HEDGE EQUITIES

“After the Second World War, we put together an economic order centered around the US and the US dollar, and that's coming apart. You can see an acceptance that it's coming apart. You saw it last week in the political discussions you saw in Europe about where we're going next. But clearly, the old system is coming apart. There's nothing to replace it. That's where the catastrophic risk component comes in.”

“We can justify the pricing if you assume that there's no catastrophic risk to worry about. But if you do bring in catastrophic risk, then the market becomes worrisome across the board. Whether it's Mag-7, not Mag-7, global equities, US equities, collectively, there seems to be too much of an acceptance that we'll figure a way through this without serious pain.”

“I think that transition, more than a collapse, is what's going to be painful, because there are going to be, you know, there are going to be some businesses, they're going to find a way to get to the other side easily, and other businesses are going to struggle more. But I think that struggle's got to be priced in more, and whether that means lower earnings growth or higher risk premiums, markets haven't quite decided yet.”

“How do you go from the US dollar as the central currency to something else? Because there's nothing else out there right now that can replace the US dollar as a global currency. So I think that that transition, more than a collapse, is what's going to be painful, because there are going to be some businesses that find a way to get to the other side and others that struggle.”

“Europe has lived in the reflected protection of the US for 70 years and essentially been able to focus entirely on economy building, leaving defense and the expense of defending Europe to the US. So this is not just a US problem. The US might have more to lose than everybody else because it's been at the center of the post-World War II economic order. But it's not just the US.”