Why Didn’t Corporations Invest instead of Buybacks? (Uneducated Economist)

14:16
goes on to say here homeowners or and
14:19
allow homeowners to refinance that is
14:20
very true
14:21
the lower interest rates did give
14:23
homeowners the ability to refinance
14:25
their homes into lesser
14:26
you know payments the problem with it is
14:28
is that most of these people when they
14:30
refinance their home they took the
14:31
equity out once and spent that on
14:32
vacation or
14:33
whatever they did with it but they
14:35
didn’t just like refinance their home
14:36
and start making the payments on it they
14:38
took the money out
14:39
lower corporate bond rates will
14:41
encourage investment which
14:43
yeah i agree with that too because we
14:44
saw a huge amount of corporate debt
14:46
being sold
14:47
while these interest rates were dropping
14:48
down but what did those corporations do
14:50
with the money
14:51
they bought back their own stock making
14:53
the stock market rise did they reinvest
14:55
it i imagine a lot of them did but a lot
14:57
of them went back and bought their own
14:58
stock with it
14:59
so you know the things that ben bernanke
15:02
were thinking were going to happen
15:04
didn’t really quite happen out to the
15:05
way that he was anticipating they would
15:09
he says although asset purchases are
15:11
relatively unfamiliar as a tool of
15:13
monetary policy some concerns
15:15
about this approach are overstated
15:17
critics have for example worried that
15:19
it will lead to excessive increase in
15:21
the monetary in the money supply and
15:23
ultimately
15:24
to significant increases in in inflation
15:27
now i do agree with that because he’s
15:28
basically saying that all this
15:30
effort that they’re going to do with the
15:31
quantitative easing and stuff is not
15:33
going to increase the inflation and it
15:34
really didn’t like you know a lot of
15:35
people were screaming hyperinflation
15:37
back then
15:38
that all this money printing is
15:39
eventually going to find its way into
15:40
the economy and everybody’s going to
15:42
have like this hyper
15:42
inflation scenario take place but it
15:44
didn’t occur that way it
15:46
it just didn’t happen and
15:49
he goes on to say here we made all
15:51
necessary preparations and we are
15:53
confident that we have the tools to
15:55
unwind these policies at the appropriate
15:57
time
15:57
now i definitely disagree with that
15:59
because they never did unwind the whole
16:01
quantitative easing program
16:02
they never returned the balance sheet
16:04
back to normal and they did not do
16:06
anything that was even remotely close to
16:08
unwinding the thing to at the
16:10
appropriate time it just didn’t happen
16:13
so very interesting uh writings there
16:16
now this speech this is probably one of
16:18
my most favorite speeches from ben
16:19
bernanke was given back in 2002
16:22
and he was talking about deflation and
16:24
the title of his deflation making sure
16:26
it doesn’t happen here
16:28
now this is a very long speech but it is
16:30
a very good one and if you have the time
16:32
to read it i suggest you do
16:34
this is the speech that has the credible
16:36
threats um
16:38
gold story in it now i’ll talk about
16:40
that here in just a minute but a lot of
16:42
you
16:42
who follow my channel for any length of
16:44
time i’ve talked about the credible
16:45
threat and the guy who invested gold
16:47
machine this is where i got that from
16:48
was this speech
16:50
now in this he says however a
16:52
deflationary scenario may defer
16:56
in one respect from normal
16:59
i’m sorry may differ in one respect from
17:01
normal recessions in which the inflation
17:04
rate is at least modestly positive
17:06
deflation of sufficient magnitude may
17:08
result in the nominal interest rate
17:11
declining to zero or very close to zero
17:13
one of the nominal interest rates
17:15
when sorry once the nominal interest
17:18
rate
17:18
is at zero no further further downward
17:21
adjustment
17:22
in the rate can occur since lenders
17:24
generally will not accept negative
17:25
nominal interest rates when it is
17:27
possible instead to hold cash
17:29
at this point the nominal interest rate
17:31
is said to have hit
17:32
the zero bound all right so it’s kind of
17:35
funny how
17:36
back then they were talking about
17:37
negative interest rates
17:39
thinking that it wasn’t even a feasible
17:41
possibility and yet here we are talking
17:43
about negative interest rates as a
17:44
feasible possibility anyway going on
17:47
here he says
17:48
because central banks conveniently
17:51
conduct monetary policies by
17:52
manipulating the short-term
17:54
nominal interest rates some observers
17:56
have concluded that when the key
17:58
key rate stands at or near zero the
18:01
central bank has
18:02
run out of ammunition that is it no
18:05
longer has the power to expand
18:07
aggregate demand and hence economic
18:09
activity
18:10
it is true that once the policy rate has
18:13
been driven down
18:14
to zero a central bank can no longer use
18:16
its traditional means of stimulating
18:18
aggregate demand
18:19
and thus will be operating in a less
18:21
familiar territory
18:22
the central bank’s inability to use
18:24
traditional methods may complicate the
18:26
policy-making process
18:28
and introduce uncertainty to the size
18:30
and timing of the economics
18:32
in in sorry uncertainty
18:36
in the size and timing of the economy’s
18:38
response to policy actions hence i agree
18:40
that the situation is one to be avoided
18:42
if possible
18:44
but he goes on to say here deflation is
18:46
generally the result
18:47
of low and falling aggregate demand the
18:49
basic prescription
18:51
for preventing deflation is therefore
18:53
straightforward at least in principle
18:55
use monetary and fiscal policy as needed
18:57
to support the aggregate spending
18:59
so that seems pretty simple it was just
19:01
like when you started running into
19:02
deflation do something about it that’s
19:04
pretty much what he was saying there
19:05
goes on the fed should take most
19:09
seriously of course it does
19:11
its responsibility to ensure financial
19:13
stability in the economy
19:14
goes on to say a healthy
19:16
well-capitalized banking system
19:18
is smooth and sorry guys i guess i
19:20
should talk a little bit more about this
19:21
before i start in on that
19:23
he says that there’s basically three
19:24
ways to prevent
19:26
deflation and the first way he talks
19:29
about is to let inflation run
19:30
high like to have like over inflation
19:33
and then when if deflation starts to
19:35
kick in that hopefully the
19:37
inflation will drop down into that kind
19:40
of target range so that you don’t have
19:42
deflation taking place or the
19:44
disinflation
19:45
so you’re saying at first is to allow
19:47
inflation to run run hotter than what
19:49
you would typically
19:50
let it go that’s the first first way to
19:52
prevent it the second way
19:54
to prevent deflation was to keep a
19:56
healthy well-capitalized banking system
19:58
and smooth functioning of capital
20:00
markets
20:01
our important line of defense against
20:02
deflationary shocks
20:04
now that led me to think about september
20:06
and the
20:07
overnight repo agreements that they were
20:10
that they were conducting for however
20:12
many months before the quantitative
20:13
easings really started kicking in
20:15
but that overnight repo facilities that
20:17
they were doing that kind of reminds me
20:19
of that statement right there for the
20:20
second way to prevent deflation a
20:22
healthy well-capitalized banking system
20:24
and smoothly function capital and
20:26
capital markets are an important line of
20:28
defense against deflationary shocks
20:30
third he goes as suggested by the number
20:33
of studies when
20:34
inflation is already low and the
20:36
fundamentals of economy suddenly
20:38
deteriorate the central bank should act
20:40
more preemptively
20:41
and more aggressively than it usually
20:43
than usual in cutting rates
20:45
so back when we saw the federal reserve
20:47
reverse course as far as unwinding their
20:49
monetary policy and then they started
20:51
dropping
20:52
interest rates that was them acting
20:53
preemptively to keep
20:55
you know to keep the deflation from
20:58
kicking in
20:58
so those three things pretty much
21:00
occurred you know as far as
21:02
what’s happened here just recently
21:04
within the last year
21:07
goes on i believe that a combination of
21:10
strong economic fundamentals and policy
21:12
makers at the
21:14
at that are attentive to the downside
21:17
as well as the upside risk to inflation
21:19
make significant deflation in the united
21:21
states in the foreseeable future quite
21:23
unlikely
21:24
but suppose that despite all the
21:26
precautions
21:27
deflation were to take hold in the u.s
21:29
economy
21:30
and moreover the fed’s policy instrument
21:32
the fed funds rate were to fall to zero
21:34
what then
21:35
so what would happen if we land at this
21:37
exact moment right so
21:39
if you not back then in 2002 but right
21:42
now here in
21:43
you know 2020 what would the
21:46
federal reserve do if the deflation
21:49
started kicking in and the fed funds
21:50
rate were at zero
21:52
what do you do about that and this is
21:53
what he says curing deflation
21:56
says some observers have concluded that
21:58
when the central bank’s policy rates
22:00
have falled to zero
22:01
its practical minimum monetary policy
22:03
loses its ability to further stimulate
22:05
aggregate demand in the economy
22:07
at a broad conceptual level and in my
22:10
view
22:11
in practice as well this conclusion is
22:13
clearly mistaken
22:15
indeed under a fiat that is paper money
22:17
system
22:18
a government in practice the central
22:20
bank in cooperation with other agencies
22:23
should always be able to generate
22:24
increased nominal spending
22:26
and inflation even when the short-term
22:28
nominal interest rates are at zero
22:31
now he goes on to talk about the gold
22:34
story this is the
22:35
he has a little story written here i’m
22:37
not going to read it but i’ll just tell
22:38
you how it goes and that’s basically the
22:39
guy who invents a gold machine and with
22:41
this gold machine he can produce as much
22:43
gold as he wants
22:44
at will with very little cost or energy
22:46
the moment that that information gets
22:48
out to the public that he has this
22:49
machine
22:50
the price of gold on the market begins
22:52
to will just immediately plummet
22:55
even before the guy produces a single
22:57
ounce of gold
22:58
just that information alone the credible
23:01
threat that he has
23:02
that he has this machine will be enough
23:03
to move the markets
23:05
he goes on to say what has this got to
23:07
do with monetary policy
23:09
like gold us dollars have value only to
23:12
the extent that they are strictly
23:14
limited in supply
23:15
but the u.s government has a technology
23:17
called a printing pressed
23:19
or today it’s electronic equivalent that
23:21
allows it to produce as many us dollars
23:23
as it wishes at essentially no cost
23:26
by increasing the number of dollars the
23:28
us dollars in circulation or
23:30
even by the credible threat of doing so
23:32
the us government can also reduce the
23:35
value of the dollar
23:36
in terms of goods and services which is
23:38
equivalent to raising the prices and
23:40
dollars of those goods and services
23:42
we concluded that under a paper monetary
23:45
system
23:45
a determined government can always
23:48
generate higher spending
23:50
and hence positive inflation now we go
23:52
back to old richard’s uh statement here
23:54
the other day
23:56
in uh in that speech where he says uh
24:02
where was it
24:06
these programs are designed to offer
24:08
backstop sources of funding to the
24:09
private sector
24:10
and just the announcement that these
24:12
backstop backstop facilities would soon
24:15
be launched appears to have
24:17
bolstered confidence in capital markets
24:19
allowing many companies to finance
24:20
themselves privately
24:22
even before the facilities were up and
24:23
running uh-huh
24:25
see the credible threat alone
24:28
all right um
24:33
of course the u.s government is not and
24:35
this is i like this one
24:36
of course the us government is not going
24:38
to print money and distribute it
24:39
willy-nilly
24:42
are you sure okay
24:46
normally money is injected into the
24:48
economy through the asset purchases of
24:50
federal reserve
24:51
the to stimulate aggregate spending when
24:54
short-term interest rates have reached
24:55
zero the fed must expand the scale of
24:57
its asset purchases or possibly expand
25:00
the menu of its assets that it buys
25:02
okay we’re starting to experience in
25:04
that right now with the
25:05
you know purchasing of the
25:07
mortgage-backed securities the
25:08
purchasing of municipal bonds the
25:10
corporate bonds you know we’re starting
25:11
to see the menu
25:12
of what they put on their balance sheet
25:14
to start to expand
25:15
just like ben bernanke said it would
25:17
back in 2002.
25:20
because the long-term interest rates
25:21
represent averages of current and
25:24
expected future short-term rates
25:26
plus the term premium a commitment to
25:28
keep short-term rates
25:30
at zero for some time if work if it were
25:33
credible
25:33
would induce a decline in the
25:35
longer-term rates
25:37
a more direct method which i personally
25:40
prefer
25:40
would be for the fed to begin announcing
25:43
explicit
25:43
ceilings for for yields on long maturity
25:48
treasury debt
25:49
say bonds maturing within the next two
25:50
years the fed could enforce these rates
25:52
ceilings
25:53
by committing to making unlimited
25:55
purchases of securities for up to two
25:57
years
25:58
from maturity at prices consistent with
26:01
the targeted yield
26:03
so basically what they’re saying is that
26:05
if they promise to make sure that
26:08
short-term rates are only allowed to go
26:10
to a certain level that everybody’s
26:12
anticipation of that
26:14
would force the longer term rates down
26:16
as well
26:18
it goes on if lowering yields on
26:21
long-dated treasury securities proved
26:22
insufficient to restart spending however
26:25
the fed might next consider attempting
26:27
to influence directly the yields on
26:29
privately issued securities
26:31
you guys hear that one all right this is
26:34
like the privately issued securities
26:36
that’s corporate debt unlike some
26:39
central banks and barring changes to
26:40
current law the fed is relatively
26:42
restricted
26:43
relatively restricted in its ability to
26:46
buy private sector
26:48
private securities directly
26:51
right unless there’s unusual in exigent
26:53
circumstances like
26:54
old richard says however the fed does
26:58
have broad powers to lend to the private
27:00
sector indirectly via banks through the
27:02
discount window
27:05
for example the fed might make 90 day
27:07
and 180 day
27:09
zero interest loans to banks taking
27:11
corporate commercial paper
27:13
at the same maturity as collateral so
27:16
some of those things that we’re starting
27:18
to experience right now with the special
27:19
purpose vehicles
27:20
okay um what else does he say here
27:25
the fed can inject money into the
27:27
economy in still
27:28
other ways for example the fed has the
27:30
authority to buy foreign government debt
27:32
as well as domestic government debt
27:34
potentially this class of
27:36
assets offers huge scopes for the fed’s
27:38
operations as the quantity of foreign
27:41
assets eligibility
27:42
or eligible for purchase by the fed is
27:45
several times the stock of the us
27:47
government debt
27:48
now that leads me back to old richard’s
27:51
talk here where he says
27:54
the establishment of the new fima
27:57
foreign and international monetary
27:59
authority repo facility with potential
28:01
eligibility for
28:02
a broad range of countries sounds like
28:05
very much what ben bernanke was
28:06
suggesting that we could use as far as
28:08
being able to
28:09
purchase foreign debt and put that onto
28:12
the balance sheet
28:13
goes on to say here if all these things
28:15
don’t really work out
28:18
fiscal policy can be used now this is
28:20
the government’s
28:21
stimuli stimulating the economy as
28:23
opposed to the fed’s actions
28:25
a broad-based tax cut for example
28:27
accommodating
28:28
accommodated by a program of open market
28:31
purchases to alleviate any tendency for
28:33
interest rates to increase
28:35
would almost certainly be an effective
28:37
stimulant to the consumption
28:38
and hence to prices broad-based tax cuts
28:42
corporate tax cuts payroll tax cuts all
28:44
right
28:45
even if households decide not to
28:47
increase consumption but instead
28:49
rebalance their portfolios by using
28:50
their extra cash to acquire real and
28:52
financial assets
28:54
the resulting increase in asset values
28:56
would lower the cost
28:58
of capital and improve the balance sheet
29:00
position of potential borrowers
29:02
any money finance tax cut is essentially
29:05
equivalent to milton friedman’s famous
29:07
helicopter money drop
29:11
all right so talked about taxes
29:15
okay if the treasury issued debt to
29:18
purchase private assets at the fed then
29:21
purchased an equal amount of treasury’s
29:24
debt
29:25
with newly created money the whole
29:27
operation would be the
29:29
the economic equivalent of direct open
29:31
market operations in private assets so
29:33
the federal reserve can’t do it but the
29:34
federal reserve says hey i’ll buy a
29:36
bunch of treasuries and if the treasury
29:38
went and bought these
29:40
private assets then you know that’s kind
29:41
of the same thing but we’re not doing it
29:43
you’re doing it
29:44
and that kind of rel reminds me of the
29:46
tarp program the troubled asset relief
29:48
program
29:49
so anyway found that to be very
29:51
interesting stuff
29:52
it leads me to think more about how this
29:55
coronavirus is used
29:57
more as a scapegoat for the economic
30:00
downturn than an actual cause for the
30:02
economic downturn
30:03
considering that everything that they
30:05
were talking about being a possibility
30:07
for deflation in the future during the
30:09
next economic downturn and how great it
30:11
could be
30:12
is now taking place and they’re using
30:14
all those all those tools
30:16
right now and it’s all the tools that
30:18
they have in their playbook
30:20
it’s very interesting stuff and i’ll
30:22
leave links down in the description for
30:24
all these things
30:25
i know that video i kind of stumbled
30:26
through a lot of it i hope you guys got
30:28
through it it was you know there was a
30:30
lot there
30:31
but uh like i said i’ll leave links down
30:33
in the description for everything and i
30:34
would
30:35
love to get you guys response on that
30:36
one uneducated economist
30:38
you guys let me know

Herbalife Sells $600 Million of Junk Bonds for Share Buybacks

Herbalife Nutrition Ltd. managed to convince investors to lend it $600 million so it could buy back shares, an unusual move at a time when companies are borrowing billions of dollars to shore up liquidity during the coronavirus pandemic.

The maker of weight-loss shakes and supplements that counts Carl Icahn as its largest shareholder sold the unsecured debt Wednesday at a yield of 7.875%, down slightly from early unofficial pricing discussions of 8%, according to people familiar with the matter.

Raoul Pal: Why did companies buy back their stocks?

27:32
we see that in GDP each dollar of debt
added to GDP produces less or less GDP
over time so I think that’s part of the
productivity issue also obviously
companies because of the tax issues in
the US and low interest rates the US
corporations are choosing to buy back
their own shares as opposed to invest
so
that drives down productivity over time
as well and that’s not going to go away
until it gets changed and I think that
would be one of the changes that comes
with a swing in populism because I think
it’s something that has to happen but
the other thing is it’s crucial it’s
related to the same thing which is
access to capital so what you were
hearing from Warren Buffett and Peter
Thiel and all of these guys is only
certain people can get the capital so
you can try as hard as you want to go
and open a cafe which was the old style
of setting up a business you can’t get
any money nobody will lend you money
banks do not lend money for small
businesses right so how do you get money
well you now have to have that gazillion
dollar idea that has a moat around it
in the industry after no the players are
to access the capital so what we’re
seeing is a narrowing of capital
availability to more people and I think
so we’re seeing capital going into
buying back shares and
less capital being allocated to a
broader range of opportunities
which
means it’s harder for most people to get
it makes the economy less productive
over time because everybody’s looking at
the same opportunity I agree I mean you
can’t even break into politics without a
few billion dollars isn’t that right I
think that’s what we’re now beginning to
29:13
see I mean that’s true though right even
29:17
within the hedge fund industry industry
29:18
I was in when I was first in that
29:21
industry so I’ve been around in about
29:22
industry since 1990 but but um I was
29:25
running a hedge fund you could still get
29:27
capital and so the insurance companies
29:31
and pension funds and endowments would
29:32
allocate to a broad range of managers
29:34
some of which may have had a hundred
29:36
million under management which was
29:37
deemed to be relatively small at the
29:39
time then a huge explosion came from the
29:43
pensions industry again as ever driven
29:45
by the same demographics which was they
29:47
wanted hedge funds to look like bonds
29:48
they wanted a low volatility but
29:52
slightly high return they wants it
29:53
looked like a junk bond but with less
29:56
catastrophe risk in it so they forced
29:59
all the returns down and everyone became
30:00
an asset gatherer so all the asset
30:03
gatherers grew in size so people had
30:06
bridgewater and a bunch of others
30:07
accumulated huge amounts of assets and
30:09
it meant that nobody else got capital
30:11
and it’s getting worse and worse to this
30:13
day so even people who are fantastic
30:16
traders and great investors can’t get
30:17
any capital because they’re not big so
30:20
investors will only follow where other
30:22
capital is just becoming even though we
30:24
talk about this massive washing around
30:27
of liquidity from the Federal Reserve
30:28
but we we have to talk about the same
30:31
issue of the elites versus the non
30:34
elites within access to capital as well
30:36
as it is for all the other I agree but I
30:39
think I think a regulatory capture I
30:42
think the the increasing is of what I
30:44
talked about patent law which I think
30:46
increasingly hinders rather than helps
30:49
competition I think these the growth of
30:52
the so-called natural monopolies you
30:54
know that’s kind of your Facebook Google
30:56
phenomenon I think all of this is just
30:59
accentuating there
31:01
don’t thing you’re talking about so
31:03
here’s a thought that I’ve been toying
31:05
with and a few people have talked about
31:06
look I think Facebook and Google should
31:08
be broken up and will be broken up and I
31:11
think that much like breaking up AT&T or
31:15
Marbella at the time what you did was
31:18
unleash a whole bunch of smaller
31:20
companies break apart monopolies and
31:22
allow more people access to that locked
31:26
in capital from the larger corporation
31:29
and it tends to offer great
31:31
opportunities I mean out of the split up
31:33
of the of the big phone company came all
31:35
the mobile phones yeah huge business I
31:39
totally agree well you know you kind of
31:42
mentioned debt and particularly
31:44
corporate debt and the rise of you know
31:46
leverage the lending and all of that and
31:49
the you know covenant light loans and
31:52
and the and the huge run-up basically of
31:54
corporate debt and the lowering of
31:57
quality of debt over this over this
31:59
entire business cycle so that’s a good
32:02
segue to talk now about the the business
32:05
cycle right where are we in the business
32:08
cycle and what are you looking for i I
32:11
did a piece this was probably about two
32:14
months ago on recession indicators and I
32:17
went down I don’t know I must have done
32:19
120 of them you know but I had my 15
32:22
favorites but I’d like to I’d like to
32:26
start that a little bit and and get you
32:28
to talk about favorite recession
32:31
indicators Adam I can go down through
32:33
some of mine that give us a good place
32:36
of where I think we are in the business
32:38
cycle but I maybe I could you know yeah
32:41
I mean I spend most of my time looking
32:43
at this because the secular framework
32:45
doesn’t change almost from decade to
32:46
decade so when you look at the business
32:49
cycle it’s the key driver of asset
32:52
prices so if I look at the year-on-year
32:54
rate of change of oil copper equities
32:58
bond yields the Korean stock markets
33:02
emerging markets in general anything
33:04
they’re all basically driven by the
33:06
business cycle so where are we in the
33:08
business cycle now well this is the
33:09
longest business cycle in all recorded
33:11
US history we’ve seen a couple of
33:13
outliers in the last
33:14
twenty twenty or thirty years what one
33:16
in the UK one in Australia which both
33:18
skipped a recession at some point I
33:21
think if I look at the indicators that I
33:23
look at i used the basic one it’s the is
33:25
m you can use that and the is M is
33:28
around fifty which says we should be
33:30
growing at about one percent GDP growth
33:32
but when I look at forward-looking
33:33
indicators of many things stuff like the
33:36
jolt survey the yield curve is the
33:39
classic example of the business cycle
33:40
there are so many indicators that
33:43
suggest we are at the point of recession
33:46
or very close to it and my point has
33:49
always been about this is that
33:51
recessions come from a slowdown in the
33:53
business cycle but they actually
33:54
crystallized by a larger event now I
33:57
think the tariffs were the thing that
33:59
actually did it we broke supply chains
34:01
around the world and we’re still
34:02
recovering but now there’s a corona
34:04
virus on top really doesn’t help so any
34:06
chance we have of of some sort of
34:10
midterm bounces is about zero now I
34:13
think so my view is we’re going into
34:16
recession now I think it’s this year and
34:20
next year they’ll probably be some sort
34:23
of euphoria around the election because
34:25
both parties whoever gets in is gonna
34:27
spend a lot of money on fiscal stimulus
34:29
and I think the Europeans will too so
34:31
and the Chinese probably will as well so
34:33
there’s going to be some euphoria in the
34:35
middle of the cycle much like there was
34:36
in the 2000 cycle and so that’s what I
34:39
think is happening now what it means is
34:42
we can really see it playing out in bond
34:43
yields bond yields are falling almost on
34:45
a day daily basis and I’ve been part of
34:47
that trade for a long time with the
34:49
ethos of buy bonds where Dan’s I spoke
34:51
to Keith about it many times I’ve also
34:53
been very interested in the dollar
34:58
because as the world slows down and
35:00
world trade slows down what you find is
35:03
the dollar there was a global shortage
35:05
of dollars I think the the BIS put it
35:09
thirteen trillion dollars the world is
35:11
short of so if the oil price Falls has
35:14
less dollars in circulation if world
35:15
trade which is currently negative Falls
35:18
there’s less dollars in circulation
35:19
keeps driving the dollar higher and even
35:21
today when the dollar almost breaking
35:23
back over a hundred so we’ve got on the
35:25
DXY so we have this issue that the
35:28
is driving up because of the debt
35:31
dynamics and some of the regulatory
35:33
issues that was caused by the banking
35:34
system that in itself flows global
35:37
growth that in itself is lowering bond
35:39
yields it’s inverting the yield curves
35:41
and the Fed have had to start cutting
35:43
already
35:43
everybody else has start to think about
35:45
stimulating more and the reality is is
35:48
at some point the equity markets
35:49
probably the final leg of this and this
35:52
unfortunately dovetails exactly when the
35:55
bulk of the baby boomers hits retirement
35:56
age you know that the issue that we
35:58
talked about is if you want to white 50%
36:00
or for retirees savings this is the time
36:03
you’re gonna do it yeah I agree and and
36:05
the the frightening thing that you
36:07
pointed out in your your kind of
36:10
retirement crisis video which I liked
36:12
very much is reminding people that the
36:15
equity markets don’t always back bounce
36:18
back right look at Tokyo look at look at
36:22
Germany in France now the United States
36:25
is the only one that’s always bounce
36:27
back bounce back strongly but that’s you
36:31
look around the world that doesn’t
36:33
always hurt so so Neil this is a key
36:35
thing so why did the u.s. bounce and
36:37
others didn’t
36:38
when 2008 should have killed off the
36:40
cult of equity
36:41
well the cultivate quilty is dead
36:43
because if you look at individual
36:45
households they don’t own equities yes
36:48
there have it in their pension plans but
36:49
as you said the super-rich do the
36:51
reality of the situation is the entirety
36:54
of all the equity purchases that have
36:57
gone on have gone on by the corporates
36:59
themselves but chairs right everything
37:03
else a net negative yeah your switch
37:05
between yeah and there’s the switch
37:08
between active to passive so indexation
37:11
has created a forced you know because
37:14
you’re corralling more assets into a
37:15
smaller number of companies so that’s
37:17
created those two things alone everybody
37:19
else has been a net seller in credit
37:20
including foreigners so you’re killing
37:23
the cult of equity off if you change the
37:25
so what is it that allows corporates to
37:28
buy their debt it’s pretty simple its
37:30
cash flow cash flows are also correlated
37:33
to the business cycle so when the
37:35
business cycle goes negative cash flow
37:36
goes negative and we’re seeing that in
37:38
many companies already so that means
37:40
they stop buying back their show
37:41
the other side of the equation is who’s
37:43
the buyer of all that debt well guess
37:45
what it’s the same baby boomer pension
37:47
and the issue is is they’re being driven
37:49
at state level by corporate tax receipts
37:51
and they are also driven by the business
37:54
cycle so as tag receipt tax receipts go
37:56
negative
37:57
the buying of corporate bonds stops by
38:01
the pension system and also corporations
38:04
stop buying back their shares so you end
38:06
up with a situation where the two most
38:08
widely held assets by the entire pension
38:11
system come to a halt as soon as the
38:13
business cycle goes negative that’s
38:15
really really key I totally agree
38:19
the buybacks and the borrowing for the
38:21
buybacks is really generating you know
38:24
the the the push up in equities and
38:27
people don’t understand that and it’s
38:30
not it’s not the growth in borrowing
38:33
that you have to worry about it’s when
38:35
the growth stops and that’s actually
38:39
happening now I mean if you look now you
38:41
find that it’s kind of peaked out it’s
38:43
kind of plateauing right now and that’s
38:45
when you really have to worry I I
38:47
totally agree to that it’s a very
38:50
dangerous sign when you have a high end
38:51
rising dollar falling commodity prices a
38:55
slowing global economy aside from the
38:59
United States and a Fed which keeps
39:01
talking about we’re fine for now
39:04
right so yeah you’re not going to get a
39:07
mid-term bounce again
39:09
Jerome Powell claims we’re kind of a
39:12
midterm correction you know so that’s
39:14
the word he would use let me let me just
39:17
give a couple of slides here and show
39:21
some of my favorite light cycle
39:23
indicators does Ben you might show at
39:26
chart 22 this is this is basically
39:31
showing how what happens when an economy
39:35
runs out of workers this is our age
39:39
adjusted employment to population ratio
39:42
we are now above where we were in 2007
39:45
and we’re about either at or above where
39:48
we were at every any previous business
39:51
cycle peak people don’t realize that
39:54
because you
39:55
have to adjust the employment population
39:57
ratio to account for the fact that this
39:59
huge group of baby boomers are now
40:02
mostly or increasingly past age 65 and
40:05
only a very small generation is now in
40:08
midlife when you correct for the change
40:11
in the distribution of the population
40:14
and look at each individual age bracket
40:17
we’re now above where we were in 2007 so
40:21
I don’t think we have a lot of a lot of
40:24
workers left if you want to go ahead
40:26
another one of my favorites Rowell and
40:29
this is just your point about the the
40:31
term spreads this is chart 26 and this
40:36
simply makes the point that if you want
40:38
to look at a long-term recession
40:39
indicator it’s been correct in 10 out of
40:42
the 11 recessions right that’s the term
40:46
spread we went into a inverted yield
40:51
curve back in April and I look at this
40:56
rule and I basically say six to 16
41:00
months after an initial inversion it
41:03
usually goes into and out of inversion
41:05
several times and as you can see if you
41:07
want to look ahead one chart here you
41:09
can see that it’s kind of going into and
41:12
out of it so we’re gonna see it skip
41:13
into and out and typically what happens
41:15
is it’ll go into inversion the Fed will
41:18
cut it will come out an inversion until
41:21
the long end slowly sinks again and then
41:23
the Fed will cut again so I think that
41:25
were avoiding is for the Fed to cut it’s
41:28
going to go out of inversion that will
41:29
come back it it’s like a stone that
41:31
skipped several times on the water
41:33
before the recession hits and and maybe
41:37
well my my favorite one to look at this
41:40
in the next chart this is a 28 you’re
41:43
talking about all-time favorites this is
41:46
the fundamental disjunction between what
41:49
the economy looks like near term versus
41:52
long term and so you see an eerie
41:55
parallel between the consumer confidence
41:58
spread then that’s basically the
42:01
consumers of view of what the economy
42:03
looks like near term versus long term
42:05
and the actual ten years
42:08
– three month term spread they actually
42:11
track eerily and incredibly closely over
42:14
a business cycle and they basically show
42:17
you where you are in the business cycle
42:19
I would add and this unequivocally would
42:22
indicate that we are indeed late cycle
42:26
yeah I agree and I think the yield curve
42:29
is telling you the Fed needs to cut
42:31
rights totally yeah and so I you know I
42:35
think this coronavirus I think will
42:37
force their hand I think they can use is
42:38
an excuse to do it as well because they
42:40
need to steep in the curve because this
42:41
is terrible for the banking system as
42:43
well so the chances are I think that
42:45
they may well cut 50 and 50 again over
42:48
the next six months as they try and deal
42:50
at the global slowdown and I think that
42:52
is what steepens the yield curve and
42:54
obviously it goes along with the
42:56
recession because that’s why the Fed of
42:57
cutting rates so I think you’re dead
42:59
right this is all to play for and this
43:00
is what’s going on right well you know
43:03
it’s Jerome Powell I think as kind of
43:07
ease the way on that you know he’s
43:10
talked about how he’s he doesn’t even
43:12
consider raising and you know inflation
43:14
is so subdued and he’s made remarks I
43:17
think he’s pretty savvy and I think that
43:19
both both Powell and and John Williams
43:22
have sort of you know that I think
43:24
they’re waiting for a chance actually to
43:26
do this I’m gonna move if you don’t mind
43:28
to some Q&A I want to get some okay some
43:32
let’s see if I can I can read this here
43:35
I’m going to just start from the top
43:37
we got wow we got a lot of questions I’m
43:41
just I’m just gonna start from the top
43:43
here and you can you know we can both
43:47
comment on this row so I’m going to I
43:48
just start from the top here is the is
43:52
the corona virus pandemic the Black Swan
43:55
event that will put the u.s. into
43:57
recession and how might it impact the
43:59
u.s. fall elections you actually
44:01
actually commented on that briefly when
44:03
you when you talk to yes it’s coming
44:05
after the terrorism the thing about
44:06
Black Swan events we don’t know what the
44:08
actual outcomes are that’s what’s
44:11
happening we don’t know what the outcome
44:13
is we don’t know the magnitude right if
44:15
we knew the magnitude we
44:18
I think it falls into the category of
44:20
the potential I think the economic
44:22
impact is enormous much bigger than the
44:25
markets yet understanding and I think
44:28
the you know without going into you know
44:30
how the virus is spreading of which none
44:32
of us know anything in reality but the
44:35
probability is this sticks around for
44:36
another two or three months globally at
44:38
best so at best we’ve got another three
44:41
months of this that makes it a five or
44:43
six month economic event well that’s a
44:45
global recession I mean it’s almost
44:47
impossible for it not to be so I think
44:49
it is very real hence why I think the
44:51
Fed will cut maybe 50 and 50 again to
44:54
get rates back down to essentially zero
44:56
yeah I totally agree I I i did a note
44:59
recently on the corona virus and what’s
45:02
behind it I think it’s actually
45:03
extremely transmissible it’s very
45:06
different from SARS in that respect I
45:08
don’t think quarantine is good do
45:11
anything to spread to to thwart its
45:13
spread
45:14
it’s it’s not all that deadly but if
45:17
it’s only 1/2 or 1% and half of China
45:20
gets it and ultimately half of much of
45:22
the world gets it that’s still an
45:24
enormous death toll well you know so
45:26
Neil I looked at just a simple thing is
45:28
the current growth rate of the virus
45:30
outside of China is roughly what it was
45:33
in the beginning of the Wuhan an
45:35
incident when it first started it’s
45:37
basically doubling every seven days
45:38
right now the numbers are small now but
45:41
in eight weeks time that would be a
45:43
million people affected worldwide right
45:46
so you know people have to understand
45:48
compounding and how fast that that works
45:50
so the point I’ve always raised with
45:53
this is I don’t know the answer but I
45:55
know how to trade it and you have to
45:56
trade the panic you trade ahead of the
45:59
fear because nobody knows anything and
46:00
though he’s gonna know anything probably
46:02
until April May so in which case the
46:05
market is gonna have to trade on blind
46:07
panic and headlines so that makes it a
46:09
very and I think the Fed will have to do
46:11
the same and so that makes it a
46:13
relatively easy trade for fixed income
46:16
because it’s has to price in the
46:18
potentials for something bad for the
46:20
time being and so that’s how I’ve looked
46:21
at it also as well trade drops further
46:24
and simple things like for example China
46:28
under the trade agreements was post buy
46:31
more
46:32
u.s. goods it needs the dollars its
46:33
buying less goods from let’s say a
46:35
country like Brazil where ports oi beans
46:37
from Brazil needs dollars it’s now
46:39
dollar starve because China’s taking the
46:41
dollars from elsewhere and world trade
46:42
has fallen so the whole thing is
46:44
creating a setup that I think is a
46:47
little more toxic than people understand
46:49
I think the dollar may be the thing that
46:50
breaks it all sell on the rumor and buy
46:54
on the news right so and you’re right
46:57
it’s all rumor I often remind people
46:59
that if it’s it if it’s only killing 100
47:04
people a day just to keep you know I’m a
47:06
demographer right so I have to keep
47:08
things in perspective in China they’re
47:11
approximately 50,000 or 60,000 people
47:14
who die every day anyway right I mean
47:16
you’ve got a population that large so if
47:20
it were only a hundred a day this
47:21
wouldn’t even be noise you wouldn’t even
47:24
be able to see it it would be a no
47:26
invisible stochastic pattern I actually
47:29
don’t think it’s just a hundred a day
47:31
I’ll just tell you I don’t think it’s
47:33
that and I think it’s spread much more
47:36
widely but yeah and I think the other
47:40
key thing here is I think the point
47:43
you’ve raised right and I keep telling
47:46
people forget that’s what you’re saying
47:48
is dead right this is why people talk
47:50
about the flu and all this other stuff
47:51
the reality is is China’s outsized
47:56
response shows how scared they are of
47:59
something like this exactly so that’s
48:01
doing well it prompts an outside
48:04
response from every other country
48:06
because the political fallout from not
48:10
doing this is even worse yes
48:12
so behaviorally none of us are going to
48:15
get them as planes as much at the
48:16
marty-mar all gonna change our behavior
48:18
even though the death rates are super
48:21
low for people who aren’t old and aren’t
48:24
male so the reality is it doesn’t really
48:28
affect anybody and unless it turns into
48:30
the Spanish flu and it’s still possible
48:32
we don’t know but the but the behavioral
48:35
outcome is everybody is going to be
48:37
affected by it because nations are I I
48:40
agree with that
48:41
and I don’t think I will turn into this
48:44
Spanish flu but but anyway I agree this
48:48
last question last part of the question
48:50
was how is going to influence the
48:51
elections we haven’t talked much about
48:53
the elections what you see coming up but
48:56
the timing is interesting right I mean
48:58
if something if we are reaching a
49:00
turning point in the business cycle
49:02
you go ahead another six months right
49:04
and and and people are look so I think
49:07
what very much resonated about your work
49:10
is is here we go and I realize it was
49:12
after 2007 that I thought well the next
49:16
cycle may well be it because we’ve
49:19
talked about in this conversation that
49:22
the debt cycle is probably the last bit
49:24
the corporate debt is the big issue here
49:27
central bank bubble well that’s about to
49:29
finish as well and you’ve got the
49:31
business cycle finishing and you’ve got
49:33
this shift of a population from
49:35
productive workers to net dive esters so
49:40
you’ve got this enormous structural
49:41
shift with a new population coming in I
49:43
mean you couldn’t ask for a better Niel
49:46
how tick list of opportunities to create
49:49
a fourth turning yeah so and you’ve had
49:51
exactly as I think you talked about
49:53
several other people have talked about
49:54
as a great guide Dee Smith is a good
49:56
friend of mine his DS always talked
49:58
about well first what they do is look
50:00
backwards so look at the the Trump
50:03
strategy and the Boris Johnson strategy
50:06
they’re basically looking back to the
50:08
past we can go back to that and that’s
50:10
appealing to the older voter is there’s
50:13
a rate of change going on of which you
50:15
don’t understand you’re not comfortable
50:16
with but we can turn back the clock of
50:18
which obviously we can’t so we can’t
50:21
throw all the immigrants we can’t go
50:24
back to 1950s England and watch the
50:26
crickets on the green and drink pints of
50:27
warm beer it’s gone forever
50:29
and the whole world is up for change so
50:32
when you have an election you now have a
50:35
mighty polarized country especially in
50:38
the US and you have a potential for an
50:42
upset again I think and I think the
50:44
upset within your framework could be
50:47
Sanders and Sanders and teaming up with
50:50
somebody like Elizabeth Warren and AOC
50:53
and the whole progressive movement
50:54
together
50:55
well that would change almost everything
50:57
that we know
50:58
today as creating some of the big
51:00
structural problems that we have today
51:02
as well or at least it’s a solution I
51:04
don’t know what the outcomes are yeah I
51:06
remind Republicans of how delighted
51:09
Hillary Clinton and the top Democratic
51:13
leaders were back in 2016 when Trump was
51:16
nominated do you remember that oh my god
51:19
they’re gonna win in a cakewalk do you
51:21
remember that hey man here’s a guy who
51:22
believes in protectionism and
51:24
isolationism in these words that
51:27
couldn’t possibly win in a modern day
51:29
and age and ID all these Republicans
51:33
saying Oh socialist no one’s gonna vote
51:35
for it so he’s beating Trump and a lot
51:38
of these head-to-head polls I don’t know
51:40
if you’d go on a real politics take a
51:42
look at head-to-head polls and I think
51:44
he’s a lock up for the election I think
51:46
he’s a lock up for the nomination I
51:47
should say well and I think I think it’s
51:50
gonna be a fascinating contest and I’ll
51:53
tell you something from everything that
51:55
I monitor I Trump himself he’s the one
51:58
he want most the does not want to run
52:01
against he would much rather run against
52:04
Bloomberg and he says it all the time
52:05
says Bloomberg just bought himself into
52:07
the election Bernie Sanders has real
52:10
supporters and that’s the world Trump
52:14
knows right a polarized nation with real
52:17
supporters it’s a problem is the problem
52:21
is is for him to attack Bloomberg is
52:25
relatively straightforward cuz
52:27
Bloomberg’s are centrist run an East
52:29
Coast billionaire and all of the things
52:30
that the design Christ is against
52:33
Sanders looks more like Trump in many
52:36
respects yes exactly he is the
52:38
postmodern candidate for the left
52:41
Trump is already the postmodern
52:43
candidate for the right let me get to a
52:45
couple of other these questions because
52:47
I you know yeah my gosh okay we have
52:51
another one for younger investors in
52:53
their in their 20s and 30s who are
52:56
worried about the potential crisis
52:58
looming on the horizon demographics in
53:00
pension shortfall assets at all-time
53:02
highs coronavirus etc how would you
53:05
recommend approaching asset allocation
53:07
for a long term growth okay here we’re
53:10
asking you I will
53:11
an asset strategist right what do you
53:14
say about asset allocation for someone
53:16
in their 20s and 30s okay so I’m have a
53:19
different view to many my first view is
53:23
you are your best asset how you leverage
53:26
that in an entrepreneurial world can
53:29
make or break everything for you so if
53:32
you have abilities to leverage your own
53:34
abilities for income that can last your
53:38
lifetime whether it’s because you happen
53:40
to be a good chef or whether it’s
53:41
because you have the brain that allows
53:43
you to create a business and run it use
53:46
that first the biggest investment you
53:47
can make is that then secondly okay at
53:52
some point this dollar is not going to
53:54
keep going up it may in fact be broken
53:56
up in some way shape or form
53:58
with some sort of a chord or the rising
54:00
of digital currencies and a number of
54:01
things that will mean that emerging
54:03
markets at the end of this cycle are
54:05
going to be almost historically cheap
54:07
this is the second largest
54:09
underperformance of emerging markets in
54:11
history and it’s getting very close to
54:12
being the largest by the time the
54:14
dollars finished its move emerging
54:16
markets gonna be cheapest chip so you
54:17
can buy markets with great demographics
54:20
great tailwind high savings all the
54:22
things you’ve ever wanted ever dreamed
54:24
of the same that the Silent Generation
54:26
got you’re gonna get them all over again
54:28
they’re just not in America so that is
54:30
the great alloc allocation for me and
54:32
the other thing so that’s why I talk
54:34
about countries like India or Indonesia
54:35
or Malaysia or there’s a bunch of these
54:37
Philippines all of these I also like
54:40
countries like Iran and Morocco and you
54:42
know there’s so many countries that
54:44
really are interesting to me so you’re
54:47
gonna get your frizz bergen’s a bride
54:49
before you get them here at home yeah
54:50
that’s probably right because you know
54:53
we think I think you will agree that the
54:56
likelihood of develop markets recovering
54:58
until this baby boom generation is
55:00
through the hosepipe it’s not is not
55:04
high so in which case you end up with
55:05
these low markets that trade up and down
55:07
with the business cycle but don’t go
55:08
anywhere and I think that is where would
55:10
you two go for the US but the emerging
55:13
markets do the opposite they’ll just
55:14
take off and then finally I you know I’m
55:16
a big believer in in the future
55:19
financial system being built because I
55:21
also do think it’s built around the both
55:23
turning narrow
55:24
which is that whole digitization of
55:27
assets the tokenization Bitcoin and the
55:30
whole thing that’s going on there I
55:32
think that is a once-in-a-generation
55:34
opportunity to invest in an entirely new
55:37
system not one that we’ve seen since I
55:40
guess the rules-based global order
55:41
system was put together and
55:42
globalization took off allowing people
55:44
to manufacture goods in different
55:45
countries around the world and trade
55:47
easily so I think this this is a really
55:49
big opportunity can I ask you another
55:51
thing where well if if we do ever if we
55:53
do ever in a recession scenario what’s
55:56
likely to happen to the long bond here
56:00
at home so I think bond
56:03
I think bond yields go to zero what so I
56:05
think yeah so that’s an opportunity as
56:07
well in terms of just the business cycle
56:09
yeah for the business like a shorter
56:12
term opportunity I’ve been banging the
56:13
drum about this forever and I’ve come on
56:14
and spoken to Keith about it numerous
56:16
times is you know just buy bonds buy
56:19
bonds because the capital gains
56:20
opportunity is huge
56:21
let alone the protection here’s another
56:24
question just to follow up on that what
56:26
do you think about real estate and
56:28
precious metals gold and silver risk
56:32
metal gold and silver I think if we’re
56:34
moving into a situation where we’re
56:35
gonna have much more monetary largesse
56:38
when we run out of interest rates
56:39
I think gold and silver do well I think
56:41
that’s a known narrative now and think
56:42
people understand it real estate I think
56:44
is a very complicated narrative and I
56:46
think you’ve touched on this a lot I
56:47
think it’s a bifurcated market for a
56:49
long time I think the stuff that the
56:51
baby boomers want to sell nobody wants
56:53
to buy because they want to live there
56:54
and the stuff that Millennials want to
56:56
buy just keeps going up in price and
56:58
they can’t get hold of it so it makes it
56:59
a very very difficult mark okay and
57:01
there’s no market clear for six paper
57:05
houses in rural New Jersey because
57:08
Millennials don’t live there so what
57:10
you’ve got is this holding out of the
57:12
baby boom places and we saw this in
57:14
Japan all over Japan is the whole town’s
57:17
we sit in Spain we’ve seen Italy
57:19
sit in Greece this whole town’s just
57:23
completely devoid of anybody under the
57:25
age of 70 or 80 right well poverty so
57:29
you got a bifurcated property market I
57:31
guess yeah the only exception of course
57:33
are all the millenials living at home
57:35
because you know that’s the that’s the
57:37
co housing and the
57:38
shirring narrative you see that
57:40
particularly in southern Europe I mean
57:41
you just look at Italy in Spain where
57:44
you’ve got just incredible ratios of
57:46
homes with adult children living in them
57:49
the reason they do that there is that
57:51
you know 15 16 17 % of the budgets of
57:55
those countries are going into pensions
57:57
which are going into these households
57:59
with older workers or retirees the kids
58:02
have to go home to get a piece of that
58:04
you know sort of like pilots just come
58:06
you know not from that angle it’s just
58:09
look if you look at the combined issues
58:11
that the family faced the kids can’t buy
58:14
the houses they both have to work they
58:17
can’t afford the babysitter or the nanny
58:19
it’s difficult to afford the cleaner and
58:21
they’re working 24 hours a day
58:23
their parents have an asset which is a
58:25
big house or a bigger house they have
58:28
some retirement savings and they have an
58:30
ability to a alleviate the workloads
58:33
which cost money to hire third people
58:35
230 people to do and additionally they
58:38
have the ability to work part-time which
58:40
is what we’ve seen of that of the older
58:42
cohort so net net it’s a huge
58:44
beneficiary for everybody if people
58:46
would move into multi-generational
58:48
households particularly people with
58:49
young kids it’s a game changer it
58:51
changes the entire retirement
58:53
demographics of the parents and the
58:55
entire future opportunity set of the of
58:57
the millennial kids it and it’s a
58:59
no-brainer
58:59
hey I’ve told everyone that you know
59:03
don’t be disappointed or don’t be
59:06
disgruntled by this this is probably the
59:08
best news for the long term political
59:11
economy the United States because it
59:13
allows us to maybe pare back on all
59:15
these third party transfer payments
59:17
between young and old if they just
59:20
simply live together this there is there
59:23
is nothing could be better news for our
59:25
long-term you know just just liability
59:29
situation in our economy I have one
59:32
other I’ll just answer it I have another
59:33
question here someone said what book
59:36
would you recommend is a follow-up to
59:37
the fourth turning I say I get calls
59:41
every couple of weeks from my agent he
59:44
wants me to come out with a new book and
59:46
I will just say it’s it’s questions like
59:48
that that will speed me up
59:51
right now I’m very busy at it hedge I
59:53
but I absolutely do want to write this
59:56
next book where I go ahead another you
59:59
know ten or another ten or twenty years
60:01
kind of into the into demography and
60:04
into the generational cycle Raul this
60:09
has been great I don’t know if there’s
60:10
any last message you want to add about
60:12
you know what you’re doing or how you’re
60:16
feeling up yeah just just a quick thing
60:19
it’s a shameless plug for real vision I
60:21
think many had joy people know about it
60:23
but we’ve got currently a two-week
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can tell which is about the retirement
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crisis and what people can do about it
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but real vision you know has some of the
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signing up for real vision now is the
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just go to real vision com will find us
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on Twitter and get hold of that
60:59
yeah and AJ we we love real vision so I
61:03
visited often so thank you so much Raul
61:08
it was it was a pleasure speaking with
61:10
you after all this time reading about
61:12
your work and listening to you so I’m
61:14
glad we finally have the time to do this
61:17
yeah I’m be pleased as well I’ve been
61:19
desperate and sit down with you so at
61:21
least over Skype but one day we’ll have
61:22
a glass of wine and chat properly
61:24
alright roll thanks so much
61:26
okay
61:34
you
61:46
you