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In this Weekly Market Recap, Andrew Brill reflects on the interviews that took place on Wealthion over the past week in another Wealthion Weekly Market Recap!


Andrew Brill  0:00  
Hello and welcome to Wealthion weekly market recap. I'm your host Andrew Brill

David Lin stopped by to speak with Anthony Scaramucci on speak up and talked about true flotation and the state of the economy, and also wisdom from Warren Buffett and Charlie Munger.

Anthony Scaramucci  0:23  
So, I mean, all of this stuff I basically agree with. And one of the things I track and I'm sure you track and are aware of it is something called Trueflation. TRU flation. And if you go to It's a decentralized way to get inflation data from the overall market. And so what they do is they send out tremendous amounts of tags to people to report prices, around the country at the gas pump in the food supply chain, if you will, the grocery stores, etc. True has two statistics, I want you to react to both of them. Sure. It's this thing number one is the US dollar has lost 25.44% of its value since January of 2020. So the inflation that was inducted into the economy as a result of lacks monetary policy and tremendous fiscal stimulus has cut us purchasing power by 25%. It's also how to, you know, effectively eliminated 25% of the US debt, because that's what inflation does in terms of real terms, or you select the nominal debt out there. But you have that kind of inflation, you're wiping away a swath of it. I want you to react to that. And the second piece of data is I logged in this morning in preparation for our interview. US inflation government reported inflation is 3.4%. But true flay Shin is sending, saying it's only 2.6, which is consistent with what you're saying is there, it's more real time, and they're probably picking up some of those big box grocery store price reductions that you're inferring their trend line is down, they expect this trueflation number to go to one and a half percent over the next 12 months. So number one, I want you to comment on the loss of the dollar value of the dollar. What does it mean? Yeah, and then number two, if you were the Fed chair, empowered with this data, what would you do?

Stephen McBride  2:29  
 Okay, let's answer number one first, loss of purchasing power only affects the bottom 50%. What it basically means is that we have a widening wealth gap. What do I mean by that? Anthony? Well, what happens when we have inflation, that's wiping out the purchasing power of your dollar, it means we also have asset price inflation, the stock market's Bitcoin, as you know, Kryptos went up a lot more than 25% of the wealthy 50% of the population, well, it's really just the wealthy 10% who own assets, they're getting wealthier, their net worth has increased by more than 25%, they can afford the loss of 25% down on their purchasing power. That doesn't mean much to them. Actually, this is backed up by real data, if you take a look at the Federal Reserve data, the wealth gap has widened. Let me just pull this up. So I don't want to quote real raw numbers here. But the wealthiest 1% has seen there See, look at this distribution of household wealth that people want to Google this themselves distribution of financial assets. So the top 0.1% now own $19.9 trillion worth of wealth. Now, the top 1% own $24.6 trillion dollars of wealth, the bottom 50% own $3.6 trillion of wealth, the top 0.1% now own more wealth than the bottom 50% combined, that wealth gap was not this wide, 10 years ago. So with the loss of purchasing power, from inflation comes the rise of assets that will make the wealth gap wider. That's the first thing that that we have to be aware of is that with the loss of purchasing power doesn't affect all equally in effect. What comes as a result of that is actually more beneficial, I believe, to those in the top 1%, who actually own financial assets to your second point, what would I do if I were the Fed? Well, first of all, the Fed has a mandate to look at official data, not true inflation, not real time data, not, you know, data by other agencies and organizations and economic economists, they have to look at their own data and their own data is unfortunate, like, unfortunately, legging. So to answer your question, I wouldn't do anything because I can't look at that data to react to it. But what I suspect may happen over the next couple of months is that the CPI data released by the BLS will slowly catch up to what you're probably reporting right now, which is true flexion. So what I'd react to this right now if I were to go and pout No, would I start reacting to it? If the PCE the core PCE as reported by the BAC starts coming down above or below 2.5%, possibly, but again, I still have a 2% mandates region that we're nowhere close yet by either headline CPI metrics, or the core PCE metrics. So the answer to the question is unfortunately, not much.

Anthony Scaramucci  5:18  
Okay, so I mean, these these is great commentary. You're You're a Buffett and you're a Munger watcher. So tell me where we can learn from them. And when you talk about bulletproof investing, what can we do to make us bulletproof today?

Stephen McBride  5:36  
Buffett and Munger okay. Yeah, I interviewed a lot of value investors. I've never had the chance to interview Buffett and sadly, I'll never have the chance to interview Munger but you know, I spoke to a psychologist yesterday and I just want to share a piece of what he told me this is Robert shell Dini, I'm if you read his book, Anthony psychology, persuasion, influence. And Munger, actually, when he read the book, and in the 90s told a Harvard commencement class that in a speech that everybody I'm paraphrase, but everybody should get a copy of influence everybody needs to pass it on to their friends, family, children. Apparently, Munger was so impressed by this book. And apparently, according to Chow Dini, who told me on the interview, it made Berkshire Hathaway so much money by chapter two or chapter one, that Munger actually sent him one class a share that Chow Dini still holds today. And I asked him, What does Buffett do that perhaps other fund managers should learn from? He says, every every annual report on the first page, first thing they do is list the mistakes they've made the previous year, they said, these are the mistakes we made. Okay? We're going to learn from this mistake, we're never going to repeat this mistakes. And then importantly, he bridges that into the successes they've had in the previous year, the things they've done, well, what does this do? This according to chow, Dini allows people to gain trust. This is not a management team that is beyond his own ego, he doesn't have an ego, he's going to learn. And he's going to he's going to make everything better for shareholders, at least that's the image that this kind of messaging projects. They also use words like family, like, you know, the treating shareholders like a family member, it brings a sense of unity. It brings a sense of togetherness, Chow Dini said he never sold that share. Because that reason, also, because I'm pretty sure the shares done well. So that's probably another reason. But Buffett does a lot of things that he calls one of the pillars of persuasion is reciprocity. So what's what's what people do for him, he'll try to do for others. That's one of the pillars of persuasion that I think that has made Buffett very successful, at least according to chow Dini in his book, what else? What else do okay? stepping aside from the psychology aspect, what do we know about Buffett's investing style, one of the things that strikes out to me is that he doesn't buy things until he claims that he or his team fully understands it. For the longest time, as you know, he's missed out on Apple. Right? And there's so if I watched a CNBC interview awhile ago, where somebody, the reporter asked Buffett, why didn't you buy Apple? Do you regret not buying the stock? And he said, Well, of course, you know, looking back, I regret missing out on the gains. But, you know, I don't regret being on a boat, or captaining a boat. I don't feel confident enough to be the captain enough. In other words, he doesn't he didn't know the stock well enough to actually own it. And now as you know, it's one of the largest holdings. So has he missed out on gains? Yes. But this approach to investing has limited his losses as well. Thanks. So many people rush into things not fully understanding it, you see that in the crypto space a lot, you know, you're an expert in the crypto space, a lot of people rushing into things they may not understand. And granted, it's a difficult space to understand. But I think if you actually just take the time to learn more about which project or asset you're buying, you may actually have a lower chance of realizing losses. And that's something we can learn from Buffett, it's not just value investing. It's his approach to risk management that we can all learn from and the value investing is self explanatory. He buys things that he believes are cheap. And you know, there's various approaches as to how you can evaluate an assets valuations relative to its peers. But I'd say I would say what stands out to me is his is reluctance to jump into something that's new and hot.

Anthony Scaramucci  9:37  
was probably 20 years ago, and I think you'll enjoy this story I got a call from so I used to have a relationship with my first RA with fidelity and they had me in their advisor referral program and there was an Asian gentleman living in a sort of one of those one story ranch houses in western, Weston W E S T O N Massachusetts and they I flew up, I took the shuttle up there, I drove to the guy's house, like went into his living room was a very modest home. And he said that he saw me on TV wanted to ask me for some help. I said, Okay, great. What would you like me to do for you? And he said, well give me a second, he went upstairs. And he took out a statement that he had from Charles Schwab. And he had, and this is 20 years ago, he had a half a billion dollar. And I'm going to repeat that he had a half a billion dollar position in Berkshire Hathaway, he had bought the position in 1968. It was 30, CD 42 years later, yeah. And he had a half a billion dollar position. Now, if he had kept that position, it's one and a half, or almost $2 billion today. Man was at a seven, he said, you know, what should I do with this? And I looked at him and I said, nothing, you should do nothing with this. And you should, you know, the smartest thing you can do sometimes in life, David, I think, you know, this better than anybody is nothing. You know, the the emotions and the whims that we carry with us in life in our primordial brains, could knock us out a great investments. And so, I wrote a Buffett in 1997, I use the noon diplom of my daughter, Amelia, who was 18 months old at the time. And I said, Mr. Buffett, I just bought a Class B share, because we didn't have the money to buy a Class A share at that time, even though wasn't really that much. 15 or so 1000. And I said, what what advice do you have for me, I have a life expectancy of 84 years, I have 82 and a half years left, which I can hold your stock. Buffett wrote back, I have the letter framed in my office and he wrote back and said I, I think your decision to own the stock for at two and a half years is a manifestation of short termism, my own intention is to hold this stock for 100 years. And I love telling people this because if you change your mindset about investing, and you make it way longer term than other people think you have a material advantage over them. And if you could take your ego, and you can take your emotions out of things, you have a material advantage over them.

Andrew Brill  12:26  
One of our registered investment advisors, Jonathan Wellum, of rock link, talked with Wealthion this week and shared his views on the economy and how the consumer is feeling. He also touched on the unsustainable debt levels.

James Connor  12:41  
And I want to get your views on the economy. The US economy has been amazingly robust. But there feels like there's an underlying element of uncertainty, a sense of uneasiness. And this was reflected recently in the consumer confidence number, which came in at the lowest level since July of 2022. So almost two years ago. And what's your sense of the US economy here?

Jonathan Wellum  13:05  
Well, I mean, again, I think you have to make a separate separate do a separation between what we're seeing on Wall Street, and some of the enthusiasm was stocks, and then what's really happening on Main Street. And so, you know, in us in from, from our perspective, those can't stay detached forever. And so, yes, you've got a lot of enthusiasm on Wall Street, they're looking at these numbers, they say, okay, things are trending the right direction interest rates, you know, we might get some cuts this year. I mean, the beginning of the year is, you know, it was like, you're gonna just slashed rates. Now, it's looks like, well, it would be lucky if you get one or two rate cuts, and, and so forth. And yet, there's this tremendous optimism that continues to percolate on Wall Street, and particularly amongst some of the large tech stock stocks, but it's also it's also filtering down into even some of the smaller stocks and securities. But on Main Street, as we see here in Canada, it's tougher times and so people have much larger mortgage payments, car payments have gone up insurance for cars, autos has skyrocketed, food costs have gone way up. And so consumer spending is being pinched significantly, people are concerned about the future. And so that I think is is starting to come through in the numbers we see it especially in the retail numbers, and in discretionary spending is coming down restaurants, spending and so forth has also been impacted. So I think the picture actually on the street is much tougher, and much more difficult for the average person given the rapid rise in inflation over the certainly the Biden years last three years to be four years. And versus the income gains and in an all we have is more and more threat of more taxes and and from the government. So I see a bifurcation. My concern as an investor is we want to make sure buying businesses that are resilient can take a tougher environment because I think it's coming and I think a wall st is going to have to wake up to some of the more more of the underlying and long term realities that are facing the market.

James Connor  15:06  
And when you say you think the US consumer is under pressure, what are you looking at specifically? Are there any indicators specifically, that tells you that they're in trouble? 

Jonathan Wellum  15:16  
Yeah, the spending numbers, I mean, and so you've got where people are spending. So they're not spending in the areas that are, you know, highly discretionary, those are starting to come down. So we're seeing that, again, in food, food numbers, you're seeing it. And in terms of the even targets number just released this morning, I mean, they're under a certain amount of pressure. You've seen it in, in restaurants and restaurants, and in Starbucks, and so forth. And so you're getting pressure in those particular areas. And so that's where I think you're starting to see some of the some of the pressure and some of the issues, you're also seeing in the large uptick in debt debt. So we look at credit debt, that's gone up a great deal. People are borrowing more money, their savings rates are down the savings level is one of the lowest it's been in a long time. So they're consuming every dollar that they're earning. And that's again, not a good thing if you're not building up savings in the economy. So I think you're seeing it both in terms of spending patterns where people can pull back, they are starting to pull back. And of course, you still have to continue to continue to buy the basics and you continue, you still have to fund a lot of your unnecessary expenses, where it's inelastic demand, you know, you just can't stop spending. But you're also seeing it in the uptick in debt and credit card debt, mortgage debt, and so forth. So that's that those are concerns for us.

James Connor  16:34  
So you touched on debt levels, and I want to talk about the federal debt. Now, it's currently at around $35 trillion, it's increasing by $1 trillion, every 100 days, these names when I go, when I touch on these numbers, it just blows me away. It's like we're throwing around a trillion dollars now. Like, it means nothing. And and so I want to get your thoughts on this. And then we can't forget the fact that it is an election year. So the Biden administration has been spending trillions of dollars to keep this economy going. I recently read an article that said for every $1 trillion that we are getting in terms of GDP, it's costing us taxpayers 1.5 trillion, so not a good use of funds. But what are your thoughts on the US debt levels? And is this an issue of concern?

Jonathan Wellum  17:20  
It's a major concern there observed is it's a complete and utter insanity. So you know, when I was in my doing my Commerce degree at McMaster back in the 80s, early 80s, that's when Ronald Reagan was president, that's when they first went over $1 trillion, I believe, was 1983. It's now 35 trillion. So you've had a compounding at over 8% a year, with a growth in the GDP of about 4% a year over that timeframe. So you've got about a 4% per year gap over the last 50 years almost. So this is not sustainable, it is what you call insanity, you can't take a jet debt to GDP from 30%, to well over 100%. And then can think you can continue to do that at a increasing rate. And in other words, the second derivative, you know, is actually positive number. So you're growing now debt, that a level, where as you've already pointed out, I've seen different numbers for every increase in dollar in debt, you might be getting 30 cents of GDP, I mean, this is a complete flop, this will not be able to continue. So it's not sustainable. And the very fact that it continues to be sustained, you know, it continues to go on does not mean it won't come to an end. And so I think investors need to be very careful. When you're when you're adding a trillion dollars every 100 120 days, on a tax base of six to 7 trillion, you know, federal government, I mean, it just that you cannot make these numbers up. So no, it's not sustainable. And that's one of the reasons why I think you've got commodities, things that are priced in US dollars gold, in particular silver starting to go up and people being concerned and using these as safe harbors, there's no way we can, we can continue to have a standard of living and have a stable economy with this kind of debt being added to the system. And particularly with the world's leading economy and also the reserve currency of the world. So I think investors need to wake up, and they need to be getting I'm not saying run from the market, but you need to be allocating capital intelligently wisely in different areas that at least might protect your purchasing power. There was I saw a great chart the other day, and it just had, you know, from gold from the time that Nixon took basically the US off the last vestiges of the gold standard back in August of 1971. You know, it's $35. Now it's it's now around 2450 or so. And that's actually grown faster than the s&p over the same period of time if you take that 5053 year span of time and so what that tells you though, is that we've seen a massive devaluation in currency. And and so if we've already had that, look Watch out ahead. I mean, you cannot be continuing to add this debt. We've seen it also in Canada, we've seen it in many countries around the world. But the US right now is out of control when it comes to their debt.

James Connor  20:08  
I gotta ask you about the Canadian stock market now. And the s&p is currently up 12% on the year after being up 20% in 2023. I'm not even going to mention the NASDAQ because the numbers are significantly higher. But the TSX or the Toronto Stock Exchange is up about 7% year to date. I'm not too sure what it was up last year, but there's no way it was anywhere near what the s&p was up. And as and then you talked about, you know, we both talked about the taxes and the excessive tax burden that we face as Canadian investors, we got a slowing economy. As a Canadian investor, how do you get ahead? 

Jonathan Wellum  20:47  
Well, I think the the benefit of being an investor is that you can target the companies you want to invest in and try to buy into the companies that are least affected by the bad Canadian government policies currently, currently, hopefully, those change. So what do I mean by that? Well, we can invite we as investors, we don't have to invest in companies that are 100%, exposed to Canada, and all of the challenges within our own economy, so we can buy into the US we can buy into Europe, we can buy Canadian based businesses that are making money all around the world. And so I think that, you know, for Canadians, what they need to really focus on is how can I best make sure my capital is going into the kind of businesses that can grow, can expand in in, in a productive ways and are not hamstrung by bad Canadian policies and bad Canadian governments, which we're seeing, you know, not only our federal government, but many of our provincial governments too. So that's the way we get around it. And so we just invest outside of Canada or in businesses that maybe are Canadian based, but make money all around the world. And I think that's probably the most productive way of doing it. And then at the same time, putting too much pressure on our leaders and our neighbors and so forth to say, Hey, how can we change this and let's, let's be more, let's be, let's be looking through the resumes of the people that we're putting into power, and making sure these policies really fit with the best, the best long term objectives of our country.

James Connor  22:12  
Jonathan, as we wrap up, you've painted a pretty negative picture about the Canadian economy, what's it going to take to turn this economy around and to write the ship? 

Jonathan Wellum  22:21  
Well, I'll give you a really brutal and honest assessment, a change in government at the federal level. And I think in many of our provincial governments, too many of them are not running their their provinces very well. But I think look, we need to we need to shrink the size of the state, the state is much too large. It's subsuming way too much of our economy, we've got to lower taxes, not increased taxes, we need to unleash our extractive industries or commodity industries, we should be deregulating and making sure that we are maximizing our oil production or gas production, we're exporting our natural gas into Europe and into the into also into Japan, down the far east where there's the needs, we need to be deregulating, and in so many areas, and we need to put more and more of our economy into the private sector. So if we're not committed to doing those things, shrinking the size of government, shrinking regulations, getting taxes down, balancing our budgets, and putting competent people into places of leadership. Yeah, it's going to be a tougher go going forward. But if we could reverse some of those policies, this country is amazingly wealthy, that people are incredibly resilient. We've got a lot of talent in this country. And we could we could really, I think, make a dramatic change in the country in a relatively short period of time. But we just need some of those tough decisions made and I think Canadians are increasing, I think at the point where they are looking for change. And so let's just pray that that is the case. And we've got the leaders that step in, they're prepared to make those tough decisions.

Andrew Brill  23:59  
Chris Mancini of Gabelli funds join Wealthion to talk gold why central banks are hoarding gold. He compared gold to silver and also how some gold is being diverted into Bitcoin.

James Connor  24:13  
So gold has caught a bid in the past year. It's up over 20% on the year and one of the reasons why is because of central bank buying. In both 2022 and 2023, Central Bank's acquired approximately 25% of global production. And why have central bank's been such aggressive buyers of gold. 

Chris Mancini  24:33  
Yeah, central banks have been buying because primarily the Chinese central bank is the biggest buyer. And the reason that they're buying is because they saw what happened to Russia. When Russia invaded Ukraine. The United States and European countries essentially confiscated Russia's Dollar and Euro denominated reserves. So around $500 billion of total reserves were essentially taken from Russia. And the way that the US and the European countries were able to do that was through saying that, that we weren't going to pay Russia back. So Russia owned US Treasuries. And essentially, so we're not essentially, in actuality had lent us government money. And so what we said to Russia was, okay, look you made to Ukraine, we don't like this, we are not going to pay you back on that money that you lent us. So China saw that happen, and for lack of a better term, I think, started to freak out. And when they went, Wait a second, you know, we have a trillion dollars of treasuries, there's a distinct possibility here that if we do something in Taiwan, or, you know, if we do something that just that the US doesn't like, they could say, we're not going to pay you back. And so China's diversifying out of dollars into gold, and that's also trickling through the rest of the world central banks that hold dollar based reserves. They're saying, look, look if it could happen, right, like, if we own treasuries, it's it's a liability of someone else. Right. So so so we need to watch out for that. So there divert, other central banks are also diversifying out of dollars in into gold.

James Connor  26:15  
 I want to get your views on silver now it's finally above $30, an ounce touch wood. And it's up over 30%. On the year, what are your thoughts on silver? And do you think it keeps going?

Chris Mancini  26:26  
I think silver, you know, Silver's the poor man's gold really, at the end of the day. So when we do see this, like gold have a run, silver tends to have beta to the gold price. Silver tends to, like, catch up to gold on the upside. And I think that that happens, like so gold tends to move first, and silver tends to catch up. And I think the reason that that happens is because silver does have a very big like, retail following, I think within the US. So I think that, you know, people really see that they could buy, you know, one ounce of gold for $2,400. Or they could get at this point, and forget the exact ratio. And it was something like 85, you know, one ounce silver coins, and it feels nicer to hold 85 ounces than to hold one ounce for $2,400, which is a substantial amount of money. So So I think what happens is there is this demand for silver from retail as as the price of gold goes up. And I think that if the price of gold keeps going, I think silver will do better than gold. 

James Connor  27:38  
And so we have gold trading at or near all time highs, but silver is nowhere near it. I think $50 is the all time high. And if you were to adjust that for inflation, it would be significantly higher. But do you think we take out $50 Here in the next year or two years?

Chris Mancini  27:54  
I mean, that's that's a big move, you know, from 30 to 50 is a huge move. I mean, I don't know if we'll do that. I mean, I remember when it was at 50. And that was, you know, there's a lot of speculative hype around that at the time. That was when like you said, there was also a lot of speculative hype around gold at the time. I think that you know, if gold goes to 3000, like above 3000 Then I think that we could see silver short touching like a 45 range. Definitely. 

James Connor  28:26  
And so why do you think silver is underperforming? Why isn't a trading closer to its all time high?

Chris Mancini  28:32  
I think the issue is that what's driving the gold price is this demand from central banks like the Chinese central banks and other central banks around the world. There's Eastern demand for gold. So like whereas I think that in the US you'll start to see demand for silver if the gold price from retail if the gold price really goes in the east in China Korea there isn't that same affinity for silver that we have here it's really gold. So they'll buy a very small little like been, you know of gold, rather than buy one ounce of silver. So I think that what we have to do is like and we're and we've seen that there's really no interest for gold in the US very little. So I think that in order for silver really have its run we're gonna have to first see the gold and the ETFs start to go back up. So we're gonna have to see again like the the the price of gold have another move here from 2400 up to say 2600 Something like this, before we see silver really make its move and that'll be predicated on retail demand in the US.

James Connor  29:46  
One of the unique issues associated with Silver's at 75% of all silver comes or is produced as a byproduct. Okay, so copper producers, for example, are very large producers of silver. Do you think this also comes into play. And I guess when when I asked that what I mean is if you have copper trading at around $5 a pound, and you have somebody like Codelco world's largest copper producer, and they're just pumping out as much copper as they can, well, they're also producing a lot of silver. And they're just dumping it onto the open market. Do you think this comes into play?

Chris Mancini  30:20  
Yeah, I mean, it, it would. But I think they kind of what's attractive about that, that analysis or that dynamic that you just mentioned is that we're, as you can see a supply response to higher gold price. So the gold price goes up, and then miners say, okay, look, we're gonna gold miner say, Look, we're going to get some more gold from this area here that we couldn't get before because it wasn't economic, you could see it pretty quick, very quick. But you can see it's, you know, a somewhat kind of time oriented supply response to an increase in the price of gold, you don't really see that for Silver's the price of silver goes up a lot. If it goes to 45. And the price of copper stays at $4.75 a pound, you don't see that supply response from from on a silver Perspective Perspective, because the copper miners gonna keep on pumping out the same amount. So that's what makes the silver dynamic a little bit more attractive, I think even on the upside for silver. Now, that being said, yeah, in this higher copper price environment, to the degree that that the copper miners are now doing the same thing that I said the gold miners would do. Yeah, it is a little bit of a headwind for the silver price.

James Connor  31:32  
Do you think money is being diverted away from gold into Bitcoin? And do you think a lot of the investors that used to invest in gold are now investing in Bitcoin?

Chris Mancini  31:44  
I don't really think so. I mean, now, I mean, I think that the most rational response would be Yeah, you know, like, it's, it has to be to some extent, but I just don't get that feeling like one example that I have to get, I really haven't totally Vegas, but it's funny, my 13 year old son has a game on his phone, where he's poking at, like, the names of like, instead of Mercedes Benz, they call it Mercedes Bands or something like that. And instead of Google, they call it goggle. But all he does is he looks at the chart. And he goes, Do I think the price, the price of this stock, you know, quote, unquote, is going up or down. And like, I go on the train back and forth to New York City, and I see people doing a similar thing, you know, like, actually on their phone betting on stock prices and things like that, and these mean stocks and whatever. So I don't think it's the same buyer. For big I think Bitcoin also has people like, you know, doing similar. It's true. And I do think that Bitcoin lovers are going to really get mad at me, but But I do think a lot of it is driven by this, like this momentum kind of day trading on the apps and stuff. Now, you know, it could could gold get that kind of bid at some point? Well, I sure hope so. And could that be manifested in maybe flows into the ETF or something like that? I hope, but, I mean, do I think that it's taking away a lot of interest? I think it is, on the margin. I don't think it's taking away a lot of interest from gold. I mean, it's a different buyer. It's like central banks, like like you're saying, I mean, hopefully pension funds, it's big funds. It's not really that that retail buyer. 

Andrew Brill  33:27  
And in a holiday shortened week, Stephen McBride, the chief strategist at risk hedge, talked about AI and the biotech world. He also touched on some of the big players in the artificial intelligence world, and what AI means for some jobs.

James Connor  33:45  
So you are currently in Dublin, but you're actually making a move to Abu Dhabi here in the coming year. And I'm curious, why do you want to move there? Why not move to London or Paris? 

Stephen McBride  33:54  
Yeah so I've been to Dubai and I;ve been there many times James, and I was just incredibly impressed by the forward looking nature of the company or the country. So they get almost all our drinking water are from desalinization plants. And they're just finished construction and opened our fourth nuclear power plant. You think about what that country was 30 years ago, right? Go look, it was it was one or two buildings beside the sea surge, small fishing villages. And now you go, and you see what they've been able to do. So really, I want my kids to grow up in an environment in a country around people that are strivers and an Abu Dhabi and Dubai have that in abundance. You know, I think 84% of the population of the country is actually not Emirati. It's really a collection of people around the world who have moved there to build a better life for themselves. And you know, I think I think I want my kid that that that mentality to rub off on my kids and also, you know, we're going to talk about AI. UAE is absolutely one of the leading countries outside of America on a AI, they've launched AI models. So that makes me even more bullish. 

James Connor  35:04  
And when I think about Abu Dhabi, I guess I think about billionaires, right? Is it? What's the cost of living like there? And what's the cost of real estate or to own a home? 

Speaker 1  35:12  
Yeah, so look, obviously, there's zero tax, and it does come across as quite luxurious, but it's actually quite affordable. I mean, you know, when you take into consideration, I actually have a friend who just recently moved from Dubai to Toronto, and he said all in Dubai is actually cheaper, that's despite paying, you know, 7080 90k rent for a villa to buy real estate is actually quite affordable, you will get a decent, you know, three bedroom villa in a nice area for half a million dollars. And so all in when you consider you're not, you're not paying tax, it's actually it actually works out cheaper in many ways.

James Connor  35:51  
So you mentioned in video, and that's like the poster child for AI. And it recently went through an all time high of $1,000. They just announced the 10 for one stock split. What are your thoughts on Nvidia? Does it keep going or is it overdone here and as a reminder, the market cap on Nvidia now is $2.3 trillion.

Speaker 1  36:13  
So, you know, I've owned in videos since 2018. And so I'm a little bit biased. I'm speaking from a position of strength. And I did We did sell half the position earlier this year, just to take profits after after it ran up so much. I believe it has Florida to run, look, the biggest cash rich companies in the world, Amazon, Google, Microsoft, Facebook, they're going to spend over $170 billion building AI data centers and an order infrastructure. This year, it's going to be over $200 billion next year. A huge amount of that money is going on chips. Okay. So I don't think it's time to sell Nvidia. Yeah, I think it has four to run. I think before this bull run is over, it actually becomes the world's largest company, which would make me a little bit cautious. Maybe that is the sell signal. And put you actually look at where it's trading on a former PE basis. As much as the stock has run up. And it earnings have gone up even faster. So as of as of yesterday or Yeah, pre pre earnings. And it was it was trading in near its five range, low on the forward P E basis. So I think it has for Tarun James and I mean, yeah, as I said, it's actually it's actually more than justified than overtime. 

James Connor  37:28  
When it comes to semiconductors, Intel has been around for many decades, and yet they've kind of lost his battle. And it's really underperforming Nvidia, well, what's happening with Intel? Are they able to compete with Nvidia?

Speaker 1  37:43  
The short answer is no, they build a layered. And when you look at the history of semiconductors, usually when a company gets a lead and a certain sector, it usually stays there for a very, very long time. It's actually a rare that, you know, we're in the verticals and semiconductors, you get change. So I really think Intel is not prepared for that for the AI age. I think it's it's, you know, it's been beaten by it's been beaten by NVIDIA on one side and TSMC on the fabrication side. So I think you there's a lot better stocks to own, not just in AI but just in semiconductors in general. I think, you know, people may be you might be a little bit bullish on Intel, because it's building all these fabs and it's spending all this money and it's getting all these subsidies from the government. I would say to you that a better bet is to buy the semi cab companies that the machines because 70% of one of these cutting edge fabs 70% of the money and we're talking to $30 billion for a fab 70% of that money goes towards the machines. That's companies like ASML of lamb research and Applied Materials, and Kla, 10 core, they're the companies that are going to be earning all this money. So that's the better bet.

James Connor  38:57  
Let's talk about AI jobs. Now. There's a lot of concern that AI will disrupt, disrupt the job market, and it seems like everyone I know, in North America, they're looking for work, okay, and they're looking for good paying jobs and they can't find any. And I don't know what it's like there in Ireland but the job situation here it's not what you're it's not as good as we're led to believe it is okay, according if you look at government numbers, and I guess my question to you is, is AI already disrupting the job market? Is it already displacing workers?

Unknown Speaker  39:32  
SoI think the fear about AI replacing jobs is completely overblown. I want to give a shout out to our friends over a pessimists archive. They wrote this great article about how Job AI robots have about been about the steal the jobs for 100 years, and it's all these examples of every decade about people saying this technology or that automation is going to take all the jobs and of course what ends up happening is technology use you Almost always creates more and better jobs, I think it's going to be the same for AI. Look, I'm not saying it's going to destroy no jobs, I think if you put a gun to my head, and I think customer service is one of those industries that will maybe have 10% of the workforce that adores today and for over 10 years, but what I'm really focused on Jameson and what I think the world needs to embrace is that how AI is going to allow us to move up the value chain, and actually help people that really need that help. For example, if you talk to teachers today, they spend less than half of their time actually teaching the kids, right, it's grading homework, it's designing lessons, it's, you know, all these rules and regulations that they have to comply with. What about if we could just automate all that away, which are GPT? Okay, just you can you can design not only design a lesson for the class, you can design it lessons for individual students based on where they are. So, you know, you might be ahead of me and math or whatever, you can design individual lessons for us. Wouldn't that be so much better? Similarly, in health care? Here in Ireland, you're waiting, you know, two to three years. Some cases I'm not joking, for an appointment? What about if we create AI assistants to radiologists, and doctors, and automate away some of those lower level functions, so they can actually serve more clients perform their jobs better. And so I actually think this is going to be an amazing thing for humanity. I think a lot of the BS jobs that we have are going to go away with this technology but create so much prosperity, that we will be more than better off than we were before. 

Andrew Brill  41:42  
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