Jan, we are asking everybody about the risks and that's where we want to start with you. We're going to get to your HODL, though.
Okay. She says HODL. You're just listening to us on Bloomberg Radio, and we're going to talk crypto risks out there.
Yeah, for the market right now. What are they?
I think our economy is actually concentrated in two areas, and one relates to this conference. One is obviously where the tech industry is providing so much of the earnings of the overall market and the earnings growth. Right, even despite the size, which has all of us shaking our heads. So tech, that's kind of obvious and well discussed. Our economy, people talk about shape and they usually care about the leg that's going down. We are such a rich country. I think there's a reflexivity a little bit, but if we have a big downturn in the market, that will pull the economy down. I mean, because the wealthy consumers are the ones that drive a lot of economic spending. And so that's the second risk, Tim, that I would see in the market.
Is that why we haven't seen... Carol brought this point up earlier and I thought it was really good. Given the challenges that we're seeing right now, higher yields, higher energy prices, concerns about a slowing economy, yet equity markets are only 3% off their highs. Are we seeing that because of the people who do have the money in this country continuing to spend with gas prices higher, with energy prices higher? Is that why we're seeing the resilience?
Yeah. Well, you know, I'd like to focus on the big ten-year macro trends. Right. And post-COVID, we had, if you look at monetary policy and fiscal policy, I call it two feet on the gas, both on monetary, right, zero interest rates, throwing money at everything, and two feet on the gas for fiscal policy, government spending. I think we're in neutral-ish. I mean, everyone has an opinion on the Fed, but I think we're neutral-ish on monetary policy. I think we still have a foot on the gas when it comes to government spending. Right. And that relates to the deficit. So I think, you know, that's why the economy has full employment. Like, we're kind of in good shape.
But you've been worried about the budget deficit for a long, long time. And I remember earlier in my career, every conversation we brought it up, and then it just went away, and we were okay not talking about it. Now it's kind of front and center. And I feel like increasingly more and more people are talking about this as a major risk. How do you see it?
I'm going to disappoint you, Carol. You're not worried? I'm one of the biggest fund bears. I talk about it all the time. Yeah. But we know that timing in the markets is super hard. And so what I've been asking people at this conference is, when do you buy the ten-year at 5%, 5.5%, 6% at some point? And when people are so negative about bonds, the contrarian in me makes me want to go buy bonds. So, you know, I'm a little bit more neutral. And I think, listen, at these yields people were talking about, you know, muni yields on the long end of duration of high single digits, that's going to compete against equities and other parts of the portfolio. So, you know, probably long-term, listen, long-term bearish, long-term full-on gold, right, ten years out, it's the new global currency. But short-term, I kind of react against all the bearishness.
Where do you think gold's then headed? I mean, we saw a couple good strong years. Last two years, I think it was up more than 50% last year. Yeah. This year it's a little bit not as... investors seem so eager to move into gold. But where do you see it going?
Well, Bitcoin and gold hit all-time highs last year. And I think they have effectively bottomed and are heading towards all-time highs again. Now, it may be a slow move. Yeah, because there's a lot of consolidation. If you look at the five-year chart of gold, it looks like it just went up, you know, the Himalayan mountains. So it's got a reset, even though I think it's got that long-term bid. So even if it takes another year of going sideways, the other thing is I tell people that gold is not driven by US inflation. We're not a US... it doesn't dominate the world anymore. We're a global world, and global growth in Asia drives a lot of demand for gold. And this war is really bad for Asian growth, right? India in particular. So that's why it's not surprising that it's sort of struggling a little bit here.
I want to go back to something that you said earlier, and we'll get back to more Bitcoin and gold in a minute. But you mentioned the deficit. And earlier today, Treasury Secretary Scott Bessent was on Capitol Hill. He said that $5,000 checks will not affect the deficit. There are ways to do this without affecting the deficit. Is he right?
You know, President Trump and Scott Bessent are risk-takers. And I think they're taking a lot of risks here. They're toying with the market. I mean, that's a flat-out silly statement. And he was there when Trump made the comment in Texas, and that really kind of... it's really undermining confidence and risking confidence because confidence is everything. That's what prices long-term interest rates. So, you know, I think that's not to be taken at face value. It's going to add to the deficit.
