Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with
Speaker 1: David Gura. Daily we bring you insight from the best
Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance
Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course,
Speaker 1: on the Bloomberg Good running everyone, Tom Keene, Bloomberg Surveillance
Speaker 1: thrilled you with this worldwide Coast to coast, Boston, Washington,
Speaker 1: San Francisco. Early morning there and in beautiful New York.
Speaker 1: Just a sort of a foggy day here in New York.
Speaker 1: Barry ridholets with me this morning. He was so good
Speaker 1: was it two days ago? Bury Tuesday? It seems like
Speaker 1: it's lifetime and lifetime ago. He's written like successes for
Speaker 1: Bloombergview since then caused the high yield tobacco yesterday came back.
Speaker 1: We'll talk to Barry Riddles about the at how you
Speaker 1: should respond when you see the new volatility. We've got
Speaker 1: a guest to lead this hour off whose expert in
Speaker 1: the perspective of what to do UH when there's um
Speaker 1: when there is UH a renewed volatility um our guests
Speaker 1: this morning to get us started is Canthy Fisher, She's
Speaker 1: will they be Bernstein providing wisdom and council in wealth management? Barry,
Speaker 1: why don't you bring in Cathy because I've beaten her
Speaker 1: to death on television on volatility, high yield and arrest.
Speaker 1: I think, sure you can do better, Berry, Sure, absolutely so.
Speaker 1: I've been hearing now for five years, Gee, we better
Speaker 1: get out of US equities because there's so much complacency,
Speaker 1: as evidenced by this low fix. And yet every year
Speaker 1: the market since the bear market lows in oh nine
Speaker 1: has grinded higher and volatility has continued to go lower.
Speaker 1: So two questions, A, is this a flashing red light?
Speaker 1: Everybody out of the pool? And be If not, why
Speaker 1: have we seen volatility come down as much as it
Speaker 1: has so on the flashing red light? I would say
Speaker 1: absolutely not. Um. The you know, the market has gone up,
Speaker 1: as we all know, incredibly calmly for the past several years. Um.
Speaker 1: This tiny pickup in volatility we've had recently is quite
Speaker 1: modest and UM, and I really think reflects just the
Speaker 1: fact that people are looking for bad news wherever they can,
Speaker 1: and whatever small signs we see, you see a little
Speaker 1: bit of a market reaction. But when we look broadly
Speaker 1: all the things we've been talking about for a while,
Speaker 1: I e. You know, good good, not exciting, but good
Speaker 1: growth around the world, no part of the no major
Speaker 1: economies and recession earnings continuing to plow ahead at very
Speaker 1: respectable rates. See even better than respectable. Earnings have been outstanding, haven't,
Speaker 1: especially overseas. And that's why this question with a overseas yeah,
Speaker 1: And I mean I think when you look the whole
Speaker 1: angle about why UH, diversifying outside the US is so
Speaker 1: powerful is that the non US markets are younger in
Speaker 1: their recovery, younger in there perhaps shareholder focus, particularly in
Speaker 1: places like Japan, but even Europe, and therefore, you know,
Speaker 1: I think a little more momentum there in in the
Speaker 1: potential trends in earnings growth and therefore stock price appreciation.
Speaker 1: So so let's stay with the US versus overseas um question.
Speaker 1: When we look at long periods of time, it seems
Speaker 1: like market leadership goes back and forth. Domestic does really
Speaker 1: well for a couple of years while overseas are soft,
Speaker 1: and then that reverses. Overseas catch up and domestic sort
Speaker 1: of legs. Is that a fair description and and what
Speaker 1: does that mean for a diversified portfolio. That is a
Speaker 1: fair description. And obviously part of it has been currency.
Speaker 1: Um and oftentimes the falling dollar means that you want
Speaker 1: to have non US stocks because when translated back to dollars,
Speaker 1: of course they're worth more. Um. So the currency can
Speaker 1: have an impact, but more in this cycle. In particular,
Speaker 1: if you look at the returns of non U s
Speaker 1: docks x the dollar impact, they are still better. And
Speaker 1: therefore we do think that's much more due to the fundamentals,
Speaker 1: not just the currency moves. Well, weent out to a
Speaker 1: record high, a true record high through too, through the
Speaker 1: peak that we saw in two thousand fourteen. They were
Speaker 1: all going to die and go away, and they're doing
Speaker 1: better than than good right now. Um, Kathy. What people
Speaker 1: don't know about you, as you were in the trenches
Speaker 1: of acquisition and m and A for years at JP Morgan,
Speaker 1: is not just wealth management that you've done defined for
Speaker 1: our audience a creative in delutive Emerson first line of
Speaker 1: their new effort to go after Rockwell, We've got to
Speaker 1: get Rockwell automation. It's an a creative deal. What does
Speaker 1: that exactly mean? It means that after all the acquisition
Speaker 1: costs are factored in, the company does expect that the
Speaker 1: opportunity from the acquisition will indeed add to their earnings
Speaker 1: per share growth going forward, as it should. You shouldn't
Speaker 1: do a deal unless it is. But obviously, in many
Speaker 1: cases deals can be temporarily dilutive to earnings per share
Speaker 1: if the acquisitions costs are high and the premium paid
Speaker 1: is high for the acquired company. Does that calculation have
Speaker 1: the same mystery of plugins is guessing our federal budget deficit?
Speaker 1: Or that I mean when when the dealmakers like you
Speaker 1: are sitting down with Company A, they're already by b.
Speaker 1: Let's go, let's go, let's go. Are the plugins of
Speaker 1: mystery one year out, three years out, five years out.
Speaker 1: They are a mystery, but nowhere near as much as
Speaker 1: mysterious as the dad obviously, because the biggest the biggest
Speaker 1: opportunity is usually in cost synergies, and those are fairly straightforward.
Speaker 1: Revenue synergies are often harder to determine, but on the
Speaker 1: cost side usually it's pretty clear cut. And what's interesting
Speaker 1: to me about the revenue I hate this phrase revenue
Speaker 1: synergies that John Tucker, they're great band. The revenue revenue, Yeah,
Speaker 1: they did revenue synergies. So revenue synergies often reflect the
Speaker 1: opportunity to cross sell to existing customers or to lever
Speaker 1: a product or service in a way that can be
Speaker 1: enhanced by the combination. That's yeah. So so you know,
Speaker 1: every every business is different. It depends. So they but
Speaker 1: that's why they're harder to estimate because they are a
Speaker 1: little bit on the come and they and therefore, you know,
Speaker 1: very people look at them with more skepticism than they
Speaker 1: do the cost control numbers. We are, I would argue,
Speaker 1: we're in a we're going to be in probably the
Speaker 1: longest recovery for both the economy and the markets we've
Speaker 1: probably ever seen in modern history because and I think
Speaker 1: it makes sense given how tepid the economic recovery has been,
Speaker 1: that it has longer to go, and they're the way
Speaker 1: companies are adapting to change also gives earnings longer to
Speaker 1: go as well, and therefore stock prices. So if this
Speaker 1: is a long, slow recovery, what does it tell us
Speaker 1: about what this secular cycle might look at look like
Speaker 1: eighty two to two thousand, Hey, that was almost two decades.
Speaker 1: You can you can date this market to where everybody
Speaker 1: broke out to new highs. Are we looking potentially at
Speaker 1: another ten plus years from here? It's hard, hard to
Speaker 1: know the time, but I think that I think you're
Speaker 1: hitting on something really important, which is that embedded in
Speaker 1: this cycle is a radical technological transformation. Right. We're all
Speaker 1: talking about the recovery from OH eight, and we're talking
Speaker 1: about geography, but but really more important is the opportunity
Speaker 1: for companies in every industry to transform their business with technology,
Speaker 1: and that will have a many, long long time to go,
Speaker 1: and how companies adapt is going to be quite interesting.
Speaker 1: Were talking business intelligent? Are we talking hardware? What? What
Speaker 1: is the focus of technology across you're describing across every field?
Speaker 1: All of the above, right, because just think of what
Speaker 1: what people can do now with any kind of handheld
Speaker 1: device for efficiencies, but then bringing an artificial intelligence, machine learning,
Speaker 1: all the things that we know are possible and can
Speaker 1: indeed enhance efficiency across the board. There's there's going to
Speaker 1: be lots of change as companies figure out what's right
Speaker 1: for them. Kathy, Thank you so much. Kathy Fisher with
Speaker 1: a beautiful premier, particularly valuable in today's calm futures. Up
Speaker 1: eight down, futures up fifty seven after uh, some of
Speaker 1: the uproar that we saw yesterday. Barry I really did
Speaker 1: try to do Barry ridholes one on one yesterday and
Speaker 1: that you know, the markets were moving and it was
Speaker 1: O MG, this that and the other thing. And yet
Speaker 1: in perspective, there was no breakage of support across any
Speaker 1: number of assets. It was just uh, somewhat normous, Kathy
Speaker 1: said earlier, somewhat normal volatility. You know, we're so used
Speaker 1: to a hundred point day on the DAW being a
Speaker 1: big deal. What we were down down yesterday almost a
Speaker 1: hundred and it's barely half a percent move, So you
Speaker 1: can't think of these market moves from your context of
Speaker 1: It's a lot to talk about with Barry Rid. Hilts
Speaker 1: will continue and do that. Gregg Val just publishes with
Speaker 1: the Horizon Investments. It's a simple headline. The tax bill
Speaker 1: is in trouble. We'll do much more on that through
Speaker 1: the morning as well. Every state is different. We have
Speaker 1: the advantage of Libby Cantrill of PIMCO that she understands
Speaker 1: in her Colorado, the Democrats have been ascended since time began,
Speaker 1: but they've never really done it. Called Rondo's election to
Speaker 1: election always a fractious state. You really never know what's
Speaker 1: gonna happen. You don't know it now, you don't. It's
Speaker 1: it's but it's good. It's actually because then folks who
Speaker 1: are sent to Washington actually are incentivized compromise. What does
Speaker 1: it mean within your policy area in Washington that it's
Speaker 1: a senior senator from Wisconsin, because Wisconsin is sort of
Speaker 1: to me, almost like Georgia or Virginia. It's a nuts
Speaker 1: every election, there is a battle. Yeah, it's all fifty stuff. Yeah,
Speaker 1: it's actually a little bit like Colorado. Different dynamics, but
Speaker 1: but but similar in that it's it's unpredictable. Um so so,
Speaker 1: Senator Johnson actually has been expressing concern about the small
Speaker 1: business issue, about this pass through rate issue actually for
Speaker 1: several months and even a couple of weeks ago, basically
Speaker 1: said this was going to be his red line. I
Speaker 1: think that the fact that he so vociferously came out
Speaker 1: against it yesterday, I mean today he's walking back a
Speaker 1: little bit, saying that he wants to get to yes.
Speaker 1: But as we know, any fundamental changes to this a
Speaker 1: bill might violate the Bird rule and might not be
Speaker 1: able to be passed. I've given up calling this tax reform.
Speaker 1: Do you disagree with me? Isn't it just blatant tax cut?
Speaker 1: It's it's so we've actually been sort of saying from
Speaker 1: the very beginning, this is probably gonna be tax reform
Speaker 1: light at best, and I think that's what you're getting.
Speaker 1: You're getting kind of tax cuts with a little bit
Speaker 1: of reform, so they can call it reform, but effectively
Speaker 1: this is a pretty big corporate tax cut with some
Speaker 1: individual tax relief that obviously will expire. Has anything to
Speaker 1: do with it. So let me push back on me,
Speaker 1: this isn't tax reform, just just to just to argue
Speaker 1: the of the side. So changes to the mortgage interest
Speaker 1: deduction have been floated and negotiated. This LLC passed through
Speaker 1: is a big deal, especially after the n f I
Speaker 1: B n f IB initially came out and said, hey,
Speaker 1: this exempts too many small businesses, we can't support it.
Speaker 1: Accelerated appreciation of capital spending is huge change. That's a
Speaker 1: very very significant change. Um. And there are other things
Speaker 1: in this tax code, certainly getting rid of the estate
Speaker 1: tax that are deep philosophical shifts from how the tax
Speaker 1: code uh was previously. Are those fair? Yeah? I think
Speaker 1: those are all, Um, you know, some elements of reform. However,
Speaker 1: if you really had true fundamental tax reform, this would
Speaker 1: be revenue neutral, right, I mean, this would not be
Speaker 1: adding anything to the deficit. And oyeah, what's what's the
Speaker 1: trillion and a half dollars? Um so? So sure, yeah,
Speaker 1: does this maybe move maybe a step in that direction, possibly,
Speaker 1: but this is not the sort of the big, comprehensive
Speaker 1: once in a generation. This is the literally cantral wheelhouse.
Speaker 1: Have you had a recent or new calculation of what
Speaker 1: that deficit ad will be like in the last twelve hours? Yeah? So,
Speaker 1: um you know this, well, we'll all it's obviously changing,
Speaker 1: um there is. So our view is that this will
Speaker 1: probably add around a trillion dollars to the deficit over
Speaker 1: ten years. Um the score is one point five trillion dollars.
Speaker 1: There's a baseline issue. This is getting very wonky between
Speaker 1: the current policy and current law base sign So basically
Speaker 1: that one and a half that's been scored includes art
Speaker 1: tax breaksets are that are already in the economy, that
Speaker 1: are I've already been factored in. Um So about a
Speaker 1: trillion dollars over over ten years. Um, but you know
Speaker 1: that we're still, you know, relatively early in terms of
Speaker 1: I mean kind of the fifth sixth inning of a
Speaker 1: nine inning game here. Um, there is still quite a
Speaker 1: long way to go, and I think Senator Johnson's opposition
Speaker 1: just shows that this thing is not fully baked yet
Speaker 1: and we may not, um, you know, we may not
Speaker 1: see anything. I think that that that there there, there
Speaker 1: is the potential for that even though there is extreme
Speaker 1: political will to get something done. So explain the thought
Speaker 1: process to me behind throwing a live bomb in the
Speaker 1: middle of this In terms of the appeal of the
Speaker 1: Obamacare mandate. I know that generates a little bit of revenue,
Speaker 1: but why would you want to waver red flag in
Speaker 1: front of all the pro A c A people on
Speaker 1: a political fight you just had and lost three times?
Speaker 1: That makes no sense, right, It's a It's a great point,
Speaker 1: and it's one of the reasons why. Um, you know,
Speaker 1: I think we thought that it would not be included. However,
Speaker 1: there's a real revenue issue here. Um. It's it raises
Speaker 1: three billion dollars and because they're going to be using
Speaker 1: something called reconciliation, which allows bills to be past the
Speaker 1: fifty votes, not sixty. They have to comply with what's
Speaker 1: called the Bird rule. The Bird war requires that that
Speaker 1: the bill does not add to the deficit in your
Speaker 1: eleven and beyond. So we'll just unset it like the
Speaker 1: Bush count. Well no, but so so. The Senate bill
Speaker 1: before the Obamacare repeal, before the individual mandate repeal, did
Speaker 1: add to the depths and out years, so would would
Speaker 1: not have complied reconciliation. Now it does. The revenue, it's
Speaker 1: a whole. It's revenue. You guys are in that side
Speaker 1: of the studio, Tucker and I are over here going
Speaker 1: to we'll get that. Wait, wait, wait, are my Texas
Speaker 1: going up? In the answers, yes, yeah, right for you
Speaker 1: and for me, yes, they absolutely are. If you're in
Speaker 1: New York, taxes aren't going up. My taxes are going
Speaker 1: down because I own an LLCRE and to me, this
Speaker 1: is just an enormous giveaway gifts, right, it's a toll giveaway. Yeah,
Speaker 1: that's get our wallets out now, in hand them. No,
Speaker 1: we should go to we should go to our accountants
Speaker 1: and say we'll make us into passed away. Well, that's
Speaker 1: the risk, isn't that the risk? With this LLC passed
Speaker 1: through that companies that are legitimately established as partnerships or
Speaker 1: limited liability companies, You're now gonna invite every other small
Speaker 1: business to becoming an ll Yes, and you're going to
Speaker 1: be inviting anybody who's in New York and New Jersey
Speaker 1: and Okay, then California. You've seen their songs for plum
Speaker 1: Wait wait wait, were gonna do a billboard here? We
Speaker 1: gotta do a message from our wonderful sponsors, Bloomberg Surveillance.
Speaker 1: Let me cantrol this morning. It's brought to you by
Speaker 1: those who will make you an LLC. We thank for
Speaker 1: their supports if you want to be an LLC, and
Speaker 1: we thank eisener Emperor, we think. So let me ask
Speaker 1: you this other question about what has just come up
Speaker 1: from some of the secretaries of Defense who are concerned
Speaker 1: that this huge deficit and and a trillion is fairly optimistic.
Speaker 1: Some of that's dynamically scored. But the numbers we've been
Speaker 1: looking at before us some anywhere from fifty higher. Is
Speaker 1: this potentially going to pull money away from the Defense Department. Yeah,
Speaker 1: I think that's what they're concerned about. Right. So, um,
Speaker 1: some former Secretary Secretaries of Defense came out overnight expressing
Speaker 1: opposition to this tax bill for fear that invariably Congress
Speaker 1: will be forced to cut, um make pretty deep cuts
Speaker 1: to to defense spending. And I think this is a
Speaker 1: really important development, especially as it relates to Senator McCain.
Speaker 1: You have to remember, first of all, the vote margin
Speaker 1: and Senate is very narrow, right, so they can only
Speaker 1: lose two votes and still pass this bill uh in
Speaker 1: the in the Senate, assuming no Democrats will support it.
Speaker 1: And Senator McCain voted against both two thousand one and
Speaker 1: the two thousand three Bush tax cuts for sort of
Speaker 1: similar reasons, right, he was concerned that this could have
Speaker 1: a deltarious impact on defense spending. And so I think
Speaker 1: this is a big development as it relates to his vote,
Speaker 1: and they can't afford to lose more votes. What does
Speaker 1: Ron Johnson and what he's the accountant from Wisconsin. How
Speaker 1: does Susan Collins is one example, react to that. Yeah,
Speaker 1: I think she, well, she's already expressed some real concern
Speaker 1: about the individual mandate being but I get they haven't
Speaker 1: committed and they're trying, right, I mean, this is that
Speaker 1: this is the thing about this is tricky because they're
Speaker 1: trying to go along kind of to get along, um
Speaker 1: to a point, but then your force a vote on
Speaker 1: something that's politically ski and you know, people are members
Speaker 1: of Congress are politically expedient. They're not gonna necessarily take
Speaker 1: about especially in the Senate, that's going to harm their
Speaker 1: re election. Brilliant. Let's come back with Libby Cantrall of
Speaker 1: Pimco and very ridholds it. It's a really good discussion here.
Speaker 1: We're really getting into the you know, the soup of it.
Speaker 1: It's not what's the today's day, November six, so we're
Speaker 1: like getting there. I haven't even begun my Thanksgiving shopping. Yeah,
Speaker 1: I gotta, I gotta, I gotta, you know, I gotta
Speaker 1: go get the turnips out of the ground in the
Speaker 1: garden in Central Park and the designer bird. Yeah no, no,
Speaker 1: we're not We're not ducking from Pimco. Um uh, we'll
Speaker 1: come back and talk about this. We're having A gentleman
Speaker 1: of Pimco recommended that I go to Greenberg's of Tyler,
Speaker 1: Texas really smoked turkey. That's interesting talking about this. My
Speaker 1: Thanksgiving planning is I buy tickets to Chicago, and I
Speaker 1: just eat my way across the city. That's brilliant. Can
Speaker 1: I can I come to the ridhole side? It's a
Speaker 1: ten pound weekend. I just have to warn you. Okay,
Speaker 1: we're gonna get to the Fed in the discussion of
Speaker 1: that with Mr Levy, Dr Levy, with barrenburg Bank, but
Speaker 1: make you leave it. I've got to ask about nine
Speaker 1: fifteen this morning, why did guys like you look at
Speaker 1: industrial production and capacity utilization if we're a service sector economy. Well, Tom,
Speaker 1: we the US does rely on services, but also relies
Speaker 1: on manufacturing, and industrial production is very important. We still
Speaker 1: produce a lot of things for domestic production and and
Speaker 1: and consumption and and for exports, so it's important. I
Speaker 1: tend to put more weight on the industrial production numbers
Speaker 1: than the capacity utilization numbers. UM. I find the ladder
Speaker 1: um um. The way they count reulate, the way the
Speaker 1: FED calculates them, I find a little questionable. Okay, let's
Speaker 1: go to our FED changer that Barry was talking about.
Speaker 1: We're gonna get Chairman Powell and all that. People have
Speaker 1: said that the concern of inflation has been overwrought and overdone.
Speaker 1: What's different now? How will a conservative economists, How will
Speaker 1: the shadow economists watching a more liberal, more devish FED,
Speaker 1: how will they react to the new Fed? Well, I don't.
Speaker 1: I do not think the concern about inflation is overstated. Um.
Speaker 1: We all benefit from stable low prices UM. And I
Speaker 1: would emphasize that the reason why inflation has been so
Speaker 1: low is nominal GDP growth has been growing very, very slowly,
Speaker 1: so there's very little excess demand in the economy relatives
Speaker 1: to productive capacity. Tom stated differently, if the FEDS policies
Speaker 1: had actually stimulated growth as they were UH forecasts to do,
Speaker 1: we would have had a much bigger inflation problem. And
Speaker 1: the final point I would make about inflation is even
Speaker 1: though it's below the FEDS two long run target, UM,
Speaker 1: it's very it shouldn't. It is not a concern. And
Speaker 1: the recent declines and inflation so far this year have
Speaker 1: been favorable for the economy, not unfavorable. So let's stick
Speaker 1: with the inflation issue for a minute. I have I
Speaker 1: have not quite a pushback, but two points to throw
Speaker 1: your way and get a response on. The first is
Speaker 1: we are still in a post credit crisis recovery. Those
Speaker 1: those tend to be primarily characterized by low growth, low inflation,
Speaker 1: and very UH low wage pressure. So so that's point one.
Speaker 1: Question one. How significant is this particular cycle to to
Speaker 1: the low inflation question? And as part of that we
Speaker 1: have seen almost no wage pressure for a decade. How
Speaker 1: significant is that to the inflation question? Very those are
Speaker 1: close are very valid points, UM. But here we are
Speaker 1: now UM in the ninth year of economic expansion and
Speaker 1: it's no longer recovery stage UM and and the economy
Speaker 1: is behaving very normally, even though, as you point out,
Speaker 1: wages are low despite the extremely low unemployment, right, and
Speaker 1: I think that the low wages have a lot to
Speaker 1: do with the disappointing growth in labor productivity. And in addition, UM,
Speaker 1: we really have a we call it a challenge or
Speaker 1: a structural problem in the United States in that, unfortunately
Speaker 1: we have tens of millions of semi skilled workers who
Speaker 1: are who are working in low productivity jobs and and UM,
Speaker 1: and their wages are not higher going up very much.
Speaker 1: So this is this is way beyond the scope of
Speaker 1: monetary policy. To correct it needs to be addressed through
Speaker 1: other UH policies like education policy and skills training. So
Speaker 1: so I agree with you. I'd love to have um
Speaker 1: accelerating wages here and I'd like to see them being
Speaker 1: regal wages to reflect improving productivity, but we just haven't
Speaker 1: had that. So I agree with your assessment. The issue
Speaker 1: is how to address it, and my unch, my read
Speaker 1: is that the FED over the last three or four
Speaker 1: years has extended the scope of monetary paul see to
Speaker 1: try to drive up wages, but it's just not the
Speaker 1: right policy tool to leave it there. Mickey Leavie, thank
Speaker 1: you so much. With baronburg Bank as we see a
Speaker 1: new FED into the next year, we are thrilled to
Speaker 1: bring you now across all of Bloomberg Radio, and I
Speaker 1: might point out our Apple podcasts as well. One of
Speaker 1: the great leaders of the art world, she's out of
Speaker 1: Harvard and of course he acclaimed Masters in Art program
Speaker 1: at Yale University, Brook Lampy. Lampley has had a storied
Speaker 1: career in art, including at Christie's working in their evening
Speaker 1: sales division. She has risen UH very much so in
Speaker 1: the art world, and we'll be vice chairman at Sotheby's
Speaker 1: beginning of the year, and we're thrilled at southobs Is
Speaker 1: allowed UH us to speak with her today. Brook there's
Speaker 1: an no other conversation, not an investment but in art,
Speaker 1: in the aesthetic than this. Leonardo to painting at four
Speaker 1: hundred and fifty million. You told me today that you
Speaker 1: were not in the room last night. It's your former employer.
Speaker 1: Just describe what's going on in the room. Is proxies
Speaker 1: bid four people, five people bid by telephone? Is it
Speaker 1: like the movies? It's spectacular it is. There were four
Speaker 1: people on the phone to by understanding and one in
Speaker 1: the room. The Christie's video is UM, and I'm familiar
Speaker 1: with both sides. Of course, UM a bit limiting and
Speaker 1: that is quite focused on the staff. So you can
Speaker 1: see the phone bitter is quite clearly, but not the
Speaker 1: room bitter. But even if you were there, you probably couldn't.
Speaker 1: Given the depth of space in the room and how
Speaker 1: many people there are, it's very difficult to see the
Speaker 1: room bitter unless you're close to them. What was fascinating
Speaker 1: about the bidding last night was the participatation of an
Speaker 1: unusually determined bidder who not only was persistent in raising
Speaker 1: their bids, but would raise them at um infleeted bid increments, so,
Speaker 1: particularly in the latter portion of the bidding, between three
Speaker 1: hundred and four hundred million dollars, where it was really
Speaker 1: between two bidders and one on the phone with Francois
Speaker 1: de portare On and the other one on the phone
Speaker 1: with Alex Rotter Um. You would see Francois would always
Speaker 1: take the bid two million and the other bidder would
Speaker 1: usually go another eight million UM, so it would go
Speaker 1: from day three two to thirty. You toss it around
Speaker 1: like you're an aisle number seven at Whole Foods, like
Speaker 1: colleague Barry Ridholtz wants to get in here. But I've
Speaker 1: got to ask the news question. Does Brook Lampley know
Speaker 1: who those two bidders were? I don't, And in all aglihood,
Speaker 1: if I were still at Christie's UM, I would have
Speaker 1: the same view probably that I do Now, I would
Speaker 1: have a good I'd have an informed idea, but likely
Speaker 1: that's very restricted information until maybe one person, until hopefully
Speaker 1: the whole world would like to know who the buyer
Speaker 1: is and perhaps will confirm it, but that's of their
Speaker 1: own initiative. Hey Brooke, Barry rid Hilts, I have so
Speaker 1: many questions for you. I'm going to keep it short
Speaker 1: and sweet. First, this is just a huge leap above
Speaker 1: the previous hug it's more than double. What does that
Speaker 1: tell you about the current state of the art market.
Speaker 1: I think it's validictory and appropriate in a sense that
Speaker 1: da Vinci should be the highest value or highest ranking
Speaker 1: artist in the art world. There are only sixteen roughly
Speaker 1: known paintings by the artist. They are all in public collections,
Speaker 1: so this is the epitome of scarcity and brand name recognition.
Speaker 1: Um these are the marquee qualities that drive the art market.
Speaker 1: So it's fitting that this work should have triumphed in
Speaker 1: the way it did. But what's I think most important
Speaker 1: for everyone is we've been talking about the spectrum and
Speaker 1: potential number of buyers who had bid a hundred million
Speaker 1: dollars for a work of art, maybe even two hundred
Speaker 1: million dollars for a work of art, and now we
Speaker 1: have a completely new benchmark. So so the follow up
Speaker 1: question is we know that da Vinci's are exceedingly rare,
Speaker 1: but there were lots of questions raised about the provenance
Speaker 1: and state of this and subsequent I think the last
Speaker 1: time this went off at auction it was forty five pounds,
Speaker 1: some silly, silly number. A lot of the work on
Speaker 1: this has been questionable. Tell us about the providence of
Speaker 1: this piece. So this everyone will have read about the
Speaker 1: Russian billionaire Dedmitru Robolia, of whom famously purchased a collection
Speaker 1: through these Bouvier um and there's been a lawsuit um
Speaker 1: about how he was defrauded in commissions. So this is
Speaker 1: this sale is a direct product of that situation. This
Speaker 1: is a work that, after it was re canonized as
Speaker 1: a da Vinci by the two thousand eleven to two
Speaker 1: thousand twelve National Gallery Exhibition in London, was sold privately
Speaker 1: to the me Tree for seven point five million dollars.
Speaker 1: Prior to that, it had been discovered by the old
Speaker 1: Master dealer Robert Sinan in two thousand five, who purchased
Speaker 1: it at I believe purchased it at an American um
Speaker 1: smaller regional auction house right sale. For I've said if
Speaker 1: it was very okay, it was it was at antiques
Speaker 1: road show or somewhere out in the Midwest. I'm kidding
Speaker 1: Brook Lampley with this vice chairman of South of Basis.
Speaker 1: We look at this historic for hundred and fifty million
Speaker 1: dollar auction yesterday, Brooke. If I do my research on
Speaker 1: the mona Lisa, which I've seen was deeply moved by Boy,
Speaker 1: does it have a providence? We know that it's on
Speaker 1: white poplar. Would we know that King Francis, the first
Speaker 1: of France bought it and it sits in the louver?
Speaker 1: Can there be science now it really looks at this
Speaker 1: thing in a claim and certifies the authenticity of it.
Speaker 1: Is there forensic stuff that you expect to see in
Speaker 1: the next year or two on this important piece. I
Speaker 1: don't expect the status of its attribution to change. The
Speaker 1: fact that it was attributed to da Vinci so um
Speaker 1: wholeheartedly in two thousand twelve by very reputable you know,
Speaker 1: internationally renowned scholars Um is definitive. It would be very
Speaker 1: unlikely for that to be challenged in our lifetimes. I
Speaker 1: think for the scholarship on this artist to change so
Speaker 1: radically in the course of our lifetime. UM, it is
Speaker 1: quite um an authoritative stance. I mean, for example, UM,
Speaker 1: the there are other artists for him. Scholarship is um
Speaker 1: in question, and there aren't scholars who are internationally regarded,
Speaker 1: so it is impossible to make attributions like this today.
Speaker 1: Medigliani is a good example. UM. So it is quite
Speaker 1: a statement for on the academic community to come forward
Speaker 1: and say this is a da vinci Um, and I
Speaker 1: don't think that's likely to change. There is a history
Speaker 1: associated with the painting. It is just that for a
Speaker 1: long time it was believed to be this work was
Speaker 1: believed to be a copy of that known work, as
Speaker 1: opposed to in fact the original. This has been a
Speaker 1: great briefing in brook Lampley. Thank you so much with
Speaker 1: south A Bees as we look forward to UH, I
Speaker 1: guess Barry you'd called an alternative investment For some people,
Speaker 1: for sure, for most people not so much. Very riddles.
Speaker 1: Thank you so much for joining us today. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
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