So it's a great emotion to be here in a Jean-Jacques Lafon theater to give this Jean-Jacques Lafon lecture. I will say a few words about Jean-Jacques at the city hall later on, but let me say that this has been an incredible adventure. I remember Jean-Jacques in 1982, the first time I met him in Paris. You know, in Paris there is nothing one can do and I will do something else somewhere else. I'll say, who is this donkey shot? He will do this, he will do that. And then I saw step by step each time he would announce the next step and the next step looked impossible each time. The next step he overperformed the next step and he went through step to step and I discovered this fantastic place, this beautiful building, the incredible PhD students, and really the great achievement. So that when well beyond, I think anything that Jean-Jacques could have dreamed of and to see, to have the privilege to witness the various steps since for the past 40 years has been quite something. And you know, we know we are in pessimistic times and we are time where we think this is the end of it. These are gloomy months, gloomy years, and I think those are the times where you have to say no, I mean, anything can be done if you have the persistence, the motivation, and you can go against the system as Jean-Jacques was always doing. He had to go against the system to change the system and he showed how much, you know, this will power can achieve. And that's, I think that should be an example for anyone, you know, with doubts who thinks that there's nothing one can do and it's just, it's exactly anybody should come to to lose these days to, to recharge the battery. Because that's, well, it's a it's a fantastic achievement. Anyway, but I will go back and say a few more things in the city. Anyway, it's extremely moving and to see Colette and to see all my friends and to be here to give to deliver this lecture. So let me without further ado, let me start some, I'm already desigrated. Usually, there is a side that said with me the big suspense is when when I will weather and when I will fall off the stage, but here it's safe because there is no stage. I can still fall but it's kind of safe because the worst can happen to me is to get. That's right. That's already bigger. Okay, let me start. So, I have, I have this. So here is a photograph of young Schumpeter, and, and it's true in economy, you know, I would take your classes, for example at Harvard with Richard caves and he would talk about Schumpeter, but I had come across, and I had this idea of creative destruction, you know that new innovations this place all technologies that looks pretty smart and and in various writings Schumpeter laid out this this concept this idea. But you know when I was a student, there was it was nowhere it was a curiosity it was absolutely not in mainstream economics. You would study growth, you would study the solo model, which is a beautiful model, which is really a model of a model. You describe the whole world with two equations. When equations they do how you produce output with labor and capital. And the second equation tells you how you accumulate capital with savings minus depreciation. And, and, and that that was the framework and then of course you would say well you can do something a bit more sophisticated with the Ramsey model and this, but all were those were modeled with of growth based on capital accumulation, but in fact we show that on the reasonable assumptions. Under reasonable assumptions. That's the paper that gave him the Nobel Prize it was published my my birth date in 1956, but gave him the Nobel Prize in 1997. Under reasonable assumptions of decreasing returns to capital accumulation, you cannot get long run growth of per capita GDP, just relying on capital accumulation you need something else, and the something else is technical progress, but Bob solo would not tell you where technical progress comes from I said you know it could maybe comes from the thing that should better mentioned, but there was no should better and model, and there was no should better and empirics. So, I met Peter how it at MIT in, in, in the fall of 87. And, and I, and I, we were neighbors there and genre remembers you were there and, and, and I worked into Peter's office which I think to my we used to talk to each other, and I say why don't we try to write a growth model that is creative destruction and that's what we started to do in the fall of 1987. And we build a model that revolve around three main ideas. The first idea is that long run growth is driven by a cumulative process of innovation, where each innovator builds upon previous innovation. Okay, so you always stands on giant shoulders of your predecessors. The second idea is that innovations result from entrepreneurial activities that are motivated by the prospect of innovation runs you, you innovate because you will get a new product or cheaper way to do things that will give you give you runs for a while until someone does better than you do. Okay. The third idea is creating destruction new innovations, this place all technologies make all technologies obsolete, but you see right away that at the, at the heart of the growth process, you have a contradiction. On the one hand, you need innovation runs to motivate innovation. But then, on the other hand, yesterday's innovators they want to use those runs to prevent subsequent innovation and regulating capitalism is largely about how to manage this contradiction. Schumpeter himself was very pessimistic about capitalism because he thought that the first innovators would turn into entrenched incumbents that would stall any new entry and in fact a lot of his worries reproduced all the time. So, but where he was totally pessimistic, we are exactly, I would have said Gramscian optimist, I should say Lafon optimist here, you see, we believe that there is the optimism of the will you when you want of the researcher. There is a there are forces that can help you avert the negative outcome that Schumpeter predicted. Okay. And, and that's what I want to argue with you today. Okay, so that way this growth framework in fact completely change the landscape I don't want to. I don't want to say bad things about other growth models. Okay. It's a, it's a fact that this new paradigm, change the landscape. Why, because we give center stage, we, it's we and all people who worked on this. Now you have people like Pete clino, who can see it. Michael Petters Fabrizio Zili, but he's our full range of, you know, researchers that that work in the Schumpeterian, you know, growth, and, and what special about the Schumpeterian growth economics is that it gives center stage to cross-term heterogeneity. It's a world where you have incumbents and entrance. It's a world where you have leaders and followers. It's a world where you have small and large firms. None of that in previous growth model. Everybody's the same. And all the action, all what's interesting, it's, it comes from this heterogeneity. So you miss the whole thing if you don't have that heterogeneity. Okay. And also what's important that this paradigm gives center stage to firm dynamics. You are in a world where you start, I start by entering with one activity. I center because for example, I do better than you.  Okay. But then I may do better than Christian and I move into become from one activity up to a two activity firm. And that's how I grow. But I may shrink also because maybe if someone else, you know, Patrick, Patrick with me may innovate upon one of my activities and I may shrink. So I grow because I keep innovating on other people thing and that's how I grow. I exit. If I am a one activity firm and someone innovates on me, that's how I exit. So you have a theory of entry growth, shrinking exit, and you have a very natural way to put some dynamics, and, and it relates to the growth process. Okay. And that's what, and it's a it's a growth theory that you test all the time with micro data. It's all about cross firm firm level data. Very micro data. No more rubbish cross country regression. No more rubbish AK. That's finished. You go into micro econometrics and you do a back and forth between theory and empirics. All the time. Okay. And that's the that's that's all that it's all about. Okay, so first part is that this theory has distinctive predictions. Okay. The distinctive prediction first is that growth is positively correlated with firm turnover. So there are various ways you can measure turnover by job creation job destruction, or by firm churning firm creation from destruction. And you see that in areas or regions or countries where you have more turnover you tend to have higher productivity growth. And you can work by David Salty longer and others document that and other things then. Okay, there is another interesting thing I told you that you, you, you have firm dynamics because I enter I innovate on Patrick, and then I keep innovating maybe I may shrink and exit, but it's this theory will give you of course that you tend to have a positive relationship between firm age and firm size. When I, when I arrive I have one activity, and then I grow little by little, I may shrink in the middle and then, but on average, there is a positive relationship between firm size and firm age. So for example, clino and chunked I say, have documented about this relationship in the US is very steep because when you US when you are good, you get the financing. When you are not good, you are driven out by the good. So those who are surviving, they get financing and they have a higher growth potential because if they didn't they would be selected out. So that's why the US curve is much steeper than for example the Mexican we are, we are between Mexico and the US in France. So the idea is that we should come, become steeper with the reforms, you know, labor market, not the reforms, competition and all that. We are still close to Mexico, not enough to close to US. Okay, and of course this theory tells you right away that you the exit rate here we look at the exit rate by age, the younger firms which are also the smaller firms than to exit at a higher rate than the larger firms, because if I am a very young firm I have only one property, it takes one creative destruction for me to be driven out. If I am a to a firm, an older item to have more activities, it takes more creative destruction for me to be driven. So you see how very naturally, the facts about exit rates of firms by age, the relationship between firm size and from age, the firm size distribution you get that very naturally with it. So in terms of growth models, you have no clue about what happens with firm dynamics. Okay, so that's the first thing, turnover and growth. Okay. A second prediction is that there is a competition, fosters innovation close to the technological frontier and discourages it from from the frontier.  The top of the class will work harder to remain the top of the class. Those are the blue, those are the, those are the blue firms that the firms close to the frontier, close to the technological frontier and the orange firm are those who are far from the frontier, they were already discouraged being at the bottom of the class that will be even more discouraged when I let these students, these new elements, these very good students in in the class Okay, and that's true also for and of course when the more people if you're a more developed country, you have a higher share of blue firms compared with orange firms. So the more developed the country is the closer a country is to the world technology frontier on average, the more growth enhancing a competition is because you have more blue firms compared with orange firms. Okay, that's that's the kind of things you can say with a with a friend. Let me do I will do two kinds three things with this with this paradigm. I will show how we can use the paradigm to revisit some main enigma in economic history. I think I will question some common wisdom. I love to have friends, your colleagues, who sometimes they come with ideas I don't agree with on policy and I love to, to say, No, I don't agree with your ideas. And I, so that's, I'm very grateful for them to have to come up with this. And then I will end up with rethink the future capitalism which is the title of the talk. Are you still alive. Okay, good. So I will start with the historical enigma. The first enigma is the secular stagnation. So in fact, the enigma is that in the US, but it's true in other countries as well. The average yearly rate of productivity growth of TFP growth went down a lot since the 2000. So you can see here the average yearly TFP growth rate in the US goes down a lot in the early 2000s. And it might be a surprise after going up a lot between 95 2005.  And you see that's true, particularly in IT producing sectors, which is the black line, and the IT using sectors is a gray line. And the most plausible explanation is very superterian is that in fact what you had is that during thanks to the IT revolution, you have the emergence of the superstar firms. So the work by author et al or by others have have emphasized this phenomenon of superstar. We talk about the Gaffam. So these firms with very good social capital, they knew how to take advantage of the IT revolution Walmart, Google, Microsoft, Facebook to, you know, to spread out. And so at first they boosted growth. But then what happened is that through merger and acquisition in particular they become, you know, pervasive. And they ended up discouraging new entry and new innovation. And that's why you see, you look at the entry rate of new firms. And you see that whether small firms or firms as of the early 2000 the growth, the entry, the entry rate declines. So in fact there is a discouragement of entry. And you see, you have those firms, they, it's very much the Schupeter syndrome, they innovate they become tentacular. And then they end up discouraging entry by new innovating firms. And in fact you have a phenomenon is important and the locker account hunger but also back I found exactly the same. If you look at markups average markup which is a red curve goes up. And not so much because within firm it goes up the within firm markup is the blue line is because it's because it's a real location effect. The superstar firms, which are high market firms low labor share firms became more pervasive. And that's why the market has gone up. So you're that really shows that you had this phenomenon of, you know, big firms these big emergence of these new superstar firms that ended up discouraging entry and growth. So there you know Gordon would say it's the end of it. We have secular stagnation we cannot do Schumpeter we tell you we are pessimistic. But then there are people like Richard Gilbert, and others who say no you have to reform competition policy. It's too much market definition market share oriented. You should more you should to a bigger extent factor in entry and innovation in the decision whether or not to allow for margin acquisition in more generally you should have, you should adapt competition policy to the digital era. So the way we are la font optimist is we say no you can reform competition policy in fact the by that administration a year ago, reform competition policy, and the hope is that though that will allow. And there are other things you can do to to limit the power of the superstar firms and and favor the entry of new innovating firms and that's the way to counteract. So you see this secular stagnation. So that's one phenomenon. Okay, another phenomenon is the middle income trap. I know that it's bad because we've got tried the initial is MIT but there's nothing bad and I don't want to. I love MIT and that's why we really we work with Peter Howie. So for example if you look at Korea, you look or South Korea, you look at the average annual growth rate of per capita GDP you see it's very high starting after the war in 1960. It declines. In fact, you see Korea had what we call a catch up growth two way to grow. That's very much based on work with them on and fabric. So one way is to catch up with the technological frontier a bar is the frontier. So this is catching up growth or imitation if you want, and you can also grow by innovating upon yourself innovating at the frontier, you move from a to gamma a where gamma is greater than one. Frontier innovation. When you are way below a bar. It's the main source of growth is this the mu M, but when you when a becomes close to a bar, the main source of growth becomes frontier innovation. The problem with Korea is during the catching up period that you have big conglomerates that emerge always the problem of the big conglomerates they're called show balls in a building from Korea here.  We don't understand. You see, so the troubles and what happened with the troubles not only they inhibited and tree of new firms, but they also somehow we believe, put pressure on government not to move to from institutions that are good for me when in particular, I showed you already that if you are in the business of frontier innovation competition is very important. So Korea should have moved increasingly towards more openness and more competition but they didn't, because this conglomerate prevented it, but there is a good thing is that good thing and good and good. They had the crisis, the financial crisis in the late 90s, and the late 90s, it had one good effect, it weakened the power of the conglomerates of the troubles, and that allowed for more entry, and it allowed for moving to more openness and more pro competition policies in Korea. And that's why you have this slot, this growth resuming here but then again goes down but you have that is this temporary boosting growth, and you can look at innovation and you can see that the crisis and the weakening effect it had on show balls boosted entry and also prompted a move of the Korean government towards more competition and more openness. So that's an interesting thing about the middle income trap. I'll come back to this issue of government being captured by firms. Okay, the last one, the third one is my debate with PKT. Okay. Blood, blood, blood. No, not a high highest respect for Thomas. Okay. When you laugh, it's true. So, here is a picture which nobody will discuss. I think a very important findings. And I think that that was a very important contribution to economics is to provide evidence that in US but also in other developed countries, the share of income of the top 1% income earners has increased a lot since the 1980. That's the share of income of the top 1% US income earners that the share of income of the top 01%. And the question is, so that's nobody discusses, okay, it's well established by the work of Thomas, Emmanuel and Antonia Kinson. The question is why and there is one driver. So the basic story is that they are, I call that Carlos Lim versus Steve Jobs. Steve Jobs becomes rich because he invents Apple. Mr. Sky becomes rich in Sweden because he invents Skype. Okay. Those are inventors. If you have Carlos Lim, I know I know there is at least one person from Mexico. One day we'll say I'm Carlos Lim son or no few. I make sure there was no slim in the room but no problem. Carlos Lim might have become an innovator in his youth. But what I witnessed during the years I was married with a Mexican friend, I mean, is that he became a head of a non regulated or poorly regulated monopoly in telecoms. And I remember when I had to make a phone call to Mexico, he would cost 10 times the cost of making a phone call elsewhere. And, and, and so that's what you have Carlos Lim versus Steve Jobs. In my world they are both so and why is it important because innovation is a source of top income inequality why because I told you innovation you get grants from innovating. And those grants make you more likely to move to the top income bracket, but it is a good source of top income because innovation gives you growth. So that's one good thing, but it turns out it has also good other good things to it. It increases social mobility, particularly innovations by new entrance why because of creative destruction. When they enter they replace someone you see they they move up because someone moves down you see I mean and that creates social mobility. Because innovation increases top income but increases social mobility on the other hand. If you look at the effect on global inequality, innovation does not increase global inequality. So now you might think that I pretend that, but that's very much the work I did with Axie get Bergeau Blondel and emus in the review of economic studies, we used cross US panel data. And, and which, and we looked, we ranked state here so the same state in a year and another year maybe here. So if it's high innovation intensity in one year it's here if it's low intensity of innovation is there we measure innovation intensity by the volume of citation weighted patterns. Okay. And what we see is that the continuous curve gives you the effect in fact we show it's causal of innovation intensity on top income inequality in the state in that year. And you see there is a positive relationship, the more innovation intensity there is in the state in a year, the higher the share of income of the top one person income owners in that state in that year. So that's clear, it is a source of top income inequality. But if now you look at the effect of innovation intensity on the genie which is a more global measure of inequality, you see no effect. So innovation is a good source of top income, because it gives you growth, it gives you social mobility and as a result, it does not increase global inequality. So I would take it. And in fact, if you look at the effect on social mobility, we're using the same thing at data as Chéti et al in the 2015 QG paper, you see that in the, in the commuting zones that have higher social mobility innovation you are also those where you have higher social mobility. So what we can show is really innovation by entrance that dominate is really the entrant innovation that drives social mobility. Okay, so that's interesting. Another thing also which is interesting when you read something we discussed in the Blanche Artirale report has to do with sub skills and good jobs. What happens another year to have innovating firms is that they create more good jobs a good job is a job that leads to promotion of the worker so here we look. This is based on UK data. We look at unskilled labor so they didn't go beyond high school. And we look at the evolution of the salary of a non-skilled worker in an innovating firm that patents as the continuous curve and the evolution in a non-innovating firm which is a dotted curve. You can see that at any age, the innovating firm space more an unskilled labor and you can see that the unskilled labor, the wage goes up by more you say I mean you have better prospects of wage increase, because in fact they create more what we call good jobs, good jobs are jobs that enhance soft skills you know you have the hard skills that you learn at school, but you have the soft skill, which are typically you know how you interact with other people in the firm, are you trustworthy, etc. So that means you have skills and innovating firm needs much more of that because if you screw up in an innovating firm it's much worse than if you scrub in a non-innovating firm. So that's another good aspect of innovating of innovation is that it also enhances social mobility because innovating firms tend to create more good jobs that mean jobs that enhance soft skills. So that's another plus of innovation. Okay, so that's the thing that by contrast lobbying it has all wrong. What is lobbying? Lobbying is what the troubles did with the government of Korea to prevent new entry. Lobbying is the incumbents that lobby to make sure that the government will not implement competition policy and will not let in new entrance. So lobbying also is a source of rents of course, but it's a bad one because it reduces innovative entries so it's bad for growth. It's bad for social mobility because I told you that entrant innovation is good for social mobility but of course lobbying will reduce it. And because it increases top income inequality and reduces social mobility, lobbying will increase global inequality. So it has all wrong. And you can see that I redo the same thing with lobbying. The US states with high lobbying, you see high share of income of the top 100% but you also see that they have a high share. They have a high genie as well whereas you remember that innovation would have no effect on the genie. So you have the good source. In Piketty's world you only have Carlos Slims and in my world you have Carlos Slims and Steve Jobs and you cannot treat them exactly the same way. Now, whether you are Carlos Slim or Steve Jobs, I still have to make sure that your wealth is not used to prevent future entry that you can do through taxation, but you can also do through competition. And now I'm working currently on a project with Blondel, Bosio and other co-authors where we show that you should look jointly at taxation and competition when you want to look at inequality and growth. You cannot look at it separately. You have to look jointly at competition and taxation. Okay. And that's what I wanted to say on inequality. So now I'm done with this part. Are you still alive? Good. Let's have a big breath. Now we get to the killing the bad ideas. Okay. Let's kill bad ideas. Let me have some water. Oh, there are plenty. Oh la la, Florence, thank you. Oh la la, what's that? It's nice. It's true that I would still need it. Because when I have all the bad ideas, it will be empty. There will be nothing left. Thank you. Okay, so I will take three ideas. One is that subsidizing incumbent firms fosters innovation. The second idea, taxing robots protects employment. The third idea is that negative growth is the way to stop climate change, la décroissance. Okay, which great in France. It's a fantastic laboratory of bad ideas. All the bad ideas we have. It's fantastic. No, I think the world should be grateful to us. You know that when I showed during CoVi, you know la la la, the so the so in particular, you can show why is it bad in a nutshell subsidizing innovation is not a bad thing in itself, but you have to be a know schyp healthy会 say no problem subsidize them subsidized R&D and it will go well. But a Schumpeterian will say, be careful, because if you subsidize too much incumbents, it might be at the expense of insurance. You will raise the entry cost, because you know they are competing on scarce resources, like, for example, scientists or scarce labor. So if you subsidize too much incumbents, you may raise the cost of entry, and possibly entry by better people. That may be better than the incumbents that you subsidize, OK? And that's why you have to be careful. When you do industrial policy, you have to always factor in the effect on entry. A non-Schumpeterian will have no problem. Subsidize, subsidize, OK? But a Schumpeterian will say, what's the effect on entry, OK? And for example, you may think that easy credit on financially-constraining incumbents is always good for innovation. Well, it's good up to a certain point, because it may reduce exit, or it may lead to zombie firms saying, and zombie taking resources away from potentially good entrants. And that you don't want to have that. So if you start from, so for example, here, I got mu is the financial development. But you see, suppose the incumbent firms, each time they innovate, they multiply productivity by gamma i. New firms multiply productivity by gamma e, where gamma is bigger. But you see, increasing mu, of course, it's good for the R&D and innovation rate of incumbent. But it's bad for the entry rates. And you have this trade-off. And because you have this trade-off, typically the relationship is like that, from no high financial constraint. Initially, it's like what King and Levine would say, you would favor growth by increasing financial development. There is a moment where this effect there kicks in and make you go down. And that's something you would not have. And we did, and you might say that this is just theoretical. I don't want to go into details, but we explored Mario Draghi to get out to avoid the recession of 2012. Took a certain number of steps. One step was to introduce additional credit claims program. In the Euro area, banks can pledge corporate loans as collateral in their refinancing operation with the central bank, as long as these loans are sufficient quality, okay? And you can say, well, before Draghi, all ratings plus, three plus plus to four, the smaller the number, the better you are, the bigger the number, the worse you are. These guys were getting the, you could use before Draghi, banks could use loans to category A firms to financing with the ECB. They could use those as collateral, but not B and C. And what Draghi has done is to say, now I will add four to the group. So I will cut here. And that's beautiful because you can do a different. Draghi, after the implementation of the program, you get Draghi extends the HGDD criterion to include firm rated four in the bank of France rating, okay? And in fact, what you will see is that it increased productivity growth for the incumbents, but it reduced exit in particular for the least productive firms. So you see what happens here is the access to loans of the four and five plus. You see they're identical up to the ACC. And then you see now, that's the access by the four and that's the access by the five plus. So you see Draghi, the one that Draghi takes, they have good access and the other one get bad access. And now you see the effect on growth. But you see that the effect on growth is post of ACC is positive or productivity growth, but the effect on exit is negative. And it's particularly negative for low productivity firm. So it's very interesting, is that you reduce the exit, particularly for the lame ducks. And that of course makes entry more difficult. And that's the downside of Draghi. So maybe when Draghi did it, it was okay. This was a big recession, but you had a zombie effect. And the non-superterian model would ignore the zombie effect. Okay. Are you alive still? Yes. You're fantastic. It was not at all obvious to get up to that point. Okay. So let's have another drink. Okay. So now another one. Taxing robots protects employment. So that's a big debate I had with Dharon. As I said this morning, when I write a paper with Dharon, he says, I have my wing behind. I travel from Boston to Paris, five hours is very fast. When I have Dharon against me, he says, if I travel westward, I have the wing against me and the trip is much longer. And so that was a thing. So papers were produced saying, robotization is a bad idea because it destroyed jobs. And we even have a presidential candidate in 2017 in France who advocated taxing robots. He did beautifully well under the advice of some of my friends above mentioned. And okay. And he said tax robots, but it's fantastic. I love these ideas. I love them to have the pleasure of killing them. Okay. So recent work with Sillian Antonin, Simovina Xavier Jaravelle and we showed. So we have various measures. So that's a modern industrial equipment, firms that automate. We will use various measures, modern investment equipment.  They create employment. And why do they create employment? It's true that you have substitution, your replacement of labor by capital. But when you automate to become more productive, when you become more productive, you lower the quality adjusted price of your goods. So you increase your market worldwide because you increase your market where there is more demand for your product. And therefore you employ more. So if now I tax these firms, I prevent them from employing more. I shoot myself in the feet. Exactly the thing I don't want to do. At least in France, maybe in Liechtenstein, it's different. But I haven't seen the Liechtensteinian paper yet. But in France, it's a very bad idea. So that's what, I still business from other firms when I automate, but mostly firms abroad in France, for the French firms. So that's what happens. And you can see firms that automate, they increase their sales, they increase their export sales, and of course they reduce employment in competing firms in the same sector. But when you are an open economy, the business ceiling is mostly to firm the road. So for you, it's good. If you are completely closed at the industry level, you would lose on one hand, but you get on the other, okay? And that might explain why none of the big industrial revolutions, starting with steam and gene, and then the electricity produce mass unemployment. You know, when you had the steam and gene, there was the Luddites movement, you know, the fear that you would have mass unemployment in England. It did not happen. When you had electricity revolution, Keynes predicted mass unemployment in the US, it never happened because you have this productivity effect that's there to counteract the other effect, okay? So that's one idea. And another one is negative growth to stop climate change. But then of course, you know, it was intimidating for me to talk about climate change on the Christian, but so, you know, it's true that historically, temperature has started to rise. When growth has started to rise, it's true that historically, the partisans de croissance, they can say, well, look at these curves. You know, exactly if you look at the Madison curve of a world per capita GDP, it's exactly flat up to the 1820, 1850, and then it starts taking off. Exactly temperature takes off when growth takes off. And the counterfactual is that without the industrial revolution, you would have had no increase in temperature. In China and India, that's where CO2 emissions start taking off. It's exactly at the time where growth takes off. So historically, they're right, but should we be, you know, we had an episode of the growth of de croissance. It was the first lockdown. We were forced to be, you know, but French GDP went down by 35% between March and May, June 2020. CO2 emissions went down by 8%. Would we want to be permanently in the first lockdown? We had to do it at the time, but you know, we know all the negative side effects we tried on our children and everything. And we don't want to be there permanently. So the other alternative is green innovation. The problem is innovation is not spontaneously green because firms that innovated in the past, in dirty technologies, they tend to continue to innovate in the future in dirty technologies. That's what it's called past dependence. You tend to continue doing what you are good at. So you need the state to redirect technical change towards clean technologies. You can do that with a carbon tax. It's very important. But you also do that with green investments, green industrial policies, subsidies to green innovation. And we need both. Why do we need two instruments at least? Because there are two externalities. There is the environmental externality and there is this past dependence, knowledge externality. So usually in public economics, when you have two externalities, you need at least two instruments and you need these two legs. And you can show, and there is work showing in particular that I did with John Van Rien showing that indeed firms that innovate or dirty in the past tend to innovate more dirty in the future, but that you can redirect technical change. So what's very interesting is that you can redirect technical change with the fuel price. You see if I increase the fuel price, I increase clean innovation at the expense of the innovation. So the carbon tax plays a role. Subsidies to green innovation plays a role as well. But what's very interesting is that civil society plays a role as well. And civil society, it's consumers. So that's the name and shame. Consumers in countries where they are pro-environment, they will tend to go for clean products and all the more if you have more competition. So for example, Patrick, no, you are clean, you are virtuous. I am non-virtuous. I am a non-virtuous. You are virtuous producer. But first, I am monopoly. So even though I'm non-virtuous, even if you have consumers that are in demand of pro-environmental products, they have no choice but purchasing from me. Now, maybe they will purchase a bit less from me, but now you come in, I have competition from you. And that will force me to innovate clean, to escape competition with you, even though I am not virtuous because otherwise I lose my customers to you. And you can see the combination of this value of consumers valuing environment and competition is a very strong force, it's shown here. Value is the extent to which firms are facing on average across countries, consumers that value environment. Competition is the extent to which on average they face competition in the countries where they sell. And you can see that you have a very significant composition effect between the two values in itself, pushes firms to innovate cleaner, but all the more when you have more competition. And what we showed in recent work with Roland Benabou and Alexandra Roulet and Ralph Martin is that this force of competition with value together, it's like three times the increase in carbon price that triggered the yellow vest. And the advantage of this is this doesn't trigger yellow vest. So that's a force complementary to carbon tax and to subsidy which in fact involves the civil society and which also is a very powerful force towards green innovation. So I can see already the triangle between firms that innovate, the state and civil society. I will get back to this triangle. And that's my optimism of the wheel. It's true we face a bad problem, but we have forces, the state and civil society that can be mobilized to accelerate the energy transition. And that I think is a subject of, that's I think for optimism. That's the Lafont optimism there, okay? Okay, we arrived at the last part. Are you still there? I see that I lost someone there. Okay, so now I arrive at the last part. So the gross is bad.  You remember, I don't know if I'm not there, but you remember the old dentist was awful. And you force the person to go to the dentist of the 1950s. I convert that person immediately into a pro gross person. Try the dentist thing, give the choice. That's radical, I think that's my recommendation. Okay, so rethink capitalism. So the COVID was a revelator. It was a revelator of, it revealed a lot. It revealed how bad the social, the U.S. is. You don't want to be without human capital and in poor condition. I remember at MIT, you remember Jean, you know when we have assistants at MIT or Harvard, whenever they got sick, it was panic. They were in panic, but they were in panic when they think they are mad.  I remember, you know, I was driving someone, pick me up a limousine, but it was not a limousine, expensive limousine from Washington to Philadelphia. And the guy said, you see this house? That was my house. I had to sell it because my wife got cancer. And to cure the cancer, I had to sell my house. No, we live in a one bedroom. And that's the U.S., okay? And we are very fortunate in France not to be there, not to be there yet. So on social model, U.S. does poorly. And on innovation, Europe is not as good as the U.S. So for example, show me some figures. Here I'm showing you the green curves, the gray curves are the U.S. and the black curves are Germany. The triangles are the share of population unemployed. It went up a lot during COVID in the U.S., okay? The circles are the share of population and without health insurance. In the U.S., when you lose your employment, you have a probability of losing your health insurance. So you can see at a time where they needed health insurance, they, some of them lost health insurance. And Germany, everybody has health insurance. I could have put France, it would be like Germany. So you see, we are better at insuring against something like COVID. But it could be also the share here and now, the circles are the fractional population at risk of poverty. It increased in the U.S., and I was beautiful by the way there, that was Obamacare. Can you see Obamacare, the beauty of it? You see, it really worked. It really worked, that's amazing. Okay, so I go down to the risk of poverty. When you lose your employment, it increases your probability of being at risk of poverty in the U.S., but in Germany, through COVID, it remained constant. You see, that's another thing. Of course, you look at Gini Index. Gini is a measure of global inequality. It's bigger in the U.S. than it is in Scandinavia, France, Germany. The poverty rate is higher in the U.S. than it is in our countries, okay? And that's the bad thing. The other bad thing is the D-ton, case D-ton.  That's why, so they look at the increase.   And you can see that the mortality rate goes up a lot since 2000, unlike continental Europe. But the U.K. is not great. It's not as bad as the U.S. But you see continental Europe, France, Germany, we are okay. It goes down continuously. The mortality of unskilled middle-aged, okay? And that's because when you lose, you're so afraid of losing your job that you're taking opioids, sleeping pills, eating pizzas a lot and all that.  And that's really the downside of the U.S. squad. You don't want to have the social model of the U.S. On the other hand, when it comes to innovation, U.S. is much better because here you can see that it's the flow of triadic patterns. Triadic patterns are patterns that are registered in U.S. PTO, U.S. Patent Office, Japanese Patent Office, European Patents. And you see the flow, the U.S. flow is much above EU and China, okay? And you can look at any measure. You can look at measure, for example, patents, application per million inhabitants, top-cited, top 5% cited patents, percentage of top-cited patent. U.S. is way above everybody because they have a fantastic ecosystem of innovation, well-founded universities, NSF, NIH, Howard Hughes Medical Investigator, which is a fantastic private sponsor organization to fund long-term researchers. They have a fantastic ecosystem. Then they have venture capital, well-developed institutional investors, well-developed to innovate in larger firms. They have the DARPA, the BARDA, but they have all this, which we don't have in France and Europe generally. So what we want is a model of capitalism that combines the good aspect of the American model to be innovative with the good side of the European model to be protective and inclusive. Some of my colleagues believe that it's either or, if you choose to be more innovative, it must be at the expense of being more inclusive and productive. And if you choose to be more protective and inclusive, it must be at the expense of being more innovative. I think there are at least three policies that we can implement that makes us both more innovative and more inclusive and protective. One of them is flexi-security, flex security on the labor market. The second one is education. The third one is competition. So let me, and that conclude like this. Flexi-security, I told you already about the death of despair in the US, okay? But Alexandra Roule has analyzed labor market in Denmark.  And then the state retrains you and helps you find a new job.  Look at the effect on a purchase of an entire, she compares the health of a worker in a firm that closes down to the health of a worker in a firm that does not close down but of an identical worker, education, experience and age. So I compare, I do this in this, I look at, I have a worker of a given age, education, experience in a firm that closes down. I compare, I'm already beyond time in a firm that does not close down. And you see no effect on the purchase of anti-depressants. No effect on a probability to visit hospital and security. This is a no effect on mortality. So they found a good system. And in fact, when they introduced that security system in the 90s in Denmark, it made creative destruction work much better because firms had the flexibility to hire and lay off. But then, so that was good for innovation but workers were retrained and rebounds into the labor market. So that was a very smart way of flexibility to reconcile, to make creative destruction both productive and socially acceptable. So that's the first type of policy. And now I want to talk about education. We have a big problem in France. Well, I want to tell you about education. So here I am looking at the probability of inventing as a function of parental income. And that's in the US, that's from the work by Belchetti, Jarabel Petkov-Aron-Rinenin, the Quarterly Journal of Economics 2019. You can see it's a J-curve. When you have parents in the top income brackets in the US, you are much more likely to innovate. Same thing, US historical data work by Axigit Grigsby-Nicholas. And that's work that I'm doing, I've done with Axigit Reitinen and Tovanen. And I was very surprised that the same should be true in Finland because in Finland, education is completely free and they have very good piece of tests. So I was surprised at first. But you see the finish in Ligma is that in Finland when I, in fact it's because the high earning parents are the highly educated parents and the highly educated parents, they transmit knowledge and aspirations to their children. So it's not so much because they pay for school, school is free, but they transmit the knowledge and that's what makes them more likely to innovate. When you control for parental education, you see the curves flattens out the relationship between parental income and, but still I told myself, look with the system they have in Finland, it should be totally flat. Why should still parent education matter? Because, and now I found the answer, is because the reform in Finland, the one I would like France to do, but I don't know when it's not being done in France. I don't know, Pependais qui fait les autres. What does he way to do the same reform as 1970 reform in Finland in 1970. Before 1970, education, they very much had the certificate etude. Very few people in Finland would go all the way to end of high school and they managed to have them go to end of high school, but while keeping the quality and have very much a small class size, teacher very well paid and treated and very much retrained all the time. And third, tutorship of, individual tutorship of children in Finland. They have those three elements whom we know from the work of Joshan Grist, are key ingredients into getting a good education outcome. So they have that in Finland. And they did the reform in 1970 and look at the effect of reform. Here I look at, as a function of father income at the jump, the upward jump in the probability of inventing for children that went through the school system after 1970 before, after versus before. And you can see that for the children that are in that range, you see the jump is big, of course much less there, but you see that it improved a lot the probability of inventing for those children this education reform. So what we should do in France and elsewhere, it's a reform like Finland did. We have a big problem of lost Einstein's in our countries, many smart children, but they are born to families that cannot give them the education and knowledge. Remember yesterday we were with Colette and interacting with, you know, professors that we try to reach out to the parents in mathematics to help, you know, homework, children's homework, okay? And what we have to do, it's a reform like that because you see it will make the economy more innovative by having more innovators but also more inclusive because more people can innovate. So education is typically a reform that makes you both more innovative and more inclusive. And the third one, and I will finish there is competition. You remember I told you the stagnation, you have these superstar firms that inhibit the entry of new firms. Now, hopefully, I don't know if it's the Biden competition reform, but if you reform competition policy, what will happen is that you will make the economy more innovative by having more entrant innovation. But also you remember when we talk about social mobility that entrant innovation is good for social mobility. So by doing that, you will also increase social mobility and reduce inequality. So competition is also a policy that makes you more innovative and more inclusive. At the end of the day, the key, if I go back to the remember Schumpeter, he was very pessimistic, he saw that the first innovators would turn into entrenched conglomerates that would prevent subsequent innovation. The first response is to say, let's have the state. The state can impose competition policy. The problem is that the state can be captured. We saw that with Korea. But now you could say, maybe the judges can play a role, but Jean has done work on the judges with Eric and the judges can be biased and they can be subject to noise. There is this book by Kanman that shows you, depending on whether the baseball match was won the day before or not, the judge decides very differently or whether it's before lunch or after lunch. So you cannot rely on judges so much or not enough. And that's why civil society is very important to limit the extent of the corruption, to limit the extent to which these guys can capture these guys. And that's why the triangle is the response to the Schumpeter pessimism. You need to have a very active triangle between firms, the state and civil society. See, society is the media, is the association, is the voters. And you need those three elements to avert the pessimistic. It doesn't mean a prediction of Schumpeter. Okay, so here is the book. And that's the English version of my book. We said in Antoinette Simon-Punel, The Power of Creative Destruction. And here is a book. And next comes a book which will be coming in July. We had a conference, after it was Emmanuel Farry who initiated it. And then with Ufuk Exigit and John Van Rinen. And this conference gave rise to a conference volume and conference volume is coming out in July 2023. And it's like 700 pages of our own creative destruction. People who build on, you know, continue work on this line of research and they are fantastically talented young researchers. And I very much recommend that you read this beautiful book that will come out in July of next year. Thank you very much. I'm done. We have time for questions or I don't know. No, yeah, we have time for questions. Yeah, one question. Emmanuel. Well, thank you. Thank you very much for this fantastic, entertaining lecture. It was very hard to read our mail, I think, during your talk about this big GAFA firm. I mean, I think some of them at least are very big because of network externalities.  And that's something which has, I think, nothing to do with preventing innovation. That's if you use a telephone, you want to reach everybody. And so the first mover. So how do you see your paradigm with this very specific aspect of...  There is an issue there. Some elements, you can make more competitive. Some elements you have to regulate. And whenever you have something that looks like a natural monopoly or like a network, I guess regulation has to be there to make sure that you don't discourage that, for example, data theory is taking place or better, they know much more than I do. How you can make sure that those firms do not discourage a new entry. But I think it has to be, each time, not just with that market share, but look at the effect on new entry and new innovation. I can go there very deep. And I think that should be the change, but maybe that's already done, but maybe not enough. I think both in Europe and in the U.S. is a very good thing. And I want to do any bashing for competition policy. I think that's a great thing. But maybe for bigger extent, there will be a factor in new entry and new innovation. It's not easy because how can you advance if you are, you know, maybe that's the next one. You see that entry has been done and then you are in some ways. And how can you, but that's, but I will not say network part of it. I mean, of course, those who can answer the question, it's not really very useful, obviously. I want to make a fuller myself. Thank you very much for this very interesting talk. I have a question about this framework of creative destruction. So when I think about Schumpeter or the Industrial Revolution or the electrification of the economy, these all occurred at times where energy supply was constantly growing. And now if governments want to honor the 1.5 degrees Celsius, it's not so unlikely that we have to reduce energy consumption. So how would your framework deal with this constraint? That precisely you want innovations that will make fossil energy obsolete and that will make it possible to, so it's like finding a new source of energy, energy savings, technology, and that we of course supersede the existing technology. So it will be all about the energy infrastructure. And in fact, I do know about the passive balance. The problem is the informants, the new firms will affect the passive balance. So the first way to go is to already pay for the infrastructure because the new firms, they don't have the passive balance problem that I was experiencing. So really great infrastructure. And the staff makes it. And then of course, you want to make sure that in direct, you will correct new firms in things that we of course make. And of course, it means that there is a lot of services because the whole capital working with this report in France by Disney and Selma Martinez, they say that huge capital already to implement existing technologies to replace will mean huge capital investment. And because there are typically more capital intensive than new technologies. And we need that some of the old capital working with 30 technologies will become obsolete. So you need to make huge investment in that. To already implement this new technologies that we have. And while pursuing research in the tomorrow's technologies, you see, and you have to hold these two hands, but it's all about creative destruction. You have to capital obsolescence and to put new capital in place. And the big issue is that we need to do that at the time of our high debt. And now we cannot do it the same way as before. We cannot look at the monetary debt without looking at the same time at our current high debt. We know that if we delay energy transition, we know it's more costly to do it tomorrow. The more we delay, the bigger the gap because firms will continue innovating in their technologies, the bigger the gap between dirty and clean. And therefore the prolonged period of lower growth, what mean why the dirty technology catches up with the dirty. So delaying investment is bad if you look at the future generations. If you say in the name of monetary debt, I delay this investment in energy transition.  So we want to look at the monetary debt, the new environmental debt and also interest rate inflation. Can we just rely on interest rate? We just rely on monetary policy or to increase it regularly. But then it's for a problem, and then it's talking in the green. So you see that now, when you factor in energy transition, you completely change macroeconomics and then you have to do it. And it's all about replacing all technologies by new technology. And there is a huge cost of transition to make that replacement. Like that on something like that. So there is a new thing which is macroeconomics and energy transition, which is a total agreement. And I think there is plenty of people who encourage everybody here to work on this. But I think the more of this is that IO people should move to market. And no, and macro people should move to IO. No, absolutely, but that's the whole point. Never do growth without IO, but never. Excuse me, just a little word for those who want to join us at the fair. The main entrance through the market, it's not possible, you have to go through behind. The road is blocked at the level of the dungeon. And that's it, at 18 o'clock.


of TFNN. The Tom O'Brien Show is produced every business day. Tom takes your phone calls toll free at 1-877-927-6648 internationally at<PHONE_NUMBER>. Let's go to Eddie and Bokarton. Hey, Eddie, what's going on? Hey, Tom, how are you, man? I'm doing great, man, yourself? Good, good. It is a treasure to have TFNN every hour during the trading day to be there to help you to guide you.  Well, listen, we appreciate you growling and prowling us out here, because we wouldn't be out here, folks, if we didn't have all you guys, gals, tigers and tigers as clients. And the market teaches you every single day, man. Now, welcome, folks. This is Tom O'Brien of TFNN. We're here five days a week. We go seven hours a day. We go 24 hours a day on the internet at TFNN.com. Always remember, folks, whatever you think about, you bring about whatever you focus on, gross, hope everyone's having a great day, safe day. Make it a great night and a great week, folks. You are responsible for your own happiness. Happiness never comes from outside of you. If you put your happiness in someone else's hands, they can always take it away. Happiness can only come inside of you and as a result of your love. Mockin' wise, let's take a look at it out here. We have the Dow Industries Up 80, NASDAQ Up 130, S&P's Up 20, gold contract down $4.20, traded at 1960 an ounce. We have Silver down 11 cents, 25 dollars, 7 cents an ounce, Light Sweet Crude Off a Buck 35, 74 dollars, 7 cents a barrel, notes and bonds, a 10-year note, trading up four ticks at 112.22, the 30-year up two ticks at 126.16 and Kingdala. Kingdala trading down 86 ticks, 99, 8.28, Euro's 112, Yen's 138 and the British pound is at 130 to one U.S. dollar. Our phone number's<PHONE_NUMBER>. Let's call folks. One note's goin' on to y'all world and the world of the S&Ps. Let's take a look at them. What do you have? Well, bottom line, we're gonna come up and test these highs of Friday. Where are ya, baby? Here we go. And you got a nice contraction of volume. That's for sure. Yes, see, it's so much trading, no doubt about that, but the bottom line is that it'll be better if you want higher prices if this went down versus up. So the higher Friday was 451.36, we've hit 451.13, that's five. Friday, which was like volume two, 69 million, you get 31 now. So we'll probably do about, I don't know, maybe 45. We'll see if we can even do 45. Now, if we take a look at the S&P, this is where it could get a little bit interesting, is that the last time that we had some juice here, we pulled us back, and that's what I talked about just in the update, was the 45.43. So that's 13 points, you know? We'll see how this shakes out, you know? But that's game, that is game. And the X100, same type of setup inside the NDX, you're going up, you're going into the highs. And to the NDX, right now we're doing 28 million, on Friday we did 55, so that'll do about 40. The high there on Friday was 382.86, we've hit 382.55 thus far. If we get into the NQs, and take a look at the NQs, you're gonna see the 15,781 is the number. Same type of setup. So we'll see how this baby shakes out. There it is right there, coming across right there. So you can see, even when we had that slight down draft, four bars right after 12 o'clock, there wasn't really volume even on those bars. There's not volume on the way up, and there's not volume on the way down. That's what's happening out here. Gold, we go to the gold contract, gold did reject lower price, had lighter volume, so gold's still on its way up to this 2,200 area, not 2,100, 2,103, I think it is. Yeah, 2,102. This is gonna get cool, because this could, well, it has set up the A to B, the B to C. So if we start charging forward once again, you're gonna see the contraction is huge, man. We went higher out here with 271,000, hit a high out here at 241,000, rejected 1949 with 15,000. 157,000, man, I'm sorry. So we go up with 272, make a high with 241, reject the low at 157, that's setting up that it wants higher price, and it very well may have just set up an ABC structure on the way up. Notes and bonds. Now, this is, notes and bonds, they got back inside the range. So notes and bonds are saying they also want higher price, lower yield. And we have here, is that once we got back inside the, on the 10 year, this is, the 110,22, well, bottom line, take a look at this. You know, we'll see how much juice we can get going here, but what we did do, we spiked that low, got above that low, had some juice getting above that low. So I suspect we're gonna build some cause to try to get through the 113.06. And right now you're at 112.21. And all of this is right here, baby. This is, if you can figure out just where this dollar is gonna go every day, you're gonna be in good shape, because the dollar, the market is so sensitive to the dollar, it's amazing actually. So we have out here with the dollar, the dollar got to 100.18 today, gave it up in spades. It looks to me that the dollar does wanna do a small bounce. We'll see though, because that's on a short term basis, a long term basis, look at this, man. I mean, this is saying markets wanna go higher, gold wants to go higher, everything wants to go higher, man, because this is a concise of break downtown, man. And your next stop, even in the dollar, is down here at the 96 area. You break the 96 area, and you're down to the 89 area. You know, so you can see that's a nice break. Now normally when you get a break like this, pull this back, normally it would end up happening, particularly because this was a huge consolidation and went on for so long. This consolidation, it broke, was just about a year. Yeah, was it a year? Let's see, yeah, just about a year. And, oh no, hold on. Yeah, no, no, half a year, January. So bottom line, most times what you're gonna see is that you can come back up to that trend line, then it blows away once again. Some of the higher volume equities we have out here today, let's take a look at them. You got, my bell is down 90, that's a big number, no. Yeah, 92 cents. At 1351, you got Tesla up eight and a half dollars. We have Verizon off 246. Inside the NDX100, the strength versus the weakness out here. You got on semiconductor is up 4.5%, Z scale is up 4.5%, Lucent the car maker is up 4.4%. Taken away for a peps, yeah, PepsiCo is down 1.4%. You have American Electric off 1.3%. Warner Brothers is down 1.2%. And XL Energy is off 1.2%. Our phone number's<PHONE_NUMBER>. You stay right there, folks. We're coming back with our man, Mr. Steve Rose. We have the dial industry is up 102. And as they got 1.33, SAP is up 21. We'll come right back. 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You go into newsletters, you're going to see it on the right hand side, mastering probability. You can get mastering probability for one month for $149. You can get it for six months for $695, which is the savings of $199 or 22%. And you can get it for one full year for $1195, which is the savings of $593 or 33%. Now they all come with a 30-day bunny-back guarantee. So the bottom line is that you can go over there, you can check it out. Steve has a huge amount of information on, it'll be your page when you get over there, that you really understand how Steve looks at the market every trading day. Huge value, big time. Steve Rhodes, what's going on? Well, just enjoying the heat of the summer, so to speak. Yes, yes. I hadn't played golf for a couple of months because of my trip overseas. Finally got out yesterday, on Saturday, playing golf in Florida in the summertime. It's the only thing I could do where I can go out, play a game of golf, and come back four or five pounds lighter. That's for sure. Well, Rory wasn't four or five pounds lighter. That was freezing over there, wasn't it? Yeah, you know, that's that. But what a really extraordinary match over in Scotland. The two shots that he had to hit to win the tournament on 17 and 18 were really amazing shots. I think I saw an interview last night where he thought that maybe it was one of the better shots in his life. Yes, no, that's what he said. You know, it was a shame if you didn't see this, folks. Okay, I mean, he's amazing anyway, but the pressure was on and he needed this last birdie and he got it. And I can understand why the cameras couldn't get it because everyone was around the 18th, right? Did you see that? Like everyone's sitting there waiting like, oh no, I can't believe we can't see this shot. And then the way he reacted, folks, was so cool because there's a couple different things you can take from that, like, oh my God, I actually finally did it. That was just a classic, like, oh, I love it. That was pretty cool, Ben. Yeah, it was a good sports day overall, you know, for summertime with Wimbledon, you know, a great match between alfalfa and... Crazy, yeah. Yeah, you know, really, really. And then you guys are really scored with Messier. This is a whole different ball game, man. Friday night's gonna be insane over there. Yeah, yeah, cheapest ticket, 200 bucks. That's the nosebleed section. So I'll go down there. I'm just gonna wait, you know, to... It's worth it, yeah.  That's what happens with Messier, right? Yeah, you watch him play and so it's gonna be perfect for, it's gonna be perfect for South Florida. It is. Looking forward. So the first charts that I actually have up on my screen, it wasn't really preparing on discussions, but it actually kind of follows through with the discussion I want to have today. And that discussion is, has gold made a major bottom. But you were talking about earlier, just before I came on, you know, if we can figure out what the U.S. dollar index is doing, then you can figure out a number of other elements in the market. So what I've got up here, I've got the futures contracts for the Euro, the Yen, and the Great British Pound. The three currencies that are gonna impact the U.S. dollar index more than anything, more than the Lune or the Swiss, the Corona, the Frank. Yes. Here, if we take a look at the Euro, which is the upper left-hand side, and I've got the futures contract up, the same thing if we looked at the currency pair. Today is going to form bar number eight, Tom, of what I refer to as a TD nine count pattern. Okay. And 90% of the time, when bar eight successfully makes the high of that pattern, here we're talking about tops, it will go out and actually complete the pattern. What needs to take place tomorrow is the close needs to be above the close of this bar, bar number five. And that close on the futures contract was at 1.1176. Odds favor that this will complete a TD nine count top tomorrow, regardless of whether price trades higher or lower. Now, the pattern itself doesn't complete until Wednesday. It can form on the bar following bar number nine. So the Euro is signaling to you and I to prepare for the U.S. dollar index to form some type of bottom. With, I think it's about 57% for the Euro. If we take a look at the Japanese yen, you've got to kind of reconfigure this here because I'm using the future contract, but here's what I really want you to know about this is prices made a rally right up to the solid green line and that is the breakdown resistance level. So that is held, sometimes a pattern can be just getting back to support or resistance. So in this case here, the yen has gotten back to a resistance level. But if we take a look at the Great British Pound, we see A to B equal CD patterns for both the Euro and the Great British Pound. But the Great British Pound is going to complete ATD nine count top today. It's going to confirm that pattern so it'll complete the pattern tomorrow. So what should take place here, Tom? If we take a look at the Great British Pound and the Euro, both of those should pull back to their green oscillator and change lines out there. So that should at least, we should see some type of rally. I believe it would begin by about Wednesday or so in the market for the U.S. dollar index. So I just thought I'd throw that out there. Any questions about those charts? No, no, no. Perfect. Okay, so let me change windows here because what I thought we would do is I would... That's weird. Okay, here we go. Got to my screen. Okay, the question that I pose for everybody out there is, has gold made a major bottom? So here's what I'm taking a look at. One of the things that I know, and folks, you can go back there and study this too, when gold makes a major top, same thing for the S&P 500, it does so in all the major currencies at about the same time, usually right on the same day. Gold priced in U.S. dollars generated its all-time high the week of August 7th, all the way back here, 2020. Whereas gold priced in Euros, Yen, Great British Pounds, they've gone on to make newer highs. So the point of this chart is we have not seen an all-time high in U.S. dollars, not based upon the fact that the markets, when they do top, they'll do it all at the same time. This is gold priced in all major currencies. Here I've got the yearly charts out here. And they, real bull markets, we're going to see price rising all at the same time. So that's something to take into consideration. Here, if I go down from a yearly chart, Tom, to a monthly chart, we can see the rally off of the 2018 August lows out here, rallied right into August of 2020. It shouldn't be August 2020. I don't think it was August. It was July 2020. Might have been August. So the August 2020 top out here then led to a bottom for gold priced in euros, yen and pounds in March of 2021. So I want people to notice is that left-hand chart here is in U.S. dollars on the upper left-hand corner. Then we've got it gold priced in euros on the upper right-hand corner, then in yen on the lower left, pounds on the lower right. And what I want folks to really pay attention to is when the low in the other currencies took place. And that was in March of 2021. You can see that in the bottom left here. Whereas inside the U.S. dollar, that didn't take place until November of 2022 out here. So what we can see here is that gold has been rallying in euros, yen and pounds since that bottom. It's something to really consider. Now when we take a look at gold here, it's going to make new all-time highs. Again, pricing euros, yen and pounds, but not so in terms of U.S. dollars. Again, this is just telling us a major top is not formed for gold. This is a monthly chart for gold. This shows that it's rally from 1999 to 2011. During a major bull run out here, the important thing to take a look at here is on a monthly basis, all those retracements were two-bar knee-jerk reaction lows. And if we take a look at where we're at right now, what took place in June, we had a two-bar move to the downside. And so when I put all that together, that indicates to me that we may have the potential for a major bottom that is going to start in gold and move to the upside. This is the daily chart for gold. It generated a wave number seven bottom. If you take a look at the daily timeframe, it generated a TD-9 count bottom. If you take a look at silver, it generated a rogement indicator bottom. The weekly charts have broken through resistance levels. I believe, Tom, that gold has made a major bottom. And folks, it's very easy to get Steve's newsletter. Come over to our website at TFNN. You go into the newsletter. It's going to see it right on the right-hand side. Steve, you have a great one. Safe one. Of course, we look forward to the show tomorrow morning. Thanks, Tom. Thanks, man. Stay right there, folks, to come right back. The Gold Report As a precious metal, gold is still king. It continues to hold the most effective safe haven and hedging properties across the global major trading hubs of the London OTC market, the US futures market, and the Shanghai Gold Exchange. The Gold Report Tom O'Brien publishes his weekly gold report every Monday morning for subscribers, consisting of coverage of the XAU, HUI, GDX, the dollar, bonds, the South African RAND, as well as 25 different mining equities with specific buy-sell recommendations. The Gold Report New subscribers get a 30-day money-back guarantee so you have nothing to risk. Subscribe to Tom O'Brien's Gold Report newsletter now at TFNN.com. 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Dow Industries up $125, Nasdaqs up $147, SAPs are up $23. Now check this out. This, I talked about this last week, man. So we just, when I was just speaking with Steve, we just got a spike high. Check this out, man. This is pretty cool.  Look at this bar. You came in, now you got a spike high. Now watch this. This is what's really cool. So you got a spike high with 29,000 contracts, okay? Now the next bar, which is a sell down, wasn't the high. The next bar, you got 45,000. So what's happening here is that the spike came in, the spike had light volume, but they spiked it up. They got it over the highs. Traders, once they got it over the highs, sold into this, they probably got stopped out first, then they sold right back into it again. So this is going to be really intriguing coming into the close now, because if we go into the spy, you're going to see the same type of setup. And this is what happens if, well, I think we're close to highs, but this is what does happen at highs. The spikes are where it's at, man. So check it out. So inside the spy, you got the spike high with 1.1 million shares, and then you got the sell down with 1.8 million shares. So you very well are going to get a failure on price and volume today. That's how this shakes out. We'll see if it, and what I mean by that specifically is that what you need is you need to close below 451.36 inside the spy, you need to close, because you're not going to get the volume. Inside of the cues, you need to close below 382.86. And right now, the cues are above it, the spies not above it. So this is going to be, this is going to be a fun little close. So that's the bottom line. That's, and you can see that if you're in front of a machine at that point, that's, that came out of nowhere, man. It just, boom, I mean, that's what happens at highs though. They jam it, see where the baby's going to go. Let's go over the, well, let's go over the dollar for a second. Let's see what this doll is doing. Yeah, the dollar just can't get going, man. This is, yeah, flattening out.  It doesn't matter. What matters is that either, you know, you're going to make it or you're going to break it. We're going to take a look at some of the, let's go look at Tesla first. We're going to look at some of these. So, Tesla right now, that's trading up $7.5 dollars. Now, you can see, this is how it's supposed to work when you get volume, I mean, when you get buyers. Tesla's taking a high out with volume, man. You know, you get 118 million. You only need 119 million. Let me put this on a weekly.  I mean, Tesla looks like it's, 313 is probably game. You still get buyers in Tesla. There's no doubt about that. We get Apple and Tesla reports. Thanks, thanks, Tuffy. Let me see what day this is. Okay. So, Tesla is reporting on the 19th. That's Wednesday. Okay. So, we go take a look at Apple. Apple's got 36 million shares. That's going for its high too. 194, 48 is the high. We hit 194, 32 are all so far. Microsoft, Microsoft got a lot of stuff going for it, man.  It's going to be amazing when Microsoft actually takes over Activision because, oh, I know what I can do right now. So, Microsoft is, look at this. Unbelievable, man. Microsoft is running 55 billion every 90 days right now. And, let's see, one second. Yeah, here we go. Okay. So, Activision is running, okay. So, that's not much, but Activision is running nine billion. So, they're going to be taking over that company. That's like nothing to Microsoft. That's pretty amazing. And then, of course, you get the AI deal, right? MSFT. So, I pulled this in. And then, what's happening with Microsoft, which is amazing, man, is that they definitely, I mean, the subscription-based business, they're getting it all over the place, man. And, I'm not a gamer, but on the subscriptions for the spreadsheets, the word and all of that, that's a good value. I mean, I think it's a good value. So, it's not like something that you get and take into the clean is on. Yeah.  Take a look at this, what, three, six months ago, it's a 219. It's 345. Oh, man.  Google, we're going to take a look at Google out here. Google's going after a swing high, not even close to its eyes, but Google's starting to get some juice into it.  What has happened is that he's out there today. Now, this is going to get really interesting, because we've all been used to the aspect of what ends up happening is that when funds, and this happens all the time, funds always get into the same, they mimic the S&P, they mimic the NDX100, if they see, you know, like they mimic Warren Buffett, okay. What Gensler's worrying about now is this, so check this out. I can see how this could really throw a wrench sometimes into markets beyond belief. He's thinking that AI itself is going to, basically, it could get large funds, small funds, all of the above, into the exact same positions at the exact same time.  But this is adding a whole other deal to it. There's no doubt about it. As to, you know, how AI will generate where you should be, when you should be, that's on the way in and the way out. That's what the difference is, okay. And of course, on the way in, it doesn't matter. You know, you're chugging up, right? Everyone likes the market that's going up. On the way out, the doors are never wide enough. That's how it works. Dow, Dow industries right now, 123 Nasdaqs up 139, S&P's up 22. Stay right there, folks, we'll come right back. If you're looking for potential trading setups in the stock market, then Rocket Equities and Options Report is a newsletter you should try. Tommy O'Brien delivers options and equity trades when the markets present them, using a combination of fundamentals and technicals. Sign up for Rocket Equities and Options Report today with a 30-day money-back guarantee so you have nothing to risk. 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TFNN has been educating traders for more than 20 years, with live programming hosted by a variety of professional traders during market hours, the Tiger's Den, available to all tigers and tigers for just $1 for the year. There's no catch or added costs when you join our community of traders. Sign up today and become a part of this educational community of traders. Just visit the front page of TFNN.com. This program is brought to you by Vista Gold. Traded on the NYSE American and TSX under the symbol VGZ. Welcome back, folks. Like, down just shows right now, trade up 120 at the NASDAQ, 140 S&Ps are up by 23. Let's get into the W. So right now, the 10 years yielded 3.8. The high's been 4.06. That's the last three months. The last year, it's 4.2. Look at this, the difference is still huge, man. Wow. So this 2.5 is gonna be dropping off. 2.5 seems a long time ago, but yet it's within the last 12 months. So that's a mind-blower, actually. Wow. That's gonna be dropping off this quarter, for sure. 2.5 to 4.2. The TLT, which is the 20-year plus, you can see that actually never got out of its range. That went right down to the bottom of the range, literally to the bottom of the range. That's interesting. So the TLT got to the 99.48. It hit 99.21, rejected it. Did reject it with light of all. I am 23 million, I don't know, 24 million, million. So that's back in the range. That's saying, hey, guess what? Now we're going back up the other side. This whole interest rate structure is gonna be so wild, folks, watching, because the reality is that it runs just about everything. There's no two ways about that. And we're at high interest rates right now. In a monster way. And yes, the money keeps piling in because there's more money out there than I guess we realized. Inside the gold market, bottom line is that, I finished, I do the gold report on Mondays. This gold market's in great shape, man. That's the bottom line. I go through about 30, 35 stocks. And they, even some of them that a week actually look pretty good, which that's when you really know that, okay, this one's higher price. So if we go to the GDX, we take a look at the GDX. GDX out here trading 32. And you can see it's, you know, bottom line is that we had gone up, but with 44 million made a high out here with 15 million to pull back with eight today. And then what you also have is a high volume high at 36. So we get some action here inside the gold market. Let me pull us back a little bit more. Yeah, we got one, two. So thus far off the lows, we get two higher highs and two higher lows. You know, bottom line, we get one more going and we really get some action. But that is saying higher prices are coming at us. If we go take a look at an eco-eagle, same setup, they almost all have the same setup. And that's what does happen inside the gold market, as well as the silver market, P-A-A-S. They all kind of trade together. We take a look at P-A-A-S, same setup, even a better setup actually, because this rejected 1562 today. We're already at 16 bucks. Don't take this swing out. See, this gets interesting. You don't want this to go to 1617 today. I don't anyway. Because it's not going to have the volume.  So let's go, we get a couple of questions on Ma Bell and Verizon. This was a delayed reaction. It's pretty wild, man. We take a look at Ma Bell first. And I believe what this is probably about, it's probably about the Wall Street Journal had a huge front page story about the cable that's been laid across the United States and the cable is lead. So of course lead folks, okay, is one of the worst things out there for our health in a monster way, not in a small way. And let's take a look. So now we know what's going to happen. The next thing is that the attorneys are going to be all over this. This is going to be some real money. Yeah, this is breaking all those, man. So let me get this closer to see what we're really doing here. Okay, so it's, okay, so it's the 17th. Right now we have five, six, we have 10 trading days, 1.1 million. It's going to be close, whether you're going to take this swing out with volume or not. So the number to keep your eye on is there, it's actually 1445. That's on Ma Bell. Now at this price, Ma Bell is still paying a, well, let's pay in an 8.18% dividend. Oh, that's going to get dicey. When you start getting up to those levels, I mean, they've been paying dividends forever, but bottom line is that you start looking at 8% dividend and that's a big number. Verizon's down 236. This is really getting taken. Let me see this. Okay, so, okay, this is taking out 585 million. Yeah, you're 300 million. We'll see if this stays up, because if it stays up, this will be a big ABC down. 4.55 is the number to keep on here. And if we take a look at Verizon, that's paying an 8.25% dividend also. And I suspect, yeah, well, they're saying what's going on with the shares. What's going on with that, I would say it's pretty clear what's going on with those shares. What's going on with those shares is all about toxic cable. Because toxic cable bottom line is that some of it's buried, some of it's up above, all the above, it's a problem. Now these are cables that aren't being used anymore, either. So that gets really interesting as the aspect of can they just leave them there, right? You know what I mean? So that gets pretty strange, actually. Let's go take a look at a few of the South African gold equities. These are a little, these, these, these are close call, and it has to do with the RAND. If I look at an eco-eagle, I mean, Anglo-Gold, yeah, it's not bad. Same type of setup. They've rejected low price out here today. I think this will get some flak coming into the 21, 23.99. But this also has a high volume high. I mean, you get, when you get the high volume highs out there, folks, and things turn, and they're going for them, the bottom line is that that's who you want to really look at closely because that's, that's when they go for them. That's, and I know that's, seems a long way off, meaning those high volume highs out there, but they're not. They're not inside the gold market. So this will be interesting here, watching this whole thing shake out, because right now, inside the spy, as well as the cues, it looks to me like you're going to act, it's going to be subtle, but it's going to be a failure of price and volume, because the spy right now has to close above, well, it's close, you know. It's 450, 136. That is, that's below it, but only by 15 pennies. And then the cues, 382, 86. Stay right there, folks. Come right back. Are you ready to take your trading to the next level? Introducing Tom O'Brien's award-winning newsletter, Market Insights, your key to successful active trading. Tom O'Brien, renowned for his expertise in the financial markets, has designed Market Insights to be your daily guide to profitable trades. Tom publishes his daily Market Insights newsletter every market day before the market open, along with updates when warranted. Stay ahead of the game with Tom's real-time analysis and trade recommendations delivered straight to your inbox.  Ready to join the ranks of successful traders? Head over to TFNN.com and subscribe to Market Insights today. Don't miss out on this opportunity to supercharge your trading results. Market Insights comes with a 30-day money-back guarantee for all new subscribers, so you have nothing to risk. Don't miss out on this opportunity to revolutionize your trading game. Head over to TFNN.com right now to join the thousands of traders who have already experienced the power of Tom O'Brien's award-winning newsletter, Market Insights firsthand. You might think that if you want to be successful at trading in the stock market, you're going to need a crystal ball. After all, it's impossible to predict the future, right? Like any endeavor in life, before you decide it's impossible, get some advice from the experts. You might find that it's not so impossible after all. For daily market overviews that give you direction on the key indices, selective stocks and commodities, subscribe to the opening call newsletter at TFNN.com. The opening call newsletter is written by Basil Chapman, creator of the trading methodology known as the Chapman Wave. The Chapman Wave up-down sequence gives you an edge in identifying price turns, finding the peaks and valleys in stock prices.  First-time subscribers also get a 30-day money-back guarantee. If you're not satisfied, let us know and you'll get a full refund within 30 days of signing up. TFNN.com Educating investors Everything in the universe is governed by the Fibonacci sequence. 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That's TFNN.com and hit watch Tiger TV. Welcome back folks to Dow Industries right now. 113 has taken up 137 recipes up 21. So check this out about Tesla. Man, the amount of money that's in public markets is unbelievable. So the Tesla board including Elon Musk just gave up this just came across the tape $735 million in stock. They had a suit that was going on from this shareholder saying that between Elon Musk, Oracle Larry Ellison James Murdoch the son of Robert Murdoch and Musk's brother had basically an inside deal going on the bottom line is that this way you can see suits, they're claiming that okay, we'll give it back now $735 million unbelievable. So the deal was going to court right now the Delaware Chantry Court Chief Justice has to accept the deal wow man there's going to be another case here we go. The case when Tesla, when I mean Musk had the $55 billion that's going to go to court, that's coming up too. So this is going to get wild on in their case. Let's put it that way. That is some big numbers. Yes and that would be bullish for Tesla because that just puts $785 million in stock into Tesla. Let's see let's just see this for a second this gets interesting so wow yeah it's no big deal really wait but listen and fairness, yeah thank god that that's coming down the pipe. We take a look at the markets out here and what you got out here you got a spike high folks, you got a spike high you're going to get a failure in price and volume so bottom line is that we'll see where this baby shakes out tomorrow but when you do take a look at this what you're going to see and this is what happens with spike highs man. They wanted to see if there's any more buyers up at the top and they didn't get them. You got 451.36, well you got 451. Always remember folks, the big and Claudia had out the book and run you over and thank god there's always another trade. Health happens in prosperity, have a great night folks have a safe night, come join Tommy tomorrow morning kicks us off 9am, great show folks, look at him folks