🌍 US assets reprice with an emerging-market risk premium

“In the last 10 years, US treasuries held by foreign holders has declined from 34%. This is a good thing, not a bad thing. I mean, it's good in one context. But my point is people, foreign countries and foreign businesses and foreign investors aren't holding US treasuries as much as they used to.”

“So, I don't know, I think that it's part of the fact that until we run surpluses and or completely eliminate the debt, there will always be a reason to be somewhat short the dollar. But the reality is that a lot of people still want to own these assets more than what they want to own any other asset. And those assets are dollar denominated. And so as long as that continues to hold in the push and pull, it will be a slow bleed, but it's probably manageable.”

“It could be the moment, but, you know, I remember the first week of April when Larry Summers came on the pod and said that the markets were melting down, and that was a different moment that he was trying to sell in favor of his policy. So my point is just there's market volatility, and we won't know for a while whether this means anything. It could just be a blip.”

“And if it passes, forget what any of us think, the bond markets will act decisively, and they're going to go in one direction, and it's away from us.”

“There is a non-linear relationship between the deficit and interest rates, which drives up the debt problem in a non-linear way, and it gets away from you and you can't fix it.”

“The difference is we are the shining city on a hill, and every other country is not. ... There's this very funny quote, which is, when you owe the bank a million dollars, it's your problem, but when you owe the bank a billion dollars, it's their problem. This is true here.”

“this actually has knock on effects with regards to things like de-dollarization. Why are you investing the American dollar if you believe that the dollar is going to”

“And right now, at $2.5 trillion a year of deficit, we're talking about a deficit to GDP of like 8%. Yes. 8% a year. This is like Argentina. This is like insane.”

“I've been talking to a whole number of multinational CEOs who do business in China. I'm talking about the McDonald's of the world, the Starbucks of the world, the Nikes of the world, and so many of them now talk about, not just how consumers aren't going necessarily in their stores the way they used to, but really about the American dream, the American brand ... So many of these companies are even trying to reestablish how they market and advertise their companies, almost as if they're a local business, not an American brand.”

“Number one, I think Ken is massively long packs America. I mean, he's built a $42 billion empire. He owns a billion dollars of American real estate. So I don't see him investing in Ecuador anytime soon, relative to the opportunity set in the United States. ... Europe is roughly uninvestable. So the more generalized answer is on a relative basis, the United States is still the shining beacon on a hill. There is no investible alternative for scaled capital except the US.”

“Not true. Larry, that's not true. That feels emotional and nice, but it's just not accurate. Let's just establish a couple of facts about, quote unquote, the markets. Number one, there are two markets and they behave totally differently, and sometimes inversely to each other.”

“The last thing which I think is profoundly important, is we are trading like an emerging market country right now.”