WEBVTT - Steve Eisman on the Three Big Macro Stories of Our Time 0:00:03.120 --> 0:00:18.720 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:20.360 --> 0:00:23.520 Hello and welcome to another episode of the All Thoughts Podcast. 0:00:23.640 --> 0:00:25.000 I'm Tracy Alloway. 0:00:24.720 --> 0:00:25.880 And I'm Jolle Wisenthal. 0:00:26.400 --> 0:00:28.640 Joe, does it feel like we're at a turning point 0:00:28.720 --> 0:00:31.560 of some sort? I feel like that's always a dangerous 0:00:31.640 --> 0:00:34.599 question to ask on a podcast, because the tendency is 0:00:35.080 --> 0:00:37.440 to call turning points or say we're at, you know, 0:00:37.560 --> 0:00:41.239 the beginning of some new structural shift. Yeah, because that's 0:00:41.320 --> 0:00:43.239 kind of what everyone wants to hear, Right, You. 0:00:44.000 --> 0:00:46.839 Don't have been thinking about That's like super meta and 0:00:46.920 --> 0:00:49.680 maybe beyond the scope of anything that we talk about 0:00:49.720 --> 0:00:53.080 on a podcast. But just since we're talking about big moments. 0:00:53.600 --> 0:00:57.160 When I was a kid, probably my parents thought that 0:00:57.520 --> 0:00:59.520 the future would look very different when I'm an adult, 0:00:59.560 --> 0:01:03.400 you know. But now I think that for my kids 0:01:03.800 --> 0:01:07.399 the future will look so radically different that that I 0:01:07.480 --> 0:01:10.880 just can't imagine twenty or thirty years from now anything 0:01:10.920 --> 0:01:14.200 being remotely similar to it is today, due to various 0:01:14.240 --> 0:01:16.959 things that we're seeing with tech and geopolitics and things 0:01:16.959 --> 0:01:17.200 like that. 0:01:17.240 --> 0:01:20.160 Particularly Ai, I don't know, back to the future promised 0:01:20.200 --> 0:01:22.679 we'd have flying cars by now, and I'm still waiting. 0:01:23.000 --> 0:01:25.480 They did get video conference. I guess that's too right, 0:01:25.520 --> 0:01:27.280 So that's one thing, but yes, you're right. 0:01:27.200 --> 0:01:30.440 All right. Well, there's obviously plenty that we could talk 0:01:30.480 --> 0:01:32.480 about when it comes to the future, like what is 0:01:32.520 --> 0:01:35.119 realistic and what is sort of pie in the sky 0:01:35.200 --> 0:01:37.960 thinking like flying cars. I suspect we're not going to 0:01:38.040 --> 0:01:40.880 have those for a while because of various reasons. But 0:01:41.080 --> 0:01:42.959 one person we do like to speak to when it 0:01:43.000 --> 0:01:46.119 comes to thinking big picture and kind of talking about 0:01:46.200 --> 0:01:50.760 these potential paradigm shifts is Steve Eisman. Of course, he's 0:01:50.800 --> 0:01:52.600 been on the show a couple of times. He's the 0:01:52.960 --> 0:01:56.400 managing director at Newburger Berman and Steve, thank you so 0:01:56.480 --> 0:01:57.880 much for coming back on all thoughts. 0:01:58.000 --> 0:01:59.000 Thanks for having me again. 0:01:59.440 --> 0:02:02.560 So big picture thoughts, what are you thinking at the moment? 0:02:03.160 --> 0:02:05.720 The last time we had you on, you were talking 0:02:05.720 --> 0:02:08.400 about a paradigm shift as interest rates got higher, And 0:02:08.480 --> 0:02:11.240 it seems like investors are starting to ratchet down their 0:02:11.280 --> 0:02:14.480 expectations for cuts right now, so we might actually get 0:02:14.520 --> 0:02:16.359 that higher interest rate environment for longer. 0:02:18.160 --> 0:02:20.080 You know, let's just start with the FED so we 0:02:20.360 --> 0:02:22.440 get that out of the way as quickly as possible. 0:02:23.400 --> 0:02:25.200 I have felt for a long time. The FED is 0:02:25.280 --> 0:02:30.680 extremely insensitive to its own impact on markets. You know, 0:02:31.080 --> 0:02:33.240 last was it last week when Powell. 0:02:32.919 --> 0:02:36.320 Spoke, So we're recording this April second, but he spoke 0:02:36.360 --> 0:02:37.120 on for I'm. 0:02:37.040 --> 0:02:40.760 Good, you know, when he said that he thought that 0:02:40.840 --> 0:02:45.160 because rates are higher, financial conditions are tight. That was 0:02:45.160 --> 0:02:50.160 a little weird. I mean, right, credit spreads are extremely narrow. 0:02:50.800 --> 0:02:53.080 I've always felt that, like I said, the Fed's insensitive 0:02:53.080 --> 0:02:56.560 to its own impact on the markets. It's clearly Fed 0:02:56.639 --> 0:02:58.680 wants to cut rates. It once seems to want to 0:02:58.680 --> 0:03:01.480 cut rates very very badly. Why wants to cut rates 0:03:01.480 --> 0:03:05.800 so badly? I don't understand in that they've engineered something 0:03:05.840 --> 0:03:09.200 that's really pretty fantastic. You know. Not only is there 0:03:09.240 --> 0:03:11.440 no soft landing, there doesn't need to be any landing. 0:03:11.520 --> 0:03:13.320 And as far as you know, the data that I 0:03:13.400 --> 0:03:16.160 can see, there seems to be something of a reacceleration 0:03:16.280 --> 0:03:19.840 in the economy right now. So why would you cut rates? 0:03:19.840 --> 0:03:25.360 What's your rush? You know? The actual What I would say, 0:03:25.400 --> 0:03:27.440 even though I think the FED is going to cut rates, 0:03:27.480 --> 0:03:29.519 the fear that I think should be out there is 0:03:29.520 --> 0:03:31.560 that if they do cut rates and be even more 0:03:31.600 --> 0:03:34.480 of resurgence in the economy and there'd be a resurgence 0:03:34.520 --> 0:03:37.920 and inflation. So what's why would you rush to take 0:03:37.960 --> 0:03:39.520 that risk? I don't get it. 0:03:39.520 --> 0:03:42.200 It's funny you start off. You started off talking about 0:03:42.240 --> 0:03:44.880 financial conditions. Actually I wrote about them a little bit 0:03:44.960 --> 0:03:47.280 more a little bit this morning, and the question that 0:03:47.360 --> 0:03:51.000 I have in my mind measures of financial conditions are 0:03:51.080 --> 0:03:54.600 clearly loose, right, so the stock market is basically at 0:03:54.640 --> 0:03:58.680 all time highs and put into financial conditions as you mentioned, 0:03:58.720 --> 0:04:01.720 credit spreads are pretty tough, and then of course crypto, 0:04:01.760 --> 0:04:03.680 which maybe you have thoughts about going to the moon. 0:04:03.720 --> 0:04:07.120 So all kinds of measures of in liquid market loosening. 0:04:07.160 --> 0:04:11.559 On the other hand, the IPO window still hasn't totally reopened. 0:04:12.080 --> 0:04:16.720 It's not obvious that private investment is reaccelerating in some 0:04:17.000 --> 0:04:21.160 dramatic way, hiring intentions. The labor market continues to at 0:04:21.240 --> 0:04:24.240 least normalize. It's not falling apart by any stretch, but 0:04:24.320 --> 0:04:27.400 it's nowhere near where it was. You know a couple 0:04:27.480 --> 0:04:30.039 of years ago. Are those tight credit spreads and high 0:04:30.040 --> 0:04:35.000 stock prices translating into the economic variables employment and inflation 0:04:35.240 --> 0:04:36.400 that the federally cares about. 0:04:37.920 --> 0:04:39.960 Inflation, I can say I think it's too early to 0:04:40.000 --> 0:04:42.360 say what's happening there. I mean, the other thing I 0:04:42.360 --> 0:04:44.559 could say is that from the companies that I speak 0:04:44.600 --> 0:04:48.479 to on the industrial side, things seem to have reaccelerated 0:04:48.520 --> 0:04:51.919 this year. Orders it picked up, Supply chain problems aren't 0:04:52.040 --> 0:04:56.080 as much of an issue. Nobody's really talking about firing anybody, 0:04:56.600 --> 0:04:59.120 you know. Is it perfect? Yeah? What's perfect? 0:04:59.320 --> 0:04:59.640 Sure? 0:04:59.720 --> 0:05:02.520 But things are pretty good. Yeah. 0:05:02.560 --> 0:05:06.599 My framework for understanding this is that the FED basically 0:05:06.720 --> 0:05:10.640 can look through loose financial conditions on the assumption that 0:05:10.720 --> 0:05:13.039 if it does build out investment and a lot of 0:05:13.040 --> 0:05:15.880 the inflationary pressures that we've seen have come about from 0:05:15.920 --> 0:05:20.599 supply constraints, then it maybe is reducing inflation longer term 0:05:20.760 --> 0:05:25.200 rather than leading to additional inflationary pressures. But one thing 0:05:25.279 --> 0:05:28.120 I have to imagine they might not be huge fans 0:05:28.120 --> 0:05:32.560 of is crypto. Crypto's back, right. I think bitcoins down 0:05:32.720 --> 0:05:35.520 as we're recording this, but it surged to a new 0:05:35.600 --> 0:05:39.000 all time high. I don't think anyone was really expecting 0:05:39.040 --> 0:05:42.200 crypto to come back in this way when rates are 0:05:42.440 --> 0:05:45.400 you still at the highest level in DEPA. 0:05:45.560 --> 0:05:47.800 That's because it has nothing to do with rates. Okay, 0:05:48.400 --> 0:05:51.800 so well, let's backtrack first. Sure, here's my big uber picture. 0:05:52.320 --> 0:05:56.440 You look, in bad times, people focus on balance sheets 0:05:56.440 --> 0:05:59.600 and credit quality, and good times they focus on stories. 0:06:00.440 --> 0:06:04.280 And there are three I think great stories of our 0:06:04.320 --> 0:06:07.760 time right now, and those are AI and everything having 0:06:07.800 --> 0:06:11.839 to do with it, infrastructure, and crypto. And I believe 0:06:11.880 --> 0:06:14.000 in the first two and I don't believe in the third, 0:06:14.240 --> 0:06:18.120 the thing about crypto. And here's me getting on my soapbox, 0:06:18.160 --> 0:06:20.240 so everybody can take this with the grainess whole. I 0:06:20.240 --> 0:06:23.159 have no position in crypto, and I never have. But 0:06:24.160 --> 0:06:25.920 you know, there are two issues with respect to crypto. 0:06:26.040 --> 0:06:29.400 Number one, is it a currency? And number two, if 0:06:29.400 --> 0:06:32.400 it's a currency, why should you own it? So let's 0:06:32.960 --> 0:06:37.320 bypass issue number one because that's kind of philosophical and say, okay, 0:06:37.360 --> 0:06:39.359 it's a currency, why should you own it? And the 0:06:39.400 --> 0:06:42.000 people who are advocates of crypto will say exactly the 0:06:42.040 --> 0:06:46.040 same thing, which is that there's a problem with FIA currencies, 0:06:46.279 --> 0:06:48.800 which is government currencies. There's been too much of it, 0:06:48.839 --> 0:06:52.240 there's too much bonduitions, there's too much debt, blah blah blah. 0:06:52.279 --> 0:06:56.440 And so if you want to hedge against FIA currency 0:06:56.760 --> 0:06:59.960 by crypto, in other words, crypto is like digital gold. 0:07:01.360 --> 0:07:04.880 If that's the case and the theory is correct, then 0:07:04.880 --> 0:07:08.680 how should crypto act. Crypto should do well when on 0:07:08.839 --> 0:07:11.200 days like today where people are starting to worry about 0:07:11.200 --> 0:07:14.200 inflation again, interest rates are up and the market is 0:07:14.280 --> 0:07:17.440 down and NASDAK is down, and crypto should do poorly 0:07:17.480 --> 0:07:21.000 when interest rates are lower, nobody cares about inflation, and 0:07:21.120 --> 0:07:24.560 Nvidia is up twenty five percent. And how does crypto 0:07:24.600 --> 0:07:27.920 actually act. It acts exactly opposite to its own thesis, 0:07:28.360 --> 0:07:32.240 which is the correlation between crypto and NASDAK is very, 0:07:32.320 --> 0:07:34.480 very very high. So what does that say to me? 0:07:34.960 --> 0:07:37.120 That crypto is just another way that people like to 0:07:37.160 --> 0:07:40.280 speculate on because they like to speculate. That's all. That's all. 0:07:40.680 --> 0:07:43.440 That's its only use. That and money. 0:07:43.240 --> 0:07:47.920 Laundering, which is a use. Okay, So the three big 0:07:48.000 --> 0:07:52.080 stories of our time that people are into AI, infrastructure, 0:07:52.760 --> 0:07:55.760 and crypto, two of which you believe in. We know 0:07:56.040 --> 0:07:58.320 you don't believe in one of them. Let's go to 0:07:58.400 --> 0:08:01.120 infrastructure for a second, because you mentioned that you talked 0:08:01.120 --> 0:08:05.160 to a lot of industrial companies. Companies that would be theoretically, 0:08:05.240 --> 0:08:08.520 I assume prime to take advantage of a lot of 0:08:08.560 --> 0:08:10.640 the building out that's going on. So what are they 0:08:10.680 --> 0:08:13.400 saying to you specifically right now? I mean you mentioned 0:08:13.440 --> 0:08:15.960 that they're not talking about job cuts, But where are 0:08:15.960 --> 0:08:19.720 we in the broader infrastructure cycle Because we saw all 0:08:19.720 --> 0:08:22.920 of this money, we saw these various bill We're. 0:08:22.720 --> 0:08:26.440 At the beginning. So here's my soapbox again. I think 0:08:26.480 --> 0:08:30.160 that there are several sort of themes that weave its 0:08:30.160 --> 0:08:33.680 way into infrastructure. So one is on shoring. You know, 0:08:33.720 --> 0:08:39.040 the world spent forty years creating global supply chain that 0:08:39.440 --> 0:08:46.800 was incredibly efficient and inexpensive and deflationary and turned out 0:08:47.320 --> 0:08:51.040 we all learned during COVID also very brittle. So you're 0:08:51.080 --> 0:08:54.120 a CEO. You got a free pass the first time. 0:08:54.840 --> 0:08:57.000 You know, if you had supply chain problems, nobody's going 0:08:57.040 --> 0:08:59.240 to blame you that you had supply chain problems because 0:08:59.240 --> 0:09:03.040 of pandemic. Nobody predicted you get one buy that apple. 0:09:03.760 --> 0:09:06.319 If for some reason you have a supply chain problem, again, 0:09:06.800 --> 0:09:10.840 that's on you. You get fired for that. So companies 0:09:10.880 --> 0:09:12.960 are bringing parts of their supply chain back to the 0:09:13.000 --> 0:09:16.400 United States. That's a ten year story and we're like 0:09:16.480 --> 0:09:21.040 in year two. That's them one theme. Two is data centers, 0:09:21.800 --> 0:09:25.800 which is AI offset offshoot, but it also has industrial 0:09:25.840 --> 0:09:29.120 o implications because number one, the GPUs that Nvidia and 0:09:29.200 --> 0:09:33.280 AMD is selling utilize three times more electricity than a CPU, 0:09:33.600 --> 0:09:36.720 and they're also incredibly hotter, so they require a lot 0:09:36.760 --> 0:09:38.680 more of the whole cooling systems that you have to 0:09:38.679 --> 0:09:42.520 put into those data centers and brings us to theme three, 0:09:42.960 --> 0:09:46.000 which is improvement in the grid. Now, the grid needed 0:09:46.040 --> 0:09:49.080 improvement before because of all the pressure that we're putting 0:09:49.080 --> 0:09:52.760 on it from electrification, etc. But now that you add 0:09:52.800 --> 0:09:54.719 the GPUs on top of it, the pressure on the 0:09:54.760 --> 0:09:58.480 grid is even higher. So you know all the industrial 0:09:58.520 --> 0:10:01.000 companies that deal with utility that are spending a ton 0:10:01.040 --> 0:10:04.319 of money to improve their grids. That's also a very 0:10:04.360 --> 0:10:06.880 long term theme and also pretty much in its early stages. 0:10:06.960 --> 0:10:10.120 And the last part is greenification, which has been a 0:10:10.120 --> 0:10:12.360 long standing theme, but it's going to keep going. And 0:10:12.400 --> 0:10:16.120 you take all four of those boxes and you turbocharge them. 0:10:16.440 --> 0:10:18.280 By the fact that the United States has not had 0:10:18.280 --> 0:10:21.800 an industrial policy in anyone's lifetime, and it has one now. 0:10:21.960 --> 0:10:27.040 The combination of the IRA and the IIJA adds up 0:10:27.080 --> 0:10:30.080 to about one point two trillion dollars over ten years, 0:10:30.200 --> 0:10:32.840 So that'll turbocharge all the four themes that it just 0:10:32.840 --> 0:10:35.480 spoke about. That's why infrastructure is so interesting. 0:10:35.760 --> 0:10:38.439 So I remember one of the last times we spoke 0:10:38.480 --> 0:10:42.480 to you, you mentioned a specific company, Quantus Services, which 0:10:42.520 --> 0:10:45.000 does electrification of the grids something like that. 0:10:45.520 --> 0:10:48.880 It's an engineering construction company, and one of the things 0:10:48.920 --> 0:10:51.360 that it does is if utility wants to build a 0:10:51.400 --> 0:10:53.439 new plant, et cetera, Quanta builds it for. 0:10:53.440 --> 0:10:56.160 Them, and that one is up. I think around forty 0:10:56.240 --> 0:10:58.480 percent since we spoke to you, which has been like 0:10:58.800 --> 0:11:01.679 less than a year or so. Are those the kind 0:11:01.720 --> 0:11:03.160 of companies that you're trying to find? 0:11:03.600 --> 0:11:07.440 Yes, they're those. Then there are some, you know, materials 0:11:07.480 --> 0:11:10.600 companies that are going to be building the roads, the bridges, 0:11:10.720 --> 0:11:14.480 et cetera, and you know, everything basically that surrounds that world. 0:11:14.679 --> 0:11:17.760 Would you do pure commodity plays? I mean, copper was 0:11:17.760 --> 0:11:18.240 a big one. 0:11:18.280 --> 0:11:20.080 I don't do commodities. These are the things I don't do. 0:11:20.400 --> 0:11:23.320 I don't do commodities. I don't do oil, I don't 0:11:23.320 --> 0:11:25.559 trade currency. I don't trade commodities and do any of 0:11:25.559 --> 0:11:27.000 that stuff. I just buy stocks. 0:11:27.440 --> 0:11:30.280 Say more about some of these because everyone knows in video, 0:11:30.320 --> 0:11:33.560 but you do see this in the sell side research 0:11:33.679 --> 0:11:36.720 that's coming out, which is that everyone is looking for 0:11:37.360 --> 0:11:42.439 these secondary and tertiary plays on AI and so quantus services. 0:11:42.720 --> 0:11:45.800 Congratulations on the good pick there, But what are the 0:11:45.880 --> 0:11:49.959 other types of companies that you're looking at as part 0:11:50.040 --> 0:11:53.440 of this in areas like cooling, which is obviously going 0:11:53.440 --> 0:11:56.600 to be huge, or you know, electrical component We got 0:11:56.600 --> 0:12:00.559 ism manufacturing out yesterday, transformers can you to be in 0:12:00.640 --> 0:12:04.320 shortage for basically three straight years? What is your process 0:12:04.360 --> 0:12:07.640 and how are you going about identifying the secondary and 0:12:07.760 --> 0:12:10.680 tertiary maybe AI data center plays out there. 0:12:12.120 --> 0:12:14.679 Well, I mean there are it's you know, it's all 0:12:14.720 --> 0:12:16.960 the offshoots of the four boxes that I mentioned. There 0:12:17.040 --> 0:12:20.839 is the cooling part, there's the grid construction part that 0:12:20.960 --> 0:12:24.400 there are the utilities that are more on the green 0:12:24.559 --> 0:12:27.160 side than on the not green side. I mean, there's 0:12:27.240 --> 0:12:29.199 just a lot to do. I mean, the other thing 0:12:29.240 --> 0:12:32.280 that people are that we're trying to figure out is, Okay, 0:12:32.920 --> 0:12:36.960 there's Nvidia, there's a MD There's there's Microsoft, you know, 0:12:37.000 --> 0:12:41.120 one of our newer stocks. There's Oracle, you know, anyone 0:12:41.200 --> 0:12:48.360 who has a huge database of anything consumer businesses. You know, 0:12:48.360 --> 0:12:50.200 in the world of AI is probably sitting on a 0:12:50.240 --> 0:12:53.920 gold mine. Whether the question is whether they can monetize it. 0:12:54.600 --> 0:12:57.440 And then then the next level, which I don't have 0:12:57.520 --> 0:13:01.160 an answer to, is Okay, everybody's trying to invent apps. 0:13:01.800 --> 0:13:04.320 Whose apps are going to do well? Although my guess 0:13:04.440 --> 0:13:07.240 is that one of the bigger beneficiaries is probably going 0:13:07.280 --> 0:13:10.200 to be Apple, because at the end of the day, 0:13:10.400 --> 0:13:13.800 the consumer I can't possibly predict what apps are going 0:13:13.880 --> 0:13:16.960 to do well. But let's assume they're a bunch of them, 0:13:17.000 --> 0:13:20.440 and let's assume that a bunch of them are for 0:13:20.520 --> 0:13:23.040 the consumer. I have no idea what those are, but 0:13:23.120 --> 0:13:26.560 let's assume that they exist, they are created, people are 0:13:26.559 --> 0:13:29.200 going to use them on their phone, so AI is 0:13:29.200 --> 0:13:31.760 going to have to be on the phone, which so 0:13:32.240 --> 0:13:34.719 you know, assume what I'm hearing is that Apple is 0:13:34.760 --> 0:13:37.880 talking to every AI creator in the world to say, 0:13:37.920 --> 0:13:40.920 you know, come on our platform because we'll make your 0:13:41.040 --> 0:13:44.280 app more efficient. They'll probably roll something out in June 0:13:44.280 --> 0:13:46.720 when they have their I don't know if it's an 0:13:46.720 --> 0:13:50.199 investor day or tech day, but you know, Apple potentially 0:13:50.320 --> 0:13:52.439 eventually is going to be one of the bigger beneficiaries 0:13:52.440 --> 0:13:53.200 in the second wave. 0:13:53.880 --> 0:13:55.800 Speaking of waves, This is one of the reasons we 0:13:55.840 --> 0:13:58.719 wanted to talk to you. How do you separate the 0:13:58.840 --> 0:14:04.600 hype around owned AI versus the reality the real opportunity 0:14:04.640 --> 0:14:07.000 there because we are seeing this dynamic in the market 0:14:07.040 --> 0:14:10.319 now where you know, companies are just mentioning AI in 0:14:10.440 --> 0:14:14.280 their press release. Right, everyone's doing AI, everyone's looking into AI. 0:14:15.040 --> 0:14:17.800 And again, one of the reasons we like talking to 0:14:17.800 --> 0:14:20.640 you is because you are well known for the due 0:14:20.680 --> 0:14:24.000 diligence that you do on various things, most famously on 0:14:24.040 --> 0:14:27.120 the housing market before two thousand and eight. So how 0:14:27.120 --> 0:14:30.320 are you separating the sort of fact from fiction here? 0:14:31.520 --> 0:14:35.320 Well, I mean, the facts are that AI at this 0:14:35.440 --> 0:14:39.800 point is really only benefiting a very small number of companies, 0:14:40.480 --> 0:14:44.600 most of whom were very, very very large. So that's 0:14:44.760 --> 0:14:47.400 we have focused our attention on everything else at this 0:14:47.480 --> 0:14:51.400 point seems to me to be hype or potential, and 0:14:52.280 --> 0:14:55.040 we don't own those companies. We own the ones where 0:14:55.200 --> 0:14:57.600 what's obvious. After that, we'll sing. 0:14:57.560 --> 0:15:16.400 It, you know. Tracy asked about the due diligence process, 0:15:16.400 --> 0:15:18.120 and I sort of want to keep driving at this 0:15:18.200 --> 0:15:20.680 because you mentioned one company, but like, there are a 0:15:20.720 --> 0:15:25.080 bunch of companies out there that probably sell some component 0:15:25.200 --> 0:15:29.240 that is useful for utilities. There's probably various companies out 0:15:29.240 --> 0:15:32.480 there that sell cables that connect those and video chips 0:15:32.480 --> 0:15:35.440 from one to another, and there's various companies that sell 0:15:35.680 --> 0:15:40.040 cooling solutions, et cetera. And so in that due diligence process, 0:15:40.080 --> 0:15:41.680 like how do you start that, Like what is your 0:15:42.200 --> 0:15:44.400 sort of open up the window of like what does 0:15:44.440 --> 0:15:47.000 it look like the process of identifying them? 0:15:47.040 --> 0:15:49.280 Well in terms of let's talk on the infrastructure. 0:15:49.360 --> 0:15:50.800 Yeah, yeah, yeah, that's the part of it. 0:15:51.400 --> 0:15:57.800 I have narrowed down that world to where I think 0:15:57.840 --> 0:16:06.000 it's significant to about eighty company Okay, And of those eighty, 0:16:08.360 --> 0:16:14.720 I would say about thirty are very very interesting. The 0:16:14.800 --> 0:16:17.640 other fifty or not so interesting at this point? 0:16:18.240 --> 0:16:20.720 Is that a function of when it's the eighty or 0:16:20.800 --> 0:16:23.640 the thirty? Is that about talking to people in the 0:16:23.680 --> 0:16:25.440 space and saying, hey, what products do you use? 0:16:25.840 --> 0:16:28.600 No, I mean it's I mean, I've been doing research 0:16:28.640 --> 0:16:29.720 on this for the last two years. 0:16:29.840 --> 0:16:31.120 Yeah, so what does that look like. 0:16:31.760 --> 0:16:33.360 It's a lot of work, It's a lot of reading, 0:16:33.880 --> 0:16:36.040 you know, it's going to a lot of meetings. You know. 0:16:36.080 --> 0:16:40.560 The area that I find is not interesting, for example, 0:16:41.080 --> 0:16:45.320 is residential solar Resisolar, I think is just an area 0:16:45.400 --> 0:16:48.840 that did very, very well during COVID, but was actually 0:16:48.880 --> 0:16:52.880 a major beneficiary of zero rates because people who put 0:16:52.880 --> 0:16:54.960 a you know, it costs about thirty thousand dollars to 0:16:55.000 --> 0:16:57.320 put a solar system on your roof, and ninety nine 0:16:57.320 --> 0:17:00.880 percent of people finance it. And when they were financing 0:17:00.880 --> 0:17:03.040 it during COVID, they were financing it at three percent, 0:17:03.120 --> 0:17:04.639 and today, if they need to finance it, they're going 0:17:04.680 --> 0:17:06.680 to need to fancy it at around nine And one 0:17:06.680 --> 0:17:08.320 thing I learned in great school is that nine is 0:17:08.320 --> 0:17:11.400 a lot more than three, and so sales are negative. 0:17:11.920 --> 0:17:14.199 Now how long they'll stay negative, I don't know, but 0:17:14.840 --> 0:17:17.399 I'm not interested in speculating about it, because the fundamentals 0:17:17.480 --> 0:17:20.800 right now are poor. On the other hand, you know, 0:17:20.920 --> 0:17:25.200 just from a pure fundamental perspective, some of the solar 0:17:25.240 --> 0:17:28.399 panel companies that sell stuff to utility they're doing quite well. 0:17:28.520 --> 0:17:30.760 So the other thing that's happened since we last spoke 0:17:30.800 --> 0:17:33.879 to you is that we are about ten or twelve 0:17:33.880 --> 0:17:38.480 months closer to a presidential election in the US. Does 0:17:38.520 --> 0:17:42.000 the infrastructure thesis take a hit if we were to 0:17:42.119 --> 0:17:43.800 get Trump in office? 0:17:43.920 --> 0:17:49.320 This perception is reality, so the perception would be that 0:17:49.560 --> 0:17:53.560 a Republican administration would be less positive on gratification, and 0:17:53.600 --> 0:17:55.720 so maybe some of those stocks would take a hit 0:17:55.840 --> 0:18:00.280 because of rhetoric. I think the reality is number one, 0:18:00.000 --> 0:18:02.280 and the states that benefit for most of this stuff 0:18:02.280 --> 0:18:05.919 are actually red states, including on the solar side. And 0:18:06.800 --> 0:18:11.320 number two. You know, one of the reasons why US 0:18:11.359 --> 0:18:14.760 solar panel companies, like a coupley like First Solar doing 0:18:14.800 --> 0:18:18.399 so well is because there are major tariffs against Chinese 0:18:18.440 --> 0:18:22.480 solar producers. Those tariffs were created by President Trump, not 0:18:22.560 --> 0:18:25.959 by President Biden. President Biden just reaffirmed them. So at 0:18:26.000 --> 0:18:27.640 the end of the day, I don't think it's gonna matter, 0:18:28.359 --> 0:18:29.840 although there'll be a lot of noise. 0:18:31.160 --> 0:18:33.600 On the near shoring. You know, this is one of 0:18:33.640 --> 0:18:37.280 those things where it's always hard, at least from my 0:18:37.400 --> 0:18:41.080 perspective to disentangle like what's talk. You know, you see 0:18:41.080 --> 0:18:43.119 a lot of like there might be like a McKinsey 0:18:43.160 --> 0:18:46.360 white paper about the benefits of near shoring, and it's like, okay. 0:18:46.080 --> 0:18:47.320 But oh I don't care about stuff. 0:18:47.440 --> 0:18:49.080 Yeah no, no, I know, I know. So I'm trying 0:18:49.119 --> 0:18:52.640 to like understand like the what are they doing specifically 0:18:52.680 --> 0:18:56.879 the companies, the industrial companies that you're talking to, what 0:18:57.119 --> 0:18:59.840 actually is being built either in the US. 0:19:00.119 --> 0:19:02.320 You know it is a long like, you know, two 0:19:02.359 --> 0:19:05.239 hour conversation kind of Look, there's some factories that are 0:19:05.240 --> 0:19:07.520 being built here. There's some chip factories being bilit here. 0:19:07.520 --> 0:19:10.600 There's some other kinds of factories being built here. You 0:19:10.640 --> 0:19:12.879 know they All you need to do is listen to 0:19:13.080 --> 0:19:15.560 let's say the Eaton conference call when they report, to 0:19:15.680 --> 0:19:18.080 understand that they're doing very very well, and they'll do 0:19:18.240 --> 0:19:20.880 very well for a long time because of those trends. 0:19:21.160 --> 0:19:26.600 Eating corp Yes, etn etn'. I don't own it, but 0:19:26.640 --> 0:19:28.480 I done a lot of research on it. You can't 0:19:28.480 --> 0:19:32.560 own everything. And they're a company saying what, that's a 0:19:32.560 --> 0:19:34.560 company that does electrification for factories. 0:19:34.600 --> 0:19:37.040 Yeah, this stalks on well, and they're saying what specifically on. 0:19:36.960 --> 0:19:38.320 Their calls, they got a lot of orders. 0:19:38.520 --> 0:19:42.280 Okay, that's what they're saying. I'm looking at those share 0:19:42.920 --> 0:19:47.400 Eating Corporation, POC manufacturers engineered products for industrial vehicle construction, 0:19:47.480 --> 0:19:48.920 commercial on aerospace markets. 0:19:49.040 --> 0:19:52.240 Or take a company right products, fluid connect Take a 0:19:52.240 --> 0:19:55.720 company like a newer company. It's not it's an older company, 0:19:55.720 --> 0:19:58.480 but it's a new company listen called CRH which is 0:19:58.480 --> 0:20:02.159 a materials company. The headquarters is in Ireland, but seventy 0:20:02.160 --> 0:20:05.360 five percent of the business in the United States. They 0:20:05.400 --> 0:20:10.520 do roads, cement, all that stuff. And on the commercial side, 0:20:10.560 --> 0:20:13.600 things are picking up, and they're partially picking up because 0:20:13.640 --> 0:20:16.800 of the IRA and the IgA. Money just starting to 0:20:16.840 --> 0:20:18.840 be spent. And one of the things that was sent 0:20:18.880 --> 0:20:21.639 on the conference call by the CFO was that this 0:20:21.720 --> 0:20:26.920 is this is now golden age for infrastructure. I never 0:20:26.920 --> 0:20:29.000 heard anybody say I call this a golden age for 0:20:29.040 --> 0:20:30.879 their industry, but he said it. 0:20:32.040 --> 0:20:34.879 Yeah, some of the stocks they look a little ai 0:20:34.920 --> 0:20:36.200 ish when you look at the charts. 0:20:36.400 --> 0:20:38.080 Street line yeah, straight line up. 0:20:38.520 --> 0:20:42.120 So CRCH is funny because this is a perfect example 0:20:42.240 --> 0:20:46.040 of why the thesis that markets are efficient is sometimes nonsense. 0:20:46.880 --> 0:20:51.359 So CRCH was a Irish listed UK listed company with 0:20:51.560 --> 0:20:54.679 seventy five percent of its businesses in the US. So 0:20:55.160 --> 0:20:59.440 materials companies in Europe sell it literally half the multiples 0:20:59.680 --> 0:21:05.680 of US companies for whatever reason. And of course all 0:21:05.720 --> 0:21:09.000 the cell side analysts who covered CRCH were European analysts, 0:21:09.400 --> 0:21:11.960 and the people who cover Volcan materials, let's say, are 0:21:12.160 --> 0:21:17.080 US analysts. So crch and September relisted in the US 0:21:17.600 --> 0:21:19.879 under thesis said hey, we might get a better valuation 0:21:20.040 --> 0:21:22.560 because we're seventy five percent US, and all of a 0:21:22.600 --> 0:21:24.560 sudden people are And that's what we started to buy 0:21:24.600 --> 0:21:29.439 it because we said to ourselves, this thing sells it 0:21:29.720 --> 0:21:32.600 less than half the multiple of its US comps because 0:21:32.680 --> 0:21:33.880 it has a different audience. 0:21:34.000 --> 0:21:36.800 That's so funn that's like cell side analyst arbitrage. 0:21:36.960 --> 0:21:40.240 That's exactly what, exactly right, it was cell side analyst arbitrage, 0:21:40.240 --> 0:21:42.640 and all of a sudden you had US analysts pick 0:21:42.680 --> 0:21:45.080 it up and say, wait a second, this is seventy 0:21:45.080 --> 0:21:47.280 five percent US. What am I missing? Huh? 0:21:47.720 --> 0:21:51.639 So one thing that comes up in infrastructure conversations is 0:21:51.840 --> 0:21:55.359 this idea of crowding out. So the government is spending 0:21:55.400 --> 0:21:58.679 billions and billions of dollars through various programs on building 0:21:58.720 --> 0:22:02.560