วิเคราะห์สด! MOU กลวงสงครามไม่จบ เงินเฟ้อปะทุ (ดร.ศุภวุฒิ สายเชื้อ)

[Music] [Music] Hello, Business Tomorrow Live, The Trader KP. In this segment, we will analyze the direction of monetary policy of the US central bank under the leadership of the new Fed Chair, Mr. Kevin Woo. Regarding yesterday's meeting, which was a significant meeting in history, the whole world was watching to see what the direction of American monetary policy would be and what Mr. Kevin's tone or message would be. Wall Street said this is the dawn of a new era for the Fed and a signal of the direction of a hawkish era. What is the perspective of economists, the perspective of those who have followed the money and capital markets, and the history of the Fed? Do they see it that way? Are we truly entering a period of rising interest rates? And if so, what will be the impact on money and capital markets and the global economic picture? Today, Guitar has the honor of having Dr. Supat Sai Chuea, Chairman of the National Economic and Social Development Council and advisor to the Kiatnakin Phatra Financial Group, to provide analysis. Hello, Professor Supat. >> Hello. >> Hello. Thank you, Professor, for making time to analyze this important Fed meeting. Wall Street says this is the beginning of an era of rising interest rates or a hawkish era. Do you see it that way from the results of the meeting? >> Uh, it is indeed a new era, but whether interest rates will rise is another matter. It depends on many factors. We have seen that what happened in this meeting, the market predicted incorrectly, and stocks fell, right? If the market had not predicted incorrectly, stocks would have been stable. It is understood that initially, the market thought Kevin Woo, because he had to please Trump, would speak in a dovish manner. But it turned out he did not go along with them. I think this is the main point. Now, he himself did not say how he views future interest rates. Everyone who made the forecasts, the committee members who made the forecasts, they did their job, but Kevin Woo did not, right? Kevin Woo said, "I won't do it. I don't want to do it." Let me tell you why. >> But it turned out the market panicked because other committee members, right? They predicted that interest rates would have to be raised once at the end of this year, which was unexpected. Kevin Woo did not stop them. That is the first point. And looking further back, the interest rate forecast is also slower than before, which means the entire committee sees that inflation is becoming more difficult to control. As for Kevin Woo himself, he only said that he is committed to price stability. He said he will control inflation. So, it is his tone, the tone of someone who wants to not accept inflation that is higher than the current target. The target is around 2%, right? And inflation is over 3%. I think this is the overall picture. The last point is that in addition to what I just mentioned, Kevin Woo also squeezed the statement, right? The statement was shortened by more than half of the original. He said, "We, the monetary policy committee, should not say this or that, try to guide the market. Do not guide the market at all." So the market is even more lost. Okay, no guidance, but it feels like it's all hawkish. And the chairman, if he doesn't say how hawkish he is, the market says, "Okay, then we don't know what to do anymore." This is the overall picture. >> Yes, and the tone is more hawkish, less communication, but more to the point and concise. Overall, does it seem more positive or negative for the market in the medium to long term, Professor? >> It's not positive or negative. He said that Kevin Woo's thinking is what I consider extremely conservative, completely conservative, like Milton Friedman. He implies that Milton Friedman once said, "Inflation everywhere is a monetary phenomenon." This means that if there is inflation, it is the central bank's fault. >> Yes. >> It is due to the money supply. Do not blame Iran, do not blame oil prices, do not blame supply shocks, do not blame this or that. Blame only the central bank. So, first, second, he said that even the monetary policy committee that makes the PL, he told reporters that the PL, everyone is using pencils to color, to color, to color. >> Meaning they are not confident and are using erasers to erase again. So, the second point for conservatives is, hey, don't guide the market. You don't know better than the market. Don't guide it. So, we are hit twice. First, wow, he sounds very serious about inflation. Second, he doesn't say what will happen in the future, which is a change from the era of Alan Greenspan, who came in over 20 years ago, actually 30 years ago. Alan Greenspan tried to make the Fed open and communicate with the market, tried to tell the market, sometimes not even tell the market, but tried to mentor the market. >> Yes. >> And the market was like having a mentor, a Fed mentor, to guide this and that, to comfort, to do various things. Now, Kevin Woo will not do that. I think this is the main point in the big picture. >> Yes, so the market will be hit twice? Professor, both hawkish, becoming more hawkish, and uncertainty, not knowing what will happen in the future, no certainty because there is no forward guidance. >> Kevin Woo also said that he will set up a Task Force, which actually means a special working group, 5 committees. >> Uh, one committee is related to reviewing the inflation assessment of the monetary committee. They say the Federal Reserve's model is bad, unusable, inaccurate. And if you are inaccurate, you still communicate it. You are leading the market astray, and you are making mistakes often. >> Yes, his main points are that he will review everything, which further increases uncertainty. Now, the issue is not whether this means interest rates will be high, right? The answer is no, in his opinion. >> Yes. >> Kevin said this. >> If I do a good job, reform the Fed system, and don't do too much, focus only on making inflation reach 2% quickly, efficiently, and accurately, then the policy interest rate will naturally come down. But as long as you, you know, do this and that, blame this and that, and inflation remains high above the target for a long time, as they say, inflation has been high above the target for many years and still cannot be brought down. Then, the policy interest rate must be higher for longer. So, if I were Kevin Woo, I would answer Guitar that it's not true. Do it my way in the long run. I will bring inflation down quickly, and the policy interest rate will follow. >> Yes, but if we look at the Fed's projections, Professor, Headline Inflation has moved up to 3.6 from 2.7. Core inflation from 2.7 to 3.3. And the latest inflation rate is 4.2. Professor, if we look at the inflation side, which Kevin Woo emphasized more than 10 times that he wants to maintain Price Stability, it is above the target. Does this indicate, Professor, that it will be higher for longer? >> It will be higher to bring inflation down quicker, right? It's not >> for longer. And another thing is that Kevin Woo said he will not participate in this forecast. He said this forecast is wrong. Believe it's wrong. Don't communicate too much. In America, the monetary committee. >> Soon, someone will invite someone to speak, someone else will speak, and we have to chase after them to see if this person said this, that person said that, this person is hawkish, this person is dovish. No, don't have that. If their working group finishes and has recommendations, they will present them. They will say, "Don't talk too much. Just do it. Bring inflation down. Don't let inflation stay high for too long. That's even worse." So, in Kevin Woo's mind, it's straightforward. If interest rates need to rise, they must rise. >> Yes. >> Rise to bring inflation down and keep it there. We don't need to blame supply, don't blame this or that. Our job is to make inflation low, which is price stability. Then interest rates will come down on their own. I think this is the main picture, including his thought that there will be a committee that he will set up, a working group, to look into AI and its impact. >> Yes. >> Right? And this has another point. If it's as Kevin Woo thinks, AI will help increase productivity, right? It will make the American economy more productive, which will help suppress inflation further. If that's true, America will get both GDP growing faster and lower inflation. But the policy interest rate will not be low. Because interest rates will have what economists call R Star, which is the real interest rate, which will also rise because GDP is growing faster. So, don't link inflation and interest rates 1:1 because there are many other variables. I repeat, if R Star rises because GDP grows faster due to higher productivity, it means interest rates will rise, but they will rise in a way that no one has a problem with because GDP is growing fast. It reflects that. >> Yes. But the central bank's job is to control inflation at 2% as quickly as possible. And whether interest rates are high or low will also depend on economic potential. Like Thailand in the past, in the past, our GDP grew by 5%, right? And our inflation was 3-4%, so interest rates were 8-9%, 10%, etc. >> Yes. So, if we look at it from one side, the inflation side first. From what you see, American and global inflation are currently high. Because in the past, we had oil prices soaring due to the war. But today, June 18th, President Trump and the President of Iran have just signed an MOU to continue peace negotiations. So, if it's on paper, the war is over. Can we relax our concerns about inflation now, Professor? >> No, no. Go read >> Go read the MOU carefully. Wow, Trump wants to end it. He wants to end it. He doesn't want it anymore. He's afraid stocks will fall. >> Yes. >> But inside, it's hollow. I emphasize that it's very hollow, hollow in a way that there are risks that something could erupt again. There are 3 main points. There are many points, but for us, there are 3 main points. The first is to end the war, the attacks on everyone. But Israel will not agree because Israel still occupies parts of Lebanon, especially Beirut. And Israel will not withdraw its troops. And Hezbollah will not stop attacking Israel. Israel will retaliate. So, there is a high risk that it will erupt again. If it erupts again, there is a risk that this agreement will be violated. That's the first point. Uh, the second point is that the agreement clearly states that the Strait of Hormuz will be opened. It will be liberalized for the first 60 days. But after that, it says Iran and Oman will manage the strait. This means Iran will collect tolls. This is the second point. And America should not accept this in principle, but it is implied that way. That's the second point. Uh, the third point is about nuclear negotiations. It's very loose, very loose. And conversely, America has to lift many sanctions. It has to lift economic pressure on Iran in many areas. Including America having to participate, but it says not to provide funds for a fund for Iran to use money, and also to unfreeze Iran's assets. This point is like this. Wow, inside the Republican party itself, it might cause a lot of ripples. A lot of ripples. They might not accept it. They might not accept it. These 3 points make me feel that this is an agreement that has a considerable risk of being violated or canceled. And importantly, the longer time passes, the more bargaining power will shift to Iran. Because Trump will have to keep his aircraft carriers, warships, planes, etc., in the Persian Gulf for another 7-8 months. He will have to withdraw them because America, by sending reinforcement warships and so on, the cost for over 100 days of conflict with Iran is over 100 million dollars. An average of a million dollars a day. Okay, at first it was 2,000 a day. Later, it might average 500-600 million dollars a day. But if it continues for a long time, it's not feasible. And your soldiers, you can't keep them on ships, stressed on ships for 2-3 months, and then another 2-3 months of stress on ships? It's not possible. They have to withdraw. And the more they withdraw, the more bargaining power Iran will have. They will demand this and that. Israel will see this and be unhappy. Israel will become more rebellious. So, I'm not sure if that can really stop. I'm not sure if it will help oil prices fall back to $60. I'm not very sure. >> Yes, Professor. But on the US side, as you said, Mr. Trump seems eager to end it, which is why he accepted the MOU that benefits Iran so much. There will certainly be pressure for the war to end. If it comes back with conditions that might be disadvantageous in some ways, but in exchange for no war, which is more important, Professor? >> Trump doesn't want it anymore, and he'll deal with the consequences later. My problem is, Guitar, try to think. Originally, on February 27th, Trump still sent his real estate developer friend, Steve Wittcoff, and his son-in-law, Jared Kushner, to negotiate. On the 27th, they were still negotiating. On the 28th, he betrayed them. He killed his father, the father of the current leader, and killed the leader of Iran. Do you think Iran will not retaliate? Why do you think, okay, Iran will negotiate with America amicably and try to compromise? I can't imagine it. Because what Trump did was a betrayal at least twice before. He also joined Israel to bomb Iran's nuclear sites in June last year. And the most recent one, his son-in-law and friend were still negotiating with Iran, and you attacked them on the 28th. I can't imagine why, if Trump wants to end it, Iran will also end it. I'm not sure. Iran got something because many sanctions have been lifted, and Iran can sell oil. And when they can sell oil, they will surely use part of the money to rebuild the country, and another part will go into building drones, building rockets, and they will want to have nuclear weapons. Now they also have a new weapon: closing the Strait of Hormuz whenever they want. So, this geopolitics has changed. The premium has risen, and it's unlikely to come down easily. Let's just say for now, in the first 60 days, you have to pass through the strait. Because Iran put mines there. You have to go through them. They deliberately slow down so that only Iranian ships can sell oil. And you can do nothing. Will Trump dare to dismantle it again or not? Only Iranian ships and Iranian oil will go out. Other people's oil might be difficult to export. American oil, whose oil can't go out? And the price will rise. The price will not fall. And we don't know what Israel will do when they are free. Because Israel still insists that they cannot accept it. Prime Minister Netanyahu has a problem. He has elections on October 27th, and he will let this happen, lose the election, because he wants Israel to be safe. Now it's not safe because Hezbollah is firing rockets into Israel. That's why Israel has to occupy areas in Lebanon where Hezbollah has troops, right? So, the problem is not over. But Trump wants it to be over. But the problem is not over. And Trump has created karma for himself, hasn't he? He hasn't made Iran admire America, saying, "Okay, we've agreed, we're friends, we're friendly." You just killed their father, the father of the current leader. Why do you think they will agree within 60 days? Obama took 2 years to negotiate, and America never harmed them. It still took 2 years. >> Yes, Professor. But the conditions that are beneficial to Iran, such as lifting sanctions, returning frozen assets, and allowing Iran to trade oil again. Even if it cannot compensate for the losses, in terms of the economy or becoming strong again, is this the best condition Iran has had in 50 years, Professor? >> Now they have a new tool: closing the strait. Why wouldn't they use it? Or else, charge heavy fees, right? The strait, which everyone used to use, they are starting to have power over it. It has changed. Everything has changed. And will they try to help Hezbollah? Yes, they will. Will countries in other regions, Qatar, Saudi Arabia, UAE, say, "Get out, American bases, we can't take it anymore"? Will America lose? >> It will lose its geopolitical status in that region significantly. Internally, America will have ripples. The Republican party itself, senators of the Republican party, might not agree. It's not easy. >> Yes. >> It's not easy. And this sanctioning, saying "don't lift it," or what? But Iran will be brave. You don't let me, so I'll close the strait. You understand? >> It doesn't sound right. Don't just say, "Okay, they have a half-page document, and everything is over." It's not like that. >> Because when Obama did the JCPOA Agreement, it was 159 pages, very detailed, only about nuclear. This has nuclear, LT S, and the Strait of Hormuz. Half a page. It's sloppy, done just to end it, but it won't end. I think so. >> Yes. Even though the last clause states that the final agreement will be ratified by a UN Security Council resolution and will be legally binding, does this not make the agreement more stable, Professor? >> Uh, Guitar, the Security Council has how many resolutions? Thousands, tens of thousands. They are violated all the time. They are not sacred. In America, it might be that the weakness of the JCPOA that Obama did was that it was not passed by Congress, it was not American law. It might be that this time, the Republican party will reject it, and they might even say the agreement must be passed by Congress to have weight. >> Otherwise, at that time, because it was not passed by Congress, it was unlucky. When Trump came to power, Trump could cancel it immediately. Normally, to cancel, it must be passed by Congress again. I think the Security Council is useless because when Obama did the JCPOA, >> Yes. >> JCPOA is the agreement between America and Iran. All permanent members of the Security Council were in that JCPOA. It's even more than a UN Resolution because that agreement, including Britain, Germany, France, and so on, >> signed it. Trump still canceled it. Why do you think just passing the UNSC will make it sacred? That was canceled, so it's useless. >> Yes. So, the energy crisis we feared before, Professor, you also warned about, and international organizations warned about stagflation, inflation will rise. Currently, the world seems to have hope that it will improve significantly. At least oil prices have fallen below $80. Professor, the level of crisis or the severity of what will lead to stagflation, has it improved at all, Professor? >> It has improved, but there will be volatility. Because suddenly, the premium for energy prices, especially oil, natural gas, and even fertilizer, increases. It might fluctuate, but it might fluctuate in an upward trend, making economic management difficult and costs more expensive. It will not return to how it was before February 28th, when everyone complained about supply gluts, right? There was an oil surplus. It won't be like that. This will become a question of whether there will be a surplus or a shortage. Will there be a surplus or a shortage? I think that's one point. Let's try to look at it positively, that okay, okay, at least it's here, say $70-80. And it won't go up further. So, it will be a supply shock at the level of $60 to $80, and then it will stabilize. Let's assume that. That's fine. Let's discuss other variables. But this variable has changed from when you had a supply glut to a situation where energy prices are high and will be volatile. >> Yes, but at this stage, oil prices are around this level, but there is still volatility, and events can erupt at any time. Professor, how do you see the impact on monetary policy? It will have to be cautious. Will we use a forward-looking approach, or do we have to follow the situation because events can change constantly, Professor? >> It's like this. Each country has different variables. As we see, right? The Bank of Japan has already raised interest rates because they can no longer control inflation. So, they have to raise them. The ECB is the same, right? They say, "Okay, we have to bring it down." Otherwise, it will persist. Inflation expectations will drift away. So, they have to adjust. It depends on the country's situation. The clearest is Japan, saying, "Hey, inflation is out of control." So, each country will have to manage its own affairs. This is the specific situation for each country. China, of course, doesn't need to, because China is still actually in deflation. Domestic demand is still very weak. So, that's fine. America is holding steady or might have to raise interest rates once, as the plot suggests, because you've let inflation exceed the target for too long. If you let it drift away from inflation expectations, right? So, it has to be managed country by country. This is looking specifically at major countries. But looking at the big picture, looking at the big picture, I think overall, from the stock market reaching new highs repeatedly, it seems that global liquidity is still quite high, net. Net, quite high. And there is still demand, competing for money. Even though liquidity is high, why do I say that? Because governments still have high budget deficits. Every government is still trying to support its citizens. So, governments will issue bonds, try to raise funds. First, second, of course, AI is raising funds everywhere, both in the capital market and the money market. Another group competing is the Gulf states, who have been hit hard by the US and Iran. So, Saudi Arabia wants to build three more oil pipelines, you know? >> Yes. >> They have to try to rebuild. They also need to find money. So, when everyone is trying, there will be demand, there will be excess demand. There is a risk that it will stimulate purchasing power, stimulate investment, and there is a risk that inflation will be difficult to bring down. It's not that it's bad, but the situation might be like this, rather than thinking, "Wow, soon this will be left, that will be left." The last point is another one. If AI becomes truly strong as feared, it will suddenly cause supply shocks in agricultural products, leading to higher agricultural prices, especially at the end of this year or early next year. This could be another cost-push factor that makes inflation high. Overall, there might be about 4-5 issues that make me suspect that inflation will be harder to control than expected. >> Yes. One of the issues that America is watching closely, Professor, is the growth of AI industries, the rise of tech stocks, and we have seen the IPO of SpaceX. This reflects that investors are still very interested in this group and are actively speculating. On the growth side in America, AI is seen as something that could increase GDP growth and help support America from worsening. Professor, how do you assess the growth of AI stocks and the AI industry in America? >> Everyone is now saying, "Wow, if you don't have it, you can't live without it." You have to say AI about 20 times a day, right? Living every day, you say AI more than brushing your teeth, right? >> Because everyone has to say it. Anyone who doesn't say AI is very outdated. >> Everything is AI now. There is a very strong trend. The issue is this. I think we are currently in a phase where companies producing AI services are accelerating the creation of mechanisms to produce AI. So, it's a phase where they will accelerate resource utilization to produce this. The problem is that it will stimulate inflation. But what we don't know is whether they will make a profit after producing it. But they are investing heavily in creating it. Not just SpaceX, they will increase capital, right? And everyone else, every single person, will try to make their own AI, their large language models. Everyone is ready to make their models smarter by quickly using data centers, using hyper-scalers. But everything is about production, hoping that we will buy services. Some services look very good, right? Uh, very good. Like Microsoft, it's so good that you're afraid to buy it, right? Because it's too good. >> Okay, Guitar, are you using AI now? Yes, Professor, a lot. And how much do you pay per month? >> Well, if you combine all platforms, it's quite a lot, Professor. >> How much, thousands of baht per month? >> Well, combined, if combined, it's around 5,000 baht, plus or minus, Professor. >> Okay, Guitar, you are the type of person that AI companies hope everyone will be like. >> Yes. >> Right? If you pay 5,000 baht per month, okay, what they produce will have buyers. But I think most people pay 700. The question is, if most people pay that much, and most people are a minority, because I guarantee that in Thailand, if I were to guess, the number of people paying to use AI in Thailand, I think it might be less than 10 million people. And those who pay, on average, pay less than 1,000 baht. And it might be like that worldwide. The question is, if we use that much, will they produce too much? Will they have to cut prices drastically? Of course, it's not B2C, right? They must hope that B2B, hope that companies adopt it a lot. But as far as I know, no company has said that adopting it has improved their bottom line. Do you know if your company, Guitar, uses it more and has improved profits? Has the company's profit improved? >> It might be difficult to reflect directly in the numbers, Professor, but it might allow us to work faster and take on more work. When we take on more work, it will improve our income. Is that considered indirect, Professor? I'm not sure if it's economics. >> Has income improved? Has income improved? >> It has improved because we can take on more work within the same amount of time. >> And has profit increased? >> Profit has increased slightly, Professor. Not much, right? >> Yes, not a leap in growth. >> Okay, profit has increased slightly. Everyone's profit has increased slightly. You've invested so much, right? >> Yes. >> I'm afraid of that too. You invest so much, adopt so much, but the results are not that great. Personally, I'm the same. I use AI more now, pay for subscriptions, and work harder. But I don't see the profit increasing. >> Yes. >> It increases a little, only a little. Because everyone is doing the same thing. Everyone is equally skilled. Everyone is equally competitive. You understand? >> Yes. >> It's not certain whether the bottom line will turn out as expected in terms of their profitability. Now, back to Microsoft, right? They recently released another version, right? >> Yes. >> And later, the American government banned it, right? I forgot the name. >> There was another one that was just released, and then it was withdrawn. This one was very good at finding security vulnerabilities, right? >> When it comes out, my question is this: isn't this increasing our costs? Because AI is increasing our costs, as we have to try to block the capabilities of AI that might hack our systems, right? >> Yes. >> So, it doesn't increase productivity. It increases costs, doesn't it? Soon, we will need very good protection, otherwise, Microsoft will hack us. It will reduce profits, so it won't increase. I'm not sure. I'm not sure. In terms of demand, there might be a problem with supply shortages. You invest heavily, but people refuse to let you set up data centers because you use water and electricity that competes with the public, right? Or there are some components that are scarce. The supply chain might be struggling to the point where costs increase significantly, but you can't produce as much as you thought. There are risks. I'm not arguing that AI is very smart and will be very beneficial in driving research and analysis and increasing productivity. I truly don't argue with that. It does allow me to do more. >> Yes. >> But is it worth the price increase? I don't know. >> Yes, Professor. And if we compare it to infrastructure in previous eras, Professor? Compared to the internet, compared to electricity, which have a growth model called a J-curve. In the early stages, when people don't use it much, the output is not high. But once it's widely used, the growth will be significant, and productivity might increase. >> Yes, yes, I don't argue with that. But the increase, are the shareholders profiting? Ultimately, who profits? The public will profit, the whole world will profit. >> But the shareholders might not profit that much. >> Most people compare. They compare AI to the construction of railways in England about 100 years ago. >> [Cough] >> At that time, the scale of investment was the same, and you saw a lot of railways being built, and too many railways being built. Ultimately, the return for those who built railways, the return for AI builders, was not worth it. But for the country in the long run, is it worth it? Ultimately, railways are used. Like fiber optics that we produced too much during the bubble. Later, they are still used. But many who produced fiber optics went bankrupt because they produced too much at first, and the revenue, cash flow, didn't come in in time. There are risks. There are risks. >> Yes. So, the bottom line is profit, right, Professor? Can they make money? Can they generate real profit compared to the massive investment being poured in now? >> Yes, because now everyone expects profit to come. >> Yes. >> Right? We think profit is coming. It's not certain if it's coming. Now, there's a final point that many people compare. They say, "This time is different from the dot-com bubble." Because now, these companies have good cash flow, they have profit, and they haven't borrowed money. They are not hollow like back then. Which, we discussed earlier, there was an analyst named Ruchir Sharma, who used to be like the CIO of Morgan Stanley's fund. He wrote an article in the Financial Times saying, "Hey, look closely. Back then, the revenue wasn't that bad. It wasn't that bad. And they had interesting points, mainly two. First, you say that the PE ratio is low now. That's an inappropriate comparison. Because back then, there was no private market. This private market we have now is a big support. Companies that were not profitable before stayed in the private market first. And when they became profitable, they entered the stock market. So, the PE ratio in the stock market is low because they are profitable. But back then, there was no private market. So, everyone entered the market a bit faster, and the PE ratio was a bit higher. So, actually, the whole system is not more profitable than before. It's just that there are things outside the market. >> They are supporting it, making the market look good. But the second, more important point, he says, "Look closely." He cited research published in the Journal of Economic Literature. Economists found that the very high profits of companies during this period, very high, are largely due to government budget deficits. America's budget deficit is about 5.86% of GDP. And government budget deficits are like a stimulus for company profits. So, back then, the government didn't have a large deficit, or even had a surplus. So, this profit comes from the fact that the American government is in a situation that cannot continue. The government will have to reduce its budget deficit. Whenever that happens, the profits of these companies will fall. And in the near future, the American government will have to reduce its budget deficit. Because now, the losses are huge, and there are structural problems. For example, you saw another news item, right? The US Social Security fund, which currently has $2.8 trillion, will be depleted by 2032. America has many budget problems, many such problems, sustainability issues. So, in the future, they will have to tighten their belts. Whenever that happens, there will be a problem that the profits of these companies, which are expected to be good, might fall because the government has to tighten its belt. So, there are factors that question whether "this time is different." >> It doesn't mean that AI technology today is stronger and has more potential than in the past, right, Professor? There are quite a few questions about how it's different, and it's explained as you said, they have profits, they have good cash flow, they haven't borrowed to invest, and they just put ".com" like that era. >> But now they are putting "AI" as a suffix, everyone, right? And don't say that, because some companies are starting to have problems with their cash flow getting worse, and they have to compete. They have to issue bonds. >> Yes. >> And it's starting. Soon, they will cap both the bond market and the stock market significantly. >> Uh, let's look at next year, in 2 years. >> Yes. >> Yes. Professor, so, from your perspective now, if we look at the framework that its strength is comparable to the dot-com era, is there a risk of ending up with a bad ending, a crisis, Professor? >> It's like this. Ultimately, there must be survivors. There must be people who survive. For example, this is not investment advice. It's not advice. >> For example, some people say that when there was a gold rush in California, right? People who profited were those who sold gold mining tools. >> Yes. >> Picks and supplies. Similarly, it's possible that those who sell to AI will profit, right? You sell electronic components, you sell hard drives, you sell chips, right? You won't complain because, right now, it's selling very well. But it's a cycle, because those who sell chips are also investing in AI. So, they are buying their own products. >> Yes. Professor, but you're talking about those who will survive. Does that mean that before survival, there will be damage first? Ruchir Sharma, who talked about the concern about the AI bubble, used 4 indicators. He said 1 is overvaluation, 2 is over-ownership, 3 is over-investment, and 4 is over-leverage. He uses this framework. If we look at it now, from your perspective, has it met the criteria for a bubble yet? >> 1 and 2 have probably happened, right? >> Yes. >> 3, and 4 will happen in about 2 years because you will have to borrow a lot more. You can't just issue stocks. You will have to borrow in the bond market too. So, there will be some. The third point will be the last one: is it over-invested? That is, after investing, will there be 2 billion people like Guitar subscribing for 5,000 baht per month? >> And what about leverage, Professor? >> Leverage, it will come. It will come. You will have to borrow more. You will have to issue more bonds. I understand from the trend. >> Because in the past 2 years, you used profits to invest. >> Yes. >> And then you will try to raise capital, like SpaceX's IPO or entering the stock market. And at the same time, the bond market is starting to try to raise funds because the cash flow, because the profits are not enough. Everyone has to compete to build data centers. >> Yes. But in the process of borrowing, Sharma also observed that what is the trigger for the bubble? He said that when inflation rises or interest rates change direction to higher, it will cause the bubble to burst. If, as you analyzed earlier, inflation will be high and interest rates might not be low, will this be the trigger for the bubble to burst? >> The problem is that at the same time, governments of all countries in the world, especially developed countries, have huge budget deficits. So, there will be many bond sellers competing. AI wants to sell bonds, governments will sell bonds. The American government has a budget deficit of $2 trillion per year, right? The AI market will have to raise hundreds of billions of dollars per year. Who will buy the bonds? If you buy them, you have to buy bonds with higher yields. Interest rates will rise. This is interest rates that the Fed cannot control. >> Yes. When we started, we talked about the Fed raising or lowering interest rates. We talked about the overnight interbank lending rate. But interest rates are not just one trend. There is a trend up to the 30-year US Treasury bond, right? >> Yes. >> Other interest rates will be determined by market mechanisms. And there is a high risk that now, many governments, including the Thai government, have large budget deficits. >> Yes. But this time, if we look at the market capitalization or the size of the market, it is much larger than the dot-com era. How much will the impact be, Professor? How do you assess it? >> I really don't know. But as time goes by, we rely more and more on the American market, both the capital market and the debt market. Especially the debt market. Especially having to buy US Treasury bonds because the US government has a large budget deficit. Uh, the US stock market, if I remember correctly, its market capitalization is perhaps 40% of the global stock market, or maybe more. I don't remember the exact number, but it's likely close to that. You can check it. But US GDP is only 25% of global GDP, for example. So, as time goes by, we are leaning more towards America in terms of money and capital markets. So, is the problem bigger? It's bigger because now everyone is putting a lot of money there. I'm not saying the market's fundamentals are bad. Actually, their fundamentals are quite good because their companies are profitable, as mentioned. But there is also a risk that if it stumbles, the impact will be more severe because the size is quite large. >> Yes. So, what is the stumbling block, Professor? Do you see it as interest rates, inflation, investment, or factors from individual companies? >> It's difficult. No one knows. But what you said, Guitar, it's like a chain with many links, right? Government link, oil price link, private market link, AI link. >> Yes. >> Even the El Niño factor, food prices. I don't know which link will break. It will be the weakest link that breaks, and the whole thing will fall apart. I really don't know. But if I had to guess, [sigh] the most frightening link is government debt, especially the very high US government debt. The US government cannot reduce its deficit. And the deficit is very high. So, will we continue to stubbornly buy US Treasury bonds? If we don't buy, the US government has to sell because the budget deficit is large. They will pressure their central bank, which economists call fiscal dominance. That is, fiscal policy will pressure the system to buy expensive US Treasury bonds, meaning low interest rates. This means those who will be disadvantaged are the bondholders, who will receive abnormally low returns. But if bondholders refuse, interest rates will be higher than expected and uncontrollable. Like the case of Truss, remember? >> Yes. >> It surged until Truss was Prime Minister for only 20-odd days. >> Yes. >> When interest rates rise that high, stocks will also fall. >> So, in this case, the good thing is that we have to hope that America will take advantage of everyone to buy their bonds at a high price, meaning low interest rates, and we will support it so that everyone can live reasonably happily. Stocks don't fall, yields don't rise, inflation is a bit high, and we tolerate it. That might be the case, which is similar to the stagflation era. It's not that comfortable. But [sigh] >> In the stagflation era, Professor. Ultimately, it didn't end well. Stagflation.

FLON, initially, I thought it couldn't be done, but it couldn't be done, so it didn't end well. When it didn't end well, it ended with the conclusion that eventually, Mr. Walker had to step in and say, "Okay, I have to take care of the kids." So, interest rates were raised very high until there was an economic downturn worldwide. Most of it had to be cleared. >> Yes. >> Cleared, cleared that kind of balance sheet. But at that time, emerging market countries were almost all bankrupt, especially in Latin America. Ours was also almost in trouble back then. We were almost in trouble too. In 1978-79, we had finance companies collapse, and many other things. >> Yes, Professor. But if we look at the depth and breadth of the market in this era, including the policies that are being used to cope, in later years, America had unconventional policies like QE. The current Fed Chairman, although he disagrees, is there a chance that tools like this will be used to deal with potential crises? >> Uh, when you did QE back then, they did QE starting after the GFC in 2000, and they kept doing it. Then you tried to stop, and you did it again during COVID. That was a time when everyone was afraid of what's called Secular Stagnation. >> At that time, everyone was afraid that there was excess supply worldwide. During that period, you could buy bonds, and no one would complain. Inflation wasn't rising. On the contrary, if you remember, in 2015, 16, 17, you started seeing government bonds in some countries in Europe, including Japan, with negative interest rates. This was because there was no demand. There was too much money left, and people dared to buy Swiss government bonds, many government bonds, including Japanese government bonds, saying, "I'm buying bonds, and I'm paying the government." At that time, when you did QE, no one complained. But today, it's not like that. Today, we have moved on. We have changed eras. If you expect that you can do new QE, it's a different era. That era was a very strange era, an era with a lot of excess money, so much excess money that bond yields went negative. But today, the Japanese government bond yield has become 2%, plus 2%, and there are no governments with yields close to zero. If you were to do QE, it would spread inflation. Inflation would erupt because when you do QE, the central bank has to print money to buy bonds. That money entering the system further increases the money supply, and inflation will rise. When inflation rises, you will see that long-term government bond yields will immediately increase because there is inflation factored into the yield that needs to be calculated. Therefore, the conclusion is, believe me, you cannot do QE in the coming era. You cannot do it. >> Yes. >> Cannot do it. But what can be done is to pressure banks, pressure insurance companies that have to buy long-term bonds, forcing them to buy long-term bonds at high prices and low yields. But these companies, these banks, will then pressure their own customers, making them benefit less. And the ones who will be disadvantaged, the ones who will have to support the American government, will be the citizens who use the services of banks and insurance companies. This is called financial repression. The problem in America is that Americans don't have enough money to buy bonds themselves. They have to sell to foreigners. The question is, will foreigners, central banks, agree to be squeezed like this? Because the Bank of Thailand is like the American government. The Bank of Japan, the Bank of China, we have to ask if we will agree to be squeezed and support them. We have done it before. In the past, we did it because we wanted dollars and considered the dollar a safe currency. We wanted to boast about having large reserves, which looked good. They still say that today, having large reserves looks good. How much? In the future, the more you support America, the more it will be. >> Yes, but regarding the attempt to force each country to buy bonds, Professor, will it ultimately lead to a situation like President Trump's trade war policies? Will there be an attempt to generate revenue, or will some pressure be used to force countries to exchange benefits with America, Professor? >> Right now, Trump only thinks of raising taxes. >> Yes. >> You, Mr. Gita, said Trump will force us to buy his bonds. He probably can't force us. >> Yes. >> Yes. He can't force us, but who knows, maybe one day he'll think he can force us, but he probably can't. What the American Treasury Secretary is doing now is that he's not issuing long-term bonds. >> Yes. >> He's issuing short-term bonds, solving immediate problems. But when you issue short-term bonds, you will have to roll them over frequently, and you will have risks. But now, the duration of American bonds has become much shorter. The IMF has warned that this is not good. But now, America is solving its own problems by buying short-term bonds. The US government is buying, selling more short-term bonds. >> Yes, Professor. Finally, it seems we have a lot of landmines ahead. Wars may not end well. Oil prices may rise again. Inflation will not go down. Interest rates have a chance to rise. Not to mention the problems in America, both AI, private credit, and the countdown to a crash in the American market. Professor, do you have any advice on how we, as individuals, can prepare to cope? It's very difficult for us to control the global situation, but what can we do to survive the risks ahead, Professor? >> I would say be cautious and don't be greedy. Don't think AI is the answer to everything. Calculate carefully, look carefully at what is reasonable. And most importantly, do your job well. If you use AI, use AI to make your work better. AI is like an employee who never complains. Whatever you ask it to do, it does it. So, it makes you better. Make yourself better so that you have job security. And we will have enough cash flow. As for investment, as I said, invest cautiously. Because looking ahead, achieving consistently high returns will likely be difficult. But if you get a reasonable return and calculate it reasonably, that's more likely. Don't hope for something that's too good to be true. "This time is different" is likely to be wrong. >> Yes, thank you very much, Professor, for your advice and very useful insights. Thank you, Professor. Goodbye. >> Thank you. >> Goodbye, Dr. Supat Suthachai, Chairman of the National Economic and Social Development Council. Professor Supawut's perspective on the recent US Federal Reserve meeting, the world watching the new Fed Chairman's policies, signals of policy communication, including the bottom line: will interest rates rise? At this moment, the overall signals from the Fed do indicate a tightening of monetary policy, but we cannot definitively say that the Fed will raise interest rates because it depends on the effort to manage inflation, which is a key indicator of whether interest rates will eventually have to rise to manage price stability or financial stability or inflation. However, if we delve into inflation, it doesn't seem easy to manage. Regarding oil prices, which have fallen below $80, the risk we see of the Middle East war ending may not actually end. If we look at the MOU that Professor Supawut analyzed, there are many fragile parts that could make progress on this MOU difficult, including the management of the Strait of Hormuz by Iran, the nuclear issue which is still unclear, and the fact that Iran will receive investments of up to $300 billion from the US and its allies. This part, in terms of numbers, looks good, and the overall MOU looks good. But for Iran to receive such immense benefits, will it create pressure on President Trump and American politics, making progress on this MOU difficult? And if the MOU cannot proceed, what will be the outcome of the conflict? Will it erupt again? And there is also the issue of the Strait of Hormuz, whether the passage will remain free and safe. We may not be able to trust it much yet, given that the risks are still quite high. Will inflation go down? It might be difficult. Will interest rates rise? It's possible. Therefore, we are in an era where interest rates are no longer low. Investing with the hope that businesses will grow well and that the return figures will grow well may not be easy. We must be cautious with our investments, given the risks we have discussed, such as the AI business. Will the expected growth materialize after massive investments, in an era of rising interest rates, tightening monetary policy, or when the US government has very high debt figures, it may make changes in policy or financial costs? All of these are risks. Not to mention private credit, where there has been a lot of fundraising, and the AI business is also using a lot of it. The figures raised may not yet show results. What will be the final outcome? But everything is like a chain reaction, interconnected. And there is a lot of fragility in the system. So, I urge everyone to be cautious. Growing with businesses or investing in themes that show good returns in this era, everyone wants that, of course. No one doesn't want returns. Just don't forget to be cautious of risks and don't forget to manage risks by diversifying investments, both in businesses that are growing and in businesses that may not be growing much but have long-term growth potential. You must use the mantra of asset allocation and strong risk management in this era. Thank you all very much for watching today. See you in the next live session. Gita, Professor Supat, the team, and everyone, goodbye for now. Goodbye.