WEBVTT - Bloomberg Surveillance TV: July 23, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:36.839 Terminal and the Bloomberg Business App. We begin with our 0:00:36.840 --> 0:00:38.839 top story, the S and P five hundred posts and 0:00:38.880 --> 0:00:41.320 its best day in more than a month. As investors 0:00:41.320 --> 0:00:44.479 look through messy politics, Brian Leavitt of Investco rights in 0:00:44.479 --> 0:00:46.920 this I don't believe that these markets will be trading 0:00:46.960 --> 0:00:50.320 based on Trump's or Harris's prospects, but rather on the 0:00:50.400 --> 0:00:53.360 direction of the economy and FED action. I find the 0:00:53.440 --> 0:00:56.600 talk of the Trump trade versus the non Trump trade 0:00:56.800 --> 0:00:58.800 to be much ado about nothing. 0:00:58.880 --> 0:01:01.040 Frank, good morning. That's music to the ears of a 0:01:01.040 --> 0:01:01.600 lot of people. 0:01:01.640 --> 0:01:04.680 After politics has dominated the conversation in this country, in 0:01:04.760 --> 0:01:06.760 this market as well, for the last few weeks, what 0:01:06.880 --> 0:01:09.600 do you think is the number one issue right now. 0:01:10.280 --> 0:01:12.119 I think it's the direction of the economy. 0:01:12.160 --> 0:01:14.319 And so you may remember I was here about a 0:01:14.360 --> 0:01:15.880 week ago and I said, for the first time in 0:01:15.920 --> 0:01:18.280 a while, I'm getting a little bit more defensive. Then 0:01:18.319 --> 0:01:19.960 you have a big rally in small caps. In my 0:01:20.040 --> 0:01:21.520 thought as oh, these folks are never going to have 0:01:21.600 --> 0:01:25.240 me back. But I still continue to believe that we 0:01:25.319 --> 0:01:27.039 want to be a little bit more defensive. It doesn't 0:01:27.040 --> 0:01:29.280 mean equities can't do well. But to what you were 0:01:29.319 --> 0:01:31.840 talking about earlier, it's the larger cap, it's the higher. 0:01:31.720 --> 0:01:32.840 Qualities because growth slowly. 0:01:33.160 --> 0:01:37.080 Now, ultimately, I think the Federal Reserve pivots. So for 0:01:37.200 --> 0:01:39.400 the week after I was on the show, the focus 0:01:39.480 --> 0:01:41.680 was on the FED cutting rates. Now the focus is 0:01:41.720 --> 0:01:45.000 a back towards growth slowing. We'll get to the point 0:01:45.000 --> 0:01:47.280 where the focus is again on the FED. We've priced 0:01:47.280 --> 0:01:49.160 in the couple of right cuts now and things. 0:01:48.960 --> 0:01:49.760 Will broaden out. 0:01:49.960 --> 0:01:52.400 But in the near term it's more of a defensive 0:01:52.480 --> 0:01:54.120 environment as the economy slows. 0:01:54.160 --> 0:01:56.160 I've got a quite in front of me from Morgan Stanley, 0:01:56.200 --> 0:01:57.680 and I think it might resonate with you. It's from 0:01:57.720 --> 0:02:01.120 Lisa Shanna she said, I'm like sickle and unlike cycles. 0:02:01.160 --> 0:02:05.240 When fed rate cuts procede, recession and reaccelerating economic growth 0:02:05.440 --> 0:02:08.720 sustainably impacts the high bit of small cap cohort. This time, 0:02:08.760 --> 0:02:11.560 a goldilock soft landing is apt to reward large cap 0:02:11.639 --> 0:02:16.640 quality names that can deliver margin gains despite modest economic growth. 0:02:16.800 --> 0:02:18.200 Is that how you're thinking about things? 0:02:18.200 --> 0:02:21.120 It is, although I wouldn't say that it doesn't involve 0:02:21.240 --> 0:02:23.360 the small caps because if you can get through this 0:02:23.440 --> 0:02:26.640 period with as without a recession, I agree, then large 0:02:26.680 --> 0:02:27.480 caps should do well. 0:02:27.520 --> 0:02:30.440 The broad market should do well. But typically, if you look. 0:02:30.320 --> 0:02:33.400 Historically, when the yell curve normalizes the ill curve normalizing, 0:02:33.440 --> 0:02:36.600 you tend to see more participation from small and value 0:02:36.639 --> 0:02:38.399 and investors have been wondering why. 0:02:38.240 --> 0:02:39.440 This market's been so narrow. 0:02:39.480 --> 0:02:41.840 We've had twenty months of an inverted yell curve, maybe 0:02:41.960 --> 0:02:43.960 twenty one months of an inverted yell curve now, so. 0:02:44.240 --> 0:02:48.640 That's a challenge. This will change as we normalize the curb. 0:02:49.000 --> 0:02:51.160 But the problem in the short term is that we've 0:02:51.160 --> 0:02:53.080 priced in the ray cuts in the economy slowly. 0:02:53.240 --> 0:02:54.679 You know, we've priced in a couple. 0:02:54.440 --> 0:02:56.960 So we'll need to see more carried through and more 0:02:57.000 --> 0:03:00.720 signs that this economy can be resilient before before things 0:03:00.720 --> 0:03:01.720 start to broaden again. 0:03:01.800 --> 0:03:03.880 I like that the market message and the political message 0:03:03.919 --> 0:03:06.000 is the same. It's the economy stupid, and look at 0:03:06.040 --> 0:03:10.440 what's going on with respect to consumers and their happiness level. 0:03:10.680 --> 0:03:13.560 Are we getting a signal from the likes of vps, from. 0:03:13.360 --> 0:03:15.000 The likes of the airlines, from some. 0:03:14.919 --> 0:03:17.120 Of the commentary that we've heard early coming. 0:03:16.880 --> 0:03:19.240 Out in this earning season that. 0:03:19.440 --> 0:03:21.840 Highlights just how quickly growth is slowing. 0:03:21.840 --> 0:03:24.360 To you, yeah, I think so. And look, we have 0:03:24.440 --> 0:03:26.080 to remember that was the wish. 0:03:26.360 --> 0:03:28.079 You know, it was a year ago when things were 0:03:28.200 --> 0:03:31.880 robust and everybody was worried about inflation, and we heard 0:03:31.919 --> 0:03:36.600 things like hyper inflation and stagflation, and everyone was trying 0:03:36.640 --> 0:03:38.720 to be hyperbolic on these things. I was never going 0:03:38.760 --> 0:03:40.600 to be the case. The reality was the Fed was 0:03:40.600 --> 0:03:43.600 going to slow the economy, the fiscal stimulus was going 0:03:43.640 --> 0:03:46.600 to moderate, and consumers we're going to start to slow down. 0:03:46.680 --> 0:03:48.600 Inflation was going to come back into the comfort zone. 0:03:48.640 --> 0:03:49.720 So that's where we are. 0:03:49.880 --> 0:03:53.040 So we can't wish for something and then when it happens, 0:03:53.360 --> 0:03:55.640 be disappointed that it's happening. 0:03:56.520 --> 0:03:58.880 And so, yeah, things are slowing in the US. The 0:03:58.880 --> 0:04:01.320 global economy slowing. The US is a big part of that. 0:04:01.400 --> 0:04:03.960 Right now, how do you assess whether this is just 0:04:04.240 --> 0:04:07.720 one data point on a different kind of trajectory downward 0:04:07.760 --> 0:04:11.200 that's perhaps a little more traumatic versus simply the Goldilocks 0:04:11.240 --> 0:04:13.040 softening that everybody was hoping for. 0:04:13.240 --> 0:04:15.640 Well, if you look for the guideposts on a path 0:04:15.720 --> 0:04:17.839 to recession, usually see cyclical access. 0:04:17.920 --> 0:04:19.479 We don't have that. 0:04:19.520 --> 0:04:21.640 We do have the inverted you'll curve, so so far 0:04:21.720 --> 0:04:23.200 we we're one out of two. 0:04:23.360 --> 0:04:24.960 You see signs that the economy is. 0:04:24.960 --> 0:04:28.159 Slowing, you look at survey data. It's not great, but 0:04:28.240 --> 0:04:31.120 it's not collapsing. And then the most important one is 0:04:31.120 --> 0:04:34.240 our credit spreads widening and our bankers tightening lending stand 0:04:34.240 --> 0:04:36.840 there's not really so you would look at that and 0:04:36.920 --> 0:04:39.880 say the economy is in reasonably good shape. It doesn't 0:04:39.920 --> 0:04:46.360 suggest a recession, but the survey data suggests things are 0:04:46.360 --> 0:04:47.320 certainly slowing down. 0:04:47.760 --> 0:04:49.720 If you don't think right now, the Trump first non 0:04:49.760 --> 0:04:52.760 Trump trains much ado about nothing. When does it become 0:04:52.839 --> 0:04:54.040 something to do about something? 0:04:54.440 --> 0:04:55.480 I'm not sure it does. 0:04:55.520 --> 0:04:59.320 I know my big north star and that I've been watching. 0:04:59.000 --> 0:04:59.960 It the entire time. 0:05:00.120 --> 0:05:02.880 From the day Trump was elected through the day Biden 0:05:02.920 --> 0:05:05.279 was elected, the market was up seventy percent. Since Biden's 0:05:05.279 --> 0:05:07.479 been elected, the market's up seventy something percent. So I'm 0:05:07.480 --> 0:05:10.520 not sure why people focus on this that much. And 0:05:10.720 --> 0:05:13.840 I'll give you an example. When it looked after the debate, 0:05:13.920 --> 0:05:17.159 post debate, and Trump's numbers are going up, probability of winning. 0:05:17.400 --> 0:05:20.760 I'm getting these notes in my inbox that say, okay, here's. 0:05:20.520 --> 0:05:21.440 The Trump trade. 0:05:21.560 --> 0:05:25.920 Crypto goes up, European defense companies go up. You want 0:05:25.920 --> 0:05:28.720 to be short Chinese equities, And I'm scratching my head saying, 0:05:28.880 --> 0:05:29.400 wasn't that the. 0:05:29.440 --> 0:05:32.920 Last four years? Right? That's exactly what happened over the 0:05:33.000 --> 0:05:33.920 last four years. 0:05:34.160 --> 0:05:36.000 The other thing is, if I were to have been 0:05:36.080 --> 0:05:39.160 here in November twenty sixteen when Trump won and I 0:05:39.200 --> 0:05:42.599 said what would win, traditional energy or clean energy, everyone 0:05:42.600 --> 0:05:43.880 would have said traditional energy. 0:05:43.880 --> 0:05:45.400 Clean energy won by a lot. 0:05:45.720 --> 0:05:49.719 The exact opposite happened under Biden, where. 0:05:49.760 --> 0:05:51.080 Traditional energy one by Latin. 0:05:51.120 --> 0:05:53.760 I have people saying to me, you know, drill, baby, drill, 0:05:54.240 --> 0:05:57.159 If Trump wins, surely we're going to get back to drilling. 0:05:57.480 --> 0:05:59.520 We're drilling more barrels of oil right now than ever 0:05:59.560 --> 0:06:02.320 before you US history. So I think people are looking 0:06:02.360 --> 0:06:04.640 at this wrong. I think people have their own perceptions, 0:06:04.680 --> 0:06:07.680 their own confirmation biases that they bring to it. 0:06:07.800 --> 0:06:10.080 But when you dig deeper, right. 0:06:09.960 --> 0:06:12.880 The Trump traders energy and financials, Energy and financials did 0:06:12.880 --> 0:06:14.760 better under Biden than they did under Trump. So it 0:06:14.880 --> 0:06:17.080 just doesn't add up when you look deeper into it. 0:06:17.160 --> 0:06:20.120 Let's park history, and let's focus one specific thing, policy 0:06:20.400 --> 0:06:22.440 and where we are right now. If you come in 0:06:22.520 --> 0:06:26.640 now and cut immigration and put up tariffs and put 0:06:26.760 --> 0:06:29.800 wolves around the United States of America, do you not 0:06:29.880 --> 0:06:32.359 see how that would be inflationary? If you extend the 0:06:32.400 --> 0:06:35.240 twenty seventeen tax cuts, do you not see that that 0:06:35.320 --> 0:06:38.080 would be boosting the deficit at a time at a 0:06:38.120 --> 0:06:40.760 time where actually they are things that people are nervous about, 0:06:40.800 --> 0:06:44.200 the prospect of inflation reaccelerating the ability of the treasury 0:06:44.240 --> 0:06:45.880 market to handle that additional supply. 0:06:46.160 --> 0:06:48.000 Well, it may also be happening at the same time 0:06:48.000 --> 0:06:50.680 that the consumer's slowing a bit in here, so you know, 0:06:50.680 --> 0:06:53.880 the u of counteracting forces against inflation, things like AI, 0:06:54.080 --> 0:06:57.920 things like older population. So I wouldn't necessarily say it's 0:06:57.960 --> 0:07:00.599 inflationary to the market. What's going to mapp most on 0:07:00.640 --> 0:07:04.040 all these things as clarity give us some understanding of 0:07:04.080 --> 0:07:06.320 what this looks like, rather than when we did it 0:07:06.360 --> 0:07:09.720 in twenty eighteen, there was uncertainty, and so business investment 0:07:09.800 --> 0:07:12.120 dried up for a while with the lack of understanding 0:07:12.120 --> 0:07:13.720 of what it was going to look like. So long 0:07:13.760 --> 0:07:16.760 as there's clarity, the business environment will be able to 0:07:16.800 --> 0:07:22.760 handle its, consumers will be able to handle it and 0:07:22.840 --> 0:07:26.200 look the realities. Both sides seem to want to pursue 0:07:26.240 --> 0:07:29.640 somewhat of an American First agenda, So there's not a 0:07:29.800 --> 0:07:34.920 substantial amount of difference with regards to this America First approach. 0:07:35.000 --> 0:07:37.360 All those conversations about politics you've been having on Wall 0:07:37.400 --> 0:07:40.960 straight frasing cub Water, Oh life from Brian Levitt, I'm 0:07:41.000 --> 0:07:51.320 investco Bran is going to see it. 0:07:53.120 --> 0:07:53.880 Here's the latest. 0:07:53.960 --> 0:07:57.560 An unofficial ap tally has harrised, passing the number of 0:07:57.560 --> 0:08:00.880 pledge delegates needed to secure the top of ticket. President 0:08:00.960 --> 0:08:04.480 Joe Biden calling into campaign headquarters to offer his support. 0:08:04.760 --> 0:08:07.680 In his first public comments since ending his campaign, Isa 0:08:07.720 --> 0:08:11.160 Bortansky Btig says, this, we continue to believe it will 0:08:11.160 --> 0:08:13.480 be a close race, and we maintain our view that 0:08:13.520 --> 0:08:16.400 Trump is the slight favorite. Isaac joins us now for 0:08:16.440 --> 0:08:18.840 more is so let's start with the numbers. Follow the money. 0:08:18.920 --> 0:08:21.520 Eighty one million dollars race in twenty four hours, more 0:08:21.560 --> 0:08:25.160 than one hundred million dollars donated for the campaign since someday, 0:08:25.200 --> 0:08:29.320 and yet your fundamental view hasn't changed, Isaac White. 0:08:30.440 --> 0:08:31.000 So look the. 0:08:30.960 --> 0:08:34.240 Money that came in for the Harris campaign, I think 0:08:34.320 --> 0:08:38.440 is a representation of the relief that's washed over the 0:08:38.920 --> 0:08:42.080 Democratic Party given that Biden is stepping aside, and they 0:08:42.080 --> 0:08:44.439 think that they have someone who can prosecute the Kese 0:08:44.800 --> 0:08:48.320 against Donald Trump in this election. But our review of 0:08:48.360 --> 0:08:52.040 this is that we still have probably seven or eight 0:08:52.120 --> 0:08:56.760 different narrative changes between now and November fifth. And when 0:08:56.800 --> 0:08:59.439 I peel back that onion, I look at the swing 0:08:59.520 --> 0:09:01.840 seats that are going to define this right, the ones 0:09:01.880 --> 0:09:04.240 that are going to actually decide this election, and you 0:09:04.280 --> 0:09:08.000 look at those six states. The issues that animate voters 0:09:08.040 --> 0:09:10.760 the most in those six states thus far have been 0:09:10.880 --> 0:09:14.360 immigration and inflation. And if that's still the case on 0:09:14.400 --> 0:09:16.720 November fifth, I think that Donald Trump is going to 0:09:16.760 --> 0:09:18.520 be the next president. 0:09:18.960 --> 0:09:20.200 The caveat here is. 0:09:20.400 --> 0:09:22.200 No one knows what we're going to be talking about 0:09:22.240 --> 0:09:24.520 in one hundred and five days. If I keep in mind, 0:09:24.559 --> 0:09:27.199 it was just twenty five days ago or so when 0:09:27.240 --> 0:09:30.040 the debate happened and it reset. 0:09:29.280 --> 0:09:30.760 The entire election. 0:09:31.000 --> 0:09:33.600 So we're going to have to deal with these narratives 0:09:33.640 --> 0:09:36.920 changing and during that time of great uncertainty. I'm just 0:09:36.960 --> 0:09:39.600 going to keep going back to what animates the swing 0:09:39.640 --> 0:09:41.240 state voter when you look. 0:09:41.080 --> 0:09:41.840 At the issues. 0:09:41.880 --> 0:09:45.080 This is why a recent poll showed that actually majority 0:09:45.080 --> 0:09:49.640 of Americans thought Trump's presidency was excess versus Biden's. If 0:09:49.640 --> 0:09:52.839 that's the case, then how does Harris differentiate herself from 0:09:52.920 --> 0:09:55.120 Joe Biden? He said there he wants to go on 0:09:55.160 --> 0:09:56.360 the campaign trail with her. 0:09:56.760 --> 0:09:59.720 Does she want him there? Yeah? 0:09:59.760 --> 0:10:02.599 Look, I think that in certain places. Absolutely. 0:10:02.640 --> 0:10:04.839 I think that President Biden's going to spend a whole 0:10:04.880 --> 0:10:07.760 lot of time in Pennsylvania over the next few months. 0:10:07.800 --> 0:10:10.000 But I think that the Biden and excuse me, the 0:10:10.000 --> 0:10:12.120 Heritage campaign got to get used to saying that now 0:10:13.160 --> 0:10:16.800 is going to enjoy some of those contrasts emory Like, 0:10:16.960 --> 0:10:20.400 I really think I don't think there's any example in 0:10:20.480 --> 0:10:26.920 modern political history of a vulnerability like age becoming weaponized 0:10:27.080 --> 0:10:29.600 this quickly with the switch in the top of the 0:10:29.600 --> 0:10:33.679 Democratic ticket. Age was their greatest weakness. It is now 0:10:33.960 --> 0:10:36.840 the cudgel that they're going to use to push back 0:10:36.920 --> 0:10:37.600 against Trump. 0:10:37.640 --> 0:10:39.480 So that's what you're going to hear a fair amount about. 0:10:39.559 --> 0:10:41.320 You're going to hear the fact that Trump is a 0:10:41.360 --> 0:10:45.160 convicted felon, the vice president is a former prosecutor. 0:10:45.200 --> 0:10:47.880 And of course we're going to hear an enormous amount about. 0:10:47.760 --> 0:10:50.439 Reproductive rights, given that that's the one area that you've 0:10:50.440 --> 0:10:54.559 seen Democrats have success with animating voters in those swing states. 0:10:54.400 --> 0:10:56.439 And she's been the face of that for this administration. 0:10:56.640 --> 0:11:00.040 But beyond reproductive rights, she was a prosecutor, but he 0:11:00.160 --> 0:11:02.960 was a vice president and a senator. But we haven't 0:11:03.000 --> 0:11:05.840 really understood what her core values aren't a lot of 0:11:05.880 --> 0:11:08.160 policy issues what differentiates herself. 0:11:09.240 --> 0:11:10.400 Look at at the moment. 0:11:10.440 --> 0:11:13.400 The way that I'm thinking about this is I'm telling 0:11:13.440 --> 0:11:17.520 clients that there really isn't much daylight between Biden and Harris. 0:11:17.920 --> 0:11:20.880 I think that a Harris one administration would look a 0:11:20.880 --> 0:11:25.360 whole lot like Biden won. There is good reason to 0:11:25.400 --> 0:11:29.840 believe that Harris is more progressive ideologically than Biden, but 0:11:30.240 --> 0:11:34.000 this has been a relatively progressive administration the past few years, 0:11:34.000 --> 0:11:36.760 so I don't see much of a shift there. Furthermore, 0:11:36.760 --> 0:11:39.120 we've got to keep in mind presidents are often limited 0:11:39.240 --> 0:11:42.280 by the other side of Pennsylvania Avenue, right, and we 0:11:42.360 --> 0:11:44.600 still firmly believe that the Senate is going to switch 0:11:44.640 --> 0:11:48.199 to Republican control, So what can be done there is limited. 0:11:48.960 --> 0:11:50.680 I do think that there are going to be subtle 0:11:50.720 --> 0:11:53.880 areas of difference in terms of trade policy and in 0:11:53.960 --> 0:11:58.000 terms of how they would push forward on the issue 0:11:58.040 --> 0:12:02.160 of fiscal fiscal policy in these firing tax cuts, but 0:12:02.200 --> 0:12:04.520 it's all very subtle when you compare it to how 0:12:04.520 --> 0:12:05.800 Trump would do those things. 0:12:05.960 --> 0:12:08.440 Isaac markets would agree with you, and betting markets seem 0:12:08.480 --> 0:12:12.160 to suggest that generally people do believe that Trump still has. 0:12:12.040 --> 0:12:14.400 The edge, although it has narrowed to slightly. 0:12:14.480 --> 0:12:17.160 I am wondering though, about the bigger issue some people 0:12:17.200 --> 0:12:20.000 are saying, which is there is new energy in terms 0:12:20.000 --> 0:12:22.320 of bringing out voters that potentially that could affect the 0:12:22.360 --> 0:12:27.160 down ballot races for a congressional House, House and Senate. 0:12:28.000 --> 0:12:31.880 See do you buy that argument for the moment? 0:12:31.960 --> 0:12:34.920 Yeah, I mean, look, the most surprising stat of many 0:12:35.520 --> 0:12:39.360 over the past few months has been the yawning enthusiasm gap. 0:12:40.040 --> 0:12:42.080 When Biden was at the top of the ticket, seventy 0:12:42.120 --> 0:12:45.200 seven percent of Republicans were happy with their candidate. Only 0:12:45.200 --> 0:12:47.600 about a third of the Democrats were happy with their 0:12:47.800 --> 0:12:49.679 candidate when Biden was at the top of the ticket. 0:12:49.880 --> 0:12:52.240 You're going to see that normalized and you're going to. 0:12:52.200 --> 0:12:54.400 See that gap close, and I think that will have 0:12:54.440 --> 0:12:57.280 an impact on the House races. And this is something 0:12:57.440 --> 0:12:59.400 that I think is important to hit. The House is 0:12:59.440 --> 0:13:01.840 going to be closed no matter what. That is the 0:13:01.880 --> 0:13:04.880 reality from the gerrymanderd system that we all live in. 0:13:05.160 --> 0:13:07.120 So the House is going to be plus ten or 0:13:07.200 --> 0:13:09.120 fifteen seats one way or the other. So it will 0:13:09.160 --> 0:13:11.760 be very very close. And in that instance, I do 0:13:11.840 --> 0:13:15.000 believe that you're going to have an impact from this, 0:13:15.120 --> 0:13:17.880 and I think that it pushes back against the red 0:13:17.960 --> 0:13:21.079 wave narrative that we had all been seeing over the 0:13:21.120 --> 0:13:21.800 past few weeks. 0:13:21.840 --> 0:13:23.880 I think the House is going to be very very close. 0:13:24.280 --> 0:13:25.400 My bed is the house. 0:13:25.200 --> 0:13:27.480 Goes whichever way the White House does, but it will 0:13:27.480 --> 0:13:29.840 be within a few seats. 0:13:29.880 --> 0:13:32.480 I want to speak to what you're telling your client base, 0:13:32.679 --> 0:13:35.640 specifically the client base in the domestic community. When you 0:13:35.679 --> 0:13:38.040 put out the note over the weekend following this decision, 0:13:38.320 --> 0:13:39.960 there's a line that jumped off the page to all 0:13:39.960 --> 0:13:43.000 of us around this table, you said, focus on electability 0:13:43.520 --> 0:13:46.080 and not policy. Just build on that a little bit more. 0:13:46.120 --> 0:13:47.600 What have you been telling clients about that? 0:13:48.760 --> 0:13:52.520 Well, I think after the disastrous debate, the performance, I 0:13:52.520 --> 0:13:55.640 think everyone was trying to parse where the policy differences 0:13:55.640 --> 0:13:58.400 would be between Harris and Biden, right, And we were 0:13:58.440 --> 0:14:01.040 all going through her Senate record, We're going back to 0:14:01.080 --> 0:14:04.200 her actions as age in California, And I just don't 0:14:04.200 --> 0:14:06.960 think that there's much value in that because they replace 0:14:07.040 --> 0:14:09.400 the top of the ticket on the Democratic side, not 0:14:09.520 --> 0:14:12.960 because of policy, but because of age and cognitive capacity. 0:14:13.360 --> 0:14:13.520 Right. 0:14:13.600 --> 0:14:16.720 And I think that the similarity between Harris and Biden 0:14:16.840 --> 0:14:18.960 is a feature, not a bug. 0:14:19.400 --> 0:14:21.040 And so to me, it's just really. 0:14:20.880 --> 0:14:24.440 A question of how she impacts this race rather than 0:14:24.480 --> 0:14:27.040 the policy substance. So is she able to change the 0:14:27.120 --> 0:14:31.720 dynamics in Georgia and get voter turned out within the 0:14:31.760 --> 0:14:35.240 black population, which is unclear that Biden was able to 0:14:35.240 --> 0:14:37.400 do in Georgia. It's unclear if that would have been there. 0:14:37.480 --> 0:14:41.560 How is she going to impact women and independent voters 0:14:42.280 --> 0:14:44.280 in some of those swing states in the Sunbelt. Those 0:14:44.320 --> 0:14:46.720 are the things that I think matter way more for 0:14:46.840 --> 0:14:48.440 markets and all of us trying to get our arms 0:14:48.440 --> 0:14:53.000 around this election than subtle differences between them between Biden 0:14:53.000 --> 0:14:54.880 and Harris and their policy perspectives. 0:14:54.960 --> 0:14:55.240 Isaac. 0:14:55.280 --> 0:14:57.520 With that being said, was JD Vance the right pick 0:14:57.560 --> 0:14:59.680 for Trump at. 0:14:59.600 --> 0:15:02.080 The moment, But it sure doesn't look like it was right. 0:15:02.120 --> 0:15:07.200 I mean, I think that hindsight is something that really 0:15:07.640 --> 0:15:10.240 underscores the humility that all of us should have here. 0:15:10.280 --> 0:15:12.880 But at that moment, I think that Trump wanted to 0:15:12.920 --> 0:15:15.840 run up the score with his base, right. He wanted 0:15:15.840 --> 0:15:18.800 this to run up the score in Ohio and Pennsylvania 0:15:19.120 --> 0:15:25.000 and Michigan and Wisconsin with white, non college educated voters. 0:15:25.200 --> 0:15:27.320 And I think that at that moment he didn't worry 0:15:27.360 --> 0:15:31.880 too much about some of the other subsets. And Jade 0:15:31.920 --> 0:15:35.840 Vance really does not help you with many other voter groups, 0:15:35.880 --> 0:15:37.200 and so at the moment, it. 0:15:37.160 --> 0:15:38.720 Sure doesn't look like the right one. 0:15:38.760 --> 0:15:41.280 But I think A Marie really underscores the importance of 0:15:41.840 --> 0:15:44.640 who the vice president picks as her running mate, and 0:15:44.680 --> 0:15:47.040 I think that she is going to focus intently on 0:15:47.080 --> 0:15:49.120 someone that can help her in one of those swing 0:15:49.200 --> 0:15:52.280 states to broaden the base. That's why you're looking at Joshapiro, 0:15:52.400 --> 0:15:55.720 the governor of Pennsylvania, or even Andy Bisheer. 0:15:56.400 --> 0:15:57.440 Isaac, thank you, sir. 0:15:57.640 --> 0:15:59.040 Just want to flo over the last couple of days 0:15:59.040 --> 0:16:12.160 on at both times Kid of BTIG. With earning season 0:16:12.240 --> 0:16:14.760 ramping up, Jill Careyhole of Bank of America writing this, 0:16:14.880 --> 0:16:17.400 we still think pockets of small caps are poised for 0:16:17.440 --> 0:16:20.720 continued down performance. Be selective near term, focus on value 0:16:20.760 --> 0:16:24.600 stocks where we'd still stick with quality or profitable value. 0:16:24.840 --> 0:16:25.480 Jill Joonice. 0:16:25.520 --> 0:16:28.200 Now for more, Jill, good morning, this is your turf, 0:16:28.480 --> 0:16:30.560 this is your world, so let's get straight into it. 0:16:30.880 --> 0:16:31.520 Small caps. 0:16:31.560 --> 0:16:34.400 When I buy the Russell, what am I buying and 0:16:34.440 --> 0:16:36.080 why should I be buying it at the moment? 0:16:36.800 --> 0:16:39.280 Well, I think you know, we had gotten more cautious 0:16:39.320 --> 0:16:41.400 on the Russell two thousand as an index back in 0:16:41.440 --> 0:16:45.120 April when the inflation data had continued to come in stronger, 0:16:45.600 --> 0:16:48.080 and you know, really we highlighted there was two things 0:16:48.120 --> 0:16:49.880 that we need to see to get more bullish on 0:16:49.920 --> 0:16:52.600 the Russell as an index, and one is you know, 0:16:52.800 --> 0:16:54.640 more confidence of the FED will be able to begin 0:16:54.760 --> 0:16:57.240 that cutting cycle, which now is what we've started to 0:16:57.280 --> 0:16:59.320 see in what was a big driver of the rally 0:16:59.320 --> 0:17:01.840 we've seen over the past week or two. I think 0:17:01.880 --> 0:17:06.000 the other is fundamentals and profitability, and that's where you know, 0:17:06.040 --> 0:17:09.640 the Russell does have a high proportion of unprofitable stocks 0:17:09.640 --> 0:17:12.119 that saw much bigger earnings recession than the S and 0:17:12.160 --> 0:17:14.919 P five hundred, And that's where I think investors are 0:17:14.960 --> 0:17:17.280 a little bit worried because when you look at the 0:17:17.280 --> 0:17:19.879 beginning of the year, investors were expecting that by this 0:17:19.960 --> 0:17:23.040 earning season, small cap profits would have come back, recovered 0:17:23.160 --> 0:17:25.760 been better than large cap profits growth, and that's not 0:17:25.840 --> 0:17:28.199 what we've seen. We've seen, you know, a lot of 0:17:28.200 --> 0:17:30.400 hope held out for fourth quarter this year, a very 0:17:30.440 --> 0:17:33.320 strong recovery, but the first, second and third quarters of 0:17:33.359 --> 0:17:36.919 this year estimates have gotten revised down significantly. So I 0:17:36.920 --> 0:17:39.320 think that's what you know, we really need to see 0:17:39.359 --> 0:17:41.800 if we want to see if this rally sustainable. Is 0:17:42.040 --> 0:17:44.320 you know, can we get good earnings day to this 0:17:44.400 --> 0:17:47.159 earning season not only surprises to the upside, but the 0:17:47.240 --> 0:17:51.360 guidance that supports that the fundamental backdrop is healthy for sus. 0:17:51.160 --> 0:17:53.000 So let's pick a sector, a dominant sector on the RUSS, 0:17:53.359 --> 0:17:55.719 the financials. We can talk about a financials. The regions 0:17:55.760 --> 0:17:57.040 have been a big part of the story. Now for 0:17:57.080 --> 0:17:58.960 the best part of twelve months, we've had a big 0:17:59.040 --> 0:18:01.600 rally there. Do you think this reason to believe earnings 0:18:01.640 --> 0:18:04.400 will pick up and reaccelerate as we start to interest 0:18:04.480 --> 0:18:06.399 rates at a federal reserve, that things get better for 0:18:06.440 --> 0:18:08.480 that cohort of companies, right? 0:18:08.760 --> 0:18:10.879 Yeah, I mean financials has definitely been a big leader 0:18:10.920 --> 0:18:13.720 of the rally recently, and certainly, you know, if we 0:18:13.760 --> 0:18:16.640 see an outlook where we're looking for FED cuts, where 0:18:16.640 --> 0:18:20.960 we're looking for soft landing, you know, no significant deterioration 0:18:21.040 --> 0:18:24.560 in the economy that should be supportive for financials. I think, 0:18:24.680 --> 0:18:27.400 you know, when you look at factors like the regionals 0:18:27.480 --> 0:18:30.800 and credit conditions, that's still a risk that's out there. 0:18:30.840 --> 0:18:33.400 So you know, if we're in a backdrop where where 0:18:33.440 --> 0:18:37.840 the Feds cutting because economic conditions have deteriorated significantly, credit 0:18:37.880 --> 0:18:41.040 spreads are rising, that would be more negative versus a 0:18:41.080 --> 0:18:46.400 backdrop where the econ is still supportive. But certainly for financials, 0:18:46.440 --> 0:18:48.320 you know, I think we've been due for a catch up, 0:18:48.920 --> 0:18:51.840