WEBVTT - Populists Manipulate Fear, Vinjamuri Says 0:00:00.080 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.960 Bloomberg dot Com, and of course, on the Bloomberg. Big 0:00:34.000 --> 0:00:36.840 week of Central Bank decisions with President Donald Trump casting 0:00:36.840 --> 0:00:39.720 a long political shadow over this week's meeting of the 0:00:39.760 --> 0:00:42.800 Federal Reserve in more ways than one. Joining me to 0:00:42.800 --> 0:00:46.120 discuss this Bruce Chasma, JP Morgan, chief economist and managing 0:00:46.159 --> 0:00:48.479 director of Global Research, and he joins us here in 0:00:48.479 --> 0:00:51.480 New York. Good money to Bruce. Good morning, big week, big, 0:00:51.479 --> 0:00:53.519 big week ahead, and let's begin with the Fed. This 0:00:53.600 --> 0:00:57.160 administration thinks we can have sustainable GDP growth of three 0:00:57.200 --> 0:01:01.520 plus percent. The Federal Reserve says otherwise, how does that 0:01:01.560 --> 0:01:05.319 tension materialize over the next couple of months, Well over 0:01:05.360 --> 0:01:07.720 the next couple of months the Fed moves in September. 0:01:08.120 --> 0:01:10.000 I'm not sure there's a lot of reason for the 0:01:10.000 --> 0:01:12.760 administration that criticize the Fed, but maybe we continue to 0:01:12.800 --> 0:01:15.240 get it. I think the issue for the Fed is 0:01:15.280 --> 0:01:18.680 they're not quite yet at neutral. Uh. They see an 0:01:18.680 --> 0:01:21.440 economy that is gonna likely deliver growth close to three 0:01:21.440 --> 0:01:23.800 percent over the next couple of quarters. But labor markets 0:01:23.880 --> 0:01:27.720 keep tightening, inflation continues to drift up. It's telling them 0:01:27.720 --> 0:01:30.720 we're growing above where the sustainable paces, and policy needs 0:01:30.760 --> 0:01:33.639 to be more close to neutral. Did you see anything 0:01:33.640 --> 0:01:35.720 in fridayce print that gives you confidence that this could 0:01:35.760 --> 0:01:39.160 be sustainable? Um? Well, I think in the short term yes, 0:01:39.319 --> 0:01:41.920 because you have an economy which, yes, that number was 0:01:42.000 --> 0:01:44.560 juiced up by a big trade contribution that's going to 0:01:44.640 --> 0:01:47.559 go away. But we have good solid underpinnings in terms 0:01:47.560 --> 0:01:50.920 of both business spending and household spending. The fiscal stimulus 0:01:51.000 --> 0:01:53.160 is still kicking in. And boy, that was a very 0:01:53.160 --> 0:01:55.440 weak inventory number, which sets you up nicely for the 0:01:55.440 --> 0:01:57.720 second It really interesting that a lot of people focused 0:01:57.720 --> 0:01:59.960 on the contribution from trite, but the contribution of try 0:02:00.040 --> 0:02:02.920 it was offset from inventories. Yeah, so I think in 0:02:02.920 --> 0:02:05.680 the second half you lose the trade and you gain 0:02:05.760 --> 0:02:07.920 the inventories, and there's a there's a little bit of 0:02:07.920 --> 0:02:10.919 a negative probably on balance there, but not a big negative. 0:02:11.240 --> 0:02:13.080 So we think the third quarter is going to be 0:02:13.120 --> 0:02:14.840 something like three and a half, which isn't a big 0:02:14.880 --> 0:02:17.120 step down and we think the second half is probably 0:02:17.160 --> 0:02:20.000 gonna average at least three percent. So we're still doing well. 0:02:20.360 --> 0:02:22.080 But we're doing well, and we're gonna have a tightening 0:02:22.160 --> 0:02:24.320 labor market. One thing we haven't mentioned is we've got 0:02:24.360 --> 0:02:26.640 an employment report this week, and we think we're going 0:02:26.680 --> 0:02:29.040 to get another two thousand gain, a dip in the 0:02:29.120 --> 0:02:31.760 unemployment rate. I think what's interesting is we're not seeing 0:02:31.760 --> 0:02:34.639 wage pressures build very rapidly, but I think there is 0:02:34.680 --> 0:02:38.040 a sign that underneath the surface labor bargaining power starting 0:02:38.040 --> 0:02:40.040 to firm here. What it also fun interesting is that 0:02:40.080 --> 0:02:42.880 that's a renewed focused on the participation right started to 0:02:42.919 --> 0:02:46.560 creep higher, and whether this administration starts to communicate towards 0:02:46.560 --> 0:02:49.240 the federal Reserve, perhaps with even more sort of conviction 0:02:49.320 --> 0:02:51.880 that hey, guys, white, look, the way you're thinking about 0:02:51.880 --> 0:02:53.840 the labor market of the last five years is dead wrong. 0:02:53.880 --> 0:02:56.600 Because people are started to come back in well, people 0:02:56.639 --> 0:02:59.400 have and the prime age participation rate has moved up. 0:02:59.440 --> 0:03:02.640 But if you get the noise around month to month data, 0:03:02.880 --> 0:03:06.040 the participation rate has done nothing but stay stable here. 0:03:06.720 --> 0:03:08.280 And I think the basic point here is there are 0:03:08.280 --> 0:03:10.360 too many people like me in the workforce. The baby 0:03:10.400 --> 0:03:13.919 boomers who are gradually starting to move into retirement age, 0:03:14.400 --> 0:03:17.480 and that's off setting the benefits of bringing those workers back. 0:03:18.040 --> 0:03:22.480 Well within that is the labor participation rate and some 0:03:22.639 --> 0:03:25.560 of these other dynamics, and it goes. I don't know 0:03:25.560 --> 0:03:27.600 if John gets this mail, John gets a lot more 0:03:27.639 --> 0:03:30.320 mail on um, you know, World Cup and all that. 0:03:30.760 --> 0:03:33.760 I get mail that says when Bruce Casman says the 0:03:33.800 --> 0:03:38.080 economy is great and we're fully employed, no one believes it. 0:03:38.760 --> 0:03:41.120 And you know, Washington Post had a whole series of 0:03:41.200 --> 0:03:44.760 charts a week ago, you know, from Bloomberg that underscored 0:03:44.800 --> 0:03:47.560 that are we fully employed? Well, I think we have 0:03:47.600 --> 0:03:50.000 to be careful what we mean by fully employed. Fully 0:03:50.000 --> 0:03:53.200 employed doesn't mean that we can attract more people to 0:03:53.240 --> 0:03:55.760 come into the workforce. What it does mean is in 0:03:55.920 --> 0:03:58.440 order to do so, you have to incentivize them more 0:03:58.760 --> 0:04:02.920 by paying them a higher way age. Isn't that happening? Well, 0:04:03.000 --> 0:04:07.160 it's happening, but very modestly. I think the question around 0:04:07.160 --> 0:04:09.400 that is how much of it is due to bad things, 0:04:09.440 --> 0:04:13.040 which is that labor bargaining power just structurally weak, and 0:04:13.080 --> 0:04:15.360 how much of its productivity weakness, which has been a 0:04:15.880 --> 0:04:18.320 key theme in the economy and how much of it 0:04:18.360 --> 0:04:20.040 is just that the pressures of brewing here and we're 0:04:20.040 --> 0:04:22.719 gonna start to see it reflected it It takes time. 0:04:22.760 --> 0:04:26.320 Maybe the unemployment rate can get into the high threes 0:04:26.400 --> 0:04:29.320 before we start to see that pressure build. Um. I 0:04:29.320 --> 0:04:31.000 think there's a lot to debate on that, but I 0:04:31.040 --> 0:04:33.240 think I think there's no doubt that somewhere between a 0:04:33.240 --> 0:04:35.839 four percent unemployment rate and zero we're gonna have problems. 0:04:36.040 --> 0:04:37.560 And I think there's no doubt that at a three 0:04:37.560 --> 0:04:39.960 percent growth rate, the unemployer rate is going to keep falling. 0:04:40.000 --> 0:04:43.760 John nailed the savings. To me, the biggest deal was 0:04:43.800 --> 0:04:46.960 the revision of savings. Was that a gain to the elite. 0:04:47.520 --> 0:04:50.919 Did the savings charts swing up to more savings in 0:04:50.960 --> 0:04:55.320 America just because of a statement that the rich got richer? Um? 0:04:55.920 --> 0:04:58.520 I think the savings rate, by the way, is one 0:04:58.520 --> 0:05:02.000 of the worst measured pieces of economic news. The average 0:05:02.000 --> 0:05:03.960 revision to the u S savings rate over the last 0:05:03.960 --> 0:05:06.800 thirty years has been from the first print to where 0:05:06.839 --> 0:05:09.479 we are now is four percentage points. So anytime we 0:05:09.480 --> 0:05:11.800 have a conversation about the savings rate, we should realize 0:05:11.800 --> 0:05:14.960 it's poorly measured. Yes, we had a lot of proprietary 0:05:15.000 --> 0:05:18.240 income of people who are working self employees. You may 0:05:18.520 --> 0:05:21.120 you can debate where that shows up on the distribution 0:05:21.160 --> 0:05:23.880 of income um, but I think the basic point is 0:05:23.960 --> 0:05:26.480 do not have a debate. I think in any short 0:05:26.600 --> 0:05:29.320 term horizon over the savings rate level telling you something 0:05:29.360 --> 0:05:32.200 about where households are for what it's worth. The revision 0:05:32.240 --> 0:05:35.040 does suggest there's more fuel in the tank for households, 0:05:35.040 --> 0:05:37.880 and I think we are seeing household behavior uh look 0:05:37.960 --> 0:05:39.919 better today than it was over the most of the 0:05:39.960 --> 0:05:42.920 past expansion where some of that saving was built up. 0:05:43.160 --> 0:05:45.320 Caught up with a series of sources of mind on 0:05:45.360 --> 0:05:47.360 the buy side on Friday and asked them just a 0:05:47.480 --> 0:05:49.560 very basic question. If I offered you the outcome of 0:05:49.560 --> 0:05:51.599 even the Federal Reserve meeting this week or the Bank 0:05:51.600 --> 0:05:53.680 of Japan meeting this week, which one would you like, 0:05:53.800 --> 0:05:56.039 right here, right now on Friday? And they all said 0:05:56.080 --> 0:05:58.360 to me the Bank of Japan. Obviously the focus seems 0:05:58.360 --> 0:06:00.719 to be the b J overn. What are you looking 0:06:00.800 --> 0:06:02.640 forth from the Bank of japanas we gotta sleep in 0:06:02.640 --> 0:06:04.520 New York and wake up tomorrow. Well, I think part 0:06:04.520 --> 0:06:06.080 of it is if we don't quite know what the 0:06:06.120 --> 0:06:07.360 bo J is going to do. The b o J 0:06:07.600 --> 0:06:10.400 has attention the Fed doesn't have right now. Uh, the 0:06:10.400 --> 0:06:12.560 b o J is not hitting its inflation target. The 0:06:12.680 --> 0:06:16.320 last inflation report was actually very disappointing, So there's every 0:06:16.360 --> 0:06:18.000 reason for them to hold the line. In fact, you 0:06:18.000 --> 0:06:20.480 could argue they should be doing more, but they're sitting 0:06:20.520 --> 0:06:23.440 there watching the flatness of the curve a road bank 0:06:23.480 --> 0:06:26.200 profitability and they're not happy about that. So there's a 0:06:26.200 --> 0:06:30.039 at tension here between financial stability and macroeconomic objectives, and 0:06:30.120 --> 0:06:33.920 certainly the the newsflow has suggested that that is going 0:06:33.960 --> 0:06:36.400 to actually get them to give us a rise in 0:06:36.440 --> 0:06:40.000 the yield control target with a doversh signal about forward guidance. 0:06:40.040 --> 0:06:42.360 Somewhat strange then that they've stepped in three times after 0:06:42.360 --> 0:06:45.240 the last week to cap yields. Can you reconcile that 0:06:45.279 --> 0:06:48.080 with a shift overnight? Because I struggled to well, I 0:06:48.080 --> 0:06:50.520 think I think part of the issue here is that 0:06:50.560 --> 0:06:54.040 when you're dealing with a control tenure yield, any time 0:06:54.120 --> 0:06:56.720 you want to signal changes, even if they are very 0:06:56.720 --> 0:06:59.279 small changes, you have a really hard time controlling in 0:06:59.279 --> 0:07:01.320 the market. And I think they're doing that. They haven't 0:07:01.320 --> 0:07:03.719 made the change, yet yields have already moved up to 0:07:03.760 --> 0:07:06.640 ten basis points. Their target is zero at the current point. 0:07:06.680 --> 0:07:09.120 If they don't come in and uh stabilize that, they're 0:07:09.120 --> 0:07:11.680 gonna have a much bigger problem. First, thank you so much, 0:07:11.800 --> 0:07:16.200 greatly greatly appreciated. First Castell with JP Morgan with I 0:07:16.200 --> 0:07:18.120 think some optims what I heard there, we didn't talk 0:07:18.160 --> 0:07:21.239 about it here about on television earlier was the fiscal 0:07:21.320 --> 0:07:26.640 stimulus coming along with a half percent calculation by his 0:07:27.360 --> 0:07:44.280 shop Leslie Benjamurra with his chadow mouse, Leslie, this is 0:07:44.320 --> 0:07:47.800 all below the radar. The leader of Italy and controversial 0:07:47.880 --> 0:07:51.360 is going to visit with the president. What will occur? Well, 0:07:51.400 --> 0:07:54.600 I think you know, this is been Trump recognizing that 0:07:54.640 --> 0:07:56.560 this is a leader who backed him at the G 0:07:56.680 --> 0:07:59.000 seven when he said we need to invite Russians in. 0:07:59.120 --> 0:08:02.160 Who's you know looking uh, you know, for Conte, this 0:08:02.280 --> 0:08:06.160 is wonderful for his position domestically. So I think, you know, 0:08:06.240 --> 0:08:08.920 the affirmation of it of an ally, of a partner, 0:08:08.960 --> 0:08:12.640 of a friendly, friendly voice in Europe at a time 0:08:12.640 --> 0:08:15.120 when things haven't been great with Europe. But somebody who 0:08:15.200 --> 0:08:17.480 has it takes a similarly you know, his country's taking 0:08:17.480 --> 0:08:20.920 governments saying a similarly hard line on immigration, it's open 0:08:20.960 --> 0:08:23.880 to Russia. Um, I think this is you know, forging 0:08:24.080 --> 0:08:29.040 his his his populous network. And in John I should 0:08:29.080 --> 0:08:33.840 mention this is Prime Minister Giuzeppe, well done, and this 0:08:33.920 --> 0:08:38.520 is not the Deputy Prime Minister mcdeo Silvini. Wow, you 0:08:38.559 --> 0:08:44.240 spent the whole weekend practical I would save me save 0:08:45.600 --> 0:08:50.719 I can't get why not the worst? I'm gonna put 0:08:50.720 --> 0:08:54.760 you in touch with my youngest sister who speaks beautiful, 0:08:54.760 --> 0:08:58.520 fluent Italian. And maybe if you said a love BiblioTech 0:08:58.600 --> 0:09:00.840 and that got me nowhere in the court. Okay, let's 0:09:00.880 --> 0:09:03.240 be let's move on. If if you chance to Angela Merkeley, 0:09:03.240 --> 0:09:07.640 you worried about today's mazing Oh, I think yes, I mean, 0:09:07.679 --> 0:09:11.000 I think inevitably everybody is worried about what's happening in Italy. 0:09:11.040 --> 0:09:14.400 It doesn't the optics of you know, the Italian PM 0:09:14.440 --> 0:09:17.680 going across uh To to talk with Trump on the 0:09:17.720 --> 0:09:20.400 back of those comments about Russia. You know, things of 0:09:20.840 --> 0:09:22.720 in the short terms gotten a little bit better with 0:09:22.760 --> 0:09:25.959 the EU on trade, but there's still this this broader conversation. 0:09:26.000 --> 0:09:29.520 What are Trump's real objectives when it comes to Europe 0:09:29.520 --> 0:09:31.320 and who does he feel closest to him? Right now, 0:09:31.400 --> 0:09:34.480 it still looks like he feels closest to the wrong 0:09:34.520 --> 0:09:37.400 part of Europe. Rachel Donadio in The Atlantic has a 0:09:37.480 --> 0:09:42.320 really timely article Italy's voters aren't anti immigration, but their 0:09:42.360 --> 0:09:44.960 government is. And you know, whether it's the United States 0:09:45.000 --> 0:09:48.560 or it's Italy, that's a huge tension, leslie Vinjamuri, isn't 0:09:48.559 --> 0:09:51.920 it between sort of the humanitarian kind of thing and 0:09:52.120 --> 0:09:57.320 voters saying enough and governments that have taken a stand. Yeah, 0:09:57.320 --> 0:10:00.000 but you know, voters are divided. There's of course, I'm 0:10:00.040 --> 0:10:02.360 in the US, right, and this is an immigrant nation. 0:10:02.480 --> 0:10:05.720 People understand and have long understood the important of immigrants 0:10:05.720 --> 0:10:09.560 to the economy and just morally and ethically to the country, um, 0:10:09.640 --> 0:10:11.520 to the you know, the fabric of the country. At 0:10:11.559 --> 0:10:14.120 the same time, the rhetoric has been very powerful with 0:10:14.160 --> 0:10:16.760 a certain segment of the population in Europe. It's powerful 0:10:16.760 --> 0:10:19.080 on the back of you know, is Italy and effect 0:10:19.080 --> 0:10:22.080 being a frontline state on the immigration crisis, on the 0:10:22.120 --> 0:10:26.040 migration crisis, and in the US, um there's certainly a 0:10:26.360 --> 0:10:29.920 very certain contingent that is that Trump is speaking to 0:10:30.640 --> 0:10:33.800 So it's that forging, you know, at the elite level, 0:10:33.880 --> 0:10:38.360 right Trump and Um and Conte. It's it's very it's 0:10:38.679 --> 0:10:40.360 it is playing a certain kind of politics that you're 0:10:40.400 --> 0:10:42.640 right to point to. But Leslie, we do often confuse 0:10:42.720 --> 0:10:45.800 too really important issues and one is a refugee crisis 0:10:45.840 --> 0:10:48.280 and the other is an immigration crisis. Can you just 0:10:48.320 --> 0:10:51.400 talk me through why those are two very important distinctions 0:10:51.440 --> 0:10:55.760 to make well, because you know, there's refugees have a 0:10:55.960 --> 0:10:59.640 right under international law to be protected, to be given 0:11:00.400 --> 0:11:06.360 um access and but but leaders in the current in 0:11:06.400 --> 0:11:09.000 the current context are reluctant. You know, there's a there's 0:11:09.040 --> 0:11:13.720 a playing on the there's a desire to kind of 0:11:13.720 --> 0:11:16.199 talk to us about themigration crisis and not to differentiate 0:11:16.240 --> 0:11:19.520 because the numbers are so vasked, it's complicated to differentiate. 0:11:19.559 --> 0:11:23.360 It's not that easy to differentiate between a refugee who 0:11:23.400 --> 0:11:27.360 has legitimate right to be protected under international law and 0:11:27.480 --> 0:11:30.440 a migrant. So Leslie, for a lot of people and 0:11:30.480 --> 0:11:31.920 for a lot of the electorate in a place like 0:11:32.000 --> 0:11:34.520 Italy at the moment, they looked to the likes of 0:11:34.559 --> 0:11:37.800 Mattea Salvini and Giuseppe Conte, who heads this government as 0:11:37.840 --> 0:11:39.640 those that are actually a weight to the reality of 0:11:39.640 --> 0:11:41.440 what is happening in a country like Italy on the 0:11:41.480 --> 0:11:44.880 front line of both the refugee and immigration crisis. And 0:11:44.920 --> 0:11:46.920 I'm just wondering, for those with a more liberal view 0:11:47.520 --> 0:11:50.520 of the world, what is the election winning argument, how 0:11:50.559 --> 0:11:52.920 do those individuals get into power? And what is the 0:11:53.000 --> 0:11:56.200 argument on an issue like the refugee crisis and on 0:11:56.240 --> 0:11:59.800 another issue like the immigration crisis that actually resonates with 0:11:59.880 --> 0:12:04.440 the electorate. Well, I mean, I think the reality is 0:12:04.559 --> 0:12:06.760 that it's it's an argument, but it's got to be 0:12:06.800 --> 0:12:09.120 backed up now there. You know, it's clearly the case 0:12:09.160 --> 0:12:11.760 that even for those who are very sympathetic to the 0:12:11.800 --> 0:12:15.719 plight of refugees, who want to um keep keep some 0:12:15.760 --> 0:12:18.320 sort of protection in place, there's got to still be 0:12:18.440 --> 0:12:22.120 a very effective regime in place that can maintain borders 0:12:22.120 --> 0:12:25.480 otherwise inevitably right, the space is open towards populace to 0:12:25.600 --> 0:12:29.520 manipulate the the language of fear and um and are 0:12:29.520 --> 0:12:35.040 successful in doing so so cooperation with Europe emphasizing the 0:12:35.080 --> 0:12:41.080 importance of protecting refugees while while not denying the very 0:12:41.240 --> 0:12:46.120 real problem of of managing and sharing uh the immigrants. 0:12:46.559 --> 0:12:50.640 What would you call the international relations foundation of the 0:12:50.760 --> 0:12:54.200 US right now? I mean it's not you know, is 0:12:54.320 --> 0:12:56.680 free to would say a post American world, or maybe 0:12:56.720 --> 0:13:00.240 it's not a clash of civilizations, Thank you, Mr Honeyton. 0:13:00.440 --> 0:13:06.839 What is the underlying theory that drives US international relations? Well, 0:13:06.880 --> 0:13:09.080 you know, the big debate, as you well know, Tom, 0:13:09.200 --> 0:13:13.040 right now is whether this is just an aberration, whether 0:13:13.040 --> 0:13:15.800 the US will get back on track and start supporting 0:13:15.960 --> 0:13:20.280 the institutions that it has created and and supported and 0:13:20.320 --> 0:13:25.240 short up for seventy years or more more, whether Trump 0:13:25.480 --> 0:13:28.880 is really about Trump is m about an under underlying 0:13:29.080 --> 0:13:32.440 social economic change, and that we're just going to see 0:13:32.480 --> 0:13:34.760 more of this. But I think right now people are 0:13:34.880 --> 0:13:36.880 very worried, and I'd say I would really point in 0:13:36.920 --> 0:13:38.920 not at the last eighteen months, but really at the 0:13:39.000 --> 0:13:41.839 last two or three months, where those who thought that 0:13:41.920 --> 0:13:44.400 America was just going through a bad time are now 0:13:44.440 --> 0:13:46.280 starting to think that we're in this. This is a 0:13:46.280 --> 0:13:49.000 permanent change that the US has been in the fine 0:13:49.120 --> 0:13:51.640 and it's and it's now saying we will no longer 0:13:53.200 --> 0:13:55.560 and show up these institutions. We need to renegotiate our 0:13:55.640 --> 0:13:57.920 role in the Well we mentioned the Italian leader today 0:13:58.000 --> 0:14:01.960 visiting what on your eight calendars the next thing? Or 0:14:01.960 --> 0:14:04.880 have you checked out until Labor Day? I mean, what's 0:14:04.880 --> 0:14:09.800 what's coming up in international relations? Well? I think the reality, 0:14:10.000 --> 0:14:11.720 right is that a lot of what the US is 0:14:11.760 --> 0:14:13.720 going to do going to push for it on this 0:14:13.720 --> 0:14:16.400 this trade war with China, and but a lot of 0:14:16.400 --> 0:14:21.000 what's going to be driving US engagement abroad is Donald 0:14:21.000 --> 0:14:24.640 Trump looking back at Congress and looking to the mid 0:14:24.800 --> 0:14:28.480 terms and trying to play very carefully and very strategically 0:14:28.600 --> 0:14:31.440 to make sure that he comes out of those mid 0:14:31.560 --> 0:14:35.520 terms looking like a strong president. And this is tricky. 0:14:35.560 --> 0:14:38.840 He's not necessarily doing his his own party any favor 0:14:38.880 --> 0:14:42.520 by threatening to shut down the government if he doesn't 0:14:42.560 --> 0:14:46.200 get you know, um, the immigration plan through. Yeah, but 0:14:46.280 --> 0:14:49.120 your studying, your study. This leslie as we're inside a 0:14:49.160 --> 0:14:51.640 hundred days, and that's a big deal because that's where 0:14:51.680 --> 0:14:55.000 I am. I mean, there's just something about a hundred days. 0:14:56.200 --> 0:14:58.000 There's something about a hundred days, but it's a very 0:14:58.000 --> 0:15:01.680 significant one days and unfore sinnately, right, it pulls everybody 0:15:01.680 --> 0:15:04.800 into a very short term focus. Now, this is when 0:15:04.840 --> 0:15:07.200 wonderful LESSI Vin Murray, thank you so much. I really 0:15:07.240 --> 0:15:09.840 appreciate those comments. And Italy, John, I think it's really 0:15:09.840 --> 0:15:12.720 below the radar. And you know, I'll be honest, John, 0:15:12.760 --> 0:15:17.120 I watched R A I two the Italian TV just 0:15:17.160 --> 0:15:19.720 to listen to the language. Like I'm serious, you're trying 0:15:19.760 --> 0:15:25.120 to learn It's it's it's excruciatingly difficult, But without exaggeration, 0:15:25.440 --> 0:15:30.400 every other news story was an immigration immigration. Try growing 0:15:30.520 --> 0:15:32.680 up in a household that when you went to the 0:15:32.720 --> 0:15:35.360 south of Italy, they didn't speak Italian. They spoke dialect, 0:15:35.720 --> 0:15:39.160 and a dialect that was nicknamed the Italian Chinese. It 0:15:39.240 --> 0:15:42.440 was so difficult to understand my grandparents because they wouldn't 0:15:42.440 --> 0:15:44.520 speak to each other in Italian. They'd speak to each 0:15:44.560 --> 0:15:47.560 other in the local dialect, which was another language entirely, 0:15:47.960 --> 0:15:52.360 and it was abruptly difference. My father grew up down 0:15:52.400 --> 0:15:53.840 in the south of Italy, and you learned to speak 0:15:53.880 --> 0:15:57.080 dialect first and your second language. It's the language of 0:15:57.120 --> 0:15:59.800 the country, Italian, and this would happen across the whole 0:15:59.800 --> 0:16:02.760 of it as well. Yeah, so we're gonna teach you 0:16:02.840 --> 0:16:06.720 some southern dialect in pulia Um after you've mastered Italian. 0:16:07.800 --> 0:16:11.480 How do you like that? It's I can see the 0:16:11.480 --> 0:16:13.880 excitement sort of just sort of oz from you this morning. 0:16:14.440 --> 0:16:16.880 For those of you that have kids, particularly for those 0:16:16.880 --> 0:16:19.560 of you older and your kids go, well, yeah, I'm 0:16:19.560 --> 0:16:22.320 not fluent in Arabic yet, but I'm getting there. And 0:16:22.400 --> 0:16:24.440 this new thing in America, John, which just say, no, 0:16:24.560 --> 0:16:26.800 three languages and and one of them one of them Mandarin, 0:16:27.280 --> 0:16:30.920 is I'm in awe. I am truly the ugly American 0:16:31.280 --> 0:16:33.000 and I'll be honest, I'm not proud of it. Let 0:16:33.000 --> 0:16:36.560 me tell you what I'm proud about. John. Afterthought, it's 0:16:36.640 --> 0:16:41.400 just gone nuts over this song. This is what I'm proud. 0:16:41.600 --> 0:16:44.280 We need to listen to what I heard all weekend, 0:16:44.920 --> 0:16:50.680 loving it total. That's nice. You know everything you've played 0:16:50.720 --> 0:16:57.400 in this slot. This is nice. I don't want to 0:16:57.400 --> 0:17:00.520 do that. You don't know the song, not the song 0:17:00.560 --> 0:17:23.959 that's next, folks, your favorite song? Do need a media update? 0:17:24.040 --> 0:17:27.160 We're thrilled to christ mo Angie's with us with Gabelly 0:17:27.800 --> 0:17:30.439 as we look at media, and of course Chris to 0:17:30.520 --> 0:17:34.120 explain this with the vailue investment proposition of Brio, Gabelly 0:17:34.160 --> 0:17:37.920 and your team. You've always been in media. How much 0:17:38.080 --> 0:17:42.320 of a vailue is cable TV? After the Fox, Disney, 0:17:42.359 --> 0:17:47.640 Comcast soap opera, Good Morning, Toma, Jonathan's great to be here. Um. Yeah, 0:17:47.840 --> 0:17:53.399 the cable companies Comcast, Charter, amongst the others are a 0:17:53.440 --> 0:17:55.960 bargain today, more of a bargain than they were before. 0:17:56.840 --> 0:18:00.440 The counterbit for for Fox, um, these are good cash 0:18:00.480 --> 0:18:04.560 flowing any recurring cash form, returning cash flow to shareholders, 0:18:04.600 --> 0:18:07.480 and that's why we like them. Comcast did that shift 0:18:07.560 --> 0:18:11.040 from huge build out to use of cash. On the 0:18:11.080 --> 0:18:13.920 Bloomberg their five year dividend growth, there's a lofty four 0:18:13.960 --> 0:18:18.400 point I'm assuming they can't sustain that, but can they 0:18:18.520 --> 0:18:23.040 actually deliver double digit dividend growth? Is the the cash 0:18:23.080 --> 0:18:27.080 flow that persistent? Yeah, The the return on capital on 0:18:27.119 --> 0:18:30.120 the cash flow are growing substantially as the business make 0:18:30.160 --> 0:18:34.199 shifts from video where they're giving up sixty cents of 0:18:34.240 --> 0:18:37.920 every dollar to the program to the content companies UH 0:18:37.960 --> 0:18:41.040 to broadband where they're keeping both that money and have 0:18:41.080 --> 0:18:43.320 a lot of pricing power. What's interesting here, folks, is 0:18:43.359 --> 0:18:46.639 we were talking with Craig Moffatt and Maffatt Nathanson with 0:18:46.800 --> 0:18:49.480 his really important work on Comcast, Reason and then Marange. 0:18:49.960 --> 0:18:51.920 It's sort of on what's called the bi side, which 0:18:51.960 --> 0:18:56.520 is where he's actually making portfolio decisions and acquiring shares 0:18:56.920 --> 0:19:03.720 as well. If comcasting cables cheap, what's rich in media? Well, 0:19:03.840 --> 0:19:06.879 you point statistically to the to the fang stocks obviously, 0:19:06.920 --> 0:19:10.000 and there's been sort of a saying anti fan trade. 0:19:10.200 --> 0:19:12.240 When the fangs are strong, some of the traditional media 0:19:12.240 --> 0:19:14.639 companies tend to be weak. I think that's starting to 0:19:14.640 --> 0:19:17.040 break down a little bit. But um, you know, doesn't 0:19:17.040 --> 0:19:19.560 mean that that Google and Netflix and others don't have 0:19:19.680 --> 0:19:23.800 outstanding businesses. Netflix and particularly just you know, appears to 0:19:23.840 --> 0:19:27.439 trade and with a minimal margin of safety. Yeah. I 0:19:27.440 --> 0:19:29.760 thought it was interesting last week, Chris, and the performance 0:19:29.800 --> 0:19:33.840 came from the old economy equities and the underperformance came 0:19:33.880 --> 0:19:36.080 from the technology stocks. And I just wonder whether that's 0:19:36.080 --> 0:19:38.400 a one off week or whether we're starting to transition 0:19:38.440 --> 0:19:40.920 to a world where we can build some confidence around 0:19:40.920 --> 0:19:43.199 what's happening in the global economy. Is Europe appears to 0:19:43.200 --> 0:19:46.439 have stabilized, China appears to be shifting towards easing, and 0:19:46.480 --> 0:19:48.200 we had that great growth here in the United States 0:19:48.240 --> 0:19:51.080 in a second quarter. Yeah. I think it's an interesting point, Janathan. 0:19:51.160 --> 0:19:53.679 The I think that the big tech names were viewed 0:19:53.760 --> 0:19:58.639 as safe havens in some ways as UM growth elsewhere 0:19:58.640 --> 0:20:00.000 started in the soul. So yeah, I think as we've 0:20:00.000 --> 0:20:03.840 a little bit of stabilization, um, the trend of value should, 0:20:04.000 --> 0:20:07.159 uh should persist. Chris. The trend of value has been 0:20:07.160 --> 0:20:10.440 a very difficult one to buy into the last year 0:20:10.720 --> 0:20:12.320 and many of our listeners have going to have heard 0:20:12.359 --> 0:20:14.840 that again and again and again over the last couple 0:20:14.840 --> 0:20:17.800 of years. Why is it different this time? Well, we're 0:20:17.800 --> 0:20:19.280 hoping it's different this time. And you know, at the 0:20:19.359 --> 0:20:21.399 in the end, we think that value um will always 0:20:21.400 --> 0:20:26.000 win out. And uh, you know again with a kind 0:20:26.000 --> 0:20:29.560 of a they're good places to be with maybe a 0:20:29.600 --> 0:20:32.520 choppy political environment, but a stable economic environment. Does that 0:20:32.560 --> 0:20:36.679 lift financials then, Chris, it should? You know. Obviously we 0:20:36.680 --> 0:20:39.159 watched the curve and what's happening with the with the 0:20:39.160 --> 0:20:40.480 finding of the curve, and I think that's been a 0:20:40.520 --> 0:20:44.760 little bit of an issue. But um, yes, the financials 0:20:44.840 --> 0:20:48.879 again statistically look very cheap here. It's something that's dominated psychology. 0:20:48.960 --> 0:20:51.240 Is it dominated profitability? And I'm talking about the yield 0:20:51.280 --> 0:20:54.320 curve here, Chris? Has it dominated profitability because I didn't 0:20:54.320 --> 0:20:57.320 see it? Will it? No? I think you know, the 0:20:57.600 --> 0:20:59.480 banks are able to make money, that they're in a 0:20:59.520 --> 0:21:01.920 better regular tory situation, that they have been a long time, 0:21:01.960 --> 0:21:05.199 able to return a lot more capitalist shareholders. Uh. So, 0:21:05.320 --> 0:21:07.119 you know, I think there's I think maybe we're overly 0:21:07.119 --> 0:21:11.280 focused on the shape of the curve. Well, okay, we're 0:21:11.280 --> 0:21:13.120 overly focused on the shape of the curve, but it's 0:21:13.160 --> 0:21:17.000 DETERMINANTU to some extend forward. What about the shape of 0:21:17.119 --> 0:21:20.240 nominal GDP? I mean, if this is if this GDP 0:21:20.400 --> 0:21:23.560 is as good as it gets and it ebbs away? 0:21:23.680 --> 0:21:28.760 What ebbs in the Christmas Ange world? The revenues ebb Yeah. 0:21:28.800 --> 0:21:32.320 So you know we've been talking about actually uh peat 0:21:32.400 --> 0:21:36.320 margins for years. Uh and you know, margins just continue 0:21:36.359 --> 0:21:39.159 to go up. I think we continue to find um 0:21:39.640 --> 0:21:42.400 companies continue to find ways to save money. Obviously, one 0:21:42.400 --> 0:21:45.120 of the themes from earnings the first two weeks has 0:21:45.160 --> 0:21:50.639 been increased costs input costs, steel, energy, labor, freight, and 0:21:50.640 --> 0:21:52.040 so we're starting to see some of those signs of 0:21:52.119 --> 0:21:55.520