WEBVTT - Traders Expect Fed Dovishness and Obamas Speak at the DNC 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always i Bloomberg Radio, 0:00:43.080 --> 0:00:47.360 the Bloomberg Terminal, and the Bloomberg Business App. The annual 0:00:47.479 --> 0:00:52.840 payrolls benchmark revision. Sarah Hunt is in equities and she's 0:00:52.920 --> 0:00:56.440 focused on this economics. Why are you focused on this 0:00:56.840 --> 0:00:58.960 payroll revisions? If you're running stocks? 0:01:00.240 --> 0:01:02.040 What's been going on for the last year. One of 0:01:02.080 --> 0:01:04.200 the big things that people have been excited about is 0:01:04.200 --> 0:01:06.440 the labor market has stayed strong, and this is given 0:01:06.440 --> 0:01:08.959 the FED room to not cut rates because the economy 0:01:08.959 --> 0:01:11.679 has stayed strong. And if this turns out, and there 0:01:11.720 --> 0:01:14.280 have been a lot of discussions about which of the 0:01:14.360 --> 0:01:18.360 various labor mass ways you should look at, this are correct. 0:01:18.600 --> 0:01:21.240 If there's a big downward revision. Then that labor story 0:01:21.280 --> 0:01:23.280 starts to take a little bit off, and people really 0:01:23.280 --> 0:01:26.640 start to worry again about the consumer because if if 0:01:26.680 --> 0:01:28.360 you have a job, you're willing to spend it, if 0:01:28.360 --> 0:01:29.880 you don't, you're not. So I think that there's a 0:01:29.880 --> 0:01:31.920 big question about how that plays out Atlanta. 0:01:32.000 --> 0:01:34.920 GDP is coming down. It was two point x boom economy, 0:01:35.360 --> 0:01:39.240 solid economy. Maybe it's down to two percent. Is there 0:01:39.280 --> 0:01:43.080 a point where in the equity space we become more 0:01:43.200 --> 0:01:47.960 like Macy's and not Target, where GDP and consumer pulse 0:01:48.320 --> 0:01:50.000 gives way to moldy earnings. 0:01:50.280 --> 0:01:52.600 I think that's the big concern, right because what you've 0:01:52.640 --> 0:01:55.600 seen out of the sort of discount retailers, if you will, 0:01:55.720 --> 0:01:58.000 is good numbers. And Target had a lot of problems 0:01:58.040 --> 0:02:00.640 coming out of the pandemic with an inventory shoe and 0:02:00.640 --> 0:02:02.520 it took them some time to work through that and 0:02:02.560 --> 0:02:05.560 now they're back on track. But with Macy's, it's hard 0:02:05.600 --> 0:02:07.520 to tell if it's just Macy's, but if that middle 0:02:07.520 --> 0:02:10.320 consumer is really starting to feel the pinch on both sides, 0:02:10.360 --> 0:02:12.120 I think you start to worry about earnings, and that 0:02:12.160 --> 0:02:14.359 becomes a question with equity levels where they are. 0:02:14.680 --> 0:02:17.239 We have some I think the earnings come out of 0:02:17.280 --> 0:02:19.360 the second quarter were pretty solid. How do you What 0:02:19.400 --> 0:02:21.200 did you take away from the second quarter earnings and 0:02:21.200 --> 0:02:23.400 maybe some of the I guess the forecast going forward? 0:02:23.760 --> 0:02:25.600 Well, I'm going to give a big plug to Tom 0:02:25.680 --> 0:02:27.800 Keane's corporations will adapt. 0:02:27.880 --> 0:02:28.840 Yes, and they. 0:02:28.680 --> 0:02:34.360 Did Sparta listening. She's probably up at ninety two nine. Yes, 0:02:34.560 --> 0:02:37.280 in Boston working on that, working on the painting, getting 0:02:37.280 --> 0:02:40.960 the curtains and all that, because after Labor Day we're 0:02:41.040 --> 0:02:42.000 on a big news single. 0:02:42.040 --> 0:02:43.480 I know Boston, I know it's huge. 0:02:43.600 --> 0:02:45.440 Basically, she said that that's great. 0:02:45.560 --> 0:02:49.560 Yeah, So I mean earnings, I mean, what's your takeaway? 0:02:49.600 --> 0:02:51.360 Well, I think that the big concern, and it was 0:02:51.639 --> 0:02:54.200 concern that we shared quite honestly, was that margins were 0:02:54.200 --> 0:02:56.200 going to have a problem as inflation came down, because 0:02:56.240 --> 0:02:59.880 if margins were accelerating because of inflation and corporations were capturing, 0:03:00.400 --> 0:03:01.760 than they were going to see a bit of a 0:03:01.760 --> 0:03:04.800 margin squeeze. So far, that has yet to materialize, and 0:03:04.840 --> 0:03:07.360 in fact, the expectation for margins going into twenty twenty 0:03:07.400 --> 0:03:10.160 five and the backup of twenty twenty four are pretty decent. 0:03:10.480 --> 0:03:12.840 So that's where your earnings have been able to be okay. 0:03:12.880 --> 0:03:14.840 The question is if the top line starts to get 0:03:14.840 --> 0:03:17.200 affected even more, that could be an issue. 0:03:17.440 --> 0:03:22.840 Is your analysis narrow and sector specific and even within sectors, 0:03:23.320 --> 0:03:25.440 or is it more holistic about the market. 0:03:25.560 --> 0:03:27.799 Well, the numbers that I was just talking about are 0:03:27.800 --> 0:03:29.520 more holistic about the market, but if you look at 0:03:29.560 --> 0:03:32.360 certain sectors, I mean, that's where also technology has really 0:03:32.600 --> 0:03:35.880 carried healthcare in a lot of places. Healthcare has been 0:03:35.920 --> 0:03:38.960 a little bit problematic coming out of the pandemic, but 0:03:39.040 --> 0:03:41.840 it's starting to work better and it's starting to do okay. 0:03:41.880 --> 0:03:44.360 I think the insurers had great numbers coming out because 0:03:44.360 --> 0:03:46.840 nobody was utilizing healthcare for a while. So the question 0:03:46.880 --> 0:03:49.280 is what's going to happen to them as utilization starts 0:03:49.280 --> 0:03:52.080 to pick up. But I think in general, the question 0:03:52.160 --> 0:03:54.200 about margins has been a lot less. It has been 0:03:54.200 --> 0:03:55.320 more benign than people expect. 0:03:55.360 --> 0:03:58.880 I said, Lisa, is my botox? Is that utilizing healthcare 0:03:59.360 --> 0:04:02.200 that doesn't care that we'll save me? 0:04:02.960 --> 0:04:04.800 All right, Sarah, where do we go here? Coming out 0:04:04.840 --> 0:04:08.360 here this earnings? We've got a fed that presumably me 0:04:08.440 --> 0:04:12.240 cutting rates. We've got decent earnings. Do we just stick 0:04:12.280 --> 0:04:14.680 with the magnificent seven. Do we try to get a 0:04:14.720 --> 0:04:16.840 little bit more creative out there, Do we look for 0:04:17.040 --> 0:04:19.520 value and sectors outside the mag seven? 0:04:19.680 --> 0:04:21.479 Well, some of the catch up in the last week 0:04:21.640 --> 0:04:23.760 has actually been on the S and P equal weight, 0:04:23.839 --> 0:04:25.840 So that tells you that that market has broadened out 0:04:25.839 --> 0:04:28.400 a bit, So it's not just the Magnificent seven. I 0:04:28.400 --> 0:04:31.000 think that downdrafting technology was bought pretty quickly. It was 0:04:31.040 --> 0:04:33.080 the balance of the market that took a couple more days. 0:04:33.080 --> 0:04:34.840 But you really have seen I mean, it's almost like 0:04:34.880 --> 0:04:36.960 the beginning of August never happened, right, So there's a 0:04:37.120 --> 0:04:39.920 very there's a very quick snapback there. And I think 0:04:40.120 --> 0:04:42.479 that as long as you can see, you know, corporations 0:04:42.520 --> 0:04:45.080 are still spending money, there's plenty of cash out there, 0:04:45.279 --> 0:04:47.279 it does look pretty good. But if you start to 0:04:47.279 --> 0:04:49.720 see things really slow down on the margin, the question 0:04:49.800 --> 0:04:52.120 is where the valuations are now? Can they stay there 0:04:52.160 --> 0:04:53.880 or can they go further? What's your next leg up? 0:04:53.880 --> 0:04:55.480 At the heart of this, and I'm going to cite 0:04:55.480 --> 0:04:57.680 glob and sex, but you know, I'm not sure that, folks, 0:04:57.720 --> 0:04:59.640 I don't have it in front of me. There seems 0:04:59.640 --> 0:05:03.680 to be a model from six percent revenue growth down 0:05:03.720 --> 0:05:06.760 to four percent revenue growth. David Coston, like me taking 0:05:06.800 --> 0:05:12.080 this off of nominal GDP. Can your world work successfully 0:05:12.560 --> 0:05:16.240 with nominal GDP giving you four percent revenue growth? 0:05:16.760 --> 0:05:19.839 Oh? I think it absolutely can. And in the people younger. 0:05:19.560 --> 0:05:21.800 Sarah don't agree with this. I mean, you were nineteen 0:05:22.200 --> 0:05:24.880 when we were doing this. But the answer is there 0:05:25.000 --> 0:05:27.240 was a time where nominal was there. 0:05:27.360 --> 0:05:29.680 Yes, and I think that there was also. Again, it 0:05:29.720 --> 0:05:32.479 is such an unusual situation to have gone through a 0:05:32.480 --> 0:05:35.480 global pandemic that this fits and starts, and the actual 0:05:35.920 --> 0:05:38.839 numbers and how fast things are increasing are harder to 0:05:38.880 --> 0:05:41.039 put into a historical context when you have such a 0:05:41.080 --> 0:05:42.720 giant downdraft. I mean, I think that's part of the 0:05:42.720 --> 0:05:44.680 problem with the labor market. And one of the reasons 0:05:44.680 --> 0:05:47.080 that people are concerned about the revisions is because we're 0:05:47.120 --> 0:05:49.479 working off a lot of models that are hypothetical, that 0:05:49.520 --> 0:05:52.240 show a birth death model for businesses and everything else. 0:05:52.240 --> 0:05:54.280 And I think that that's really difficult to parse when 0:05:54.320 --> 0:05:56.880 you go through such a big historic change. 0:05:57.400 --> 0:06:02.200 Fixed income to your treasuries four percent, that's fine for me, 0:06:02.400 --> 0:06:04.320 but try to take some more credit risk. 0:06:04.839 --> 0:06:06.599 Well, I think The difficult thing is now is that 0:06:06.640 --> 0:06:08.719 you know that the FED is going to start cutting rates. 0:06:08.720 --> 0:06:10.680 They pretty much telegraph that that's going to happen, and 0:06:10.720 --> 0:06:13.159 whether or not they do it in a big, chunky fashion, 0:06:13.200 --> 0:06:15.720 which I don't expect them to do. We know that 0:06:15.760 --> 0:06:17.680 those short term rates are coming down, so sure you 0:06:17.680 --> 0:06:19.400 can take four percent out of two year, which you're not. 0:06:19.440 --> 0:06:23.040 It's going out further, that's the question. And compressed credit 0:06:23.240 --> 0:06:26.200 spreads are still very compressed, so that means that taking 0:06:26.200 --> 0:06:28.080 that credit risk, you're not getting paid as much as 0:06:28.120 --> 0:06:30.400 you would have in any kind of an with a 0:06:30.400 --> 0:06:32.919 little bit more uncertainty. So it's a little difficult, but 0:06:32.960 --> 0:06:35.279 I think that having some fixed income now finally is 0:06:35.320 --> 0:06:36.280 part of the portfolio. 0:06:36.880 --> 0:06:38.920 All Right, we're sending Tom Keen and Lisa browm w's 0:06:38.920 --> 0:06:41.760 out to Jackson Hole today, so they're going to get 0:06:41.760 --> 0:06:44.120 ready for this whole thing. What are they going to 0:06:44.160 --> 0:06:45.320 hear when they go out there? Do you think? 0:06:45.800 --> 0:06:45.920 Well? 0:06:45.960 --> 0:06:47.320 I think a lot is going to depend on what 0:06:47.360 --> 0:06:49.440 happens today and with those revisions, because whether or not 0:06:49.480 --> 0:06:51.600 they have to talk about that or not talk about 0:06:51.640 --> 0:06:53.920 that is going to be a big issue. But I 0:06:53.920 --> 0:06:56.440 also think that it's been telegraphed, like I said, pretty 0:06:56.480 --> 0:06:59.080 well that unless the data goes in the opposite direction 0:06:59.120 --> 0:07:00.840 and or you see a spy and inflation, we can 0:07:01.040 --> 0:07:03.400 start to expect to see rates come down. And I 0:07:03.400 --> 0:07:05.599 think that's going to be if we don't do much 0:07:05.600 --> 0:07:07.599 else except deal with that. I think that's probably going 0:07:07.680 --> 0:07:08.880 to be what they're targeting. 0:07:09.800 --> 0:07:12.000 So, I mean, I think the issue here for a 0:07:12.000 --> 0:07:15.360 lot of investors, Sarah is I mean, I've had a 0:07:15.360 --> 0:07:18.240 pretty good year so far. I mean, do I just 0:07:18.520 --> 0:07:20.840 can I just take my money and just put it 0:07:21.120 --> 0:07:23.240 under the mattress for the rest of the year. What 0:07:23.320 --> 0:07:23.920 do I do here? 0:07:24.280 --> 0:07:25.920 Well, you could unless you did it for a living, 0:07:26.080 --> 0:07:28.720 which case it wouldn't really appreciate. 0:07:28.200 --> 0:07:30.200 That we're paying you to do this. I forgot we're 0:07:30.200 --> 0:07:30.960 paying you to do this. 0:07:31.080 --> 0:07:33.960 I think. I mean, we've been really we've been pretty 0:07:33.960 --> 0:07:37.160 happy with our positioning thus far this year. That downdraft 0:07:37.280 --> 0:07:39.960 was so fast, nobody really changed very much because it 0:07:40.000 --> 0:07:43.080 was such a quick, quick up and down. I think 0:07:43.080 --> 0:07:45.520 that what people are looking for is what's going to 0:07:45.560 --> 0:07:48.160 happen into twenty twenty five, what's going to happen as 0:07:48.200 --> 0:07:49.720 we go through the end of this year. This year 0:07:49.760 --> 0:07:51.840 looks pretty good. What's going to happen next year? We've 0:07:51.880 --> 0:07:53.400 got an election. There's some uncertainty there. 0:07:53.480 --> 0:07:57.480 As a general statement, I don't see exuberants within broader 0:07:57.600 --> 0:08:01.520 society for stocks. I can't believe I'm saying this. It 0:08:01.640 --> 0:08:06.040 futures forty one twenty five on the doubt, I don't sense. 0:08:06.160 --> 0:08:06.720 Am I wrong? 0:08:07.520 --> 0:08:10.240 No? I think that there is a real question of, like, okay, 0:08:10.280 --> 0:08:12.640 we bounce back for all this, all these things happen, 0:08:12.680 --> 0:08:14.520 Where are we right now? And how much money do 0:08:14.560 --> 0:08:16.480 I want to put to work immediately? If I was 0:08:16.480 --> 0:08:19.080 starting a brand new portfolio, I would probably do that 0:08:19.400 --> 0:08:22.160 in stages, because I'm not sure given some of the 0:08:22.240 --> 0:08:24.600 uncertainties that we're seeing, why you would put one hundred 0:08:24.600 --> 0:08:27.920 percent on day one. Given that the equity markets are 0:08:27.960 --> 0:08:30.760 where they are, which doesn't mean that they're completely overvalued, 0:08:30.800 --> 0:08:32.720 it just means that we are not. We're not in 0:08:32.720 --> 0:08:33.720 the middle of a downdraft. 0:08:33.720 --> 0:08:34.040 We didn't. 0:08:34.040 --> 0:08:36.360 We had a correction, We turned around and came right 0:08:36.400 --> 0:08:38.200 back to close to all time highs. 0:08:38.640 --> 0:08:40.040 Yes, sir, thank you so. 0:08:40.040 --> 0:08:54.600 Much, Sarah, thank you for being this Olping was kepling 0:08:54.960 --> 0:09:00.839 and reporting from Chicago, reporting and she always does wonderfully 0:09:00.880 --> 0:09:03.520 on the politics of the nation in this case of 0:09:03.559 --> 0:09:06.920 a democratic flavor. Open question and where he to start. 0:09:07.240 --> 0:09:10.840 How's the energy in Chicago different from any other convention 0:09:11.320 --> 0:09:12.040 you've attended. 0:09:14.600 --> 0:09:17.040 Well, look, I think there's a ton of energy at 0:09:17.080 --> 0:09:20.480 the RNC as well, especially that evening that Trump came 0:09:20.520 --> 0:09:22.679 out to give his performance. I was on the convention 0:09:22.840 --> 0:09:25.600 floor and it was really it was electric to the 0:09:25.600 --> 0:09:28.480 people in the room. The man had just literally dodged 0:09:28.480 --> 0:09:31.400 a bullet, there was an attempt on his life. And 0:09:31.440 --> 0:09:34.760 then he comes out and explains all of that in 0:09:34.840 --> 0:09:38.360 depth to his supporters and almost gave a sermon. But 0:09:38.559 --> 0:09:43.240 since then, a month later, this election has changed drastically 0:09:43.600 --> 0:09:47.840 and there is fresh energy and momentum in this Democratic Party. 0:09:48.120 --> 0:09:52.119 Kamala Harris is drawing crowd that Joe Biden was unable 0:09:52.160 --> 0:09:53.720 to do for the past year. 0:09:53.880 --> 0:09:57.319 In fifteen minutes scheduled, there's going to be the Hispanic 0:09:57.480 --> 0:10:03.000 Caucus meeting. Does Vice President Harris want out of the 0:10:03.080 --> 0:10:04.920 Hispanic Caucus meeting? 0:10:07.800 --> 0:10:10.160 Well, she wants them to be energized to get voters 0:10:10.200 --> 0:10:13.480 out in places like Arizona and Nevada, which now are 0:10:13.600 --> 0:10:17.800 in play for this Democratic Party, and these are states 0:10:17.800 --> 0:10:21.080 that she is going to be visiting, and she needs 0:10:21.120 --> 0:10:23.400 to do that because one issue that's close to a 0:10:23.440 --> 0:10:25.640 lot of these people in these states is the border, 0:10:25.960 --> 0:10:29.960 and President Donald Trump will be in Arizona at the 0:10:30.000 --> 0:10:34.680 border on Thursday, wanting to counter program the rhetoric and 0:10:34.720 --> 0:10:37.679 the policies we're hearing out of the DNC. He really 0:10:37.679 --> 0:10:40.199 wants to try, or his campaign wants him to try 0:10:40.240 --> 0:10:42.839 to focus on the issues, and that's one of them. 0:10:42.920 --> 0:10:47.000 So when she speaks to people like the Latino or 0:10:47.080 --> 0:10:50.640 LATINX Coalition, it's about this making sure they can run 0:10:50.720 --> 0:10:52.559 up these numbers in these states. 0:10:53.200 --> 0:10:57.400 An Marie, what is the expectation about the Democrats positioning 0:10:57.440 --> 0:11:00.120 for down ballot races. I've seen some reporting over the 0:11:00.200 --> 0:11:03.120 last couple days that the momentum that Kamala Harris has 0:11:03.400 --> 0:11:06.560 generated so far since entering the race as the top 0:11:06.640 --> 0:11:11.120 candidates will maybe impact down ballot's. What's the thinking on 0:11:11.160 --> 0:11:12.160 floor there in Chicago. 0:11:14.440 --> 0:11:16.280 Well, this is one of the reasons why when President 0:11:16.320 --> 0:11:19.839 Biden recently sat down with CBS this morning, he talked 0:11:19.880 --> 0:11:22.679 about that's one of the reasons why he decided to 0:11:22.760 --> 0:11:26.080 leave the race. He saw that the data he saw. 0:11:26.160 --> 0:11:28.760 The information he was given was that it was affecting 0:11:29.080 --> 0:11:32.559 his colleagues in Congress. There's been a lot of anecdotes 0:11:32.600 --> 0:11:35.840 about this. You have someone like Alissa Slotkin of Michigan 0:11:36.000 --> 0:11:38.719 trying to claim that seat, trying to move from the 0:11:38.760 --> 0:11:41.840 lower Chamber to the upper chamber. In a leaked report 0:11:41.920 --> 0:11:43.720 to The New York Times about a phone call she 0:11:43.760 --> 0:11:46.280 had with donors, she was talking about the fact that 0:11:46.400 --> 0:11:48.960 the issue she was facing was that with Trump on 0:11:49.000 --> 0:11:51.720 top of the ticket, with Biden on top of the 0:11:51.760 --> 0:11:55.280 ticket versus Trump, it was hurting her chances. Now there's 0:11:55.640 --> 0:11:59.640 renewed momentum down ballot that Kamala Harris can help pick 0:11:59.679 --> 0:12:02.480 some of the these people up in very very tough 0:12:03.200 --> 0:12:05.880 a very tough map in terms of Democrats trying to 0:12:05.880 --> 0:12:08.560 hold the Senate and also trying to win back the House. 0:12:08.880 --> 0:12:12.679 Amory, the script is you do the polarity at the conventions, 0:12:13.320 --> 0:12:16.440 and then you run to the center. When does the 0:12:16.559 --> 0:12:20.120 run to the center, Oh, mister Trump, I guess it's 0:12:20.160 --> 0:12:21.640 sort of unique because he's going to do what he 0:12:21.679 --> 0:12:25.120 wants to do. But for the Democrats, it's an example 0:12:25.600 --> 0:12:29.040 when do they shift to a center tendency? 0:12:30.920 --> 0:12:33.360 I think they're trying to do that now. Really they 0:12:33.400 --> 0:12:37.000 are balancing who is speaking. Yeah, they're balancing who is 0:12:37.040 --> 0:12:40.320 speaking at this convention. When you heard from Michelle and 0:12:40.320 --> 0:12:44.400 Barack Obama yesterday, it is this message about how this 0:12:44.400 --> 0:12:48.319 could be a ticket for every Americans. They are trying 0:12:48.360 --> 0:12:51.600 to lean into this idea and Libby Cantrell was on 0:12:51.640 --> 0:12:56.679 surveillance this morning talking about this idea of vibes and personality. 0:12:57.559 --> 0:13:00.720 They're trying to reenact what happened in two thousand and eight. 0:13:01.480 --> 0:13:05.599 The issue is they have a very short runway. Potentially 0:13:05.760 --> 0:13:08.720 they can do this because they have a very short 0:13:08.800 --> 0:13:11.120 runway and don't need to go into detail and some 0:13:11.160 --> 0:13:14.080 of their policy proposals that maybe some in the middle 0:13:14.520 --> 0:13:18.280 would not be would not be excited to vote for. 0:13:18.520 --> 0:13:22.040 Right. One final question, can you get out to Cubbs 0:13:22.080 --> 0:13:25.440 Tigers at eight pm tonight? Can you sort of, you know, 0:13:25.520 --> 0:13:28.360 do the Ammory Horden Act and then slide out to 0:13:28.360 --> 0:13:30.800 Wrigley Field to take in three innings now. 0:13:30.760 --> 0:13:31.320 On a mission. 0:13:34.200 --> 0:13:36.120 I think it'll be a little bit difficult tonight, given 0:13:36.160 --> 0:13:39.800 the fact that Governor Walls will be giving his speech 0:13:40.040 --> 0:13:44.560 accepting his VP nomination and also Speaker Pelosi, which Tom 0:13:44.600 --> 0:13:46.800 I got to say. The line that struck me last 0:13:46.880 --> 0:13:50.240 night at the DNC was when Governor Newsom said He's 0:13:50.280 --> 0:13:53.679 coming from the great state of Nancy Pelosi. That's how 0:13:53.720 --> 0:13:57.520 he introduced California, when he helped when he was calling up. 0:13:57.800 --> 0:13:59.040 The end of the role call. 0:13:59.360 --> 0:14:01.920 And in many way this feels like this is her convention, 0:14:02.480 --> 0:14:05.199 a totally different convention we're having now than we were 0:14:05.200 --> 0:14:06.120 planning a month ago. 0:14:06.400 --> 0:14:09.480 Okay, I'm gonna go see Dansby Swanson. You can deal 0:14:09.520 --> 0:14:12.600 with the politics. Emory Orton, thank you so much. They're 0:14:12.679 --> 0:14:16.000 really great following and in reporting. I mean, she's tough. 0:14:27.040 --> 0:14:30.880 William Lee, Billy's chief economist the Milican Institute, Bill I 0:14:30.880 --> 0:14:32.320 don't know if you're up to speed on this, but 0:14:32.400 --> 0:14:35.000 basically for it came out and said today they're EV 0:14:35.120 --> 0:14:40.360 strategies not working, billions of losses. China completely dominates as 0:14:40.400 --> 0:14:44.080 a foreign affairs article this month. It's literally in my suitcase, 0:14:44.120 --> 0:14:47.600 folks on the way to Jackson Hole, Bill Lee, the 0:14:47.800 --> 0:14:51.720 Chinese EV strategy. How does America compete against that? 0:14:52.880 --> 0:14:55.040 It's got to be a really tough Tom. The Chinese 0:14:55.040 --> 0:14:57.640 have so dominated in their production of EV's the state 0:14:57.720 --> 0:15:02.280 subsidies have made them so good cevs. Their efficiencies are 0:15:02.480 --> 0:15:05.400 just better than anybody else right now. In fact, that's 0:15:05.440 --> 0:15:07.560 why you see Elon Musk over there, because he really 0:15:07.600 --> 0:15:10.080 has taken advantage of not only the state subsidies, but 0:15:10.080 --> 0:15:12.560 also he's brought his own technology there. So the way 0:15:12.600 --> 0:15:15.080 you compete, I think is to sort of join them. 0:15:15.560 --> 0:15:18.160 But that is truly, that's true for a lot of 0:15:18.200 --> 0:15:23.400 these new energy industries, electric photos, electric solar cells, and 0:15:23.800 --> 0:15:25.480 batter and electric vehicles. 0:15:26.000 --> 0:15:29.400 So you know, Bill, a lot of investors, Western investors 0:15:29.400 --> 0:15:31.320 got exposure to China through some of the big tech 0:15:31.360 --> 0:15:34.560 companies like an Ali Bober for example, and a lot 0:15:34.600 --> 0:15:37.200 of those folks who financed a lot of the growth 0:15:37.240 --> 0:15:41.320 for China technology. I think they feel like China's uninvestable 0:15:41.520 --> 0:15:44.200 now given what the government has done too, not only 0:15:44.280 --> 0:15:47.400 technology but other parts of the economy. What's your view 0:15:47.480 --> 0:15:49.440 to those or how do you respond to those types 0:15:49.480 --> 0:15:49.880 of folks. 0:15:50.560 --> 0:15:53.760 That's the rare point, Paul. If you're already in China, 0:15:54.440 --> 0:15:59.360 like a city bank, JP Morgan, even a tesla, you 0:15:59.360 --> 0:16:01.440 can put more in because you know exactly what you're 0:16:01.440 --> 0:16:03.400 getting into. You know the deals that you're getting into, 0:16:03.960 --> 0:16:05.920 you know the kind of market that you're going into, 0:16:06.600 --> 0:16:09.480 and you have a niche product if you're a new investor, 0:16:10.440 --> 0:16:12.800 and a lot of a lot of our sponsors that 0:16:12.840 --> 0:16:15.480 at Milkin I have talked about, how do you get 0:16:15.480 --> 0:16:18.160 into China now if you're not able to do the 0:16:18.240 --> 0:16:21.480 due diligence to find out exactly what it is that 0:16:21.520 --> 0:16:24.760 you're getting into, especially a dynamic market like China where 0:16:25.200 --> 0:16:28.440 the domestic market itself is not growing as rapidly as 0:16:28.440 --> 0:16:30.240 you thought it would have been would have just a 0:16:30.280 --> 0:16:33.840 few years ago. Not only is the demographics situation dismal, 0:16:34.120 --> 0:16:37.440 but their near term situation is really a problem because 0:16:37.720 --> 0:16:41.320 they aren't able to bring the amount of stimulus to 0:16:41.400 --> 0:16:44.120 aggregate demand that they really need to seem like the 0:16:44.120 --> 0:16:47.760 economy and get growth going. And part of that problem 0:16:47.800 --> 0:16:51.200 is because they're so heavily indebted there. The size of 0:16:51.240 --> 0:16:53.800 the fiscal signals they need to bring is limited by 0:16:53.840 --> 0:16:56.080 the huge amount of debt that they have, not only 0:16:56.880 --> 0:17:00.960 not only at the general government level, but more importantly 0:17:01.080 --> 0:17:03.640 at the provincial level. Because it's tom as you know, 0:17:05.119 --> 0:17:07.479 when you go into a deal with China, a lot 0:17:07.560 --> 0:17:09.800 of the deals are made with provincial governments, But now 0:17:10.080 --> 0:17:12.600 those guys are so heavily indebted they can't make the 0:17:12.680 --> 0:17:13.840 kind of deals they used to make. 0:17:14.440 --> 0:17:17.959 Billy, I look at the currency movement here, and folks, 0:17:18.160 --> 0:17:22.639 I can't emphasize enough the persistency of trend. For example, 0:17:22.960 --> 0:17:28.359 singapore dollars strength literally over twenty years. Now we have 0:17:28.520 --> 0:17:32.600 finally a legitimate dollar weakness for Bill Lee of the 0:17:32.720 --> 0:17:37.320 IMF and of Milken. Is it a legit weakness or 0:17:37.359 --> 0:17:41.160 is it just a wobble along the way of selected 0:17:41.240 --> 0:17:42.520 Pacific rim strength. 0:17:44.080 --> 0:17:47.320 It reflects the shifting positions of these two economies, and 0:17:48.080 --> 0:17:52.119 in some ways it represents the success of these currencies, 0:17:52.680 --> 0:17:56.280 both in Asia and the shift in the United States, 0:17:56.280 --> 0:18:00.240 where so much of our manufacturing prowess has really moved 0:18:00.280 --> 0:18:02.240 out of the United States. And that's what all of 0:18:02.280 --> 0:18:05.720 these chip acts and all these US subsidies are about 0:18:05.760 --> 0:18:08.520 to try to bring back some of these jobs and 0:18:08.560 --> 0:18:11.399 be sure or at least a friends shore some of 0:18:11.440 --> 0:18:15.240 these supply chains. But again we have to talk about 0:18:15.640 --> 0:18:20.359 the apparent's historical success versus the prospective success going forward. 0:18:20.960 --> 0:18:23.840 Will China continue to be the super growth market, Will 0:18:23.880 --> 0:18:27.439 Asia continue to be the super growth market for the latter. Yes, 0:18:27.560 --> 0:18:31.119 it's very clear that during the demographics in Asion, and 0:18:31.400 --> 0:18:36.240 and and India, there's a huge advantage and growth potential there. 0:18:36.520 --> 0:18:40.199 For China not so clear. And as I said, the 0:18:40.280 --> 0:18:44.600 debt problem is really a huge problem for them, especially 0:18:44.640 --> 0:18:46.840 at the local level, and it's the off balance sheet 0:18:46.880 --> 0:18:49.760 dead the local government financing vehicles they call them. 0:18:50.119 --> 0:18:54.520 What do the em Central bankers or for that matter, 0:18:55.000 --> 0:18:57.840 the managing director Gargava the i m F. What do 0:18:57.960 --> 0:19:00.800 they want from Chairman Powell at Jackson Hole. 0:19:02.600 --> 0:19:04.200 I think the one thing they want from the United 0:19:04.240 --> 0:19:07.400 States is a stability of policy and consistency of policy. 0:19:08.480 --> 0:19:14.439 You can't have the kind of database strategy that is 0:19:14.480 --> 0:19:18.800 so data dependent that you can't say how we're targeting inflation, 0:19:19.480 --> 0:19:24.680 whether we're going to be continuing to subsidize certain industries 0:19:24.720 --> 0:19:27.000 to try to attract them back on board. I think 0:19:27.520 --> 0:19:32.159 the foreign companies as well as foreign governments and our 0:19:32.240 --> 0:19:35.159 own government, our own domestic companies. I'm looking for our 0:19:35.240 --> 0:19:38.000 government to be much more consistent in our policies. 0:19:39.000 --> 0:19:53.360 Billy, thank you so much. With Milkin in the front pages, 0:19:53.400 --> 0:19:56.560 of course, A Lisa Mateo, our Lisa Matteo. 0:19:56.680 --> 0:19:59.040 All right, So the US open begins next week, right, 0:19:59.080 --> 0:20:01.000 the feeders already started, but the Wall Street Journal is 0:20:01.000 --> 0:20:03.760 saying that Americans they're going to have more to cheer 0:20:03.800 --> 0:20:07.600 about because five US men, five US women. They're ranked 0:20:07.600 --> 0:20:10.760 in that top twenty for the first time since nineteen 0:20:10.920 --> 0:20:13.600 ninety seven. So for the women, you have Cocoa Goff 0:20:13.680 --> 0:20:16.320 right and a number three she wants to defend her 0:20:16.400 --> 0:20:19.040 US Open Women's singles title. You have Jessica Pagoula is 0:20:19.040 --> 0:20:23.040 another one there, Danielle Collins and the Navarro Madison keys. 0:20:23.160 --> 0:20:25.040 And then on the men's side, you have Ben. 0:20:24.920 --> 0:20:29.479 Shelton, he's thirteenth in the world, Taylor fitz Fritz, Tommy 0:20:29.520 --> 0:20:34.240 Paul Sebastian Corda, Francis Tiaffo, he's a semi finalist in 0:20:34.240 --> 0:20:37.119 the US Open in twenty twenty two. But the last 0:20:37.119 --> 0:20:39.000 time this is what I thought was interesting that they 0:20:39.040 --> 0:20:40.960