Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa Bramowitz. Each day we
Speaker 1: bring you the most important, noteworthy, and useful interviews for
Speaker 1: you and your money, whether you're at the grocery store
Speaker 1: or the trading floor. Find the Bloomberg P and L
Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Joining
Speaker 1: us now to tell us about municipal finance and green
Speaker 1: finance is Pat McCoy, Finance director for the New York
Speaker 1: Metropolitan Transportation Authority. He directs the issuance of over three
Speaker 1: billion dollars in municipal bonds annually. Pat McCoy, thank you
Speaker 1: very much for being with us. Thanks for having me. Now.
Speaker 1: You're responsible for the m t a's thirty four billion
Speaker 1: dollar debt portfolio. How much of that would you like
Speaker 1: to see go into green on the initiatives? Sure well.
Speaker 1: Our our dead outstanding is actually closer to forty billion now,
Speaker 1: so UM, look, we everything we do to move people
Speaker 1: around this city on electrified rail, be it the subways
Speaker 1: or commuter rails, is inherently green, and we've worked with
Speaker 1: the Climate Bonds Initiative to UM to issue bonds that
Speaker 1: labeled green, and as we continue to roll out our
Speaker 1: funding of our capital program through the issuance of bonds,
Speaker 1: I would expect that all of our transportation revenue bond
Speaker 1: or dedicated tax fund bond issues will be green. Pat
Speaker 1: do you ride the subway? I do? I do. I
Speaker 1: I commute from Terrytown in Westchester, so I take Metro
Speaker 1: north to Grand Central and then I take the lex
Speaker 1: line down here to our office at too Broadway. What
Speaker 1: project would you most like to see done next? Well,
Speaker 1: you know, we have such a wide variety of projects
Speaker 1: that we're looking to fund. Clearly the most critical our
Speaker 1: you know, signalization and our subways to improve service there
Speaker 1: and to enable us to put more trains on the
Speaker 1: rails and move people around faster. That's a big project.
Speaker 1: It's not funded, and we're aggressively looking to put that
Speaker 1: program together and find funding. How much it cost. The
Speaker 1: estimates are in the in the many billions. We don't
Speaker 1: have a firm estimate at this point, but it will
Speaker 1: be a very expensive project. Now, you have a lot
Speaker 1: of experience dealing with the financing of a variety of projects,
Speaker 1: not only in your role is at the m T. A.
Speaker 1: But also in previous roles, what can you tell people
Speaker 1: who might be skeptical about green bond initiatives why you
Speaker 1: believe they work, and maybe explain a little bit about
Speaker 1: the attractiveness to the marketplace. Sure, you know, the green
Speaker 1: bond space, in our view is a natural fit to
Speaker 1: what the m t A is all about. As I said,
Speaker 1: but according to the Climate Bonds Initiative Low Low Carbon
Speaker 1: Transport criteria, everything we do to move people on rails
Speaker 1: is green. That's that in and of itself is important.
Speaker 1: And I think the MTA needs to get recognition in
Speaker 1: the market for doing, for undertaking activity that is inherently green.
Speaker 1: But what does that mean when you say green? Good
Speaker 1: good good question. So we estimate that um, every trip
Speaker 1: on public transportation saves or avoids about ten pounds of
Speaker 1: greenhouse gases going into the atmosphere. No, on an annualized basis,
Speaker 1: that's about a nineteen million metric ton number, because the
Speaker 1: alternative is taking some kind of fossil fuel based transport exactly.
Speaker 1: So the alternative of people riding around in cars typically
Speaker 1: one person, one car, UM, so we avoid nineteen million
Speaker 1: metric tons going into the atmosphere every year, we spend
Speaker 1: about two million metric tons to provide the service that
Speaker 1: we do, so the net benefit of seventeen million metric
Speaker 1: tons avoided is inherently good for our region, for our state,
Speaker 1: and for the for the economy. When you said that
Speaker 1: the total debt load right now is forty billion dollars, UH,
Speaker 1: I imagine it would climb considerably if all the projects
Speaker 1: you would like to see done actually get okayed. In
Speaker 1: the sign off, we had Richard Ravage, the former Lieutenant
Speaker 1: Governor of New York, on our program a couple of
Speaker 1: months ago, and he said, you know, the MTA hasn't
Speaker 1: conducted a thorough study of even what would be required
Speaker 1: to fix the subways and exactly what the costs would be.
Speaker 1: Is that accurate? Well, you know, like, I have a
Speaker 1: lot of respect for Dick. He's a friend, and I
Speaker 1: think he is a wonderful UM UH spokesperson for infrastructure generally. UM.
Speaker 1: What I'll say is that we're in the throes of
Speaker 1: working on what we call our twenty year Needs Assessment,
Speaker 1: which essentially UH mandates that all of our agencies, Transit Authority,
Speaker 1: the railroads, bridges and tunnels undertake a really thorough top
Speaker 1: to bottom review of all of our infrastructure needs. That
Speaker 1: will inform how we put together our next capital program,
Speaker 1: and that will be the capital program will be a
Speaker 1: five year capital program. Our current program the fifteen to
Speaker 1: nineteen period is thirty three point five billion. So, you know,
Speaker 1: I don't want to say Dick's off base on this.
Speaker 1: What I would say is that, you know, we're we're
Speaker 1: coming up with a new twenty year needs assessment that's
Speaker 1: going to really lay out what those critical priorities are
Speaker 1: for the coming capital investment cycle. How much of that
Speaker 1: three billion dollars or so would be financed through the
Speaker 1: bond market versus through state or city funding. Sure, so,
Speaker 1: bonds are an important funding uh component to the capital programs,
Speaker 1: but not the only thing. We rely on. The cornerstone
Speaker 1: of our capital investment cycle is the federal government through
Speaker 1: participation in the fifty three oh seven and the fifty
Speaker 1: three oh nine, the formula programs, the new starts programs,
Speaker 1: you know, for example for Second Avenue subway, and then
Speaker 1: of course the state and the city kick in. So
Speaker 1: bonds have typically been in that um what about a third.
Speaker 1: It varies, you know, it varies by program, by by
Speaker 1: revenue sources the state can identify for us to lever.
Speaker 1: But it will be an important piece of the picture,
Speaker 1: all right. Which which train line is going to get
Speaker 1: renovated next? That hasn't been announced. I wish I could
Speaker 1: tell you. I don't know what you're looking at it
Speaker 1: hundred and sixteen Station of the Sea. I think that
Speaker 1: that's next. I'm very excited about that. Fat mcoy, Fat
Speaker 1: McCoy find insurrector for the New York Metropolitan Transportation Authority.
Speaker 1: I sent a plaque. Yeah, that was you know, in
Speaker 1: a lot of public venues, you know, like benches in
Speaker 1: Central Park, you know, you can get someone to sponsor
Speaker 1: train station. It's true, It's true. I've I've spent a
Speaker 1: lot of my life in train stations. Pat McCoy, thank
Speaker 1: you again for joining us. Pleasure to be here. Thank you.
Speaker 1: We are here. We are very lucky to say with
Speaker 1: the chief executive and the chairman of Build America Mutual,
Speaker 1: Sean McCarthy and Bob cochrane um. And you know, it's interesting.
Speaker 1: We've seen a number of stories about unprecedented outflows from
Speaker 1: a few municipal bond funds. We've seen rates rise just
Speaker 1: across the board is as benchmarks rise, and certainly that's
Speaker 1: the same story for municipal bonds. And I want to
Speaker 1: start with Sean, what does this mean for municipalities that
Speaker 1: are hoping to finance infrastructure projects or anything else three
Speaker 1: music bi bond market? How are they dealing with or
Speaker 1: planning around the increasing rates we've seen. So it's interesting
Speaker 1: to UM two points. The first is that interest rates
Speaker 1: are rising because the economy is strong UM. And one
Speaker 1: thing to look at is what is the revenue strength
Speaker 1: or stream that state and local governments have right now?
Speaker 1: And if we look at that over the past year,
Speaker 1: it's increased by six point seven So the capacity for
Speaker 1: municipalities to actually issue debt for new money UM has
Speaker 1: increased the last year. Because it's really interesting that you
Speaker 1: say that, I'm just thinking to myself, is it even
Speaker 1: across the board or there's certain areas that have actually
Speaker 1: in their tax revenues increased dramatically. Well, other places have
Speaker 1: seen them DECLIMBA. Generally, it's increased in some places quite
Speaker 1: a bit more UM so that as the economy has increased,
Speaker 1: interest rates have gone up, and generally that capacity for
Speaker 1: state and local governments has increased. So if you look
Speaker 1: at it this year. Actually, UM, there's been a fourteen
Speaker 1: percent increase in a spending by state and local governments
Speaker 1: on infrastructure. So that's a total of two hundred and
Speaker 1: ninety three billion dollars in construction, and that would be
Speaker 1: an increase of thirty six billion dollars, so it's not insignificant.
Speaker 1: Bob Cochrane, I'm wondering if you could just step back
Speaker 1: for a second and describe why you and Sean decided
Speaker 1: to start this firm. You both worked at f S
Speaker 1: A that was acquired by Assured. What makes Build America
Speaker 1: BAM different not only in its ownership structure, but in
Speaker 1: the kinds of municipal debt that it underwrites that it
Speaker 1: guarantees rather right, So Sean and I got together. We
Speaker 1: had we've been together as business partners for over thirty
Speaker 1: years UM, even prior to f s A right build
Speaker 1: in three days and builds up at for a while.
Speaker 1: Uh So we had a lot of experience in the industry,
Speaker 1: have a love of the industry and a lot of
Speaker 1: the people that work in it. UM. We took a
Speaker 1: couple of years off and as you know, through the
Speaker 1: financial crisis, most of the companies didn't make it. We
Speaker 1: tried to assess what we thought were the causes and
Speaker 1: results of that, and UH, could we build a better company,
Speaker 1: a better business model that would address what we thought
Speaker 1: were the problems that led to UH, some of the
Speaker 1: failures in two thousand and eight nine and Build American
Speaker 1: Mutual was a result of that collaboration. We spent almost
Speaker 1: two years um sort of working through that plan and
Speaker 1: raising the capital to start the company, and UH, it's
Speaker 1: a BAM as a mutual insurance company, I think probably
Speaker 1: the first one created in New York and at least
Speaker 1: forty ye fifty years. And the reason we did that
Speaker 1: so that the issuers, the public entities that use insurance
Speaker 1: would essentially be our shareholders are members. And the reason
Speaker 1: for that is we're not driven by high returns on equity.
Speaker 1: Were driven by high accumulation of capital and the safety
Speaker 1: of the bonds that we ensure for investors. So Sean,
Speaker 1: given that, and given that it's been a really benevolent
Speaker 1: backdrop to issue debt over the past eight years ten years,
Speaker 1: why is there this impression that a lot of local
Speaker 1: and state municipalities have declined to issue debt to pay
Speaker 1: for big infrastructure projects. Why are we hearing this push
Speaker 1: about the need for a cold rebuilding of American infrastructure. Well,
Speaker 1: it's a good question. UM. First and foremost, remember that
Speaker 1: state and local governments represent nine of the financing for
Speaker 1: infrastructure in the nation. So when people think has the
Speaker 1: federal government passed to bill that's going to UH finance
Speaker 1: state and local governments infrastructure in the country, it's really
Speaker 1: state local governments that are doing that. They are the
Speaker 1: really the engine behind infrastructure finance. UH. The thing I
Speaker 1: mentioned before is directly related to that, and that is
Speaker 1: the fact that UM municipalities, their revenue UH strength has
Speaker 1: been increasing since the recession. That happens gradually as tax
Speaker 1: bases grow, real estate values increase, and that enables municipalities
Speaker 1: to then commit to new projects when when things are
Speaker 1: in a recession, they actually are trying to claw back
Speaker 1: and make sure that they keep themselves in in a
Speaker 1: fiscally sound position. So it's interesting for UM for for
Speaker 1: BAM because as a mutual insurance company, we do a
Speaker 1: number of things that are unique. One is that we
Speaker 1: provide credit profiles, a financial description of each credit that
Speaker 1: we do. We updated every year. It's available for free
Speaker 1: on our website, and part of the logical outgrowth of
Speaker 1: that is our green Star program. So the speaker before
Speaker 1: us UH, Andrew Wyley, was talking about um UH green bonds.
Speaker 1: What we have recently launched is an examination within the
Speaker 1: credit analysis we already do on each credit about the
Speaker 1: credits that we analyze will qualify as green bonds into
Speaker 1: the market. So we think that over UM the near
Speaker 1: and long term will be help the market understand and
Speaker 1: expand the green bond initiative, which really comes down to
Speaker 1: environmental and climate appropriate bonds, water treatment, water purification, UH,
Speaker 1: renewable energy exactly, and all those things I think pair
Speaker 1: up very well with what UM BAM does you know
Speaker 1: right now, we've been in writing business for six years. UH.
Speaker 1: That's UH comprises fifty three billion dollars worth of municipal
Speaker 1: bonds for six thousand, five hundred different issuers. So when
Speaker 1: you said what's different about what we do, one of
Speaker 1: the things that different is we are looking at sort
Speaker 1: of core municipal finance, so general obligation bonds, revenue bonds
Speaker 1: from taxes. It's really straight down the middle of the
Speaker 1: fairway in terms of what is classically municipal finance. And
Speaker 1: for the investing market that's important because they can look
Speaker 1: at us as ultimate transparency, look at every credit on
Speaker 1: our website, look at the financial strength of our double
Speaker 1: A from Standard and pores, and look at our commitment
Speaker 1: as being the only muni only municipal guaranteur. So if
Speaker 1: you think about it in those terms, what happened in
Speaker 1: the crisis, There wasn't municipal bonds that defaulted in mass
Speaker 1: there was other things that happened. And BAM's committed to
Speaker 1: the fact that we only do municipal finance and the
Speaker 1: core of that business is state and local governments. There
Speaker 1: the engine behind the growth and rehabilitation of infrastructure in
Speaker 1: the market. And finally, if you just think about what's
Speaker 1: the demand. You know, the American Society of Civil Engineers
Speaker 1: has projected a two hundred billion dollar need for additional
Speaker 1: financing over the next ten years in infrastructure. And just
Speaker 1: real quickly, in thirty seconds, do you think that that's
Speaker 1: going to be difficult to finance given the fact that
Speaker 1: rates are rising up more and potentially the credit cycle
Speaker 1: could could turn. Well. First of all, Sean, that's two
Speaker 1: hundred billion a year. More so two trillion over the
Speaker 1: next ten years that we have to increase UM. Interest
Speaker 1: rates are definitely a factor, because if we're gonna achieve
Speaker 1: that kind of funding rate over and above what the
Speaker 1: municipal market is already achieving, which is about two d
Speaker 1: and fifty billion a year in new money financing, UM,
Speaker 1: that's those bonds. I've got to It's got to be
Speaker 1: financed with some sort of long term debt, municipal bonds
Speaker 1: or and it's got to be paid back over time
Speaker 1: with the revenue stream. Thanks very much, gentleman. Bob cochrane, Chairman,
Speaker 1: Build America Mutual, Sean McCarthy, chief executive Officer, Build America Mutual.
Speaker 1: We are focusing today on Caterpillar, which has been a
Speaker 1: bell weather of global growth, and today that bell weather
Speaker 1: is not signaling something positive joining us now as Brooks
Speaker 1: Sutherland Bloombroock Opinion industrials columnists and brook I'm just wondering.
Speaker 1: I mean, Caterpillar didn't boost its outlook for the year,
Speaker 1: which analysts had expected, but was it really so bad
Speaker 1: this report or our investors simply looking for the negative
Speaker 1: right now because they're feeling a skittish and are looking
Speaker 1: to take profits right now. I think it's a little
Speaker 1: bit of both. I mean, I think what's really key
Speaker 1: to keep in mind here is that nobody's saying that
Speaker 1: growth is all of a sudden going to stop and
Speaker 1: we're going to start to see sales decline at these
Speaker 1: industrial companies. It's all about where the momentum is heading.
Speaker 1: And I think what Caterpillars report indicated is that the
Speaker 1: sales momentum is slowing, so you're not You're still going
Speaker 1: to see growth, but you're probably not going to see
Speaker 1: it at the rates that we I've been seeing. A
Speaker 1: part of that is just lapping tougher comparisons, but there's
Speaker 1: also questions about how demand is going to hold up
Speaker 1: in some of these markets. And as Caterpillar pushes through
Speaker 1: price increases to offset some of these rising raw material
Speaker 1: costs amid the trade war, you know, could that ultimately
Speaker 1: affect demand and sort of accelerate the grows slowdown that
Speaker 1: we're already seeing naturally as we get later in the
Speaker 1: economic cycle. Brooke, if you happen to be a company
Speaker 1: that is buying or leasing a Caterpillar, let's say, off
Speaker 1: highway truck, you know, in the mining industry, or construction business.
Speaker 1: Those items, they're like three and a half million dollars
Speaker 1: just for the one time purchase. If you're financing it,
Speaker 1: things are going to get more expensive. If you're buying
Speaker 1: it raw material inputs are making it more expensive. What
Speaker 1: has happened in three months? How come we didn't hear
Speaker 1: this three months ago in the last earnings report? You know,
Speaker 1: I think we did. I think this price cost headwind
Speaker 1: has been a matter of debate for the bulk of
Speaker 1: this year. Is you know, people sort of digest the tariffs,
Speaker 1: and especially as the tariff actions have escalated, I think
Speaker 1: the big question is how companies are going to be
Speaker 1: handling this. And you make a good point that you know,
Speaker 1: if Caterpillar raises its prices, those customers are also seeing
Speaker 1: rising costs on their end, so their ability to absorb
Speaker 1: those price increases as really gets to the heart of
Speaker 1: what the issue is here is are they willing to
Speaker 1: tolerate that and continue buying equipment or do they just
Speaker 1: you know, decide to hold off on some of these
Speaker 1: replacement purchases or especially new equipment purchases. Do we get
Speaker 1: a sense of which industries were the most positive for
Speaker 1: Caterpillar and which were the most negative. In other words,
Speaker 1: are there sectors of their business that are doing better
Speaker 1: or worse? Uh? Yeah. And so they also reported their
Speaker 1: September sales on Monday night, and that's on a three
Speaker 1: month rolling average basis. And what you saw there was
Speaker 1: a slight slowdown in construction equipment sales growth um, and
Speaker 1: that was offset by you know, pretty strong momentum in
Speaker 1: its mining segment, which makes sense because mining is coming
Speaker 1: back from a pretty severe downturn. But you are seeing
Speaker 1: a little bit of that weakness and construction and sort
Speaker 1: of you couple that with a lot of the negative
Speaker 1: sentiment that we've been hearing for home builder stocks and
Speaker 1: for you know, construction in general. And I think that
Speaker 1: is definitely something that investors are picking up on today.
Speaker 1: And that's actually a really interesting point I was going
Speaker 1: to go to that. I mean, does this signal something
Speaker 1: broader about the slowdown in the in the home building
Speaker 1: sector and just sort of in general about some of
Speaker 1: the the industries that have reported the recovery so far
Speaker 1: really slowing down and perhaps an even more meaningful way
Speaker 1: than people have realized. I think, you know, a lot
Speaker 1: of what you're seeing is sort of coming up on
Speaker 1: the peak in the cycle, and that affects companies in
Speaker 1: different ways. So three M also reported today and its
Speaker 1: stock is getting crushed, and a lot of the slowdown
Speaker 1: that it saw is in these shorter cycle markets, so automotive, electronics,
Speaker 1: UM healthcare as well, and some of those have had
Speaker 1: stronger momentum for a longer stretch of time. And I
Speaker 1: would also put UM residential construction, home building in that
Speaker 1: they've they've been on this recovery track for a longer period,
Speaker 1: and so it makes sense that we might be nearing
Speaker 1: the peak of that versus some of these longer cycle businesses,
Speaker 1: like I think of United Technologies, which is also about
Speaker 1: today and it's aerospace business. I mean, it takes those
Speaker 1: orders very far in advance. You don't just show up
Speaker 1: at United Technologies and buy a jet engine. So those backlogs,
Speaker 1: those order rates should help United Technologies and companies in
Speaker 1: those later cycle businesses maintain momentum through twenty nineteen. But
Speaker 1: as you sort of look at these dynamics, I think
Speaker 1: you can read into some of the trends we're seeing
Speaker 1: at the shorter cycle companies that that we might be
Speaker 1: nearer a turning point than Uh, than not. I want
Speaker 1: to thank you very much for being with us. A
Speaker 1: brook Southerland, of course expert in all things having to
Speaker 1: do with mergers, acquisitions and just general corporate go ahead.
Speaker 1: Something really strange because s Brooke is talking about home
Speaker 1: builders and how there has been this slowdown. Told Brothers,
Speaker 1: one of the biggest home builders. Their shares are up
Speaker 1: today nearly two per sense, so go figure. There actually
Speaker 1: is some strength today and home builders, even though there
Speaker 1: is a generally negative sentiment and frankly homebuilder stocks, as
Speaker 1: Dave Wilson has pointed out in his chart of the day,
Speaker 1: actually a editor bear markets. So perhaps some people are
Speaker 1: seeing some opportunities. President Donald Trump is set to meet
Speaker 1: with the Chinese President Jijing Ping at the Group of
Speaker 1: Twenty Nations summit in Buenosaurus. The topic, of course, is
Speaker 1: going to be trade disputes and the uh. The information
Speaker 1: comes from the White House Economic Advisor Larry Cudlow, and
Speaker 1: here to tell us more about the dispute and whether
Speaker 1: it presents some opportunities is John Authors of Bloomberg Opinion.
Speaker 1: John welcome as always and as the senior markets editor
Speaker 1: for Bloomberg. I wonder if you could just describe emerging markets.
Speaker 1: Does China still count as an emerging market? Yes, I
Speaker 1: mean to something extent. There's still an argument about whether
Speaker 1: it's even as far as emerging, given that it still
Speaker 1: doesn't open its markets as freely to to the outside
Speaker 1: world as it should. That's why we've had the annual
Speaker 1: excitement over whether ms c I is going to, you know,
Speaker 1: the the index group that largely controls the description of
Speaker 1: emerging markets, whether MSc AND is going to be including
Speaker 1: a Chinese A shares in its index. But it doesn't
Speaker 1: really matter terribly which measure of China you take at
Speaker 1: the moment there, they're all down quite badly over the
Speaker 1: last six months. Yeah. John. First of all, I want
Speaker 1: to just welcome you to Bloomberg because you spend nearly
Speaker 1: three years at the financial time a variety of positions,
Speaker 1: and it is a coup for us that you joined us.
Speaker 1: So I just want to say congratulations. Um John, I
Speaker 1: want to just take a step back and look at
Speaker 1: the broader cell off today in markets, and on a
Speaker 1: certain level it's almost comforting, and I'll tell you why,
Speaker 1: because you're not seeing bonds and stocks all off in tandem.
Speaker 1: So I'm wondering from your perspective, do you think that
Speaker 1: this is actually um somewhat more predictable, that basically this
Speaker 1: is the market more broadly saying to the photo reserve,
Speaker 1: slow down. Growth is going to slow going forward. Higher
Speaker 1: input costs are going to weigh on companies, and things
Speaker 1: are just going to take a breather for a minute.
Speaker 1: I mean, is that the interpretation here, that's one interpretation
Speaker 1: of it, certainly, you know, not not necessarily an unreasonable one.
Speaker 1: Another way of looking at it, which would be relatively healthy,
Speaker 1: although it would suggest that the President might have been
Speaker 1: a little unwise to make the stock market such a
Speaker 1: measure of his success is that we might finally be
Speaker 1: getting to the long awaited point when Main Streets gains
Speaker 1: somewhat at the expense of Wall Street that you're seeing, uh,
Speaker 1: You know, a number of the companies that have disappointed
Speaker 1: and endings have cited the problems of rising costs, including
Speaker 1: labor costs. Obviously, that's good news for the very many,
Speaker 1: very frustrated people here in the US who have suffered
Speaker 1: sluggish wage growth for a long time. Similarly, as the
Speaker 1: economy strengthens and and rates go up, that makes it
Speaker 1: harder harder sledding to a harder sledding to make money
Speaker 1: out of the stock market. But it's it suggests that
Speaker 1: there is more genuine robust health out here. So to
Speaker 1: some extent um, this is what had been hoped for
Speaker 1: for a while. You could argue, yes, that it's a
Speaker 1: that it's a healthy form of growth. The problem, there
Speaker 1: is a problem. The problem probably arises with, as we
Speaker 1: mentioned earlier, what exactly is going on in China. We're
Speaker 1: in a bipolar world in many senses in the moment
Speaker 1: that there are two economies that count, the US and China,
Speaker 1: and some of the things that are happening in China
Speaker 1: cannot be ascribed merely to trade tensions which are yet
Speaker 1: seriously to bite, and they play in the art. Concerning John,
Speaker 1: you're famous for taking the long view, and you're an
Speaker 1: investor that takes the long view. Where would you be
Speaker 1: telling people to look for prospective assets to purchase somewhere
Speaker 1: other than the US, more or less anywhere other than
Speaker 1: the US. Frankly, I mean in terms of in the
Speaker 1: very long term. The it's very hard to dispute the
Speaker 1: notion that the single most important factor in the return
Speaker 1: you'll get in the end is how much you paid
Speaker 1: for it at the start. There are almost no stock
Speaker 1: markets out there that look particularly expensive other than the US,
Speaker 1: which I've been in various arguments with the people. Now
Speaker 1: that my blue and my email is starting to regularly
Speaker 1: go out from from Bloomberg, and so Bloomberg readers are
Speaker 1: discovering because I think US stocks are overpriced. My beloved
Speaker 1: FT readers have known that for a while. If US
Speaker 1: stocks are plainly overpriced, if you don't believe it, don't
Speaker 1: believe it, send me in an email and I'll try
Speaker 1: to convince you otherwise. But but, but outside of the US,
Speaker 1: most of the world has interesting characteristics to it. You
Speaker 1: can certainly argue whether some of them, more apparently cheap
Speaker 1: markets are value traps. The fact that the cheapest mainstream
Speaker 1: stock market at the moment is Russia does tell you
Speaker 1: something about why it might be cheap right there. But
Speaker 1: outside the US, they're interesting opportunities. So is Italy interesting
Speaker 1: or is it Italy is fascinating? I would even say
Speaker 1: it's very entertaining. You have to be entertaining. No, No,
Speaker 1: it's it's really if you want to make it, if
Speaker 1: you if you want to try to be clever and
Speaker 1: make an opportunity by opportunistic by don't do it now
Speaker 1: in Italy because I don't see a way in which
Speaker 1: this political standoff is resolved quickly. This isn't Greece. The
Speaker 1: Italians really can try to call the Europeans bluff, and
Speaker 1: the Europeans really can't have bring the kind of leverage
Speaker 1: against Italy that they used against Greece, but the bond
Speaker 1: market can. So this is this is not the time
Speaker 1: to dive in yet unless you really feel like you
Speaker 1: might like mega millions. It might work out for you,
Speaker 1: but I wouldn't recommend it my feet. It might be
Speaker 1: trying to get the jackpot for one point six billion
Speaker 1: dollar uh pool that's out there for the lottery that
Speaker 1: nobody has won yet. John Author's senior markets editor for Bloomberg.
Speaker 1: We welcome him to Bloomberg. We're thrilled that he has
Speaker 1: joined us. We really appreciate you joining us right now.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
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