Today. Nice to see you in person for a change. I think people are predisposed to think of you as bearish. Why a bubble in the u. S. . Why this feeling now . Well, i think that we have to distinguish the different sectors in the u. S. The bubble is in the most popular stocks is making great companies. Amazon, netflix, so forth, but theyre highly priced and dont forget. October 99 to march 2000 the nasdaq 100 doubled and then it went down 70 . And navidia which is one of the millennials favorite stock declined in 2000 to 2002 by 95 . After 2007 it declined by 88 . I think we are in a financial bubble, not only stocks but also bonds and we have this liquidity bubble. I would rather invest in europe than the u. S. And where the economy is improving. Thats people think. In asia we have cheaper markets. If you look at the u. S. Market compared to other markets, it is at the highest level ever. If i say improving economy in the u. S. Thats what you say. I disagree. You dont agree . No. On what metric . Well, car sales are weakening. This is an important industry also in terms of employment and i think that the retail sales tell you that the consumer he would like to spend but hes unable to spend because affordability is not there. The millennials, the young peop people, they earn less than their parents did and less money because they pay 50 of their rent in new york and newport beach, san francisco, los angeles. Its an affordability issue. The fed has been very good at boosting seasset prices but the wages havent followed. People dont have enough money to spend and invest. If i say, okay, this quarter the economy is likely to print 2. R5 . Wheres the competition for stocks . And then i say the looming trump agenda, which could be positive for stocks according to so many different people, whether its tax cuts or more regulation coming off, you disagree with all of that . No. I dont disagree. Trump is better than others. That i already said. Some of his policies have been better reflected. This year its up 6 against the u. S. Dollar. The s p havent made any money whereas in europe italy is up 25 in u. S. Dollars. All the other markets between 15 and 20 . In asia, similar. This year foreign markets have out weighed the u. S. I know everybody wants to get in. We do. Marc, weve had our differences and ive disagreed with your opinions. Im not going to debate that. Im going to ask you in the present you paint a picture of the u. S. Economy that looks as though its weakening. I ask you about technology and the contributions of the companies such as an amazon, such as facebook, such as whether it be apple, all the tech heavy weights, the contribution to the economy . Do you not see that as very difficult to measure but you believe its there . It is there and certainly the tech sector as is reflected in property prices on the west coast reflects that. The marketplace knows that. Thats the sector of the economy that is doing well. If you look at the 330 million americans, the portion of americans that are really involved in tech is very small. And then if you look at china, do you think there is no Technology Company in china . We have lots of Technology Companies in asia, in india, in china, in europe the same. So this is universally a sector that has done very well until now. Will it continue to do well . As you know, the Semiconductor Industry is very cyclical. You talked about retail being soft. At the same time theres a massive transition moving on the productivity, amazon, all of the onli online. The consumers preferences are changing as to what they buy . Absolutely. You take total consumption. Its relatively weak for this stage of the recovery. Its 1. 5 up, maybe 2 in the next quarter. Thats what were hoping nor. But, look. Im not dealing in 1 or 2 . In india, in vietnam, in china there has been a slowdown but were still growing at 6, 7 per annum easily. Yes, but nobodys suggesting other markets cannot outperformed. Remember, they have under performed the u. S. Market for ten years. Its about time and reasonable to expect they might catch up. Thats different than saying the u. S. Economy and the market is in a bubble and is going to have a traumatic decline. If we think last point about 99 and 2000, they were ridiculous. I believe in this situation. It was in 2007. In 2007 in 2000 we didnt have a bond bubble. Now in the u. S. I still like treasuries. 2. 2 on the ten years is a huge yield compared to european and japanese bonds at zero interest. Thats your idea . Are bond yields as low as they are because its a sign that the economy is weaker than people think or is it simply because of Central Bank Intervention and still the sugar that everybody they havent intervened but you see if you print money in japan and by the ecb in europe, the money is printed by essentially the Central Banks buying asset. Im an insurance company. I sell bonds to the ecb or boj or stocks. They have liquidity. Then i shift money to u. S. Treasury so the printing jeefr seas has helped the dollar until say the beginning of this year. Now i believe the money flows are shifting back and ush row means are even more bearish than 100 million. Where do you put it . Where are you putting your money . I would put it rather in europe and in emerging economies. In equities . Yes. Bonds. Not in european bonds. Credit or Government Debt . Mostly credit. Corporate bonds in emerging markets. The bond market. But i agree with you. Look, im telling you theres a bobble in everything. Asset price is very low. All of us have lots of assets, were going to lose 50 , either the government will take it away through taxation, export creation or there will be a deflation thats slowing it down. Breaking news getting to meg tir rel who has that. Scott, the Ohio Attorney general is suing five makers of prescription opioid drugs saying it violated state laws including for four of them the ohio corrupt practices act also saying they violated medicaid fraud. Those drug makers include Purdue Pharma which is a private company, Johnson Johnson, teva, Endo Pharmaceuticals and allergan. None of them getting hit very hard. We have reached out to Johnson Johnson getting back to us, telling us, quote, we firmly believe the allegations are legally and factually unfounded saying they believe theyve acted appropriately and responsibly. Heard back from Purdue Pharma saying they have got a deterrent for the opioid crisis. The second state suit filed after one in mississippi against makers of these prescription opioids. Stocks as well, meg. Meg tir rel with the breaking news. Steve weiss. Let me go point by point. Retail sales, there are so many retailers that are independent retailers selling through amazon that are making money that didnt before. You cant focus on that. In terms of real estate. Housing happens to be one of the pillars of the economy. So let me continue to go. In terms of the u. S. In a bubble, i went back and i looked. Id be hardpressed to find any emerging market that didnt decline worse than the u. S. When the u. S. Stock market hopped and didnt take longer to recover. I dont want to be in other markets if i think the u. S. Is going to implode. Bonds, i was very surprised. About the emerging markets and the u. S. And some of the risks that steve 34e7gsed to you. If things do unravel, why would you want to be in the emerging markets at this particular time when theyve had a nice rally. No one is disputing the facts. It is what it is. Emerging markets, theyre two different markets. I basically agree with you. Once the s p trades down 20 , everything will be down. All the other markets as well. Well, depends. Some emerging markets have already had huge declines and say the indian market and the Chinese Market, especially the Chinese Market is not very core lated. They have a credit problem in china. The point i want to make is that what you just said is not entirely correct. After 2003 some emerging markets until 2007 way outperform the u. S. And after 2009 when we hit the bottom on march 6th, 2009, some emerging markets have bottomed out three months before the u. S. Stock market had already rallied. So we we have occasionally changing leadership. Its like passive investments has way outperformed active investment. But now i believe like at the end of at the beginning of 2000, at the end of the bubble the active managers will come back so we have this changing leadership. Its easy to identify the previous leadership, the bonds, stocks then the new leadership but there will be a new leadership. Hang on real quick. In the last, lets say ten days. Yes. Robert schiller has been out. Maybe you read this or saw this on our program. He talked about stocks going up 50 from here. Jeremy siegel, another notable voice on the market said stocks are still the place to be. Yes. Juxtapose that against the paul stone who says all hell will break loose. The risks are being ignored. Theyre elevated. Lee cooper man on our program had this to say on where he thinks we are in the cycle. Lets listen to that. Heres lee cooper man yesterday on halftime. Were not in the third inning of a bull market. Were not in the 23450i7bth to the last inning. Conditions arent there. Bull market doesnt die of old age. Economic excesses dont die of old age. Youre suggesting that were at a point of excess . Yes. In the u. S. Stock market . Were not in the ninth inning, weve gone into extra innings of this rally . Well, were somewhere between 99 and 2000. You know, 99 the nasdaq still doabled into march 2000. If youre praying to money, the dow could easily go to 100,000, could go to a million but in real terms it may not go up and as Financial Assets and asset prices move up, the real economy may actually real measure, not measured by the government, the ministry of truths could really measure, the economy will go down and real wages will continue to deflate. And one day this bobble will then end. But im always telling people, look, thats why i own 25 of my assets are in stocks, 25 in real estate but not real estate in bobble markets but in the countryside and in asia. The bobble markets in asia are in big cities, not the countryside. Wheres the other 50 . The other 50 , 25 in bonds and cash and 25 of course in precious metals, gold. I think it will go up. John and jerry . Marc gold has been up 10 but of course the media doesnt like to talk about gold. The Fund Managers dont like to talk about gold, but the fact is last year and this year after having made a low in 2015, gold has performed. David has been in gold, jeffrey donelock has been in gold. Been correct on his prediction of where gold was going to be this year. So my question is a question of allocation, mark. For instance, i agree with you. Emerging markets come with the risk of liquidity and increased volatility in terms of europe and the united states. So my question is thats one of the emerging markets, of course, what allocation would you put of that portfolio you described as 25 in stocks and so forth, what percentage of stocks would you allocate to an emerging market sort of portfolio versus the developed market . I have 90 of my money that is allocated to stocks and bonds in emerging economies. Thats a lot. 90 because i can tell you one day you will see many of the teslas of this world, the netflix of this world and the amazons of this world down 10 in one day. Ive seen the whole market in 1987 down 21 in one day. Let me ask you about risk. Yeah, but let me ask you then why is it that volatility trades the way it does in an environment that youre describing . There are mysteries in this world that even mr. Faber doesnt understand. I love it. This is true. I dont know why volatilitys this low but, you know, its become fashionable to show a volatility. The short volatility funds you are in etfs, you know that. Theyve done fantastically well. Everybody is short volatility. But one day it will turn around and then volatility will be up. The market may still go up as volatility goes up, but it will be a sign, a signal that something is changing in investors mind. Let me ask you this. The s p is at lets call it 2400 . Yes. Yes. Just for round numbers. When did you start to get worried about where the u. S. Stock market was . Recently or is this a few hundred points ago . A few hundred points ago. To be precise, i think that i wasnt interested in u. S. Stocks anymore for the last three years but i invested in emerging economies and some have done well and in europe and in some european markets have done well. So i do not regret that. The only regret i have in my life is that i didnt put all my money in amazon and netflix and google and these kinds of players. Dont we all. Im also happy that i didnt do it in march 2000 and in 2007. Let me ask you about your call on treasuries. Yes. Because it seems that you believe past is prologue. With the ten year 2. 2 yes. And with europe hopefully on the cusp of raising rates even though russia was very disappointing throughout europe, why would you want to be in treasuries that have historically low yields for an extended historically long period of time . That seems to be more of a bubble to me than equities. Yes, probably youre right. Probably youre right, but i think that rather than shorting stocks that as i said could be 99 and still go up 100 if you print money and so forth, id rather hedge my stock portfolio and stock exposure in treasuries because the initial declining stocks will probably boost treasury prices. That would be my view. Number two, i always hold cash because opportunities come every day. They come every night and they come every day. So you want to have some cash, decide to take the opportunity to buy and that cash i can keep in different currencies and i can keep in Bank Deposits or in bonds. I like treasuries because they give a certain yield. The ten year thats assuming the fed you dont think there will be a hike next month in june . I think treasuries will rally. They will rally the most if the fed increases rates three times because that will guarantee a recessi recession. Let me ask you. Thats because youre saying theyre making a mistake . Yes. Yes. The Central Banks always make a mista mistake. They make the policy question. Everything goes down 50 . Yes. Is it august 2014 that monday where everything collapses and were okay within 30 days . Does everything go down and stay down or does everything go down and give all us active managers the opportunity . I think this is a very good question because lets assume the market drops 20 . 20 today is 500 s p points almost. You think it will stay there and do nothing . And trump, he will go to yellen and say, please ease, ease. You know, make the market go up again. And then the market will rally again on further easing on qe 4 and then you watch the dollar. The dollar will go tumbling down. The question is tumbling down against what . The other currencies are not much better. Thats your goal. Thats why 25 i mentioned im sorry, i mentioned at the top of the Program People are predisposed of thinking of you as bearish. Yes. Bear right. Right. I ride motorcycles in thailand. You like some risk. High risk. Why dont your views evolve with the changing landscape of lets say where the u. S. Currently is . If youre always bearish, dont you see the re i mean, the ability to miss a pretty sizeable move from the election of donald trump until now, the prospects of the economy and the agenda and the presidency didnt force you at all to evolve your point of view on what the rewards of being in u. S. Stocks could be . Well, actually, i was interviewed on cnbc dan just before the election. We both said, well, if he gets elected its bad for the market. On his election the market tumbled. I argued, no, for the economy and for stocks trump is good. Actually, i was relatively positive by my standards. Were you more exposed or did you just miss it . No, i was exposed. On that i thought its good for the u. S. And since as it was pointed out i think by you, everything trades around the p s p, i increased my position in european stocks. European stocks have way outperformed the u. Sms. They have gone against the luminaries that said the dollar will go up. If the market went down 20 would you become more invested in stocks . Securities. So nothing would make you more bullish on the u. S. Stock market . Not really because i think that what you will earn in u. S. Stocks you will lose on the currency. So have you given up on the premise that donald trump, President Trump is good for the economy and stocks . Lets talk about another subject. I think hes its too early to tell. I was supporting him. I would have voted for him because i think that mrs. Clinton would have been unacceptable for a moral person like i am, but i think that he turns out to be an interventionist and i am against all interventions. Im for a free market, thats why im also so much against Central Banks. I think theyve turned into central handlers. Theyre no longer watching money at the store of value, theyve intervened. Actually, if they were at a private bank or a public bank, theyd be all in jail as manipulators of markets. Can we just go back to one point you made which is you go and see them. I dont know, on alcatraz. Well, thats close, but if the market were to drop 20 as you mentioned yes. Since 1970 the markets only fallen 20 . Immediately preceding your session so you must feel theres going to be a recession in the united states. Yes. Yes. If you look at for example corporate earnings, s p earnings up 14 in the first quarter. It looks like were going to have a Second Quarter thats strong. The rate may be accelerating despite the fact that rates are slow. Yes. I find it hard to believe that were going to see a recession so i find it hard to believe there will be a 20 drop in the market. Maybe 5 . The market drops 5 to 10 for every year. It hasnt since 2016. Its a good point. What i hear him saying, tell me if im wrong. I want to distill your thesis down to tradeable outcomes. Youre telling me to buy europe unhedged, in other words, in the local currencies, so its franks, euros, british pounds, i hear that. And youre telling me to buy gold. Those are two trades that come out of your thesis whether the market krektsz or not. And emerging markets. I hedge emerging markets. Unhedge. Couple of your etfs. I got that. 14 . You would buy the eem right here and now . I wouldnt because i invest in individual securities and i buy individual stocks. Whether its in europe or in asia, i very seldom use etfs. Marc, its safe to say you are not in love with the u. S. Dolla