1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,479 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:21,640 Speaker 1: at Bloomberg dot com slash podcast. All right, want to 7 00:00:21,680 --> 00:00:24,479 Speaker 1: treat today in our Bloomberg Interactive Broker studio. Today we 8 00:00:24,520 --> 00:00:27,960 Speaker 1: have Eric Adams, New York City mayor candidate, and he's 9 00:00:27,960 --> 00:00:30,400 Speaker 1: got a day job too, he's Brooklyn Borough President. He 10 00:00:30,480 --> 00:00:33,040 Speaker 1: joins us here in studio. Mr Adams, thank you so 11 00:00:33,120 --> 00:00:36,400 Speaker 1: much for joining us. We really appreciate you taking the time. Um, 12 00:00:36,440 --> 00:00:38,360 Speaker 1: you know, you still have a general election to go, 13 00:00:38,680 --> 00:00:42,519 Speaker 1: but let's make the assumption that you per that you 14 00:00:42,560 --> 00:00:46,199 Speaker 1: win that election. What is job one for you? And 15 00:00:46,360 --> 00:00:50,159 Speaker 1: you're a new administration of public safety? We we have 16 00:00:50,280 --> 00:00:53,000 Speaker 1: to be safe. I stated this over and over again. 17 00:00:53,120 --> 00:00:58,640 Speaker 1: The prerequisite to prosperities, public safety and justice. I must 18 00:00:58,920 --> 00:01:02,560 Speaker 1: allow New Yorkers to know that they're going to be 19 00:01:02,600 --> 00:01:05,319 Speaker 1: safe on our their subway system when they returned back 20 00:01:05,360 --> 00:01:09,880 Speaker 1: to their offices. Our individuals that go to restaurants are 21 00:01:09,920 --> 00:01:12,440 Speaker 1: not going to be robbed like we saw a few 22 00:01:12,520 --> 00:01:15,760 Speaker 1: days ago while they sit down and have dinner. This 23 00:01:15,920 --> 00:01:19,080 Speaker 1: city must be safe for tourism to return and for 24 00:01:19,280 --> 00:01:22,600 Speaker 1: businesses to grow and thrive. How do we do that 25 00:01:22,720 --> 00:01:25,000 Speaker 1: or how does a city do that? Is it simply 26 00:01:25,319 --> 00:01:29,600 Speaker 1: numbers more cops, better train cops, better deployment of cops. 27 00:01:29,600 --> 00:01:32,120 Speaker 1: How do we do that? It's a combination. Uh, the 28 00:01:32,440 --> 00:01:35,640 Speaker 1: bad guys are watching the good people of this city 29 00:01:35,760 --> 00:01:40,800 Speaker 1: squabble with each other over technical aspects and how we police. 30 00:01:41,319 --> 00:01:44,760 Speaker 1: So I'm going to hit reset with my police officers 31 00:01:44,800 --> 00:01:47,039 Speaker 1: and let them know I have their backs. But I'm 32 00:01:47,040 --> 00:01:50,280 Speaker 1: also going to send aloud message that if you don't 33 00:01:50,320 --> 00:01:53,760 Speaker 1: respect the nobility of public protection, you can't serve in 34 00:01:53,880 --> 00:01:57,440 Speaker 1: my agency. And We're going to reintroduce ourselves to the 35 00:01:57,440 --> 00:02:00,520 Speaker 1: men and women who are protecting us. Yeah, I saw. 36 00:02:01,120 --> 00:02:03,760 Speaker 1: I was back in New York, um where I'm from, 37 00:02:03,800 --> 00:02:07,560 Speaker 1: actually went to PS for kindergarten. I was back in 38 00:02:07,600 --> 00:02:10,560 Speaker 1: New York in July and Um I was hanging out 39 00:02:10,600 --> 00:02:15,440 Speaker 1: on Street and Lex waiting for an uber. I saw 40 00:02:15,639 --> 00:02:19,600 Speaker 1: a group of people riding stolen motorcycles past a few 41 00:02:19,639 --> 00:02:23,359 Speaker 1: squad cars. Not none of the police moved a finger. 42 00:02:23,440 --> 00:02:26,080 Speaker 1: I turned around. Somebody was selling drugs right behind me. 43 00:02:26,200 --> 00:02:28,919 Speaker 1: The police clearly could see it, not doing anything about it. 44 00:02:29,440 --> 00:02:31,560 Speaker 1: How do you motivate a police force that is just 45 00:02:31,840 --> 00:02:36,600 Speaker 1: seemingly given up, and that's true. You motivate them by 46 00:02:36,840 --> 00:02:40,120 Speaker 1: letting them know that one of their own will be 47 00:02:40,160 --> 00:02:43,760 Speaker 1: moving into the position of ensuring that they get to 48 00:02:43,800 --> 00:02:46,560 Speaker 1: support they need to get there to do their jobs. 49 00:02:46,639 --> 00:02:50,360 Speaker 1: And you're right, I've witnessed it as well, just a 50 00:02:50,480 --> 00:02:54,880 Speaker 1: hands off approach to dealing with those quality of life issues, 51 00:02:55,280 --> 00:02:58,280 Speaker 1: and that's not acceptable a city as diverse and as 52 00:02:58,440 --> 00:03:01,160 Speaker 1: large as New York is in parative that we have 53 00:03:01,280 --> 00:03:03,800 Speaker 1: a set of standards and how do we expect to 54 00:03:03,919 --> 00:03:07,600 Speaker 1: treat our neighbors. I've watched a group of people on 55 00:03:07,919 --> 00:03:10,720 Speaker 1: a t v s driving up to down the sidewalk 56 00:03:10,960 --> 00:03:17,200 Speaker 1: of by Fifth Avenue in Manhattan, New Prospect in Central Park. 57 00:03:17,919 --> 00:03:21,200 Speaker 1: We can't have a city of disorder. We can do 58 00:03:21,240 --> 00:03:24,160 Speaker 1: it without heavy handedness. But at the same time, we 59 00:03:24,200 --> 00:03:28,919 Speaker 1: need to create a standard of expectations in our city. Alright, 60 00:03:28,919 --> 00:03:30,919 Speaker 1: some stratums you when you came into the Bloomberg in 61 00:03:31,360 --> 00:03:34,200 Speaker 1: the Bloomberg headquarters here on Election toon Avenue and fifty 62 00:03:34,200 --> 00:03:36,720 Speaker 1: eight Street. You might have seen that in this block 63 00:03:36,760 --> 00:03:40,040 Speaker 1: between fifty eight and fifty nine Street on Electionington, every 64 00:03:40,040 --> 00:03:44,600 Speaker 1: storefront was vacant and pre pandemic. They were thriving with 65 00:03:44,960 --> 00:03:47,800 Speaker 1: some seemingly big box stores as well as some local retailers. 66 00:03:48,320 --> 00:03:51,360 Speaker 1: How do we bring business back to How do we 67 00:03:51,360 --> 00:03:53,280 Speaker 1: reopen New York City? How do we bring business back 68 00:03:53,320 --> 00:03:56,600 Speaker 1: to New York City? One thing I have been doing 69 00:03:56,720 --> 00:03:59,320 Speaker 1: for the last two and a half three years, having 70 00:03:59,360 --> 00:04:03,480 Speaker 1: focused with business leaders and finding out how do we 71 00:04:03,560 --> 00:04:08,240 Speaker 1: do just that? And I was alarmed to discover how 72 00:04:08,320 --> 00:04:11,960 Speaker 1: too expensive, to bureaucratic, and too difficult it is to 73 00:04:12,040 --> 00:04:17,719 Speaker 1: do business in the empire state. We were a city 74 00:04:17,800 --> 00:04:22,360 Speaker 1: where we build empires. But cities are made up of agencies, 75 00:04:22,640 --> 00:04:26,560 Speaker 1: and if those agencies are in the way of building empires, 76 00:04:26,600 --> 00:04:29,200 Speaker 1: we would never be able to allow it to happen. 77 00:04:29,880 --> 00:04:35,520 Speaker 1: This is a city that is vibrating with ten million dreams. Uh, 78 00:04:35,600 --> 00:04:37,760 Speaker 1: those dreams are about to wake up, and they're going 79 00:04:37,800 --> 00:04:41,400 Speaker 1: to wake up because I'm going to create a city 80 00:04:41,480 --> 00:04:45,599 Speaker 1: that is open for business, where we're going to you 81 00:04:46,040 --> 00:04:50,120 Speaker 1: utilize our agencies and our manpower to make sure businesses 82 00:04:50,160 --> 00:04:53,080 Speaker 1: are here. We're going to attract them with incentives. We're 83 00:04:53,080 --> 00:04:56,320 Speaker 1: going to encourage them to developing out of boroughs. We're 84 00:04:56,360 --> 00:04:59,520 Speaker 1: going to build out the pipeline of talent so that 85 00:04:59,560 --> 00:05:02,440 Speaker 1: we can filled the jobs that are available. Right now, 86 00:05:02,760 --> 00:05:05,480 Speaker 1: no one wants to do business in this city because 87 00:05:05,640 --> 00:05:09,400 Speaker 1: we have been defined as a business enemy city instead 88 00:05:09,440 --> 00:05:13,120 Speaker 1: of a business friendly city. It is too expensive and 89 00:05:13,120 --> 00:05:17,039 Speaker 1: I think, uh for residents as well. I say this 90 00:05:17,240 --> 00:05:21,960 Speaker 1: as a free market capitalist, and I'm sure that almost 91 00:05:21,960 --> 00:05:25,800 Speaker 1: all of our listeners and most of our clients also 92 00:05:25,920 --> 00:05:28,920 Speaker 1: believe in free markets. On the other hand, if you're 93 00:05:29,520 --> 00:05:32,680 Speaker 1: you know, a family of three or four or five, 94 00:05:33,000 --> 00:05:36,039 Speaker 1: and you're working middle class job in New York, there's 95 00:05:36,080 --> 00:05:39,480 Speaker 1: no way you can afford an apartment big enough for 96 00:05:39,520 --> 00:05:40,960 Speaker 1: the family. How do you do? How do you deal 97 00:05:41,000 --> 00:05:45,120 Speaker 1: with that? As mayor? Well, clearly we have decimated the 98 00:05:45,360 --> 00:05:47,720 Speaker 1: middle class in this city. There are a lot of 99 00:05:47,760 --> 00:05:51,600 Speaker 1: incentives for low income and high income, but we forgot 100 00:05:51,640 --> 00:05:55,600 Speaker 1: the backbone of our city. And I believe the backbone 101 00:05:55,800 --> 00:05:59,760 Speaker 1: is that teacher and accountant. Uh that backbone. Believe it 102 00:05:59,800 --> 00:06:02,720 Speaker 1: in odd is even the fast food workers. We were 103 00:06:02,720 --> 00:06:07,160 Speaker 1: successfully getting them to receive a fifteen dollar minimum wage. Uh, 104 00:06:07,240 --> 00:06:09,760 Speaker 1: you have a husband and wife. They are moved into 105 00:06:09,800 --> 00:06:13,040 Speaker 1: an area where the city is unaffordable. And so we 106 00:06:13,120 --> 00:06:18,280 Speaker 1: must reinvest in the Mitchell Llama style programs that we had, 107 00:06:18,320 --> 00:06:21,240 Speaker 1: in the officer teacher next door programs that we had 108 00:06:21,600 --> 00:06:25,200 Speaker 1: where we incentivized people to be able to not only 109 00:06:25,240 --> 00:06:28,880 Speaker 1: rent approaches. And then we should look at our affordable 110 00:06:28,920 --> 00:06:33,599 Speaker 1: housing program and look at some form of affordable housing 111 00:06:33,680 --> 00:06:37,640 Speaker 1: with ownership in that affordable housing. How do we carry 112 00:06:37,640 --> 00:06:40,840 Speaker 1: it out so people can start owning and building equity 113 00:06:41,160 --> 00:06:44,240 Speaker 1: in the city that they love. So we must ensure 114 00:06:44,320 --> 00:06:47,680 Speaker 1: the areas that government can control, such as rent. We 115 00:06:47,800 --> 00:06:50,479 Speaker 1: must ensure that we have a cross section based on 116 00:06:50,600 --> 00:06:54,400 Speaker 1: income bands of low income, middle income New Yorker is 117 00:06:54,520 --> 00:06:57,520 Speaker 1: so that they can stay in the city that they love. Uh. 118 00:06:57,640 --> 00:07:00,640 Speaker 1: Mr Adams talked to us about infrastructure. We've um, you know, 119 00:07:00,720 --> 00:07:03,919 Speaker 1: the subways and just general infrastructure in this city challenge. 120 00:07:03,960 --> 00:07:06,479 Speaker 1: We just have the recent um, you know, the remnants 121 00:07:06,480 --> 00:07:08,800 Speaker 1: from the Hurricane Ida, you know, putting a crimp into 122 00:07:08,800 --> 00:07:11,560 Speaker 1: the subway system for about twenty four hours. How do 123 00:07:11,560 --> 00:07:16,320 Speaker 1: you think about infrastructure in this city? Great question of 124 00:07:16,760 --> 00:07:18,960 Speaker 1: you know, we need to be honest with ourselves. We 125 00:07:19,080 --> 00:07:22,200 Speaker 1: screwed up the planet and we didn't do it in 126 00:07:22,200 --> 00:07:26,760 Speaker 1: one day. We did it over years of improper treating 127 00:07:26,920 --> 00:07:30,360 Speaker 1: of the planet. So we're not going to fix this instantly. 128 00:07:30,640 --> 00:07:34,360 Speaker 1: We must have an intervention plan and a prevention plan, 129 00:07:34,840 --> 00:07:38,880 Speaker 1: prevention other long term things. Every new sewer project we 130 00:07:38,880 --> 00:07:42,360 Speaker 1: should build it with a one hundred year outlook of 131 00:07:42,520 --> 00:07:47,000 Speaker 1: canna withstand the water levels and the changes in our environment. 132 00:07:47,600 --> 00:07:49,440 Speaker 1: We need to look at how do we learn how 133 00:07:49,480 --> 00:07:53,360 Speaker 1: to live with water UH, And there's some amazing programs 134 00:07:53,360 --> 00:07:55,880 Speaker 1: that are taking place globally. I'm getting ready to take 135 00:07:55,880 --> 00:07:58,520 Speaker 1: a trip to the Netherlands so I could look at 136 00:07:58,520 --> 00:08:00,560 Speaker 1: some of the things that they're doing. But then we 137 00:08:00,600 --> 00:08:03,960 Speaker 1: need intervention right now. Mother Nature is not going to 138 00:08:04,080 --> 00:08:06,960 Speaker 1: wait for us to build out our sewer systems, so 139 00:08:07,120 --> 00:08:11,640 Speaker 1: we need to have early warning systems, identified those basement 140 00:08:11,640 --> 00:08:17,240 Speaker 1: apartments and give people the proper escape routes, investing legalizing 141 00:08:17,320 --> 00:08:21,800 Speaker 1: some of the units. UH build large retaining pools of 142 00:08:22,000 --> 00:08:24,480 Speaker 1: We could use some of our open spaces to build 143 00:08:24,560 --> 00:08:28,320 Speaker 1: large retaining pools to deal with water spill off, spill 144 00:08:28,320 --> 00:08:31,880 Speaker 1: off and to hold the water into we did with 145 00:08:31,920 --> 00:08:35,439 Speaker 1: the emergency situation of something they're doing in Hoboken right 146 00:08:35,480 --> 00:08:39,800 Speaker 1: now where they're building basketball courts over retaining pools. So 147 00:08:39,880 --> 00:08:43,320 Speaker 1: we have to think differently and embrace the concept that 148 00:08:43,360 --> 00:08:45,839 Speaker 1: are coming from the experts who we have been meeting with. 149 00:08:46,120 --> 00:08:49,239 Speaker 1: But there must be a two pronged attack, both intervention 150 00:08:49,640 --> 00:08:54,600 Speaker 1: and prevention. Have you got any um, you know, think 151 00:08:54,640 --> 00:08:59,160 Speaker 1: differently solutions to the congestion, the traffic, the double parking. 152 00:08:59,600 --> 00:09:01,440 Speaker 1: You know, it's always been an issue with New York, 153 00:09:01,559 --> 00:09:04,200 Speaker 1: but cities around the world are coming up with other 154 00:09:04,280 --> 00:09:08,240 Speaker 1: ideas and ways to fight it. I'm a congestion pricing guy. 155 00:09:08,320 --> 00:09:10,760 Speaker 1: I believe in it. I believe the concept is important. 156 00:09:10,920 --> 00:09:15,200 Speaker 1: Is similar to what London has done many years ago. 157 00:09:16,120 --> 00:09:18,640 Speaker 1: I think it's important that we do so. But I 158 00:09:18,720 --> 00:09:22,400 Speaker 1: also believe we need to incentivize truck deliveries. A lot 159 00:09:22,480 --> 00:09:25,400 Speaker 1: of our congestion is coming from deliveries. We need to 160 00:09:25,400 --> 00:09:29,240 Speaker 1: start delivering at night, and I think if we incentivize that, 161 00:09:29,400 --> 00:09:32,280 Speaker 1: we can get a lot of the deliveries done. Uh. 162 00:09:32,320 --> 00:09:37,200 Speaker 1: And then we need to use alternative methods of transportation. UH. 163 00:09:37,559 --> 00:09:40,880 Speaker 1: That's everything from the scooters, uh, the you know, the 164 00:09:40,960 --> 00:09:45,000 Speaker 1: mopas I've visited many countries bike use. When I'm in 165 00:09:45,120 --> 00:09:47,800 Speaker 1: China or in other parts of the globe, people are 166 00:09:47,920 --> 00:09:51,560 Speaker 1: using non cars to get around for those who can 167 00:09:51,600 --> 00:09:55,120 Speaker 1: do so. And not only does it encourage a greater 168 00:09:55,200 --> 00:09:59,160 Speaker 1: level of mobility diversity, but it does it also deals 169 00:09:59,200 --> 00:10:02,880 Speaker 1: with the congestion because this congestion is not sustainable in 170 00:10:02,880 --> 00:10:06,160 Speaker 1: the city. Too much is lose, is lost doing business 171 00:10:06,160 --> 00:10:08,920 Speaker 1: in the city because you're stuck in traffic somewhere. And 172 00:10:08,960 --> 00:10:12,840 Speaker 1: then we must create a first rate transportation system. I'm 173 00:10:12,840 --> 00:10:15,960 Speaker 1: gonna train user, I have a metro card. We create 174 00:10:16,000 --> 00:10:20,720 Speaker 1: a safe, first rate transportation system, people will utilize our 175 00:10:20,800 --> 00:10:25,559 Speaker 1: subways and buses. Inequality. As this city builds back, reopens, 176 00:10:25,640 --> 00:10:28,319 Speaker 1: how do we ensure it reopens and builds back for everyone. 177 00:10:28,480 --> 00:10:31,120 Speaker 1: It's so true. That is a real problem we have 178 00:10:31,200 --> 00:10:35,040 Speaker 1: in the city. Uh, the inequalities that we're witnessing is 179 00:10:35,120 --> 00:10:38,600 Speaker 1: leading to the lack of prosperity for so many New 180 00:10:38,679 --> 00:10:41,680 Speaker 1: Yorkers and it's just on so many levels. We must 181 00:10:41,679 --> 00:10:43,840 Speaker 1: do so, and it's not going to be done in 182 00:10:43,880 --> 00:10:46,520 Speaker 1: the first four years. What I must do, if I'm 183 00:10:46,520 --> 00:10:49,280 Speaker 1: fortunate enough to become the mayor, is to build the 184 00:10:49,320 --> 00:10:53,360 Speaker 1: foundation that other mayors can build on. Uh. The inequalities 185 00:10:53,600 --> 00:10:56,360 Speaker 1: is to go to the source. Number one education. We 186 00:10:56,400 --> 00:10:59,400 Speaker 1: need to deal with children with special needs and learning 187 00:10:59,480 --> 00:11:03,400 Speaker 1: disability tease. One study showed that over thirty of our 188 00:11:03,440 --> 00:11:08,559 Speaker 1: prison population a place like uh like Texas, we're dyslexic. 189 00:11:09,160 --> 00:11:12,440 Speaker 1: We don't just do dyslexia screening in our city. UM 190 00:11:12,559 --> 00:11:15,599 Speaker 1: learning disabilities. Uh, you see, fifty five percent of the 191 00:11:15,640 --> 00:11:18,480 Speaker 1: inmates a rich is a dealing with learning disabilities. So 192 00:11:18,600 --> 00:11:22,240 Speaker 1: one way of ending inequalities is to focus on education 193 00:11:22,480 --> 00:11:26,120 Speaker 1: so people can have the opportunities they deserved. Eric Adams, 194 00:11:26,160 --> 00:11:28,080 Speaker 1: thank you so much for joining us. We really appreciate 195 00:11:28,080 --> 00:11:30,760 Speaker 1: your time. Eric Adams, New York City Mayoral. Kennedy in 196 00:11:30,800 --> 00:11:33,600 Speaker 1: Brooklyn Borough President joining us here in our Bloomberg Interactive 197 00:11:33,600 --> 00:11:39,320 Speaker 1: Broker studio. I want to bring in Megan Horneman, director 198 00:11:39,360 --> 00:11:43,559 Speaker 1: of portfolio Strategy Advertence Capital Advisors, about two point six 199 00:11:43,679 --> 00:11:47,960 Speaker 1: billion dollars in assets under management, located in Hunt Valley, Maryland, 200 00:11:48,000 --> 00:11:50,839 Speaker 1: just outside the Charms City of Baltimore. Megan, thanks so 201 00:11:50,920 --> 00:11:53,000 Speaker 1: much for joining us here. You know, let's turn to 202 00:11:53,120 --> 00:11:56,880 Speaker 1: earnings here, evaluation and some of the old time fundamental 203 00:11:57,240 --> 00:11:59,480 Speaker 1: stuff here we've had some really good earnings over the 204 00:11:59,520 --> 00:12:02,679 Speaker 1: past several quarters, but some economic concerns you know, from 205 00:12:02,720 --> 00:12:05,240 Speaker 1: the delta variant and so on, or maybe causing some 206 00:12:05,280 --> 00:12:07,880 Speaker 1: people to question some of the earnings essments out there 207 00:12:07,960 --> 00:12:10,000 Speaker 1: for ACQUES three and four. How do you think about 208 00:12:10,040 --> 00:12:14,320 Speaker 1: that in potential risk for this market. Yes, I think 209 00:12:14,320 --> 00:12:18,680 Speaker 1: we we've likely seen that peak in the earnings growth rate. 210 00:12:19,200 --> 00:12:21,440 Speaker 1: We probably saw that this year, and now there's just 211 00:12:21,480 --> 00:12:24,920 Speaker 1: a little bit more uncertainty because people had come into 212 00:12:24,920 --> 00:12:28,280 Speaker 1: the third quarter with such heightened expectations for economic growth 213 00:12:28,559 --> 00:12:30,880 Speaker 1: and now a lot of the data has been mixed. 214 00:12:30,920 --> 00:12:32,760 Speaker 1: I mean you can see that even just by looking 215 00:12:32,800 --> 00:12:35,959 Speaker 1: at the City Group Economic Surprise Index that's deeply in 216 00:12:36,040 --> 00:12:39,439 Speaker 1: negative territory. Um. I know, we got some some positive 217 00:12:39,559 --> 00:12:42,480 Speaker 1: news from the consumer, but it is on the backup 218 00:12:42,520 --> 00:12:45,240 Speaker 1: some downward revisions to the prior month. And then as 219 00:12:45,320 --> 00:12:48,320 Speaker 1: as mentioned, the consumer confidence is still relatively weak. So 220 00:12:48,559 --> 00:12:50,640 Speaker 1: I think you're going to see some estimates coming down, 221 00:12:50,679 --> 00:12:53,120 Speaker 1: not just from the earnings perspective, but also from the 222 00:12:53,120 --> 00:12:58,160 Speaker 1: economic growth perspective as well. We have our own economic 223 00:12:58,240 --> 00:13:03,079 Speaker 1: Surprise Index as L and a really cool page that 224 00:13:03,120 --> 00:13:05,280 Speaker 1: you can pull it up with e C s U. 225 00:13:05,840 --> 00:13:09,480 Speaker 1: Paul just in case you're on right now is the 226 00:13:09,559 --> 00:13:14,600 Speaker 1: command and obviously, UM it matches up with Megan with 227 00:13:14,600 --> 00:13:17,040 Speaker 1: the city surprise in Dex we've seen you can you 228 00:13:17,040 --> 00:13:18,959 Speaker 1: can if you click on the chart on e C 229 00:13:19,200 --> 00:13:21,880 Speaker 1: S you go, you can blow up the surprise index. Um, 230 00:13:22,440 --> 00:13:26,079 Speaker 1: look look at or zoom into what we've seen happen 231 00:13:26,200 --> 00:13:29,840 Speaker 1: over the last I don't know, UM, I guess six months. 232 00:13:29,920 --> 00:13:33,840 Speaker 1: It hit a high in April May and has come 233 00:13:33,920 --> 00:13:38,760 Speaker 1: down now into pretty extreme negative territory. Um does this 234 00:13:38,840 --> 00:13:43,439 Speaker 1: opera opportunities you think, Megan, I don't think quite yet. 235 00:13:43,559 --> 00:13:45,760 Speaker 1: I think there's still is some more there's some other 236 00:13:45,800 --> 00:13:48,280 Speaker 1: things in the market that keep us a little hesitant. Um, 237 00:13:48,360 --> 00:13:51,839 Speaker 1: we have some dry powder, we have cash in portfolios 238 00:13:51,880 --> 00:13:54,520 Speaker 1: that we're waiting to put to work. We're still optimistic 239 00:13:54,600 --> 00:13:56,959 Speaker 1: long term, but in the very near term, I think 240 00:13:56,960 --> 00:13:59,000 Speaker 1: there's still some other risks that we have to digest. 241 00:13:59,120 --> 00:14:01,800 Speaker 1: Whether it's from the political standpoint. Um, there's going to 242 00:14:01,840 --> 00:14:03,800 Speaker 1: be a lot of noise just over the next next 243 00:14:03,840 --> 00:14:08,160 Speaker 1: couple of months, the Federal Reserve next week evaluation. Still 244 00:14:08,679 --> 00:14:11,920 Speaker 1: even with the modest you know, weakness we've seen here 245 00:14:11,920 --> 00:14:14,199 Speaker 1: and I say very modest. Keep in mind, the smps 246 00:14:14,280 --> 00:14:17,880 Speaker 1: only down about two um. This isn't really a pullback 247 00:14:17,960 --> 00:14:20,600 Speaker 1: that we're seeing here, um. But the valuations still look 248 00:14:20,640 --> 00:14:22,600 Speaker 1: a little bit stretched here. And do you expect to 249 00:14:22,600 --> 00:14:24,640 Speaker 1: pull back? Do you expect that we've been hearing so 250 00:14:24,680 --> 00:14:28,000 Speaker 1: many warnings of maybe there's a ten even fiftcent pullback 251 00:14:28,040 --> 00:14:31,160 Speaker 1: to come. I think that there is chance for this 252 00:14:31,240 --> 00:14:33,160 Speaker 1: to continue to get for us to go a bit 253 00:14:33,240 --> 00:14:35,480 Speaker 1: weaker from here. I can't pinpoint exactly whether it'll be 254 00:14:35,520 --> 00:14:38,360 Speaker 1: ten or fifteen percent, but I think we're well overdue 255 00:14:38,440 --> 00:14:41,160 Speaker 1: for at least a minimum of five percent correction. We 256 00:14:41,160 --> 00:14:45,040 Speaker 1: haven't even pullback. We haven't even had that this year yet. Megan, 257 00:14:45,080 --> 00:14:48,680 Speaker 1: where are you suggesting your clients allocate their equity portfolios. 258 00:14:48,840 --> 00:14:50,880 Speaker 1: Is it more than the growth, typical growth kind of 259 00:14:51,080 --> 00:14:54,200 Speaker 1: portfolio and that has worked so well for a decade 260 00:14:54,280 --> 00:14:56,120 Speaker 1: or more, or is it some of the more cyclical 261 00:14:56,160 --> 00:14:58,440 Speaker 1: trades that might be more sensitive to maybe you know, 262 00:14:59,000 --> 00:15:01,560 Speaker 1: you know, rising in flay, shouldn't reopening economy, that type 263 00:15:01,600 --> 00:15:04,600 Speaker 1: of thing. Yeah, we we have a little bit of 264 00:15:04,640 --> 00:15:07,720 Speaker 1: both in our portfolios, but we definitely have more of 265 00:15:07,760 --> 00:15:10,520 Speaker 1: the value til given our view that we think the 266 00:15:10,520 --> 00:15:13,640 Speaker 1: cyclical trade has room to go. And also we think 267 00:15:13,680 --> 00:15:15,440 Speaker 1: that interest rates are going to go higher from here. 268 00:15:15,480 --> 00:15:18,200 Speaker 1: I think that everybody knows that. But I think interest 269 00:15:18,280 --> 00:15:21,440 Speaker 1: rates right now just aren't justified where they are looking 270 00:15:21,480 --> 00:15:24,480 Speaker 1: at long term ten thirty year treasure yields, that's just 271 00:15:24,560 --> 00:15:27,920 Speaker 1: not justifiable. And when you're talking about the FED tapering, 272 00:15:28,320 --> 00:15:31,800 Speaker 1: those types of things will weigh on those expensive, you know, 273 00:15:32,280 --> 00:15:34,040 Speaker 1: growth types of stock, so we have more of a 274 00:15:34,120 --> 00:15:37,400 Speaker 1: value till here in the US you expect a serious taper. 275 00:15:39,040 --> 00:15:42,680 Speaker 1: I think you're gonna get the first um, you know, 276 00:15:42,920 --> 00:15:46,240 Speaker 1: a solid suggestion about it um in the meeting next week. 277 00:15:46,520 --> 00:15:48,600 Speaker 1: I think you'll start to see the actual taper or 278 00:15:48,600 --> 00:15:50,960 Speaker 1: taping taking place before the end of this year, probably 279 00:15:50,960 --> 00:15:53,600 Speaker 1: in the in the November meeting. But I think we're 280 00:15:53,680 --> 00:15:56,280 Speaker 1: probably going to kind of get us through this debt 281 00:15:56,320 --> 00:15:57,760 Speaker 1: ceiling that we have at the end of this month. 282 00:15:57,800 --> 00:15:59,840 Speaker 1: I don't think you're gonna get a firm commitment of 283 00:15:59,840 --> 00:16:02,200 Speaker 1: its starting next week. I think it'll probably be in 284 00:16:02,240 --> 00:16:05,200 Speaker 1: November or December, and then they'll have that continue to 285 00:16:05,240 --> 00:16:09,200 Speaker 1: taper through the all of next year and they'll continue 286 00:16:09,280 --> 00:16:11,520 Speaker 1: to say, you know, interest rates and tapering are not 287 00:16:11,640 --> 00:16:15,120 Speaker 1: tied together, so the interest rate hikes are still aways off. Megan, 288 00:16:15,160 --> 00:16:17,800 Speaker 1: do you get a lot of incoming calls from your 289 00:16:17,840 --> 00:16:23,000 Speaker 1: clients about crypto and if so, what do you tell them? Uh? No, 290 00:16:23,480 --> 00:16:27,040 Speaker 1: We've been UM pretty vocal and some of our publications 291 00:16:27,080 --> 00:16:30,320 Speaker 1: about the crypto market UM that we at this time 292 00:16:30,360 --> 00:16:33,440 Speaker 1: we're not investing in in the cryptocurrency market or any 293 00:16:33,440 --> 00:16:37,360 Speaker 1: of the other crypto type of investments. There's still this 294 00:16:37,440 --> 00:16:40,680 Speaker 1: is such a um the crypto market and all of 295 00:16:40,720 --> 00:16:43,400 Speaker 1: these other crypto coins and things. But this is a 296 00:16:43,480 --> 00:16:47,360 Speaker 1: very new UM kind of experiment trying to look at 297 00:16:47,200 --> 00:16:49,280 Speaker 1: at things. Is using this as some sort of a 298 00:16:49,640 --> 00:16:51,960 Speaker 1: uh form of tender. But I just don't think that 299 00:16:52,320 --> 00:16:55,160 Speaker 1: at this time that it really warrants us investing in it. 300 00:16:55,160 --> 00:16:57,560 Speaker 1: It's way too violatble for our clients, just doesn't have 301 00:16:57,600 --> 00:17:00,520 Speaker 1: a place in client portfolios. We don't leave it's going 302 00:17:00,560 --> 00:17:03,280 Speaker 1: to take over any kind of the regular you know, 303 00:17:03,320 --> 00:17:07,200 Speaker 1: the US dollar or anything from a currency perspective and regulation. 304 00:17:07,240 --> 00:17:08,639 Speaker 1: I think it's the biggest risk that you're going to 305 00:17:08,720 --> 00:17:11,240 Speaker 1: see in the crypto market. Could really take the wind 306 00:17:11,240 --> 00:17:13,680 Speaker 1: out of the sales here and then also just spark 307 00:17:13,800 --> 00:17:16,239 Speaker 1: volatility and that's just not something that we that we 308 00:17:16,280 --> 00:17:21,240 Speaker 1: find profit find a good place for portfolios. Megan, thanks 309 00:17:21,280 --> 00:17:22,840 Speaker 1: so much for joining us. Great to get your take 310 00:17:22,880 --> 00:17:24,359 Speaker 1: and I hope we can get you back on the 311 00:17:24,400 --> 00:17:27,760 Speaker 1: program soon. Megan Hornum and their director of portfolio Strategy 312 00:17:27,760 --> 00:17:31,400 Speaker 1: at Verden's Capital Advisers out of Hunt Valley, Maryland, where 313 00:17:31,400 --> 00:17:34,760 Speaker 1: they have about two point six billion dollars of assets 314 00:17:34,840 --> 00:17:39,560 Speaker 1: under management. Earlier I said we're gonna bring in Morgan 315 00:17:39,640 --> 00:17:42,800 Speaker 1: Stanley's global chief economist, Seth Carpenter, and we've got him 316 00:17:42,880 --> 00:17:45,679 Speaker 1: on the line right now. Seth, great to have you 317 00:17:46,240 --> 00:17:50,199 Speaker 1: with us. Um. I guess the overriding question is what 318 00:17:50,240 --> 00:17:53,960 Speaker 1: does the global economy look like right now after a 319 00:17:54,000 --> 00:17:58,040 Speaker 1: big spike in the delta variant? Is it rolling over? 320 00:17:58,320 --> 00:18:02,960 Speaker 1: Are we reopening again? It's your view. Yeah, it's great 321 00:18:02,960 --> 00:18:04,720 Speaker 1: that it's great to be on with with both of you, 322 00:18:04,800 --> 00:18:07,119 Speaker 1: So thank you for having me. You know, in the 323 00:18:07,119 --> 00:18:10,080 Speaker 1: medium term where we're pretty constructive and then there are 324 00:18:10,080 --> 00:18:12,840 Speaker 1: a bunch of asterisks to talk about downside risks, but 325 00:18:12,920 --> 00:18:15,800 Speaker 1: you sort of nailed it with the delta variant being there. 326 00:18:16,160 --> 00:18:18,560 Speaker 1: So what have we seen. We've seen a clear deceleration, 327 00:18:18,760 --> 00:18:20,240 Speaker 1: but there was always going to be a bit of 328 00:18:20,240 --> 00:18:23,359 Speaker 1: a deceleration once we got past the surge and growth 329 00:18:23,400 --> 00:18:26,760 Speaker 1: from reopening and settled into something you know, more medium 330 00:18:26,960 --> 00:18:30,680 Speaker 1: term and sustainable. So we still feel like we'll see 331 00:18:30,720 --> 00:18:34,000 Speaker 1: the slowdown, but it will be sustained. What's driving that, 332 00:18:34,040 --> 00:18:36,199 Speaker 1: I mean, look at global trade for example, trade and 333 00:18:36,320 --> 00:18:39,120 Speaker 1: consumer good sort of exploded out and brought us back 334 00:18:39,119 --> 00:18:41,520 Speaker 1: to pre COVID levels. We're seeing now trading capital goods 335 00:18:41,520 --> 00:18:44,080 Speaker 1: in a CAPEX cycle. What could get in the way, though, 336 00:18:44,240 --> 00:18:47,040 Speaker 1: is if DELTA is not as contained as we think, 337 00:18:47,080 --> 00:18:49,720 Speaker 1: So as you implied and as we think, you know, 338 00:18:49,760 --> 00:18:52,360 Speaker 1: we're peaking with delta, it should be subsiding. And if 339 00:18:52,400 --> 00:18:54,720 Speaker 1: that's the case, then we should see continued, you know, 340 00:18:54,760 --> 00:18:58,879 Speaker 1: reasonably strong growth from consumers globally, not just in the US. 341 00:18:59,040 --> 00:19:02,600 Speaker 1: And the part of global trade that's lower than pre 342 00:19:02,680 --> 00:19:05,680 Speaker 1: COVID levels is trade and services, especially tourism, and if 343 00:19:06,160 --> 00:19:08,960 Speaker 1: travel restrictions keep getting lifted, you know, we should see 344 00:19:08,960 --> 00:19:12,720 Speaker 1: that coming back as well. Seth, I'm a logistics geek 345 00:19:12,720 --> 00:19:15,280 Speaker 1: here and I'm just fascinated by it, by this global 346 00:19:15,359 --> 00:19:19,560 Speaker 1: supply chain UH challenges out there, and it's affecting all 347 00:19:19,600 --> 00:19:22,000 Speaker 1: types of companies and industries. We hear that, then they're 348 00:19:22,359 --> 00:19:26,080 Speaker 1: quarterly conference calls. Um, how does that impact your global 349 00:19:26,800 --> 00:19:29,359 Speaker 1: economic outlook if we can't get goods to where they 350 00:19:29,359 --> 00:19:32,920 Speaker 1: need to be in a timely fashion. Uh so, yeah, 351 00:19:33,000 --> 00:19:34,720 Speaker 1: I think I think you're right to focus on it. 352 00:19:34,760 --> 00:19:38,000 Speaker 1: And I think the even more sort of nerdy part 353 00:19:38,000 --> 00:19:40,320 Speaker 1: of it is that there are non linear implications here. 354 00:19:40,359 --> 00:19:43,159 Speaker 1: It's not as though there's a producer that has a 355 00:19:43,240 --> 00:19:46,439 Speaker 1: supplier and if that supplier has trouble, then we have 356 00:19:46,440 --> 00:19:48,760 Speaker 1: a supply chain issue. It's the fact that they are producers, 357 00:19:48,800 --> 00:19:51,600 Speaker 1: many of them, who have suppliers, and those suppliers have 358 00:19:51,640 --> 00:19:54,720 Speaker 1: suppliers and those suppliers of suppliers as well. And so 359 00:19:55,040 --> 00:19:58,840 Speaker 1: when a country somewhere has a COVID case flare up 360 00:19:58,840 --> 00:20:01,760 Speaker 1: and there are these very intense restrictions, but in place 361 00:20:01,840 --> 00:20:05,040 Speaker 1: to limit things, you can get a disruption that just 362 00:20:05,080 --> 00:20:08,240 Speaker 1: spreads out in a very rapid way. So you know, 363 00:20:08,280 --> 00:20:10,439 Speaker 1: we're trying to monitor those sorts of things as well 364 00:20:10,480 --> 00:20:12,359 Speaker 1: as we can. We turn to our colleagues, whore the 365 00:20:12,400 --> 00:20:16,120 Speaker 1: equity analysts who cover specific firms. This general feedback we're 366 00:20:16,119 --> 00:20:19,000 Speaker 1: getting as things have got past their worst for supply 367 00:20:19,119 --> 00:20:21,560 Speaker 1: chain's disruptions and they're gradually getting better. You can look 368 00:20:21,600 --> 00:20:24,760 Speaker 1: at some of the p M I type surveys and 369 00:20:24,800 --> 00:20:28,240 Speaker 1: look at how long the delivery delays are, and does 370 00:20:28,320 --> 00:20:31,600 Speaker 1: also give you the impression that we got past worse 371 00:20:31,680 --> 00:20:34,040 Speaker 1: than things are slowly starting to normalize by no means 372 00:20:34,040 --> 00:20:37,520 Speaker 1: good right now, but hopefully starting to heal. And so 373 00:20:37,600 --> 00:20:39,800 Speaker 1: again it with that is the baseline view that the 374 00:20:39,840 --> 00:20:43,119 Speaker 1: supply chains are going to get fixed over time. You've 375 00:20:43,119 --> 00:20:45,679 Speaker 1: got to feel pretty good as a baseline, But we 376 00:20:45,840 --> 00:20:48,760 Speaker 1: have seen flare ups time and again, and and so 377 00:20:48,800 --> 00:20:51,640 Speaker 1: I think again you don't want to get too complacent 378 00:20:51,720 --> 00:20:54,880 Speaker 1: and just assume that everything's on a steady path back 379 00:20:54,880 --> 00:20:58,040 Speaker 1: to normal. Well, I'm sure that UM J. Powell and 380 00:20:58,119 --> 00:21:01,440 Speaker 1: Christine Leguard would agree with you. Nonetheless, it doesn't really 381 00:21:01,480 --> 00:21:05,840 Speaker 1: seem like all these asset purchases are doing that much. 382 00:21:06,080 --> 00:21:08,400 Speaker 1: Should they be wrapping this stuff up? Is it time 383 00:21:08,440 --> 00:21:11,959 Speaker 1: to taper? Yeah? Well, I mean I think just listening 384 00:21:12,000 --> 00:21:15,399 Speaker 1: to the FED commentary themselves, the answer is yes. And 385 00:21:15,440 --> 00:21:18,120 Speaker 1: so Powell and the rest of the committee has said 386 00:21:18,160 --> 00:21:22,480 Speaker 1: that tapering this year is their baseline view, and so 387 00:21:22,520 --> 00:21:24,560 Speaker 1: I see no reason to disagree with them. You know, 388 00:21:24,640 --> 00:21:29,240 Speaker 1: our view is slightly more probability on December than the November, 389 00:21:29,240 --> 00:21:33,520 Speaker 1: whereas November is clearly from my perspective, market consensus. You know, 390 00:21:34,280 --> 00:21:38,800 Speaker 1: the last um CPI report, the last retail sales report, 391 00:21:38,920 --> 00:21:41,320 Speaker 1: the last jobs report have shown us that forecasting and 392 00:21:41,400 --> 00:21:43,800 Speaker 1: current circumstances is even harder than usual, and so I 393 00:21:43,800 --> 00:21:46,919 Speaker 1: think that favor is slightly more patient fed to accumulate, 394 00:21:46,960 --> 00:21:49,480 Speaker 1: you know, two more jobs report before tapering instead of 395 00:21:49,480 --> 00:21:52,000 Speaker 1: just the one that they're going to get at the 396 00:21:52,040 --> 00:21:54,399 Speaker 1: November meeting. But nevertheless, it seems like they're set to 397 00:21:54,440 --> 00:21:57,400 Speaker 1: start tapering. I think the ECB is a little trickier 398 00:21:57,440 --> 00:22:01,600 Speaker 1: they're President le Guard said in her press conference. You know, 399 00:22:01,680 --> 00:22:05,240 Speaker 1: the lady isn't tapering and trying to draw a big 400 00:22:05,240 --> 00:22:10,480 Speaker 1: distinction between the PEP, the emergency QUEI program versus the 401 00:22:10,520 --> 00:22:15,040 Speaker 1: app ongoing QUI program. You know, our the Morgan Stanley 402 00:22:15,080 --> 00:22:21,440 Speaker 1: European Economics team expects, uh as the PEP program is 403 00:22:21,480 --> 00:22:24,399 Speaker 1: tapered down, the APP program gets more flexible and actually 404 00:22:24,480 --> 00:22:28,119 Speaker 1: picks up a little bit um. You know, is that constructive? 405 00:22:28,160 --> 00:22:29,800 Speaker 1: You asked you they be wound down. I think the 406 00:22:29,880 --> 00:22:32,680 Speaker 1: challenge that the ECB has to confront is where inflation 407 00:22:32,760 --> 00:22:35,600 Speaker 1: expectations are for them and how how low they are. 408 00:22:35,800 --> 00:22:38,760 Speaker 1: Their own forecasts have inflation coming back down well below 409 00:22:38,840 --> 00:22:40,760 Speaker 1: two percent, you know, one and a half percent or 410 00:22:40,800 --> 00:22:43,720 Speaker 1: so in coming years. That for them, I think is 411 00:22:43,720 --> 00:22:46,040 Speaker 1: the key struggle if they ever want to get their 412 00:22:46,040 --> 00:22:48,439 Speaker 1: inflation rate back up to their two percent target. And 413 00:22:48,480 --> 00:22:51,480 Speaker 1: I think that from from the CBS perspective, is the 414 00:22:51,520 --> 00:22:55,200 Speaker 1: real reason to keep going with their QUI program is 415 00:22:55,240 --> 00:22:58,760 Speaker 1: to try to support those inflation expectations. So that's how 416 00:22:58,960 --> 00:23:03,200 Speaker 1: coordinated are the global central banks these days? As again 417 00:23:03,240 --> 00:23:06,480 Speaker 1: this is a global issue, like you know, we haven't 418 00:23:06,520 --> 00:23:09,720 Speaker 1: really seen before. How coordinated are they? Should they be 419 00:23:09,720 --> 00:23:13,720 Speaker 1: more coordinated? How do you view it? Yeah? So, um, 420 00:23:14,000 --> 00:23:17,359 Speaker 1: it's interesting. So it spent fifteen years doing central banking 421 00:23:17,400 --> 00:23:19,919 Speaker 1: at the FED, and one thing that always happens is 422 00:23:20,000 --> 00:23:23,840 Speaker 1: lots of communication. Coordination where they actually take actions together 423 00:23:23,960 --> 00:23:26,199 Speaker 1: is quite rare. And I think now we're actually in 424 00:23:26,240 --> 00:23:30,040 Speaker 1: a place where there's meaningful divergence that's starting to happen. 425 00:23:30,280 --> 00:23:32,760 Speaker 1: And I think right now that divergence is between e 426 00:23:32,920 --> 00:23:35,080 Speaker 1: M central banks and d M central banks in general. 427 00:23:35,200 --> 00:23:36,840 Speaker 1: And then as we get into next year and beyond, 428 00:23:36,880 --> 00:23:39,000 Speaker 1: it will be divergence between the ECB on the one 429 00:23:39,000 --> 00:23:42,320 Speaker 1: hand and other developed market central banks. And what I 430 00:23:42,320 --> 00:23:46,920 Speaker 1: mean here is, you know, inflation, the inflation surges is global. 431 00:23:47,720 --> 00:23:49,919 Speaker 1: It's likely to be transitory. But a lot of e 432 00:23:50,080 --> 00:23:53,120 Speaker 1: m UH central banks are saying, we can't rely on 433 00:23:53,640 --> 00:23:57,840 Speaker 1: anchored inflation expectations given the performance of inflation in recent decades, 434 00:23:58,119 --> 00:24:00,440 Speaker 1: so they have to be a little bit more active 435 00:24:00,440 --> 00:24:03,760 Speaker 1: to the high inflation. Until we're seeing, for example, Latan 436 00:24:03,880 --> 00:24:09,840 Speaker 1: central banks shifting to a hawkish stance UH in contrast 437 00:24:09,920 --> 00:24:13,080 Speaker 1: to where the d M central banks are UM and 438 00:24:13,240 --> 00:24:14,639 Speaker 1: I think you know that makes sense. They also have 439 00:24:14,680 --> 00:24:16,520 Speaker 1: to react to the market starting to say, wow, the 440 00:24:16,520 --> 00:24:18,600 Speaker 1: Fed's gonna start to taper, and after that, at some point, 441 00:24:18,600 --> 00:24:20,679 Speaker 1: the Fed's gonna start to hike, and they have to 442 00:24:20,720 --> 00:24:25,000 Speaker 1: worry about depreciation possibly exascerbating inflation. Fast forward to next 443 00:24:25,080 --> 00:24:27,680 Speaker 1: year when we see the Bank of England the Bank 444 00:24:27,680 --> 00:24:30,760 Speaker 1: of Canada starting to tighten policy, and then we think 445 00:24:30,800 --> 00:24:33,960 Speaker 1: the FED actually raises rates in the middle of three 446 00:24:34,560 --> 00:24:36,760 Speaker 1: that's going to be very different than the ECB with 447 00:24:36,880 --> 00:24:39,800 Speaker 1: their inflation outlook. I think they're in trouble if they 448 00:24:39,840 --> 00:24:44,879 Speaker 1: have any communication missteps and inflation expectations go lower, not higher. 449 00:24:45,520 --> 00:24:48,200 Speaker 1: You know, if you push our European econ economics team 450 00:24:48,240 --> 00:24:50,000 Speaker 1: and you say when when is the ECB gonna hike? 451 00:24:50,080 --> 00:24:54,760 Speaker 1: They they say, well, I'd say you had five but 452 00:24:54,800 --> 00:24:58,200 Speaker 1: with the risk to never, because you know, I'm an economist. 453 00:24:58,280 --> 00:25:02,840 Speaker 1: We forecast, but how good is the forecast? Exactly? All right, 454 00:25:02,880 --> 00:25:04,880 Speaker 1: set thank you so much for joining us. To really 455 00:25:04,880 --> 00:25:08,640 Speaker 1: appreciate your time. Seth Carpenter, Global chief economist for Morgan Stanley. 456 00:25:08,720 --> 00:25:17,040 Speaker 1: Joining us now we are truly global. We not only 457 00:25:17,080 --> 00:25:19,120 Speaker 1: cover what happens in New York, but we also cover 458 00:25:19,160 --> 00:25:21,640 Speaker 1: what happens outside of Detroit. Let's go to David Diets 459 00:25:21,760 --> 00:25:24,159 Speaker 1: right now. Sorry, some in New Jersey, David, and some 460 00:25:24,280 --> 00:25:28,640 Speaker 1: in New Jersey. It is a booming outdoor dining capital 461 00:25:28,680 --> 00:25:31,720 Speaker 1: of New Jersey. Yeah, I don't know how I I 462 00:25:31,760 --> 00:25:34,240 Speaker 1: was thinking of something else anyway. David Deets joins us 463 00:25:34,280 --> 00:25:38,720 Speaker 1: managing Principal and senior portfolio strategist at Peapack Private Wealth Management. 464 00:25:39,080 --> 00:25:42,160 Speaker 1: We've got about ten billion dollars of assets under management, 465 00:25:42,600 --> 00:25:44,760 Speaker 1: so not that far off from New York. David, what 466 00:25:44,800 --> 00:25:47,920 Speaker 1: did you think about the our interview with the next mayor. 467 00:25:48,000 --> 00:25:50,480 Speaker 1: I mean, how important is uh is New York to 468 00:25:50,560 --> 00:25:54,840 Speaker 1: Summit New Jersey. Well, it's critical, I think. I mean 469 00:25:55,040 --> 00:25:59,000 Speaker 1: I would say that the residents Summit New Jersey have 470 00:25:59,119 --> 00:26:02,240 Speaker 1: historically commun it it into New York. Now we'll see, 471 00:26:02,280 --> 00:26:05,040 Speaker 1: of course, in this post pandemic world, whether there's a 472 00:26:05,119 --> 00:26:09,760 Speaker 1: little bit more permanent remote working. But uh, the somewhat 473 00:26:09,800 --> 00:26:12,280 Speaker 1: depends on New York and and our real estate prices 474 00:26:12,320 --> 00:26:14,320 Speaker 1: go up as New York real estate prices go up. 475 00:26:14,359 --> 00:26:15,879 Speaker 1: So whatever is good for New York is gonna be 476 00:26:15,920 --> 00:26:18,320 Speaker 1: good for Summer. And David, I just so you know, 477 00:26:18,359 --> 00:26:20,560 Speaker 1: I hopped on New Jersey Transit from Summer today and 478 00:26:20,640 --> 00:26:23,280 Speaker 1: make my way into New York. To everybody, trains are 479 00:26:23,280 --> 00:26:26,040 Speaker 1: more packed. I will say they're much more crowded than 480 00:26:26,040 --> 00:26:28,159 Speaker 1: they were even a couple of weeks ago. So it 481 00:26:28,200 --> 00:26:30,840 Speaker 1: looks like people slowly are coming back to work. So David, 482 00:26:30,960 --> 00:26:33,640 Speaker 1: is your day job is looking at these markets here 483 00:26:33,960 --> 00:26:36,480 Speaker 1: and trying to get a sense of where the next 484 00:26:36,520 --> 00:26:40,960 Speaker 1: six to twelve months are. I'm a valuation guy, you know, 485 00:26:41,080 --> 00:26:43,320 Speaker 1: I'm a little more than a little I'm a lot 486 00:26:43,359 --> 00:26:46,160 Speaker 1: concerned with valuation here. Yes, I know the ten years, 487 00:26:46,359 --> 00:26:49,439 Speaker 1: you know, one point three eight percent, But still this 488 00:26:49,480 --> 00:26:52,640 Speaker 1: is a big multiple. How do you think about evaluation? Yeah, 489 00:26:52,720 --> 00:26:55,600 Speaker 1: so evaluation is critical, of course, because we all know 490 00:26:55,720 --> 00:26:57,800 Speaker 1: that the more you pay, the lower is going to 491 00:26:57,840 --> 00:27:00,480 Speaker 1: be your returns. But I guess I would pushed back 492 00:27:00,520 --> 00:27:04,320 Speaker 1: just a little bit insofar as UM your key valuation 493 00:27:04,400 --> 00:27:08,080 Speaker 1: metric perhaps is what you can uh earn in terms 494 00:27:08,080 --> 00:27:10,919 Speaker 1: of alternatives like putting your money in a CD, like 495 00:27:11,080 --> 00:27:13,920 Speaker 1: buying a ten year treasury. It we've got historic lows 496 00:27:13,920 --> 00:27:16,720 Speaker 1: on those levels. Indeed, the yield on the SMP five 497 00:27:16,800 --> 00:27:20,520 Speaker 1: hundred is about comparable with that yield on attain your treasury. 498 00:27:20,560 --> 00:27:23,800 Speaker 1: Now ten your treasury payout is going to be locked 499 00:27:23,800 --> 00:27:26,679 Speaker 1: in for the next ten years. Historically, dividends move up 500 00:27:26,720 --> 00:27:29,159 Speaker 1: two to ten percent each year. So if people put 501 00:27:29,200 --> 00:27:30,639 Speaker 1: a gun to my head and say, Dave, where am 502 00:27:30,640 --> 00:27:32,480 Speaker 1: I going to make more money over the next ten years? 503 00:27:32,760 --> 00:27:35,320 Speaker 1: Was with the dividend payout on stocks going up and 504 00:27:35,400 --> 00:27:39,280 Speaker 1: presumably asset prices moving up as well, it seems to 505 00:27:39,359 --> 00:27:42,160 Speaker 1: tilt pretty well in favor of fixed income. Of course, 506 00:27:42,200 --> 00:27:44,280 Speaker 1: there's not going to be a straight line. One other 507 00:27:44,359 --> 00:27:47,439 Speaker 1: thing I point out is, remember, uh, Matt, you know 508 00:27:47,640 --> 00:27:50,000 Speaker 1: five companies at the very top of the SMP five 509 00:27:50,040 --> 00:27:54,440 Speaker 1: hundred account for of the overall waiting of that market. 510 00:27:54,440 --> 00:27:57,200 Speaker 1: That index, okay, and those are the ones that, for example, 511 00:27:57,240 --> 00:27:59,480 Speaker 1: Microsoft trying to get thirty three times earnings if you 512 00:27:59,520 --> 00:28:02,760 Speaker 1: strip is out. Although it's not a cheap market, is 513 00:28:02,760 --> 00:28:06,320 Speaker 1: certainly more reasonably priced. Well, some stocks are cheap. Some 514 00:28:06,680 --> 00:28:10,159 Speaker 1: uh industries or regions have taken a hit. I noticed 515 00:28:10,200 --> 00:28:13,560 Speaker 1: that some of your ideas wells Fargo taken a beating lately, 516 00:28:13,640 --> 00:28:16,840 Speaker 1: Exxon as well, I share as large cap China. Is 517 00:28:16,880 --> 00:28:19,439 Speaker 1: the idea that the bad news you think is has 518 00:28:19,480 --> 00:28:23,840 Speaker 1: passed on these Well, you know, we we do like 519 00:28:24,080 --> 00:28:27,600 Speaker 1: to buy things that you know, have solid valuations but 520 00:28:27,640 --> 00:28:29,400 Speaker 1: are a little bit out of favor. So let's look 521 00:28:29,400 --> 00:28:31,399 Speaker 1: at China for a moment. Here. You know, the China 522 00:28:31,520 --> 00:28:36,040 Speaker 1: Large cap et F is down thirty seven since March. 523 00:28:36,160 --> 00:28:39,400 Speaker 1: So if the if the concern is we're at nosbley 524 00:28:39,520 --> 00:28:42,720 Speaker 1: valuations China maybe the antidote. Of course, that doesn't mean 525 00:28:42,760 --> 00:28:44,760 Speaker 1: things are going to turn around. But the more I 526 00:28:44,800 --> 00:28:46,760 Speaker 1: look at it, and I was certainly heartened by the 527 00:28:46,760 --> 00:28:49,800 Speaker 1: fact that they injected about fourteen billion dollars of reserves 528 00:28:49,960 --> 00:28:53,440 Speaker 1: in the past twenty four hours into the economy. It 529 00:28:53,480 --> 00:28:57,680 Speaker 1: doesn't make any sense for the second largest economy if 530 00:28:57,720 --> 00:29:00,720 Speaker 1: it wants to be a true geopolito, well power to 531 00:29:00,840 --> 00:29:03,680 Speaker 1: kneecap that private sector. It just doesn't really make sense. 532 00:29:03,720 --> 00:29:05,760 Speaker 1: Now there's a lot of noises here, but to destroy 533 00:29:05,800 --> 00:29:08,800 Speaker 1: the value of companies like Ali Baba in ten cent, well, 534 00:29:08,840 --> 00:29:11,240 Speaker 1: what do they really get out of that? Yeah, it's 535 00:29:11,240 --> 00:29:15,120 Speaker 1: been an extraordinarily difficult time for those stocks there, and 536 00:29:15,120 --> 00:29:17,440 Speaker 1: it just kind of highlights, you know, the whole quote 537 00:29:17,520 --> 00:29:20,560 Speaker 1: unquote China risk uh that people always had in the 538 00:29:20,600 --> 00:29:23,120 Speaker 1: back of their mind. But boys are coming to roost here. Uh. 539 00:29:23,240 --> 00:29:25,560 Speaker 1: David back closer to home with the U S stocks here, 540 00:29:26,440 --> 00:29:29,840 Speaker 1: do I go reopening cyclical small caps or do I 541 00:29:29,920 --> 00:29:33,680 Speaker 1: stick with my big cab growthy Amazon, Apples, Google's kind 542 00:29:33,680 --> 00:29:36,400 Speaker 1: of things? Well, certainly you want to beat the first 543 00:29:36,400 --> 00:29:39,400 Speaker 1: of five. But I share the concern we started conversation 544 00:29:39,480 --> 00:29:43,320 Speaker 1: with that our evaluations are an issue. So I valuations 545 00:29:43,320 --> 00:29:45,280 Speaker 1: are an issue. You've got to be cautious with Microsoft, 546 00:29:45,320 --> 00:29:48,920 Speaker 1: You've gotta be cautious with for example, Amazon, and and 547 00:29:48,960 --> 00:29:52,240 Speaker 1: we like for example financial services. We think that five 548 00:29:52,320 --> 00:29:55,719 Speaker 1: years now, interest rates will be higher as inflation picks up, 549 00:29:55,960 --> 00:29:58,160 Speaker 1: as the economy picks up, and loan demand goes up, 550 00:29:58,200 --> 00:30:00,640 Speaker 1: and you know, the financial services companies are so well 551 00:30:00,720 --> 00:30:03,440 Speaker 1: poised to benefit from that because the price of their 552 00:30:03,520 --> 00:30:07,800 Speaker 1: key product, loans will will go up. Historically, they're not 553 00:30:07,880 --> 00:30:10,360 Speaker 1: trading much above what they've normally traded in the last 554 00:30:10,360 --> 00:30:12,680 Speaker 1: twenty years in terms of relative to book value. The 555 00:30:12,760 --> 00:30:18,520 Speaker 1: one word, oh did I I think you might have 556 00:30:18,560 --> 00:30:21,320 Speaker 1: lost David Diets. I thought it was me for a second. 557 00:30:22,320 --> 00:30:24,880 Speaker 1: Maybe there's probably some problems, you know, in the summit, 558 00:30:25,000 --> 00:30:26,760 Speaker 1: maybe the phone issues out there and someone off the 559 00:30:26,800 --> 00:30:28,040 Speaker 1: check on that. When we get home. We didn't even 560 00:30:28,080 --> 00:30:30,959 Speaker 1: get to get to bud. Yes, I mean, I mean 561 00:30:31,040 --> 00:30:33,760 Speaker 1: we didn't. You know, it's t Bush. He likes Anheuser 562 00:30:33,800 --> 00:30:35,680 Speaker 1: Busch as well, which I wanted to ask about now. 563 00:30:36,160 --> 00:30:38,640 Speaker 1: It's shocking if you pull up the chart right bud 564 00:30:39,160 --> 00:30:41,600 Speaker 1: uh the ticker b U D obviously, and the beer 565 00:30:41,960 --> 00:30:45,959 Speaker 1: um has risen this year up to eighty dollars a share, 566 00:30:46,120 --> 00:30:49,280 Speaker 1: but it's now back down at fifty seven, and I 567 00:30:49,320 --> 00:30:53,760 Speaker 1: wonder why that is. I mean, we're people drinking more 568 00:30:53,840 --> 00:30:56,000 Speaker 1: bud at home, and you think when they go out 569 00:30:56,000 --> 00:30:58,440 Speaker 1: to the bars in the reopening trade, they're gonna be 570 00:30:58,560 --> 00:31:04,880 Speaker 1: ordering um, you know, yava or Vosh diner becks something 571 00:31:04,880 --> 00:31:07,840 Speaker 1: a little bit more high brow. Or is the idea 572 00:31:07,960 --> 00:31:10,560 Speaker 1: that the delta variant has stopped people from going out 573 00:31:10,560 --> 00:31:12,960 Speaker 1: and ordering a bud at the ballpark. Here's what I 574 00:31:12,960 --> 00:31:16,200 Speaker 1: think it is. I think it's the hard seltzer thing. 575 00:31:16,440 --> 00:31:19,280 Speaker 1: It's a fat. It's gone. It's over the white claw 576 00:31:19,440 --> 00:31:22,200 Speaker 1: every oh and Anheuser Bush makes. It's not You're right, 577 00:31:22,240 --> 00:31:24,760 Speaker 1: they don't just make beer. They make that stuff. What's 578 00:31:24,800 --> 00:31:26,520 Speaker 1: for the whole industry. It's for the whole industry. And 579 00:31:26,520 --> 00:31:28,640 Speaker 1: that was kind of that was one of the really 580 00:31:28,720 --> 00:31:32,400 Speaker 1: near term growth drivers for um, you know, the malt 581 00:31:32,640 --> 00:31:35,200 Speaker 1: liquor business, if you will, kind of the beer business 582 00:31:35,200 --> 00:31:37,760 Speaker 1: over the last couple years of these hard seltzer So 583 00:31:37,760 --> 00:31:40,120 Speaker 1: it was kind of like the wine coolers of our day. So, 584 00:31:40,200 --> 00:31:44,480 Speaker 1: but it was a fat. It reminded me of Zema. 585 00:31:44,520 --> 00:31:47,160 Speaker 1: When I was in high school, there was there was 586 00:31:47,200 --> 00:31:50,120 Speaker 1: a malt liquor beverage called Zema. I remember that it 587 00:31:50,200 --> 00:31:56,080 Speaker 1: was clear and absolutely delicious. Really you didn't drink that, 588 00:31:56,160 --> 00:31:59,120 Speaker 1: did you? Well? I did when I was fifteen. Um, 589 00:31:59,160 --> 00:32:01,400 Speaker 1: but obviously a else aren't down and that's the same 590 00:32:01,440 --> 00:32:03,560 Speaker 1: with the hard Seltzer. Right, we got David Diet's back. 591 00:32:03,640 --> 00:32:06,080 Speaker 1: Let me David just asked you quickly about Anheuser Busch. 592 00:32:06,600 --> 00:32:09,200 Speaker 1: Why has it been hit so hard coming from eight 593 00:32:09,360 --> 00:32:12,560 Speaker 1: down to fifty seven? And why do you like it? Sure? 594 00:32:12,600 --> 00:32:15,960 Speaker 1: Absolutely so we like it because when you talk about beer, 595 00:32:16,240 --> 00:32:18,760 Speaker 1: you know it's got. UM is one of the largest 596 00:32:18,800 --> 00:32:21,280 Speaker 1: consumer products companies in the world. It's got like ten 597 00:32:21,400 --> 00:32:25,400 Speaker 1: of the twenty largest brands. So why is it off 598 00:32:25,440 --> 00:32:27,640 Speaker 1: from the start of the summer. I think several things. 599 00:32:27,880 --> 00:32:31,600 Speaker 1: One is UM busting beer, which is big on the 600 00:32:31,640 --> 00:32:36,600 Speaker 1: hard Seltzer and not very disappointing continuing trend in in 601 00:32:36,720 --> 00:32:39,640 Speaker 1: hart Seltzer, So the whole category were sold off, but 602 00:32:39,720 --> 00:32:41,600 Speaker 1: of course we know, but there's a lot more than 603 00:32:41,600 --> 00:32:44,440 Speaker 1: the hard Seltzer. Second, of course, there is concerned about 604 00:32:44,440 --> 00:32:47,280 Speaker 1: this surging dollar UM and of course so much of 605 00:32:47,280 --> 00:32:50,160 Speaker 1: their revenues come in from overseas. That's not helpful. And 606 00:32:50,160 --> 00:32:51,880 Speaker 1: of course the big difference between the start of the 607 00:32:51,920 --> 00:32:56,400 Speaker 1: summer and now is the continuing delta variant issues, and 608 00:32:56,440 --> 00:32:59,640 Speaker 1: so much of their business comes in from the emerging markets. 609 00:32:59,760 --> 00:33:02,400 Speaker 1: There's real questions, says delay in the reoining great, but 610 00:33:02,400 --> 00:33:05,120 Speaker 1: I thank you very longer term for you. You'll do well. Yeah, 611 00:33:05,160 --> 00:33:06,880 Speaker 1: all right, David. Thanks, I'm glad we got you back 612 00:33:06,920 --> 00:33:09,320 Speaker 1: in for that. David Dietz talking to us there from 613 00:33:09,320 --> 00:33:12,160 Speaker 1: Peapack Private Wealth Management. Thanks for listening to the Bloomberg 614 00:33:12,240 --> 00:33:15,600 Speaker 1: Markets podcast. You can subscribe and listen to interviews with 615 00:33:15,680 --> 00:33:20,480 Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. 616 00:33:20,760 --> 00:33:25,000 Speaker 1: I'm on Twitter at Matt Miller. Yet on Fall Sweeney 617 00:33:25,000 --> 00:33:27,640 Speaker 1: I'm on Twitter at pt Sweeney before the podcast. You 618 00:33:27,680 --> 00:33:30,040 Speaker 1: can always catch us worldwide at Bloomberg Radio