins, and it's not great or inflation.

So I think all of these long term factors are beginning to buy this will make this particular down leg more dangerous and perhaps worse than we anticipated, and perhaps make it go on the long So before we get to more of those long term factors that you were just about when you and I spoke a couple of weeks ago, you said, the range of problems we have right now is greater than it usually is. And obviously

you have decades of experience. So it is it those things that you you were just talking about, the war in Ukraine and some of the supply chain issues that we're still that are still lingering. Is that what you're you're referencing or what is it about the current times that's so different or difficult? It's those two things coupled with global politics, the Cold War coming back and the

deglobalizing that we will we are embarking on. And compounding that is, the running out of resources, running out of people, and climate change are all biting into that equation, interacting with it, making it worse. And in that sense, you could not have at a worse time. And all of this is occurring on the down leg of one of the great bubbles breaking. They have never been very good two thousand. By the way, it was a very benevolent bubble in that sense. It didn't have a savage recession.

It didn't have any wars, it didn't have any deglobalizing, It wasn't running out of anything. The nazteck went down eighty two percent, the SMP went down fifty percent. There was a recession. There was a huge recession after nineteen twenty nine, there was a huge recession after the nifty fifty run up of nineteen seventy two, and there was the biggest bubble of all time. By the way, is Japan who did a duel bubble in land real estate and the stomacht in picking in nineteen eighty nine. And

what was that followed by? It was followed by twenty last years. If you look at the fifty years in Japan before nineteen eighty nine, it was like Para guys, one of the fastest growing countries on the planet, if not the fastest. And then you look at the thirty years since then, they have barely grown that That double barreled bubble and the land was the biggest bubble in history. It was worse than the Tulip bubble. It was worse than the Sausa bubble. It was the biggest, most spectacular

bubble of all time. And the land under the Empress Palace really did sell for more than California. I mean, it was valued at more than the entire state of California. It was crazy. It was more than ten times downtown Manhattan, in downtown Tokyo, and you pay a high price, and happily this bubble is not as bad as that, but it has more ancillary and negatives coming in. And the first phase of a bubble is pretty simple. You take

out the pin for whatever reason. All you have to do is convince people that it's not pared ice forever, which is what they believe at the top of the bubble, and so it goes down pretty fast. Leg one always has a terrific rally, and then it gets into the much more complicated phase three, which is the fundamentals. The fundamentals have been artificially inflated by crazy optimism and by a long drawn out perfect economy, and all of that is turning against you. And the question is how bad.

Is it going to be mild like two thousand, Is it going to be tragic like nineteen twenty nine. Is it going to be long and drawn out like Japan? Is it going to be very painful? Indeed, like the housing bubble that will need unprecedented daylight. It's bad news. You don't want to mess with bubbles. I hold it

against the Federal Reserve. Of course, they created an environment, pushed up the price of all assets, all every asset on the planet, and then they step back as just something to do with them when these bubbles eventually break, as they have done in two thousand and the housing bubble of two thousand and six, two thousand and seven, and oh my god, no one could have seen this coming. These events they stick out of the database like him Alayan peaks out of a playing Guys, do not kid yourself.

You couldn't miss nineteen twenty nine, You couldn't miss nineteen seventy two. You could not possibly miss two thousand, thirty five times earnings. Anyone knows that thirty five times earnings is pretty high. The previous high in nineteen twenty nine it was twenty one times. Thirty five is significantly higher than twenty one. In Japan, it actually got to sixty

five times earnings, of course, the biggest one in history. Well, Jeremy, let me let me interrupt real quickly, because you did mention the FED policy and the role it played in creating this bubble. So just to bring that into the present tense, you know, this week Jerome Palets testified before Congress. He was a little bit more hawkish than you know, the markets had expected, or at least the market response to it suggests that he surprised markets with his hawkishness.

You know, the thinking is now the FED funds rate could get as high as five and a half six percent. Talk to us about what pal is doing. Is he being aggressive enough? Not aggressive enough? Um? And will it work? You know, will we he? You know this, the Fed alone be able to normalize inflation or or all those other things that you're talking about, deglobalization, a lack of resources of course not No, they don't have that kind of pilot. They yeah, well they can mess around with interest, right.

They have hardly gotten anything right since Alan Green's been first arrived. Paula Boca knew what he was doing, but since then it's been a long continuous horror ship. They've engaged in policies to drive up the prices of assets, other things being even, and create spectacular overpriced bubbles. They then break, because that's what bubbles have to do. They simply break of their own extreme overpricing, and we pay a very tough price. And then the Fed racist to

the rescue. Oh dear, the wreckage of two thousand. They came in and they prevented it, the SMP from going down more than fifty percent, which it would have done. They with moral hazard, lots of aggressive language, and reduction in rates. They managed to curtail that at fifty. They couldn't stop a recession. They didn't stop the nazdec going down eighty two. They threw the kitchen sink at it. And then what happened to Bananche? He's facing a housing bubble,

he says, Oh, the US housing has never declined. It never had it isn't ever had a bubble before. It didn't have to decline. It was famously diversified between California going up and Florida going down, etc. Or vice versa. And then he said, the US housing market merely reflects the strong US economy. The US housing market has a long historical record. You could measure it. It was a three segment event, which is the kind of event in a normal series that would occur every hundred years. And

all his staff could see that. No one apparently plucked up the courage to tell him, so he could apparently believe that the housing market was unremarkable. The housing market back then was beautifully well behaved as a bubble. It went up and then it came down in a beautiful round trip, symmetrical, perfect, The best one I ever saw so were three years up, three years down. They sucked in an extra three or four people to owning houses,

three or four percent of the public. It went from a normal sixty two percent sixty five or six the first time in history. And then painfully for the marginal buyers, that went all the way back to sixty one sixty two. The housing market went all the way back to trend and actually overcorrected, which is typical for two or three years. That's a lot of pain. It was all their fault, and why would we believe that they know what they're doing. And then they stoked the fire again, and this time

it's real estate. It went to a higher multiple family income for a house than the housing bubble in late late last year, after the biggest year in history twenty the last year, the biggest move including the housing bubble, forestry, farming, fine art, you name it, bonds of course, legendary, the lowest rates in the history of economics, and the stock market way back up. Why would they do this? It's always the same. They always break and everyone says, oh,

it's fine this time. It never has been. Everyone says there won't be a hard landing, it will be a soft landing. None of the great psychological bubbles have ever had anything other than an ordinary recession or a savage recession. There are normal ones and there are terrible ones. There are no soft landings in my little universe of super bubbles that you can see statistically as easy as pie. So why don't more people see them? Because it's not

good for business. The commercial understanding is you're always bullish and that maximizes your money. Why Morgan Stanley is so verish this time? And a little bit of Goldman sence on this is actually perplexing me. It's as if someone hasn't read them chapter two of the Banking Investing Commercial Maximizing your Bumbits Manual. It has gone miss. It's bothering you that, you know, the contrarian view seems to be

the consensus these days, right, Yeah, it bothers me. I do know as a historian that once in a while,

almost everybody gets things right. It doesn't last long, but it does happen from time to time, just enough to bamboozle contrary and I am certainly expecting that this is one of those relatively rare occasions when almost anyone with the brain is being pretty bearish because, as they say, almost to a man, they say, the current stock prices do not reflect the high probability of profits coming down, and that is part of the story. And they're not

even looking at the long term is now. They are not looking at all those longer term factors that we were talking about before. They're not looking really at the long term problems with the climate change and resource shortages and above all people shortages. This people thing, you know, it's massive, it's happening so fast. Jeremy, can I ask you then, when you foresee a US recession because obviously a lot of the data that we've seen coming in

has been very, very strong. And we're taping this podcast before the job's number comes out for February, but a lot of people are expecting a really hot number once again. Economics complicated, lots of cross currents, lots of leaves and lots of flags. And I have tried to avoid spending too much time over analyzing the short term data. First of all, they change it two or three times. Secondly,

it's never as important as you think. The things that really matter are the broad sweeps of events, the forming of the great bubbles, the breaking of the Great Bubbles, et cetera, the rising of inflation, the falling of the inflation. This ridiculous concentration on the nuances of the Federal Reserve, who never get anything right. Why would we believe and exaggerate every little nuance? The market rows up, the market ralls down. It is all ridiculous posts. It is really ridiculous.

Try and concentrate on them. You saying that makes me feel better about my my everyday angst. You've got confirmation rong, Yeah, I can, I can shill a little. Journalists have a terrible job. You have to come up with a reason why the market goes up or down on a daily basis, which would if you've got it right, we'd have to burn you as a witch. I mean utterly impossible. Creative, creative writing. You think that's h yeah, yeah, I mean it's filling up space. Actually it doesn't ac create us.

There every argument for why the market goes up has been used for rick dumes and going down. Jeremy, I wanted to get back to that notion of climate change. I know you've been spending a lot of your time studying the issue, but I want to talk to you about it from the role of the investment industry. Obviously, there's been a big backlash against the notion of ESG you know, investing through the lens of environmental, social and

government governance issues. Uh, you know, some on the right wing really want to do away with that whole strategy of investing. How do you think about it? Is there a role for investing to actually mitigate climate change if it's done properly, or is it you know, a marketing gimmick for for Wall Street to extract higher fee to make people feel good about the way they're spending their investment money. All about you from my point of view

is humans are not great at these things. We've been bred over millions of years, like every other organism, to be incredibly short term and incredibly aggressive to grow and multiply period And anything that gets in my way gets trampled on. And capitalism is very much kind of an extension of survival of the fits. It's very much an extension of the natural process, and that's probably why it's worked pretty well. And capitalism does millions of things brilliantly well.

I mean, balancing the complexities of supply and demand is beyond well. Maybe who in a few years artificial intelligence will be up to it. But that is why the central governments had such a hard time. It's infinitely complicated. The problem is capitalism does not do those things that

aren't in its immediate self interest. If it's long term, get round to it in a couple of years, if it's the commons, If it's something that I'm not getting charged for and I'm inflicting my pollution on someone else, why would I stop doing that out of the goodness of my heart? You know, try and maximize your short term gains is what runs capitalism, and it's what makes it efficient. Most of the time. It only does these few things badly. It does not deal with with the

climate change. It cannot deal with climate change. It cannot act out of the goodness of its heart to forego profits in the interest the collective grand children. It's pretty bizarre actually that everything is career risk in life. You know, you're protecting your job, you're protecting your firm, protecting its image.

Very few people can actually say what they really want to say, what is really symbol and straightforward that we're all caught up in in basically protecting something or other and when when it comes to climate change, we're really not interested in anything other than looking good. We want to, for the lowest possible price, be seen to be the most civic minded. We are not going to give up

anything out of altruism. We can't capitalize in general, can't spell the word altruism or patients by the way, they want quick response, they want profits, and climate change is not their cup of tea. However, dang heavens. Along with being a short term aggressive, grow while you can species, we are very creative, very inventive, and so we have a terrific record in dealing with new inventions, coming up

with new solutions. If we make it through climate change, and I use the word if deliberately, there's a decent chance that this will be existential, that it will remove a reasonably stable global civilization before it's finished. But if we make it, it'll not be because we're altruistic and we see our civic duty. It's because it will be

good for business. It's because the inventions of wind, solar and storage are simply going to be much cheaper than burning fossil fuels, and we will gradually replace everything and it will pay. We will have silent electric helicopters that are getting you there at one third the running cost and half the maintenance cost, and so on and so forth.

And the technology improvements are merciless. They grind ahead, and today's battery constraint will not last, and they will have twice the power to weight ratio, and with a little bit of what based on the latest and greatest ideas, perhaps even four times the power to weight ratio. So we'll be able to fly perhaps even to Chicago before this is finished, and all transportation will be electrified, and we will have plenty of cheap green energy before this

is over. If we can just hold the global society together and withstand the shark to food and immigration of climate change and terrible weather and so on, that's that's a big if, Jeremy, that's a big if. That sounds like Unfortunately, it is a big if, and there's nothing we can do about it. And we phrase we framed this issue as the race of our lives, that the bad news is getting worse at an accelerating rate. We're actually still putting up carbon dioxide particles at an accelerating rate,

although it's just beginning to flatten out now. And the good news is that I think the technology is moving at an accelerating rate. No one fifteen years ago thought the cost of wind, solar and storage would be it's lower than building a coal plant. Today, almost everywhere in the world, and in most places with decent wind or sun, you can build and operate wind and solar cheaper than you could operate a coal plant if you were given it,

built and ready to go. In other words, the full total cost of building and running a solo plant is less than the day to day operating cost of digging the coal, shipping it, and burning it. Wow, that's remarkable. That is that is amazing. Well, that sounds like a nice little teaser of your next note, so we look forward to that, and we'll have to have you back to discuss that when it comes out. Vildonna. Jeremy there reminded me of a good Homer Simpson quote. You know.

It's that beer is the cause of and solution to all of life's problems. And it sounds like capitalism is very similar to jeremy the cause of and solution to all of our problems. Perhaps, but Jeremy, really really great to hear your thoughts. I feel like we could go on for two or three hours. So I hope you do come back some day and unpack some of these issues further. But before we let you go, we've got to do our tradition Vildanna. I'm gonna go first with

the craziest thing I saw this week. It's from Stephen Balaban and it's about a perpetual bearer bond. Now I'll tell you what that is, because your eyes are starting to fog up there. That So a perpetual guy. A perpetual bond is a bond that pays interest every year but never actually repays the principle bearer bond is an old fashioned bond where whoever owns the paper and presents it to the UH the bond issue where gets that payment.

So Yale University has a perpetual bearer bond issued by a Dutch agency that basically dug the canals in UH sixteen forty eight. Sixteen forty eight, Jeremy, a perpetual bear bond from the Dutch government owns this bond. Yale owns this bond. They are still collecting payments on this bond from sixteen forty eight. The bond was actually written on goat skin. Oh, but they filled up. You know, every time they issue, they pay the payment they market on

the bond, so they ran out of space. So there's a piece of paper now that the folks at Yale every few years take to the Dutch Water Agency and get and get their payment clip their coupon. Basically. So, Jeremy, I hate to tell you, but you're now a contestant on a game show. We call the prices precise and the question is what do you think the interest rate on that sixteen forty eight Dutch bond pays to Yale? And if it helps, I'll tell you that the current

Dutch ten year yield is about three percent. It doesn't help at all. I didn't think it would. But this was issued in sixteen forty eight. It's a compliment complicate things. They actually rescheduled it. They redid the yield on it shortly after it was issued, so it's not the original yield. It was changed. But you have to guess what four in a quarter? Four and a quarter? Oh, okay, I'm glad you went for I was going to say something higher,

but I'll go with three percent. Yeah, you think I was tipping my hand there with the correct answer is two and a half percent, but they did the original rate was five percent, So maybe Jeremy's looking at that that chart, So how much have they baked in over the year five percent? So the story says, Um, a few years ago, one guy from Yale went and collected twelve years of interest on the bond. You know what?

His payment was one hundred and fifty three dollars. Oh no, So I don't know why it's worth the flight to go over there. But Jeremy, if I'm showing a perpetual bond at two and a half for you a buyer, so I know I'm an issue. Yeah, that's smart, smart, right, great, all right, that's a good one. You like that one. I think that's the craziest thing I've seen all year. Actually, yeah, you're set, you're you don't you never have to come up with another one. Um, I'll go, I'll go next.

This is a Bloomberg story. New York, New Jersey signed a sister city that doesn't exists. Its sister city, I know, but it's not markets related, So I didn't go with it. Then what I'm going with? And Jeremy actually brought up he brought up the you know, in the future, maybe having silent helicopters driving around for cheap. But we have a Bloomberg story that says Elon Musk is so busy his private jet is taking thirteen minute flights, and we

lay out all of these different flights he's taken. I think it's over the last year, and just it's so counterteen minute flights. Yes, from like that's like the Kardashians do that, don't they from one side of yeah, but it's so counter to his ethos or to his you know climate, yeah, clean en, yeah, clean energy. Thirteen minute flights and he he has taken out of all the billionaires, he takes the most number of flights. Wow, if that was electric, if everything under two hundred miles was electric,

we probably wouldn't even bother to say that. Yeah, exactly right. It doesn't use It only uses about twice to gasoline equivalent of the taxi ride, right, and quite remarkable. Anyway. The thing is, if you value your time at a hundred times average, then of course these things make a lot of sense. Right, He's running five companies, right, He's going from yah from the Yahoo I'm having a senior movement from Twitter headquarters to to Tesla's plant, and anyway,

it is a couldn't Jeremy. It's pretty close though, So maybe that's what I'm thinking. I get to give you

my weirdest little next. Okay, Well, we spent a lot of time working this out, and we think that the parts pamillion in the atmosphere that have risen from two eighty to a current four twenty will peak at about five twenty five five fifty, and we have to get it back to two eighty, and that will mean the removal of three trillion tons of CO two has to be removed one day, let's say, over the next hundred years.

And if we get it down to fifty dollars, which we will fifty dollars a ton, that is one hundred and fifty trillion dollars to remove the CO two after we have gotten to carbon neutral to zero carbon, what are our chances that is equal to one percent of GDP globally smoothed out over the next hundred years. Wow. Well, if we get some goat skin and issue a perpetual

bond at two and a half, that's it. That would papers They would take a lot of goats though, and that would not be environmentally, that would not be all right. Jeremy Grantham of GMO, what a absolute treat to hear your thoughts. And like I said, we could go on for hours, so I hope you do come back. It was It was really an honor and APPROPLI it was fun. Thank you for having me. Thank you so much for

joining us What Goes Up. We'll be back next week and so then you can find us on the Bloomberg Terminal website and app or wherever you get your podcasts. We'd love it if you took the time to rate and review the show on Apple Podcasts so more listeners can find us. And you can find us on Twitter, follow me at reag Anonymous. Bildona Hirich is at Bildanna Hirech. You can also follow Bloomberg Podcasts at Podcasts. What Goes Up is produced by Stacy Wong. Thanks for listening, See

you next time. That that you mean