Bloomberg Surveillance- Ken Rogoff, Processor of Economics at Harvard University
- Gary Cohn, Vice Chairman at IBM
- Steven Tananbaum, Managing Partner at GoldenTree Asset Management
- David Rubenstein, co-founder at the Carlyle Group
We're live from Davos at the World Economic Forum, engaging with leaders in finance and business about the direction for global markets and public policy. Joining us for conversation are Ken Rogoff of Harvard, Gary Cohn with IBM, Steven Tananbaum of GoldenTree Asset Management, and Carlyle Group co-founder David Rubenstein.
Boo, Bloomberg Audio Studios, Podcasts, radio news.
This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Joining us now to discuss that is the former IMF Chief economist Ken rogof Ken It's going to.
See you, sir, Good to see you.
You wrote a.
Piece in the South China Morning Post. I believe questioning whether we could see the same boom this time around as we saw last time around. And I want to be clear, and I'm going to do this for you and give you some credit. Back in sixteen seventeen, you weren't pessimistic on the Trump economy going into it. You were somewhat constructive. Is we're very very downbeat, So what's changed for you? Personally?
People were unhappy when I said that, but I think it was closer to true than not. Well, I mean, for one thing, if we're just looking at policies, the things that he did and the first term I think on the whole were constructive, as you say, for the economy, deregulation, the tax cuts, getting rid of the state and local deduction, I think was actually a good move over.
The long term.
And this time every campaign practice promised practically is something counterproductive. I mean you could go to the tariffs, social Security being not taxed, and on and on and on. So you know, it's less obvious that he has the same room to run with his policies. And when he came interest rates were zero. Now they're not. Our bill for debt was you know, a couple hundred billion a year. Now it's pushing a trillion. So he has a lot of strengths that he didn't face the first time. So I don't think we can expect quite the boom that we got the last time.
Ken was doing a panel at the World Economic Forum a little bit earlier this morning. Fantastic lineup, and you're also alongside Ruggaraja, who we'll catch up with in about five or ten minutes time. You mentioned that we're now spending more on our interests in America than we are in our defense. Do you think we are at that tipping point where this becomes problematic or are we not there yet?
We hit it a while ago. I mean, I don't know about tipping point to crisis. But interest rates had been going down and down in the whole world, and I'm sure you interviewed them here over the years. Secular stagnation lower forever. That's very ingrained in the mindset, and it met in Washington and a lot of policy think tanks at the central banks. Dat is free, nothing to worry about. But when the interest rates are this high, then you start to have to think about it. I mean, so we're running a six point seven percent depsit on top of or I don't know, thirty five trillion dollar debt. You start to pile up an interest bill, and I think we've reached a moment where things have tanged. It's the interest rate that's turned. It has happened. It's not Donald Trump. I think it would have happened just as much if Harris had won.
And you point out that right now where interest rates are would add two to three percent to the deficit of the United States over the coming years, just based on where rates are currently, do you think they will stay here? Do you think that they're going to go up? You said, you know, last time we spoke to you, that the FED couldn't necessarily cut that much.
Can they cut again?
Are they going to have to hike?
Well, let's start with the long term rates. I don't think they're going lower outside of a recession. In fact, if I had to look at the arc of the next five years, I think we'll get another burst of inflation sometime within the next five to seven years, and this time we will not get a free pass. Inflation expectations will go up and interest rates will go up even more. But for now, I think think they're settled, you know, around in the four and a half five range that they probably going to stay. Maybe in a recession going down, I mean, the Fed's a different matter. But my guess is where we are at the moment, is the odds of a hiker as good as the odds of a cut.
I think the.
FED was way off the mark on where the neutral interest rate was, and that's what I found in my research on They're adjusting. They're starting to see that, And I don't think it's just what's going on the second. I think it's a longer term phenomenon.
You were not very positive on the potential for the first Trump term. You're much less positive this time around, as John was mentioning, And I'm just wondering what that lack of positivity looks like in contrast to all the optimism we're hearing from all the bankers.
So just to be clear, I don't have Trump derangement syndrome. I try to have an I try to have an objective, you.
Know, trying to give you that pass that.
We're starting at a very strong this is a question, and we've been booming for a while. It's a different picture, you know, somewhat than when he came in before. And you know, so just based on that, it's not as obvious that it would do well where I wouldn't quite say recessions around the corner, but it's not as many miles away as it was, you know, at one time. But also the uh, you know, I think certainly corrections to some of the things Biden did are welcome.
I get it.
Why so much of corporate America feels the wicked Witch is dead, and you know, now they can finally, you know, breathe freely on a lot of different dimensions.
We drove down on that just a little bit. I understand it. The wicked Witch is dead. He was hardly warm and fuzzy with corporate America. GDP was pretty decent. These guys wetuwn out record profits quarter on quarter. Many of them were what is actually going to change fundamentally? So the underlying economy GDP growth, corporate profits, well.
I mean, the sustainability of what's going on is its highly questionable. So yes, GDP growth was good, but we have this massive deficit we're running. I mean, all these Keynesians were saying the multipliers too. In other words, for every percent deficit you run, you get two percent growth. We're running double the deficit, more than doubles that we're getting in growth.
Now.
The immigration was probably larger than the official numbers by a considerable margin, and that also is contributing to growth. These things are not sustainable. But yeah, I mean, neverthing, you know. So it's true. You're right that some of what's going on was going to run out at some point. So it's a more difficult situation that he's inheriting.
The death story is terrible. We all agree on that. Any evidence that people are pulling back from the US dollar and doubles denominated assets.
With that in mind, well, the interest rate is the vote that they have. I mean, so I think our markets are very dollar oriented. Over the very long run, there could be more fragmentation that Chinese don't like the system. You know, you heard the session I was in this morning in Kyuzhin, who's a great brilliant economists originally from China, was talking about everything they're doing to build away from the dollar.
If you go back to the.
Sixties, the Europe was moving towards trying to have its own currency, and the dollar before it broke off, a lot of things were starting to be denominated in deutsch mark's. So you know, there's some gradual movement. But the big thing, you know, certainly is that the interest rates are going up, and that's people.
Are requiring more.
If they love the dollars so much, why don't they love it at one in one point seventy five percent for the tenure, which is what they were taking you know, five years ago.
This is something that a lot of people were talking about that the US can afford to borrow more and more if the dollar is strong. You wrote a book about the dollar and the loss of its reserve currency status. Is it going to closer as a result of the deficits that we're seeing right now? Are you seeing that time frame brought forward?
So?
I have a book coming out in May called Our Dollar Year Problem that deals with us and some of your colleagues may have seen some early version, but you know, the dollar has just soared beyond anything people expected. There were several turns, not just the value, but it's footprint. But surely over time they're forces that are going to push that back. Crypto may not take over the legal economy, but the illegal economy, the underground economy, which in my work I find twenty percent of the global economy that's up for grabs, and China clearly needs to pull away. If China pulls away, then it pulls other people with them.
That's a slow process.
But yeah, I mean, I think, you know, we've had a great run. It's not over, but we might be looking at a little bit last sage are in a prevalence.
In the future.
Ken we could talk all day, but we're eating into raggedge times, so we got to go.
Don't want to do that.
To see sir, you got to catch up. Thank you. Ken Rogoff there, the former IMF Chief Economists and so much more joining us sat at the World Economic Forum. I'm pleased to say Gary Cohen, the IBM Vice chairman and former National Economic Council Director under Donald Trump. Gary or Gary's going to see you.
Great to be here.
Thanks very We mentioned this the last time we caught up in New York, how different things might be this time around. What are you hearing here in Davos, Switzerland? How different are things this time around compared to years gone by?
You know, I started with the propos lease of making I always take dives with the grain of salt, because you know, you have lots of different opinions here, and I'm always the start of a new year. Everyone likes to be excited. Everyone likes to be balled up. We obviously went through an inauguration and change of power in the United States yesterday. We know that's fairly positive for business on the fundamental level. It's positive business. It's a pro business. It's a smart regulatory environment. So everyone's thinking that's very good for business. But I think we're going to ultimately have to see what the year brings, because there's still more unknowns.
Than knowns in the equation at this point.
When you were last in the administration, the focus was on taxes first, and I spent the best part of the year trying to work out that tax build. The following year things shifted towards trade. There's a sense this time around that maybe we can do everything all at once. How difficult is it to do everything all at once?
Look, I'm not in Washington right now, so I don't know. I can't speak for them, but look, doing taxes by itself is going to be quite difficult. You know, there are a lot of different constituencies in Washington when it comes to doing taxes, and look, there are small margins of victory, so especially in the House.
You know you've got two or three today.
It might even be one or two seat majority in the House. And within the House, you've got certain members that want certain things.
To be able to vote for a tax bill.
You've got certain people that are deficit hawks, so they do not want to see the deficit go out. You've got other members that want to bring back as much of the state and local tax deduction assault as we always call it, the salt deduction. You've got other members that want to just extend everything in the Trump's tax cuts. Then you've got those that want to not only extend what's there and all of the additional things that were talked about on the campaign trail.
All of those things.
Have a price tag associated with them, so it's four trillion, five trillion, six trillion, and you try and balance those with the people that don't want to have a deficit, and ultimately something has to be worked out. And remember, the only thing that really has to change because its expires at the end of the year, is the personal side of the equation.
That doesn't mean they won't.
Touch the corporate side of the equation, because to make this all work, they're going to have to balance it. It's a balancing act, and there's numbers, so you're going to need revenue from certain places to be able to give it in other places.
It's a balancing for Congress, and each congressional member has its own power just simply because of the thin margins. It is a one man show that when it comes to tariffs, And are you surprised that we didn't see more aggressive tariffs implemented or at least even announced from the get go, other than what we heard about from Mexico in Canada.
No, I'm not supplied prize.
I think that even when I was there eight years ago, there was always a heavy debate on tariffs, on the positives and the negatives of tariffs, on the intended consequences and the unintended consequences. You know, look, it's day one of a four year administration. You don't have to put tariffs on day one. I'm sure there's an enormous amount of debate going on in the White House today as there was in the transition, on what to do with tariffs, Where to put tariffs, Where can tariffs be helpful?
Where can tariffs be hurtful?
There are places, I'm sure where there's pretty universal agreement that we should tariff. There's other places where there's probably divided opinion, and there's places where people think there should not be terrif.
So we're here in Davos. Everyone's incredibly excited about all the good and not really considering the potential inflationary component of this. The potentially rate, the potential rate rise that could accompany this, or the potential slow down from an increase in the price of goods at a time when spending power has been coming down. Are you trying to tell corporate executives who you meet with or others maybe temper your enthusiasm.
No, I'm not trying to tell corporate executives anything. I think every one of us is eyes wide open. Everyone has a fairly good view of what's going on in Washington. Look, the one thing about the Trump administration is they're very transparent, and the administration are very transparent.
They've had enormous access.
The corporate community has access, The corporate community has been involved. The Trump administration has wanted to hear from corporate community. So I don't need no one needs to tell the corporate community to slow down. I think what people are starting to understand is what are the intended what are the unintended consequences? As you talked about, we've seen a higher rate environment. We're talking about an environment where we may not get.
Cuts this year.
We're talking about a steeper and steeper yield curve. I think the realization that the COVID financings that we're five year financings come do.
There's a big maturity wall coming up.
There's also a lot of deals in the pipeline. If you look back at the vintage years of sort of twenty ten on in the venture world, the private equi world, there's been very little to no liquidity.
Out of twenty ten vintages on.
There's a lot of investors, especially pensions and endowments, started looking for a return of capital from those vintage years.
There's a lot of pressure in the.
System to do transactions and get deals done. We all feel that, we all know that that will be great if we can get.
It all done.
But I think there's a realism that not all this can get done at the same time, and we'll have to see what the market can bear it. And we have all of this at the exact same time when we have very tight credit spreads and very high multiples in the market.
You've said it repeated by coming into this year, there's a lot of paper that needs to be moved. Moment in the hearing with Scott Besson, the incoming Treasury Secretary, where he was asked about scrapping the debt ceiling, the debt limit and he said something instead of the warrant didn't really let him speak. But what I ultimately was going out was that he wanted to survey market participants. And what I sensed about where he was going was he wanted to find out how market participants would respond to that headline. Now, you've been in both office in the administration, and you've know the business financial markets, and your time at Goldman Sachs. What would you be telling Scott Besson about that, about how that headline would be absorbed in financial markets? And you're concerned that we could get some pushback to some of these plans.
Well, I think you will get some pushback some of these plans.
You know, the.
Market is getting to a point now where they're telling you we are more concerned about the debt and the deficit today than we have been in a while.
And I think there's a few factors there.
The debt and deficit continues to get bigger, but we're also getting closer and closer to that Social security sort.
Of tipping point.
You know, when they work together, we all know that the Social Security Trust Fund will be unable to fund itself in a matter of years. So it's five six, seven four, you know, somewhere in there. And I think we're all confident that no one's going to cut those security payments. There's no member of Congress that is going to vote to cut those.
Security payment nor should they.
So not only do you take the pre existing debt that we have, the debt that we're going to continue to build by running this government, you're going to have a new source of additional debt called Social Security that you're going to have to have to fund. So you start putting all those things together, and you look at what the government's need going to need to borrow in the near future, and it's a fairly large number. And the rollovers, the quarterly rollovers, are going to start getting quite staggering. Add to that that the prior administration did not really elongate the maturities on the debt. They were using a very short dated maturity system, which I didn't understand when we had low rates. When you have low rates, you want to elongate your debt. We're going to have to deal with the problem that we never really put.
Duration into the pre existing debt. So we've got to roll the duration of the pre existing.
Debt out we've got to add to it the exist the new debt we're going to create, and we've got to be prepared for.
So security.
Do you think we can term out of debt just to unpack one piece of that? If we turned out the debt right now and you're fantastic this, We've talked about it before. Front end of the curve. At the moment it is priced around FED funds on twos, the curve is what forty fifty basis points step maybe forty something like that. The last time I check, historically that's not that much. I mean, I don't think there's any real sign that we're freaking out about the fiscal debt. So yeah, that's before you even do all of these things you've talked about.
We're not.
Look, I think it is a good opportunity to term out debt. We've got a, as you said, a forty point inverted yield curve. Historically, we've got to positively shape yield curve. You know, we still need to continue to elongate our maturities in the United States.
You think we have the space to do that right now because I think it's about forty basis points steeper twos versus ten. Do you think we have the space to do it so steep?
Yeah, Yeah, it's Steve, You're right, we do need we do need to do it at forty basis points.
I still think it's it's the right place to go.
Your message to the people that didn't live a steep yield curve and things that right now at the moment like this might be it. What's your message to them?
My message is go back and look at history. You know, if you go back.
And look at history, the one hundred year ten year rate average in the United States is over four percent. If you look at the steepness of the yield curve over the one hundred years, we've always had one hundred and fifty basis points of steepening in of steepness in the curve if you look at FED funds out so we are still in a relatively flat curve.
Gary, appreciate your time. Always shop It's going to catch up, Thank you, sir. Gary Khan there the former National Economic Council Director and of course formerly of Goldman Sachs, as well David Rubinstein, a co founder and co chairman of the Carlough Group. David, it's going to see you. My pleasure to be here, thanks for joining us. We caught it with someone you know well, mister Friedman of Canyon Partners, someone who you've spoken see quite recently, and he said that the inauguration felt like a commercial for all the best of the United States of America or the CEOs from the biggest tech firms. Joe Biden, the former president, has said something different. He said, an oligarchy is taping shape. How do you see things?
Well, I don't want to side with either side and say either person.
Is right, you know both of them.
I would say that clearly there are a lot of technology people that are involved with Donald Trump, and they were very visible at the inauguration. You could see the most visible people at the inauguration right behind the President when he was being sworn in. Where the tech CEOs, the finance CEOs. They must have been in Wall Street doing deals, or maybe they're in Davos.
They weren't there.
There's no doubt that business people have become very important in the American economy in the last couple of years because of technology.
There's no doubt about it.
This is true for President Biden, President Trump, the technology companies, United States are not only dominant in the United States, they're dominant in the world.
So live anywhere in the world today.
Can you get through a technology get through the day without using an American technology. Almost everybody in the world is using either Amazon or an Apple, or Facebook or a Google. And European technologies are not quite like that. And even the Asian technology, with the exception of TikTok, isn't really prevalent. So the American technology leaders have become important business leaders, not only the United States, all over the world.
And they're more than.
Business leaders, They've become like folk heroes in some ways. People that started these companies, Bill Gates, Mark Zuckerberg, among others, and the.
Late Steve Jobs.
These are like people have done much larger than life figures. And I'm not surprised that President Trump would want to involve them, and I think President Biden did meet with them as well.
Mark Zuckerberg said recently in a podcast with Joe Rogan that he found like the European regulators were going after the US tech firms, and the US administration was given the Europeans cover to do that. Do you sense a shift where we are now celebrating our national champions under Donald Trump in a way that maybe we have done over the last four years.
Well, I think both all presidents want to celebrate American technologist. I'm not sure exactly what he's referred with Mark Zuckerberg referring to, so I can't comment on that, but there's no doubt that when you have American technology companies that are very dominant. Google is another one that had a lot of problems in Europe, you expect Europeans to maybe regulate because they're not happy with the fact that American companies are dominating their technology. You know, Europe and France really invented the Internet. They had a kind of an Internet before we had the Internet, but they kind of lost it and as a result, today, think of a European technology that you need to get through the day, there's virtually none of them. So I'm not surprised that Europe is upset about it. But Europe is an important a life the United States.
So I don't expect Rolex. I'm sorry, Well, I literally.
I want to have a great summer vacation. There is no place better in the world than you know, Mediterranean or Europe, and the museums are great, the food's great, the people are family, everything's grown of them. But if you really want to build a great technology company, many of the great technology leadlead are moving to the United States from India or from Europe.
So there's a larger question here about how much we've priced in the US market tech market divorcing from China at a time when it seems like maybe that's not exactly Donald Trump's plan, and I wonder whether that might be the surprise actually a shift toward a more amenable approach towards China than currently this market is expecting.
I can't speak for Donald Trump, obviously, and he changes his mind when he feels it's appropriate to do so. He's a very transaction oriented person. I wouldn't say as ideological, as transaction oriented, that would be my perception.
And therefore, if he can get a.
Deal with the Chinese on something that would be helped with the United States, I think he'll do that. I've read that he wants to move there and get there relatively quickly and have a meeting with Cgping. I think that'd be a good idea, But I think it's too early to say whether China is going to go down and the United States is going to go up in terms of the fight between each other, whether it's going to be large tariffs. I think the Secretary of Treasury said designate that the tariff policy is a maximalist policy, which is to say, it's to be used in negotiating positions. So I suspect that that will be what Donald Trump does, and as people negotiate and have the threat of tariffs, but maybe not you impose them.
Well, the reason why I ask this is because we're trying to figure out signal from noise right and the TikTok ban that was delayed for seventy five days. There's a signal in that that maybe there isn't as much of a concern about the national security concerns surrounding a property like this, at least in Donald Trump's mind, and that could open the door to more negotiating between the US and China in a way that a lot of businesses had really backtracked from how much you hearing them actually start to look at potential opportunities again with China, given that maybe that got overestimated well in the.
National security information and concerns.
I don't have access to what the senators and members of the House saw. So I can't comment on that, but I would say Donald Trump is obviously interested in MAB security, but he may have some way to deal with that if you have an American press in the company or American ownership. So I just have to wait and see. It might take more than ninety days to actually get this resolved. You know, business deals don't get done that quickly. But the fact that TikTok is able to get the attention of the present of United States in a way that many people wouldn't have expected a couple months ago shows that this is a technology that obviously has a lot of popularity in United States. Think about one hundred and seventy million users, which is staggering when you think about it.
Right now, the takeaway for us from Davos has been this incredible optimism, this whole deal making surge that we were expecting. Do you think that's overplayed or do you think that that's going to be validated in the numbers.
Well, the optimism certainly is here. Whether it'll be merited, I don't know yet, but I do think that many business people feel that there'll be more of an opportunity to get regulatory burdens removed. There'll be more opportunity to get things done that won't have be on our trust concerns. The SEC won't be as big a challenge for many people. I think that is the feeling of some business people, not everybody, And that is the feeling that I think is fueling a lot of the optimism.
Sure is that you'll failing. I'm sorry, is that you'll failing.
I feel it's a different environment, will be different.
I think there were some pluses to some of the things that were done in the previous administration, and there were some things that probably I wouldn't have agreed with. And we'll see what the new administration is going to do. I think the important thing you should think about is this. We've only had a president the second term non consecutively once before, as Grover Cleveland. And when you have second terms for presidents, sometimes in the second terms, they get tired, they make mistakes. Reagan's second term wasn't perfect. Obviously, Nixon had to leave, Bill Clinton had some challenges as well. Maybe that's because in a second term, a president gets tired, and it's people get tired. Maybe if you have a president who has served for as president before, it actually knows something about the job, has some chance to think about it, comes back with fresh people. Maybe a second term it's not consecutive, might produce some good results.
We'll time, Hotel, we.
Will see and we'll catch up with you saying no doubt as well, David, appreciate your time.
Thank you, thanks much for this.
Thank you, David Rubinstein there as the Carlisle Group, joining Guess not Stave, Town of Bound, the founder of Golden Tree Asset Management Stave. It's good to say, you.
Said, John Lisa, great to be back.
Thank you for being with us. I was listening to some of your comments immediately after the election. Why you said it might be more bock than bite, but maybe people that get in how over that scace just to touch What do you think we are now and what do you expected?
So it's been a lot of enthusiasm, a lot of hope, and it's great and prospects look like they were accelerating, improving, and valuations suggest that my guess is it's not going to be a one way train, a one way trip, and that we're going to likely to get a pause.
What does it mean six months to a year from now.
If you look at the Reagan analogy, there was a lot of hope build up. The first year was tougher, but then it built on that and it was ended up being a very good experience. And there's no reason to think you can't have different environment but similar results over time.
Is confidence sufficient to generate economic activity? Because confidence feels sky high speaking to American executives, and you see that the sentiment surveys over the last few months as well. Do you see that translating right now into superior economic activity?
Absolutely, there's a lot of excitement and there's a can do attitude and people feel good.
So dubos always tends to be wrong. People get together and they have this conviction and then the exact opposite usually happens over the remainder of the year.
I just keep that in mind.
At a time where the conviction seems to be American exceptionalism, growth is going to go gangbusters, and there's this huge fly in the ointment, which is the debt market and what rates are saying. How much does that worry you?
A great question?
Because what we get the cuts that the market's hoping and a lot of the valuations are assuming that rates have a downward bias, and if they don't and have an upward or a flat bias without hurt valuations. If you look at nominal growth rates, which we think will be about five percent, so nominal is inflation plus real, and if real is a higher percentage than inflation in that five percent number, that's a good thing and they'll be room to cut.
But if it's about.
The same, or if there's more inflation in that nominal number as a percentage of the total, then it's going to be a pause and that's not going to be good for the markets based on that.
Are credit markets in particular, high yield markets priced perfection sort of leverage to both the growth and the idea of potential cuts.
You're leading the witness and by the way.
So.
Carry on, yes, please answer.
As long as the market's constructive about growth, valuations make sense. If there's volatility on, is inflation accelerating, is there a concern that you're not going to have cut you may even have an interest rate spike or pause, then that's going to be different. Some of the outliers, like the tariff conversation, I'm less concerned about today's how.
Much are you actually starting to look outside the US because of valuation story. I mean, this is something we keep hearing about going to Europe. Sure we're here, but also investing.
So one of the interesting things on Europe are the real rates are quite low compared to the US. So if you look at economies, for instance, like Germany, you could say, well, there's low debt to GDP and their real rates are called the twenty rates. The twenty year rates are under one, so that you could kind of make a case for that, I don't think a very good good case. But when you look for something like France, where it seems like they have worse flexibility, they're going to might be spending more on defense, less entitlements, less growth, and those real rates or the twenty year rates or in the mid ones to low ones and the US or in the mid twies, it doesn't seem right. So the real rates in Europe seem high. I do feel as if when you look at the Mario Drahi report, uncompetitive, there are solutions, there is self help if they choose to do it.
How much needs to go right to generate bigger retents out of Europe because expectations into twenty five are exceptionally low. We've seen one innings reply. I can think of Richemont in the last week come out with a decent endings report at stock coup ten fifteen to twenty percent.
Just like that, John, It feels that way.
So you look at for instance, I was talking about draw Hay's report. He singled out telecom where they used to very much encourage competition. So retail price is low, but as a result you couldn't reinvest in the properties in the systems, and as a result, the investments the companies sell are very low multiples. You take something like a Vodaphone, if all of a sudden, the consolidation occurs, which allowed occurred, and that they allowed the investment on their systems to have appropriate returns, those valuations could be up fifty to one hundre percent. So I could see it. Look at something like Germany in Vodafone. If that's stabilized and you believe that there is a good investment, that could be really very attractive.
Before we let you go.
Last year year Soldier's crypto business. This year crypto has gone crazy. Yes, do you regret it?
You know it not at all. And because it's in a better home.
I mean, we still we've done some things that have been crypto related, and of the firm Republic, who we sold it to, is just a more appropriate home for it. But and I think it's an interesting space. I'm not so sure that the valuations justify the fundamentals today, but the fundamentals are very strong.
How do you value these companies? How do you value these things? What are the valuations off them? I've had from traditional investors, They just say, I can't have tolerance to invest in something if I don't know why it guys up or down from week to week.
You know it's I try and focus on what I can analyze, and there's enough of that then to worry about what I can and you know, there's very much. It's a concept and you could have said that about the Internet in two thousand. It's true, and you know it's a concept and some will be realized and some won't be.
Steve appreciate your time so aways you get to hear from you're super smart Steve talnabout that of Golden Tree. This is the Bloomberg Surveillance podcast, bringing you the best in markets economics, and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always, on the Bloomberg Terminal and the Bloomberg Business app.
