WEBVTT - Examining Market Volatility and an iPhone Shipments Pop 0:00:00.080 --> 0:00:12.879 Bloomberg Audio Studios, Podcasts, radio News. This is the Bloomberg 0:00:12.960 --> 0:00:16.960 Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join 0:00:17.079 --> 0:00:21.000 us each day for insight from the best in economics, finance, investment, 0:00:21.200 --> 0:00:24.840 and international relations. You can also watch the show live 0:00:25.079 --> 0:00:29.400 on YouTube. Visit the Bloomberg Podcast channel on YouTube to 0:00:29.520 --> 0:00:32.920 see the show weekday mornings from seven to ten am 0:00:32.960 --> 0:00:36.960 Eastern from our global headquarters in New York City. Subscribe 0:00:37.000 --> 0:00:40.360 to the podcast on Apple, Spotify, or anywhere else you 0:00:40.440 --> 0:00:44.600 listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and 0:00:44.640 --> 0:00:47.480 the Bloomberg Business App. So we are thrilled to bring 0:00:47.520 --> 0:00:51.720 it out on your equity market, your bullmarket, Liz Young, Liz, 0:00:51.760 --> 0:00:54.360 I love, love, love your note. And the answer is 0:00:54.400 --> 0:00:57.800 you say profit wins? What are profits look like forward? 0:01:00.040 --> 0:01:02.600 If you look at why people are buying stocks right now, 0:01:02.600 --> 0:01:05.399 I think everybody is searching for more upside, and especially 0:01:05.440 --> 0:01:08.959 after such a strong rally, it's been more difficult to find. 0:01:09.120 --> 0:01:12.280 So then trying to answer that question of where are 0:01:12.319 --> 0:01:14.679 we in the market cycle, where are we in the 0:01:14.720 --> 0:01:17.920 business cycle, and what kind of stocks win at this 0:01:18.120 --> 0:01:20.800 point so that we can find more upside, and we 0:01:20.840 --> 0:01:23.360 did a bunch of analysis looking at what might happen 0:01:23.400 --> 0:01:25.640 to the yield curve, what might happen to the dollar 0:01:26.040 --> 0:01:28.600 if and when the FED finally does start cutting rates. 0:01:28.840 --> 0:01:30.720 And one of the things that is consistent is that 0:01:30.760 --> 0:01:34.479 you do want companies that are kicking out good margins, 0:01:34.520 --> 0:01:37.880 that have healthy profits and are able to produce that 0:01:38.000 --> 0:01:38.800 kind of cash flow. 0:01:38.920 --> 0:01:41.400 Do we grow our way in the denominator price to 0:01:41.480 --> 0:01:44.520 cares flow, price to this price to ebita, do we 0:01:44.560 --> 0:01:47.880 grow the denominator into a more intelligent valuation? 0:01:49.560 --> 0:01:51.360 Well, you know what's interesting is that if you look 0:01:51.360 --> 0:01:55.080 at valuations, there continues to be this comparison between now 0:01:55.120 --> 0:01:58.200 and what happened in the early two thousands, and valuations 0:01:58.200 --> 0:02:01.960 compared to them are really not that outrageous. They're frothy, 0:02:02.480 --> 0:02:06.520 and in particular pockets, they're perhaps higher than most investors 0:02:06.520 --> 0:02:09.320 would want as an entry point. But I do think 0:02:09.440 --> 0:02:12.800 over the next couple years, if we managed to avert 0:02:12.919 --> 0:02:17.160 some big catastrophe, we do need earnings to continue to grow. 0:02:17.240 --> 0:02:19.160 We do need them to come through in order to 0:02:19.200 --> 0:02:22.840 just support the current level of valuations. And then it 0:02:22.880 --> 0:02:26.800 becomes this awkward mental exercise of okay, if the pe 0:02:26.960 --> 0:02:30.040 is coming down, that's actually a good thing if earnings 0:02:30.040 --> 0:02:32.840 are going up, but the price of the index hasn't 0:02:32.880 --> 0:02:35.480 necessarily moved all that much. I think we've been used 0:02:35.520 --> 0:02:38.920 to these double digit returns and we may enter a 0:02:38.960 --> 0:02:42.320 period where we're in that more regular return era of 0:02:43.080 --> 0:02:46.600 mid single digits, but with earnings growth that's still strong. 0:02:47.120 --> 0:02:49.239 Liz, you know, given the move we've had off those 0:02:49.320 --> 0:02:52.600 October levels here in the stock market, the S and 0:02:52.639 --> 0:02:54.799 P five hundred up, you know, over twenty five percent, 0:02:54.840 --> 0:02:58.960 where what sectors still screen attractive to you? 0:02:59.000 --> 0:02:59.959 Guys? If any. 0:03:01.400 --> 0:03:03.280 Yeah, Well, that goes back to the earlier part of 0:03:03.280 --> 0:03:07.240 this conversation is where do you find that upside and look, 0:03:07.320 --> 0:03:11.560 growth companies, particularly large cap still seem attractive compared to 0:03:11.560 --> 0:03:13.919 small cap. You start with some of those big buckets. 0:03:13.960 --> 0:03:17.160 What's better large or small? And at certain points in 0:03:17.200 --> 0:03:19.760 the business cycle, large cap does tend to do better. 0:03:20.000 --> 0:03:23.160 At certain types of yield curve environments, large cap also 0:03:23.240 --> 0:03:25.840 tends to do better. So if we expect that at 0:03:25.840 --> 0:03:28.440 some point later this year, which I do expect, we 0:03:28.520 --> 0:03:31.560 will experience what's called a bull steepener, meaning that the 0:03:31.600 --> 0:03:34.040 short end of the curve comes down and the long 0:03:34.160 --> 0:03:36.240 end of the curve either stays put or rises a 0:03:36.320 --> 0:03:39.440 little bit. In that environment, you do want those large 0:03:39.440 --> 0:03:42.720 cap companies, some of them growth. You do also want 0:03:42.760 --> 0:03:45.680 some of those defensive names. And although it's a bull market, 0:03:45.960 --> 0:03:48.360 there are defensive sectors that can do really well in 0:03:48.360 --> 0:03:50.560 a bull market, and utilities is one of those that 0:03:50.640 --> 0:03:53.560 has done well this year. I would still be staying 0:03:53.560 --> 0:03:56.320 away from sectors that start with the word consumer, though. 0:03:56.440 --> 0:04:01.520 Liz so far has such a herity of studying the 0:04:01.560 --> 0:04:07.200 technology of America within the AI frenzy, what does our 0:04:07.240 --> 0:04:10.800 technology look like forward? And can you invest in it? 0:04:12.960 --> 0:04:15.800 I heard a quote last week that was sort of 0:04:15.840 --> 0:04:19.159 resurrected from Bill Gates. It goes something along the lines 0:04:19.160 --> 0:04:22.520 of technology is always overestimated in the first two years, 0:04:22.520 --> 0:04:26.160 but underestimated in the ten year period. And I think 0:04:26.200 --> 0:04:28.920 what's happening with AI right now is obviously we've got 0:04:28.920 --> 0:04:32.360 a lot of enthusiasm and there are some real fundamentals 0:04:32.440 --> 0:04:35.839 behind that trade and behind that theme. The reality is 0:04:35.880 --> 0:04:38.360 that all themes go through a life cycle, and we're 0:04:38.480 --> 0:04:41.240 likely to see at least somewhat of a boom and 0:04:41.320 --> 0:04:43.960 bust in the AI theme, and things are going to 0:04:44.040 --> 0:04:47.080 change quite a bit over time, much like what happened 0:04:47.080 --> 0:04:49.720 with the Internet theme. We didn't really know how to 0:04:49.720 --> 0:04:52.360 make money off of that early on, and I think 0:04:52.360 --> 0:04:54.719 that's where we are with AI and at some point 0:04:54.720 --> 0:04:57.039 we'll have to come back down to earth of we're 0:04:57.040 --> 0:04:58.600 not going to come up with these profits in the 0:04:58.640 --> 0:05:01.200 next twelve months. I think that's sort of where that 0:05:01.240 --> 0:05:02.039 theme sits today. 0:05:02.120 --> 0:05:03.279 We Liz, I don't want to talk to you about 0:05:03.320 --> 0:05:05.680 Texas Systems per se. I know that's not part of 0:05:05.680 --> 0:05:08.320 the game. But we've got Anna rag Rana coming up 0:05:08.320 --> 0:05:12.640 here with the announcement from CNBC of an Elliott Management Steak, 0:05:13.240 --> 0:05:19.280 Kunjohn Sohani and Oscar Hernandez Tejada for Bloomberg Intelligence absolutely 0:05:19.480 --> 0:05:23.920 nail a company that's going to spend forward based off 0:05:24.080 --> 0:05:28.400 semiconductive development in America and that and as a generalization, 0:05:28.760 --> 0:05:32.640 investor saying, wait a minute, who's going to win out 0:05:32.680 --> 0:05:37.839 in that tug of war between capex Frenzy and investors 0:05:37.839 --> 0:05:42.240 saying I want a little discipline and capital allocation responsibility, 0:05:42.279 --> 0:05:44.880 who's going to win right now? 0:05:44.960 --> 0:05:47.800 I think we are actually going through a pivot where 0:05:47.839 --> 0:05:50.840 investors are deciding that you need to be much more 0:05:50.920 --> 0:05:53.560 judicious with your spending of capital, and we saw that 0:05:53.920 --> 0:05:56.559 in some of the announcements in first quarter earnings, where 0:05:56.760 --> 0:05:59.160 you're hearing big tech companies say we're going to spend 0:05:59.200 --> 0:06:01.919 a bunch on ai I. Last year they got rewarded 0:06:01.960 --> 0:06:04.880 for saying that, this year getting a little bit more punished, 0:06:05.120 --> 0:06:07.520 with investors looking at it as Okay, if you're going 0:06:07.560 --> 0:06:10.279 to spend, then where's the zero sum game? Who's going 0:06:10.360 --> 0:06:13.480 to benefit from that spending? So rather than this, you know, 0:06:13.520 --> 0:06:16.200 the pie is getting bigger. I think it has turned 0:06:16.240 --> 0:06:18.640 into a little bit more of an environment where investors 0:06:18.640 --> 0:06:21.919 are saying, you need to be responsible. I will, I 0:06:21.920 --> 0:06:24.560 will go to the company that can benefit from some 0:06:24.680 --> 0:06:27.200 of that spending, but let's be careful about how much 0:06:27.240 --> 0:06:31.440 money we're throwing at a theme that isn't quite mature yet. 0:06:31.800 --> 0:06:32.520 Hey, Liz, what are you? 0:06:32.800 --> 0:06:35.520 What are you telling your clients these days about opportunities 0:06:35.880 --> 0:06:37.080 in fixed income? 0:06:37.120 --> 0:06:38.280 Broadly speaking? 0:06:38.279 --> 0:06:40.680 Do you stick it to your treasury close to five percentity? 0:06:41.200 --> 0:06:42.440 Maybe take a little credit risk? 0:06:43.600 --> 0:06:45.719 You know, I wish I had a juicier answer to 0:06:45.760 --> 0:06:48.280 this question, but yeah, I am your I am two 0:06:48.320 --> 0:06:50.560 year treasuries all day long. I mean We're at a 0:06:50.600 --> 0:06:53.039 point in the cycle where the FED is going to 0:06:53.120 --> 0:06:55.960 have to cut rates at some point. We keep pushing 0:06:56.000 --> 0:06:58.200 it out, but at some point that short end of 0:06:58.240 --> 0:07:00.760 the curve is going to have to come to grips 0:07:00.800 --> 0:07:04.200 with the fact that the FED will eventually embark on 0:07:04.240 --> 0:07:07.160 a cutting cycle. So I still think it offers great opportunity. 0:07:07.600 --> 0:07:09.880 Jong, thank you so much for so far great equity 0:07:10.720 --> 0:07:24.040 discussion there, folks, Aniragrano would have known to press the 0:07:24.040 --> 0:07:26.120 blue button. He joins us right now with the Bloomberg 0:07:26.160 --> 0:07:29.760 Intelligence arog loves to talk about, including the Apple ballet, 0:07:29.840 --> 0:07:31.880 But I've got to ask you away from your remit 0:07:32.520 --> 0:07:34.960 about Texas instruments and what I want to talk about 0:07:35.000 --> 0:07:38.760 anerog And this is not Colenngenzolbani and asking Hernanda Tejada 0:07:39.440 --> 0:07:42.800 that will report for Bloomberg Intelligence and Texas Instruments way 0:07:42.800 --> 0:07:46.360 out front on the question that Elliot's bringing up, like, 0:07:46.440 --> 0:07:49.200 wait a minute, you got all these Capex dreams, what 0:07:49.320 --> 0:07:53.640 about US investors, anierog within the cloud space, within the 0:07:53.720 --> 0:07:59.240 Aniogarana world, your universe. Is the Capex being overdone? 0:07:59.240 --> 0:07:59.400 Now? 0:07:59.520 --> 0:08:04.120 Is there two much enthusiasm about spend spend spend versus 0:08:04.160 --> 0:08:07.080 listening to investors or that they're saying, where's my return? 0:08:08.440 --> 0:08:10.680 Tom, I love Capax, and you know what has been 0:08:10.680 --> 0:08:14.080 disappointing is you know, it's not you know, it's not 0:08:14.240 --> 0:08:17.200 resounding a lot with clients as I should it should have, 0:08:17.280 --> 0:08:20.640 because this really gives me a very big leading indicator 0:08:21.160 --> 0:08:23.520 that the cloud demand is going to bounce and bounce 0:08:23.560 --> 0:08:26.120 back good. So i'm i'm I'm very happy that these 0:08:26.160 --> 0:08:29.400 companies are investing very heavy in Capax, which means they 0:08:29.840 --> 0:08:32.480 they know something that all of us don't know. I 0:08:32.760 --> 0:08:34.040 feel okay about it at all. 0:08:35.040 --> 0:08:37.080 All right, So let's go over to our good friend's 0:08:37.120 --> 0:08:39.679 Apple June tenth. I mean I don't know, Tom, I 0:08:39.760 --> 0:08:42.200 are thinking about booking, you know, the Gulf Stream to 0:08:42.240 --> 0:08:42.840 go out there. 0:08:42.720 --> 0:08:44.160 And see what are you do? 0:08:47.440 --> 0:08:49.439 You and the boat that what should we be looking 0:08:49.480 --> 0:08:53.920 for for Apple come June tenth. 0:08:53.960 --> 0:08:56.120 So I think it's very clear at this point. Apple's 0:08:56.160 --> 0:08:59.120 now had their big focus on Jenny I and everything 0:08:59.160 --> 0:09:01.640 around it. They really need to tell the street that 0:09:01.679 --> 0:09:04.040 they can do it better, if not better, at least 0:09:04.040 --> 0:09:07.600 match what Google has showcased in the past few months. 0:09:08.160 --> 0:09:09.840 If they don't do that, I don't think it's going 0:09:09.880 --> 0:09:13.079 to be really good for investors in the near town 0:09:13.160 --> 0:09:16.200 because so far the story has been Apple has lacked 0:09:16.240 --> 0:09:19.520 behind and they have not done much. We have heard 0:09:19.520 --> 0:09:23.240 from Markerman that they have a contract upcoming with open 0:09:23.320 --> 0:09:26.280 Ai that can infuse some of the features in there. Now, 0:09:26.440 --> 0:09:30.120 remember one thing Apple has the distribution. Apple has over 0:09:30.480 --> 0:09:33.760 one billion smartphone users, So if they can get somebody 0:09:33.840 --> 0:09:35.960 to use their products, I think it's going to help 0:09:36.000 --> 0:09:38.960 them out in the long run. But I would say 0:09:39.000 --> 0:09:42.440 a lot hinges on in this Tune tenth event for them. 0:09:42.679 --> 0:09:47.720 So how do you define this overused word ecosystem? I mean, 0:09:47.800 --> 0:09:51.439 is there an ecosystem nothing more than an ecosystem of convenience? 0:09:52.160 --> 0:09:57.720 Or is it a tangible ecosystem? Is it a tangible universe? 0:09:58.760 --> 0:10:00.800 So if you think about it, Tom, the way I 0:10:00.800 --> 0:10:03.960 think about it is ecosystem of Excel users. I mean, 0:10:04.400 --> 0:10:07.120 you know, free Google sheets have come and gone. I 0:10:07.280 --> 0:10:09.880 wouldn't care about it. You could argue that, you know, 0:10:09.920 --> 0:10:12.760 the same is the user, The same is the ecosystem 0:10:12.880 --> 0:10:14.920 for people who read Wall three journals. Once you are 0:10:15.000 --> 0:10:17.480 in that install base, you're not going to move away, 0:10:18.160 --> 0:10:20.320 even if I get a cheaper phone out there, I'm 0:10:20.320 --> 0:10:23.360 not moving away from Android to iOS or vice versa. 0:10:23.720 --> 0:10:26.400 So I think the real big kicker here is do 0:10:26.520 --> 0:10:29.680 they really have the compelling next generation app where it 0:10:29.760 --> 0:10:32.880 can keep the I would say, you know, the users 0:10:32.880 --> 0:10:37.080 that may decide to either pick iOS or Android in 0:10:37.080 --> 0:10:40.679 the long run. So I think the ecosystem is sticky 0:10:40.800 --> 0:10:43.280 because once you get into one, you don't get out 0:10:43.320 --> 0:10:46.040 of it. But they really need to showcase that they 0:10:46.040 --> 0:10:49.120 have the mindset to you know, keep people in it. 0:10:49.400 --> 0:10:55.240 Paul in Video is over one, so they were stacks 0:10:55.240 --> 0:10:59.040 split into one hundred. My first number was ninety seven, 0:10:59.640 --> 0:11:01.960 and right now the stock split to one hundred and 0:11:02.000 --> 0:11:03.080 ten dollars per share. 0:11:03.160 --> 0:11:06.040 Yep, how about I mean, just that's the way to 0:11:06.040 --> 0:11:09.360 play Airo in a lot of people's minds. Hey, Honora, 0:11:09.520 --> 0:11:12.920 we saw some reporting coming out recently that Apple's China 0:11:13.080 --> 0:11:15.320 iPhone shipments jumps fifty two percent. 0:11:16.400 --> 0:11:18.240 What is going on with that? I thought they were 0:11:18.280 --> 0:11:19.880 losing in China. What's going on there? 0:11:19.960 --> 0:11:22.960 So I as probably one of the things we learned 0:11:23.000 --> 0:11:25.160 from the last earning scull on Apple is some of 0:11:25.200 --> 0:11:28.320 these ship in data shouldn't be relied upon that heavily, 0:11:28.679 --> 0:11:31.559 because remember it's this is. This is the same source 0:11:31.880 --> 0:11:34.320 that told us chan fab data was down I think 0:11:34.360 --> 0:11:37.120 thirty nine forty percent or something in that. But when 0:11:37.160 --> 0:11:39.480 Tim Cooat came on the conference call, he said, you 0:11:39.520 --> 0:11:41.760 know what iPhone sales were up in Malee and China. 0:11:42.000 --> 0:11:44.360 So I I, you know, the part of the ease 0:11:44.400 --> 0:11:46.440 in the stocks only of one percent and not quite 0:11:46.480 --> 0:11:49.120 a bit. I'm not expecting a fifty two percent jump 0:11:49.120 --> 0:11:52.280 in iPhone revenue in the next quarter. I think this 0:11:52.480 --> 0:11:55.760 just shows one thing it shows though, is Apple's not 0:11:56.400 --> 0:11:59.360 losing out that big as it was made out in 0:11:59.400 --> 0:12:02.640 the last six months. People will buy and sell depending 0:12:02.640 --> 0:12:05.040 on when the sales are, when the seasonal nature is. 0:12:05.640 --> 0:12:08.040 So I mean I I really don't put that much 0:12:08.040 --> 0:12:09.320 emphasis on some of this data. 0:12:09.320 --> 0:12:09.520 Point. 0:12:09.760 --> 0:12:14.160 Explain to us ANA rog the utilities certitude that cloud 0:12:14.320 --> 0:12:19.119 your world, the aneriog around and world needs electricity generation 0:12:20.040 --> 0:12:22.120 and we're going to have to build all this stuff out. 0:12:22.240 --> 0:12:25.960 What in that theme do we get wrong? What's the 0:12:26.040 --> 0:12:28.559 distinction you say that needs to be clarified. 0:12:29.600 --> 0:12:31.520 I think the biggest thing is, and Paul and I 0:12:31.559 --> 0:12:33.840 had discussed this a while ago, is how are they 0:12:33.840 --> 0:12:35.640 going to make up for something like this? How will 0:12:35.679 --> 0:12:37.559 you see what are you going to do? Where is 0:12:37.600 --> 0:12:40.040 the capacity going to come from? And I think I 0:12:40.080 --> 0:12:43.680 am pretty much looking forward to new kinds of ways 0:12:43.720 --> 0:12:47.000 of doing things people coming up with. I think, you know, 0:12:47.360 --> 0:12:51.720 creative ways to utilize or make it more power and 0:12:51.840 --> 0:12:55.800 you know, use a friendly because the hungry nature of 0:12:55.880 --> 0:12:58.480 this particular technology is such that you know, we're going 0:12:58.559 --> 0:13:01.719 to see a lot of build up off you could say, 0:13:01.760 --> 0:13:07.480 alternative fuel rather than you know, the renewable energy because 0:13:07.559 --> 0:13:09.960 because we do need a lot of power to run 0:13:10.000 --> 0:13:10.760 these workloads. 0:13:12.000 --> 0:13:15.080 So ana when we think about just Apple, you know, 0:13:15.440 --> 0:13:17.400 this has been such a great stock for such a 0:13:17.440 --> 0:13:21.080 long period of time, but this China risk, it just 0:13:21.200 --> 0:13:25.680 doesn't seem to go away. If I'm an when you 0:13:25.720 --> 0:13:29.160 talk to these institutional investors in Apple, how did they 0:13:29.280 --> 0:13:32.839 kind of carmental well, how do they put that risk 0:13:33.000 --> 0:13:35.040 kind of to rest a little bit? 0:13:35.960 --> 0:13:38.920 Yeah, I think, you know, I think the last earnings call, 0:13:39.000 --> 0:13:41.440 as well as the data today should pass by one 0:13:41.480 --> 0:13:44.400 thing that this is a cyclical nature of the demand 0:13:44.440 --> 0:13:47.720 in China and not so much structural shrinking. That's a 0:13:47.880 --> 0:13:50.319 very good thing for long term and and something that 0:13:50.360 --> 0:13:52.080 you and I and the three of us have discussed 0:13:52.080 --> 0:13:55.480 over the last twelve months is you can say all 0:13:55.559 --> 0:13:58.440 you want about India and other emerging markets, at least 0:13:58.440 --> 0:14:01.640 for the next five years, Apple growth in iPhones is 0:14:01.679 --> 0:14:04.439 going to come from China. Like it or not, that's reality. 0:14:04.760 --> 0:14:06.680 So I think this is a good news at least 0:14:06.720 --> 0:14:09.120 for the next couple of years. Now. One thing is 0:14:09.160 --> 0:14:12.000 also I think getting clearer something we've been hopping on 0:14:12.120 --> 0:14:14.440 for a while is this is not a company that's 0:14:14.440 --> 0:14:17.120 going to grow sales ten percent anymore. This is going 0:14:17.160 --> 0:14:20.120 to be at best a five percent sales growth company. 0:14:20.120 --> 0:14:23.280 And people need to get, you know, comfortable with that. 0:14:23.360 --> 0:14:25.320 And I think a lot of people are now finally 0:14:25.320 --> 0:14:28.000 getting comfortable that that's the story. So you take five 0:14:28.040 --> 0:14:31.640 percent of revenue growth, a little bit margin expansion, and 0:14:31.720 --> 0:14:34.040 then share buybacks, you get to like eight to ten 0:14:34.080 --> 0:14:36.800 percent EPs growth trade and that's the reality of the 0:14:36.880 --> 0:14:37.600 park at this point. 0:14:37.720 --> 0:14:40.400 One final question, have you ever been to an Apple 0:14:40.440 --> 0:14:41.600 developers conference? 0:14:42.760 --> 0:14:45.760 No? No, they keep it insight, they keep it very tight. 0:14:45.800 --> 0:14:47.040 I know they have not invited me. 0:14:47.920 --> 0:14:49.920 It's like an invited audience, right. 0:14:50.040 --> 0:14:52.320 Yeah, yeah, no, absolutely, I don't even have about eye 0:14:52.360 --> 0:14:54.440 so definitely not invited. 0:14:54.800 --> 0:15:01.800 And Ron thank you so much joining us now with 0:15:01.880 --> 0:15:06.480 Panje policy. This came up not once, Terry, but twice 0:15:06.520 --> 0:15:10.320 this weekend. I'm not going to mince words. How's the 0:15:10.400 --> 0:15:15.240 president's health and what is the dialogue forward for Joe 0:15:15.280 --> 0:15:16.680 Biden given. 0:15:16.400 --> 0:15:19.760 The health, Well, what he's going to have to do 0:15:19.880 --> 0:15:22.680 is frankly, convince everybody that he's up to the job 0:15:23.120 --> 0:15:26.040 and do a better job than he has so far. 0:15:26.200 --> 0:15:29.160 I mean, I think the nadier of this was kind 0:15:29.160 --> 0:15:31.680 of late February early March, preceding the State of the 0:15:31.760 --> 0:15:35.280 Union with the Special Council report. He's been you know, 0:15:35.480 --> 0:15:38.320 it's gotten better since then. He's been better since then, 0:15:38.480 --> 0:15:40.960 But he's got a long way to go, and he's 0:15:41.000 --> 0:15:43.080 going to have to sustain for about the next five 0:15:43.120 --> 0:15:46.560 months the ability to show that he stood the so 0:15:46.640 --> 0:15:48.840 capable of governing. To me, that's the key to the 0:15:48.960 --> 0:15:49.480 entire election. 0:15:49.680 --> 0:15:53.720 What's the optionality he has forward? Based on the calendar, 0:15:53.800 --> 0:16:01.640 there's now June and then I assume the convention, excuse me, 0:16:02.200 --> 0:16:05.120 and then there's something after that. What does the windows 0:16:05.120 --> 0:16:09.200 of decision the President and his team and Missus Biden have. 0:16:10.400 --> 0:16:13.760 Well, he's got this June twenty seventh, debate, and that's 0:16:13.800 --> 0:16:16.320 going to tell you an awful lot about not just 0:16:16.680 --> 0:16:20.040 Biden's health and Biden's ability to go forward, but also 0:16:20.080 --> 0:16:23.880 how Democrats feel about it, and you know, going into 0:16:23.920 --> 0:16:27.840 the uh going into their convention soon after that. If 0:16:27.840 --> 0:16:30.880 he doesn't do well in the Junie debate, there's going 0:16:30.920 --> 0:16:32.760 to be speculation is going to be right that the 0:16:33.480 --> 0:16:40.920 party revolts. So there's a great potential roiling around politically, 0:16:40.960 --> 0:16:43.880 which will probably express itself in the markets to some extent, 0:16:44.240 --> 0:16:46.560 given the political and geopolitical implications. 0:16:46.560 --> 0:16:50.520 I mean, Paul, I want to make clear, Paul that 0:16:50.800 --> 0:16:53.360 there was no ill will from the people that asked 0:16:53.400 --> 0:16:57.560 me about this this weekend. They're just mystified of what 0:16:57.600 --> 0:17:00.320 the path is for the president given is there was 0:17:00.360 --> 0:17:04.840 no nobody was like ranting or you know Republican's Maga 0:17:04.920 --> 0:17:05.920 rant He was none of that. 0:17:05.960 --> 0:17:08.400 It's just baffled off almost exactly. 0:17:09.040 --> 0:17:12.159 On the other side, Terry, here in Manhattan, we have 0:17:12.200 --> 0:17:15.320 got a little trial about to reconvene here today. Can 0:17:15.320 --> 0:17:18.719 you put in context what this trial for former President 0:17:18.760 --> 0:17:19.560 Trump and the other. 0:17:19.480 --> 0:17:20.400 Legal issues are. 0:17:20.840 --> 0:17:22.520 How are they kind of stacking up here in the 0:17:22.560 --> 0:17:25.080 greater scheme of things as we plowed towards the election. 0:17:25.880 --> 0:17:27.960 Well, you got a situation where, you know, six months 0:17:27.960 --> 0:17:30.160 ago we were talking about this and we would have said, oh, 0:17:30.320 --> 0:17:32.119 you know, these are all these trials are going to 0:17:32.160 --> 0:17:35.719 be hugely significant for the for the path of the election. 0:17:36.760 --> 0:17:40.199 You know, now it's it's fairly obvious that they won't be. 0:17:40.760 --> 0:17:43.960 I think there's a a I asked myself on the election, 0:17:44.400 --> 0:17:47.600 or excuse me, on the conviction likelihood, what would Tom 0:17:47.600 --> 0:17:50.400 Wolfe think, you know, and Tom wolf would probably think 0:17:50.440 --> 0:17:53.600 the conviction would exist just so the judge and the 0:17:53.680 --> 0:17:56.440 jury could get you know, could get through the thing, 0:17:57.160 --> 0:18:02.439 knowing that they could bucket along to an appeals. Beyond that, 0:18:02.560 --> 0:18:06.360 I think it's a situation where it doesn't it doesn't 0:18:06.760 --> 0:18:08.959 help Trump at all. It's sort but it hurts him 0:18:09.080 --> 0:18:12.199 very little. Frankly, Uh, You've have a situation here, I 0:18:12.200 --> 0:18:15.560 think where everybody who thinks he's wronged already thinks he's wrong. 0:18:15.880 --> 0:18:19.080 And at most what happens here is you've got some 0:18:19.119 --> 0:18:23.080 independent voters who will hesitate a little bit more because 0:18:23.119 --> 0:18:25.320 this is a reminder of kind of the Trump circus 0:18:25.320 --> 0:18:29.000 and the Trump drama. Beyond that, I don't think it 0:18:29.040 --> 0:18:30.240 matters a lot. 0:18:30.880 --> 0:18:33.680 How about the conventions that this summer Terry should should 0:18:33.680 --> 0:18:35.800 Tom might be paying attention to these things? 0:18:37.680 --> 0:18:40.639 Yeah? You should, Yeah, you should. The you know, the 0:18:40.640 --> 0:18:47.280 conventions have turned into such you know, predigested comfort food 0:18:47.359 --> 0:18:51.720 that there's usually not not much there for anybody. But 0:18:51.800 --> 0:18:53.439 this time out, I mean, there's going to be a 0:18:53.440 --> 0:18:57.200 lot more drama around the Democratic Convention as a result 0:18:57.359 --> 0:19:02.160 of Biden's condition, as we've discussed, and on the Republican side, 0:19:02.160 --> 0:19:04.200 I think what you need to look for is whether 0:19:04.240 --> 0:19:08.800 Trump's successful or not in consolidating support, naturally unifying the 0:19:08.800 --> 0:19:11.720 Republican Party, and actually starting to draw independence to him. 0:19:11.960 --> 0:19:14.280 He needs both of those, as he did in twenty sixteen. 0:19:14.560 --> 0:19:16.959 Right now he's got neither of those. So the convention, 0:19:17.000 --> 0:19:18.639 you're going to tell you a lot about where that is. 0:19:18.920 --> 0:19:23.280 Terry hates frame your guesstimate of what the White House, 0:19:23.440 --> 0:19:27.600 the Senate, and the House looks like the first Wednesday 0:19:27.600 --> 0:19:31.120 of November. What's your guess on which way they'll go? 0:19:31.840 --> 0:19:36.359 Oh, I think I think Biden probably, aside from you 0:19:37.240 --> 0:19:40.240 something that else that might happen today, I think Biden 0:19:40.320 --> 0:19:44.600 probably squeaks through to victory. And I mean squeaks on 0:19:44.840 --> 0:19:50.840 the strength of superior organization and message discipline. I think 0:19:50.920 --> 0:19:54.959 the Senate is marginally Republican and the House is marginally Democrats. 0:19:54.960 --> 0:19:57.560 So what you have is a kind of refraction of 0:19:57.600 --> 0:20:01.520 the situation that exists today and without a lot of 0:20:02.320 --> 0:20:05.640 without a lot different and the same or similar consequences 0:20:05.640 --> 0:20:07.240 for fiscal and a bunch of the other things that 0:20:07.320 --> 0:20:08.320 markets care about most. 0:20:08.720 --> 0:20:10.879 Terry Haynes, thank you so much for the brief with 0:20:10.920 --> 0:20:24.280 Peenjia policy. You did. Look at the front pages with 0:20:24.400 --> 0:20:28.000 Lisa Matteo. Where do you start after a three day weekend? 0:20:28.800 --> 0:20:31.320 You start with this interesting one from the Washington Post. 0:20:31.480 --> 0:20:33.720 It put a couple studies together and it says that 0:20:33.800 --> 0:20:36.400 more home buyers they're turning to the bank of mom 0:20:36.400 --> 0:20:39.160 and dad to buy a home to get that down payment. 0:20:39.600 --> 0:20:42.439 So Freddie Mack did this analysis of their home loans. 0:20:42.480 --> 0:20:46.800 They share of young home buyers relying on older mortgage 0:20:46.800 --> 0:20:49.160 co signers like family members most often the parents. 0:20:49.240 --> 0:20:51.520 Yes, mom and Dad is as high as it's been. 0:20:51.400 --> 0:20:54.760 In at least thirty years, So that's how bad it's getting. 0:20:55.240 --> 0:20:57.879 Redfin suggests it picked up even more in twenty twenty 0:20:57.920 --> 0:20:58.600 three and. 0:20:58.560 --> 0:20:59.040 Here's the thing. 0:20:59.160 --> 0:21:03.000 Parents are even taking out loans against their existing homes 0:21:03.280 --> 0:21:05.000 to fund their children's homes. 0:21:05.359 --> 0:21:07.400 This is how crazy. 0:21:07.720 --> 0:21:10.280 And they're considering joint purchases where their kids as part 0:21:10.280 --> 0:21:13.320 of this long term investment too. But the people who 0:21:13.320 --> 0:21:15.159 are being left out are the people who don't have 0:21:15.280 --> 0:21:15.919 that family. 0:21:16.840 --> 0:21:20.080