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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App.

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Speaker 2: Joining us now is really one of the key calls

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Speaker 2: within the Bloomberg Surveillance world. It's rarely that you get

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Speaker 2: somebody to give you a statistic or directional call and

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Speaker 2: also throw a date on it. Matthew Lizetti and the

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Speaker 2: team led by Peter Hooper and David Fokers Landau Deutsche

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Speaker 2: Bank had the courage to do that a long long

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Speaker 2: time ago. They said, there is going to be a slowdown,

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Speaker 2: some form of Nber recession, but it's going to be

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Speaker 2: out there. He nailed that call. We get an update

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Speaker 2: this morning with mister Okay, let's go to the time delement.

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Speaker 2: Now which week, which day, which hour do we get

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Speaker 2: a recession?

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Speaker 3: Yeah, you know that the timing is always very difficult

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Speaker 3: to a month.

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Speaker 4: We're still Q four.

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Speaker 3: We updated our outlook this week, kept the recession timing

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Speaker 3: in Q four. You know, I think it's based on

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Speaker 3: we've seen the FED titan obviously very aggressively. You've seen

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Speaker 3: credit conditions titan. You've seen some breadcrumbs within the labor

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Speaker 3: market data of some softening. I'd be cautious about this

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Speaker 3: morning's data just because there's a lot of volatility, there's

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Speaker 3: seasonal adjustment issues, there's states that are they're moving around.

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Speaker 3: But if you look at the last Friday's jobs report,

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Speaker 3: it showed the permanent job losers really rising, and that's

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Speaker 3: I think an important important indicator. And then as you

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Speaker 3: look forward for the consumer, you have excess savings dissipating

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Speaker 3: by the end of the year, you have student debt

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Speaker 3: payments coming back, and so we think it's a consumer

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Speaker 3: that looks a lot weaker by the end of the year.

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Speaker 4: What gives you confidence, especially since people have been pushing

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Speaker 4: out this date again and again and again.

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Speaker 3: Yeah, I don't think you want to express too much

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Speaker 3: confidence on any particular month or quarter, to be honest.

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Speaker 3: You know, the labor market has proven to be more resilient,

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Speaker 3: the consumer has proven to be more resilient, but I think,

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Speaker 3: unfortunately for the Fed, so has inflation. And that was

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Speaker 3: kind of our expectation as you go back to last year.

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Speaker 3: It was that the labor market was strong, it was

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Speaker 3: that the consumer was strong, and then therefore inflation was

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Speaker 3: going to be more persistent and the Fed would have

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Speaker 3: to move more aggressively. I think looking ahead, I think

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Speaker 3: the Fed skips next week, barring a big upside surprise

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Speaker 3: to CPI, but I also think that they tee up

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Speaker 3: a rate hike over the next several meetings. We think

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Speaker 3: that comes in July.

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Speaker 4: If they skip. If they go through with that kind

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Speaker 4: of shift, do you expect a meaningful move up in

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Speaker 4: longer term yields or basically people say, maybe this is

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Speaker 4: a sign that this Federal Reserve is willing to accept

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Speaker 4: inflation that is a two point something over the longer term.

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Speaker 1: Yeah.

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Speaker 3: I think that's the worry from their perspective, that you

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Speaker 3: get this upward shift in inflation expectations, because the market

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Speaker 3: interprets it as they are losing some of their credibility

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Speaker 3: or commitment to that two percent objective, and so I

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Speaker 3: think they will want to do anything to push back

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Speaker 3: or kind of tone that down that that notion. I

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Speaker 3: think even from the doves you've heard, you know they

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Speaker 3: want to skip, but they want to be very clear

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Speaker 3: that this is not the peak of the tightening cycle,

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Speaker 3: that there's very likely the potential for more rate hikes

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Speaker 3: to come.

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Speaker 2: We've given short shrifts this week to the crew, including

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Speaker 2: Adheim and at evercore Isi, who say, look, we're going

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Speaker 2: to disinflate with clarity in your note, and again you've

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Speaker 2: got the courage to put a date on it year

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Speaker 2: in twenty twenty four, December of two and twenty four,

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Speaker 2: some kind of sub three percent inflation. How does our

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Speaker 2: world change with say two point sixty five percent inflation.

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Speaker 3: I think it's all about how you get to there.

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Speaker 3: We for our forecast at the end of next year

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Speaker 3: are down at two and a quarter percent core pc.

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Speaker 3: So it looks like the Fed no one.

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Speaker 1: Is very close to the way sing that in right now.

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Speaker 3: Well, I think it depends on how you get there.

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Speaker 5: Now.

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Speaker 3: If it's an immaculate disinflation where a labor market stays

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Speaker 3: where it is and that's in a kind of a

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Speaker 3: fantastic outcome for the economy, for markets, If it's a

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Speaker 3: recession that is needed to get you there that it's

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Speaker 3: a labor market that very sure much needs to weekend.

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Speaker 3: I think it's a very different dynamic the FED, you know,

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Speaker 3: I think their own forecasts have shown a need for

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Speaker 3: sum recession and rising unemployment. It's clear that the staff

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Speaker 3: for the past several meetings have come to that conclusion

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Speaker 3: as well. We still hold that view that they really

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Speaker 3: do need this economy to slow materially the labor market

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Speaker 3: the weekend to get close to two percent.

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Speaker 2: And the legacy of Deutsche Bank analysis, it even goes

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Speaker 2: back to Adam Siminsky and oil years ago, is always

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Speaker 2: think dynamics. So I've got wage growth coming down, but

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Speaker 2: I've got inflation screaming down to two point x percent.

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Speaker 2: Can we have a quote unquote Lazetti recession with actual

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Speaker 2: real wage stability or real wage growth.

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Speaker 3: I think what you will see is that wages will

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Speaker 3: come down materially as the labor market weekends, and that

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Speaker 3: is I think part of the Fed's game plan. They

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Speaker 3: talk about, you know, wages being a very important input

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Speaker 3: into that X service core services, X shelter component. We

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Speaker 3: think it's an important the overall labor market is an

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Speaker 3: important input into too. Rental inflation to get back to

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Speaker 3: two percent sustainably, I think you need a softer labor

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Speaker 3: market and the FED needs wage growth to come down

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Speaker 3: closer to that that metric that shairpalse site to three percent.

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Speaker 4: Do you think that if they go again in July,

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Speaker 4: assuming they skip next week, that the FED is done

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Speaker 4: after that?

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Speaker 3: I think there's still upside risks. You know, we have

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Speaker 3: been I think everybody has been consistently surprised, and those

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Speaker 3: surprises have all been in one direction, which is inflation,

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Speaker 3: stickier labor market, stronger consumer, a bit more resilient than anticipated,

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Speaker 3: and so you don't want to discount the kind of

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Speaker 3: serial correlation in those in those surprises. Could we get

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Speaker 3: more I think it's it's certainly possible, which could push

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Speaker 3: the FED.

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Speaker 4: To raise rates and yeah, again behind five and a

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Speaker 4: half percent. I'm just wondering, though, from your perspective, as

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Speaker 4: we headed to this mid year point and everybody writes

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Speaker 4: their mid year outlooks, whether there's anything that you're kind

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Speaker 4: of changing shifting second guessing from the first half that

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Speaker 4: you think will be a driving theme heading into the

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Speaker 4: next six months.

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Speaker 3: Yeah, for us, it's definitely that the potential that this

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Speaker 3: cycle takes a little bit longer to play out, and

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Speaker 3: that therefore their session doesn't come by in this year,

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Speaker 3: but but a little bit later. I think for us

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Speaker 3: a key has been that we've pushed back the timing

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Speaker 3: of rate cuts. We're now in March of next year,

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Speaker 3: in part because the unemployment rate takes a bit longer

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Speaker 3: to get there. I think just one important counterfactual here

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Speaker 3: is that if we had not had these banking stresses emerge,

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Speaker 3: it looked likely that the FED was going to raise

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Speaker 3: rates by fifty basis points in March, and having done that,

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Speaker 3: I think they probably would have done so in May,

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Speaker 3: and so the counterfactions we'd probably be fifty basis points

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Speaker 3: higher on the FED funds.

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Speaker 1: Right.

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Speaker 3: The key question for them is our credit condition is

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Speaker 3: tightening enough to offset that.

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Speaker 2: What's the counterfactual of China? Do the export disinflation even

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Speaker 2: outright deflation? What do they do with the struggles they seem.

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Speaker 1: To be having. How does that change the American model?

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Speaker 3: Certainly the global growth impulse that people are expecting from

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Speaker 3: China is seemingly not there as much as anticipated. I

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Speaker 3: think the real concern from an inflation perspective in the

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Speaker 3: US however, has been not only is services elevated, we've

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Speaker 3: seen core goods inflation over the past three or four

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Speaker 3: months also bounce back. Now, last month it was all

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Speaker 3: about used cars, so you want to discount that a

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Speaker 3: little bit. But go back three or four months before that,

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Speaker 3: it was broad based. It was household furnishings, it.

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Speaker 4: Was medical goods.

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Speaker 3: And so there's even in that category that we have

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Speaker 3: the most confidence that you're going to get this big disinflation.

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Speaker 1: Aymils, tell me that you're not walking back to the office.

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Speaker 6: I am.

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Speaker 1: Actually you come on this. It's like deadly out there.

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Speaker 4: You have a mask, and you do a mask.

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Speaker 3: You guys have some down in the lobby.

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Speaker 1: You're taking one of Mike's last mask. I brought myself.

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Speaker 1: I'm going to go out there and die today.

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Speaker 7: I'll leave one for you.

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Speaker 1: I'll take you for you.

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Speaker 2: Matt Zetti walking across Central Park. But what do you

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Speaker 2: call the building?

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Speaker 3: The deutsch Bank Center the time warne deutsch Center, just

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Speaker 3: the deut Back Center.

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Speaker 2: Very exciting. Well, we looked at we we'll do something

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Speaker 2: over there. Sometimes Misteretti is a Deutsche Bank. But right

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Speaker 2: now and this is really important. And radio on television.

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Speaker 2: If you want to know what the margin were caate next,

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Speaker 2: listen carefully to Kristin Bidderley, head of North America investments

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Speaker 2: at City Global Wealth. Were thrilled she could join us today.

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Speaker 2: There's a very sentence in the usual blatherer of a

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Speaker 2: mid year outlook that you're released today, which is are

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Speaker 2: you playing defense or you being on the sidelines. That

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Speaker 2: is a perfect metaphor for the emotion right now.

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Speaker 4: I think that's exactly right.

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Speaker 8: There's this feeling out there that you're either all in

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Speaker 8: or all out of the market that I think you

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Speaker 8: guys were talking about this earlier on the program, this

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Speaker 8: idea that you're either all in T bills and sitting

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Speaker 8: in that five percent, or somehow you're chasing and finding

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Speaker 8: a defensive play in tech stocks. And so what we've done,

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Speaker 8: and this is something that we've done from the very

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Speaker 8: beginning of the years, we've actually been very balanced in

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Speaker 8: terms of our fixing come portfolios, our equity portfolios where

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Speaker 8: we are fully invested, but we're picking our spots in

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Speaker 8: those asset classes in terms of quality. And when you

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Speaker 8: look at the performance of something like that year to date,

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Speaker 8: it's actually high single digit returns for a balanced portfolio.

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Speaker 8: It's not the twenty five percent of the NASDAC, but

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Speaker 8: it's certainly strong returns.

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Speaker 6: Here to date.

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Speaker 7: Stan Jokimena was great, ye said, I with Shnali Basseki

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Speaker 7: talked about the prospect of going into recession and compared

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Speaker 7: almost staples to what's happening with AI in Nvidia. Can

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Speaker 7: I compare can I put in the same bucket some

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Speaker 7: of these tech names with consumer staples.

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Speaker 8: I would love to hear that in more detail. I

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Speaker 8: think that would be a challenging analysis to do. But

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Speaker 8: I think when we talk about what's happened within the

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Speaker 8: market more broadly, I do think this concentration and everyone's

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Speaker 8: talking about this, this is not a new story about

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Speaker 8: the breadth and the market. The breadth in the market,

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Speaker 8: those seven stocks representing more than one hundred percent.

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Speaker 5: Of the gains.

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Speaker 8: Even if you look it's not a uniquely US story.

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Speaker 8: That's a global story as well, that there's ten companies

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Speaker 8: representing eighty five percent of the global gains. And so

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Speaker 8: what does that tell me? It actually tells me that

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Speaker 8: the market is pretty rational. Where the money has been

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Speaker 8: going into has been these megacap companies with strong free

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Speaker 8: cash flow generation, the ability to fund growth not dependent

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Speaker 8: on credit. Markets have their balance sheets in order, and

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Speaker 8: that a lot of them have raised guidance going forward.

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Speaker 4: So given that, right, given that, maybe there's rationality, but

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Speaker 4: maybe I want to play that because you can't really

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Speaker 4: predict the AI future. Are you starting to now say

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Speaker 4: that the rational plays of say regional banks, of say

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Speaker 4: just generally financials. Areas that have gotten beaten up are

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Speaker 4: looking good again if things aren't that bad.

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Speaker 8: That's one of the themes in our outlook is actually

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Speaker 8: this coming rotation within equity. So as I mentioned earlier,

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Speaker 8: we have been playing defense. We've been invested in areas

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Speaker 8: like global dividend growers, but some of the areas that

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Speaker 8: we've been eyeing and adding exposure, so something like MidCap. Right,

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Speaker 8: So looking at MidCap and the valuation differential trading at

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Speaker 8: about a twenty eight percent discount to larger cap, looking

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Speaker 8: at some of those themes, you have to be selective.

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Speaker 8: This isn't just kind of a broad brush. You want

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Speaker 8: profitable companies just like you want profitable companies in large cap.

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Speaker 8: But that's an area when people ask the question, has

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Speaker 8: this theme gotten away from me? You can actually find

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Speaker 8: opportunities just going down the cap structure.

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Speaker 4: One thing we've been talking about throughout the morning is

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Speaker 4: the weight of people who have been hiding in T

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Speaker 4: bills to go into Nvidia, to go into big tech,

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Speaker 4: to look for those double digit returns that you were

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Speaker 4: talking about, and not be happy with single digit returns

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Speaker 4: even if they look pretty pretty good on a risk

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Speaker 4: adjusted level. You've been traveling a lot talking with clients.

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Speaker 4: What do they say? How much pressure are you hearing

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Speaker 4: to get a little bit more with respect to earnings.

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Speaker 8: I think everyone is asking that question of is tech

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Speaker 8: a buy? Should I continue to chase this rally? And

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Speaker 8: I think one of the most interesting things bringing it

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Speaker 8: back to the AI conversation because we have to, right

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Speaker 8: that's just the dominant conversation right now. I think there

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Speaker 8: are fabulous companies out there, but they're valued at, you know,

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Speaker 8: in even more extreme level, and so in terms of

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Speaker 8: making money in any type of market, it's really that differential.

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Speaker 8: And so some of the areas that if you think

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Speaker 8: of the net beneficiaries of AI, the concentration has really

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Speaker 8: been in those megacap companies. But then when you look

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Speaker 8: at areas like cybersecurity that's going to have to come

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Speaker 8: along for the ride. Areas like one of our long

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Speaker 8: term term unstoppable trends is investing in longevity, a net

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Speaker 8: beneficiary of this technology, where you have haven't seen that

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Speaker 8: type of valuation and you haven't seen the funds really

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Speaker 8: come into those areas. Those are ways to be invested,

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Speaker 8: but not in a pure play.

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Speaker 7: Just quickly, what's special about forty three hundred on the

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Speaker 7: S and P.

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Speaker 8: I don't think anything special about forty three hundred.

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Speaker 7: Act this way, you could just stop in them pulling back.

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Speaker 8: I think Look, I think the major conversation is once

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Speaker 8: we hit that twenty percent appreciation level and this idea

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Speaker 8: that all of a sudden it would turn into a

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Speaker 8: true bull market, I think we have to look at

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Speaker 8: whether you're in the camp of higher for longer in

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Speaker 8: interest rates, or you're in the camp that we could

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Speaker 8: see a cut at the end of this year. If

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Speaker 8: there is some type of recession ultimately and some type

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Speaker 8: of it has to signal that we're going to see

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Speaker 8: further contraction within earnings. And that's something that I think

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Speaker 8: the outlook right now is a little bit too rosy.

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Speaker 8: We actually that was one thing. Coming into this year,

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Speaker 8: we thought we were going to see about a ten

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Speaker 8: percent contraction in earnings. We've reduced that. We think is

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Speaker 8: about going to be about a six percent based on

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Speaker 8: the strong Q one, but still a contraction.

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Speaker 2: This conversation is of fifteen years ago. I'm not used

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Speaker 2: to a normal conversation that was in fabosi or in

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Speaker 2: you know, the CFA curricula. I mean, it's shocking to

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Speaker 2: hear this. It's like, oh, a normal conversation after fifteen

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Speaker 2: years of oddity.

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Speaker 1: We're all recalibrating.

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Speaker 7: Fifteen years Is there a rights? Is that what you're

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Speaker 7: referring to.

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Speaker 2: Yeah, and there was no risk free rate. The sharp

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Speaker 2: ratio didn't work. I mean, it's all there is to it.

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Speaker 2: And we all made it up as we went. And

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Speaker 2: what's so important here, John, is all the focus of

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Speaker 2: the media, the financial press is on short covering a

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Speaker 2: short squeeze convexity to the upside stuff I don't even understand.

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Speaker 2: And you know what it's about, the bitterly world, you know,

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Speaker 2: the David Kelly world, which is the basic idea, do

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Speaker 2: you have the courage to get off the sidelines.

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Speaker 1: That's the heart of the matter.

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Speaker 7: The cash trap. Yeah, it's been a fate for the

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Speaker 7: shot for the last few weeks. Kristin, thank you, Thank you.

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Speaker 7: Kristin Biddley, the City Global Wath Management at Any joining

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Speaker 7: Us now the president of Any Research ED. I've loved

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Speaker 7: the notes over the last couple of weeks. The mother

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Speaker 7: of all mounts ups at a week closer to a

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Speaker 7: mount up than a mount down.

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Speaker 5: Well, I think we've definitely had a melt up in

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Speaker 5: the Megacap eight stocks. As you've been highlighting, these stocks

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Speaker 5: have kind of taken over the market in recent weeks.

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Speaker 5: I think it really started with the banking crisis right

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Speaker 5: in March March eighth or so, when we started having

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Speaker 5: the banking crisis, the financials took a dive. Even energy

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Speaker 5: took a dive on fears that if the financials are

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Speaker 5: going down, that can't be good for the economy. And

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Speaker 5: the energy stocks went down. But people still wanted to

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Speaker 5: be in the market, and they ran into the Megacap

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Speaker 5: eight because they have cash, they have cash flow, and

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Speaker 5: they have a good business. I think the market's actually

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Speaker 5: got broad now back to the financials. Right now, we've

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Speaker 5: got some uncertainty concerns about whether there might be another

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Speaker 5: rate hike, but I think the economic outlook is still

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Speaker 5: pretty good, and I think that once people get more

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Speaker 5: comfortable with the financials, so I think the market will

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Speaker 5: broadened out in that direction.

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Speaker 1: Yeah, I want to.

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Speaker 2: Give a look back here quickly in a victory lab

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Speaker 2: for you. You've had a set of victory laps over

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Speaker 2: a lengthy career. In October, Ralphan Kampora and Edward Yardanny said,

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Speaker 2: climb on board this bottom in the market. You're up

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Speaker 2: nineteen percent from your October low. The triple leveraged Yard

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Speaker 2: Denny fund. This is something in develop right now. Is

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Speaker 2: a fifty seven percent at return since October. Yeah, that's

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Speaker 2: before Yard Danny takes out. It's two and twenty. But

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Speaker 2: the answer here, d Dar Danny, I want you to

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Speaker 2: talk to people who missed it. They didn't listen to

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Speaker 2: Ralphan kampor they didn't listen to Ben Ladler, they didn't

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Speaker 2: listen to ed Yard Danny. Talk to the people who

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Speaker 2: misses rally, how they get on board.

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Speaker 5: Well, I'm still optimistic that the market is going to

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Speaker 5: move higher by the end of the year into next year.

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Speaker 5: I think next year is sort of the environ meant

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Speaker 5: that the market is increasingly thinking about discounting, and I

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Speaker 5: think the economy is going to be better. I think

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Speaker 5: earnings are going to be better. However, we have had

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Speaker 5: a heck of a move, and it's been in these

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Speaker 5: large cap stocks. I think you know, as I said,

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Speaker 5: look for where there's been laggards, and there certainly have

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Speaker 5: been laggers in the financial they have been laggers and energy,

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Speaker 5: even in industrials. In addition to the melt up scenario

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Speaker 5: for megacaps, I've also been monitoring the situation for construction

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Speaker 5: in the United States and it's absolutely booming for non

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Speaker 5: residential construction, and I think it's about the boom for

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Speaker 5: infrastructure spending, and so I think the industrials are another

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Speaker 5: place to be.

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Speaker 4: You were saying that the forty six hundred target that

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Speaker 4: you currently have might be conservative. If this all bears out,

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Speaker 4: what do you say to those who push back and say,

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Speaker 4: if that comes to pass and all the people who

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Speaker 4: are in cash decide it is the time to throw

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Speaker 4: in the towel and go into equities that will give

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Speaker 4: the FED more ammunition to high rates further and kill

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Speaker 4: this off more quickly.

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Speaker 5: Well, I think the Federal Reserve, the Federal official. Federal

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Speaker 5: Reserve officials have been saying for quite some time that

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Speaker 5: they want to get the interest rate, the Fed fund

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Speaker 5: rate up to a restrictive level. I think five to

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Speaker 5: five and a quarter percent is proving to be restrictive.

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Speaker 5: There has been a banking crisis. We have seen surveys

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Speaker 5: of loan officers saying that they are tightening lending standards.

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Speaker 5: So I think they're where they want it to be,

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Speaker 5: and I think they have to factor in that quantitative

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Speaker 5: tightening as well as the tightening of lending standards probably

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Speaker 5: amounts to at least another fifty one hundred basis points

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Speaker 5: in effective federal funds rate hikes. So if the fund

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Speaker 5: rate now is five to five and a quarter percent,

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Speaker 5: I think effectively it's already sixty six and a quarter percent.

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Speaker 4: But if that's not enough edge to slow any kind

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Speaker 4: of growth, And you are seeing construction construction companies actually

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Speaker 4: seeing a boom, You're seeing the housing market reignite, You're

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Speaker 4: seeing all shoots of possibly some sort of recovery, and

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Speaker 4: manufacturing sectors that have been beaten up. Doesn't this go

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Speaker 4: against the idea that it is enough, that it is

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Speaker 4: restrictive enough to bring about a decline in inflation to

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Speaker 4: the degree that the FED would like well.

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Speaker 5: Inflation has been coming down, as you know. Maybe it's

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Speaker 5: not coming down as rapidly as some people think, but

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Speaker 5: I think it's proven to be quite transitory in durable

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Speaker 5: goods and even non durable goods. Where we still have

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Speaker 5: stickiness or persistence is in services. And we know that

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Speaker 5: rent inflation in the real world has come down pretty dramatically,

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Speaker 5: and that's likely to mean that we get down to

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Speaker 5: something like three to four percent inflation by the end

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Speaker 5: of this year. Right now, we're about four to five percent,

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Speaker 5: So I'm optimistic that inflation can very well can come

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Speaker 5: down very well on its own without any more restriction.

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Speaker 5: I think a lot of the inflation was pandemic related.

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Speaker 5: It was a shock that had been after shocks, and

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Speaker 5: I think we're sort of normalizing.

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Speaker 2: Did jar Danny you talk about a broadening market? Helped

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Speaker 2: me with package goods. Some of them are trading at

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Speaker 2: nineteen twenty twenty one times earnings. Am I supposed to

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Speaker 2: acquire new shares in those companies? I mean, I'm just

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Speaker 2: just dazzled by the idea of buying new shares at

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Speaker 2: a twenty one multiple that's got a single digit slow,

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Speaker 2: single digit revenue growth.

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Speaker 5: You know, the bearers have been certainly right about the

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Speaker 5: fact that we have really never seen a situation where

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Speaker 5: a bull market got started with multiples basically at fair value.

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Speaker 5: The forward pe, the forward pe of the S and

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Speaker 5: P five hundred was fifteen point one on October twelfth

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Speaker 5: when the market bottomed, and that is troubling to a

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Speaker 5: lot of people. But the reality is, if you take

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Speaker 5: out the megacap eight, which are unusual stocks, you get

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Speaker 5: a multiple of about sixteen, so again it's closer to

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Speaker 5: fair value, whereas with them you're at eighteen eighteen and

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Speaker 5: a half. So I think you have to really kind

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Speaker 5: of slice and dicely the stock market and look for

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Speaker 5: where the value is right now. And as I said,

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Speaker 5: it's beating up financials that seem to be pretty good values.

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Speaker 5: Industrials I don't think have discounted what we're seeing with

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Speaker 5: on shoring and with building the chip plants in the

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Speaker 5: United States, electric vehicle battery plants and so on. So

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Speaker 5: I think there are still opportunities in the market.

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Speaker 7: Great to catch up at what a coal just to

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Speaker 7: be constructive. So far through this year, mine's constructive authorny research.

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Speaker 7: Talking of the financials, let's continue on now when we

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Speaker 7: do so with Jeffer you visiting with Paul Sweeney yesterday.

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Speaker 2: It is b N Y Melon conference in Florida, and

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Speaker 2: its jetted up to join us. He's senior market strate

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Speaker 2: to just be and y Melon. It's a quiet period,

438
00:20:54,600 --> 00:20:56,639
Speaker 2: but it's not a quiet period. I'm gonna ask you

439
00:20:56,680 --> 00:20:59,879
Speaker 2: an open question to start equities, bonds, currencies come out

440
00:20:59,880 --> 00:21:02,800
Speaker 2: of these, Where is your single focus now in.

441
00:21:02,840 --> 00:21:06,080
Speaker 9: The I think those single focus is we need to

442
00:21:06,080 --> 00:21:09,560
Speaker 9: acknowledge high for longer. By single focus is those residual

443
00:21:09,640 --> 00:21:11,560
Speaker 9: fed cuts that still seem to be the market is

444
00:21:11,600 --> 00:21:15,600
Speaker 9: intent on pricing and heading into next January probably needs

445
00:21:15,600 --> 00:21:16,199
Speaker 9: to get rid of them.

446
00:21:16,200 --> 00:21:18,080
Speaker 4: Now. We talked about the fog as being sort of

447
00:21:18,080 --> 00:21:20,040
Speaker 4: a metaphor right now for a lot of the uncertainty

448
00:21:20,040 --> 00:21:23,200
Speaker 4: that we have in the market. It's unfortunate and convenient. However,

449
00:21:23,240 --> 00:21:25,880
Speaker 4: I do wonder how much this lack of conviction makes

450
00:21:25,920 --> 00:21:28,679
Speaker 4: you have all that much more conviction in cash, because

451
00:21:28,760 --> 00:21:30,840
Speaker 4: if you could just sit there and earn something, you know,

452
00:21:30,880 --> 00:21:32,600
Speaker 4: even if you're not through, you know, throw blowing it

453
00:21:32,640 --> 00:21:34,040
Speaker 4: out of the water. It's better than nothing.

454
00:21:34,359 --> 00:21:36,879
Speaker 9: That's been the theme that we've observed in our flows

455
00:21:36,920 --> 00:21:38,800
Speaker 9: and for the best part of the last six probably

456
00:21:39,320 --> 00:21:42,160
Speaker 9: six months, if not longer. But having said that, there

457
00:21:42,200 --> 00:21:45,160
Speaker 9: is one new dynamic seemingly coming through things of flat lines.

458
00:21:45,160 --> 00:21:47,400
Speaker 9: So people not adding to more cash because they're seeing

459
00:21:47,400 --> 00:21:50,600
Speaker 9: that allocations are just solo right now to risk and

460
00:21:50,680 --> 00:21:54,000
Speaker 9: are the institutional investors that we custod for. I think

461
00:21:54,000 --> 00:21:57,439
Speaker 9: they're starting to push some funds, not speculatively a bit

462
00:21:57,800 --> 00:22:00,560
Speaker 9: or opportunistically, but they're looking at valuation and they're looking

463
00:22:00,560 --> 00:22:02,680
Speaker 9: at the growth environment. It could be a bit more

464
00:22:02,680 --> 00:22:04,960
Speaker 9: benign than we give it credit for, so funds are

465
00:22:05,000 --> 00:22:06,080
Speaker 9: actually being pushed back in.

466
00:22:06,080 --> 00:22:07,560
Speaker 4: In the next half hour, we're going to speak with

467
00:22:07,600 --> 00:22:09,119
Speaker 4: Eddie Danny who's going to talk about the Mother of

468
00:22:09,200 --> 00:22:11,719
Speaker 4: all meltups Mammo as he calls it. And I'm wondering

469
00:22:11,760 --> 00:22:14,320
Speaker 4: how much this positioning right now of an increasing amount

470
00:22:14,359 --> 00:22:19,199
Speaker 4: of cash is actually being fuel for this mother of

471
00:22:19,240 --> 00:22:20,600
Speaker 4: our meltups. It could be coming.

472
00:22:21,119 --> 00:22:23,640
Speaker 9: I think it is going to be the fundamental ass

473
00:22:23,640 --> 00:22:25,919
Speaker 9: allocation story for the second half of the year. But

474
00:22:26,000 --> 00:22:28,160
Speaker 9: on top of that, the macro picture is can we

475
00:22:28,320 --> 00:22:30,480
Speaker 9: dirt and visage maybe a soft landing, and Gun was

476
00:22:30,520 --> 00:22:32,639
Speaker 9: having a few conversations around this. If we can get

477
00:22:32,680 --> 00:22:36,119
Speaker 9: to say year end with still pay rolls around two

478
00:22:36,160 --> 00:22:38,480
Speaker 9: hundreds hundred and fifty thousand, but core inflation core PC

479
00:22:38,680 --> 00:22:40,440
Speaker 9: on the way down to four four and a half percent,

480
00:22:40,480 --> 00:22:42,440
Speaker 9: I think that is a good environment. That's a good result.

481
00:22:42,840 --> 00:22:46,320
Speaker 9: So if that translates into the corporate profitability, stability and

482
00:22:46,320 --> 00:22:48,480
Speaker 9: earnings growth as well, then with the cash on the

483
00:22:48,520 --> 00:22:51,440
Speaker 9: sidelines your better return profile, why not push cash back

484
00:22:51,440 --> 00:22:51,960
Speaker 9: into equity.

485
00:22:52,080 --> 00:22:54,920
Speaker 7: I feel like right now there's two different views. Either

486
00:22:54,920 --> 00:22:57,280
Speaker 7: you just sit in cash take five or you go

487
00:22:57,359 --> 00:23:00,680
Speaker 7: to AI and chase types and dreams something in between.

488
00:23:00,760 --> 00:23:03,120
Speaker 9: Right now, for you, it's that bubble story as well.

489
00:23:03,119 --> 00:23:04,840
Speaker 9: If there's still one asset class I have of conviction

490
00:23:05,240 --> 00:23:08,280
Speaker 9: on globally, I think it's an emerging market at asset

491
00:23:08,280 --> 00:23:09,960
Speaker 9: it's a lot of interest in Latin right now. The

492
00:23:10,040 --> 00:23:13,919
Speaker 9: benefiting from a US story is still positive. I do

493
00:23:13,960 --> 00:23:15,680
Speaker 9: think a China stimulus is coming as well on the

494
00:23:15,680 --> 00:23:18,840
Speaker 9: commodity side, and see credibility in that region. In terms

495
00:23:18,840 --> 00:23:20,800
Speaker 9: of positive real rates, we always go back to the

496
00:23:20,800 --> 00:23:22,840
Speaker 9: real rate story. The FED is giving you a one

497
00:23:22,880 --> 00:23:25,880
Speaker 9: percent or so real rate buffer, but in Latin they're

498
00:23:25,880 --> 00:23:28,160
Speaker 9: giving you two three, if not higher. So in terms

499
00:23:28,200 --> 00:23:30,240
Speaker 9: of asset allocation, the residual flow, I think a lot

500
00:23:30,240 --> 00:23:30,800
Speaker 9: can go there.

501
00:23:30,680 --> 00:23:32,480
Speaker 7: To China stimulus. What do you expecting.

502
00:23:33,200 --> 00:23:35,760
Speaker 9: So if we use the benchmark and from from years

503
00:23:35,760 --> 00:23:37,800
Speaker 9: ago where they had that tax cut round as around

504
00:23:37,800 --> 00:23:40,320
Speaker 9: two trillion woman b mark, that is the baseline that

505
00:23:40,359 --> 00:23:43,800
Speaker 9: the bare minimum to really make a difference to the data.

506
00:23:43,880 --> 00:23:45,280
Speaker 9: But on top of that, I think there needs to

507
00:23:45,280 --> 00:23:47,399
Speaker 9: be a shift in expectations. You know, when I was

508
00:23:48,040 --> 00:23:49,560
Speaker 9: there for the first time in many, many years a

509
00:23:49,600 --> 00:23:51,920
Speaker 9: few months ago, you know, there was just this palpable

510
00:23:51,920 --> 00:23:53,840
Speaker 9: fear that things could still go back to, you know,

511
00:23:53,880 --> 00:23:56,199
Speaker 9: where they were a few months ago. But that clearly

512
00:23:56,320 --> 00:23:58,360
Speaker 9: is not the case near right now. So there's got

513
00:23:58,359 --> 00:24:01,080
Speaker 9: to be a governmental push, but again encouraging the private

514
00:24:01,119 --> 00:24:04,440
Speaker 9: sector that they can leverage, they can add to their

515
00:24:04,480 --> 00:24:06,840
Speaker 9: balance sheets and move on according because China has been

516
00:24:07,320 --> 00:24:09,320
Speaker 9: de risking, deleveraging of the last two years.

517
00:24:09,320 --> 00:24:12,600
Speaker 2: To China, and it's the last twenty four hours has

518
00:24:12,640 --> 00:24:16,879
Speaker 2: been just extraordinary. How do you treat the IMF's cautious

519
00:24:16,960 --> 00:24:20,359
Speaker 2: five year view, even what Oas did yesterday. Do you

520
00:24:20,520 --> 00:24:22,879
Speaker 2: just instantly say I want to be suspect of that

521
00:24:23,040 --> 00:24:27,480
Speaker 2: and take a contrarian, more optimistic view and global GDP.

522
00:24:27,680 --> 00:24:29,920
Speaker 9: Well, I think global GDP is reflective of you know,

523
00:24:29,920 --> 00:24:32,520
Speaker 9: where global productivity is, where global demographics are. You know,

524
00:24:32,600 --> 00:24:34,720
Speaker 9: China's own growth forecast. If we go back to March,

525
00:24:34,920 --> 00:24:36,639
Speaker 9: you know when they came out with the growth targets

526
00:24:36,680 --> 00:24:39,480
Speaker 9: the NPC that was considered conservative at the time, especially

527
00:24:39,520 --> 00:24:42,320
Speaker 9: if we take into account the rebound and the remands

528
00:24:42,359 --> 00:24:45,320
Speaker 9: and coming through. But then if that is a warning signal,

529
00:24:45,359 --> 00:24:47,960
Speaker 9: then I think it gives the impetus for government suspend

530
00:24:48,160 --> 00:24:51,120
Speaker 9: to invest, a boost productivity, to boost growth and get

531
00:24:51,119 --> 00:24:52,120
Speaker 9: things in a back on track.

532
00:24:52,280 --> 00:24:55,800
Speaker 2: Leilan Miller at China Basebook is heated that the street

533
00:24:55,880 --> 00:24:59,480
Speaker 2: has this wrong. He's far more optimistic of the domestic

534
00:24:59,560 --> 00:25:02,080
Speaker 2: Chinese experience and says it'll even come over to a

535
00:25:02,160 --> 00:25:05,520
Speaker 2: Pacific room statement, is this the mother of opportunities?

536
00:25:05,520 --> 00:25:05,960
Speaker 1: Were missing?

537
00:25:05,960 --> 00:25:08,560
Speaker 9: I wouldn't say it's the mother of all opportunities, but

538
00:25:08,880 --> 00:25:11,880
Speaker 9: given the last three years, you know, China's almost been

539
00:25:11,920 --> 00:25:14,400
Speaker 9: an afterthought in terms of AUST allocation because of lockdown,

540
00:25:14,400 --> 00:25:17,840
Speaker 9: because of other factors. There is an opportunity set there

541
00:25:17,880 --> 00:25:19,880
Speaker 9: as well. But having said that, going to the fiscal story,

542
00:25:19,920 --> 00:25:23,560
Speaker 9: that's also one thing I deeply worry about globally right now.

543
00:25:23,960 --> 00:25:27,480
Speaker 9: When the IMFIR and with them Chancellor Hunt just upgraded

544
00:25:27,560 --> 00:25:29,879
Speaker 9: reports for the UK, one thing joor jy Over said was,

545
00:25:30,200 --> 00:25:32,800
Speaker 9: please don't do additional fiscal stimulus right now. We've seen

546
00:25:32,840 --> 00:25:34,960
Speaker 9: what happened in Turkey before the elections. We've seen what's

547
00:25:34,960 --> 00:25:38,399
Speaker 9: happening in Poland right now New Zealand for example, pushing

548
00:25:38,400 --> 00:25:41,199
Speaker 9: through stimulus that's lasting. Central banks certainly right now, to

549
00:25:41,200 --> 00:25:43,280
Speaker 9: be honest, even the debt se debate, maybe the fiscal

550
00:25:43,640 --> 00:25:48,600
Speaker 9: h consolidation, shall we say, was barely anything. So central banks,

551
00:25:48,640 --> 00:25:50,080
Speaker 9: you know, they need some help from the governments.

552
00:25:50,320 --> 00:25:52,080
Speaker 4: That was the most diplomatic way of saying they actually

553
00:25:52,080 --> 00:25:53,960
Speaker 4: didn't make any progress and cutting any kind of spending

554
00:25:53,960 --> 00:25:56,080
Speaker 4: whatsoever in the debt celling debate. Just sort of putting

555
00:25:56,080 --> 00:25:58,920
Speaker 4: this all together. This is a time of media reviews. Yes,

556
00:25:59,240 --> 00:26:01,679
Speaker 4: and there were a number of high conviction trades in

557
00:26:01,680 --> 00:26:05,280
Speaker 4: the first half that were absolutely demolished annihilated. What are

558
00:26:05,280 --> 00:26:07,840
Speaker 4: some of the conviction trades heading into the second half

559
00:26:07,960 --> 00:26:09,840
Speaker 4: that you're concerned about and I think about the conviction

560
00:26:09,920 --> 00:26:13,520
Speaker 4: trades that you talked about of AI in Lancash right.

561
00:26:13,720 --> 00:26:16,400
Speaker 9: So in terms of AI, do we want to think

562
00:26:16,440 --> 00:26:19,040
Speaker 9: you know that is that you do have a growth story,

563
00:26:19,040 --> 00:26:22,800
Speaker 9: you have the innovation story, but is there a Tina

564
00:26:22,880 --> 00:26:24,760
Speaker 9: focus in there? Again, and I do have some cash

565
00:26:24,760 --> 00:26:27,680
Speaker 9: allocations to push for I will just go with via

566
00:26:27,760 --> 00:26:30,040
Speaker 9: Tina theme. So I think that is one thing to

567
00:26:30,320 --> 00:26:33,280
Speaker 9: bear in mind. But going back to my earlier point

568
00:26:33,320 --> 00:26:35,720
Speaker 9: about FED cuts need to be priced at, one conviction

569
00:26:35,840 --> 00:26:38,720
Speaker 9: view that we have is this high for longer narrative globally,

570
00:26:38,760 --> 00:26:41,440
Speaker 9: and we're talking about potentially no cuts from major central

571
00:26:41,440 --> 00:26:43,439
Speaker 9: banks at all until at least the second half of

572
00:26:43,480 --> 00:26:46,240
Speaker 9: next year, whereas you know, that is not something that's

573
00:26:46,280 --> 00:26:48,240
Speaker 9: priced and I would say the FED or anywhere globally

574
00:26:48,320 --> 00:26:51,680
Speaker 9: because it's sticky inflation, persistent inflation, and fiscal is only

575
00:26:51,720 --> 00:26:53,800
Speaker 9: going to make that worse. And we've got quite a

576
00:26:53,800 --> 00:26:56,040
Speaker 9: few elections near coming up globally over the next eighty

577
00:26:56,119 --> 00:26:58,520
Speaker 9: months as well, and we love electoral giveaways on the

578
00:26:58,520 --> 00:27:02,440
Speaker 9: fiscal side, don't we. So that's where curve steepening bond yields.

579
00:27:02,640 --> 00:27:04,880
Speaker 9: Will we even be looking at, say JGB ten years

580
00:27:04,880 --> 00:27:06,359
Speaker 9: at one and a half a century, West teams are

581
00:27:06,359 --> 00:27:07,120
Speaker 9: going to come through.

582
00:27:07,200 --> 00:27:10,000
Speaker 7: A Jeff, that's interesting. Jeff, you there have been my man,

583
00:27:10,040 --> 00:27:13,080
Speaker 7: and looking forward to eighteen months of politics and financial

584
00:27:13,160 --> 00:27:32,119
Speaker 7: market volatility.

585
00:27:24,560 --> 00:27:25,400
Speaker 1: I'm golf now.

586
00:27:26,080 --> 00:27:28,240
Speaker 2: It would pay it to some to talk to somebody

587
00:27:28,280 --> 00:27:33,840
Speaker 2: that actually understands sport. John Garrimandi is a Democrat from Sacramento,

588
00:27:34,000 --> 00:27:37,320
Speaker 2: but far more than that, he's someone at Berkeley who

589
00:27:37,400 --> 00:27:41,119
Speaker 2: was second team All American in football. He is someone

590
00:27:41,160 --> 00:27:44,679
Speaker 2: that had a legit football prospect with the Dallas Cowboys

591
00:27:44,680 --> 00:27:47,159
Speaker 2: and the Oakland Raiders, and he said, now I'm going

592
00:27:47,200 --> 00:27:48,680
Speaker 2: to go over to the Peace Corps with the love

593
00:27:48,720 --> 00:27:51,360
Speaker 2: of my life to Ethiopia, and that was the end

594
00:27:51,359 --> 00:27:55,600
Speaker 2: of his football career. He did so well in California politics,

595
00:27:55,680 --> 00:27:59,359
Speaker 2: Lieutenant governor, of course, insurance commissioner, and joins us here

596
00:27:59,720 --> 00:28:03,680
Speaker 2: on the combat of modern sport. John, I can imagine

597
00:28:03,720 --> 00:28:08,160
Speaker 2: the Saudis wanting to buy the Dallas Cowboys or something

598
00:28:08,600 --> 00:28:14,920
Speaker 2: like it. Compare your analysis of this golf transaction regulation

599
00:28:15,680 --> 00:28:19,919
Speaker 2: and monopoly with the shock if the Saudis or someone

600
00:28:20,000 --> 00:28:22,280
Speaker 2: wanted to buy the Dallas Cowboys.

601
00:28:23,520 --> 00:28:26,840
Speaker 10: Well, actually that kind of thing has happened in the

602
00:28:26,880 --> 00:28:30,320
Speaker 10: soccer leagues of the world. The super wealthy, some of

603
00:28:30,359 --> 00:28:33,800
Speaker 10: them from the Middle East, do own one of the

604
00:28:33,920 --> 00:28:37,760
Speaker 10: key soccer teams in Europe. So yes, it does happen.

605
00:28:37,760 --> 00:28:42,240
Speaker 10: But this situation in golf is really unparalleled. What has

606
00:28:42,360 --> 00:28:43,560
Speaker 10: happened is.

607
00:28:43,480 --> 00:28:43,840
Speaker 6: That the.

608
00:28:45,440 --> 00:28:49,800
Speaker 10: Leagues, the PGA leave and the European leagues have formed

609
00:28:49,840 --> 00:28:54,760
Speaker 10: a monopoly and they do not pay American taxes, so

610
00:28:54,760 --> 00:28:57,600
Speaker 10: they can come into the United States make billions, which

611
00:28:57,840 --> 00:29:00,920
Speaker 10: certainly the PGA already had at least a billion and

612
00:29:00,960 --> 00:29:05,000
Speaker 10: a half annual revenue, and it considers itself a charity

613
00:29:05,040 --> 00:29:08,240
Speaker 10: and does not pay corporate or any taxes at all.

614
00:29:08,480 --> 00:29:10,000
Speaker 6: So we're going to end that piece of it.

615
00:29:10,240 --> 00:29:13,240
Speaker 10: With regard to the monopoly, if I were a professional

616
00:29:13,360 --> 00:29:16,640
Speaker 10: wanted to be a professional golfer, I have no choice

617
00:29:16,680 --> 00:29:20,080
Speaker 10: now but to bend my knee to this new monopoly.

618
00:29:20,760 --> 00:29:22,680
Speaker 10: And if I wanted to sell golf clubs or I

619
00:29:22,720 --> 00:29:25,440
Speaker 10: had a golf course, I've only got one choice.

620
00:29:25,440 --> 00:29:28,040
Speaker 6: I'm going to have to take whatever they offer to me.

621
00:29:28,360 --> 00:29:32,840
Speaker 2: Gauge the bipartisan support. What's so different about Gara Mendi, Folks,

622
00:29:32,920 --> 00:29:36,720
Speaker 2: is he's been in the depths as insurance commissioner in California.

623
00:29:36,880 --> 00:29:39,920
Speaker 2: Trust me, it's the worst job in California. So John,

624
00:29:40,000 --> 00:29:44,120
Speaker 2: explain to me how you're going to garner bipartisan support

625
00:29:44,520 --> 00:29:48,480
Speaker 2: against the lobbying of the golf people. But frankly, the

626
00:29:48,480 --> 00:29:52,120
Speaker 2: lobbying of football, basketball, hockey, and the rest.

627
00:29:52,920 --> 00:29:57,560
Speaker 10: Well, hockey, basketball and the rest did have the same exemption.

628
00:29:58,080 --> 00:30:00,720
Speaker 10: But over the years beginning all almost a decade and

629
00:30:00,760 --> 00:30:05,080
Speaker 10: a half ago, those exemptions were eliminated. And they do

630
00:30:05,160 --> 00:30:09,520
Speaker 10: pay taxes based on their net income. So there's only

631
00:30:09,560 --> 00:30:13,400
Speaker 10: one left, and that's the PGA. It considers itself to

632
00:30:13,400 --> 00:30:16,760
Speaker 10: be a charity, does not pay taxes on their income.

633
00:30:17,000 --> 00:30:20,200
Speaker 10: They're exempt from corporate taxation. We're going to end that.

634
00:30:20,320 --> 00:30:23,280
Speaker 10: I think we got a real good shot at it. Interestingly,

635
00:30:23,680 --> 00:30:30,360
Speaker 10: in the twenty seventeen Trump Republican tax cut, this tax exemption,

636
00:30:30,920 --> 00:30:34,320
Speaker 10: in the early drafts of that bill was there to

637
00:30:34,400 --> 00:30:38,640
Speaker 10: be eliminated. A fellow by whose initials were let's see

638
00:30:38,880 --> 00:30:43,640
Speaker 10: j N contacted the President or somebody in Congress and said,

639
00:30:43,720 --> 00:30:46,360
Speaker 10: oh no, no, you can't do away with the tax exemption,

640
00:30:46,960 --> 00:30:49,680
Speaker 10: and it was removed in the final version of the

641
00:30:49,720 --> 00:30:53,080
Speaker 10: twenty seventeen tax bill. It's been floating around for a

642
00:30:53,120 --> 00:30:57,640
Speaker 10: long while, the elimination of this exemption. My staff for

643
00:30:57,720 --> 00:31:01,520
Speaker 10: one of my legislative guy he wakes up in the

644
00:31:01,600 --> 00:31:04,800
Speaker 10: middle of nights and tries to identify the worst grossest

645
00:31:05,240 --> 00:31:08,480
Speaker 10: tax loopholes, and this was on his list. Yeah, he

646
00:31:08,520 --> 00:31:11,600
Speaker 10: pulled it out yesterday and said, why don't we run

647
00:31:11,640 --> 00:31:14,360
Speaker 10: with this and eliminate this gross tax loophole.

648
00:31:14,480 --> 00:31:17,160
Speaker 4: Congressman, There's a larger issue here as well, when it

649
00:31:17,160 --> 00:31:20,800
Speaker 4: comes to US relations with the Middle East, with some

650
00:31:21,040 --> 00:31:24,720
Speaker 4: of the areas that are trying to plow into a

651
00:31:24,760 --> 00:31:27,200
Speaker 4: lot of the major sports that people really depend on,

652
00:31:27,240 --> 00:31:31,480
Speaker 4: including golf. I'm wondering how much pushback you're getting from

653
00:31:31,480 --> 00:31:34,160
Speaker 4: within your own party, especially at a time when Tony

654
00:31:34,200 --> 00:31:36,480
Speaker 4: Blinkin right now is meeting with over in Riad with

655
00:31:36,680 --> 00:31:39,560
Speaker 4: MBS trying to work out some peace tale. How much

656
00:31:39,640 --> 00:31:42,840
Speaker 4: are people unwilling to really poke the bear in this

657
00:31:42,880 --> 00:31:44,240
Speaker 4: particular instance.

658
00:31:44,720 --> 00:31:46,480
Speaker 10: Well, we ought to do more than poke the bear.

659
00:31:46,720 --> 00:31:51,320
Speaker 10: It really really angers me that we are forced to

660
00:31:51,480 --> 00:31:55,720
Speaker 10: bend our knee to NBS, to Saudi Arabia that has

661
00:31:55,760 --> 00:31:59,600
Speaker 10: the worst human rights record perhaps in the world, and

662
00:31:59,680 --> 00:32:04,200
Speaker 10: we know h has assassinated and then hacked up a

663
00:32:04,320 --> 00:32:07,920
Speaker 10: journalist who was critical of Saudi Arabia.

664
00:32:08,320 --> 00:32:09,400
Speaker 6: We should never.

665
00:32:09,720 --> 00:32:13,920
Speaker 10: Ever put ourselves in the position of being subservient to anybody,

666
00:32:13,960 --> 00:32:17,480
Speaker 10: and certainly certainly not to Saudi Arabia. Now, just keep

667
00:32:17,480 --> 00:32:21,120
Speaker 10: in mind, they've stuck the United States and really the

668
00:32:21,160 --> 00:32:24,920
Speaker 10: world with an increase in petroleum prices. Just in the

669
00:32:25,040 --> 00:32:28,600
Speaker 10: last week they decided to cut their production, the result

670
00:32:28,640 --> 00:32:31,680
Speaker 10: of which is America is going to wind up paying

671
00:32:31,680 --> 00:32:34,920
Speaker 10: more for the gasoline and fuel that we consume. At

672
00:32:34,920 --> 00:32:38,920
Speaker 10: the same time, this merger is going to give Saudi

673
00:32:38,960 --> 00:32:43,640
Speaker 10: Arabia access to the American market, access to American money,

674
00:32:43,920 --> 00:32:45,720
Speaker 10: and not have to pay taxes.

675
00:32:45,960 --> 00:32:47,880
Speaker 6: That just really pisses me off.

676
00:32:48,240 --> 00:32:50,960
Speaker 4: Well, I just again, I wonder, though, and to your point,

677
00:32:51,080 --> 00:32:54,520
Speaker 4: how much you have support from other members of the

678
00:32:54,600 --> 00:32:58,760
Speaker 4: Congress at a time when they don't want necessarily opek

679
00:32:58,840 --> 00:33:02,440
Speaker 4: plus making another They don't want a continuation of these cuts,

680
00:33:02,560 --> 00:33:05,520
Speaker 4: they don't want oil prices to keep going up. How

681
00:33:05,520 --> 00:33:08,880
Speaker 4: do they sort of gain leverage at a time where

682
00:33:09,240 --> 00:33:12,440
Speaker 4: they might be equally angered as you, but might have

683
00:33:12,560 --> 00:33:15,160
Speaker 4: these other interests as well.

684
00:33:15,200 --> 00:33:19,120
Speaker 10: Well, let's put it this way. If Saudi Arabia thinks

685
00:33:19,160 --> 00:33:21,800
Speaker 10: it can come to America, run a business in America

686
00:33:21,840 --> 00:33:25,320
Speaker 10: and not pay taxes. Something is seriously wrong with that equation.

687
00:33:26,000 --> 00:33:30,520
Speaker 10: And that's exactly where the situation is today. And we

688
00:33:30,720 --> 00:33:34,200
Speaker 10: as Americans ought to say, yeah, fine, if you like

689
00:33:34,280 --> 00:33:37,120
Speaker 10: this merger, I do not. But if you like this merger,

690
00:33:37,480 --> 00:33:40,200
Speaker 10: then go ahead. But by God, you're part of this system,

691
00:33:40,240 --> 00:33:41,560
Speaker 10: then you're going to pay taxes.

692
00:33:42,040 --> 00:33:42,640
Speaker 6: And that's that.

693
00:33:42,720 --> 00:33:45,680
Speaker 10: You're not a charity by any stretch of the imagination.

694
00:33:46,160 --> 00:33:51,880
Speaker 10: And this loophole, this gross tax loophole, simply has to end.

695
00:33:52,800 --> 00:33:57,200
Speaker 2: Congressman ten years ago or so, you decided that the

696
00:33:57,320 --> 00:34:01,040
Speaker 2: nation had to honor a golfer named Jets. You put

697
00:34:01,040 --> 00:34:03,880
Speaker 2: in legislation in the House. I'm not sure quite how

698
00:34:03,880 --> 00:34:06,440
Speaker 2: it came out, but I want you to comment on

699
00:34:06,520 --> 00:34:11,200
Speaker 2: a time past of Garamendy, on Palmer Nicholas and the

700
00:34:11,280 --> 00:34:15,239
Speaker 2: sportsmanship that's out there. I saw that at Okill at

701
00:34:15,280 --> 00:34:19,120
Speaker 2: the PGA Tournament of a couple weeks ago. It sounds like,

702
00:34:19,360 --> 00:34:23,560
Speaker 2: because of greed and money, we're blowing up what we knew.

703
00:34:24,120 --> 00:34:27,520
Speaker 2: What can your shop on Capitol Hill do to get

704
00:34:27,560 --> 00:34:28,319
Speaker 2: out front of this?

705
00:34:29,880 --> 00:34:33,399
Speaker 10: Well, there are two specific issues in play here. One

706
00:34:33,520 --> 00:34:38,279
Speaker 10: is the tax loophole which my legislation would close, and

707
00:34:38,440 --> 00:34:43,560
Speaker 10: this new monopoly would then have to pay corporate taxes

708
00:34:43,600 --> 00:34:46,719
Speaker 10: adds with any other corporation, and that raises a whole

709
00:34:46,719 --> 00:34:50,360
Speaker 10: other question about American corporations that do not pay taxes,

710
00:34:50,400 --> 00:34:52,839
Speaker 10: But we'll let that go for a while. The other

711
00:34:53,000 --> 00:34:58,120
Speaker 10: issue is one of competition, and what has been created

712
00:34:58,160 --> 00:35:03,919
Speaker 10: here is an international monopoly on professional golf. That race

713
00:35:04,000 --> 00:35:08,640
Speaker 10: is very very serious questions of competition or no competition.

714
00:35:09,160 --> 00:35:11,480
Speaker 10: So they said at the outset here, if I wanted

715
00:35:11,480 --> 00:35:14,360
Speaker 10: to be a professional golfer, I could have chosen to

716
00:35:14,360 --> 00:35:17,920
Speaker 10: play golf in Europe, or in the United States, or

717
00:35:17,960 --> 00:35:19,840
Speaker 10: in this new leave league.

718
00:35:20,280 --> 00:35:21,920
Speaker 6: Now I have but one choice.

719
00:35:22,080 --> 00:35:24,600
Speaker 10: I'm going to have to take whatever this new league

720
00:35:24,960 --> 00:35:29,560
Speaker 10: offers me, and I have no negotiation opportunity. Similarly, if

721
00:35:29,600 --> 00:35:32,320
Speaker 10: I have a golf course, I don't know, call it

722
00:35:32,400 --> 00:35:37,480
Speaker 10: Deadmaster Trump's golf course, he could have gone and negotiated

723
00:35:37,520 --> 00:35:41,000
Speaker 10: with two different leagues for the use of his golf course.

724
00:35:41,160 --> 00:35:43,960
Speaker 10: Now he's going to take whatever they offer him. He's

725
00:35:44,160 --> 00:35:46,680
Speaker 10: just no choice. There was a monopoly this year, and

726
00:35:46,680 --> 00:35:48,240
Speaker 10: I would expect Congress.

727
00:35:48,000 --> 00:35:50,120
Speaker 6: To take that up. And if we don't, certainly the

728
00:35:50,120 --> 00:35:51,920
Speaker 6: European Union should congresson.

729
00:35:51,960 --> 00:35:52,560
Speaker 1: Thank you so much.

730
00:35:52,560 --> 00:35:56,719
Speaker 2: It's a gentleman from Sacramento, the Democrat John Berrimandy. Subscribe

731
00:35:56,760 --> 00:36:00,520
Speaker 2: to the Bloomberg Surveillance podcast on Apple, Spotify, and anywhere

732
00:36:00,560 --> 00:36:04,920
Speaker 2: else you get your podcasts. Listen live every weekday starting

733
00:36:04,960 --> 00:36:09,120
Speaker 2: at seven am Easter. I'm Bloomberg dot Com, the iHeartRadio

734
00:36:09,200 --> 00:36:12,959
Speaker 2: app tune In, and the Bloomberg Business app. You can

735
00:36:13,080 --> 00:36:16,840
Speaker 2: watch us live on Bloomberg Television and always I'm the

736
00:36:16,840 --> 00:36:17,880
Speaker 2: Bloomberg Terminal.

737
00:36:18,280 --> 00:36:22,480
Speaker 1: Thanks for listening. I'm Tom Keen, and this is Bloomberg