1
00:00:09,880 --> 00:00:13,800
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily

2
00:00:13,960 --> 00:00:17,560
Speaker 1: we bring you insight from the best in economics, finance, investment,

3
00:00:18,000 --> 00:00:23,480
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,600 --> 00:00:27,440
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. This

5
00:00:27,480 --> 00:00:29,640
Speaker 1: is a joy. Mark Lass rejoins us, and yeah, we

6
00:00:29,680 --> 00:00:32,320
Speaker 1: can talk Milwaukee basketball and all that, but far more.

7
00:00:32,440 --> 00:00:36,760
Speaker 1: This is a story of West Hartford, Connecticut, wandering over

8
00:00:36,800 --> 00:00:40,520
Speaker 1: to Clark University, the land of rocketry and Mr Goddard

9
00:00:40,520 --> 00:00:45,000
Speaker 1: where he rocketed through distressed investment to the success of

10
00:00:45,080 --> 00:00:49,040
Speaker 1: his Avenue Capitol group. Mr Last rejoins us this morning

11
00:00:49,080 --> 00:00:52,239
Speaker 1: to look at this pandemic, the partition of America, the

12
00:00:52,320 --> 00:00:55,080
Speaker 1: distress that is out there in the view forward for

13
00:00:55,160 --> 00:00:59,320
Speaker 1: his industry, Mark, are you optimistic about opportunity in two

14
00:00:59,360 --> 00:01:03,400
Speaker 1: thousand any one? Um? Well, first of all, thank you

15
00:01:03,520 --> 00:01:07,680
Speaker 1: for that introduction. I love that very few times to

16
00:01:07,720 --> 00:01:11,120
Speaker 1: people talking about Clark, But um, yeah, I am actually,

17
00:01:11,840 --> 00:01:15,520
Speaker 1: um pretty optimistic. I think for us, Um, what you

18
00:01:15,600 --> 00:01:18,160
Speaker 1: are seeing is it's a little bit of what you

19
00:01:18,240 --> 00:01:21,640
Speaker 1: just talked about your You're seeing that there are problems

20
00:01:22,120 --> 00:01:25,400
Speaker 1: and a number of places, but there's also growth. So

21
00:01:25,520 --> 00:01:29,360
Speaker 1: for us, really, what we're finding is opportunities where we

22
00:01:29,400 --> 00:01:32,880
Speaker 1: can invest in situations where people need capital. Uh, and

23
00:01:32,920 --> 00:01:36,640
Speaker 1: we're providing that capital, but we're doing a pretty steep price.

24
00:01:36,880 --> 00:01:39,840
Speaker 1: When you clear a balance sheet out, you are now

25
00:01:40,000 --> 00:01:43,840
Speaker 1: clearing within the reality of a FED at the zero bound.

26
00:01:44,440 --> 00:01:48,160
Speaker 1: Is the FED distorted? You're part of the hedge fund world.

27
00:01:49,280 --> 00:01:53,520
Speaker 1: It actually has UM. What's ended up happening is it's

28
00:01:53,600 --> 00:01:58,400
Speaker 1: made UM it easier for companies to borrow money. UM.

29
00:01:58,480 --> 00:02:01,520
Speaker 1: So anybody who can borrow is doing so. But then

30
00:02:01,560 --> 00:02:04,960
Speaker 1: what it's done is the reverse. If you can't borrow UM,

31
00:02:05,080 --> 00:02:07,560
Speaker 1: then you've got to you've got to deal with folks

32
00:02:07,640 --> 00:02:10,400
Speaker 1: like me. And if you're doing that, UM, we're able

33
00:02:10,400 --> 00:02:13,840
Speaker 1: to charge twelve. So it's kind of odd a zero

34
00:02:13,919 --> 00:02:17,600
Speaker 1: rate environment, yet we're still charging twelve to fifteen. I

35
00:02:17,680 --> 00:02:20,080
Speaker 1: love that you say, otherwise you've got to deal with me,

36
00:02:20,160 --> 00:02:22,040
Speaker 1: and you don't want to deal with me. Mark. I

37
00:02:22,080 --> 00:02:24,720
Speaker 1: do wonder when you look at distress invest in going forward,

38
00:02:24,800 --> 00:02:27,560
Speaker 1: how much of this is simply who knows bankruptcy law best?

39
00:02:27,600 --> 00:02:29,799
Speaker 1: And I ask this of you knowing that you did

40
00:02:29,880 --> 00:02:32,480
Speaker 1: clerk for a bankruptcy judge in the Southern District of

41
00:02:32,480 --> 00:02:36,440
Speaker 1: New York. So is that really what this game has become? Um,

42
00:02:36,480 --> 00:02:40,040
Speaker 1: I think you've got to understand bankruptcy law because what

43
00:02:40,160 --> 00:02:42,919
Speaker 1: ends up happening now is, um, you're gonna have a

44
00:02:43,000 --> 00:02:45,200
Speaker 1: number of restructurings. But I would tell you the most

45
00:02:45,280 --> 00:02:49,239
Speaker 1: important part today is really understanding the balance sheet of

46
00:02:49,280 --> 00:02:52,040
Speaker 1: a company. Um that if we're gonna lend, are we,

47
00:02:52,760 --> 00:02:55,680
Speaker 1: you know, super secured? Are we senior? Where are we

48
00:02:55,720 --> 00:02:59,160
Speaker 1: in the capital structure? Because things can change on a

49
00:02:59,240 --> 00:03:01,160
Speaker 1: dime and you want to make sure that your cover.

50
00:03:01,680 --> 00:03:03,640
Speaker 1: So I would tell you that capital structure is gonna

51
00:03:03,639 --> 00:03:05,720
Speaker 1: be a little bit more important, but you better have

52
00:03:05,840 --> 00:03:09,160
Speaker 1: that legal background well Embedded in this is the assumption

53
00:03:09,240 --> 00:03:12,880
Speaker 1: that perhaps, or my presumption that recoveries are not going

54
00:03:12,880 --> 00:03:15,919
Speaker 1: to be as robust this time around, given how much

55
00:03:15,960 --> 00:03:18,640
Speaker 1: debt has been incurred and given some of the erosion

56
00:03:18,720 --> 00:03:21,680
Speaker 1: with some of the Covenant light loans that we have seen.

57
00:03:22,080 --> 00:03:25,400
Speaker 1: How much lower will recoveries be and how much fiarcer

58
00:03:25,400 --> 00:03:28,839
Speaker 1: will the battle be over who gets what? I think

59
00:03:28,840 --> 00:03:31,560
Speaker 1: recoveries will definitely be lower, and I think the fights

60
00:03:32,240 --> 00:03:36,680
Speaker 1: are going to be absolutely insane because everybody is going

61
00:03:36,720 --> 00:03:40,720
Speaker 1: to be fighting over a smaller pie. So that that's

62
00:03:40,720 --> 00:03:42,840
Speaker 1: why the focus is really where are you in the

63
00:03:42,880 --> 00:03:46,760
Speaker 1: capital structure? But you're going to have lower recoveries. It's

64
00:03:46,520 --> 00:03:49,200
Speaker 1: it's it's hard for you not to mainly because of

65
00:03:49,200 --> 00:03:51,280
Speaker 1: what you said, which is that people have taken on

66
00:03:51,400 --> 00:03:55,560
Speaker 1: more debt um and there's less equity value there. Mark,

67
00:03:55,640 --> 00:03:58,600
Speaker 1: I want to talk about market draw down, sharp ratios

68
00:03:58,600 --> 00:04:01,200
Speaker 1: and the ability to make two twenty, but that's gonna

69
00:04:01,200 --> 00:04:03,520
Speaker 1: have to pass. I've got a horde of people that

70
00:04:03,600 --> 00:04:05,560
Speaker 1: want to know if you can bring the glory of

71
00:04:05,600 --> 00:04:09,760
Speaker 1: Elsinder and Oscar Robertson and the Milwaukee Bucks back, what

72
00:04:09,920 --> 00:04:13,800
Speaker 1: does the plan forward after signing this gentleman for a

73
00:04:13,960 --> 00:04:17,599
Speaker 1: jillion million dollars? What is the Bucks plan into two

74
00:04:17,640 --> 00:04:23,600
Speaker 1: thousand twenty one in the NBA bubble? Um? I the

75
00:04:23,680 --> 00:04:27,279
Speaker 1: plan is simple, to try to win a championship. The

76
00:04:27,360 --> 00:04:32,320
Speaker 1: execution of that plan is going to be kind of hard. Um. Look,

77
00:04:32,320 --> 00:04:35,239
Speaker 1: we're gonna do everything we can, and I think we've

78
00:04:35,360 --> 00:04:40,159
Speaker 1: got probably you know, our Big three, which is I

79
00:04:40,200 --> 00:04:44,040
Speaker 1: think second to none at least in the East. Um,

80
00:04:44,160 --> 00:04:47,520
Speaker 1: So I think we'll have a pretty good shot. Um.

81
00:04:47,560 --> 00:04:49,960
Speaker 1: I think everybody's pretty excited. I think the hard part

82
00:04:50,080 --> 00:04:53,280
Speaker 1: was really resigning Janice, and the fact that we were

83
00:04:53,320 --> 00:04:56,680
Speaker 1: able to do that is actually great for Milwaukee. It's

84
00:04:56,720 --> 00:04:59,840
Speaker 1: great for small market teams, um. But more important, it's

85
00:04:59,839 --> 00:05:03,159
Speaker 1: great for our team. Mark, your leadership was there in

86
00:05:03,200 --> 00:05:06,159
Speaker 1: a time for this nation where Milwaukee was a center

87
00:05:06,200 --> 00:05:09,680
Speaker 1: and the soul of protest in this nation. What do

88
00:05:09,720 --> 00:05:13,039
Speaker 1: you want to see from Milwaukee this year? What is

89
00:05:13,040 --> 00:05:17,039
Speaker 1: the goal to get to a more peaceful America? Look,

90
00:05:17,040 --> 00:05:18,400
Speaker 1: I think at the end of the day, I think

91
00:05:18,440 --> 00:05:22,479
Speaker 1: it's listening, it's trying to bring about change. But I

92
00:05:22,520 --> 00:05:25,440
Speaker 1: think what we've tried to do is be at the

93
00:05:25,480 --> 00:05:29,080
Speaker 1: forefront of that um with our players, um, I think,

94
00:05:29,120 --> 00:05:32,640
Speaker 1: with everyone. So we're trying to bring about that change,

95
00:05:33,000 --> 00:05:37,039
Speaker 1: but we're doing it by seeing how and what people need.

96
00:05:37,560 --> 00:05:40,440
Speaker 1: So I think we're you know, it's Look, it's gonna

97
00:05:40,480 --> 00:05:44,400
Speaker 1: be difficult, it's gonna take time, but hopefully if people

98
00:05:44,400 --> 00:05:46,800
Speaker 1: have patience, we'll be able to do it. Mark Lass,

99
00:05:46,839 --> 00:05:48,800
Speaker 1: we thank you so much. With the basketball team in

100
00:05:48,880 --> 00:05:58,400
Speaker 1: Milwaukee and also Avenue Capital as well. Europe has received

101
00:05:58,440 --> 00:06:02,080
Speaker 1: the attention of Nathan she It's an esteemed career is

102
00:06:02,160 --> 00:06:06,320
Speaker 1: under Secretary of Treasury, he provided provided leadership on international

103
00:06:06,360 --> 00:06:10,599
Speaker 1: affairs with the International Monetary Fund. He did terrific work

104
00:06:10,680 --> 00:06:13,880
Speaker 1: and then leading the charge on international economics for Villain

105
00:06:13,960 --> 00:06:16,880
Speaker 1: Powder at City Group. He is now at PEJAM and

106
00:06:16,920 --> 00:06:22,440
Speaker 1: has that a terrific year melding economics into their global

107
00:06:22,560 --> 00:06:25,960
Speaker 1: call on fixed income. Nathan, let me go back here

108
00:06:26,040 --> 00:06:28,719
Speaker 1: just a bit. How is two thousand twenty for you

109
00:06:29,320 --> 00:06:35,320
Speaker 1: and melding economics into the animals? Like Greg Peters, Well, uh,

110
00:06:35,839 --> 00:06:39,400
Speaker 1: that's a great question, and uh that is uh that

111
00:06:39,720 --> 00:06:43,920
Speaker 1: is my challenge. But uh, I think that the task

112
00:06:44,040 --> 00:06:49,960
Speaker 1: at hand is very much articulating and economic narrative. And

113
00:06:50,040 --> 00:06:53,920
Speaker 1: the narrative for has been quite clear. It's been about

114
00:06:55,360 --> 00:07:00,240
Speaker 1: viruses and lockdowns and then bounce backs. Adds that uh

115
00:07:00,600 --> 00:07:03,240
Speaker 1: as that lockdown is ease and come back in again.

116
00:07:03,640 --> 00:07:06,600
Speaker 1: And I think our investors pay a lot of attention

117
00:07:06,839 --> 00:07:09,760
Speaker 1: to what's going on in the backro so also then

118
00:07:09,960 --> 00:07:14,240
Speaker 1: bring with it the micro market narrative. Someone that can

119
00:07:14,240 --> 00:07:16,800
Speaker 1: do that is Janet Yellen. It will be the great

120
00:07:16,840 --> 00:07:20,280
Speaker 1: transition from Fed to Treasury. You of course no chair

121
00:07:20,400 --> 00:07:24,000
Speaker 1: yelling quite well, what will yelling be like a secretary

122
00:07:24,000 --> 00:07:27,160
Speaker 1: of the Treasury, What will be her challenge and that

123
00:07:27,320 --> 00:07:32,480
Speaker 1: political shift. So I think the appointment of Janney Yelling

124
00:07:32,960 --> 00:07:37,400
Speaker 1: UH to uh be Secretary of the Treasury is is

125
00:07:37,400 --> 00:07:43,520
Speaker 1: a splendid appointment. She comes with platinum plated credibility. When

126
00:07:43,560 --> 00:07:49,320
Speaker 1: she speaks, others will listen to her across the political spectrum.

127
00:07:50,160 --> 00:07:53,720
Speaker 1: The Treasury is a different building than the Federal Reserve,

128
00:07:54,200 --> 00:07:58,720
Speaker 1: but I think that Janet Yelling's insights into the labor

129
00:07:58,800 --> 00:08:01,680
Speaker 1: market are going to be radical and helping to get

130
00:08:01,720 --> 00:08:06,880
Speaker 1: the economy back on normal footing. I think it will

131
00:08:06,920 --> 00:08:11,440
Speaker 1: be very helpful their issues like financial regulation, managing the dollar,

132
00:08:12,080 --> 00:08:15,360
Speaker 1: China relationship, these are all things that she's thought about

133
00:08:15,440 --> 00:08:19,000
Speaker 1: and and dealt with at the fedough Reserve and as

134
00:08:19,040 --> 00:08:21,960
Speaker 1: an academic for for many years. I think that she

135
00:08:22,040 --> 00:08:25,440
Speaker 1: will have a very successful and constructive tenure. What do

136
00:08:25,480 --> 00:08:27,880
Speaker 1: you think will be her view or her push when

137
00:08:27,920 --> 00:08:30,679
Speaker 1: it comes to the dollar. There's been some concern about

138
00:08:30,720 --> 00:08:33,320
Speaker 1: whether she'll continue the sort of strong dollar being a

139
00:08:33,360 --> 00:08:37,120
Speaker 1: good thing narrative or whether she'll piggyback with what President

140
00:08:37,160 --> 00:08:38,800
Speaker 1: Trump was saying and frankly with what a lot of

141
00:08:38,800 --> 00:08:41,360
Speaker 1: economists say, which is that a weaker dollar will give

142
00:08:41,360 --> 00:08:44,640
Speaker 1: a tail into the U S economy. Well, I think

143
00:08:44,679 --> 00:08:47,480
Speaker 1: this is one of the key issues on the international

144
00:08:47,640 --> 00:08:51,920
Speaker 1: side of the Treasury that on the one hand, I

145
00:08:51,960 --> 00:08:55,360
Speaker 1: think there might be a case that the strong dollar

146
00:08:55,600 --> 00:08:59,560
Speaker 1: policy has been around for a long time, can we

147
00:08:59,679 --> 00:09:02,840
Speaker 1: still say that a strong dollar is in the US

148
00:09:02,960 --> 00:09:07,800
Speaker 1: interests and particularly in the interests of US workers. I

149
00:09:07,840 --> 00:09:11,960
Speaker 1: think for some time that organized labor has challenged that.

150
00:09:12,559 --> 00:09:15,160
Speaker 1: On the other hand, the strong dollar did a lot

151
00:09:15,240 --> 00:09:20,680
Speaker 1: of positive and constructive things that policy in the international road,

152
00:09:20,800 --> 00:09:25,000
Speaker 1: where it gave the United States moral standing and moral legitimacy.

153
00:09:25,520 --> 00:09:28,280
Speaker 1: Essentially said We'll played by the rules, and we expect

154
00:09:28,280 --> 00:09:31,160
Speaker 1: others to play by the rules as well. And what

155
00:09:31,240 --> 00:09:34,040
Speaker 1: would if if they want to deviate from it, what

156
00:09:34,080 --> 00:09:37,880
Speaker 1: would another structure look like, and would it carry those

157
00:09:38,000 --> 00:09:42,559
Speaker 1: those positive benefits of allowing the United States to uh

158
00:09:43,240 --> 00:09:46,360
Speaker 1: influence the policies of other countries in the same way.

159
00:09:46,840 --> 00:09:48,800
Speaker 1: I think this is something they're gonna be struggling with.

160
00:09:49,120 --> 00:09:51,760
Speaker 1: We're speaking with Nathan Sheets of p JIM and just

161
00:09:51,880 --> 00:09:55,280
Speaker 1: the backdrop today is of vaccines that are gaining steam

162
00:09:55,640 --> 00:09:58,320
Speaker 1: of a nine billion dollar stimulus bill that was passed

163
00:09:58,320 --> 00:10:02,120
Speaker 1: in Congress and just now crossing the Bloomberg right now

164
00:10:02,160 --> 00:10:04,160
Speaker 1: that Alex Asar, the head of a J j S,

165
00:10:04,200 --> 00:10:09,679
Speaker 1: is saying that expect late February early March general vaccine programs.

166
00:10:09,760 --> 00:10:13,160
Speaker 1: Given what we got overnight from Congress and given the

167
00:10:13,200 --> 00:10:17,480
Speaker 1: expectations for the time frame vaccinations, is the fiscal support

168
00:10:17,559 --> 00:10:20,600
Speaker 1: already on the table enough to carry the economy through.

169
00:10:21,640 --> 00:10:24,960
Speaker 1: So my feeling is the goal was to build a bridge,

170
00:10:25,200 --> 00:10:30,240
Speaker 1: and this nillion dollars stimulus package certainly does that. Over

171
00:10:30,280 --> 00:10:34,360
Speaker 1: the next few months, will be putting UH four percent

172
00:10:34,640 --> 00:10:40,560
Speaker 1: of GDP into the economy seventeen percent at an annual rate.

173
00:10:41,360 --> 00:10:45,800
Speaker 1: I think it protects the economy from downside risks and

174
00:10:45,920 --> 00:10:51,439
Speaker 1: importantly protects the most vulnerable parts of the household distribution

175
00:10:51,520 --> 00:10:54,960
Speaker 1: as well as small firms and maybe UH at risk.

176
00:10:55,080 --> 00:10:58,240
Speaker 1: So I I think it does very effectively build that

177
00:10:58,320 --> 00:11:02,120
Speaker 1: bridge UH in to the vaccine, and then I think

178
00:11:02,200 --> 00:11:06,160
Speaker 1: once the vaccine arrives, you put on your seatbelt. I

179
00:11:06,200 --> 00:11:10,600
Speaker 1: think this economy could really rep Nathan Sheets. I want

180
00:11:10,600 --> 00:11:14,800
Speaker 1: to go to your wheelhouse, which is international economic dynamics.

181
00:11:14,920 --> 00:11:18,319
Speaker 1: The idea of the movable parts out there. Does a

182
00:11:18,440 --> 00:11:21,880
Speaker 1: dollar move in two thousand twenty one with it a

183
00:11:21,960 --> 00:11:26,240
Speaker 1: traditional framework or things so distorted that we need a

184
00:11:26,280 --> 00:11:29,400
Speaker 1: different prism to look at dollars six months or a

185
00:11:29,480 --> 00:11:33,120
Speaker 1: year from now. Well, I think this is this is

186
00:11:33,160 --> 00:11:40,120
Speaker 1: a fantastic question. Typically a weaker dollar is associated with

187
00:11:40,280 --> 00:11:43,880
Speaker 1: a stronger euro, and then as the Euro moves, that

188
00:11:44,040 --> 00:11:48,360
Speaker 1: then escalates and moves into the emerging market space. But

189
00:11:48,440 --> 00:11:50,320
Speaker 1: I think we're at a place where, on the one hand,

190
00:11:50,360 --> 00:11:53,600
Speaker 1: the dollar is likely to weaken. On the other hand,

191
00:11:53,720 --> 00:11:57,400
Speaker 1: I'm not sure the euro area is well placed given

192
00:11:57,400 --> 00:12:00,760
Speaker 1: the economic challenges that they're facing with that with the

193
00:12:00,840 --> 00:12:05,360
Speaker 1: virus to be able to absorb also can happen in

194
00:12:05,360 --> 00:12:07,440
Speaker 1: the young space. I don't mean to interrupt, Nathan, but

195
00:12:07,480 --> 00:12:10,880
Speaker 1: your true world class on this. There's a doom and

196
00:12:10,920 --> 00:12:15,120
Speaker 1: gloom fear out there of Plaza Louver re ducts, of

197
00:12:15,200 --> 00:12:20,880
Speaker 1: Reuben dollar reducts. Aren't we in a largely floating exchange

198
00:12:21,000 --> 00:12:24,280
Speaker 1: rate economy where we've done away with so many of

199
00:12:24,360 --> 00:12:29,839
Speaker 1: the rigidities of those older systems. So when we go

200
00:12:29,920 --> 00:12:33,960
Speaker 1: back and look at some of those past accords where

201
00:12:33,960 --> 00:12:39,160
Speaker 1: there were more odd agreements with respect to currency, the

202
00:12:39,240 --> 00:12:44,240
Speaker 1: misvaluations and misalignments were much larger. And I think in addition,

203
00:12:44,280 --> 00:12:47,760
Speaker 1: as you're pointing out Tom the official sector relative the

204
00:12:47,880 --> 00:12:51,800
Speaker 1: private sector was much larger. So on the one hand,

205
00:12:52,280 --> 00:12:56,040
Speaker 1: I don't see those same misalignments, so I wouldn't expect

206
00:12:56,160 --> 00:13:01,160
Speaker 1: some broad based UH agreement. And on the other hand,

207
00:13:01,200 --> 00:13:04,040
Speaker 1: it is a lot harder for the public sector to

208
00:13:04,320 --> 00:13:08,920
Speaker 1: enforce its will on on the f X market. UH.

209
00:13:09,040 --> 00:13:10,840
Speaker 1: So I think it really is at the end of

210
00:13:10,840 --> 00:13:13,959
Speaker 1: the day, about these macro fundamentals, and I think they

211
00:13:14,040 --> 00:13:18,040
Speaker 1: point to somewhat weaker dollar UH, and UH may not

212
00:13:18,240 --> 00:13:21,199
Speaker 1: point to a much stronger euro from here, Nathan, how

213
00:13:21,280 --> 00:13:24,000
Speaker 1: much is higher inflation part of that weaker dollar call?

214
00:13:26,480 --> 00:13:31,960
Speaker 1: So my feeling is that inflation over the medium term

215
00:13:32,160 --> 00:13:36,680
Speaker 1: is going to stay relatively muted as it was before

216
00:13:36,720 --> 00:13:41,240
Speaker 1: the pandemic. Now as we're coming out of out of

217
00:13:41,280 --> 00:13:44,240
Speaker 1: the situation and as the vaccines a lot, could we

218
00:13:44,280 --> 00:13:47,360
Speaker 1: have a temporary boost in inflation where there were some

219
00:13:47,440 --> 00:13:52,000
Speaker 1: bottlenecks and shortages. Yes, So I think that in general

220
00:13:52,040 --> 00:13:55,280
Speaker 1: will continue to be a low inflation environment. And so

221
00:13:55,440 --> 00:13:58,079
Speaker 1: my view of a weaker dollar is not so much

222
00:13:58,120 --> 00:14:01,520
Speaker 1: predicated on an inflation call. So the reason why I

223
00:14:01,520 --> 00:14:04,120
Speaker 1: asked that is because earlier you were saying that mid

224
00:14:04,200 --> 00:14:06,320
Speaker 1: next year you can start to see the economy, to

225
00:14:06,440 --> 00:14:09,800
Speaker 1: use your high level economic speak, really rip, And so

226
00:14:09,920 --> 00:14:12,800
Speaker 1: I'm wondering what the consequences will be if that isn't

227
00:14:12,840 --> 00:14:16,320
Speaker 1: necessarily on inflation, Whether we continue with this goldilocks scenario

228
00:14:16,360 --> 00:14:18,480
Speaker 1: where we can see growth and we can see job

229
00:14:18,760 --> 00:14:22,200
Speaker 1: jobless rates go down and yet inflation stay muted. Can

230
00:14:22,240 --> 00:14:27,040
Speaker 1: you walk us through that whole narrative. So my feeling

231
00:14:27,200 --> 00:14:30,120
Speaker 1: is that during the second half of next year, as

232
00:14:30,160 --> 00:14:36,040
Speaker 1: the economy is booming, that we are likely to see

233
00:14:36,080 --> 00:14:41,200
Speaker 1: some shortages and bottlenecks manifest themselves and a temporary period

234
00:14:41,240 --> 00:14:44,920
Speaker 1: of somewhat elevated inflation to some extent. We saw that

235
00:14:45,680 --> 00:14:48,080
Speaker 1: in the third quarder of this past year as we

236
00:14:48,160 --> 00:14:52,000
Speaker 1: came out of the spring lockdowns. But that as we

237
00:14:52,080 --> 00:14:57,640
Speaker 1: move into two and beyond that these deep structural factors

238
00:14:57,640 --> 00:15:04,160
Speaker 1: like demographics to leveraging, automation and uh and and inflation

239
00:15:04,280 --> 00:15:08,560
Speaker 1: expectations being well anchored on the downside will reassert themselves

240
00:15:08,800 --> 00:15:13,120
Speaker 1: and it will continue to be a low inflation world,

241
00:15:13,240 --> 00:15:16,960
Speaker 1: with perhaps even further disinflation as we continue to age.

242
00:15:17,160 --> 00:15:19,880
Speaker 1: Nathan Sheets, thank you for wisdom across this two thousand

243
00:15:19,880 --> 00:15:22,040
Speaker 1: and twenty look forward. To speaking you to you into

244
00:15:22,040 --> 00:15:28,800
Speaker 1: the new year with Pijam. Nathan Sheets joins us, we've

245
00:15:28,800 --> 00:15:32,400
Speaker 1: tried all across Bloomberg surveillance really from February to give

246
00:15:32,440 --> 00:15:34,480
Speaker 1: you the pros on this. Someone that's helped us so

247
00:15:34,600 --> 00:15:37,400
Speaker 1: much out of Hope College, Kalamazoo and of course the

248
00:15:37,480 --> 00:15:41,040
Speaker 1: combine at uh Wisconsin Madison and now Holding Court in

249
00:15:41,080 --> 00:15:46,200
Speaker 1: Washington and they were claimed microbiology program. Deborah Fuller joins us.

250
00:15:46,440 --> 00:15:48,960
Speaker 1: Right now, Debra, you and I were talking to break

251
00:15:49,000 --> 00:15:51,040
Speaker 1: about the need to get back in the lab and

252
00:15:51,160 --> 00:15:54,400
Speaker 1: solve the mysteries. What's the great mystery we need to

253
00:15:54,480 --> 00:16:00,240
Speaker 1: solve with this fear of mutation, this fear of variant. Well,

254
00:16:00,240 --> 00:16:02,880
Speaker 1: there are two mysteries we need to solve. The first

255
00:16:03,000 --> 00:16:06,880
Speaker 1: is whether it truly is more transmissible and the second

256
00:16:07,080 --> 00:16:11,280
Speaker 1: is is this going to impact the efficacy of our vaccine? So, uh,

257
00:16:11,360 --> 00:16:13,360
Speaker 1: you know, if you if you break that down just

258
00:16:13,440 --> 00:16:15,600
Speaker 1: a little bit, that this is a new variant that

259
00:16:15,640 --> 00:16:19,040
Speaker 1: has about twenty nu muications and it does appear to

260
00:16:19,040 --> 00:16:21,200
Speaker 1: be taking over as a dominant strain in the UK

261
00:16:21,920 --> 00:16:24,240
Speaker 1: based on you know, there's a substantial increase in the

262
00:16:24,280 --> 00:16:29,040
Speaker 1: frequency in detecting the strain in in the population. Uh.

263
00:16:29,080 --> 00:16:32,320
Speaker 1: But what we don't know yet is whether that is

264
00:16:32,360 --> 00:16:35,120
Speaker 1: truly an increase in transmission. We're going to need additional

265
00:16:35,240 --> 00:16:38,800
Speaker 1: tests to really validate that, such as does it outcompete

266
00:16:38,800 --> 00:16:41,840
Speaker 1: other viral strains in in a cell culture study in

267
00:16:41,880 --> 00:16:46,320
Speaker 1: the lab? Does that result in higher amounts of viral shedding? Uh?

268
00:16:46,360 --> 00:16:49,160
Speaker 1: And animals infected with it? This usually does translate to

269
00:16:49,240 --> 00:16:51,960
Speaker 1: higher transmission, So those those particularly experiments need to be

270
00:16:52,000 --> 00:16:55,680
Speaker 1: done too to confirm that. What doesn't mean for vaccines,

271
00:16:55,720 --> 00:16:58,800
Speaker 1: we don't really know yet. Uh. There is no evidence

272
00:16:58,880 --> 00:17:02,080
Speaker 1: yet that these new mutations are going to impact they

273
00:17:02,160 --> 00:17:05,919
Speaker 1: of vaccines. Uh. There's some confidence among the manufacturers that

274
00:17:05,960 --> 00:17:09,479
Speaker 1: it won't. Uh, they still need to test that. You know,

275
00:17:09,480 --> 00:17:12,840
Speaker 1: in microbiology, it's about the nucleus, societoplasm and all the

276
00:17:12,920 --> 00:17:16,119
Speaker 1: drama at the cellular wall. The drama here are the

277
00:17:16,240 --> 00:17:19,720
Speaker 1: fearsome spikes that we see on this virus. Do we

278
00:17:19,800 --> 00:17:23,560
Speaker 1: have an understanding of the physiology of those spikes and

279
00:17:23,640 --> 00:17:28,000
Speaker 1: what we can do about it? The spike protein on

280
00:17:28,040 --> 00:17:32,280
Speaker 1: the virus means yes, yeah. The spike protein the virus

281
00:17:32,400 --> 00:17:34,840
Speaker 1: is absolutely cential for the virus to be able to

282
00:17:34,960 --> 00:17:37,480
Speaker 1: enter the cell and that's why we've designed vaccines to

283
00:17:37,720 --> 00:17:40,720
Speaker 1: target that particular spike protein. It is going to be

284
00:17:41,080 --> 00:17:44,280
Speaker 1: the area the virus is likely going to mutate the most,

285
00:17:44,400 --> 00:17:49,600
Speaker 1: because mutations are often driven by the virus wanting to

286
00:17:49,640 --> 00:17:52,879
Speaker 1: improve its own fitness, its own replication, and the spike

287
00:17:52,880 --> 00:17:55,960
Speaker 1: protein would be an obvious target for that. What we've

288
00:17:55,960 --> 00:17:58,119
Speaker 1: done with the vaccines though, is that we've targeted a

289
00:17:58,160 --> 00:18:01,399
Speaker 1: particular area on the spike protein that is absolutely essential

290
00:18:01,440 --> 00:18:03,440
Speaker 1: for the virus to be able to enter into the cell.

291
00:18:03,640 --> 00:18:06,960
Speaker 1: So if it mutates that particular area, there's a good

292
00:18:07,080 --> 00:18:10,600
Speaker 1: chance that it actually is going to aboard itself. So

293
00:18:10,680 --> 00:18:14,000
Speaker 1: that's probably why we haven't seen of many mutations have

294
00:18:14,160 --> 00:18:16,600
Speaker 1: risen in this in this virus, many of them in

295
00:18:16,600 --> 00:18:20,359
Speaker 1: the spike proteins have an impact yet on the vaccine.

296
00:18:20,359 --> 00:18:22,679
Speaker 1: With that said, uh I have I had a mentor

297
00:18:22,760 --> 00:18:24,760
Speaker 1: once told me that if if if a virus can,

298
00:18:24,760 --> 00:18:28,399
Speaker 1: it will and viruses can eventually potentially figure out a

299
00:18:28,440 --> 00:18:31,000
Speaker 1: way to a vaccine immunity, and that's why it's so

300
00:18:31,000 --> 00:18:33,920
Speaker 1: important every time one new one emerges it like this one,

301
00:18:33,960 --> 00:18:37,200
Speaker 1: we have to look at our vaccines and see whether

302
00:18:37,320 --> 00:18:41,399
Speaker 1: or not these new mutations, UH could result in resistance.

303
00:18:41,560 --> 00:18:45,639
Speaker 1: I'll leave the cellular biology to Tom Keane. But Deborah,

304
00:18:45,840 --> 00:18:48,360
Speaker 1: I've got a much simpler question, which is one, will

305
00:18:48,440 --> 00:18:50,760
Speaker 1: kids be able to be vaccinated given the lack of

306
00:18:50,840 --> 00:18:55,480
Speaker 1: information in studies so far to the state. So what

307
00:18:55,520 --> 00:18:59,400
Speaker 1: they're doing right now is they are initiating UH clinical

308
00:18:59,440 --> 00:19:04,240
Speaker 1: trials will include younger children, and unlike what was required

309
00:19:04,280 --> 00:19:07,080
Speaker 1: for for adults, where we had to go all the

310
00:19:07,119 --> 00:19:10,720
Speaker 1: way to an efficacy study comparing with CIBO versus versus

311
00:19:10,720 --> 00:19:13,080
Speaker 1: those who are taking the vaccine, what we can do

312
00:19:13,080 --> 00:19:15,800
Speaker 1: is study those who have already see the vaccine and

313
00:19:15,840 --> 00:19:18,000
Speaker 1: we know that they're protected. We can look at the

314
00:19:18,640 --> 00:19:22,359
Speaker 1: levels of immunity they have and then use that information say,

315
00:19:22,440 --> 00:19:24,919
Speaker 1: are hey, are these kids who are getting UH in

316
00:19:24,960 --> 00:19:28,919
Speaker 1: our clinical trials developing antibodies or immune responses comparable to

317
00:19:29,000 --> 00:19:31,960
Speaker 1: what we see and protected adults. And if they are,

318
00:19:32,040 --> 00:19:35,439
Speaker 1: then I think they could probably get more extend the

319
00:19:35,480 --> 00:19:38,760
Speaker 1: authorization to to include children. Of course, that that really

320
00:19:38,800 --> 00:19:42,679
Speaker 1: depends on assuring that these vaccines are also safe in children. So,

321
00:19:42,720 --> 00:19:45,720
Speaker 1: based on the rollout so far, deb what's your best

322
00:19:45,920 --> 00:19:48,320
Speaker 1: estimate for a time frame of when we'll reach some

323
00:19:48,400 --> 00:19:50,159
Speaker 1: sort of I hate to say this because I know

324
00:19:50,240 --> 00:19:54,240
Speaker 1: Tom has a lot of issues of herd immunity. Yes,

325
00:19:54,359 --> 00:19:57,640
Speaker 1: herd immunity being defined as when we get sufficient amounts

326
00:19:57,640 --> 00:20:00,240
Speaker 1: of vaccine induced immunity and the population so that the

327
00:20:00,320 --> 00:20:03,440
Speaker 1: virus is not able to transmit as well anymore. So

328
00:20:03,720 --> 00:20:05,840
Speaker 1: it really depends on how many many people we can

329
00:20:05,840 --> 00:20:09,199
Speaker 1: get to come forward to to get vaccinated. If we

330
00:20:09,280 --> 00:20:12,800
Speaker 1: can get over sixt of people vaccinated number one and

331
00:20:12,960 --> 00:20:16,360
Speaker 1: number two, if the distribution of the role happens in

332
00:20:16,359 --> 00:20:19,439
Speaker 1: in the schedule that they're predicting, let's say April the

333
00:20:19,480 --> 00:20:22,000
Speaker 1: most everybody will have an opportunity to get a vaccine,

334
00:20:22,240 --> 00:20:24,399
Speaker 1: and we can get six people to to take a

335
00:20:24,480 --> 00:20:28,320
Speaker 1: vaccine and the manufacturer number to produce that much vaccine,

336
00:20:28,840 --> 00:20:32,880
Speaker 1: then we could probably see her community sometime in late

337
00:20:32,920 --> 00:20:35,879
Speaker 1: spring early summer. That is the money question. Deborah Fuller,

338
00:20:36,000 --> 00:20:37,840
Speaker 1: thank you so much for the money answer. Where the

339
00:20:37,960 --> 00:20:47,400
Speaker 1: university was Washington, I should say School of madisone president elect.

340
00:20:47,440 --> 00:20:50,360
Speaker 1: There's an inauguration it'll be I don't know, the third

341
00:20:50,359 --> 00:20:52,840
Speaker 1: week of January or something like that. The second most

342
00:20:52,840 --> 00:20:55,720
Speaker 1: famous person to ever graduate from the University of Delaware.

343
00:20:56,080 --> 00:20:58,600
Speaker 1: We now welcome the most famous person to ever graduate

344
00:20:58,640 --> 00:21:02,200
Speaker 1: from the University of Delaware. Liziane Saunders joins us from

345
00:21:02,680 --> 00:21:07,119
Speaker 1: Charles Schwab was just a lot of good years of perspective. Listen,

346
00:21:07,160 --> 00:21:09,040
Speaker 1: I've got to go to the money question, which you're

347
00:21:09,080 --> 00:21:13,240
Speaker 1: always so good at, which is not the bladder the

348
00:21:13,359 --> 00:21:17,040
Speaker 1: pundit try, but what are we actually doing with our money?

349
00:21:17,080 --> 00:21:22,399
Speaker 1: What does Schwabs see that people are actually doing well?

350
00:21:22,720 --> 00:21:25,600
Speaker 1: From a fund flows perspective which goes beyond to Schwab,

351
00:21:25,680 --> 00:21:29,200
Speaker 1: but broader fund flows inclusive of both mutual funds and

352
00:21:29,480 --> 00:21:32,760
Speaker 1: e t F you really started to see a significant

353
00:21:32,800 --> 00:21:36,320
Speaker 1: move back into US equities starting at the beginning of November.

354
00:21:37,119 --> 00:21:39,359
Speaker 1: Much at the same time you've got the initial Fiser

355
00:21:39,440 --> 00:21:44,800
Speaker 1: vaccine news. That led to another stage of the rotation,

356
00:21:44,960 --> 00:21:47,560
Speaker 1: which was not so much into cyclical areas but into

357
00:21:47,640 --> 00:21:50,280
Speaker 1: all right, what hasn't worked yet, hence the big move

358
00:21:50,320 --> 00:21:56,679
Speaker 1: into energy and financials um. Interestingly, though, the larger speculators

359
00:21:56,880 --> 00:21:59,119
Speaker 1: are basically moving to the other side of the trade,

360
00:21:59,520 --> 00:22:03,679
Speaker 1: so they been upping their speculative short positions on the

361
00:22:03,840 --> 00:22:07,000
Speaker 1: s and it's a bit of a divergence, which I'm

362
00:22:07,040 --> 00:22:09,959
Speaker 1: a bit worried about the sentiment environment because fund flows

363
00:22:10,040 --> 00:22:14,720
Speaker 1: was sort of the last thing to fall since sentiment

364
00:22:14,800 --> 00:22:17,800
Speaker 1: got a bit fraughty in early September. It was mostly

365
00:22:18,000 --> 00:22:21,280
Speaker 1: by the new limited day traders in the options market,

366
00:22:21,640 --> 00:22:25,320
Speaker 1: and then it became more pervasive in attitudinal measures of

367
00:22:25,400 --> 00:22:29,800
Speaker 1: sentiment into fund flows since early November. And the success

368
00:22:29,800 --> 00:22:32,720
Speaker 1: of the market I think has bread a risk, which

369
00:22:32,800 --> 00:22:35,880
Speaker 1: is that we're looking at fairly froughty sentiment. We don't

370
00:22:35,880 --> 00:22:38,240
Speaker 1: go through the math this close to the holidays, but

371
00:22:38,680 --> 00:22:41,720
Speaker 1: the bottom line is, if somebody is short and they cover,

372
00:22:42,640 --> 00:22:47,360
Speaker 1: it develops a convexity or acceleration of buying. Are we

373
00:22:47,400 --> 00:22:50,639
Speaker 1: setting ourselves up for a big short cover if we

374
00:22:50,760 --> 00:22:55,080
Speaker 1: get good news on the vaccine. I think there could

375
00:22:55,080 --> 00:22:59,480
Speaker 1: be a set up for shortcovering on a number of factors.

376
00:22:59,560 --> 00:23:03,640
Speaker 1: Yesked news on the vaccine, maybe less weak economic data

377
00:23:03,800 --> 00:23:07,880
Speaker 1: driven by the current state of the virus um. We've

378
00:23:07,920 --> 00:23:09,960
Speaker 1: already gotten some of the good news on the vaccine

379
00:23:10,040 --> 00:23:13,400
Speaker 1: specific to the amount of shots that can be administered

380
00:23:13,560 --> 00:23:18,040
Speaker 1: from each vial, but of course there's also the possibility

381
00:23:18,080 --> 00:23:21,400
Speaker 1: of negative news. You know. Dr Gottlieb said, I think

382
00:23:21,480 --> 00:23:25,680
Speaker 1: yesterday that the stream that was seen in the UK,

383
00:23:25,800 --> 00:23:28,959
Speaker 1: this new stream is probably already in the United States,

384
00:23:28,960 --> 00:23:31,480
Speaker 1: and we don't know the details of whether it's it

385
00:23:31,480 --> 00:23:34,600
Speaker 1: can be combated by the same vaccine. So I think

386
00:23:34,600 --> 00:23:37,479
Speaker 1: there are there are risks on on both sides. If

387
00:23:37,520 --> 00:23:41,359
Speaker 1: we take a generalization Lizzian Saunders that we go seven

388
00:23:41,440 --> 00:23:44,359
Speaker 1: eight nine years of quiet and value and then we

389
00:23:44,400 --> 00:23:47,280
Speaker 1: get a value lift which pretty much makes up for it.

390
00:23:47,640 --> 00:23:52,960
Speaker 1: Have we moved away from growthiness towards that value pop

391
00:23:53,119 --> 00:23:56,080
Speaker 1: people have been waiting for or do you not see

392
00:23:56,119 --> 00:23:59,400
Speaker 1: the determinants that make that happen yet? Well, I think

393
00:23:59,480 --> 00:24:02,919
Speaker 1: we have to distinguished between the fundamentals of value and

394
00:24:02,960 --> 00:24:06,879
Speaker 1: the index components of value. This this so called move

395
00:24:07,000 --> 00:24:10,840
Speaker 1: to value, has been more driven by the surge in

396
00:24:10,960 --> 00:24:15,000
Speaker 1: financials and energy, which are much more heavily weighted in

397
00:24:15,040 --> 00:24:19,240
Speaker 1: the value indexes and even within the value indexes. Financials

398
00:24:19,359 --> 00:24:23,600
Speaker 1: is a huge play. Russell one thousand Value has seventeen

399
00:24:23,680 --> 00:24:27,439
Speaker 1: or eighteen percent financials, Russell two thousand Value has twenty

400
00:24:27,440 --> 00:24:31,840
Speaker 1: eight percent financial and financial movement financials. You have to

401
00:24:31,880 --> 00:24:35,280
Speaker 1: look at where it accrues from a style index perspective.

402
00:24:35,880 --> 00:24:38,480
Speaker 1: So we just have to do more than just watch

403
00:24:38,520 --> 00:24:41,919
Speaker 1: the headlines of say money going from growth to value

404
00:24:41,920 --> 00:24:44,600
Speaker 1: are large too small and understand that there are spector

405
00:24:44,680 --> 00:24:48,600
Speaker 1: drivers that need to be considered. And another example, healthcare

406
00:24:48,800 --> 00:24:52,119
Speaker 1: is half the weight in Russell two thousand value as

407
00:24:52,160 --> 00:24:54,040
Speaker 1: it is in Russell one thousand values. So if you

408
00:24:54,080 --> 00:24:55,919
Speaker 1: get a big healthcare move over the course of a

409
00:24:56,000 --> 00:24:58,359
Speaker 1: day or a series of days, it's going to accrue

410
00:24:58,400 --> 00:25:01,480
Speaker 1: to the greater benefit of large value. Even well, you

411
00:25:01,600 --> 00:25:03,520
Speaker 1: just heard. There's two things here, folks. And this is

412
00:25:03,520 --> 00:25:05,440
Speaker 1: why it's such a joy to have miss Sanders on

413
00:25:05,560 --> 00:25:10,760
Speaker 1: with us. Literally this morning, as I was beginning my day,

414
00:25:11,000 --> 00:25:14,280
Speaker 1: I looked on the Bloomberg terminal Russell one thousand, two thousand,

415
00:25:14,320 --> 00:25:19,000
Speaker 1: three thousand, and asked myself exactly the question we observe

416
00:25:19,080 --> 00:25:25,720
Speaker 1: from Lizanne Sanders about bank or financial allocation across these indices,

417
00:25:26,320 --> 00:25:30,120
Speaker 1: all of the indices are different. What's the biggest mistake

418
00:25:30,800 --> 00:25:35,000
Speaker 1: we have, Lizanne that were slaves to the Tao, were

419
00:25:35,040 --> 00:25:40,360
Speaker 1: slaves to vix dynamics. I mean, that's so simplistic, isn't it?

420
00:25:40,359 --> 00:25:43,720
Speaker 1: It is simplistic. And another another example I often gave

421
00:25:43,760 --> 00:25:46,320
Speaker 1: of the whole what are you talking about when you

422
00:25:46,359 --> 00:25:49,280
Speaker 1: talk about growth versus value? Is it the fundamentals is

423
00:25:49,320 --> 00:25:52,200
Speaker 1: it the factors or is it the index labels? If

424
00:25:52,240 --> 00:25:54,400
Speaker 1: you if you go back to October of O two,

425
00:25:54,440 --> 00:25:56,440
Speaker 1: I know that's a while ago now, but think about

426
00:25:56,960 --> 00:25:59,439
Speaker 1: when the tech bust has finally ended, you had the

427
00:25:59,560 --> 00:26:02,560
Speaker 1: NASA one hundred down I think at that point from

428
00:26:02,600 --> 00:26:06,760
Speaker 1: peaking off plus for the overall NAZZAC and the SMP.

429
00:26:07,359 --> 00:26:10,439
Speaker 1: If you are a value factor oriented investor, if you

430
00:26:10,440 --> 00:26:13,000
Speaker 1: wanted to buy deep value, you wanted to buy the

431
00:26:13,080 --> 00:26:16,439
Speaker 1: tech stocks, then Russell hadn't moved them all from the

432
00:26:16,520 --> 00:26:19,360
Speaker 1: growth indexes to the value indexes. So if you just

433
00:26:19,520 --> 00:26:21,800
Speaker 1: stop the analysis that okay, I need to buy value

434
00:26:22,280 --> 00:26:24,320
Speaker 1: and you bought the value indexes, you would have still

435
00:26:24,320 --> 00:26:28,199
Speaker 1: been buying utility stocks, not the tech stocks. So I

436
00:26:28,240 --> 00:26:30,240
Speaker 1: think this is an environment where you want to have

437
00:26:30,320 --> 00:26:32,879
Speaker 1: a hybrid approach. From a factor perspective, you want to

438
00:26:32,880 --> 00:26:36,199
Speaker 1: look for companies that have those growth characteristics, but you

439
00:26:36,240 --> 00:26:38,040
Speaker 1: want to have a value mindset in terms of what

440
00:26:38,119 --> 00:26:42,160
Speaker 1: you pay for that growth, and that that spans across

441
00:26:42,400 --> 00:26:46,880
Speaker 1: growth indexes, value indexes, small cap index is, large cap indexes,

442
00:26:46,960 --> 00:26:52,280
Speaker 1: sector indexes, etcetera. Do the tech winners, the juggernauts, do

443
00:26:52,359 --> 00:26:57,119
Speaker 1: they still have growthiness yet? Priced at value when you

444
00:26:57,160 --> 00:27:00,879
Speaker 1: look at their revenue prospects, it's I wouldn't. I wouldn't

445
00:27:00,880 --> 00:27:03,359
Speaker 1: certainly wouldn't call them value stocks. But if you have

446
00:27:03,400 --> 00:27:06,600
Speaker 1: as so many cops to circuit two thousand with regard

447
00:27:06,680 --> 00:27:09,560
Speaker 1: to those names, especially because as of early September, the

448
00:27:09,640 --> 00:27:14,359
Speaker 1: big five we're index and they were the big five

449
00:27:14,400 --> 00:27:18,840
Speaker 1: back then, we're only eighty index. But the multiple comparison

450
00:27:19,720 --> 00:27:23,720
Speaker 1: is shows the stronger fundamental. So back in two thousand,

451
00:27:23,800 --> 00:27:26,760
Speaker 1: the largest five stocks had a multiple of it sixte

452
00:27:27,320 --> 00:27:29,200
Speaker 1: and now they have a multiple of that half That

453
00:27:29,400 --> 00:27:32,399
Speaker 1: not that thirty two is cheap by any means, but

454
00:27:32,840 --> 00:27:37,200
Speaker 1: it reflects them much stronger underlying fundamental of those types

455
00:27:37,280 --> 00:27:40,320
Speaker 1: of companies. Not I'm not an analyst covering those company

456
00:27:40,400 --> 00:27:43,520
Speaker 1: so that that shouldn't be seen as some improvate by recommendation.

457
00:27:43,600 --> 00:27:47,520
Speaker 1: It's just a fact about valuations. What is the place

458
00:27:47,600 --> 00:27:51,560
Speaker 1: to go if you want dividend growth to be a

459
00:27:51,680 --> 00:27:55,120
Speaker 1: yield equivalent? I mean, I know this is hazardous, folks.

460
00:27:55,200 --> 00:27:58,000
Speaker 1: I go back to the Bill gross told being Procter

461
00:27:58,080 --> 00:28:01,840
Speaker 1: and Gamble was a yield equivalent, and that may worldwide headlines.

462
00:28:02,000 --> 00:28:05,640
Speaker 1: I mean, is there a kind of dividend it's more

463
00:28:05,760 --> 00:28:10,040
Speaker 1: yieldy than others. Right now, Well you can't and again

464
00:28:10,080 --> 00:28:12,280
Speaker 1: I don't. I'm not going to give you individual names,

465
00:28:12,320 --> 00:28:16,760
Speaker 1: of course, but you know there are screening tools, including

466
00:28:16,760 --> 00:28:19,359
Speaker 1: our own Chi Equity ratings, but but there are others

467
00:28:19,400 --> 00:28:22,200
Speaker 1: that do it where you can screen for dived and yield,

468
00:28:22,280 --> 00:28:25,960
Speaker 1: but you're also screening for strong underlying fundamentals, the ability

469
00:28:26,000 --> 00:28:29,520
Speaker 1: to maintain in or grow that dividend. And too many

470
00:28:29,560 --> 00:28:33,280
Speaker 1: investors in a yield starved world will screen by dividend

471
00:28:33,359 --> 00:28:35,439
Speaker 1: yield rank from high to low and then don't do

472
00:28:35,480 --> 00:28:39,000
Speaker 1: any additional analysis. And we all know that an extremely

473
00:28:39,120 --> 00:28:42,880
Speaker 1: high dividend yield can be an underlying sign of weak

474
00:28:43,080 --> 00:28:46,920
Speaker 1: fundamentals and a much greater likelihood that that dividend gets

475
00:28:46,960 --> 00:28:49,920
Speaker 1: cut or eliminated altogether given those weak or fundamental So

476
00:28:50,000 --> 00:28:52,400
Speaker 1: you have to you have to take a multi factor

477
00:28:52,440 --> 00:28:55,760
Speaker 1: approach to screening when looking for yield to make sure

478
00:28:55,840 --> 00:28:59,800
Speaker 1: you are getting that strong underlying fundamental quality balance sheet.

479
00:28:59,840 --> 00:29:02,400
Speaker 1: It's better. LIZI and Saunders, thank you so much, just

480
00:29:02,760 --> 00:29:06,840
Speaker 1: very very informative of She's of course with Charles Schwab,

481
00:29:07,320 --> 00:29:11,520
Speaker 1: thanks for listening to the Bloomberg surveillance podcast. Subscribe and

482
00:29:11,600 --> 00:29:16,920
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

483
00:29:16,960 --> 00:29:21,200
Speaker 1: platform you prefer. I'm on Twitter at Tom Keene before

484
00:29:21,240 --> 00:29:25,080
Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg

485
00:29:25,160 --> 00:29:25,480
Speaker 1: Radio