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BFM 89.9: Don’t Panic, Debt Default Will Not Happen

This podcast was originally published by BFM 89.9. Find the original link at

In this podcast episode from BFM 89.9, the hosts discuss the latest updates on global markets and dive into the US debt talks. They are joined by Tony Nash, CEO of Complete Intelligence, who shares his perspective on the debt ceiling and its potential impact on the markets. Tony believes that a US debt default is unlikely and views the current concerns as overblown political maneuvering. He highlights that the debt ceiling issue arises regularly and is often resolved at the last minute, causing frustration among Americans.

The conversation then shifts to the state of the US economy, particularly the labor market. Tony notes that there is fatigue in jobs growth, with ongoing layoffs in various industries, including tech companies. The hosts also discuss the recent rise in the US April services PMI, indicating a shift from goods to services and suggesting continued growth in the services sector.

Nvidia’s quarterly results become the focus of the discussion, as the company outperformed expectations and experienced significant stock price growth. Tony explains that Nvidia is a key player in the AI infrastructure space and has benefited from the increasing adoption of AI and machine learning technologies. However, he cautions that the high valuation and potential impact of a recession on corporate infrastructure spending could affect Nvidia’s future performance.

The podcast concludes with a recap of Nvidia’s financial performance and analyst expectations, noting the positive sales figures and high target price. The hosts question whether a company involved in AI deserves the current forward PE ratio of 66 times.

Overall, this podcast provides insights into the US debt ceiling issue, the state of the labor market, and the performance of Nvidia in the context of the broader market trends.



This is a podcast from BFM 89.9. The Business Station. BFM 89.9. It’s 7:06 A.M. On Thursday the 25 May. You’re listening to the Morning Run. I’m Shazana Mokhtar, with Wong Shou Ning and Mark Tan. In half an hour, we’re going to be discussing the outlook for Netflix and the US streaming services. But as always, we’re going to kick start the morning with a recap on how global markets closed overnight.


The markets are all red, probably thanks to the jitters surrounding the US debt talks. In the US markets, the Dow Jones was down 0.8%, S&P500 down 0.7%, and Nasdaq down 0.6%. Over here in the Asian markets, Nikkei down 0.9%, Hang Seng down 1.6%, Shanghai Composite down 1.3%, STI down 0.1%, and our own FBM KLCI down 0.1%.


All right, so for more insights on what’s moving markets we have on the line with us, Tony Nash, CEO of Complete Intelligence. Tony, good morning. Thanks, as always, for joining us. So let’s start with what seems to be keeping markets on tenterhooks. In recent commentary, though, you’ve opined that a US debt default really isn’t on the table. So why do you say that? And why are current concerns of a debt default overblown, in your view?


Yeah, so the debt ceiling literally happens every other year in the US. And it’s happened for the past 15 years. So I’ve said this many times. This is shameless partisan positioning intended to show politicians coming to the rescue of a crisis that they created themselves. So they’ll get media attention. Then at the last minute, probably after the deadline, they’ll miraculously find a solution when everything seems the most chaotic. So this is something that most Americans are really frustrated by. It’s like we know they’re not going to default. If they do, it’s ridiculous, and it’s just shameless partisanship. So are people here worried? To be honest, not really. I think a bunch of portfolio managers are being very careful in markets, but on a personal level, I seriously doubt that many people are all that worried.


So, putting aside the political shenanigans, of much greater importance to global markets is the state of the US economy, particularly the labor market. Is there a sense of fatigue in jobs growth or more room for expansion?


There’s definitely fatigue. If we look at the data since the end of COVID there’s a metric that the Fed…


Okay, we’re going to try and get Tony back to talk more about what’s happening with the US labor market. But as he said earlier about the debt ceiling, he’s taken a little bit of a, I guess, sanguine tone on it. He’s less worried that debt default will actually have long term implications. He thinks things will be resolved, just that it’ll take a lot of drama to get there.


Yeah, but the consequences are already being felt. I mean, I’m seeing this headline on Bloomberg, United States may be cut by Fitch on debt limit fight because US ratings have been placed on Watch Negative from Outlook Stable by Fitch. So the rating watch reflects the increased political partisanship that is hindering reaching a solution to race or suspend a debt limit despite the fast approaching, as we call it, X State. This is the first rating agency that has already given them some warning snakes, right? And once this happens, what this means is that the cost of borrowing is going to rise quite significantly on top of the fact that the interest rate in the US is already 5.2%. I mean, the Feds have raised it what, ten times since last year?


There’s a lot of moving parts to this picture, and I think there’s also discussion on what is it that other stakeholders in the US government can do if Congress can’t get its act together, what can the Treasury do? Can the Fed do anything? In any case, I think the Treasury will probably try to prioritize the debts that it owes, which means that some people will may not receive their bills. I think looking at Social Security and Medicaid and Medicare, hospitals, roads, who’s going to maintain all that?


Well, I do think that we have Tony back on the line. Tony, can you hear us?


Hi, guys. There you go. Sorry about that.


No worries.


On the debt ceiling. What’s interesting what’s happened is this week people in Congress asked Janet Yellen how she did her calculation on finding that X date. So it’s a kind of mysterious calculation and nobody knows. So people are trying to dig into that to understand when actually is the date, because nobody’s showing any math, nobody’s showing any data around it. And again, it seems like this is being hyped as a political ploy. So what you rightly point out about if it does come, the US government will have to prioritize payments. Right? And that’s fine. But again, voters and legislators don’t actually know how she’s coming up with that X date and a lot of people just don’t trust her.


Well, coming back to the point we were discussing earlier on the labor market, Tony, what’s your sense of how jobs is doing there?


Yes, jobs are in a rough spot. So there’s a metric called continuous unemployment claims and they’re at their highest level since the end of 2021. So I know that isn’t a long period, but stimulus is worn off, consumer credit levels are rising really fast, and tech companies are still laying off staff. So Verizon, a big telecom carrier here, just announced today that they’re going to be doing layoffs. So we’ve seen the Amazon and Facebook. Facebook yesterday announced another layoff. And so what’s happening now? That those initial layoff announcements were made to give a boost to stock prices. But now that that boost is largely expanded, people are simply not hiring. So they’re choosing not to hire for open jobs as a way to contain their workforce through just retirements and quits and that sort of thing.


Now, Tony, the US April services PMI rose from 55.1 from 53.6, surpassing the market expectation of 52.6. Isn’t this further evidence that at least in this sector, growth hasn’t been tempered by inflation or the rate hikes?


Yeah, well, certainly I think what it’s showing is an ongoing shift from goods to services. So during COVID everyone loaded up on goods. For the past twelve to 18 months, we’ve seen a trade off of goods purchases to services purchases. That services PLI will likely continue for the next two to three months, partly because the summer here in the US is holiday season, it’s vacation season, and so services will continue to thrive through that period. So we would expect a services PMI decline, maybe not necessarily contraction, but at least decline in Q3, probably mid Q3.


Okay, Tony, can we talk about one results, one set of results that came out last night, and that’s Nvidia. Right. They really beat street expectations up 20 over percent stock price. This is one tech stock that has done exceptionally well, I think a lot to do with AI. Are you bull on this name?


Well, Nvidia has done very well, and definitely top line growth surpassed expectations. So Nvidia is to the AI boom, which Cisco was to the Internet boom 20 plus years ago. Right. So they’re selling the infrastructure for AI and machine learning and a lot of these new capabilities, and people need them. And that same infrastructure is used for crypto mining and other things. So they planned extremely well, and they’re kind of reaping the profits of that right now. So as long as we continue to see companies adopting and expanding AI and machine learning capabilities, the value in Nvidia should be there. I don’t necessarily want to make a prediction on the stock price where it is right now. It’s a pretty high price in terms of valuation and other things. But I think in terms of corporate performance, it’s certainly strong and will remain strong.


So do you think any stock that has an edge or have first mover advantage when it comes to AI deserves a premium? Just pretty much like Tesla when it comes to electric vehicles?


Well, I think when you’re looking at a stock value, you have to look at the forward expectations. And so do you believe, or does an investor believe that that company that provides either AI software or AI hardware or something like that, do they believe there’s growth in that area? And if they believe there’s growth, so what’s the multiple on that growth and how quickly will it come? That’s how people come up with those price expectations.


Yeah, because when I look at Nvidia, the Bloomberg showing a PE of 66 times forward PE. So it looks like markets are really expecting a lot of growth.


Oh, yeah, they do. And I think part of the problem is people really load up on hardware first. And so that growth may very well continue at that same pace. But it really all depends on what happens to corporate infrastructure spending. And if that corporate infrastructure, meaning IT infrastructure spending continues, then it’s really good news for Nvidia. If we do hit a recession, then corporate infrastructure spending could be hit and that could hit Nvidia in a negative way.


Tony, thanks as always for the chat. That was Tony Nash, CEO of Complete Intelligence, talking to us about some of the trends that he sees moving markets in the days and weeks ahead. Capping the conversation there with just some thoughts on how Nvidia has performed. And we do have their results coming out overnight, right? They did really well, performing well beyond Wall Street expectations. Their sales in the three months ending July will be about $11 billion, which is 53% higher than what analysts were foreseeing.


Revenue for the first quarter was $7.2 billion versus 6.5 expected, while earnings per share was $1.9 adjusted versus the $0.92 expected.


Okay. Sorry.


Net income was $2.5 billion versus $1.62 billion from the same period last year.


Okay. I’m so excited to tell you how many analysts cover this. Well, a lot. 44 buys, 13 holds. No sells at all. At all. Okay. So consensus target price, $307, which is already very, very close to the regular market hours share price, which was down one dollars. And but I know aftermarket hours, the stock boomed, shattered by ceiling by going up by 20%. So I won’t be surprised if a lot of the analysts actually rush out to upgrade. But the ceiling to me is the fact that PE forward PES are 66 times. Do you think a company involved in AI deserves 66 times? Which was my question for Tony.


That’s right. And I think AI is going to be driving a lot of investor interest in these kinds of stocks. But let’s turn to another stock in the tech sector that hasn’t been doing so well or hasn’t done so well recently. Then that’s snowflake. Their sales outlook for the current quarter fell short of analyst expectations, and this did lead to a share downturn. Snowflake software helps businesses organize data in the cloud, and their quarterly revenue is expected to be growing at 34%, but well below Wall Street expectations.


Snowflake also cut its outlook for the fiscal year, saying product revenue will be about $2.6 billion versus 2.7 it predicted early in March. Analysts had feared that a slowdown demand for cloud services would dance. Snowflake’s pay as you go model.




But still quite popular with analysts. 29 buys, 13 holds, two sells, albeit not as popular as Nvidia. Consensus target price for the stock, $188. Last time, priced during regular market hours, it was up all right at 718 in the morning.


We’re going to take a quick break, but we’ll come back to cover more top stories in the newspapers and portals this morning. Stay tuned BFM 89.9.


You you have been listening to a podcast from BFM 89.9, the business station. For more stories of the same kind, download the BFM app.


BBC: EU responds to US Green Deal by relaxing state aid rules

This podcast is originally published by BBC Business Matters in this link:

BBC’s Description:

The European Union will allow members to offer subsidies that match those offered by the US Inflation Reduction Act to prevent an exodus of green energy projects. The White House’s $369 billion initiative has been criticised by many countries, which fear it could attract local companies to move across the Atlantic.

Roger Hearing discusses this and more business news with two guests on opposite sides of the world: Stefanie Yuen Thio, joint managing partner at TSMP Law in Singapore, and Tony Nash, chief economist at Complete Intelligence in Texas.

Tony Nash, CEO and founder of Complete Intelligence, joined BBC Business Matters podcast, to discuss a range of topics from autonomous vehicles to green energy subsidies.

Nash shared his thoughts on the future of AI and autonomous vehicles. He discussed the challenges of ensuring self-driving cars can navigate changing road conditions and the safety concerns that come with autonomous driving. Nash also discussed the potential of AI in the transportation industry and the need for continued development in this area.

Nash also provided insights on Joe Biden’s tax plan, specifically focusing on corporate taxes and unrealized gains tax. He discussed the potential impact of the tax plan on companies and individuals and offered alternative solutions to the proposed policies.

Nash also discussed the transatlantic race for green energy subsidies in another episode. He explored the role of government grants in spurring innovation in the green energy industry and discussed the challenges facing countries caught in the middle of geopolitical forces. Nash also highlighted the importance of consumer pressure in driving environmentally friendly products.



Hello, and welcome to Business Matters. I’m Roger Hearing. Coming up on the program today, the European Commission is allowing member states to subsidize companies with green energy projects. They’re trying to forestall a drift of such firms to the US. Where state aid is already in place. Also, as pro Western protests go on in Georgia, we take a look at the strength for the economy in a country that really desperately wants to join the European Union. President Biden’s budget plan see a big tax rise for rich individuals and companies. So how’s that going to go down?


What he’s promising is we’re going to have European style benefits, but still have incredibly progressive taxes, and that’s just not realistic.


And self driving cars are on their way, but how can we make them safe on crowded urban roads? And I will be joined throughout the program by two guests on opposite sides of the world. Stefanie Yuen Thio, who’s joint managing director at TSMP Law Corporation, is joining us from Singapore. And Tony Nash, founder of the AI firm Complete Intelligence, joining us from Houston, Texas. So clearly, Tony, let me come to you and ask, well, what’s going on down in Texas at the moment?


Hey, Roger. Well, we have the Houston Rodeo, which is the largest rodeo in America, and it sounds like a throwback, but it’s actually a really big deal. They raise about half a billion US. Dollars for scholarships for Texas students. So it’s a big deal here in Houston, and it sends a lot of kids to university.


Yeah, and worth watching, too, I imagine, isn’t it?


Yes, it is. Yes, sir.


But you don’t take part, I imagine, Tony. I mean, the picture in front of my mind at this moment is quite.


Last year, but I’m not good for 8 seconds on a horse, so I’ll just sit in sidelines.


The let’s hope you’re good for 60 minutes on the radio, and I’m sure you will be. Anyway, welcome both. Let’s first of all talk about what’s happened here in Europe, because really it’s a transatlantic issue. But Europe has moved to try and level the playing field for companies there who want to set up green energy projects. There’s been fears that very generous new subsidies for US firms brought in by President Biden would drain Europe of green energy projects as businesses moved across the Atlantic to take advantage of what was over there. Well, now the European Commission has relaxed the rules on state aid for projects aimed at speeding up energy storage and the use of renewable energy and wants that take out carbon from industrial processes. EU member states will have until the end of 2025 to set up their schemes. What’s your take on this? It’s your side of the Atlantic that has really upped the ante on this with the Inflation Reduction Act covers a multitude of things, but one of them is this enormous amount of subsidy, over $300 billion, and then it starts this war with the EU over it, really.


So, Roger, the first thing I want to do is start a green energy company to game both sides of the subsidy plan. Right. So I think it’s interesting. It started in the US and obviously it’s just a truckload of money, and like everyone has said, it’s just a race to get somewhere. And I think it’s really hard to believe that this race is a credible one when Germany is burning more coal than they have in decades. Right. So I think that is it going to stimulate innovation? I don’t think so, because it’s grants, right. These are grants that are being given out by government, which I think I.


Don’ think they’re necessarily direct grants. Some of them may be, but it’s a mixed picture, I think.


Yeah, it’s mixed. And so those grants will be the first to go and they’ll be given very inefficiently, and then the tax credits or the other things that are done, if they’re in small batches, then they could kind of engender some competition. But if there are very large tax subsidies to be given, then it’s just going to be pigs at a trough. That’s all it’s going to be here in the US, in Europe. Europe is not unique. It’s the same thing here.


Well, indeed, but at the same point, I’ve put to Stephanie, I mean, isn’t in the end, Tony, the problem that you can’t leave it up to the market to do something that actually matters much longer term than most markets really have anything to do with?


Oh, well, you can. When you look at emissions, the US has been well ahead of kind of targets for years, because for the most part, we’ve had markets that haven’t subsidized kind of inefficient companies to do this. Of course, we have companies like Cylindra, which was a big story 15 years ago or something, and other wasteful green tech companies. But for the most part, when you look at, say, the US auto industry, other industries, they’ve done they’ve worked very, very hard to reduce emissions. And the US auto industry, even on petrol-fuelled cars, has done an amazing job at reducing emissions. And of course, there are subsidies that go to US automotive makers, but they’re not new and they’re not a large part of the revenues that those auto makers get.


What’s the incentive for them to do this? Because there has to be some incentive.


Consumers want it.


Consumer pressure.


Why do people make a car Blue? Or why do people put a Bluetooth connection to your ipod or your iPhone in the car? It’s because consumers want it. So the more consumer pressure there is to have environmentally friendly automobiles, it moves in that direction.


That’s very interesting. But Tony, let me bring you in on this, because it is an interesting picture of a country that is in a very difficult position, caught between Russia and the west but also with an economy that clearly doesn’t basically function. It seems to be held together entirely by aid.


And wine.


And wine. The wine is very nice, don’t get me wrong on that.


Yeah. It’s in a tough position. It’s between some big powerhouses and they had a conflict with Russia a decade or so ago, so it’s a very kind of tenuous position, and it’s definitely not something that’s easy to get out of, I don’t think.


Tell me, the other thing is that being caught in the middle of very big geopolitical forces, what was very interesting, Georgia. Georgia’s economy right now seems to be run by mainly by Russians who fled from Russia, which is an extraordinary situation, isn’t it?


Yeah, it is. Roger, I’m really not sure. The basis of this protest is supposedly that NGOs have to register because of their foreign influence, foreign money. But that is required in a lot of countries, so it’s required in Singapore, for example. Right. So I’m not really sure why this is such a problem. If foreign newspapers, like in Singapore, every foreign newspaper has to be approved. Yeah, and I I’m sorry, I don’t mean to be picking on Singapore, but but this is the case in a lot of countries, and so I’m just puzzled as to why this is a problem, especially if there’s so much foreign aid there. I just don’t understand it.


Tony, can I hazard stephanie, come in. Yes. Yeah. Let me hazard a guess. What’s happening in the Ukraine is a very big part of the consciousness of that part of the world right now, as it is for the rest of us as well. How Ukrainians are getting their message out there, how they’re garnering support internationally, is through social media and the foreign press. So I can imagine that any move that tries to muzzle foreign ownership of media is going to look like it is a very authoritarian move. And by and large, we get worried about things like that. And Singapore has been criticized, as Tony, you’ve pointed out, for having those rules, and I can accept that. I can appreciate that that is an issue. Having said that, international interference in national issues has become an increasing thing. We’ve seen the effect of troll farms in Russia on the US elections in the past, for example. And while we think we don’t want there to be constraints on independent and credible news organizations, what if you had an Islamic State take a very large percentage of the news outlets shareholdings?


Yeah, it’s one of those issues. It has to be applied not in general, but in specifics, and then see how it plays out. And I think that is absolutely the problem in Georgia. No doubt we’ll hear more from that country… Of the Manhattan Institute. Right. Tony, I’m going to let you get your teeth into it, but I will say, first of all, there’s a sense in which this is a phony budget, isn’t it? Because he doesn’t even expect necessarily to get it through Congress.


Yeah, it’s not going to make it through Congress. I mean, it’s just not. I mean, look, the capital gains tax that he’s proposing is higher than the ordinary income tax of the US. Meaning if you work for a living and you pay taxes from your salary, the capital gains tax he’s proposing is higher than that. And so these people who are actually taking risk on investments, they’re going to pay a higher tax for putting investment money into the market. That’s just ridiculous, and that stuff won’t make it. The thought that companies are going to pay higher tax is just silly because it’s not going to happen. I mean, there are several tax attorneys who, if you believe that’s going to happen, then you need to talk to tax attorneys and understand and CPAs and understand how things really work.


You’re saying, Tony, that the taxes are not going to happen because he won’t get through Congress, but you’re saying it’s a silly idea.


I’m saying the corporate taxes won’t happen because it’s unrealistic. So companies pay tax and that’s fine, but they also employ a lot of people. They make investments, they generate intellectual property and so on and so forth. So do we want to tax them more? Sure, maybe a little bit more. But to take a plan like this and aggressively state that you’re going to make companies pay a lot more, it’s really questionable, especially as earnings are collapsing. Publicly earnings in publicly traded companies are collapsing right now, so we’re going to put higher tax on them. And you saw this in the UK when there was the pressure on Gilt six months ago, right? You can’t put this type of thing forward if you don’t have a legitimate plan. And so for Biden to say, if you don’t have a better plan, well, I have a better plan. Why don’t you tax electric vehicles for the miles they drive? Because they don’t pay any fuel tax in the US.


Yeah, but that’s not going to fill the gap, is it? I mean, if you compare these enormous companies with huge profits, some of them, particularly in the energy sector, the financials as well.


It’s net positive, right? So it’s net positive. And anybody who thinks like your guest said, people are going to game that $100 million. I mean, that’s just silly, right? Anybody who makes under $100 million, they’re going to distribute it to family and shell companies and LLCs and other things. Nobody’s going to be worth $100 million.


It’s that they tax people. The people who earn over $400,000. That was the figure, wasn’t it? That’s where the burden is going to fall. But to a lot of people, that seems very reasonable. It’s an awful lot of money.


What’s? An awful lot of money for $400,000. Yeah, but how many people who earn $400,000 are really going to pay it? Right? I mean, they will, of course, but most of them are also going to have a lot of deductions, too. So you would have to raise the standard deduction unless those guys are going to circumvent. The other really silly thing which your guest was really good at talking about was the tax on unrealized gains. Okay? So imagine if you own a stock and it’s gone up two or three times and you haven’t sold that stock yet. That’s what an unrealized gain is. So imagine this. You own a house and the value has gone up by 50% and the government comes to you and says, hey, I know you haven’t sold your house yet, but I’m going to tax you on that sale of that house anyway, right? That’s exactly what this unrealized gain tax is doing. It’s saying everybody who owns a house that’s gone up in value, the government’s going to come in and tax you on that gain in that house. And you own a house and you’re like, wait, that’s not fair.


I haven’t even got that money yet. Right? So let these guys make their gains and tax them on those capital gains. That’s fine. We don’t need to hate rich people just for being rich.


Also, Tony, does the house owner get it back if the house price falls?


And how do you measure it? What’s the measure of value anyway? It’s full of difficulties, clearly. Well, definitely they will find ways around it. Well, let me come back to you then, Tony, on this, because we’ve said basically what you don’t think will work with what Joe Biden is promising or suggesting. If he is attempting to increase the size of the state, which it seems he is, and perhaps a bit parallel to what’s happening in Singapore, how should he be seeking the money for that?


Well, I think the first thing he needs to do is look at why he’s hiring 17,000 new Environmental Protection Agency agents, right? I mean, you know, we need to understand why we’re hiring more people into the government rather than just putting the heads aside and saying we’re going to grow government, we’re going to be greener, and so on and so forth. There was a law passed last year that said there would be something like 70,000 new Internal Revenue Service agents. And once the new Congress came in, the first thing they did was attack that and defunded because Congress has the power of the purse. So effectively what Biden is doing is he’s trying to anchor the budget discussion. I don’t think many of these things are actually going to happen. This is a negotiation. We have the debt ceiling coming on. We have a number of other things happening with regard to federal government revenue. So all he’s doing here is trying to anchor the conversation very high. And I think what you have in Congress right now is you have a set of Republicans who are not going to negotiate with that.


What they’re doing with the budget ceiling is they’re ticking off item by item the things that they want and getting the federal government to give in on things one by one because the bureaucrats do not want the debt ceiling to be a problematic issue.


Well, yeah.


Is it likely to Republicans on things one by one? Of course.


Are we going to find the new debt ceiling problem, which seems to be.


Oh, my gosh, Roger, there’s going to be so much drama about the debt ceiling. Oh, my gosh, it’s going to be the end of the world and full fifth grade of the US. Government and all this garbage. It’s it’s not going to be an issue. It’s never going to be an issue.


Okay. Interesting. I mean, Singapore, I suppose. Tony, would you would you put your faith in in autonomous vehicles? I mean, they, they have tested some, I think in Texas.


Yeah. I was driving in Dallas probably a year or so ago, and I was on a very crowded highway, and I looked next to there was a big semi truck next to me, and it was supposedly an autonomous driven semi truck, but of course there was a driver there. And to be honest, I found it terrifying. I heard an interview with one of the grandfathers of AI. His name is Stuart Russell. This was probably about three years ago. And he has been in AI since the 70s or something, and he was involved in self driving cars in the 90s. According to him, and I’m sure the technology has come a long way in three or four years. But at the time he said that we were no further with self driving cars at the time of that interview, which I think was 2018 or something, than we had been in the 1990s. That’s extraordinary. It is. And I work for an AI company. I mean, it’s not magic. It’s code and math. And that’s really what it is. It’s computer code and math. And as Stephanie pointed out, we have trouble updating apps. Right. And so if you’re going to be moving along at 100km/h or whatever and put your faith in a car and other people’s cars, I think when everything is automated, that’s different.


Right. If we’re 100% self driving cars, then that’s a very different story. But when you have some self driving and some not, there are so many unknowns in the environment, and how can a car know if something walking along the side is a child or a mailman or whatever, right. And you just don’t know what they’re going to do. So I don’t think cars on their own have the compute power to understand what’s going on around them. I suspect that a lot of what we’re being told is marketing more than actual capability. I would really like to talk to somebody and understand if it’s actual capability, because I just don’t believe it. I want it to happen, but I just don’t believe it’s.


Isn’t it I mean, what you said they want it to happen because I certainly feel it will be hugely useful. I mean, elderly parents being able to get places, for example. But all sorts ways in which actually it’d be really useful to have such a thing. I suppose we feel. And, Stephanie, I’d be interested to get your intake on this. We feel that at this point, with all the technical know how, we have self demonstrated that we should be able to do this. I mean, it’s been a staple of science fiction films, probably going back to the 19th century, that these kind of things would exist.


Yeah, but I have a question on AI. We’ve been talking about Chat GPT and how biases get into it. Now, if you’re trouble, who is setting the safety standards for these self driving cars? If there is a person walking on the street, is it going to make a distinction between a minority race? If there are two people and it has to pick one to hit and it can’t stop, for example, does it pick the minority race guy to hit? What does it do?


That’s like the famous trolley example in a philosophy class. Do you run over the fat person or not? And these kind of things, which you can’t really expect, I suppose, a self driving car to think of. But I suppose that the point of this. If everything is autonomous, then, as Tony says, perhaps the issue isn’t really a big one. But I would say with all these caveats you’re putting in there, Stephanie, the fact is there are a lot of very bad drivers out there already. Is it worse to have one that’s autonomous?


No, I totally want to have a self driving car, frankly. I would like to not have to drive me around. I would like my husband to not have to drive around. He thinks he’s a race car driver. He’s not really that good. So I think that would be great. But I agree all the cars should be autonomous. And maybe we should have speed limits.


Well, yes. And you could impose them automatically very easily, couldn’t you? That would be one of the things. And Tony, I suppose you’re in AI. Okay, I take on board your point. You’re saying it hasn’t come people reporting it hasn’t come that far since even the 1990s. But it must be something that AI can take on, surely.


Sure, AI can take on a lot of things. But is it there right now? And would I want to drive in it right now? Probably not. And Roger, going back to your question about is it worse for a machine to, say, be a bad driver than a human? Absolutely. Yes, it’s worse.




Because the unique function of that machine is to drive you around safely. That driver person does not have a unique function, right? So if that machine is specifically made to drive you around safely, that’s the only thing it’s there for. So it should be able to drive you around safely. And until that can happen, we should absolutely not have autonomous vehicles on the road.


Okay, but take the bad drivers. Who knows what the function of the bad driver is? But if they hit you, they’ll still do damage, and that’s really what matters. Principle, surely.


Of course they will. And to go into any country and get a driver’s license. Anybody can get a driver’s license, right? And so that’s a kind of least common denominator standard. The worst driver can still get a license.


And the worst robot might be a better driver.


Yeah, but that’s that robot’s 100% job, and unless they can do it in the top, I would say, decile of drivers, it shouldn’t be on the road.


All right, well, I think they’ve got a big, long way, I think, to persuade either of you, really, that it’s happening. I think Stephanie probably would prefer it probably more than you would. I certainly would love it. Not least for the fact I can go to a lovely English country pub and after perhaps consumed a little bit of lovely, I can just get in the car and it’ll take me home. No issues. That’s what I’m all about. Anyway, thanks to both of you for being with us. Your rodeo of business Matters has been survival, I’m very pleased to say, Tony. And we’ll welcome you all back soon, I think. But thanks for listening to Business Matters. Bye.


BFM 89.9: Early Exuberance For Markets Are Over

This podcast is originally published by BFM 89.9: Morning Run. Find the episode here:

In this BFM 89.9 podcast, CEO of Complete Intelligence, Tony Nash, discusses the February US equities market and gives his predictions for March. Nash predicts another down month for US markets, albeit not as much as February, with China also being down markedly. He also expects Malaysia to do well and increase by about 1%. Nash also comments on US earnings season, stating that the quality of earnings reported so far is not great and that only $0.88 was matched by cash flows for every dollar of profit, with some companies passing along price hikes successfully but for how long can they keep it up. Nash also discusses interest rates and a more hawkish Fed, which could lead to the dollar rising. He also comments on a newly formed House committee aimed at examining economic competition between the US and China.


BFM: BFM 89.9. Good morning. You’re listening to the Morning Run at 7:07 on Thursday the 2nd of March. I’m Shazana Mokhtar with Chong Tjen San and Wong Shou Ning. Now, in half an hour, we’re going to discuss Malaysia’s bilateral ties with the Philippines in light of our Prime Minister currently on a visit there. But as always, we’re going to kick-start this morning with a recap on how global markets closed.

Overnight, US markets were mixed. The Dow was up marginally by 0.2%, the S&P 500 down 0.5%, NASDAQ down 0.7%. Asian markets were also mixed. The Nikkei was up by 0.3%, Hang Seng popped it up and was up by 4.2%, Shanghai Composite up by 1%, Straits Times Index down by 0.2% and the FBMKLCI was down by 0.3%.

It’s everywhere.

That’s right. Well, we’re going to try and kind of peel some trends with Tony Nash, CEO of Complete Intelligence. Tony, good morning. Let’s review what happened back in February. It wasn’t such a great month for US equities. We did see the Dow and SP 500 both lose 4% and 2.6%, respectively. Where do you see the stock market heading in March? Is it going to be more volatility or perhaps brighter skies on the horizon?

Tony: Oh, yeah, it’s going to be pretty choppy. Generally, we expect US markets to have a down month, not down as much as it had been in Feb, but we do expect another down month. Obviously, if the Fed comes in with a very hawkish meeting, then we could see more chop there. We do expect China to be down this month as well. That kind of goes against what we’ve seen in News early this month, but we are seeing China down markedly, say more than 2% this month as well. Good news is we expect Birth of Malaysia to be up about 1%. So while we see chop in others, we may see Malaysia do squeak out a good positive month.

BFM: And Tony, as the US earnings season starts to taper off, what is your assessment of the results that have been released so far? In particular, the most cyclical consumer-facing companies?

Tony: Yes, so the quality of earnings reported so far is not great. So for every dollar of profits, only about $0.88 was matched by cash flows. That’s the largest discrepancy since at least 1990. So that means 12% are from kind of non-cash earnings. So it’s really accounting and other things. So what we’re seeing, especially on the consumer side, is some companies are passing along price hikes, and we see some of them doing that really successfully. I think we’ve talked about that here before, where they’ll hike between eight and say 15% and their sales volume will be down maybe 5%, something like that. That’s really helped the top line and margin expansion. But the real question is for how long can they keep raising those prices and kind of sacrificing transaction volume. So there’s a real question there. But many of those companies have said they’re going to continue to raise prices into later in ’23. The problem is when we run into a company like Coals, which is a retailer here in the US that reported today, and it was all bad, they’re losing customers they’re not able to keep with their costs and other things.

For those companies that cannot pass along price hikes, for whatever reason, it’s really bad news for them. The inflation they’re importing from their vendors is just squeezing their margins, and in some cases, they’re losing money. So, I don’t think the quality of earnings improves from here for at least two quarters. That’s just something to think about as we go into the next Q1 and Q2 earnings.

BFM: Okay, I want to come back to interest rates, Tony, because I’m reading Bloomberg and it seems like the Street is now expecting a terminal rate of 5.6%. Honestly, this changes every day. It was 5.4% not too long ago. But what does this mean for the US dollar? Are we back to the reign of King Dollar again?

Tony: Well, if we see a more hawkish Fed, then I would say yes, that’s probably the case. So, what we would likely see are things like 25 basis points, at least for the next three meetings, if not longer. If we continue to see hot inflation, as we have over the past couple of days, they could do a surprise 50. I don’t think that’s what they’re going to do, but we can’t rule it out. We could also see quantitative tightening, meaning the Fed could unload more mortgage-backed securities or other things, accelerating that from their balance sheet. Because housing is still pretty hot, actually. Prices aren’t moving that much, so we could see the Fed move on MBS or some other things to accelerate that off of their balance sheet. I don’t think that’s highly likely, but it’s a possibility. All of those bode well for the dollar and dollar strength. If that happens, we would definitely see the dollar rise generally.

BFM: Can we take a look at what’s happening over in the US Congress, Tony? There’s a newly formed House committee aimed at examining economic competition between the US and China. I think they held their first hearing earlier this week. What was the outcome? And do you think, as a result, we’re just going to see more trade conflicts between these two superpowers?

Tony: Yeah, so there’s a lot of focus on decoupling from China. There will never be a full decoupling from China. I don’t think we’ll even have a majority decoupling from China. But there are some key industries, like semiconductors and pharmaceuticals, some healthcare aspects that people really do want to decouple from China because we saw through the pandemic that supply chains are very, very dependent on China. Americans want many of those core things closer to home. They’re focused on decoupling. For some reason, people in Congress are just becoming aware that the CCP is in charge of everything in China. So they’ve underestimated the influence of the CCP and they’re waking up to the fact that they’re central in China. We had a couple of former national security advisors suggesting things like accelerating the arming of Taiwan and helping Chinese circumvent the Great Firewall, those sorts of things. And then, of course, human rights. They talked about CCP police outposts that are in US cities where there are actually these CCP outposts that will pursue Chinese nationals within the US, among other things. It’s taking a pretty tough stance on China. I’m not sure to what extreme that will go and what policies will be adopted yet, but I think it’s definitely trying to at least uncover some of the things that Americans haven’t been aware of.

Keep in mind, a little bit of this is theater, right? It’s people in Congress holding hearings to publicize some of their agenda. So, I think it’s a little bit of that so that they can then move into legislation and move the needle just a little bit. I don’t think we’ll see anything extreme, but you will certainly hear some extreme talk over the next couple of months.

BFM: Yeah, but does this change the way fund managers invest? You’ve got this continuing geopolitical tension between the US and China. Is it going to stop, for example, American fund managers from buying Chinese stocks?

Tony: I think it definitely puts China as a higher risk for US portfolio managers. And certainly over the past couple of years, more US portfolio managers have become aware of the risks of investing in China as supply chains close down, among other things. So, I think you will see more of a tighter risk calibration and more weighting of risk for Chinese equities. So, it could potentially not be good for American money investing in Chinese exchanges. Absolutely.

BFM: Tony, thanks very much for speaking with us. That was Tony Nash, CEO of Complete Intelligence, giving us his take on some of the trends that he sees moving markets in the days and weeks ahead. As he was talking about how March is possibly going to be down, although not as down as February, I couldn’t help but think, ‘Oh, beware the eyes of March.’ But, yes, it’s still choppy out there, especially as the FOMC will be having their meeting this month. I think everyone’s going to wait and see how much they’re going to hike those rates.

Yeah, he gave some predictions on Malaysia as well. He thinks the market will possibly be up by about 1% in March, but the market has been quite disappointing in Malaysia. And he also expects the China market to be down in March by about 2%. And we spoke about the geopolitical risk which may impact US fund managers as well.


BFM 89.9: Should The Fed Have Gone For 50bp?

This podcast was originally published on

The Morning Run podcast by BFM 89.9 featured Tony Nash, CEO of Complete Intelligence, discussing the state of the US economy, market movements, and supply chains. The podcast began with a brief overview of the previous day’s market performances. The key US markets had ended in the green, while all Asian markets were in the red, except for the FBMKLCI, which was up by 0.3%.

The podcast host then discussed with Tony the state of the US economy. The US retail sales in January increased the most in two years, and the home builder sentiment rose in February by the most since 2020. Meanwhile, US inflation rose by 0.5% in January. According to Tony, these indicators suggest that there is still demand, and consumers are still willing to spend. Companies are able to raise prices pretty dramatically, resulting in more revenue and faster growth, even if the volume of sales is slightly lower. Tony believed that the Federal Reserve will continue to raise interest rates. He felt that the Fed should have kept the foot on the brake a little more in the last meeting when they hiked by 50. He thinks that the interest rate will remain at 25 for the next three meetings, but the question is how much beyond that will they raise it.

The podcast then moved on to discuss company performance, particularly in the tech industry. Cisco delivered strong results and beat street expectations, suggesting that companies still have money for capex. Tony believed that companies are having to build out more robust technology infrastructure for their existing operations, which is good for tech infrastructure companies like Cisco. However, there is a divergence in the tech industry, with old tech like HP Enterprise and Cisco doing better than new tech like Apple and Amazon. Companies like Apple, Amazon, and Meta suffer on the ad side because there is a growing supply of ad space, but there are not as many ad dollars, and companies have generally less to allocate to marketing on a proportional basis.

Finally, the podcast touched on supply chains. Tony believed that supply chains have generally recovered, partly due to the falling demand. However, there are still challenges, particularly with logistics and labor shortages. Companies are looking at how to reduce supply chain risks and increase resilience, including reshoring and nearshoring. Tony believed that the current supply chain challenges could last up to two years, and he recommended that companies should develop more robust supply chain strategies.

In summary, Tony Nash shared his insights into the state of the US economy, the tech industry, and supply chains during The Morning Run podcast. He believes that there is still demand in the US economy, with consumers willing to spend and companies able to raise prices. The tech industry is experiencing a divergence between old and new tech, with old tech companies doing better. The supply chains have recovered, but there are still challenges, particularly with logistics and labor shortages. Companies should develop more robust supply chain strategies to increase resilience and reduce supply chain risks.


This is a podcast from BFM 89.9, The Business Station.

BFM 89.9, 7:05 A.m. On Thursday, the 16 February you are listening to The Morning Run. I’m Shazana Mokhtar with Wong Shou Ning and Chong Tjen. Now, in half an hour, we’re going to move the proposal for Petronas to be publicly listed in order to pare down national debt. But we are going to kickstart the morning as we always do, and it looks like it’s going to be a glorious morning with a look at how global markets closed overnight.

So all key US markets ended in the green. The Dow was up 0.1%, S&P 500 up 0.3%, NASDAQ up 0.9%. In Asian markets, they were all in the red, except for our very own FBMKLCI. The Nikkei was down 0.4%. Hang eng down 1.4%. Shanghai Composite down 0.4%. The Straits Times Index down 1.1%. But the FBMKLCI, it was up by 0.3%.

So for some thoughts on what’s moving markets, we have on the line with us, Tony Nash, CEO of Complete Intelligence. Good morning, Tony. Now, US retail sales in January jumped at the most in two years, and home builder sentiment rose in February by the most since 2020. While US inflation rose by 0.5% in January. What do all these indicators tell us about the state of the US economy?


It says that there’s still demand. It says that consumers are still willing to spend and that people really aren’t slowing down. We’re seeing things like price over volume. Meaning as we see more companies report, their earnings reports, they’re able to raise prices pretty dramatically, say, eight to say 12%, generally with a volume decline of, say, one to 3%, meaning the number of sales. Okay, so these companies are choosing to raise their prices and have fewer sales, but it results in more revenue and faster growth. So consumers are willing to pay more. They’re just buying slightly less of things.


And Tony, taking all this into account, what do you think the Federal Reserve will likely do next?


Yeah, they’re going to continue to raise. I do think that Powell missed a trick in hiking 50 in the last meeting. I do think they probably should have kept the foot on the brake a little bit more as a transition from 75 to 25. But I think for 25, it’s kind of as far as the I can see right now, at least while the current pace of the economy holds up. So, you know, we’ll certainly see 25 for the next three meetings. The question is, how much beyond that will we see it?


And Tony, are you in the camp where I have seen more economists raising their forecast for US GDP growth? I see numbers jumping from 1% to 2% for the first quarter. Are you in that camp?


Our view has been 1.4 this year, so it really hasn’t changed.




We do reforecast each month.

CI Futures covers 50+ economies around the world. You can see historical data and forecasted data in an instant, like the US GDP here. Learn more about CI Futures:


All right. And then looking at some results right. Old tech, Cisco delivered really good numbers, beating street expectations with strong spending on tech infrastructure, suggesting that companies still have money for capex. Is this indicative that actually companies are doing better than we expected?


Well, I’m not sure it means companies are doing better because earnings generally are on a slowing trend. But I think what it means is that companies are having to build out more robust technology infrastructure for their existing operations. And that’s good for the tech infrastructure companies like Cisco. So we are at the emergence of a new tech cycle with generative AI, there’s a ChatGPT and so on. So companies are going to need more robust infrastructure to deal with that.


But then we also notice there’s a divergence right when it comes to results. So old tech like HP Enterprise and Cisco doing better versus new tech like you see results being soft from the likes of Apple, Amazon. Will this divergence continue?


Well, I think when you look at things like Apple, Amazon, Meta, these sorts of guys, part of their revenues are ad revenues. And what’s happening on the ad side is we have a growing, say, supply of ad space with different companies coming on, like Netflix offering ad models. So there’s more ad supply. There are not as many ad dollars out there, or even if you assume the same ad dollars. With inflation, people are having to make trade offs. Companies are having to make trade offs, so they have generally less to allocate to marketing on a proportional basis. But there’s more ad supply out there. So many of those tech companies where ads are a part of their revenue mix, they’re suffering on the ad side.


Turning our attention to supply chains. During the Pandemic, the world faced a series of supply chain stresses made worse by the Ukraine conflict and China’s sporadic lockdowns. Do you think that global supply chains have recovered? Are they functioning better now? Or do you still see some kind of rocky road ahead?


I’d say generally supply chains have recovered. Part of that is demand falling. So we had in the port of Long Beach, we had the volume declined by about 28% in January. So the volume of imports have have actually gone down year on year on the west coast of the US. So the demand there is slowing. We’ve seen one of the indicators is headcount cuts. Guys like Federal Express or FedEx and UPS are cutting headcount. FedEx has announced about a 10% workforce cut, which tells me those are usually the guys who see the supply chain issues first and the guys who see the slowdowns first as well. So if they’re cutting staff, it tells me that some of these things are really slowing down.

When we look at delays at Chinese port, for example, they’re about half the time of what they were about a year and a half ago. So they’re not really bad at all. And then when we look at, say, freight that’s waiting on ships that’s down dramatically to, say, Q1 of 2020 levels before all of the COVID stuff set in. There’s a great just for your listeners, keel. The Kiel, K-I-E-L, I think in Germany has a great indicators on supply chain delays. So I would recommend you guys to check that out.


And Tony, ASEAN is a key player in this global supply chain. Which countries in this region are likely to be major outperformers in that regard?


Well, you guys know Malaysia is seeing more inward investment, especially around electronics, so I wouldn’t be surprised if we saw some upside in Malaysia. I know the expectations for Malaysia aren’t as aggressive as, say, Indonesia or Vietnam, but it’s possible that Malaysia overperforms those expectations. Indonesia, I think there are a lot of expectations on indonesia’s outperformance partly on AG prices, but also partly on movement of some manufacturing to Indonesia, which has a pretty low base. And then Vietnam, of course, you know, we’ve seen blistering growth in Vietnam. We expect that to continue as people look for a substitute for Chinese supply chains.


And Tony, are you still a bull on energy stocks? Because if you look at the sector, it’s the worst performing in the S&P 500 today and also for the month so far. We see energy stocks all coming under pressure, I think in part due to all prices stagnating and weak earnings from some of these companies. Is it time to buy or is it time to just step back and say, hey, maybe I should cash in my chips?


Yeah, I think you have to look at the different segments of energy. So, for example, oilfield service providers, we’re starting to see upstream, meaning people who take oil and gas out of the ground starting to spend on development outside of the US. So some of these oil and gas services providers, it’s a very interesting space to look at right now because we haven’t had CapEx in so long in oil and gas. And as we get that, we could see some of these service providers do really well. In terms of oil price. I do think that we do see upward pressure. I don’t think anybody really expected that to hit in Q1, but as we end Q1 and go into Q2, we do start to see that. And I think we do see I don’t think we see two or $300 crude oil this year, but I think low 100s, 110s, high 90s. I think those are definitely within possibility and likelihood.


Tony, thanks very much for speaking with us today. That was Tony Nash, CEO of Complete Intelligence, giving us his take on some of the trends that he sees moving markets in the days and weeks ahead. Ending the conversation there with just a projection on how oil prices could be trending later on this year.

Yeah, so I think we’ll have to watch this space. But I want to focus on one of the names that I mentioned earlier on, which is Cisco. Right. So their results came out. In fact, it went up 8% after market hours trading because the street was really impressed with the numbers. Apparently the earnings, the last time we saw this kind of level earnings was in 2013, and that’s like a long time ago. So a lot of attention on Wall Street has been on what I call the new tech. So Amazon, meta, Apple, Microsoft, even on some level. But there’s a little bit of a shift. And I think what these names are showing is that, hey, there is still spending out there.

Yeah, I think the CEO actually said that the public sector business performed stronger than expected as compared to historically. While in the service provider category, some customers are adjusting to better delivery of the company’s products into the environment. In terms of the guidance for the next quarter, Cisco is guiding adjusted earnings of 96 to 98 cents to share and revenue of roughly about 14.25 to 14.5 billion dollars.

So currently the street doesn’t really like this name that much because there’s only 14 buys, 15 holds, and one sell. Consensus target price for the stock is $53.83. Like we say, it was already up 8% after market hours, right. I won’t be surprised. After these set of numbers, we will see quite a number of upgrades on this name because the company is already suggesting on giving guidance a more positive one.

That’s right. Their guidance is more positive for the next quarter. But turning our attention to other earnings report we have, the Canadian ecommerce platform Shopify. Shopify, in contrast to Cisco, didn’t have such a great report. They reported a loss of $623.7 million in the fourth quarter after adjusting for stock based compensation, gains on investments and other costs. The company reported earnings of 7 cents a share, down from adjusted earnings of 14 cents per share in the holiday quarter.

And revenue came in at about $1.73 billion, up from $1.38 billion. And the analysts on average expected an adjusted loss of a penny a share on sales of about $1.65 billion. The company said Black Friday sales rose close to 20% last year from 2021. And this year is working to recover from a misplaced bet that the Pandemic Field search in online shopping would become more permanent. Although he’s cut jobs, raised prices, and expanded offerings to merchants.

19 buys, 25 holes, five sells. Consensus target price for the stock, $46.48. Actually, the current share price is already above that, to $53.39 year to date. Actually, the stock is up 53%, but I think came from a very low base because 2022 was very painful for them.

All right, 07:17 A.m.. We’re going to take a quick break, but we’ll come back and cover more top stories in the newspapers and portals this morning. Stay tuned to BFM 89.9 you have.

Been listening to a podcast from BFM 89.9, the business station. For more stories of the same kind, download the BFM app.


Forecasting Global Markets with Artificial Intelligence

“Bitcoin Kid” JP Baric is joined by Tony Nash in this premier episode of Digital Gold.


Tony Nash is the CEO and Founder of Complete Intelligence. Using advanced AI, Complete Intelligence provides highly accurate market, cost, and revenue forecasts fueled by billions of enterprise and public data points. Previously, Tony built and led the global research business for The Economist in the Asia consulting business for IHS he’s also been a social entrepreneur, media entrepreneur, writer, and consultant.


JB: Tony, as I mentioned, you’re the founder of Complete Intelligence. Can you tell me a little bit more about what Complete Intelligence does and how you work with your clients?


TN: Sure, yeah. As you mentioned in the intro, I led global research for a British firm called The Economist and I led Asia consulting for an American firm called IHS Markit. In that time, over about a decade, I had a bunch of clients come to me saying, we have two problems. First, forecasts are terrible and that was a comment both on the work of the firms that I worked with as well as just the market generally and they said forecast error rates are terrible. There’s no accountability of the forecasting saas and nobody tracks their historical data, so we have to try to dig it out ourselves.


So forecast accuracy is a huge issue. The second issue is the appropriateness of a forecast. So if you make a chemical or a mobile phone or cake mix, there are specific items within that product that you need to know the cost of. But you may not be able to do that internally. Major companies have hundreds of Excel workbooks floating around with their forecast for sales or for costs or whatever and it’s just really confusing. So what ends up happening is people kind of manually estimate costs and revenues. And so, what we wanted to do was automate that entire process company-wide.


We wanted to take out the human bias that comes with the forecasting industry and internal forecasts and all that stuff and we really wanted to build products that allowed the machines to learn how markets move so that’s currencies commodities equities and so on as well as how company revenue and spend changes over time.


JB: So when doing some of my initial research on Complete Intelligence, basically just to paraphrase, you guys are taking the spot of what an analyst would do. Is that correct?


TN: Yeah. But here’s what we don’t do. We don’t put together a report on what’s going to happen in industry x or with commodity y because what we find is when that stuff is put together so when an analyst puts a report together on some aspect of an industry, it’s really loaded with a lot of, let’s say, a house view on something or a personal bias. And so we do have a weekly newsletter and we do kind of video podcast that sort of thing. But we don’t have industry notes because we don’t want our clients to feel like we have bias towards say the oil and gas sector or toward industrial metals or that we’re for or against gold or for or against crypto or something.


There’s so much of that loaded into forecasting today and it has been that way for decades, that we just want to let the data and the sophistication of the data… we’re doing billions and billions of calculations every time we run our process. Humans do this but they’re not aware of it. The humans also aren’t aware of the amount of bias that they put into their calculation. So what we do is we track this and we track it based on error rates and we allow the machines to correct based upon how they’ve made error over time. It’s just like an infant learns, right. You touch a hot stove and you learn not to do that again. It’s very similar the way we kind of reinforce the behaviors that we want within our platform.


JB: I guess my question to you is when it comes to these machines, they’re learning in the background so you don’t have a team of a thousand analysts. Instead you have a team of a thousand neural networks or machines basically working for you running these calculations 24/7 on all these different commodities and are they just making assumptions and then confirming if those assumptions are right and then the models that do better end up going end up kind of getting weighted more? How does that work, I guess? How do those questions and answers work in those data testing points, those AB testing that you mentioned.


TN: It’s a good question. So we’re running tens of thousands of scenarios for everything we forecast, every time we forecast. And then we’re looking at which ones best reflect the market as it stands right now and then we add in the different approaches on a weighted basis to make sure that they reflect where the market is. So it’s a multi-layer analysis. It’s not just a basic kind of regression correlations driver, that sort of thing. We’re also looking at the methodologies themselves.


Some of these are very fundamental, traditional statistical methodologies. Some of them are more technically-driven say decision trees, those sorts of things, types of machine learning models and we’re looking at how on a proportional basis those different methodologies best understand the market at this point in time. And so yes. I mean, that’s a long way of saying “yes” to your question.


JB: No. I think that was a great answer. So you guys are looking at currencies, equities, and in July you discussed gold and silver being nature’s Bitcoin. Can you explain to our listeners what you mean by that and provide your thoughts on bitcoin as a store of value and where you see that blockchain space going?


TN: Well I think one of the key aspects of cryptocurrencies is that there should be a fixed amount of it. If it really is immutable, then there’s only so much of it and if there really is demand for something that’s limited, then the value should rise or fall based upon the availability of that fixed good, right?


Gold is similar in that I can’t necessarily go and buy a car with gold. I mean I’m sure I could. I can’t buy a loaf of bread with gold. I think cryptocurrencies is becoming a bit more spendable than precious metals, a bit more useful depending on which cryptocurrency you’re looking at. But yeah, it is similar in that cryptocurrencies to date have been more of an asset than a currency. They’ve behaved more like an asset than a currency.


Meaning the value goes up and down pretty dramatically based upon the perception of scarcity. Currencies don’t necessarily act that way. Currencies act as units of value so that you can buy other stuff. And so, it is. Gold is on some level kind of nature’s bitcoin or nature’s cryptocurrency. But I think we’re coming to a point where there’s a division between those two, where cryptocurrencies are starting to be used as and when II say starting of course they have already been, but more broadly be used as vehicles to buy other stuff not just stores of value. So the former is a currency the latter is an asset.


JB: Yeah. I definitely agree with you on that point as we move down this line of utilization. We saw with the Paypal news that recently came out Square News. Hopefully people will start using bitcoin more as a day-to-day currency. It’s one of the biggest I guess questions I get is, you know, it’s too hard to use bitcoin or what am I going to use at the store less of actually bitcoin has a store of value especially from some of the retail clients coming into this space.

So regarding bitcoin and Complete Intelligence, are you guys forecasting anything in the digital currency space? Are you forecasting the currencies themselves maybe the mining profitability or any of the mining machines and can you speak a little bit further on that?


TN: We do. We started forecasting limited cryptos about six months ago and as I’m sure you can imagine there’s been a lot of volatility in cryptocurrencies over the last couple years. And because we’re a machine learning platform, it takes a while for the machines to understand how cryptocurrencies trade and move and so just because we started forecasting cryptocurrencies doesn’t necessarily mean that we would recommend people making trades or taking positions based upon what we forecast. You know, it’s different for things like, I don’t know, copper or whatever that we’ve been doing for a long time and those are also relatively stable markets say industrial metals, you know, that sort of thing. But cryptocurrencies very volatile, very new, and the market is still learning how to value them.


This is one of the key things about cryptocurrencies that I think is misunderstood is the market is still learning how to value them. That’s not a comment on whether I think they’re undervalued or overvalued right now. I just think the market isn’t really sure how to value them. And so, you know, in our platform we expect it to take really another couple months before we’re confident in where our platform is saying cryptocurrencies will go again because it’s such a complicated asset in the way it moves and because there’s so little institutional and historical knowledge about it. We have to iterate it, you know, a couple billion more times for us to really understand where it’s going.


JB: Are you seeing a lack of data or trading data, network data in making these decisions that making it harder than traditional markets or have you seen that the data in the bitcoin space is relatively open and well established?


TN: I don’t really see an issue with data. I think part of the problem with cryptocurrencies is that it doesn’t really trade on fundamentals. So what we’re utilizing is a configuration of methodologies that balance out fundamentals and technicals. You know, some months, certain assets lean more toward technicals. Some months, they lean more toward fundamentals.


Cryptocurrencies don’t really have fundamentals to lean on and so then you’re looking at a lot of relatively short-term and ultra-short-term approaches to understand the value of something. So the memory of the price, it’s either sticky or it’s not and I know that sounds a little bit silly but you know cryptocurrencies move in bursts or they languish. There’s really not a lot of in between and so understanding which technical approaches to take and within what configurations to take them is what’s really kind of confounding our platform right now and I would say our error rates for cryptocurrency is probably I think three times what our average error rate is.


So our average error rates for across our assets on an absolute percentage basis is between five and seven percent something like that. Across currencies, commodities, equities. For cryptos, we’re looking at probably a 15 ish to 20 percent error and so it might be a little bit lower than that now. But it’s settling within the range that we’re comfortable with. We’re really comfortable when things are say less than 10 percent error and we expect to be there, you know, very soon. But part of what’s different about what we’re doing is that we’re not afraid to talk about our error rates. We’ll be very transparent with people about what our current and historical error rates are and have been because our clients are making decisions based upon the data that we bring to them and the forecast that we bring to them.


So when I say to you, look our, you know, our error rates for cryptocurrencies is between 15 and 20 percent, I’m not really sure you can find many other people who would admit that publicly. But if traders are making decisions based upon the forecasts that we bring to market, then they need to know that, right? They need to know how to hedge against that error range.


JB: And so you’re referring to that the cryptocurrencies are much harder to predict. Is that keeping any of your current clients from moving over to the digital currency space? Are they looking at this space for growth opportunities or for potential revenue generating opportunities or even a way to hedge from the current macro environment?


TN: I think everyone is either involved and trading let’s say even at a small level or they’re very committed. I think the approach that we’ve tried to take, the number of firms that get very hypey about cryptocurrencies and almost feel like they’re trying to push it on to their clients. We’re not that way. We don’t care if someone invests in iron ore or investing cryptocurrencies. It’s really what is their profile and you know how well can we forecast it. But I think the interest in cryptocurrencies obviously is still very high because nobody really knows what’s happening there.


Nobody really knows what the future is there and nobody really wants to miss out. Actually, I know maybe two or three people who want to miss out on that and do and already at all but very few people want to miss out on it and so they’re keeping an eye on it or dipping a toe in if they’re not already in in a big way. And I think you know you have to be fair on these sorts of things you know. It’s not as if say the main cryptocurrencies have have kind of fizzled out. They’re still around. They didn’t fizzle out after say two years. They’re still around. People still trade them. You’re still trying to you know we’re still trying to figure out how to get them into some sort of monetary system or some sort of transmission mechanism. And until that’s figured out, I think that you know unless they fizzle out you know the main ones I think it’s still necessary to stay involved. So we’re not seeing a massive demand for what we’re doing in terms of forecasting and when I say forecasting I’m not talking about the next say five to seven days. I’m talking about the next 12 months, okay. Monthly intervals over the next 12 months.


So for something like cryptocurrencies that have a relatively short-term horizon because it has been pretty speculative from an investment perspective. It’s been pretty hard to to look at this stuff over a longer term. But we’re getting better at it and I think as these things become more predictive, there will be a lot more interest and that’s largely the market coming to agreement on what the various cryptocurrencies are actually worth.


JB: And following up on that you know, how do you value them this being a common trend it seems like in the analysis that you guys are doing as a large bitcoin miner in this space, we believe the stock to flow ratio is a huge component of giving value to underlying cryptocurrency and so that is when the when you know the having occurs did your models take that into account or did they do they how do they kind of work with that event?
Because I think the having is an event where you don’t really have that in any other industry where you’re losing half of your new coins coming in or half a new supply coming in on a daily basis.


TN: Well I think you you know, what you. You do see this a bit with say central bank money supply, you know that sort of thing. So and you do see, let’s say with the Dollar or the Euro, the Japanese Yen or something like that. You do see central bank money supply coming in and the pickup of that money supply is not fundamentally dissimilar from cryptocurrencies. Although I think with cryptocurrencies, it’s a it’s a fair bit more technical. But I think it’s you know understanding both the stock and the flow is critical to understanding where that value is. If there’s too much stock, then, you know, it’s obviously not valuable unless there’s the demand, the flow going into demand.


So yeah. I think it’s… But until people can have a normalized discussion around where it’s similar to say central banks, then I think it’s really hard for people to contextualize within their kind of trading and valuation framework. So look. You know, if you look for example, you know, the Chinese government introduced this coin into Shenzhen a few weeks ago, right. They effectively gave people the equivalent of thirty dollars in this Chinese crypto currency to spend and then it was gone. So they’re calling that a study on how widespread adoption of cryptocurrencies will work and I’m sure it was gone within a day, right. I mean if I’m given 30 bucks to spend for free then I’m going to spend it probably today.


So you know, I think until we have a better baseline for widespread adoption and I think the government endorsement on some level kind of matters because let’s look at that thirty dollar. It’s effectively like a voucher or a gift card, right, that they’ve given people. They gave people a thirty dollar gift card for free. It doesn’t matter what currency it’s in. Okay. It’s gonna get spent, right. I don’t necessarily think that that’s a valid test of the adoption of a cryptocurrency.


I think you have to have something more widespread and more enduring because there you have a fixed amount of stock that’s spent over a very abbreviated period. Doesn’t really mean anything, right. But I think until we have a wider spread adoption for spend, we’re not necessarily going to get a fundamental based value, okay. We’ll get that technically based value, meaning looking at the stocks and the flows and trying to understand based on stocks and flows but not necessarily based on the inherent value that you get with a legit currency. Not that cryptocurrency is illegitimate. That was probably a bad word choice but let’s say a central bank endorsed currency, we’ll say that much.


JB: And on the central bank, endorsed currency kind of chain of thought, when you see the United States and Europe and also China adopting these different types of cryptocurrencies or I guess you could say ways to distribute capital to individuals for stimulus. How are you seeing China and the US and any other major players kind of deploying these central bank currencies over the next two or three years? As you did mention, you know China is already doing it. In the US, I’m not aware of us doing any type of central bank currencies or deploying central bank currencies to citizens. But are you seeing… I guess, how do you see that playing out over the next two or three years, if not and maybe longer?


TN: Sure. So China, the China central bank did a first test of a cryptocurrency I think in January of 2017.


JB: Oh wow.


TN: So they’ve been trying to figure this out for some time and I think china sees it as a potential way to rival the US Dollar. The problem is, there is no trust in the the People’s Bank of China. Nobody outside of China really trusts it, okay. So the immutable aspect of a cryptocurrency doesn’t have validity outside of probably the walls of the center of the People’s Bank of China building. And without that, kind of limited supply, without the immutability of it, then again, it’s just a gift card. It’s just a voucher. Now I think the PBOC, the Chinese central bank has had but with each day it’s kind of passing I think they’ve had an opportunity to utilize cryptocurrencies for things like trade finance which is a really opaque aspect of international finance related to trade. And if they had, let’s say gone to some of their trade partners and said look in Europe or the Middle east or somewhere, you know, we can get around using the US Dollar by utilizing this digital, you know, Chinese yen or something.


I think there was a time when people would have been open to it especially if it made payments faster and less costly. But I think that window has passed at least for now. I think it’s really hard for China to insert itself. I think if they had done this say in 2015-16, I think they would have had a real opportunity and they could have done a lot to displace some US Dollar denominated trade finance and probably displace a lot of Euro denominated trade finance. But they didn’t do it. They’ll keep trying.


I’m not sure how successful they’ll be outside of those places that have to trade with them meaning North Korea, Iran and and those sorts of economies Venezuela and so on. With Europe and the US, I don’t think the central bankers fully understand what a cryptocurrency is and I don’t think that they really have say the patience to understand how to say deploy it in a credible way, if that makes sense. And so, I think you’ll almost have these parallel currency regimes with cryptocurrencies.


The problem though is, I don’t necessarily, at least for the next few years, see them displacing a currency like the Dollar. They may displace say secondary or tertiary currencies within say international trade, trade finance, cross-border payments, these sorts of things, and even domestic payments where say a central bank doesn’t really have credibility that makes a lot of sense but I’m not necessarily sure that I see it displacing say US Dollar or Euro transactions let’s say in kind of main say kind of day-to-day activities.


If you look at a government like Venezuela or Turkey or something like that where you see a real currency crisis, I think it’s possible. I’m not necessarily saying it’s probable at a place like Turkey but I think it’s possible that you could see adoption of something like cryptocurrency especially if the government puts a a restriction on US Dollar use.


JB: Tony, do you see… I mean it seems like you’re saying that the western, you know, China will have its own central bank digital currency and maybe the United States will try to deploy theirs as well. Do you think this is going to move the global economy into being a more closed system or do you think this will actually open up finance and trade and make it you know better for everyone? Or do you think we’ll end up having this almost finance war. We already do have that but like on the digital currency level now where it’s traceable and trackable by a single entity and the capital or the cost to deploy these systems is much lower.


TN: It’s a great question. I think the people who accept the digital Chinese Yuan are going to have to decide if they want a centralized authority in China, tracking all of their activities in that digital CNY, you know. I think that’s a real decision and a real trade-off that those people who trade in that currency are going to have to figure out.


Although dollars are traceable, you know you can kind of transmit them and other currencies. You can kind of transmit them, I wouldn’t really say in an anonymous way but you can kind of get around tracking of every single transaction. But with cryptocurrencies, you know, the ledger tracks everything. And so if you have say the PBOC in China tracking every single transaction for every single digital CNY, that’s out there.


That’s kind of next level of information out there, right it’s not just Google understanding what’s in your email and it’s not just Alexa tracking what you’re saying. It’s every single Penny you put out there being tracked by a central ledger.


JB: And I think you said that perfectly you know China will be tracking every transaction and that will help these Central Bank digital currencies. If it’s China, if it’s the U.S. if it’s you know somewhere in Europe and as these different currencies are deployed.


They’ll really be able to build almost a very well put together social graph of who you’re paying. I mean it’s very similar to Venmo. When Venmo had the kind of privacy era, when you could see every transaction. If you had your transaction on public that you sent all your friends, right?


This is almost like that but the Central Bank can see that for every single person. Now we know who interacts with who, where you go, you know if you’re going to get coffee at Starbucks every morning. Where you’re going to be you know it’s very interesting to see the amount of power that you know these Central Banks in my opinion are going to start are going to gain over deploying a currency. Where it’s traceable trackable and it’s on a single ledger.


TN: Right, well also imagine, you know right now we have macroeconomic data releases like gross domestic product or industrial production or retail sales, those sorts of things. Imagine you know right now the way that happens is a statistics ministry does an estimate of what that economic activity is and they release it like a month after it actually happens. And then they revise it four times before they finally give up and say that this macroeconomic variable is finished.


If you do have a centralized kind of ledger for this stuff, you can actually look at national and global economic activity on a real-time basis, right? So you could actually see through Covid. You could see the U.S. economy declining on a real-time basis or the Europe economy declining on a real-time basis which would be pretty scary actually but that’s the reality of it. If you have this centralized ledger you can see let’s say, the velocity of that currency grinding to a halt as people don’t spend money which from a Central Bank perspective can help you understand how to incentivize people to spend money if they have it.


So from a kind of centralized monitoring of the economy perspective. I could see that being beneficial from a consumer and an individual saver. Spender perspective, I can see that being a little bit scary.


JB: It is a little bit scary but I agree with you also with the Covid situation. You know, the stimulus, really in my opinion didn’t get to the people as well as it should have. And Central Bank digital currencies will allow the these Central Banks to give stimulus to those who are most affected, at least in theory. And to be able to provide you know potentially different access to credit for different types of individuals we’re taking different types of risk being business owners or just employees. But on the Covid kind of analysis and as you guys with CI were we’re doing the analysis on the equity markets and in oil. And different types of currencies. Did you guys see any indicators you know as Covid was picking up in the analysis of the market. And how did it affect your predictions in these you know kind of broadly over the different markets that you guys predict and watch.


TN: I think what we saw in the wake of Covid was, and this is no surprise to anybody I don’t think is. A move to very short-term thinking you know, what data points are coming out. What’s moving. What are people doing let’s track to day what’s actually happening. Also an eye on kind of what is the government doing. What stimulus is coming out. When is it coming out. How much is it. Where is it going that sort of thing.


So I think for the probably three to four months I would say until July or August, a lot of trading and forecasting was really done on that basis kind of the news moved the market. It was fear and news that really moved markets and we had to come to a place where the size of the dump truck of stimulus was bigger than the fear that people had of Covid. And when we got to a number big enough you started to see markets break higher. Which was I guess a positive thing for people who weren’t working but getting stimulus from government so they could kind of day trade and make some money in markets to shore up some of their bills.


Now that the stimulus has gone out and now that we see at least some markets coming back to I wouldn’t say normal but at least to a significant level. We’re starting to see or we’ve started to see over the past, say six to ten weeks, more fundamental basis put into markets and put into some of those those value decisions whether it’s in equity or whether it’s a commodity or something. It’s still playing out in a number of ways a lot of the texts still very sentiment and stimulus based.


We see things like you know some of the commodities that are still very much based on that or I would say kind of more than 50 based on that but we’re starting to see markets move back into a direction that’s a bit more traditionally based and I use that term very loosely traditionally based but with at least a bit of fundamental analysis. But you know look at something like Tesla for example the price to earnings ratio is around 1100, I think something like that. It’s just I mean you may love Tesla but that’s a pretty healthy multiple, right? So you know at some point and I’m not necessarily predicting Tesla will fall to earth but at some point something will catch up with the valuations of these things.


Whether they’re commodities or whether they’re equities and will start to value things on a more traditional again. That’s a loose application there but on a more traditional basis.


TN: One of the things that I’ve been noticing in just conversations is it seems like you know the stock market is almost I would say really turning into a casino. Where you have people just buying stocks they heard on the news. They’re getting the motley fool every week and they have so many decisions to make. So many different options and I’ve noticed that it seems to be just too complex for I would say normal retail robinhood traders. They get overwhelmed with so many decisions. I think one of the nice things you know about value as we talked about valuing crypto. Is at least with Bitcoin you know what you’re getting. You know that this is an asset with a stable monetary supply with a stable issuance rate over the next 100 years.


What are your thoughts on how bitcoin mining? I’m actually gonna change it up and move to a separate topic a different topic but what are your thoughts on Bitcoin mining and how it relies on as on the global supply chain starts in semiconductor factories in China and you mentioned the supply chain optimization a lot on your website as a function of Complete Intelligence. Can you walk through a little bit how you guys optimize supply chain and then I’d love to talk with you through potentially how the Bitcoin mining supply chain works on our end and see where you know optimizations are and and how Covid or any of these other things impact supply chains and what you guys are seeing on a worldwide basis?


TN: Sure, that’s great, I think with any supply chain you have really three factors. You have cost, you have distance, and you have time, okay? And so I mean there’s quality as well but if you assume that you can get equal quality in you know in multiple locations. You have cost, distance and time. And so we help people initially with costs, okay? We’re helping them to kind of arbitrage the best cost locations.


We have a client who manufactures confectionary that makes candies and sweets. And they buy sugar, I think at eight different places around the world and so we help them understand where the sugar price is because there’s not a single global sugar price, right? There are local factors so we we help them understand where sugar prices will change and at what magnitude they change.


So that their factories can be prepared and that they can have the right margin they need so that they can take in the right inventory. So that they can make the right transactions at the right time. So I think from a pure cost basis with commodities for example like sugar, it’s possible to do that. When you look at something like semiconductors with a very sophisticated manufacturing process.


Cost is probably not the only, well I can assure it’s not the only factor associated with the decision. So then you start looking at things like time and you look at things like distance and so when we go back to say March, April, May, a lot of semiconductors travel by air and we had air freight rates from Asia to the U.S. that were normally say a dollar fifty a kilogram. That had in many cases been jacked up to say 15 dollars a kilogram. So, 10 times or more of the normal price. So that’s where distance becomes or let’s say cost becomes a function of distance, right? And so that’s that chipset that semiconductor may cost the same x factory but getting it to the destination is increasingly critical and increasingly costly.


So, that’s where we help people also to understand what the cost of that distance is and what the cost of that time is because you could put it on a vessel and you could ship it and it could take three weeks to get where it needs to go. But in many cases the cost of those the finished goods are high enough that you can absorb some of that transport cost. Okay? So there are a number of ways that we help people understand those transactions but at the end of the day it all has to do with the cost of that bill of material, meaning the cost of the goods that go into that finished item that’s ultimately sold to a customer.


So when we look at semiconductors for example and you look at what has happened over the last, particularly last year and if you look at say TSMC Taiwan semiconductor. Moving one of their locations to I think it’s Arizona in the U.S. We’re starting to get more of that high value supply chain in the U.S. more as a function to de-risk supply chains in the wake of Covid meaning, factories in China closed during Covid people still had to make stuff and they had to still have their business open but they couldn’t because the factories in China were closed.


Once the factories in China opened. There was constrained transport capacity so it would cost them a lot more so they had goods that were late and they had goods that were a lot more expensive than normal. And so I think what a lot of manufacturers have done especially in the wake of Covid and said, look we need to diversify our supply chains and have multiple sources for some of these high-value goods and we Complete Intelligence have been talking about regionalization of trade since 2017. We wrote about it more formally in say starting Feb of 18 when the steel and aluminum tariffs were put on by the current administration but we’ve believed for years that we would start to see a re-regionalization of trade and that cuts out some of the risk associated with supply chains and some of those costs. Maybe, transport costs that may be lower are offset by maybe marginally higher say labor or taxes or something like that either in the U.S. or Mexico or something.


So one of the things that many people don’t necessarily understand is when China came into the WTO in 2000 the U.S. was in the first decade of the NAFTA agreement North American Free Trade Agreement at the time there were a lot of manufactured there was a lot of manufacturing for the U.S. done in Mexico. Part of the reason a lot of factories moved to China was because electricity in Mexico was really really expensive at the time, okay? And the electricity in China was really cheap. So a lot of these manufacturing especially energy intensive manufacturing firms moved to China to save on their electricity. Which was a large fun factor within their total cost. So what’s happened in Mexico over the last… I think four years is laws were passed to deregulate the electricity market in Mexico. So now you have power in Mexico that’s a lot cheaper than it was 15, 20 years ago. So the attractiveness of Mexico as a location at least from a cost basis is quite a bit higher than it was in the past and especially quite a bit higher than it was when firms were leaving Mexico to go to China.


JB: So Tony you mentioned the impact of of Covid on these supply chains and I want to talk a little bit about something that we have in in Bitcoin mining called the supply gap. And it basically what that is when the price of Bitcoin is is skyrocketing and is hitting an all-time high, like it did back in 2017. The underlying you know value of these Bitcoin miners really relies on the profitability of those machines and that is heavily relies on the price of of Bitcoin.


So what we see is that you know these supply chains they they shrivel up, almost. They you know there’s being able to order machines over a three-month period it ends up going out to six months. You won’t be able to get machines and you know until six months later. Do you see this sent not centralization but going from globalization back to Mexico. Back to these localized economies. Do you see that helping these kind of massive supply fluctuations or kind of I guess events that occur specifically you know with Bitcoin price and Bitcoin miners but I guess also globally with events like code that really do shock the system we know of today.


TN: Yeah, I do. I think that of course you know we’re going to have some difficulties in the early days of it. We’re going to have some awkward moments where things don’t work as people plan, that sort of thing. Whenever you have a large systemic change you always have some moments that are a little bit embarrassing and cause you to second-guess the decision. We’re going to have those that’s normal but I think over time. What we’re building is a more robust global supply chain you know. Something like 40 of all manufactured goods are made in Northeast Asia, China, Korea, Japan and as we have re-regionalization of manufacturing and that’s to North America, that’s to Europe and so on. We have a diversity of manufacturing locations and so if there is let’s say Covid in China or in Asia but it hasn’t hit the U.S. yet then you know it’s possible to use additional capacity in say U.S. or European factories to help meet the needs of Bitcoin miners, right? Depending on what we’re doing. Depending on the sophistication of those factories and the capacity of those factories but I believe that as we have regionalization of supply chains you have much more robustness in those supply chains.


I also think that in the wake of Covid… so I lived in Asia for 15 years. I just moved back to the U.S. in 2017. I lived through probably five or six pandemics in that time and so we got a little bit used to it. In the U.S. it’s relatively new and I think people here trying to figure out how to contend with it and kind of the calibration of risk in the U.S. to pandemics is it’s new. So people aren’t really sure what it means or doesn’t mean. So the global transmission of viruses is not something that’s really going away. So will we have more code like viruses coming out of Asia or coming out of Europe or the U.S. It’s likely and so we’re at a point where we have to have regionalization of supply chains.


So first we have robust supply chains where we can source from the U.S., Europe, Asia wherever we want as capacity as demand and as costs require but also we have the flexibility if there is one of those events whether it’s a disease event or whether it’s you know let’s say a war or something like that. We have the flexibility to make stuff in other parts of the world too. So if there was a devastating conflict in Northeast Asia today. Global supply chains would be paralyzed that’s just a fact and so the sooner we can get regionalized supply chains the better, we’re all off because the risk of a let’s say a conflict in Northern Asia, if it ever happens, it won’t impact everyone on the planet as much as it would.


JB: We definitely, I agree are seeing that de-risking and a big huge news with a semiconductor in TSMC moving to potentially the United States to build a facility you know hopefully reducing on that that distance for Bitcoin miners specifically. I found it very interesting that you mentioned about Mexico and the electricity prices there. To understanding that those manufacturers actually had to leave Mexico and went to China because it was too you know too expensive to extract or to complete that manufacturing process. I view Bitcoin mining as a way to almost extracting you know Bitcoin from the network through a manufacturing process where we’re using these Bitcoin miners and large amounts of energy to do just that.


So I wanted to talk farther about how you’ve worked with clients in either the natural gas or the energy sectors in the United States specifically and pricing out those markets and where do you see the future of this industry going the electricity market specifically and the cost of power in the United States?


TN: Sure, so I’m in Texas the cost of natural gas is very low and the abundance of natural gas is very high. So electricity prices to be honest is not really something we worry about here. I know in other parts of the country and other parts of the world it is a worry you know, electricity is something that has kind of always been very regional and it has been always been very feedstock specific if you’re burning oil to make electricity or coal or nuclear or whatever and you really have to look at that blended cost, right? but in Texas we’re looking at a lot of natural gas to fuel our electricity. So not that much of a worry for us and and in this region it’s not that much of a worry.
I think in places like Europe where they’re net gas importers, I think it’s more of a worry and there’s always a lot of discussion around importing gas from say Russia or from the Middle East or from the U.S. I think they have an abundance of choice there but it’s relatively more expensive there than it is say here in the U.S.


I think in Asia you have a lot of imports from the Middle East particularly places like Qatar, these sorts of things for natural gas. China uses a lot of coal something like 70 plus percent of their power generation is from coal and it’s really hard to um to wean themselves off of that. Japan is a very large LNG and natural gas importer because they shut off their nuclear power after the incidents in 2010 or 2012 sorry with the reactors the Fukushima reactors. So you know it really all depends on the local power generation capacity in feedstocks. But I think generally you know we’re not necessarily seeing a world where hydrocarbons become all that expensive for quite some time. When we look at what Covid did to demand the demand destruction that Covid brought about is is pretty shocking that applies to industries and that applies to consumers so we don’t see say oil prices or natural gas prices hitting let’s say the highs of 2008 for quite some time. And you know since they are relatively global commodities although there are differences in certain aspects of them it also pushes down the prices, let’s say in other parts of the world say the middle east and so on and so forth. So we don’t see electricity prices outside of say regulatory impacts or things like fixed investment requirements.


So let’s say there’s a regulatory requirement that a power station can only be say 20 years old you know that’s a significant cost that would add to electricity prices but other than that it seems to us that the feedstocks, although we don’t necessarily expect to see kind of negative 37 oil like we saw in April. We don’t necessarily see energy price inflation coming anytime in the next say 24 months. And if you look at things like gasoline I know this isn’t electricity but things like gasoline prices are down say 30 percent from where they were a year or so ago. And they’re expected to remain that low at least for the next six to 12 months. So it’s not just electricity it’s also gasoline or petrol as well where because of muted demand prices will remain relatively low.


JB: I think that’s that’s great news for for miners in the in the United States and you know I really cross the world as more and more energy generation comes online. We’re seeing that that cost to produce coins is continuing to get cheaper and which allows miners here in the U.S. to compete if not beat miners in China on the cost per kilowatt hour. Tony, was there any other trends that you guys are focusing on right now in regards in to your investment portfolio analysis that you wanted to highlight on the show today?


TN: JP, I think there are hundreds of trends we’re following but I think we’ve cut most of the main ones. I think really it’s you know understanding risk of any asset that we follow or our clients follow is really really important. Whether it’s cryptocurrencies or whether it’s oil and gas or whether it’s you know I don’t know the SP500. Understanding the risk there is really critical we’re always trying to figure out how to balance the risk and opportunity associated with the assets that we forecast and that’s I would say for any of your listeners that’s the really critical part to understand. So you know we could pursue this down any avenue and I’m sure we could talk for another hour on you know on just about any asset. So I really appreciated the time today it’s been a fantastic discussion, thank you very much.


JB: Yes, thank you Tony it was great to have you on. I want to offer you the opportunity to join you have any questions that you want to ask me about Bitcoin specifically that you want the audience to make sure they hear, anything that’s on your mind?


TN: You know, I guess what I am curious about Bitcoin is you know we saw a bump in 2017. I think largely driven by broad awareness or a more broad awareness of the opportunities in Bitcoin. What will drive the next bump in Bitcoin or crypto value? What do you see driving that next rise let’s say 30 to 40 to 50 rise in the value of of cryptocurrencies?


JB: So the way I view the cryptocurrency market and really Bitcoin specifically is I’m all about as the stock to flow ratio and how that bitcoin is created. So when that having event occurs I got into cryptocurrency back in 2013. So I’ve been through two of these having events now and when that have even occurred in 2016 we see that it kicks off like a real almost momentum. Moving into the space where the cost of creating these new coins is exponentially higher, makes it so that all these older machines have to come offline and it really does a disservice or really degrades the value of these mining machines it makes the profitability got cut in half. And so when that happens I think that there are these the lack of coins new coins coming into the system, creates the momentum which is needed to push the price up to those 2017 highs you were talking about or potentially you know 2021, 2022 highs, simply saying it doesn’t happen instantly because it does take a while to get there but I expect that to you know to happen in the next coming years. Not necessarily because of one event but simply because of the schedule of new coins coming out of the market.


TN: So sorry if I understood you correctly are you also saying that the age of the infrastructure that the miners are working on has an impact on the so the replacement cost of that infrastructure also puts upward pressure on the price of bitcoin?


JB: I would say that exactly so the fact that we have to replace machines that have less efficiency. So the joules per tera hash or how well they can turn one watt of energy into one terra hash of mining power is needs to be upgraded by 50 so if you have a machine that was running 100 joules per terahash like the s9 that machine is no longer and it was just barely making money that machine is no longer going to be even anywhere close to profitable because of this having event, you know now, you would need to go upgrade all of your machines so they run at the 50 joules per tera hash level or you need to find half the cost of electricity and that is very hard to do especially because these facilities are massive with hundreds of megawatts of power.


So that’s what I drive as the underlying driver to this Bitcoin price push that we see every four years if you look back on the chart it happens every four years. Simply because the miners place such they’re one of the biggest components of the ecosystem there’s about five billion dollars in mining rewards today every year and that’s a huge driver in a relatively small market where Bitcoin is currently sitting.


TN: Interesting, so that that replacement cycle like you said it’s and this is a question it’s not a statement that’s that’s about every four years give or take.


JB: Every four years give or take either have to replace your equipment with newer machines which now you’re waiting in line because you know everyone else in the whole bitcoin network has to do that or you’re moving to power where it’s half as expensive but all miners are always searching for the cheapest power so that’s something that’s always occurring.


TN: Okay, so with the kind of the supply chain hiccups that we saw with Covid does that push that replacement cycle back like are is that replacement cycle being pushed back by six to nine months so or is that do we have a pent-up kind of inflation meaning. Do you believe that the value of bitcoin being driven up will last for longer because of the supply chain issues we saw in Covid?


JB: So with this definitely the supply chain issues in Covid it affected our shipping rates as you mentioned those increased dramatically it affected how fast machines could get out it actually caused bitmain and some of the other major manufacturers to delay their shipping by two or three months. So if you were to buy a batch to be delivered in November it still hasn’t been delivered.


So there is that that pushback and we’ve seen that greatly affect the market regarding the deployment of these machines and kind of scaling with the recent bitcoin price-wise guys new machines are very hard to get. I would say about maybe 10,000 to 15,000 new machines per month are coming to the U.S. And that might be even on the higher range that’s about 50 megawatts of power per month coming to the U.S. and coming out of these factories. Which is is only 50 million dollars worth of capital. So we have huge constraints on the semiconductor themselves and being making those mining machines and when the price of bitcoin even jumps up like it has over the past couple of days up to the 13,000 mark that’s going to create even more external pressure even more interest in mining which makes it even harder to get those machines and will push out the timeline even farther.
So yes it’s a huge issue when it comes to supply chain management because of Covid and the Bitcoin price increasing investors appetite to get exposure the space.


TN: Fantastic that’s really interesting. Thanks for that.


JB: Of course Tony, well thank you for coming on. I appreciate it and I’m glad we’re able to have you on. Thanks again Tony.


TN: Thank you, hope to speak soon. Have a great day. Thanks JP, bye-bye.


BBC Business Matters: President Trump announces new US sanctions on Iran

Tony Nash joins Fergus Nicoll at the BBC for Business Matters podcast where they discussed about US sanctions on Iran, the battle for the new head of World Trade Organization, Texas’s stand on green technology, and the coronavirus update right in Houston, Texas.


This podcast was published on October 9, 2020 and the original source can be found at


BBC Business Matters Description:


The US has imposed sweeping new sanctions on Iran, this time targeting its major banks as the Trump administration continues its strategy of “maximum pressure.” We’ll hear from Barbara Slavin, Director of the Future of Iran Initiative at the Atlantic Council. Also in the programme, the selection of a new director general of the World Trade Organisation (WTO) is entering its final stage and with both the final candidates being female, whoever gets it, it will be the first time the job has been taken by a woman. We’ll hear from Annamie Paul, the new leader of the Green Party of Canada on her vision for how the economy can be overhauled to create sustainable jobs. And we’ll hear from one entrepreneur who has taken the pod-serving idea of coffee machines like Nespresso, and used it to serve different kinds of whiskey.


All through the show we’ll be joined by financial professional Jessica Khine in Malaysia and Complete Intelligence economist Tony Nash in Texas.


Show Notes


FN: On US sanctions on Iran: it’s damned if you do and damned if you don’t, I guess at this kind of fervid election time, you’ve got to have a foreign policy and yet you get a slamming if it comes up at what looks like a cynical moment.


TN: I just want to clarify something that your guest said. The U.S. Treasury Department made a specific statement about agriculture, food, medicine and medical devices and said that they specifically don’t apply to those commodities. This applies to 11 Iranian banks. The U.S. is working on peace agreements across the region. They’re working on withdrawing troops from Afghanistan by the end of the year. Saying that this is whipping up disagreement in the region, I actually don’t think is the case. The U.S. is proving with the actions that it’s really going to great lengths to bring peace to the region.


FN: So you would say presumably that when we heard Barbara say that Mike Pompei just kind of looking busy for busy’s sake, you’d say the State Department, Foggy Bottom is much more active, proactive.


TN: Well, if Mike Pompei wants to just look busy, there’s plenty of other stuff we can do. It’s not as if Iran is just something on the edge waiting to happen. There’s a lot going on with the US State Department, quite frankly, a lot more than has gone on for years.


As you know, I lived in Asia for 15 years. I lived in Europe for a spell before that. I’ve seen the U.S. State Department in action in these cities. Although the U.S. State Department has become quite assertive over the last two or three years, at least they’re doing something productive. There wasn’t much going on previously aside from upholding status quo, kind of rigid lines.


FN: OK, Tony, thanks. Great to have you with us. Now, I’m hoping are we going to bring you a first time appearance on Business Matters on the part of the financial professional? Jessica Khine’s with us from Nusajaya in southern Malaysia. Jessica, you’re hearing us okay? I know we’ve had a little bit of difficulty establishing connection. Good morning.


JK: Good morning, gentlemen. Glitches are over and delighted to join you.


FN: Well, that’s fantastic. Tell us a bit about Nusajaya. I had to admit I had to look it up, but it looks to me about perfect for commuting over the strait to Singapore.


JK: Yes. That is provided that the pandemic does not frighten the two governments, Singapore and Malaysia. And once upon a time, I was able to pop into my car, drive down with a special cash card to pay the Singapore Transport Authority as I crossed the causeway, you know, quickly flashed my passport at both customs and Immigration and pop into a meeting in the central business district in Singapore. But sadly, that has now been prevented and forbidden since March the 18th. And if you think that today where, you know, October the 9th in Asia, it has been an absolute business killer.


FN: In what sense? A business killer?


JK: No physical driving over a causeway for a meeting with a client, an institution, you know, a lunch with a friend. It’s quite frustrating to be a mere 10 kilometers north of Singapore. Tony, you have your Asian experience. I don’t know if you ever knew that the tip of southern Malaysia was so close to Singapore.


TN: Of course, I was actually in Nusajaya for one of the launch events years and years ago, and the intention was that it would be kind of a suburb to Singapore.


JK: Something like that, I think. Was it was it Mark Mobius who identified the state called Leisure Farmers as somewhere where, you know, the sultan had provided affordable land and wanted to have a lot of Singaporeans have a decent second weekend home?


TN: I’ve had a lot of friends who lived in that area and in those developments, and the plan was that they would commute into Singapore. Of course, that’s been very difficult in 2020.


FN: Jessica, what’s the state in Malaysia? Across Malaysia, if you look north to Kuala Lumpur, what is the state of the domestic fight against coronavirus? Because I’ve seen a spike in the last week or so, I think.


JK: Yes, indeed. They badly calculated the outcome after holding some elections in the state of Sabah, which you might know is to the east of the of peninsular Malaysia. And I think where you have a lot of people congregating together, insufficient ventilation. I actually even found out that a particular NGO had lured Sabah citizens to fly back by subsidizing their flight tickets, saying, come on, come back and vote for us, etc.. So that was slightly poorly planned. Numbers of new cases which had been, you know, a very proud single digit for a thirty four point six million population nation, suddenly got catapulted right up into 600, 400, 300. And it’s quite a sort of a, you know, quote unquote horror movie situation at the moment.


FN: Go on, finish that. And then just tell us quickly whether there’s been an impact within Malaysia on business and the way people travel around to do business.


JK: I think the complete lockdown in the first quarter was grim. And now interstate travel is not banned. But is business choked? Absolutely. And I think, you know, it’s such a global pattern that, you know, I couldn’t beg to differ in any way. But I think we we are already aware that many governments have not been able to implement, you know, the best policy. And the continuing discussion does seem to be, do we sacrifice growth or do we pander to the the virus?


And and it’s, you know, unique, unique nature.


FN: And a quick word. Bring us up to date. And in Texas, Tony, how do things stand since we last spoke?


TN: I think they stand pretty well. The governor here just started to lift even more restrictions here. We’re in the top five states in terms of the the lowest R0 contagion rate in the U.S. It’s very low here. We may hear case numbers, but the hospitalization and casualty numbers are very, very low here. So things here seem to be getting much, much better and have done so over the past six to eight weeks very much. And so it’s getting better. I just hope things move on.


FN: Tony Nash on Texas of course, you know, massively organized around the petroleum industries. What is the tolerance or or interest in Green Party as such a green new deal as such in Texas?


TN: I’m in Houston. It’s not very high at all. Obviously, that endangers a lot of jobs here. What’s happening in Canada is slightly different with the Tarzans and the cost of getting crude out of the ground there versus shale in west Texas, which is cheap on a relative basis. We produce much less expensive from a cost perspective, hydrocarbons in Texas. In parts of Canada, you have to have crude trading at relatively high levels for it to be economical. I can understand why it would be more interesting there. Here in Texas, we get out of the ground a lot cheaper. So it makes kind of less sense here.


FN: We’ve got to go to a break in a moment, Tony, but what’s been the impact. Has the coronavirus shut down earlier in the year? What happened with with fracking and so on in Texas?


TN: Coronavirus is one blow, but what we had about three or four weeks before coronavirus was, if you remember, the Saudis and the Russians did an OPEC deal where they really crushed the price of crude. The crude markets were oversaturated on the supply side and the price was down already. And then we had a second blow with a coronavirus. The oil and gas sector is really damaged this year, not only because of COVID, but also because of what the Russians and the Saudis did to prepare crude markets for this, meaning oversupply in a market where demand just evaporated.


FN: Tony, how on earth do you pick between two talented, experienced, clever people of this in a competition of this kind?


TN: Yeah, they’re both great. I think we have a trade expert against a reformer expert. And I think the question really is, what does the WTO need right now? Do they need trade expertise or do they need reform? Given that Azevêdo regime at Servicio has been pretty lackluster and so well, I would love to see an Asian head at the WTO. At this point, a reform is much more important because issues like nontariff barriers continue to allow countries to circumvent trade rules. And until there is reform to actually track and name the names of that stuff, we’re going to continue to see massive problems in trade.


FN: Will come to Jessica in a moment on that desire for an Asian head of the organization. But, Tony, just amplify that point about reform, because both candidates use that word. Everybody says the WTO is seriously wanting. But what are the most egregious problems and who’s standing in the way of this reform?


TN: I think it’s an institutional problem more than an individual problem. What is it? I think it’s the ability for countries to try to circumvent the rules. The WTO hasn’t necessarily kept up with technology and kept up with trade policies and the value buildup of goods. And this is why, like in the U.S., I moved to the U.S. three years ago. I spent most of my life in Asia.


This is why the U.S. has done things like the USMCA to really prepare for re-regionalization of trade patterns. What we saw from 1990, 2000 until 2015 was the clustering of trade power in Northeast Asia. And that has led to a lot of concentration of risk and supply chains. What we’re seeing, especially in the wake of coronavirus, is a desire for companies and countries to de-risk their supply chains by re-regionalizing, their supply chain.


So in the late 80s, early 90s, we saw regionalization of supply chains with the E.U., with NAFTA and with other regional agreements. It’s only when China came into the WTO that you saw this real dash for a hard centralized concentration in Northeast Asia.


FN: Very interesting, Jessica. I’m not sure what whether you want to add to that. But just let’s start at least with this point about maybe it’s a myth, Asian solidarity for an Asian candidate. Would you assume that across Southeast Asia, for example, there would be enthusiasm for the candidate presented by Seoul?


JK: I think the important point is that just to honor someone we have recently lost Ruth Bader Ginsburg. Women belong in places where decisions are being made. So I, for one, am absolutely over the moon about the two candidates. It is true that there is some tension from China and Japan regarding a union, his candidacy. But I think that it’s time to grow up. I fully concur with Tony that, you know, in. The whole organization called WTO, I think reform is crucial, the ability to track name and shame, you know, perpetrators who are consistently breaking rules and laws and policies is absolutely important.


But the other the counter weight to that is that I think we’ve also got to fight this big move, which has been reinforced post pandemic of kind of globalization. Tony used the word re regionalization. But I think the supply chain issues, I think there’s whoever comes in is going to have, in a way, a sort of a poisoned chalice. There’s got to be a lot of work that’s done to clean the house. I’m delighted that its two strong candidates, but I might agree with Tony that the reformer might possibly win over the candidate with a strong color and background in trade.


TN: And Tony, it’s worth noting that, you know, we should probably just stop. You know, it is no longer a remarkable thing for a woman to head such an organization. We have Christine Lagarde at the ECB. We have Kristalina Georgieva, the IMF chief economist, the IMF, Gitter Gopinath, and so on. We had the former head of the Fed, of course, was a woman. So is this now normalised?


TN: I think it’s great that we’re in this position. But I don’t think anybody is as shocked that there are two women battling to enter the WTO. I don’t think this is the 1980s. It’s in 2020. I think it’s definitely normalize.


FN: These guys do Martin and their colleagues. These are the dreamers who who just turn everything over, reinvent things and and who’s who’s to who’s to quibble about that centuries old tradition, whatever these guys are doing something radical and new.


TN: It’s a tough hill to climb because the whiskey drinkers that I know like the tradition and they like the process. Your comment about the chemistry set was pretty apt, actually, because it’s for anybody who has a taste for any certain kind of food, it doesn’t matter what can be done super quickly. The enjoyment is in the process. It’s in the refinement and it’s in the care that it takes for that stuff to come to market.


FN: That’s what they say about Business Matters. Thank you very much, guys. Great pleasure. Good to have you with us, Tony, as always.



Why Bank Stocks are Falling?

BFM 89.9 discusses with Tony Nash about why bank stocks are falling — the US markets were dragged down by financial stocks as big banks JP Morgan, Wells Fargo and Citigroup reported their first-quarter earnings.


Find this podcast originally published at the BFM: The Business Station.



Show Notes:

BFM: Right now, taking a look at the wider global markets, we speak to Tony Nash, CEO of Complete intelligence. Tony, thank you for taking the time to speak to us today. The Fed book was released showing that almost all economic data activity has stopped and the question is how difficult will it be to restart it? Do you expect even more contraction?


TN: Very difficult. I mean, as we’ve talked about before, this is a government-mandated shut down, so it’s going to take a lot of fiscal stimulus to get things restarted. That’s why you’ve seen governments come out with such large stimulus programs. We don’t believe it’s a situation where central banks can wave a magic wand and use monetary policy to get things started. It’s not that kind of problem. This is a problem that has to be addressed with fiscal stimulus and direct spending from governments.


BFM: Is there enough fiscal stimulus so far?


TN: No. We’re two weeks into the second quarter, and when we look at all of the country, where the orders to not work are in place, it’s going to be at least two to three to four, maybe six weeks before some countries are up and running. And because a this is government-mandated order, those governments have to find a way to compensate individuals and companies for those close-down orders. Otherwise, we’d have catastrophic economic contraction. Spending is a key component of the GDP calculation. So if you count “don’t spending” as a substitutional factor to consumption and investment, you can still grow your economy or have it not contract as much as it would. Governments are feverishly trying to find find where they can spend, but I think many governments don’t really have the money. They accumulated so much debt over the last 10 or 20 years, they don’t have the money to be able to stimulate the way they need to.


BFM: Tony, Mexico’s been downgraded by Fitch to just one or just one level of Junk. Do you think this portends a rash of similar downgrades by other agencies?


TN: Oh, sure, absolutely. I think emerging and middle income markets are going to have a tough year. And that’s the case because we have a strong US Dollar and are likely going to have a stronger US Dollar. And on a relative basis, emerging market currencies are going to have a real uphill battle. So those emerging markets that are export-dependent will have a tough time, as well as we see consumption collapse. So I don’t want to sound entirely pessimistic, and it’s actually quite hopeful once we hit, say, July or August. But, Q2 is a very, very difficult situation. And the quicker governments can get their countries moving from an economic perspective, the better off we are.


BFM: So Tony, let’s move back to the US for a bit. The banks, the big banks, have started releasing the Q1 results with JP Morgan, Wells Fargo, Goldman Sachs, Bank of America and Citi or reporting significantly lower profits and more particularly huge provisions there, some as five times more than usual. What does this tell you about the broader economy? What are they expecting at least?


TN: Well, we’ve been trying to tackle all the bad news now. That’s for Q2. They can say, we accounted for that before and they can report better numbers in Q3. And this is all relative. A lot of companies are going to report horrific numbers for Q2. But, you know, the government is coming in and encourage loan repayment to be delayed and backed up the number of loans as well.


So should these provisions be larger than they are or as large as they are? Maybe that’s a prudent thing to do. But it looks really like there, you know, these provisions should have been in Q2, not necessarily in Q1. So I think they’re being conservative and I think that’s fine. But I think to some extent it’s really you just tacking all the bad news or what they expect to be the bad news into Q1 so that they can look better later in the year.


BFM: Yeah, that’s always what this was about to ask you, actually, Tony. Do you think they’re trying to pack as much bad news in this quarter as possible? Yes. But I think on on the call yesterday with Bank of America’s chief financial officer, he also seemed a bit, well, at sea in terms of really putting a finger on exactly what kind of quantums provisions might lead to the next quarter. Do you think they really know what’s happening around the corner, do you think?


TN: I don’t think they know. And I know that, the US banks are really, say take serious problems with like with PPP, these are small business loans. They’re just overwhelmed with the number of applications for these small business loans. That loan processing is truly inefficient and it’s not all the banks’ fault because it was, the US department pretty pretty quickly. So they’re kind of doing the best they can, but those are not their most efficient operations and we’re having to just adjust to where the attention is.

So I think they don’t know how bad it is. Until we know when some of these stay at home orders will be lifted, nobody really knows. And it’s the same thing in Asia as it is here. You’d see all these kids schooled, and it’s a problem, and so until it’s lifted, we really don’t know the full extent of the economic damage.


BFM: Well, speaking about Asia, even after better than expected March trade figures, People’s Bank of China cut medium term lending rates by 20 basis points. What do you read from what they just did?


TN: Honestly, guys, a 20 basis points isn’t going to do anything. I mean, nobody is going to take a loan out because it’s 20 basis points cheaper. What China needs is a very large fiscal stimulus package to make sure that their factory workers and other certain workers are given, maybe not a full wage, but enough of a wage to continue to get by. Our major worry for China this year is a very sharp contraction of industrial production, meaning manufacturing. We’re looking for contraction in exports starting in February, going through March and April, May, simply because the consumption markets are not there.


There is a global demand problem. So there is a demand problem domestically in China, but there’s also a demand problem in the rest of the world. So how can China, which is an assembly point and a maker of finished goods, how can China have kind of relatively normal export data when the rest of the world isn’t buying. It’s just not possible. So, you know, what we’re worried about is the industrial production contraction in China and we’re worried about deflation in China.


We think deflation will be worse in China than in any other parts of the world because of the dependence on manufacturing. So it’s manufacturing insures on making stuff, their workers aren’t working, and so they don’t have the money to buy stuff. And so that creates a huge gap in demand, which is likely deflationary, which is a big, big worry for us.


BFM: I’m wondering, though, I mean, if it’s not likely to move the needle by too much, why would it cut interest rates?


TN: I think a lot of central banks right now are going through the motions, hoping to kind of ride on the coattails of the big moves at the ECB, BOJ and Fed are doing, right? PBOC is is taking some big moves. So I’m not saying that they’re not doing their part. They’re definitely playing a part. But little moves like this, I think with what we’ve seen is generally a big action is taken. We saw this with the first Fed action and so does in the central bank with the OPEC move over the weekend, right? A big action is taking, and the markets really just going on, they don’t care that a big action has been taken. But what happens is a series of smaller actions are then taken, and markets take notice. So if anything, I think there’s 20 basis point cut is in one action among many that the PBOC is planning so that they can gradually feed that market expectation.


But again, the markets are really bored and not satisfied by a single big move. They’re looking for a series of moves, can be satisfied and to gradually kind of re-course positive expectations into markets. But 20 basis points is not going to do it, especially when you’re looking at a fall in manufacturing or fall in wages, a fall in consumption, and potential deflation. Nobody is going to take out a market rate loan when they have all these other worries to tick down the list.


BFM: All right. Thank you so much for spending some time with us this morning. That was Tony Nash, CEO of Complete Intelligence.


Using Data to Scale your Business in a Smarter Way with Tony Nash

Tony Nash, CEO and founder of Complete Intelligence, speaks with Austinpreneur about using data to scale your business and talks about what his company does and how it helps businesses do better forecasting. Questions asked during the podcast:


  1. Tell us about yourself and your company.
  2. Can you contextualize and give examples of how your products and services help procurement folks?
  3. How did you come up with this business idea?
  4. Why did you decide to move from Singapore to Texas?
  5. What do you think caused the skills improvement in the US?
  6. What’s causing high turnover rates?
  7. What’s your take on AI and how does your computer use that?
  8. How are you working to build data privacy and security?
  9. What does the future look in AI and Complete Intelligence?
  10. What are the trends that you are looking at?
  11. Why don’t we have a higher level of transparency in products and processes?

Description from Austinpreneur: Trying to predict the future for any business can be a challenge. Accurate and reliable data is a highly prioritized need for any business in any market. Complete Intelligence was built to provide business with data that is highly accurate and will allow you to build and grow with a glimpse into what the future could be. Tony Nash has built Complete Intelligence to enable revenue teams and finance teams to better manage their risk.


Listen to the podcast in Austinpreneur.



Policy Action Kicks In As Bull Market Officially Ends

Various central banks are implementing emergency rate cuts to respond to the coronavirus and as the bull market ends. Meanwhile, it remains to be seen whether peak infections in China and South Korea are a light at the end of the tunnel.


Presented by: Wong Shou Ning, Lyn Mak, Julian Ng



The UK has launched a stimulus plan. Do you think the ECB will be pressured to do the same?


I’m sure they will. I don’t think they have that much power into interest rate cutting area – the rates are already right around zero. What they’ll most likely do: buy more government bonds, ease up on the reserve ratio, loan incentives, etc.


Europe is in a pretty bad position partly because COVID really attacks older people more aggressively than younger people, and the demographic profile of Europe is pretty terrible. So the ECB has to do something to help the economy. What they’re trying to do is to make sure the consumers don’t totally close their wallets and the banks don’t totally close lending. They’re really trying to stimulate banks to keep money moving.



In China and South Korea, there are indications that the infections have peaked. Pres. Xi visited Wuhan. Is this the light at the end of the tunnel?


I think it’s a natural progression and it’s quite possible that things are dissipating in China and things are improving. We see road traffic congestion gradually building back. That’s good for everybody. 2/3 recovered. We’re getting there. There may still be quite a lot of bounce back in March. Hopefully, in Q2, we’re back to an almost normal level.



Japan’s economy seems to be bordering on the recession. Do you think even the Bank of Japan has assisted on the current downward cycle? Have they got any more policy options left?


Central banks can do for the ending bull market. The BOJ really has been focused since 2012 on Abenomics to try to raise the inflation rate to 2%. They never achieved that. But they have helped some other things to stimulate the economy.


Japan’s in a very tough place because it’s tied to the Northeast Asian supply chain and it has the same demographic problem that Europe has. They really need to start circulating money. They can use these tools on reserve rates and loans, but how much further can they push it?



The fall in crude prices has also negatively affected shale oil producers. What’s your near and long-term outlook for the industry?


Shale for the US is energy security. Americans are tired of the political issues that they face in the Middle East to secure their energy supply chain. The current administration help the shale producers to survive including backing up their loans, working with banks to extend the payback period, etc. Shale is seen as a national asset by the current administration as they work very hard to make sure that those companies continue to be competitive and have the resources.



Listen to this podcast on the bull market at BFM: The Business Station.


Has COVID-19 Exposed Over-Dependence on Chinese Manufacturing?

The Business Station Malaysia spoke to Tony about his insights from the Federal Reserve’s minutes released yesterday as well as his thoughts on Chinese manufacturing as activity slowly ramps up again. How long will it take for global supply chains to return to a sense of normalcy?


Beyond that, this podcast also get into Germany’s economy as weak economic data dragged down the Euro, and thoughts on whether we’ll see Asian Central Banks cut rates due to the Covid-19.


Listen to the podcast in BFM: The Business Station 89.9.