STEVE CLAPHAM: Hi. I'm Steve Clapham. I'm really
excited and looking forward to my discussion with Russell Napier. Russell, welcome.
What I would like to start off by doing is just painting the scene. Russell,
you've explained to me in the past your views, which are quite radical, I think, about the
forthcoming denouement of inflation, how equities will develop, how bonds will develop. Could
you briefly just paint a picture of your views. RUSSELL NAPIER: Yeah. I'll try to get it into
a very short period of time so we can get to discussing what it means for investment. But
the simple way to explain this is that there have always been two ways of creating money. One
is by a central bank. But most importantly, the other is by commercial banks. And
the vast majority of all the money in the world has been created by commercial banks.
Now, sometimes that astounds people. But of course the idea is the central banks
kind of control of commercial banks. And therefore they are in control at the rate
at which the commercial banks create money. My entire thesis is that that changed in May. It
changed April, May. And it changed through the use of what we call government bank guarantee
schemes or bank credit guarantee schemes. And it sounds like a very technocratic,
not-very-interesting, not-very-important shift, but actually it's fundamental.
And last week, the European Central Bank recognized this. And they called it the
sovereign-bank- corporate nexus, which is a classic euphemism for the fact that money is
now created by governments, not by central banks. Now, I can't persuade anybody of that, even though
the ECB has now come out and said it as well. Because once a government is then
offering that guarantee to the bank, the bank begins to lend money. And we've
seen spectacular growth in bank credit in this biggest recession in this country-- this
country being the United Kingdom-- since 1708, fastest bank credit growth probably we've
ever seen, or certainly one of the highest we've ever seen in peacetime. How on earth do you
reconcile those? The government guarantees it. So when those bank loans are made, money is
created. And that has been the failure of central banking for 12 years, that they absolutely
failed to do that. They created a lot of their type of money, which is technically called a
bank reserve and sits in the banking system. But they didn't create a lot of what I call our
type of money. And by what I mean our type of money, I mean citizens, people who spend it, the
stuff that we pick up in GDP and measure in GDP. And my goodness, the governments are
doing a spectacular job at creating that. So to give you some numbers, the growth
in the total number of dollars in the world is up 25% year on year. For the yen,
we're looking at about 9% year on year. For the euro even we're getting to 10% year on
year. And these numbers, these growth rates, have all doubled or tripled during COVID-19.
So the first point is that it's a new mechanism. It is working. Historically, that level of money
supply growth would normally create inflation. And there's a bit of people who doubt that. But at
a very high level, it's almost certainly the case. And then the second part, Steve, which we will
no doubt talk a great deal about, is that that leads us to a time when bond yields are capped,
when the state central bank regulator does not allow the bond yields to reflect the inflation
outlook. And that is something called financial repression. And it leads us down a rabbit hole
for a generation of government control mechanisms to try and force savers to own an asset they
don't want to own. And if I started to talk about that in detail, it would take me 90 minutes.
But that is the outline of two things. One, inflation is coming because the control of
money is coming. But it takes us to a world where we have to control the yield curve. And that
takes us to a thing called financial repression. And then we're definitely not in Kansas anymore.
STEVE CLAPHAM: Before we go down there, I mean, the way I look at this, very simply, is
that the governments have got a lot of debt. They need to keep ---
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I don’t think you can afford to be without it. STEVE CLAPHAM: Before we go down there, I
mean, the way I look at this, very simply, is that the governments have got a lot of debt.
They need to keep interest rates very low. And therefore, if we do get inflation, we're
going to be in a period in which there's negative real interest rates, and large.
And that means that anybody that's trying to protect their wealth will have to seek to
borrow money, which means that there will be a huge demand for credit. And that's why the
rationing will have to take place. Is that-- RUSSELL NAPIER: That's absolutely right.
And that's a brilliant word. Rationing is a brilliant word, and a word that most people
watching this will never have had to live with. And people will think it's an alarmist word
as well. But let's be clear what rationing is. Rationing is the allocating of resource by
a mechanism other than price. So don't think of World War II. Don't think of queuing up to get
two eggs. Think of a means of allocating anything by a mechanism other than price.
So you're absolutely right. When you get negative real yields, we'll all want to borrow
really. I mean, if my wages were going up at 6%, why wouldn't I want to borrow at 2%? And if I
was a corporation and my revenues were rising at 7% or 8% because I was getting price rises
or 6%, of course I'd want to borrow at 2%. So we have to put in place administrative
restrictions on this. And of all of the many, many things we could discuss, this is probably one of
the most important. Because we've lived in an era where anybody could get credit. Dogs got credit.
At least they were mailed credit card application forms. At a right price, anybody could get credit.
And the world is geared for that reason. And just one thing I'd correct you on
is, yes, it is about government debt-to-GDP being high. But actually the
private sector debt-to-GDP is at a record high. At least government debt to GDP may be slightly
lower than World War II in some countries. But the private sector is at a record high.
So just imagine a situation where we have to unstitch the past 30 years to get debt where we
need it or want it to be. How much debt will flow to private equity? How much debt would flow to
allow you and I, if we ran a corporation, to buy back our own equity? How much debt
would flow to gear up commercial property? In fact, what you might argue is that the
government divides rationing, good credit and bad credit. The bad credit would be gearing up an
existing income stream. And the good credit would be building an existing income stream. Because
in building an existing income stream, we have the prospect that we're going to employ people.
So you've absolutely hit the nail on the head. And as a stock selector, of course, that has huge
ramifications. Because if you can find the stocks that get that really cheap credit, there is
potentially extremely good benefits for the equity. But if you are in the stock already, which
has all this credit, and basically can't renew it, and has to go for equity funding, then we're
going through a very prolonged re-equitization, which I would argue is probably not
good for the price of that equity. But you're the micro specialist.
So what do you think? STEVE CLAPHAM: Well, that is an interesting
question. I'm going to come back to that in a minute. Because this idea, if we've
got inflation, well, theoretically, if governments are trying to inflate away the
debt, it might be a good idea to form leveraged companies. But if they can't refinance the
credit, that's going to be a real problem. But before we get onto that, there is one
sort of pushback I think people will have to this idea we're going to have inflation.
And that pushback is, well, governments have wanted the inflation for the last decade--
more. And they haven't been able to get it. So why are you so convinced that now is the time?
RUSSELL NAPIER: Well, I need to give you a little bit of my own history here. So when we got
to 2009, when I became a bill of equities, I said, this is going to create inflation,
this quantitative easing. And you should own equities and commodities. And of course they
both went up. And inflation actually went down. So inflation did get quite close to 4%.
But in 2012, I completely changed my mind, and said, we're not going to get inflation, we're
going to get deflation. Well, it took a while, but as early as 2015, America was
actually again reporting deflation. So why, as you say, given that
governments have wanted it for so long, given that central-bank balance sheets have
gone like this, why didn't they get it? Because they didn't create the sort of money that
circulates in the things that we call GDP. What that activity by the central bank
acting alone did is it was buying, effectively, bonds from savings institutions and
crediting the savings institutions with cash. You and I have both worked for savings
institutions. So we know that the only thing that a savings institution can do with that is buy
more assets. It can't buy a Lamborghini. Despite what you read in the press, the fund manager
can't take the money and buy a Lamborghini. So the money we're creating today is of an
entirely different sort. And if we look at these loan programs, they've all really gone
to small companies rather than big companies. This is the ones that have come through
the banks rather than the bond market. And I mean, very small companies, you know, taco
stands, Uber drivers, these are the sort of people who are getting this. And these guys spend the
money. They have to spend the money to survive. And they're going to spend this money.
So to me, the fundamental difference is that-- and it shows up in the data. So the
crucial data-- let's take Japan, the infamous Japan, where there's been no inflation back
since the early 1990s. I think it's about 2% that broad money growth has averaged in Japan
over that period. And all the incredible things the Bank of Japan has done, it's been 2%.
Well, depending whether you go for M2 or M3, we're up close to 10% today. Now, you can
either say that's irrelevant and it doesn't make a difference, or you can say, that's
it, the world has just changed. And to me, that is what changed and who has that
money. And it will be spent in GDP. And that's why, after many, many years, I'm
looking at a thing I wrote. I have it on the wall. Because I wrote it in 1996. It was called
Dealing with Deflation. So I mean, it's something I've been aware of since 1996. And every recession
we've had since 1996, it has tipped us towards-- either into deflation or a fear of deflation.
So here I am, sitting here, after writing about that now for over 20 years, to
say that it won't happen again, that this has fundamentally changed because of how
money is created and whose hands it is in. STEVE CLAPHAM: OK, so our working assumption is
that you're right and there will be inflation. We don't want to risk everything by betting 100%
that you're right, and just going and buying gold, putting all our assets into gold and into gold
miners, which would be the simple solution. So let's just explore, OK, let's put some of our
assets into gold and gold miners, but what do we do with the rest? So the first thing was to think
about companies that are heavily indebted. And that's risky, because obviously companies with a
lot of debt will have to refinance at some point. Your theory is that they'll just come up against
a roadblock and they won't be able to borrow the money, either because the central banks will
ration the credit or because the credit markets will charge them a heinously price because of
the risk that they won't pay and because they want real interest rates. Is that fair enough?
RUSSELL NAPIER: Well, I think the first one is fair enough. And the second
one I'm going to differ on. So on the first one, absolutely. But remember,
the world is being divided into good and bad. So we can find the corporate that's allowed to access
that credit because it's considered that credit is for a socially-useful purpose. Then
things may be fine. I think it's very clear that green lending is going to be
one of those socially-useful purposes. Another one is definitely building residential
real estate. That is the American dream. it's not just the American dream, it's a dream for
most people in the world to own their own homes. That's going to be good credit. There's lots of
reasons why you might look to invest in companies like that get access to the good credit.
The second point was corporates are going to be starved because the yield they'll have
to pay to go into the non-bank market will be excessively high. I think that's really
interesting. Because in my book, I looked at 1949 as one of the great bear market bottoms. And of
course that's a period of yield-curve control, when the central bank is actually keeping yields
at a certain level. The necessary arbitrage, if you were a savings institution, actually
kept corporate bond yields pretty close to that yield. That worked as an anchor. It worked as an
effective anchor. Now, it has to be said that most corporate balance sheets in 1949 were in a hell
of a lot better condition than they are today. But on that second bit, the fundamental way we
did this after World War II was not via market system at all. So the United Kingdom had a
thing called the Capital Issues Committee. And the Capital Issues Committee, if you
and I wanted to issue a bond of debenture, as it was called, to raise this money, let's say
to build office properties in London, it had to be approved by a committee. And if the committee
didn't approve it, there wasn't any price that we could issue at. We didn't get a license to
raise capital. So it didn't really matter. And I think most people will think that's
extreme. But in November last year, the Bank of England, Her Majesty's Treasury,
and the FCA, announced a committee that is going to work out what productive investment is.
Now, we'll just have to wait and see what that means. But when the government starts drawing a
line between productive and non-productive, we could well be morphing back into that committee.
So you're absolutely right. If you and I run a company which is just not getting at any
price, then it's a forced re-equitization. And that is not going to be good
for the return from investing in the equity. Probably not going to be good for it.
STEVE CLAPHAM: But the post-war period, which was characterized by a limited amount of trade- - I
mean, we're in a much more global world today. So the Bank of England can say, to all the
banks, you're not issuing loans to real estate developers. A real estate developer is just going
to go to a Cayman Islands entity and issue a bond. I mean, how can the government-- I mean, even
if the governments collude, can they stop global finance? I mean, I don't see how that's possible.
RUSSELL NAPIER: So it is possible. And in recent times, lots of people have
done it. Of course the Chinese do it. I mean, they don't do it with 100%
success, but they do it with significant success. And that's not just significant
success in stopping capital coming out, it's also significant success in stopping Chinese
corporates borrowing overseas and bringing it in. I mean, that got out of control up until about
2014. And they brought it back under control. Of course, the ultimate control is capital
controls themselves. And people say, well, that can't happen. The technology's so wonderful.
We have Bitcoin. It'll never happen. Well, then someone better explain to me how Iceland,
Greece, and Cyprus have all had capital controls within the last 10 years. They've had them and
they've removed them. They're quite common in emerging markets, where they work to a certain
degree. But even three of the-- well, you can't call them major countries, but three developed
world countries have run these capital controls. It is very difficult to do if one country was kind
of-- if you're bankrupt or over-leveraged and had to do all this in isolation. But when you look at
the data, everybody's in the same boat. I mean, China is the only emerging market that's really
geared. All the developed world is really geared. So there is a reason why they will cooperate.
And just some evidence of that which existed before COVID, the OECD has been forming a
group couple of years to try and work out what they call base erosion profit sharing
taxation, which is stuff we all know about, that every company-- Starbucks has a Belgian
or a Dutch subsidiary. They pay a license for marketing and all that stuff.
We-- I say "we" as a developed-world group of companies-- were working on that
even before COVID came along. The secret of taxation is to extract the maximum amount
of feathers with the least amount of hissing. And when governments can collaborate-- because
they all need the tax revenue-- then I think these things become much more possible.
So it may not be as strict as the post-World War II situation. But that's not the point. The
point is it's going to be radically different from the system that you and I spent our careers in.
STEVE CLAPHAM: Well, I think this is an important point you make. Because we've had, what,
nearly 40 years of falling interest rates. And now they can't fall any further unless you
believe that they can go to negative 5%, which I suppose is a potential-- I mean, you can't say
it's impossible. But it's probably less likely. So I think everybody that's operating in
markets today has to look with a very different lens. Because you can't look back at history and
necessarily conclude that this is what's going to happen in the future. And I think you've actually
really got to think a lot more radically, and start with a blank sheet of paper, and think, OK,
so we're going into an inflationary environment. Let's say there are capital controls. How
does that work? I'm sitting with Apple shares. Apple buys its products from China. It pays
huge amounts of money to Foxconn. It sells huge numbers of iPhones in China. It's got a
service platform operating all around the world. Well, does the cash have to stay in China
or wherever? I mean, how will it work? RUSSELL NAPIER: Yeah, so where
you'd begin with is you'd stop capital outflow. And you'd try to divide this
between capital outflow and outflow associated with trade. So I'm not saying that it works, but
this is where you'd begin. So you don't want to disrupt trade. Trade keeps people employed.
So somehow you can say, to a corporation, if you're Apple, and you're moving $6 billion
offshore to buy something in Europe, that's not allowed. We want to at least have a look at
that. But if you're Apple, and you need to move some working capital to China to do some trade,
that's a different thing. I think we both know how difficult that will be. But that's how it works.
All the money that Apple has offshore, of course, it can bring back to America at any given point
in time. Capital controls are like a lobster pot. You can always bring money in always. It's just
that you can't take it out. But there may be a few companies that are really just struggling
with far too much capital coming in. Switzerland is already in that situation. I suspect Singapore
could be there. So there might be a few companies that will try and stop you taking your
money out. And we can talk about how you do that. But for most countries, it's not allowing
you to take money out for the purposes of capital investment. And that's where it begins.
But it becomes a giant game of whack-a-mole. Because everybody finds ways of arbitraging that,
as the Chinese do. And then the government chases everybody around, trying to make sure that it's
not transfer pricing or whatever else. So that's the mechanism where you worked on. So you start
with this sort of-- you target a tier. But, by definition, you spread down through the system.
And you probably know that, in the 1960s, I think the maximum amount of money you could
take out of the United Kingdom was 30 sterling. Now, I'm not saying we're
going to get to that level. But I keep recommending that everybody goes and reads
Graeme Green's Travels with my Aunt, which is a novel. And I don't really want to give too much
away, because I'll ruin the entire novel. But it tells you something about capital arbitrage and
the world of exchange controls. That's all I will say. But he's a great novelist. So worth a read.
STEVE CLAPHAM: Well, you weren't allowed to take out more than a certain amount in cash. But if
you were going for a long holiday, it wasn't enough to finance your holiday. So everybody
took more, right? And I mean, they didn't search you at the airport-- or maybe they did.
RUSSELL NAPIER: That's what I mean about arbitrage. It turns out that your
grandmother becomes an arbitrager in such a system. The Bank of England had a
huge department, Steve. So if you and I wanted to move money out of the country, we filled in
a huge form. It went to the Bank of England. I mean, I can't remember the numbers, but there
was something like 800 people in that department. And it basically closed down overnight.
Sir Jeffrey Hodge stood up-- I think it was 1979-- said, there won't be any exchange
controls tomorrow morning. And all 800 of them had to go home. So it was a really big
industry, approving our movements and capital. And the other interesting thing about that is--
because when the capital controls came down, and they came down here in 1939 for obvious
reasons-- what happened is that, your foreign assets, they went to a big premium. Because if I
was in London and I owned some shares in New York, and you wanted to invest in New York, and
I'd say, Steve, if you want to have this dollar- denominated asset, you've got to pay me a
premium. So that's a simplified way of doing it. But a thing called dollar premium developed,
which you could get your money out of the country if you like. But it certainly wasn't
at the prevailing exchange rate. It was at a significant premium to that exchange rate.
STEVE CLAPHAM: So that presumably is what we should be doing right now, is to
protect ourselves if we believe the capital controls are coming. We're sitting
in the UK. Where should we put our money? Singapore? Switzerland?
RUSSELL NAPIER: So the definition of who will not have to put in financial repression are countries
with low debt-to-GDP ratios. So that's where we start. And we say, are there any of those? But the
only ones in the developed world would actually be Germany and Austria. But they are not irrelevant,
given that they are part of the European Union. So it's not Germany and Austria. But Switzerland
is all right. Singapore is probably very good. The fascinating thing, however, is if you look at
countries with low debt-to-GDP, with the exception of China, they're all in the emerging markets.
Now, if I said to you that we need to put our money into Mumbai to avoid financial repression,
I think there would be deep, deep skepticism. And policymakers in India are-- let's
just say they can be unpredictable. So I'm not suggesting-- as you said, you
don't want all your eggs in one basket. But there are reasons, I think, where we
should be looking to emerging markets. Now, for me, that's not yet investing in the
equities. There's a changing relationship between the West and China coming, which will
be deeply dislocative for emerging markets. But there is a prospect that emerging markets can
do. Well, let me give you two historical examples. Switzerland, after the war, was a brilliant
place to avoid financial repression for very obvious reasons. Switzerland didn't
have a lot of debt at the end of World War II. It was a nonbelligerent. Therefore, even
just putting money in the Swiss bond market, you made money from your bonds in Swiss Franc
terms. But actually you made a lot more on your exchange rate. So that was a good place to be.
But I think the really peculiar one is Hong Kong, another colony that didn't have a lot of
debt after World War II for obvious reasons, given that they'd been occupied by the
Japanese. They did not endorse financial repression. It was famously run by a British
civil servant called Sir John Cowperthwaite, who shunned financial repression and pursued a
kind of more free-market approach. That turned out to be a wonderful place to make money in
the kind of 40, 50 years after World War II. So we're looking for-- but so I raise Hong Kong
because who would have thought of it? If I'd said to you, in '45, Steve, you know what, London--
and, now, London had been the financial capital of the world, really, until 1914-- get your money
out of London, put it into Hong Kong. You'd say, you must be nuts. And not only that, it's got
all these communists just north of the border. So when you said, let's start
with a blank sheet of paper, when it comes to a world like this, we do need to
start with a blank piece of paper. So personally, although, it's not a huge amount, I think
investing in India is probably one of the better things to do. And that will sound radical to
many people. And to be sure, not a huge percent, but it seems to me that there are-- Indonesia,
I've just made an investment in Indonesia. Seems to me, for all the trials and
tribulations that Indonesia faces, a need to financially repress will not be one of them.
STEVE CLAPHAM: Well, I'm glad you said that, because India is actually one of my biggest
country exposures in my equities portfolio. So I believe in it, not because of what we're talking
about, because of fundamentals of the country. One thing I'd like to explore on the subject
of inflation-- and you know, many of the people watching this will almost have no idea what
inflation is. I mean, I can remember, as a child, not as an operator in the stock market, I can
remember inflation. What do you think about what sort of investment people should be looking for?
And one of the things I wanted to talk about was, if you look at what will work in a period of
inflation, it should be pricing power. But when we talked about this before, you said that in an
inflation world, everybody's got pricing power. And what you need to have is cost control.
And I thought it was-- it was quite a funny comment to me. I
mean, what do you think about this? I mean, obviously, if you've got real pricing power,
that's the best protection against inflation. How do we look for companies with cost control?
Because it's something that people have paid much less emphasis on in the last 10, 20 years.
RUSSELL NAPIER: Yeah, so, well, my personal experience of the '70s was my father
was a butcher. So I used to work with him in his shop. And the first thing we did every
Monday morning was wipe down last week's prices and put up this week's prices. I think UK
inflation peaked at 22%. But meat inflation was running at a much higher rate.
So I remember, very well, going into a fish-and-chips shop about five years ago, and
noticing, for the first time, that the guy who owned the fish-and-chips shop had bought a pricing
board where you couldn't change the prices. All the prices were kind of-- he paid up, so
it was all done nicely. And I thought, well, that tells you, in my lifetime, how we've
gone from wiping them down every day to a complete belief that prices could never go again
because you'd paid for permanent prices there. This is the issue with stock markets, isn't it?
They [INAUDIBLE]. So you're absolutely right to say pricing power is a good thing to have in
a period of rising inflation. That's obvious. But what we've got in the market today is an
entirely bifurcated market. You just mentioned 40 years of disinflation. So you have very high
valuations for companies with pricing power. Moats is another word that the Sage of Omaha calls them.
Everybody knows that. You pay up for the moat, you pay up for the pricing power. In other words,
I think it's in the capitalization of the price. And then we have this other class of stocks. And
let's just call them value stocks. Because I think everybody can kind of close their eyes and see
the price chart. And we know that the value stocks are languishing down here with one
of the worst-ever performances ever relative to the so-called growth
stocks or pricing-power stocks. And then we wake up one morning, and let's pick
a number-- I don't think this is coming that quickly, but let's say we wake up and inflation
is 5%. Well, what that kind of means is everybody gets to put their prices up by 5%, and some people
get to put their prices up by more. But all these stocks down here, which have been hit because
they've been price takers are still price takers, but they just had to take a lower price
or virtually no price rise for 40 years. Suddenly they're price takers at 5% higher up.
A, what does that mean for their valuation, just that they're suddenly enfranchised to get a higher
price? Not because they're brilliant businessmen, that's just what happens in inflation. I
think that is positive for the earnings. But now the second thing is the thing you raised
about cost control. There are some people who just get cost control naturally. They don't have to
be geniuses either. And that's because so much of their costs are fixed. And we've discussed
this in the past. Depreciation's an obvious one. There's these operating leases,
which is another obvious one. There is interest if you have sort of borrowed
far into the future on a fixed coupon. That's also a fixed cost.
So I am fishing at the bottom for those types of stocks. I.e. they have natural cost
control because they've got a lot of fixed cost. But also, and crucially, the valuation's
right down because everybody thinks, these guys will never put their prices up ever
again. Therefore they're worth x. This guy has been putting his prices up at 4% per annum for 20
years. Therefore I pay a premium on a valuation up here. And all I'm saying is it will narrow.
And it will narrow. And therefore there's more risk in these guys than there is in these ones.
STEVE CLAPHAM: I mean, this is what makes it so fascinating, isn't it? Because people will be
conditioned for years and years and years to look for those stocks with the economic bolt, to
look for stocks with high returns in investment capital. And if we're going into a period
in which there's consistent high inflation, those stocks-- perversely, those stocks with
very low returns on capital may actually do quite well. Because if you need to have a
lot of assets, whether it's fixed assets-- I remember, in the 1980s, there
was current-cost accounting. And what they did with current-cost accounting
was that, there being such high inflation, they looked at the assets on the balance
sheet at their replacement cost value. Because assets that were very old were generating
extremely high returns on capital. So perversely, those heavy, capital-intensive industries which
have very low returns could end up seeing their returns grow much faster than the ones with very
high returns. Is that something you agree with? RUSSELL NAPIER: Yeah, it's something I agree with.
And then when I agree with that, people say, oh, but there's the reinvestment rate. There's the
money they have to put back into the asset. So I want to tell you a story about my
visit to Santiago de Cuba, in Cuba. And I think I went in 1992. And that is
where the old Bacardi distillery is. And it's still making rum. I don't think they're
allowed to go in-- I don't know what the Cubans call it. Obviously the Bacardi family and the
Cubans have got a few disagreements. But it's still there and it's still producing. And
Cuba's most famous for those old automobiles that are still managing to trundle along the
roads, whatever it is, more than 50 years ago. Well, the distillery's still working. So it has
been possible, with virtually no reinvestment, to keep a distillery running from whenever
the revolution was, right up until today, producing rum. So I understand that that's not
the ideal way that one would produce rum. One would put some reinvestment back into
that distillery. But still, it is possible to run a large fixed asset with a minimal level of
reinvestment. So the price of reinvestment, which is obviously going up in an era of inflation,
isn't really massively undermining your returns. China plays into this a lot. The people
that we're talking about who have those big, fixed assets, many of them have suffered
from Chinese competition. And one thinks of shipbuilding or steel, things like that.
Now, this is a different conversation really. But if we believe that China is being increasingly
ostracized from the global trading regime, this also lifts pressure from that type of
company. And when I look at where all of these things cross, I keep looking at Japan.
Now, I get a lot of kickback on that. People aren't so keen on the idea. But if you say to
me, who's really got cost control? I think the people who've really got cost control to the
people who've been under the cosh for 30 years. And they've learned how to do it. And they will
now be rewarded for it in an era of inflation. So I think we should be looking up at Japan. You
are the expert on valuations. The valuations look reasonable. I mean, when you look around
the world, you see a lot of unreasonable valuations. I think you can find some reasonable
valuations up there. And I think that is more likely to be the benefit from inflation. And
it's been heavily hit by trying to compete with China. We attribute the deflation to many, many
things. But I don't think we pay enough attention to just how much damage has been done
to Japan through competition with China. STEVE CLAPHAM: Absolutely. And there's lots
of cheap stocks there. And I mean, I agree with you. There's lots of roads pointing there.
The other thing I think is quite interesting, just talking about low returns on capital
which may rise in an inflationary environment, is companies with very high stocks.
Because one of the things that people won't necessarily remember is that
if you've got very large inventory, as you reprice the meat each week, as
you reprice the products each week, you end up getting a gain on holding inventory.
So again, perversely, the low-return stocks, because they've got high inventory, will see
the greatest benefit in their earnings in an inflationary environment, which I think is
something that people may not necessarily-- it's not an obvious conclusion. And what
this tells me is that maybe we need to throw a lot of our existing rules. Because
everybody's doing screens for a "high return on investment" stocks. And maybe
they should be starting to think about screens for low-return stocks.
RUSSELL NAPIER: Well, you will the name of it-- and it's in this library somewhere,
this is my library-- the British government published a report on inflation accounting in
the '70s somewhere which will be available now on eBay. And I think we should watch the price
of that on eBay. And I think you're going to see it's going to start inflating quite quickly.
Because it mentions things like that. But actually there's a host of things where you just have to
start rethinking how you value a corporation. I would add, however, that, I mean, a lot of those
profits were fake profits. And you were taxed on them anyway. So in the early 1970s, things were
out of control here. I think headline inflation was 22%. The corporate tax rate was very high. And
as you reported fake-inflation profits, they were all taxed actual cash flow. And this doesn't apply
to all companies but, for some companies cash flow was getting sucked out of these companies. And
that process was called the doomsday machine, and was run by a man that you and I both remember very
well, called Tony [? Benn, ?] who was quite keen to run a doomsday machine, given that it would
catapult British enterprise into public control. So I don't think either of us are talking about
a level of inflation at that. So let's be clear about this. So what we are talking about has
some of these marginal effects. But if you get up to that sort of level of inflation,
then it's very difficult for any company. Because your cash gets sucked out by taxation.
STEVE CLAPHAM: I mean, if you talk to anybody that was an industrialist in the 1970s, they
always shake their heads, obviously particularly in the UK, because it was a disastrous period in
the UK, up until-- was it 1976 we went to the IMF? And I had a call very recently with a very
well-known industrialist. And I talked about this idea of inflation. And I could hear him, on the
other end of line, shaking his head. Because he remembered how difficult it was. When I was on the
sales side, I used to follow P&O. And the chairman of P&O, Lord Sterling, told me about the 1970s,
when he used to go around collecting the rent on a Friday because they had their senior management
making sure that the rent was in. Because it was hand-to-mouth, week to week, day
to day. And so it's kind of frightening. RUSSELL NAPIER: This is the really important
thing. We shouldn't pretend that inflation is good for equities. We're talking an
element of equity asset class and which element could have see more protection. But for
equities as a whole, this is not a good thing. And obviously if it's 3%, 4%, not so bad.
But if it starts getting to 7%, 8%, 9%, there isn't evidence that equities protect you
from inflation as a whole asset class. And of course, the best example of that is the '70s.
And I'm sure it'll be online somewhere-- and everybody who's watching this should read it--
an article that Warren Buffett wrote in 1977 for Fortune magazine, called High Inflation
Swindles the Equity Investor. So that's very much a bottom-up view. But it's really worth
looking at in terms of what happened to margins, what happened to effective tax rates,
and why equities didn't perform during that period. It wasn't just that
interest rates went up and valuations came down. But some of the reasons we've touched
on, it actually became very difficult to retain cash and grow cash and reinvest.
So the early stages of inflation are pretty reassuring. But in the long run, equities are not
the place to be. Equities in the whole are not the place to be. So what we are talking about,
maybe heavy- asset companies, maybe Japan. We're looking at a subset of equities. So I'm very
bullish on equities, because I think we're in the early stage of inflation. And that's working on
all right at the minute. But this depends where we're going to and how high it's going to get.
STEVE CLAPHAM: Well, of course, if we are in for a period like that, then you can't put your money in
bonds. So you've got to put your money somewhere. And it's funny you mentioned Buffett. Because
I read that I read the article this week, preparing for this. And I also read his 1980
letter. And he said, well, if you look at not the book value but their adjusted book value
of Berkshire, including the market value of the quartered holdings, we've done quite well
because we've increased at 20.5% per annum from 1964 to 1979. So this is that 1980 letter.
He said, we would pat ourself on the back, but in 1964, a share of Berkshire bought you half an
ounce of gold. And today it buys you half an ounce of gold. And you think about that as one of the
best-performing companies, it's quite remarkable. But the other thing I just wanted to touch on was,
if we're in a high-inflation environment-- I mean, it doesn't need to be 8%-- presumably we need to
avoid companies that have a lot of labor cost. There are two reasons for that. One is that labor
costs will be rising quite rapidly, because we'll get, I assume-- and tell me if this is wrong--
but I assume we'll get that labor push inflation. But the other thing is-- and I think it's
really relevant today-- is pension deficits. Because if you start to increase the inflation
assumptions in the calculation of the pension liability, those pension liabilities
are going to go through the roof. And of course this kind of rates aren't going
to go up. So is it possible that is a ticking time bomb in those companies with big workforces
and ticking time bomb in the pension deficit? RUSSELL NAPIER: So as you know, I run this course
called The Practical History of Financial Markets. Both of these are issues we cover in that.
And I think the fascinating one in the post- World War period, you ask anybody, certainly in
the United Kingdom, why do we have inflation, certainly, if you go down to the city of
London, they'll say, oh, it was unions. It was unions. It was all to do with the
unions. The unions caused the inflation. There's quite a lot of statistical evidence that
actually what happened is the inflation caused the unions. It was kind of the other way around.
I mean, all of us want protection from inflation. And if we lived in a world where there isn't
inflation, we don't need to unionize to protect ourselves. But when inflation
comes, that's when people go back to unionization. So Steve, one day, you
and I will be forming the analysts union. So I look forward to discussing that
somewhere appropriate when the time comes. And that the second point is, I think, an
absolutely essential point for all of us to think about in the Practical History
course. When we look at the things that make corporate mean revert, you would point
towards rising labor that we're discussing, rising interest expense which we're discussing,
rising corporation tax which we're discussing, rising cost of goods sold which we're discussing.
But historically, we kind of never thought about the pension scheme. Because in the long
sweep that we look at, in terms of that data for mean reversion, the pension schemes, they only
come along really aggressively after World War II. And of course, really, they're building
up into quite a big liability just as interest rates start to decline from '78 to today.
So for those people who are not familiar with pensions and accounting, that's how you value
your liabilities. And suddenly the liabilities are going up as the interest rates are going down. As
we now cap interest rates as inflation goes up-- and remember, quite a few of these pension
liabilities are linked to inflation. They're usually capped about 4%, not 12% or 13%.
Then, suddenly, one of the reasons we might see corporate profits mean revert is because
such a large percentage of cash flow has to go into the pension fund. If you look at the
assumed returns that pension funds put in, some of them are putting in 7% or 8%. There is
nothing in the price of bonds-- nor equities for that matter-- which would give you any inkling
of hope that you're going to get a blended 7%. So if we begin to force people to take a realistic
look in that-- and crucially, the interest rate isn't allowed to go up, so the liabilities don't
come down-- tons of corporate cash could be pouring into these pension schemes. I used to be
a pension fund trustee. So I used to say, to our actuary-- because every actuary in the country
spends most of the time in the meeting saying, to the trustees, don't worry, interest rates are
going up, liabilities are coming down. And I would say to them, well, what happens if interest
rates don't go up but inflation does go up? And the most normal answer you get from
an actuary is, well, that's not possible. And of course, in a market system, in
an economic textbook, it isn't possible. But in real life it's absolutely been possible.
And it's going to happen again. So I'm glad you raised the pension issue. But particularly for
a lot of European companies, I think there are big pension legacy issues which the market
is not really paying enough attention to. And we could also-- and I will be, in
the next report I'm writing for clients, looking at the life insurance industry,
particularly of northern Europe, which on these numbers-- I mean, it's been in
deep, deep trouble for many years because of where interest rates are. But in a world where
interest rates stay low and inflation goes up, we are looking at a crisis for the
savings system slash pension system, particularly for Northern Europe.
STEVE CLAPHAM: So this doesn't sound like a very pretty picture all round. I
mean, it sounds pretty awful. RUSSELL NAPIER: I just watched an
interview with Evelyn Waugh from 1960. And we're kind of saying this is kind of
a repeat of the post-World War II. And he claimed to be broke, claimed that he
didn't have any money. For those of you who don't know, he's another famous English author.
And the interviewer said to him, but Mr. Waugh, you made a fortune selling books before the war,
before it was taxed away, to which he replied, that's true, but I spent it all. And no honest
man has been able to save money since 1945. In a world where the government is
telling you what to do with your savings, it is incredibly difficult. So that's why the
top recommendation is find jurisdictions where the government isn't going to tell you what
to do with your savings. And that isn't easy, but that is the type of world that we now live in.
STEVE CLAPHAM: I mean, one place you can go would be commodities. Another place would be energy,
because you own real assets. I mean, to what extent do you think that will be hampered by the
whole move to ESG? I mean, interestingly, I listen to a podcast with Peter Harrison, the CEO of
Schroders. I'm a bit behind in my podcast queue. The interview was recorded last March. And
I just listened to it a couple of weeks ago. But he said something quite remarkable. He
said, in five years, the term, ESG, won't exist. And by that he meant that it'll be so ingrained in
every investment manager, every institution will have that as an integral part of the process. If
that's the case, I mean, is that the opportunity for the little guy, the private investor? Because
no professional fund manager will want to be seen owning big oil or, indeed, oil stocks.
And oil demand will continue. And there's an opportunity for the little
guy to actually profit from the fads and the fashion by buying real assets.
RUSSELL NAPIER: Yeah. So just when we're talking about real assets, I mean, I'll just do
10 seconds on residential real estate. That is, to me, the key real asset, which is easier than
this. We're going to have a discussion which is really quite complicated and has a lot of moving
parts. I think the case for residential real estate in a world where wages were maybe going
to be growing at 4% or 5%. Bond yields were 2%, 3%. I think it's probably even clearer in America,
where outside of the homes of the plutocrats, I think property is very cheap. So that's 10
seconds. And maybe we'll come back to that. In terms of commodities, there's lots of
commodities which we need and lots of commodities which we need for the Green Revolution. That's the
kind of irony of this. We're about to through a huge investment boom-- a series of investment
booms, actually, one associated with getting us green, one associated with us buying more
stuff from somewhere else other than China, and I think another one associated with shorter
distribution chains, which is linked to China but actually is supplementary to China. So three
investment booms are very good for commodities and ultimately will be good for the planet.
I mean, ultimately not bad for the planet. One of the things that's been going on for years
now is people have been moving their polluting industry to China because there's no real control.
So if we are bringing stuff back from China, I don't think we're going to go easier on the
pollution regulation. So that is an investment in commodities to save the planet, despite the fact
that extraction is inherently and necessarily not that green. So I don't to what extent we'll really
want to come down on that in the first instance. And just one thing-- there's one obvious
thing that we shouldn't be taking out of the ground anymore. And that's gold. I mean,
I do realize it has its practical uses. And you can't have a wedding in India without it.
That's a crucially practical use for gold. But on the whole, I think ESG means it's going to be more
difficult to get gold out of the ground, which makes it incredibly bullish for the gold that is
out of the ground. And I say out of the ground, because as you know, it comes out of the ground
very briefly and then goes back under the ground. So the whole ESG thing, I think, will not
be as bad for commodities as we expect, number one. And number two, it could be
particularly bullish for the price of gold. And when we're talking to commodities, I almost
hate to mention this, but the history of inflation is really the history of commodity inflation,
including food inflation. And the reason I don't want to mention it is disastrous if the savings
of the world flock into food because a lot of people go hungry. But that is what's going
to happen and arguably is already happening. Now, it may be that the governments have
to ultimately try and stop people's savings going into food. But it's a very good example
of what can happen when you get to a tipping point in inflation, when people consider that
their savings are better off in consumables than in a savings asset. And that's
called the velocity of money. And that's when the velocity of money starts going up.
So food is a good one. If you think back to the Weimar Republic, who made all the money in the
Weimar Republic? Farmers. Not just because they were selling food prices that were going up like
this. It's because they had quite a lot of debt, long-term debt, over their farmland. So they
did spectacularly well. So let's not forget what might happen to food prices. So rather than
saying you should go out and buy a lot of food, which is obviously not going to happen, there are
lots of countries in the world who might benefit from somewhat higher food prices going forward.
STEVE CLAPHAM: So we should find some land in the right country, agricultural land in the right
country. But just going back to residential real estate, I was trying to recall-- you wrote
this very good piece, Solid Ground, in 2016, talking about financial repression. And you talked
about capital controls. Wasn't one of the issues, in the past, when we had financial
repression, didn't we have rent controls? RUSSELL NAPIER: Yeah, so that is definitely
an issue. And they have come in in Berlin, they've come in in Vancouver, and they've come in
in Toronto. So you can't rule them out. So you've got to be very careful about this. I think that's
one of the reasons I favor American residential real estate, because I think, while it can
happen in America and it has happened in America, if you've read that report, you'll know that
Mia Farrow is still paying something ridiculous, like $2,000 a month to rent her rent-controlled
apartment up on the Upper East Side. But I think, in some countries, it's much less
likely than others. So I'm prepared to do that. I started my career as a lawyer in Belfast. And I
remember traveling up to a place called Coleraine. And there we were doing a rent-control review
for a very old lady who'd got her rent controlled in 1948. And in 1987, she was still alive,
still there, and still paying her 1947 rent. So for people who don't know what rent control
means, begin to think of the consequences of that for the capital value. In fact, there
were some-- and I've just been speaking to one-- there were some people who were putting so
much money into the renovation of the property that it cost more than the lease.
Let me give you another example of why property isn't necessarily the way to go. Continental
Can owned a building on Wall Street in the '70s. New York was not in a good place in the '70s. But
property taxes were very high. And it couldn't be rented. So they knocked it down. It was
cheaper to destroy a building on Wall Street than it was to keep it open. You couldn't
get any income of it, and you were paying property taxes. So you knocked it down.
So it's back to this-- where we keep coming back to, Steve, we have to think very differently. So
I'm happy to invest in US residential real estate on the basis that we won't have rent controls
for the average citizen. And that could be wrong. But I wouldn't be so keen to
do that in Paris, for instance. STEVE CLAPHAM: Do you think governments will
introduce price controls? In that article, you talked about that-- was it called the Office
of Price Control under Nixon? It seems almost unimaginable. But then I wasn't aware-- I mean,
it's not that long ago, 50 years ago, that we did have that. Do you think that will happen again?
RUSSELL NAPIER: Do you think anybody who voted for Richard Nixon thought he would introduce
price controls? I mean, that's the point. I mean, as you know, he sat with McCarthy on the
anti-communist trials. He was thought to be extremely to the right of politics.
So why on Earth did he bring in price controls? You do what you have to do. Or as a certain
gentleman has famously said, "whatever it takes." So I there's a lot of speculation about
what the Democratic party might do in America. I don't think it really
matters that much. You know, politicians, under extreme pressure, do extreme things.
I wrote in that article that the first man to head the Office of Price Control was another famous
communist called Donald Rumsfeld. And Donald was so busy in his first few months, he needed
help. So he hired another famous communist called Dick Cheney. So the idea that Nixon, Cheney,
and Rumsfeld got together to control prices tells you, in a crisis, anything is possible.
So I'm not saying we're going to price controls in the next two, three, four, five years. Highly,
highly unlikely, I think-- highly unlikely. But at some stage in an inflationary movement, is it
possible? Of course it's possible. And most people have never heard of it. They'll say, well, why
on Earth didn't they just raise interest rates? And the answer is they thought it would be too
painful-- pretty simple. I mean, Nixon knew that, by raising interest rates or persuading Arthur
Burns to raise interest rates, he could tackle inflation. But he knew what it would do to
the average American. So instead he went for price controls. So I guess the answer to
this is, never underestimate the ability of politicians to make the same mistake all over
again, but usually giving it a different name. STEVE CLAPHAM: But I suppose the justification
this time will be that we've all got so much debt, every country in the world, government
debt and, as you say, private-sector debt, that you can can't really afford for
interest rates to go up by much. And therefore-- well, I mean, what else can they do
other than introduce some form of price controls? RUSSELL NAPIER: So there isn't anything you
can do, which is called credit controls, instead. So back to kind of my opening
statement here, that most of the money in the world is created by banks. So if you
and I, as the government, control the banks, and we said, look, guys, this year you're only
growing credit by 6%, and therefore the growth in money supply was close to 6%, inflation should
be pretty low. So that's another way of doing it. The history suggests that we end up getting
a mixture of both of those. But it is worth remembering that the way inflation was controlled
post-World War II, particularly in somewhere like France, was not by using interest
rates or not so much by price controls. But by controlling the banking system, the
governments managed to control the growth of money and keep inflation somewhat in abeyance.
That's it, I think, in terms of how you can control inflation without using interest
rates. Rationing is another one. But I don't think we'll get to rationing.
STEVE CLAPHAM: But presumably, controlling the banks, would that work
for multinational companies? Because wouldn't companies just borrow overseas?
RUSSELL NAPIER: So you obviously have to stop that. I mean, if we're doing it in the
United Kingdom, we're only interested in sterling lending. Because only sterling
lending really contributes to our GDP. So controlling the sterling lending would be easy.
If they started borrowing euros, selling euros, and bringing it in, well, as long as we control
the supply of sterling, it really wouldn't make any difference. So I think it's possible
unless you've got banks prepared to take huge kind of currency risks to run a
sterling book borrowing it in Europe. So there are commercial limits on that,
usually. But ultimately you can stop them from doing that. And obviously we
had capital controls after the war. So that was not an option, not an option at all.
But normal commercial procedure makes that quite a risky venture. Not that our banks are averse
to a bit of risk, of course, every now and then. STEVE CLAPHAM: You've said this isn't going to
happen tomorrow, obviously. It's going to take quite a long time for it to unwind. What's your
best guess on the sort of timescale for this? And what should we be looking out for? I
mean, what are the signals? What are the milestones that we'll need to pass that
will tell us, OK, now's the time to panic? RUSSELL NAPIER: So the only thing to me that
really matters are bond yields. And that's what you should be looking at. So it'd be nice for me
to give you a detailed time frame and a detailed endpoint. And that's just a hostage to fortune.
But there is probably more value in me saying, here's a level of long-term bond yields
at which these things, these extreme measures, are going to have to be taken.
So I have done a very large report on that. And I won't go through all of the details in it.
But the conclusions are pretty straightforward, that on the-- and I'm looking at the five-year
rate, because it's the five-year government bond yield that probably has more of an effect
on the price of bank credit, particularly for corporations. And the kind of argument is, at
what level of interest rates would we trigger debt defaults because interest are so expensive?
So the answer, in America, is roughly 200 basis points above today. That's quite a bit to
go. We're going quickly though, but that's quite a bit to go. For the United Kingdom, it's
still 200 basis points. For the European Union, it's about 100 basis points. For Japan,
actually, it's probably about 100 basis points. But obviously their rates are very low.
And the fascinating one is China. It's only 100 basis points for China. I mean, I think, in
sort of the mess that we're in, we've forgotten that China also has a debt-to-GDP ratio
just as high as the US, the United Kingdom, not quite as high as Europe-- or some places
in Europe. So those are the sort of numbers. So all I would say is we can live in-- this
is not a normal-- I don't want to explain what's happening out the window today as
normal because it's very, very abnormal. But a continuation of this can go on till those
interest rates are hit. When we start hitting those interest rates, then we have to go into
the world that you and I have been discussing. And that is a world of control. Bull market in
the word control, bear market in the word market, when interest rates reset to those levels.
And of course I can't say when. That's the difficult thing about the world we live in,
when. I mean, I, personally, if someone came up today and wanted me to buy a 10-year treasury
yielding 2%, I wouldn't take it, or 2 and 1/2%, I wouldn't take it. But the market is full of
people who seemingly want to do that. And that will happen until the day it doesn't happen.
STEVE CLAPHAM: Just to finish off, Russell, I mean, one of the things that I remember
reading in the past about inflation-- I think it was a Goldman Sachs piece-- they said that when
inflation got to above 4%, it had a massive impact on multiples. Multiples really contracted when
inflation went above 4%. And I assumed that that was simply because interest rates went up.
Now, if we get above 4% and interest rates can't go up, won't people think about equities
as being real assets, companies that have real productive capacity, and be prepared to pay up
for them anyway? Because if they can't buy bonds-- because in the old days, when inflation went
above 4%, interest rates went up and you got more interest in your money. If that's not the
case, is it not possible that we're in an era of higher inflation but equities don't go down?
RUSSEL NAPIER: So there's only a long answer to that, I'm afraid. So I also have written
exactly the same thing. And I wrote that in 2009, and said, buy equities, buy them today,
and hold them until inflation gets to 4%. And it turned out to be pretty reasonable advice.
And we look at this in the course as well. And we also conclude that, when inflation goes above
4%, that is problematic. And the reason it's problematic is the one you've mentioned-- the
central bank tends to jack up the short-term rate. And that is a higher discount rate to create
a lower growth rate. And if you want something that's bearish for equities, you have a
higher discount rate and lower growth rate, your NPV comes down. So that's pretty obvious.
Therefore, is there a jurisdiction where, when inflation goes up, interest rates don't
go up? And the answer is yes. It's Hong Kong. Hong Kong runs a thing called a Currency Board
system. So it effectively always imports US rates. So you just look back at history and say,
wasn't there a time when inflation in Hong Kong was going through the roof and interest
rates were coming down? And the answer is yes. And that was in the early 1990s. And
you're absolutely 100% right. What happened to the price of equities? They just
went straight up. And I was fortunate enough to live through that giant party, which ended,
actually, at the very end of December 1993. So it begs the question, well, isn't that
exactly what's going to happen again? The problem is, how we keep interest rates down,
how we manage the yield curve. That's the crucial thing. If it's going to be done by central
bankers, then I think you're right. I mean, I don't know if infinity is the right valuation
for equities. But if it's going to be done by central bankers, equities is the place to be.
But we've got to imagine just how mad it would be for central bankers to do that. You and I are
selling our government bonds, because we believe inflation's coming. And then the central bank,
in response to that, commits to two things-- never raising interest rates and producing
an infinite growth on its balance sheet. I mean, it's the route to hyperinflation
exchange-rate collapse. And I really believe that none of them would be that stupid to do
it. And I don't think any of them will be. And people say, well, look, they've been doing
it for years. Of course they're doing it for years in an era of low inflation. So you kind of
get away with it. But when inflation comes back, you've got to stop.
So in my opinion, the way we cap these yields is we force savings
institutions to buy all these government bonds at a yield they're told to buy at. And that
is why we cap the yield curve. But that's the problem for equities. If it's that way of doing
it and not the central bank way of doing it, then to buy all this stuff, they've got to sell
something. There's lots of stuff they can sell. But the biggest thing in the portfolio,
after bonds or near-bonds, is equities. So that's why the equity class as a whole doesn't
benefit from this. You and I have discussed some of the operational issues that will come
anyway at much higher levels of inflation. But within the equity class, as we've also
tried to discuss, there may be pockets where you can defend yourself from this. So it really
does depend, crucially, on how that yield curve is capped. And I can tell you that nine out of 10
fund managers think the central bank will do it. And I think the chance of the central bank
doing it are about one in 100 because it is so dangerous. And history shows it's so dangerous.
So the market is really riding for a fall here because they're convinced that the right price for
equities will be infinity when a yield cap comes. And I think there'll be a lot of
disappointment, to put it mildly, when they find out how the yield cap is enforced.
STEVE CLAPHAM: Russell, I think that's a great point for us to finish on. Thank you
enormously. It's been a fascinating, really interesting discussion. Can you
just tell people where they can find you? RUSSEL NAPIER: Well, I can actually answer that
question for the first time. Because until Monday, I was not available unless you were a professional
investor. So if you're a professional investor, you can go to www.eric.com. If you're not, and
you're a retail investor, then there is an option now at RussellNapier.co.uk. So there are, for
the first time, subscriptions to the research available through that. And we finally,
after six years, found a way of doing it. STEVE CLAPHAM: Well, that's great.
I shall look forward to subscribing myself. My name's Steve Clapham from Behind
The Bounty. thank. You very much, Russell. NICK CORREA: I hope you enjoyed this
special episode of the Interview, the premier business and finance series in
the world. However, this is just the tip of the iceberg. For more in-depth content and
expert analysis, visit the membership link in the description to unlock a week’s access for
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