WEBVTT - Surveillance: MTA In Desperate Need, CEO Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily 0:00:13.960 --> 0:00:17.560 we bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.480 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.640 Bloomberg dot Com, and of course on the Bloomberg Right now. Off, 0:00:27.760 --> 0:00:29.840 what we heard from Sunder McConnell in the mystery of 0:00:29.840 --> 0:00:33.720 what we'll see today from Disarray and the Republican Party 0:00:34.280 --> 0:00:36.400 is the reality of what it means for the funding 0:00:36.479 --> 0:00:40.040 of our transportation. That can be DFW and Dallas. That 0:00:40.120 --> 0:00:42.720 can be the airlines out west, the railroads coast to 0:00:42.800 --> 0:00:46.400 coast amtrack even or it can be the m t A. 0:00:46.560 --> 0:00:49.480 The chairman and CEO is ex Scott, and our Pat 0:00:49.520 --> 0:00:53.159 Foy joins us right now. Pat, you're listening to the 0:00:53.240 --> 0:00:58.640 dialogue in Washington on the Foyd desperation Meter. How badly 0:00:58.720 --> 0:01:03.440 do you need federal help after the writer's shortfall you're 0:01:03.480 --> 0:01:08.240 seeing on the desperation index. We're in a we're facing 0:01:08.240 --> 0:01:11.679 a fiscal tsunami, once in a hundred year fiscal tsunami 0:01:11.800 --> 0:01:16.640 which has left our infrastructure intact with demolished of our revenues. 0:01:17.319 --> 0:01:20.360 We exhausted, and we exhausted on Friday, the last of 0:01:20.400 --> 0:01:24.319 the CARES dollars that we got several months ago. That 0:01:24.400 --> 0:01:27.280 was about three point nine billion dollars of funding. We 0:01:27.319 --> 0:01:30.160 need an additional three point nine and these are shocking 0:01:30.280 --> 0:01:33.240 numbers to get us through the remainder of the year. 0:01:33.959 --> 0:01:38.960 Our revenue sources are come from our customers, affairs and tolls. 0:01:39.000 --> 0:01:42.440 Those are down precipitously, and the remaining half of our 0:01:42.480 --> 0:01:45.640 revenues comes from a dedicated package of taxes and subsidies 0:01:45.880 --> 0:01:48.760 which are economically sensitive. In those two are falling off 0:01:48.760 --> 0:01:51.880 a cliff town. Do you get a feeling Washington and 0:01:51.960 --> 0:01:55.800 different flavors, including a gentleman residing above the Gucci store 0:01:56.200 --> 0:01:59.040 on Fifth Avenue. Do you get the feeling they're saying 0:01:59.240 --> 0:02:04.360 New York up dead? I I hope not. I think 0:02:04.400 --> 0:02:08.799 we'll find that out in the in the weeks to come. Clearly, 0:02:09.240 --> 0:02:12.160 states and cities around the country, including New York City 0:02:12.160 --> 0:02:14.480 and New York State, or in desperate need of funding. 0:02:14.960 --> 0:02:16.760 I'm here to talk about the m t A today, 0:02:16.800 --> 0:02:19.200 and the m t A is in desperate need of funding. 0:02:19.520 --> 0:02:21.440 The m t A is not only just a mass 0:02:21.480 --> 0:02:24.480 transit agency, it's frankly the circulatory system of the New 0:02:24.560 --> 0:02:28.040 York City regional economy, and not funding the m t 0:02:28.240 --> 0:02:32.680 A will stunt and thwart economic recovery and job creation 0:02:32.800 --> 0:02:35.200 all over New York. Well, give us a sense of 0:02:35.200 --> 0:02:38.200 that scope and scale. I mean, we understand the subway system, 0:02:38.240 --> 0:02:41.040 the busses. I give you major credit for showing the 0:02:41.080 --> 0:02:44.919 decline in ridership numbers right up front on your website, 0:02:45.320 --> 0:02:49.040 But give us give our viewers and listeners worldwide a 0:02:49.200 --> 0:02:53.000 sense of the geographic reach of the m t A. 0:02:53.160 --> 0:02:57.040 It's not the Five boroughs, is it. No, it's beyond 0:02:57.120 --> 0:03:00.600 the subways buses in New York City, five earls Long 0:03:00.600 --> 0:03:06.000 Island Railroad goes out NASA and Suffolk County. Metro North 0:03:06.080 --> 0:03:09.240 covers Westchester and North as well as part of Connecticut. 0:03:09.320 --> 0:03:11.760 And we've got a small operation that New Jersey Transit 0:03:11.840 --> 0:03:15.200 runs for US west of Hudson UH In a technical 0:03:15.320 --> 0:03:19.480 day pre pandemic will carry well over eight million passengers. 0:03:20.000 --> 0:03:23.600 Pre pandemic subway ridership average weekday five and a half 0:03:23.639 --> 0:03:27.280 million customers right now one point two million. That's up 0:03:27.320 --> 0:03:30.760 substantially from the depths of the pandemic, but a fraction 0:03:30.800 --> 0:03:32.760 of the numbers that we would carry on all of 0:03:32.800 --> 0:03:36.040 those agencies. In my anecdotal and his, folks is real simple. 0:03:36.200 --> 0:03:40.000 I was thunderstruck how empty New York City was this weekend, 0:03:40.040 --> 0:03:43.120 Like I've honestly never seen it in my time at 0:03:43.120 --> 0:03:45.920 Bloomberg and PET four. You're living with this, with the 0:03:45.960 --> 0:03:48.440 empty office buildings of Midtown and there's all these other 0:03:48.520 --> 0:03:52.280 stories as well. If you get that aid, what do 0:03:52.360 --> 0:03:54.720 you do with it or do you have to begin 0:03:54.880 --> 0:04:00.080 thinking about firing thousands of people. Well, Tom, here's what 0:04:00.080 --> 0:04:02.960 we're gonna do. I'm cautiously optimistic that we're gonna get 0:04:02.960 --> 0:04:05.400 the funding because frankly, it's in the interest of the 0:04:05.520 --> 0:04:08.640 nation to fund the m t a UH to help 0:04:09.040 --> 0:04:13.360 bolster New York City's regional economic recovery. That's in the 0:04:13.480 --> 0:04:17.640 national interest. The pandemic is an international and national challenge, 0:04:17.720 --> 0:04:21.440 and it requires a national solution. So I'm postiously optimistic 0:04:21.480 --> 0:04:24.159 that Washington is going to do the right thing. But 0:04:24.240 --> 0:04:28.080 without funding UH for the rest of the year, that's 0:04:28.080 --> 0:04:31.400 what we're talking about. To get us through, decline in 0:04:31.480 --> 0:04:35.360 revenues has been that precipitous. We will have to consider 0:04:35.520 --> 0:04:40.720 things like wage freezes, like service reductions, like head count reduction, 0:04:41.200 --> 0:04:44.159 delaying or deferring the capital plan. We have an historic 0:04:44.200 --> 0:04:46.880 fifty one and a half billion dollar capital plan that 0:04:47.000 --> 0:04:49.440 was approved a year ago. We've put that on pause. 0:04:49.800 --> 0:04:51.960 None of us wants to replay the movie from the 0:04:52.000 --> 0:04:54.960 seventies and eighties when MTA didn't infest in subways and 0:04:55.000 --> 0:04:59.280 buses and service to climbs. Pafoy, We've got some breaking 0:04:59.279 --> 0:05:00.960 news here. Some gonna have to let you go, but 0:05:01.040 --> 0:05:03.120 we'll monitor is carefully. And of course the m t 0:05:03.240 --> 0:05:05.800 A folks with a huge reach in New York, we 0:05:05.800 --> 0:05:10.320 welcome Bloomberger eleven three oh particularly listening to this swarny. 0:05:10.400 --> 0:05:19.480 Mr Foys, chairman and CEO of the mt AS put sweets. 0:05:19.920 --> 0:05:22.440 And they have a wonderful chief economist. His name is 0:05:22.520 --> 0:05:27.480 James Sweeney, with terrific us and British academics. James Sweeney 0:05:27.680 --> 0:05:31.400 was brilliant a few years ago saying the disinflation and 0:05:31.480 --> 0:05:35.159 deflation gloom of Europe a few years ago was off 0:05:35.200 --> 0:05:38.160 the mark. He joins us this morning with a different view, 0:05:38.440 --> 0:05:41.520 James Sweeney, our service is going to cave in and 0:05:41.640 --> 0:05:47.560 joined goods as disinflation and deflationary items. Well, right now, 0:05:47.640 --> 0:05:51.800 services have joined goods with this collapse and activity, but 0:05:51.839 --> 0:05:56.560 it's been driven by shutdown. Now we're rebounding because there's 0:05:56.760 --> 0:05:59.840 some activity turning back on. But I think if you 0:06:00.040 --> 0:06:03.520 look beyond this rebound, the fears should indeed be toward 0:06:04.520 --> 0:06:08.920 weaker inflation, including in services, given a very uncertain path 0:06:09.000 --> 0:06:12.960 for unemployment and potential for pretty elevated unemployment deep into 0:06:12.960 --> 0:06:15.880 two thousand twenty one. How have you adjusted your GDP 0:06:16.120 --> 0:06:18.480 for the United States of America? Give us a view 0:06:18.520 --> 0:06:20.880 out twelve months or dare I say even at the 0:06:20.960 --> 0:06:24.480 end of this year? Well? Yeah, I mean again, the 0:06:24.520 --> 0:06:28.560 rebound is formidable because when you turn the lights off 0:06:28.600 --> 0:06:30.560 and you turn the lights back on again, it does 0:06:30.600 --> 0:06:33.640 crazy things to the data. So what we're seeing now 0:06:33.800 --> 0:06:38.240 is an incremental slowdown in the US because of increasing 0:06:38.279 --> 0:06:42.040 infections in the summer. But you know, we're still forecasting 0:06:42.080 --> 0:06:46.080 a very strong, basically double digit increase in Q three 0:06:46.160 --> 0:06:48.880 g d P. But what you have to remember is 0:06:48.880 --> 0:06:51.480 that the level of activity is going to be well 0:06:51.520 --> 0:06:55.000 below trent. So you know, if we have GDP contracting 0:06:55.080 --> 0:06:59.560 you know, five percent six percent this year, Um, you've 0:06:59.560 --> 0:07:02.279 got a big cold. Help me with a folk trio 0:07:02.400 --> 0:07:06.880 MC McConnell, Minution and Meadows. I'm sure they're watching right now. 0:07:07.360 --> 0:07:10.800 James Sweeney, what's the American all in unemployment right now? 0:07:10.840 --> 0:07:15.120 The U six it's over, isn't it. Well, that's a 0:07:15.280 --> 0:07:18.280 that's a fake number, because that's telling you about how 0:07:18.320 --> 0:07:22.120 many hourly workers are getting zero hours during a period 0:07:22.120 --> 0:07:25.560 of shutdowns. But I think the real number is probably 0:07:25.560 --> 0:07:28.640 closer to ten than five. And that's a big problem. 0:07:28.760 --> 0:07:32.920 And in six months, even if there's a vaccine around UM, 0:07:32.960 --> 0:07:35.760 if that number is still real number is still closer 0:07:35.800 --> 0:07:39.440 to ten than five UM, then that has real implications 0:07:39.480 --> 0:07:41.760 for the for the FED, and and and for growth 0:07:41.880 --> 0:07:44.600 and for inflation pressures. Let's talk about the latter one. 0:07:44.640 --> 0:07:47.200 Inflation pressures, as you point out, will be the low 0:07:47.200 --> 0:07:51.120 capacity for a sustained period an extended period of time. Yet, James, 0:07:51.160 --> 0:07:55.560 there's a conversation drifting into inflation away from disinflation. Inflation 0:07:55.600 --> 0:07:58.720 reexpectations started to pick up, James, from your perspective and 0:07:58.760 --> 0:08:03.680 your conversations. Why, yeah, Well, it's actually a very popular 0:08:03.720 --> 0:08:09.080 conversation among equity investors, not so much among debt investors. 0:08:09.120 --> 0:08:12.520 But the view is basically, you know MP two money 0:08:12.520 --> 0:08:15.640 supply in the US is up three trillion dollars. Bank 0:08:15.720 --> 0:08:19.120 credit is up just under a trillion dollars. No Treasury 0:08:19.160 --> 0:08:22.920 debt is up, you know, three trillion ish FED balance 0:08:22.920 --> 0:08:27.200 sheets similar, Um, surely this is inflationary down the road. 0:08:27.960 --> 0:08:31.040 Not so surely It's possible, But inflation is a forward 0:08:31.040 --> 0:08:34.640 looking phenomenon. It depends on expectations later on. It depends 0:08:34.679 --> 0:08:39.320 on whether the FED responds to incipient inflationary pressures. A 0:08:39.360 --> 0:08:41.880 lot of good things have to happen first in order 0:08:41.960 --> 0:08:45.560 for us to get there. So, um, so I think 0:08:45.679 --> 0:08:49.720 the focus is it needs to be on, you know, 0:08:49.880 --> 0:08:53.400 on exactly that European situation that I've been not expecting 0:08:53.400 --> 0:08:55.880 in the US for a long time. But the odds 0:08:55.920 --> 0:08:59.439 that inflation gets stuck at a lower level are elevated 0:08:59.520 --> 0:09:01.360 at the moment, and I think the FED is going 0:09:01.400 --> 0:09:03.480 to be focusing on that, and I think we're going 0:09:03.520 --> 0:09:06.720 to see policy actions over the next six months that 0:09:06.720 --> 0:09:08.760 that confirm that fear. James, we can talk about the 0:09:08.760 --> 0:09:10.400 policy action at just a moment. Can you just walk 0:09:10.440 --> 0:09:13.600 through our audience the relationship between money supply and inflation. 0:09:13.679 --> 0:09:16.040 Just how tied does that relationship being or not over 0:09:16.040 --> 0:09:20.079 the last ten years, the last twenty years poor, not good, 0:09:20.360 --> 0:09:25.000 not not a good relationship. And again um with with 0:09:25.160 --> 0:09:29.160 interest rates. So low bonds are not necessarily a great 0:09:29.320 --> 0:09:33.520 attractive alternative to cash in the bank. So if if 0:09:33.720 --> 0:09:37.199 cash is being created in deposits are being created, you know, 0:09:37.320 --> 0:09:39.840 I may not want to put those in fixed income securities. 0:09:39.880 --> 0:09:42.719 I may not want to take the risk of of equities, 0:09:43.320 --> 0:09:45.680 and so the deposits don't go anywhere. I mean, in 0:09:45.720 --> 0:09:48.880 the short run, it's nice that the stimulus has has 0:09:48.920 --> 0:09:52.240 gotten cash flow into a lot of especially you know, 0:09:52.320 --> 0:09:54.959 lower income cash constraint workers, so that they can pay 0:09:55.000 --> 0:09:58.040 their bills. That's extremely important. But the idea that this 0:09:58.080 --> 0:10:01.200 money is going to circulate at a high rate and 0:10:01.320 --> 0:10:03.960 risk and and really grow aggregate demand in a way 0:10:03.960 --> 0:10:08.400 that will quickly be inflationary, uh, seems pretty far fetched 0:10:08.440 --> 0:10:11.040 to me. You're just joining us Bloomberg Radio, Bloomberg Television, 0:10:11.080 --> 0:10:13.480 John Farrell in Time, King James Sweeney with us with 0:10:13.520 --> 0:10:17.520 Credit Sweetzer, Chief Economists. Lots of really good conversation this morning, 0:10:17.600 --> 0:10:22.439 centering on Washington and our fiscal policy, along with Marcus 0:10:22.480 --> 0:10:26.560 Futures up seventeen now up thirteen. James Sweeney. All that's fine, 0:10:27.000 --> 0:10:30.080 But if I get a James Sweeney economy, what does 0:10:30.120 --> 0:10:32.560 four trillion in debt due to it? I don't understand 0:10:32.600 --> 0:10:36.680 the dovetail of saggy nominal g d P, you know, okay, 0:10:36.760 --> 0:10:39.040 kind of like real g d P and a new 0:10:39.120 --> 0:10:43.280 overlay of four trillion in debt. Well, I mean longer term. 0:10:43.320 --> 0:10:46.120 I think that's what's happening with the dollar. I mean, 0:10:46.200 --> 0:10:50.840 I think there are fears about the fiscal path of 0:10:50.880 --> 0:10:53.680 the US longer term. So it's driving a narrative both 0:10:53.720 --> 0:10:57.200 of longer term inflation and you know, positive for gold 0:10:57.320 --> 0:11:01.080 and positive for break evens and and and all these things. Um. 0:11:01.120 --> 0:11:03.559 But there's just a very important hump to get over first, 0:11:03.559 --> 0:11:07.320 and that's the disinflationary pressure of the of the high unemployment. 0:11:07.320 --> 0:11:10.160 And I would say also, you know, without very high 0:11:10.240 --> 0:11:13.800 fed purchases, you're likely to see a decent slowdown in 0:11:13.880 --> 0:11:17.360 bank credit and money supply growth over over the next 0:11:17.360 --> 0:11:20.120 twelve eighteen months. Um. And so if you're if your 0:11:20.200 --> 0:11:22.680 argument is based on those things, your argument may fall apart. 0:11:22.800 --> 0:11:25.000 John who booked him, We don't do this much gloom 0:11:25.040 --> 0:11:28.240 on a Monday, James Sweeney, how are the market people 0:11:28.240 --> 0:11:32.280 at credit suits reacting to your cautious view. The bond 0:11:32.280 --> 0:11:35.640 guys and the equity guys they're different. How are each 0:11:35.720 --> 0:11:39.360 of them reacting to this scenario? Well, I mean a 0:11:39.400 --> 0:11:41.880 lot of the bond guys basically agree with it. I 0:11:41.880 --> 0:11:43.960 mean on the equity side, you know, our our house 0:11:44.040 --> 0:11:47.400 Field and zerich Ar Investment Committee recently went from overweight 0:11:47.440 --> 0:11:50.720 global equities to to neutral. Uh. And part of it 0:11:50.760 --> 0:11:52.800 is based on these fears as we as we get 0:11:52.840 --> 0:11:55.120 into the into the autumn, and I mean neutral is 0:11:55.160 --> 0:11:58.480 not underweight and and risky assets are of course doing 0:11:58.520 --> 0:12:02.200 okay um and but you know, looking forward, I think 0:12:02.200 --> 0:12:04.720 expected returns have definitely come down. It's on this place 0:12:04.760 --> 0:12:06.600 into the Golob trade as well, that you'll pay a 0:12:06.640 --> 0:12:09.800 premium for growth. Jonathan Golub far more constructive on the 0:12:09.840 --> 0:12:12.280 growth names big tech than most people I speak to 0:12:12.320 --> 0:12:14.520 on Wall Street. It has been for quite a while. Yeah, 0:12:14.520 --> 0:12:17.240 And that's to the conversation had earlier with the Licia 0:12:17.320 --> 0:12:19.400 Levine at b N y Mellon who went the other 0:12:19.440 --> 0:12:22.240 way and said you've got to go away from growth 0:12:22.320 --> 0:12:24.679 right now. I mean, John, these are these huge tensions, 0:12:25.320 --> 0:12:28.040 all of them secondary to what we see in Washington 0:12:28.120 --> 0:12:30.680 over the next well, James, not just on the fiscal debate, 0:12:30.720 --> 0:12:32.480 let's talk about the Fed. They meet in forty eight 0:12:32.480 --> 0:12:35.480 hours time as well. Just sounds like your positioning now 0:12:35.600 --> 0:12:38.560 thinking about the next move. Governor Brain had really really 0:12:38.600 --> 0:12:40.920 stimulated this conversation in the last couple of weeks when 0:12:40.960 --> 0:12:44.760 she said we'll move from stabilization to accommodation, and everyone 0:12:44.760 --> 0:12:46.400 on Wall Street was like, well, what was the last 0:12:46.440 --> 0:12:49.400 few months about. If that wasn't about accommodation, what does 0:12:49.440 --> 0:12:53.000 that transition look like in your mind? Well, I think 0:12:53.000 --> 0:12:56.760 the last few months were about emergency measures responding to 0:12:56.800 --> 0:13:00.760 the cash flow crisis through the shutdowns UM and trying 0:13:00.760 --> 0:13:04.320 to ensure market functioning. And you know, if anything, they've 0:13:04.400 --> 0:13:08.080 over ensured market functioning. But I think going forward again, 0:13:08.120 --> 0:13:10.360 it's where does the unemployment rate settle? What does the 0:13:10.400 --> 0:13:14.400 growth and inflation look like three or six months from now? UM, 0:13:14.440 --> 0:13:17.480 And I think most of us think that activity is 0:13:17.480 --> 0:13:19.000 going to be running at a pretty low level, and 0:13:19.000 --> 0:13:22.240 so you're gonna need more help from from the FED. 0:13:22.400 --> 0:13:24.960 So you maybe pulling back some of these emergency measures. 0:13:24.960 --> 0:13:28.000 But in the short run, I think the Fed may 0:13:28.440 --> 0:13:31.800 signal that you know, until unemployment and inflation or at 0:13:31.840 --> 0:13:35.160 exceptional levels, some kind of substantial stimulus is going to 0:13:35.240 --> 0:13:36.600 be in place. And I think in the in the 0:13:36.640 --> 0:13:40.760 background is yield curve control as the next big Buzuka 0:13:41.200 --> 0:13:44.120 to be fired at a time when you're in severe 0:13:44.240 --> 0:13:47.120 market and growth stress. So hopefully that doesn't show up. 0:13:47.400 --> 0:13:50.120 That's the that's the big option, James. Aren't we in 0:13:50.280 --> 0:13:53.920 yield curve control right now? I mean, I'm looking at 0:13:53.920 --> 0:13:57.680 a tenure of point five eight percent. How do you 0:13:57.760 --> 0:14:02.280 control a number that low in America? Well, I mean 0:14:02.360 --> 0:14:05.080 the fact that the market is behaving as if it's 0:14:05.080 --> 0:14:08.920 already implemented, ob serves the FEDS objectives like that's a 0:14:08.960 --> 0:14:11.840 good thing. So what you don't want is the market 0:14:11.880 --> 0:14:13.719 to start to think they're never going to do this. 0:14:14.320 --> 0:14:16.440 And so yields is a curve starts to step and 0:14:16.520 --> 0:14:19.360 yields start to move in a in a in a 0:14:19.440 --> 0:14:23.640 way that that suggests, you know, tightening of financial conditions. 0:14:24.080 --> 0:14:26.600 So um, at some point you know, they may need 0:14:26.680 --> 0:14:29.600 to formalize this thing, but at the moment, there's certainly 0:14:29.640 --> 0:14:33.080 no risk. Assets are doing okay, and yields are doing 0:14:33.080 --> 0:14:35.520 exactly what we need them to do got to catch you. 0:14:35.680 --> 0:14:44.640 They send up best of the tame chief economists. So 0:14:44.680 --> 0:14:48.800 we've got a market your folks is extraordinary and a mystery. 0:14:49.080 --> 0:14:51.400 She's a chief strategist of Mystery of b n Y 0:14:51.480 --> 0:14:54.080 mel And Alicia Levine joins us. And what's great about 0:14:54.080 --> 0:14:58.960 a leisure Levine is prodigious academics behind trying to game 0:14:59.040 --> 0:15:01.760 and guests a view Ford. Alicia, thanks so much for 0:15:01.880 --> 0:15:05.240 joining John Amy this morning. Can you buy the marginal 0:15:05.320 --> 0:15:09.400 share this morning? Alicia? Yeah, but I think you don't 0:15:09.400 --> 0:15:12.240 buy it in tech and you know the message from 0:15:12.280 --> 0:15:15.600 the last couple of weeks. It's really interesting the five 0:15:15.720 --> 0:15:18.800 large cap tech stocks over the last two weeks, we're 0:15:18.960 --> 0:15:23.440 down over five and the rest of the SMP was 0:15:23.480 --> 0:15:28.000 actually up five in the last two weeks, suggesting a 0:15:28.120 --> 0:15:31.480 broadening of the market and the trade moving away from 0:15:31.480 --> 0:15:34.800 the parabola like stocks that we've all talked about for 0:15:34.840 --> 0:15:39.160 the last four months. You can, but you can, yeah, 0:15:39.320 --> 0:15:41.640 do what I mean to interrupt, but this is so important. 0:15:41.640 --> 0:15:43.960 Do you rebalanced by selling tech or do you hold 0:15:44.000 --> 0:15:46.360 the tech and put in new cash to work? Which 0:15:46.400 --> 0:15:49.880 is it? I think you have to sell a little 0:15:49.880 --> 0:15:53.640 tech here. Okay, I think I think that the growth 0:15:53.720 --> 0:15:58.840 stocks must remain a core holding in an overall portfolio allocation. 0:15:59.440 --> 0:16:02.760 Simply the US going forward growth will not be strong, 0:16:02.800 --> 0:16:06.800 will be lower, and so growth tend to outperform. But 0:16:06.920 --> 0:16:09.320 you know, if you look at it on the short basis, 0:16:09.400 --> 0:16:12.520 these are parabolas. They don't suggest future gained in the 0:16:12.640 --> 0:16:15.440 new Yar term, so you know they've gone too far, 0:16:15.640 --> 0:16:18.960 too fast. And the forward, the forward comments after the 0:16:19.040 --> 0:16:23.920 quarters has not been matching what the stack prices have done. 0:16:24.160 --> 0:16:25.960 So I think you pull a little bit out of Teck. 0:16:26.000 --> 0:16:27.560 And that's what we saw in the last couple of 0:16:27.600 --> 0:16:31.360 weeks that people just sort of shaving, not not really dumping, 0:16:31.400 --> 0:16:33.560 but shaving. And that makes sense, you know, because that's 0:16:33.560 --> 0:16:35.720 what you do for rebalancing. You sell your winners and 0:16:35.800 --> 0:16:38.200 you kind of reallocate. Tom And that was the last 0:16:38.200 --> 0:16:41.320 time you interrupted someone with that, meaning to interrupt them. 0:16:41.520 --> 0:16:47.040 Um No, Nixon. Nixon was back to Nixon at least 0:16:47.080 --> 0:16:49.520 I know you're used to Thanks for being with us 0:16:49.520 --> 0:16:52.520 this morning. I know you can handle it. I'm not 0:16:52.560 --> 0:16:55.400 worried about you, Alicia at all, in any way, shape 0:16:55.480 --> 0:16:58.000 or form. The rotation away from tech, let's continue that 0:16:58.040 --> 0:16:59.880 conversation because a lot of people come on this show, 0:17:00.040 --> 0:17:02.280 you know, Alicia, and they talk about rotating out of 0:17:02.320 --> 0:17:06.600 tech but into the cyclical areas elsewhere m Asia, China, 0:17:07.000 --> 0:17:09.720 Europe much more so it's there an argument to stay 0:17:09.800 --> 0:17:14.520 US based. So I think, look, it's really interesting right now. 0:17:14.560 --> 0:17:17.679 The rest of the world is recovering faster than the US. 0:17:17.800 --> 0:17:20.600 So we see it in the industrial production in China, 0:17:20.720 --> 0:17:23.080 we saw it in the data coming out of China 0:17:23.119 --> 0:17:25.000 in the last week, and we saw it last becoming 0:17:25.000 --> 0:17:28.000 out of Europe and the t m I. So the 0:17:28.040 --> 0:17:31.160 rest of the world is recovering faster. The only thing 0:17:31.200 --> 0:17:33.440 I'll say is that the valuations tend to get higher 0:17:33.440 --> 0:17:35.720 in the US. Must I think you definitely have to 0:17:35.720 --> 0:17:39.000 have an allocation to Europe. But the softer dollar does 0:17:39.280 --> 0:17:42.679 argue for cyclicals here in the US. That's going to 0:17:42.720 --> 0:17:46.040 be the bedrock of and some of these stocks. I mean, 0:17:46.080 --> 0:17:49.760 so your software dollars helping these multinational companies. And by 0:17:49.800 --> 0:17:54.520 the way, multinational companies are exposed to the recovery overseas, 0:17:54.840 --> 0:17:57.720 So you know, you have to stay in the US. 0:17:57.760 --> 0:18:00.840 But I think Asia is great, and I think Europe 0:18:00.880 --> 0:18:04.399 looks it looks like a nice trade here. Well, Lea, 0:18:04.480 --> 0:18:06.840 let's continue this conversation. Then. Is the weaker dollar a 0:18:06.920 --> 0:18:09.800 symptom of the foreign inflows or a driver off them? 0:18:09.800 --> 0:18:13.280 How do you frame that for clients at the moment. Well, 0:18:13.320 --> 0:18:17.359 that's a really great technical question, Thank you, Jonathan Um. 0:18:17.440 --> 0:18:20.120 I think I think it's it's a symptom, and it's 0:18:20.160 --> 0:18:24.600 a symptom because let's let's go back to the first 0:18:24.680 --> 0:18:27.439 first basis, right, first stasis is the path of the 0:18:27.480 --> 0:18:32.040 recovery is going to track the path of the virus. Okay, 0:18:32.200 --> 0:18:34.520 and what we've seen in the last sixteen at the 0:18:34.600 --> 0:18:37.040 path that the path of the virus is exploding everywhere 0:18:37.040 --> 0:18:41.119 in the US, and so economic activity is flattening and 0:18:41.200 --> 0:18:44.040 so there it's not happening in other regions of the world. 0:18:44.320 --> 0:18:47.879 So therefore they're recovering fast. We're flattening s. The first 0:18:47.920 --> 0:18:51.760 problem in the labor markets last Thursday, where the claimed 0:18:51.840 --> 0:18:54.000 data win in the wrong direction for the first time 0:18:54.040 --> 0:18:56.960 in sixteen weeks. So we're gonna start feeling it here 0:18:57.040 --> 0:18:59.520 and I think this office dollar is a reflection of that. 0:19:00.080 --> 0:19:03.080 Not to mention, not to mention, yields are so low 0:19:03.080 --> 0:19:05.280 and we've got negative yield as you were talking about 0:19:05.600 --> 0:19:08.119 all the learning long So I think I think that 0:19:08.200 --> 0:19:11.200 the week or dollar is a symptom. Or is dividend 0:19:11.280 --> 0:19:19.640 and dividend growth a proxy for yield right now? Yes? Yes, um, Look, 0:19:19.760 --> 0:19:22.639 you know it's interesting only sixty two companies in the 0:19:22.760 --> 0:19:25.240 SMP have actually cut dividends. I would have thought that 0:19:25.280 --> 0:19:28.080 would have been more, and it's interesting that they haven't. 0:19:28.119 --> 0:19:31.040 And part of that is due to the support from 0:19:31.040 --> 0:19:35.520 the FED supporting all the different levels of bonds here, 0:19:35.560 --> 0:19:38.880 you know, creating a situation where you have enough capital 0:19:39.000 --> 0:19:41.040 and you can both play paid dividends. Because it's the 0:19:41.119 --> 0:19:43.840 number of companies that have cut dividends actually less than 0:19:43.840 --> 0:19:45.840 in two thousand and eight and two thousand and nine, 0:19:46.040 --> 0:19:48.600 which I find really interesting. I would not have expected 0:19:48.640 --> 0:19:50.399 that three months ago. Well come all of you on 0:19:50.400 --> 0:19:53.600 Bloomberg Radio, Bloomberg Television, John Farrow and Tom Keen, Alicia 0:19:53.680 --> 0:19:57.160 Levine with us right now. B and why Melan, Alicia, 0:19:57.200 --> 0:19:59.800 what are you seeing people actually do with their money? 0:19:59.800 --> 0:20:02.119 I'm fascinating when I talked to you, or saying Lisian 0:20:02.200 --> 0:20:06.919 Sanders a hub about what the actual action is of people? 0:20:07.000 --> 0:20:10.080 What is the action right now? So the action is 0:20:10.200 --> 0:20:15.560 very defensive, and that's why we remain cautiously bullish on 0:20:15.560 --> 0:20:21.719 on this market. Nervous but bullish because positioning is defensive. 0:20:21.840 --> 0:20:27.439 So money market funds, goals, and bonds and investment great bonds, 0:20:27.520 --> 0:20:30.959 and that's really where the the incremental trade is coming from. 0:20:31.040 --> 0:20:33.640 People are nervous to buy into this market. And as 0:20:33.640 --> 0:20:36.560 long as you still have that going on, you have support. 0:20:36.640 --> 0:20:40.400 You know, it's it's a it's a contrarian you know view, 0:20:40.640 --> 0:20:43.120 and and so therefore you know you have support under 0:20:43.160 --> 0:20:46.040 the market. But positioning is defensive. So let me ask 0:20:46.040 --> 0:20:53.399 the stupid question, who's buying stocks? Then, um, people are buying. 0:20:53.480 --> 0:20:56.480 If people are still buying stocks, it's just not running 0:20:56.480 --> 0:20:58.679 into tech in the same way. I mean the you know, 0:20:58.720 --> 0:21:01.760 the last couple of weeks as a cautionary sign. That's 0:21:01.760 --> 0:21:05.159 evaluation do matter ultimately, and you have to take some 0:21:05.200 --> 0:21:08.320 of the excess out of it. So we are we 0:21:08.359 --> 0:21:11.960 are sing buying in equity. It's just as the trade is. 0:21:12.119 --> 0:21:15.520 You know, the incremental trade still is bonds, gold and 0:21:15.560 --> 0:21:18.920 and fixed income. Just because we're hermetically sealed here, John 0:21:18.960 --> 0:21:23.720 and I are in two separate cubicles to try to together, well, 0:21:23.760 --> 0:21:27.680 you know that's true. That you know, I just did 0:21:27.720 --> 0:21:31.400 a log chart on Amazon with some fancy moving mathematical 0:21:31.440 --> 0:21:35.080 averages for Alicia Levine. Come on, Alicia, Amazon, all that's 0:21:35.119 --> 0:21:38.360 done is fallen back to a very comfortable support. It's 0:21:38.400 --> 0:21:41.480 not a correction. It's almost like a pause. I mean, 0:21:41.520 --> 0:21:45.040 do you buy the dip? Can you buy the dip? 0:21:45.080 --> 0:21:47.680 In the text of I need to make some money 0:21:47.720 --> 0:21:50.840 here about nine tenths of one percent west of camp 0:21:51.200 --> 0:21:53.560 on Nata on the NaSTA in the last couple of weeks. 0:21:53.560 --> 0:21:55.639 I know we've come back a bit, but hardly. We're 0:21:55.680 --> 0:21:58.280 still up near old time hist Tom. I don't know. 0:21:58.320 --> 0:22:00.560 I'm just trying to impress Alicia with my math, and 0:22:00.600 --> 0:22:03.480 all I see is on a large chart, Amazon's back 0:22:03.560 --> 0:22:07.960 to support. I mean, it's not like it's caved in, right, no, so, 0:22:08.080 --> 0:22:11.840 but look it is twelve off the high so you 0:22:11.880 --> 0:22:15.240 know that is not you know again, that is that's 0:22:15.280 --> 0:22:17.800 not a bad that's not a bad entry point for 0:22:17.840 --> 0:22:20.919 any stuck after your you know, ten to twelve percent 0:22:20.960 --> 0:22:23.639 off the highs and that kind of fast mover. That's 0:22:23.680 --> 0:22:26.400 that's fine. We don't think these stocks are rolling over. 0:22:26.560 --> 0:22:28.400 We just think some of the excess has to come 0:22:28.400 --> 0:22:31.119 out of it, and charting is a great way to 0:22:31.160 --> 0:22:34.200 pick your entry point. You know, as I've said before, 0:22:34.240 --> 0:22:36.840 parabolus don't make for a great technical charts. You have 0:22:36.960 --> 0:22:39.480 to wait. Always enjoy catching up with you. Appreciate that 0:22:39.480 --> 0:22:41.800 your patients this morning with us as well, Alicia Leavin, 0:22:44.560 --> 0:22:48.720