1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane 2 00:00:13,480 --> 00:00:17,560 Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,880 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Let's 5 00:00:27,880 --> 00:00:30,400 Speaker 1: talk about the strategy forward Bunama Haitian with us with 6 00:00:30,480 --> 00:00:34,720 Speaker 1: Alian's global investors strategy in the US. But everybody, mona, 7 00:00:35,040 --> 00:00:40,000 Speaker 1: everybody yesterday was an EU strategists, weren't we ha That's right, 8 00:00:40,000 --> 00:00:43,440 Speaker 1: Tom uh Yeah, you know, the dragging press conference was 9 00:00:43,560 --> 00:00:45,600 Speaker 1: a little bit on the depressing side. You know, he 10 00:00:45,640 --> 00:00:49,080 Speaker 1: talked about weakness in China, he talked about possible weakness 11 00:00:49,120 --> 00:00:50,839 Speaker 1: in the US, but then really brought it back to 12 00:00:50,880 --> 00:00:54,800 Speaker 1: the Euro Area itself, noting German autos in particular, Italy 13 00:00:55,120 --> 00:00:58,360 Speaker 1: weakening overall. So um, you know, I think in a 14 00:00:58,440 --> 00:01:01,200 Speaker 1: week where we are void of you know, news flow, 15 00:01:01,600 --> 00:01:04,360 Speaker 1: that really kind of took center stage. Why is the 16 00:01:04,360 --> 00:01:07,160 Speaker 1: ECB always the last of the party. You should never 17 00:01:07,240 --> 00:01:10,679 Speaker 1: have to cut your forecasts as aggressively as they had 18 00:01:10,720 --> 00:01:13,240 Speaker 1: to yesterday. And the only reason they had to cut 19 00:01:13,280 --> 00:01:16,959 Speaker 1: their forecast that aggressively is because they've been dragged, kicking 20 00:01:17,000 --> 00:01:20,640 Speaker 1: and screaming into delivering the mere cult that we got yesterday. 21 00:01:20,680 --> 00:01:23,600 Speaker 1: Why are they always the last the party? Mona? Yeah, 22 00:01:23,680 --> 00:01:26,479 Speaker 1: you know, that's an interesting question. And we talk about how, 23 00:01:27,000 --> 00:01:30,200 Speaker 1: you know, the US and Asia really have had a 24 00:01:30,319 --> 00:01:33,480 Speaker 1: key source of growth u driving their economy over the 25 00:01:33,520 --> 00:01:36,240 Speaker 1: last ten years, and that was in part technology and innovation. 26 00:01:36,800 --> 00:01:38,640 Speaker 1: In the US, it was the thanks stocks in the 27 00:01:38,880 --> 00:01:41,440 Speaker 1: in China and Asia the bad stocks. We looked to 28 00:01:41,480 --> 00:01:44,759 Speaker 1: Europe and we don't see that same sort of innovation 29 00:01:44,880 --> 00:01:47,280 Speaker 1: productivity coming out of that region. Of course, they also 30 00:01:47,400 --> 00:01:51,320 Speaker 1: mired in political uncertainty and difficulty around being an explot 31 00:01:51,360 --> 00:01:56,960 Speaker 1: oriented economy, so in some ways they just haven't perhaps 32 00:01:57,040 --> 00:01:59,560 Speaker 1: picked up on one of the key drivers of growth 33 00:01:59,560 --> 00:02:02,240 Speaker 1: probably going forward. I mean, I know, Mona, it was 34 00:02:02,280 --> 00:02:06,720 Speaker 1: a quiet December and then a quiet January and quiet February. 35 00:02:06,920 --> 00:02:10,360 Speaker 1: John and I aged you didn't. But now, what after 36 00:02:10,520 --> 00:02:14,960 Speaker 1: drug do you make a strategy adjustment off the market 37 00:02:15,040 --> 00:02:19,720 Speaker 1: reaction to drugs? Bombshell Y. You know, I think our 38 00:02:19,840 --> 00:02:22,919 Speaker 1: strategy even going into this year, had been a bit 39 00:02:22,919 --> 00:02:25,639 Speaker 1: of a Barbell approach um, and we talked about how 40 00:02:25,639 --> 00:02:27,560 Speaker 1: in one hand of that Barbell, we still prefer the 41 00:02:27,680 --> 00:02:31,280 Speaker 1: US as best in the block from a developed market perspective. 42 00:02:31,560 --> 00:02:33,760 Speaker 1: The other hand of that Barbell was really China and 43 00:02:33,840 --> 00:02:37,000 Speaker 1: selective em which were you know, poised to do well 44 00:02:37,040 --> 00:02:40,240 Speaker 1: with not only potential trade deal but the selective stimulus 45 00:02:40,280 --> 00:02:44,120 Speaker 1: measures they're facing, and valuations that had really catered our 46 00:02:44,160 --> 00:02:46,919 Speaker 1: crater last year or so, you know, some attractiveness there 47 00:02:46,960 --> 00:02:49,160 Speaker 1: In the middle of that Barbell and no man's land 48 00:02:49,320 --> 00:02:52,160 Speaker 1: was Europe still and I think, um, you know, not 49 00:02:52,240 --> 00:02:54,400 Speaker 1: only Brexit, but some of the economic uncert until we 50 00:02:54,440 --> 00:02:57,400 Speaker 1: talked about was what was driving that decision. You know, 51 00:02:57,400 --> 00:03:02,200 Speaker 1: at some point Europe may become interesting from a dividend perspective, 52 00:03:02,240 --> 00:03:04,160 Speaker 1: So I think, you know, with the euro stocks at 53 00:03:04,160 --> 00:03:08,440 Speaker 1: a three percent yield and foots the flues, uh, you know, 54 00:03:08,480 --> 00:03:11,000 Speaker 1: we may get some interest from a value or dividend 55 00:03:11,000 --> 00:03:13,560 Speaker 1: oriented investor, but you know, we're not there yet in 56 00:03:13,680 --> 00:03:15,720 Speaker 1: terms of really kind of pounding the table. I don't 57 00:03:15,720 --> 00:03:18,080 Speaker 1: think you're alone moment, that is for sure. I stugged 58 00:03:18,160 --> 00:03:21,239 Speaker 1: to find a single European equity market ball for the 59 00:03:21,320 --> 00:03:23,680 Speaker 1: last few months. We've had a market rally that I 60 00:03:23,720 --> 00:03:26,040 Speaker 1: think and many others would also agree that has been 61 00:03:26,040 --> 00:03:28,720 Speaker 1: built on the faith in policymakers and their ability to 62 00:03:28,880 --> 00:03:32,480 Speaker 1: stabilize the situation. At some point this year we were 63 00:03:32,520 --> 00:03:35,240 Speaker 1: inevitably going to go through a period where that faith 64 00:03:35,280 --> 00:03:39,400 Speaker 1: would be tested. Was the ECB news conference the beginning 65 00:03:39,400 --> 00:03:41,320 Speaker 1: of that. Just the period that we have to go 66 00:03:41,400 --> 00:03:44,400 Speaker 1: through where the faith in the policymaker's ability to stabilize 67 00:03:44,400 --> 00:03:47,880 Speaker 1: the global economy is tested somewhat. And what is your 68 00:03:47,920 --> 00:03:51,400 Speaker 1: advice to investors listening to this that may experience that 69 00:03:51,480 --> 00:03:55,000 Speaker 1: in the coming weeks. Yeah, you know, we went through 70 00:03:55,160 --> 00:03:57,920 Speaker 1: a dramatic fall in December. We fell Pete trough probably 71 00:03:57,920 --> 00:04:01,640 Speaker 1: around on the SMP, and then we went through dramatic reversal. 72 00:04:01,760 --> 00:04:06,560 Speaker 1: So now we're up about from the December flows. It's 73 00:04:06,760 --> 00:04:10,560 Speaker 1: natural after that kind of one way directional upboard movement 74 00:04:10,800 --> 00:04:13,760 Speaker 1: to get a period of consolidation of profit taking. I 75 00:04:13,760 --> 00:04:16,960 Speaker 1: think it's actually healthy. Um. What we have to wait 76 00:04:17,000 --> 00:04:20,320 Speaker 1: for now is the next set of catalysts to emerge 77 00:04:20,360 --> 00:04:23,760 Speaker 1: to drive us to perhaps either our next leg upward 78 00:04:24,160 --> 00:04:28,080 Speaker 1: or maybe some sideways movement. But what we're watching closely is, uh, 79 00:04:28,120 --> 00:04:31,000 Speaker 1: those two economies that we mentioned earlier, the US and China, 80 00:04:31,080 --> 00:04:33,040 Speaker 1: to really pull US out of this. So we'll get 81 00:04:33,040 --> 00:04:35,919 Speaker 1: the jobs number this morning, which may be somewhat telling. 82 00:04:35,960 --> 00:04:38,000 Speaker 1: If the US is you know, we'll be able to 83 00:04:38,080 --> 00:04:40,839 Speaker 1: decouple further. But what we're really looking for is we 84 00:04:40,960 --> 00:04:42,839 Speaker 1: entered the second half of this year, is whether the 85 00:04:42,920 --> 00:04:46,520 Speaker 1: Chinese stimulus will be able to be effective and US 86 00:04:46,640 --> 00:04:50,040 Speaker 1: earnings growth story is effective as well. Nicely framed in 87 00:04:50,839 --> 00:04:54,880 Speaker 1: mystery here in March mortomaazed, thank you, thank you with Alians. 88 00:04:58,040 --> 00:05:01,919 Speaker 1: What a perfect time to speak to Kathy Jones of 89 00:05:02,000 --> 00:05:04,360 Speaker 1: schwab as we look at fixed income and so much 90 00:05:04,360 --> 00:05:10,000 Speaker 1: of this UH, Cathy is draggy adjust It's got nothing 91 00:05:10,040 --> 00:05:13,760 Speaker 1: to do with America. But in the butt in your world, 92 00:05:14,320 --> 00:05:17,719 Speaker 1: is the terminal value of where the yield is heading? 93 00:05:18,360 --> 00:05:22,800 Speaker 1: Doesn't it migrate a little bit lower? Yeah, Tom, I 94 00:05:22,839 --> 00:05:26,640 Speaker 1: would definitely agree. Um, we had been looking at a 95 00:05:26,760 --> 00:05:30,160 Speaker 1: trading range maybe you know, the in the ten year 96 00:05:30,200 --> 00:05:32,840 Speaker 1: treasury around two and a half to three percent this year, 97 00:05:32,839 --> 00:05:36,000 Speaker 1: but I think UH it could break below two and 98 00:05:36,040 --> 00:05:38,440 Speaker 1: a half based on some of the weakness we've seen 99 00:05:38,480 --> 00:05:43,240 Speaker 1: in global UH economic activity, particularly those horrible numbers out 100 00:05:43,240 --> 00:05:47,200 Speaker 1: of China overnight. So um, yeah, we think that it 101 00:05:47,200 --> 00:05:49,360 Speaker 1: it drifts lower from here, and that the FETE has 102 00:05:49,360 --> 00:05:52,880 Speaker 1: done raising rates to seventy five just seems to be 103 00:05:53,080 --> 00:05:55,279 Speaker 1: the line in the sin Now the upper end of 104 00:05:55,279 --> 00:05:57,919 Speaker 1: a really narrow trading range. Are you saying we're going 105 00:05:58,000 --> 00:06:02,280 Speaker 1: to be back into trading rights, Cathy? But it shifts Ilowa. Yeah. Um. 106 00:06:02,360 --> 00:06:04,600 Speaker 1: We had our call had been that we had peaked 107 00:06:04,640 --> 00:06:06,719 Speaker 1: last year at three and a quarter for the cycle, 108 00:06:06,800 --> 00:06:09,320 Speaker 1: and the probably holding about a two and a half 109 00:06:09,320 --> 00:06:11,880 Speaker 1: to three percent range. But now I'm I'm looking at 110 00:06:11,920 --> 00:06:14,440 Speaker 1: maybe two in a quarter to two and three quarters 111 00:06:14,520 --> 00:06:18,200 Speaker 1: has more likely range. Um, A lot's going to depend, 112 00:06:18,240 --> 00:06:21,200 Speaker 1: of course on whether we bounce back um some of 113 00:06:21,200 --> 00:06:24,159 Speaker 1: this weakness, but it is looking more more on the 114 00:06:24,200 --> 00:06:27,640 Speaker 1: downside than the upside. Kith. We talked to equity types 115 00:06:27,680 --> 00:06:30,880 Speaker 1: like Liziane Saunders about the single digit world, and of 116 00:06:30,880 --> 00:06:34,080 Speaker 1: course we've had many years of bowl market migrating to 117 00:06:34,279 --> 00:06:38,320 Speaker 1: high single digit and some would psychologically frame double digit 118 00:06:38,480 --> 00:06:41,880 Speaker 1: in your world, that's not the case. Tell me that 119 00:06:42,000 --> 00:06:44,640 Speaker 1: savers are going to get used to a nominal return 120 00:06:45,279 --> 00:06:49,560 Speaker 1: of three or four percent? Is that true? Oh? Yeah, 121 00:06:49,640 --> 00:06:52,640 Speaker 1: I think so. Um, it's would be very difficult to 122 00:06:52,680 --> 00:06:58,320 Speaker 1: get a lot above that, given the aging of the population, 123 00:06:58,640 --> 00:07:01,960 Speaker 1: the level of growth at we're expecting. It wouldn't make 124 00:07:02,000 --> 00:07:05,320 Speaker 1: a lot of sense to get to expect much. Okay, 125 00:07:05,880 --> 00:07:09,880 Speaker 1: so is dividend growth my new yield, Well that has 126 00:07:09,920 --> 00:07:12,200 Speaker 1: been for quite some time. But I would say now 127 00:07:12,240 --> 00:07:14,840 Speaker 1: there's real competition. I mean, you can get two and 128 00:07:14,840 --> 00:07:17,320 Speaker 1: a half percent in a very short term risk free 129 00:07:17,840 --> 00:07:21,960 Speaker 1: piece of paper, So that is stiff competition for the 130 00:07:22,040 --> 00:07:25,600 Speaker 1: volatility the equities john to be a good property for you. 131 00:07:25,720 --> 00:07:27,960 Speaker 1: The real dividend growth. Oh thanks, I think it's just 132 00:07:28,160 --> 00:07:31,760 Speaker 1: that's just an extra show. It's a show. It's got 133 00:07:31,760 --> 00:07:34,960 Speaker 1: a tone to it. Six basis points. German tenure, Kathy, 134 00:07:35,440 --> 00:07:38,720 Speaker 1: just phenomenal. It's this security that everybody wants to be 135 00:07:38,760 --> 00:07:40,640 Speaker 1: able to show up but just gets the face ripped 136 00:07:40,640 --> 00:07:43,000 Speaker 1: off every tron they try and do it. Kathy, what 137 00:07:43,160 --> 00:07:46,720 Speaker 1: is going on in Germany? Well, I think what we're seeing, 138 00:07:46,760 --> 00:07:50,040 Speaker 1: as DROGGI pointed out, is just the real impact of 139 00:07:50,080 --> 00:07:52,480 Speaker 1: all this trade conflict that we've had. So we have 140 00:07:52,600 --> 00:07:56,440 Speaker 1: the slowdown in growth. It's coming out of both China 141 00:07:57,240 --> 00:08:00,400 Speaker 1: and now out of Europe as a result of all 142 00:08:00,400 --> 00:08:05,160 Speaker 1: these trade business that's going on. And I think that 143 00:08:05,160 --> 00:08:08,040 Speaker 1: that is the issue for the FED. Now you know, 144 00:08:08,120 --> 00:08:13,000 Speaker 1: we can't be isolationist in the sense that we were 145 00:08:13,080 --> 00:08:16,240 Speaker 1: open enough to global trade to feel its impact as well. 146 00:08:16,280 --> 00:08:19,440 Speaker 1: But I think, yeah, Germany is so dependent on on trade, 147 00:08:19,800 --> 00:08:23,640 Speaker 1: and particularly trade with China, that that's really what's affecting 148 00:08:24,000 --> 00:08:26,440 Speaker 1: UM the boone market. So, Cathy, I was watching your 149 00:08:26,600 --> 00:08:29,960 Speaker 1: dollar yesterday break down, then breakdown again, then keep breaking 150 00:08:29,960 --> 00:08:32,920 Speaker 1: down into the end of yesterday's session, and I was 151 00:08:32,960 --> 00:08:35,079 Speaker 1: asking myself a couple of questions. How much of this 152 00:08:35,160 --> 00:08:38,440 Speaker 1: move as a percentage was about the policy that the 153 00:08:38,440 --> 00:08:41,199 Speaker 1: ECB had introduced, and how much of it as a 154 00:08:41,240 --> 00:08:43,400 Speaker 1: percentage was just a total lack of belief that the 155 00:08:43,400 --> 00:08:46,520 Speaker 1: policy will actually work. What he's driving about right now? 156 00:08:46,520 --> 00:08:48,960 Speaker 1: The former of the letter, Yeah, I would say it's 157 00:08:48,960 --> 00:08:54,320 Speaker 1: probably the latter, because although um drawing, you introduced some 158 00:08:54,440 --> 00:08:57,679 Speaker 1: easier policy that should you know, is designed to help 159 00:08:58,080 --> 00:09:00,199 Speaker 1: the banking system, designed to help me A to me, 160 00:09:00,280 --> 00:09:01,880 Speaker 1: I don't think there's a lot of faith that there's 161 00:09:02,000 --> 00:09:05,960 Speaker 1: enough firepower there to really do it. I look, I 162 00:09:06,000 --> 00:09:10,320 Speaker 1: think it where we are after draggy and it's clearly 163 00:09:10,320 --> 00:09:13,959 Speaker 1: a reaffirmation of lower rates as well. Give me a 164 00:09:14,080 --> 00:09:18,400 Speaker 1: schwab prediction on inflation and that what that does to 165 00:09:18,480 --> 00:09:22,520 Speaker 1: my lovely total return. Well, we're actually saying a little 166 00:09:22,520 --> 00:09:25,160 Speaker 1: bit of an optick in inflation this year, but we 167 00:09:25,240 --> 00:09:28,000 Speaker 1: think some of that is driven by energy that not 168 00:09:28,120 --> 00:09:30,439 Speaker 1: only flows through the top line, but we'll flow through 169 00:09:30,480 --> 00:09:34,520 Speaker 1: a little bit to the underlying core rate. But we're 170 00:09:34,520 --> 00:09:37,320 Speaker 1: still saying it pretty tame. I mean, I don't think 171 00:09:37,320 --> 00:09:40,640 Speaker 1: that we're looking for anything above two percent in core inflation. 172 00:09:41,400 --> 00:09:44,319 Speaker 1: What do you recommend for somebody desperate for you, gentlemen 173 00:09:44,400 --> 00:09:48,440 Speaker 1: the yesterday on loans and he's you know, he's spouting 174 00:09:48,520 --> 00:09:51,960 Speaker 1: seven and eight percent coupons, I mean above high yield. 175 00:09:52,080 --> 00:09:55,720 Speaker 1: I mean, what do you recommend for someone who says, Cathy, 176 00:09:55,800 --> 00:09:58,200 Speaker 1: this is all great, but I can't get it done 177 00:09:58,200 --> 00:10:02,199 Speaker 1: at four percent? Yeah, the the only way you can 178 00:10:02,240 --> 00:10:04,920 Speaker 1: get above four percent is to take a certain amount 179 00:10:04,960 --> 00:10:06,960 Speaker 1: of risk, And so we just try to be realistic 180 00:10:07,040 --> 00:10:09,360 Speaker 1: with people and say, sure, you can get seven percent, 181 00:10:09,440 --> 00:10:10,920 Speaker 1: but you're going to have to be in very low 182 00:10:10,960 --> 00:10:14,880 Speaker 1: credit quality towards the end of the business cycle. You know, 183 00:10:15,120 --> 00:10:18,320 Speaker 1: you probably don't want to have your whole portfolio in 184 00:10:18,440 --> 00:10:20,360 Speaker 1: high yield our loans at this stage of the mind. 185 00:10:20,400 --> 00:10:22,280 Speaker 1: And we don't we don't talk enough about this, John, 186 00:10:23,040 --> 00:10:26,360 Speaker 1: right now, are are you comfortable, Cathy saying that we've 187 00:10:26,360 --> 00:10:29,440 Speaker 1: seen the tights in high yield after the rally over 188 00:10:29,480 --> 00:10:32,600 Speaker 1: the last couple of months at about four basis points over? 189 00:10:33,160 --> 00:10:36,640 Speaker 1: Is that it? Yeah? I still think so. I mean, 190 00:10:36,679 --> 00:10:39,360 Speaker 1: I've been really surprised by the magnitude of the rally 191 00:10:39,440 --> 00:10:43,440 Speaker 1: since you know, Christmas Eve, uh in high yield and 192 00:10:43,440 --> 00:10:47,440 Speaker 1: and generally speaking in all the spreads, But I'm pretty 193 00:10:47,440 --> 00:10:50,760 Speaker 1: comfortable that we've probably seen the tights. You see, Okay, 194 00:10:51,120 --> 00:10:54,640 Speaker 1: Cathy's if you say tights, It's okay. Farrell gets like 195 00:10:54,720 --> 00:10:57,400 Speaker 1: this on Fridays because he's preparing for the real yield. 196 00:10:58,000 --> 00:11:01,480 Speaker 1: John wise, guy, I'm not gonna was Jones to explain this, 197 00:11:01,880 --> 00:11:05,440 Speaker 1: Would you explain what the leotard is? So typically in 198 00:11:05,480 --> 00:11:08,360 Speaker 1: any given market, Europe, the United States, and let's talk 199 00:11:08,400 --> 00:11:10,520 Speaker 1: about the United States for that matter, you'll have a benchmark, 200 00:11:10,679 --> 00:11:13,080 Speaker 1: so you'll be four hundred basis points over the benchmark 201 00:11:13,080 --> 00:11:15,560 Speaker 1: of a similar maturity. So basically, when you say that 202 00:11:15,600 --> 00:11:18,880 Speaker 1: we're really tight, you're looking at high yield over treasuries 203 00:11:18,920 --> 00:11:22,000 Speaker 1: at about four hundred basis points um. For the other 204 00:11:22,080 --> 00:11:27,240 Speaker 1: all different four hundred basis points. Can you go to 205 00:11:27,360 --> 00:11:32,079 Speaker 1: percentage points for percentage points, which which is pretty tight, Tom, 206 00:11:32,120 --> 00:11:35,560 Speaker 1: given to how wide things have got through December. Big 207 00:11:35,640 --> 00:11:38,959 Speaker 1: V shaped recovery, Cathy in High Yield, Big V shaped 208 00:11:39,000 --> 00:11:42,840 Speaker 1: recovery inequities. Do you see this being a story that 209 00:11:42,880 --> 00:11:45,760 Speaker 1: goes beyond credit, that we've had the V shaped recovery 210 00:11:46,000 --> 00:11:49,080 Speaker 1: and that we've exhausted the federal reserve fueled rally of 211 00:11:49,120 --> 00:11:51,920 Speaker 1: the last couple of months. Well, I think at leads 212 00:11:52,000 --> 00:11:55,400 Speaker 1: for the time being. UM. I think total return year 213 00:11:55,520 --> 00:11:58,280 Speaker 1: to date and high yield is something like seven seven 214 00:11:58,280 --> 00:12:00,840 Speaker 1: and a a half percent. I mean, it's a whole year 215 00:12:01,160 --> 00:12:04,280 Speaker 1: worth of performance right there. So I think we have 216 00:12:04,440 --> 00:12:07,199 Speaker 1: to back and fill to some extent. I certainly don't 217 00:12:07,240 --> 00:12:11,080 Speaker 1: see the impetus from moving a lot further from here 218 00:12:11,559 --> 00:12:14,319 Speaker 1: unless you really really think that the you know, a 219 00:12:14,520 --> 00:12:17,240 Speaker 1: that the economy is going to turn around and go 220 00:12:17,480 --> 00:12:20,120 Speaker 1: sharply higher, but the Fed's going to sit back and 221 00:12:20,160 --> 00:12:22,880 Speaker 1: allow it to do that. Very good Cathy Jones, thank 222 00:12:22,920 --> 00:12:25,760 Speaker 1: you so much for an important update for US investors 223 00:12:25,800 --> 00:12:31,800 Speaker 1: on all the drama we saw yesterday in your Let 224 00:12:31,880 --> 00:12:34,760 Speaker 1: us begin and let's really focus here on the fabric 225 00:12:34,800 --> 00:12:36,760 Speaker 1: of the American labor economy. We can do that with 226 00:12:36,840 --> 00:12:39,880 Speaker 1: Juliet Cornado. And the reason that Dr Cornados with this 227 00:12:40,040 --> 00:12:44,079 Speaker 1: John is she was loving the nickelback and the choice 228 00:12:44,520 --> 00:12:47,240 Speaker 1: of picking out the one with zz tops Billy Gibbons 229 00:12:47,280 --> 00:12:50,160 Speaker 1: in it. As Juliet, Dr Cornado, are you a large 230 00:12:50,240 --> 00:12:54,120 Speaker 1: nickelback fan? I am not a nickelback fan. I'm sorry 231 00:12:54,120 --> 00:12:57,920 Speaker 1: to disappoint you, Tom, I'm I'm I am astonished that 232 00:12:58,040 --> 00:13:00,640 Speaker 1: it is being debated on the floor of it was. 233 00:13:00,679 --> 00:13:04,080 Speaker 1: I think I'm well astonished it made an appearance on 234 00:13:04,120 --> 00:13:10,960 Speaker 1: this program. Julia equally astonishing. Julia is too young for this. 235 00:13:11,080 --> 00:13:14,200 Speaker 1: But we played Kansas and Sticks earlier in the weeks. 236 00:13:14,720 --> 00:13:19,600 Speaker 1: We finished Strong Memories of that the bar Is Show. 237 00:13:19,679 --> 00:13:22,040 Speaker 1: This week, I'm sure you do. Let us go out 238 00:13:22,080 --> 00:13:25,600 Speaker 1: to the broad midwest of Kansas. Carry on my wayward son. 239 00:13:26,240 --> 00:13:29,839 Speaker 1: Forget about the East coast, the west coast, Julia, what's 240 00:13:29,840 --> 00:13:34,160 Speaker 1: the employment fabric of the great middle west of this nation. 241 00:13:35,520 --> 00:13:38,920 Speaker 1: The employment fabric is the service sector. And we're going 242 00:13:38,960 --> 00:13:42,480 Speaker 1: to be relying on that turvice sector as we moved 243 00:13:42,480 --> 00:13:44,560 Speaker 1: through the year, because I think we're going to see 244 00:13:44,559 --> 00:13:50,000 Speaker 1: a fading in the manufacturing and energy sector hiring that 245 00:13:50,080 --> 00:13:52,560 Speaker 1: has been a powerhouse in the last couple of years. 246 00:13:52,880 --> 00:13:56,400 Speaker 1: That's got to fade. With the global slowdown. We're we're 247 00:13:56,440 --> 00:14:00,199 Speaker 1: starting to see the cracks there, and that's where we 248 00:14:00,240 --> 00:14:03,680 Speaker 1: should feel the pain. The service sector is what's likely 249 00:14:03,720 --> 00:14:06,199 Speaker 1: to carry us through. It was resilient in the last 250 00:14:06,240 --> 00:14:11,840 Speaker 1: global slowdown during twenty sixteen, and it's largely domestically oriented. 251 00:14:12,240 --> 00:14:14,960 Speaker 1: As long as consumers keep the phase, that can be 252 00:14:15,000 --> 00:14:18,800 Speaker 1: a virtuous cycle with consumers spending supporting the service sector 253 00:14:18,920 --> 00:14:21,520 Speaker 1: and the service sector continuing to add jobs. John This 254 00:14:21,640 --> 00:14:25,040 Speaker 1: is so important. If we're in a virtuous cycle, that's 255 00:14:25,040 --> 00:14:28,000 Speaker 1: how you get to where the optimus are. This is 256 00:14:28,360 --> 00:14:30,120 Speaker 1: a big, big issue right now, not just for the 257 00:14:30,160 --> 00:14:32,400 Speaker 1: United States, but for Europe. To even in Europe, the 258 00:14:32,440 --> 00:14:37,880 Speaker 1: service sector is pretty resilient. Got these two economies. Global 259 00:14:37,880 --> 00:14:40,440 Speaker 1: manufacturing Abadankie is largely in a recession at the moment. 260 00:14:40,440 --> 00:14:42,720 Speaker 1: It is not looking good at all, especially in China 261 00:14:42,760 --> 00:14:45,400 Speaker 1: and Europe and hitting the United States. It is two 262 00:14:45,400 --> 00:14:48,040 Speaker 1: economies as well, Julius. So essentially you're saying that the 263 00:14:48,080 --> 00:14:50,400 Speaker 1: service sector can pull up the arrest of the economy 264 00:14:50,600 --> 00:14:52,840 Speaker 1: and won't be brought down by what is happening with 265 00:14:52,880 --> 00:14:57,120 Speaker 1: manufacturing worldwide. Well, I think we will be brought down. 266 00:14:57,160 --> 00:14:59,880 Speaker 1: We will see growth moderate. I think there's no doubt 267 00:15:00,000 --> 00:15:04,040 Speaker 1: about the fact that is likely to be much lower 268 00:15:04,040 --> 00:15:09,240 Speaker 1: than But the service sector dynamics can be resilient to 269 00:15:09,320 --> 00:15:12,840 Speaker 1: that slowdown. Uh. And we've seen that before and and 270 00:15:12,920 --> 00:15:15,160 Speaker 1: that will be you know that that's that's going to 271 00:15:15,240 --> 00:15:17,880 Speaker 1: be our saving grades. It's not going to necessarily accelerate 272 00:15:17,880 --> 00:15:21,120 Speaker 1: to offset the slowing manufacturing, but it will be a 273 00:15:21,160 --> 00:15:24,160 Speaker 1: buffer to that slowdown. Julia, on the global basis and 274 00:15:24,200 --> 00:15:27,120 Speaker 1: the cliche the Chairman Powell is a central banker to 275 00:15:27,160 --> 00:15:31,120 Speaker 1: the world. Maybe Chairman Draggy is central banker to the world. 276 00:15:31,240 --> 00:15:34,440 Speaker 1: I M. Currencies have had a real tough go of 277 00:15:34,440 --> 00:15:38,920 Speaker 1: it the last ten twelve training sessions with even Argentinean 278 00:15:39,000 --> 00:15:42,600 Speaker 1: pays so knocking out to new weakness yesterday. I mean 279 00:15:43,160 --> 00:15:50,040 Speaker 1: the drag effect or the Powell effect. They're global, aren't they? Oh? Absolutely, 280 00:15:50,160 --> 00:15:53,200 Speaker 1: Central banking is a global game now and uh. I 281 00:15:53,240 --> 00:15:57,200 Speaker 1: think the FED certainly is has gotten on board with 282 00:15:57,240 --> 00:15:59,600 Speaker 1: that in the last few years. They're talking and keeping 283 00:15:59,640 --> 00:16:03,480 Speaker 1: their eye very closely on global development. But yes, primarily 284 00:16:04,120 --> 00:16:06,240 Speaker 1: the E c D and the FED really set the 285 00:16:06,240 --> 00:16:08,760 Speaker 1: tone for global market. What is your observation on the 286 00:16:08,840 --> 00:16:13,440 Speaker 1: jobs report? What will you look for? Well, we've seen 287 00:16:13,520 --> 00:16:15,840 Speaker 1: kind of a disconnect between a lot of the high 288 00:16:15,920 --> 00:16:20,920 Speaker 1: frequency job market indicators and other indicators of demands in 289 00:16:20,960 --> 00:16:24,920 Speaker 1: the economy and payrolls. Payrolls have been accelerating in the 290 00:16:25,000 --> 00:16:28,080 Speaker 1: last few months and everything else has been moderating. So 291 00:16:28,160 --> 00:16:31,160 Speaker 1: I expect a number I'm a little bit below consensus. 292 00:16:31,160 --> 00:16:34,360 Speaker 1: I'm looking for one fifty k. It looks like we're 293 00:16:34,440 --> 00:16:38,960 Speaker 1: due for some correction down again. One, you know, a 294 00:16:39,040 --> 00:16:42,040 Speaker 1: healthy number, it's nothing to worry about, but we should 295 00:16:42,080 --> 00:16:46,480 Speaker 1: see some either a combination of downward revisions and slower 296 00:16:46,560 --> 00:16:48,920 Speaker 1: higher and John, this shows a variance. It's out there 297 00:16:48,920 --> 00:16:52,680 Speaker 1: because we've got many others two fifty or two as well. 298 00:16:52,680 --> 00:16:55,360 Speaker 1: There's a there's a real variance, folks going into this 299 00:16:55,480 --> 00:16:58,560 Speaker 1: number in eighteen minutes. I've gotta get you thought some 300 00:16:58,560 --> 00:17:00,920 Speaker 1: white scot to j D of a Whatmently, I think 301 00:17:00,920 --> 00:17:03,160 Speaker 1: the consensus for you now is even with white growth 302 00:17:03,160 --> 00:17:06,720 Speaker 1: getting towards decade highs of three something per cent, that 303 00:17:06,720 --> 00:17:10,040 Speaker 1: that's not going to bleed into headline price pressures. That 304 00:17:10,080 --> 00:17:11,960 Speaker 1: we won't see a big pick up inflation off the 305 00:17:12,000 --> 00:17:14,720 Speaker 1: back of that. Do you agree with that? Julia, Yeah, 306 00:17:14,800 --> 00:17:17,359 Speaker 1: I'm I'm I'm in that camp. We just really haven't 307 00:17:17,400 --> 00:17:19,880 Speaker 1: seen much passed through. It's not to say we're not 308 00:17:20,000 --> 00:17:23,960 Speaker 1: seeing cyclical pressures in inflation. We are seeing, for example, 309 00:17:24,040 --> 00:17:27,640 Speaker 1: goods prices pick up, goods inflation pick up, but there's 310 00:17:27,680 --> 00:17:33,520 Speaker 1: a lot of other structural factors from from housing, from technology, UH, 311 00:17:33,640 --> 00:17:37,440 Speaker 1: from healthcare that are offsetting that in weighing inflation down. 312 00:17:37,520 --> 00:17:40,000 Speaker 1: So it's going to be really hard to see a 313 00:17:40,119 --> 00:17:43,080 Speaker 1: notable acceleration. How do you and Julia Cornado with his 314 00:17:43,160 --> 00:17:46,680 Speaker 1: folks macro policy perspectives as we moved to jobs today, 315 00:17:46,760 --> 00:17:48,560 Speaker 1: Jim Glassman with us in a bit, and then every 316 00:17:48,640 --> 00:17:52,400 Speaker 1: Joseph Cohen as well. Dr Coronado, how do you study 317 00:17:52,960 --> 00:17:57,080 Speaker 1: retail America? Do you like partition bricks and mortar and 318 00:17:57,240 --> 00:18:01,840 Speaker 1: Amazon ors or a different Coronado method. There's been such 319 00:18:01,880 --> 00:18:04,600 Speaker 1: a disruption and retail in the last couple of years, 320 00:18:04,600 --> 00:18:08,359 Speaker 1: an accelerated disruption, and that actually I think it adds 321 00:18:08,400 --> 00:18:10,480 Speaker 1: to the noise in the data. For example, what we 322 00:18:10,520 --> 00:18:14,960 Speaker 1: saw on retail sales UH in December was overstated because 323 00:18:15,200 --> 00:18:18,040 Speaker 1: we just can't do the things like we like to do, 324 00:18:18,119 --> 00:18:21,960 Speaker 1: like seasonally adjusted data, because all the patterns have been disrupted. 325 00:18:22,000 --> 00:18:25,040 Speaker 1: So taking the temperature of the retail sector is a 326 00:18:25,040 --> 00:18:27,520 Speaker 1: lot harder than it used to be. And you need 327 00:18:27,560 --> 00:18:29,840 Speaker 1: to be more patients, and you need to sort of 328 00:18:29,880 --> 00:18:32,520 Speaker 1: smooth through some of the noise and the data because 329 00:18:33,400 --> 00:18:35,880 Speaker 1: it's just all over the map now. And that's true 330 00:18:35,920 --> 00:18:39,800 Speaker 1: both for measures of inflation and measures of sales. Julia, 331 00:18:39,880 --> 00:18:42,600 Speaker 1: if we get another take higher in the participation, right, 332 00:18:42,760 --> 00:18:44,760 Speaker 1: do we have some people on the FOMC that start 333 00:18:44,840 --> 00:18:46,680 Speaker 1: looking back at the policies over the last couple of 334 00:18:46,760 --> 00:18:49,200 Speaker 1: years and say, you know what, maybe we got this wrong. 335 00:18:51,280 --> 00:18:54,959 Speaker 1: You know, it's second guessing is hard to do. Uh. 336 00:18:55,119 --> 00:18:57,119 Speaker 1: You know. I think say they were making the decisions 337 00:18:57,160 --> 00:19:00,560 Speaker 1: coming off the zero lower bound. Uh, you know, with 338 00:19:00,640 --> 00:19:03,720 Speaker 1: a healthy labor market and a falling unemployment rate, it 339 00:19:03,760 --> 00:19:07,840 Speaker 1: didn't make sense to stay at zero. Uh. You know. 340 00:19:07,960 --> 00:19:10,480 Speaker 1: And I think right now the debate is more around Okay, 341 00:19:10,480 --> 00:19:12,800 Speaker 1: now that we are closer to something that looks like 342 00:19:12,800 --> 00:19:17,120 Speaker 1: a neutral interest rate, now we can let this run 343 00:19:17,200 --> 00:19:19,359 Speaker 1: a little bit and see how far we can go 344 00:19:19,480 --> 00:19:22,720 Speaker 1: with it. But I think, you know, second guessing getting 345 00:19:22,720 --> 00:19:26,280 Speaker 1: off the zero lower bound when the economy was doing well. 346 00:19:26,320 --> 00:19:28,080 Speaker 1: You know, I don't think many people are going to 347 00:19:28,200 --> 00:19:32,120 Speaker 1: regret that decision, per se. Julia Karnata, thank you so much. 348 00:19:32,200 --> 00:19:35,000 Speaker 1: Macro policy perspectives of the look at the job economy, 349 00:19:35,040 --> 00:19:42,720 Speaker 1: and we'll continue with discussion this discussion. This is a 350 00:19:42,800 --> 00:19:46,680 Speaker 1: joy and extensive conversation this morning with Abbey Joseph Cohen. 351 00:19:47,359 --> 00:19:49,880 Speaker 1: She's been a wonderful friend of Bloomberg on the economy 352 00:19:49,880 --> 00:19:53,000 Speaker 1: and Bloomberg surveillance, and she joins US futures at negative 353 00:19:53,000 --> 00:19:56,679 Speaker 1: eighteen down futures negative one seventy three. Abby, wonderful to 354 00:19:56,760 --> 00:19:59,879 Speaker 1: have you with us this morning. Is Jim Blastman was 355 00:20:00,000 --> 00:20:03,720 Speaker 1: alluding to within the synthesis of your work as a 356 00:20:03,840 --> 00:20:09,400 Speaker 1: senior investment strategists and advisory director at Goldman Sachs, can 357 00:20:09,440 --> 00:20:13,960 Speaker 1: you say that America stands alone, separate from draggy and 358 00:20:14,080 --> 00:20:19,280 Speaker 1: separate from the challenges of e M and China. Clearly, Tom, 359 00:20:19,440 --> 00:20:23,119 Speaker 1: the United States has many advantages, and one of the 360 00:20:23,160 --> 00:20:26,919 Speaker 1: things I am concerned about is that these disparities that 361 00:20:26,960 --> 00:20:29,800 Speaker 1: we have benefited from in the US are beginning to 362 00:20:29,880 --> 00:20:32,800 Speaker 1: ease up a little bit. So for example, he talked 363 00:20:32,840 --> 00:20:37,080 Speaker 1: about the importance of immigration to the United States. Let's 364 00:20:37,160 --> 00:20:39,520 Speaker 1: keep in mind that while we always focus on the 365 00:20:39,600 --> 00:20:43,520 Speaker 1: quarterly GDP numbers, I think long term economists look at 366 00:20:43,560 --> 00:20:47,119 Speaker 1: potential growth rate of GDP and that has come down 367 00:20:47,200 --> 00:20:50,320 Speaker 1: in the United States. There are two key reasons. One 368 00:20:50,520 --> 00:20:53,480 Speaker 1: is that productivity of our workers has come down. Maybe 369 00:20:53,520 --> 00:20:57,040 Speaker 1: we've not been infesting enough in terms of capex. But 370 00:20:57,160 --> 00:20:59,760 Speaker 1: the other thing that's happened is that labor force growth 371 00:21:00,160 --> 00:21:03,479 Speaker 1: is now slowing UM. And one key component of that 372 00:21:03,600 --> 00:21:07,120 Speaker 1: growth and labor force had been immigration. If we look 373 00:21:07,160 --> 00:21:10,800 Speaker 1: at at some early indicators, they're not looking good. So, 374 00:21:10,880 --> 00:21:15,440 Speaker 1: for example, if we look at approved student visas, this 375 00:21:15,520 --> 00:21:18,600 Speaker 1: is for foreign students coming to the United States, either 376 00:21:18,680 --> 00:21:22,760 Speaker 1: for university studies or graduate level, that has declined double 377 00:21:22,840 --> 00:21:26,000 Speaker 1: digit UM. And in addition, there has been a sharp 378 00:21:26,080 --> 00:21:29,679 Speaker 1: decline in the number of those special visas that we 379 00:21:29,760 --> 00:21:33,440 Speaker 1: grant workers who have special skills and categories. And this 380 00:21:33,520 --> 00:21:36,479 Speaker 1: is something I hope it's not the canary in the 381 00:21:36,480 --> 00:21:39,440 Speaker 1: coal mine, but we need to watch it carefully. I 382 00:21:39,440 --> 00:21:42,000 Speaker 1: want to I want I want to say broader here 383 00:21:42,440 --> 00:21:44,879 Speaker 1: and and then go more micro later, but on a 384 00:21:44,920 --> 00:21:48,280 Speaker 1: broader theme, from what we heard from Mr Draggy yesterday 385 00:21:48,359 --> 00:21:51,440 Speaker 1: and his illusion late in the press conference to protectionism, 386 00:21:51,840 --> 00:21:55,400 Speaker 1: are you working at this point at Goldman Sachs around 387 00:21:55,560 --> 00:21:59,840 Speaker 1: wrapped around a mercantilistic America, and we see the effect 388 00:21:59,840 --> 00:22:02,560 Speaker 1: on the labor economy, we see the effect from Mr 389 00:22:02,640 --> 00:22:06,720 Speaker 1: Dragging indeed a mercantilistic America. We see the effect for 390 00:22:06,760 --> 00:22:11,760 Speaker 1: an ascendant Asia. You've raised so many different interesting points 391 00:22:11,800 --> 00:22:14,520 Speaker 1: in that question. Let me try to respond briefly. I 392 00:22:14,840 --> 00:22:18,080 Speaker 1: can First of all, the United States, in many ways 393 00:22:18,119 --> 00:22:21,760 Speaker 1: does stand alone UM. We have the most productive workers 394 00:22:21,760 --> 00:22:26,360 Speaker 1: on the planet. My concern is that productivity impetus is slowing. 395 00:22:26,880 --> 00:22:30,720 Speaker 1: Number one, number two UM. From a standpoint of our 396 00:22:30,880 --> 00:22:34,200 Speaker 1: exposure to foreign trade, the United States is not as 397 00:22:34,240 --> 00:22:38,120 Speaker 1: exposed many of these other countries Germany, Japan, and so on. 398 00:22:38,440 --> 00:22:42,119 Speaker 1: More than of their GDP is related to foreign trade. 399 00:22:42,400 --> 00:22:46,080 Speaker 1: For the United States it's roughly fifteen percent. So those 400 00:22:46,160 --> 00:22:51,400 Speaker 1: are different factors as well. But nevertheless, over the last decade, 401 00:22:51,560 --> 00:22:55,160 Speaker 1: the single fastest growing sector of the United States has 402 00:22:55,200 --> 00:22:59,840 Speaker 1: been exports, and if our main customers outside the United States, 403 00:23:00,160 --> 00:23:03,520 Speaker 1: which are developed economies, but also economies who have been 404 00:23:03,560 --> 00:23:07,200 Speaker 1: buying our agricultural goods as China has been doing. If 405 00:23:07,200 --> 00:23:10,040 Speaker 1: those economies are slowing or in the case of China 406 00:23:10,400 --> 00:23:14,639 Speaker 1: consciously not buying soybeans from the United States, that's not 407 00:23:14,680 --> 00:23:17,359 Speaker 1: good for our g d P, or for our farmers 408 00:23:17,600 --> 00:23:20,680 Speaker 1: or for our other workers. You're Jeffrey Curry does brilliant 409 00:23:20,680 --> 00:23:23,000 Speaker 1: work on commodities. I know he's been long gold, but 410 00:23:23,080 --> 00:23:26,800 Speaker 1: he's always looking at the more the greater complexities of 411 00:23:26,840 --> 00:23:31,320 Speaker 1: commodities as well. Abby. If China walks away in some 412 00:23:31,520 --> 00:23:36,080 Speaker 1: form from these trade negotiations, what will be the ramification 413 00:23:36,560 --> 00:23:40,040 Speaker 1: on the stock market and what will be the ramification 414 00:23:40,480 --> 00:23:44,800 Speaker 1: on commodity China. Well, the simple answer, Tom is something 415 00:23:44,840 --> 00:23:48,120 Speaker 1: we've already seen in the equity markets. We have seen 416 00:23:48,200 --> 00:23:51,880 Speaker 1: daily volatility related to whether the headline news is good 417 00:23:52,000 --> 00:23:55,120 Speaker 1: or bad with regard to those trade talks. But let's 418 00:23:55,160 --> 00:23:59,040 Speaker 1: talk more basics, and that is the issue properly has 419 00:23:59,119 --> 00:24:03,000 Speaker 1: never really been the size of the trade deficit. In fact, 420 00:24:03,040 --> 00:24:07,000 Speaker 1: we've seen the trade deficit balloon in part because of 421 00:24:07,119 --> 00:24:10,440 Speaker 1: worry about what's going on with regard to tariffs. More 422 00:24:10,440 --> 00:24:13,159 Speaker 1: on that later. If you wish, the real issue with 423 00:24:13,240 --> 00:24:17,520 Speaker 1: regard to our conversations with China really should be where 424 00:24:17,600 --> 00:24:22,280 Speaker 1: Mr Leightheiser is focusing, and that is protection of intellectual property, 425 00:24:22,840 --> 00:24:26,960 Speaker 1: no more forced technology transfers and so on. And it's 426 00:24:27,000 --> 00:24:30,240 Speaker 1: not quite clear to anyone not directly involved in those 427 00:24:30,280 --> 00:24:34,200 Speaker 1: negotiations how that is going. One of the things we'd 428 00:24:34,200 --> 00:24:37,240 Speaker 1: obviously like to see is the Chinese to say, Okay, 429 00:24:37,280 --> 00:24:40,040 Speaker 1: we're gonna come back and we're gonna buy us soybeans, 430 00:24:40,080 --> 00:24:43,160 Speaker 1: We're going to buy us pork production and so on. 431 00:24:43,440 --> 00:24:46,760 Speaker 1: That would be an obvious public signal to me. It 432 00:24:46,920 --> 00:24:50,000 Speaker 1: is the less public signals having to do with this 433 00:24:50,160 --> 00:24:54,520 Speaker 1: transfer of our research and development to China, that to me, 434 00:24:54,640 --> 00:24:56,920 Speaker 1: is the real crux of these trade talks. If you're 435 00:24:56,920 --> 00:24:59,920 Speaker 1: just joining us, Abby Joseph Cohen with us with Golden SAG, 436 00:25:00,200 --> 00:25:03,760 Speaker 1: their advisory director and senior investment strategist. This on a 437 00:25:03,880 --> 00:25:07,480 Speaker 1: job's day, with a stunning number off the corrected three 438 00:25:07,520 --> 00:25:11,000 Speaker 1: hundred thousand plus number of a month ago, coming in 439 00:25:11,200 --> 00:25:14,760 Speaker 1: very light twenty thousand, but as our John Farrell mentioned, 440 00:25:14,760 --> 00:25:17,399 Speaker 1: the bondom market really not moving all that much. A 441 00:25:17,440 --> 00:25:21,960 Speaker 1: ten year yield now in two basis points two separate 442 00:25:22,119 --> 00:25:25,600 Speaker 1: from a discussion with the Abbey Joseph Cohen, there's right 443 00:25:25,640 --> 00:25:30,520 Speaker 1: now something really remarkable in terms of American technology and innovation, 444 00:25:30,960 --> 00:25:34,439 Speaker 1: and that is we're seeing the Dragon, the crew Dragon 445 00:25:34,600 --> 00:25:38,000 Speaker 1: coming back from space where we're actually going to see 446 00:25:38,119 --> 00:25:41,199 Speaker 1: a landing in the Atlantic Ocean. This is some two 447 00:25:41,240 --> 00:25:45,639 Speaker 1: hundred miles off the Florida coast involved as a SpaceX 448 00:25:45,680 --> 00:25:49,720 Speaker 1: recovery ship, and it really hearkens back to another time. Abby. 449 00:25:49,720 --> 00:25:53,160 Speaker 1: That's a good jump off to your life work studying 450 00:25:53,240 --> 00:25:58,800 Speaker 1: technology and innovation in America. Elon Musk, who SpaceX is 451 00:25:58,840 --> 00:26:01,399 Speaker 1: trying to get that done, but give us the Golden 452 00:26:01,480 --> 00:26:06,160 Speaker 1: SAX report card and how America is doing on technology. 453 00:26:06,320 --> 00:26:09,960 Speaker 1: We're doing well, Tom, but we could be doing better. Um. 454 00:26:10,000 --> 00:26:13,480 Speaker 1: We have been the global leader for decades. And one 455 00:26:13,480 --> 00:26:16,399 Speaker 1: of the things that is very interesting to watch is 456 00:26:16,480 --> 00:26:20,680 Speaker 1: that many other countries China included, but there are many 457 00:26:20,760 --> 00:26:24,760 Speaker 1: others who have made a more conscious effort on the 458 00:26:24,840 --> 00:26:29,120 Speaker 1: part of government policy to do the following things. Number one, 459 00:26:29,320 --> 00:26:33,280 Speaker 1: make sure that enough students are educated in STEM. Number 460 00:26:33,320 --> 00:26:36,560 Speaker 1: two to provide funding for the basic research and the 461 00:26:36,600 --> 00:26:40,320 Speaker 1: development which needs to follow. I'll also point out that 462 00:26:40,440 --> 00:26:44,120 Speaker 1: while we all applaud the great success of SpaceX, so 463 00:26:44,200 --> 00:26:48,880 Speaker 1: much of this is based upon NASA developed technology. They're 464 00:26:48,960 --> 00:26:54,120 Speaker 1: using NASA telemetry, NASA communications, NASA launch pads and so on. 465 00:26:54,400 --> 00:26:56,480 Speaker 1: And I think this is great. I think this kind 466 00:26:56,480 --> 00:27:00,320 Speaker 1: of combination of public and private sector in a way 467 00:27:00,520 --> 00:27:04,000 Speaker 1: is the way we've almost always done the space program. Um. 468 00:27:04,240 --> 00:27:06,120 Speaker 1: And and by the way, for people who say, why 469 00:27:06,119 --> 00:27:09,400 Speaker 1: are we spending money on this, well, we're spending money 470 00:27:09,560 --> 00:27:13,280 Speaker 1: in the United States to get this done. In terms 471 00:27:13,400 --> 00:27:17,760 Speaker 1: of what we're actually accomplishing in space. It's extraordinary to see, uh, 472 00:27:18,080 --> 00:27:20,400 Speaker 1: something that harkens back the decades ago. And I really, 473 00:27:20,560 --> 00:27:23,240 Speaker 1: just as an aside, folks, I can't say enough about 474 00:27:23,240 --> 00:27:26,000 Speaker 1: seeing Ryan Gosling in the First Man of Neil Armstrong 475 00:27:26,359 --> 00:27:30,160 Speaker 1: and the challenges SpaceX now coming in with the classic 476 00:27:30,520 --> 00:27:34,480 Speaker 1: the parachutes coming down with the capsule, and we'll see 477 00:27:34,520 --> 00:27:36,600 Speaker 1: on that here in a bit. Abby, let us bring 478 00:27:36,600 --> 00:27:39,040 Speaker 1: it over to the stock market. Everybody wants to know 479 00:27:39,480 --> 00:27:43,600 Speaker 1: the call, um, did you go a triple leverage David 480 00:27:43,640 --> 00:27:50,359 Speaker 1: costan Long on December? Um, Well, I have to say 481 00:27:50,480 --> 00:27:56,000 Speaker 1: we all now know with hindsight that Christmas Eve was 482 00:27:56,359 --> 00:28:00,520 Speaker 1: a gift. Was a gift. It was a gift. Um. 483 00:28:00,560 --> 00:28:03,680 Speaker 1: But it also tells us not to worry terribly much 484 00:28:03,760 --> 00:28:07,320 Speaker 1: about noise. And I'd say the same thing about the 485 00:28:07,359 --> 00:28:11,360 Speaker 1: employment data for example. So what what the markets took 486 00:28:11,359 --> 00:28:14,440 Speaker 1: away in December they gave back in January. It's a 487 00:28:14,480 --> 00:28:17,119 Speaker 1: do over, um. And when we take a look at 488 00:28:17,119 --> 00:28:19,920 Speaker 1: what's going on, we're looking at a US economy that 489 00:28:20,000 --> 00:28:22,600 Speaker 1: we don't think we'll see a recession. But there has 490 00:28:22,640 --> 00:28:25,879 Speaker 1: been a moderation in g d p our potential growth 491 00:28:25,960 --> 00:28:29,120 Speaker 1: rate is down now below two percent. Uh. There will 492 00:28:29,160 --> 00:28:32,720 Speaker 1: be a moderation in profit growth. Obviously, the sugar high 493 00:28:32,800 --> 00:28:35,920 Speaker 1: of those tax cuts UM is now gone, and we're 494 00:28:35,920 --> 00:28:39,080 Speaker 1: going to be seeing mid single digit profit gains. And 495 00:28:39,120 --> 00:28:42,280 Speaker 1: what this basically says to me is that within the 496 00:28:42,320 --> 00:28:45,680 Speaker 1: fixed income markets, you better be very careful. UM. I 497 00:28:45,720 --> 00:28:48,680 Speaker 1: don't think you're going to see another move lower in 498 00:28:48,680 --> 00:28:52,120 Speaker 1: interest rates. UM. I think the opportunities are as many 499 00:28:52,160 --> 00:28:55,000 Speaker 1: people have already said on your show and elsewhere. Uh, 500 00:28:55,120 --> 00:28:59,280 Speaker 1: the opportunities that do exist are in risk markets. But 501 00:28:59,320 --> 00:29:03,400 Speaker 1: the valuation, since they are okay, not wonderful, is the trap. 502 00:29:03,480 --> 00:29:05,600 Speaker 1: And I go back to your wonderful work with the 503 00:29:05,600 --> 00:29:08,840 Speaker 1: cf A Institute. Is the trap. And have you talked 504 00:29:08,840 --> 00:29:11,680 Speaker 1: about a name from your in my past, the wonderful 505 00:29:11,720 --> 00:29:15,840 Speaker 1: Tom Galvin when he was at Donaldson Lovekan Generette sales 506 00:29:15,960 --> 00:29:20,520 Speaker 1: become ever more precious, a precious If we're in a 507 00:29:21,040 --> 00:29:26,240 Speaker 1: single digit bond, single digit ectuery world, people growing revenue 508 00:29:26,360 --> 00:29:32,240 Speaker 1: at double digit levels, that's of an extraordinary value, isn't it. 509 00:29:32,240 --> 00:29:35,120 Speaker 1: It certainly is, Tom, And what we are advising our 510 00:29:35,160 --> 00:29:39,600 Speaker 1: clients really falls into that category. Number One, we're looking 511 00:29:39,600 --> 00:29:44,280 Speaker 1: at companies that are generating good top line growth number one. 512 00:29:44,680 --> 00:29:50,280 Speaker 1: Number two, we're encouraging owners of assets to think not 513 00:29:50,400 --> 00:29:55,120 Speaker 1: so much about passive approaches index oriented approaches, but really 514 00:29:55,160 --> 00:29:58,440 Speaker 1: active management UM. As I mentioned a few moments ago, 515 00:29:58,880 --> 00:30:02,560 Speaker 1: the valuation is k not great overall in a lot 516 00:30:02,600 --> 00:30:05,200 Speaker 1: of the risk markets, but there has been so much 517 00:30:05,240 --> 00:30:09,560 Speaker 1: focus on these passive index oriented approaches. The opportunities are 518 00:30:09,640 --> 00:30:13,600 Speaker 1: probably away from there, not just in equities, but also 519 00:30:13,680 --> 00:30:17,640 Speaker 1: in sixth income, and I would argue as well in commodities. Uh. 520 00:30:17,680 --> 00:30:19,800 Speaker 1: You know, we are blessed to have Jeff Curry and 521 00:30:20,000 --> 00:30:23,520 Speaker 1: his excellent work UM in terms of telling us which 522 00:30:23,520 --> 00:30:26,520 Speaker 1: way commodity markets are likely to go, But there are 523 00:30:26,520 --> 00:30:30,800 Speaker 1: also individual opportunities to do well or by the way, 524 00:30:30,840 --> 00:30:33,560 Speaker 1: to do really poorly. Uh, but we we think two 525 00:30:33,600 --> 00:30:38,040 Speaker 1: thousand nineteen in all markets is a year for active management. Okay, 526 00:30:38,240 --> 00:30:40,840 Speaker 1: I'll go with that, Abbey, But our listeners go, that's 527 00:30:40,880 --> 00:30:43,640 Speaker 1: all great, But only the fancy people like Abby, Joseph 528 00:30:43,960 --> 00:30:51,640 Speaker 1: Cohen and Golden Sas have access to those unique active opportunities. 529 00:30:52,120 --> 00:30:56,480 Speaker 1: Can the public take advantage of active management here? Or 530 00:30:56,560 --> 00:31:00,840 Speaker 1: they squeezed out by the private elite markets. I believe 531 00:31:00,880 --> 00:31:05,120 Speaker 1: that many individual investors Tom, in response to your extraordinarily 532 00:31:05,160 --> 00:31:08,280 Speaker 1: important question, ought to be looking at some of the 533 00:31:08,360 --> 00:31:12,320 Speaker 1: mutual fund complexes, uh, the ones that have had a 534 00:31:12,320 --> 00:31:18,000 Speaker 1: long history of providing funds that are not index oriented. Um. 535 00:31:18,240 --> 00:31:21,800 Speaker 1: I think I shouldn't be listing what those companies are. 536 00:31:21,840 --> 00:31:25,080 Speaker 1: People know what they are. My concern is that over 537 00:31:25,120 --> 00:31:28,520 Speaker 1: the last eight to ten years, so much of the 538 00:31:28,560 --> 00:31:32,560 Speaker 1: new inflow into the equity market by individual investors has 539 00:31:32,600 --> 00:31:36,640 Speaker 1: gone into index oriented products. And I think that's something 540 00:31:37,040 --> 00:31:39,480 Speaker 1: that always feels good because you have lots of company 541 00:31:39,640 --> 00:31:42,480 Speaker 1: that's the problem you at this point. I want to 542 00:31:42,480 --> 00:31:46,760 Speaker 1: be invested in places where somebody is selecting companies, where 543 00:31:46,800 --> 00:31:51,600 Speaker 1: there's not quite so much competition to be buying those securities. 544 00:31:51,880 --> 00:31:54,200 Speaker 1: If you're just joining us, Abby Joseph Cohen was an 545 00:31:54,200 --> 00:31:58,480 Speaker 1: exceptionally generous half hour. Today she is advisory director, Senior 546 00:31:58,480 --> 00:32:01,600 Speaker 1: investment strategist at Olban Sacks. I like what Ian Lincoln 547 00:32:01,680 --> 00:32:04,880 Speaker 1: wrote out at BMO Capital Markets his title of his 548 00:32:04,960 --> 00:32:07,960 Speaker 1: jobs report that is not a typo, and that of 549 00:32:08,000 --> 00:32:12,600 Speaker 1: course of payrolls increasing twenty thousand to zero Comma zero 550 00:32:12,800 --> 00:32:15,760 Speaker 1: zero zero. We did get some bond market move but 551 00:32:15,800 --> 00:32:17,880 Speaker 1: a little bit ten ure yield down to two point 552 00:32:17,960 --> 00:32:21,360 Speaker 1: six zero back to two point six to Futures have 553 00:32:21,560 --> 00:32:26,200 Speaker 1: deteriorated negative fourteen ish now negative twenty on the SMP future. 554 00:32:26,280 --> 00:32:29,000 Speaker 1: So there was a I want to say, a reaction 555 00:32:29,480 --> 00:32:31,760 Speaker 1: uh to this job report, but I would call it 556 00:32:31,840 --> 00:32:35,800 Speaker 1: more measured than maybe what that stunning statistic would UH 557 00:32:36,040 --> 00:32:39,880 Speaker 1: suggest as well. Separately, a real moment for space and 558 00:32:39,920 --> 00:32:42,240 Speaker 1: I can tell you on the radio it's tough to 559 00:32:42,240 --> 00:32:46,280 Speaker 1: convey the beauty of the images of the SpaceX dragon 560 00:32:46,720 --> 00:32:52,480 Speaker 1: that just uh fell down from space with four gorgeous parachutes, 561 00:32:52,840 --> 00:32:55,200 Speaker 1: and Abby, what was amazing about it was it was 562 00:32:55,400 --> 00:33:00,840 Speaker 1: totally different than anything you and I remember from Mercury Gemini, 563 00:33:01,360 --> 00:33:04,720 Speaker 1: A Mercury Gemini and Apollo. It's all new you really 564 00:33:04,760 --> 00:33:08,840 Speaker 1: see that it's all new technology that they're dealing with. 565 00:33:09,040 --> 00:33:10,800 Speaker 1: ABBY in the time that we have left, I want 566 00:33:10,800 --> 00:33:14,360 Speaker 1: to synthesize in here what retirees should do, and then 567 00:33:14,400 --> 00:33:18,720 Speaker 1: I want to move on to education in America. Retirees 568 00:33:18,920 --> 00:33:22,920 Speaker 1: have been trapped. I thought Bill Gross's uh phrases for 569 00:33:23,040 --> 00:33:26,760 Speaker 1: it over the last ten years really captured the repression 570 00:33:27,040 --> 00:33:30,840 Speaker 1: that retirees are in. What do you recommend They're not 571 00:33:30,920 --> 00:33:34,520 Speaker 1: at Goldman Sachs, they're not doing fancy stuff at Goldman. 572 00:33:35,080 --> 00:33:39,440 Speaker 1: What does savers and retirees need to do to prepare 573 00:33:39,520 --> 00:33:44,120 Speaker 1: for the next ten years? Tom By using the word prepare, 574 00:33:44,440 --> 00:33:47,440 Speaker 1: I think that is really the key. One of the 575 00:33:47,520 --> 00:33:51,880 Speaker 1: things that disturbs me a great deal about individual investors 576 00:33:51,920 --> 00:33:55,200 Speaker 1: today is that they're not prepared. Um. We see that 577 00:33:55,400 --> 00:33:59,800 Speaker 1: young and middle aged workers are saving way below with 578 00:34:00,120 --> 00:34:02,520 Speaker 1: need to be. And so while you and I and 579 00:34:02,640 --> 00:34:06,920 Speaker 1: others on your program can talk about specific securities and products, 580 00:34:07,440 --> 00:34:11,240 Speaker 1: the number one concern is how much money is actually 581 00:34:11,280 --> 00:34:14,880 Speaker 1: being set aside for retirement, and it is extremely low. 582 00:34:15,280 --> 00:34:18,960 Speaker 1: It's also extremely low even at companies that are providing 583 00:34:19,040 --> 00:34:22,440 Speaker 1: some sort of payroll match. UM. I don't quite understand it. 584 00:34:22,480 --> 00:34:26,160 Speaker 1: I think this represents some financial illiteracy on the part 585 00:34:26,200 --> 00:34:28,440 Speaker 1: of our nation and and this to me is is 586 00:34:28,520 --> 00:34:32,360 Speaker 1: very problematic. But let me ask answer the specific question 587 00:34:32,800 --> 00:34:35,960 Speaker 1: you asked, which is what about the next ten years UM. 588 00:34:36,000 --> 00:34:39,160 Speaker 1: I believe over the next ten years UM investors are 589 00:34:39,200 --> 00:34:43,240 Speaker 1: well served to be in UM. Let's call them equity 590 00:34:43,320 --> 00:34:47,000 Speaker 1: or equity like assets rather than fixed income. I believe 591 00:34:47,080 --> 00:34:52,000 Speaker 1: that the thirtysom year bullmarket in bonds is over, not 592 00:34:52,120 --> 00:34:55,279 Speaker 1: expecting interest rates to gallop higher, but nor am I 593 00:34:55,320 --> 00:34:58,719 Speaker 1: expecting great returns. So I think that there are some 594 00:34:58,960 --> 00:35:02,960 Speaker 1: UM place is within the fixed income market for some 595 00:35:03,040 --> 00:35:07,680 Speaker 1: individuals to go. They're also a dividend generating equities to 596 00:35:07,719 --> 00:35:11,400 Speaker 1: look at, but not to focus on high yield dividend 597 00:35:11,760 --> 00:35:15,239 Speaker 1: generators because the high yields often indicate that there's an 598 00:35:15,320 --> 00:35:19,400 Speaker 1: underlying fundamental problem, but rather companies that offer dividend growth. 599 00:35:19,680 --> 00:35:22,040 Speaker 1: And let me hasten to add that this should not 600 00:35:22,080 --> 00:35:26,880 Speaker 1: be viewed as specific advice gesticular individual. I'm just providing 601 00:35:27,000 --> 00:35:30,160 Speaker 1: a sort of overview. Abby, You're the only one I 602 00:35:30,200 --> 00:35:32,400 Speaker 1: know that can think with a clear thought on the 603 00:35:32,480 --> 00:35:35,959 Speaker 1: tobacco of own stocks. We can turn to Craft, where 604 00:35:36,000 --> 00:35:38,279 Speaker 1: I grew up with Velvita cheese, and I'm sure it 605 00:35:38,400 --> 00:35:42,279 Speaker 1: was never ever in your household as a child. But 606 00:35:42,360 --> 00:35:44,959 Speaker 1: when you see the right down of goodwill in a 607 00:35:45,000 --> 00:35:50,719 Speaker 1: true ancient blue chip like craft, conservative retirees say, that's 608 00:35:50,719 --> 00:35:54,560 Speaker 1: why I don't want to own stocks the corporations. Is 609 00:35:54,560 --> 00:35:59,759 Speaker 1: there a transparency now or is it all just financial engineering? 610 00:36:01,360 --> 00:36:05,960 Speaker 1: Wonderful question, and the answer is it depends, um and. 611 00:36:05,960 --> 00:36:09,000 Speaker 1: And one of the things we always need to remind 612 00:36:09,040 --> 00:36:14,600 Speaker 1: ourselves of is that good management is essential. Um and. 613 00:36:14,840 --> 00:36:18,719 Speaker 1: Managers that have assets that are valuable but don't use 614 00:36:18,760 --> 00:36:23,480 Speaker 1: them appropriately are not helping anybody. Um So we need 615 00:36:23,520 --> 00:36:26,080 Speaker 1: to focus again on what are the metrics by which 616 00:36:26,080 --> 00:36:29,280 Speaker 1: we measure whether a management is doing a good job, 617 00:36:30,040 --> 00:36:32,360 Speaker 1: the one that we've often looked at, or things like 618 00:36:32,440 --> 00:36:36,440 Speaker 1: return on equity. My concern has been that equity itself 619 00:36:36,520 --> 00:36:40,120 Speaker 1: is shrinking, which means that returns on equity look like 620 00:36:40,200 --> 00:36:43,759 Speaker 1: they're getting better. Number one. Number two. The point that 621 00:36:43,840 --> 00:36:47,680 Speaker 1: you raised is an essential one and it's not new. 622 00:36:47,960 --> 00:36:50,080 Speaker 1: If we go back and we look at the the 623 00:36:50,200 --> 00:36:53,960 Speaker 1: treatise from the Dow Jones Industrial average from the a 624 00:36:54,080 --> 00:36:57,359 Speaker 1: T nineties, what we basically see is that there were 625 00:36:57,400 --> 00:37:01,360 Speaker 1: many so called blue chip companies that did not survive. 626 00:37:01,960 --> 00:37:05,920 Speaker 1: And I think investors need to recognize that every economy 627 00:37:05,960 --> 00:37:09,160 Speaker 1: shifts um and we just don't know for sure what's 628 00:37:09,200 --> 00:37:12,000 Speaker 1: going to happen. Uh. The analogy that I love to 629 00:37:12,080 --> 00:37:16,000 Speaker 1: point to is UH in the late nineteenth century when 630 00:37:17,680 --> 00:37:22,040 Speaker 1: of Americans worked on farms and there was enormous concern 631 00:37:22,440 --> 00:37:25,959 Speaker 1: about what we're going to happen with this gosh darn 632 00:37:26,000 --> 00:37:29,080 Speaker 1: newfangled equipment that was going to come into the farms 633 00:37:29,120 --> 00:37:31,239 Speaker 1: and people were going to use their jobs. Well, they 634 00:37:31,239 --> 00:37:33,799 Speaker 1: did lose their jobs, but we do see it was 635 00:37:33,880 --> 00:37:38,600 Speaker 1: also the beginning of this normo century of of American prosperity. 636 00:37:39,200 --> 00:37:42,839 Speaker 1: So well, my answer simply is as a nation, we 637 00:37:42,920 --> 00:37:45,919 Speaker 1: need to be prepared. We need to make sure that 638 00:37:46,040 --> 00:37:50,960 Speaker 1: our children in particular have the skills to be flexible 639 00:37:51,400 --> 00:37:53,920 Speaker 1: UM and have the skills to think and and that 640 00:37:54,080 --> 00:37:56,960 Speaker 1: I think will protect them. Rather than saying here is 641 00:37:57,000 --> 00:38:00,400 Speaker 1: the specific profession or specific job for what you need 642 00:38:00,480 --> 00:38:04,000 Speaker 1: to prepare, it would be inappropriate, Abbey Joseph Cohen for 643 00:38:04,080 --> 00:38:08,040 Speaker 1: you to comment on other banks or even individual banks, 644 00:38:08,080 --> 00:38:11,400 Speaker 1: but I must have you comment off of draggy and 645 00:38:11,440 --> 00:38:17,840 Speaker 1: the challenges of Europe Europe on their Japanification and particularly 646 00:38:17,880 --> 00:38:22,000 Speaker 1: the inability to clear their financial system, to clear is 647 00:38:22,040 --> 00:38:26,560 Speaker 1: a broad sense, their banking system. What is the catalyst 648 00:38:26,640 --> 00:38:30,880 Speaker 1: that Europe needs. Is it a political catalyst, Is it 649 00:38:31,000 --> 00:38:34,760 Speaker 1: simply a courage and will or is there another path 650 00:38:34,840 --> 00:38:38,240 Speaker 1: that you see for Europe to get its act back together? 651 00:38:39,480 --> 00:38:42,799 Speaker 1: And we must recognize that the United States after the 652 00:38:42,840 --> 00:38:48,040 Speaker 1: financial crisis benefited enormously from the tough love that we 653 00:38:48,080 --> 00:38:51,880 Speaker 1: got from our regulators, the FED, through the stress tests, 654 00:38:52,160 --> 00:38:56,400 Speaker 1: the other regulators basically say when don't hide here. In fact, 655 00:38:56,440 --> 00:38:59,880 Speaker 1: for the first few years, the major failures on the 656 00:39:00,080 --> 00:39:04,600 Speaker 1: stress tests were the American subsidiaries of European banks. So 657 00:39:04,880 --> 00:39:08,480 Speaker 1: we turn now to your question and basically to say, 658 00:39:08,600 --> 00:39:11,640 Speaker 1: it's taken them a long time to get religion and 659 00:39:11,680 --> 00:39:14,520 Speaker 1: they still don't have it. Uh. In some cases with 660 00:39:14,560 --> 00:39:16,799 Speaker 1: regard to this, and I think part of it is 661 00:39:16,840 --> 00:39:20,600 Speaker 1: that the potential growth rate itself in Europe is lower 662 00:39:20,640 --> 00:39:23,440 Speaker 1: than it is in the United States. We were able 663 00:39:23,520 --> 00:39:28,440 Speaker 1: to ultimately move forward here because we have a strong economy, 664 00:39:28,760 --> 00:39:32,040 Speaker 1: vibrant labor force and so on. Uh. Europe has, as 665 00:39:32,040 --> 00:39:34,960 Speaker 1: you've pointed out before, a labor force that in some 666 00:39:35,000 --> 00:39:38,920 Speaker 1: countries is not growing. And it is also um a 667 00:39:39,000 --> 00:39:44,440 Speaker 1: Europe where there is disparity in results um good returns 668 00:39:44,640 --> 00:39:50,360 Speaker 1: uh for workers in terms of wages and companies in Germany. Um. 669 00:39:50,360 --> 00:39:52,799 Speaker 1: But let's take it to the next step. Some of 670 00:39:52,840 --> 00:39:55,359 Speaker 1: the German companies, some of the German banks are still 671 00:39:55,440 --> 00:39:59,440 Speaker 1: facing some difficulty. So UM, I'm going to kick the 672 00:39:59,560 --> 00:40:03,080 Speaker 1: question you you said, does it take a political solution? 673 00:40:03,120 --> 00:40:05,759 Speaker 1: The answer, in my view is yet Abby one uh 674 00:40:06,000 --> 00:40:08,680 Speaker 1: more moment if we could with you in your generous 675 00:40:08,719 --> 00:40:12,520 Speaker 1: time today it is International Women's Day. It's a heritage 676 00:40:12,520 --> 00:40:15,080 Speaker 1: folks that at least goes back to nineteen o nine 677 00:40:15,680 --> 00:40:18,600 Speaker 1: in what the Socialist Party of America did with Women's Day, 678 00:40:19,000 --> 00:40:21,879 Speaker 1: uh in another time and place. And what I find 679 00:40:21,920 --> 00:40:27,080 Speaker 1: so interesting, Abbey, is the idea of women and rigor. 680 00:40:27,200 --> 00:40:30,680 Speaker 1: You had the courage years ago to take what so 681 00:40:30,719 --> 00:40:33,520 Speaker 1: many would suggest as a different path. I lump in 682 00:40:33,560 --> 00:40:37,359 Speaker 1: with your excellent Sally craw Check at Bernstein years ago 683 00:40:37,480 --> 00:40:41,240 Speaker 1: on Wall Street. Give us a window into the first 684 00:40:41,320 --> 00:40:44,640 Speaker 1: day you walked in the door. How difficult was it 685 00:40:44,719 --> 00:40:49,600 Speaker 1: to be a woman? At Goldman Sachs. The question I 686 00:40:49,640 --> 00:40:52,840 Speaker 1: think should be, how difficult has it been to be 687 00:40:52,920 --> 00:40:56,400 Speaker 1: a woman in financial services. And I would back it 688 00:40:56,480 --> 00:40:59,640 Speaker 1: up a little bit and say, for example, that women 689 00:41:00,040 --> 00:41:06,839 Speaker 1: remain dramatically underrepresented on university At universities in economics, UM, 690 00:41:07,719 --> 00:41:11,520 Speaker 1: they basically are, you know, less than a quarter of 691 00:41:11,560 --> 00:41:15,080 Speaker 1: the number of students. How fix that women faculty are 692 00:41:15,120 --> 00:41:18,160 Speaker 1: less than ten percent, And I think that's the issue. Uh, 693 00:41:18,200 --> 00:41:21,719 Speaker 1: there is a real bias that has been proven in 694 00:41:21,880 --> 00:41:25,760 Speaker 1: terms of both economics and finance at the graduate level, 695 00:41:26,080 --> 00:41:29,000 Speaker 1: which means that we are not producing enough women pH 696 00:41:29,160 --> 00:41:32,880 Speaker 1: d s and professors in these categories. So there aren't 697 00:41:32,880 --> 00:41:36,160 Speaker 1: those sort of role models number one, but number two, 698 00:41:36,520 --> 00:41:42,560 Speaker 1: there have been blatant um instances of gender harassment UM 699 00:41:42,600 --> 00:41:47,480 Speaker 1: in in economics. Interestingly UM in terms of our industry. 700 00:41:47,560 --> 00:41:50,080 Speaker 1: The thing that I love to point to our various 701 00:41:50,080 --> 00:41:53,200 Speaker 1: studies that have been done that show, for example, morning 702 00:41:53,200 --> 00:41:57,040 Speaker 1: Star has some results that show equity mutual funds managed 703 00:41:57,080 --> 00:42:01,600 Speaker 1: by women outperform um fixed come mutual funds managed by 704 00:42:01,640 --> 00:42:05,360 Speaker 1: women outperform. And I think it's because women have proven 705 00:42:06,040 --> 00:42:08,839 Speaker 1: that on a risk adjusted basis, they are better long 706 00:42:08,920 --> 00:42:12,120 Speaker 1: term investors. They're less likely to be caught up in 707 00:42:12,239 --> 00:42:16,040 Speaker 1: the statistical noise of day to day action. Or week 708 00:42:16,080 --> 00:42:19,680 Speaker 1: to week action in the markets. Um, women tend to 709 00:42:19,760 --> 00:42:22,480 Speaker 1: be more diligent when it comes to the numbers. And 710 00:42:22,520 --> 00:42:25,440 Speaker 1: I know what I just said may sound um, maybe 711 00:42:25,480 --> 00:42:28,799 Speaker 1: somewhat offensive to some of your listeners. I don't mean 712 00:42:28,800 --> 00:42:31,600 Speaker 1: it to be, um, but but those are with it. 713 00:42:32,640 --> 00:42:36,080 Speaker 1: I got thirty seconds left. Isn't it fun watching the 714 00:42:36,120 --> 00:42:41,080 Speaker 1: Washington Capitals? It's a delight watch watching the Capital. Can 715 00:42:41,120 --> 00:42:43,480 Speaker 1: they do it again? I mean folks to review this. Ms. 716 00:42:43,480 --> 00:42:47,839 Speaker 1: Cohen as a direct personal relationship with Mr Kin and 717 00:42:47,880 --> 00:42:51,239 Speaker 1: it was magical. Last year's Abbe Joseph Cohen partied with 718 00:42:51,320 --> 00:42:54,279 Speaker 1: Mr Ovechkin into May and June and July. Can they 719 00:42:54,320 --> 00:42:57,919 Speaker 1: do it again? Abbey? They have a great team. Um, 720 00:42:57,960 --> 00:43:00,960 Speaker 1: there's some other good teams elsewhere, but you know, I'm 721 00:43:01,040 --> 00:43:05,480 Speaker 1: I'm already invested in Washington Capital's paraphernalia. Um, so I'll 722 00:43:05,520 --> 00:43:08,080 Speaker 1: go with it, Okay, Abbe Joseph Cohen, thank you so 723 00:43:08,160 --> 00:43:12,600 Speaker 1: much New Jersey Devil's Abbe Joseph Cohen's Washington Capitals. Tonight, 724 00:43:12,680 --> 00:43:17,960 Speaker 1: we thank Abbe Joseph Cohen of Goldman, Sex. Thanks for 725 00:43:18,040 --> 00:43:22,440 Speaker 1: listening to the Bloomberg Surveillance Podcast. Subscribe and listen to 726 00:43:22,600 --> 00:43:28,360 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 727 00:43:28,880 --> 00:43:32,239 Speaker 1: I'm on Twitter at Tom Keane before the podcast. You 728 00:43:32,280 --> 00:43:35,680 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio