Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Farrell and Lisa Brownowitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: To find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. I'm wearing blue
Speaker 1: for frost this air MS tie. We wear that when
Speaker 1: Johnny Phillion shows up chief executive of BMP Parry bout,
Speaker 1: Lisa brownwits and time King John Farrell wishing it was here.
Speaker 1: I mean it's it's frankly too bad because John is
Speaker 1: far more knowledgeable of this. But for the gentleman from
Speaker 1: BMP parow, We're gonna get right into it. With futures
Speaker 1: up thirt Lisa's got actually adult questions forget about it.
Speaker 1: Explain the joy in two thousand eighteen when France pled
Speaker 1: this incredibly differ are called feed off. What was it
Speaker 1: like for all of the BNP Perry pat family to
Speaker 1: see France do this four years ago? Well, Tom, thank
Speaker 1: you for having me. By the way, Lisa as well,
Speaker 1: it was a real celebration for the whole country, including
Speaker 1: at bmp PI. But obviously, and that was the second
Speaker 1: time that France won the World Cup. Then there with
Speaker 1: a lot of expectations for this upcoming World Cup viavly Blue, right,
Speaker 1: it's always complex to be the defending country, right exactly.
Speaker 1: And you know today in this uh, in this soccer landscape,
Speaker 1: there is no small teams anymore. Francis play Denmarks or
Speaker 1: Tunisia Australia, and you just never know. I will keep
Speaker 1: an eye. I have the privilege of being French an American.
Speaker 1: Then I have two teams, you know, to support and
Speaker 1: because of John is not here with us today, but
Speaker 1: I would keep an eye on England, I promise. I
Speaker 1: went to John and I said, give me a smart
Speaker 1: question there, uh John even and he said, asked about
Speaker 1: a thirty six year old Olivier is getting a little old,
Speaker 1: how an older French team do and the heat. Well,
Speaker 1: it's a combination. You know. The World Cup is a
Speaker 1: long journey, it's a one months competition, and you're right,
Speaker 1: it's a combination of youth energy but experience. And I
Speaker 1: think this French team is putty what equipped on on
Speaker 1: both fronts. So you said that you're both us as
Speaker 1: well as French, and you can vote for both teams,
Speaker 1: and you can read from both teams as the US
Speaker 1: arm of the biggest European bank, how much is your
Speaker 1: main company diverting money to you because it is so
Speaker 1: much stronger here in the US. Well, this economy is
Speaker 1: still the most basilient economy in the world. Uh. If
Speaker 1: we look at the status today in terms of tight
Speaker 1: labor market, in terms of status of corporate balance sheets,
Speaker 1: households are still spending and the capital markets are still functioning.
Speaker 1: And uh, a US bank here has been benefiting from this.
Speaker 1: Having said that, our economists are pretty predicting a shallow
Speaker 1: recession in because the US economy is still very quite
Speaker 1: interconnected with the rest of the world, we expect to
Speaker 1: rebound in. How much does that affect your willingness to
Speaker 1: lend right? I mean, because if you basically you're tasked
Speaker 1: with trying to support other aspects of the bank, perhaps
Speaker 1: that are in other areas that aren't as optimistic, perhaps
Speaker 1: as the US, but the US is also in a
Speaker 1: difficult spot. How do you decide how loose to be
Speaker 1: with your purse? You? Risk management is critical. You have
Speaker 1: to be quite selective with the sectors you cover with
Speaker 1: the clients you support. But I have to say, if
Speaker 1: I look at my client needs today, it's around three dimensions.
Speaker 1: Lending your right. Even the most frequent issuers in high grade,
Speaker 1: you know, because of the higher cost of funding, they
Speaker 1: try to wait, and we're actually bridging significant number of
Speaker 1: capital market transactions to optimize your capital raising. Hold on
Speaker 1: a second, So this is really important. Other words, you're
Speaker 1: taking on your books that basically you're saying you'll lend
Speaker 1: at a lower rate than the market rate to have
Speaker 1: them wait until rates are lower. It's a combination of
Speaker 1: lower rates or making sure they can pick the right
Speaker 1: window high rate as remain open. But you have to
Speaker 1: pick your windows if you want to optimize your capital rating.
Speaker 1: The second important need I see from clients today is
Speaker 1: waste management and hedging sprategies, and it's really across rates
Speaker 1: and communities and currencies and in equities. They took a
Speaker 1: cup of coffee in Beijing decades ago with the senior
Speaker 1: officer of BMP parabout with the decades of French experience
Speaker 1: in China, give us your perspective and our China is
Speaker 1: going to extricate itself from this mess. Well, it's definity
Speaker 1: another country. We have a lot of connection with the
Speaker 1: bank as presidents there. Uh oh, you understate, come on
Speaker 1: the bed. It's huge traditional presence there. And still if
Speaker 1: you expect this economy in two any two eight three
Speaker 1: to go through a shadowy session, your bozone is already
Speaker 1: in my session. You still see to a China providing
Speaker 1: some growth to the double economy which we expect to
Speaker 1: be for two around two and it's a it's a downturn.
Speaker 1: Uh in China. A lot of it will be around,
Speaker 1: you know, getting truly out of the pandemic and obviously
Speaker 1: expecting some most ability there. The heritage of your shop
Speaker 1: is a wonderful reticence to speak about economic boom. Your economist,
Speaker 1: Carl Rico, donno, we've got a not in a quaince.
Speaker 1: So thank you, sir for stealing him from Bloodboard. Will
Speaker 1: never forgive you. But Mr Rickodon and back to Dr
Speaker 1: Cornado has been dead on about g d P. What
Speaker 1: does he say in this titanic battle we're having on recession?
Speaker 1: Calling by his way, it was my only way to
Speaker 1: be to really continue to be part of the Bloomberog
Speaker 1: family to have called on that. And we love to
Speaker 1: thank you for that, having trained in post so many
Speaker 1: years college saying in three shadow accision as we've just discussed,
Speaker 1: you know, minus one percent, but he's very confident done that.
Speaker 1: In four he sees is rebound because of the good
Speaker 1: foundations of the resiliency of this economy and back to
Speaker 1: a more normalized g D pig voles around. You know. Two,
Speaker 1: how concerned you as you are? You as you look
Speaker 1: at some of the risk management you're talking about earlier,
Speaker 1: as you decide how much to lend, how do you
Speaker 1: factor in exogenous events? How do you factor in a
Speaker 1: colder winter? How do you focus in how do you
Speaker 1: fold in the prospect of a federal reserve that potentially
Speaker 1: could go well beyond what people currently I wish we
Speaker 1: had all the answers to your wonderful questions. So how
Speaker 1: do you even model it out? I wait, well, definitely
Speaker 1: in bring out. But you know the way it really
Speaker 1: works in the real life, it's really about the sectors,
Speaker 1: about the clients, and honestly about the management you deal with,
Speaker 1: because a big part of managing the companies between the
Speaker 1: hands of the leaders um. You know, you you mentioned
Speaker 1: in flish and you mentioned energy. If I look at
Speaker 1: back to comparison between Europe and US. I think you're
Speaker 1: up as two main challenges in the in the months
Speaker 1: to come. It's obviously inflation and the e c B
Speaker 1: is going exactly in the same direction as the FED.
Speaker 1: You know they're gonna be okish, they're doing the job.
Speaker 1: And the second one is energy. And on the energy
Speaker 1: side you start seeing with the good news is for
Speaker 1: two for the winter three. I think the Eurozone has
Speaker 1: managed to, you know, to to to navigate through this
Speaker 1: energy crisis. And I think the second trend and I
Speaker 1: can see this happening already there, it will happen here eventually.
Speaker 1: You see a real commitment to diversify sources of energy
Speaker 1: renewable hydrogen, star wind, hydro when it works. But I
Speaker 1: think the trainers left the station on this front. And
Speaker 1: in Europe there is a probably very favorable regulatory and
Speaker 1: UH fiscal environment to support this trend toward s G
Speaker 1: and sustainability. Johnny Julian, thank you so much for joining
Speaker 1: us here and we do accept your invitation to come
Speaker 1: to Paris and April. You got team surveillance at the
Speaker 1: little cafe. There's a little cafe overlooking Dander Luxembourg effee
Speaker 1: sweets and you know the three of us out there
Speaker 1: remote on the street, but are you really that person?
Speaker 1: Thank you for inviting yours. I'll be going to bucket.
Speaker 1: I need a bugette great as with BMP Perry. Thank
Speaker 1: you so much for telling us France will do it
Speaker 1: again at the World Cup as well. Right now. David Balan,
Speaker 1: Chief Investment Officer, Global Head of Investments, It's City Global Wealth. David,
Speaker 1: I'm not surprised to hear you say quality is in
Speaker 1: order for two thousand twenty three. But color to the quality,
Speaker 1: what does it look like? Well, you know, we're gonna
Speaker 1: continue to earn money all the way through the next
Speaker 1: year without a decline. Those stocks that pay dividends and
Speaker 1: pay buybacks, well you and Lisa were just talking about
Speaker 1: is incredibly important because the Fed has raised rates and
Speaker 1: is going to raise rates more looking at the data
Speaker 1: on inflation that is behind it, the leading you know,
Speaker 1: the lagging indicators, that's what they're looking at, and as
Speaker 1: a result, they're gonna have rates go too high and
Speaker 1: they're going to keep them there for too long. And
Speaker 1: if they do that, we are going to have not
Speaker 1: only a recession, but potentially it's seriously you know, serious
Speaker 1: in terms of its length, and potentially it's breadth. And
Speaker 1: that's really what's being set up here. And the market
Speaker 1: you know, looks at it somewhat sanguin, you know when
Speaker 1: the senguin lens, and I think that's a mistake because
Speaker 1: really what we're dealing here is potentially with an earnings
Speaker 1: decline that is not yet priced into the market. For
Speaker 1: the earnings decline assumes also revenue declined. Do you just assume,
Speaker 1: with the dearth of nominal GDP off the the oddities
Speaker 1: of the last twenty four months at revenue growth comes
Speaker 1: in as well as earnings, but actually is going to
Speaker 1: come in tom is the is the is the profit margin? Right.
Speaker 1: Revenues will go up, of course with inflation, but costs
Speaker 1: are going to go up more than that. The ability
Speaker 1: for people who produce goods to actually pass on pricing
Speaker 1: creatures is going to go away. And the reason is
Speaker 1: because inventories are extremely hot. And what inventories do is they,
Speaker 1: you know, they drive prices down so we'll all be
Speaker 1: able to buy, you know, things less expensively during this
Speaker 1: coming in Black Friday, in Christmas season, but ultimately it's
Speaker 1: going to make profits you know, go down next year,
Speaker 1: and I think it's going to cause you know, the
Speaker 1: economy to slow more than people think, because you know,
Speaker 1: once inventories build like this, then production, your future production
Speaker 1: will be reducing disproportionately downward. David, I want to sit
Speaker 1: on something that you said that potentially because if it's
Speaker 1: going to raise rates far beyond people think, even in
Speaker 1: the face of weakness, that is happening more rapidly than
Speaker 1: perhaps people realize. This is going to lead to a
Speaker 1: long and potentially deep recession, right, I mean, that's essentially
Speaker 1: what you're saying, and then that's not being priced in.
Speaker 1: I'm looking right now at NASDAC down this year. I'm
Speaker 1: looking at an SMP and down this year. Where is
Speaker 1: it not being priced stand well, Le, So you know,
Speaker 1: if you actually take a look at recessions historically, you
Speaker 1: know they could see markets down you know, easily between
Speaker 1: thirty But this is the most important single line that
Speaker 1: you know, I think people are missing. Markets have never
Speaker 1: bottomed before a recession has begun. Look back at the
Speaker 1: historical data and that's why you know, you see these
Speaker 1: bear market rallies, you see shortcovering, you see the fact
Speaker 1: that we're in the fourth quarter, and the fourth quarter
Speaker 1: is always a good quarter. You know, all of those
Speaker 1: things are true too. But what we have to do
Speaker 1: is actually price in what is going what is going
Speaker 1: to happen in the future, and what you said earlier.
Speaker 1: You know, let's take a look at housing as a
Speaker 1: leading indicator right right now. You know, housing, how the
Speaker 1: houses that were started a year ago when interest rates
Speaker 1: a three percent needs to be completed, so the amount
Speaker 1: of housing unemployment that's taken place is virtually zero. We
Speaker 1: think that there'll be four hundred thousand people unemployed in
Speaker 1: housing next year, and about two million people who will
Speaker 1: be unemployed across the economy, which is not especially deep recession,
Speaker 1: but it's certainly not positive employment growth as we've almost
Speaker 1: all year long. David, what does this mean in terms
Speaker 1: of what you're recommending to her clients? I mean, if
Speaker 1: you're talking about a long and deep recession, is this
Speaker 1: hide out in tenure treasuries? Is this hiding out in
Speaker 1: t bills until we have a better sense of what's
Speaker 1: going to happen. Yeah, we are deeply wave Lisa over
Speaker 1: were deeply overweight bonds at the moment you know, we
Speaker 1: think the bonds are going to be a terrific investment,
Speaker 1: by the way, because you know, if you buy attaining
Speaker 1: your bond today, let's say three a D right, and
Speaker 1: it happens to go to you know, three P and
Speaker 1: you hold it for a year and change, you know
Speaker 1: that total return on that bond could be because we
Speaker 1: think interest rates are going to be down a year
Speaker 1: to a year and a half from now. You know,
Speaker 1: we hit the long term rate on the Tenure Committe
Speaker 1: between two fifty and three. And that's because once our
Speaker 1: recession begins, rage will of course, you know, come down,
Speaker 1: and once we have unemployment prints for a couple of months,
Speaker 1: will finally realize as vocal, did they have to do
Speaker 1: something about it? Well, your economics team, and good morning
Speaker 1: Andrew Holland Horse has been way out front on the slowdown,
Speaker 1: called David Bale, and we've got a stagger to December
Speaker 1: two and all of a sudden the jobs report, which
Speaker 1: is of interest. Are we going to see the unemployment
Speaker 1: rate move in December yet or does that all wait
Speaker 1: till the first week of January? Well it certainly could,
Speaker 1: you know, Tom. The rders come down relatively little so far,
Speaker 1: you know. But what we're seeing are you know, the
Speaker 1: postings come down. We're seeing a lot of pre announcements
Speaker 1: of layoffs all across the tech industry. Some of the
Speaker 1: names you were talking about, you know, are are planning
Speaker 1: you know ten in fifteen thou uh, you know, layoffs
Speaker 1: next you next year. But those haven't happened yet. And
Speaker 1: of course we haven't seen this sort of industrial company
Speaker 1: off anybody at this point because of the hoarding of labor. David,
Speaker 1: thank you for the brief. David Balin City Group Global Wealth,
Speaker 1: just thrilled to have them on. We are briefed by
Speaker 1: Amrita Sind of Energy Aspects this morning. A Marina help
Speaker 1: me with a recent pullback in oil? Is it just
Speaker 1: a bat Demand won't be there now? I think there's
Speaker 1: a lot of confusion in the market right now, right
Speaker 1: and yes, demand in China is weak, and this is
Speaker 1: something been saying for some time. Don't get too excited
Speaker 1: by all the headlines coming out of China about reopening
Speaker 1: because that reopening isn't happening until April of next year.
Speaker 1: So right here, right now, there are more locked down.
Speaker 1: So absolutely demand in China will remain weak. Now the
Speaker 1: thing is the rest of the world demand is actually
Speaker 1: pretty decent and the numbers coming in have actually surprised
Speaker 1: to the upside and not downside. So how does that
Speaker 1: frame up for next year? Every you know, a hundred
Speaker 1: page report I skimmed through says Pacific rim demand is
Speaker 1: the variable. If we get what Lisa talks about five
Speaker 1: China GDP growth, does that reverse you out to a
Speaker 1: hundred and twenty a barrel? Absolutely, China, It's going to
Speaker 1: be critical for next year's balances. And I think again,
Speaker 1: if you look at what has caused this year's kind
Speaker 1: of softness, it's been China. It's not that we were
Speaker 1: expecting a reopening, but these renewed lockdowns have actually dental
Speaker 1: demand quite substantially more than we all the market was expecting.
Speaker 1: And I think that's one of the biggest reasons why
Speaker 1: China is not out buying crude right now. They are
Speaker 1: going to be the biggest variable for next year, especially
Speaker 1: given all the uncertainties around Russian oil. With the EU
Speaker 1: and bargo ticking in on the fifth of December, we
Speaker 1: are going to lose some Russian barrels, but that is
Speaker 1: again going to be after the products embargo on the
Speaker 1: fifth of February, So the timing is going to be
Speaker 1: critical that if China starts to reopen from April, the
Speaker 1: real upside and the drill tightening and balances is going
Speaker 1: to be Then why is the bookcase for oil now
Speaker 1: coming truition now given that we are getting a bit
Speaker 1: colder now and that we do have a bit more
Speaker 1: resilient of US economy. Yeah, I mean, look, there's a
Speaker 1: lot of your end positioning going on as well. But
Speaker 1: what I and this gets a little bit technical to
Speaker 1: bear with me, but I think what's been interesting is,
Speaker 1: you know, and I've seen a lot of kind of
Speaker 1: narrative around this that Accruede has obviously sold off and
Speaker 1: that just means everything. It's very verish. If you look
Speaker 1: at the products markets, pretty much every single products and
Speaker 1: all of all of them in Asia are back dated.
Speaker 1: That tells you that the underlying demand conditions are strong.
Speaker 1: Usually when the market is wobbling because of fundamentals, it
Speaker 1: tends to come for the product site. But if you
Speaker 1: look at gasoline, diesel, even fuel oil and after which
Speaker 1: had been weaker, have all strengthened over the course of
Speaker 1: the month. So this is more of a macro thing
Speaker 1: that's driving crude stronger dollar obviously, worries about continuous rate highs.
Speaker 1: We had even correlation with bitcoin, which is just insane
Speaker 1: and tells you that not that many specialists are trading
Speaker 1: crude oil right now. And policy uncertainty, which we've talked
Speaker 1: about on this show before as well, is just not helping.
Speaker 1: We don't know because of the amount of even media
Speaker 1: reports constantly contradicting one another. You know, we have very
Speaker 1: strong views about the EU embargo, but people are telling us,
Speaker 1: clients are telling us, oh, do you think Europe is
Speaker 1: going to go ahead with the embargo? And I think
Speaker 1: that's what's creating a lot of confusion in the market.
Speaker 1: So even putting aside all of that confusion, when you
Speaker 1: hear from people who say they're actually Europe isn't a
Speaker 1: much better position than they previously were, not just for
Speaker 1: this winter, but for next winter, do you pay credence
Speaker 1: to that? Do you feel like crisis averted regardless of
Speaker 1: what happens in Russia and Ukraine and that there has
Speaker 1: been immunization from the conflict. I'd say right now, sure,
Speaker 1: Europe is in a much more comfortable position because it's
Speaker 1: been mild and we have a bunch of energy cargoes
Speaker 1: sitting um waiting to be discharged. But if it does
Speaker 1: get cold, and I really tread to think how people
Speaker 1: can say that next year is going to be fine
Speaker 1: as well. We can get through this winter, assuming it's
Speaker 1: a mild enough winter, no problem. Next year there's a
Speaker 1: huge issue. And by the way, this is much more
Speaker 1: a gas story than an old story um oil. We
Speaker 1: haven't lost Russian or to begin with, So I don't
Speaker 1: understand why even if the talk of ceasefire again instruction
Speaker 1: which we completely disagree with to begin with, but let's
Speaker 1: say it does again credence, how does it affect oil
Speaker 1: because oil wasn't impacted, So why should oils sell off now?
Speaker 1: If you know, even if there is a ceasefire, And
Speaker 1: that's where I think the market is very fused and
Speaker 1: you're just selling getting like suits of just macro sell
Speaker 1: off and oil getting caught in with that one final
Speaker 1: unfair question and then all of a sudden, money costs something,
Speaker 1: the risk free rates legitimate, all of a sudden, the
Speaker 1: investment calculation is like we remember, do you assume there
Speaker 1: will be a boost in energy production? And what politicians
Speaker 1: of all ILK are calling for, which is more production?
Speaker 1: Are you optimistic hydrocarbon producers will produce more at the margin. No,
Speaker 1: And for two simple reasons. One, shareholders continue to tell
Speaker 1: them not to do so and prioritize green energy. And too,
Speaker 1: because interest rates are going up again, servicing debt just
Speaker 1: gets a lot more expensive. This is the other problem
Speaker 1: that we're seeing in the U S. U S. Production
Speaker 1: isn't rising particularly sharply, and I think the market will
Speaker 1: realize this next year. But of course the problem for
Speaker 1: the US is that freight rates have skyrocketed so moving
Speaker 1: that oil has become extremely expensive. And I think that's
Speaker 1: actually good to be a double whammy and way on
Speaker 1: US production. Even Samrita sent thank you so much. Always
Speaker 1: a clinic she is with energy aspects just outstanding as well.
Speaker 1: Duck Cass now on the market's Duck. I loved your
Speaker 1: note where you talked about old stock strategist named Voltaire
Speaker 1: and it's just a point where you have to learn
Speaker 1: to climb on board. How do you climb on board
Speaker 1: a bull market? No one believes in it's rough. I
Speaker 1: mean this has been some year, um. Most investors have
Speaker 1: been beaten up. Fortunately, we had a profitable year a
Speaker 1: hedge run Sea Breeze partners UM. We started the year bearish,
Speaker 1: But the real key to our success this year and
Speaker 1: hopefully in the future is that we're a throwback. We're
Speaker 1: throwback to the original hedge fund A. W. Jones, which
Speaker 1: was formed actually the year I was born. And I
Speaker 1: think the business media spent a lot of time in
Speaker 1: talking about market outlook Tom and Paul, not enough about process.
Speaker 1: What's the process at Sea Breeze if you remember, Unlike
Speaker 1: most investment funds of the day, Jones was created essentially
Speaker 1: along and short long short hedge fund, or as Jones
Speaker 1: called it, a hedged fund UM. So, like Jones, Sea
Speaker 1: Breeze strategy is to balance long positions or bets that
Speaker 1: the security is going to rise in price, with short
Speaker 1: positions that bets security will fall UM. And they introduced
Speaker 1: this approach in order to reduce exposure to market swings
Speaker 1: and create alpha, and certainly relevant today with all the
Speaker 1: economic and market outcomes uncertain they introduced something called pairs trading,
Speaker 1: and I think it seems to be a continued ticket
Speaker 1: or strategy in a period of very sluggish, uncertain and
Speaker 1: uneven growth. And this direction we're taking. By the way,
Speaker 1: you were talking about Taylor Swift. My favorite pair of
Speaker 1: strade is short Taylor Swift and long El Fitzgerald. People.
Speaker 1: If you think about it, if you think about the
Speaker 1: last ten or fifteen years, guys come on ast traditional plane,
Speaker 1: vanilla asset managers come on and they say they do
Speaker 1: all the same thing. They buy the thirty favorite stocks,
Speaker 1: they hold them through hell or high water, they play
Speaker 1: a lot of golf, they acquire more assets their at
Speaker 1: there's not managers. And when the tide went out as
Speaker 1: it did this year, their exposed was swimming naked. Quote
Speaker 1: of the year not seeing teleb love him to death
Speaker 1: and he said gravity is back in physics and years
Speaker 1: in mind Paul's world, the risk free rate is back.
Speaker 1: How does the risk free rate change? Naive long only
Speaker 1: active investment? You know, risk free is a big issue.
Speaker 1: Um uh, this is the way I look at it, Tom.
Speaker 1: The S and P dividend yield today is one point
Speaker 1: six The two year yield just broached four point five
Speaker 1: percent UM. With the profit cycle turning down, it is
Speaker 1: quite obvious with this relationship materially different than it was
Speaker 1: as little as eleven or twelve months ago that this
Speaker 1: should be a fundamental part of one's core bearish view.
Speaker 1: And obviously there are other headwinds that we have political
Speaker 1: partner partisanship, we have the lack of leadership in Washington.
Speaker 1: We have a wayward central bank. We have rising geo
Speaker 1: political risks, were weakening non US economic growth, most notably
Speaker 1: in China and Europe. And as you've talked all morning,
Speaker 1: we have curb and version, which typically pre sages recession.
Speaker 1: I think that that the profits cycle is turning down
Speaker 1: much harder than most realized. In terms of market view, however,
Speaker 1: I think we're basically model value. There's a tendency I
Speaker 1: think to be hyperbolic and market views. It gets media
Speaker 1: attention and gets celebrity. But I've observed that outlier forecasts,
Speaker 1: both fulish and bearish, are rarely met. And as Buffett says,
Speaker 1: it tells you more about the four asked than the forecast. So, Doug,
Speaker 1: I mean, one of the many reasons we like chatting
Speaker 1: with you is we come away knowing exactly what you're
Speaker 1: doing in the market. Are you buying or selling this market?
Speaker 1: Are you waiting? Um? I have said that UM that
Speaker 1: with the market decline over the last three months, I've
Speaker 1: been able to buy great companies at good prices, but
Speaker 1: not great companies that great prices. As the markets rallied,
Speaker 1: I'm no longer being able to buy great companies at
Speaker 1: good prices. I do see value. I see value in
Speaker 1: several sectors. I think large cap technology has begun to
Speaker 1: look very attractive. I'm back very large long in Amazon
Speaker 1: as well as Alphabet and Microsoft. I think that their
Speaker 1: competitive modes, if you think about it, have improved in
Speaker 1: the last three years, and all these less well capitalized
Speaker 1: competitors are falling by the wayside as well. If you
Speaker 1: look at the NASTAC one hundred UM, the index is
Speaker 1: selling at roughly four times sales and that's UH compared
Speaker 1: to eight point five times at the peak in November December.
Speaker 1: I'm buying bank I'm buying the banks UM, which Bank
Speaker 1: of America, wells Fargo. As rates go higher and stay
Speaker 1: higher for longer, the interest rates UH. The industry is
Speaker 1: interest rates sensitive and assets sensors. And finally, I'm very
Speaker 1: high on cannabis stocks UM. I own Green Thumb Industries,
Speaker 1: which is the Krem Della Kreme. I own a small
Speaker 1: stock terrorist t R SSF, which is benefiting from the
Speaker 1: New Jersey exposure, is managed by the best executive in
Speaker 1: the business, Jason Wilde. And in terms of unfavorable sectors,
Speaker 1: I'd avoid all companies naturally. They are heavily indebted and
Speaker 1: have large debt maturities coming up. And if you look
Speaker 1: at companies like Carnival Cruise Lines and Carvana, they come
Speaker 1: to mind, of course. And then there is f t X.
Speaker 1: I want to go, Doug, what do you? What do you?
Speaker 1: You know? This is removed from Doug cast folks, but
Speaker 1: Doug cast on you and I have seen this a
Speaker 1: million times before. And basically, to come on of this
Speaker 1: is whatever the bigcoin chat chat chat is, you can
Speaker 1: make eight percent with us, or whatever the bigcoin chat
Speaker 1: chat chat is, you can make ten percent. This is
Speaker 1: like the annuities Doug in our ut. I mean, we
Speaker 1: have we seen this before and we should learn a
Speaker 1: lesson from all this. Pol Um. By the way, I'm
Speaker 1: looking forward to ft X, the movie starring Jonah Hill
Speaker 1: as Sam Banquin. Fraud. But I've long been an outspoken
Speaker 1: crypto bail bear, calling it a backslapping millennium fraud clear
Speaker 1: many times with you in barrens and elsewhere. I like
Speaker 1: what Charlie Munger said. He described bigcoin as stupid and evil,
Speaker 1: and I think it's an epic failure that has plumbed
Speaker 1: the depths of human investing. File Ali. It was a
Speaker 1: monumental failure, failure accountability, transparency, filled with a numerous supporters
Speaker 1: who possessed clear but often unexposed conflicts of interest and
Speaker 1: driven by raudulent actions barring customer funds, creating FTX coins,
Speaker 1: using them, showing them as reserves among the nonsensical and okay,
Speaker 1: stupid and the other thing. The final thing is that
Speaker 1: we should always remind us elves that we, as Benjamin Disraeli,
Speaker 1: the Exchequer of England said, what we've learned from history
Speaker 1: is that we haven't learned from history. And these things
Speaker 1: endron ft X world Coom made off. They always occur
Speaker 1: in the lot of stages of a bull market. Okay,
Speaker 1: we gotta leave it there. Doug Cass, thank you so much.
Speaker 1: Great to talk to you about Justin Verlander, his MVP.
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