1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,560 --> 00:00:16,520 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,279 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course, 5 00:00:27,320 --> 00:00:35,200 Speaker 1: on the Bloomberg Good running everyone, Tom Keene, Bloomberg Surveillance 6 00:00:35,280 --> 00:00:39,480 Speaker 1: thrilled you with this worldwide Coast to coast, Boston, Washington, 7 00:00:39,600 --> 00:00:43,240 Speaker 1: San Francisco. Early morning there and in beautiful New York. 8 00:00:43,320 --> 00:00:46,000 Speaker 1: Just a sort of a foggy day here in New York. 9 00:00:46,120 --> 00:00:48,840 Speaker 1: Barry ridholets with me this morning. He was so good 10 00:00:49,040 --> 00:00:51,280 Speaker 1: was it two days ago? Bury Tuesday? It seems like 11 00:00:51,360 --> 00:00:54,320 Speaker 1: it's lifetime and lifetime ago. He's written like successes for 12 00:00:54,360 --> 00:00:59,240 Speaker 1: Bloombergview since then caused the high yield tobacco yesterday came back. 13 00:00:59,280 --> 00:01:01,840 Speaker 1: We'll talk to Barry Riddles about the at how you 14 00:01:01,880 --> 00:01:05,160 Speaker 1: should respond when you see the new volatility. We've got 15 00:01:05,160 --> 00:01:08,000 Speaker 1: a guest to lead this hour off whose expert in 16 00:01:08,040 --> 00:01:12,399 Speaker 1: the perspective of what to do UH when there's um 17 00:01:13,040 --> 00:01:18,640 Speaker 1: when there is UH a renewed volatility um our guests 18 00:01:18,640 --> 00:01:21,800 Speaker 1: this morning to get us started is Canthy Fisher, She's 19 00:01:21,800 --> 00:01:27,319 Speaker 1: will they be Bernstein providing wisdom and council in wealth management? Barry, 20 00:01:27,319 --> 00:01:29,440 Speaker 1: why don't you bring in Cathy because I've beaten her 21 00:01:29,520 --> 00:01:33,200 Speaker 1: to death on television on volatility, high yield and arrest. 22 00:01:33,319 --> 00:01:36,200 Speaker 1: I think, sure you can do better, Berry, Sure, absolutely so. 23 00:01:36,959 --> 00:01:40,840 Speaker 1: I've been hearing now for five years, Gee, we better 24 00:01:40,880 --> 00:01:44,840 Speaker 1: get out of US equities because there's so much complacency, 25 00:01:44,959 --> 00:01:48,480 Speaker 1: as evidenced by this low fix. And yet every year 26 00:01:48,760 --> 00:01:52,280 Speaker 1: the market since the bear market lows in oh nine 27 00:01:52,760 --> 00:01:56,080 Speaker 1: has grinded higher and volatility has continued to go lower. 28 00:01:56,160 --> 00:02:00,720 Speaker 1: So two questions, A, is this a flashing red light? 29 00:02:00,840 --> 00:02:04,559 Speaker 1: Everybody out of the pool? And be If not, why 30 00:02:04,600 --> 00:02:07,640 Speaker 1: have we seen volatility come down as much as it 31 00:02:07,720 --> 00:02:10,919 Speaker 1: has so on the flashing red light? I would say 32 00:02:10,960 --> 00:02:15,520 Speaker 1: absolutely not. Um. The you know, the market has gone up, 33 00:02:15,520 --> 00:02:20,280 Speaker 1: as we all know, incredibly calmly for the past several years. Um. 34 00:02:20,320 --> 00:02:24,160 Speaker 1: This tiny pickup in volatility we've had recently is quite 35 00:02:24,200 --> 00:02:27,040 Speaker 1: modest and UM, and I really think reflects just the 36 00:02:27,080 --> 00:02:29,639 Speaker 1: fact that people are looking for bad news wherever they can, 37 00:02:30,240 --> 00:02:33,800 Speaker 1: and whatever small signs we see, you see a little 38 00:02:33,800 --> 00:02:37,280 Speaker 1: bit of a market reaction. But when we look broadly 39 00:02:37,919 --> 00:02:39,720 Speaker 1: all the things we've been talking about for a while, 40 00:02:39,760 --> 00:02:43,400 Speaker 1: I e. You know, good good, not exciting, but good 41 00:02:43,440 --> 00:02:46,120 Speaker 1: growth around the world, no part of the no major 42 00:02:46,160 --> 00:02:51,560 Speaker 1: economies and recession earnings continuing to plow ahead at very 43 00:02:51,600 --> 00:02:56,040 Speaker 1: respectable rates. See even better than respectable. Earnings have been outstanding, haven't, 44 00:02:56,200 --> 00:03:02,239 Speaker 1: especially overseas. And that's why this question with a overseas yeah, 45 00:03:02,240 --> 00:03:04,600 Speaker 1: And I mean I think when you look the whole 46 00:03:04,639 --> 00:03:08,120 Speaker 1: angle about why UH, diversifying outside the US is so 47 00:03:08,240 --> 00:03:11,919 Speaker 1: powerful is that the non US markets are younger in 48 00:03:11,960 --> 00:03:16,840 Speaker 1: their recovery, younger in there perhaps shareholder focus, particularly in 49 00:03:16,880 --> 00:03:20,480 Speaker 1: places like Japan, but even Europe, and therefore, you know, 50 00:03:20,520 --> 00:03:23,120 Speaker 1: I think a little more momentum there in in the 51 00:03:23,160 --> 00:03:27,079 Speaker 1: potential trends in earnings growth and therefore stock price appreciation. 52 00:03:27,120 --> 00:03:31,480 Speaker 1: So so let's stay with the US versus overseas um question. 53 00:03:31,520 --> 00:03:34,440 Speaker 1: When we look at long periods of time, it seems 54 00:03:34,480 --> 00:03:38,640 Speaker 1: like market leadership goes back and forth. Domestic does really 55 00:03:38,680 --> 00:03:41,360 Speaker 1: well for a couple of years while overseas are soft, 56 00:03:41,800 --> 00:03:45,840 Speaker 1: and then that reverses. Overseas catch up and domestic sort 57 00:03:45,880 --> 00:03:48,640 Speaker 1: of legs. Is that a fair description and and what 58 00:03:48,720 --> 00:03:51,440 Speaker 1: does that mean for a diversified portfolio. That is a 59 00:03:51,480 --> 00:03:54,840 Speaker 1: fair description. And obviously part of it has been currency. 60 00:03:55,000 --> 00:04:00,560 Speaker 1: Um and oftentimes the falling dollar means that you want 61 00:04:00,600 --> 00:04:03,640 Speaker 1: to have non US stocks because when translated back to dollars, 62 00:04:03,680 --> 00:04:06,200 Speaker 1: of course they're worth more. Um. So the currency can 63 00:04:06,240 --> 00:04:08,880 Speaker 1: have an impact, but more in this cycle. In particular, 64 00:04:09,240 --> 00:04:11,640 Speaker 1: if you look at the returns of non U s 65 00:04:11,640 --> 00:04:14,920 Speaker 1: docks x the dollar impact, they are still better. And 66 00:04:14,960 --> 00:04:17,920 Speaker 1: therefore we do think that's much more due to the fundamentals, 67 00:04:17,960 --> 00:04:20,360 Speaker 1: not just the currency moves. Well, weent out to a 68 00:04:20,480 --> 00:04:23,720 Speaker 1: record high, a true record high through too, through the 69 00:04:23,720 --> 00:04:26,719 Speaker 1: peak that we saw in two thousand fourteen. They were 70 00:04:26,760 --> 00:04:28,479 Speaker 1: all going to die and go away, and they're doing 71 00:04:28,520 --> 00:04:31,400 Speaker 1: better than than good right now. Um, Kathy. What people 72 00:04:31,440 --> 00:04:33,320 Speaker 1: don't know about you, as you were in the trenches 73 00:04:33,320 --> 00:04:36,400 Speaker 1: of acquisition and m and A for years at JP Morgan, 74 00:04:36,600 --> 00:04:40,080 Speaker 1: is not just wealth management that you've done defined for 75 00:04:40,120 --> 00:04:44,840 Speaker 1: our audience a creative in delutive Emerson first line of 76 00:04:44,880 --> 00:04:47,720 Speaker 1: their new effort to go after Rockwell, We've got to 77 00:04:47,760 --> 00:04:51,880 Speaker 1: get Rockwell automation. It's an a creative deal. What does 78 00:04:51,920 --> 00:04:56,200 Speaker 1: that exactly mean? It means that after all the acquisition 79 00:04:56,320 --> 00:05:00,279 Speaker 1: costs are factored in, the company does expect that the 80 00:05:00,320 --> 00:05:03,880 Speaker 1: opportunity from the acquisition will indeed add to their earnings 81 00:05:03,920 --> 00:05:07,279 Speaker 1: per share growth going forward, as it should. You shouldn't 82 00:05:07,279 --> 00:05:09,400 Speaker 1: do a deal unless it is. But obviously, in many 83 00:05:09,440 --> 00:05:13,320 Speaker 1: cases deals can be temporarily dilutive to earnings per share 84 00:05:13,720 --> 00:05:16,960 Speaker 1: if the acquisitions costs are high and the premium paid 85 00:05:17,040 --> 00:05:20,760 Speaker 1: is high for the acquired company. Does that calculation have 86 00:05:20,839 --> 00:05:25,039 Speaker 1: the same mystery of plugins is guessing our federal budget deficit? 87 00:05:25,480 --> 00:05:28,159 Speaker 1: Or that I mean when when the dealmakers like you 88 00:05:28,200 --> 00:05:31,720 Speaker 1: are sitting down with Company A, they're already by b. 89 00:05:31,960 --> 00:05:34,840 Speaker 1: Let's go, let's go, let's go. Are the plugins of 90 00:05:34,920 --> 00:05:37,800 Speaker 1: mystery one year out, three years out, five years out. 91 00:05:38,080 --> 00:05:40,280 Speaker 1: They are a mystery, but nowhere near as much as 92 00:05:40,320 --> 00:05:43,320 Speaker 1: mysterious as the dad obviously, because the biggest the biggest 93 00:05:43,360 --> 00:05:47,680 Speaker 1: opportunity is usually in cost synergies, and those are fairly straightforward. 94 00:05:48,040 --> 00:05:51,600 Speaker 1: Revenue synergies are often harder to determine, but on the 95 00:05:51,640 --> 00:05:55,120 Speaker 1: cost side usually it's pretty clear cut. And what's interesting 96 00:05:55,120 --> 00:05:58,279 Speaker 1: to me about the revenue I hate this phrase revenue 97 00:05:58,320 --> 00:06:07,560 Speaker 1: synergies that John Tucker, they're great band. The revenue revenue, Yeah, 98 00:06:07,800 --> 00:06:12,520 Speaker 1: they did revenue synergies. So revenue synergies often reflect the 99 00:06:12,520 --> 00:06:17,920 Speaker 1: opportunity to cross sell to existing customers or to lever 100 00:06:18,720 --> 00:06:20,919 Speaker 1: a product or service in a way that can be 101 00:06:21,040 --> 00:06:25,520 Speaker 1: enhanced by the combination. That's yeah. So so you know, 102 00:06:25,760 --> 00:06:28,479 Speaker 1: every every business is different. It depends. So they but 103 00:06:28,600 --> 00:06:33,479 Speaker 1: that's why they're harder to estimate because they are a 104 00:06:33,480 --> 00:06:36,560 Speaker 1: little bit on the come and they and therefore, you know, 105 00:06:36,680 --> 00:06:39,320 Speaker 1: very people look at them with more skepticism than they 106 00:06:39,360 --> 00:06:44,400 Speaker 1: do the cost control numbers. We are, I would argue, 107 00:06:44,400 --> 00:06:46,240 Speaker 1: we're in a we're going to be in probably the 108 00:06:46,360 --> 00:06:50,440 Speaker 1: longest recovery for both the economy and the markets we've 109 00:06:50,440 --> 00:06:54,480 Speaker 1: probably ever seen in modern history because and I think 110 00:06:54,480 --> 00:06:58,240 Speaker 1: it makes sense given how tepid the economic recovery has been, 111 00:06:58,760 --> 00:07:02,360 Speaker 1: that it has longer to go, and they're the way 112 00:07:02,400 --> 00:07:06,919 Speaker 1: companies are adapting to change also gives earnings longer to 113 00:07:07,000 --> 00:07:11,000 Speaker 1: go as well, and therefore stock prices. So if this 114 00:07:11,080 --> 00:07:14,200 Speaker 1: is a long, slow recovery, what does it tell us 115 00:07:14,280 --> 00:07:18,560 Speaker 1: about what this secular cycle might look at look like 116 00:07:19,160 --> 00:07:22,240 Speaker 1: eighty two to two thousand, Hey, that was almost two decades. 117 00:07:23,280 --> 00:07:28,120 Speaker 1: You can you can date this market to where everybody 118 00:07:28,280 --> 00:07:31,440 Speaker 1: broke out to new highs. Are we looking potentially at 119 00:07:31,480 --> 00:07:35,080 Speaker 1: another ten plus years from here? It's hard, hard to 120 00:07:35,120 --> 00:07:37,200 Speaker 1: know the time, but I think that I think you're 121 00:07:37,240 --> 00:07:40,280 Speaker 1: hitting on something really important, which is that embedded in 122 00:07:40,360 --> 00:07:45,600 Speaker 1: this cycle is a radical technological transformation. Right. We're all 123 00:07:45,600 --> 00:07:48,760 Speaker 1: talking about the recovery from OH eight, and we're talking 124 00:07:48,760 --> 00:07:52,960 Speaker 1: about geography, but but really more important is the opportunity 125 00:07:53,000 --> 00:07:58,040 Speaker 1: for companies in every industry to transform their business with technology, 126 00:07:58,160 --> 00:08:02,080 Speaker 1: and that will have a many, long long time to go, 127 00:08:02,400 --> 00:08:05,040 Speaker 1: and how companies adapt is going to be quite interesting. 128 00:08:05,120 --> 00:08:08,360 Speaker 1: Were talking business intelligent? Are we talking hardware? What? What 129 00:08:08,560 --> 00:08:14,160 Speaker 1: is the focus of technology across you're describing across every field? 130 00:08:14,240 --> 00:08:17,080 Speaker 1: All of the above, right, because just think of what 131 00:08:17,080 --> 00:08:19,760 Speaker 1: what people can do now with any kind of handheld 132 00:08:19,760 --> 00:08:23,680 Speaker 1: device for efficiencies, but then bringing an artificial intelligence, machine learning, 133 00:08:23,960 --> 00:08:26,840 Speaker 1: all the things that we know are possible and can 134 00:08:26,960 --> 00:08:31,360 Speaker 1: indeed enhance efficiency across the board. There's there's going to 135 00:08:31,400 --> 00:08:33,600 Speaker 1: be lots of change as companies figure out what's right 136 00:08:33,679 --> 00:08:36,160 Speaker 1: for them. Kathy, Thank you so much. Kathy Fisher with 137 00:08:36,200 --> 00:08:40,280 Speaker 1: a beautiful premier, particularly valuable in today's calm futures. Up 138 00:08:40,280 --> 00:08:43,360 Speaker 1: eight down, futures up fifty seven after uh, some of 139 00:08:43,400 --> 00:08:46,439 Speaker 1: the uproar that we saw yesterday. Barry I really did 140 00:08:46,440 --> 00:08:49,080 Speaker 1: try to do Barry ridholes one on one yesterday and 141 00:08:49,120 --> 00:08:50,920 Speaker 1: that you know, the markets were moving and it was 142 00:08:51,000 --> 00:08:53,760 Speaker 1: O MG, this that and the other thing. And yet 143 00:08:53,800 --> 00:08:57,440 Speaker 1: in perspective, there was no breakage of support across any 144 00:08:57,520 --> 00:09:01,880 Speaker 1: number of assets. It was just uh, somewhat normous, Kathy 145 00:09:01,920 --> 00:09:05,480 Speaker 1: said earlier, somewhat normal volatility. You know, we're so used 146 00:09:05,520 --> 00:09:07,880 Speaker 1: to a hundred point day on the DAW being a 147 00:09:07,920 --> 00:09:11,240 Speaker 1: big deal. What we were down down yesterday almost a 148 00:09:11,280 --> 00:09:17,680 Speaker 1: hundred and it's barely half a percent move, So you 149 00:09:17,800 --> 00:09:24,440 Speaker 1: can't think of these market moves from your context of 150 00:09:22,679 --> 00:09:26,160 Speaker 1: It's a lot to talk about with Barry Rid. Hilts 151 00:09:26,200 --> 00:09:28,599 Speaker 1: will continue and do that. Gregg Val just publishes with 152 00:09:28,640 --> 00:09:32,320 Speaker 1: the Horizon Investments. It's a simple headline. The tax bill 153 00:09:32,960 --> 00:09:34,959 Speaker 1: is in trouble. We'll do much more on that through 154 00:09:35,000 --> 00:09:50,840 Speaker 1: the morning as well. Every state is different. We have 155 00:09:50,880 --> 00:09:54,359 Speaker 1: the advantage of Libby Cantrill of PIMCO that she understands 156 00:09:54,360 --> 00:09:58,079 Speaker 1: in her Colorado, the Democrats have been ascended since time began, 157 00:09:58,120 --> 00:10:01,480 Speaker 1: but they've never really done it. Called Rondo's election to 158 00:10:01,559 --> 00:10:04,520 Speaker 1: election always a fractious state. You really never know what's 159 00:10:04,559 --> 00:10:08,560 Speaker 1: gonna happen. You don't know it now, you don't. It's 160 00:10:07,280 --> 00:10:11,440 Speaker 1: it's but it's good. It's actually because then folks who 161 00:10:11,440 --> 00:10:14,240 Speaker 1: are sent to Washington actually are incentivized compromise. What does 162 00:10:14,280 --> 00:10:17,719 Speaker 1: it mean within your policy area in Washington that it's 163 00:10:17,760 --> 00:10:21,600 Speaker 1: a senior senator from Wisconsin, because Wisconsin is sort of 164 00:10:21,640 --> 00:10:25,800 Speaker 1: to me, almost like Georgia or Virginia. It's a nuts 165 00:10:25,840 --> 00:10:30,880 Speaker 1: every election, there is a battle. Yeah, it's all fifty stuff. Yeah, 166 00:10:30,960 --> 00:10:34,360 Speaker 1: it's actually a little bit like Colorado. Different dynamics, but 167 00:10:34,360 --> 00:10:37,720 Speaker 1: but but similar in that it's it's unpredictable. Um so so, 168 00:10:37,800 --> 00:10:41,199 Speaker 1: Senator Johnson actually has been expressing concern about the small 169 00:10:41,240 --> 00:10:44,160 Speaker 1: business issue, about this pass through rate issue actually for 170 00:10:44,200 --> 00:10:46,880 Speaker 1: several months and even a couple of weeks ago, basically 171 00:10:46,920 --> 00:10:49,680 Speaker 1: said this was going to be his red line. I 172 00:10:49,720 --> 00:10:52,600 Speaker 1: think that the fact that he so vociferously came out 173 00:10:52,600 --> 00:10:55,200 Speaker 1: against it yesterday, I mean today he's walking back a 174 00:10:55,200 --> 00:10:57,040 Speaker 1: little bit, saying that he wants to get to yes. 175 00:10:57,559 --> 00:11:00,120 Speaker 1: But as we know, any fundamental changes to this a 176 00:11:00,160 --> 00:11:02,959 Speaker 1: bill might violate the Bird rule and might not be 177 00:11:03,000 --> 00:11:07,120 Speaker 1: able to be passed. I've given up calling this tax reform. 178 00:11:07,440 --> 00:11:11,280 Speaker 1: Do you disagree with me? Isn't it just blatant tax cut? 179 00:11:11,400 --> 00:11:13,800 Speaker 1: It's it's so we've actually been sort of saying from 180 00:11:13,840 --> 00:11:16,000 Speaker 1: the very beginning, this is probably gonna be tax reform 181 00:11:16,160 --> 00:11:18,720 Speaker 1: light at best, and I think that's what you're getting. 182 00:11:18,720 --> 00:11:21,679 Speaker 1: You're getting kind of tax cuts with a little bit 183 00:11:21,720 --> 00:11:25,040 Speaker 1: of reform, so they can call it reform, but effectively 184 00:11:25,080 --> 00:11:28,079 Speaker 1: this is a pretty big corporate tax cut with some 185 00:11:28,240 --> 00:11:33,280 Speaker 1: individual tax relief that obviously will expire. Has anything to 186 00:11:33,320 --> 00:11:34,959 Speaker 1: do with it. So let me push back on me, 187 00:11:35,120 --> 00:11:38,880 Speaker 1: this isn't tax reform, just just to just to argue 188 00:11:38,920 --> 00:11:43,160 Speaker 1: the of the side. So changes to the mortgage interest 189 00:11:43,200 --> 00:11:48,199 Speaker 1: deduction have been floated and negotiated. This LLC passed through 190 00:11:48,840 --> 00:11:51,160 Speaker 1: is a big deal, especially after the n f I 191 00:11:51,240 --> 00:11:54,320 Speaker 1: B n f IB initially came out and said, hey, 192 00:11:54,320 --> 00:11:56,840 Speaker 1: this exempts too many small businesses, we can't support it. 193 00:11:57,320 --> 00:12:01,880 Speaker 1: Accelerated appreciation of capital spending is huge change. That's a 194 00:12:02,000 --> 00:12:07,520 Speaker 1: very very significant change. Um. And there are other things 195 00:12:07,679 --> 00:12:10,520 Speaker 1: in this tax code, certainly getting rid of the estate 196 00:12:10,600 --> 00:12:15,880 Speaker 1: tax that are deep philosophical shifts from how the tax 197 00:12:15,920 --> 00:12:21,480 Speaker 1: code uh was previously. Are those fair? Yeah? I think 198 00:12:21,520 --> 00:12:26,040 Speaker 1: those are all, Um, you know, some elements of reform. However, 199 00:12:26,120 --> 00:12:29,480 Speaker 1: if you really had true fundamental tax reform, this would 200 00:12:29,480 --> 00:12:31,520 Speaker 1: be revenue neutral, right, I mean, this would not be 201 00:12:31,559 --> 00:12:37,000 Speaker 1: adding anything to the deficit. And oyeah, what's what's the 202 00:12:37,000 --> 00:12:40,160 Speaker 1: trillion and a half dollars? Um so? So sure, yeah, 203 00:12:40,200 --> 00:12:44,680 Speaker 1: does this maybe move maybe a step in that direction, possibly, 204 00:12:45,040 --> 00:12:47,440 Speaker 1: but this is not the sort of the big, comprehensive 205 00:12:47,600 --> 00:12:50,360 Speaker 1: once in a generation. This is the literally cantral wheelhouse. 206 00:12:50,520 --> 00:12:53,760 Speaker 1: Have you had a recent or new calculation of what 207 00:12:53,960 --> 00:12:57,880 Speaker 1: that deficit ad will be like in the last twelve hours? Yeah? So, 208 00:12:58,240 --> 00:13:02,040 Speaker 1: um you know this, well, we'll all it's obviously changing, 209 00:13:02,360 --> 00:13:05,600 Speaker 1: um there is. So our view is that this will 210 00:13:05,640 --> 00:13:09,000 Speaker 1: probably add around a trillion dollars to the deficit over 211 00:13:09,080 --> 00:13:13,360 Speaker 1: ten years. Um the score is one point five trillion dollars. 212 00:13:13,640 --> 00:13:16,320 Speaker 1: There's a baseline issue. This is getting very wonky between 213 00:13:16,320 --> 00:13:19,280 Speaker 1: the current policy and current law base sign So basically 214 00:13:19,320 --> 00:13:21,679 Speaker 1: that one and a half that's been scored includes art 215 00:13:21,679 --> 00:13:23,840 Speaker 1: tax breaksets are that are already in the economy, that 216 00:13:23,840 --> 00:13:26,240 Speaker 1: are I've already been factored in. Um So about a 217 00:13:26,240 --> 00:13:29,840 Speaker 1: trillion dollars over over ten years. Um, but you know 218 00:13:29,960 --> 00:13:33,520 Speaker 1: that we're still, you know, relatively early in terms of 219 00:13:33,559 --> 00:13:35,120 Speaker 1: I mean kind of the fifth sixth inning of a 220 00:13:35,200 --> 00:13:37,920 Speaker 1: nine inning game here. Um, there is still quite a 221 00:13:37,920 --> 00:13:40,880 Speaker 1: long way to go, and I think Senator Johnson's opposition 222 00:13:41,000 --> 00:13:43,760 Speaker 1: just shows that this thing is not fully baked yet 223 00:13:43,800 --> 00:13:45,520 Speaker 1: and we may not, um, you know, we may not 224 00:13:45,559 --> 00:13:47,480 Speaker 1: see anything. I think that that that there there, there 225 00:13:47,520 --> 00:13:49,679 Speaker 1: is the potential for that even though there is extreme 226 00:13:49,720 --> 00:13:52,520 Speaker 1: political will to get something done. So explain the thought 227 00:13:52,600 --> 00:13:57,760 Speaker 1: process to me behind throwing a live bomb in the 228 00:13:57,800 --> 00:14:01,440 Speaker 1: middle of this In terms of the appeal of the 229 00:14:01,480 --> 00:14:05,160 Speaker 1: Obamacare mandate. I know that generates a little bit of revenue, 230 00:14:05,720 --> 00:14:08,760 Speaker 1: but why would you want to waver red flag in 231 00:14:08,800 --> 00:14:12,880 Speaker 1: front of all the pro A c A people on 232 00:14:12,920 --> 00:14:15,960 Speaker 1: a political fight you just had and lost three times? 233 00:14:16,280 --> 00:14:18,720 Speaker 1: That makes no sense, right, It's a It's a great point, 234 00:14:18,720 --> 00:14:21,160 Speaker 1: and it's one of the reasons why. Um, you know, 235 00:14:21,240 --> 00:14:24,320 Speaker 1: I think we thought that it would not be included. However, 236 00:14:24,720 --> 00:14:27,680 Speaker 1: there's a real revenue issue here. Um. It's it raises 237 00:14:27,680 --> 00:14:31,520 Speaker 1: three billion dollars and because they're going to be using 238 00:14:31,560 --> 00:14:34,360 Speaker 1: something called reconciliation, which allows bills to be past the 239 00:14:34,360 --> 00:14:37,200 Speaker 1: fifty votes, not sixty. They have to comply with what's 240 00:14:37,240 --> 00:14:40,240 Speaker 1: called the Bird rule. The Bird war requires that that 241 00:14:40,320 --> 00:14:42,480 Speaker 1: the bill does not add to the deficit in your 242 00:14:42,480 --> 00:14:45,440 Speaker 1: eleven and beyond. So we'll just unset it like the 243 00:14:45,440 --> 00:14:47,360 Speaker 1: Bush count. Well no, but so so. The Senate bill 244 00:14:47,440 --> 00:14:51,720 Speaker 1: before the Obamacare repeal, before the individual mandate repeal, did 245 00:14:51,800 --> 00:14:53,680 Speaker 1: add to the depths and out years, so would would 246 00:14:53,680 --> 00:14:56,720 Speaker 1: not have complied reconciliation. Now it does. The revenue, it's 247 00:14:56,760 --> 00:14:59,000 Speaker 1: a whole. It's revenue. You guys are in that side 248 00:14:59,000 --> 00:15:02,800 Speaker 1: of the studio, Tucker and I are over here going 249 00:15:02,800 --> 00:15:06,760 Speaker 1: to we'll get that. Wait, wait, wait, are my Texas 250 00:15:06,880 --> 00:15:10,040 Speaker 1: going up? In the answers, yes, yeah, right for you 251 00:15:10,120 --> 00:15:12,240 Speaker 1: and for me, yes, they absolutely are. If you're in 252 00:15:12,280 --> 00:15:15,800 Speaker 1: New York, taxes aren't going up. My taxes are going 253 00:15:15,880 --> 00:15:19,840 Speaker 1: down because I own an LLCRE and to me, this 254 00:15:19,960 --> 00:15:24,720 Speaker 1: is just an enormous giveaway gifts, right, it's a toll giveaway. Yeah, 255 00:15:25,240 --> 00:15:27,400 Speaker 1: that's get our wallets out now, in hand them. No, 256 00:15:27,560 --> 00:15:30,239 Speaker 1: we should go to we should go to our accountants 257 00:15:30,280 --> 00:15:32,960 Speaker 1: and say we'll make us into passed away. Well, that's 258 00:15:33,000 --> 00:15:35,960 Speaker 1: the risk, isn't that the risk? With this LLC passed 259 00:15:35,960 --> 00:15:40,320 Speaker 1: through that companies that are legitimately established as partnerships or 260 00:15:40,360 --> 00:15:44,080 Speaker 1: limited liability companies, You're now gonna invite every other small 261 00:15:44,160 --> 00:15:46,440 Speaker 1: business to becoming an ll Yes, and you're going to 262 00:15:46,480 --> 00:15:48,720 Speaker 1: be inviting anybody who's in New York and New Jersey 263 00:15:48,720 --> 00:15:52,040 Speaker 1: and Okay, then California. You've seen their songs for plum 264 00:15:53,640 --> 00:15:55,160 Speaker 1: Wait wait wait, were gonna do a billboard here? We 265 00:15:55,240 --> 00:16:00,000 Speaker 1: gotta do a message from our wonderful sponsors, Bloomberg Surveillance. 266 00:16:00,160 --> 00:16:02,200 Speaker 1: Let me cantrol this morning. It's brought to you by 267 00:16:02,520 --> 00:16:08,440 Speaker 1: those who will make you an LLC. We thank for 268 00:16:08,520 --> 00:16:12,880 Speaker 1: their supports if you want to be an LLC, and 269 00:16:13,000 --> 00:16:16,960 Speaker 1: we thank eisener Emperor, we think. So let me ask 270 00:16:17,000 --> 00:16:20,080 Speaker 1: you this other question about what has just come up 271 00:16:20,600 --> 00:16:24,640 Speaker 1: from some of the secretaries of Defense who are concerned 272 00:16:24,720 --> 00:16:29,440 Speaker 1: that this huge deficit and and a trillion is fairly optimistic. 273 00:16:29,840 --> 00:16:32,440 Speaker 1: Some of that's dynamically scored. But the numbers we've been 274 00:16:32,480 --> 00:16:37,440 Speaker 1: looking at before us some anywhere from fifty higher. Is 275 00:16:37,440 --> 00:16:41,040 Speaker 1: this potentially going to pull money away from the Defense Department. Yeah, 276 00:16:41,040 --> 00:16:43,800 Speaker 1: I think that's what they're concerned about. Right. So, um, 277 00:16:43,800 --> 00:16:49,000 Speaker 1: some former Secretary Secretaries of Defense came out overnight expressing 278 00:16:49,040 --> 00:16:53,000 Speaker 1: opposition to this tax bill for fear that invariably Congress 279 00:16:53,000 --> 00:16:55,720 Speaker 1: will be forced to cut, um make pretty deep cuts 280 00:16:55,760 --> 00:16:58,920 Speaker 1: to to defense spending. And I think this is a 281 00:16:59,040 --> 00:17:02,400 Speaker 1: really important development, especially as it relates to Senator McCain. 282 00:17:02,520 --> 00:17:04,960 Speaker 1: You have to remember, first of all, the vote margin 283 00:17:05,000 --> 00:17:07,320 Speaker 1: and Senate is very narrow, right, so they can only 284 00:17:07,359 --> 00:17:10,520 Speaker 1: lose two votes and still pass this bill uh in 285 00:17:10,520 --> 00:17:12,879 Speaker 1: the in the Senate, assuming no Democrats will support it. 286 00:17:13,240 --> 00:17:16,600 Speaker 1: And Senator McCain voted against both two thousand one and 287 00:17:16,640 --> 00:17:19,119 Speaker 1: the two thousand three Bush tax cuts for sort of 288 00:17:19,160 --> 00:17:21,439 Speaker 1: similar reasons, right, he was concerned that this could have 289 00:17:21,480 --> 00:17:24,680 Speaker 1: a deltarious impact on defense spending. And so I think 290 00:17:24,760 --> 00:17:27,360 Speaker 1: this is a big development as it relates to his vote, 291 00:17:27,400 --> 00:17:29,800 Speaker 1: and they can't afford to lose more votes. What does 292 00:17:30,080 --> 00:17:35,520 Speaker 1: Ron Johnson and what he's the accountant from Wisconsin. How 293 00:17:35,560 --> 00:17:39,720 Speaker 1: does Susan Collins is one example, react to that. Yeah, 294 00:17:39,720 --> 00:17:42,800 Speaker 1: I think she, well, she's already expressed some real concern 295 00:17:42,920 --> 00:17:45,440 Speaker 1: about the individual mandate being but I get they haven't 296 00:17:45,480 --> 00:17:48,439 Speaker 1: committed and they're trying, right, I mean, this is that 297 00:17:48,560 --> 00:17:51,640 Speaker 1: this is the thing about this is tricky because they're 298 00:17:51,680 --> 00:17:54,720 Speaker 1: trying to go along kind of to get along, um 299 00:17:54,920 --> 00:17:58,480 Speaker 1: to a point, but then your force a vote on 300 00:17:58,560 --> 00:18:02,400 Speaker 1: something that's politically ski and you know, people are members 301 00:18:02,400 --> 00:18:04,920 Speaker 1: of Congress are politically expedient. They're not gonna necessarily take 302 00:18:04,920 --> 00:18:07,240 Speaker 1: about especially in the Senate, that's going to harm their 303 00:18:07,520 --> 00:18:10,000 Speaker 1: re election. Brilliant. Let's come back with Libby Cantrall of 304 00:18:10,040 --> 00:18:13,000 Speaker 1: Pimco and very ridholds it. It's a really good discussion here. 305 00:18:13,000 --> 00:18:15,479 Speaker 1: We're really getting into the you know, the soup of it. 306 00:18:15,480 --> 00:18:19,120 Speaker 1: It's not what's the today's day, November six, so we're 307 00:18:19,119 --> 00:18:23,200 Speaker 1: like getting there. I haven't even begun my Thanksgiving shopping. Yeah, 308 00:18:23,200 --> 00:18:26,120 Speaker 1: I gotta, I gotta, I gotta, you know, I gotta 309 00:18:26,160 --> 00:18:27,679 Speaker 1: go get the turnips out of the ground in the 310 00:18:27,800 --> 00:18:31,359 Speaker 1: garden in Central Park and the designer bird. Yeah no, no, 311 00:18:31,400 --> 00:18:37,280 Speaker 1: we're not We're not ducking from Pimco. Um uh, we'll 312 00:18:37,320 --> 00:18:39,919 Speaker 1: come back and talk about this. We're having A gentleman 313 00:18:39,920 --> 00:18:44,119 Speaker 1: of Pimco recommended that I go to Greenberg's of Tyler, 314 00:18:44,240 --> 00:18:50,119 Speaker 1: Texas really smoked turkey. That's interesting talking about this. My 315 00:18:50,200 --> 00:18:52,919 Speaker 1: Thanksgiving planning is I buy tickets to Chicago, and I 316 00:18:52,960 --> 00:18:55,720 Speaker 1: just eat my way across the city. That's brilliant. Can 317 00:18:55,520 --> 00:18:57,359 Speaker 1: I can I come to the ridhole side? It's a 318 00:18:57,440 --> 00:19:09,439 Speaker 1: ten pound weekend. I just have to warn you. Okay, 319 00:19:11,280 --> 00:19:13,159 Speaker 1: we're gonna get to the Fed in the discussion of 320 00:19:13,200 --> 00:19:16,240 Speaker 1: that with Mr Levy, Dr Levy, with barrenburg Bank, but 321 00:19:16,280 --> 00:19:18,600 Speaker 1: make you leave it. I've got to ask about nine 322 00:19:18,680 --> 00:19:22,240 Speaker 1: fifteen this morning, why did guys like you look at 323 00:19:22,320 --> 00:19:30,560 Speaker 1: industrial production and capacity utilization if we're a service sector economy. Well, Tom, 324 00:19:30,560 --> 00:19:35,240 Speaker 1: we the US does rely on services, but also relies 325 00:19:35,359 --> 00:19:42,399 Speaker 1: on manufacturing, and industrial production is very important. We still 326 00:19:42,480 --> 00:19:47,240 Speaker 1: produce a lot of things for domestic production and and 327 00:19:47,240 --> 00:19:50,480 Speaker 1: and consumption and and for exports, so it's important. I 328 00:19:50,600 --> 00:19:53,320 Speaker 1: tend to put more weight on the industrial production numbers 329 00:19:53,320 --> 00:19:57,639 Speaker 1: than the capacity utilization numbers. UM. I find the ladder 330 00:19:57,840 --> 00:20:00,639 Speaker 1: um um. The way they count reulate, the way the 331 00:20:00,720 --> 00:20:04,200 Speaker 1: FED calculates them, I find a little questionable. Okay, let's 332 00:20:04,200 --> 00:20:07,160 Speaker 1: go to our FED changer that Barry was talking about. 333 00:20:07,240 --> 00:20:11,720 Speaker 1: We're gonna get Chairman Powell and all that. People have 334 00:20:11,840 --> 00:20:16,960 Speaker 1: said that the concern of inflation has been overwrought and overdone. 335 00:20:18,000 --> 00:20:23,360 Speaker 1: What's different now? How will a conservative economists, How will 336 00:20:23,400 --> 00:20:28,520 Speaker 1: the shadow economists watching a more liberal, more devish FED, 337 00:20:28,840 --> 00:20:34,240 Speaker 1: how will they react to the new Fed? Well, I don't. 338 00:20:34,320 --> 00:20:40,400 Speaker 1: I do not think the concern about inflation is overstated. Um. 339 00:20:40,480 --> 00:20:45,960 Speaker 1: We all benefit from stable low prices UM. And I 340 00:20:45,960 --> 00:20:50,040 Speaker 1: would emphasize that the reason why inflation has been so 341 00:20:50,200 --> 00:20:56,600 Speaker 1: low is nominal GDP growth has been growing very, very slowly, 342 00:20:56,600 --> 00:21:00,000 Speaker 1: so there's very little excess demand in the economy relatives 343 00:21:00,119 --> 00:21:04,960 Speaker 1: to productive capacity. Tom stated differently, if the FEDS policies 344 00:21:05,359 --> 00:21:09,840 Speaker 1: had actually stimulated growth as they were UH forecasts to do, 345 00:21:10,560 --> 00:21:12,680 Speaker 1: we would have had a much bigger inflation problem. And 346 00:21:12,720 --> 00:21:15,440 Speaker 1: the final point I would make about inflation is even 347 00:21:15,520 --> 00:21:21,440 Speaker 1: though it's below the FEDS two long run target, UM, 348 00:21:21,880 --> 00:21:24,600 Speaker 1: it's very it shouldn't. It is not a concern. And 349 00:21:24,640 --> 00:21:28,639 Speaker 1: the recent declines and inflation so far this year have 350 00:21:28,760 --> 00:21:32,600 Speaker 1: been favorable for the economy, not unfavorable. So let's stick 351 00:21:32,640 --> 00:21:35,600 Speaker 1: with the inflation issue for a minute. I have I 352 00:21:35,640 --> 00:21:40,200 Speaker 1: have not quite a pushback, but two points to throw 353 00:21:40,240 --> 00:21:43,359 Speaker 1: your way and get a response on. The first is 354 00:21:43,800 --> 00:21:47,639 Speaker 1: we are still in a post credit crisis recovery. Those 355 00:21:47,840 --> 00:21:53,280 Speaker 1: those tend to be primarily characterized by low growth, low inflation, 356 00:21:54,160 --> 00:21:59,560 Speaker 1: and very UH low wage pressure. So so that's point one. 357 00:21:59,640 --> 00:22:04,879 Speaker 1: Question one. How significant is this particular cycle to to 358 00:22:05,040 --> 00:22:08,480 Speaker 1: the low inflation question? And as part of that we 359 00:22:08,560 --> 00:22:12,720 Speaker 1: have seen almost no wage pressure for a decade. How 360 00:22:12,760 --> 00:22:18,080 Speaker 1: significant is that to the inflation question? Very those are 361 00:22:18,160 --> 00:22:21,560 Speaker 1: close are very valid points, UM. But here we are 362 00:22:21,640 --> 00:22:26,800 Speaker 1: now UM in the ninth year of economic expansion and 363 00:22:26,920 --> 00:22:31,560 Speaker 1: it's no longer recovery stage UM and and the economy 364 00:22:31,640 --> 00:22:36,240 Speaker 1: is behaving very normally, even though, as you point out, 365 00:22:36,960 --> 00:22:40,920 Speaker 1: wages are low despite the extremely low unemployment, right, and 366 00:22:40,960 --> 00:22:44,119 Speaker 1: I think that the low wages have a lot to 367 00:22:44,200 --> 00:22:52,879 Speaker 1: do with the disappointing growth in labor productivity. And in addition, UM, 368 00:22:53,000 --> 00:22:56,760 Speaker 1: we really have a we call it a challenge or 369 00:22:56,800 --> 00:23:02,920 Speaker 1: a structural problem in the United States in that, unfortunately 370 00:23:03,600 --> 00:23:08,000 Speaker 1: we have tens of millions of semi skilled workers who 371 00:23:08,000 --> 00:23:13,119 Speaker 1: are who are working in low productivity jobs and and UM, 372 00:23:13,160 --> 00:23:16,200 Speaker 1: and their wages are not higher going up very much. 373 00:23:16,240 --> 00:23:19,359 Speaker 1: So this is this is way beyond the scope of 374 00:23:19,440 --> 00:23:23,240 Speaker 1: monetary policy. To correct it needs to be addressed through 375 00:23:23,760 --> 00:23:29,640 Speaker 1: other UH policies like education policy and skills training. So 376 00:23:30,119 --> 00:23:36,159 Speaker 1: so I agree with you. I'd love to have um 377 00:23:36,200 --> 00:23:39,520 Speaker 1: accelerating wages here and I'd like to see them being 378 00:23:39,640 --> 00:23:43,879 Speaker 1: regal wages to reflect improving productivity, but we just haven't 379 00:23:43,920 --> 00:23:48,040 Speaker 1: had that. So I agree with your assessment. The issue 380 00:23:48,160 --> 00:23:54,000 Speaker 1: is how to address it, and my unch, my read 381 00:23:54,160 --> 00:23:56,720 Speaker 1: is that the FED over the last three or four 382 00:23:56,840 --> 00:24:00,359 Speaker 1: years has extended the scope of monetary paul see to 383 00:24:00,440 --> 00:24:03,399 Speaker 1: try to drive up wages, but it's just not the 384 00:24:03,480 --> 00:24:06,400 Speaker 1: right policy tool to leave it there. Mickey Leavie, thank 385 00:24:06,400 --> 00:24:08,639 Speaker 1: you so much. With baronburg Bank as we see a 386 00:24:08,720 --> 00:24:24,919 Speaker 1: new FED into the next year, we are thrilled to 387 00:24:24,920 --> 00:24:27,639 Speaker 1: bring you now across all of Bloomberg Radio, and I 388 00:24:27,720 --> 00:24:31,240 Speaker 1: might point out our Apple podcasts as well. One of 389 00:24:31,240 --> 00:24:33,679 Speaker 1: the great leaders of the art world, she's out of 390 00:24:33,720 --> 00:24:36,920 Speaker 1: Harvard and of course he acclaimed Masters in Art program 391 00:24:36,920 --> 00:24:40,320 Speaker 1: at Yale University, Brook Lampy. Lampley has had a storied 392 00:24:40,400 --> 00:24:44,600 Speaker 1: career in art, including at Christie's working in their evening 393 00:24:44,600 --> 00:24:50,000 Speaker 1: sales division. She has risen UH very much so in 394 00:24:50,080 --> 00:24:53,160 Speaker 1: the art world, and we'll be vice chairman at Sotheby's 395 00:24:53,760 --> 00:24:56,600 Speaker 1: beginning of the year, and we're thrilled at southobs Is 396 00:24:56,600 --> 00:24:59,880 Speaker 1: allowed UH us to speak with her today. Brook there's 397 00:24:59,880 --> 00:25:03,400 Speaker 1: an no other conversation, not an investment but in art, 398 00:25:04,040 --> 00:25:07,320 Speaker 1: in the aesthetic than this. Leonardo to painting at four 399 00:25:07,400 --> 00:25:10,919 Speaker 1: hundred and fifty million. You told me today that you 400 00:25:10,960 --> 00:25:14,520 Speaker 1: were not in the room last night. It's your former employer. 401 00:25:15,400 --> 00:25:19,920 Speaker 1: Just describe what's going on in the room. Is proxies 402 00:25:20,240 --> 00:25:24,560 Speaker 1: bid four people, five people bid by telephone? Is it 403 00:25:24,680 --> 00:25:30,360 Speaker 1: like the movies? It's spectacular it is. There were four 404 00:25:30,440 --> 00:25:32,560 Speaker 1: people on the phone to by understanding and one in 405 00:25:32,600 --> 00:25:36,840 Speaker 1: the room. The Christie's video is UM, and I'm familiar 406 00:25:36,880 --> 00:25:39,439 Speaker 1: with both sides. Of course, UM a bit limiting and 407 00:25:39,440 --> 00:25:42,680 Speaker 1: that is quite focused on the staff. So you can 408 00:25:42,720 --> 00:25:45,080 Speaker 1: see the phone bitter is quite clearly, but not the 409 00:25:45,200 --> 00:25:48,080 Speaker 1: room bitter. But even if you were there, you probably couldn't. 410 00:25:48,119 --> 00:25:49,919 Speaker 1: Given the depth of space in the room and how 411 00:25:49,960 --> 00:25:52,639 Speaker 1: many people there are, it's very difficult to see the 412 00:25:52,680 --> 00:25:55,520 Speaker 1: room bitter unless you're close to them. What was fascinating 413 00:25:55,560 --> 00:26:01,000 Speaker 1: about the bidding last night was the participatation of an 414 00:26:01,119 --> 00:26:08,439 Speaker 1: unusually determined bidder who not only was persistent in raising 415 00:26:08,480 --> 00:26:15,280 Speaker 1: their bids, but would raise them at um infleeted bid increments, so, 416 00:26:15,960 --> 00:26:19,960 Speaker 1: particularly in the latter portion of the bidding, between three 417 00:26:20,040 --> 00:26:23,280 Speaker 1: hundred and four hundred million dollars, where it was really 418 00:26:23,320 --> 00:26:26,320 Speaker 1: between two bidders and one on the phone with Francois 419 00:26:26,359 --> 00:26:28,560 Speaker 1: de portare On and the other one on the phone 420 00:26:28,560 --> 00:26:32,440 Speaker 1: with Alex Rotter Um. You would see Francois would always 421 00:26:32,600 --> 00:26:36,880 Speaker 1: take the bid two million and the other bidder would 422 00:26:36,960 --> 00:26:40,439 Speaker 1: usually go another eight million UM, so it would go 423 00:26:40,560 --> 00:26:46,960 Speaker 1: from day three two to thirty. You toss it around 424 00:26:47,000 --> 00:26:49,240 Speaker 1: like you're an aisle number seven at Whole Foods, like 425 00:26:49,320 --> 00:26:51,760 Speaker 1: colleague Barry Ridholtz wants to get in here. But I've 426 00:26:51,800 --> 00:26:54,720 Speaker 1: got to ask the news question. Does Brook Lampley know 427 00:26:54,920 --> 00:27:00,560 Speaker 1: who those two bidders were? I don't, And in all aglihood, 428 00:27:01,200 --> 00:27:05,680 Speaker 1: if I were still at Christie's UM, I would have 429 00:27:05,920 --> 00:27:09,400 Speaker 1: the same view probably that I do Now, I would 430 00:27:09,440 --> 00:27:14,560 Speaker 1: have a good I'd have an informed idea, but likely 431 00:27:15,040 --> 00:27:21,760 Speaker 1: that's very restricted information until maybe one person, until hopefully 432 00:27:22,760 --> 00:27:24,400 Speaker 1: the whole world would like to know who the buyer 433 00:27:24,520 --> 00:27:26,840 Speaker 1: is and perhaps will confirm it, but that's of their 434 00:27:26,880 --> 00:27:29,760 Speaker 1: own initiative. Hey Brooke, Barry rid Hilts, I have so 435 00:27:29,880 --> 00:27:32,520 Speaker 1: many questions for you. I'm going to keep it short 436 00:27:32,600 --> 00:27:37,399 Speaker 1: and sweet. First, this is just a huge leap above 437 00:27:37,520 --> 00:27:42,840 Speaker 1: the previous hug it's more than double. What does that 438 00:27:42,960 --> 00:27:46,480 Speaker 1: tell you about the current state of the art market. 439 00:27:48,000 --> 00:27:51,359 Speaker 1: I think it's validictory and appropriate in a sense that 440 00:27:52,920 --> 00:27:59,360 Speaker 1: da Vinci should be the highest value or highest ranking 441 00:27:59,600 --> 00:28:05,280 Speaker 1: artist in the art world. There are only sixteen roughly 442 00:28:05,440 --> 00:28:11,560 Speaker 1: known paintings by the artist. They are all in public collections, 443 00:28:12,520 --> 00:28:20,640 Speaker 1: so this is the epitome of scarcity and brand name recognition. 444 00:28:21,160 --> 00:28:25,800 Speaker 1: Um these are the marquee qualities that drive the art market. 445 00:28:26,040 --> 00:28:30,639 Speaker 1: So it's fitting that this work should have triumphed in 446 00:28:30,720 --> 00:28:34,200 Speaker 1: the way it did. But what's I think most important 447 00:28:34,320 --> 00:28:38,760 Speaker 1: for everyone is we've been talking about the spectrum and 448 00:28:39,120 --> 00:28:42,800 Speaker 1: potential number of buyers who had bid a hundred million 449 00:28:42,840 --> 00:28:45,760 Speaker 1: dollars for a work of art, maybe even two hundred 450 00:28:45,800 --> 00:28:47,880 Speaker 1: million dollars for a work of art, and now we 451 00:28:47,960 --> 00:28:50,920 Speaker 1: have a completely new benchmark. So so the follow up 452 00:28:51,040 --> 00:28:55,240 Speaker 1: question is we know that da Vinci's are exceedingly rare, 453 00:28:55,920 --> 00:28:59,600 Speaker 1: but there were lots of questions raised about the provenance 454 00:28:59,760 --> 00:29:03,560 Speaker 1: and state of this and subsequent I think the last 455 00:29:03,600 --> 00:29:06,200 Speaker 1: time this went off at auction it was forty five pounds, 456 00:29:06,600 --> 00:29:10,200 Speaker 1: some silly, silly number. A lot of the work on 457 00:29:10,320 --> 00:29:13,360 Speaker 1: this has been questionable. Tell us about the providence of 458 00:29:13,440 --> 00:29:19,160 Speaker 1: this piece. So this everyone will have read about the 459 00:29:21,080 --> 00:29:28,880 Speaker 1: Russian billionaire Dedmitru Robolia, of whom famously purchased a collection 460 00:29:29,320 --> 00:29:33,560 Speaker 1: through these Bouvier um and there's been a lawsuit um 461 00:29:34,200 --> 00:29:41,160 Speaker 1: about how he was defrauded in commissions. So this is 462 00:29:41,640 --> 00:29:45,240 Speaker 1: this sale is a direct product of that situation. This 463 00:29:45,440 --> 00:29:50,560 Speaker 1: is a work that, after it was re canonized as 464 00:29:50,600 --> 00:29:52,920 Speaker 1: a da Vinci by the two thousand eleven to two 465 00:29:52,960 --> 00:29:57,960 Speaker 1: thousand twelve National Gallery Exhibition in London, was sold privately 466 00:29:58,560 --> 00:30:03,760 Speaker 1: to the me Tree for seven point five million dollars. 467 00:30:05,120 --> 00:30:09,960 Speaker 1: Prior to that, it had been discovered by the old 468 00:30:10,040 --> 00:30:14,520 Speaker 1: Master dealer Robert Sinan in two thousand five, who purchased 469 00:30:14,560 --> 00:30:18,840 Speaker 1: it at I believe purchased it at an American um 470 00:30:19,640 --> 00:30:25,080 Speaker 1: smaller regional auction house right sale. For I've said if 471 00:30:25,120 --> 00:30:28,360 Speaker 1: it was very okay, it was it was at antiques 472 00:30:28,440 --> 00:30:30,880 Speaker 1: road show or somewhere out in the Midwest. I'm kidding 473 00:30:31,240 --> 00:30:33,400 Speaker 1: Brook Lampley with this vice chairman of South of Basis. 474 00:30:33,480 --> 00:30:35,360 Speaker 1: We look at this historic for hundred and fifty million 475 00:30:35,400 --> 00:30:39,120 Speaker 1: dollar auction yesterday, Brooke. If I do my research on 476 00:30:39,200 --> 00:30:43,040 Speaker 1: the mona Lisa, which I've seen was deeply moved by Boy, 477 00:30:43,120 --> 00:30:45,000 Speaker 1: does it have a providence? We know that it's on 478 00:30:45,120 --> 00:30:47,800 Speaker 1: white poplar. Would we know that King Francis, the first 479 00:30:47,840 --> 00:30:50,440 Speaker 1: of France bought it and it sits in the louver? 480 00:30:50,960 --> 00:30:55,040 Speaker 1: Can there be science now it really looks at this 481 00:30:55,240 --> 00:30:59,880 Speaker 1: thing in a claim and certifies the authenticity of it. 482 00:31:00,640 --> 00:31:03,520 Speaker 1: Is there forensic stuff that you expect to see in 483 00:31:03,600 --> 00:31:07,200 Speaker 1: the next year or two on this important piece. I 484 00:31:07,280 --> 00:31:11,000 Speaker 1: don't expect the status of its attribution to change. The 485 00:31:11,120 --> 00:31:14,080 Speaker 1: fact that it was attributed to da Vinci so um 486 00:31:14,160 --> 00:31:20,440 Speaker 1: wholeheartedly in two thousand twelve by very reputable you know, 487 00:31:20,600 --> 00:31:25,280 Speaker 1: internationally renowned scholars Um is definitive. It would be very 488 00:31:25,360 --> 00:31:30,400 Speaker 1: unlikely for that to be challenged in our lifetimes. I 489 00:31:30,520 --> 00:31:33,240 Speaker 1: think for the scholarship on this artist to change so 490 00:31:33,480 --> 00:31:36,840 Speaker 1: radically in the course of our lifetime. UM, it is 491 00:31:37,040 --> 00:31:41,239 Speaker 1: quite um an authoritative stance. I mean, for example, UM, 492 00:31:41,720 --> 00:31:44,880 Speaker 1: the there are other artists for him. Scholarship is um 493 00:31:45,000 --> 00:31:49,560 Speaker 1: in question, and there aren't scholars who are internationally regarded, 494 00:31:49,760 --> 00:31:54,720 Speaker 1: so it is impossible to make attributions like this today. 495 00:31:55,080 --> 00:31:58,480 Speaker 1: Medigliani is a good example. UM. So it is quite 496 00:31:58,520 --> 00:32:02,240 Speaker 1: a statement for on the academic community to come forward 497 00:32:02,280 --> 00:32:05,760 Speaker 1: and say this is a da vinci Um, and I 498 00:32:05,880 --> 00:32:09,520 Speaker 1: don't think that's likely to change. There is a history 499 00:32:09,560 --> 00:32:12,600 Speaker 1: associated with the painting. It is just that for a 500 00:32:12,720 --> 00:32:16,200 Speaker 1: long time it was believed to be this work was 501 00:32:16,240 --> 00:32:18,520 Speaker 1: believed to be a copy of that known work, as 502 00:32:18,560 --> 00:32:21,800 Speaker 1: opposed to in fact the original. This has been a 503 00:32:21,840 --> 00:32:23,720 Speaker 1: great briefing in brook Lampley. Thank you so much with 504 00:32:23,800 --> 00:32:26,760 Speaker 1: south A Bees as we look forward to UH, I 505 00:32:26,840 --> 00:32:30,720 Speaker 1: guess Barry you'd called an alternative investment For some people, 506 00:32:30,840 --> 00:32:34,200 Speaker 1: for sure, for most people not so much. Very riddles. 507 00:32:34,280 --> 00:32:45,520 Speaker 1: Thank you so much for joining us today. Thanks for 508 00:32:45,640 --> 00:32:49,720 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 509 00:32:49,840 --> 00:32:55,840 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 510 00:32:56,440 --> 00:32:59,400 Speaker 1: I'm on Twitter at Tom Keene, David Gura, is that 511 00:32:59,600 --> 00:33:04,360 Speaker 1: David Europe? Before the podcast? You can always catch us worldwide. 512 00:33:04,640 --> 00:33:05,680 Speaker 1: I'm Bloomberg Radio.