WEBVTT - There will be a new conservatism, Lenkner says 0:00:00.080 --> 0:00:12.960 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Leye. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:34.200 Bloomberg dot Com, and of course, on the Bloomberg YEA. Treasuries. 0:00:34.280 --> 0:00:36.199 The story of the last couple of months is just 0:00:36.320 --> 0:00:39.720 yields bleeding lower. This morning, yields unchanged tenure yields to 0:00:39.880 --> 0:00:42.720 eighty three on a US two year note were unchanged 0:00:42.720 --> 0:00:46.280 at two fifty. Sort of story sentiment just whip storic, 0:00:46.720 --> 0:00:49.600 first by Treasury Secretary Steve Manuchin, who for some set 0:00:49.600 --> 0:00:52.800 the States race softer approach towards China, and then by 0:00:52.840 --> 0:00:57.120 economic advisor Larry Cundlow, who suggested the US wasn't backing down. 0:00:57.400 --> 0:00:59.560 Joining me here in New York is Kate Moore blank Rock, 0:00:59.640 --> 0:01:02.800 chief equity strategist. Good morning to k Good morning, So 0:01:02.840 --> 0:01:04.840 what do you site to clients? What on earth is 0:01:04.880 --> 0:01:07.600 going gone? Well, look, I think it's very difficult for 0:01:07.640 --> 0:01:09.399 any of us to predict what's going on in the 0:01:09.440 --> 0:01:11.880 White House. The White House has difficult predicting what's going 0:01:11.880 --> 0:01:15.440 on in the White House. So outside people can't really 0:01:15.480 --> 0:01:19.600 forecast exactly how trade will evolve. Here's what we do 0:01:19.720 --> 0:01:22.480 know is that this back and forth in this uncertainty 0:01:22.560 --> 0:01:24.720 is starting to have an impact on how companies are 0:01:24.760 --> 0:01:27.800 talking about taking risk. And that's something we're really focused on, 0:01:27.959 --> 0:01:32.080 especially because the expectations for spending and investing we're very 0:01:32.120 --> 0:01:34.560 strong going into the beginning of this year and then 0:01:34.600 --> 0:01:37.800 got supercharged after the tax cuts. So any kind of 0:01:37.880 --> 0:01:39.960 change in tone we get from companies as the reporting 0:01:39.959 --> 0:01:43.320 second quarter earnings, particularly around guiding for investment and if 0:01:43.319 --> 0:01:46.160 they're sighting trade issues, which we've heard a couple very 0:01:46.240 --> 0:01:50.600 high profile ceo s do over recent days. UM I 0:01:50.600 --> 0:01:52.880 would hope that would have an influence on the way 0:01:52.920 --> 0:01:56.040 that the trade discussions evolved. So tell me how you 0:01:56.080 --> 0:01:59.120 see the balance of risks around CAPEX improving. Is the 0:01:59.160 --> 0:02:01.360 balance of risk now tilted to the downside or to 0:02:01.400 --> 0:02:04.520 the upside? Look, I was always in the camp that 0:02:04.600 --> 0:02:06.720 Capex was going to be a little bit more conservative 0:02:06.880 --> 0:02:09.680 than some of the initial surveys suggested. You know, you 0:02:09.720 --> 0:02:12.720 had a lot of companies either because they felt explicit 0:02:12.720 --> 0:02:16.040 political pressure or implicit or because things were finally feeling 0:02:16.080 --> 0:02:17.839 a little bit better on the regulatory environment. They felt 0:02:17.840 --> 0:02:19.400 like they had to say they were going to spend 0:02:19.440 --> 0:02:23.040 more money. It's not a bad thing, but you know, 0:02:23.080 --> 0:02:27.040 the follow through has been you know, um, you know, 0:02:27.200 --> 0:02:30.720 not necessarily as strong as some of these surveys would suggest, 0:02:30.760 --> 0:02:33.120 and in fact, looking back at the historic data, it 0:02:33.160 --> 0:02:36.400 almost never is. There's not a great relationship there. But 0:02:36.560 --> 0:02:39.919 very importantly, the companies that are spending today or those 0:02:39.960 --> 0:02:42.440 that already have had a lot of free cash, Yes, sir, 0:02:42.639 --> 0:02:45.160 some of them are getting benefiting from the tax cuts 0:02:45.160 --> 0:02:48.880 and repatriating money um back to the US, But we're 0:02:48.880 --> 0:02:52.160 not getting a lot of the riskier companies all of 0:02:52.200 --> 0:02:56.560 a sudden changing their investment plans. And I certainly you know, 0:02:56.639 --> 0:03:00.200 see the policy environment and the trade environment make not 0:03:00.560 --> 0:03:02.880 a difficult switch right now. It's funny, it's hard to 0:03:02.919 --> 0:03:05.480 reconcile west sentiment is at the moment on Wall Street 0:03:05.520 --> 0:03:07.600 with the numbers that were expected to get from the 0:03:07.600 --> 0:03:10.680 second quarter in the US economy. We're expecting a big 0:03:10.760 --> 0:03:14.440 second quarter GDP figure. Yeah, Kate, how do you reconcile 0:03:14.480 --> 0:03:17.000 those two things, sentiment and the fundamentals on the ground 0:03:17.000 --> 0:03:18.840 in the United States at the moment, I know, it's 0:03:18.840 --> 0:03:21.359 a little bit difficult radio, John, but for the I 0:03:21.400 --> 0:03:23.240 was just nodding my head as you were speaking. It's 0:03:23.280 --> 0:03:25.840 not just the GDP figures for the second quarter, but 0:03:25.919 --> 0:03:28.720 it's also second quarter earnings. I think we're going to 0:03:28.840 --> 0:03:31.680 have a big bucket of strong data in the US 0:03:32.320 --> 0:03:34.679 over the next couple of weeks, that we're going to 0:03:34.760 --> 0:03:38.880 have not only strong consumption and strong overall economic growth, 0:03:39.200 --> 0:03:44.040 but actually quite strong earnings across a huge variety of sectors. 0:03:44.120 --> 0:03:47.000 And you know that doesn't seem to be playing itself 0:03:47.000 --> 0:03:51.640 out in prices across risk asses at this moment. Within 0:03:51.840 --> 0:03:56.119 all this is new cash. Cash has a yield. Now 0:03:57.000 --> 0:03:59.960 is cash a new asset class for cape more? Cash 0:04:00.040 --> 0:04:02.560 is definitely an asset class that it hasn't been for 0:04:02.600 --> 0:04:05.160 a very long time. I don't see it as a 0:04:05.200 --> 0:04:09.000 great substitute for overall equity risk, but it certainly does 0:04:09.080 --> 0:04:11.880 change the calculation on the fixed income side, and across 0:04:11.880 --> 0:04:14.080 a lot of the fixed income portfolios within black Rock, 0:04:14.120 --> 0:04:19.040 we've seen a rotation towards holding a shorter duration instruments 0:04:19.240 --> 0:04:22.280 and more cash. You know, it's a prudent thing to do, 0:04:22.880 --> 0:04:26.520 even for you know, a multi asset investor. Who's thinking 0:04:26.520 --> 0:04:29.480 about waiting for even a further pullback or looking for 0:04:29.520 --> 0:04:32.800 opportunities and with a slightly higher risk premium. Here's a 0:04:32.839 --> 0:04:37.240 headline out just perfectly time for ms more Walgreens Dow 0:04:37.360 --> 0:04:42.640 component third quarter beats estimates make America ready again, and 0:04:42.680 --> 0:04:46.600 they announced a ten billion dollar share buy back. The 0:04:48.480 --> 0:04:52.360 thousand employees they got free cash flow the generating per 0:04:52.440 --> 0:04:56.839 year of six billion dollars. So they're gonna buy back 0:04:57.720 --> 0:05:02.360 off the top of my head twenty months. Yeah, free. Look. 0:05:02.400 --> 0:05:05.000 I would be very surprised if we didn't see a 0:05:05.080 --> 0:05:09.479 whole swath of new buyback announcements coming after earnings. It 0:05:09.560 --> 0:05:12.920 makes sense for companies if they don't have perfect visibility 0:05:12.960 --> 0:05:14.919 into future demand. I mean, this is one of the 0:05:14.920 --> 0:05:16.960 other things with challenging. As we talked about the Quebec 0:05:17.000 --> 0:05:19.320 story as well, you need to if you're gonna engage 0:05:19.320 --> 0:05:21.880 in a multi year investment plan. I feel like you 0:05:21.920 --> 0:05:24.159 can predict the cycle. But this is critical. And this 0:05:24.240 --> 0:05:26.960 goes frankly back to Mario Dragging and Chairman Poule and 0:05:26.960 --> 0:05:30.360 the rest companies that you look at every day are 0:05:30.480 --> 0:05:35.680 managing for a low nominal GDP, low revenue growth environment. 0:05:36.120 --> 0:05:38.920 That's they're they're going out there buying revenue growth. Good 0:05:39.000 --> 0:05:42.800 morning everyone with Pinnacle. They're going out there buying revenue growth, 0:05:42.880 --> 0:05:44.520 and they're buying back stock because they don't know what 0:05:44.560 --> 0:05:46.440 to do with the money. I don't even think it's 0:05:46.440 --> 0:05:48.320 just they don't know what to do with the money. 0:05:48.120 --> 0:05:50.800 I would just suggest that you know, companies are at 0:05:51.240 --> 0:05:54.240 especially US companies, record level of profits. They've had this 0:05:54.360 --> 0:05:57.640 boost from the tax cuts, and what they're doing today 0:05:57.839 --> 0:06:00.520 is saying, I will make some investments for the future, 0:06:00.680 --> 0:06:04.840 but realistically, this is a very long cycle. And they 0:06:04.880 --> 0:06:07.120 are the same people who are kind of cautious about 0:06:07.720 --> 0:06:09.920 whether or not the bull market can continue, who are 0:06:09.920 --> 0:06:12.760 also managing these companies and saying, I don't want to 0:06:12.800 --> 0:06:15.680 spend too far, too much, too far into the cycle. 0:06:16.040 --> 0:06:18.680 I want to have some dry powder, and buying back 0:06:18.720 --> 0:06:22.200 shares also provides them with a little support and dry 0:06:22.200 --> 0:06:24.440 powder as well. Okay, speaking of a sector that buying 0:06:24.480 --> 0:06:27.320 bank shares the banks. Now, I don't want to let 0:06:27.320 --> 0:06:29.919 you go without talking about the financials in the United States. 0:06:30.000 --> 0:06:34.200 We're on a thirteen day losing streak. We just did that. 0:06:34.279 --> 0:06:36.200 I'm glad you're doing it again. It's worth doing. It's 0:06:36.240 --> 0:06:39.719 a record losing streak on a daily record forever. It 0:06:39.800 --> 0:06:44.000 is a record daily losing streak on financials. Doesn't amount 0:06:44.040 --> 0:06:47.120 to a big, big slide, but it's a record daily 0:06:47.120 --> 0:06:49.400 losing streak. Okay, what do you think of that? What's 0:06:49.440 --> 0:06:52.000 behind it? Going into stress test results that should reveal 0:06:52.120 --> 0:06:53.799 the banks have got the green light to go ahead 0:06:53.800 --> 0:06:56.200 with buying back a lot of stock. I find it 0:06:56.240 --> 0:06:58.159 a little bit puzzling. I can come up with us 0:06:58.440 --> 0:07:02.280 a bunch of micro explanations for why the banks have underperformed, 0:07:02.880 --> 0:07:05.920 but you know, in this environment where we're expecting more 0:07:06.000 --> 0:07:10.080 cash return and we're expecting very good results today, where 0:07:10.120 --> 0:07:13.440 the regulatory environment is easing, where rates are going up, 0:07:13.600 --> 0:07:17.400 with the macro backdrops strong, and you know, I think 0:07:17.440 --> 0:07:20.560 some of these micro explanations shouldn't hold a lot of 0:07:20.560 --> 0:07:24.200 water after today. Why did Denmark beat the Republic of 0:07:24.240 --> 0:07:30.120 Ireland five to one last fall? What happened that? Tom? 0:07:30.560 --> 0:07:32.480 You know, we'll have to take that offline because I'm 0:07:32.520 --> 0:07:34.520 afraid the viewers are not ready for my explanation. The 0:07:34.720 --> 0:07:39.440 listeners on radio as listeners, John again, I'm surprised Anie 0:07:39.440 --> 0:07:41.680 took you white minutes to bring up the World comp Well, 0:07:41.720 --> 0:07:43.480 we're gonna get to it a minute here. You know, 0:07:43.640 --> 0:07:46.280 the England Belgium today is like a big deal. Is 0:07:46.360 --> 0:07:49.280 Ireland a soccer force? John like at a decent same 0:07:49.360 --> 0:07:51.920 that just didn't mike it. They didn't. I wouldn't call 0:07:51.960 --> 0:07:54.679 it false, but it's a decent tang. They beat whales 0:07:55.360 --> 0:07:58.840 what nothing in October. You're fascinated by this, I am. 0:07:58.960 --> 0:08:02.320 I it's the highlights. Last night I was almost interested 0:08:02.360 --> 0:08:05.520 in Germany losing. I mean it was like really exciting. Yeah, 0:08:05.520 --> 0:08:07.240 I mean I was. I was doing my radio show 0:08:07.240 --> 0:08:10.800 in London. It started at mid day Eastern time, and 0:08:10.920 --> 0:08:14.320 the game was literally bumping right up against the start 0:08:14.360 --> 0:08:16.000 of the radio show. So I watched the game at 0:08:16.000 --> 0:08:19.640 my desk, then sprinted to the radio show for London. Yeah, 0:08:19.680 --> 0:08:22.000 and just made the start of the program. I think 0:08:22.680 --> 0:08:26.280 the last time I sprinted Nixon was London listeners. They 0:08:26.320 --> 0:08:29.559 take some satisfaction from Germany's exit from the World Cup. 0:08:29.920 --> 0:08:33.800 Yeah yeah, okay, well very good, Kate, Kate more, thank you, 0:08:34.040 --> 0:08:36.680 thank you, Kate, thank you for tolerating this. I feel 0:08:36.720 --> 0:08:38.480 like Tom at the moment, I'm thanking all our guests 0:08:38.520 --> 0:08:40.760 and saying thank you for tolerating. Well, that's true, but 0:08:40.800 --> 0:08:44.640 she's optimistic view of the market. I have an optimistic view, 0:08:44.679 --> 0:08:47.280 but I think a fairly balanced view in terms of 0:08:47.320 --> 0:08:50.440 corporate activity. And actually that's why I'm more optimistic. Look, 0:08:50.480 --> 0:08:53.560 I'm just one last point on when you look at 0:08:53.640 --> 0:08:57.280 the performance of World Cup. Okay, when you look at 0:08:57.280 --> 0:09:00.440 the performance of companies that have done, you know, the 0:09:00.480 --> 0:09:04.040 highest levels of cat bas not just since the financial crisis, 0:09:04.120 --> 0:09:07.120 but over kind of a thirty year period, they've underperformed 0:09:07.160 --> 0:09:09.720 those companies that have been more conservative and have returned 0:09:09.760 --> 0:09:12.960 cash to shareholders. So you know, this this big hope 0:09:13.000 --> 0:09:14.679 that we were going to get a spending wave that's 0:09:14.679 --> 0:09:16.559 going to lead to our performance of all these companies, 0:09:16.880 --> 0:09:20.000 I think it's overdone. We don't have the same veterinarian. 0:09:20.240 --> 0:09:22.680 But I take vet bill to the vet and I write. 0:09:22.679 --> 0:09:24.400 When I write a checkout to the vetinary, and I 0:09:24.440 --> 0:09:26.360 just write it out to a prep school. I don't 0:09:26.360 --> 0:09:27.880 even write it out to the damn VET. I write 0:09:27.880 --> 0:09:30.439 it out, just make it out to this prep school. 0:09:30.720 --> 0:09:32.640 I just write it directly. It's amazing. I could fund 0:09:32.640 --> 0:09:35.040 a small country with my vet bill. You could, you know, 0:09:35.120 --> 0:09:37.160 we could fund an island nation. Tom, we're still on 0:09:37.240 --> 0:09:39.439 live radio. You know when what you can do this 0:09:39.520 --> 0:09:41.880 in a commercial break? Oh no, this is people care 0:09:41.960 --> 0:09:44.679 about vet build. They can about the vet bill. No, 0:09:45.240 --> 0:09:48.360 that builds the name of the dog. Yeah, like your family. 0:10:02.559 --> 0:10:04.600 Foreign exchange has been a tough place to live over 0:10:04.600 --> 0:10:07.080 the last couple of years. Seventeen people called for a 0:10:07.080 --> 0:10:10.040 stronger dollar, We got a weaker one. Eighteen people called 0:10:10.080 --> 0:10:12.160 for eight weeker dollar. We got a stronger one. And 0:10:12.200 --> 0:10:16.240 I still haven't heard the dollar bears capitulate. Well, I 0:10:16.240 --> 0:10:17.600 can tell you we've got a bit of a dollar 0:10:17.640 --> 0:10:19.959 ball here. David Wood joins US now of Bank of 0:10:20.000 --> 0:10:23.319 America Meryl Lynch, head of Global Rates Effects and e 0:10:23.559 --> 0:10:26.719 M Fixed Income Strategy and Economics Research. David, when did 0:10:26.720 --> 0:10:32.240 your title get so long? I know, it's crazy, absolutely crazy. Well, 0:10:32.320 --> 0:10:34.200 welcome to the program. Helped me out with the US 0:10:34.280 --> 0:10:36.800 dollar call because I keep talking to dollar bear after 0:10:36.840 --> 0:10:39.360 dollar bear that refuses to capitulate and believe in what 0:10:39.400 --> 0:10:42.480 we're seeing on the screen. So far this year, you know, 0:10:42.520 --> 0:10:44.920 it's amazing. You know, I've been traveling on the West 0:10:44.920 --> 0:10:47.839 Coast in the last two or three days. L and 0:10:48.000 --> 0:10:51.600 Cisco Seattle's decramental. I'm telling you, I could not find 0:10:51.600 --> 0:10:55.360 a single claim that was long the dollar. And it's 0:10:55.360 --> 0:10:59.280 amazing because this probably must be of a record of 0:10:59.360 --> 0:11:02.160 some sort because we've just had a total person dollar rally. 0:11:02.600 --> 0:11:05.400 It's amazing. I cannot find a single person or either 0:11:05.840 --> 0:11:07.880 professor to be longer dollar for that might have been 0:11:07.920 --> 0:11:11.000 bullish per dollar. It's pretty crazy. This also leads me 0:11:11.040 --> 0:11:12.840 to think that, you know, there's no question of this dollar, 0:11:12.920 --> 0:11:14.920 Railly is probably gonna keep going. So David, that's what 0:11:14.960 --> 0:11:16.400 I've been looking at this morning as well, and I 0:11:16.480 --> 0:11:19.200 fold em into this too. You know, despite the price action, 0:11:19.320 --> 0:11:22.679 I really haven't heard that much capitulation from e M 0:11:22.800 --> 0:11:25.720 bulls or dollar bears, and at least me just concluding 0:11:26.080 --> 0:11:28.040 that I just don't have any conviction that this trade 0:11:28.080 --> 0:11:30.000 is totally exhausted. And it is that pretty much where 0:11:30.040 --> 0:11:32.760 you are as well, David, just folding the forces. They 0:11:32.760 --> 0:11:34.559 are really going to drive this dollar through the back 0:11:34.640 --> 0:11:37.240 end of the year. I think so, because you know, 0:11:37.920 --> 0:11:39.920 especially when it comes to e M, because a big 0:11:39.920 --> 0:11:42.240 difference between this game self off. First of all, we 0:11:42.280 --> 0:11:45.199 saw that in two thirteen, the two dozen thirteens, you 0:11:45.240 --> 0:11:47.880 saw a big correction in prices, but we also saw 0:11:47.920 --> 0:11:51.560 a very significant positional adjustment. This time we've seen a 0:11:51.559 --> 0:11:54.320 big correction of prices. We haven't seen anything like what 0:11:54.360 --> 0:11:57.280 we saw in terms of positional adjustment. Tells me there's 0:11:57.280 --> 0:12:00.320 not aquidity for one thing. I mean, certainly, the average 0:12:00.360 --> 0:12:02.840 age of market makers in e M on Walster right 0:12:02.880 --> 0:12:04.920 now is probably ten years younger than they were five 0:12:05.000 --> 0:12:08.040 six years ago. There is absolutely north door to even 0:12:08.040 --> 0:12:10.320 get out. So from that point of view, this, this 0:12:10.400 --> 0:12:12.880 is a very very worrying thing to me, David, this 0:12:12.920 --> 0:12:14.440 is right where I wanted to go. I'm glad you 0:12:14.440 --> 0:12:17.640 brought this up and that I would suggest into this cycle, 0:12:17.679 --> 0:12:22.720 whatever happens, we're dealing with a wildly a historical street 0:12:22.840 --> 0:12:27.080 and that they really don't know the history. How close 0:12:27.200 --> 0:12:31.199 are we to the correlations and the behavior the emotions 0:12:31.679 --> 0:12:36.959 that you get with strong dollar weaker e M. I mean, Tommy, 0:12:37.000 --> 0:12:39.000 I think jobs right, I mean this is why in 0:12:39.040 --> 0:12:42.199 any ways I mean this, this, this is why e 0:12:42.360 --> 0:12:45.480 M gets very dangerous when cross over investors start to 0:12:45.520 --> 0:12:49.280 basically give up. I'll give an example. Incredibly right now, 0:12:49.920 --> 0:12:52.400 not that incredible. Do you know right now you can 0:12:52.480 --> 0:12:56.200 buy a one year JP Morgan paper or Bank American 0:12:56.240 --> 0:12:59.960 paper that pays you three percent and more. In other word, 0:13:00.080 --> 0:13:02.560 is the first time in at least ten years you 0:13:02.559 --> 0:13:06.280 can earn three percent without thinking a duration risk, without 0:13:06.320 --> 0:13:10.400 taking any credit risk, just being lone the US dollar? 0:13:10.640 --> 0:13:12.520 And why if you can earn three person by jating 0:13:12.559 --> 0:13:14.160 working paper, why the hell would you want to buy 0:13:14.160 --> 0:13:17.040 Brazil six percent? This is what I think a lot 0:13:17.080 --> 0:13:20.440 of crossover investors started to ask themselves. And this is 0:13:20.440 --> 0:13:23.360 the reason why I think if we just get ten percent, 0:13:23.400 --> 0:13:26.360 a crossover investors mean investors were not bench points EM 0:13:26.360 --> 0:13:28.640 started basically pulled out. I think you're gonna see a 0:13:28.640 --> 0:13:31.880 shock wave three EM that we haven't begun to see yet, David. 0:13:31.880 --> 0:13:33.600 In the limited time that we have with you, I've 0:13:33.600 --> 0:13:35.600 already got to get your thoughts on on China as well. 0:13:35.640 --> 0:13:37.040 If we're going to see a shock in am, what 0:13:37.080 --> 0:13:38.600 are we about to see in China? And just what 0:13:38.760 --> 0:13:42.120 is going on with the Chinese currency? Unpack? What is 0:13:42.200 --> 0:13:46.400 driving this currency lawa waka? I think you know what 0:13:46.800 --> 0:13:49.320 last year my worst call was that I thought Chinese 0:13:49.360 --> 0:13:51.959 commun was gonna slow because of the de leveraging. But 0:13:51.960 --> 0:13:54.400 a gains what last year, global growth was so strong, 0:13:54.720 --> 0:13:56.600 you know, Chinese textbook growth is so strong and more 0:13:56.600 --> 0:14:00.199 than offset of deal leveraging. This time around toy first, boy, 0:14:00.520 --> 0:14:03.240 they're confused. The leverage. Global growth was definitely not as 0:14:03.320 --> 0:14:06.240 quite as strong. So basically there's no question Chinese group 0:14:06.320 --> 0:14:10.199 this swimming, which means that they need easier credit conditions 0:14:10.440 --> 0:14:12.839 and monster conditions which I'm killing now they have to 0:14:13.040 --> 0:14:15.600 will I'm willing to give because they were under pressure 0:14:15.600 --> 0:14:17.679 to prop up the R and B. Now I think 0:14:17.720 --> 0:14:20.280 it's very clear they have now a gun pointing at 0:14:20.320 --> 0:14:22.600 their head and they have no choice. They're now starting 0:14:22.640 --> 0:14:24.720 to let the R and B go. Notwith getting the 0:14:24.800 --> 0:14:26.880 fact that the under pressure from the US to basically 0:14:26.880 --> 0:14:28.840 reach your agreement on trade, but I think you know, 0:14:28.920 --> 0:14:32.840 in some sense the arm by weakness is actually very concerning. David, 0:14:33.080 --> 0:14:34.720 what is your calling yen? I just want to frame 0:14:34.760 --> 0:14:36.760 how big a move you see? What's your twelve months? 0:14:36.760 --> 0:14:41.000 I'll call in dollar yen dollar again? You mean dolling 0:14:41.360 --> 0:14:43.520 dollar again? I think yeah, I think we're going to 0:14:43.560 --> 0:14:46.480 one fifteen, one seventeen. Just because I'm so incredibly bullish 0:14:46.560 --> 0:14:49.560 about the US. Isn't so much move isn't that like 0:14:49.600 --> 0:14:53.880 a disruptive move to see seven big figures? You know what? 0:14:55.000 --> 0:14:56.920 You know, I've been doing this for twenty years, then 0:14:57.000 --> 0:15:00.240 you know me. I've been a doom and gloom guy far, 0:15:00.680 --> 0:15:03.760 but I've never been this bullish the US economy in 0:15:03.840 --> 0:15:06.560 twenty years. I've been doing this well, I am absolutely 0:15:06.560 --> 0:15:09.600 It's a liberating, basically feeling every morning I wake up, 0:15:10.080 --> 0:15:14.600 you know what? And that's that's the fundamental story here, 0:15:14.920 --> 0:15:18.280 which is that this economy is growing gangbuster and for 0:15:18.360 --> 0:15:21.440 all the reasons in the market remains in denial that 0:15:21.600 --> 0:15:24.960 because this times reform, it is absolutely changing the way 0:15:25.000 --> 0:15:28.160 people think about the economy. In my new special in 0:15:28.200 --> 0:15:30.760 Corporate America, David really emphatic, and we have a real 0:15:30.840 --> 0:15:33.560 limited time left. So just one quick final question. I 0:15:33.600 --> 0:15:36.280 just wonder whether Dolly and is the cleaner rates play 0:15:36.320 --> 0:15:38.000 in G ten at the moment. And the reason I 0:15:38.040 --> 0:15:39.960 asked this is what is the global dividend of a 0:15:40.000 --> 0:15:42.240 really strong U S economy? And if we get the 0:15:42.280 --> 0:15:44.000 dollar that really starts to rip in the way you 0:15:44.040 --> 0:15:45.880 think it will, aren't we gonna need to buy a 0:15:45.920 --> 0:15:47.560 little bit of Japanese? Yeah? Aren't we going to see 0:15:47.560 --> 0:15:51.040 a bit of risk aversion internationally. So that's why I 0:15:51.120 --> 0:15:54.040 still like selling euro dollar as my favorite based. The 0:15:54.160 --> 0:15:58.520 dollar interesting because I'm telling you, whether there's there's no 0:15:58.600 --> 0:16:02.400 tree war, the economy is gonna go crazy, and I'm 0:16:02.440 --> 0:16:05.080 telling you the dollar is going to search because we're 0:16:05.080 --> 0:16:07.640 gonna see a massive reproaching of the terminal five months. 0:16:07.680 --> 0:16:11.480 Rade's going to go down. The toilet in Europe is 0:16:11.600 --> 0:16:14.200 much more dependent on Ian than is the US. So 0:16:14.200 --> 0:16:17.360 it was very simple, David, We're going to leave it there. 0:16:17.400 --> 0:16:19.120 David would thank you so much on the West coast 0:16:19.280 --> 0:16:21.280 greatly appreciate what a trooper to get up this early. 0:16:32.960 --> 0:16:36.000 This is, without question, our interview of the day. Travis 0:16:36.080 --> 0:16:38.960 Langner is in Chicago. He is out of the academic 0:16:39.000 --> 0:16:43.760 combine of Kansas, but he is a person of immense uniqueness. 0:16:43.840 --> 0:16:47.440 He has clerked both for Justice Kennedy and also for 0:16:47.560 --> 0:16:50.800 Justice Brett Kavanaugh, who is on the short short list 0:16:50.880 --> 0:16:54.520 to replace h Mr Kennedy. We are joined now by 0:16:54.640 --> 0:16:58.160 Mr Langner in Washington. Travis, wonderful to have you with us, 0:16:58.160 --> 0:17:01.400 no effelments with us yesterday from Harvard Law and spoke 0:17:01.440 --> 0:17:04.280 of the moment of Justice Kennedy help our audience with 0:17:04.400 --> 0:17:08.560 how Justice Kennedy practice Supreme Court law? What was he 0:17:08.680 --> 0:17:12.760 like in the chambers? While in chambers and with his colleagues, 0:17:13.119 --> 0:17:17.720 he was just incredibly collegial. You know, the Court presents 0:17:18.080 --> 0:17:21.879 in its written work as sometimes fairly a combative place 0:17:21.920 --> 0:17:24.760 among the justices. In fact, many of them have very 0:17:24.760 --> 0:17:27.880 close relationships, and Justice Kennedy really was a part of 0:17:27.920 --> 0:17:31.520 that fabric friends on both sides of the aisle, as 0:17:31.600 --> 0:17:33.879 as we would would think of it from outside the court. 0:17:34.080 --> 0:17:35.680 And I think you saw that in the statements from 0:17:35.720 --> 0:17:39.360 his colleagues yesterday. Who really will miss his personal presence 0:17:39.680 --> 0:17:42.159 on the court and in chambers as well as his 0:17:42.280 --> 0:17:45.000 legal mind and his work critically as we move to 0:17:45.119 --> 0:17:48.280 Brett Kevanaugh and the other candidates. To me, it seems 0:17:48.320 --> 0:17:52.240 like a generational shift. Noah and others, Cass Sunstein and 0:17:52.320 --> 0:17:56.200 others speak of Justice Kennedy's interpretation of dignity is his 0:17:56.440 --> 0:18:00.399 broader view of making law. Is that a generational shift 0:18:00.440 --> 0:18:03.440 of the past, And what will the new law be, 0:18:03.720 --> 0:18:07.720 whether it's Justice Kavanaugh or someone else, Well, I think 0:18:08.119 --> 0:18:10.720 I'm not sure if it's a generational shift in legal thinking, 0:18:10.720 --> 0:18:13.800 it's certainly anytime there's an opportunity for a president to 0:18:14.040 --> 0:18:17.280 make an appointment, a nomination to the Supreme Court. It's 0:18:17.359 --> 0:18:20.240 usually a generational shift, just in the sense that Justice 0:18:20.280 --> 0:18:23.119 Kennedy will be eighty two this summer, and all of 0:18:23.119 --> 0:18:25.760 the folks who are mentioned as possible replacements are in 0:18:25.800 --> 0:18:29.080 their their early fifties or maybe they're late forties. In 0:18:29.160 --> 0:18:31.600 terms of his jurisprudence and what the future of the 0:18:31.600 --> 0:18:34.560 Court looks like. If Justice Kennedy really is at heart 0:18:34.840 --> 0:18:37.800 a conservative, but someone uh, you know, if you trace 0:18:37.880 --> 0:18:40.720 his roots to California and maybe think of a of 0:18:40.760 --> 0:18:45.600 a western a US Western libertarianism, and that's really a 0:18:45.640 --> 0:18:47.920 streak that runs through all of his opinions, and there 0:18:48.000 --> 0:18:51.159 is a there is probably a new type of conservatism 0:18:51.920 --> 0:18:55.240 whoever is nominated to replace him. From where you sit, 0:18:55.680 --> 0:18:59.800 what is the distinction between the present Justice Gorsuch in 0:18:59.840 --> 0:19:03.080 a candidates such as Kavanaugh or is it almost a 0:19:03.119 --> 0:19:08.440 cookie cutter modern conservatism? Well, I think to contrast Justice 0:19:08.480 --> 0:19:12.320 Corset and and Judge Kavanaugh, Uh, there are probably some 0:19:12.400 --> 0:19:14.560 differences on the margins and the way they would approach 0:19:14.840 --> 0:19:17.600 certain issues, and certainly in the types of experience that 0:19:17.640 --> 0:19:20.720 they've had. Uh. Judge gorse It's now Justice scor Such 0:19:20.760 --> 0:19:23.200 sat on the Tent Circuit Court of Appeals in Denver, 0:19:23.600 --> 0:19:26.160 which is a circuit that is a little different from 0:19:26.200 --> 0:19:28.600 Judge Kavanaugh's Cortner in d C. For the types of 0:19:28.680 --> 0:19:31.400 issues where they have expertise, but in terms of their 0:19:31.440 --> 0:19:35.760 legal thinking, uh, their their work as a mainstream conservative 0:19:35.760 --> 0:19:38.040 in the law today, those are two very similar. Name 0:19:38.119 --> 0:19:41.119 your voice and the heritage, and Professor Felbon at Harvard 0:19:41.160 --> 0:19:44.920 captured this and Scorpions beautifully. Your voice and heritage out 0:19:44.960 --> 0:19:47.840 of Kansas and Chicago is critical, and that it's a 0:19:47.920 --> 0:19:50.560 Midwest voice in whether it's Wizard White from the past 0:19:50.880 --> 0:19:53.280 and the rest of them. There is an American view 0:19:53.800 --> 0:19:56.679 that the Supreme Court is controlled by the elites of 0:19:56.720 --> 0:19:59.520 the East and a few selected liberals that got lost 0:19:59.560 --> 0:20:04.200 on the West coast. How mid continent will this Supreme 0:20:04.240 --> 0:20:08.560 Court become? How Kansas like will this Supreme Court be? 0:20:09.880 --> 0:20:12.280 I'm not sure it will be terribly Kansas like. But 0:20:12.320 --> 0:20:15.520 I would say that of of the potential nominees that 0:20:15.560 --> 0:20:20.280 are listed now, all of them, regardless of their current geography, 0:20:20.600 --> 0:20:23.320 share an academic background and a background in the law 0:20:23.560 --> 0:20:26.840 that looks very similar and is fairly elite, and UH 0:20:27.040 --> 0:20:29.880 Professor Feltman and others have have rightly pointed out that 0:20:30.200 --> 0:20:33.520 this is not a court made up of Byron Whites 0:20:33.560 --> 0:20:38.520 and Tony Kennedy's and UH folks from Minnesota, California, all 0:20:38.560 --> 0:20:42.760 across the country. This is an East Coast court, regardless 0:20:42.760 --> 0:20:44.840 of who is nominated and even if that person happens 0:20:44.880 --> 0:20:48.560 to sit now in the Midwest, Travis. We often talk 0:20:48.640 --> 0:20:53.160 about politicians getting into power and changing a little bit 0:20:53.200 --> 0:20:55.560 in how they view things and trying to find either 0:20:55.600 --> 0:20:58.520 more consensus or being more belligerent. Is it the same 0:20:58.560 --> 0:21:01.400 for justices to do p People change when they get 0:21:01.400 --> 0:21:05.080 appointed to the Supreme Court in their beliefs. I don't 0:21:05.119 --> 0:21:08.520 know if they change immediately upon appointment to the Supreme Court, 0:21:08.600 --> 0:21:13.000 but we've seen historically changes while justices serve on the Court, 0:21:13.240 --> 0:21:16.080 and of course the Court is a legal institution, but 0:21:16.080 --> 0:21:19.840 but also in many ways of political institution. Justices read 0:21:19.880 --> 0:21:23.440 the newspaper. They know the issues of our time, and 0:21:23.560 --> 0:21:26.880