In short: "If I look at TIPS especially, 2.5% real yield on the ten-year, that's pretty good." It is part of dipping back into long-term bonds, and he thinks the market is underpricing inflation expectations relative to real yields.
TIPS are US Treasury bonds whose principal rises with inflation, so their yield is a "real" return after inflation. A 10-year TIPS paying about 2.5% on top of inflation is, to him, "pretty good."
His view is that the recent bond sell-off came almost entirely through real yields, not through expected inflation. An investor in TIPS gets the high real yield and is protected if inflation turns out hotter, which is his base case.
46:48So have a lot of cash. I would dip back into long-term bonds. Not really out of bullishness or excitement. I just think that 5% — if I look at TIPS especially, 2.5% real yield on the ten-year, that's pretty good.
47:15Long-term I would maintain the whole debasement trade, because I do think that what I was describing, what Japan did, what Europe is about to do, is the solution. And at the end of the day we have to devalue. And if everybody devalues, the only things that rise are the things that cannot be devalued.
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