Okay, it seems to have started now. It

will go live on YouTube.

Well oh, it loaded, portlo. Boys and

girls, hello everyone. BTIC connection

is online. Drop some pluses or minuses

to let me know if you can hear me.

Right, let me figure this out.

Something is lagging in the admin panel

. It’s really sluggish. Looks like

plus, plus. Can you hear me well, so I

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mic?

People will complain anyway.

Always gotta have some dirt. Yeah,

seems like everything is fine.

Excellent. So, my friend, hello.

Hello. We’ll be meeting in person

soon, which I’m personally very happy

about. And, yes,

since summer is practically coming to

an end and we're entering the favorite

time for all investors, speculators,

and other folks, there's plenty to

discuss—what to expect, should we

prepare a spare pair of diapers for

September and October? I think it’s

always best to keep them handy

just in case. Yes, of course.

And I decided not to start with your

favorite question about what to do with

TLT. Although people are already asking

what will happen to TLT.

Today I have a different question.

Should one buy or not buy 30-year

Japanese bonds?

Oh, I don't really have an opinion on

30-year Japanese bonds. Logs on

I don't know, let's see.

Um, the fact that this intervention

just happened—it seems like they hit

it hard, the Japanese weakened it well,

it's been over a week or two, and we're

almost back to the same levels as

before. On one hand, they say they

started selling Euros, meaning there's

some kind of signal strength in that

mechanism, why they sold specifically

dollars. And the logic now is that

everyone is screaming that the Yen is

extremely undervalued. Rosenberg was

writing something today, down 50%, it

needs a revaluation. In principle, the

Japanese were doing more or less okay,

actually. Nobody is going to ask them,

but if the Yen strengthens, and

considering the 30-year Japanese bond

is now yielding 4%, well, in principle,

the TLT trade could shift to Japanese

territory. I mean, if we assume the

long end will be politically controlled

anyway, it’s already illiquid, so

they will suppress it. Does it make

sense to bet that the yields will be

automatically suppressed? In that case,

the structural desire to strengthen is

much more profitable than sitting in

TLT, because the Americans want a weak

dollar. So, you might gain from the TLT

rebounds, but you'll lose out on the

exchange rate due to the weak dollar. I

mean, it seems to me that Japanese debt

, structurally speaking—not right now

, but looking ahead a couple of years

—is a clear signal that they’ll

strengthen it, regardless of how,

perhaps by pouring it back into 30 or

40-year bonds. They'll essentially be

scratching each other's backs to keep

the long end supported. With that logic

, I think it's not just that the yen is

interesting, like Napier always says, "

Hold 25%." Shouldn't you hold that 25%

exposure, as he suggests, not just in

yen, but in Japanese duration?

Well, it seems to me that what you've

described captures the whole point. If

you do that and you're not Japanese,

you're taking on extra currency risk.

Well yes, if you believe that 160 level

will hold, you could argue there’s

some kind of floor there. That’s not

how I see it. I’m not sure. I think

the market will continue to test them,

just like you said, right? I even sent

you that funny Simpsons meme, you know,

where you think you've solved the

problem, but the problem is still there

. So for me, it remains an additional

currency risk. Usually, speaking for us

and our approach, we hold the bond

portion as a form of protection. We

typically take that exposure in the

base currency. Assuming the portfolio

is in euros, it’s euro-bonds; if in

dollars, then dollar-denominated ones,

and so on. We don’t have a yen base;

we don't have Japanese clients. If we

did, then yes, it would be something to

consider. I don’t have a position on

the yen either, to be honest. I'm not

betting that it's over, because if it

goes above 165, there’s such a gap

that it could fly to 200 very quickly.

That’s exactly the point, isn't it?

You can’t ignore that risk if

you’re assessing it objectively,

right? And the question is, how much do

you really want to speculate on the yen

? Because if you buy those JGBs, you're

buying them in yen by default.

Regarding the thirty-year bond, whether

it’s high or Japanese, or the

twenty-year, it doesn’t matter; this

is happening in every country, yes,

same in America and Europe, but these

long-term bonds, they yield more. And,

well, on one hand, it’s tempting, but

on the other, there are reasons why

it’s like that, right? I mean,

we’ve discussed them many times

together. I think Japan has the same

reasons, sort of, as everywhere else,

yes. Well, I agree, but you have

historical examples like the Plaza

Accord and so on. I mean, when the

Finance Minister, what was it, Kanachi,

Tanachi, came out and said, "Guys, go

ahead, bring the money back here." They

have cases where, back in the nineties,

they said, "Bring the cash back." And

the yen gets a massive rally within a

year just because they were told to do

it, and they did. It’s not like they

have some kind of pluralism, saying "we

need more yield." Yeah, but that’s

only part of the repatriation equation.

It hasn’t really happened properly

yet, because if it had, we would have

seen it in the markets and, in fact, in

American indices too. Because for the

most part...well, Japan is a creditor

nation, right? Meaning they have

significantly more assets outside of

Japan than anyone else; accordingly,

most of those assets are in dollars,

yes? So, there is no repatriation yet.

Of cash from Japanese corporations. I

think that might be one reason, yes,

why something there is growing. But

speaking of yield curve control, I only

see some initial attempts so far. And

intervention is also a type of yield

curve control, if we’re talking about

America, right? I mean, they won’t

let them sell these Treasuries, right;

one way or another, they are doing

everything to keep the Japanese from

selling them. Well,

well, they opened this FIMA repo, which

the Japanese currently have 100 billion

in.

Yes,

they’ll lift the limits now, and

basically, "Guys, take as much as you

want, we’ll give you as much money as

you need."

Well yes, in theory, but you see,

there’s a nuance with this FIMA. When

a foreign central bank comes in and

pledges their Treasuries to this FIMA,

new dollars are created, right? So, in

essence, it increases liquidity, which

isn't necessarily bad for markets, but

it dilutes the dollar, right? If it’s

used on a massive scale, it’s just

the dollar basement, essentially, a

straight-line move. I mean,

isn't that what they want? I think

that’s the whole point of this

nonsense, when they talk about lowering

rates to weaken the dollar, and all

this AI boom that’s happening, it’s

just unclear. It's unclear what they're

saying. One day, the Fed says they’re

for a strong dollar and all that. The

next day, they do everything to weaken

that dollar. Yeah. I mean, where the

truth lies is just not clear. I think

they want the dollar to be more or less

stable, but in this scheme, that's

impossible, you know, because you're

essentially printing it. So, I don't

know, to me, this is a fairly risky

operation that doesn't look very risky.

Well, it’s already cheap, right?

It’s undervalued in many ways, and it

feels like yield curve control is

looming. But I think it’s riskier

than it looks. Well, at first glance,

at least. That’s why we’re not

doing it. But in principle, with this

logic, if you want your Treasuries not

to be sold off, you should actually be

weakening the dollar. You provide more

liquidity to the markets, and the

necessity for those fire sales we saw

in the spring kind of goes away. And

you get this stabilization because if

you cut the rate now and weaken the

dollar a bit further, the long end

automatically gets a bid that keeps

pushing that curve down over and over

again.

Maybe, yeah. Well, from what was said,

I read it as them wanting a steepener,

ideally.

Uh-huh. Meaning they want the

short-term rate more or less where it

is now, maybe plus or minus 25 basis

points; under certain conditions, they

might cut by 25 or 50, but the market

is doing the work for them at the long

end. So for me, coming back to TLT or

the ten-year or something like that, I

think it’s still too early to get

into those. Because there’s no actual

yield curve control yet. It will happen

sooner or later, right? But for now,

it's just these hidden maneuvers, let's

say. They are doing these buybacks at

the Treasury level, they are conducting

interventions, yes, the same FIMA, yes,

but that’s not de facto yield curve

control like there was, for example,

after World War II. Where it’s

strictly going to be like that and

that’s it. Yes. I think that

something like that will eventually

happen. And when it does, that will be

the moment when it makes sense to buy

long-term debt. And regarding the yen,

I believe that, well, you know, right,

that my roots are for exchange, I’m

basically a currency dealer, trader

and

a speculator.

Well, no, I wouldn't say that, but okay

, a speculator. Uh, and I believe that

if you want to speculate on currency,

you should speculate on currency. Don't

pretend that you are, uh, how is it,

trading a carry or something else. Yes,

that’s, well, I’ve seen a lot of

those stories, especially with some

exotics, some Hungarian forint, you

know, there, debt or something else.

Uh, they, well, rarely end well, yeah.

Uh, so if you want to speculate on the

yen, well, you should speculate on the

yen, yes.

No, well, I’m more from a structural

point of view, the forint isn't the yen

after all, and the volumes are

different, but you have the Central

Bank clearly telling you that we want

capital repatriation. The prime

minister comes out and says: "Guys,

bring the money here." It's clear that

everyone is sweating it because all the

Japanese money is in the American

market. And alright, Treasuries, a

trillion, they have another 3 trillion

there, well, let's say 2 trillion stuck

in American stocks. So, there’s no

interest from anyone for capital to

leave there either. Therefore, all

these dances with tambourines, with

FIMA, are so that these pools aren't

touched. And, in my opinion, the

demonstrative selling of the euro is

like a little message, guys. We will

sell everything, all these Koreans,

everyone who holds anything, sell

everything, anything except the buck.

You have 2.5 trillion in euro reserves.

And by and large, if you look,

there’s practically a trillion of

Japanese European debt, which they

could theoretically dump if they really

had to.

It’s clear this would trigger reverse

dynamics, but still.

Well, it looks like they aren’t being

allowed to repatriate. That’s obvious

. Like things that Japan needs to do,

yes,

but they aren't being allowed to,

including stocks, they aren't allowed

to, yes,

hence also

the question, this is this It's a

question of temporary LEGO, because if

you have a structural necessity,

there's the question of what the

trigger will be to set that process in

motion. I mean, the Japanese don't

really have much of a choice here.

First, they need to finish raising

rates so their banks can start adding

bonds back to their balance sheets. And

they need to shove all that cash back

into their own economy to strengthen

the currency. Because if you look, the

personal spending data came out and

it's down 6%—things are honestly in

really bad shape, there's a massive

slump. And,

well, this surely has political

consequences; if the population is

suffering, there are already questions

for the current prime minister, and

there will only be more. I think this

is a timing issue, that they aren't

being allowed to do it, or they just

aren't doing it. But regarding the

timing—I think repatriation will

happen eventually, because they likely

have no other choice. Yes,

yes, I agree. And, well, as long as the

Americans are financing this thing one

way or another, sure, that's fine. But

I fear they won't do it forever.

Reality is, well, I don't know, the

Treasury Secretary changes, or someone

else comes in, there could be a

different party line, or internal

American problems, or something else.

So sooner or later, yes, but not today,

and you know, timing is everything, so

I don't see this as an asymmetric trade

. It’s interesting. I think it’s a

cool story at some point, but I’d

stay cautious for now. Yes, I’m just

looking at it structurally; if you want

to have—considering the whole world

is bet on America—a 20%portfolio

exposure, whether in stocks or bonds,

just to have exposure to this dynamic,

because, well...

Well, we don't have Japan, if we're

talking about ourselves. No, no, it’s

not just Japan in the world; besides

America, there’s Europe, I don't know

, South America, China, there are all

sorts of other countries. Latvian

Japanese stocks feel a bit expensive to

me. Yes, they’re performing and

surging, but it feels like a total "

basement" theme, so I think it’s

already too late to jump into this

rally. Looking back, we probably closed

out those positions we had a bit too

early. We had some good gains, you know

, some multiples, but in hindsight, it

could’ve been more. But I don't

really worry about it,

because, for example, if we move away

from Japan and lean into that, Napier

objectively writes that the biggest

potential weak link, if we assume the

Americans and Japanese have agreed with

their allies to dump euro assets, is

France, which would become the main

target. Two-thirds of the debt is held

by foreigners. Political instability,

huge deficits, they’re stuck in a

swamp with no movement whatsoever. If

money starts fleeing from there, how is

the European Union going to patch that

up and manage it? Will it be used for

real, rapid fiscal consolidation? Or

will it lead more toward a collapse,

especially considering all the rhetoric

going on here, like when our African

friends jumped the fence into the

Spanish enclave and they started

imposing Schengen border closures and

restricting movement? So, on one hand,

if you look at it now, Euro Stoxx is

performing well, and the English market

is performing well too. It’s clear

that if you go there, the valuation is

cheaper than in America. Plus, you get

exposure to corporations whose main

revenue streams—well, their main

profits—aren't primarily in Europe. I

mean, only a quarter of their profit is

in Europe; the rest is quite

diversified, so you’re basically

getting an MSCI World index. And given

the overall valuation, it actually

looks pretty decent. And what do you

think about Europe in general if you

look at it that way? No, I actually

think: if you live in Europe, you can

have some allocation to Europe,

especially mid-cap stocks that will

benefit from those—you know, what the

Germans are spending on defense, all

those stimulus programs—that money is

going to flow into that segment, more

or less. And plus, banks actually look

quite good, because compared to the

American ones, they look very cheap. If

you assume that Christine will be

handing out candy to everyone anyway,

well, to support this whole system,

then European banks also look pretty

fantastic. About Europe, what,

right? Banks, yes. Well, a normal curve

is always good for banks. A steeper

curve is always good. Yes, that is the

core business of banks. Borrow short

and pay little, lend long and get a lot

. Yes, that’s a classic. Accordingly,

if the long end rises, well, that's

great. Valuations are really good,

those dividend stories, if we are

talking about major banking players.

It’s not that we hold a lot, but our

clients do have some European banks.

Otherwise, our approach is more

sector-based. Meaning, uh, the same

story with oil, some miners, some

companies servicing all these mining

things and so on, and so on. I think

that is more important than geography

itself. And yes, many companies that

are European are only conditionally

European, they are rather global, even

those that are hated, like automakers,

right. Well yes, so why not. So, we

hold Europe, unlike Japan. Well, again,

it is largely a question of the base

currency, right, you need to manage

this currency risk, right? Definitely.

And if our bonds are usually in the

base currency or have some simple,

clear hedge, then for stocks, sorry, we

usually don't hedge currency exposure,

so, let’s say, that which is in euros

, there is no such issue, and that’s

a plus. Yeah. Therefore, yes, I think

that regarding what you said about

capital concentration in American

indices, well, it will definitely stop

at some point. I think that a lot of

what has been supporting the dollar

lately is all these data centers, AI,

LLMs, all of that, I saw that there

were record, near-record foreign

inflows, right, into all these things.

Accordingly, also, if this hype ends at

some point, well, most likely there

will be nothing to support the dollar,

Treasuries aren't really needed by

anyone from the outside. Well, if you

remove the Caymans and some of these

proxies for hedge funds. The stock game

is pretty much played out, right?

Meaning there are the most questions.

And then, yes, then we can talk about

capital flows, including back into

Japan, into Europe, and elsewhere. And

this money that is already in the

system, no matter who issued it, whose

liquidity it is, it can't just be

burned, right? It stays in the system,

so it has to go somewhere. The question

is, where?

Wait, are you factoring in that this

year we have how much? 29 trillion in

total borrowing, some insane figure—

are you talking about the US or global,

galactic, universal totals?

I'm reading this book by Bernard

Connolly right now, who...everyone is

copying him now, and back in his day he

wrote and trashed Greenspan, calling

him an absolute fool and saying that we

economists are all morons—the kind of

thing we love to say—but in his logic

, there's a debate about whether you

need to raise or lower the rate. Yes,

even if we go back to US inflation, the

logic is that when you have an

investment boom, you have huge demand

for everything related to the

investment component. And at that

moment, as a central bank, you should

raise the rate to curb consumption,

home purchases, and mortgages, and save

that powder for the moment when your

investment boom ends. And everything

you've built there hits the market and

becomes supply. And by lowering the

rate, you match this supply with the

accumulated potential of that

consumption. And your standard cyclical

sine wave should, you know, be smoother

. He says that when Greenspan should

have raised the rate in '95, he lowered

it instead, because there were huge

productivity gains and inflation was

understated. And so they kept pushing

until '98, '99, when they started

raising it aggressively. It was already

too late. And now, the discussion

involving, say, Tim White, or that guy

appointed to the Fed's budget committee

—he also wrote on this topic, saying

what chance do we have in the current

cycle to lower the rate when you're in

the middle of a boom? Now they'll build

all this crap, and then it'll all dump

onto the market. If you look at the

labor market, the general sentiment,

and the overall debt levels, your

consumer is basically languishing deep

in the basement, beaten up and bruised,

and feeling, to put it mildly, not very

vibrant. And in this case, they say, "

We can lower the rate because of the

fact that." And that's where the

element of coercion disappears, right?

So, to compensate for this collapse,

when all these capacities start coming

in, they say, "Fine, right now most of

the capital, or all the products, are

being imported." I mean, TSMC and all

that—everything connected to it—

huge flows are going into America to

build up, to build out all this

infrastructure. Accordingly, capital is

flowing to Taiwan, Korea, and other

such fellows. And the narrative

they’re pushing is that we will

create the following dynamics. I mean,

Poszar writes about this. He says that

the shift in US debt issuance will be

around two years. That is, this extreme

liquid segment, for which there is

always demand, because even if you have

30 trillion in global debt, if you

issue 2 trillion in bills. That's the

kind of collateral that is needed in

any case. So, you won't have stress

there due to the rate cut. Basically,

you make bills quite attractive, and

with the easing of bank regulations,

you can herd all the banks into them. I

mean, they'll be hedging there. You

have a fairly steep curve; you don't

need to go into thirty-year bonds. As a

bank, you can just sit in the 2-7 year

range, play the steepener, and

everything will be just fine. And for

anything beyond ten years, let's say,

you take your slant-eyed friends, grab

them by the reins, and say, "Guys, you

have to." And this moat, which Bessen

was constantly talking about last year,

that we need to do these long-term

things, that you will have access to

liquidity through the repo market.

Basically, we tell the Japanese: "We'll

give you unlimited access, but you

bastards are going to buy with all the

surpluses you have.""You are going to

go into the long end—the 30, 50, 100-

year bonds." Essentially, you end up

with a political curve that is

controlled. And you'll have this kind

of slope, where everyone can live quite

comfortably for a relatively long time,

I think. Yes, I think that is the plan,

more or less. Lower the rate. Well,

listen,

it works.

Well, listen, yes, he says a lot of

things, if you recall all his promises

and what actually happened, it's like

night and day. He’s still blathering

on about these stablecoins, like

they’re some kind of manna from

heaven. It’s all, you know, about

demand, he claims. Where did he even

get that? It’s a mystery, right? I

don’t understand, for example—

what's the idea that the crypto market

will quintuple and then the demand will

just appear? But why would it quintuple

? It’s just unclear why, all of a

sudden, just because you passed some "

clarity act." I mean, hardly.

Even if it does quintuple, the

stablecoin market cap is around 300

billion, give or take. Even if you get

it to 1.5 trillion, it’s like sewing

a second pair of ears on a dead man.

Yeah, pretty much. So even in a

super-positive scenario, it still

doesn't solve the problem, right? The

deficit remains exactly as it was,

doesn't it? There was another

record-breaking month just recently, I

read it yesterday. So he can talk all

he wants. Uh, there is a plan. What

could push the Fed to lower the rate?

It’s definitely the job market. And

the latest numbers, they’re getting

worse and worse, yes. They continue to

play this game that Biden started. You

know, showing good numbers, then

revising them, then good ones again,

and revising again. It’s obvious now,

right,

the same old story. And, well, the

ideas are coming out—there was

already some negative stuff, but it's

like they’re prepping the market with

an excuse to cut the rate, you know? So

far.

Do you think they’ll keep drawing

this crap up until the elections, like,

artificially maintaining this narrative

?

Well, why not? Why wouldn't they? Maybe

.

Because of what Connolly wrote in his

book, exactly like that. I thought

about it yesterday—they say that when

they raised rates in '99, in 2000, when

the first slump began and it became

clear that the market was reflecting it

, that the bubble was starting to

deflate, it finally began to reflect

real economic dynamics again. And on

one hand, it seemed like inflation was

starting to rise, because imbalances

started appearing, and you need to

raise the rate, but they knew if they

raised it, everything would fall apart.

And they said, "Okay, until the

elections, we’ll sit and wait," and,

well, they waited until it happened. So

, I think there is such a thing.

I think there is. I think there

definitely is. And this, well, let's

say, Powell is a very interesting

character. He projects this confidence,

you know, he speaks very confidently, a

good orator. But what he’s saying, if

you strip away the confidence, is very

strange. It’s, like, very

contradictory. And, of course, labor

market weakness or some underestimated

inflation figures give him the

opportunity, you know, to remain

politically neutral. Because, well, I

can't imagine what would happen if he

just unexpectedly hiked the rate—the

market isn't pricing it in, and he does

a 25 basis point surprise hike—Trump

would just eat him alive, literally

come in and devour him. So I think

they’re going to stall on that for as

long as possible. And the probabilities

generally show that. You have a 100%

probability for 25 basis points, but

only in December. So I think that’s

how it will play out. Most likely, what

happens next is what’s important. And

probably, in many ways, that will be

dictated by politics and who wins.

Because if the current administration

is a lame-duck one, say they lose the

Senate and there’s chaos, well, you

can do whatever you want, but you won't

be able to make any decisions.

Executive orders, nothing. That’s two

years. Well, it's a complicated

situation.

The situation is complicated. Uh-huh.

You could, like his brother-in-law, buy

the Lakers.

Well, get into basketball. Okay.

With Saudi money, at that. So what’s

up with that?

Well, that won’t solve the deficit

problem, right? It’s, like, just a

good team, you can hang out, but

it won’t cover the deficit, ticket

sales won't cover it,

therefore,

yes, but on the flip side, the

franchise is worth 12 billion. Well,

inflation, what can I tell you. Same

thing.

Ah, yes. Wait, let's move on from that.

Ah, okay. But look, we have Jackson

Hole coming up at the end of August,

and the next meeting isn't until

September.

So, by and large, they’re just going

to sit back and watch it all unfold.

Yesterday the CPI came out, very

neutral and as expected. Today we had

the PPI. Suspiciously neutral, I’d

say.

Well, I don't know, if you look at

what's inside, it was generally

expected, there was nothing terrible,

nothing that would make you say, well,

don't get on a plane.

Look, I'm not saying it's outright

rigged, but the fact that it's so close

to expectations also fits into this

picture, you know, this data

macro-management, right. It's very

convenient for the Federal Reserve and

the Treasury right now,

yeah. Well, look, the data came out

today, for instance, income was below

expectations, and your PCE figures also

came in slightly below expectations. So

, you have this whole disinflationary

dynamic, it's noticeable, even though

nothing has really been resolved with

Iran, and it’s as if the world has

just gotten used to it; you don't

really read much about it anymore. It's

like everything is normal, like it's

the way it’s supposed to be. If I

recall, I remember doom-mongering in

March that if they didn't open the

strait, all the supply chains would

collapse by July. Everyone was writing

about it. I mean, it's August now, and

you realize that a total disaster is

looming, yet somehow it all still seems

to be working. And it's clear that

there is this uncertainty regarding oil

prices right now. Actually, we could

talk about oil while we're at it. Oil

prices

well, it's working. It's working

because, well, they're draining the

reserves, that's why it's working. But

these reserves aren't infinite. I read

just yesterday that Aramco, well,

Saudi Aramco, has some, I don't know

how to put it, some crisis, or not a

crisis, but it's a real mess. And

fixing this mess will take a long time,

like a year and a half, yes, to

replenish those reserves. There is

definitely a shock, yes, they are

managing it, sure, but it exists, and

we are already seeing the effects of it

. Well, gasoline remains expensive, yes

. Natural gas is rising significantly

in Europe for sure, yes, because

there's no Qatari LNG. And that's it.

So for now, they are managing it by,

well, draining various strategic

reserves. And they are manipulating the

price, I'm sure of it, yes. I mean, if

you look at the short position on oil,

it's epic, really,

and yet it’s not falling all that

much, right.

Therefore,

well yeah, fair enough. And in your

view, in that case, let's suppose

tomorrow this whole story ends,

everyone agrees, they hug it out, and

Israel and Iran become best friends.

And Which is unrealistic—but

regardless, say, if the de-escalation

process proceeds quite smoothly, it's

clear that the next logical step is for

everyone to rush and stock up to the

brim, because everyone understands that

this truce period—one, two, or three

years—will still mean that if Iran

lets the Americans go now, they'll

regroup and come back.

If this continues, it will be some kind

of element of escalation. So, in any

case, any de-escalation leads to the

world preparing, feeling the need to

stock up. In that logic, they should be

well prepared. On the other hand, given

that the overall indicators don't look

very bright and demand itself is quite

weak, what do you expect for oil in the

near future in such a scenario? Up,

down, or a trading range, as we usually

say, which is more or less comfortable

for everyone? Well, I think that, first

of all, reaching an agreement is

practically unrealistic. Why? Because,

well, my personal opinion, yes, one can

argue with it, but my personal opinion

is that Iran holds all the cards in

this conflict, well, so,

well, it has won, roughly speaking.

Well, won, also. How do you define this

victory? Nothing has ended there. On

penalties. A yellow card, a red card. I

believe that it is in a position of

strength, yes, precisely in this

conflict.

Accordingly, the one in a position of

strength dictates the terms of the

truce. The terms that Iran wants. And,

well, one can read the MO, it has been

voiced many times, it doesn't matter.

They are, in principle, putting an end

to American control over the straits,

not just this one, but any of them. But

that is a cornerstone of hegemony,

right? So if that's gone, then nothing

is left. Accordingly, this is

absolutely not acceptable to America,

not at all. Therefore, as they say, a

physical truce will lead to certain

outcomes. Well, I don't know, oil has

run out, for example, the American

strategic petroleum reserve is already

at critical levels and production keeps

getting lower. Well, it will probably

increase now, but we'll see how much

can be produced. But even if shale

production increases, that's very

specific oil. It doesn't solve all of

America's problems at all. Therefore, I

think that sitting down at the

negotiating table and reaching an

agreement—I don't see that scenario.

Unrealistic.

It sounds like it. Unrealistic, yes.

Well, anything is possible, sure, but

at the moment, the idea of two sides

sitting down and agreeing—I just

don't see it. Most likely, the outcome

will be driven by external factors.

You’re forced to negotiate, right? I

think that’s what will force America

to negotiate, not the other way around.

But if that happens, then that’s it;

it’s the imperial finale, so to speak

.

Well, look, America is America, but

ultimately, it’s Israel that’s

pulling the strings from above. He got

in there because of Bibi’s prodding.

To me, that’s one and the same, you

know? They are so integrated into each

other, into each other's political

systems, that it's essentially

one story, yes, two different countries

, of course, there’s that religious,

ideological aspect and so on, but er,

let's say, Israel's behavior is defined

by America's power. Well, definitely,

yes. Or rather,

the opposite, America’s behavior is

defined by Israel.

Or the other way around, or...well, it

is defined, yes, but by America’s

power, right? I mean, if America is the

main country, the main determinant of

who goes through the elevator, who

doesn't, and so on, then it’s the

other way around. Well, it doesn't

matter. The main point is that they are

super-integrated; they can be viewed as

a single entity. That is why I think

they will drag this out until the very

end. Regarding oil, we are kind of

still bullish, if you were to ask. And

we were bullish not because we were

expecting a war—not the first

iteration, not the second—but because

I believe there were objective reasons.

We discussed them together several

times, many times. That there is a

certain floor for oil, right? Well,

when we discussed this earlier, a year

ago, it was around 60-70, and at those

levels, it seemed cheap to me, simply

because you can't expect any serious

increase in production at those levels,

which is needed, because demand keeps

growing. Now, at current prices, you

can expect that. Is anyone interested

in super-high oil prices? I don't think

so. I think nobody wants that. Neither

China nor America. Nobody wants that.

Well, maybe the Arabs do, but that’s

debatable too. So, well, I don't know,

I think that, uh, it's possible they'll

just stretch it until they hit that

critical strategic reserve level. You

know, when it actually becomes a

problem, like a physical one, right?

You just need pressure in those storage

facilities for everything to keep

working. And at that point, well, what

are you supposed to do? You’ll have

to come up with something, right, to

change the situation. The funny thing

is that they’re obviously

manipulating oil prices, but it doesn't

affect gas prices at all, which is much

more important politically for America.

I mean, Trump keeps popping up,

scolding those Exxons and majors,

calling them bastards, capitalists,

like why......and yet their profits are

quadrupling.

What is that? How does that happen?

Yeah, but he forgets that the problem

is with refining, not with the oil

itself. And that problem is unsolvable.

There.

I’d be stammering in his case. See

how it is? So, I think there are good

reasons to believe we're at least

somewhere around here. But I think the

floor now isn't 60-70 anymore, but

rather 70-80, roughly speaking.

And in principle, that’s how we’re

positioning ourselves. We don't have

that large of a direct position in oil.

We closed a lot of it during the

previous spike. It wasn't huge before,

but we trimmed it even more. But we

hold a lot of oil companies, many

different refiners, midstream, and so

on, from various parts of the world. So

I think the cash flow of these

companies will remain very strong. And

in the event of any, I don't know,

physical issues, uh, we could see a

sharp spike in oil prices as well. Well

, by that same logic, you should be

pretty bullish on copper first, because

even though it's scraping near highs,

there are huge problems in Chile or

Peru—I always confuse where that is.

Well, both places, it's a question of

where it's worse, you know.

Yeah, where it's huge, I don't...I

always confuse it, there's that massive

deposit, which is...

I think it’s also Chile, but it

doesn't matter.

Congo has huge problems too. And the

infrastructure, right—copper is, well

, it's obvious, electricity, if you

need to increase capacity, where are

you going to go without it? Well, look,

we hold all kinds of metal miners and

companies that don't just mine copper,

but include it among others. But we

don't speculate directly simply because

our focus is on gold, silver, and oil.

So that’s where we focus our

attention.

Since you brought up your focus on gold

and silver,

what should we do?

Look, you know me, I’m structurally a

gold bug, but then these Elliott Wave

fans come running up to me and start

telling me—I get confused by them—

about the fifth or fourth wave. Wait,

we'll get there.

For them, there’s always, always one

last wave.

Yes. They say this is it, this is going

to wash out all the gold lovers, and

we'll head somewhere in the 2,000–

3,000 range.

Optimists.

No, look, in my view, at 4, we spent a

long time struggling, and we rode that

level through news where, logically,

gold should have crashed like a stone.

With all that dynamic, if you look at

real yields in America,

2.37 is really above 2%given the

current level of debt. Who wrote that?

Some guy, what’s it called? There was

an economist back in the nineties who

wrote about 2%fiscal dominance.

That’s the topic Grantham is always

writing about. And right now we have,

roughly speaking, 2.4 real yields. I

mean, for gold, that’s total poison.

Why the hell would you hold this rock

when you actually have—yes. You have

all that movement, and yet gold doesn't

jump in either direction.

Uh-huh.

And now, after hanging around for so

long, silver started moving, gold

started moving, and first and foremost,

the miners really started surging again

. So, there’s this feeling that right

now

we could easily see a couple of X’s.

Well, at least in the miners. Well, "

easily," I don't know, it’s unlikely

to be easy. But the technical picture

is good, yes, it’s a bullish setup.

Well, maybe it’s some kind of fake

breakout. I wouldn’t be surprised if

we head back toward 4 or even lower at

some point. I don’t think—well, I

think the probability isn't very high

for that, but it could happen. I’m

not ruling it out just yet. But I think

the main argument is just this, that

right now this AI bubble is going to

start deflating, and we have liquidity

problems. Because, well, we see this

private credit now, which has been

really inflated, and now they're all

having problems, they're crawling out

of every crack. The only question is

when the elastic on the underwear will

snap. Everyone says, well, when it

triggers some chain of events that

leads to liquidations, you have

everyone sitting on margin, this basis

trade—if that collapses, everything

collapses, and the stock markets are at

all-time highs for margin. I mean, if

you look at it, this potential collapse

of leverage spills over from that small

two-trillion-dollar circle of the

market to the entire capitalization of

over 100 trillion. And in that case,

well, like the Turks, they ran out of

dollars, so they had to sell gold,

and then, well, goodbye. Well, the

Turks had problems, so they sold their

reserves, but the Chinese, for example,

did the opposite and used the dip to

buy more—it was a record month, for

instance. Listen, regarding positive

real rates. I have big questions about

these positive real rates. Well, first

of all, I think inflation, consumer

inflation, is seriously understated.

But okay, to hell with it, you don't

have to believe that. But real rates

are calculated by looking at

break-evens, right? Looking at the

two-year break-even, for example,

and it has dropped. Well yeah, but what

is a break-even, really? Who determines

this break-even? It’s purely the

American market. It’s a market

dominated by hedge funds, pension funds

, and the biggest banks. I mean, well,

the banks are the Federal Reserve,

essentially. And I don't think it’s a

coincidence that he talked so much

about these real rates. "Look at how

positive our real rates are." He said

it about five times; I actually

listened. I usually don't listen to

that crap, but this time, well, a new

face, you know, I decided to listen. He

mentioned it about five times, talking

about how great it is. I don't believe

it, because if you look at, I don't

know, those two-year break-evens, well

there that two-year break-even rate,

how much is it? 2.2 right now,

something like that. Well, basically,

well, that's how it is, yes. In essence

, you are told,

yeah, well, essentially you are told

that the swap market expects inflation

at 2.2 for the next 2 years on average.

But I just can't believe it. I don't

believe in that. I don't think it will

be that way. That's the first thing.

Consequently, if, well, if there are

doubts about the validity of these Real

Rates, well, then gold doesn't suffer,

right. If, if enough market

participants don't believe in it, well,

then it doesn't have an impact. That's

the first thing. And second, I think

that what you said about selling

reserve assets is very important,

because, well, what do most central

banks hold in reserves? Government debt

, right, some kind, mostly Treasuries,

right, and gold, yes? So you have two

assets that compete with each other as

the main collateral assets, the main

reserve assets. What do you even need

reserves for? You need them in case of

some kind of disaster. And so we have

two examples. There's a disaster in

Turkey. What did they do? They sold

gold. No one said a word to them.

You're welcome, you sold your gold and

covered some of your issues. You have a

disaster in Japan, you can't sell your

collateral asset. They start making up

all these stories, no selling,

intervention, FIMA and so on. So what's

the question? What is the real reserve?

What is the real collateral?

Well, I don't know. Sorry. There. Well,

listen, this is understandable,

everything is debatable, but for me,

these are right next to each other.

These events, they are right next to

each other. And for me, the answer is

unambiguous. This largely explains why

gold is not being revalued. But then

again, listen, we corrected by 25%from

the peak. That's a normal, good

correction, right? I mean, yeah, it was

fast, and yeah, few people sold at 5300

, at 5500. Well, I

I think that all these, all these reals

, not reals, play no role, because

everyone understands that we are in the

endgame, and this endgame will be

resolved solely through harsh

debasement. And this will be a game, it

won't be that one person decides how to

do it, everyone will be doing it in a

race. Ah, so you have it as, like, you

understand perfectly well from the

perspective, then you don't believe in

the swap rate, you understand? Then you

are saying that inflation is much

higher.

Well, listen, here, here one needs to

distinguish, in that case, one needs to

distinguish between two philosophical

discussions. Like with inflation. you

are saying that it is understated. I

understand the logic, but I believe the

inflation metric, if we are talking

about the mechanical calculation, is

quite significantly overstated. I mean,

if we say that you go to the store and

buy a piece of something that used to

cost 10 and is now 20, or cars that

have doubled in price, or houses that

have grown just unbelievably—well, of

course, you can count that as inflation

, on the whole, since it hits me

specifically, right? For instance, I

went, well, my dog hurt her paw, and

getting a blood test for her cost 180

euros. I just stood there and said: "

Wow, guys, no way."

Wow, guys, no way. That's a good one.

Uh

is your blood test also 180 or cheaper?

I thought it would be cheaper.

With that money, I could have bought a

bottle of Macallan.

A good one. Not bad.

A good one, yes, a good malt doesn't

rise in price quite that much. But if

we look from an allocation perspective,

this discussion itself is secondary.

After all, we are looking at the

discussion we're having, asking what

should we be buying? Should we be

taking an inflation hedge or some

anti-cyclical things, growth, right? In

that case, we are only looking at the

trend and the rate of change of this

metric. We can talk about whether it's

high or low, whether rent payments are

falling or not, but the absolute level

itself is, most likely, even irrelevant

in this discussion about allocation.

And real rates fall into the same

dynamic. I mean, we can say that if I

have real rates, I'm a huge allocator,

like a pension fund, and for me to get

2.5%real rate over 10 years, that is

absolutely fantastic. It doesn't matter

if it's overstated or understated,

because I have a mandate, just like the

Japanese, right? They need to perform

asset-liability matching. What matters

to me is noticing that if they are

giving me free money, I am going to

take it. So, this thing we call real

life versus how we manage and value

assets, it seems to me, are two

different things. And in my view, if we

are talking about the financial side,

then inflation is very, very overstated

. This is not least because of these

rent payments, which have completely

unthinkable weight and are simply a

distortion. And in this, well, that's

what the whole discussion is about,

right? Everyone is shouting that the

trend has turned. Now we've started, I

was reading Rosenberg yesterday, his

favorite variation: the three-month and

twelve-month Core PCE rate. So, they've

stripped everything else out.

Yeah? They cleared it all out and it

remained. You know, I find it funny

that they call these "reals," meaning

you take certain market expectations

for the future and compare them to, say

, the actual two-year rate, which is a

fact, you know, and then claim that

Treasuries are more attractive.

That’s why I don't believe in it. I

don’t believe in 2%average inflation.

Even with the CPI and all its flaws,

whether it’s overstated or

understated, it doesn’t really matter

. I just don’t see it getting there.

Consequently, if it’s not there, then

maybe there are no positive real rates.

That’s why I’m so skeptical about

it. But this issue of reserves and

collateral, I think, is very important.

I mean, you can’t claim the role of

the primary collateral and then not let

anyone use that collateral. And this

isn't the first time. I mean, you know,

the Japanese are partners, like, you

know, long-standing ones, they hold a

lot of Treasuries, there are ties at

the corporate level and so on. But

there were other nuances, right—

freezing assets, seizing those

Treasuries, sanctions, and so on. So

it’s building up, right? You can do

it, and do it, and do it, and at some

point, most of the world says to you, "

Sorry, friend, this isn't collateral;

it's just an instrument, it’s a way

to get a clear yield in dollars, or

something else." But it’s not reserve

collateral,

right. But that is the whole discussion

: Japan is the largest marginal buyer

of all debt. For 20 years they kept

everything at zero, and all the capital

that was formed or crystallized through

constant deficits and a huge debt

burden had to look for extra yield

somewhere. And so, when a

five-trillion-dollar elephant starts

turning its back to you and its face to

the forest, Comrade Warsh might find

himself in a rather uncomfortable

position. Of course,

easily could. Easily could, yes. His

position is unenviable altogether, I

think. But the most interesting thing

is that we talk about the Japanese as

if they’re so super-duper. If you

look at it, the Germans have an NIIP, a

Net International Investment Position,

that’s even bigger than the Japanese.

I mean, the Japanese have something

like 4.7, while the Germans have 5.5

trillion.

And what's more,

Yes. And what's more, just like the

Japanese, almost 60%of it is debt.

Mainly French debt. Well, obviously,

they bought everything—all the

European debt, they have Target 2,

which means everyone owes us. Uh, and a

bunch of American stocks and bonds that

they bought at zero rates, and they are

just sitting in deep losses. And they

say there's talk now that if things

start to, uh, go south in Europe, they

won't be selling debt. Well, in any

case, dollars are your funding source.

You, like, it's easier for you to just

dump the S&P on a large scale, because

if you dump the S&P, the treasury

starts having huge problems with tax

revenue. Well, because the main budget

relies on the market being up for so

long,

unsolvable problems,

yes, and overall you're back to Trump

imposing, let's say, tariffs and

introducing various things. In short,

the insanity is deepening. We've got,

uh, the Germans here. There was an

incident once where they tried to blow

up a Ukrainian Antonov in Leipzig.

Oh, what was I saying, yeah, and there

was some kind of drone that didn't

explode. And now the American, oh, not

American, the German intelligence wants

official parliamentary permission to

conduct preventive cyberattacks and

surveillance on enemies. Well, like,

it's not happening now, that's the

message.

Well, I guess now it will just be done

officially.

What's the difference? I don't see a

difference. I think the same thing is

happening anyway. That's all. Listen,

what does it matter if it's legal or

illegal? It's all classified anyway,

and so on. If they're going to do it,

they're going to do it. Listen, yes, I

think that's where all these nuances

with the chaos come from, because it

all works. You know, these reserves,

savings in dollars, only work in a

unipolar world where there's this clear

hegemon that, let's say, dominates and

sets the rules of the game. If it

doesn't set the rules of the game, well

, you can argue about stocks, because,

you know, there are some unique

companies, productive, profitable ones,

so why not? But Treasuries are

definitely a problem. And as you know,

as probably everyone listening to us

knows, Treasuries are much more

important than stocks. Well,

systemically, from a systemic point of

view, yes,

something will be saved,

therefore,

well, they will save something, but

they will always save the debt market

in any case. Yes, yes, of course. But

to save the debt market, there aren't

many options, right? I mean, in

principle, there are two options:

either default or inflate it away, as

always. Default, I think, is a

practically unrealistic scenario.

Accordingly, it's inflated away. What

does "inflated away" mean? Well, you

keep inflation higher than the interest

rate. That's what it is.

Well, you sharply cut the front end via

YCC—they'll come up with some

nonsense after the second minute, call

it some kind of program, and they'll

just suppress the long end, shift

everything to the front, and then lower

the rate. Again, if you have 80%on the

front end, you bring the rate down to

zero. Your dollar drops, your deficit

collapses by a trillion, and

automatically, if you peg the

three-year rate at 2%, you can just

herd all your allies who are hanging

out in your market into it and say, "

Guys,

yes, that solves a lot of issues, but

it kills any hint of, well, the

dollar's reserve status. When it's the

sole reserve—that's definitely the

end of the line. Yes, and I see the

Americans trying to—you know, as they

say, it's a well-known saying, trying

to ride two horses with one ass, you

know. It's very difficult. Did you

write about this on Twitter today?

Yesterday? Yes. Well, yeah, yesterday.

It's impossible, yes. You can't remain

the sole reserve in terms of currency

or collateral and simultaneously

inflate it away. It's, like, impossible

. It’s either one or the other. I

think they are just waiting for the

moment that will come, when they have

to make the decision that has actually

already been made. You just need to

make sure that when you make this

decision, the more players you catch

off guard, the more you provoke some

kind of harsh and uncoordinated

reaction from other players, the more

room you have to maneuver. So, these,

yes, well, this is actually

historically quite typical for an

empire to act like this at the end, yes

. Well, for example, if the conflict

with Iran had developed differently,

yes, well, if there had been phenomenal

success, a quick victory, I don't know,

it's hard to imagine, but say, yes,

that happened, that's a different setup

. Then many questions are resolved, yes

, that, well, these guys can still

protect these bottlenecks, maritime

logistics, and so on.

And Trump wouldn't have had to exit the

plane inside a container.

Well, yeah, he wouldn't have had to,

because there’d be nothing to fear,

you know. Uh, so that's where this

conflict actually comes from, yes? It's

an attempt, well, to prove something,

that we've still" got it, "you know,

but in reality, it looks like it turned

out the opposite.

Yeah?

Another accelerator, you know, a

booster.

Last question, before we move on to

questions. The artificial intelligence

bubble. How close are we to something

going wrong? Because this week Nvidia

came out and said that they, along with

BlackRock, KKR, and Apollo, are

creating a 500-billion fund, or rather

a loan facility, which will be aimed at

, roughly speaking, vendor financing,

right? Meaning Nvidia will be lending

to companies that are going to order

chips from them. So, this whole dynamic

, this circular economy of orders and

dependency that has existed for quite

some time now, has led us to the point

where spreads are blowing out, well, uh

, credit default swaps on almost all

these hyperscalers. You've got Google

with negative cash flow, you've got

borrowing plans of 4 trillion through

2030. It's clear that your cash flow

servicing. It's one thing when Meta or

Google start to struggle, or even

Amazon, but under those three guys,

there's a whole layer of companies that

the entire momentum depends on, and

they most likely simply don't have

access to that capital. And in my view,

this is an indication that Nvidia has

to—not only are they likely

supporting their own stocks and so on

—but they realize that for this

dynamic to continue, they need to

artificially support demand for chips

themselves so that this whole ladder

keeps spinning upward. And everything

looks pretty sketchy, because even

private credit is starting to, to put

it mildly, murmur in the wrong

direction. Uh,

well yeah, I think there's a whole heap

of problems there. And if you

objectively evaluate everything you

said, the most important thing is the

spreads, in my opinion, because the

bond market is way smarter than the

equity market. And if the bond market

is demanding, I don't know, 9-10

percent annually for this debt, say,

from an Oracle or Meta, for long-term

paper, that's a bad sign. It means that

bond investors and traders are asking

for a higher compensation for higher

risk, and that makes financing much

more difficult, right? So, if you just

want to issue bonds and get financed

that way, you have to expect that you

will, even if you are a major American

corporation, you have to expect that

with negative cash flow, you'll be

paying, well, something close to

double-digit interest rates. Well, and

that's ridiculous. You look at this

debt, it's rated investment grade, like

BBB or something, but it's trading like

junk. Well, is it junk or not? For a

bond investor, it's junk. I mean, you

can call it whatever you want, but the

yield...That's why I think it's a sure

sign of trouble. It's a sure sign that

the market is demanding more and more

compensation for this kind of story.

This is the most important thing. It is

, of course, a bad signal. And at the

same time, it’s obvious that this

administration, at least, considers it

a critical industry. Accordingly, it

will be supported in every way, bailed

out, and subsidized. They'll come up

with anything to keep it barely

breathing. That doesn't mean market

valuations will stay high, but I think

they'll keep fueling this thing. And

BlackRock, someone mentioned KKR,

someone else—well, these are all

oligarchic structures. These are the

real decision makers, right? I mean,

it's not quite the state yet, but it's

close. Someone must have guaranteed

them something. Well, they aren't going

anywhere in that regard. Again,

everyone understands perfectly well

that if Oracle crashes into the trash,

the market is doomed. There isn't the

capacity to absorb all of that. And the

selling that will hit, even with any

upside, won't be...Yeah, yeah, I agree.

Absolutely. To me, if you look at it

historically, it's very similar to

previous cycles of technological

innovation, where the build-out was

slightly ahead of reality. I don't know

, you could recall the internet era,

when everyone was laying cables, or the

railroads at the turn of the last

century, that sort of thing. It's a

typical story, isn't it? You build too

much, and the demand appears later. To

be honest, I don't see the demand. I

see a lot of demand for local solutions

. If we're talking about LLMs and AI,

it's clear that if you approach this

model intelligently, it can be super

useful for your business, but that's

not about ChatGPT, not about, I don't

know, the bidding. with Anthropic,

that's a completely different story.

It's a local solution where, say, the

expertise comes first, and then the

technology comes in to simply, let's

say, triple that expertise, make it

faster, make it more efficient. But

we're told that everyone is going to

use, I don't know, Claude or ChatGPT,

and they'll pay for it. Nobody is going

to pay for that. I can give you an

example.

A simple example. Uh, well, clients

periodically send me some kind of

structural products. You know, banks

are always offering some kind of junk,

you know,

auto-callers, collections,

or, you know, baskets or something else

. And, well, you could calculate them

yourself, but it's slow, tedious, you

have to, you know, fuss over it, think.

Or you can go to Google.com and ask the

AI:" Hey, break down this structure for

me, "and all that.

And, well, I did exactly that one time;

they sent me a structure, and I said:"

Here is the structure, write out the

payoff for me. "It wrote everything out

and said:" Do you want to upload the

PDF they sent you? I'll calculate

everything exactly and tell you what

the barriers are, and so on. "So I

uploaded it, and it calculated

everything. All of that for free. Well,

conditionally free, right, meaning, you

know, clicks, ads, and so on. But

what's the point of using ChatGPT for

this specific task? There isn't one.

It’s a, well, a pointless waste of

money. Well, to me, anyway. If you have

No, well, your case is a bit different.

I mean, you can, for example, train

your own neural network that is

tailored to your specific needs. I, for

example,

yeah, yeah. Well, that’s the research

I’ve collected over 10 years; I

uploaded it. That’s what I’m using

right now. The quality is leaps and

bounds better,

right? But that’s not about ChatGPT,

that’s about a local solution, and

there’s a lot of competition there.

You have Chinese models that are just

as good, maybe even better in some ways

, and nothing gets stolen from you

because you can verify everything,

since it's open source and so on. So,

again, I’m not criticizing ChatGPT;

many people like it, and why not? If

you like the service, why not pay for

it? But will it go mainstream? Unlikely

. It’ll end up with you just being

able to ask those questions in Google.

But if you want a local solution, well,

then you need to think, sit down, or

maybe combine these models, or build

your own, or something like that. That

takes time, it will still take a lot, a

lot of time. And, well, you know,

business is always about efficiency. I

mean, if you have a cheap alternative

there, well, why would you use an

expensive alternative? Doesn't make

sense.

Ag, I agree. But I just uploaded a file

for you, well, from that DMI, yeah,

and it shows an analysis of what is

happening with Amazon itself. The same

thing that is happening with Morpika.

It’s just interesting to read the

case there, why Amazon will fly like

like a butterfly, sting like a...not

sting, but strike like a monom. And

just take a look, the point there is

actually something completely different

. It says that the speed, the demand

for tokens, even though the cost of

tokens is falling significantly because

of the Chinese, your volume and

business margins are growing sharply

due to consumption. I I thought, I also

, in principle, thought it was some

kind of nonsense, but the statistics

shown there are quite impressive. And

it's quite possible that we're missing

something in this case. And in his

topic, he says that, well, Japanese and

Chinese models are a completely

different topic in terms of market

capture. I mean, the Chinese go in,

capture the base first, and then build

up, while you are going from the top

for volumes and complex tasks. And

Goldman Sachs says that token

consumption will grow 24 times over the

next 4 years. And so even this Unit

Economics that existed, it actually

aligns with everything else. Well,

anyway, we'll read it now.

No, well, I'm sure it will be used more

and more. I don't know, by 24, 100, 34,

it doesn't matter. It will develop. We

aren't talking about that, are we? Yeah

. It seems to me that this whole thing

on the credit market is going to

collapse. Because everything is

debt-based, sooner or later, you're

just going to have an imbalance in the

system, when you have competition, when

there is crowding out at the government

and corporate levels. Meta just issued

a bond that gives, like, 3%on top. So,

would you take 3%on top with Meta or

get into those same treasuries? Well, I

think many will think about it. In

principle, the risk is the same, even

if one could still argue about where or

how a person might go. And

not the same. Not the same. That’s

exactly the problem. But a 3%spread is

good, yeah,

so it’s not that simple with all this

artificial intelligence. Well,

not that simple. Yeah, yeah. But listen

, once again, I’m sure that this will

be, uh, well, a technology that will

definitely be with us. It’s, well,

listen, with someone, for example, in

software development, if you talk to

anyone, any programmer will tell you

that their work, how they work, has

changed radically, right? I mean, uh,

those who adapted and use agents

effectively, their revenue is improving

, right, because costs are lower, fewer

people are needed. So it definitely

works, yes. But if we’re talking

about other businesses, the idea is

that for all businesses, it doesn’t

matter if you’re making software or

selling donuts, your efficiency will

still grow because of this technology.

I don’t think that’s the case. I

think that’s not the case at all.

I’m saying that right now, there’s

so much code being produced that we

won’t be able to get rid of it later.

Well, its quality is also a question,

actually, yes. I mean,

plus all the discussions about whether

it’s okay to release these

cybersecurity applications when hacking

tools start breaking out of their

containers and spreading. Well,

something really bad has to happen for

everyone to scratch their heads and ask

if we even want this kind of stuff or

not.

Well yes, I think good models are

auxiliary models. Well, at the local

level, they are auxiliary models that

simply speed up your processes. Well,

sort of guardrails, let’s call them

that, where you just have some limits

that keep you from going off track, but

there still needs to be a human on top

who, you know, makes the final decision

, hits that final button. I think

that’s the only way. Unless, of

course, we’re talking about some kind

of general intelligence, but I don’t

believe in that at all. So, it seems to

me, that’s absolute mythology.

Consequently, these data centers, they

are, most likely, well, too fast, too

massive. And the question is why, uh,

why are these companies doing this,

right, these hyperscalers? Well, the

answer: either they understand

something we don't, which is easily

possible, they see the demand in this

industry, or, I don't know, something

else. Or they were guaranteed it.

Guaranteed by whom? Well, the

government guaranteed it. They were

told it's something like the defense

industry. Don't worry, we'll cover it.

And I believe in the second more than

the first.

Well, exactly, whatever happens,

happens.

Yes,

if anything, we’ve already lived our

lives, we’ve seen it all.

Might as well launch Skynet, right? It

doesn't matter anymore.

I want everything to be fine for me,

and for you, in that regard. Let there

even be an agent.

Even agents. Yes. And what was he

called in the Matrix, that Mr. Johnson?

Mr.

Damn, how

which one in the Matrix do you mean?

No, no, that was from the other side,

that wasn't it. Ain

Morpheus, he was there.

No, there was the one running around in

glasses.

Ah, that CIA guy,

yeah? Hey,

he had some Anderson. No, what

Anderson. Anderson. Exactly. Yes. Mr.

Anderson. Well, we’ve cleared up the

important stuff, so let's move straight

to questions to avoid further

embarrassment.

Will the S&P reach 9k, or will there be

a reversal sooner?

I don’t know, I won't comment on that

.

Now

maybe,

maybe.

I think that, I think that Trump is

very focused on the stock market. For

him, it’s like the holy grail of

everything. Therefore, everything he

can, everything this administration can

, including the Federal Reserve, uh,

they will do to ensure that it, well,

at least doesn't crash, right. So, it

seems to me the chances are high that

it will go higher. There. But how much

higher? That is the question. Giving

specific levels is very difficult to

say.

Yes. That’s exactly the question. If

it hits, will we go to new highs?

Incentivization in the system is

present in any case. But as for the

question, of course, also

if you recall, they were lowering rates

when it was already clear that things

were bad, but it didn't help. Nasdaq

fell anyway.

Well yes, though they weren't dealing

with such nonsense back then, like

swaps for everyone and so on. I mean

there, they were a bit, yeah, and all

that was under a slightly different

guise. Well, nonetheless, you know, not

even what seems positive for the market

, right? Well, I don't know. Liquidity

is also a big question. So, uh, on one

hand, uh, QT has finished, we see some

versions of QE, what is it, RM,

something like that, yes, they call it

Treasury buybacks. But if you look at

the liquidity momentum specifically, I

mean it’s growing, but the growth

rate isn't that high, it's quite

sluggish. I mean, uh, if we were to see

some kind of dip and they turn that

liquidity back on, you know, open the

tap, well then, that could easily

happen to the S&P. But for now, no.

For now, no, yeah. I mean, what

CrossBorder writes, saying the Chinese

have started to stir a bit, while the

Americans are just sitting tight for

now.

The ECB isn't doing anything either.

Yeah, sort of.

Well, they really have a real energy

trouble there, I mean they're sitting

on hot coals. Inflation came out today,

and it was pretty much in line with

expectations. Any shock in the Middle

East for them immediately...

No, well,

you drop out of everything, everything

has been done for this. Everything has

been done for this.

So, we’ve answered that. Plus, plus

TLT. Oh, you want to talk about TLT? We

kind of skipped over that topic. Say

something good about TLT.

Well, what can I say, we were right,

what’s there to say about TLT.

Well, I think it’s the same story. I

mean, it’s the same story as what we

were discussing with Japanese long-term

debt, yes, very similar. I mean, yeah,

it seems low, or conversely—it seems

the rate is high there, and it seems

like it’s not profitable for anyone,

but...it is profitable for someone,

it’s profitable for banks, uh, if the

curve is normal and this steepening

happens, meaning your lower, well,

short-term rates are lower, long-term

are higher—it feels like that solves

a lot of problems. There will be curve

control, but when will it happen? So

far we only see these...band-aids,

I’d call them that, yes, these

interventions like with all these

scumbag officials who realize they have

risk asymmetry, because anything you do

proactively in that swamp, the

probability of losing your job

increases sharply. So, you have no

desire to be proactive. And,

accordingly, you are incentivized from

the start, at any level, to sweep this

whole thing under the rug for as long

as possible. And your main job is, in

case of any trouble, to look for

someone to blame, to have a scapegoat.

Yeah, there must be someone to blame,

no matter what.

There must be a culprit found, surely.

Uh, here’s my point. In order to take

the long end, you need to be sure about

yield curve control. That, that is my

point. For now,

it's too early. Too early,

too soon. Yes. I mean, as long as we

see these sluggish attempts, like, I

don't know, Treasury buybacks,

interventions, which are also a

platform—you can view them as a yield

curve control platform. That's not

enough for the market. The bond market

will still test this hypothesis until

the Fed de facto says: I'm buying right

here, back off. I mean, yes, this

moment will happen sooner or later.

When it happens, you should go all-in

on TLT, but that’s not today.

There is a discussion going on right

now, again, with all these committees,

that, first of all, the Federal Reserve

will be reducing its balance sheet, not

increasing it. In any case, yield curve

control will eventually take off

following the Japanese balance sheet.

Right now, a steepener, lower front-end

rates, and acceptable yields on the

long end imply, among other things,

that the duration on the balance sheet

will be pushed into the market as

regulatory norms are eased. Meaning

you’re saying:" Okay, I, the Federal

Reserve, won’t act as a lender of

last resort or take on credit risk;

I’ll just provide liquidity. "And all

these RRP programs for bills are

basically designed to keep you sitting

comfortably. We are a liquidity

backstop. Regarding what JPMorgan and

Jamie Dimon say: if you look at their

reserves, JPMorgan holds a minimal

amount. It’s Citi, it’s Bank of

America, they are the ones up to their

ears in those. Uh, and their goal right

now is to adjust the curve so that

banks hold minimum reserves and all of

that flows into the economy, into

lending. To do that, you need to

destigmatize the discount window. Again

, getting back to the Turkey situation

—whether they are selling gold or not

—we know what Brazil did in 2015,

what India is doing, and what, most

likely, Japan is doing, which is trying

to build a synthetic dollar position

via forwards and futures so that no one

sees they are selling. Once you realize

that reserves are being sold, they

start attacking you, and the risk that

this spiral will start is just too high

, so it's easier to sweep it all under

the rug, like everything else,

basically.

Yeah, basically, it's a bit too early

to buy. Yes, crypto.

Slower.

Uh-huh. Actually, again, if we're

talking about Cross-border, they

overlaid the Chinese Central Bank's

liquidity chart onto the gold price.

And the fact that the Chinese were

stalling for a while is why that spike

in gold happened.

Except they are called GL now, not