Speaker 1: Who you put your trust in matters. Investors have put
Speaker 1: their trust in independent registered investment advisors to the tune
Speaker 1: of four trillion dollars. Why learn more and find your
Speaker 1: independent advisor dot com. Yeah, Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best in economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and
Speaker 1: of course on the Bloomberg. Um, we're gonna speak with
Speaker 1: the Nobel Prize winner we begin this hour. We're speaking
Speaker 1: to someone who um is a Nobel Prize winner in football.
Speaker 1: When the NC State Wolfpack do it to Trade Dome,
Speaker 1: that gets your attention. One Dennis Gartman joins us. He's
Speaker 1: footballed out with his NC State. Mr Gartman, good morning,
Speaker 1: Good morning, And we did indeed beat not tre Dome
Speaker 1: and we are two and now against the Golden Domers.
Speaker 1: And then let's let's hear it for the wolf Pack
Speaker 1: and it's four and one. Is this a better than
Speaker 1: good season or you know it's like easy games that
Speaker 1: you're gonna get crushed later on? Which is it's been
Speaker 1: easy games, and we're gonna get crushed later. We have
Speaker 1: we will and Clemson coming, so it's it's not pretty.
Speaker 1: So we're we're happy to be four and one, but
Speaker 1: logically we're at three. One of those one of those years, Dennis,
Speaker 1: speaking of crushed, Let's talk about trading in a range
Speaker 1: bound market. It is a contact sport, isn't it. Yeah,
Speaker 1: it really is. I mean, it's interesting whether one talks
Speaker 1: about the the the S and P, the NASDAC, whether
Speaker 1: one talks about the Russell, or whether one talks about
Speaker 1: the Dow Jones International Index itself. We have been in
Speaker 1: a trade range for the past months and one half.
Speaker 1: It looks like it breaks up to the upside, the
Speaker 1: next day it break it moves lower, and then one
Speaker 1: day it looks like it's breaking to the downside, and
Speaker 1: the next day it moves higher. You get stopped into
Speaker 1: long positions and taken out, You get stopped into short
Speaker 1: positions and taken out, and at the end of two
Speaker 1: weeks you've gone nowhere, and you've been stopped in and
Speaker 1: out four or five times. It's one of those periods
Speaker 1: that make it very difficult to be any kind of
Speaker 1: an investor or. A trader. This UH, This U n C.
Speaker 1: Tar Heel is looking forward to the day after Thanksgiving
Speaker 1: when my heels take on the wolf pack, but will
Speaker 1: leave it. It was it was very politely mute during
Speaker 1: that top of the UH. Dennis, let me ask you
Speaker 1: about oil. We have had all of this news out
Speaker 1: of oil as this congress is underway in Istanbul. It
Speaker 1: seems like there was there were signs here that that
Speaker 1: agreement in principle was going to become a real agreement.
Speaker 1: And then you have the CEO of Russia's biggest oil
Speaker 1: company saying he doesn't intend to cut production. So here
Speaker 1: we are a few weeks away from, yes, the the
Speaker 1: tar Heels versus wolf Pack game. But all so that
Speaker 1: meeting in Vienna, what are the odds here that that
Speaker 1: something goes on to scuttlet before then? I think there's
Speaker 1: a lot that to say for the this agreement to
Speaker 1: be scuttled, And I think that not enough importance is
Speaker 1: being put on Mr Secheon's comments this morning. Secon is
Speaker 1: a fellow that most Americans, I would say one in
Speaker 1: a thousand Americans know who he is. But born sechion
Speaker 1: Is is the head of ross Neft. He is a
Speaker 1: former KGB agent, has been a very close friend of
Speaker 1: Mr Putin's, and as I've always said, once KGB, always KGB.
Speaker 1: This is a very savvy but I think the disturbing gentleman.
Speaker 1: And when Mr Secheon said that he has no intention,
Speaker 1: why should he of cutting production? If Russia's largest producer
Speaker 1: of crude oil has no intention of cutting production, no
Speaker 1: one else shell either. I think that it's always been
Speaker 1: a tenuous idea to think that OPEC could put forth
Speaker 1: and agree upon and then follow through on an agreement
Speaker 1: to curtail production. Sechion has simply put a top to it.
Speaker 1: Given that closeness between him and Vladimir Putin, professional closeness,
Speaker 1: how do you explain the dissonance there between what he
Speaker 1: said today and what Vladimir Putin said in his stumblom
Speaker 1: yesterday saying that that he saw a freeze as as
Speaker 1: the only way forward here. It's been interesting because until
Speaker 1: about a year ago, what Suction said, Putin said, and
Speaker 1: what Putin said Section said, But for all of a
Speaker 1: sudden in the course of the past year, it's as
Speaker 1: if they have become demonstrably less friendly. Now one has
Speaker 1: to be a reader of Russian tea leaves to be
Speaker 1: certain that that's true. But no longer can one say
Speaker 1: that as goes such and so so goes Putin. There
Speaker 1: has been a seeming divorce between the two. Maybe I'm wrong,
Speaker 1: but that's what I have read, or that's what I
Speaker 1: read in the comments of following both these gentlemen over
Speaker 1: the course of the past year. So I think there
Speaker 1: is some sort of dichotomy, some sort of divorce that
Speaker 1: has occurred. And I put the credence in what suchtion
Speaker 1: has said. He has no intention as the president of
Speaker 1: ross Enuf to curtail production. Dennis, let me get the
Speaker 1: two trays. We'll come back and talk about gold. You've
Speaker 1: gone long corn. Corn has been ugly, ugly, ugly. I'm
Speaker 1: looking at the chart right now. Give me the y.
Speaker 1: How do you go stochastic on corn? You don't have
Speaker 1: a trend. It's ben down, it's been flat since July.
Speaker 1: How can you go long corn? What do you see if?
Speaker 1: If for no other reason, corn refuses or has at
Speaker 1: least not made a new low in the course of
Speaker 1: the past month and a half. Yes, the chart. If
Speaker 1: you put the chart on the wall, walk twenty five
Speaker 1: ft away from it and were asked what is that doing,
Speaker 1: you would say, my word, it's moving O my word,
Speaker 1: my strategy. Yeah, it's from the upper left to the
Speaker 1: lower right. But it has failed to go to new
Speaker 1: lows even as the size of the crop has gotten
Speaker 1: egregiously large. I mean, this is a record crop. Whether
Speaker 1: it's fifteen point one or fifteen point two or fifteen
Speaker 1: point three billion books. Everybody everywhere knows that fact, and
Speaker 1: I have to think that that's fairly well discounted in
Speaker 1: the market. Is that a structural record crop or is
Speaker 1: it a one off? That's a critical question. I think
Speaker 1: West listeners, well, I think it's a a structural record
Speaker 1: crop every year, every year year, except for except for that,
Speaker 1: you know, except for usually after outs. One of the
Speaker 1: things that you can count upon is that we are
Speaker 1: going to produce more and more corn, more and more soybeans,
Speaker 1: more and more cotton, more and more wheat on less acreage.
Speaker 1: We just are very good at what we do. Our
Speaker 1: con farmers are extraordinary. So yeah, I think it is structural.
Speaker 1: The Dennis Gartment, you're where I am, which is yeah,
Speaker 1: Sterling's down, folks. It's brutal. It's what on a curve
Speaker 1: basis is called log quadratic brutal electric says, and nobody's
Speaker 1: paying attention to Euro one tense seventy eight. Are you
Speaker 1: there yet, um Dennis, where you can short euro? And
Speaker 1: is it a short through parody? Oh? I think it's
Speaker 1: a short towards parody. As I said in my news
Speaker 1: letter this morning, we've broken through one eleven fifty, we've
Speaker 1: broken through one eleven. Now we're about to break through one.
Speaker 1: And as I said, under one O nine fifty there
Speaker 1: be monsters, as they used to say on the old
Speaker 1: Mariners maps, under one nine then that is critical. That
Speaker 1: leads to dollar strength. Is it at a dollar strength
Speaker 1: that impinges the American corporate system? It makes it we
Speaker 1: are going to continue to see a dollar strength. I
Speaker 1: don't think there's any question about that fact. And it
Speaker 1: does make it difficult, especially if you want to be
Speaker 1: bullish of corn, which I want to be to allow
Speaker 1: for exports of American agriculture. I mean, that does make
Speaker 1: the game that much more difficult. It also makes us
Speaker 1: that much more we we become more competitive because the
Speaker 1: dollar is getting stronger and it's likely to continue to
Speaker 1: get stronger. Can can the euro trade the parity, Well,
Speaker 1: I think it's over the course of the next year
Speaker 1: or two. I think that's a given the political circumstances,
Speaker 1: of the economic circumstances, the technical circumstances of the psychology
Speaker 1: mandate a stronger dollar a much weaker euro, And if
Speaker 1: you have to pick on one currency, I think that's
Speaker 1: the one to continue to pick on. Real quick, here
Speaker 1: you were talking fifteen point three billion bushels of corn.
Speaker 1: Where's that corn going? To have this conversation about about exports?
Speaker 1: Where where farmers sending that corn to? Uh tigs, cattle, livestock.
Speaker 1: Of course, ethanol, which I'm not, I've never been and
Speaker 1: never shall be a great proponent of ethanol, but it's
Speaker 1: bill in ethanol production and it goes into exports trade.
Speaker 1: I mean is that we are now at a point
Speaker 1: where the supply of of corn is not that is
Speaker 1: not the determining factor. It's the demand for corn which
Speaker 1: will be the determining factor. And the problem shall be
Speaker 1: A strong dollar makes the exports, of course, that much
Speaker 1: more difficult. One thing Dennis Gartment and I have talked about,
Speaker 1: folks and speaking engagements we've done is what I call
Speaker 1: position sizing. Actually Van Thorpe callset position sizing. I call
Speaker 1: it the how much idnus. Mr Gartman recently learned about
Speaker 1: the how much idness of being in gold. I know
Speaker 1: that Tom is very eager to ask about gold. That
Speaker 1: just indulge me a second before before we get to that.
Speaker 1: I wanted to ask you about the Sterling flash crash
Speaker 1: that we saw last week, and you said it's taking
Speaker 1: up far more of our time than we think it merits.
Speaker 1: But indulge me a bit here. And if you peg
Speaker 1: this to sort of temporal liquidity, are you worried it
Speaker 1: could happen again? I mean this this is something that
Speaker 1: would be recurring. Then well, I'm woray that can happen
Speaker 1: in the bond market. I'm woray that can happen in
Speaker 1: in the grain markets. I'm worried it can happen again
Speaker 1: in the equities markets. We have the markets seem not
Speaker 1: to be nearly as liquid as they used to be.
Speaker 1: Graham Dot I think has had a great impact taking
Speaker 1: any large number of banks out of the markets that
Speaker 1: used to be able to make markets on both sides.
Speaker 1: I fear flash crash is happening on a rather consistent
Speaker 1: basis in any number of commodities, uh, in any number
Speaker 1: of markets. So I was not surprised that it happened.
Speaker 1: I was surprised it happened in the forex market, however,
Speaker 1: where there usually is greater liquidity than any place. Out
Speaker 1: Come on, you're the next or ocean made a fortune?
Speaker 1: And now Dennis Gartman on the one way bet or
Speaker 1: the one trick bet. Dennis, You're in gold? And boy,
Speaker 1: who has it been an ugly number of weeks? How
Speaker 1: did you know? First of all, you know what's your
Speaker 1: biggest percentage exposure at any time? Uh? And I probably
Speaker 1: am there in gold and should not have been no question.
Speaker 1: How does one respond well after one stops throwing up? Uh? Well,
Speaker 1: one one gets smaller. One hasn't any choice. Thankfully, at
Speaker 1: least I was not long of gold solely in US
Speaker 1: dollar terms. In fact, I don't own any golden dollar terms,
Speaker 1: at least somewhat. The the loss was mitigated by the
Speaker 1: fact that I own golden euro terms, which is down
Speaker 1: the down, demonstrating less than golden dollars. Let's let's be honest,
Speaker 1: but was it Has it been fun? It was fun
Speaker 1: early in the year. Has it been fun in the
Speaker 1: past within a half. Oh lord, No. If it's range
Speaker 1: bound and you go down two point one or two
Speaker 1: point two standard deviations, do you rationalize regression to the mean?
Speaker 1: Do you go to cash? How do you reframe it
Speaker 1: down to standard deviations? You get smaller, you reduce the
Speaker 1: size of your trade. You have no choice. That's what
Speaker 1: pros do. That's how you have to respond. You may
Speaker 1: you may come back and and own it again later,
Speaker 1: But the first thing that one does is one gets smaller.
Speaker 1: And that's exactly what I did. I got smaller. Do
Speaker 1: I wish that I had gotten smaller before we had
Speaker 1: the the collapse in gold prices in dollar terms two
Speaker 1: weeks ago? Of course I do. Have I increased my
Speaker 1: position since then? No? I have not. I am I
Speaker 1: interested again? Yes, because suddenly golden in euro terms, I
Speaker 1: see the euro getting weaker and gold in the course
Speaker 1: of the past forty eight hours has begun to show
Speaker 1: signs of strength. But is my confidence level high enough
Speaker 1: to say let's go back and do it again? No?
Speaker 1: Not yet. So where do we go from here? We
Speaker 1: we broke that twelve fifty barrier, if fleetingly on on Friday,
Speaker 1: when you're looking at gold, what's what's your path forward
Speaker 1: in order for its turn for the better. And in gold,
Speaker 1: I think has become solely a technical circumstance, not a
Speaker 1: fundamental circumstance, because let's be honest, in dollar terms, it's
Speaker 1: still up for the year rather markedly. In Euro terms
Speaker 1: it's up for the year very markedly. But I need
Speaker 1: to see gold trading above twelve seventy to say that
Speaker 1: that the low has been seen. The fact that we
Speaker 1: broke under twelve fifty and saw no real new selling,
Speaker 1: uh there. And I think most of the selling that
Speaker 1: occurred a week and a half ago or two weeks
Speaker 1: ago was predicated on one, maybe two large funds being
Speaker 1: taken out by their own margin clerks. If we get
Speaker 1: about twelve seventy, I think you've started. I think you
Speaker 1: will have been able to say twelve forty eight was
Speaker 1: the low. Time shall tell. But this is this goes
Speaker 1: also separately to the idea of trying to be informed
Speaker 1: and in place in the markets. But you're in a range,
Speaker 1: is you know range dissipates capital? How does Dallas gartment
Speaker 1: adjust when it's an obvious dollar range, oil range, gold range.
Speaker 1: You get smaller, you get smaller, you get smaller and
Speaker 1: you get smaller. There's really I wish there were some
Speaker 1: secret that that I I could grant and say this
Speaker 1: is how one does it. But I think the only
Speaker 1: thing one knows how to do is get smaller and weight.
Speaker 1: That's that's what one does. And I can't emphasize enough
Speaker 1: folks of reading the literature on trend based mathematics dynamics
Speaker 1: to know what to do in critically, to know what
Speaker 1: not to do. That is half the battle. Dennis Gartman
Speaker 1: has always thank you so much, love having you on.
Speaker 1: I will remind people that, unlike most in the game,
Speaker 1: Mr Gartman on a daily basis puts the gold in
Speaker 1: the gore of his trades in the back of his newsletter.
Speaker 1: That's our point. A very few people do that. Dennis
Speaker 1: Gartment Gartman UH letter joining us and there's like eight
Speaker 1: ways to go here, including the Nobel Prize on contracts.
Speaker 1: Man holds them to join us. In the next hour
Speaker 1: from the Massachusetts Institute, Technology Professor Stephen Ratner joins us
Speaker 1: and will it uh advisors and professor, I've got to go.
Speaker 1: Your cards are and even your most largest critics would
Speaker 1: like you to be. Debates are or politicals are with
Speaker 1: your broad reaching skills. I'm trying to make it up
Speaker 1: as we go. What would you do to our broken
Speaker 1: political process? Do we just get beyond the first Tuesday
Speaker 1: of November? I think we at this point, certainly for
Speaker 1: this cycle, we get past the first Tuesday in November.
Speaker 1: There's uh, whatever momentary thoughts people might have had that
Speaker 1: there would be a different Republican nominee are certainly by
Speaker 1: the boards. Mr Trump is going to finish this race.
Speaker 1: Hillary Clinton is going to finish this race. Presumably Hillary
Speaker 1: Clinton is going to win. That's what all the polls
Speaker 1: seemed to say. And the Republican Party will have a
Speaker 1: lot of soul searching to do with within this is
Speaker 1: we just mentioned with the nf I report, the angst
Speaker 1: over a type of economy. Did you hear any policy
Speaker 1: and debate uno or debate dose about economic policy and
Speaker 1: placing the nation on a better track or vector? Shockingly
Speaker 1: little this has been. This has been like like a
Speaker 1: smoke free zone. This has been a policy free zone
Speaker 1: this campaign. There were two questions really in the in
Speaker 1: the second debate that we're pretty directly on policy and
Speaker 1: then a few others have touched on it. One was
Speaker 1: of course, about Obamba Acare and the debate they in,
Speaker 1: the discussion they had about whether to keep it uh
Speaker 1: and and and the second one was about taxes and
Speaker 1: what to do about taxes and the difference between their
Speaker 1: two approaches. And then there was some happy talk about
Speaker 1: how we have to get the country moving again. And
Speaker 1: Trump would talk about unleashing regulation and and and letting
Speaker 1: the free enterprise system work. Hillary Clinton will talk about
Speaker 1: programs to help those left behind and retrain them, to
Speaker 1: get them back in the workforce, to invest in infrastructures.
Speaker 1: A little bit of that around the edges. But for
Speaker 1: somebody as who's a policy guy as opposed to a
Speaker 1: polite local guy, these debates are are are not are
Speaker 1: not very satisfying. It was back in made that you wrote,
Speaker 1: I'll bet there's plenty to learn about Donald Trump's taxes.
Speaker 1: Since then, the New York Times obtained the first three
Speaker 1: pages of his return that came up at the debate.
Speaker 1: He commented on it, what have what have we learned since?
Speaker 1: And in that broader conversation about taxation where it might
Speaker 1: head under a president Trump for President Clinton, where do
Speaker 1: we stand? I think Trump has done a pretty good
Speaker 1: job I have to give him credit of of having
Speaker 1: a line of response on his tax returns, which is
Speaker 1: to simply say, of course, I used all my DIDI wouldn't,
Speaker 1: don't you. Does anybody in this room not use their deductions?
Speaker 1: I do. Then he goes on to say, but I'm
Speaker 1: so therefore I'm the only one who can fix it.
Speaker 1: But if you look at Trump's tax plan, it would
Speaker 1: not fix it. It would make it worse. He's proposing
Speaker 1: a five point a trillion dollar tax cut over ten years,
Speaker 1: which would vastly disproportionately go to the wealthy, including potentially,
Speaker 1: though they haven't really clarified it, giving the so called
Speaker 1: passed through the LLCs that many businessmen hedge funds, everybody
Speaker 1: operates through tax rate, and so, in fact, you make
Speaker 1: it worse. Now, what's interesting about the two candidates is
Speaker 1: that neither of them has actually proposed tax reform. Hillary
Speaker 1: Clinton has proposed raising taxes on the wealthiest to pay
Speaker 1: for her programs. Donald Trump has proposed this massive tax cut,
Speaker 1: but nobody's actually talking. With some small exceptions, Hillary Clinton's
Speaker 1: for the Buffett rule. They both want to get rid
Speaker 1: of the carried interests for private equity, which is kind
Speaker 1: of a small dollar amount, but in terms of fun
Speaker 1: the kind of in terms of fundamental reform to prevent
Speaker 1: people like Donald Trump from doing what they did, nobody's
Speaker 1: talking about it. Could I say that maybe giving them
Speaker 1: benefits doubt here that's because they have some awareness of
Speaker 1: the fact that Congress has not been working in concert
Speaker 1: with the administration for for some time. Here, I wanted
Speaker 1: looking ahead to to whomever is elected president, what's going
Speaker 1: to make that relationship between the White House and Congress
Speaker 1: measurably better? That is the absolutely most important question. Everybody
Speaker 1: is focused on this election, and not very many people
Speaker 1: are focused on what's going to happen after the election,
Speaker 1: which is at someone going to have to try to govern,
Speaker 1: and you're almost certainly going to have divided government regardless
Speaker 1: of which one wins. You're nobody's going to have sixty
Speaker 1: votes in the Senate, which means that filibusters can occur.
Speaker 1: Paul Ryan is still going to have his hard heart
Speaker 1: right caucus that won't pass anything. Uh, And it's going
Speaker 1: to be really, really tough for who's ever president. And
Speaker 1: that's the most scary part of this. How did you
Speaker 1: respond when Secretary Clinton cited Spielberg and Lincoln in uh,
Speaker 1: the the Amazing Congress at that time. I'm sure you
Speaker 1: saw what I saw the movie. And what she what
Speaker 1: she didn't say, is that the way that Lincoln got
Speaker 1: that amendment passed was by doing stuff that today is illegal.
Speaker 1: You cannot appoint your brother in law, whoever it was
Speaker 1: the friend of the brother in law, to be postmaster
Speaker 1: general in Ohio. You just can't. You can't hire two
Speaker 1: bag men from all mony to go around with bags
Speaker 1: of cash to persuade people who results. But but, but
Speaker 1: the important point here is there are many people who
Speaker 1: feel that changes in the procedure up there that were
Speaker 1: meant to cleanse it, like getting rid of your marks,
Speaker 1: actually may have made the problem worse because now the
Speaker 1: leadership has no way to reward people who actually do
Speaker 1: what they want them to do. And this is actually
Speaker 1: contributed to the gridlock. So what what Hillary Clinton was
Speaker 1: saying was interesting, But there's no way to go and
Speaker 1: be linked anymore. It doesn't work. Stephen Ratner with us
Speaker 1: with willowed advisors, as we look at any number of
Speaker 1: linkages here, Stephen, within the equity market, you've always made
Speaker 1: clear you want to find good companies and hold them
Speaker 1: if they're working with a new terminal value that's lower,
Speaker 1: if they're working with lower nominal GDP, if they're working
Speaker 1: with lower revenue growth. Is there loads of room to
Speaker 1: go down the income statement and cut costs to get
Speaker 1: to better margins even in a low single digit world.
Speaker 1: I'm not sure that there is. As you know, corporate
Speaker 1: profit margins peaked a year or two ago and then
Speaker 1: i've been coming down, obviously heavily driven by energy, but
Speaker 1: other sectors as well. And if you look at corporate
Speaker 1: profits as a share of GDP, if you look at
Speaker 1: corporate profit margins, none of it's suggests that there's a
Speaker 1: lot of room, a lot of room at this point.
Speaker 1: And so we think, we think our view has been
Speaker 1: and we've we've acted on this, that the equity markets
Speaker 1: are very fully valued, that what is mostly propelling the
Speaker 1: US equity market anyway has been lower interest rates. As
Speaker 1: and when that reverses itself, we think that the US
Speaker 1: equity markets are going to be challenged, and so we
Speaker 1: have been actually reducing our exposure to US equity markets.
Speaker 1: You mentioned energy, and we've had a whirl of interest
Speaker 1: here in a production freeze over the last couple of
Speaker 1: weeks from OPEC participants and and and talk that that
Speaker 1: might be formalized at the meeting in Vienna at the
Speaker 1: end of of November. What effect is that going to
Speaker 1: have on equities do you think here in the next
Speaker 1: couple quarters. Well, you can see already obviously in the
Speaker 1: in the energy markets that the price of crewed has
Speaker 1: now gone up above fifty uh I think for the
Speaker 1: first time at least certainly for the most sustained time
Speaker 1: since since the whole collapse and in prices, and it
Speaker 1: hasn't really had any delaterious effects so far on the
Speaker 1: equity markets. I think what would hurt the equity markets
Speaker 1: would be if it appeared that there was some dramatic
Speaker 1: escalation energy prices. But you still do have a supply
Speaker 1: demand imbalance in favor of supply in terms of what's
Speaker 1: being produced every day. Maybe they'll succeed in cutting that,
Speaker 1: but after that you have huge inventories and and those
Speaker 1: have to be worked down before they can really be
Speaker 1: a major impact on price. We're talking with Katherine Man
Speaker 1: of the o E c D about economic participation, the
Speaker 1: degree to which people in the global economy feel left
Speaker 1: out by what gains we have seen. Let me try
Speaker 1: to devetail this with with politics a little bit. A
Speaker 1: few weeks back, there was polling indicating that Donald Trump
Speaker 1: was doing well with voters in places like Ohio, Pennsylvania. Uh,
Speaker 1: I wonder what you make of that in your experience
Speaker 1: with the auto industry. These are places where that continues
Speaker 1: to play a large role. What more could Hillary Clinton,
Speaker 1: your candidate, due to to speak to those voters. Why
Speaker 1: has she been able to reach them? Why has Donald
Speaker 1: Trump been able to get those voters on the matter
Speaker 1: of participation highlighting the fact that there's been some exclusion here. Look,
Speaker 1: one of the one of the most shocking things to
Speaker 1: me from my experience in autos was to find out
Speaker 1: what was going on in Ohio, what was going in Michigan,
Speaker 1: what was going on in Indiana, What was going on
Speaker 1: in these states with these workers, and what's happened to
Speaker 1: their standard of living, What's happened to their real incomes
Speaker 1: as as auto companies have closed or moved jobs out
Speaker 1: of the country and so forth, and so the effect
Speaker 1: is real. And the question for these auto workers and
Speaker 1: former auto workers are for all the people down there
Speaker 1: who are suffering, is which which candidate do you think
Speaker 1: is most equipped to help you. Do you think closing
Speaker 1: the borders, putting thirty five percent tariffs on imports and
Speaker 1: so on and so forth is the way to solve
Speaker 1: the problem or do or do you think we simply
Speaker 1: need to invest in the economy, invest in infrastructure, retrain
Speaker 1: these workers, and get the country moving again. That's the
Speaker 1: choice that's in front of the American people right the second, Steve,
Speaker 1: I know you like to paint, and you know you've
Speaker 1: painted your apartment like fourteen times. Um, if you want
Speaker 1: to watch paint dry, go to the I I F meetings,
Speaker 1: at the I M F meetings. Is that enough alphabetical soup?
Speaker 1: But as you know, Steve, all the bankers get together
Speaker 1: in wax philosophical that happened this weekend. Mr Diamond and
Speaker 1: Mr Gorman, among others, said, Okay, London's challenged. The assumption
Speaker 1: is we moved to continental Europe or we moved to Dublin.
Speaker 1: Wait a minute, we Jason may move back to New York.
Speaker 1: Kid New York compete for London's business against Frankfurt and
Speaker 1: other Paris and other European destinations. Look, I think there's
Speaker 1: a couple of questions here. The first, I'm not convinced
Speaker 1: they're leaving Britain self fast agree full disclosure. Okay, so
Speaker 1: there we are. This is yet yet unresolved. Secondly, I'm
Speaker 1: not an export on the so called passporting and where
Speaker 1: these banks can operate from. But I would not have
Speaker 1: guessed that they could operate from New York for the
Speaker 1: same reason they won't be able to operate from Britain
Speaker 1: if they don't pertain that passport part of the basic
Speaker 1: idea of future growth. Okay, but if you passporting is
Speaker 1: not a problem, then why would they leave the UK
Speaker 1: in the first place. I I don't disagree, but I
Speaker 1: just thought it was an idea of saying New York
Speaker 1: can compete within the the philosophical capitalism of Europe, I
Speaker 1: would say. I would say as a former banker, it
Speaker 1: is hard, and it's not hard necessary because of philosophical issues.
Speaker 1: It's hard because it is a It is a basic
Speaker 1: rule of banking and my experience that the closer you
Speaker 1: are to the client physically, even in the modern world
Speaker 1: of technology, the better the better job you can do.
Speaker 1: Retaining can you do a better job in Helsinki from London?
Speaker 1: Or from US. I don't I'm just Amsterdam or Brussels
Speaker 1: or someplace that has good train service all over the
Speaker 1: rest of Europe. I don't know where they're going. I
Speaker 1: don't think they know where they're going. Well, come out this.
Speaker 1: The train service New York City can't compete. It's a
Speaker 1: long way across the Atlantic in the train. David, ing
Speaker 1: back to what we heard from from the O E
Speaker 1: c D. The fact that the fallout from that breakit
Speaker 1: vote has not been as great as man you head
Speaker 1: for fear, Let's talk about the psychological followed from what
Speaker 1: it says about the notion of globalization going forward to
Speaker 1: fallout on the pound has been pretty signature. Um, look
Speaker 1: the Brexit vote and what got people scared here until
Speaker 1: Donald Trump began his self immolation campaign. What scared people
Speaker 1: here is there clearly is whether it's in Columbia, South America,
Speaker 1: or in Britain, or in the US, or or in
Speaker 1: France where you have ms Lapen you know, doing very
Speaker 1: well on from the left, there is an undercurrent of
Speaker 1: people who are being left behind in the in the
Speaker 1: in the course of globalization. That's a fact. You can't
Speaker 1: you can't get around that. And so the question is,
Speaker 1: are are saying people are going to offer a better
Speaker 1: alternative to avoid having people who are less stable implementing
Speaker 1: solutions that are almost certainly going to be disastrous. Stephen
Speaker 1: thanks always always been Have you here? Who you put
Speaker 1: your trust in? Matters. Investors have put their trust in
Speaker 1: independent registered investment advisors to the tune of four trillion dollars.
Speaker 1: Why they see their role is to serve, not sell.
Speaker 1: That's why Charles Schwab is committed to the success of
Speaker 1: over seven thousand independent financial advisors who passionately dedicate themselves
Speaker 1: to helping people achieve their financial goals. Learn more and
Speaker 1: find your independent advisor dot com. It is not often, Tom,
Speaker 1: you talk to a chief investment strategist who is a
Speaker 1: classics major Magicum law of graduate of Princeton University. We're
Speaker 1: talking about Scott Clemens, chief investment strategist Crivate Wealth Management,
Speaker 1: Brown Brothers Harivan Eager to talk about that biographical trajectory
Speaker 1: if we can, Scott, but let me start with with
Speaker 1: the foot see one hundred today, reaching an intra day record. That's,
Speaker 1: of course, on concerns about the government's approach to to Brexit.
Speaker 1: What we've seen in the pound as well, a sign
Speaker 1: of more to come. Do you think I think it is.
Speaker 1: It reminds us that Brexit is a process, not an event,
Speaker 1: and it's a process that's going to unfold in very
Speaker 1: unpredictable ways for the next couple of years. You know,
Speaker 1: the background Britain is not yet triggered Article fifty, which
Speaker 1: starts the two year clock to negotiate what Brexit actually means.
Speaker 1: As that happens, it's going to create more disruption along
Speaker 1: the way. I think, you know, I think I think
Speaker 1: about the conversation surrounding the Brexit referendum. It was about immigration,
Speaker 1: certainly was about the economy and regulation. As you begin
Speaker 1: to see these market focuses, market factories in play here,
Speaker 1: I wonder how that has shifted the conversation as you've
Speaker 1: as you've observed it in the UK, seeing the kind
Speaker 1: of reaction we've seen in the pound recently, well, it's
Speaker 1: certainly it raises the prospect of disruption. The uncertainty alone
Speaker 1: raises the prospect of disruption and reminds us once again
Speaker 1: that that risk as investors, as our stock and trade
Speaker 1: no pun intended, it's our bread and but a risk
Speaker 1: is analyzable. Risk is something that we can measure and
Speaker 1: deal with. Uncertainty is a different creature and because there's
Speaker 1: no precedent for what Britain has embarked upon, that uncertainty
Speaker 1: alone is going to create a lot of disruption. Having
Speaker 1: said that, for a disciplined investor, particularly a value driven investor,
Speaker 1: disruption creates opportunity. UH, it's certainly something we're watching for
Speaker 1: in in UH in the UK markets. We haven't acted
Speaker 1: on it yet again because I think this process has
Speaker 1: got a while to play out, but I think it
Speaker 1: will create some opportunities. There will be winners, there will
Speaker 1: be losers, and valuations will give us the opportunity to
Speaker 1: take advantage of that. Where are you on international investment
Speaker 1: right now, whether it's blue chip investment or something more
Speaker 1: obscure and e M like it's been a debate on
Speaker 1: surveillance about the the amount in the further amount that
Speaker 1: should be put into international Where are you on that
Speaker 1: scot You know, Tom, we've we've there aren't any low
Speaker 1: hanging fruit opportunities and equity markets worldwide. Where we are
Speaker 1: finding them is in select emerging markets. And you guys
Speaker 1: know this. Emerging markets is the broadest of all possible
Speaker 1: brushes to paint with. It's a paintbrush we should have
Speaker 1: put down because those markets could not be more different.
Speaker 1: But where we are finding opportunities selectively in emerging markets
Speaker 1: rallocating capital there for the time being, the single largest
Speaker 1: equity exposure we have remains the US market for reasons
Speaker 1: related not only uh to to currency, but related to
Speaker 1: just the opportunity set on offers. You mentioned your holding,
Speaker 1: you're holding fire in the UK until something happens. Is
Speaker 1: that when Article fifty is triggered? What what's the what's
Speaker 1: the point at which you're going to be comfortable making
Speaker 1: a move there in the UK and maybe a bigger
Speaker 1: move in Europe well, So, to be precise, we have
Speaker 1: some exposure to the UK and Europe already. What we
Speaker 1: would like to see in order to raise that exposure
Speaker 1: is disruption that comes from possibly a misstep in in
Speaker 1: in government decisions or something that hits the pound even
Speaker 1: for of than it's already been hit. I'm not entirely
Speaker 1: sure what that would look like, but it would express itself.
Speaker 1: We're very much fundamental bottom up investors who would expressed
Speaker 1: itself in a broader set of companies trading in a
Speaker 1: discount what we believe to be the fundamental value of
Speaker 1: the intrinsic value of the business. So it's really more
Speaker 1: of a bottom up indicator that we are anticipating than
Speaker 1: it is some macro effect that's going to show up
Speaker 1: on the calendar. You've got a great chart in your research,
Speaker 1: and folks, I can't say enough about the density of
Speaker 1: the research from Brown Brothers Harriman. We protect their copyright,
Speaker 1: don't email us for it. But with that said, the
Speaker 1: chart is extraordinary. How this is not the nifty fifties,
Speaker 1: We're almost beyond that. Some people say, no, it's not
Speaker 1: the valuations we saw. Then you've got equity pe ratios
Speaker 1: just after World War two. Two now wanted to standard
Speaker 1: deviations and we're basically there, Scott, aren't we? Yeah, Thomas,
Speaker 1: things that you can do a one one, even if
Speaker 1: it's radio um. The two things that worry me about
Speaker 1: the market right now is the combination of sluggish earnings
Speaker 1: growth and lofty valuations. The valuation concern is mitigated somewhat
Speaker 1: by low inflation and low interest rates, but I think
Speaker 1: the low interest rates are somewhat artificially driven by Fed policy,
Speaker 1: and I'm not sure I trust the low inflation numbers either.
Speaker 1: So from a top down perspective, it concerns us. The
Speaker 1: bottom up perspective, I think one of the graphs you're
Speaker 1: referring to points to the narrow leadership of the market,
Speaker 1: which indicates that there are a wide variety of companies
Speaker 1: that are not trading at lofty valuations that do have
Speaker 1: earnings growth. I think this is that cliche stock pickers market.
Speaker 1: Uh and uh. It's uncomfortable, to be sure, and the
Speaker 1: opportunities are not a stick on the ground as they
Speaker 1: were three, five and seven years ago, but they're still there. Scott,
Speaker 1: I want to crowbar out of you one really important topic.
Speaker 1: You're married to a music teacher, and how do you
Speaker 1: get how do you need kids to do the instrument?
Speaker 1: What's the what's the secret sauce of getting offspring to
Speaker 1: actually do the given instrument? You have to model it
Speaker 1: for them. They have to see you play in practice
Speaker 1: and struggle and succeed and enjoy, and that will be
Speaker 1: infectious and they'll get it to Scott clements with us
Speaker 1: with Brown Brothers Harriman who writes just a terrific, terrific
Speaker 1: thoughtful equity piece across all market. Scott, help me with
Speaker 1: the banks and the presumed cash flow. When we talk
Speaker 1: to the cullth side, whatever their nuances of this bank
Speaker 1: or that bank, there's a general idea that the cash
Speaker 1: flows spigot opens X months out after penalties, etcetera, etcetera,
Speaker 1: and it is a nirvana for banking. Do you agree? Uh, well,
Speaker 1: that's that's a subtle question. But if I had to
Speaker 1: answer in a binary way, I would say no. I
Speaker 1: think the banks and again we'll be picking up a
Speaker 1: broad brush to paint with. The banks are still struggling
Speaker 1: to figure out what regulatory environment they're operating and we're
Speaker 1: not going back to the pre two thousand and eight
Speaker 1: type environment. That's still a process that's unfolding. And um,
Speaker 1: I think it's still unfolding. So I don't think it's
Speaker 1: as easy as just now that the penalties are done,
Speaker 1: the cash flow is back on. So it's it's an
Speaker 1: area where they're selective opportunities, but nothing, nothing wholesale that
Speaker 1: we see as terms the tide coming in. David, you
Speaker 1: understand that Mr Clemens didn't understand. It's binary Tuesday here.
Speaker 1: That's what we do on Tuesday zero and was very
Speaker 1: let me ask you here, didn't get that memo. Here
Speaker 1: we are, you know, at the beginning of of the
Speaker 1: courtly artic season, and in your most recent note you
Speaker 1: said the ultimate fuel for equity markets as corporate profits,
Speaker 1: and the fuel is running low. Give us your outlook
Speaker 1: here for these next few weeks. As these earnings reports
Speaker 1: start to roll in, well, I think we're going to
Speaker 1: get yet another quarter of year over year declines UH
Speaker 1: in earnings, which by by our numbers, will be the
Speaker 1: sixth quarter in a row, which is unprecedented in the
Speaker 1: absence of an economic downturn. There are reasons why we're
Speaker 1: late in economic cycle. Corporations have exhausted the easy cost
Speaker 1: cutting exercises. It's very difficult to grow your unit volumes
Speaker 1: when the economy is modestly expanding. It's very difficult to
Speaker 1: increase your prices when there's not a whole lot of
Speaker 1: inflationary environment. So the the the next boost to earnings growth,
Speaker 1: in my opinion, comes from the top line from corporate revenues.
Speaker 1: And that's why I think the linkage to UH to
Speaker 1: an economic variable is really important. Wage growth is probably
Speaker 1: the single most important economic variable to watch over the
Speaker 1: next twelve to eighteen months, I think you'll start to increase.
Speaker 1: And one of the big conundra of this economic cycle
Speaker 1: is as and as unemployment has fallen down to four
Speaker 1: point nine, as we're adding jobs a pretty healthy clip,
Speaker 1: you haven't seen any wage acceleration, almost as if the
Speaker 1: laws of supply and demand have been repealed. I just think,
Speaker 1: like so many other dynamics in this economic cycle that's
Speaker 1: been protracted and delayed and prolonged, I think we're on
Speaker 1: the verge of beginning to see it. We may already be.
Speaker 1: Wage growth is up to two point seven percent. That
Speaker 1: doesn't sound like a very big number, but it's the
Speaker 1: highest year over year number since two thousand and ten.
Speaker 1: So as long as we get a modest acceleration in wages,
Speaker 1: the psychological benefit to consumer spending will be good for
Speaker 1: the economy. That will be good for corporate earnings as well.
Speaker 1: I think that's what's going to unfold over the next
Speaker 1: twelve eighteen months. That modest ray is something that we
Speaker 1: were definitely talking about the last monthly employment report. Uh.
Speaker 1: I'm I'm wondering how this all plays into what the
Speaker 1: FETE is thinking to degree was you were thinking about
Speaker 1: what the vet is is thinking about. At this point,
Speaker 1: we we've been consumed with central patent right, And I
Speaker 1: think the growth is important is a wage growth is
Speaker 1: important as an influence on FED decisions as well for
Speaker 1: two reasons. One, I think they would read accelerating wages
Speaker 1: as proof positive of tighter labor market conditions and success
Speaker 1: on the labor market front. And they would also see
Speaker 1: in it hints of future inflation. And I think those
Speaker 1: two things together would push them to raise interest rates
Speaker 1: at a more rapid pace than they have been, which
Speaker 1: isn't saying much, by the way. As I look at
Speaker 1: the FED funds market this morning, the futures markets putting
Speaker 1: about a sixty eight percent probability on a hike in December,
Speaker 1: I think that's likely to happen. I think the FED
Speaker 1: would like to raise interest rates. You saw at the
Speaker 1: last the September meeting of the f O m C
Speaker 1: a vote of seven to three to keep interest rates
Speaker 1: stables of three voting members wanted to raise interest rates
Speaker 1: in September. So I think you're going to see higher
Speaker 1: interest rates over the course of I'm sorry, And accelerating
Speaker 1: wage growth will give the FED the rash Chanel to
Speaker 1: warrant those those hikes. It's fascinating to me. And this
Speaker 1: is Scott with with your with your great experience with this.
Speaker 1: How our audience with rising rates are good or bad
Speaker 1: for stocks? That's as basic as it. Guess how does
Speaker 1: it depends it? Historically, the answer to that question depends
Speaker 1: on why rates are rising. So, if rates are rising
Speaker 1: because the FED is increasingly confident in the stability of
Speaker 1: economic activity, that's usually good for corporate earnings. That's usually
Speaker 1: good for stocks. Stocks tend to rise in that environment.
Speaker 1: I believe that's the environment which we're likely to be If,
Speaker 1: on the other hand, rates are rising because the market
Speaker 1: has concluded that the FED is behind the curve on inflation,
Speaker 1: the FED has lost its handle on on the inflation
Speaker 1: part of the picture, that tends to be bad for stocks.
Speaker 1: I think we're more likely in the former environment there's
Speaker 1: not a whole lot of overt inflationary pressure, there is
Speaker 1: sign of economic stability, there is rationale for the FED
Speaker 1: to raise rates. I think the market will interpret that
Speaker 1: positively and that will be that'll be a tail win
Speaker 1: for it for equities. When when you're when you look
Speaker 1: at the cycle. Where we are in the cycle right now,
Speaker 1: Position us and give us your sense of of where
Speaker 1: we're headed next. Well, typically equity, usually the equity market cycle, David,
Speaker 1: or the economic cycle equity, I mean, typically the first
Speaker 1: stage of an equity market cycle. And they're all different
Speaker 1: than details. But the first stage is driven by by
Speaker 1: lower interest rates. We we've and that we've been through that,
Speaker 1: I mean, that's that's been again very protracted in this cycle.
Speaker 1: The second stage of the cycle is one in which
Speaker 1: the market is more driven by rising earnings, even in
Speaker 1: an environment which interest rates begin to tick upwards. We're
Speaker 1: poised right now between those two cycles who interest rates
Speaker 1: are fall and fall and fall, and they've risen the
Speaker 1: tiniest bit with the FED rate high class December. What
Speaker 1: we desperately need to see is that acceleration and earnings
Speaker 1: growth to power the next leg of this equity cycle.
Speaker 1: I expect that one fold over the next twelve day months.
Speaker 1: That's what I'm watching very carefully, and I think the
Speaker 1: primary driver of that is going to be this acceleration
Speaker 1: in wages that I'm anticipating. Wonderful. We love to have
Speaker 1: you back, Scott Clemens. Thank you so much with Brown
Speaker 1: Brothers Harriman greatly appreciated today. David Gura and Tom Keene
Speaker 1: in New York. Um, David. Some years the Nobel Prize
Speaker 1: is given in economics, and it sounds wonderfully accessible. I
Speaker 1: find it hilarious that Paul Krugman one year took the
Speaker 1: Nobel Prize and most people didn't realize what it was for. Yeah,
Speaker 1: his first work with Donald Trump. No. Um, the Professor
Speaker 1: Krugman redefined so much of our international economics and the
Speaker 1: discussion of it. Or some year maybe somebody far more accessible,
Speaker 1: like Robert Schiller of Yale University, who has an esteemed
Speaker 1: career but of course is acclaimed not only for the
Speaker 1: case Shiller real estates issues, but also of course irrational
Speaker 1: exuberance and gaming cycles and behavioral economics. We are honored
Speaker 1: to bring to you now worldwide. Bank Holstrom of the
Speaker 1: Massachusetts Institute of Technology, Professor good morning and congratulations to
Speaker 1: you and Professor Hart of Harvard. I loved the Nobel
Speaker 1: Price summary of contract theory and what was so great
Speaker 1: about it, and folks I highly recommended. I'll mention this
Speaker 1: in our time here this morning. The Tyler Cowen op
Speaker 1: ed for Bloomberg View is lovely in explaining the importance
Speaker 1: of this award. To me, Professor Holstrom, what's so important
Speaker 1: here is the exhausted state of America's workforce. We have
Speaker 1: a contract with employers around something you speak of incentive intensity.
Speaker 1: His digital technology is the modern workplace changed our contract
Speaker 1: with our employers. His digital technology changed your work of
Speaker 1: thirty years ago. To the first question, I would answer
Speaker 1: yes to the second question. No, you know the second question.
Speaker 1: I believe that the workplace is changing dramatically, and that
Speaker 1: that the old style contracts that have prevailed arounder a
Speaker 1: lot of pressure in a number of professions. So but
Speaker 1: the book I did, audios ago have have have actually
Speaker 1: they are explicit contracts, as we call them, and and
Speaker 1: so they are incentive contracts and and their relevance may
Speaker 1: be actually increasing now within this in folks, this goes
Speaker 1: back to Holstrom Milgram of nineteen needed seven permeate simplicity.
Speaker 1: What I love about your work. And we've been making
Speaker 1: jokes this morning, Professor about thie beta equals f plus
Speaker 1: cape beta is Sanford Grossman is involved with your work
Speaker 1: with Professor Hart of Harvard, with Joe Stiglets, of Columbia
Speaker 1: with with Joe Stiglets great work. Simplicity is everything. What
Speaker 1: is the simple message of contract theory that our audience
Speaker 1: needs to know? I think the simplest messages that that
Speaker 1: narrow incentives can be very damaging, and sometimes no incentives,
Speaker 1: that's financial incentives shouldn't be used because there are a
Speaker 1: lot of other mechanisms for incentivizing people and motivating them,
Speaker 1: having relationships, uh, just observing them and making judgment and
Speaker 1: moving them, promoting them and designing their jobs. And so
Speaker 1: one of the things I think has been my contribution,
Speaker 1: mainly be Paul Milgram, actually has been to explain things
Speaker 1: in terms of a systemic approach to incentives as opposed
Speaker 1: to a single this rate or something like that. Is
Speaker 1: your work been forever changed because of the consultant based
Speaker 1: madness of corporate CEO con uh consulting and lawyers and
Speaker 1: management people. They've taken your simple original theories and trust
Speaker 1: and principle and agent and turned it into a cottage industry.
Speaker 1: Is that a problem? It is a problem what they
Speaker 1: are doing, But I don't see it as them. They
Speaker 1: may be having paid that much attention to my book
Speaker 1: and and and they certainly have not paid attention to
Speaker 1: the basic flaw in the incentives games that prevailed after
Speaker 1: Ron Endron, you know, Andron revealed already, which was that
Speaker 1: they were just too shortly vested, that you should vest
Speaker 1: them for a longer period. Instead, they started tampering with options,
Speaker 1: and they blamed options and not understanding that the stock
Speaker 1: is actually an option itself. So so so you know,
Speaker 1: they didn't either read it or misread it or whatever
Speaker 1: it is. But the CEO compensation as I knew it
Speaker 1: in two thousand and twelve, and I I left left,
Speaker 1: you know, boards corporate boards, that it was a sorry state. Well,
Speaker 1: let's let me bring in my colleague David Girl with
Speaker 1: the Laura ben Holstrom tome of m I T. Tom.
Speaker 1: I'm looking at the front page of the Boston Globe
Speaker 1: this morning. It is a pantheon of hometown heroes. You
Speaker 1: have bets and orties on the upper left, and just
Speaker 1: below that you have heart and homes of smiling. More broadly,
Speaker 1: I think, than than the other two. You know something
Speaker 1: that that Tyler Cowen flagged in the column that Tom
Speaker 1: mentioned a moment ago, Professor, is that you have built
Speaker 1: a technical framework for other researchers to oilled on. You
Speaker 1: have been at the vanguard here of contractory. When you
Speaker 1: look at your colleagues, when you look at your students
Speaker 1: and what they're doing, what are you most excited about
Speaker 1: in this field going forward? I think the dynamic incentives
Speaker 1: that people are studying now the young Clowd that that
Speaker 1: analyzing you know, even more techniquely complicated, but ultimately simpler mechanisms.
Speaker 1: I think that's the interesting book. And then applications of
Speaker 1: of this what we call multitasking understanding that you know,
Speaker 1: the job portfolio that people have greatly determined what you
Speaker 1: can do with the explicit incentives. Professor one final question
Speaker 1: and we'll let you go. You are of Sweden and
Speaker 1: particularly of Finland. What did you learn from the challenges
Speaker 1: of Nokia and Ericsson? I learned that technology companies are
Speaker 1: vulnerable to change. Well, we'll leave it their Professor Holmestrom, congratulations,
Speaker 1: greatly appreciate where the Massachusetts I Institute of Technology. We'll
Speaker 1: do a lot more on this. I'll send some articles out.
Speaker 1: I just sent out the It's forty nine pages, David,
Speaker 1: and it's a absolutely spectacular walk through of how we
Speaker 1: got from early heart and early Holmestrom and even Robert B.
Speaker 1: Wilson who was at Stanford Ages before Holmestrom. How we
Speaker 1: got to where we are today, which is John Tucker's
Speaker 1: five hour work week? And was it eighty two last
Speaker 1: week or five? It's it's going on in the contracted
Speaker 1: in the the the incentive intensity. Clickton went about Wednesday
Speaker 1: before that to click in. And that's interesting what the
Speaker 1: professor said there. I mean, this is a huge deal.
Speaker 1: Not the work weeks of all Americans, but a subset
Speaker 1: of Americans working John Tucker hours, the hardest working man
Speaker 1: at Bloomberg Radio. I think I'm I'm gonna fight him
Speaker 1: for that. But you're you're all. Indeed, you're very good
Speaker 1: Time Tucker, thank you so much for opining after our
Speaker 1: conversation with Holmstrom of m I t the Nobel Laureate.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform
Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David
Speaker 1: Gura is at David Gura. Before the podcast, you can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio. Who you put
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