 Hello and welcome to episode 69 of the market maker podcast. And in this episode, we've had Apple's developer event earlier this week. And while a lot of people are pretty obsessed about augmented reality technology, we're not actually going to talk about the hardware side because not a great deal came to light. We're going to talk about Apple software. Sounds pretty boring, but it's actually could be quite a big deal in the revenue streams for the tech giant. Apple CarPlay and also Apple Finance talking about the whole new buy now pay later product that are coming to market with. And then secondly, we're going to focus on Ray Dalio. Probably seen him peddling his latest book more recently. But again, he's out in force. Why? Because Bridgewater, the firm he's obviously closely linked with his back in the spotlight betting on a sell off in corporate bonds this year. They're still underscoring their gloomy view on the trajectory of the global economy for what they see going forward. But before we begin, if you're listening to this in audio for on the podcast and not via video, you won't be able to see that. Piers, I'm going to. Is that virtual background that looks like one of those zoom preset virtual backgrounds going on there. Where are you? They are real palm trees in my background. Thanks very much. Yeah, I'm just so happens to be Palm Beach, Florida. Okay, well, is this a PIMCO or is this what's going on here? You meeting who's there now? Bill Gross or are you hanging with? I'm actually hanging with the Citadel crew. We're we're out here helping them run their summer intern program, actually. So this is, yeah, it's pretty, I mean, it's pretty cool. It's pretty phenomenal what Citadel put on for their interns. I mean, they so they're made offices in New York and Chicago, but they fly at the start of their 10 week intern program they week one is in Florida on the beach. So they fly about 250 students down to Florida. You know, look at the entire four seasons and there is training every day, right. And then they, you know, it's like to kick off the intern program and it's a lot networking events getting to know all the other students and then they have a lot of inspirational speakers. So check this out, you know, so Tuesday, headline speaker, Michael Phelps. As you do, yeah, greatest Olympiad of them all. Yes, indeed. So he rocked up just to have a chat, you know. And actually, well, I was talking to the I wasn't here for that. Unfortunately, I only arrived yesterday, but it's actually really interesting. I was talking to the Citadel team running, you know, running the program and just about that Michael Phelps thing. And because you know, he's the biggest. It's just a legend, right. Olympian record of what the number of golds what the stats 23 golds. Yeah, three silvers to bronze. And that is obviously just extraordinary. And he's still not the greatest Olympiad though. It's the greatest summer Olympiad though. Okay, well, I'm sticking with some of them. He's not. You say he's not. No, he's not. I definitely not. Are you what you mean? Well, he is based on medal stats. But he's not. He's not. He's obviously no Steve Redgrave. Surely. Yeah, I mean, I would, I would agree with that actually five, five golds, five games, just one gold per game. Come on. But five versus 23 28 total medals. All right. But anyway, the point I was going to make was he so what was he talking about to these Citadel interns. He wasn't talking. He wasn't about how amazing he is and winning mindsets and stuff. It wasn't about that. It was actually about post Olympic retiring and actually it was about mental health. And it was about depression and how he had experienced quite a sharp, you know, fall into depression following his retirement. I guess these these kind of successful people that especially athletes right where your career ends and you're still young, relatively. I mean, you go from everything to then right what am I going to do now and the kind of fall off the pedestal is almost impossible to deal with, I guess. And so he was talking about, you know, mental strength and, you know, overcoming adversity and obviously a lot of these. The roles that these interns at Citadel are trying to get obviously they're only on their 10 week summer program right these are full time hires but you know Citadel is there a market maker and they're a hedge fund very markets. You know your frontline markets roles. And so, you know, it's about dealing with mindset around dealing with loss, dealing with adversity dealing with, you know, really challenging situations. And so he was talking about how he'd overcome those kind of post success sort of depression period and come through it so yeah he's now on a big mission to really help, you know, with mine with with mental health generally but particularly amongst you know the younger age group. So, very interesting. Yeah, shame you missed that would have been great to get. But, but yeah, I'm sure you'll get some intel over the coming days in and around your activity in the fall seasons and palm trees but that's the first things first a quick shout out to our summer analysts they've started the first cohort is in for amplify me. Which is great. And, yeah, great to have them with us. They're on the buy side week so they're doing an asset management sim right now. I've been with them working in the kind of futures market talking about more intraday cross asset class event driven new stuff today so yeah, it's been great to get them stuck in some good and bad results so far in terms of people's risk adherence to risk protocols let's call it all part of the learning journey. Well the quantum that we're running for Citadel tomorrow for interns here in Miami that yeah these summer analysts on our program they'll be doing that exact simulation next week. Cool. Well, yeah, I mean can't wait to see the match up the results. Yeah, they cut it. And so yeah, check out the show notes, more information about some of that training that we do but before I begin, do if you enjoy this episode or any previous ones rate and review the show be much appreciated whether that Spotify Apple wherever you consume this and yeah share it with a friend get the word out really appreciate it. But let's get straight to it let's talk about Apple. So, Apple announced a complete refresh of car play to better connect with the cars instrument panel and a deep integration with the vehicle itself. I promise, I am not an apple representative. I'm not an apple salesman here, but car play users will be able to swap what they see on the instrument panel with a very Apple looking widget design. So it can be bespoke, you know the way that a lot of these interfaces are heading is to have it so you want it in terms of the modular setup the color palette and all these different sorts of things so those. In this video you should check it out it's quite doesn't quite flight my boat because it looks a bit gimmicky in my opinion but you should have a look it was the WWDC is the developer conference you can just check out the video on YouTube it's worth a look. Apple's been working obviously internally on an electric autonomous vehicle, but the company is, as we've discussed on the pod many times, set back after set back executive departure after executive departure. They find it incredibly tough to retain talent when someone like alphabet is quite compelling as a place to go as an engineer because their breadth of project work. It's just as advanced they are then as Tesla, who are the market leader in a lot of these fields and technology as it stands, but manufacturers are said to be already looking to integrate the new generation that they're talking about of car play, just a couple names, Ford, Audi, Jaguar Land Rover Nissan Volvo Polestar, these are just a couple that are already on board. Stat for you Apple says 98% of all new cars already have car play and 79% of users consider the feature before they purchase a car stats origination from Apple. Hang on hang on what 98% 98% of all new cars already have car play. So why would 79% of people have that as a real priority when they're choosing a car if all cars have got it. I guess the interaction of the friction between you and the life that you have built into you via your phone and it's seamless transfer to your automobile I guess. But yeah just thoughts on that first to start off with. What do you think I mean. Yeah I mean it's so Apple have kind of they've got a two pronged attack when it comes to this whole electric vehicle strategy. One, so the one prong has been so far. Well that's, let's be straightforward, pretty much a failure. So this is their Titan project, which is to build their own car. I mean here's some stats because you mentioned Google there and so Google's way more sort of driverless vehicle is it so not electric vehicle I meant driverless vehicle right so this is the race to produce driverless vehicles and you know Apple well in 2019 they acquired drive.ai, which was a self driving car startup. And that kind of bolted on to what they were already doing and they're hoping that was going to accelerate their, their kind of help them leapfrog ahead on this self driving car race but you know it's been a bit of a disaster and just in 2021 I think they're kind of prototypes only managed to do I think, well, 19,000 autonomous miles. So, compare that to like Waymo's that they did 630,000 autonomous miles and so obviously with these kind of new projects that the miles under the belt is what you want right because then you're getting data. You know that that kind of machine learning with more data you feed that back in and then the algorithms cleverer and you know the whole automated driving bot then becomes a better driver and so on right. But look there for whatever reason they just haven't really been able to kind of get that going. So that second prong is forget about building an actual car. It's the software that goes into it and this, you know is almost exact opposite this is seemingly incredibly successful and I think this step they've announced with this update is certainly looking pretty interesting for Apple. What I mean what I'd say is, I know people are getting quite excited about this. We'll talk about Tesla in a minute but you've got people saying like this is the, this is the end of Tesla, which I think it's a little bit sensationalist. Basically this car, if you've I don't know people listening to this I don't know if you're drivers and a few own vehicles but car play as it stands was actually launched in 2014. So Apple's car play was launched in 2014. I've got it in my car. Do I use it. No. I mean, I don't know whether that says more about me. We've rolled over. But what I would say is the Apple the car play at the moment. I don't think it's particularly good and it really doesn't do much other than connect your iPhone and you can whatever make calls and access your music and right bog standard stuff. So, you know what's exciting I guess about this, this kind of new upgrade is that, you know it's going to give Apple more access to much much more interesting and potentially way more valuable data about how someone's operating a car, you know about how the cars performing. And I guess one of the key things here is that people are kind of starting to look into the future about is right is this actual is this driving data that Apple can harvest to feed into their Titan project, and help them accelerate the self drive car initiative that's the one key thing Tesla have above all others in this race it's the amount of data that Tesla are able to kind of pull down from all of their vehicles and as I was saying before there's no substitute for miles under the belt to learn from and feed into your machine learning process so I guess people are getting quite excited about that I mean what I'd say is don't this new car play is not available till what they're saying at the moment late 2023. So let's just say 2024 and fine if great and maybe it will get rolled out I think right now the car play as it stands you mentioned the big names I mean they're across most car companies and I think there's 600 different car models that have car play. And interestingly the absolute noticeable absentee from the list is definitely Tesla. So Tesla have always been very anti Apple. I mean this kind of goes back. I mean Musk has got a bit of beef with Tim Cook. They've got a bit of a history and this kind of goes back to stuff like Apple poaching Tesla kind of stuff basically and Musk famously once said that he called Apple the Tesla graveyard. And as you said look if you don't make it here at Tesla then you know you go and work at Apple and obviously Tim Cook didn't like those types of comments particularly well so look so there's zero Apple in a Tesla. And they're pretty much the only ones you go to all the other car big chart car giants and apples part of it right and and I guess the one of the quite unique things about Tesla is that they're basically I don't know how many like five or six different companies in one because Tesla built their own operating system from scratch from the ground up. Now that is a fantastically difficult thing to do all these other cars, they've tried it and spectacularly failed I don't know if you've ever been frustrated by the operating systems in some of these vehicles and it's so bad is so clunky it's incredibly difficult to navigate around especially when you're driving at the same time right it's actually just kind of downright dangerous. So, I think there's a huge play here for Apple who have obviously got the operating system down to an absolute T one of the, you know along with Android the two big giant operating systems on the planet and if, and if Apple can continue to buy big car companies, you know the operating system off the shelf. And of course, with the whatever 1.4 billion is it Apple active users or iPhone users. Clearly that's a that's a positive feature when people are buying cars especially if there's a more advanced Apple operating system available to make your driving experience you know to enhance your driving experience so but I think this is incredibly interesting for Apple this car play things been around for ages I don't think it's really, really done much for Apple at this point but I think this looks exciting but we've got to wait until 2024. And then it's only in new vehicles right so it's going to take a decade maybe for this new car play operating system to be, you know, in a large portion of vehicles on the road and then all that data that could be valuable to start coming through so you know I don't think Tesla got too much to worry about in the near term. Yeah, definitely. Pragmatic as ever. So boring. It's okay VW will see to Tesla before the car play kills them. It's fine. Absolutely. That's interesting. Just about on what you said I think there's a lot of unknown data here in terms of from a legal perspective, I get it auto manufacturers will. I think it makes sense to outsource almost that tricky proposition of nailing down your own iOS and you want to think with user in mind. That's that simplicity of being able to then such a large portion of people that will product to have that individual bespoke experience almost enhances your product offering as a car. I get that. But if I was the auto manufacturer, when you start talking you mentioned the word data harvesting of my user I'm going to be like, well, no, that's a line by line data digit by digit like agreement that we don't know at all. Yeah, how that stands so it's all well and good saying. Okay, yeah, it's about the mileage and accumulation of data, but what data will they be allowed to have. And then you bring in the regulatory concern of what you're telling me that there's like 1.4 billion people and I know it's a fraction amount that will be driving cars to take data from, but what you're allowing out that you think the regulators will allow Apple to just like gobble that up with no, you know, at least confrontation with the with the politicians I don't know I just think it's, there's a lot there to, to leap over. Before you hit that holy grail outcome, which is, yeah, a new revenue stream of addressable market of 450 million like people or in Western developed nations I think. Yeah, I get it. It's exciting I like it. And I like the idea of the services side perhaps maybe okay this is out the box, maybe this is deflection tactic away from them. This is a non deliverable target of AR VR updates from a hardware perspective. Let's just throw it out a little car play 2014 little v2 spin. Get people excited about that buys us another few months to just work away at this project actually we're finding is much more tricky proposition which is this whole meta and augmented reality space. Yeah, you're calling me the kind of dull pregnancy. But you're you're right. I mean, well it depends. Apple so in some ways quite diverse in that you've got your Apple Uber fans, and it's that Apple can do no wrong. And if you're on that side of the fence, then the way to explain why they haven't rolled out any of this. AR stuff, or is that they've got so much great innovative new products that actually wasn't really room in this conference to actually now bring in all that stuff there's so much other stuff that's amazing that's going on that they, you would argue that they kind of push that to the next one because they can. You're your spin on it's on the opposite side of the fence which I probably I'm with you to be honest but but yeah you're right going back to that data harvesting. Of course it is a conflict of interest for the big automotive vehicles to you know hand apple. So yeah, I mean you're right it's not quite as you know this isn't the sort of highway into the sunset for Apple to kind of just clean up. But one thing, you know on the, well again it comes back to whether they can get the actual data or not but you know stuff like it's not just about driverless vehicles and harvesting data to kind of put into that it's the other interesting stuff like car insurance. And so if you can track how people are driving. You know, most like in real time, then that can feed into a much more kind of clever car insurance sort of system where you're paying, maybe your monthly premium. And that is entirely based on how you're driving the car and the Betty driver you are the kind of the lower the premium gets and that's quite that's kind of where in that's what the future of insurance looks like right and so that's quite. That's quite an interesting play especially given apples and here's a kind of segue for you into our next topic. So actually given apples you know obvious growing obvious move more into that kind of finance kind of world with with their Apple pay so yeah it's quite an interesting one that insurance product suite could be there for the future new future revenue streams. I could bail me out when my wife tells me I drive like a granddad, I can say look I'm just taking care of our personal finances for the better of our families future. But yeah you mentioned Apple they're making that that kind of move into a little bit more in the finance space by offering loans directly to consumers for its new by now pay later product, taking on a role played in other services by partners that they they work closely with like Goldman Sachs for example so what's what's going on here what what's the involvement between. Well, first of all they're doing by now pay later. Yeah, which we talked about before. Yeah, so what it's, it's spreading. What's the amount is it's up to 600 is up to $1,000 am I right and say I can't remember what the ceiling is but anyway you spread you can. Nice, you'll be able to spread your payments over four installments over six weeks. So yeah very much striding right into the middle of the by now pay later market, which is a monster huge market at the moment and you know it's like, you know the clowners of this world. Well, this is. Yeah, this is really bad news to be quite frank. So I don't think this is this isn't a surprise this kind of move because we were talking about this earlier in the year but Apple are quite they made an acquisition back in March and they acquired a company called credit Q DOS. Which essentially is a kind of clever new bit of software but which is around credit scoring. Okay, so one of the things about this by now pay later space you want a seamless as possible user experience right and so if you're on your iPhone, you want to buy something, then you want to go for this spread the payments option, then obviously you don't want to be messing about with. Oh, you try and hit buy and then it goes okay payment pending, you know a credit rating right credit check. And then what that credit check takes what 24 hours and then you got to come back to the product and hang on did I get that I passed it I'm not have I bought this thing have I not bought it you know so you want a seamless so you want to pretty much as rapid a kind of credit check scenario as possible. And I think what and that happens right with the clowners of this world is super fast but I guess the problem that people consumers are facing is that the way that credit checks happen. They're quite they're still still quite backwards looking. So the data that they're using for your credit score, you know is is your kind of, you know, all quite quite kind of, I guess, looking at your bank statements and looking at your payment history for loans in the past and you know it could be that it's you know the way they credit check you isn't particularly kind of relevant to perhaps your financial situation in the moment you're clicking that button to try and buy it it might be based more on your financial situation six months ago. What the frustration people are finding is they get refused credit, even though right now today. Actually they're a healthy consumer, and you know if it was based on today's evidence they get it, but it's based on historic stuff so Apple bought this company. And QDOS whose software is a much more clever much more real time much more up to date way of checking people's credit history, one of which is actually you checking their mobile phone monthly contract, for example, are you you know and obviously you've got all the data. So this is about right do you have a monthly contract with Apple, have you always been, you know top of payments, add on to the fact that for Apple, I mean Apple products are quite premium. So actually if you're an Apple user, then almost by definition you're probably a more affluent person. So obviously from a buy now pay later if you're going to get into that credit game where you're basically lending money to Apple are now lent they're a lender, and obviously you're going to get people defaulting. And once you're into that game, you know that's a big issue what's the kind of percentage default rate but for Apple I guess they can their customers, you know, are probably in the more affluent category given they can afford iPhones. So this is kind of all tying into a move that had been telegraphed for months and months and months and months and now it's here. And it's been a such a slow motion rollout, I have to say, in terms of them finally entering this space. So now yeah it'll be interesting to see how they execute it. So with the hook up then and with goldman's goldman's is facilitating Apple pay later by allowing basically the tech company to access master cards network. Since the iPhone maker lacks a license to issue payment credentials directly, but Apple is handling the underwriting and lending using its new subsidiaries that new subsidiary wholly owned by Apple is called Apple financing. Yeah, essentially so that's how the two kind of hook up and work with one another in that way so yeah I guess from the bank, I guess just one point on the banks, you know I get, because obviously to operate as a bank and to be a lender. You have to have a kind of balance sheet of assets that you have deposits, if you like, you know historically the way a bank works in terms of lending money you have deposits from your kind of current account users and that's the kind of capital that kind of goes against that kind of process right obviously Apple aren't a bank. But so rather than deposits, just so happens Apple have got $73 billion in cash just sat on the balance sheet, just because they're such a crazy kind of cash generative business and so they almost are a bank but just a very very different one and I think you know this is, this is huge for Apple as I said, this isn't new so it's not like the Apple share price is suddenly spiking, because oh my God this is amazing and they're going to, this has been so telegraphed and you could argue, it's been negative for their share price because it's taken them so long to actually get here so, but yeah I mean for Apple this is, you know in the years to come this is going to become, you know, definitely a very, the growth rate of this part of their business which is now financing. The growth rate of this part of their business will be very interesting to watch and definitely will add a you know a big new powerful revenue stream. Okay so let's move off Apple and let's talk a little bit more markets oriented with using the new Bridgewater call on markets which is they've worn the inflation could be far stickier than economists and the market are currently predicting. You might sort of question that and go, how do you think you're so right well I was reading, I think it's there in the full name of it that alpha fund pure out pure alpha love that it's not just alpha pure alpha fund at Bridgewater. It manages $151 billion in assets as of the start of the year, probably higher why because year to date their fund is up 26.2%. You might have seen a meme very popular one go around the market this week. And it's a picture of this guy who looks like Ronald McDonald that McDonald's investing in the stock market in 21 and he and he's just having a party. And then there's a second image of a guy in a suit looking at loads of technical screens and his and his accounts crashing 2022. The point being is is that, you know, without carrying the joke through Ronald McDonald could make money in 21 when the market was going up now it's a little bit more of a tricky proposition. But you know they've done 26.2% in those conditions which is pretty phenomenal. What they're saying is is they're quite bearish, and that then is a reflection of the fact that they think that the Federal Reserve are going to have to hike rates harder faster higher, I guess, in summary, and that's going to cause complications. So yeah just wanted to kind of deconstruct how they kind of pulled together review. What other sort of signals do you think that they look at, and that kind of constitutes around timing I guess to exercise this view, and then about how do they structure this. How do you, because this is something we've been working with the analysts with this week is kind of like, these aren't just outright positions they're more complex in their nature of how they try to then minimize risk but optimize the profit potential of that strategy so yeah just going to get a bit of a walkthrough so that's okay. Yeah I mean, so this. So Ray Dalio, who's Bridgewater Chief, is one of, you probably, I mean obviously hugely successful, hugely over the decades one of the most successful investors of all time. But certainly in recent years, you know he's been very much about the big, you know debt cycles right the boom and bust, kind of massive debt cycles and the rise and fall of superpowers, you know this is his, his book on debt cycles that he's been kind of masterminding and peddling I mean most of his time spent selling books these days it appears but you know the point is that he's been I guess predicting what's happening, he's been predicting it for years. And I think, and to be fair to him he wasn't like saying, it's not that in 2019 he was saying right in 2020 and in 2021, all the stuff I'm predicting is going to happen, he didn't say that he said look these are ultra long cycles it's incredibly hard to pinpoint the precise timing. But of course then COVID happened, which was obviously completely out of left field. And this was the catalyst for him saying well actually what tends to happen at the end of these massive cycles is there's a major shock event. And then that triggers everything into motion when we transition and have this big downturn and he, you know was definitely saying COVID appears to be probably a big event that might well accelerate this so bearing in mind he's been of that persuasion for quite a while in terms of looking for when is the correction going to start and he thinks it's going to be more than a correction so the fact they've outperformed this year is definitely of no surprise. They probably underperformed last year, by the way, because they were probably more bearish and markets obviously did incredibly well last year so now their bearish few is coming through. And it's looking incredibly positive when you're comparing their performance against everyone else's. What's interesting though is now we're here we are in the summer of 2022, and you're actually starting to get some notable investors some banks actually starting to come out and say well, maybe, maybe we're past the worst. You know, and starting, you know, and you can point towards stuff like the Fed, you know rate hike expectations that were over hawkish a few months back have calmed down a little bit. And you know there's not going to be 75 basis point rate hikes or anything ridiculous like that and so. And with that you're getting some analysts go well actually maybe where maybe this is the bottom, maybe the second half of the year could be a recovery for stock markets and remember stock markets are always their lead indicators they're forward looking. So it might be that we still get a recession. Maybe what I don't know, do we get a recession in the US at the end of the year possibly, but the stock market could bottom out or normally bottoms out before the recession, because we're kind of forward looking. Okay. So, what's interesting to me is here we are middle of the year and they're now almost like doubling down on this bearish few. Obviously, that's the key takeaway here was others are starting to say right, the worst is behind us, they're coming out and going no, absolutely not. And actually we think this is going to be, this is going to get worse. So they're probably moving more, maybe, I don't want to say the contrarian camp I think it's quite divided at the moment at the marketplace as to whether we've seen the worst or not. They're well done to them for this year and positioning correctly I mean, for sure, obviously the inflation conundrum is the hardest one to predict, we've got some incredibly important US data on this tomorrow so we're recording this on Thursday so Friday. It's 30pm on a UK time we've got US CPI report. So this is another inflation update for the month of May, and what we've seen is that I guess the question is has inflation peaked, and it looks like it has because the April figure was lower than the month before so this will be the next. This is a key moment I think to do we now see two months of declining headline CPI in a row that's what people are thinking and expecting and if that's the case. Then maybe Bridgewater are wrong, and actually maybe this camp who think the worst is behind us are right but for Bridgewater they want to see a super high inflation print tomorrow, because their view is inflation this inflation crisis is going to last longer. And markets are currently pricing. Therefore they think the Fed and other central banks will have to hike more to control inflation. Then you feed into how they're positioning themselves for this view, and that is based around the corporate bond market, because in the end, if they're right, an interest rates have to go up really quickly, much higher than markets currently pricing or a borrower. And if you're balance sheet, or if you're and well and if you're a borrower and you hit a recession and rates are suddenly jumping higher. Well that's a recipe for disaster. Right, that's a recipe for companies literally going to the wall and going bankrupt, and how many and we call these zombie companies right how many zombie companies are out there that have been able to survive in the last decade. They're not really growing. They got a huge amount of debt, which is just keeping them alive. And it's fine whilst interest rates are zero. But when they're not zero, it's not fine, and they'll go under. So how quickly do these zombie companies get stripped out of the system. Bridgewater think is going to be a rapid and very painful scenario of sharply higher rates and so they're in the corporate bond market space and look this, they haven't expressed exactly how they've set up this trade but there's certainly a lot of derivatives involved. It's kind of like you know the good old credit default swaps, which if you are around in the great financial crisis back in 2008 was the kind of the kind of market to be monitoring but this is where you can buy derivatives that go up in value, you know if the credit worthiness of a company deteriorates. But so that's kind of their angle right higher rates. So companies that aren't in good shape, they've got a lot of debt, their credit ratings are going to get chopped credit worthiness is going to decline as they move towards bankruptcy, and the credit default swap pricing that's insurance against default pricing and that goes through the roof. And so you can use these kind of derivative instruments to profit from that kind of down trending credit worthiness so it may be that they've kind of got positioned in a way that's also yeah. So there's also clever things you can do around spreads. So that's looking at the spread between yields on. So again thinking about credit ratings right the whole debt market is based on this credit rating system. So you've got the standard and pause and the Moody's and the fixtures of this world that a big three kind of global credit rating agencies and their job is to do a deep dive analysis into a company that issues corporate bonds to borrow money, and they give them a rating based on their financial health, and therefore their credit worthiness right. So, you know that the, the, the worse your credit rating, well that the more expensive it is to borrow, of course, because there's a higher risk for the lender. So the yield on these corporate bonds that have a lower rating, the yields are higher. So we have to look at the spread between what's the difference between the yield of a corporate company that's got a credit rating of triple C, compared to company like Apple, let's say is like triple a. And what's the difference in the yield and that's the spread. And if Bridgewater are right. What will happen is these spreads will widen. So if the yields on the high risk stuff gets a lot higher. The apples of this world will be the safe haven right so the yields on those will stay where they are anchored and low. And so you can kind of place these spread trades to profit from the spread widely. So there's lots of clever ways you can engineer a position around this but ultimately they just think that, you know, borrowers are going to get squeezed as rates go higher. They're going to get bankruptcies. And they think the crisis is still ahead of us. Cool. Well, I won't end it there because that's a sour note. So a quick, a great summary is ever and we'll have a quick word on the ECB. As you said we're recording this on Thursday the event is still kind of happening while we're talking but the initial take was that these be kept rates on hold very much as expected. So deposit rate negative point five, but they said they intend to raise interest rate by 25 basis points at its July meeting and I'll expect to raise again in September. The kicker at the beginning in a statement was, quote, if in the medium term inflation outlook persists or deteriorates a large increment. It will be appropriate at the September meeting to potentially start talking about essentially going bigger. So the euro actually rallied in the initial statement, however, well to finish that part off, it was accompanied by their latest projections so every alternate meeting. They release them kind of in a similar fashion to the to the Fed. So every calendar quarter, and the end of year inflation target they bumped up. It's now tracking at 6.8%. Last time in March when they issued these it was at 5.1%. They shifted 2023 2024 growth they've downgraded to 2.8% from 3.7%. So they were your forecast but actually now when you look at it, the euro reversed that move and some. So the one thing I always find with Christine Lagarde is traders just seem to have it so locked in their head that whatever she says. It's like, she's she's tries to claw away at reinstalling like some degree of credibility but I don't know if it's because people didn't see her as a credible actor in the first instance, given she's had a little bit of a bumpy political history before the helm of the ECB. It's almost like people have started with a investment community I mean with a negative psyche and how they view her communication. Yeah, and therefore that always it seems like a bit of a recurring theme whenever there's an ECB press conference. And it's like unfair on her. I would probably say and but yeah you're right is this kind of unspoken just uncertainty and unease about her and her ability to, I guess what the other thing is not just about her as an individual and her history she was previously in the IMF and politically very well connected and so it's not necessarily just about her but do remember she's following in some pretty big footsteps with you with your man Mario Draghi, who, I mean, I think it's a bit of a legend so I think to try and take those footsteps is an incredibly difficult job. But yeah I do think there's still a little bit of a trust issue between markets and the guard. But yeah I mean look the euro is selling off now I mean it's that is new loads for the day but it's not massive move I mean we're just testing the low from yesterday right now I'm just looking at the chart but so so really. You know the euro dollar, I think in looking over the last, well obviously this year has dropped off massively, but we have bounced over the last month. So we, I think the lower the year so far was about 10350 if I'm just going to round it 10350. And we traded up and we've been trading around the 107 handle for the last couple of weeks, we're still in the tight little range, even though there's been a lot of volatility today. So this is the range today not particularly large at this point. So we're still in that consolidation range after that little bounce that we've seen in the last couple of weeks. So, look, I think this is just quite a noisy intraday market reaction to a kind of an event that's pretty much as expected. There's not too much of a surprise I know they, I know they said, we may go larger if inflation warrants, of course they will, and you know we talked about that last week I think they should go larger inflation warrants because the feds going larger so there's no door to try to raise rates at a higher clip. And I said but you know in some ways, being the pessimist again, you know the higher you can raise rates now the more you can cut when the recession comes right but so I don't think this is kind of a lot of intraday volatility in this event but in the end I don't think too much has changed in terms of the medium term outlook for the European economy or the euro's value along with that. Cool. All right well we'll wrap it up there and don't forget to check out the show notes I'll also put the link to our daily newsletter, because there's been lots of other things that have gone on this week which obviously we have times cover everything like Boris Johnson surviving. There's a lot of confidence vote. He's going to potentially rewrite legislation overriding the Brexit bill. There's Russian still forceful activity happening in Donbass in Ukraine. There's Elon Musk flip flopping now he's employing more people after he said cutting 10% he's now Twitter now giving him access to the data he's requested now he's going to be quiet. There's a whole ton of stuff that's super interesting so we cover that all in the daily newsletter myself and the team. So, you know, obviously free to subscribe to check it out. I'll put it in the show notes and yeah thank you Piers and enjoy Palm Beach. Yeah, just going to just going to drop down for a swim in the ocean. Thanks Ben. See you later.