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Hi, I am Tom Lassing, Beursbox.nl. Nice that you are watching. I will talk with Jack Hoogland from Topaandelen.com about topics that are economically important. Jack, welcome. Good morning Ton. Jack, what I want to start with is the interest rate of the FET. I wrote an article on Tuesday in which I indicated, yes, what are the considerations and what do I see happening? Ultimately, my conclusion was: they can almost not do otherwise than keep the interest rate the same. That is also what happened. It was no surprise to me. I dared to put that in the article on Tuesday already. How did you look at it? Well, I understood that the bond market was not very happy with Kevin Warsh, the new vet president or the vet chairman. Because yesterday the interest rate on two-year government bonds fell, while the interest rate on 10- and 30-year government bonds rose sharply. And the one on 30-year government bonds even reached its highest level since 2007. And and that is actually the fact that, you know, that is actually a kind of accusation, so to speak, indirectly, that you are not fighting inflation enough. So I don't feel like holding long-term government bonds and therefore I'm selling them. So that's one thing and that seems to have been mainly due to the press conference. So okay. And the other thing that struck me: I quickly read the vet statement and next to it there was another document that states that we will buy short-term government bonds, as far as necessary, to keep the market functioning. Well, that's a flexible term. They have already bought a few hundred billion in government bonds this year. And that they also make that statement. That doesn't sound very much like fighting inflation, so to speak. Because if you want to fight inflation, you have to stop printing money. Hmm. But the Federal Reserve says: the interest rate is what is it? 3.5 to 3, between 3.5 and 3.75. So let's say 3.6%. And what they do is the margin between 3.5 and 3.75. And if the interest rate goes above that 3.75 on the government bond market and on the interest rate futures market, then they intervene. Then they will buy to push that interest rate back below 3.75. And they reserve the right. And there, yes, there seems to be a suspicion that the interest rate will go above that. And they are already saying: "Listen, if you go above that, if you all throw everything on sale, then we will buy." So it doesn't sound much like fighting inflation. That's one side. The other side, yes, I can understand that Kevin Warsh sees the necessary economic risks. So that he is a bit afraid that if the interest rate goes too high, then yes, just look at the housing market. Look at private economy, private credit; I still want to say something about that later. Yes, then you already know enough. Yes, what else is playing out and I haven't heard you about that yet, is of course the relationship of the United States with other countries. And many countries, including Japan, but also Europe, are simply selling American government bonds on the market. And that has also happened. So it is of course partly a bit of a political game where there might even be a bit of ill will. By bringing something into the press or actually offering some supply at that very moment when things are happening, to make it even a little more difficult for the Americans. Because Trump is not making friends, certainly not in North America. Where he has indicated that the trade deal with Mexico and Canada that he himself concluded, that was a deal and he made it in his first term and he wants nothing more to do with it now. So yes, I think that might also play a role in the background. Yes, China is a large country and still has many American government bonds. Yes. And you. Yes. You don't have to be a professor to understand that they are slowly phasing them out. And besides that, that is separate from politics. Besides that, Japan is one of the largest, one of the largest investors in American government bonds. But it is in trouble. And every time Japan decides, oh, we have to intervene, we have to buy yen to support the fall of the yen and to bring back some confidence, which has never worked, but that doesn't matter. Yes, then they have, you know, to buy yen, they have to sell something else. And what they then sell are dollars. So they sell government bonds and exchange those dollars for yen to support their own yen. And so you have those kinds of things too. But ultimately, it's just about how high the long-term interest rate can rise before the economy really cracks. Yes. Yes. And it's already cracking considerably. It's not yet at the point where it's breaking, but it is cracking. Something completely different for a moment. That is a crisis in tech stocks. I'll mention some stocks and their prices over the past four weeks. Intel from 125 to 80. Marvel from 2565 to 161. Micron from 1000 to 720. Sandisk from 1800 to 1000. And Astera from 440 to 250. Huge blows. Truly enormous. And then we have Apple, and it's up. It's at its highest price ever. And I don't know the story behind why Apple is excluded from this decline. But huge blows are being dealt in the last week. Well, I think Tom, I think I read, I haven't looked it up, but I think I read that Apple invests relatively little, in comparison to all those others, relatively little in that AI situation. Yes, so and the fear you see now, last night Meta announced its figures after the bus. The entire positive cash flow is just gone. It had a few billion positive cash flow every quarter. That's just completely gone. There's only 0.7 billion left or something. And they have indicated that they will invest a bit more in all those data centers again. So the nervousness about that is, yes, it is rising rapidly. And and one, one big, one important candidate, so that's also one you really have to keep an eye on, is Oracle at the moment, because Oracle, yes, it's in the worst shape and has the biggest obligations. And at the moment that Oracle, for example, gets a downgrade for its book, then there's a good chance that the whole house of cards will collapse. Because it's a kind of incestuous circular situation where one, where one, for example, let me give an example. Nvidia says to Open AI: "Okay, I'll invest 250 billion in you, in Open AI, so that you can keep buying computer chips from us." So then you know, that becomes a kind of incestuous situation and then the question arises why, why are they doing this? Is it just to keep things going? To, you know, to ensure that everyone, that everyone keeps dancing to, to recall Check Prince. As long as the music is playing, you got to keep dancing. Yes. Is it that? And besides that, I also, you know, I also have things, for example, at Google. I'll mention Google as an example. Well, no, I'll go broader. Those big four or five, Oracle, Google, Meta, and Microsoft, and another one, have a total of 100 and so many billion in debt on their balance sheet. Well, there's nothing wrong with that in itself. There's nothing strange about that. Because their activities are much larger. They have positive equity. But they also have 1650 billion in off-balance sheet liabilities, so debts they take on in other vehicles so that they don't have to report them on their own balance sheet. And yes, then I ask the simple question: "Yes, what is that for? Why are you doing that? Why, why do you find it necessary to do something like that?" And yes, when I see that, I disengage. Then I think, yes, where, if people start doing these kinds of things in this way, manipulating things, yes, then I don't want to invest in that at all. I have no interest in that at all. And so you see a few more of those things. Yes. Yes, of those things where, yes, where you can just, where you can just question them. Google, for example, also had an enormous profit increase. And if you then look at their figures, it's other income. And other income is how they value their investments in Anthropic, you know. And yes, who controls that? Who knows what the correct valuation is? Yes, you know, those kinds of things. I don't like that. Then, you know, if you just book your figures straightforwardly and just do your accounting in a way that it should be done, so that it's understandable for everyone, then everything is okay. But if you start playing tricks, yes, then you sow doubts. And and why would you play tricks? Well, because you are entering into such financial obligations now as you have never done before. And then it's just to conceal the fact that you are actually taking risks now that you shouldn't be taking, but the rest is dancing and you have to dance along. And where Apple in fact seemed to have missed the boat a bit at first, it now seems that investors, as you also indicate, are in fact rewarding you for not having been tempted by it. So yes, well. We'll see what ultimately happens, because there is of course also a chance that AI will indeed become the hit they expect. And AI is popular, of course, but it's not yet profitable enough to make up for all those investments. And maybe it will be, but I can't really imagine that. Because yes, the potential is too small for that. So the amounts being invested are simply too large for everyone to make profits from it later. And that means that we have now seen gigantic declines, 30-40% in 4 weeks for many companies. And even then, they are still valued far too high for those companies. So yes, then I fear that there might be a bit more to come. The decline will stop at some point, of course, but yes, we have also risen so much that it's quite a problem. I don't have those stocks in principle, except that at Freestocks I have the Nasdaq 100 stockbox. And that's why I've seen those stocks, because my portfolio has fallen from 50,000 to 35,000 in four weeks. So that's a gigantic drop. And I was in it and am in it because I can't invest in those stocks myself. That's just not in me. I put 13,000 into it. I'm still at 35,000. So in that sense, I shouldn't complain. But there has been a loss of $15,000,000 in four weeks. So that's quite a significant. Yes, I have to say one thing, one thing I do have to add. If you look at the price charts, and I'm looking at the weekly chart, for example, where each bar is one week, then you see a decline last year, a decline from mid-February to the first week of April, which technically looks much worse than the current decline. Hmm hmm. And then came again, you know, there was just a recovery, a strong recovery. So you have to take that into account as well. But I think that there too, you know, the fear of what you see in the bond market, those rising interest rates and so on, I think that's spoiling the sentiment a bit now. I think that might be the difference between now and, say, 15, 16 months ago. Yes. And now we also have the Iran war, which is also playing a role, which America is losing. So in that sense, that also contributes to bringing the sentiment down a bit. Yes. Yes, but yes, that radio war is getting a bit tiresome. Yes, no, well. Well, in the sense that I try to get an objective analysis of it, but it's either someone who hates Trump, or it's someone who is pro-Trump. And I can't manage to read or see anything about it that makes me think, okay, this person is looking at it from all sides and this person is looking at it soberly and objectively and without necessarily hating Trump or being a fan of Trump. So I have great difficulty with it, but that doesn't matter. Yes, I have great difficulty with, let me say, I have great difficulty making any sense of it. No. Well, the only thing we do know is that the Strait of Hormuz is completely blocked again. I've even seen that American ships that have been lying in the middle of the Strait of Hormuz for weeks are now gone. So it's really escalated now. And yes, however we look at it, the Strait of Hormuz is closed. And that means that America's power in that region is now gone, because otherwise the Strait of Hormuz would be open. And yes, so in that sense, it's clear that America is losing that war at the moment. And that's how I see it. And yes, what is the consequence? Well, the consequence is that those Gulf states are now having a very difficult time, because they can't sell their products. This means that those super-rich Gulf states are now depleting their wealth. But the world is also running short of gas and oil. Because that 20% of oil that has to come from there, isn't coming from there. And now you still have a bit of oil coming from Saudi Arabia through pipelines, 7 million barrels towards the Red Sea. But there too, the problem is now with the routes that they are blocking the southern route of the Red Sea for Saudi ships. So in that sense, it doesn't look good. And I don't see a quick solution for it yet. But we'll see. The entire German automotive industry, BMW and Volkswagen have announced that quite a few people will be laid off. They both say: "We will do that without actively firing people. We hope that people will retire early or that they will look for another job themselves." Yes, but it looks very bad. It has everything to do with EVs. They have lost the battle for EVs. And what you are actually seeing now, I wrote about it today. If you look at an electric car, it consists of a battery that is very likely from China. It consists of electric motors that are very likely from China. And what do you have left then? Yes, the design and a bit of the shell, everything around that battery. That's what you could still make in Europe, but what China can also make perfectly. So I think the battle for the electric car has been completely won by China. And that, in fact, the combustion engine cars they are still making in Europe are a declining business, they know that too, and then the electric car market is gone. Then it's over for the German automotive industry, unless they can perhaps switch to hydrogen in the future. But yes, well. We'll have to see if that ever gets off the ground. Yes, Germany, the entire industry in Germany is heading towards a drama. And this week, this week, the, you know, the association of entrepreneurs, industrial entrepreneurs. You have that in the Netherlands too. You have that in Germany too. They warned that companies are stopping investing, moving activities out of Germany to somewhere else where energy costs are cheaper. Yes, you know, it all starts with that. And on top of that, in the case of the German automotive industry, there are dormant, lulled companies. They are just, you know, in the years up to Covid, they thought it would all go by itself. Yes, and also people's brand loyalty. If you buy a Mercedes, you keep buying a Mercedes, Volkswagen ditto. Yes, that's now switching to electric cars. Is it not logical to say: "Oh, then I still want to stay there." Because yes, then you suddenly see, hey, if I have to switch to a completely different type of car, why not take a Chinese car that is also designed in Europe? The chance is very high. You see that with Polestar, which is actually Volvo. Yes, and there are several brands already taken over by China. There are also design agencies from Europe already working for China. Yes, what is the brand worth then? The brand was mainly the engine. And the engine is now a battery that comes from China. So yes, then there's not that much car left to say, yes, that's why I drive a Mercedes, because it's all nonsense. And yes, how reliable? Yes, just like any Chinese brand you mention, because they have the same batteries in them, in fact. Not entirely, but broadly speaking. It all comes from the same factory, so to speak. So what's the extra point in paying double for the fact that you drive a Mercedes? The only thing is that we put a Mercedes sticker on it, and now it's a Mercedes. But it could also be a Polestar, but then you only pay 40% less. Yes, what do you want then? Then I can imagine that many people say: "Yes, then I'll drive a Polestar." Yes. Yes, I don't, because I will never buy a Chinese car in my life, but that doesn't matter. And at some point they are the only ones still making cars for this. Yes, who knows, who knows. But I have something else, Tom. Yes, I came across a short video on X this week of two men who, just like us, were talking about the market and so on. And one of them had a warning and said, listen, private credit and private equity and the CLOs, the collateralized loan obligations that follow from that, that market and that bubble, he said, is bigger than the savings and subprime mortgages, everything combined. That was his claim. Hmm. And he explained it. He said: "Listen, since 2008, nothing has changed regarding the rating agencies." There were even, there were about three or four then, now there are. So it's much easier for Wall Street bankers to shop for a triple A rating. Yes. So that's one thing, he said. And what you see with private equity and private credit is, well, private equity, you know, it sounds very interesting and a very nice name, but it's just a fund that, for example, takes over the veterinary practice or the dental practice in the area. And that fund then loads that practice or that company full of debt. And those debts, those loans, are then provided by private credit funds. And he says: "Listen, so what they do is, you know, all those interest rates that private credit provides, they are all, say, perhaps just above junk, you know, BB, a rating of BB, just above junk, and for a part even junk or even below, because those companies are burdened with far too much debt." He said: "But you know what they do?" He said: "They package 100 of those loans and then call it a collateralized loan obligation. So it's like the mortgage-backed securities of 2008. And then they go to the rating agency with that. They put a AAA stamp on it. And that means that pension funds and life insurers, because they are not allowed to invest in junk and so on, they have to have the triple A stamp on it, and they invest massively in it." And he says: "Yes, this, and what those, and what those funds do is: they keep those valuations, you know, no one can, no one can neutrally assess the valuations of those loans and those stakes in companies, like tech stocks." Hmm. For example, we were just talking about Oracle. If Oracle is not doing well, you see that immediately in the interest rate on government bonds. You immediately see the, or rather, the interest rate of Oracle bonds. You immediately see the prices of those bonds fall, so everyone can see that something is wrong with Oracle. Well, here no one can see that. And they have an interest in keeping those valuations high, because they want to pretend for as long as possible that everything is going very well for their investors. But also because they continue to cash in their commissions, their commission income. And Sandisk: "Listen, we're just going to do like in 2008. At some point, they will have to write down. They will have to say: 'Okay, this and that loan can no longer be classified as triple A, but it will now be triple B or whatever.'" And at that moment, the pension funds and life insurers will be forced to sell, because that's in their statutes. And then the party is over, because they are all illiquid investments, you know. It's not like if you have stock or shares or the Nasdaq and you want to get rid of it, you can get rid of it with a click of a mouse. It just doesn't work like that. He said: "This will simply result in a crisis breaking out. And that crisis will be bigger than 2008." And then I looked up that man, his name was Rob Dubitskiy. First I watched the whole conversation where he explained all that. Then he also gave his background. He's been in that world of mortgage-backed securities and all that since 1987. And then I looked him up and then I also saw a video of him explaining to a congressional panel in December 2008 how all this had come about. And then he said exactly the same as what, Tom, you say. Yes. Yes. Yes. What I then said. I'm talking about mortgage-backed securities, how it all went wrong, what you invest in The Big Short, in that AI situation, is exactly the same as what you see now. He said the banks, and it's relatively easy to, you know, to pump money into the banks, to pump money into the banks, which they have done. Obama transferred money to the banks. But with life insurers, it's all a bit more difficult. That doesn't go so easily. And he said: "The total outstanding amount of life insurance is 62 trillion." Okay. So if you have a life insurance policy, and that might be a bit less severe in Europe than in the US, but if you have a life insurance policy or you are in a pension fund, then there's a good chance that you won't get what you've been promised. Because this, I think this bubble we're seeing, those guys have been around since the bus figures were announced and have become intertwined, it has taken off enormously since 2011. And it started normally, just like with mortgages, it started normally. But at some point, the demand from those pension funds and life insurers becomes so great, because it's easy, stable income as long as everything goes well. That all the criteria for investing become looser and looser and looser. Yes. Well, what happens with that is that a certain company says, yes, I would like money because I want to invest. Can I borrow money? That's one. And those are the good companies that want to grow. And what you will then see is that those companies will naturally say, hey, I'm looking for investment. Is there no company to invest in? Or so it becomes indeed a bit more difficult. And then you have the veterinarian or the pharmacist in your area, hospital. It can be anything, it can be anything. Which will really be sold. But such a company, if they buy the whole practice, for example, then there's a chance that such a company will be loaded with loans purely to get the maximum out of it. Yes. And then it's just a matter of waiting for the moment when such a company is no longer able to perform well enough to manage all of that. And yes, indeed, as you say: at the moment that those problems arise, now gone, completely the interest rates, even if it's just $1 too little, then the whole thing starts to crack and yes, it collapses like a house of cards, because in fact, those pension funds also say: "Whoa, now I have to." And that large, with one pension fund candidate, everyone at the same time. Yes. And then they will also throw out things that are still going well, just to be safe. Yes. And as you said, it's illegally black, so no one will buy it. And then there's a write-down where you have to write down 90% in the worst case. And even then, you can ask yourself, is that still too much paid for the person who will eventually buy it? Because there are parties who say: "Oh yes, for a 90% discount, I'll take it." And then the question is, is that still the price? Because the loans behind it in the crisis that will arise will also not be paid. So yes, well, there are, so I was thinking of two consequences. The first thing that, what I, what I, what I had in mind was, yes, you have to pay attention, every day, pay attention to whether there are messages from, you know, Moody's and S&P and those kinds of agencies, that they will come with a downgrade. So the moment downgrades come, it becomes dangerous. The second thing I thought was that there's a good chance that you'll see a, that you'll see on the stock markets because everything will go down. There will be panic on the stock markets, then you also have a chance that gold and so on will also go down. But the next consequence is that there is another crisis and that central banks will have to save the situation again and that incredible amounts of money will be pumped in again, once the initial shock is over, for example, gold. Yes, the long-term target for gold, the target price for gold, is only getting higher. Yes. Well, for everyone watching: if a crisis breaks out, a big one, then everything goes down. So don't think you can escape a crisis; it's a real crisis. 2008 was one like that. Everything goes down. The question is what goes up first afterwards, and that's where you can make money. And what goes up first is often gold, or those are Saudi Arabian stocks. Yes. And that's where you should put your money. And what is important then? Yes, that is, when the crisis is over, that you still have cash. Then you can take advantage of the bargains that are available. And at the moment you enter the crisis and are in OpenAI shares that fall by 90%, then the recovery of OpenAI will come. And partly because of that, I always say, when the market goes up, I take money out of that market and put it into gold and silver. Because of the fact that I have cash with it to be able to step in at those two Saudi moments when there is a crisis. And I know that I will make less money in that rise, but you make the most profit at the beginning of the recovery. Yes. And that's why I approach it differently than many others. When the market goes up, I am investing: many others say, "Yes, but now you have to go all in." Many of those people will lose 90% of their wealth if a crisis comes. And I cannot predict whether that crisis will come and when it will come. That, yes, that man said, yes, that it will go wrong, that is certain. There, there, there is no escaping it. But the point is that, yes, that, you know, it can, if you compare it to the credit crisis, it can be 2006. It can, you know, if it's 2006 in relation to the credit crisis, then it's still 2 years. That's possible. Yes. And yes, I think the biggest risk is when banks, when central banks really have to, really have to tighten. So really have to fight inflation and not the inflation you see now as a result of a lack of supply, but inflation as a result of an overheated economy. And then the biggest risk, and then that is for me the signal to get out anyway. But that is, in itself, separate from this, at least 12 months away in my eyes. So yes. Well, let's hope so. Because at the moment, that inflation, and we'll come back to the, to the, to the Fed yesterday. Yes, that Kevin Warsh, he knows, he's not crazy. He also knows that the inflation that is there now, yes, that is a consequence of a lack of supply. No, that is a completely different type of inflation than inflation as a result of too high, too rapidly rising demand. Hmm hmm. You know, the first is inflation as a result of too rapidly rising demand. Then, as the F-reserve, you really have to, you really have to be on top of it. You have to reduce that demand, because otherwise it's going too fast. But inflation as a result of a lack of supply, if you have that kind of inflation and you then raise interest rates and fight inflation, yes, then you push the economy into a hell of a recession. Yes. And so, and if you, well, the DCB could perhaps, they could perhaps say, formally, they could perhaps say, yes, but we have only one mandate. They don't do that in practice, but they could formally say that. But formally, the Federal Reserve can't even say that, because it also has to ensure that the labor market functions. So they are not allowed, they are not allowed to really fight inflation at such a moment, because the economy will go into recession and they are not allowed to let that happen. So according to their own, according to their statutes, so to speak. So, so yes, so you have to make a distinction there, you know. The war in Iran causes a lack of supply of oil and gas, etcetera. So yes. Hmm hmm. That's a different story than, for example, 2021-2022, when everyone was throwing money around because they all wanted to make up for the damage of Covid. So, so that's a thing. And I think that Kevin Warsh, he sees that, he understands that, because he's not a stupid guy, you know. He's not a loser, as the Flemish would say. So I think he understands that, but and that he is therefore cautious and doesn't want to raise interest rates. So yes, well. I think the FED is cautious in general, whether it's Kevin or someone else. They can only do very little. And yes, well. In my analysis, it was also that, yes, actually the best option now is to do nothing, but try to make something of it by talking. Well, that didn't quite work out. But hey, thank you for the conversation again this week. I'll speak to you again soon and yes, well. Enjoy the nice weather, I would say. Okay, Tom, good. Have a good weekend in advance. Bye. Goodbye.