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Speaker 1: Bloomberg eleven thirty.
Speaker 2: Let's get back to the CPI number.
Speaker 3: So the takeaway in general seems to be that disinflation
Speaker 3: is not what we've seen, say, in the last three months,
Speaker 3: that what we're used to, But that doesn't necessarily mean
Speaker 3: that the economy is reaccelerating. So we kind of want
Speaker 3: to understand the nuance here. Here's Lindsay Pigs, chief economist
Speaker 3: over at Stifel. She joins us from Minneapolis. Lindsay, how
Speaker 3: would you categorize the CPI data this morning and does
Speaker 3: it change the trajectory at all for the FED? Well?
Speaker 4: I would categorize it as a somewhat disappointing report for
Speaker 4: the Fed's that's still struggling desperately to reinstate price stability. Now,
Speaker 4: it's important not to look at one data point. That's
Speaker 4: never enough to sway the FED in one direction. Or
Speaker 4: the other. But we do have to put this in
Speaker 4: the context of ongoing, an ongoing lack of even downward
Speaker 4: momentum in prices at best. Inflation has been uneven moving
Speaker 4: sideways for the past couple of months, and so this
Speaker 4: really underscores the need for the FED to remain focused
Speaker 4: on reaching that two percent target. Now, last month they
Speaker 4: were buoyed by this mounting concern for the labor market.
Speaker 4: But as we saw in the latest September labor market data,
Speaker 4: the employment reports are still near full employment. The data
Speaker 4: suggests the labor market is still very solid, and so
Speaker 4: I do think that at this point the fed's focus
Speaker 4: may be better directed towards that price stability component of
Speaker 4: the dual mandate.
Speaker 5: You know, Lindsa we were talking to Tom Keen and
Speaker 5: I are earlier today with the professor Cam Harvey at
Speaker 5: Duke University, and he's a big proponent of the fed's way, way,
Speaker 5: way behind, because they're using really dated data, particularly housing data,
Speaker 5: and if you take a look at some of the
Speaker 5: real rents and stuff like that, inflation's already whipped and
Speaker 5: this FED should be you know, cutting rates. Maybe how
Speaker 5: do you feel about that?
Speaker 4: Well, I think there's a number of different ways to
Speaker 4: look at inflation, and sure, if we take out some
Speaker 4: of the stickiest components, you can get a much better
Speaker 4: read on inflation. But when we're trying to look at
Speaker 4: the overall price index for consumers, what we're feeling in
Speaker 4: terms of costs for goods and services out in the marketplace,
Speaker 4: that underlying core measure, which excludes food and energy because
Speaker 4: those are extremely volatile. From a policy standpoint, that suggests
Speaker 4: that inflation is not quote whipped, and that the Fed's
Speaker 4: job of reinstating price stability has not been complete and
Speaker 4: remaining on a downward trajectory back to two percent is
Speaker 4: not a foregone conclusion. So I would caution against that
Speaker 4: line of thinking. That could leave us in a very
Speaker 4: difficult position where the FED takes a more aggressive approach
Speaker 4: to policy in anticipation of further improvement, only to find
Speaker 4: out we're not there yet and the FED either has
Speaker 4: to reverse course or simply has driven us into the
Speaker 4: most unfavorable scenario of stagulation at that point.
Speaker 3: But but, but, but that brings us to the other
Speaker 3: data point, which is initial jobless claims.
Speaker 2: I know that they can be volatile.
Speaker 3: I know you also have a hurricane Helene as well
Speaker 3: as the Boeing strike impact, Like there's those reads too,
Speaker 3: So which path is a FED follow like inflation slowing
Speaker 3: less than we thought or initial jobless claims rising more
Speaker 3: than we thought.
Speaker 4: Well, I think you have to put the jobless claims,
Speaker 4: as you said, in the context of the events that
Speaker 4: are occurring in the economy at this point. Between the
Speaker 4: strikes and the hurricanes, we anticipated a lot of volatility,
Speaker 4: and you can tell that this is an outsized increase
Speaker 4: relative to the very calm trend that has been well
Speaker 4: established for the past couple of years. You also have
Speaker 4: to put this one weekly data point in the context
Speaker 4: of again that September employment report, where we see wages,
Speaker 4: we see job vacancies, we see the participation rate, we
Speaker 4: see top line hiring, all suggesting tight ish conditions, lingering
Speaker 4: tightish conditions for the labor market, which does not support
Speaker 4: this pop in weekly jobless claims, again, which is primarily
Speaker 4: a reflection of some of these one off incidents in
Speaker 4: the economy. The FED knows that the FED is not
Speaker 4: going to adjust policy based on a weekly data point,
Speaker 4: but again it does underscore this bifurcation among FED officials.
Speaker 4: As we saw in the Minutes yesterday, there are a
Speaker 4: number of FED officials that are concerned about the labor
Speaker 4: market and say that we should continue to cut in
Speaker 4: anticipation of weakness to support the labor market and the
Speaker 4: broader economy regardless of what it takes. On the other side,
Speaker 4: you have Governor Bowman leaving the pack saying no, they're
Speaker 4: still upside risk to inflation, and that's where we need
Speaker 4: to keep our focus because without price stability, the economy
Speaker 4: doesn't work for anybody.
Speaker 5: How about the consumer, lindsay, some of the data points
Speaker 5: you've seen over the last couple weeks, what's your read
Speaker 5: on the yost consumer.
Speaker 4: Well, I think that consumer is surprisingly resilient at this point.
Speaker 4: The consumer is still out in the marketplace spending on
Speaker 4: goods and services, but they're doing so at a noticeably
Speaker 4: reduced pace. We've gone from double digits to eight to
Speaker 4: six now down to an average pace of three. Again
Speaker 4: still positive, but a very clear second derivative decline or
Speaker 4: slower pace of positive expenditures as consumers are feeling the
Speaker 4: weight of higher prices, higher borrowing costs, the resumption of
Speaker 4: student debt payments, and so we see consumers increasingly turning
Speaker 4: to these less organic measures for support in order to
Speaker 4: keep spending in the marketplace. We see four oh one
Speaker 4: k hardship withdrawals of double digits. We see consumers turning
Speaker 4: to an intergenerational wealth transfer, and of course, surprise, surprise,
Speaker 4: credit cards are up there on the list.
Speaker 3: Yeah, absolutely, all right, lindsay, thanks a lot, really appreciate it.
Speaker 3: I still feel like it's all a ork check test
Speaker 3: at the end of the day, pigs. As she joins
Speaker 3: us from Stefelt.
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Speaker 3: Let's say on the Hurricane Milton track. Of course, there
Speaker 3: were reports of tornadoes also pumbling through the state as well.
Speaker 2: Let's take an impact. Let's take a look on the
Speaker 2: impact on the housing market.
Speaker 3: Ken Johnson is Walker Family Chair of real Estate at
Speaker 3: the University of Mississippi. Ken, it's great to get your
Speaker 3: perspective on this. How do we know what the full
Speaker 3: damage is to say, the housing market. How long does
Speaker 3: that assessment take?
Speaker 6: So we can make some upfront esturbations, but we probably
Speaker 6: won't know the full results quite honestly, for a couple
Speaker 6: of years. Using Ian as a test case, we're still
Speaker 6: recovering South Florida. That is, is still covering southwest Florida.
Speaker 6: From Ian, this appears to be less in scope, so
Speaker 6: we're probably still looking at several months before we've completely
Speaker 6: gotten rid of Hurricane Milton.
Speaker 5: Talk to us about just I don't know you think
Speaker 5: about owning real estate Florida. But that is not for
Speaker 5: the faint of heart here because talk to us at
Speaker 5: just about I don't insurance and how this folks that
Speaker 5: are just.
Speaker 7: Keep rebuilding and rebuilding. Is there are there lessons learned
Speaker 7: down there?
Speaker 6: Well, many, many folks predict that these hurricanes are going
Speaker 6: to end the growth in Florida, and they've been on
Speaker 6: record for one hundred and fifty plus years. Going back
Speaker 6: over one hundred years, I think there's over thirty category
Speaker 6: threes or higher that have struck the state. Dire predictions
Speaker 6: have been made in the past and they never come about.
Speaker 6: And it's because the demand to live in Florida just
Speaker 6: keeps increasing. Nice, solid economy, good weather, Son's hurricanes, warm
Speaker 6: in the winter, air conditioning works in the summer, strong
Speaker 6: business climate. People are coming to Florida and this is
Speaker 6: not going to stop.
Speaker 3: What about the prices of those particular houses though, because
Speaker 3: what we can't argue is that insurance companies are dump
Speaker 3: in Florida right there's any local insurance companies. There are
Speaker 3: many stories of people's insurance premium is just rising really fast,
Speaker 3: which means it's hard then to sell the house. At
Speaker 3: the same time, maybe it's more expensive than to buy
Speaker 3: a house.
Speaker 2: Does this need to settle out?
Speaker 6: It does, and this has been an issue in Florida
Speaker 6: for quite some time now. It's slowly getting better. Some
Speaker 6: legislation was brought about in terms of limiting liability exposure
Speaker 6: off of certain types of damages and that you had
Speaker 6: to be timely and filing your claims slowly slowly taking effect.
Speaker 6: But home insurance is going to be an issue in
Speaker 6: Florida for years to come. The state does have an
Speaker 6: insurer of last resort and that's the Citizens Group. If
Speaker 6: you there in Florida, you're very familiar with Citizens, So yes,
Speaker 6: it's a problem. It's something that'll work through. The reinsurance
Speaker 6: rates have gone down this year for Florida. That was
Speaker 6: really good news. Probably will not be again. So in
Speaker 6: other words, the people ensuring the insurance companies their rates
Speaker 6: had went down an end of twenty three, they'll probably
Speaker 6: be back up end of this year now due to
Speaker 6: the two storms combined.
Speaker 7: All right, let's zoom out a little bit from Florida
Speaker 7: and just talk about affordability.
Speaker 5: Housing affordability or lack there of in this country. Can
Speaker 5: you just give us a sense of how do we
Speaker 5: got to this place where we are now where it
Speaker 5: really seems to be a real stretch for so many Americans.
Speaker 7: Housing affordability.
Speaker 6: Sure, So, if I had to pick one item that
Speaker 6: was the most influential in this or the approximate cause
Speaker 6: of unaffordable housing at this point in time was post
Speaker 6: the last housing crash circa two thousand and seven and eight,
Speaker 6: depending on where you were in the country. The markets
Speaker 6: turned out. Real estate markets all over the country turned down.
Speaker 6: They bottomed about twelve but during that period in time,
Speaker 6: we lost thousands of small builders. Today we mostly have large,
Speaker 6: publicly owned developers. It's hard to keep pace. We've just
Speaker 6: lost so many builders. You know, the difference between a
Speaker 6: builder and developer quite often is maybe the scale. So
Speaker 6: we have fewer but much much larger developers, But we
Speaker 6: still need those mom and pop builders that build those
Speaker 6: fifty plus or minus homes a year, and they just
Speaker 6: they left the market, or they were forced out, or
Speaker 6: they were forced into bankruptcy, and they have not come
Speaker 6: back into the marketplace. That might so we're not building enough.
Speaker 3: Years explanation I've heard for what we don't have enough
Speaker 3: supply that nuance. Does that mean then that this is
Speaker 3: a cyclical industry still, as you say, like, okay, so
Speaker 3: then you got to then we're going to overbuild at
Speaker 3: some point and then prices come down or is this
Speaker 3: truly structural?
Speaker 6: I think it's still more cyclical. But this is this
Speaker 6: is an ongoing issue. So if we go through a
Speaker 6: few cycles and we haven't solved it, then yes, we
Speaker 6: have a chronic, persistent problem. I would love to see
Speaker 6: a little bit easier for the small builder to develop
Speaker 6: and thrive and restart. Getting that done is another set
Speaker 6: of circumstances to work through.
Speaker 5: You know, one of the issues for a lot of
Speaker 5: folks is nobody wants to leave their home because so
Speaker 5: many people are sitting on you know, three four percent
Speaker 5: mortgages some people below.
Speaker 2: You set me up, man, you do it on purpose.
Speaker 3: At this point, I have two point seventy five, which
Speaker 3: I talk about all the time all the time.
Speaker 8: So where do you think mortgage rates need to go?
Speaker 5: Professor for you know, the Alex Steels of the world, saying,
Speaker 5: all right, I can consider selling my existing home and
Speaker 5: going somewhere else.
Speaker 7: That would free up some inventory.
Speaker 6: So our overall mortgage rates in the country, they're higher.
Speaker 6: Oddly they're higher since the Fed's announcement to lower the
Speaker 6: interbank loan rate, but that that'll correct itself in the
Speaker 6: next few weeks or so. But it's not necessarily what
Speaker 6: rate will have to come about such that folks will
Speaker 6: start to begin to sell those two point seventy five
Speaker 6: three percent loans. What will happen, probably more likely for
Speaker 6: those folks is they'll have a change in life event
Speaker 6: I'm moving to another city. Unfortunately, financial distress will cause
Speaker 6: a lot of sale. So a lot of these things
Speaker 6: are going to be brought back. A lot of these
Speaker 6: properties are going to be brought back into the marketplace
Speaker 6: because I have to sell rather than I want to sell.
Speaker 6: But we're probably going to see an environment we'll get
Speaker 6: back to the four and a half spives. We're never
Speaker 6: I don't think in my professional lifetime will we ever
Speaker 6: see two point seventy five or three percent again. That
Speaker 6: was just so unusual and we can't have that as
Speaker 6: the norm. And oh we're not back to the norm.
Speaker 6: Well that wasn't the norm.
Speaker 3: Yeah, I was doing a little happy dance for those
Speaker 3: of you who were unfortunately smug.
Speaker 7: Yes I am. I mean the air of smugness.
Speaker 3: It's the one thing I can literally, the one thing
Speaker 3: I can brag about, and so I do walk about.
Speaker 3: It's still being a cyclical industry. How long do you
Speaker 3: think that cycle then could be? Like when do we
Speaker 3: get to like an oversupply situation?
Speaker 2: Ten years? What does it look like?
Speaker 6: So hard to say. Again, the cycle, this last cycle
Speaker 6: has been extended for several reasons, one of which is COVID,
Speaker 6: And we were talking about the low interest rates. We
Speaker 6: were pretty near a peak back in twenty ish, and
Speaker 6: then we had COVID and we've all had much easier
Speaker 6: access to capital, shortage of housing, we bid prices up.
Speaker 6: This is going to be quite some time. We're years
Speaker 6: in the catchup, so minimum another three to four years
Speaker 6: to catch up, maximum a decade.
Speaker 5: All right, you just made the big move from Boca Raton, Florida,
Speaker 5: Florida Lanta University to Oxford, Mississippi thirty seconds.
Speaker 7: What's the big difference.
Speaker 6: Well, I have the best of both worlds now. Originally
Speaker 6: I'm from the South and I've always loved are that
Speaker 6: dreamt of being at a state university, flagship school SEC
Speaker 6: football and sports. I love Boca. So we've kept a
Speaker 6: place there in Boca, my wife and I have and
Speaker 6: we will continue to be there in the summers and
Speaker 6: at Christmas time. You know, to be anything above it
Speaker 6: ten is like a reflecting barrier in terms of winter cold.
Speaker 6: But if you come to Oxford, you would understand why
Speaker 6: I wouldn't pass on this opportunity to come here and
Speaker 6: build a program.
Speaker 7: Yeah, it's fantastic.
Speaker 5: Old Miss Ken Johnson Walker Family Chair of real Estate
Speaker 5: at the University of Mississippi that is in Oxford, Mississippi.
Speaker 5: I just kind of googled map the because I always forget.
Speaker 7: Where Oxford is. Northwestern part of the state. Just it's
Speaker 7: very close to Memphis. Tennessee. Actually, oh, it's closely the
Speaker 7: Arkansas border, but it is. You know, that's deep sec.
Speaker 5: Country, Old miss but pretty cool there. But again, a
Speaker 5: big move from Bocah to Oxford.
Speaker 3: I thought you were looking at an uber and I'm like,
Speaker 3: you're not goingwhere. For like two hours, I don't know
Speaker 3: what this guy's doing.
Speaker 7: But now now I understand you where it's all about.
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Speaker 5: Let's check in with somebody who's paying attention to earnings
Speaker 5: because they're going to kick off in size tomorrow with
Speaker 5: JP Morgan. We always pay attention to what Jamie Dimond
Speaker 5: says about the overall economy. Karen Murphy Joints is. She's
Speaker 5: a CIO at Kestra Investment Management. So Carol, we're gonna
Speaker 5: have earnings tomorrow. But I love to just get your
Speaker 5: thoughts here on that CPI print today and maybe how
Speaker 5: you think that may impact FED actions going forward.
Speaker 9: Yeah, so I given the print today, I don't think
Speaker 9: there are too many doves who are celebrating. You know,
Speaker 9: this is definitely a little bit of a fly in
Speaker 9: the ointment of the deceleration and inflation that we've seen
Speaker 9: over the last couple of months.
Speaker 10: That's it.
Speaker 9: I mean, it looks like markets are taking it in stride. So,
Speaker 9: you know, inflation showed up a little bit hotter than
Speaker 9: what I think many of us would have liked to
Speaker 9: have seen, and I think it's a really good reminder
Speaker 9: that the FED has a tough job. You know, we
Speaker 9: saw also claims happened to come in today a little
Speaker 9: bit higher than expected. So what we're seeing now is
Speaker 9: inflation a little bit hotter than expected, labor market a
Speaker 9: little bit weaker than expected. So it's a really difficult trajectory.
Speaker 9: So I think the FED is still on track to
Speaker 9: do a twenty five bit cut at its next meeting.
Speaker 9: Today's print won't be enough to really change the Fed's mind,
Speaker 9: but you know, it does highlight that there's a lot
Speaker 9: of complexity and a couple more sort of hotter inflation
Speaker 9: prints between now and the end of the year. It
Speaker 9: could start to slow those FED rate cuts.
Speaker 3: Yeah, exactly, we've seen FED cuts kind of priced down
Speaker 3: a little bit up for twenty twenty five. So if
Speaker 3: we are okay, it's a two firm, does that mean
Speaker 3: that the US economy could reaccelerate? And then if we
Speaker 3: are seeing a longer economic cycle, does it change where
Speaker 3: in the market have to be invested with in equities.
Speaker 9: I think that's the question that we should be asking ourselves,
Speaker 9: and I think the easy answer is that, like, we
Speaker 9: know that the economy and the market typically doesn't go
Speaker 9: in a straight line, So the FED is actively trying
Speaker 9: to pivot. Right. We had our first rate cut in
Speaker 9: quite a while, and that introduces a lot of cross
Speaker 9: currents into the market, and so it makes sense that
Speaker 9: the economy is going to kind of, you know, chunk
Speaker 9: around for a little bit. So yes, we could see
Speaker 9: a reacceleration. I think the Fed will then you start
Speaker 9: to pull back a little bit. But this like lag
Speaker 9: issue in monetary policy is a really big challenge because
Speaker 9: the labor market starting to weaken a little bit is
Speaker 9: responding to rate cuts that happened quite some time ago.
Speaker 9: So even sorry rate hikes that happened quite some time ago.
Speaker 9: So even if the Fed starts to cut, it will
Speaker 9: be a while before we see it in the market,
Speaker 9: So it makes sense that the market will or the
Speaker 9: economy will sort of like reaccelerate and then slow down again,
Speaker 9: and it'll take a little while before we get to
Speaker 9: like that firm footing and determine where the FED should
Speaker 9: have its resting place be. So then what does the
Speaker 9: market do in the meantime? I think smaller companies who
Speaker 9: rely more heavily on debt are a little bit more
Speaker 9: subject to the fed's whims, so as FED rates come down,
Speaker 9: they'll benefit more. If those rates take longer, it might
Speaker 9: take longer for them to see that real earnings reacceleration
Speaker 9: that we're waiting for. But there are multiple different pieces
Speaker 9: that kind of feed into that.
Speaker 5: So given all that background, how are you guys positioned? First,
Speaker 5: let's go with the equity side of the equation.
Speaker 7: How are you positioned there?
Speaker 9: So we still are really favorable on equities, But what
Speaker 9: we found is that your core benchmarks have moved very
Speaker 9: heavy into large cap or megacap and into growth. So
Speaker 9: what we're doing is kind of taking a step closer
Speaker 9: towards a little bit more even split between value and
Speaker 9: growth and favoring some of those somewhat smaller companies, and
Speaker 9: like I often say, you don't have to go all
Speaker 9: the way down to small cap in order to benefit
Speaker 9: from being out of that megacap You just you can
Speaker 9: just go into the smaller large cap or we think
Speaker 9: megacap MidCap is really attractive as well. So just starting
Speaker 9: to step a little bit towards the center of that
Speaker 9: while still remaining overweight equities.
Speaker 3: Yeah, I feel like I've been talking about mid caps
Speaker 3: for a bit, and every kind of day you got
Speaker 3: the SMP making a record high, the midcaps also make
Speaker 3: a run for it at the same time. Okay, how
Speaker 3: does that then position you in the bond market? Like,
Speaker 3: do we still get a steepener? It's just a matter
Speaker 3: of how we get that steepener that matters.
Speaker 9: Yes, it does. And I think the easier sort of
Speaker 9: bet to make on the fixed income side is to
Speaker 9: be out of high yield credit, not completely out, but
Speaker 9: underweight high yield credit where we think if the FED
Speaker 9: rate cutting cycle takes longer than we'd like to, those
Speaker 9: are the companies that are going to face some pressure.
Speaker 9: And you see really low spreads there right, so you're
Speaker 9: not being paid a lot in order to take that risk.
Speaker 9: High quality corporate on the other hand, we think is
Speaker 9: pretty attractive. There you get a nice interest rate bomb,
Speaker 9: you're not taking a huge amount of duration risk, but
Speaker 9: still benefiting from that higher overall yield compared to treasuries.
Speaker 9: So in treasuries there you know, would be more in
Speaker 9: the belly of the curve outside those really long duration
Speaker 9: which we've seen be fairly volatile as inflation sort of
Speaker 9: comes and goes. But you want to start to step
Speaker 9: off of those really short term rates.
Speaker 5: And if I look at then GO function on the
Speaker 5: Bloomberg terminal, which gives me a nice overview kind of
Speaker 5: fixed income market year today performance, the best for fixed
Speaker 5: income has been and by far has been US high
Speaker 5: yield corporates.
Speaker 7: Talks about the higher money now, love to get your
Speaker 7: thoughts there. What do you think about the high old market.
Speaker 9: Yeah, so it's been super interesting to see how it's
Speaker 9: really led. And typically what we see is high yield
Speaker 9: is very highly correlated with equity markets. So in some ways,
Speaker 9: you know, that's a lot of what we've been seeing
Speaker 9: where it's very consistent that investors are looking for a
Speaker 9: little bit more risk, and so if they're dipping their
Speaker 9: toe into the fixed income market, high yield becomes an
Speaker 9: easy place to go. I also think as folks were
Speaker 9: worried about kind of the trajectory of the FED rate cut,
Speaker 9: that was also a safer place to be. You're a
Speaker 9: little bit more inoculated from those rate changes because you
Speaker 9: have that spread. But again, that's looking in the rear
Speaker 9: view mirror. So we've seen that real strength in the
Speaker 9: past and going forward, I don't know that you're being
Speaker 9: paid to take a lot.
Speaker 7: Of that risk.
Speaker 3: Yeah, right, exactly. So then if you want to go
Speaker 3: in corporate credit, where's the right place, Like you're looking
Speaker 3: at double Bee's, Triple B's kind of thing.
Speaker 9: Yeah, I think right in that place, And you can
Speaker 9: also go higher credit quality as well. Again, those spreads
Speaker 9: are fairly tight, but if you're in the belly part
Speaker 9: of the curve, you're a little bit protected from any
Speaker 9: of that volatility on the long end, and you can
Speaker 9: have some really nice, juicy yields. If you look at
Speaker 9: yields today in that space compared to the last ten years,
Speaker 9: you have among the best yields that we've seen during
Speaker 9: some investors' lifetimes. So that's you know, that's a pretty
Speaker 9: attractive place to be.
Speaker 5: And Cara, I think the month of September was either
Speaker 5: the biggest issuance month, but are one of the biggest
Speaker 5: issuance months of investment grade corporates. When you, as an
Speaker 5: investor see companies rushing to the market, what does that
Speaker 5: tell you about the market?
Speaker 7: Take anything away from that.
Speaker 9: Well, I think a lot of firms had really held
Speaker 9: off issuing debt because of uncertainty in the market. It's
Speaker 9: an uncertainty of where rates we're going to go. So
Speaker 9: I think this is a sign of confidence that people
Speaker 9: are willing to come back to the market. I would
Speaker 9: expect to continue to see issuance kind of tick up
Speaker 9: over the next couple of months, especially as if we
Speaker 9: see additional rate cuts. So I think it's a healthy
Speaker 9: sign for the market overall.
Speaker 3: All right, Kara, really appreciate it. Thank you so very
Speaker 3: much for joining us Care. Murphy CEO Orchestra Investment Management.
Speaker 3: It all depends too, Paul, like, what do you think
Speaker 3: the catalyst is going to be? Deutsche Bank had a
Speaker 3: really interesting note oubt and I appreciate it is from
Speaker 3: the equity side, but saying that cyclical growth is now
Speaker 3: the key driver for equity is not infletion not rates,
Speaker 3: which makes an earning season kind of all the much
Speaker 3: more important.
Speaker 2: Sure, maybe you're all talking your book.
Speaker 3: Of what you like to cover, but still, but the
Speaker 3: idea is like, look, the Fed is going to do
Speaker 3: the thing. Other things are going to matter, especially if
Speaker 3: we get any sort of capex spend after the US
Speaker 3: election or even after earnings, for example.
Speaker 2: And some of that's going to be structural rather than cyclical.
Speaker 5: Yeah, in interesting to see, and I guess you know, uh,
Speaker 5: Jamie Diamond tomorrow. I think a lot of folks kind
Speaker 5: of really dial into that call hoping to get a
Speaker 5: view of kind of how the global economy is looking
Speaker 5: across all of their businesses. But again, maybe it could
Speaker 5: be a time for cyclicals. A lot of folks, as
Speaker 5: Caro was suggesting, maybe thinking about broadening out this mark
Speaker 5: a little bit at mid captain small cap.
Speaker 7: So yep, keep keep that in mind.
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Speaker 3: I we want to get the take now on what
Speaker 3: Hurricane Milton means for the reinsurance and the insurance companies.
Speaker 3: Matthew Palizoa, Bloomberg Intelligence Andior ANALYSTP and C Insurance joins US. Now,
Speaker 3: so how have you changed your modeling in terms of
Speaker 3: the impact for the insurers based on what we've seen.
Speaker 11: So it looks like they avoided the worst case scenario
Speaker 11: we were talking about going into the storm. The inturyers
Speaker 11: talking about about one hundred billion dollars worth of insured losses,
Speaker 11: which would have made it the worst storm ever. That
Speaker 11: was predicated on a direct hit into Tampa Bay, which
Speaker 11: really didn't happen. So that was the good news. The
Speaker 11: bad news is still going to be a large insured
Speaker 11: loss event. Now. The other good news for the large
Speaker 11: national carriers when we kind of talked about this before,
Speaker 11: is they're just not big players in that market. So
Speaker 11: companies like Travelers, Chubb, AIG, Hartford, they're not major players
Speaker 11: in the Florida home market. They will have losses from this,
Speaker 11: but much less than we initially anticipated. I come to
Speaker 11: like a midpoint of maybe five to six percent of
Speaker 11: annual EPs taken out from the storm.
Speaker 5: What do we think that insured losses actually will end
Speaker 5: up being, if not one hundred billion.
Speaker 11: So it's super early, Paul, But I mean, just back
Speaker 11: at the envelope, we're kind of looking at maybe ten
Speaker 11: to fifty or something like that. Like it could be
Speaker 11: on top Hurricane Ian twenty twenty two was sixty five.
Speaker 11: The early reports I'm hearing is the surge in Tampa
Speaker 11: was actually less than even Colleen, So it was less
Speaker 11: than Ian as well, So it could be lower than
Speaker 11: sixty five. But it's still early, and you've got the
Speaker 11: holding damage on top of it.
Speaker 3: Is this, So how does it work done with premiums?
Speaker 3: I mean we're used to hurricanes, right, so like do
Speaker 3: premiums for insurers or reinsures wind up going up?
Speaker 9: Like?
Speaker 2: How does that work? And what's the immediate reaction?
Speaker 11: So you got a bunch of dynamics in this whole
Speaker 11: insurance premiums going up.
Speaker 2: Anyway, right for everyone?
Speaker 11: Pretty much for everyone. That's been happening for a while now,
Speaker 11: And that is cost of materials, the frequency and severity
Speaker 11: of storms nationwide anyway, severe convective storms, kind of strong hail,
Speaker 11: stuff like that. So it's not just hurricanes, So that
Speaker 11: has been driving home insurance prices up anyway. Reinsurance prices
Speaker 11: insurance for insurance companies have been going up anyway, which
Speaker 11: drives it up as well. What I think will happen,
Speaker 11: and not exactly want to make this call, but there's
Speaker 11: gonna be demand surge, meaning there's gonna be a huge
Speaker 11: demand for building materials and that is going to push
Speaker 11: up costs across the country as well, so that'll feed
Speaker 11: into price. So there's a bunch of upward things pushing
Speaker 11: on home insurance prices.
Speaker 5: I don't know, it just feels like we've had a
Speaker 5: lot of storms, and I know this this season was actually.
Speaker 7: Pretty common until just recently.
Speaker 5: Then I go look at the S and P five
Speaker 5: hundred Property and casually insurance sub industry index, and there
Speaker 5: is such a thing on the Bloomberg terminal. It's up
Speaker 5: thirty eight percent year to date. These insurance stocks are
Speaker 5: doing well.
Speaker 7: What's going on there? So what's the call?
Speaker 11: Fundamentals still good for them, and we expected a busy
Speaker 11: hurricane season. Kind of new conditions were conducive to that happening,
Speaker 11: and there was a lot of formation. It just there
Speaker 11: weren't a lot of big landfalls but these stocks they're defensive,
Speaker 11: so it's like kind of when you get worried about
Speaker 11: the economy, they do okay, But then they can also
Speaker 11: benefit from the economy, so they're a nice play on
Speaker 11: both of those things. Interest rates going down is less
Speaker 11: of an impact on them than other financials. It's not
Speaker 11: great for them. It helped them a lot, but if
Speaker 11: you have to own financials, they're less sensitive to interest
Speaker 11: rate moves. So there's a bunch of positives there. I see,
Speaker 11: sorry when I see fundamentals probably peaking, so you know,
Speaker 11: we might be at that point, but still still good fundamentals.
Speaker 3: This might be a really silly question, but did the
Speaker 3: insurance policies just for homeowners are even small businesses. Do
Speaker 3: they ensure the right things for the type of weather
Speaker 3: pattern changes that we're seeing?
Speaker 11: Good question? So that makes me so, well, here's the
Speaker 11: thing is that they do. So they step back the
Speaker 11: home insurance industry. It's not like they're raking in profits.
Speaker 11: It's not like, oh, there's a big flood and we
Speaker 11: didn't have to pay for it, and we're making a
Speaker 11: lot of money. We look so over the past ten years,
Speaker 11: the industry has paid out a dollar and three cents
Speaker 11: for every dollar they've taken in, and that's in losses
Speaker 11: and expenses. And that's even excluding you know, storm surge
Speaker 11: and flood. So it's not any incredibly profitable business to
Speaker 11: be in anyway. So if you were to say, Okay,
Speaker 11: now these guys have to ensure flood, they have to
Speaker 11: in storm surge, then the prices of these policies would
Speaker 11: need to double. So to answer your question, out, they're not.
Speaker 11: But for them to ensure everything they need to would
Speaker 11: be prohibitively expensive.
Speaker 3: It's sort of like how I wouldn't have wildfire insurance
Speaker 3: for a New York apartment, but then we had all
Speaker 3: that wildfire smoke, Like if that becomes like a common
Speaker 3: occurrence and it messes up with I don't know, whatever
Speaker 3: things you have in your house or apartment, like, that's
Speaker 3: different anyway.
Speaker 5: Just I think did Warren Buffett go into the Florida
Speaker 5: insurance market in the last several years and was that
Speaker 5: a mistaken with.
Speaker 11: Hindsight, so Berkshire has obviously vast insurance businesses. Geico's a
Speaker 11: big auto insurance writer in Florida. In twenty twenty three,
Speaker 11: they made a big bet on the Florida reinsurance market
Speaker 11: and that paid off handsomely for them. They could have
Speaker 11: lost a lot there, but it actually worked out well.
Speaker 11: You know, we would have to hear from them, but
Speaker 11: it appears that they kind of completely backed off of
Speaker 11: that market this year, which turns out to be another
Speaker 11: good idea. So they'll have losses in there, no doubt,
Speaker 11: it will not be anywhere near the magnitude that it
Speaker 11: would impact another insurance company with a smaller balance sheet,
Speaker 11: So they'll have some losses from this. But last year
Speaker 11: they made a big bet on Florida the paid off
Speaker 11: this year. Pulling out that big bet was beneficial.
Speaker 5: I didn't know insurance simms could go in and out
Speaker 5: of market so quickly.
Speaker 11: So in the reinsurance market is easier, right, Like they
Speaker 11: can reprice on an annual they can all reprice on an
Speaker 11: annual basis. But there's less regulation in that market, so
Speaker 11: they can they can write or not anywhere in the
Speaker 11: world kind of where they want to.
Speaker 3: All right, matt thanks lot, I really appreciate it. Matthew Palizowa,
Speaker 3: Bloomerg Intelligence Senior ANALYSP and C Insurance. We didn't even
Speaker 3: get to the cat bond market but apparently there were
Speaker 3: estimates that those catastrophic bonds would lose as much as
Speaker 3: fifteen percent, and now that's been repriced as well, so
Speaker 3: now maybe we're in single digit losses for that.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 5: Thirty, Alex Steel, Paul Sweeney live here in our Bloomberg
Speaker 5: ARCTA Brooker's studio in New York City, or streaming live
Speaker 5: on YouTube as well Bloomberg Radio Live. That's kind of
Speaker 5: where you can find us there when you search, I'll
Speaker 5: tell you it. In the world of M and A,
Speaker 5: I'm not sure i'd want to be a banker today.
Speaker 5: Maybe an M and A lawyer is something that would
Speaker 5: be I think I bill by.
Speaker 7: The hour and get paid.
Speaker 5: Or any trust lawyer, any trustler. Boom, because this FTC
Speaker 5: is no joke under President Biden. At Lena Khan, who
Speaker 5: heads this Federal Trade Commission. She is tough and she
Speaker 5: is a subject of our Big Take story today. Lena
Speaker 5: Khan has plenty more targets if she gets another term.
Speaker 5: Joining us is Max Chafkin. He's a senior reporter for
Speaker 5: Bloomberg BusinessWeek, and the story does appear in Bloomberg BusinessWeek
Speaker 5: this week. It's his co author's Josh Idelsen Max Chafkins
Speaker 5: with this year, Max talk to us about Lena Khan.
Speaker 5: Who is she and how does she view the FTC
Speaker 5: as perhaps a check on consolidation and number of industries.
Speaker 10: Yeah, Lena Khan is a really interesting figure in the
Speaker 10: Biden administration but also as a political figure today.
Speaker 8: She's very young.
Speaker 10: She's the youngest ever FTC chair at age thirty five.
Speaker 10: She also, you know, she sometimes described as an academic,
Speaker 10: but her academic career was very brief. She basically went
Speaker 10: almost straight from law school to this position. And she
Speaker 10: became kind of famous for writing this article in twenty
Speaker 10: seventeen arguing that, you know, regulators need to look at
Speaker 10: Anti Tree different differently, in particular in relation to Amazon.
Speaker 8: So in the past most people said.
Speaker 10: Hey, if prices are going down, that's good for consumers,
Speaker 10: No need to worry about it, Leni Khan argued in
Speaker 10: this paper that there are other costs of having Amazon
Speaker 10: dominate so many industries, cost to businesses, other smaller businesses,
Speaker 10: cost to labor, and maybe ultimately cost to consumers.
Speaker 8: And that view.
Speaker 10: Has kind of powered this new movement that has scrutinized
Speaker 10: a lot of the big tech companies. We've seen anti
Speaker 10: trust actions against you know, Google and Apple and Amazon
Speaker 10: and as well as as you're saying, a level of
Speaker 10: scrutiny on mergers that that feels new, that feels somewhat
Speaker 10: different from the past.
Speaker 2: That's so interesting.
Speaker 3: I love the way you phrase that. So we usually
Speaker 3: think about it as does it hurt consumers? And now
Speaker 3: we're thinking about hurting in a much broader sense. So
Speaker 3: if if we get a Harris or Trump.
Speaker 2: Well we're gonna get one of them. So does that.
Speaker 3: Change because one can make an argument that I'm sure
Speaker 3: Wall Street is pressing the Harris camp to all so
Speaker 3: have changes at the FTC.
Speaker 8: Yeah.
Speaker 10: My co writer on this, Josh Eidelson, and I spent
Speaker 10: a lot of time talking to various you know, donor
Speaker 10: types and people who are pushing for various things. And
Speaker 10: what you learn is that the people who seem to
Speaker 10: be most vocal right now are sort of centrist Democrats
Speaker 10: and centrist Republicans, both of those, both of those groups
Speaker 10: the kind of who represents sort of what you might
Speaker 10: think of as like the normal kind of corporate consensus,
Speaker 10: the way that a lot of people thought about how
Speaker 10: government should relate to business over the last forty years
Speaker 10: or so.
Speaker 8: They all are.
Speaker 10: Kind of against Lena con in one way or another.
Speaker 10: You've seen a lot of angry, very angry Silicon Valley
Speaker 10: types saying that she's you know, destroying M and A,
Speaker 10: destroying the venture capital industry and so on, and you're
Speaker 10: seeing that kind of thing.
Speaker 8: From sort of chamber of commerce Republican types.
Speaker 10: Now where you see support is kind of the squad,
Speaker 10: the sort of progressive left that likes Lena Khan because.
Speaker 8: She's pro union.
Speaker 10: There's also some support from some corners of Silicon Valley,
Speaker 10: the parts of Silicon Valley that maybe are mad about
Speaker 10: Google and Amazon being so dominant. And then on the
Speaker 10: right you actually see support as well, because sort of
Speaker 10: like the trumpest right, the MAGA right, jd Vance types,
Speaker 10: the sort of young Trump supporters who tend to be
Speaker 10: really mad about tech dominance and also have somewhat populist
Speaker 10: views on business and on how government should should relate
Speaker 10: to business.
Speaker 5: Do we have any idea how Vice President Harris feels
Speaker 5: about Lena Khan in this FTC She has.
Speaker 8: Been studiously vague.
Speaker 10: I would say I think the closest sign we have
Speaker 10: is this the price gouging proposal, Because so Harris announced
Speaker 10: that she was going to have the FTC crackdown on
Speaker 10: price gouging by grocery stores. That would be an expansion
Speaker 10: of the FTC's authority. We asked Lena Khan about this,
Speaker 10: and you know, her answer was somewhat careful and political,
Speaker 10: but essentially was like, hey, I'm open to it, and
Speaker 10: she made clear, you know, she would like to serve
Speaker 10: another term. She feels there is a lot of work
Speaker 10: to be done, and you've seen over the last few
Speaker 10: months the FTC has been very active. I think they
Speaker 10: will continue to be very active.
Speaker 3: We heard Jamie Diamond speak with Lisa Brahmins earlier this week,
Speaker 3: CEO of JP Morgan very much again saying who thinks
Speaker 3: that CEOs should have a seat at the table? That
Speaker 3: like half the cabinet should be probably overdid it, but
Speaker 3: half the cabinet should be CEOs and so I'm just
Speaker 3: wondering how that plays in to an FTC that is
Speaker 3: more aggressive against company mergers, like will there be a
Speaker 3: relationship to be had.
Speaker 10: I mean, the most interesting thing to me about the
Speaker 10: Biden administration has been in years past. You know, I
Speaker 10: typically cover Silicon Valley, and when Silicon Valley would say
Speaker 10: this person is anti tech, this politician anti tech, that
Speaker 10: would provoke a reaction because no politician wants to be
Speaker 10: seen as anti tech or hasn't been. And the difference
Speaker 10: with Biden, and I think to some extent the difference
Speaker 10: with Trump, is both of them have been comfortable with that.
Speaker 10: They say, you want to be mad at me billionaires, Okay,
Speaker 10: you know that's good politics.
Speaker 8: I'm a populist. People tend to like that.
Speaker 10: And we actually heard that, And there's some quote in
Speaker 10: this story of this effect, like you know, Reid.
Speaker 8: Hoffmann speaking out against Lena Khan.
Speaker 10: There are people on the left who think he is
Speaker 10: doing Lena Khan a huge favor because he's gonna make
Speaker 10: it very hard politically to fire her. And I think
Speaker 10: this position, the position you're hearing from Jamie Diamond and
Speaker 10: from lots of people in kind of the centrist, kind
Speaker 10: of traditional, you know.
Speaker 8: Corporate roles.
Speaker 10: I don't know how popular it is politically. The the
Speaker 10: ideas that are on the ascent are really populist ideas
Speaker 10: and you're seeing that on both sides.
Speaker 7: And it's not just Lena Khan.
Speaker 5: You know, you look at the Department of Justice, you're
Speaker 5: reporting your your piece here, they're taking a tough rule
Speaker 5: against Google, for example, Apple SEC chairman Garagant to pushing
Speaker 5: back on crypto.
Speaker 7: So this is not just a Lena Khan thing.
Speaker 8: No, absolutely not.
Speaker 10: And I think, yeah, Jonathan Kanter, who's the head of
Speaker 10: Anti Trust that the DOJ, Gary Gensler, you said SEC.
Speaker 8: It is Lena Khan has come to symbolize something.
Speaker 10: And I think that it's partly because of her youth
Speaker 10: and and because of who she is and where she
Speaker 10: comes from. She's not a conventional Washington figure in any way.
Speaker 10: And also because you get this attitude that she doesn't care.
Speaker 8: That and that can rub people the wrong way. And
Speaker 8: I think it does rub people the wrong way.
Speaker 10: When you talk to business people, they are mad about policy,
Speaker 10: but they are also mad about tone, and I think
Speaker 10: that is some of what they're reacting to. And but
Speaker 10: of course that has its that has a political upside.
Speaker 10: We saw yesterday AOC coming out really swinging in favor
Speaker 10: of Lena Khan after Mark Cuban made some comments, he
Speaker 10: made some similar comments to us that we put in
Speaker 10: our story, but essentially criticizing Lena con AOC, saying it's
Speaker 10: going to be an all out brawl if you wanna,
Speaker 10: if anyone wants to remove her. So I think this
Speaker 10: will be an interesting political issue whoever is elected in November.
Speaker 3: All right, Max, thanks lot, really appreciate it. Max Chafkin,
Speaker 3: a Bloomberg at BusinessWeek senior reporter, this.
Speaker 2: Is the big take piece.
Speaker 3: You can check it out on Blueberg business Week and
Speaker 3: also a big take on the Bloomberg terminal. Really good stuff.
Speaker 3: It's gonna be so fascinating. And if you're, you know,
Speaker 3: a CEO, do you want to get into the M
Speaker 3: and A line and just kind of wait there or
Speaker 3: do you want to wait and see what happens after
Speaker 3: November and what happens to Lena Cohn?
Speaker 2: Like what's your strategy?
Speaker 3: You know?
Speaker 5: Yeah, it seems like we talk to Jenri who's anti
Speaker 5: trust analyst at Bloomberg Intelligence, seemingly almost every week about
Speaker 5: every deal that gets announced, we got to go to
Speaker 5: jenary and say, are these right?
Speaker 1: There?
Speaker 7: Is going to let this thing go?
Speaker 3: Ito's busier George Ferguson or Jenri exactly?
Speaker 2: I don't know. I think it's a toss up at
Speaker 2: this point.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: This is Bloomberg Intelligence Radio.
Speaker 3: We bring you all the top news, not about lice
Speaker 3: or Amazon, but other stuff too through our lens of
Speaker 3: our Bloomberg Intelligence folks. They cover two thousand companies one
Speaker 3: hundred and thirty industries around the world. Tim Craighead joins
Speaker 3: us now from Bloomberg Intelligence. He's a global chief content officer.
Speaker 3: He has his eyes on everything and they have a
Speaker 3: great note out that talks about ten companies to watch
Speaker 3: in the fourth quarter. All right, can you pick your
Speaker 3: favorite like.
Speaker 2: I have ones.
Speaker 3: I want to ask you about, Tim, but you pick
Speaker 3: your favorite and let's start there.
Speaker 12: Well, you guys are talking about talking to your bartender
Speaker 12: and your Amazon driver. You're going to do that after
Speaker 12: you visit truly even better.
Speaker 2: All right, So what's that company and why?
Speaker 12: So you know, just to put context, this list of
Speaker 12: ten are all focus ideas of ours. So companies where
Speaker 12: we have a high conviction view that we think is
Speaker 12: different from what the market thinks. And there's catalyst ahead.
Speaker 12: True Leave is a marijuana grower and a distributor. They
Speaker 12: have stores. Seventy percent of their stores are in Florida,
Speaker 12: and Florida has on the referendum this November the potential
Speaker 12: for legalization for recreational use. It would be a big
Speaker 12: deal for Truely if this were to come through.
Speaker 7: Yeah, I'm maybe Florida a huge market.
Speaker 5: And you know what I recognized when we went over
Speaker 5: to Ireland, coupic Scope, they don't do the gummy thing
Speaker 5: over there.
Speaker 7: They don't have the weed thing. They're gonna get on
Speaker 7: board there.
Speaker 2: They maybe that's they don't really need to that.
Speaker 12: They just go to New York and then they come
Speaker 12: back to.
Speaker 7: Exact Ireland exactly.
Speaker 5: Anti Sports talk to us about that because I feel
Speaker 5: like I know they're an Asian company, so I'm assuming
Speaker 5: this has a China call to it.
Speaker 12: It does with an interesting twist. Anta is a is
Speaker 12: a sports wear company. They have a number of brands.
Speaker 12: I think when I've been on your show before, you
Speaker 12: may have seen that I've had an Arctics best on.
Speaker 5: Tim is like an extreme biker, climber hiker, all the stuff.
Speaker 2: That I just have good for you.
Speaker 12: I got nothing on that, But no Arctics is owned
Speaker 12: by Anta. But the reason why Anta is on here
Speaker 12: is twofold number one. Do have a lot of things
Speaker 12: going on from the standpoint of driving their business with
Speaker 12: various brands, and the Olympics playthrough will get results when
Speaker 12: they report next in terms of how good it's been.
Speaker 12: The China national team were anti sports kit. But it's
Speaker 12: also a case. You've seen lots of news about Adidas
Speaker 12: and Nike and how they're trying to get their inventory
Speaker 12: under control. That's making pricing better for sports where generally,
Speaker 12: and we think that that's playing through into anti sports
Speaker 12: margins as a corollary.
Speaker 3: That's interesting when you compare it to like say Nike,
Speaker 3: I understand that they do different things, but still you've
Speaker 3: also on here, so this is basically straight up railroad stock.
Speaker 2: Why do you guys like this one.
Speaker 12: Well, there's two things here. If you were to look
Speaker 12: at a three year, five year type chart, you would
Speaker 12: see that this company has gone through some problems. They
Speaker 12: had a big right off and problem that was announced
Speaker 12: a year or so ago, stock had collapsed. That's been
Speaker 12: settled and they're on the right track. No pun intended
Speaker 12: at this point. But importantly, there is a new European
Speaker 12: union wide signaling system that's coming into place that is
Speaker 12: meant to be reducing a lot of complication between different
Speaker 12: countries and whatnot. And it's an Alstom system. And in
Speaker 12: general the train businesses is running pretty well. We think
Speaker 12: they're on a road for recovery.
Speaker 5: Tim the biggest mark or one of the bigger market
Speaker 5: cap names on your list is Saudi National Bank. And
Speaker 5: I'll start with I know nothing about Saudi National Bank,
Speaker 5: but it's fifty seven billion market cap.
Speaker 7: What's the story there?
Speaker 12: Yeah, you know, it's really interesting. And this is true
Speaker 12: for Saudi National Bank, it's also true for some others
Speaker 12: in the country. It's running contra to what most banks
Speaker 12: are experiencing. I think there's been lots of news and
Speaker 12: coverage and certainly we've written about the pressure coming ahead
Speaker 12: for most banks with their net interest margins as interest
Speaker 12: rates start to decline. You know, their their loan pricing
Speaker 12: comes down, and you know that's not great for margins.
Speaker 12: Saudi National Bank isn't is an interesting case. We're given
Speaker 12: the nature of how their loans reprice versus their deposits
Speaker 12: repricing they actually stand to see over the course of
Speaker 12: the next six to twelve months, and then interest margin
Speaker 12: growth and expansion, and so it's running counter given just
Speaker 12: simply the nature of their asset and liability mix to
Speaker 12: to normal bank profitability in the current cycle we're in.
Speaker 12: So it's a really unusual story.
Speaker 3: Okay, we got like a minute, can you do for
Speaker 3: solar for me? Because that's gonna for me that's a
Speaker 3: TVD based on what happens with the Inflation Reduction Act
Speaker 3: here in the US.
Speaker 12: But you tell me it absolutely is. I mean, we
Speaker 12: all know that the election coming up is going to
Speaker 12: have a lot of implications for what happens from energy
Speaker 12: transition related spending and whatnot. That said, we're still going
Speaker 12: to see solar panels as a renewable energy source continued
Speaker 12: to grow. These guys are in the Catbird seat, so
Speaker 12: to speak, from the standpoint of they have a dominant
Speaker 12: position in the US. They've got good technology. Even though
Speaker 12: the Chinese producers are bigger and lower cost with arguably
Speaker 12: better technology, there's way too many restrictions for China product
Speaker 12: to come into the States. And so for solar is
Speaker 12: not you wouldn't say it's in a monopoly position, but
Speaker 12: it's a very advantaged position. And almost regardless of what
Speaker 12: happens with the IRA, we think that they've got winded
Speaker 12: their back for better order growth. Going ahead, all.
Speaker 3: Right, Tim, thanks a lot, super appreciate it.
Speaker 2: Tim Kraig. We're gonna get you back because we got
Speaker 2: through what fine.
Speaker 7: Yeah, we're going to get back. Yeah to New York.
Speaker 7: We need to get into New York.
Speaker 2: You want to play, but Mark, let's go back.
Speaker 3: We'll do the other five, all right, Tim Craig kad
Speaker 3: Bloomberg Intelligence a global Chief Content officer, joining us there
Speaker 3: on companies to watch in the fourth quarter.
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