WEBVTT - Boris Johnson, The Yen, And The Fed (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:24.919 at Bloomberg dot com slash podcast. Lots of interesting news 0:00:24.960 --> 0:00:28.800 coming out of the UK. Prime Minister Boris Johnson steps down, 0:00:29.680 --> 0:00:32.760 so of course my question is what's next? And I 0:00:32.840 --> 0:00:36.120 honestly don't know, but our next guest does. John Author's 0:00:36.120 --> 0:00:39.400 senior editor for Bloomberg Opinion. John. It's not like they 0:00:39.479 --> 0:00:43.000 got a vice premiere just sitting there waiting to take over. 0:00:43.159 --> 0:00:45.920 They do. Do they have a vice premiere? And what 0:00:45.960 --> 0:00:49.560 does this vice premiere? Do you want me to answer 0:00:49.560 --> 0:00:52.839 that question that there's a there is a title of 0:00:52.960 --> 0:00:57.279 depty prime Minister which has no constitutional significance. Okay, well, 0:00:58.560 --> 0:01:04.840 given in the PA, there's a stop too disappointed office seekers. 0:01:05.520 --> 0:01:11.440 In this case, Dominic rob who at one point got 0:01:11.440 --> 0:01:15.960 as far as in the Foreign Secretary, was named as 0:01:16.160 --> 0:01:20.040 his deputy by Boris two or three years ago and 0:01:20.080 --> 0:01:24.000 then did actually formally act up when, as he remembered, 0:01:24.360 --> 0:01:27.959 U Boris had to go to the ICU with COVID. 0:01:28.920 --> 0:01:31.959 He has says he's not running. He really wouldn't, Dominic 0:01:32.040 --> 0:01:34.200 rob has, and he would have very little chance of 0:01:34.200 --> 0:01:40.920 winning anyway. So there is this availability of he is 0:01:40.959 --> 0:01:44.560 a convenient guy that they can tap to be a 0:01:44.640 --> 0:01:48.000 caretaker prime minister, given that a lot of Conservatives now 0:01:48.040 --> 0:01:52.760 one Boris out of swift leest by the way it possible, John, 0:01:52.800 --> 0:01:56.000 at this point we should make clear to those who 0:01:56.040 --> 0:02:00.600 aren't Brits or political scientists that it's a system where 0:02:00.640 --> 0:02:04.080 you vote for the party, not the person. Right. So um, yes, 0:02:04.280 --> 0:02:07.520 someone asked me earlier, how can Boris leave and be 0:02:07.640 --> 0:02:10.720 replaced by a Tory leader. Doesn't the opposition get to 0:02:10.720 --> 0:02:12.720 step in now or don't they have a general election? 0:02:12.720 --> 0:02:16.919 And that's not the case. No, no, no, he's been arguing, 0:02:17.120 --> 0:02:19.960 And I think this shows personally who chose that he 0:02:20.160 --> 0:02:24.560 really doesn't quite understand the ways his own country's political 0:02:24.600 --> 0:02:28.600 way of doing things. That he has a mandate. Certainly, 0:02:29.040 --> 0:02:34.520 his popularity his personality helped the Conservatives win the nineteen 0:02:34.639 --> 0:02:38.280 general election. That's true, but no, he does not have 0:02:38.360 --> 0:02:42.840 a personal mandate each individual MP has a mandate to 0:02:43.000 --> 0:02:46.040 vote for somebody to be prime minister as they see fixed. 0:02:46.800 --> 0:02:53.480 There's plenty of examples in British history of prime ministers resigning, 0:02:53.720 --> 0:02:59.600 standing down between elections and their the MP's in their party. 0:02:59.680 --> 0:03:06.400 Tuesday somebody, it was one of the most famous ones, 0:03:06.840 --> 0:03:10.400 Blair and pretty Blair standing there for Gordon Brown and 0:03:10.440 --> 0:03:14.440 then both the last two Conservative prime ministers took over 0:03:14.600 --> 0:03:18.240 in mid term without general electure, both to reason and 0:03:18.240 --> 0:03:22.800 and Boris himself. So there's nothing there's nothing unusual about 0:03:22.840 --> 0:03:26.200 about about a prime minister standing down and being replaced 0:03:26.200 --> 0:03:28.359 by his party. How about the whole concept of the 0:03:28.560 --> 0:03:33.320 caretaker prime minister? Is that just a function of what 0:03:33.480 --> 0:03:36.200 popularity you have left whether you can remain a caretaker 0:03:36.200 --> 0:03:41.440 p m ntil there's another election. I know he's Rob 0:03:41.520 --> 0:03:44.360 is not going to be a leader to to go 0:03:44.600 --> 0:03:48.600 into the election. No, I think Paul means Johnson wants 0:03:48.640 --> 0:03:53.480 to stay as the prime minister Protram until yes he does. 0:03:53.880 --> 0:03:59.640 And I my opinion, my judgment from you know, from Afar, 0:03:59.800 --> 0:04:01.920 but I don't think he's going to be allowed to 0:04:01.920 --> 0:04:07.840 do that. UM. Basically the problem for him and the 0:04:07.880 --> 0:04:11.640 fact that he showed really no contrition. Never used the 0:04:11.640 --> 0:04:15.200 word sorry in his speech earlier. The problem for him 0:04:15.240 --> 0:04:20.000 is that this isn't about some policy disagreement or some 0:04:20.120 --> 0:04:24.960 political defeat. It's about the over majority of his colleagues saying, 0:04:25.400 --> 0:04:28.840 we don't trust you. You are not personally honest enough 0:04:29.560 --> 0:04:32.320 to be our leader. It's not even the economy is stupid. 0:04:32.560 --> 0:04:35.800 They just think he's a liar. Exactly we we we 0:04:35.880 --> 0:04:40.919 don't trust you, You're a liar. Go And in these circumstances, 0:04:40.960 --> 0:04:45.360 if the basis f you're saying, Theresa May can carry 0:04:45.400 --> 0:04:47.960 on until they chosen a new leader. If she's resigned 0:04:47.960 --> 0:04:52.360 because they know people don't trust her to to make 0:04:52.400 --> 0:04:55.520 a Brexit deal, so she's a terribly weakened position, but 0:04:55.600 --> 0:04:58.760 she can carry on being the Prime minister until the 0:04:58.800 --> 0:05:02.960 new guy gets David Cameron can announce his resigning as 0:05:02.960 --> 0:05:06.240 soon as the referendum happens, but not actually stand down 0:05:06.400 --> 0:05:09.760 until they've chosen somebody new. But in this case it's 0:05:09.800 --> 0:05:13.279 not clear that you can do that because it's nothing 0:05:13.320 --> 0:05:18.359 about politics per se. It's about you personally shouldn't be 0:05:18.480 --> 0:05:21.440 the Prime minister. You are not for this job, and 0:05:21.480 --> 0:05:26.440 we don't trust you, which is a remarkable state of affairs, 0:05:26.560 --> 0:05:30.160 but it does make it difficult for conservative in peace 0:05:30.200 --> 0:05:32.760 to serve answer and for the for a matter of months, 0:05:33.160 --> 0:05:35.600 especially if THEE doesn't want to step up. Now you've 0:05:35.600 --> 0:05:37.480 got to figure out who. So it leaves a lot 0:05:37.480 --> 0:05:41.320 of questions, um unanswered, John, just quickly on the market. 0:05:41.440 --> 0:05:43.880 We've only got about thirty seconds, are we Is this 0:05:44.000 --> 0:05:49.080 rally like a reverse ferret here? What's going on? But 0:05:49.240 --> 0:05:52.200 rally in the pounds or no? No? In in markets? 0:05:52.200 --> 0:05:54.440 I mean do we just don't. We don't believe the 0:05:54.480 --> 0:05:57.000 FED is going to fight inflation more than a recession. 0:05:58.680 --> 0:06:05.440 I think basically there was an immense shock created by 0:06:05.440 --> 0:06:08.600 the pandemic, which has created a much shorter economic cycle 0:06:08.640 --> 0:06:11.360 than usual, And there is an immense shock created by 0:06:11.360 --> 0:06:13.600 the fact that at this point nobody is sure they 0:06:13.600 --> 0:06:17.600 really do believe the feds guidance after two reverse ferrets 0:06:17.640 --> 0:06:22.720 by the FED uh in quick succession. Therefore, it's a 0:06:22.839 --> 0:06:25.559 natural consequence of the market will gine call over the place? 0:06:26.200 --> 0:06:29.599 All right? I don't. I don't think there is any 0:06:29.600 --> 0:06:34.039 clear cut reason to think that, yeah, the FED will 0:06:34.040 --> 0:06:37.560 fold any more than there was for respect. I recommend 0:06:37.560 --> 0:06:40.120 to listeners who are wondering what the heck a reverse 0:06:40.160 --> 0:06:43.640 faret is. Yes, to go on Bloomberg dot com and 0:06:43.680 --> 0:06:45.880 read John's column. Or if you have a Bloomberg terminal 0:06:45.880 --> 0:06:47.880 in front of you, type ni authors and you can 0:06:47.880 --> 0:06:52.560 read a reverse ferret gets up markets trousers by John Authors. 0:06:57.240 --> 0:07:00.080 Now we're bringing Massa Takeda. He's a portfolio manager for 0:07:00.120 --> 0:07:04.760 the Hennessy Japan Fund and this has been, uh, to 0:07:04.880 --> 0:07:08.560 my mind, one of the most interesting stories that doesn't 0:07:08.640 --> 0:07:11.720 get the coverage it deserves. Let's give it. The Bank 0:07:11.760 --> 0:07:16.160 of Japan is insistent that it's gonna hold rates to 0:07:16.400 --> 0:07:20.480 a quarter percent or lower, and the market mr market 0:07:20.720 --> 0:07:25.680 is testing them out. Now traditionally this trade is called 0:07:25.720 --> 0:07:32.520 the widow maker. You short jgbs, you short the end, 0:07:32.760 --> 0:07:36.880 and so many investors have gotten burned that it's earned 0:07:36.880 --> 0:07:40.000 that moniker Massa Takeda, Are you one of those investors 0:07:40.040 --> 0:07:46.680 that's trying this again? Uh No, I'm just make fenty 0:07:46.760 --> 0:07:50.440 vibes to conclupanies. Well, what do you think about the 0:07:50.480 --> 0:07:53.840 Bank of Japan's will to hold out against the market? 0:07:53.880 --> 0:07:56.160 I mean, can they keep it uh pegged it a 0:07:56.200 --> 0:07:58.920 quarter percent? Or will they have to let it slide 0:07:59.000 --> 0:08:01.120 like the Swiss National Ank did a couple of years ago. 0:08:02.840 --> 0:08:05.320 Um well, it's hard to tell, but it seems like 0:08:05.480 --> 0:08:07.400 a plank of plan is they're very much committed to 0:08:07.400 --> 0:08:10.640 the zero right policy and we have to control um. 0:08:10.760 --> 0:08:14.880 Now they're in a dilemma. Obviously, if they choose to 0:08:14.960 --> 0:08:17.680 raise rates, then of course it's going to hurt the economy. 0:08:18.080 --> 0:08:20.760 We're just you know, coming out of the pandemic. Um. 0:08:20.840 --> 0:08:24.960 So it's there's still their fragile um if they don't 0:08:25.040 --> 0:08:28.080 choose to raise rates. But then um, the yam will 0:08:28.080 --> 0:08:32.800 continue to depreciate on lightening interest rate differential, and that's 0:08:32.800 --> 0:08:36.960 going to also drive inflation for the so and that 0:08:37.080 --> 0:08:39.920 that inflation isn't going to be good for the equality either. 0:08:40.080 --> 0:08:42.160 So a BAN, I think it is a very tricky 0:08:42.200 --> 0:08:45.280 situation right now. Um So that's that's that's my take 0:08:45.320 --> 0:08:47.719 on just just pointing out right now we're at a 0:08:47.800 --> 0:08:50.880 hundred thirty five seventy two, which is we're having around 0:08:50.880 --> 0:08:54.920 the low. The last time we saw this was you know, 0:08:55.000 --> 0:08:57.400 long term capital management, yep, exactly. I'm looking at the 0:08:57.400 --> 0:08:59.360 one year chart for the Japanese end. We started the 0:08:59.440 --> 0:09:01.760 year are year ago twelve months ago. What about one 0:09:01.840 --> 0:09:05.360 ten UH now are one thirty five such as significant weakening? 0:09:05.600 --> 0:09:07.920 Must I love to get just your overview based upon 0:09:07.960 --> 0:09:10.439 your experience of the folks you talked to in Japan. 0:09:11.160 --> 0:09:15.360 How has the pandemic impacted Japan just broadly defined, and 0:09:15.600 --> 0:09:18.000 how has it impacted the economy and and how are 0:09:18.000 --> 0:09:25.679 folks they're dealing um. Obviously economy was severely damaged and UM. 0:09:25.840 --> 0:09:29.440 And also it has been not as resilient as as 0:09:29.520 --> 0:09:33.680 we hoped it as we hoped UM and still enhanced. 0:09:33.679 --> 0:09:36.960 The economy is in a very fraudule the state. So 0:09:37.280 --> 0:09:39.320 as a call photo manager, I mean I'm a I'm 0:09:39.320 --> 0:09:45.760 a japan UM photo manager. But my UH investment style 0:09:46.000 --> 0:09:49.479 is to invest in great companies that have global footprints. 0:09:49.520 --> 0:09:52.600 So trying not to put all our eggs in one basket, um, 0:09:52.640 --> 0:09:55.679 you know, one geography UM and they loven't great companies 0:09:55.720 --> 0:09:59.880 out there in Japan that have a strong presence UM worldwide. 0:10:00.040 --> 0:10:01.760 And if if there's going to be you know, a 0:10:01.800 --> 0:10:04.680 strong uptake in Japan, our port companies should also benefit 0:10:04.679 --> 0:10:08.280 from it. So that's my sort of defensive investment strategy 0:10:08.320 --> 0:10:10.600 at the moment. So talk to us about maybe some 0:10:10.720 --> 0:10:14.160 names that might fit that. Uh, you know the kind 0:10:14.160 --> 0:10:16.240 of framework that you're you and your team are doing 0:10:16.240 --> 0:10:20.120 some work on right now. Yeah. So you know, our 0:10:20.200 --> 0:10:23.480 our investment mantra is to invest in great business with 0:10:23.720 --> 0:10:29.240 exceptional management attractive class. So, um, you know we uh 0:10:29.400 --> 0:10:32.800 growth growth manager. We're in the growth management bucket. And 0:10:33.040 --> 0:10:35.760 obviously a market rotation from growth of value has been 0:10:36.120 --> 0:10:39.840 has taken a toll on us. Um that we continuously 0:10:39.840 --> 0:10:43.000 remain invested in in our long term holdings and growth needs. 0:10:43.040 --> 0:10:45.760 But at the same time, we've been actively searching for 0:10:46.000 --> 0:10:48.679 what I would call growth names in disguise, and what 0:10:48.720 --> 0:10:52.040 I mean by that is companies whose growth prospects are 0:10:52.080 --> 0:10:54.800 just as strong as any pure growth name. We're talking 0:10:54.800 --> 0:10:58.000 about learning, throw a Group, Campus and plus, but they're 0:10:58.000 --> 0:11:00.160 trading out of value stuff about multiples due to its 0:11:00.200 --> 0:11:02.720 perceptions in the market. And I would highlight the Touch 0:11:02.760 --> 0:11:05.640 as an example. And then there's another example, another type 0:11:05.640 --> 0:11:10.680 of growth in disguise where growth growth earn if growth 0:11:10.760 --> 0:11:12.880 rate might be in the med single digits, but they 0:11:13.000 --> 0:11:16.839 come with significant ability to buy back shares and sub 0:11:16.880 --> 0:11:18.679 division news and if you add am all up, you 0:11:18.760 --> 0:11:22.040 can plus return as a showholder. And I would highlight 0:11:22.120 --> 0:11:25.640 general insurance companies as as as primary example. I just 0:11:25.679 --> 0:11:27.640 want to quickly ask you about the election House of 0:11:27.720 --> 0:11:32.000 Counselor's election on Sunday. What are the market implications of that? Uh? 0:11:32.320 --> 0:11:37.439 What could they be? Well, it seems like the ruling 0:11:37.480 --> 0:11:42.240 party is going to win the majority ships um and UM. 0:11:42.559 --> 0:11:46.800 I think you know right now Prime Minister Kishi Daum 0:11:47.160 --> 0:11:51.199 he's been promoting the so called Japan's New capitalism and 0:11:51.960 --> 0:11:55.599 the market was once in spooks by the prospects of 0:11:56.200 --> 0:12:02.240 Kishida potentially introducing not to shareholder not extridly. Um. Policing 0:12:02.360 --> 0:12:04.960 is just like higher how about the games tax ridge 0:12:05.000 --> 0:12:08.040 and middle on bridge hikes. Um. So depending on what 0:12:08.160 --> 0:12:10.920 policy imagers will will come out going forward, they may 0:12:10.960 --> 0:12:13.520 have some many percussions in the market, but I would 0:12:13.559 --> 0:12:15.959 look at it more positively. There. You know, this is 0:12:16.200 --> 0:12:19.800 really a mark to shift from showhold of friendly capitalism 0:12:19.920 --> 0:12:23.320 to sustainable growth capitalism. So um, you know we should 0:12:23.360 --> 0:12:26.600 take it as a positive movement. All right, Massa, thank 0:12:26.600 --> 0:12:29.520 you so much for joining us there. Massa takeda portfolio 0:12:29.600 --> 0:12:33.360 manager for the Hennessy Japan Fund, getting an update on 0:12:33.800 --> 0:12:37.760 the developments out of Japan, and again elections matches pointed 0:12:37.760 --> 0:12:43.880 out coming up out in sun Valley, Idaho at this 0:12:44.040 --> 0:12:47.160 time of year. Every year, the good friends at Allen 0:12:47.200 --> 0:12:50.280 and Company, the investment bank hold their conference. Were all 0:12:50.360 --> 0:12:56.800 the big tech media, telecom, really cool kids gather uh 0:12:57.160 --> 0:12:59.599 to just talk deals, talk business, talk, what's going on 0:12:59.720 --> 0:13:02.320 in the world, and of course we send out our 0:13:02.440 --> 0:13:05.160 ace reporter. Ed Ludlow is a West Coast correspondent for 0:13:05.200 --> 0:13:07.960 Bloomberg News. Ed, you're in sun Valley. You probably went 0:13:08.080 --> 0:13:11.720 to the Soul last night for a couple of cocktails. 0:13:11.800 --> 0:13:14.000 Hopefully you bumped into some media moguls. But what are 0:13:14.000 --> 0:13:16.719 you hearing out there in beautiful sun Valley? What's the 0:13:16.800 --> 0:13:20.160 theme kind of this year? Yeah, you know, Tom Keating 0:13:20.280 --> 0:13:24.760 just framed it as the Ludlow Humility Meter there television, 0:13:25.400 --> 0:13:28.319 and at first I thought, oh goodness, here we go. 0:13:28.920 --> 0:13:31.480 But then you know, that is pretty appropriate that all 0:13:31.520 --> 0:13:34.040 the conversations I'm having on the record on boom Bow 0:13:34.080 --> 0:13:37.240 Television and in the corridors behind the scenes, is that 0:13:37.520 --> 0:13:39.480 there's kind of dis acceptance of the world is very 0:13:39.520 --> 0:13:43.600 different from twelve months ago and pre pandemic. There's public 0:13:43.679 --> 0:13:47.680 market volatility, you know, there's zeroed in on the inflation story, recession. 0:13:48.320 --> 0:13:51.199 But you know, everyone is quite bullish here. You know, 0:13:51.280 --> 0:13:54.000 there's a lot of optimism. They're clearly enjoying each other's company. 0:13:54.360 --> 0:13:57.120 But remember this is a TMT conference where the focus 0:13:57.240 --> 0:14:01.480 is deals and meeting your clients, your customers, your bankers, 0:14:01.920 --> 0:14:04.959 and everyone is kind of acknowledging the problems out in 0:14:04.960 --> 0:14:07.800 the world but saying there are real opportunities in these 0:14:07.840 --> 0:14:10.720 sectors to deploy capital. And I think that's really interesting. 0:14:11.040 --> 0:14:13.040 So what are the biggest deals that we're looking at 0:14:13.160 --> 0:14:15.839 right now? What are people talking about there? You know, 0:14:15.920 --> 0:14:18.720 I think the valuations have come down a lot, particular 0:14:18.800 --> 0:14:21.360 in media and telecoms companies, right you know, the big 0:14:21.720 --> 0:14:23.800 king of the hill is the phrase I used this 0:14:23.960 --> 0:14:27.760 year is is Warner Brow's Discovery CEO David Doust laugh, 0:14:27.960 --> 0:14:31.640 you know that merger was successful. Um, he is kind 0:14:31.640 --> 0:14:36.520 of point and optimistic. And it's funny because last year Netflix, 0:14:36.840 --> 0:14:39.120 Read Hasting S Sanda Rose were kind of those star 0:14:39.280 --> 0:14:41.600 people that everyone wanted to be too. But there's this 0:14:41.720 --> 0:14:44.160 idea that valuations have come down. The consumer has so 0:14:44.320 --> 0:14:47.120 much choice on the streaming side, and you do wonder 0:14:47.160 --> 0:14:50.360 whether there will be further consolidation. One really interesting point 0:14:50.600 --> 0:14:52.520 some sources made me last night, and by the way, 0:14:52.560 --> 0:14:57.160 I did go to the Pioneer Saloon. It was excellent. Saturday, 0:14:57.520 --> 0:15:00.040 according to sources, is the day that a lot of 0:15:00.120 --> 0:15:04.880 the smallest startups and interesting founders have been invited present. 0:15:05.200 --> 0:15:07.760 And one source, a long time attendy and investor, said 0:15:07.800 --> 0:15:11.560 to me that he actually invested, has invested over the 0:15:11.640 --> 0:15:14.480 years in many of those startups that present on the Saturday. 0:15:14.920 --> 0:15:20.840 You know, they're all kinds of people from healthcare, biotech, transport, mobility, tech, 0:15:21.080 --> 0:15:23.080 and they get an opportunity to stand in front of 0:15:23.160 --> 0:15:26.000 this just incredible room of people and make their pitch 0:15:26.520 --> 0:15:30.720 behind closed doors. And I'm told with absolute certainty that 0:15:30.960 --> 0:15:32.840 the twelve months that follow a lot of those guys 0:15:32.880 --> 0:15:36.880 do receive investments, you know. And one of the speakers 0:15:36.920 --> 0:15:39.080 that I think a lot of folks are in participating 0:15:39.520 --> 0:15:43.200 hearing from, assuming he shows up as Elon Musk because 0:15:43.840 --> 0:15:46.000 there's a big, big m and a trade out there 0:15:46.040 --> 0:15:49.280 that he's involved in with Twitter, that is really you know, 0:15:49.560 --> 0:15:51.400 nobody knows whether this thing is going to go through 0:15:51.560 --> 0:15:54.280 or not, and nobody really knows what he's thinking anywhere. 0:15:54.600 --> 0:15:56.600 I mean, I don't know, So we'd love to hear 0:15:56.680 --> 0:16:00.320 from Mr musk Is that's still the plan to as 0:16:00.360 --> 0:16:03.560 a former m and a banker in the TMT space, 0:16:04.240 --> 0:16:07.680 if someone if the richest man in the world made 0:16:07.720 --> 0:16:10.600 an offer for a company at would you expect it 0:16:10.640 --> 0:16:13.760 to be trading at thirty nine? No? Absolutely not, And 0:16:14.280 --> 0:16:16.120 so that kind of tells you the market's telling you're 0:16:16.160 --> 0:16:17.480 right there that it's they don't view it as a 0:16:17.560 --> 0:16:19.880 credible deal. But what do you expect to hear ed 0:16:20.040 --> 0:16:24.560 from Elon musk Iffen when he shows up? So sources 0:16:24.600 --> 0:16:26.600 tell me that he is showing up. We're not sure 0:16:26.680 --> 0:16:29.840 when we thought it would be today Thursday. Sources also 0:16:29.920 --> 0:16:33.600 tell me that he is making the Saturday prime time 0:16:34.200 --> 0:16:38.080 address and now that's that's a slot usually reserved for 0:16:38.280 --> 0:16:42.000 one Warren Buffett traditionally at the Allen and Co. Conference. 0:16:42.000 --> 0:16:45.440 So I thought that was interesting. Um, wait, Warren Buffett 0:16:45.480 --> 0:16:49.520 like always does it. Warren Buffett traditionally speaks on the 0:16:49.600 --> 0:16:52.720 Saturday and you know the Oracle of Omaha, it's his 0:16:52.880 --> 0:16:55.400 moment where he gives his world view behind closed doors. 0:16:55.880 --> 0:16:57.600 You know a lot of Allen and Co. Attendees I've 0:16:57.640 --> 0:16:59.440 spoken to in private say, you know, this is why 0:16:59.480 --> 0:17:02.800 people stay through the weekend. You know this is this year. 0:17:02.960 --> 0:17:05.040 By the way attendees are allows bring their families. You 0:17:05.080 --> 0:17:08.120 have the extra added issue of childcare and keeping people 0:17:08.280 --> 0:17:10.160 entertained in one of the most beautiful spots on Earth. 0:17:10.480 --> 0:17:13.200 It's very hard. It's a serious issue for Elon Musk, 0:17:13.320 --> 0:17:16.840 now right with nine childious issue. We'll get to that 0:17:17.359 --> 0:17:20.159 that basically, you know, I have spoken to people about it. 0:17:20.200 --> 0:17:22.720 They are talking about it in the corridors. Ned SEAgel 0:17:22.760 --> 0:17:26.600 Twitter CFO is here. I asked him. I shouted at him, frankly, 0:17:27.000 --> 0:17:29.160 are you going to meet with Elon? And he smiled 0:17:29.280 --> 0:17:33.760 and put his index finger in the air showing one digit. 0:17:33.880 --> 0:17:36.320 But and you know I took that to mean one 0:17:36.440 --> 0:17:38.720 time he'll meet with him. I have no idea what 0:17:38.880 --> 0:17:41.520 he was saying. We haven't seen Tara Gagl who's the 0:17:41.560 --> 0:17:44.400 Twitter CEO. I have had a number of conversations people 0:17:44.440 --> 0:17:47.920 that say Elon Musk can't get out of this. The 0:17:48.000 --> 0:17:51.600 reverse termination fee is a distraction. You can't bank on 0:17:51.760 --> 0:17:53.680 him just being able to pay a billions dollars to 0:17:53.720 --> 0:17:56.959 walk away. One source made a really interesting point. If 0:17:57.000 --> 0:17:59.200 your Twitter and you want to fight this. To Belon 0:17:59.280 --> 0:18:01.040 Musk walks away, you really going to go to court 0:18:01.080 --> 0:18:03.440 for a decade, you know, because that's how long it 0:18:03.520 --> 0:18:05.560 could take. So I think the consensus here is that 0:18:05.640 --> 0:18:07.800 he could come in with a lower offer price. And 0:18:07.920 --> 0:18:12.680 if your Twitter share if you're an existing Twitter shareholder, 0:18:12.960 --> 0:18:15.080 you would bite somebody's hand off for that deal any 0:18:15.160 --> 0:18:17.280 time in the last two years, right, you just would 0:18:17.440 --> 0:18:21.680 like So I think that a lower price for those involved, 0:18:21.720 --> 0:18:23.959 just to get it done would be a good outcome 0:18:24.040 --> 0:18:26.920 based on what you know, the conversations I'm having. So, 0:18:28.160 --> 0:18:32.359 Elon Musk has another set of twins that we didn't 0:18:32.400 --> 0:18:36.520 know about, and apparently one of his kids has like 0:18:36.920 --> 0:18:41.320 disowned him. Really, so how many I guess nine unless 0:18:41.359 --> 0:18:46.600 you don't count um his one of his kids just 0:18:46.880 --> 0:18:52.480 changed her name you know, and gender and said she 0:18:52.640 --> 0:18:56.440 wants nothing to do with her father. Probably is this 0:18:56.520 --> 0:19:00.480 getting to no? Okay, So a lot to back here, 0:19:00.520 --> 0:19:02.520 But there was a business inside a report that Elon 0:19:02.640 --> 0:19:06.080 Musk had twins who are now eight months old, with 0:19:06.160 --> 0:19:09.960 the Neuralink employee, and that was discovered through court filings 0:19:10.040 --> 0:19:14.359 where the NEURALNK employee and Masque wanted to have the 0:19:14.480 --> 0:19:17.160 names changed so that it reflected the Musque name as well. 0:19:17.400 --> 0:19:19.280 But why didn't they just put that on the birth certificate. 0:19:19.320 --> 0:19:21.440 I don't get that. Usually when the kid's born, you 0:19:21.520 --> 0:19:25.720 just put the father's name down. And well, two things. 0:19:25.960 --> 0:19:28.600 I'm yet to be a father, But I also don't 0:19:28.760 --> 0:19:31.680 pretend to know what is going on inside. Elon must 0:19:31.760 --> 0:19:35.120 mind and the actions that he takes at any time. Um. 0:19:35.280 --> 0:19:38.600 But according if this report is to be believed them, 0:19:38.800 --> 0:19:41.040 you know, we've asked Musque about it. He hasn't replied. 0:19:41.080 --> 0:19:43.640 We've asked Neural Link about it, they haven't replied. Then 0:19:44.040 --> 0:19:48.040 Musk does currently technically have nine children? All right, We've 0:19:48.040 --> 0:19:49.800 got to keep up to date on that stuff. But 0:19:49.880 --> 0:19:52.840 that just came across. I mean, we don't, Actually we don't. 0:19:53.040 --> 0:19:56.359 It's silly, gossipy stuff. And I guess CEOs can have 0:19:56.440 --> 0:20:00.159 as many children as they want, just like a normal person. Um. 0:20:00.200 --> 0:20:02.119 And he has certainly got the money to support them. Well, 0:20:02.119 --> 0:20:04.400 he's got a he's got a policy. It's just fun 0:20:04.480 --> 0:20:06.240 to keep up with Elon. He thinks there needs to 0:20:06.280 --> 0:20:09.000 be more people on the planet, right, he says, yeah, 0:20:09.600 --> 0:20:12.800 Yet I saw a tweet from him today that said 0:20:13.359 --> 0:20:18.000 the US has been underpopulated for like fifty years, so 0:20:18.840 --> 0:20:22.000 it's against consensus. I think. All right, all right, Ed Ludlow, 0:20:22.080 --> 0:20:26.080 West Coast, corresponding Bloomberg News. He is our reporter on 0:20:26.240 --> 0:20:29.080 the ground in sun Valley. We get talked about Rivivian. 0:20:29.160 --> 0:20:31.120 Next time we get on, we gotta talk about Rivian. 0:20:31.800 --> 0:20:35.199 Yesterday they boosted their UH production target for the second quarter. Right, 0:20:35.320 --> 0:20:37.520 stop us up? Not good stuff, ed Lolo out there 0:20:37.520 --> 0:20:43.639 at sun Valley, Idaho. Let's get right to it. Danielle 0:20:43.640 --> 0:20:47.240 DeMartino Booth, CEO of Quill Intelligence, also at the Dallas 0:20:47.320 --> 0:20:50.240 FED for a while. So when we talk interest rates, 0:20:50.240 --> 0:20:53.480 when we talk FED, boom our go to choice here 0:20:53.520 --> 0:20:55.560 and daniel nothing says that we're getting back to normal 0:20:55.800 --> 0:20:58.280 than Danielle DeMartino Booth in our Bloomberg, in our actor 0:20:58.280 --> 0:21:00.440 broker studio. So what is the Fed? Wait? How was 0:21:00.480 --> 0:21:02.480 the flight? First of all, how is you travel? Because 0:21:02.760 --> 0:21:05.280 last time Paul came here from Texas, his flight was canceled. 0:21:05.359 --> 0:21:09.520 He was forced to stay at a water park all day. Yes, well, 0:21:09.640 --> 0:21:11.399 knock on wood because I've got to get on another 0:21:11.440 --> 0:21:13.560 flight tomorrow. But it was seamless now, but one in 0:21:13.640 --> 0:21:16.120 front of me was canceled because of no crew. That's 0:21:16.200 --> 0:21:19.240 the thing's all right. So what let's assume that there's 0:21:19.240 --> 0:21:21.399 a crew at the Federal Reserve. Are they going to 0:21:21.520 --> 0:21:24.919 raise fifty basis points? Seventy five basis points? What are 0:21:24.960 --> 0:21:27.920 you thinking? So two days after the FED announces, we're 0:21:28.000 --> 0:21:32.080 probably going to get our second negative print on personal consumption, expenditures, 0:21:32.080 --> 0:21:34.560 personal income, and spending comes out the Friday. At it's important, 0:21:35.160 --> 0:21:36.960 it's very important for it. In fact, they're likely to 0:21:37.040 --> 0:21:39.840 have that data in hand when they announced, and if 0:21:39.960 --> 0:21:43.320 it's negative, I would argue, counterintuitively that they're gonna go 0:21:43.400 --> 0:21:46.040 for seventy five basis points to get it into the can. Yeah. 0:21:46.080 --> 0:21:48.560 I actually have a bet right now with Paul and 0:21:48.680 --> 0:21:52.680 Ira Jersey. If they do seventy five, Paul has to 0:21:52.760 --> 0:21:54.600 drive me down to Princeton and Ira has to buy 0:21:54.680 --> 0:21:57.560 us dinner. I started feeling, honestly a little bit nervous 0:21:57.600 --> 0:22:00.639 about that bet yesterday reading these fedman it's that everyone 0:22:00.800 --> 0:22:04.080 said we're hawkish, and I got this feeling in my 0:22:04.119 --> 0:22:06.440 stomach like I could lose this bet. I don't know why, 0:22:06.600 --> 0:22:11.320 but it's not a sure thing. It's nothing is a 0:22:11.440 --> 0:22:14.479 sure thing, and I think that markets interpreted the minutes 0:22:14.560 --> 0:22:17.480 as being a time stamp, which sometimes markets don't. Sometimes 0:22:17.560 --> 0:22:19.600 markets read in that the Fed is massage the minutes 0:22:19.640 --> 0:22:22.200 after the fact if they have a reason to do so. 0:22:22.520 --> 0:22:23.680 But I think a lot of people said, you know 0:22:23.720 --> 0:22:26.160 what those minutes were time stamp before the Atlanta Fed 0:22:26.200 --> 0:22:29.160 printed negative two point one percent for the second quarter, 0:22:29.240 --> 0:22:32.320 before SMP Global said the second quarter was gonna be 0:22:32.359 --> 0:22:35.920 negative one point five um. And that's telling you something actually, 0:22:35.960 --> 0:22:39.120 because the Atlanta Fed GDP now model kind of broke 0:22:39.200 --> 0:22:41.760 down during COVID, and now that we've got all the 0:22:41.840 --> 0:22:44.040 COVID noise out of the data, it's coming right back 0:22:44.160 --> 0:22:46.280 up to where some of the best models on the 0:22:46.359 --> 0:22:49.000 street are and they're converging. And that that tells you 0:22:49.160 --> 0:22:51.479 that a lot of it tells you why a lot 0:22:51.520 --> 0:22:53.640 of cell side, if it's economist right now, are saying 0:22:53.640 --> 0:22:55.159 it's going to be a technical recession but not a 0:22:55.200 --> 0:22:57.040 real one. I mean, it would have to be really 0:22:57.160 --> 0:22:59.920 far off for there to be growth though, right We're 0:23:00.160 --> 0:23:03.119 very likely to see two quarters of contraction, right, I mean, 0:23:03.280 --> 0:23:06.000 I'm saying that's a recession, but it's a it's a 0:23:06.080 --> 0:23:08.680