Ted Audio Collective.
Hello everyone, you're listening to After Hours.
I'm Felix. I'm me here.
And I'm Sarah Green -Karmichael from Bloomberg Opinion.
Hey Sarah. Great to be together.
Great to be with you guys.
You know, one of the reasons why I'm always looking forward to these conversations is the world just seems very complicated right now.
The business world is complicated.
The economic news is very mixed.
And then on the political front, frankly, there's so many reasons to be mildly pressed about the news every day.
Yeah. And so I'm really looking forward to talk with both of you and try to make sense of what's going on.
And there are these remarkable stories of bravery that are unfolding around us all.
And I don't know, Felix, at times like this, I find them particularly inspirational.
Yeah. So what is happening in Iran in particular I think is just remarkable.
And those stories are really something that during these really crazy times can keep the hope alive in a way.
Yeah. The women in Iran have just been really spectacular.
I mean, it's such bravery.
Yeah. Almost unimaginable.
And then I think very similar in the Ukraine where you see both soldiers but also civilians fighting for their country.
So it's true, it's a complicated picture overall.
And then there's all these little beams of light that hopefully get us through the day and through the weeks.
Well, and I think also the teenage girls in Iran have really inspired me.
As a former teenage girl, you know, they're putting their bodies on the line, their physical safety on the line.
Yeah. It's so amazing.
And they are fighting for something that has been repressed for a long time.
And it is kind of amazing to watch and you just have to hope for the best.
Absolutely. Well, let's maybe we can get started.
So Sarah, what do you got for us this week?
Oh my goodness. From the sublime to the ridiculous, I thought we could talk about Twitter.
Yeah. There you go.
Oh, yes. You know, we have so studiously avoided talking about Elon Musk and Twitter.
For a good reason, I should say.
Indeed. But now it seems like we should talk about it.
Yeah. So that sounds great.
What did you bring me here?
Well, there's a lot of craziness going on, Felix, as you said, in the macro world and in the financial markets.
And we haven't done a roundup in a while.
And I thought the way into it would be the bond markets.
What? You want to talk about the bond market?
Well, it just turns out to be incredibly important if you look at the UK, you look at emerging markets, you look at the US.
That's where all the action is.
And I think it's worthwhile just seeing what's happening in those markets and trying to understand it.
Because it's going to continue to just be incredibly important.
We probably lost half of our listeners right there.
Let's do it. There you go.
So, Sarah, Twitter.
I'm really curious to know what you guys think is going on.
Is this just a soap opera?
Is the real Elon Musk going to pull off a rubber mask and say, behold, I just had amnesia?
Now I'm here. And if you were Elon, where would you go?
What would you do with Twitter to try to fix it?
So, there's a lot to talk about here.
And then just to be clear, it seems like we've reached some kind of a conclusion, Sarah, right?
Which is, he sent a letter saying that he's going to do the thing that he said he wasn't going to do, which is go through all the original terms of the deal for something like $44 billion.
That was the original thing that got started in March, April.
So, we've kind of come full circle after a whole bunch of craziness of unsolicited bid.
I'm not going to bid.
You guys are a terrible company.
But now I'm going back to the original bid.
Do you guys have any sense of why he changed his mind all of a sudden?
Well, one of the developments, I think, is that on the legal front, things were not going very well.
I think all indications were that Twitter's lawsuit would go forward.
It would entail Musk now being on the stand, trying to explain to himself what on earth he was trying to do.
And it turns out, I think the merger agreement, the lawyers did a really good job.
It was very well written.
Musk, in typical Musk fashion, didn't do much due diligence.
And I think the terms will bind.
The part that I find most fascinating is actually the debt finance part of the deal.
See, bond market again feels good.
All right. I know you can partly wait.
So, I think there's two interesting things.
One is, of course, it's always possible that the court will have decided that you have to go through with it.
You have to pay the $44 billion.
But there's one version of the world where actually courts would have let him just pay the breakup fee, which is about a billion dollars.
Now, if you're Musk -like, which maybe that's not a big difference.
But I'm a little surprised that he would walk away from this option, that the court would ultimately decide that maybe the breakup fee is really what's in order here.
And then the second, to your point, is that it wasn't a Musk letter if it didn't come with a little twist, right?
So, it's the original terms of the offer, but now dependent on the availability of financing.
And the financing environment has just changed dramatically.
So, it's about $13 billion or so that is financed.
There's a firm commitment, or we think it's a firm commitment by Morgan Stanley.
But it looks like they will lose a ton of money if in fact they are asked to support the deal.
Right. I mean, it's both those pieces.
So, it's the equity holders of which, according to these very text messages, he was looking to get some help with his friends from.
And then you have the debt, and they look like commitments.
I mean, one version of the story, Felix, is it became clear that he was going to lose.
And losing would mean not just paying that fine, but losing would mean you've got to do the deal.
And I think he probably made several offers of $3 to $5 to $7 billion, and then he realized that he was going to have to pay that anyway, and then why not end up with an asset.
And maybe that's kind of what happened.
And maybe moreover, while the financing terms are secure, we should try to nail it down.
And so, let's go ahead, and let's just go for it.
So, I think that's a little bit of what happens.
And it's kind of fascinating, both in terms of legal things, but also just personally, I think part of what's going on here is, do these people want to be deposed?
Does must want to be deposed?
Does all the stuff that would come out really worth it if you were going to end up with this asset?
Losing anyway. So, I'm curious, Sarah, if somehow you were asked to run it, what would you do?
We opened by talking about the protests in Iran, among other things, and we're in Ukraine.
And I feel like social media is really important in allowing people in situations like that to broadcast to the world what they are facing, for example.
But in my life, Twitter has been predominantly a negative influence, I think.
And I think on US journalism, it has been a predominantly negative influence.
Because I think journalists look to Twitter for ideas.
They see this sort of snarkiness and downward spiral toxicity that happens there.
And then they write stories about that, which makes it seem like whatever the thing was was a real thing.
And then people tweet about it, which makes it seem even more real.
And you get this kind of weird echo chamber effect.
What I would like to see happen in journalism is to have more journalists getting off Twitter, or at least not spending so much time on it.
Walk your neighborhood, talk to people in your town, travel to other towns, report on real stuff in the real world, and don't say, oh, someone tweeted this and they must be upset.
And so I'm going to write a story about it.
So, I am very tempted to say, I would buy it, and then I would just shut it down.
And I'm like, bye -bye, Twitter.
But I also understand that there would be a cost there, maybe more outside the U .S.
than in it. Yeah. So that's, I think, interesting, probably not the most likely course of action, even though, who knows?
We cannot possibly guess, as you have pointed out.
So, formally, he said that one change that he's trying to pull off is to change away from advertising revenue, which now is not growing nearly as fast as it used to.
It's also a very competitive market towards more of a subscription model.
And that's not exactly an original or novel idea.
That's basically what every media outlet there is trying to do.
And then I think the big question becomes, what am I subscribing to?
Like, why would I turn to have about 200 million users today?
The official goal is to get about 100 million of them to pay for Twitter.
And the question is, what would you pay for?
I think if I look at the innovation potential, at least of the current Twitter, that just seems about impossible to do.
The most exciting news on the product front is this edit button, which now seems, oh, my God, really?
Like, we're even talking about the fact that there is a social media platform out there that has an edit button.
And then other things like status.
So now you might remember you're allowed to pair your tweet with somehow how you feel about the tweet or how excited or how sad or how shocked you are.
And frankly, I have like this Deja Vu experience.
Isn't that exactly what MySpace had about 500 million years ago?
There you were allowed to attach some sort of notion.
So really hard to see where subscribers might come from and really hard to see how the typical way you do it is you split the audience.
Part of it, the low willingness to pay is advertising finance and then the rest are subscribers.
But again, like subscription of what?
I don't really see it.
Well, I think the way to think about it, if I were to try to defend this idea, is it is the news source for a lot of people.
It is a primary breaking news source for many people, including myself sometimes.
I will scroll through Twitter to know what is happening right now.
And is that valuable?
Yeah, I think it is.
Both with respect to news and with respect to kind of sassy opinions about various things.
And to your point, Sarah, journalism is now centered on Twitter in many, many ways.
So the question is, can you get 50 million people to pay five bucks a month and have that be a reasonable thing?
And I think that's hard, but I don't think it's not doable.
I think it's a possibility.
I think the first couple of questions you have to ask even before that first, which I think is a monumental question, is who the heck is going to run this thing?
Think about who is going to come in and be willing to work in this environment, which is going to be decimated of talent.
You're going to have Musk hanging over you.
Anybody who takes his job, you're not going to be able to get the best people to do it.
And then the second thing is this idea of this super app and this X app, what could that be?
And then you have to get really big on things like messaging.
You have to get really big on things like payments.
And this is a world you know well, Felix.
It seems everybody's goal is to become WeChat.
And he thinks he can do it.
And so he's got to have an idea that it's a bundle of subscription plus payments plus messaging plus better videos so he can take on TikTok.
That bundle is his best shot, I think.
What do you think about that super app more broadly?
All that additional functionality, which of course in WeChat exists and has been enormously successful.
I can definitely see the appeal of having some kind of micropayments attached to it because it would be very easy for them, Twitter, to take a teeny tiny percentage of each payment.
And that would be very profitable if they could get even a few of their users to use it, relatively speaking, to the total proportion.
And there's certainly more room, I think, for more forms of electronic micropayments between friends.
I think what is challenging is that the Internet of 2022 is not the same as the Internet when WeChat was founded, when even Facebook was founded, even when Twitter was founded.
A lot of accounts that have tens of thousands of followers have plateaued.
They're not growing and they haven't grown in years.
And I don't think Twitter as a platform is growing very much.
And if you look at people on other social platforms, yes, new ones come out, TikTok starts taking off.
And I don't want to say like there can never be a new social network.
But I don't know that the network effects that were there earlier on are still as easy to capture.
Right. And unless you're offering something really new in the way that TikTok did offer something new, I'm not sure that people are necessarily going to flock to it.
And it certainly isn't going to be older people who have money to pay.
It's going to be always, I think, teenagers coming up with, oh, this is the next cool thing.
I want it. And it's free.
And they don't want to be on the platforms with the old people because that's where their parents are.
I think both of these points are super important, Sarah.
The first is whenever you move from an advertising based model to a subscription model, one reason why this is so attractive is you don't want to lose out the ad revenue.
So to your point, me here, yes, of course, it's an important source for many people and they may have a willingness to pay for it.
But how exactly do you monetize that?
Do you delay the news for people who are not subscribers?
That seems very tricky to do.
And what new ideas do you have you could offer on top of what you're already doing in an environment, frankly, that even in political news has just been very, very competitive.
TikTok really has become a powerhouse even when it comes to the dissemination of political news.
And then, of course, we're looking at TikTok's growth and we're saying, oh, my God, that's amazing.
This year alone, they will add 100 million users globally.
But look at what cost.
They're spending 30 percent of revenue on marketing.
Building these audiences is so expensive.
And if you're Twitter with your financials today, I don't really see that you can afford it.
I do have one idea.
I could see something where like the Twitter app put in a time limit and said, you get 15 minutes of Twitter every day for free.
But if you want to do more than that, then you have to pay some tiny amount.
And it's like a dollar or something.
But I could see hitting a scroll wall and being like, oh, do you want to keep scrolling?
Oh, well, like just give us some money.
And I think a lot of people probably would pay because they're sort of phone zombies.
I think what you're pointing to is some kind of a paywall.
It's a paywall, but that is registered by how much you scroll.
And I think that makes a ton of sense, Sarah.
I think that is the way to go as opposed to layering on functionality, because I don't...
First off, I don't know if they have the capacity to build a better functionality.
They don't seem to have.
And by the way, there's just going to be a massive exodus of people within Twitter.
And hiring new people is not going to be easy.
So I think that's what you would do.
I guess the longer run question is, what is Twitter in five years?
So you said it's 200 million plus monetizable daily average users.
Something like this.
Where do you think we end up?
Obviously, he's going to do other things, which we haven't discussed.
He's going to change the free speech kinds of stuff.
He's going to bring people back on the platform that have been off the platform.
I think he's not going to monitor content in the same way.
And he's going to make it a vehicle maybe for himself.
But is this something that grows to be 500 million?
Or does it just become like more of a niche service?
Where do you think this goes in five years?
I definitely think Donald Trump will be back on the platform.
And other people who may have been booted off.
If Elon Musk can actually manage to do something with Twitter that is like a meaningful change, that gets more people using it, I will be very surprised.
And I will have to give him maybe more credit than I have been giving him so far.
Because I think it's a really hard problem.
It is. And I think he's very good at talking about these big visions.
And then somehow other people seem to bring them to life.
This might be where we see his sort of reality distortion field just shatter and stop working.
Or he could prove me wrong.
It's your question here.
My prediction would be it's going to be an incredibly toxic environment.
Essentially, the audience will be two types.
The professional journalists who feel they have to be on Twitter.
There's no real substitute.
At least not in the next couple of years.
And then people who like to battle it out.
And the people who like to battle it out are people on the far right and people on the far left.
It's actually interesting that the far right platforms have not taken off anywhere nearly as much as you might have expected.
And my interpretation was always, what fun is it to fight if everyone around you has the same view, has the same opinion.
And so I do think that the fight, the battle will come back to Twitter.
But at the same time, it'll drive out all the reasonable readers and reasonable viewers.
Yeah, it's interesting.
I would go somewhere in the middle, which is I think you're both absolutely right.
It becomes more conflictual and more toxic.
But I think it basically in five years looks like it looks like today.
No change. There's basically very little change.
People who like it use it.
And they consume content in the way they do.
But these larger aspirations go by the wayside, in part because I don't know who's going to build it for him.
I really think there's a really significant question about managerial talent and who's going to run this business.
And so I think it kind of stays where it is, in part because I don't see an alternative coming up for what it does.
Maybe TikTok, it is, obviously TikTok, on some features of news is becoming amazing.
TikTok on search, the number of young people I know who just search directly into TikTok is incredible.
But there is this aspect of debate and exchange of ideas in the crudest sense of the word that I think Twitter does uniquely well.
And that will stay.
And it'll kind of just be what it is now.
But as you said, Sarah, with Musk, it's a binary outcome.
It could be that or it could be something absolutely beyond your imagination.
And we're just going to have to wait and see what exactly that looks like.
Yeah. Sarah, my sense is, given your ideas about how to monetize, you should probably apply for the job the moment Agarwal is gone.
That sounds like the worst job in the world, to me here's point about who wants to work there.
I think that is the earliest tell on the future of Twitter, is who ends up running it.
That will tell us most of what we need to know about the next couple of years.
Me here, you want to talk about bonds?
Let me just get my pillow and then I'll be right back.
We can talk about bonds.
No, seriously, this is going to be super exciting.
There has just been in these last 10 months this remarkable amount of economic upheaval that we're living through.
And it's all centered on this corner of the world that many people don't pay attention to, which is the bond market.
And so I think it's our way in, not just to the bond market, but it's our way into this crazy moment that we're living in.
So let me give you a couple of things that have happened so we can get a sense of how many events around the world are linked to this basic set of phenomenon.
Obviously, there's been a fight against inflation and inflation has been too high by many people's standards.
And in particular in the US, the Federal Reserve has awoken to the reality of inflation, albeit somewhat late, but they woke up and then they started to very aggressively raise interest rates.
The speed and the magnitude of those raising of interest rates is really something to behold.
We have just not seen it in the last 30 years.
So there's around two and a half percentage points of increases in short term rates that the Federal Reserve controls in like six months.
We just have never seen anything like that before.
Why do they do it? Well, they do it because they're trying to hold down inflation.
But once they do that, it just unleashes a set of effects throughout the world that we have to really, I think, come to terms with.
The first effect is then those longer term rates that matter for things like mortgages, they also go up.
And then, of course, valuations change because that old fashioned stuff in finance turns out to matter.
Like the present value of things is like the discounted cash flow and when rates go up, well, guess what?
All those assets that don't pay off for 20 years, those kind of speculative bets become a lot cheaper, like 80 percent cheaper whenever rates go up.
And then finally, things like real estate, which have been booming, suddenly look more expensive when mortgage rates for the first time hit 7 percent.
And it's all coming from the same source.
What happens next? The US dollar just skyrockets in a way that we haven't seen before, like 10 or 15, 20 percent against some currencies.
So at one point, the dollar versus a pound was almost a parody in Euro.
It broke through parody.
What happens next? Well, interest rates start to rise in other parts of the world, including in emerging markets, which are already struggling with lots of high inflation because everybody's competing for funds.
So rates go up all around the world.
And it happened in a moment.
And so I think that world, it's not done yet.
We don't know what happens next.
I think the bond market is our way into understanding this current macroeconomic moment in a really important way.
And so what would you say?
How is the bond market central to the story that we're seeing?
Because I can see the Fed and increases in rates.
That's what everybody talks about.
But mostly in these stories, the bond market doesn't really feature as a central actor.
I think people are much more likely to talk about, oh, my God, increases in interest rate will discourage companies from investing.
And as a result, we should see not quite the spectacular performance that we have seen in the past.
Is there something specific, interesting, unusual that you see in the bond market that you think is so important?
Well, I think there's two things.
One is we should just realize that people are deeply connected to it.
So when people wake up and they see their 401Ks and they've been into these target retirement funds, which have been allocated to bonds, and they see, for example, the target retirement 2020 fund is down 20 percent because it's been allocated to bonds, that's going to impact people in a real way.
And then second, Felix, that bond market, when it gets unstable and when it moves very fast, there can be, as we saw in the UK, disruptions to it.
And because it is the market that provides safe securities.
So you're supposed to be able to invest in gilts and US government treasuries and it's supposed to be safe.
If you don't get liquidity in those markets, if they stop functioning, then the world gets really crazy.
And then the Fed and all the central banks stop talking about inflation and they start talking about financial stability.
And that's exactly what happened in the UK.
So I think it matters because it's like the bedrock of all financial markets because it's these really supposedly riskless assets.
Everybody has lots of leverage in those things and everybody has some kind of a bet on those things.
And if that starts to get illiquid and starts to get crazy, lots of markets get crazy because it is the foundation of all financial markets in a way.
I loved your example of what happened in the UK as just a very prominent example of how these markets can then have far reaching consequences that I at least never really thought of.
So let's just maybe quickly recap.
The UK government announces plans for a really significant tax cut that's about 1 % of GDP.
Right. Mostly financed via the issue of new debt.
So budget deficits would go up.
As a result, if budget deficits go up in an environment where the UK economy is stressed to begin with, everybody expects that inflation will increase.
And bondholders, whenever they have higher expectations of interest rates, they will demand higher interest rates and as a result, the prices of bonds will fall.
I think so far it was just the usual garden variety story.
And then it seems every time there is a big financial dislocation, I'm learning a new acronym.
So this time I learned LDI, liability -driven investment, which is a type of investment that pension funds use in order to stabilize their returns over time.
So maybe talk a little bit about these LDI things and then how that got us into trouble.
And I think trouble of a type that we're not done yet.
So we actually have not seen the end of it.
So again, this is kind of plumbing in finance, right?
But it turns out plumbing is really, really important.
So the short problem if you are a pension plan in the UK, a defined benefit pension plan, which we don't typically have as much in the US anymore, but you have like fixed payments that are due to people in the future.
So the way you think about that is you say, well, oh, I have all these fixed payments I got to make.
So I should buy bonds to like target those payouts because then the bonds will pay me and then I'll pay out all my beneficiaries.
Well, here's the problem.
You're probably underfunded.
And then what do you do?
And then the answer is, well, I got to invest in a lot of other stuff like equities and private equity and a bunch of other stuff because then I got to go find all those yields.
Okay. But I still got to make those certain payments.
So then what do we do?
Well, asset management industry to the rescue.
We will devise a set of products called LDI.
And what do you do?
Well, we'll actually give you those fixed payments in the future.
But you got to actually post a lot of collateral.
And all that collateral is going to secure the ability to get those things in the future.
And by the way, in effect, you're taking a bet on rates because if rates go way up, your collateral is going to be worth less and you're going to have to liquidate all that.
Well, guess what? Rates start to go way up all of a sudden, Felix, because of a surprise announcement from the UK government.
And what ends up happening?
You have massive liquidations of bonds and then rates go even higher and it gets even weirder.
The last piece of it is then the Bank of England who has been raising rates has to, at the same time, go start buying lots and lots of bonds.
And the reason that's weird is because for the last ten years, what have central banks been doing?
They've kept rates low and they've done this thing called quantitative easing, which is effectively buying lots of bonds.
And so what have they been saying they want to do for the last year or two?
Quantitative tightening.
And all of a sudden, the Bank of England is pushed into this position of saying, oh, yeah, yeah, yeah, we're raising rates, and oh, yeah, yeah, yeah, yeah, we're also going to buy lots and lots of bonds.
That's now chaos because you're doing one thing with one hand and you're doing the other thing with the other hand.
And that's part of what is causing people to get, I think, really concerned about could that happen again in some other weird place?
It happened, Felix, for some weird reason in like the UK pension industry, but where does it happen next?
And that's part of what I think people are getting really worried about.
In the US, it's very common for politicians to talk about cutting taxes and very common for especially US presidents to cut taxes and have these big tax cuts.
George Bush did it.
Donald Trump did it.
And then people always said this will be terrible for our economy.
And then everything just chugs along seemingly the same and nothing changes.
Why would Truss's sort of announcement on these tax cuts have this effect?
It's a great question.
And I think the short version is in the US, we get away with it because we're special.
We're just a big, rich country that's got a huge economy and we're the world's currency?
Basically, because we get away with it and the UK doesn't get away with it and other countries won't be able to get away with it.
It's an artifact of our strength and it's like this incredible thing that the US has.
Now, how long will it last?
Who knows? But look around the world.
Tell me who's going to replace us.
Again, we haven't lived through something like this in the last 20 years.
I mean, the dollar just moved by 15, 20 % in like six months because of those rising rates by the Federal Reserve.
But also we'll look around, do you want to be in the eurozone with a war going on on the continent?
I don't think so. Where else do you want to be?
So it is something that we in the US get away with for better or worse.
And in the UK, they just took them to the woodshed for even the possibility of doing this.
And of course, the end of the story is they ended up retracting at least a piece of that story.
This is a really fascinating window to me to look at currency markets in response to the changes.
And part of what's really fascinating is generally speaking, if you expect higher inflation, you expect higher interest rates.
And as a result of higher interest rates, you expect capital inflows, because all of a sudden it's more interesting to invest in the UK and to do so, I would typically exchange whatever currency I have against the pound.
So it's highly unusual that the pound collapses when expectations about inflation and expectations about interest rates go up.
One is unlike in the US, the mortgage market in the UK has a big fraction that is floating rates.
So where interest rates will adjust very quickly in a short period of time.
It's about a third of the market is floating rate as it is.
And about another third of the market or so current mortgages come due, because the duration of the mortgages is also much shorter than the typical fixed interest rates 30 year mortgage that we have in the United States.
So that puts the central bank in a really difficult position.
And to the extent that we think the pound should appreciate because interest rates will go up.
Well, if the central bank looks at the market and say, oh, my God, we're super, super nervous to raise rates, because who knows exactly whether short term pain in the form of higher mortgage rates is really what we can afford at this moment in time.
That's one reason, I think, why you see the markets being more nervous and eventually the pound obviously recovers.
But I think this moment of nervousness just comes from how expensive is it in different economic environments to raise rates?
And it turns out in the UK, it's fairly expensive.
The other part that is sort of interesting and that again reminds us of sterling crises before.
You might remember when George Soros speculated against sort of like a euro like mechanism that they had before the introduction of the euro.
The question is, will governments really step up and eventually bring their budget to a balance?
And if you think that there's increases in pressure, that the likelihood that the government will be able to pay back instead, that maybe that likelihood is a little less than the likelihood in the United States.
Then, of course, all of a sudden you're super nervous and you're looking at the higher interest rates and thinking, oh, my God, let me get out before it gets really worse.
Many of us remember the humiliating episode in the 1970s when the UK had to go to the IMF and ask for a loan to basically bail out the economy because they couldn't live up to their financial obligations.
So part of it is, of course, always this big advantage if you can issue debt in your own currency.
Part of it, I think, is peculiarities in your economic environment like the mortgages and then credibility.
In the end, so much of what happens in these markets just reflects credibility.
And by the way, if you think that credibility is an issue in the UK, wait till we go to emerging markets where this game gets played out many times over.
And wait till we see what happens to companies that have issued dollar denominated debt, which is something that many companies in some of these emerging markets do.
So there's a sense in which we've lived through these remarkable six months in the bond markets.
But I don't think it's over.
I think there's another six months of craziness that can evolve out of these situations.
And maybe most of all, I think many of us just grew up during this period where rates were zero.
And we're just all going to have to readjust.
Maybe savings accounts are like pretty great things and CDs are like, OK, you know, things that we would never have said.
But like, there's a whole new world that is going to be keyed off of these rising rates.
And I don't think we're ever going back.
I know it's super geeky to talk about bond markets, but I got to say, I think we're only in the middle innings of a really, really remarkable transformation in the way these things play out.
Where do you think we are a year from now?
Well, it's hard to say, but I think a couple of things are likely to be true.
I don't think rates are any lower.
I think they're probably where they are today.
And I think inflation has come down, but has not come down as much as they want to, like, 2 % levels.
And so they will have to keep rates higher than they would like and a lot of people would like.
And the big question is, has something happened because of these moves in currency markets to emerging markets that make it more damaging for them?
And then ultimately for the global economy.
Typically you need something to pull you out.
If you remember back to 08, a little bit of it was China.
You need an engine of growth.
And so where is that going to be?
Now, if China comes out and the recession isn't as bad, then everything's okay.
And we kind of start to get better.
If China doesn't come out of its lockdown -induced frozen period, then it's really, really complicated.
Yeah. So, Sarah, did you need the pillow?
I was on the edge of my seat.
Okay. Now, after that segment, we definitely need some pics, preferably uplifting ones.
Sarah, what do you got?
I have a newsletter I'd like to share by a writer named Erin Gloria Ryan.
She's very, very funny.
She's written for TV in the past.
It's a parenting newsletter.
It's called Just Enjoy It While You Can.
Part of the reason I like it is that our kids are very close in age.
But I think even if your kids are older, you will enjoy the trip down memory lane.
But articles and newsletters are about advice.
And this is not about advice.
This is just from another parent whose kid is doing crazy things.
And she's just very good at writing in a way that is sort of touching without ever being sentimental or saccharine and is very, very funny and often just gets right to the point.
And so, Erin Gloria Ryan, Just Enjoy It While You Can.
Excellent parenting newsletter.
Oh, fantastic. And as always, we'll have a link on the podcast's website, harvardafterhours .com.
You find all our pics.
Felix, what do you got?
I have a website. Is it the actual After Hours website with all the pics?
I will be a lame recommendation, though.
So much of media has gotten so much better at data visualization.
If you look at a paper today, it's just amazing what people do.
Typically, you start with a story and then you find the right data to illustrate it.
But I love this idea that just give me some interesting data, nicely illustrated in a way.
And then let me think about what it means, if anything.
And the website that I wanted to recommend does exactly that.
It's called visualcapitalist .com.
It's not only about business -y kinds of things, although it's dominated by business and economic news.
But it's just fascinating to see, okay, so say we live in a billion -people world very soon.
What's that going to be like?
And there's a bunch of charts that show where these people live and what they're likely to do.
Or say out of all the investor -owned utilities in the United States.
Who's really green?
Who's not so green?
Who's made lots of promises but didn't really follow up?
And to me, at least, it's almost refreshing that there's no comment.
You just look at the data, you try to make sense of it, and then you go on to something else.
So I find it highly enjoyable, visualcapitalist .com.
Wow, that's a great pick.
Given our last discussion, I thought it would be useful to go with something a little bit culinary and a little bit alcoholic.
Oh, I thought it was a finance book about bonds.
Exactly, I should be recommending Frank Fabozzi's Bond book.
No, so I have two things.
One is I've had a habit of recommending sweets, including the zachts, and I would just like to recommend zweets, which is Z -W -E -E -T -S, fantastic, high -quality, sour strips and all kinds of things.
But my real recommendation is a cocktail liqueur, which I imagine you two may know about.
But I have fallen in love, especially this summer, with elderflower and elderflower liqueur.
They are good. And Saint Germain is just fantastic.
So getting more elderflower in your life, by the way, doesn't need to be alcohol, just elderflower soda.
But in particular, elderflower liqueur in your gimlet is, like, the greatest thing ever.
So my pick is little zweets and a little bit of elderflower liqueur.
Sounds delicious. Wonderful.
How do you usually drink it?
So a couple of different ways, either in the gimlet form, which is like gin and lime and elderflower, or you can just use the Saint Germain in conjunction with, again, gin, and then sometimes just sparkling water.
It's a particularly good summertime, but it's really good all year round.
Wonderful. And it's a great cure for your bond market woes.
Which we need. Yeah, exactly.
And this is it for today.
Thank you everyone for listening.
This was After Hours from the TED Audio Collective.
And I'll see you next time.
