WEBVTT - NFL Advertisers Will Have an 'Ebullient' Year, Porter Bibb Says 0:00:05.800 --> 0:00:08.360 Welcome to the Bloomberg P and L Podcast. I'm Pim 0:00:08.400 --> 0:00:11.440 Fox along with my co host Lisa Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.560 --> 0:00:20.560 store or the trading floor. Find the Bloomberg P M 0:00:20.680 --> 0:00:31.520 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 0:00:31.720 --> 0:00:33.159 I want to bring in Oliver Redneck. He has our 0:00:33.159 --> 0:00:36.800 Bloomberg Stocks Reporter, and he joins us right now. I 0:00:36.840 --> 0:00:38.440 want to just get a lay of the land. There 0:00:38.440 --> 0:00:40.320 are a bunch of deals that came out. What's catching 0:00:40.320 --> 0:00:43.360 your eye today. I think that today, at least from 0:00:43.360 --> 0:00:46.279 the market's perspective, is just it's it's quiet still, it's 0:00:46.320 --> 0:00:49.479 low volume, it is a sort of stand still that 0:00:49.560 --> 0:00:51.920 it's kind of gripped equity markets at least when we 0:00:51.960 --> 0:00:54.280 look at risk assets, I think it's probably a little 0:00:54.280 --> 0:00:56.000 bit more interesting, sort of your neck in the woods. 0:00:56.040 --> 0:00:58.440 It's just what's happening with bonds, what's happening with yields? 0:00:58.760 --> 0:01:01.400 And I think that also spells a story for stocks 0:01:01.400 --> 0:01:03.560 as well, because in the past week there's a little 0:01:03.560 --> 0:01:05.840 bit of reversals. Our story that our team put out 0:01:05.840 --> 0:01:08.039 on Friday that kind of took the week in recap 0:01:08.040 --> 0:01:09.800 and that I think says the stage for this week 0:01:10.120 --> 0:01:12.360 is large about some of the rotations that have occurred 0:01:12.400 --> 0:01:14.480 within the market. This is largely been a story of 0:01:14.520 --> 0:01:17.399 the past year, which is changing perspectives on what's going 0:01:17.440 --> 0:01:20.119 to work, what's going to work based on Washington, what's 0:01:20.120 --> 0:01:22.959 going to work based on economic growth? Um, right now, 0:01:23.000 --> 0:01:24.800 I've got a few interesting notes in my inbox that 0:01:24.840 --> 0:01:27.920 our story of homing in on the idea of a 0:01:27.920 --> 0:01:31.880 potential value stock rebound based on higher rates and what 0:01:31.920 --> 0:01:33.959 happens when the rest of the market starts to view 0:01:34.080 --> 0:01:36.720 higher rates and the likelihood of that beginning to happen. 0:01:37.040 --> 0:01:38.440 What kind of companies do go in? And there are 0:01:38.440 --> 0:01:40.319 a little bit of different types of companies well, and 0:01:40.360 --> 0:01:43.480 I think that a lot of the muted volatility that 0:01:43.480 --> 0:01:46.279 we're seeing in markets is partly because we're just getting 0:01:46.319 --> 0:01:48.840 so much noise from Washington, d c UH and the 0:01:48.920 --> 0:01:52.640 latest I want to uh have some insight from Porter Bibb, 0:01:52.920 --> 0:01:56.160 who's managing partner at Media Tech Capital Partners, which is 0:01:56.200 --> 0:01:58.760 based in New York and and Porter bib is known 0:01:59.080 --> 0:02:02.640 as being the first publisher of Rolling Stone Magazine reporter 0:02:03.080 --> 0:02:08.640 Um we Over the weekend, President Trump diverted attention away 0:02:08.680 --> 0:02:11.760 from his tax plan and put it toward whether or 0:02:11.800 --> 0:02:16.320 not NFL players stand for the national anthem. He absolutely 0:02:16.400 --> 0:02:21.520 limbasted some for kneeling in protest of the pervasive racial 0:02:21.520 --> 0:02:24.760 discrimination in the country. He was saying that that's disgraceful. 0:02:25.280 --> 0:02:28.280 As a result, the team's kneeled even more. What's your 0:02:28.280 --> 0:02:30.639 take on this and at what point our advertisers going 0:02:30.720 --> 0:02:34.400 to have to weigh in on this? Uh sort of 0:02:34.440 --> 0:02:40.119 odd controversy on. On top of criticizing the activists who 0:02:40.120 --> 0:02:44.560 were kneeling, he also criticized the referee referees for taming 0:02:44.600 --> 0:02:47.200 down the game and taking away some of the violent 0:02:47.280 --> 0:02:51.280 hits that he demonstrated by banging his fist together in 0:02:51.320 --> 0:02:56.240 a typical Trumpian manner. But the reality is, after he said, 0:02:56.520 --> 0:03:00.320 the ratings of the NFL are way way down. Last 0:03:00.400 --> 0:03:04.960 year was the highest NFL rating in for the season 0:03:05.000 --> 0:03:08.520 in history, and except for the two hurricane weekends of 0:03:08.639 --> 0:03:12.359 Harvey and Irma, they're running ahead right now of last year. 0:03:12.400 --> 0:03:15.360 So it looks like NFL ratings and viewership is going 0:03:15.360 --> 0:03:18.320 to be very very strong and not way way down. 0:03:18.680 --> 0:03:22.400 Advertisers are sitting tight because two thirds are more of 0:03:22.480 --> 0:03:29.760 the NFL most advocate uh strongest fans are basically in 0:03:29.800 --> 0:03:34.359 the Trump camp in terms of activism, mixing with with 0:03:34.440 --> 0:03:38.680 their their sports, and advertisers are going to stay very silent, 0:03:38.760 --> 0:03:41.160 but pay attention to the ratings, and the ratings, as 0:03:41.200 --> 0:03:45.480 I suggested, are holding. So NFL advertising is going to 0:03:45.560 --> 0:03:49.360 be very bulliant this year. Is your sense that viewership 0:03:49.440 --> 0:03:52.760 will go down? I don't think so. I think it's likely. 0:03:53.600 --> 0:03:58.720 Yesterday they had an all time record rating viewership because 0:03:58.800 --> 0:04:00.840 everybody wanted to see what was going to happen with 0:04:00.920 --> 0:04:03.560 the with the kneelings. It started with the Jaguars and 0:04:03.640 --> 0:04:07.440 Ravens in London and Saturday Sunday morning and continued um 0:04:08.080 --> 0:04:11.560 right through the evening. Um ratings are are holding, and 0:04:11.680 --> 0:04:15.720 advertisers respect the ratings more than they respect politics. You know. 0:04:15.840 --> 0:04:18.839 One thing that has struck me is that a number 0:04:19.040 --> 0:04:23.160 of billionaire donors to President Trump who are also owners 0:04:23.279 --> 0:04:27.000 of these teams have come out against him, albeit not 0:04:27.160 --> 0:04:30.600 necessarily in some cases as strongly as someone would hope. 0:04:30.839 --> 0:04:33.719 I mean, at what point will they have to take 0:04:33.920 --> 0:04:37.680 more aggressive stances? Will they will sort of widen the 0:04:37.760 --> 0:04:40.440 divide between some of his base, at least the wealthier 0:04:40.480 --> 0:04:42.880 part of his base. Well, the NFL is a business, 0:04:42.960 --> 0:04:45.960 and and these owners, even the ones who are very 0:04:46.080 --> 0:04:48.000 very close to Trump, and some of them who have 0:04:48.080 --> 0:04:52.280 given millions of dollars to Trump, really are protecting their 0:04:52.320 --> 0:04:55.440 business more than anything else. And they they have said 0:04:55.480 --> 0:05:00.359 their pieces. Um. Only one, Mike Brown, the Cincinnati Bengal owner, 0:05:00.440 --> 0:05:03.440 was the only one among all of the NFL owners 0:05:03.480 --> 0:05:05.839 who came out in support of the comments that Trump 0:05:05.839 --> 0:05:08.880 had made on Friday and then again on Saturday and Sunday. 0:05:08.920 --> 0:05:12.920 So I think that they want to respect the value 0:05:13.160 --> 0:05:17.040 of their team and the profitability that that the team 0:05:17.120 --> 0:05:19.919 can engender. And it's a team sport. They have to 0:05:20.040 --> 0:05:24.240 hold everybody together or else the whole business falls apart. 0:05:24.279 --> 0:05:26.800 And it's not likely to happen anytime soon. What's the 0:05:26.880 --> 0:05:32.800 history of advertisers actually getting political. They really have stayed away. 0:05:32.880 --> 0:05:35.120 I mean, you had just a week ago to my 0:05:35.560 --> 0:05:41.160 hill at ESPN, UM was sanctioned by by Trump's UH 0:05:41.680 --> 0:05:46.640 communications director and said she should be fired. UH. Advertisers 0:05:46.640 --> 0:05:51.360 did not flinch, They didn't budge from ESPN, and ESPN 0:05:51.440 --> 0:05:54.200 just moved on. Well, the reason why I asked that 0:05:54.279 --> 0:05:56.480 is because I remember during the Super Bowl there were 0:05:56.520 --> 0:06:00.320 there were a couple of controversial advertisements that actually lead 0:06:00.320 --> 0:06:04.920 did get political and make messages, uh that that you know, 0:06:05.360 --> 0:06:09.200 took a stand. It's it's more difficult for the advertiser 0:06:09.320 --> 0:06:11.520 to cross over the line than it is for team 0:06:11.560 --> 0:06:15.320 owners or players or even the NFL. Roger Goodell came 0:06:15.320 --> 0:06:19.000 out very strongly against the comments and the and the 0:06:19.800 --> 0:06:25.600 substance of what the President said about the activists kneeling um. 0:06:25.640 --> 0:06:29.240 But it's still a business, and both sides, the advertisers, 0:06:29.279 --> 0:06:31.719 the NFL and the team owners have to make a 0:06:31.720 --> 0:06:35.480 profit or else the whole system falls apart. It's just amazing. 0:06:35.560 --> 0:06:37.599 As I was seeing on Twitter, it's sort of the 0:06:37.680 --> 0:06:41.400 rival teams we're coming together, the fans were coming together 0:06:41.680 --> 0:06:46.440 with this united cause. So it's sort of amazing what 0:06:46.440 --> 0:06:48.760 what President Trump can do to bring unity up. Port 0:06:48.880 --> 0:06:50.560 Bit thank you so much for joining us part of 0:06:50.560 --> 0:06:53.560 BIT managing partner at Media Tech Capital Partners in New York. 0:06:53.600 --> 0:06:57.320 And of course our thanks to Oliver Rennick Bloomberg Stocks reporter. 0:06:57.560 --> 0:06:59.960 And as we were saying, a lot of this controversy 0:07:00.040 --> 0:07:03.320 took attention away from the tax plan that Republicans are 0:07:03.400 --> 0:07:20.480 pulling together. Over the weekend, GOP Congressman announced a draft 0:07:20.560 --> 0:07:23.720 of a tax plan that has a pretty aggressive schedule 0:07:23.800 --> 0:07:27.920 to get through Congress and get into practice. I want 0:07:27.920 --> 0:07:31.120 to bring in Laura Davison, Capital Hill, reporter for Bloomberg 0:07:31.200 --> 0:07:33.040 B and A. And Laura, can you just give us 0:07:33.360 --> 0:07:36.880 an overview of what the main tenants are that are 0:07:36.920 --> 0:07:40.520 being proposed. Yes, So this plan is expected to be 0:07:40.560 --> 0:07:43.040 officially released later this week, and sort of the headline 0:07:43.120 --> 0:07:46.400 numbers are that the corporate rate would drop to you know, 0:07:46.440 --> 0:07:49.520 it's now, and there would be a special rate for 0:07:49.600 --> 0:07:52.480 pass through entities. So that's everything from you know, doctor's practices, 0:07:52.560 --> 0:07:55.240 law firms, private equity funds that would have a special rate. 0:07:55.240 --> 0:07:59.040 Of those taxes are almost at now. So these are 0:07:59.080 --> 0:08:01.360 the big numbers, and the whole point of this is 0:08:01.400 --> 0:08:04.480 to get support from Republicans and Congress to buy onto 0:08:04.480 --> 0:08:07.600 this plan. What it won't have, however, is sort of 0:08:08.120 --> 0:08:09.600 what how it's going to be paid for. You know, 0:08:09.640 --> 0:08:12.400 what are the deductions, the credits, the other tax breaks 0:08:12.400 --> 0:08:14.280 that they're going to get rid of, uh, in order 0:08:14.320 --> 0:08:16.800 to make those those deep rate cuts. So, in other words, 0:08:16.840 --> 0:08:20.200 this is really a corporate tax cut rather than a 0:08:20.560 --> 0:08:24.680 tax reform plan. Correct. You know, that's still to be 0:08:24.720 --> 0:08:26.680 seen a little bit. And they're also playing around with 0:08:26.680 --> 0:08:30.160 whether these changes will be temporary or be be permanent. Um. 0:08:30.240 --> 0:08:32.160 You know, there's some rules in the Senate that they 0:08:32.160 --> 0:08:33.960 have to to work with to make sure all the 0:08:34.000 --> 0:08:37.200 numbers add up. Um. But right now, the emphasis is 0:08:37.240 --> 0:08:39.000 on sort of what are the rate reduction is going 0:08:39.000 --> 0:08:40.880 to be, and then on the tax cut side of it. 0:08:41.640 --> 0:08:43.080 If they're able to get a lot of buy in 0:08:43.120 --> 0:08:45.280 and they're able to kind of move the process quickly, 0:08:45.640 --> 0:08:47.880 they may they may be able to do some simplification 0:08:47.960 --> 0:08:51.120 type reforms and overall cleaning up the tax code, but 0:08:51.160 --> 0:08:53.120 they're on a really time tight schedule to do that, 0:08:53.160 --> 0:08:55.400 and if there's any hiccups in the process, more of 0:08:55.440 --> 0:08:57.959 the emphasis will shift to the tax cut side versus 0:08:58.000 --> 0:09:01.320 the reform side. So just how tight is the schedule 0:09:01.400 --> 0:09:05.719 going forward? Um? Basically every single card needs to fall 0:09:05.800 --> 0:09:08.040 exactly where it needs to for this to to move 0:09:08.080 --> 0:09:10.480 by the end of the year. Uh. You know, they 0:09:10.480 --> 0:09:12.679 they have to get this to the House, get it 0:09:12.679 --> 0:09:15.360 through committee. The plan is to go through regular orders, 0:09:15.360 --> 0:09:18.680 So unlike the health care bill, UM on both sides, 0:09:18.679 --> 0:09:20.520 it will go through committee, get approved, go to the 0:09:20.559 --> 0:09:22.600 House floor, get approved, and then the same side over 0:09:22.640 --> 0:09:25.360 on the Senate. UM. And we're already seeing some divisions 0:09:25.400 --> 0:09:27.880 between the House and the Senate. Or In Hatch, who's 0:09:27.920 --> 0:09:29.720 the chairman of the Senate Finance Committee, had said, Look, 0:09:29.760 --> 0:09:31.520 we're just not going to rubber stamp anything that the 0:09:31.559 --> 0:09:34.160 House does. We want to have our own input shape 0:09:34.200 --> 0:09:37.120 the plan ourselves, and that can really slow down the process. Laura, 0:09:37.200 --> 0:09:40.800 how much will President Trump himself pose an obstacle simply 0:09:40.840 --> 0:09:43.679 because he's come out, uh and sort of cast a 0:09:43.720 --> 0:09:46.040 little bit of shade on the proposal for not getting 0:09:46.080 --> 0:09:49.560 down to the rate that he was hoping for. That's 0:09:49.600 --> 0:09:51.880 that's the big question, right because the President has been 0:09:51.880 --> 0:09:54.319 a little bit unpredictable in some of these policy discussions. 0:09:54.360 --> 0:09:57.040 You know, he's really pushed for a fifteen percent rate. UM. 0:09:57.080 --> 0:09:58.600 That looks like that's not going to happen, and there's 0:09:58.600 --> 0:10:00.600 been a lot of recognition among law makers that that 0:10:00.679 --> 0:10:03.560 was probably unrealistic. Um. You know, but as the close 0:10:03.640 --> 0:10:06.000 at the end of the year, especially if healthcare falls through, 0:10:06.120 --> 0:10:09.920 especially if some of these other um priorities appear to 0:10:09.960 --> 0:10:12.720 be allusive to Republicans, there will be a push to 0:10:12.880 --> 0:10:14.839 get this done sort of no matter what that rate is. 0:10:15.280 --> 0:10:18.240 What about the Democrats? Do you expect there to be 0:10:18.280 --> 0:10:22.240 any support for the plan in its current incarnation at 0:10:22.320 --> 0:10:25.480 least uh the rough sense that we've gotten, will ever 0:10:25.520 --> 0:10:28.720 be any support from the Democrats? Um, that is on 0:10:28.760 --> 0:10:30.840 the House side. There will probably be very limited House 0:10:31.080 --> 0:10:33.840 support from for Democrats. On the Senate side though, you know, 0:10:33.840 --> 0:10:38.240 Trump is courting UM some some Democrats who are from 0:10:38.320 --> 0:10:40.840 states where he wants the Heidi Height camp in North Dakota, 0:10:41.120 --> 0:10:45.360 Joe Donnally and Indiana, UM, Joe Manson uh from from 0:10:45.400 --> 0:10:47.240 West Virginia. You know, he's been taking them out with 0:10:47.400 --> 0:10:49.719 as he's going to give speeches in their states, and 0:10:49.760 --> 0:10:52.080 you know, we'll we'll see. But they've sort of left 0:10:52.080 --> 0:10:55.280 the door open to UM to be available uh potentially 0:10:55.280 --> 0:10:57.240 to vote for this, especially if the bill gets moderated 0:10:57.240 --> 0:10:59.200 in the Senate, which it which it typically does. That's 0:10:59.200 --> 0:11:01.640 the kids for pretty mu any sort of legislation. UM. 0:11:01.720 --> 0:11:03.320 You know, you could see some pressure on them to 0:11:03.480 --> 0:11:06.440 vote yes, and Republicans maybe really heavily relying on their 0:11:06.480 --> 0:11:08.480 vote especially if you know, they only have two members 0:11:08.520 --> 0:11:10.079 on their side that they can lose in the Senate 0:11:10.080 --> 0:11:13.000 for this bill the past. So what's the likelihood that 0:11:13.559 --> 0:11:18.720 this proposal will end up bleeding into household tax rates 0:11:18.840 --> 0:11:22.160 as well? So there there is much talk about also 0:11:22.200 --> 0:11:24.920 reducing rates on me on the individual side as well. 0:11:24.960 --> 0:11:26.880 You know, the top rate for individuals may be going 0:11:26.920 --> 0:11:28.880 down to about thirty percent. You know, that's from about 0:11:28.880 --> 0:11:31.959 thirty nine percent where it is now. Um, though, what 0:11:32.000 --> 0:11:34.959 they're looking at is really doing big reductions on the 0:11:35.240 --> 0:11:37.960 mid to lower income side of the scale, because there's 0:11:37.960 --> 0:11:39.720 been some criticisms that, look, this is just a tax 0:11:39.720 --> 0:11:41.600 cut for the wealthy. So they're looking at, you know, 0:11:41.679 --> 0:11:44.000 doubling the standard deduction so fewer people would have to 0:11:44.000 --> 0:11:46.280 itemize would be simpler for them. Um. You know, they 0:11:46.280 --> 0:11:48.400 could also you know, lower that bottom rate to about 0:11:48.440 --> 0:11:51.160 ten percent and have that include more people, and that 0:11:51.200 --> 0:11:54.160 would be very helpful for um, especially sort of this 0:11:54.200 --> 0:11:57.760 populous message of uh, you know how actually for for 0:11:57.800 --> 0:12:01.320 middle and lower income people, although it could potentially affect 0:12:01.600 --> 0:12:05.400 the wealthier people in New York and New Jersey particularly hard, 0:12:05.480 --> 0:12:08.600 right exactly, Well, so the one pay for that they 0:12:08.600 --> 0:12:10.120 seem to have sort of agreed on is that they're 0:12:10.120 --> 0:12:12.559 going to get rid of that state and local tax deduction. 0:12:12.679 --> 0:12:14.959 So in states where there are low taxes, you like 0:12:15.000 --> 0:12:17.160 think Tennessee, that's not as big of a deal. But 0:12:17.240 --> 0:12:18.920 in New York, New Jersey, where you have state and 0:12:18.920 --> 0:12:21.080 local tax rates that exceed you know, ten percent in 0:12:21.120 --> 0:12:23.840 some cases, that would be a huge tax increase. And 0:12:23.840 --> 0:12:25.240 you know that's not only people in New York City, 0:12:25.240 --> 0:12:27.040 that's people in upstate New York to that also says 0:12:27.080 --> 0:12:29.920 high taxes. So uh and what about business leaders? Are 0:12:29.920 --> 0:12:32.360 they excited about this so far? They're could of holding 0:12:32.400 --> 0:12:35.560 their judgment until more details roll out. There's a lot 0:12:35.600 --> 0:12:38.600 of sort of um, you know, sort of hoping for 0:12:38.600 --> 0:12:40.720 the best, but anticipating that it might not be as 0:12:40.800 --> 0:12:42.920 much as they've wanted. You know, I think after seeing 0:12:43.000 --> 0:12:45.880 lu Way Healthcare went, and you know, they're they're really 0:12:45.880 --> 0:12:48.120 pushing for for rates to go as low as possible, 0:12:48.600 --> 0:12:51.679 But no one's really making any strategic decisions based on 0:12:51.720 --> 0:12:53.319 what this plan could. Everyone's sort of in a wait 0:12:53.320 --> 0:12:55.440 and see mode at the moment. Laura Davison, thank you 0:12:55.480 --> 0:12:58.360 so much for this great insight. Laura Davison, as Capital 0:12:58.360 --> 0:13:01.920 Hell reporter for bloom b n A talking about the 0:13:02.120 --> 0:13:18.360 tax plan that is expected to be unveiled later this week. Well, 0:13:18.400 --> 0:13:21.280 we are starting to talk a little bit more concretely 0:13:21.320 --> 0:13:25.280 about a possible tax plan coming out of Congress. Here 0:13:25.320 --> 0:13:27.640 to give us a sense of just too much optimism 0:13:27.720 --> 0:13:29.720 there is that there will be something passed and it 0:13:29.760 --> 0:13:32.679 will give a boost to stock markets beyond where they 0:13:32.679 --> 0:13:35.439 are now. Is John Augustine He chief investment officer of 0:13:35.480 --> 0:13:38.160 Huntington National Bank, which overseas about seventeen and a half 0:13:38.200 --> 0:13:41.120 billion dollars in Columbus, Ohio. John, always a pleasure to 0:13:41.160 --> 0:13:44.199 speak with you. Um, thanks for coming in. What's your impression. 0:13:44.240 --> 0:13:46.199 Does the plan that was unveiled over the weekend by 0:13:46.360 --> 0:13:50.319 GOP Congressman give you hope that there will be some 0:13:50.360 --> 0:13:53.439 sort of plan past in the near term that will 0:13:53.480 --> 0:13:57.080 be a boon to stocks. Yeah, good morning, Lisa. And 0:13:57.679 --> 0:14:02.800 the tax package is represented, we would say fifty fifty 0:14:02.840 --> 0:14:07.040 odds of some implementation. It will likely be in our view, 0:14:07.160 --> 0:14:12.839 targeted implementation around corporate tax rates. We would say, if 0:14:12.880 --> 0:14:15.200 we're looking at the end of this year into the 0:14:15.240 --> 0:14:18.839 fourth quarter. It seems like that was the emphasis of 0:14:18.880 --> 0:14:23.240 the administration. It seems like whatever comes out will likely 0:14:23.280 --> 0:14:26.160 be targeted versus broad based reform. Well, how much of 0:14:26.200 --> 0:14:29.080 that is already baked into valuations? Right? I mean some 0:14:29.160 --> 0:14:31.480 people will would say, well, if we do get tax 0:14:31.520 --> 0:14:34.600 reform or tax changes, uh, then you will expect bond 0:14:34.680 --> 0:14:37.520 yields to go up just because growth expectations would go 0:14:37.640 --> 0:14:40.560 up and stock prices would also go up. But what 0:14:40.720 --> 0:14:43.320 they or is it all baked in? The interesting thing 0:14:43.360 --> 0:14:45.000 to us is we thought this would play out the 0:14:45.120 --> 0:14:47.760 entire second half of this year and the FED would 0:14:47.760 --> 0:14:50.800 actually be more aggressive in the face of economic agenda 0:14:50.840 --> 0:14:53.680 coming at it. Now the Fed seems to have kind 0:14:53.680 --> 0:14:58.400 of played its hand. We do wonder about pemotibles around that. However, 0:14:59.120 --> 0:15:02.000 what we would say is maybe it's worth five dollars 0:15:02.000 --> 0:15:05.000 to share to the SMP next year, which could have 0:15:05.040 --> 0:15:09.600 an appreciable impact on stocks next year as this earnings 0:15:09.640 --> 0:15:14.000 recovery continues. You know, we were talking before the segment 0:15:14.080 --> 0:15:16.760 and you were saying that you still do like stocks 0:15:16.760 --> 0:15:19.280 of re bonds, but you really did not sound particularly bullish. 0:15:19.280 --> 0:15:21.920 You were saying that our earnings expectations for next year 0:15:21.960 --> 0:15:26.000 seemed like they're probably too high. Um, what are your 0:15:26.000 --> 0:15:28.600 what are your highest convictions right now amid such a 0:15:28.640 --> 0:15:32.480 dearth of information and ongoing uncertainty out of Washington. Yeah, 0:15:32.560 --> 0:15:34.600 so October is going to be a very interesting month. 0:15:35.160 --> 0:15:36.880 You know, our equity teams are going to be looking 0:15:36.880 --> 0:15:40.280 at looking at those earnings because they're low expectations now 0:15:40.320 --> 0:15:44.560 and getting lower expectations because their earnings in the third quarter. Yeah, 0:15:44.680 --> 0:15:47.520 in general, and who all is that going to affect? 0:15:47.880 --> 0:15:50.200 And who all might not in effect, but says it 0:15:50.280 --> 0:15:52.920 affected them. That's something our equity teams are going to 0:15:52.960 --> 0:15:57.480 be looking at now. Evaluation perspective. You know, the pe 0:15:57.520 --> 0:16:04.040 of the SMPS about times trailing. We had thought that 0:16:04.080 --> 0:16:07.680 would come down to the eighteen or nineteen range by 0:16:07.760 --> 0:16:11.360 year end with a more aggressive FED. Now we're starting 0:16:11.360 --> 0:16:15.520 to question that. So our point here is maybe there's 0:16:15.520 --> 0:16:20.120 a little bit more support for stocks going into the 0:16:20.240 --> 0:16:26.280 end of this year that we stay at the undred level. However, 0:16:26.480 --> 0:16:29.480 we don't see what our equity team and Randy Hair 0:16:29.560 --> 0:16:33.560 do not see is multiple expansion. So now it's more 0:16:33.560 --> 0:16:37.320 about earnings. So that's where when when we discussed it, 0:16:37.360 --> 0:16:41.280 that's where some hesitancy came. We're probably done with multiple expansion. 0:16:41.320 --> 0:16:44.280 In this cycle, but maybe we get to keep the 0:16:44.400 --> 0:16:47.440 multiple we thought they would pull back. It's something on 0:16:47.480 --> 0:16:49.480 our mind. So that sort of speaks to some of 0:16:49.520 --> 0:16:52.640 the stocks that you're looking at in particular as high conviction, Microsoft, 0:16:52.720 --> 0:16:56.520 Crowncastle International, x On Mobile. These aren't exactly undervalued, but 0:16:56.560 --> 0:17:00.320 they're sort of mainstays that will keep their value. Yeah, 0:17:00.360 --> 0:17:03.760 they're consistence, you know, they're kind of ruler stocks, and 0:17:03.760 --> 0:17:07.240 and those stocks represent their represented and all three of 0:17:07.280 --> 0:17:09.720 our internal portfolios that we do for clients. That's what 0:17:09.800 --> 0:17:13.439 caught our attention. Um, there's conviction around those from a 0:17:13.480 --> 0:17:17.080 growth team, a core team, and in a dividend income team. 0:17:17.400 --> 0:17:19.800 And so when we see that consistency, we like it, 0:17:20.119 --> 0:17:22.879 and we obviously like that for our customers. So one 0:17:22.880 --> 0:17:25.240 other thing that you were talking about is that you 0:17:25.320 --> 0:17:29.440 cannot recommend your clients to invest in treasuries right now 0:17:29.440 --> 0:17:31.520 with a ten year yield at about two and a quarter, 0:17:32.520 --> 0:17:34.840 given the fact that inflation rates and growth rates are 0:17:34.840 --> 0:17:38.879 about one point nine? What how I would yield have 0:17:38.960 --> 0:17:42.440 to go for you to say, you know what, take 0:17:42.520 --> 0:17:46.200 some profits off the table going back into bonds. Our 0:17:46.240 --> 0:17:49.399 fixed income team at Huntington the numbers about two six 0:17:49.520 --> 0:17:52.879 right now, So that much the ten years been in 0:17:52.960 --> 0:17:57.040 a to one percent to to six percent range really 0:17:57.040 --> 0:18:00.880 since the election, and it's had trouble obviously holding over 0:18:00.960 --> 0:18:05.280 to two point six percent. So without some big adjustments 0:18:05.359 --> 0:18:10.479 to inflation or economic expectations, to six, you know, as 0:18:10.520 --> 0:18:13.280 unbelievable as that may be, to six seems to be 0:18:13.320 --> 0:18:16.480 a place of demarcation for the bond market right now. 0:18:16.680 --> 0:18:18.560 So this is interesting because there was actually a jp 0:18:18.680 --> 0:18:22.199 More Morgan UH analyst note out this morning saying that 0:18:22.240 --> 0:18:25.879 they didn't expect that there was room for benchmark yields 0:18:25.880 --> 0:18:28.240 to rise before it really affected equities. They said there 0:18:28.240 --> 0:18:30.680 was room about UH for for yields to rise about 0:18:30.680 --> 0:18:33.359 a hundred hundred and fifty basis points one percent to 0:18:33.400 --> 0:18:37.439 one percentage points. This seems like it's much less than 0:18:37.480 --> 0:18:40.120 that before it starts affecting equities. Well, you asked about 0:18:40.160 --> 0:18:43.000 valuations so to speak, or wanting to go into bonds. 0:18:43.040 --> 0:18:44.679 It's when they get out of the range that's when 0:18:44.720 --> 0:18:48.359 we start to look at them now, equity valuations. Yeah, 0:18:48.400 --> 0:18:51.040 maybe maybe it's the next round number at three percent. 0:18:51.160 --> 0:18:53.040 That's what we all thought would be this year, and 0:18:53.080 --> 0:18:55.560 we were trying to base the future on three percent. 0:18:56.119 --> 0:18:58.080 It looks like the bondmark is going to be foiled 0:18:58.119 --> 0:19:01.720 once again this year to get to three. So two 0:19:01.720 --> 0:19:04.639 six is an area we're watching to see if he 0:19:04.680 --> 0:19:07.879 can get above. The expectations are it only goes to 0:19:07.960 --> 0:19:13.560 two four this year. Three. Maybe that affects stock market valuations. 0:19:13.600 --> 0:19:15.920 So we're operating in these ranges because we're on such 0:19:16.040 --> 0:19:19.320 low numbers in the bond market. Is now the FEDS 0:19:19.359 --> 0:19:24.800 trying to normalize, and inflation is trying to come back up. 0:19:25.359 --> 0:19:27.800 You know, I have to wonder on the macroeconomic sphere. 0:19:27.840 --> 0:19:30.919 I mean, we just see so many alarming headlines about 0:19:31.359 --> 0:19:34.359 nuking each other and whatever else. I mean, at what 0:19:34.400 --> 0:19:38.080 point do you care about this stuff? If we would 0:19:38.080 --> 0:19:40.440 have invested on those over the past, let's stay starting 0:19:40.480 --> 0:19:42.840 with Brexit, we'd be about oh for four for our 0:19:42.880 --> 0:19:46.920 customers trying to handicap political events and other headline events. 0:19:46.960 --> 0:19:50.920 So what we mean by that is the global economy 0:19:50.960 --> 0:19:53.240 has picked up some speed in the summer. The U 0:19:53.359 --> 0:19:57.400 S seems to be staying around two. Profit growth is recovered, 0:19:57.400 --> 0:20:01.879 inflation stay and calm, and each changes to that environment 0:20:01.960 --> 0:20:06.200 would make us reconsider allocations. We're just not seeing any 0:20:06.240 --> 0:20:08.560 changes to that environment right now, right so you have 0:20:08.600 --> 0:20:10.080 to look at the actual data. You have to look 0:20:10.080 --> 0:20:13.159 at the actual numbers. But as far as Twitter wars 0:20:13.440 --> 0:20:18.600 or even ongoing you know, military threats, no headlines haven't 0:20:18.600 --> 0:20:22.600 affected any of those as as much as they catch 0:20:22.640 --> 0:20:25.560 our attention, as bad as they could be, they just 0:20:25.600 --> 0:20:28.119 haven't caught the market's attention because they don't seem to 0:20:28.160 --> 0:20:31.440 affect the global economy. Thank you so much for joining us, 0:20:31.480 --> 0:20:34.200 Thanks for having me. John Augustine is chief investment officer 0:20:34.200 --> 0:20:37.240 of Huntington National Bank, which oversees about seventeen and a 0:20:37.240 --> 0:20:40.600 half billion dollars and it's based in Columbus, Ohio, and 0:20:40.600 --> 0:20:42.879 he was talking about how a lot of his clients 0:20:42.920 --> 0:20:45.240 still have a lot of cash and that you just 0:20:45.320 --> 0:20:47.760 can't justify pouring that cash into something that has a 0:20:47.800 --> 0:20:51.840 real yield of nearly nothing at a time of relatively 0:20:52.000 --> 0:21:07.280 good economic expansion. Definitely an interesting conversation. I want to 0:21:07.320 --> 0:21:09.400 pick up and what John was talking about with respect 0:21:09.560 --> 0:21:12.399 to Apples shares being among the most actively traded today 0:21:12.440 --> 0:21:15.600 and being down for a fourth day. This comes as 0:21:16.080 --> 0:21:20.640 reports are coming in pretty much everywhere from everywhere that 0:21:20.960 --> 0:21:24.840 new orders and new purchases of the latest iPhone addition 0:21:25.000 --> 0:21:28.600 are below expectations. Alex web joins us now. He's a 0:21:28.640 --> 0:21:30.760 tech reporter for Bloomberg News and joins us from our 0:21:30.760 --> 0:21:34.760 Bloomberg nine sixties studio in San Francisco. So Alex, can 0:21:34.800 --> 0:21:37.199 we talk a little bit about just the color that 0:21:37.240 --> 0:21:41.320 we've been hearing about the disappointing orders. How significant is 0:21:41.359 --> 0:21:45.560 this and why is there some kind of uh decline 0:21:45.720 --> 0:21:48.360 in the desire for this phone? So you gotta taken 0:21:48.359 --> 0:21:50.000 into account here that there are two phones coming out. 0:21:50.000 --> 0:21:51.840 We've got the iPhone eight, which is already on sale, 0:21:52.000 --> 0:21:53.840