Perpetual Motion Stocks

week on the show. It may seem cold, but in the COVID nineteen era, the stock market has rewarded companies that are labor light, that focused on intangible asset growth and digitization, at times at the expense of the human worker. In part, it's a fact that helps so the disconnect between the stock market and the economy of late a divide that was again on display this week as stocks rally to records while the US capital was being ambushed.

Today we bring you a guest who really has been at the forefront of this type of analysis over the last year, and as always, will close out the episode with our tradition, the craziest thing I saw in markets this week, Um Sarah, I think we can all agree on what the craziest thing we all witnessed was this week. Whether or not the market reaction was crazy or not,

I don't know. I don't know. This week was full of crazy things that is beginning in a very mike, God help us all, but anyway to help us make sense of it all. We're very happy to welcome back to the show. He's the director of Global macro Strategy at stone X Group. His name is Vincent de Luard. Vincent, welcome back to the show. Thanks hing me. It's always a pleasure to to see you and I love your podcast, so thank you, thank you, thank you. We're blushing, well

you can't see we are, you can see ash. Whatever the sound of blushing is will We'll get the producer to add some sound effects. But uh, you know, if

it's an UM yes, Sarah pointed out. Sarah and I are both sort of fascinated with this uh notion who came up with this year that how it's a it's a bear market for humans UM based basically on how the stocks of companies that do not really rely as much on their human employees did so well this year compared UM to the rest of the market, and you know, specifically companies that that are much more reliant on human capital. I I'm fascinated with this because I think it has

ramifications well beyond the stock market. Um and Sarah will tell you. That means I'm I'm winding up here for like a twelve part question for you. But I know, yes, yes, actually I won't make it a question. I'm just gonna monologue like like a supervillain in a hero in a movie. And uh, and you tell me, yeah, even better, you

tell me where I'm right and wrong about this. But I do think we can connect this back to the events of the week, um and and hear me out, because obviously, the whole history of economic progress is littered with examples of what appeared to be very barish elements for for labor in the short term, you know, whether it be the printing press back in the fourteen hundreds or the cotton gin in the eighteen hundreds, all of this stuff seemed to, you know, basically disrupt a big

source of the way people work, you know, their jobs, their labor. Um the last twenty years, I gotta say, um feels like that issue. But on steroids. Um, just with the the continued automation of everything that continued, you know, uh,

move to retail online, on and on and on. And I wonder, you know, and this might take you a little bit out of your your comfort zone, but um, I wonder if if the events of this week and even of the last four year, is this sort of this embrace of economic nationalism is part of that story. You know, I know it's not a market story itself, but uh, you know, people blame sort of the economic

anxiety on what's created economic nationalism. You know, I don't want to mix that up with sort of the other motivations that are are you know, uh, sort of scarier, whether it be racism or xenophobia and that sort of thing. But I do think the you know, this notion that the the opportunity set for the sort of average American labor feels like it's gone down a lot in recent years.

Am I crazy to sort of connect those two dots that this this sweeping nationalism we've seen um and the bear market for humans are are sort of joined at the hip, are sort of the same story in some way. No, absolutely, I'm actually glad you burned that out. And I mean a st from the day to day market, but I

think it's externally important. I actually I remember writing that piece at the Trump election looking at the percentage of drivers truck drivers in the in the counties versus the Trump vote, and that was a you know, people had come up with like a bunch of indicators. I think one of them was like whole foods, whether the county at the whole foods versus a cracker barrel, as as

a predictor of Democrat versus Republican. Another one that that showed really well was two of them which I think are relevant to a point, how many truck drivers you had and the percentage of Chinese imports from that county. Um. And I think, you know, looking at the Trump phenomenon for these lands of fear about automation, fear that you know, and I think that's you know, it's not expressed correctly, but a lot of the fears are we is there a place in this country for me? Is there something

that I can do? And if we've been everything on to race and to being a soul loser. And I'm not saying these things are not there, because it definitely are. But we also need to not miss what I think trumps Um truly was about, which was, you know, the forgotten man and the prospects for for you know, I guess for them became as a as a light of hope. And four years in we had this pandemic which further accelerated these trends that we talked about, automation, artificial intelligence,

demise of human bear market for humans. And I think this was some sort of a curious apathosis of this movement, the curious events that happened. Do you suppose there's any chance of this sort of rebounding ricocheting back into the markets itself. You know, it's kind of hard to identify tipping points in real time, but to me, this week kind of feels like a tipping point at least culturally, politically,

um in a lot of other ways. And I wonder, you know, I wonder if there are if there is the potential for sort of a backlash UM, whether be amongst the E. S G. Prone type of investors, regulators looking at Amazon sort of running rough shot over over the retail industry. Right, Okay, I think the regulation is far far, you know, regulators is far does not understand these issues UH and and the SG movement I think

contributes to that. I actually had a piece following the work with Donald Sarah on the on the Bare Market for Humans, on how E s G makes the problem worse. UH. So what I did is I looked at the I think the largest thirty E s D funds equity funds in the US, and I compare their holdings UH to the rest of free thousand. And I look at the number of employees UH and the the average eh D company, so that the one the highest eh ranking, he's about

thirty percent smaller than the average restauran three thousand. In spite far the biggest difference. I mean there are other small different and is like they're more profitable. Uh. They generally have better balance sheet, so there's a quality tilt which has helped them in But by and large they are companies that trans human. And again, think about how E s G works, Right, I mean that the carbony, the corbon impact of these our master card is is zero. Right,

it's a financial network or the same throw Microsoft. The whole which companies can afford to be good to their workers is going to be Again, things like Microsoft that are very profitable big tech monopolies. So structurally here she is actually biased against humans and rewards the company that are already benefiting from all the strengths. So as we she more capital towards e h G phone, I think

we are making the problem a lot worse. And if I were, you know, running an E s G company, I would really focus on the S and s is. You know, before you can worry about how good your governance is and and you know labor issues. Do you have workers? I think the first good thing you can do for for humans is to give them jobs. Uh. And so far sc IS is actually challenging companies towards

companies that either have future to join. Yeah, it's certainly a contrarian view right now in a way to view E s G at a time when so many are

pushing behind it. So thanks to you, Vincent, I've written a lot about this topic over the last year, and you created this factor where you look at intangible assets versus the amount of employees that are hired at a company, and at the end of the year, uh, around the numbers for me and the spread between companies that rely more untangible assets versus human labor versus those that rely

more on human capital was twenty seven percentage points. And I want to turn to how you're viewing where markets go from here. I'm looking at your outlook right now for one, and I'll read part of this for our listeners. Um, you expect demand for returns to real goods, so well that demand will return to real goods. And you say the great disinflation of the past decade was at least

partially attributable to the rise of digital goods. Contrary to their real world counter parts, digital goods have almost no marginal cost and their consumption is non exclusive. And then you go on to say that the vaccine will surely invert this trend, at least temporarily. So I'm curious this reversion of the trend, what's it actually going to look like? And you say at least temporarily, how long does it actually last? Wait? Sorry, sorry, I got a butt in

a minute here. You left out the funniest line in his report that that followed that I couldn't read it. You read it, he says. He says the money which was spent on Netflix subscriptions, premium accounts, on Headspace, and don't donations on only fans. We'll go back to bars, restaurants, strip clubs, and the other venues where humans can numb their ex exstential angst. Wow, Vincent, that's a that's a very French way of looking at things, I would have

to say. I'll also point out the fact that every time I tried to forward your notes, Vincent to Mike, I got flagged on Bloomer and I kept clicking send anyway. Anyway, But but talk to us about that that this you know, you're expecting a obviously, this snap back into spending on real world stuff, you know, less on digital whatever, whatever,

your favorite digital time waster of choices. But before we get to that, you're expecting a real SOFTS patch and the soft spot in the economy in the first quarter, possibly even a double dip recession. So talk us through that whole outlook. And sorry to button there, Sorry, but I had to get that. I had to get that part in you're forgetting. Yeah, yeah, So I'm I'm gonna do the the outlook and then then we got to

go into the stars question. So on the outlook at I think what we're looking at today is kind of the mirror opposite of of the late seventies, early eighties where it's a it's a period of transition, so in the early late seventies, early eighties or transition from inflation to disinflation, um. And this year is a transipent from disinflation or even after a deflation to inflation secular inflation.

So that's kind of like the seculdar. You Now, if you remember eight eight one eighty two, there were a couple of inflation scares, like if you look at the Fed funds rate, it really got jacked up almost needlessly to do I think close to eighteen percent uh in ain eighty one, and that triggered an economic recession. So it's not uncommon as as you reach the end of a cycle to one last year, So in the seventh

and the early eighties it was inflation fears uh. And I think this year we're gonna have think could be I don't know, it's not looking that way right now, but we we could see maybe my expectation would would see some some deflation fears again in H one because the impact of the lockdowns is still going to be felt, especially if you look at at cernaal commodities market like oil. Yes,

it's greatly. We're adding at fifty one. But I mean, if you have all of Europe under lockdown, if you have you know, we had a record record deaf Again, I think yesterday. It's going to take some time for the vaccines to be rolled out, and in that time the economic destruction to create the illusion that we are still in that own environment of more deflation, more constuption

online and things like that. And then my guess is at by maybe q Q two already Q three, then acceleration really starts popping up, and then accelerats or second inflation in the second half and then towards and at the end of the decade. UM. Now, let me let me answer Sarah's question on on digital overs is really good. So one of the reasons why I look at it is um because I view the consumption of digital goods

as deflationary. So when your marginal dollar goes to digital goods, which have no marginal costs, you can just you know, the normal laws of supplant demand on the plant, right, you can keep consuming. You know, it doesn't matter how many people are watching the same movie on Netflix at the same time that there is no cost. Now, if people go to the movie there. Instead, you need to be more theaters, you need to hire more workers, and

that creates inflation because you you're consuming really real goods. Um. The reason why I expect that shift is just just what what we saw in Europe this summer. Europe was a really good, good death case in my opinion, because we had you know, very nasty uh lockdowns in in Q one twenty and then by Q two it was over and then most things opened. Uh. Europe was opened for vacation this summer. I mean the Americans couldn't get there,

but everywhere everyone else at a great time. Uh. And you look at the restaurant's booking, for example, in Germany, they were twenty percent over the prior year, so we actually had a better tourism season. And who would have thought that? Uh? And I think that talks to that that desire somewhat natural right after being cooked up in your house, you want to experience thing again. No, you don't want to do another Netflix and shield, you want

to go to the movie. You want to go to two two restaurants, um or you know other venue where you can numb the existent cell of tanks stuff of being a human. I love that line. So, like you said, I mean, there's plenty of pent up demand. We hear this all the time. The savings right in the US is extraordinarily high right now. But how long does this

trend last? I asked, just because it's underpinning what seems like a consensus understanding of where the barkets are going to go from here, and that being the fact that we're going to see cyclical assets rally. We're going to see old economy, real world assets lead this market higher. But what I'm really curious about is how long does that last? For? I mean, eventually do we turn back to this world that we've been living in where people continue to pour into companies and assets that rely on

digitization and automation. Uh. And just this this trend that we've seen for years now and was just accelerated this year during COVID, And that's the next question. And I think that kind of helps us um deal with what I called the Schrodinger's market. You know, Shroddinger's cat, right, it's both dead and life at the same time. UM. I feel that about the market today. We have a Shroddinger market where if you look at the work from

home in DF since November it's up thirty percent. And if you look at the reopening stops there are fully percent. So both things seem to be going at the same time. Um, and I think that that's a timeframe matter, right. I mean, if you just look at the next year, I think, you know, reopen easy office one. But then you can make the case as you do that maybe it's just a blip, like a flash in the pan, and then everything will go back to normal. I'm not in that.

I'm not in that camp. I think that once you start a political transformation or secular transformation, like we are a lot of the ideas that that came up during the pandemic, the overtoned window if you want, as as as opened universal basic income, I think this is going to be it's going to have to happen. I mean

we see the Stamish check. You know it's six No two thousand and after that there's going to be need to be more a student non council a s, a start at home, like the idea to pay a thick in thousand people so people can buy home, so that the notion that the government should use the central bank in order to achieve social and economic objectives explicitly, which is basically m MT. I think this is happening UM,

and that's what that will keep the trend going. I really doubt that a year from now will go back to austerity. I do not see, you know, a key party movement arise from the ashes in in UH for the next mid term. We are, I think at a secular transition in terms of monetory versus fistical, in terms of wealth concentration versus wealth distribution UH, and in terms of inflate inflation to inflation well universal basic in the Revenge of the Yang Gang, I haven't heard about that

in a while, but it makes sense. Listen. I don't think Sarah has any existential angst. I think she's all existential joy Sarah's are right. My exist state central angst right now is I don't know if you can see what My puppy behind me is eating everything in sight and I'm just trying to make sure that my apartment doesn't cover. But we all have our own existential angst that we we struggle with. But if it's so, I

want to get UH. Speaking of angst, I I feel like the word inflation UM is such a sort of red flag word for the markets. Obviously, it's spooks stock market investors to think about the prospect of secular inflation like you're describing. Um. You know, you wrote in one note that and how and and this has been observed by a lot of people obviously that valuations tend to

compress in periods of high inflation. You know, I think back of the Peter Lynch roll a twenty thing, which is maybe an oversimplified idea, but basically that the the P plus the cp I rate should equal twenty in sort of a fair market. Obviously, we're way past that point now. I mean we're peas you know, in the in the thirties, uh on the indexes. UM. But I'm curious how you see it's shaping out with equities this year specifically, because UM, that is a tried and true

relationship that that high inflationary regimes tend to compress multiples. UM. But I wonder is it inflation itself that compresses the multiple or is it the assumption that interest rates are going to rise and that the Fed is gonna sort of remove the punch bowl that that does it to two valuations? And and in the scenario this year where the FED has indicated it's it's willing to let inflation run a little bit hot. Um. Is it sort of

a different regime this year, a change from that relationship? Um? And I suppose a lot of it will depend on how much clarity we get from the FED about exactly how hot they'll let inflation go and for how long. But but how are you sort of viewing that whole issue? I think here and that's the only way I can make sense of this rally is I think most people by now, I figured that inflasion. You know, I made that invasion call, you know, eight months ago, and I

look crazy. Now It's it's everywhere, right, you see, you see in copper prices, you see a big corner with your gold even inflasion, expectation break events rightly rising about two percent dollar index breaking Biddle ninety or at fifty. I mean, there's so many, so many triggers, even though the tenure rising about one. I mean, in two thousand and twenty one, we had so many key level that broke, which kind of just you know, go go go towards

my direction of a high inflasion. Um. Of course, you know the part that I would have expected is the multiple compression is not happening. And I think that's precisely what you're saying, is why do multiple compress when you have inflation? Because you know people expect the fat to titan. Well, what if we have inflasion and the fat does not

tighten um and it's surprised. There's a shocking amount of if we follow through, if you really read the speech by by power, by events, what you see behind it is an ocean and GDP nominal GDP targeting. Uh, the idea that the facts you kind of dropped the inflation target and instead of focused on on on on the level of nominal GDP. Depending on how you said that,

And I just ran an experiment. If you assume that trend growth for was nominal GP between seven and then you would have to you would have kept going linearly like that GDP today would be fifty percent higher. So they can actually, I mean, if you really want to push it like crazy, you could say, well, we need a decade of seven percent inflation to get back to where we should have been absent on the financial crisis,

absent COVID. So if the FED is really serious about this um, it's possible that that that inflation ran much harder than people expect for much longer um. And then that really gives us an in person on the situation. I mean, the analysis that you refer to is based on the seventies. Went back in the seventies, I think Burns was the the Thatch chairman. He actually raised rates. I mean real rates were positive, the rates get up

within flash. In the seventies, we may have something completely different where you see in fashion pick up and rate stay low. Now, my expectation is that what happens is occurs will eventually stephen. So that's to me, that is the trade. If you bet on that eventually the curves stephens, and then eventually I think at some time there would be some sort of a shadow cost of capital that

would be reflected into equities variation. If if really insist on on financial repression everywhere, I doubt that maybe the equity market ends up playing the role of the bond market vigilantes wha was I think, No, this is not possible. The cost of capital is not zero. By the way, another fund that point I noticed in Denmark you can borrow for twenty years at zero percent um. You know, this is at some point, some some part of the market is going to start to realize that this is

not feasible. That's why we like this guy on the podcast. He just called out one of the crazy things that that a Twitter user had sent to us the Denmark uh was a T. T. J. Bellers that that the Twitter that was the one that you think, alike, mortgage rates at aer precent in Denmark. It's just it's mind boggling.

But you know, Vincent, it's it's interesting because you know, there's this function on the terminal that we have that lets you see what people are reading over the last say five minutes or ten minutes, and I I tend to check it obsessively to see kind of like, you know, what everyone's focused on from minutes a minute. And it was amazing because on Wednesday here it looked like democracy was dying, that the capital was overrun by protesters. I mean, it just was the most surreal thing I think any

of us have ever seen in the world. I checked this function. The most dread story at that time was the was about the FED minutes, not not the death of Jeffersonian democracy, but the FED minutes and I wonder you know it. It doesn't sound like, Okay, we don't have to worry about a rate increase any time soon. But it doesn't necessarily sound like tapering is off the off the table. Tapering of the Fed's acid purchase says the years is off the table. We all know what

happened last time, the taper tantrum. Um, how do you have any idea of how you see that that happening uh going this year? If there is sort of even uh concerns about tapering, let alone if they actually do taper the purchases of treasuries and age. I mean, I'm gonna go I'm gonna go m empty on you and and say that it's at this point it's a public finance problem. Um. And that's why I don't believe we can have we cannot have a I don't think we can have a taper A don trum because I don't

think I can have a taper. I think I I need to check the number. But I think for the January, February March, we have were the Treasury needs to roll up one point five trillion in debt for each one of these months. Uh, so that that you know, to all that four and a half trillion that needs to be rolled out, rolled over in three months. On top of presumably I don't even know where we stand the stimulus, but you it looks like the Georgia race is being marked.

We're gonna get the checks. And then you know it was always in the Democrats. It's as always stepping stone for an augustimulus after the election. So um, the amount of insurance that there will be is just so enormous that I really don't see the fat being able to taper, and I don't see the kount of of You know, in prior decades you had excess savings for other countries

that could be deployed to finance U S depicits. I mean typically the Chinese accumulation of of of U S treasuries conversing the current count surplaces UH into treasury holding or all pack doing the same thing. Well, this is not happening this time. I mean, if you'll get all the all exploring countries, they have big, big trouble of their own. You know, if anything, there are more you know, disbursing than than saving. And then China does that record

current counserpaces. But it certainly not investing in U S. Treasury, So it seems just by default that the FED needs to do basically nationalized the treasury market. And that's that's going to be the reality we're going to live in for the next outsaid decade. So I want to ask you before we get to sharing our crazy things, because one of your reports is titled how the perpetual motion stock Market will break? How does that happen if all of a sudden, I mean, the Fed's kind of stuck

the Fed. The FED can't go about doing anything. At the same time, we're looking at m m T, the possibility of universal basic income. I mean, how does the stock market break in an environment that is almost suited for its needs? I would have I think inflation eventually is the key risk you have to worry about, because that will eventually remove the Fed's ability to just, you know,

keep bading out of the market every time. Another thing that inflation will do is that it will invert the negative cooration between stops and bonds, causing havoc for respiraty strategies and also traditional sixty four portfolios. Once saturn, including that report, which I felt was was insane is if

you go on on Vanguard's website. You know they sell the starting date phones who very popular, and I've actually reversed engineer their the return assumption and they say that, you know, fixed income is gonna return five close to five percent a year until the day you retired. Now, I look at the v b t i X, the Vengar Total Bond Market Index fond, and I found that ninety nine p nine percent of the funds of the holdings of the securities in that fond yield less than

two one a half percent. So you promise five and then ninety nine per time year less than two an a half. I mean, at some point this line is going to be exposed. People are going to stop questioning. I'm going to start realizing that, you know, this is just impossible, and maybe inflation is the one that does that. As I realize it, it's like, well, why my buying you know securities that yield like, you know, zero point

five percent even though on promised five. Um. So I think infaction is the biggest risk if at the second race that I would mention insure mentioned professional emotion engine Um. You know, one of the reasons you can't build a perpetual motion engine the physical world is because their energy leaks, right, It's the first stor thermodynamics. You know, every time you convert something into something else, you have a little bit

of energy left, whether it's heat or friction. I think in the financial markets the equivalent to that would be bitcoin on gold. These are leaks from the system, right, These are ways that people can you know that the you know, money is being injected in it, and then it leaks from goal and bitcoin and obviously we see that the leaks are making becoming bigger and bigger by

the day. Um. And then the third and last point, which we only the spoke plenty about, is I think that the rise of a new political agenda that becomes much more focused on humans, on infrastructure, spending, on on deficits, on real distribution, on anti trust. And we are thinking

at the very early days of that. But as the decade progress is a thing, this is going to be a shift kind of like the progressive shift in in early twentieth century until the out in the late sixties in the US, which which I think is again Donald this new year. That target date return works. If if you're planning to retire, I think right, that was that was the time to retire generation. That was that was it when we missed the boat, just put it on

the fixed income and uh wow, can you imagine. Well, with all that existential lengths out of the way, Sarah, it's time for the crazy things. Angst stand clearer of the craziest things we saw in markets this week. Let's start with you, Sarah. I'd like to start with you. I like to just put you right on the hot seat.

So nice of you. I actually came with a couple this week just because when I was getting ready for this recording, I was just looking around and I was like, you know what, there's too much crazy going on right now. So I'm gonna I'm gonna use a couple. So one, um, I'll go to Wednesday. So Wednesday crazy crazy day for obvious reasons, essentially when the U S. Capital is being attacked. I looked at total call options volume, uh more than twenty nine million call options traded in the stock market.

That is the fourth most in history. And then of course the other three happened. Um so just in a day in which I mean, you can't believe what you're seeing on your television screens twenty nine million call options, which is stunning, and then on Thursday we get bitcoin fort and at the same time you have Tesla rawling for a temph day, which is the longest winning streak on record, and now Elon Musk is the richest man

in the world, overtaking Jeff Bezos. So mind blowing stuff going on this week to kick off the new year. It is a strange new world. I agree. I agree, that's stimmy. All the robin Hood traders and they're they're buying calls. Vincent, how about you? Did you see anything

crazy this week? Yes? Yes, And by the way, first one, I want to give a shout out to too, Sarah for you know covering this this retailed frenzy option trading insanity and now you were one of the first journalists to do it, and you know, at first people were looking at it skeptically and it turned out to be I think one of the driving forces of and you call it it early saw a good job, so I

appreciate it. I mean, I'll be the first to admit the first time I wrote about it was right after we got first quarter earning statements from the brokers, and you just saw the account openings, and I was like, you know, I think we have something here. And I started speaking with retail investors who are new to it opening up new accounts. And then I mean, at that point in time, I don't think I could have imagined

what would have turned into. But I believe let me, let me go to my crazy thing, which which I know is not something that you're familiar with, or I'd be very surprised because about strip clubs actually existential answer. Yeah, So as as part of that existential angstraight, I was actually looking at a strip club and whether there was any stock on that because I thought, hey, you know, pandemic is over, maybe maybe people want to have a good time. So that it turns out there is actually

a small gap. It's called r CI Hospitality Holdings UM and again at background, we had a pandemic last year. What was the twelve month return for our CEI of Spetality Holdings, which is a strip club operator mostly out of Texas. Settle, give me a guess. I'll say, I know it's gonna be counterintuitive or you wouldn't be mentioning it, So I'll say, plus Sarah, I'll take the over on that.

So I'll be smart and say any one so you'll have a year with a global pandemic and meant that they social distancing and lockdown, and a strip club operator doubles in that year all time high at any trades for a hundred times, a hundred times earnings, highest valuation on record, and so forth, and h The reason I bring that up, I think is is also to to highlight, um,

how crazy the rally and small caps have been. I felt two months ago there was an opportunity on smoke caps actually compared to the you know, the big tech companies. But since November, I mean the Russell's two thousand has been on fire and pretty much every name, including strip club operators, that really increased dramatical in value, which kind of brings me to my my reopening trade. I think, you know, I still like the reopening trade. I just

don't like it in the US. I think people need to look outside of the US, especially look at the country explain. I mean, to miss, Spain is like the perfect on tie COVID country, right, I mean, it's a beach bodies, clubs, restaurants, so tourism. So if you want to bet on things. Coming back to normal you buy the IBEX verty five index and here you see actually valuation by not are much lower than they work with pandemic what in the US, even the most exposed name

of you know, are very expensive. So that's the case for international is the U S which I think he's kind of the one of these trends that he's a that he's already changing from the you know one to the cry day k Well that that strip club operator is. I guess it's the exception to your bear market for humans thesis. There's that one. You know, it's hard to automate that that profession. We're in the midst of the return to real assets. That's temporary. So many comments, I'm

not gonna make uh for good reasons. All right, Well, that's a good one. That's a good one. I'm I don't know, sorry. I think we gotta give it to Vincent,

but I'll give you mine anyway. Just in case. Our colleague vill Donna had interesting right up of a some commentary from none other than Bill Miller, you know, one of the most famous value investors of the twentieth century, and he sounds very very bullish on bitcoin um And the reason is he thinks, you know, there's been a few companies that are actually sort of keeping their cash reserves least a small portion of them on their balance sheet in bitcoin. Um, and he thinks that trend is

going to accelerate. I think the quote was a torrent of corporate cash into bitcoin. And the reason I think this is crazy is I'm not saying he's he's wrong. He very well could be right. But to me, what's crazy he's just how far the pendulum swung in terms of sort of old school equity and investor types who used to just roll their eyes completely at bitcoin, so this year going you know, the opposite way and and really making a case for making a bowl case where

But it so I gotta wonder. You know, people love bitcoin allegedly for where it's non correlation to other assets, but you start loading up corporate balance sheets with bitcoin. Uh, that doesn't sound like a recipe for non correlated assets to me anymore? Is uh, where do you see that trend going? Do you think this is uh, you know, something that more companies could could get on the bus with, or is it you know we'll wake up one day to a negative bitcoin day and that that's where is

just gonna go away. Well wait wait, wait you go to bitcoin day. I mean it happened before, and you know hasn't ready hasn't ready done much for uh for for bitcoin. Um, I think what your point is an interesting thing is is the institutional adoption of bitcoin is something that really impresses me and and basically turning it into an asset class. And I mean it's probably not the answer you expect, but for me that the question

I think is one for regulators. Um. I mean, I'm convinced that at the end of the day, Um, you know there will be some something will be done. As Bitcoin it's too much or the threat to the existing infrastructure the financial system to be let alone and to be like but but the more it grows, the harder

it is going to be too to underline it. Especially if we see you know, those things actually saying open bound sheet or even like minuture fronts or you know, an accentuary product that that a little bit coins, then I mean, you know, it won't just be like cracking down on a crazy on a bunch of crazy loonies that are you know, day trading from their basement. But if it coin becomes like something that people actually use

and invest in. Um, I think it will make the the unfolding which I think will need to happen again. I don't think governments can allow a parallel currency to develop and that they watch. I mean, it's an essential part of serenity. Uh. And I would really wish to know what regulators are thinking of doing. And the more the more they wait, the bigger problem grows. Yeah. I think everyone's hyped up about possibly getting that ETF this year, and maybe that could be the one, the one sort

of pushback we get. I don't know, I don't know hard to say. I guess we have to hear who the SEC chairman is. Certainly, I mean, it's been unbelievable to watch. But before we let you go, Vincent, I have one more are from Twitter, and I've got to read this. This is from John Luca Sagretto and he did some serious reporting here, so I'm just gonna read

this for you. Around one month ago, a post on Wall Street Bets was made regarding the fact that if everyone on Wall Street Bets bought at least twenty five shares of game Stop, they could end up owning the entire float force a short squeeze and also paying themselves out with a free PS five once they became quote owners of the company said the next day the stock was up around six percent and closed of two percent.

The stock was then up for the week around two point four percent before crashing in just five days between the eighth and the fourteenth of December, which is the most he points out. Then he goes on, he says, and here is where things get interesting. Dators in Wall Street bet didn't give up. Since then, the stock is up fort and people in Wall Street bets are celebrating their gains in the classics style. Uh. And then he

sent a fun video to that's some serious reporting. Uh see the deepest crazy thing message I ever got in and just goes back to the retail story of the year. I mean, it's what It's unbelievable. I feel like Reddit is to the stock market what the Trump's supporters are to the Capitol. You know, they just storming the thing, running rock shot, sitting in the big comfy chair at the front of the room, doing whatever they want. I'll let you run with that analogy, Mike, Okay, let did happen?

But Vincent Delawart It's always such a pleasure to speak with you, to get your thoughts, always thought provoking, and we're so happy that we could have you on one of our first podcasts of the year. Thank you so much. Always a pleasure to keep up the great work, and I'm sure you have many more crazy things to report this year What Goes Up We'll be back next week. Until then, you can find us on the Bloomberg Terminal,

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is Francesco Levie. Thanks for listening. See you next time.