WEBVTT - Mayoral Candidate Eric Adams On The Future Of NYC 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.640 at Bloomberg dot com slash podcast. All right, want to 0:00:21.680 --> 0:00:24.479 treat today in our Bloomberg Interactive Broker studio. Today we 0:00:24.520 --> 0:00:27.960 have Eric Adams, New York City mayor candidate, and he's 0:00:27.960 --> 0:00:30.400 got a day job too, he's Brooklyn Borough President. He 0:00:30.480 --> 0:00:33.040 joins us here in studio. Mr Adams, thank you so 0:00:33.120 --> 0:00:36.400 much for joining us. We really appreciate you taking the time. Um, 0:00:36.440 --> 0:00:38.360 you know, you still have a general election to go, 0:00:38.680 --> 0:00:42.519 but let's make the assumption that you per that you 0:00:42.560 --> 0:00:46.199 win that election. What is job one for you? And 0:00:46.360 --> 0:00:50.159 you're a new administration of public safety? We we have 0:00:50.280 --> 0:00:53.000 to be safe. I stated this over and over again. 0:00:53.120 --> 0:00:58.640 The prerequisite to prosperities, public safety and justice. I must 0:00:58.920 --> 0:01:02.560 allow New Yorkers to know that they're going to be 0:01:02.600 --> 0:01:05.319 safe on our their subway system when they returned back 0:01:05.360 --> 0:01:09.880 to their offices. Our individuals that go to restaurants are 0:01:09.920 --> 0:01:12.440 not going to be robbed like we saw a few 0:01:12.520 --> 0:01:15.760 days ago while they sit down and have dinner. This 0:01:15.920 --> 0:01:19.080 city must be safe for tourism to return and for 0:01:19.280 --> 0:01:22.600 businesses to grow and thrive. How do we do that 0:01:22.720 --> 0:01:25.000 or how does a city do that? Is it simply 0:01:25.319 --> 0:01:29.600 numbers more cops, better train cops, better deployment of cops. 0:01:29.600 --> 0:01:32.120 How do we do that? It's a combination. Uh, the 0:01:32.440 --> 0:01:35.640 bad guys are watching the good people of this city 0:01:35.760 --> 0:01:40.800 squabble with each other over technical aspects and how we police. 0:01:41.319 --> 0:01:44.760 So I'm going to hit reset with my police officers 0:01:44.800 --> 0:01:47.039 and let them know I have their backs. But I'm 0:01:47.040 --> 0:01:50.280 also going to send aloud message that if you don't 0:01:50.320 --> 0:01:53.760 respect the nobility of public protection, you can't serve in 0:01:53.880 --> 0:01:57.440 my agency. And We're going to reintroduce ourselves to the 0:01:57.440 --> 0:02:00.520 men and women who are protecting us. Yeah, I saw. 0:02:01.120 --> 0:02:03.760 I was back in New York, um where I'm from, 0:02:03.800 --> 0:02:07.560 actually went to PS for kindergarten. I was back in 0:02:07.600 --> 0:02:10.560 New York in July and Um I was hanging out 0:02:10.600 --> 0:02:15.440 on Street and Lex waiting for an uber. I saw 0:02:15.639 --> 0:02:19.600 a group of people riding stolen motorcycles past a few 0:02:19.639 --> 0:02:23.359 squad cars. Not none of the police moved a finger. 0:02:23.440 --> 0:02:26.080 I turned around. Somebody was selling drugs right behind me. 0:02:26.200 --> 0:02:28.919 The police clearly could see it, not doing anything about it. 0:02:29.440 --> 0:02:31.560 How do you motivate a police force that is just 0:02:31.840 --> 0:02:36.600 seemingly given up, and that's true. You motivate them by 0:02:36.840 --> 0:02:40.120 letting them know that one of their own will be 0:02:40.160 --> 0:02:43.760 moving into the position of ensuring that they get to 0:02:43.800 --> 0:02:46.560 support they need to get there to do their jobs. 0:02:46.639 --> 0:02:50.360 And you're right, I've witnessed it as well, just a 0:02:50.480 --> 0:02:54.880 hands off approach to dealing with those quality of life issues, 0:02:55.280 --> 0:02:58.280 and that's not acceptable a city as diverse and as 0:02:58.440 --> 0:03:01.160 large as New York is in parative that we have 0:03:01.280 --> 0:03:03.800 a set of standards and how do we expect to 0:03:03.919 --> 0:03:07.600 treat our neighbors. I've watched a group of people on 0:03:07.919 --> 0:03:10.720 a t v s driving up to down the sidewalk 0:03:10.960 --> 0:03:17.200 of by Fifth Avenue in Manhattan, New Prospect in Central Park. 0:03:17.919 --> 0:03:21.200 We can't have a city of disorder. We can do 0:03:21.240 --> 0:03:24.160 it without heavy handedness. But at the same time, we 0:03:24.200 --> 0:03:28.919 need to create a standard of expectations in our city. Alright, 0:03:28.919 --> 0:03:30.919 some stratums you when you came into the Bloomberg in 0:03:31.360 --> 0:03:34.200 the Bloomberg headquarters here on Election toon Avenue and fifty 0:03:34.200 --> 0:03:36.720 eight Street. You might have seen that in this block 0:03:36.760 --> 0:03:40.040 between fifty eight and fifty nine Street on Electionington, every 0:03:40.040 --> 0:03:44.600 storefront was vacant and pre pandemic. They were thriving with 0:03:44.960 --> 0:03:47.800 some seemingly big box stores as well as some local retailers. 0:03:48.320 --> 0:03:51.360 How do we bring business back to How do we 0:03:51.360 --> 0:03:53.280 reopen New York City? How do we bring business back 0:03:53.320 --> 0:03:56.600 to New York City? One thing I have been doing 0:03:56.720 --> 0:03:59.320 for the last two and a half three years, having 0:03:59.360 --> 0:04:03.480 focused with business leaders and finding out how do we 0:04:03.560 --> 0:04:08.240 do just that? And I was alarmed to discover how 0:04:08.320 --> 0:04:11.960 too expensive, to bureaucratic, and too difficult it is to 0:04:12.040 --> 0:04:17.719 do business in the empire state. We were a city 0:04:17.800 --> 0:04:22.360 where we build empires. But cities are made up of agencies, 0:04:22.640 --> 0:04:26.560 and if those agencies are in the way of building empires, 0:04:26.600 --> 0:04:29.200 we would never be able to allow it to happen. 0:04:29.880 --> 0:04:35.520 This is a city that is vibrating with ten million dreams. Uh, 0:04:35.600 --> 0:04:37.760 those dreams are about to wake up, and they're going 0:04:37.800 --> 0:04:41.400 to wake up because I'm going to create a city 0:04:41.480 --> 0:04:45.599 that is open for business, where we're going to you 0:04:46.040 --> 0:04:50.120 utilize our agencies and our manpower to make sure businesses 0:04:50.160 --> 0:04:53.080 are here. We're going to attract them with incentives. We're 0:04:53.080 --> 0:04:56.320 going to encourage them to developing out of boroughs. We're 0:04:56.360 --> 0:04:59.520 going to build out the pipeline of talent so that 0:04:59.560 --> 0:05:02.440 we can filled the jobs that are available. Right now, 0:05:02.760 --> 0:05:05.480 no one wants to do business in this city because 0:05:05.640 --> 0:05:09.400 we have been defined as a business enemy city instead 0:05:09.440 --> 0:05:13.120 of a business friendly city. It is too expensive and 0:05:13.120 --> 0:05:17.039 I think, uh for residents as well. I say this 0:05:17.240 --> 0:05:21.960 as a free market capitalist, and I'm sure that almost 0:05:21.960 --> 0:05:25.800 all of our listeners and most of our clients also 0:05:25.920 --> 0:05:28.920 believe in free markets. On the other hand, if you're 0:05:29.520 --> 0:05:32.680 you know, a family of three or four or five, 0:05:33.000 --> 0:05:36.039 and you're working middle class job in New York, there's 0:05:36.080 --> 0:05:39.480 no way you can afford an apartment big enough for 0:05:39.520 --> 0:05:40.960 the family. How do you do? How do you deal 0:05:41.000 --> 0:05:45.120 with that? As mayor? Well, clearly we have decimated the 0:05:45.360 --> 0:05:47.720 middle class in this city. There are a lot of 0:05:47.760 --> 0:05:51.600 incentives for low income and high income, but we forgot 0:05:51.640 --> 0:05:55.600 the backbone of our city. And I believe the backbone 0:05:55.800 --> 0:05:59.760 is that teacher and accountant. Uh that backbone. Believe it 0:05:59.800 --> 0:06:02.720 in odd is even the fast food workers. We were 0:06:02.720 --> 0:06:07.160 successfully getting them to receive a fifteen dollar minimum wage. Uh, 0:06:07.240 --> 0:06:09.760 you have a husband and wife. They are moved into 0:06:09.800 --> 0:06:13.040 an area where the city is unaffordable. And so we 0:06:13.120 --> 0:06:18.280 must reinvest in the Mitchell Llama style programs that we had, 0:06:18.320 --> 0:06:21.240 in the officer teacher next door programs that we had 0:06:21.600 --> 0:06:25.200 where we incentivized people to be able to not only 0:06:25.240 --> 0:06:28.880 rent approaches. And then we should look at our affordable 0:06:28.920 --> 0:06:33.599 housing program and look at some form of affordable housing 0:06:33.680 --> 0:06:37.640 with ownership in that affordable housing. How do we carry 0:06:37.640 --> 0:06:40.840 it out so people can start owning and building equity 0:06:41.160 --> 0:06:44.240 in the city that they love. So we must ensure 0:06:44.320 --> 0:06:47.680 the areas that government can control, such as rent. We 0:06:47.800 --> 0:06:50.479 must ensure that we have a cross section based on 0:06:50.600 --> 0:06:54.400 income bands of low income, middle income New Yorker is 0:06:54.520 --> 0:06:57.520 so that they can stay in the city that they love. Uh. 0:06:57.640 --> 0:07:00.640 Mr Adams talked to us about infrastructure. We've um, you know, 0:07:00.720 --> 0:07:03.919 the subways and just general infrastructure in this city challenge. 0:07:03.960 --> 0:07:06.479 We just have the recent um, you know, the remnants 0:07:06.480 --> 0:07:08.800 from the Hurricane Ida, you know, putting a crimp into 0:07:08.800 --> 0:07:11.560 the subway system for about twenty four hours. How do 0:07:11.560 --> 0:07:16.320 you think about infrastructure in this city? Great question of 0:07:16.760 --> 0:07:18.960 you know, we need to be honest with ourselves. We 0:07:19.080 --> 0:07:22.200 screwed up the planet and we didn't do it in 0:07:22.200 --> 0:07:26.760 one day. We did it over years of improper treating 0:07:26.920 --> 0:07:30.360 of the planet. So we're not going to fix this instantly. 0:07:30.640 --> 0:07:34.360 We must have an intervention plan and a prevention plan, 0:07:34.840 --> 0:07:38.880 prevention other long term things. Every new sewer project we 0:07:38.880 --> 0:07:42.360 should build it with a one hundred year outlook of 0:07:42.520 --> 0:07:47.000 canna withstand the water levels and the changes in our environment. 0:07:47.600 --> 0:07:49.440 We need to look at how do we learn how 0:07:49.480 --> 0:07:53.360 to live with water UH, And there's some amazing programs 0:07:53.360 --> 0:07:55.880 that are taking place globally. I'm getting ready to take 0:07:55.880 --> 0:07:58.520 a trip to the Netherlands so I could look at 0:07:58.520 --> 0:08:00.560 some of the things that they're doing. But then we 0:08:00.600 --> 0:08:03.960 need intervention right now. Mother Nature is not going to 0:08:04.080 --> 0:08:06.960 wait for us to build out our sewer systems, so 0:08:07.120 --> 0:08:11.640 we need to have early warning systems, identified those basement 0:08:11.640 --> 0:08:17.240 apartments and give people the proper escape routes, investing legalizing 0:08:17.320 --> 0:08:21.800 some of the units. UH build large retaining pools of 0:08:22.000 --> 0:08:24.480 We could use some of our open spaces to build 0:08:24.560 --> 0:08:28.320 large retaining pools to deal with water spill off, spill 0:08:28.320 --> 0:08:31.880 off and to hold the water into we did with 0:08:31.920 --> 0:08:35.439 the emergency situation of something they're doing in Hoboken right 0:08:35.480 --> 0:08:39.800 now where they're building basketball courts over retaining pools. So 0:08:39.880 --> 0:08:43.320 we have to think differently and embrace the concept that 0:08:43.360 --> 0:08:45.839 are coming from the experts who we have been meeting with. 0:08:46.120 --> 0:08:49.239 But there must be a two pronged attack, both intervention 0:08:49.640 --> 0:08:54.600 and prevention. Have you got any um, you know, think 0:08:54.640 --> 0:08:59.160 differently solutions to the congestion, the traffic, the double parking. 0:08:59.600 --> 0:09:01.440 You know, it's always been an issue with New York, 0:09:01.559 --> 0:09:04.200 but cities around the world are coming up with other 0:09:04.280 --> 0:09:08.240 ideas and ways to fight it. I'm a congestion pricing guy. 0:09:08.320 --> 0:09:10.760 I believe in it. I believe the concept is important. 0:09:10.920 --> 0:09:15.200 Is similar to what London has done many years ago. 0:09:16.120 --> 0:09:18.640 I think it's important that we do so. But I 0:09:18.720 --> 0:09:22.400 also believe we need to incentivize truck deliveries. A lot 0:09:22.480 --> 0:09:25.400 of our congestion is coming from deliveries. We need to 0:09:25.400 --> 0:09:29.240 start delivering at night, and I think if we incentivize that, 0:09:29.400 --> 0:09:32.280 we can get a lot of the deliveries done. Uh. 0:09:32.320 --> 0:09:37.200 And then we need to use alternative methods of transportation. UH. 0:09:37.559 --> 0:09:40.880 That's everything from the scooters, uh, the you know, the 0:09:40.960 --> 0:09:45.000 mopas I've visited many countries bike use. When I'm in 0:09:45.120 --> 0:09:47.800 China or in other parts of the globe, people are 0:09:47.920 --> 0:09:51.560 using non cars to get around for those who can 0:09:51.600 --> 0:09:55.120 do so. And not only does it encourage a greater 0:09:55.200 --> 0:09:59.160 level of mobility diversity, but it does it also deals 0:09:59.200 --> 0:10:02.880 with the congestion because this congestion is not sustainable in 0:10:02.880 --> 0:10:06.160 the city. Too much is lose, is lost doing business 0:10:06.160 --> 0:10:08.920 in the city because you're stuck in traffic somewhere. And 0:10:08.960 --> 0:10:12.840 then we must create a first rate transportation system. I'm 0:10:12.840 --> 0:10:15.960 gonna train user, I have a metro card. We create 0:10:16.000 --> 0:10:20.720 a safe, first rate transportation system, people will utilize our 0:10:20.800 --> 0:10:25.559 subways and buses. Inequality. As this city builds back, reopens, 0:10:25.640 --> 0:10:28.319 how do we ensure it reopens and builds back for everyone. 0:10:28.480 --> 0:10:31.120 It's so true. That is a real problem we have 0:10:31.200 --> 0:10:35.040 in the city. Uh, the inequalities that we're witnessing is 0:10:35.120 --> 0:10:38.600 leading to the lack of prosperity for so many New 0:10:38.679 --> 0:10:41.680 Yorkers and it's just on so many levels. We must 0:10:41.679 --> 0:10:43.840 do so, and it's not going to be done in 0:10:43.880 --> 0:10:46.520 the first four years. What I must do, if I'm 0:10:46.520 --> 0:10:49.280 fortunate enough to become the mayor, is to build the 0:10:49.320 --> 0:10:53.360 foundation that other mayors can build on. Uh. The inequalities 0:10:53.600 --> 0:10:56.360 is to go to the source. Number one education. We 0:10:56.400 --> 0:10:59.400 need to deal with children with special needs and learning 0:10:59.480 --> 0:11:03.400 disability tease. One study showed that over thirty of our 0:11:03.440 --> 0:11:08.559 prison population a place like uh like Texas, we're dyslexic. 0:11:09.160 --> 0:11:12.440 We don't just do dyslexia screening in our city. UM 0:11:12.559 --> 0:11:15.599 learning disabilities. Uh, you see, fifty five percent of the 0:11:15.640 --> 0:11:18.480 inmates a rich is a dealing with learning disabilities. So 0:11:18.600 --> 0:11:22.240 one way of ending inequalities is to focus on education 0:11:22.480 --> 0:11:26.120 so people can have the opportunities they deserved. Eric Adams, 0:11:26.160 --> 0:11:28.080 thank you so much for joining us. We really appreciate 0:11:28.080 --> 0:11:30.760 your time. Eric Adams, New York City Mayoral. Kennedy in 0:11:30.800 --> 0:11:33.600 Brooklyn Borough President joining us here in our Bloomberg Interactive 0:11:33.600 --> 0:11:39.320 Broker studio. I want to bring in Megan Horneman, director 0:11:39.360 --> 0:11:43.559 of portfolio Strategy Advertence Capital Advisors, about two point six 0:11:43.679 --> 0:11:47.960 billion dollars in assets under management, located in Hunt Valley, Maryland, 0:11:48.000 --> 0:11:50.839 just outside the Charms City of Baltimore. Megan, thanks so 0:11:50.920 --> 0:11:53.000 much for joining us here. You know, let's turn to 0:11:53.120 --> 0:11:56.880 earnings here, evaluation and some of the old time fundamental 0:11:57.240 --> 0:11:59.480 stuff here we've had some really good earnings over the 0:11:59.520 --> 0:12:02.679 past several quarters, but some economic concerns you know, from 0:12:02.720 --> 0:12:05.240 the delta variant and so on, or maybe causing some 0:12:05.280 --> 0:12:07.880 people to question some of the earnings essments out there 0:12:07.960 --> 0:12:10.000 for ACQUES three and four. How do you think about 0:12:10.040 --> 0:12:14.320 that in potential risk for this market. Yes, I think 0:12:14.320 --> 0:12:18.680 we we've likely seen that peak in the earnings growth rate. 0:12:19.200 --> 0:12:21.440 We probably saw that this year, and now there's just 0:12:21.480 --> 0:12:24.920 a little bit more uncertainty because people had come into 0:12:24.920 --> 0:12:28.280 the third quarter with such heightened expectations for economic growth 0:12:28.559 --> 0:12:30.880 and now a lot of the data has been mixed. 0:12:30.920 --> 0:12:32.760 I mean you can see that even just by looking 0:12:32.800 --> 0:12:35.959 at the City Group Economic Surprise Index that's deeply in 0:12:36.040 --> 0:12:39.439 negative territory. Um. I know, we got some some positive 0:12:39.559 --> 0:12:42.480 news from the consumer, but it is on the backup 0:12:42.520 --> 0:12:45.240 some downward revisions to the prior month. And then as 0:12:45.320 --> 0:12:48.320 as mentioned, the consumer confidence is still relatively weak. So 0:12:48.559 --> 0:12:50.640 I think you're going to see some estimates coming down, 0:12:50.679 --> 0:12:53.120 not just from the earnings perspective, but also from the 0:12:53.120 --> 0:12:58.160 economic growth perspective as well. We have our own economic 0:12:58.240 --> 0:13:03.079 Surprise Index as L and a really cool page that 0:13:03.120 --> 0:13:05.280 you can pull it up with e C s U. 0:13:05.840 --> 0:13:09.480 Paul just in case you're on right now is the 0:13:09.559 --> 0:13:14.600 command and obviously, UM it matches up with Megan with 0:13:14.600 --> 0:13:17.040 the city surprise in Dex we've seen you can you 0:13:17.040 --> 0:13:18.959 can if you click on the chart on e C 0:13:19.200 --> 0:13:21.880 S you go, you can blow up the surprise index. Um, 0:13:22.440 --> 0:13:26.079 look look at or zoom into what we've seen happen 0:13:26.200 --> 0:13:29.840 over the last I don't know, UM, I guess six months. 0:13:29.920 --> 0:13:33.840 It hit a high in April May and has come 0:13:33.920 --> 0:13:38.760 down now into pretty extreme negative territory. Um does this 0:13:38.840 --> 0:13:43.439 opera opportunities you think, Megan, I don't think quite yet. 0:13:43.559 --> 0:13:45.760 I think there's still is some more there's some other 0:13:45.800 --> 0:13:48.280 things in the market that keep us a little hesitant. Um, 0:13:48.360 --> 0:13:51.839 we have some dry powder, we have cash in portfolios 0:13:51.880 --> 0:13:54.520 that we're waiting to put to work. We're still optimistic 0:13:54.600 --> 0:13:56.959 long term, but in the very near term, I think 0:13:56.960 --> 0:13:59.000 there's still some other risks that we have to digest. 0:13:59.120 --> 0:14:01.800 Whether it's from the political standpoint. Um, there's going to 0:14:01.840 --> 0:14:03.800 be a lot of noise just over the next next 0:14:03.840 --> 0:14:08.160 couple of months, the Federal Reserve next week evaluation. Still 0:14:08.679 --> 0:14:11.920 even with the modest you know, weakness we've seen here 0:14:11.920 --> 0:14:14.199 and I say very modest. Keep in mind, the smps 0:14:14.280 --> 0:14:17.880 only down about two um. This isn't really a pullback 0:14:17.960 --> 0:14:20.600 that we're seeing here, um. But the valuations still look 0:14:20.640 --> 0:14:22.600 a little bit stretched here. And do you expect to 0:14:22.600 --> 0:14:24.640 pull back? Do you expect that we've been hearing so 0:14:24.680 --> 0:14:28.000 many warnings of maybe there's a ten even fiftcent pullback 0:14:28.040 --> 0:14:31.160 to come. I think that there is chance for this 0:14:31.240 --> 0:14:33.160 to continue to get for us to go a bit 0:14:33.240 --> 0:14:35.480 weaker from here. I can't pinpoint exactly whether it'll be 0:14:35.520 --> 0:14:38.360 ten or fifteen percent, but I think we're well overdue 0:14:38.440 --> 0:14:41.160 for at least a minimum of five percent correction. We 0:14:41.160 --> 0:14:45.040 haven't even pullback. We haven't even had that this year yet. Megan, 0:14:45.080 --> 0:14:48.680 where are you suggesting your clients allocate their equity portfolios. 0:14:48.840 --> 0:14:50.880 Is it more than the growth, typical growth kind of 0:14:51.080 --> 0:14:54.200 portfolio and that has worked so well for a decade 0:14:54.280 --> 0:14:56.120 or more, or is it some of the more cyclical 0:14:56.160 --> 0:14:58.440 trades that might be more sensitive to maybe you know, 0:14:59.000 --> 0:15:01.560 you know, rising in flay, shouldn't reopening economy, that type 0:15:01.600 --> 0:15:04.600 of thing. Yeah, we we have a little bit of 0:15:04.640 --> 0:15:07.720 both in our portfolios, but we definitely have more of 0:15:07.760 --> 0:15:10.520 the value til given our view that we think the 0:15:10.520 --> 0:15:13.640 cyclical trade has room to go. And also we think 0:15:13.680 --> 0:15:15.440 that interest rates are going to go higher from here. 0:15:15.480 --> 0:15:18.200 I think that everybody knows that. But I think interest 0:15:18.280 --> 0:15:21.440 rates right now just aren't justified where they are looking 0:15:21.480 --> 0:15:24.480 at long term ten thirty year treasure yields, that's just 0:15:24.560 --> 0:15:27.920 not justifiable. And when you're talking about the FED tapering, 0:15:28.320 --> 0:15:31.800 those types of things will weigh on those expensive, you know, 0:15:32.280 --> 0:15:34.040 growth types of stock, so we have more of a 0:15:34.120 --> 0:15:37.400 value till here in the US you expect a serious taper. 0:15:39.040 --> 0:15:42.680 I think you're gonna get the first um, you know, 0:15:42.920 --> 0:15:46.240 a solid suggestion about it um in the meeting next week. 0:15:46.520 --> 0:15:48.600 I think you'll start to see the actual taper or 0:15:48.600 --> 0:15:50.960 taping taking place before the end of this year, probably 0:15:50.960 --> 0:15:53.600 in the in the November meeting. But I think we're 0:15:53.680 --> 0:15:56.280 probably going to kind of get us through this debt 0:15:56.320 --> 0:15:57.760 ceiling that we have at the end of this month. 0:15:57.800 --> 0:15:59.840 I don't think you're gonna get a firm commitment of 0:15:59.840 --> 0:16:02.200 its starting next week. I think it'll probably be in 0:16:02.240 --> 0:16:05.200 November or December, and then they'll have that continue to 0:16:05.240 --> 0:16:09.200 taper through the all of next year and they'll continue 0:16:09.280 --> 0:16:11.520 to say, you know, interest rates and tapering are not 0:16:11.640 --> 0:16:15.120 tied together, so the interest rate hikes are still aways off. Megan, 0:16:15.160 --> 0:16:17.800 do you get a lot of incoming calls from your 0:16:17.840 --> 0:16:23.000 clients about crypto and if so, what do you tell them? Uh? No, 0:16:23.480 --> 0:16:27.040 We've been UM pretty vocal and some of our publications 0:16:27.080 --> 0:16:30.320 about the crypto market UM that we at this time 0:16:30.360 --> 0:16:33.440 we're not investing in in the cryptocurrency market or any 0:16:33.440 --> 0:16:37.360 of the other crypto type of investments. There's still this 0:16:37.440 --> 0:16:40.680 is such a um the crypto market and all of 0:16:40.720 --> 0:16:43.400 these other crypto coins and things. But this is a 0:16:43.480 --> 0:16:47.360 very new UM kind of experiment trying to look at 0:16:47.200 --> 0:16:49.280 at things. Is using this as some sort of a 0:16:49.640 --> 0:16:51.960 uh form of tender. But I just don't think that 0:16:52.320 --> 0:16:55.160 at this time that it really warrants us investing in it. 0:16:55.160 --> 0:16:57.560 It's way too violatble for our clients, just doesn't have 0:16:57.600 --> 0:17:00.520 a place in client portfolios. We don't leave it's going 0:17:00.560 --> 0:17:03.280 to take over any kind of the regular you know, 0:17:03.320 --> 0:17:07.200 the US dollar or anything from a currency perspective and regulation. 0:17:07.240 --> 0:17:08.639 I think it's the biggest risk that you're going to 0:17:08.720 --> 0:17:11.240 see in the crypto market. Could really take the wind 0:17:11.240 --> 0:17:13.680 out of the sales here and then also just spark 0:17:13.800 --> 0:17:16.239 volatility and that's just not something that we that we 0:17:16.280 --> 0:17:21.240 find profit find a good place for portfolios. Megan, thanks 0:17:21.280 --> 0:17:22.840 so much for joining us. Great to get your take 0:17:22.880 --> 0:17:24.359 and I hope we can get you back on the 0:17:24.400 --> 0:17:27.760 program soon. Megan Hornum and their director of portfolio Strategy 0:17:27.760 --> 0:17:31.400 at Verden's Capital Advisers out of Hunt Valley, Maryland, where 0:17:31.400 --> 0:17:34.760 they have about two point six billion dollars of assets 0:17:34.840 --> 0:17:39.560 under management. Earlier I said we're gonna bring in Morgan 0:17:39.640 --> 0:17:42.800 Stanley's global chief economist, Seth Carpenter, and we've got him 0:17:42.880 --> 0:17:45.679 on the line right now. Seth, great to have you 0:17:46.240 --> 0:17:50.199 with us. Um. I guess the overriding question is what 0:17:50.240 --> 0:17:53.960 does the global economy look like right now after a 0:17:54.000 --> 0:17:58.040 big spike in the delta variant? Is it rolling over? 0:17:58.320 --> 0:18:02.960 Are we reopening again? It's your view. Yeah, it's great 0:18:02.960 --> 0:18:04.720 that it's great to be on with with both of you, 0:18:04.800 --> 0:18:07.119 So thank you for having me. You know, in the 0:18:07.119 --> 0:18:10.080 medium term where we're pretty constructive and then there are 0:18:10.080 --> 0:18:12.840 a bunch of asterisks to talk about downside risks, but 0:18:12.920 --> 0:18:15.800 you sort of nailed it with the delta variant being there. 0:18:16.160 --> 0:18:18.560 So what have we seen. We've seen a clear deceleration, 0:18:18.760 --> 0:18:20.240 but there was always going to be a bit of 0:18:20.240 --> 0:18:23.359 a deceleration once we got past the surge and growth 0:18:23.400 --> 0:18:26.760 from reopening and settled into something you know, more medium 0:18:26.960 --> 0:18:30.680 term and sustainable. So we still feel like we'll see 0:18:30.720 --> 0:18:34.000 the slowdown, but it will be sustained. What's driving that, 0:18:34.040 --> 0:18:36.199 I mean, look at global trade for example, trade and 0:18:36.320 --> 0:18:39.120 consumer good sort of exploded out and brought us back 0:18:39.119 --> 0:18:41.520 to pre COVID levels. We're seeing now trading capital goods 0:18:41.520 --> 0:18:44.080 in a CAPEX cycle. What could get in the way, though, 0:18:44.240 --> 0:18:47.040 is if DELTA is not as contained as we think, 0:18:47.080 --> 0:18:49.720 So as you implied and as we think, you know, 0:18:49.760 --> 0:18:52.360 we're peaking with delta, it should be subsiding. And if 0:18:52.400 --> 0:18:54.720 that's the case, then we should see continued, you know, 0:18:54.760 --> 0:18:58.879 reasonably strong growth from consumers globally, not just in the US. 0:18:59.040 --> 0:19:02.600 And the part of global trade that's lower than pre 0:19:02.680 --> 0:19:05.680 COVID levels is trade and services, especially tourism, and if 0:19:06.160 --> 0:19:08.960 travel restrictions keep getting lifted, you know, we should see 0:19:08.960 --> 0:19:12.720 that coming back as well. Seth, I'm a logistics geek 0:19:12.720 --> 0:19:15.280 here and I'm just fascinated by it, by this global 0:19:15.359 --> 0:19:19.560 supply chain UH challenges out there, and it's affecting all 0:19:19.600 --> 0:19:22.000 types of companies and industries. We hear that, then they're 0:19:22.359 --> 0:19:26.080 quarterly conference calls. Um, how does that impact your global 0:19:26.800 --> 0:19:29.359 economic outlook if we can't get goods to where they 0:19:29.359 --> 0:19:32.920 need to be in a timely fashion. Uh so, yeah, 0:19:33.000 --> 0:19:34.720 I think I think you're right to focus on it. 0:19:34.760 --> 0:19:38.000 And I think the even more sort of nerdy part 0:19:38.000 --> 0:19:40.320 of it is that there are non linear implications here. 0:19:40.359 --> 0:19:43.159 It's not as though there's a producer that has a 0:19:43.240 --> 0:19:46.439 supplier and if that supplier has trouble, then we have 0:19:46.440 --> 0:19:48.760 a supply chain issue. It's the fact that they are producers, 0:19:48.800 --> 0:19:51.600 many of them, who have suppliers, and those suppliers have 0:19:51.640 --> 0:19:54.720 suppliers and those suppliers of suppliers as well. And so 0:19:55.040 --> 0:19:58.840 when a country somewhere has a COVID case flare up 0:19:58.840 --> 0:20:01.760 and there are these very intense restrictions, but in place 0:20:01.840 --> 0:20:05.040 to limit things, you can get a disruption that just 0:20:05.080 --> 0:20:08.240 spreads out in a very rapid way. So you know, 0:20:08.280 --> 0:20:10.439 we're trying to monitor those sorts of things as well 0:20:10.480 --> 0:20:12.359 as we can. We turn to our colleagues, whore the 0:20:12.400 --> 0:20:16.120 equity analysts who cover specific firms. This general feedback we're 0:20:16.119 --> 0:20:19.000 getting as things have got past their worst for supply 0:20:19.119 --> 0:20:21.560 chain's disruptions and they're gradually getting better. You can look 0:20:21.600 --> 0:20:24.760 at some of the p M I type surveys and 0:20:24.800 --> 0:20:28.240 look at how long the delivery delays are, and does 0:20:28.320 --> 0:20:31.600 also give you the impression that we got past worse 0:20:31.680 --> 0:20:34.040 than things are slowly starting to normalize by no means 0:20:34.040 --> 0:20:37.520 good right now, but hopefully starting to heal. And so 0:20:37.600 --> 0:20:39.800 again it with that is the baseline view that the 0:20:39.840 --> 0:20:43.119 supply chains are going to get fixed over time. You've 0:20:43.119 --> 0:20:45.679 got to feel pretty good as a baseline, But we 0:20:45.840 --> 0:20:48.760 have seen flare ups time and again, and and so 0:20:48.800 --> 0:20:51.640 I think again you don't want to get too complacent 0:20:51.720 --> 0:20:54.880 and just assume that everything's on a steady path back 0:20:54.880 --> 0:20:58.040 to normal. Well, I'm sure that UM J. Powell and 0:20:58.119 --> 0:21:01.440 Christine Leguard would agree with you. Nonetheless, it doesn't really 0:21:01.480 --> 0:21:05.840 seem like all these asset purchases are doing that much. 0:21:06.080 --> 0:21:08.400 Should they be wrapping this stuff up? Is it time 0:21:08.440 --> 0:21:11.959 to taper? Yeah? Well, I mean I think just listening 0:21:12.000 --> 0:21:15.399 to the FED commentary themselves, the answer is yes. And 0:21:15.440 --> 0:21:18.120 so Powell and the rest of the committee has said 0:21:18.160 --> 0:21:22.480 that tapering this year is their baseline view, and so 0:21:22.520 --> 0:21:24.560 I see no reason to disagree with them. You know, 0:21:24.640 --> 0:21:29.240 our view is slightly more probability on December than the November, 0:21:29.240 --> 0:21:33.520 whereas November is clearly from my perspective, market consensus. You know, 0:21:34.280 --> 0:21:38.800 the last um CPI report, the last retail sales report, 0:21:38.920 --> 0:21:41.320 the last jobs report have shown us that forecasting and 0:21:41.400 --> 0:21:43.800 current circumstances is even harder than usual, and so I 0:21:43.800 --> 0:21:46.919 think that favor is slightly more patient fed to accumulate, 0:21:46.960 --> 0:21:49.480 you know, two more jobs report before tapering instead of 0:21:49.480 --> 0:21:52.000 just the one that they're going to get at the 0:21:52.040 --> 0:21:54.399 November meeting. But nevertheless, it seems like they're set to 0:21:54.440 --> 0:21:57.400 start tapering. I think the ECB is a little trickier 0:21:57.440 --> 0:22:01.600 they're President le Guard said in her press conference. You know, 0:22:01.680 --> 0:22:05.240 the lady isn't tapering and trying to draw a big 0:22:05.240 --> 0:22:10.480 distinction between the PEP, the emergency QUEI program versus the 0:22:10.520 --> 0:22:15.040