0:00

Welcome

0:07

to the MedFavor Show. The focus is on

0:09

helping you grow and preserve your wealth. Join

0:11

us as we discuss the craft and investing and

0:13

uncover new and profitable

0:14

ideas, all to help you grow wealthier and

0:16

wiser better investing starts here.

0:20

Matt Faber is the cofounder and chief investment officer

0:22

at Cambrey Investment Management. Due to industry regulations,

0:24

people not discuss any of Cambria's funds on this podcast.

0:27

All opinions expressed by podcast participants are

0:29

solely their own opinions and do not reflect the opinion of

0:31

Cambria Investment Management or its affiliates. For

0:33

more information, visit kymriahinvestment dot

0:35

com. Today's

0:39

episode is brought to you by kymriah. Is inflation

0:42

hitting your wallet At the same time, your investment

0:44

portfolio is performing poorly this year.

0:46

Ouch. With one of the worst starts

0:49

ever for traditional US stocks and bonds,

0:51

is there a better way Cambria thinks

0:53

so. With strategies like global deep

0:55

value, trend following, and tail

0:57

risk, Cambria thinks different. Explore

1:00

why over one hundred thousand investors have

1:02

chosen to invest with Cambria. To learn

1:04

more, email us at the following address

1:06

info at cambriafunds dot com

1:09

Or if you're a financial professional, check

1:11

out the contact us page on our website

1:13

and reach out to your local representative

1:15

today. Investing involves risk including possible loss

1:17

of capital, past performance is not indicative of future

1:19

results. What

1:22

is that? My friends. We got an awesome show for

1:24

you today. Our guests is one of my favorite

1:27

financial commentators, doctor

1:29

David Kelly, chief global strategist

1:31

and head of the global market insight strategy

1:34

team for JPMorgan Asset Management.

1:37

Today's episode doctor Kelly shares his

1:39

view of the investment world today. He

1:41

shares what he expects inflation to

1:43

do this year, subside. Why

1:45

he loves the setup for international stocks

1:47

and why he doesn't expect much fiscal help

1:49

in the next two years. He also talks

1:51

about some changes he'd like to see to improve the

1:53

US, like immigration and education reform,

1:56

and why he thinks the debt bubble is a

1:58

doomsday machine. Please enjoy

2:00

this episode with JPMorgan Asset Management's

2:02

doctor David Kelly. Doctor

2:07

Kelly, welcome to show. Glad to

2:09

be

2:09

here. For the listeners, where's here? Where do

2:11

we find you?

2:12

I live in Acton, Massachusetts, which is

2:14

about twenty miles northwest of Boston.

2:16

We are recording this In the

2:18

second week of the New Year, happy

2:20

New Year, do you have any resolutions? Is

2:22

there one picking around? Do you do resolutions?

2:25

I

2:25

do resolutions. Yeah.

2:27

I sort of do them continually during

2:29

the year. So at this stage, you don't have a

2:32

a new set. I'm gonna be running the Boston

2:34

marathon again in April. I run

2:36

it every year for Dana Farber. So that's

2:38

sort of my big thing right

2:39

now. I was just trying to get this creaky old body.

2:41

If there's enough to tackle the Boston Marathon

2:43

again. If you do it every year, is it

2:45

sort of a continual training

2:47

or do you say two months ahead of time? I gotta

2:49

put in the

2:50

work. How's it work for you? They need to put in the

2:52

work about five months ahead of the time. But the other

2:54

seven months of the year, you can do what you

2:56

like, but the less fit you get, the more

2:58

you have to train up again

3:00

to get going. So did I try not to get too far

3:02

out of shape during the

3:03

year? I've only got one under my belt and

3:05

that was enough. You're one of my favorite

3:07

commentators on the markets to listen

3:09

to. I heard you years ago in LA in

3:11

person, so we're remote. This

3:13

is the second best we can

3:14

do. But definitely have a passion

3:16

for markets.

3:17

What does the world look like you today? We're gonna hand

3:19

you the mic. We've had a pretty

3:21

weird last couple of

3:23

years. Preward decade, really.

3:25

But let's start. What's your view of the world

3:27

today? It's kind of the opposite

3:29

of the start of a tale of two cities. Because

3:32

it's not the worst of times and it's not the best

3:34

of times. And I think people

3:36

take a very extreme

3:38

view of where we are right now, but

3:41

what I see is we've been through this

3:43

huge roller coaster of political

3:45

roller coaster, but then the pandemic, the

3:48

policy response, Ukraine,

3:50

food prices, oil prices inflation, federal

3:53

reserve raising rates, the market having a terrible

3:55

twenty twenty two. With all of that,

3:57

I think people are pretty bewildered

4:00

But as we go into this year, looks

4:02

to me like inflation's coming down. The

4:04

economy is soft. It might be on

4:06

the edge of recession, but that's close if

4:08

we may not have recession. But we

4:10

are going to see slow growth. But

4:12

meanwhile, valuations are lot

4:14

better than they were a year ago, as an investor,

4:17

do I see things out there that I'd want to

4:19

buy right now? Absolutely. Buying

4:21

at this point for the long

4:23

run makes all the sense given

4:25

valuations

4:26

as I say, not the best of times, not the

4:29

worst of times kind of outlook. Well, let's start with

4:31

inflation. I mean, that's a topic that the

4:33

better part of my life hasn't

4:35

really been front of mind

4:37

for US investors for the

4:39

most part. I mean, it's been in a nice

4:42

trend or trajectory directionally, which

4:44

has been down. And

4:46

ignoring other investors around the rest of the world,

4:48

Brazil and Argentina and all

4:50

sorts of other places, Turkey. It's

4:52

something that all of sudden popped back up.

4:54

We did a poll on Twitter last year at one point.

4:56

We said, which is five percent first?

4:58

Maybe I said Fed funds. I can't remember. It was

5:01

basically bonds or inflation.

5:03

Who's gonna cross by first? And

5:05

looks like it might be a horse race.

5:07

Give us a little more insight in this inflation

5:09

discussion. Howard

5:10

Bauchner: This is one of those cases where you just

5:12

got to be honest about the story

5:14

even if it's a little bit unpopular to

5:16

be honest. Because the truth is

5:18

what we've had is a transitory bout

5:20

of inflation, but it has

5:22

been extended by what happened this year

5:24

with Ukraine. So

5:27

Why do we have inflation? It's not because of

5:29

the Federal Reserve. It's not because of printing too

5:31

much money. The connection between the growth

5:33

of money and inflation has

5:35

broken down for decades.

5:37

What really happened is you had the pandemic,

5:39

which restricted supply, and then you

5:41

had the policy response, which not only

5:43

eludes the budget deficit, but it gave

5:45

money large chunks of money

5:48

to lower and mid income households

5:50

in America. And so we had lots of

5:52

spending power with nothing to

5:54

buy. And so the prices all

5:56

shot up. And that's really what kicked off

5:58

as inflation. And we were beginning

6:00

to turn the corner on that. I think we would have

6:02

turned the corner on that in the first

6:04

half of twenty twenty two, except then we

6:06

had Ukraine. And Ukraine

6:08

caused a huge surge in energy prices and

6:10

people very sensitive to energy prices

6:12

as better weather of inflation, and

6:14

then we also had a spike in food prices.

6:16

And all of that kept inflation going

6:19

through the summer, got very hard over

6:21

the summer It's been cooling since

6:23

then. And I do think that going

6:25

forward unless there's some other big shock, the

6:27

inflation rate will continue to gradually

6:30

come down I don't think we'll get to two

6:32

percent year over year by the

6:34

end of twenty twenty three, but I think we'll

6:36

get close. I think we'll be down as

6:38

three point something And I think by the end

6:40

of twenty twenty four, we're gonna be

6:42

down about two percent, probably below two

6:44

percent. I can easily see

6:46

a situation whereby the middle of this decade,

6:48

inflation's below two percent of the Federal

6:50

Reserve's busy trying to boost it back up

6:52

to two percent rather than the

6:54

situation we've seen right

6:55

now. Or over the last two years?

6:56

Thinking of that playbook, is that

6:59

a scenario that we look

7:01

around and say, man, four

7:03

percent bond yields screaming

7:05

by? If that does indeed

7:07

occur. I mean, I think I've seen some of the projections

7:09

where people were really expecting two percent 463

7:11

three percent even this summer

7:13

where some of the of the futures, I can't

7:15

remember, but what's the implications for that?

7:17

Is that baked in consensus? Or is that

7:19

something that you don't think the market really

7:21

appreciates? I don't think it's The

7:23

market fully appreciates it, but I think its biggest

7:25

implication is for stocks and all bonds.

7:27

The long market is cheaper than

7:29

it's been for a long, long time.

7:32

Really, you have to go back to before

7:34

the Great Financial Crisis to find

7:36

bond deals at these levels

7:39

where you can get nine percent

7:41

yield on high yield bonds. You can

7:43

get over a four percent yield

7:45

on a thirty year bond. I mean,

7:47

these are better yields than we've seen for a long

7:49

time. If you go back a few

7:51

decades, historically, it's still not

7:53

that great. On a ten year treasury

7:55

right now, you can make about three point six percent

7:57

but over the next ten years, what's the inflation rate

7:59

going to be on average? If it's two, then

8:01

you make one point five percent in real terms

8:03

per year. That's not actually

8:05

historically a great return on financial

8:07

assets. So when I look at the stock

8:09

market and particularly when I look at international

8:11

stocks, I can see much better returns going

8:13

forward. That I can see in

8:15

the bond market. But I simply, the

8:17

bonds should be part of a portfolio and

8:19

they look much more attractive today than they

8:21

have for

8:22

many, many years. Yeah. I mean,

8:24

foreign stocks is something that

8:26

we have long been a proponent

8:28

of. And if he was a little bit

8:30

waiting for Gooddo, where Historically

8:33

speaking, US foreign coinflip in

8:35

any given year, there's periods where

8:37

each does better not

8:39

even that long ago, you know, the post two thousand

8:42

turn of the century foreign had a nice

8:44

long run, but it feels

8:46

really long to experience

8:49

this US stocks being the only game in

8:51

town. Are there any

8:53

signs that point to a

8:55

catalyst where this

8:57

might be a turn or is it hard to

8:58

say? Well, first of all, you're quite right

9:01

that it's been a very long time. One

9:03

of the ways we look at this is we look at

9:05

relative valuation. So let's not

9:07

focus on performance. Let's just look at

9:09

what price earnings ratios have done

9:11

overseas relative to the US.

9:13

Since two thousand and eight, International

9:15

PE ratios have been falling relative

9:17

to US PE ratios almost every

9:19

year. And now they're about thirty

9:21

percent lower. Now if you think about it,

9:23

there's no particular reason

9:25

why a dollar of foreign

9:27

earnings should have a lower PE

9:29

ratio than a dollar of US

9:31

earnings. About the thirty percent cheaper.

9:33

They've also got almost twice a

9:35

dividend yield. What's been going

9:37

on is I do think the US

9:39

has had a somewhat

9:41

smoother path of it since a great

9:43

financial crisis. We didn't have

9:45

the European debt crisis.

9:47

We did have the Trump tax cuts,

9:49

which made US corporate

9:52

profits, after tax profits, a little

9:54

better. We did have a more

9:56

aggressive response to pandemic, which allowed

9:58

for the economy bouncing back

10:00

faster. And uncertainty in

10:02

general tends to favor the US

10:04

dollar and that tends to push my

10:06

US

10:06

equity. So you can sort of see what's

10:07

happened. Where we are right now is the US

10:10

dollar got to an extremely high

10:12

level in the middle of the last year.

10:14

In real terms, the highest we've seen since the

10:16

mid nineteen eighties, and international

10:18

stocks were very cheap. So since

10:20

about October of last year, we've

10:22

seen international stocks actually beat

10:24

US stocks. They beat US stocks for

10:26

all of last year put together.

10:28

We've seen the dollar come

10:31

down. We think it could come down a lot

10:33

more. On the catalyst, I think that the

10:35

most important thing to think about here is

10:37

not just what's going on

10:39

here and overseas, or

10:41

even what's going on with central

10:43

banks here and overseas. But what's going

10:45

on in the mind of investors? Because

10:47

When it comes to international stocks, when it comes to

10:49

stocks in general, the US

10:51

accounts for sixty percent

10:53

of the value of all stocks in the

10:55

world, sixty percent What's

10:57

also true is the US accounts for at

10:59

least sixty percent of all the

11:01

stock ownership in the world. We are the

11:03

world's great stock investors. Nobody

11:06

does it with as much gusto or excitement

11:08

as we do it. So if

11:10

Americans decide we don't like international

11:12

stocks and we just won't buy that

11:14

international stocks cannot do well. So

11:16

the real question to my mind is what

11:18

makes the average American investors

11:20

say, I want to be overweight international?

11:22

And I can tell Meb people in that

11:25

category right now. I talk to a lot of

11:27

financial advisers and almost none of

11:29

them have clients who want to be overly international.

11:31

we're changing minds. It's not

11:33

really about Putin or Ukraine

11:36

or China. It's really about

11:38

performance. If you have a year or

11:40

two, which the dollar falls,

11:42

and guess what the international

11:44

equity part of your portfolio actually was the

11:46

star of the show? If that

11:48

happens for a year or two, there are people suddenly say, oh,

11:50

maybe that's a good idea. And

11:52

that's what I think gets people

11:54

to move away from their bias against

11:56

international equities. For

11:58

most people, it's just going to have to

12:00

be sort of a perfect moment.

12:02

International equities are just going to have to outperform

12:04

probably because of a falling dollar And

12:06

we're gonna have to do that for long enough

12:08

that the public just eventually buys

12:10

into, okay, we are gonna look at this based

12:12

on fundamentals. I

12:13

like to say for investors, it's

12:16

important to try to be a

12:18

little asset class agnostic, you

12:20

know, not to get too emotionally

12:22

attached. But there's certain assets that

12:25

elicit a very emotional or

12:27

religious cult like response. I mean,

12:29

Crypto has got to be number one,

12:31

but in this cycle, I

12:33

spent a lot of time on Twitter trying

12:35

to mix it up a little bit and try

12:37

to make people think about the

12:39

buffet of choices we have out there in

12:41

foreign stocks has been one we certainly

12:43

talk a lot about. But

12:45

I get more of vitreous and

12:47

anger over the last year or two

12:49

about people who

12:51

put all their money in US stocks,

12:53

about even the prospect of anything

12:55

else. And it's strange to me because

12:57

it's an odd thing to get that

12:59

heated about, but sentiment

13:01

certainly follows price. You

13:03

get a little period. And it seems

13:05

interesting enough because we run some momentum and

13:07

trend strategies over the past three

13:09

or four months. You've definitely

13:11

seen a ticking up of more and

13:13

more foreign and foreign

13:15

sectors and emerging markets come into

13:17

the

13:17

mix.

13:18

I think the thing is that over the years,

13:20

as international has continually underperformed

13:23

US, people more and more

13:25

rationalize that. So, say, well, this

13:27

is because they don't know how to deal

13:29

with debt or this is because they don't know how to deal

13:31

with growth or this is because

13:33

they're always in political conflict. But

13:35

if you look at it with a non biased eye,

13:37

I mean, the truth is this, the

13:39

conflict everywhere. There are, of course,

13:41

plenty of countries around the world,

13:43

which are in much more turmoil than the U. S. But

13:45

there are plenty of countries which are not.

13:48

And I think it's just important to be

13:50

unbiased when it comes to this. And also,

13:52

buying base evaluations. Historically, that

13:55

has worked out pretty well for long term

13:56

investors. You shouldn't be in stocks at all if

13:59

you're not a long term investor. The

14:01

challenge particularly over the past couple of years with

14:03

all the meme stocks and Robinhood.

14:05

I mean, time compression. When

14:07

I think of long term, it's ten

14:10

years plus. And I think a lot of people

14:12

what they're thinking about long term means

14:14

it's quarters and months or weeks

14:16

even at this point, but

14:18

While we're still on the topic of foreign talk

14:20

to us about any shifting

14:23

forces last year,

14:25

the curiosity was that

14:27

foreign did well just fight one

14:29

entire equity market going to

14:31

zero. And then also despite

14:33

probably one of the largest

14:35

economies and also largest

14:37

stock markets really struggling for a

14:39

lot of the year with being

14:39

China, and those two may be

14:42

somewhat related. But talk

14:44

to us a little bit about any just general

14:46

trends of the global

14:48

markets. So let's talk about

14:50

China to start with because after the

14:52

initial outbreak in Wuhan, China

14:54

relocked down and was

14:56

the strictest big country in the world

14:59

in terms of trying to contain the

15:01

coronavirus. And that works

15:03

pretty well against alpha and against

15:05

delta. But it was never going to be

15:07

successful against the Omaha. So

15:09

after president Xi Jinping got

15:11

inaugurated for a third five year

15:13

term, We have these protests against

15:16

lockdowns. The government modified

15:18

its policies a little bit as the Chinese

15:20

government often does. They didn't make

15:22

many changes, just small changes.

15:24

The problem is that this disease is so

15:26

contagious that even though small changes just

15:28

meant they were not dealing with a massive

15:30

outbreak they couldn't control. That point, they

15:32

just throw up their hands and say, you have to get it. We're not

15:34

gonna try control this at all. We're gonna say,

15:36

this is like the flu. You had your chance to get

15:38

backstage. You still get backstage if you want.

15:40

But right now, it's open season. And that's

15:42

what China has done, and it is suppressing

15:44

all information about the

15:46

actual death tolls. So you can hear

15:48

sort of pretty grisly stories

15:50

about what this is doing to older

15:52

Chinese people, but the Chinese

15:54

population has essentially decided

15:57

that it's just not gonna be locked down any

15:59

longer. It can't do that. And

16:01

the reason this is important from an

16:03

economic perspective is While

16:05

China was threatened by lockdowns, he always

16:07

had a slow growing Chinese economy

16:09

with a threat that it might slow down to

16:11

a halt. We have problems right now as

16:13

Ovapong is sweeping through China, the shortages

16:15

of various types of workers, as well

16:17

as medical supplies. But

16:19

this should be relatively short lived.

16:21

I mean, omicron moves very fast

16:23

through a country. So

16:25

within a few months

16:27

and maybe even within a few weeks,

16:29

the vast majority of people in China will have been infected by

16:32

Omicron. And whatever the health and

16:34

result of that is, the vast

16:36

majority Chinese people. This

16:38

means they can just get back to normal.

16:40

And they will. There's

16:42

also significant news that they've had three years of

16:44

lockdown. You saw the pent up demand in the United

16:46

States after one year of a

16:48

lockdown. People really wants to move

16:50

around and see viral subs and friends and

16:52

so forth. I think you're gonna see the same thing in

16:54

China, because you're gonna see a bounce back up 463

16:56

three years of lockdown. Which means that Chinese

16:58

economy will likely reaccelerate pretty

17:00

rapidly in the second quarter and

17:02

second half of this year. That's part of

17:04

the overall picture. And then you look at

17:06

Europe, the eurozone seems to be

17:08

weathering the effect of higher energy

17:11

prices in the Ukraine world very well. did

17:13

manage to restock the natural gas.

17:15

Luckily, they're having a mild winter

17:17

in Europe. And so it looks like they're going to get

17:19

by with that having serious economic

17:21

disruption because of high energy

17:23

prices, the Arizona might tip and

17:25

recession might not, it might get by

17:28

without recession. I think

17:30

the UK will have a recession. But

17:32

all of them, I think if you look at the global economy

17:34

in general, I think it's a slow

17:36

start to twenty twenty three. Because

17:38

of Ukraine, high energy prices, and

17:40

the pandemic in China. But as the year

17:42

goes on, I think you're going to see a

17:45

significant pickup in growth overseas

17:47

I think that's really significant given where

17:50

we think the U. S. Economy is going to be

17:52

going. Because in the environment,

17:54

twenty twenty three, I think it will be

17:56

very apparent that the world economy has actually

17:58

got better growth dynamics than the

18:00

US economy has at this stage.

18:01

Think about China as interesting there's

18:04

probably been no other stock market I can think

18:06

over the past twenty years. It's

18:08

really had sort of boom bust

18:11

levels of returns and

18:13

valuations, looking at some of the

18:15

long term PE ratios, I mean, back

18:17

in, I think, o seven during the

18:19

brick's media, China got to

18:21

some pretty high multiples and

18:23

then goes down, goes back up, goes

18:25

down. And right now seems

18:27

to be one of the cheaper

18:29

multiples in its history. What

18:31

do you think the kind of avoidance and

18:33

poor performance for Chinese stocks has

18:36

been? It's not exactly Taiwan,

18:38

but I think the greater

18:41

conflict between China and the

18:43

United States and China and the

18:45

West sort of nationalism of Xi Jinping

18:47

has, I think, really rattled a

18:49

lot of investors. It's not just

18:51

COVID lockdowns. It's the

18:54

Titfertash technology wars. It's

18:56

what the Chinese government is

18:58

increasingly doing to suppress

19:01

information in China. I think

19:03

it's a crackdown that we've seen in Hong

19:05

Kong. I think all of these

19:07

things make people pretty

19:09

nervous that in the decades

19:11

after the death of chairman Mao,

19:13

there had been sort of a continual

19:15

movement in China towards

19:17

not necessarily an embrasive democracy, but an embrasive

19:19

free enterprise. There's a lot

19:21

more freedom in China because

19:24

of that. That has really

19:26

been called the question in the last few years. And

19:28

I think that's really at the heart of

19:30

the concerns by China. I think heart

19:32

from that is obviously

19:35

a very big real estate issue in

19:37

China. You could see some problems for

19:39

their economy. That may be part of the

19:41

story too. I think the biggest thing

19:43

is just Is China

19:45

going to have collective

19:47

government, even if it's not democratic

19:49

government, it's at least plenty

19:51

of rational lines in the room or

19:53

is it going to be an authoritarian

19:56

government? And I think there are fears

19:58

about an authoritarian government, particularly

20:00

if people believe that the ruler is likely to

20:02

be more nationalistic. I mean, yes, I think

20:05

prudence was our behavior apart from

20:07

very evil behavior with regard

20:09

to Ukraine. Has further worried people

20:11

of Meb Xi

20:13

Jinping if his back was to where it

20:15

would attack

20:15

Taiwan. Hoping freight that would

20:18

not happen. That would

20:18

not be just an issue for Chinese stocks. That would

20:21

be a huge global issue. But

20:22

I think that is part of the worries. It's

20:25

really about the system of government and what

20:27

the Chinese government will allow.

20:28

Just mentally trying to think of all these

20:31

giant asset managers, the

20:33

headache they they have

20:36

with a market like that. I mean, look, the Chinese market

20:38

shutdown before as Russia, so it's

20:40

not exactly new or

20:42

without

20:42

precedent. And the

20:43

information is very important to you because

20:46

the Chinese government does not seem to

20:48

tolerate any criticism or what's perceived

20:50

as criticism. It's much easier to

20:52

believe in an economy if you

20:54

can read non

20:56

biased commentary on what's going on in an

20:58

economy rather than feeling that everything that's

21:00

being said is being distorted

21:02

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21:49

Coming back to

21:52

the topic of the consumer,

21:55

we hit on briefly in the beginning. I know you're a

21:57

big proponent of thinking about the consumer

22:00

and the impact of what's

22:02

going on. We had this

22:04

situation where we had a huge savings

22:07

rate during the COVID times sort of

22:09

almost unprecedented levels and

22:11

that seems to be a

22:13

tough situation. Because as you know, if anyone

22:16

all of a sudden gets flushed with a little

22:18

more money, we're

22:20

all humans, and we get on that hedonic

22:22

treadmill, and we get used to having more

22:24

money. And then all of a sudden, he told

22:26

us it's probably harder to

22:28

adjust our spending than we think. What

22:30

does that look like to

22:30

you? Is that something that is showing up in the

22:33

data? Is it gonna be a problem? Is it gonna

22:35

be what? I think it's a very

22:37

significant problem. I think When

22:39

the pandemic hit, I think

22:41

it was correct

22:44

policy to try to help out those

22:46

people and businesses that we're gonna get

22:48

thrown out of business or thrown out of work

22:50

by the pandemic itself. But the

22:52

way the government approached us, both under

22:54

the Trump administration, the Biden administration,

22:57

is they tried to help both

22:59

households and consumers who've been affected by the

23:01

pandemic, because they tried to help all a whole pile of other

23:03

people too. And all these stimulus

23:05

checks and the enhanced unemployment benefits

23:07

per few gig workers left

23:09

consumers with a lot of cash in their

23:11

pockets, which caused inflation because

23:13

we were trying to buy too much

23:15

stuff. But also cause inflation versus buying too

23:17

much stuff, could landlords have increased

23:19

rents as much as they did if

23:21

people didn't have their cash in their pockets? And I think

23:23

the answer is no. Think that

23:25

one of the reasons for big rent increases was that

23:28

landlords calculated that

23:30

maybe people don't wanna pay twenty five hundred dollars

23:32

a

23:32

month. They'd rather pay pay two

23:34

hundred dollars a month, but could they in a pinch? Well, right now,

23:36

they could. And

23:37

I think push rents up, and of course, if it gets

23:39

rents to come back down again,

23:41

The prorated savings rates is

23:43

very important. The personal saving

23:46

rate has now fallen to two point

23:48

four percent on average, and that's

23:50

the difference between total

23:52

income and total spending

23:55

as a share of total income.

23:57

But that two point four percent compares to an average about seven

23:59

percent in the five years before

24:01

the pandemic. So what's happened is over

24:03

the course of pandemic, people release this

24:05

standard of living. And they tried

24:07

to sustain that standard of living by borrowing our credit

24:10

cards, by taking emergency

24:12

withdrawals for 401s, by doing a

24:14

lot of other things, by not saving.

24:16

Over the longest year or

24:18

so. But that means that consumers are running

24:20

out of rope here. So I think

24:22

that starting from here, when consumers

24:25

spending will grow, So it's almost

24:27

guaranteed to grow very slowly over

24:29

the next year or

24:29

two. Howard Bauchner: We

24:30

kind of bounced around a little bit, but doctor

24:32

Kelly is thinking about the economy and what's going

24:34

on in the world. What do we not

24:36

talked about that's particularly front of

24:38

mind for

24:38

you? There are a few things. I mean, one of them

24:41

is what's going on with federal

24:43

government. We had the midterm elections, and although the Republicans

24:45

didn't do as well as some

24:47

people had expected in the midterm elections, they did

24:49

gain control of the House of Representatives.

24:52

So now you have divided government. And I think this

24:54

is significant for a few reasons.

24:57

First of all, in terms of

24:59

fiscal stimulus, I

25:01

think fiscal stimulus is dead. The world stimulus,

25:04

a lot of stimulus during the

25:06

pandemic, and I

25:08

personally think that both the Trump administration and the

25:10

Biden administration overdid it. But

25:13

now that stimulus has basically worked

25:15

through the system, it's gone Even if

25:17

the economy were to fall into recession, I do

25:19

not believe a stimulus bill would pass out to

25:21

representatives. People would say, we're not gonna do

25:23

this because it's still a conflation. So means

25:25

that this arm of government is

25:27

essentially sidelined. So if the economy

25:29

opens dialogue or if we

25:31

have a recession, the only people that

25:33

can react to it in Washington are the

25:35

Federal Reserve. So I would say the

25:37

lack of any potential fiscal soonest

25:40

before twenty twenty five at the earliest means that the

25:42

Federal Reserve, if the economy slows down, they

25:44

may have to change their attack.

25:46

And while we expect them to continue

25:48

to raise rates, a little bit more in

25:50

the first quarter of this year and maybe into May of

25:53

this year. By the end of this

25:54

year, there may well be cutting rates. So

25:56

I think that's one part of the story.

25:58

Another part of the story, it was the dash and

26:00

the dead ceiling. I mean, the deaths are still

26:03

too high. I get it why the deaths were

26:05

very high during the pandemic, and I think we ought to

26:07

bring it down as a moderate

26:09

pace. But the truth is we're in a full

26:11

employment economy. We should not be running a

26:13

deficit equal to five percent of GDP.

26:15

When the unemployment rate is if it's the lowest level

26:17

in over fifty years. The deficit

26:19

also is running about a trillion dollars a year.

26:21

It's adding to the debt. And

26:23

that brings up the the debt ceiling. If you look at the amount

26:25

of money that the treasury department has sitting

26:28

in its checking account at the Federal

26:30

Reserve, and then you the

26:32

gap between total debt outstanding and

26:34

the debt ceiling. You've

26:36

got over five hundred billion dollars

26:39

still to play with, so that's good. But it has come

26:41

down a lot, and I think we're okay

26:44

through the spring. But by

26:47

about July or August of this

26:49

year, we're gonna be bumping up against that debt

26:51

ceiling. Now, as I

26:53

said, I think we should be bringing down the

26:55

deficit gradually. By

26:57

removing the time that the access in one

26:59

fell swoop by a trillion dollars

27:01

immediately by essentially enforcing the debt

27:03

ceiling and not raising the debt ceiling.

27:06

Google calls a

27:08

recession, and we could well cause a second

27:10

global financial crisis. Is

27:12

this highly irresponsible of both

27:14

parties to maintain a debt ceiling. I

27:16

wish everybody would understand that

27:18

the debt ceiling does nothing to slow the

27:20

growth of government debt. It's Doomsday Now

27:23

we need to get rid of

27:25

it. Third parties are faulty

27:27

because either party when they control the White

27:29

House and Congress they had a responsibility and

27:31

opportunity to simply eliminate the debt ceiling,

27:33

but they haven't done this. And so that,

27:35

unfortunately, is a big worry for me later on this year.

27:37

We could get into a partisan fight

27:39

there was somebody tries to use the debt

27:40

ceiling, to try to win some political concessions,

27:43

and markets get very nervous indeed.

27:45

Politicians are gonna be politicians.

27:47

Only guarantee we have. You mentioned

27:49

two phrases there. One,

27:52

I feel like it is not that scary. The other is a

27:54

lot more scary. One being prospects of recession,

27:56

which is normal and happens from time

27:58

to time. The other being second global

28:00

financial crisis, you snuck

28:02

that in. And that would be

28:04

obviously a lot more dramatic. I

28:06

imagine most of the conversations you're having with

28:08

institutions on a daily basis, does

28:10

recession come up in everyone like their

28:12

favorite

28:12

question. They're like, alright, doctor Kelly, when

28:14

is the recession gonna happen?

28:15

Howard Bauchner: It's a more complicated question than

28:17

it sounds. If I tell you,

28:19

we've got inflation we can argue that

28:21

back and forth, but it's very easy to just look at the rate

28:23

of growth of CPI. So inflation got

28:26

up to nine percent year over year in June. You can

28:28

certainly say a bit higher than normal

28:30

inflation. But what is a recession?

28:32

The actual definition of recession is

28:34

not two consecutive negative quarters of

28:36

GDP that's simply a back of the envelope

28:38

definition, which is not particularly accurate.

28:41

This group called the National Bureau of Economic Research, which has

28:43

been ran since nineteen twenty. And

28:45

they define a recession as a broad

28:48

decline output that lasts for more than a few

28:50

months across the whole country, which

28:52

involves a decline

28:54

in real consumer spending, real

28:56

retail and wholesale sales industrial

28:58

production, household employment, payroll

29:01

employment, and personal

29:03

income outside of transfers. They look at

29:05

these six series. Remember

29:07

all flashing red. There's a bit of a hunch. You

29:09

can see some problems in the consumption side. You

29:11

can see some problems in industrial

29:13

production, but you're not seeing some problems in

29:15

job growth yet. So I'd say we're not

29:17

in recession right now. We might avoid one

29:20

altogether. But if we avoid one, I think

29:22

it's important to see why. One of the

29:24

reasons we could avoid recession because we're still generating

29:26

jobs. And the reason we're generating jobs is

29:28

because we came into this

29:30

year with a massive pent up

29:32

demand for labor there's still

29:34

more than ten million job openings. And

29:36

not all of those are real jobs.

29:38

I think over the next few months, you're gonna

29:40

see job openings come down. But one of

29:43

that exists people are still being hard in significant

29:45

numbers, and that I think is keeping

29:47

job growth going and keeping wage growth

29:49

going at a time where if you'd

29:51

had as much of a sum of demand as we've

29:53

seen on the demand side of the

29:54

economy, you might be seeing negative job growth

29:56

and then you really would be in recession. We're

29:58

not there right now. And then

29:59

the other thing is, there isn't a

30:02

huge amount of rebuilding the

30:04

economy. We didn't actually build too many

30:06

houses or too many cars. We didn't build

30:08

too much inventory. We haven't done too much capital

30:10

spending. So the most cyclical sectors of the

30:12

economy aren't really overbuilt, and that means it's

30:14

very hard for them to collapse. So

30:16

for many years, I run a

30:18

macroeconomic model of the US economy. And I'm trying

30:20

to see can I get GDP to turn negative in

30:22

a consistent way? And I can't

30:25

right now because I just can't find

30:27

enough gravitational forces out of something that's

30:29

going really long in the economy to put us

30:31

in recession. What I will

30:33

say is we're gonna have slow growth. One of the things

30:35

people don't talk about a lot they should is

30:37

just how much our demographics have

30:39

really collapsed. It's a

30:41

sad thing to say, but the truth

30:43

is that if you look not just

30:45

at people dying from COVID, but

30:47

also just at growth in the

30:49

death rate, in the last few years, and maybe some of this is long

30:51

COVID, maybe it's just the age of the population, but a

30:53

number of people dying in America's unfortunately is

30:55

rising. It's significantly

30:57

higher than what's last decade. And

30:59

then the number of babies being born, we had a

31:01

brief baby bust and then a brief baby boom

31:03

in the pandemic, and again, the Census

31:06

Bureau doesn't treat a very good job in describing

31:08

that. You think that would be kind of their job, but they

31:10

don't. But that's what we had. We had a baby bust

31:12

and then a baby boom. But now we're back to the same

31:14

downward trend. It's very

31:16

hard for young people to afford to have

31:18

babies. And so we've got very short

31:20

demographic growth and that feeds into

31:22

along with low immigration, low legal

31:25

immigration, so economic growth. So when we are at the start

31:27

of twenty twenty three, we've got unemployment at three

31:29

and a half percent, but I don't see where we're going to get

31:31

enough workers. Started

31:33

from here to get the economy to grow by more than

31:35

two percent per year going

31:37

forward. It might well grow by less than two percent

31:39

going forward. So it's gonna be so

31:41

growth whatever. I know it was a long answer, but you

31:43

asked, are we on the edge of recession?

31:45

We might be. But if we aren't, we're not

31:47

standing on the edge of a cliff. We're standing on the edge of

31:49

a swamp. It's not a big drop. could sort of slide

31:51

in. The problem about swampiness

31:53

is it's pretty hard to get at

31:54

all. I think that's really what we're

31:55

looking at here.

31:57

I give you a magic wand and I say

32:00

doctor Kelly, the phone rings behind

32:02

you, president Biden's on the

32:04

phone, and he wants some counsel as

32:06

far as economic policies

32:08

in general. But you got five minutes.

32:10

He's a busy man. What do

32:12

you give him? Is there one or two

32:14

that really stick out? Is here's

32:16

something to think about or chew on, but I've been really wanting

32:18

to chat with you about this. Anything coming to

32:21

mind?

32:21

Yeah. The most obvious thing is

32:24

let on television put everything

32:26

behind comprehensive bipartisan

32:28

immigration reform. Because the truth

32:30

is Americans are not nearly divided as

32:32

CNN and Fox News would tell about this. Everybody

32:35

realizes you've got to have

32:37

a system of immigration in this

32:39

country, which is legal,

32:41

which is controlled, which we have protected border, which treats

32:44

people with respect. But we also have to deal

32:46

with the demographic reality that the baby boom is

32:48

retiring in huge numbers and

32:50

we need immigrants right now, and we need legal

32:53

educated, qualified, hardworking

32:55

immigrants. And there

32:57

are many legal education and

32:59

hardworking immigrants in America. America built off

33:01

immigrants. But we need that

33:03

immigration form. Because if we

33:05

do that, we can make up for the lack of demographics over the

33:07

next five years is the ten hundred day boomer

33:09

cars. Then you can get your economic growth rate

33:11

up to three percent as opposed to

33:13

two percent And if you do that, you could do a

33:15

lot of other things. The compromise

33:17

is obvious. The compromise

33:19

is when you will lock

33:21

tight that border and only allow people

33:23

to get in on a legal basis

33:25

if having done that have

33:27

a reasonable number of legal immigrants

33:30

in treatment put the money into processing immigrants

33:32

in a fair way and in

33:34

an efficient way. And if we did

33:36

that, we could raise down to economic growth

33:39

I think personally, we're politically great for

33:41

the president too, but you've got to lead in

33:43

that one because the party system will not

33:45

give you a solution to that. You've got

33:47

to get both sides on board that would

33:49

do more than anything else to lift growth in this economy and

33:52

actually in the end reduced political

33:53

division. That's the first thing I'd

33:56

say. Let's say he says, okay. Well,

33:58

doctor Kelly, perfect. We'll check that

34:00

box. We got two minutes left. Could you give

34:02

us a quick answer? It's like I'm

34:04

concerned about the state

34:07

of the wealth and income gap in

34:09

the US, which seemingly is

34:12

getting bigger getting ideas on how to fix that or how to think about

34:14

that for our administration?

34:16

What would you tell them? I think you have to

34:18

realize

34:18

that there are answers of both sides of

34:20

this. It's not just about

34:22

how to stop the rich getting rich, it's

34:24

how to stop the poor getting poor.

34:26

You need to have a better educational

34:28

system in this country. And I think that means more

34:31

freedom to choose where you want to

34:33

send your kid to school. We shouldn't

34:35

use race or religion as

34:37

reasons to try to have some

34:39

political question about this. People need the right to choose where they want to send the

34:41

kids to school so we can have competition to

34:43

get better schools. We need

34:45

to do that. I

34:47

think there things that we need to recognize.

34:50

Nobody will talk about it, but

34:52

gambling in this country just chips away at

34:54

the poor. We've got all these state

34:56

libraries which do nothing but make the poor

34:58

poor. At least the state shouldn't be in the

35:00

game. We shouldn't be just making

35:02

it worse. I think we need to do

35:04

something about the healthcare system. I think we need to recognize this

35:06

healthcare is not a particularly insurable

35:09

type of thing. We need to give

35:11

you consent as to be healthier,

35:14

to act in a healthier way. We need to

35:16

try to increase not so much

35:18

life spans as health spans. And if you do that, you take a lot

35:20

of the burden of when a lot of people in this country

35:22

were sick, we derm with this at the longer

35:24

the largest life expectancy in the world,

35:27

nothing like it. That is actually a burden

35:29

to the economy. There are things we could do there too. But again, I

35:31

really think it's about leadership with

35:33

clear ideas and leading from the center.

35:35

There are all things that can be done, but

35:37

you have to speak over the partisan talking points. You've

35:39

got to annoy people on your side as well as the

35:42

other side to get there. You know, it's funny

35:44

image

35:45

in Lottery. I will kind of tweet on this on occasion

35:48

and say, look, this is like a prime

35:50

example of how politicians

35:52

can be just full of it because

35:55

very clear. The lottery is predatory.

35:58

Look, I get that it's voluntary,

36:00

but there's plenty of

36:02

less predatory versions I

36:04

think in your heritage

36:06

over across the pond. They have some,

36:08

like, prize link savings. And other ideas

36:10

that are at least less bad And

36:12

there's at least some interesting I invested in one, but

36:14

some interesting companies in the US that are trying to

36:17

tackle that problem. Americans love

36:19

the gamble, so I can't

36:21

imagine it's gonna take hold at the same point that

36:23

it will that has in Europe, but I'm

36:26

optimistic. I actually did an

36:28

article a few years ago and talked about four ideas

36:30

I had now is actually one

36:32

of them thinking about it's saving space lottery versus just

36:34

one that you just guaranteed to

36:35

lose, which is timely because

36:38

in California,

36:40

maybe US wide, like one point three billion or whatever it is 463? It

36:43

depresses me because the media spends so

36:45

much time telling people how they can make

36:47

money in law breweries and

36:49

how they're gonna money in the stock market. But the long

36:52

sweep of history suggests exactly the opposite

36:54

happens. If people would just commit to getting

36:56

rich

36:56

slowly, rather pretend they're gonna

36:58

get rich quickly. They do much better.

37:00

Yeah. You know, along that same topic,

37:02

I mean, two of the things you've mentioned,

37:05

education, and certainly, that ties with

37:08

personal finance. We've long

37:10

moaned on the show about how

37:12

we don't teach investing or

37:14

even basic personal finance in schools.

37:16

The good news is the trend is moving in the right direction. It used to be like ten percent

37:18

of high schools. I think we're up to

37:20

like a quarter or a third

37:23

now that have at least one

37:25

mandatory But how would you think about, like, are there

37:28

any ways from the economists standpoint? We

37:30

wanna teach

37:32

our entire country or generation to be literate in

37:35

investing in personal finance. Any good

37:37

ideas

37:37

there? I think there

37:39

is an opportunity because

37:42

as you and I know, the most important

37:44

things are really rather simple. And I think

37:46

that the perception people get

37:48

when they turn on CNBC or

37:50

Bloomberg and see all these numbers scrolling in the

37:52

bottom of the screen or up and down the

37:54

sides of it is this is all

37:56

tremendously complex. And there's

37:58

a whole industry devoted to the idea of

38:00

making it incredibly complex. Generally

38:02

speaking, you know, just a diversified portfolio,

38:05

invest in, you know, you don't have to pick the tree,

38:07

you just grow the forest or assume the

38:09

forest is gonna grow. I think that we get

38:11

away from the

38:14

basic idea You gotta, you know, pick a professional where you're gonna make a decent

38:16

income. Get your income to exceed your

38:18

expenses. Know how to run a spreadsheet. Know how

38:20

to balance your

38:22

own accounts. Actually not that difficult. But do it. How are you gonna plan

38:24

your budget? How are you gonna save some money? How are you

38:26

gonna make sure that

38:28

your income rules over time

38:30

in a way that's gonna actually allow you to achieve what you

38:32

want to do. You're right, there's a lack of

38:34

education, but there's also a taboo about

38:36

talking about money in America, which

38:38

is terrible. And I said, this is somebody

38:40

comes from Europe. I mean, when I was growing up, my mother would know what every second cousin made,

38:42

and it wasn't to do it all. Now,

38:46

health care in arms is a way to do something. You never talk about your own

38:48

health. Those are very private. And

38:50

America is exactly the opposite. Most people

38:52

do not know where their best friend makes them money.

38:55

It'd be incredibly good question. But I can tell you,

38:57

I've been on long plane flights. The

38:59

person beside me would explain in

39:01

excruciating detail every health issue they

39:03

can cause. And in fact, Americans

39:05

have very well education and health. I mean, you use

39:07

to aid people down at the table and describe

39:10

some symptoms to them. You have some excellent

39:12

diagnosis. I ask some question. How much do

39:14

I need for retirement? Having a

39:15

clue. And it's because we just don't talk about it.

39:17

I wonder if it is changing a little bit. I

39:19

feel like this younger generation for better

39:22

or for worse. Obviously, the meme

39:24

stock mania is probably the wrong

39:26

lessons to be learning, but maybe they get the

39:28

scars and hopefully learn

39:30

from it. But at least they're interested and more

39:33

open about it. At least it feels that way

39:35

a little bit. I don't know. I'm

39:37

conflicted. Alright. So we only got you for a

39:39

few more minutes. I wanna bounce on a

39:41

few more questions while we're at it. Somebody, you get a new

39:43

intern. JPMorgan comes in this summer and

39:45

says, Dr. Kelly, what's your

39:48

favorite indicator? Just one the

39:50

economics world or investing markets. Is

39:52

there one that you really say,

39:54

okay, this is one that I

39:56

have a soft spot for or I really think

39:59

is one that matters a lot to

40:00

me. My general

40:02

answer to that is sorry

40:05

it doesn't work that way. A lot of people who don't

40:07

do any statistics will just show a

40:10

chart where they show this line looks pretty

40:12

much the same shape as that line. And therefore, we to

40:14

correlations. So this is how it all works.

40:16

And the truth is the world is

40:18

complicated. And so I run a

40:20

macroeconomic model. We just

40:22

got a few thousand rows to

40:24

it, and it's quite complex.

40:26

It's a big mosaic. That's what the

40:28

economy is. And there's lots of interaction. You just gotta try and understand the whole

40:30

thing. But if you're asking me a

40:32

slightly different question of if I only

40:34

had one indication based on which to know

40:36

when to

40:38

invest, I'd use consumer sentiment because what we've

40:40

noticed going back over the last

40:42

fifty years of US consumer sentiment

40:46

index is that when people feel the most depressed, when you see a

40:48

trough in sentiment, returns over the

40:50

next year are excellent. And

40:52

when you

40:54

see when people are most happy, returns over the next year

40:56

tend to be much less promising. So

40:58

if everybody around you is truly miserable and

41:00

scared, probably a good time to get invested.

41:04

optimism all listening to extremes.

41:06

And if you can latch on to one of those extremes

41:08

and bet the opposite

41:09

way, that generally works pretty

41:11

well. I favor

41:13

it. Sentiment, stat. Well, there's two that I

41:15

really like, but AI is one

41:18

that I think is fun

41:20

to watch. Really to

41:22

me when it gets to kind of the extremes,

41:24

but my favorite statistic of it, it's

41:26

been going back fifty years or

41:28

whatever. The single most bullish stock reading was

41:30

December ninety nine and the single most

41:32

bearish reading was March two thousand eight

41:34

or March two thousand nine, excuse me,

41:36

and you couldn't come up

41:38

with a theoretical that was more ridiculous than

41:40

that setup, but it's interesting to

41:42

compare it to the

41:44

investor's intelligence. Luthold

41:46

does some good work on that where they look at Cement over the course of

41:48

an entire year. And really

41:50

up until this last period, has

41:54

been consistently high, obviously, a decade of US

41:56

stock outperformance. But historically, that

41:59

meant future returns a little

42:01

more subdued. So we'll see. What

42:03

does Dr. Kelly believe economics

42:06

investing, pick a pick

42:08

that the vast majority

42:10

of your professional peers that

42:13

your contemporaries don't believe.

42:16

And there's probably a handful. I've been

42:18

tweeting out a list of mine that's up to almost

42:20

twenty now, but is there anything to your like, look,

42:22

this is a belief I have, and none

42:24

of my friends in the economics investing

42:26

world agrees with this. So

42:28

anything online? I think we

42:29

mentioned two of them

42:31

in economics. One thing that

42:33

people somehow have latched onto is the idea that

42:35

things have permanently changed in terms of

42:37

inflation. That inflation is

42:39

back.

42:39

And I look at the long term drivers of

42:42

inflation, which is greater

42:44

inequality, greater information technology,

42:46

demise of trade unions,

42:49

all that seems to Meb in place. I think

42:51

this was a brief cameo

42:53

from inflation and it is going

42:55

to fade again. I think a lot of

42:57

people don't believe that. And when comes to investing, I believe

43:00

there's a lot of opportunity in international

43:02

equities and for a very good reason

43:04

because of years of

43:06

underperformance. Nobody wants to

43:08

recommend international equities with their clients.

43:10

Well, it's career risk. In my

43:12

own personal investments, I can do that.

43:14

Even my wife gives me a hard time better, but when I

43:16

look at valuations, both of the dollar and international equities, I'm quite

43:18

happy to put my chips in that square

43:21

and let this thing play out.

43:24

Yeah. We used to have a slide in presentations

43:26

where it would be global market valuations. And

43:28

on the left side, it'd be the cheap countries. On

43:30

the right side, it was the really

43:33

expensive ones. On the left side, I didn't label cheap, I

43:35

labeled career risk. I was like, if

43:37

you go home and you come back a year from now

43:39

these countries do

43:42

really well, Great. You may get a pat on the back. Your wife tells you,

43:44

okay. Well done. Doctors, your

43:46

job, your clients say, okay. Well,

43:48

cool. But if they

43:50

do poorly, or poorly for an

43:52

extended period, your head's on a

43:54

spike. You're an idiot, doctor Kelly, why

43:56

would you possibly recommend we

43:58

know US stocks are a

44:00

better

44:00

deal? So That's part of it I think

44:02

it is at this stage. But of course, you don't have

44:04

to put all your eggs in that basket either. It's

44:07

just most Americans are very underweight

44:09

international

44:09

equities. And I think the first step

44:11

of these getting a level wage might be an idea.

44:13

What's been your most memorable investment over your

44:16

lifetime, good, bad,

44:18

and the

44:19

twain, does anything that sticks out burned

44:21

in

44:21

near memory? The best investment I ever

44:23

saw was my grandfather bought my

44:26

father and mother a house back in the

44:28

nineteen

44:28

sixties. Which my mother then sold at the peak of the Irish real

44:30

estate bubble in two thousand and six.

44:32

Was there any magical timing

44:34

behind that or it's just time or

44:38

she hung on longer than she should have because she didn't have

44:40

her act together, but she managed to catch

44:42

the absent peak of the market. And

44:44

essentially, Dish Warren Buffett's in

44:47

terms of return. Yeah.

44:48

Investing in Irish real estate because it has been from trough to

44:51

peak was about this biggest boom

44:53

that I ever

44:55

saw. I was gonna make a comment before I forget, and it's little

44:58

disjointed. But as we were thinking

45:00

about what you believe that others don't on the

45:02

inflation topic,

45:04

I was gonna comment as and

45:06

say, I wonder how much of the narrative for

45:09

a lot of

45:12

economists, particularly PTSD

45:14

about the nineteen seventies where

45:16

you had this initial inflation. It

45:18

looked like it was going

45:22

away. And then bang, like, it got way worse.

45:24

I'm kind of the second run up. I wonder

45:26

how much, like, in the back of the head, through

45:28

the fad, or your economy. It's like, look.

45:32

known for doing this

45:33

again. I'm afraid that is what it is, but

45:36

remember how different this country is. I

45:38

mean, back in the nineteen seventies with strong

45:40

trade unions, prices

45:42

went up, workers went on strike until

45:44

they got wage increases to compensate them.

45:46

And so it had a price wage

45:50

spiral. There is no evidence that that's really going on right now.

45:52

And in between, we've had

45:54

this huge growth in inequality, which I

45:56

think funneled money towards financial assets.

45:59

And away from goods and services, I don't really see

46:01

that changing. And also information

46:04

technology just makes everything a technology.

46:06

With one click of a mass, I could buy the

46:08

cheapest anything. And that simply wasn't

46:10

the case in nineteen seventy. So I think we're going to

46:12

be careful about the lessons from history

46:14

because more has changed in terms of

46:16

the inflation dynamics since the

46:18

nineteen

46:18

seventies. That has stayed the same. Dark

46:19

Kelley, where did people

46:19

go? They wanna find you? They can't find you on

46:22

Twitter. Where's the best place to find your research? What

46:24

you guys are

46:25

up to? If you want to read, you can find me on LinkedIn or

46:27

on JPMorgan Asset Management's website.

46:30

But we also put out two podcasts,

46:32

one cold notes in the week ahead.

46:35

Another cold insights now and you can find them

46:37

where you find podcasts. It's supposed to Spotify

46:39

or something like that. But I'm not very

46:41

good at finding

46:43

podcasts, but Those who would like podcasts can find them. So it's a notes

46:45

in the week ahead and insights

46:48

now.

46:48

Well, you're one of

46:49

my favorite people to listen to,

46:51

particularly in person. So thank you

46:53

so much for joining us

46:55

today. Anytime, Nick. Very glad to be able to

46:57

do this. Podcast listeners will

47:00

post show notes to today's conversation at web favorite dot com forward

47:02

slash podcast. If you love the show, if

47:04

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