 Hello and welcome to episode 81 of the market maker podcast and this week to give you a bit of a heads up we're going to talk about Kim Kardashian. Not probably the most usual character that would appear in our podcast maybe in his browser history but not so much as a talking point for us. Why, because she's about to break the PE world this time, not the internet so would understand what exactly that is and why she's getting involved with the Carlile group, a previous head honcho there, trying to take on the private equity world. We also talk about central banks. We've seen the Fed hanging tough with their kind of inflation focus with power speaking yesterday the ECB of hiked 75 basis points. So we'll discuss the kind of implications of that. And in fact, markets are going up, which is slightly contradictory, made for many listeners who might think that was the real reason why we were going down so we'll explain why exactly that's happening or at least attempt to. And then the UK has appointed finally the new Prime Minister Liz trust and she's announced that 150 billion pound package to shield written from the ongoing energy crisis so we'll go into some of the details that was there and our thoughts about the impact that that could have. But before we begin, of course, have to pay tribute to Her Majesty Queen Elizabeth the second remarkable woman served her country with dignity, loyalty, and grace. Question I've got for you peers. Yeah. Nickname, apparently in inner circles was cabbage. Who do you think started that and referred to her as cabbage. I mean, this is this is new. I've never heard this. I need to be like watching the crown or something to get that kind of knowledge. Perhaps I wouldn't know because I don't watch the crown or have I'm going to go Prince Philip. Perhaps you're right. Perhaps that's because maybe you call your wife the cabbage cabbage my little loving cabbage. You absolutely nailed it. The other nickname that she had was gangam. Who do you reckon calls her gangam. Here comes gangam. There's a little grandkids, isn't it. George. George before you got it. He wants to be a millionaire. But yeah, obviously, a nation in mourning, but a tremendous figure in most of our lives. And in fact, there was one thing you mentioned to me, Piers, about the percentage of people who are alive over that time. Well, the reason why it's quite shocking slash surreal. I mean, it's not surprising, but it's yeah 80% of the UK's population was born after she became Queen. So she became Queen in 1952. So 80% of current, the population were born after 1952. So all you all you've ever known. Yeah, is the Queen. So yeah. Strange times until we have another Queen. Yeah, for a very long time, well beyond our lifetimes. Perhaps. Well, most likely. Yeah, for sure. But look, from one queen to another. Let's talk about Kim Kardashian. And the reality TV star, but I don't like calling her that. I like calling her business woman. Because this woman is pretty tremendous. I think yeah, all things put aside. So she's launched bit of background here this week she launched her own private equity firm co-founded with the former partner, like with Jay Sammons at the investment firm the Carlisle Group. He's called Skype partners. It's going to focus on consumer. And as you'd imagine media businesses. And then her partner in crime here, a little bit background on him. He was the former global head of the consumer media and retail at the Carlisle Group, which if you don't know who Carlisle Group are, they're an American multinational investment firm. Fourth biggest. Fourth biggest. And the reason why this guy is quite unique is that his clients over the years amongst many, one of which included beats by Dre. Yeah. And I was just trying to think of the circles here, like how did Kimmy meet Jay. And I was thinking, okay, so beats. There's that Jimmy, Jimmy Iovine. I think his name is and he's the guy that basically took Dre when he was coming up. And managed him coming up in WA days. And they started beats together. And that's what's turned Dre into a billionaire. I was just thinking, okay, so yeah, maybe there's that connection. But then also there's probably Kanye. And Dre know each other. And then I think about you think about like the circle here. It's a quite a small world. You can probably tie them all together. But the background here, and I guess where I want to take this is that Kim Kardashian launched a shape where label skims. And here's another tenuous link. She actually recently did a skims line on beats headphones. Oh, wow. So there's the hook. There's the connection to probably Jay. Right. In that sense. You know how much that you know how much you know how much that. So skims. Yep. I was reading. I mean, this is quite extraordinary. It only launched in 2019. Do you know how much it's valued at as of well as of January 2022. So this valuation is most likely gone south. Like most valuations. But anyway, it's the only start I've got. So by January 2022, it was valued at 3.2 bill. I think launched in 2019. That's pretty decent. She's also launched the skincare brand, which is also out there. So she's not. I think it was someone else I was reading about the other day, which was JLo. Oh, yeah. And she's a billionaire as well. Yeah. They're just all at it. Queen of Paltrow. Savvy. She's worth a few bill because of Gloop. And you've got Leo. Ashton Putcher. They're all in the PE world. These, these people. So I thought what would be a good place to start was as we've just described there. Kim Kardashian's had a phenomenal. She's been a phenomenal success. Whether you like her or you, you don't. Yeah. Business perspective. It's she's been incredible success story. So why does she need to go down this private equity route? What does that offer her being someone of phenomenal wealth? Who has already started businesses and being successful at doing it? What is she trying to untap here? Well, I think it's like any Uber wealthy person. You know, at the end of the day, you get so wealthy that. Your lifestyle is, is kind of peaked. No, you can't. You can't get better. You can't spend more money to make it better because you're already, you've hit the ceiling, right? And so then you still mean how that feels. Yeah. It's pretty dull when you get there. You'll find out. And what happens is they've got so much surplus wealth, right? But then it's about, right? Put this money to work. You know, and you're getting, you're getting advisors. Like your money's got to be managed by someone. Right. And when you're getting Uber wealthy, it's going to be managed by one of the big funds. And then, you know, so you kind of enter that world of investment. And I think over time, like when you're, like a lot of these celebrities, you know, they get super wealthy when they're incredibly young. And I think that's so naive. And they really know nothing about the world of money and investment. And they often get taken advantage of, I would say, by these big wealth management firms. And it's not really on their radar. And I think as they get older, it's a classic case here with Kim Kardashian as they get, they get more savvy, they get more business savvy. They start to understand this world because they've been in it for 10 years now. And then they start to, I think make connections like this guy from Carlisle Group through their friends of friends and, you know, we're at a party and we're having a glass of Dom Perignon. And, you know, one thing leads to another. I mean, the jacuzzi, you know. And so it's just about very wealthy people becoming more savvy about the investment world and wanting to put their money to work in different ways. So that's it. That's what's happening here. I think it's interesting that she's gone PE route. Because maybe we should just step back and just talk about, well, hang on, private equity. Because I was going to say a lot of these celebrities would maybe more go VC type of route, venture capital. But she's gone PE. I would assume it's just because of the fact that through her connections, she met this dude from Carlisle Group who for whatever reason left the Carlisle Group. And I guess he's trying to, you know, find ideas, what am I going to do next and met Kim and, you know. So I would say probably it's that connection as to why she's gone down the PE route. I perhaps wouldn't say it was a conscious thing necessarily. But anyway, private equity, I mean, just from the super basics for those that aren't quite fully aware of some word, people obviously, people know the name private equity, but actually what is it? And what makes it different to VC and other forms of kind of investment. So private equity, I mean, as the name suggests is about investing in private companies. So this isn't, this isn't investing. This isn't buying shares in Apple, right? That's what kind of hedge funds do. So buying shares in Apple, that's on the secondary market. That's on the stock exchange. Private equity is all about buying private companies, or in certain cases it's taking companies that are public and buying them, taking them back private. So they buy all the publicly issued shares and take them private. And so it's about taking a normally a majority stake ownership in the business. And then having a direct influence on how that business is run. And often they'll, so very hands-on, often they'll drop in a CEO to kind of take over. So if they're buying a majority stake, then they're definitely going to be having big influence on the board, which of course then has an influence on company strategy and so on. So it's about private company investment. And it's about long-term. And again, a big differentiator between let's say hedge funds and private equity is the time horizon of the investment. This is long-term and really illiquid. Because think about it, if you want to get out of your trade, if you bought 60% of a company that's private, how'd you get out? Well, you're going to need to find someone to buy it, right? It's not like listed on the stock exchange and I just sell my shares. So it's super illiquid. And they're looking for normally a three to five turnaround between the time of investment and then exit. And then typically looking for three times their money over that three to five year period. Another thing that differentiates, so the difference between VC and private equity, I would say is typically, like two things actually, it's typically about where is this company in its life in terms of its journey. VC tends to be much more startup planned, new companies much higher risk, whereas P is looking for a bit more mature companies that are normally a profitable, in fact. So that's a kind of key category difference. And then the other one is how the purchase is financed. So the private equity world is very, very famous for its leveraged buyout. That's the kind of modus operandum for how a private equity firm would finance the purchase of the company. So this is why they would, you know, so this is about leveraging their funds under management. So let's say, I don't know, let's say you want to buy, let's say you want to buy out a company for 100 million and you've got a fund. So these private equity firms, they raise money, right? They go to investors and say, right, we're raising a new fund and here's our track record. Have a look at all our funds over the last couple of decades. When we've raised a new fund on average, we've invested and generated a return in three to five years of X. That's what's happened in the last five funds. We're starting a new fund now, are you in? At that point, they don't know who they're going to be investing in normally. They raise the money and then it's right, okay, let's start finding opportunities to invest in, right? Now, if they raise 100 million, or sorry, oh yeah, let's just say they raise 100 million, okay? They don't just go out and buy firms with that 100 million. They leverage it up. So what they'll do is, if they want to buy a company for 100 million, normally they do a 90-10 deal. They'll raise 90 million through borrowing and they'll use 10 million cash of their fund to then buy the company, okay? And if let's say the company triples in value and they exit in five years time, their holding has gone from 100 million to 300 million, okay? They exit. They've got 90 million of debt, so they pay that off. So they're left with 210 million. So they've made 210 million from deploying just 10 million of cash. That's leverage. It's much higher risk. And actually, in my personal opinion, they're quite, they're bullies, private equity firms. They'll go and take advantage of companies who don't really know about all this because what they do, when they borrow this money, they actually use the company they're buying as the collateral to underpin that loan. And often the company they're buying has to pay at least some of the interest on that debt. So, but often these companies are desperate for the cash, right? Especially if they're not profitable especially these days, if their cash burns high and suddenly the economic outlook's not so sweet, then right, they have to raise and they're being forced into these PE deals, but... So these companies would go with a Karla group for their expertise, their exposure, their connections. Right. That's the upside for the company irrespective of the commitments it's then tied to to be forced to grow. Yeah, and I'd say it's kind of, it sends you down a slightly different path as a business, I would say. It's often a PE deal would often be, especially if they're buying a majority stake, it will often be an exit opportunity for founders or early shareholders. And these days, I'll come on to a point in a minute, but I'll mention it now. These days, it's actually PE firms just sell their stake to other PE firms. It's just like this baton, they pass it on and they get to mark up the value of that trade and then they get to say, right, we're raising funds, we're raising a new fund, look at what happened with our last funds because they just flogged their holding to another PE firm for a higher inflated price to make the numbers look good. But I'd say it takes the company into... I think I've seen something about this with like the analogy in the FT and they were talking about, they used to compete with each other and now they're all bezies, all these people. Yeah, well, I'll talk about that in a minute, just in terms of how the PE world has evolved. But it does take the business, I think, in a different direction because all of a sudden, your company is now majority owned by a PE firm who's basically now in control and they have a three to five year time horizon. That's it. The 100% focus on growth is about growing in that three to five year period, which can be good. I'm not saying that's necessarily a bad thing, but I think most businesses would probably benefit from a slightly longer time horizon growth strategy, but I don't think it's not always the case, but yeah, so they really do take control because they are in the majority, right? But the PE world, I mean, it has evolved quite dramatically, I would say, like Blackstone. So they're the king. They're the biggest in terms of assets under management, but it's kind of got a bit messy because so Blackstone have got $881 billion under management, okay? And they're a private equity firm, except they're really not anymore. They're part private equity. In fact, of their $881 billion, only $126 billion is private equity. And that's similar for all of these big boys. So Blackstone are the biggest, then KKR are number two, CVC partners number three, Carlisle Group number four or three or four in there. Anyway, they're kind of big four if you like, but a lot of these private equity firms have really morphed into credit investment businesses because what happens is these deals have got so leveraged. So an example would be a deal that got done earlier this year, okay? And this is where these big deals, you actually get two private equity firms coming in and teaming up to do the deal. If you go back 20 years, private equity was super cutthroat. It was like fiercely competitive. You're arch enemies. Any other private equity firm out there is dog eat dog. We've got to beat them. We've got to beat them to the deal. Now they're all Pali and cozying up and partnering up. So we had a deal for Zendesk earlier this year. So Helman and Friedman was one of the PE firms. And the other one was was Permira. And they bought Zendesk. They took Zendesk private and they bought it for $10.2 billion. Obviously a leveraged buyout. I think they raised $4 billion in debt as part of the financing for that deal, right? $4 billion. This is for Zendesk, which was a company whose profits last year totaled $80 million. So they bought it for $10.2 raising $4 billion in debt with Zendesk the business being the collateral, but it's a business that only makes $80 million. Now the problem with that deal is it's so leveraged. It's so risky. You can't go to a big investment bank and raise that debt. Sorry, not only will they not, they can't lend to you for regulatory reasons because the risk level is too great. So where the hell did you get the money from then? Well, Zendesk is the thing. They get the money from other PE firms. So who was the lead lender in that deal? Blackstone, a consortium of PE firms, Blackstone at the lead, led that $4 billion debt financing round that then gets pumped into this deal. Then what happens is, well, as I said, when you kind of need an exit because it's three to five years and you've got to keep your track record going, because one thing from an investor, if you're investing in a private equity firm, you want your money back in three to five years. You understand that it's illiquid, but I don't want it stuck in there after five years. So they really need to flip these deals. And so sometimes it's hard. So what do they do? I'll just flip it to our mates. We'll just sell it to another PE firm. Just get it off the books. They all kind of, it's turned out to be quite incestuous, incredibly leveraged, quite high risk, entirely unregulated, and possibly vulnerable if the brown stuff really hits the fan in terms of the economy. If we do get the Armageddon scenario, which we may not obviously, but the PE world's pretty leveraged up to the eyeballs. And it's a space you just got to be careful of. And it's so big, 25% of M&A deals now are PE. And it's a $10 trillion industry. So the regulator needs to start catching up. You sound like a super fan of PE. It's one of those things, it's kind of gone a bit bubbly, the size of it. And it's kind of gone under the radar a little bit. And it's all of a sudden massive. And they're having to resort to doing incestuous deals to pull off these super risky plays like a bit of a heist of cards in some ways. But there you are. Yeah, it seems like then that the, if you were thinking about the way of which these different industries within finance kind of put themselves forward. Yeah, it always seems a bit cloak and dagger of what's actually going on in the PE world. Yeah, come down to my crypt and my investors and we will discuss which was a real life story I could tell another day. Yeah, it's always a bit funky. I don't want to be too critical. I mean, from a career's point of view, a lot of people listening to this will perhaps be quite really interested in intrigued by the PE world and wanting to go down that pathway from a career's point of view. And look, these Blackstones, they're so massive, massive organizations. It's a great career path from a grad level. You'll learn a huge amount about cutting-edge M&A and they're so massive in terms of the institution's size now that they're rivaling some of the big banks. So your career paths and career ladders and career opportunities can look pretty interesting. But I would say it's pretty tricky getting into a PE firm as a grad. Their normal kind of mode of operating is that they hire people who've got a couple of years of IBD experience at a big bulge bracket bank. That's what they'll tend to do. Basically, Goldman's, you can pay for the graduate training. Yeah. Once you've been there a couple of years, we'll pluck you. I know of someone who signed for Goldman Sachs as a grad. Before they signed the Goldman Sachs contract, they signed another contract with a PE firm that said, absolutely go to Goldman's. And in two years' time, you come to us. So he pre-signed a PE position for two years. With all transparent, they knew that he's going to Goldman's. Obviously, Goldman's didn't know. Yeah. So was there a little brown paper bag involved in order for this person to actually then go to Goldman's under the guy? I'm right. They're getting paid. Yeah. There's a signing on. There's money changing hands for sure. Signing on fee. Yeah. Wow. Well, I was just on the Carlisle website, actually. Oh, yeah. And for anyone who's been in, you know, it's kind of stoked their interest in what we've just been discussing. It's quite interesting taking a little nosy around their website. Obviously they pitched themselves now as like an environmental green and all the investments that are to make for a better planet. But beyond that, beyond that angle, there's customer quite interesting the anatomy of a PE deal. And they've kind of got the steps of investment deal sourcing, the due diligence, the investment period leading to the exit as you kind of described. So yeah, worth checking that out and having a look around for sure. But let's move on. Let's talk about, let's talk about a little bit back to our bread and butter of macro global markets. Yeah. Really, it's just to discuss the fact that we're a couple of things. Jay Powell has done very little to dispel expectations that the Fed are going to, going to pull the trigger on the third successive 75 basis point rate hike. He said the US central bank needed to act forthrightly to ensure elevated inflation did not become entrenched and entrenched is what exactly the Bank of Canada said. Bank of Canada also high rates by 75 basis points signaling more rate hikes to come. They're in fact Canada central bank the highest policy rate amongst all major advanced economies. Now they're already at 3.25%. Remember they hiked 75. They hiked 100 meeting. They were front. They were like the advocate of front loading quite quickly out the gate and then the ECB of course have come out this week. And unprecedented 75 basis point unprecedented for them, not for the marketplace as I'm sure you'll discuss in a second and Lagarde said determined action had to be taken inflation remains far too high. So at this point, the expectation is now moving for the ECB to potentially maintain this kind of pace for the US Fed funds rate and now pricing 86% probability that they'll go 75. So that's pretty much the highest it's been following the power speech and we've only got, I think it's 12 days until the meeting. So it's not far out now and the blackout period will kick in blackout period being this kind of period of time a week before the event when they cannot speak. And so really if their forward guidance strategy is working, then if they disagreed with that market pricing, they really need to say something pretty quickly. Otherwise, 75 is in the bag. So yeah, just your thoughts on, you know, is 75 the new 25 and the idea of particularly with the ECB because you've kind of got the extremities here of the Bank of Canada super quick and aggressive to the ECB super slow playing catch up who out of these three or more are going to be the winners and losers of the different strategies that they've done to counter out the situation. Yeah, that's a good question. I mean, obviously time will tell if I was to predict I was a betting man, then my money would not be on the ECB. I can tell you that. I would say the way markets have taken this this week because because as you were saying, like J pal being hawkish, you know, probability of a 75 hike in a couple of weeks that probability at an hour at its highest ECB going 75 when actually, I mean, it was probably the consensus in the end, but there was a healthy minority that were expecting only 50. So it's been a hawkish, hawkish week. And yet stock markets are up. The dollars weakened. And I think, all right, it's a bit of profit taking and so on, but I think it's actually in many ways the way you are talking it through there. So in many ways, it's the Bank of Canada. There are the. What do I how do I describe the lead indicator because the Bank of Canada hiked 100 basis points. Then they hiked 75. So what's the direction of travel there? Well, it's a reduced size in hike. Even though 75. Six months ago was like crazy town. It's now normal and Bank of Canada went that one extra now they're coming back. And so I think markets are trying to always look ahead. You know, markets are forward looking. They're very much pricing in future expectations. So what are our future expectations? And it's been incredibly cloudy. It's been very difficult to be anywhere near certain about what might happen into this year into the start of next year. But maybe that Bank of Canada thing is just meant that people are looking beyond the 75 hikes and they're expecting these central banks to start to slow down. Ironically, the ECB is speeding up. They're always the last ones to the party. And well done. They've done it again. Well, there's a great comment that I saw, which is one of the kind of factors that might well determine the success or not of these strategies. And it came from your friend, your dear friend, Jim Reid. Oh, yeah. Of Deutsche. Yeah. Still knocking around. Yeah, they're very. That's amazing. He's still producing his daily, the daily read, daily read. Yeah. Early morning read. So one of his snippets this week that was was this, he said that well, why both the ECB and the Fed are now praying and hoping that a recession strikes soon because the longer it takes for the economy to contract, the longer financial conditions have to be restrictive, the greater the pain and fallout once the hammer finally does hit. And the greater the monetary stimulus that will be required to reverse the damage that is currently inflicted by the central banks themselves. I love that. I think that's spot on. And what a, what a screwed up world we live in. Praying the recession hits soon, like the sooner the better. I mean, it's quite, yeah. I mean, it's spot on though, right? They're desperate to stop hiking or slow down their hiking desperate, but they can't if data stays strong and inflation kind of continues to remain elevated. And then, yeah, that's right. The rates going up further. What's the peak in interest rates during this hiking cycle is basically what he's talking about. And the higher that peak, the more damage, the more hurtful it will be, you know, on the other side. And then therefore the more stimulus it's going to require to kind of bail us out of the hole again. So you don't want to join me at the 4500 club in the S&P just yet then. Well, I was looking, I was looking quite good there for a while. Those just remind listeners. We had a bet a few weeks ago. I think we're trading. I think the S&P was trading at 4200. And the bet was and thinks it'll hit 4600. And I said it'll hit 3,700. Then we had a two week big sell off. And I was very smug, but we only got down to 3,900. We've now kind of bounced back up our 4,000. So yeah, it's kind of you're a million miles away from the target. So I'm feeling all right still. I'll keep it. Keep it cool. We're all good. But it's not only the stocks. I mean, what's happening into the end of the week in markets across all markets is all linked. It's so highly correlated at the moment. What's happened is the dollars weakened a bit. It's still like super, super strong, you know, relatively it's been strengthening all the year, but the dollar index hit 110. And now it's dropped back to 109. Okay. So a little bit of profit taking. Okay. A bit of dollar weakness. And that is just fed through markets. So stocks have gone up a little bit. Commodities are up. Bitcoin's gone up. I mean, everything's bounced because this dollar strengths just come off the top. And there's been a bit of profit taking. Well, look, we'll talk about the pound on the back of our talk about the UK because it was quite interesting comment from the legendary investor, Bill Gross, who we can talk about a little bit because not everyone would be aware of who he is. He's quite old school, now retired actually. The bond king. The bond king. But the bond king's been talking about FX and he hasn't got a very good track record. So we'll talk about that in a moment because he's put out some pretty punchy sterling calls this week, but talking of the UK, Prime Minister Liz Truss has announced an estimated £150 billion package to counteract soaring energy prices. But with just six months cover for businesses compared to two years is what we're going to see for households. The energy price guarantee will limit average annual household bills two and a half grand over the next two years, just two and a half grand. So it's okay. But there was kind of, so there's four factors here. I see that I wanted to kind of pick your brains over, which is first off the two ones I've mentioned. So there's two approaches here. There's household on a timeframe of two years. And then there's businesses, which is far shorter at six months. The third area is then she announced a £40 billion liquidity facility to help energy companies deal with volatility in response to requests this week for the government to help deal with potential cash flows crisis that the companies, the energy companies themselves are happening. So that's the third one. And then the fourth one, she's given the go ahead to fracking and more North Sea licenses to accelerate production of domestic energy. So of those four things or the package in its entirety and the points to the overall economic impact. What's been your thoughts this week? Well, it's a big, bold package. It's about the, it's pretty literally the opposite end of the spectrum to what Liz Truss would have wanted to do. You know, in terms of her being a bit of a thatcher, right, sort of conservative, you know, big state handouts is the opposite end of the spectrum politically. But obviously we're in a unique situation. So she's come in big and she's come in and it is big. She's got a really big bat out here. And I think that firstly, so can I just clear something up? Because everyone's going, it's 150 billion, but it definitely might not be 150 billion. No one knows how much it will be because you can't predict where gas prices are going to go in the next 12 months, 24 months, sorry, right? This is a 24 month package. So what will gas prices be? Because ultimately that will determine how much the government have got bail out here. So if gas prices stay behind for that entire 24 month period, then sure, it might be 150 billion. It could be a hell of a lot less than that. But I guess it gives certainty to the public, which is a good thing. It's still a step. Now, one key thing here, which I've been trying to debate in my own brain, is this inflationary or not? Because inflation is our big issue at the moment, and obviously that's tied into energy prices, right? But like Liz Truss and the government are saying, this will curb inflation and boost growth is their line, which is kind of a bit of an oxymoron. Because if you're boosting growth, then that's increasing demand, which leads to inflation. They're a bit confusing with their message here. So on the growth side, first of all, how will it boost growth? Well, that's obviously straightforward, in so much as people will only spend on a maximum of two and a half thousand a year on their energy bill. We've been predicting, if there was no government support here, that that might go up to five or even 6,000, right? That's your killer. That is your economy destroyer right there, which is why they've had to step in. So at least now, they've capped it at two and a half grand, meaning that income above that can now get spent on the high street, whereas it might not have done if there was no government support. So that's where they're saying it will boost growth. But right now, energy bills are about 1,900 pounds. So it will get more expensive for people. So is that, I don't see how that's, that when they say boost growth, they mean relative to what would happen if they didn't provide this support. It's going to be a growth negative from a consumption point of view. If you take surplus household income today, versus in a couple of months time, that surplus household income is going down because energy prices are going to move from 1,900 to 2,500. How much it boosts growth, I don't know. But from the inflation point of view, again, two angles. Number one, it caps energy prices. So therefore, that's a positive for trying to bring inflation down. But if people go, hey, I've now got the 1,000 pounds that I was going to have to spend on greater energy bills, well, hey, I can now go down to H&M and fill my boots. Does that happen? If it does, then that's inflationary. And I guess the big issue and the big risk here with this big bold package is that, fine, it solves one issue over here, energy crisis issue, but it just adds fuel to the other big issue that's over here and that's inflation. And so ultimately, you may still end up in a dark place with interest rates super high and stagflation where we've got a recession and inflation is really high. So that's my two cents. To be honest, I don't think she had much choice. I think in some ways it's probably worked out well because of the change of leader because you know what it's like. It's like a fresh piece of paper, right? There's no baggage from the previous administration, right? Let's start out on the right foot with some giveaways. And I think that's been a benefit of all of this kind of political turmoil. On the business side then, yeah, I mean, look, it's a bit more difficult on the business side, I think. I mean, so they've said, look, we'll support for six months. What I've said then is from there onwards we'll review it and we may continue to support selected sectors because it's not fair for some businesses who are much more energy consumption as part of their process. It's not fair on them versus a business to produce their product is less energy consumption. So they might try and offset that. What I'm hoping is gas prices come back down. And this 150 billion thing turns out that it's more like 50 billion. But will prices come back down and this comes to then her while your fourth point. Like, let's desperately, desperately find other suppliers and not have to rely on Russia. And then there's this good headline grabbing, oh, let's start fracking. Or let's sign off on some new exploration deals and then we'll see whatever. And that's like, I think that's more for the headlines more than anything. I mean, that's not a quick fix. That doesn't mean to say it shouldn't happen. But of course it's very negative from an environmental perspective. But you could say, I don't know, an argument is that let's shelf that climate issue because we've got a bigger, more immediate problem. But I mean, I'm not sure that's the best way to behave. So, you know, I think out of all of this, a continued increase in breaks and funding for green energy is the way. And that's definitely going to happen. It's just whether they can find a short term solution for alternative gas supplies, which I doubt. So at this point then, if I was a strategist for Putin, knowing that they're basically the entire trade is based on inflationary conditions are going to ease energy prices will settle. It's just a matter of staying tough and hanging in for the long game. Europe cannot be agile enough to change quick enough. So the war in Ukraine will continue for the foreseeable. Unfortunately, I mean, I think Putin. From a gas price point of view, he's got to play this game where he keeps gas prices super elevated. But obviously to do that, he's selling less gas. It's not on oil. It's a bit different. I know he's selling less oil to Europe, but India and China are buying it all. But with natural gas, because of the deliveries through the pipelines, right, which are fixed channels. It's easy to divert a ship that normally we go to Germany. Well, let's just ship it on the top to India, right? It's much harder to, you know, sell your gas elsewhere, because the infrastructure is not there. So to keep the gas price high, which is in his interest politically, is hitting him from a kind of revenue point of view. He's having to sell less. But will he just entirely switch to tap off? Wow. I doubt it because they need some money coming in, right? So it's like a trickle. Let's keep it like Nord Stream 1 at 20%. Keep those prices super high. Really put the pressure on. But, you know, ultimately, medium to long term, he's shooting himself in the foot because obviously it's just accelerating Europe's pivot away from just fossil fuel energy, but also then away from, you know, being so reliant on Russia. So medium long term, this is going to backfire. Maybe he could, maybe he could do a backdoor deal with Mr. China, whereby China commit to an upfront increased order size to offset his loss of gas income on the premise that then by securing the geographic defensiveness of that eastern part of Ukraine and so forth. That allows China to exercise its long term trade routes, utilizing those areas that have been safeguarded by the Russians. So I'd be engineering a deal if I was Putin. China would be quite pivotal to make sure that then you encapsulate or you try to maximize this opportunity that you have in Europe at this point in time. Absolutely. And if he does a deal with China at long term deal at a price point that's quite heavily discounted from the current very elevated price. Right. And actually you're still doing at a price that longer term is pretty decent. Thanks very much. Yeah. I mean, yeah, so we'll see. I mean, I do. I think the trust she was forced into this. I don't think she had a choice. I think she's done the right thing by putting it a two year time frame. I think that's the right play. You know, I think what the pretty like Boris was doing was going, right, well, well, we'll have a cap at whatever I can't even remember the numbers now, but we'll have a cap for the next three months and then we'll review it. And then you get to three months and you're like, oh, shit, prices are really high. Okay, well, let's have another cap for another three months. I mean, that's, that's the worst case scenario. So I think getting out in front of this two year deal, I think that's the right. Yeah, strategically, I think you're right. You go out there, you put the bazooka on the table, we can go up to 150. Right. Your intention is to never get close to 150. Yeah. The point has been made. Political favourability is backing then the authority to control the situation. And yeah, yeah. Well, let's see, early days. Indeed. But yeah, what did Bill Gross to finish have to say? Well, we use that as our conclusion. So Bill Gross for those who are not familiar was what the co-founder of PIMCO and PIMCOs at the time. He was he was running what the world's biggest is the world's biggest bond fund. He was the man in charge. And he was a dictator. Yeah, he was the real infamous character, let's say, in the world of finance. He he exited PIMCO. I think, well, I can't remember what year that was now several years ago. And I think he joined Janice Henderson. Yeah, he's West Coast based Newport Beach. I think is where PIMCO based. He's he's now packed in as of 2019, but he's not shy. Is our dear Bill putting out a few bold calls. So there was one, I'm trying to find the actual headline. He said, what's he say, like the low parity or something. No, no, no, the opposite. He said he is a big buyer of sterling right now. So his rationale was basically talking about the fact that he thinks that the overvaluation of the dollar against all major currencies. He said that continued large trade deficits and a ceiling on the Fed's ability to raise rates to anticipated levels. Due to future recession will limit further depreciation of the pound and will likely lead to future relative increase increases compared to the dollar. So he's, he's calling for long dollar despite fiscal political problems, long sterling, excuse me, right at this point. But yeah, it's calling the top of the dollar. Yeah, basically. The problem is he was criticised. I think it might be back in 2010 2012. He said the opposite. He was balls deep calling short sterling. He said he said the UK economy is built on nitri glycerine or something at the time. And no, and he was wrong. So the Bond King is China. It should stick to effects advice, but yeah. Any, any thoughts on that? Well, calling the top of the dollars brave. I mean, it is very, very, very high. I mean, to the point where we're in potential intervention country, like thinking about the yen, for example. And I was just saying to the guys earlier on the desk that the EC at least they've hiked 75 right so that might just keep that euro dollar around parity now. You know that thing was trending lower hit 99 it was going down. And I think they've done they've been hawkish enough to just just flatten that off now so I think we've got parity for euro dollar probably for the next couple of months at least. So that will help to just calm that dollar strength thing down but you know, ultimately, I think for now we've gone through phase one of dollar strength which has been driven by a hawkish, a more hawkish Federal Reserve than versus the other central banks that's driven phase one. There is a potential phase two to the dollar strength, which is about recession, and how bad is the recession, and how much stimulus might be needed to deal with it. I think the US recession will be milder than Europe. So personally, I think there's a potential for further dollar strength, just from that recession differential, which is still ahead of us. We're only two months out or so from the midterms as well and actually that look like quite clear that Biden was going to get hosed doesn't actually look quite clear now. In terms of the house and the Senate I was looking at some initial modeling that was coming out the FT you put together this week and it's the model is wide. Yeah, so there's a lot of uncertainty now over what is quite a radical change in the last month, I'd say. Yeah, I think because the, I think the odds are they'll stop the Republicans will win the House of Representatives, but the Senate might stay Democrats hands. You're right. It's that the the polling has dramatically shifted. Like from the start of the summer to now the end of the summer has been a mean Biden campus has been a great great few months. When you're when you're down the early way is up baby. When you've hit rock bottom. On that note, we'll wrap it up so if you enjoyed the episode please do leave us a rating and a review be hugely appreciated it really helps kind of boost the visibility on the various different podcast platforms to get this out as many people as possible. Yeah, check out the links in the show notes for our daily amplify me newsletter and our finance accelerator free simulation sessions. They're still happening every Wednesday. I would love to have you on board if you've not already done one but with that peers thanks very much and take care everyone. Have a good weekend.