1 00:00:00,080 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,160 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:47,280 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. A victim 11 00:00:47,320 --> 00:00:51,080 Speaker 2: out of the Emory University, Julian Emmanuel joins us. Right now, 12 00:00:51,080 --> 00:00:52,879 Speaker 2: what was it like at Emery in Atlanta? Did you 13 00:00:52,960 --> 00:00:55,480 Speaker 2: like cut class and go out to braves Ball. 14 00:00:55,600 --> 00:00:57,760 Speaker 3: Well, we certainly went to the old the day now 15 00:00:57,840 --> 00:01:01,160 Speaker 3: and there were five thousand people in the stands and 16 00:01:01,200 --> 00:01:01,720 Speaker 3: you could. 17 00:01:01,560 --> 00:01:04,000 Speaker 4: Sit right down, You could sit right. 18 00:01:03,880 --> 00:01:05,200 Speaker 5: Down next to Ted Turner, and. 19 00:01:06,880 --> 00:01:08,440 Speaker 6: Yeah, wonderful to have you here. 20 00:01:08,520 --> 00:01:11,039 Speaker 2: You have the honor, you have the coolest equity job 21 00:01:11,040 --> 00:01:14,600 Speaker 2: on the planet to hang with Ed Hyman every day 22 00:01:14,880 --> 00:01:17,920 Speaker 2: at every Core SR is your shop in Ed linking 23 00:01:17,920 --> 00:01:21,160 Speaker 2: into your work in equities, are you some two percent 24 00:01:21,240 --> 00:01:22,560 Speaker 2: real GDP forward? 25 00:01:22,760 --> 00:01:27,319 Speaker 3: Well, look, so Ed has been on the inflation slowing 26 00:01:27,440 --> 00:01:32,520 Speaker 3: more than anticipated years and he's on the eventual the 27 00:01:32,560 --> 00:01:36,520 Speaker 3: economy is going to slow more than anticipated towards the 28 00:01:36,640 --> 00:01:39,399 Speaker 3: end of the year and into twenty twenty five. And 29 00:01:39,480 --> 00:01:42,280 Speaker 3: so you know, when you put that all together, the 30 00:01:42,360 --> 00:01:46,360 Speaker 3: conclusion is pretty obvious with regard to. 31 00:01:47,120 --> 00:01:51,960 Speaker 2: What okay, economics dam phenomenal GDP? Why do stocks go 32 00:01:52,320 --> 00:01:54,280 Speaker 2: up if the economy's slower. 33 00:01:55,520 --> 00:01:59,720 Speaker 3: So there are a lot of moving parts at this 34 00:01:59,800 --> 00:02:03,040 Speaker 3: point point, and the first is that there's lots and 35 00:02:03,080 --> 00:02:05,840 Speaker 3: lots of liquidity out there, and no surprise to anyone, 36 00:02:06,240 --> 00:02:10,120 Speaker 3: whether it's Corporate America throwing off as you sort of reference, 37 00:02:10,480 --> 00:02:13,560 Speaker 3: you know, huge amounts of free cash flow. Obviously we 38 00:02:13,680 --> 00:02:17,320 Speaker 3: know where that's centered, whether it's you know, households really 39 00:02:17,360 --> 00:02:24,519 Speaker 3: flush with cash still. And frankly, there's this idea that 40 00:02:24,639 --> 00:02:28,959 Speaker 3: the Fed will not necessarily when and the degree to 41 00:02:29,000 --> 00:02:31,720 Speaker 3: which they're going to cut although we certainly heard this 42 00:02:31,800 --> 00:02:34,880 Speaker 3: morning that the story get reiterated, but that they're actually 43 00:02:34,960 --> 00:02:38,120 Speaker 3: going to do the right thing. So if inflation stays 44 00:02:38,160 --> 00:02:40,840 Speaker 3: sticky for a number of more months. They'll be patient. 45 00:02:41,240 --> 00:02:43,960 Speaker 3: If the economy starts to turn down, they will be 46 00:02:44,080 --> 00:02:48,160 Speaker 3: less patient. Mistakes will not be made. Roll that all 47 00:02:48,240 --> 00:02:53,720 Speaker 3: into the enthusiasm around AI and the potential for what 48 00:02:53,840 --> 00:02:59,160 Speaker 3: we've seen as high multiple regimes can stay elevated, and 49 00:02:59,560 --> 00:03:01,600 Speaker 3: you have a market that continues to rally. 50 00:03:01,680 --> 00:03:04,200 Speaker 2: Paul, you got to Lisa does such a good job 51 00:03:04,240 --> 00:03:06,920 Speaker 2: with that. You know, data check the Bloomberg Business Flash 52 00:03:07,360 --> 00:03:11,200 Speaker 2: Tesla two oh nine, make it two ten is up 53 00:03:11,360 --> 00:03:12,800 Speaker 2: nine dollars to nineteen. 54 00:03:12,840 --> 00:03:13,240 Speaker 4: There you go. 55 00:03:13,400 --> 00:03:16,000 Speaker 6: Okay, very good friend's tesla Lisa. 56 00:03:16,240 --> 00:03:19,280 Speaker 4: Here's some nice round numbers for you, Tom, mister Manuel 57 00:03:19,360 --> 00:03:21,160 Speaker 4: here he raised his year end twenty four s and 58 00:03:21,200 --> 00:03:24,680 Speaker 4: P five hundred price target to six thousand from forty 59 00:03:24,960 --> 00:03:28,880 Speaker 4: seven fifty and maybe saying seven thousand by year end 60 00:03:28,919 --> 00:03:31,680 Speaker 4: twenty twenty five. Those are numbers you can sink your 61 00:03:31,720 --> 00:03:33,320 Speaker 4: teeth into. What's driving that. 62 00:03:33,280 --> 00:03:38,360 Speaker 3: At So so, really, what this was is some introspection 63 00:03:38,840 --> 00:03:43,400 Speaker 3: on our parts, because it's very difficult to sort of 64 00:03:43,840 --> 00:03:48,680 Speaker 3: set aside the valuation discipline because when you look at 65 00:03:48,720 --> 00:03:53,040 Speaker 3: the long sweep of history, you know, buying low and 66 00:03:53,480 --> 00:03:57,480 Speaker 3: you know, perhaps trimming high has been a pretty robust 67 00:03:57,520 --> 00:04:01,720 Speaker 3: strategy to complement buy and hold. But what we found, 68 00:04:01,920 --> 00:04:06,120 Speaker 3: and we have been proponents of AI underpinning the broader 69 00:04:06,160 --> 00:04:08,680 Speaker 3: equity market for well over a year, I think we 70 00:04:08,680 --> 00:04:11,240 Speaker 3: were pretty early to that party. We think it's still 71 00:04:11,480 --> 00:04:16,520 Speaker 3: very early on in this theme is that these high 72 00:04:16,640 --> 00:04:22,440 Speaker 3: valuation regimes can persist, and valuation alone is not a 73 00:04:22,480 --> 00:04:23,680 Speaker 3: reason to sell stocks. 74 00:04:23,880 --> 00:04:24,800 Speaker 5: And when we look at. 75 00:04:24,760 --> 00:04:29,920 Speaker 3: The barbells right, the probability of recession the economy deteriorating, 76 00:04:30,040 --> 00:04:33,960 Speaker 3: you know, materially in the near term, we don't see it. 77 00:04:34,360 --> 00:04:37,840 Speaker 3: And then the probability of a bubble inflating, we certainly 78 00:04:37,880 --> 00:04:38,440 Speaker 3: don't see. 79 00:04:38,880 --> 00:04:40,600 Speaker 5: At this point. We're a long way from that. 80 00:04:41,120 --> 00:04:44,000 Speaker 4: How much of those of that significant I'm talking to 81 00:04:44,040 --> 00:04:46,960 Speaker 4: twenty five percent increase in your twenty four price target. 82 00:04:47,240 --> 00:04:48,680 Speaker 4: You don't see the ell on the street today. You 83 00:04:48,680 --> 00:04:51,600 Speaker 4: see other banks raising at bout two hundred, you know, 84 00:04:51,680 --> 00:04:54,560 Speaker 4: just slightly three or four or five percent. How much 85 00:04:54,600 --> 00:04:57,360 Speaker 4: of that was earnings? How much of that was expectation 86 00:04:57,440 --> 00:04:59,880 Speaker 4: of FED cutting, what was kind of the driver's. 87 00:05:00,000 --> 00:05:02,400 Speaker 3: He was really a mix of all of it. Okay, again, 88 00:05:02,440 --> 00:05:05,320 Speaker 3: I go back to what I said earlier. Our confidence 89 00:05:05,520 --> 00:05:08,880 Speaker 3: is whatever the right thing to do the FED is 90 00:05:09,120 --> 00:05:10,600 Speaker 3: likely going to do the right thing. 91 00:05:10,640 --> 00:05:12,560 Speaker 5: And that explains why we. 92 00:05:12,480 --> 00:05:14,919 Speaker 3: Started the year at six and a half cuts priced 93 00:05:14,960 --> 00:05:17,760 Speaker 3: in and came down to here where it basically we're 94 00:05:17,760 --> 00:05:21,080 Speaker 3: at one and a half and stocks have not faltered 95 00:05:21,160 --> 00:05:26,960 Speaker 3: materially during that time. We increased our earnings with the 96 00:05:27,040 --> 00:05:30,640 Speaker 3: idea that even if a downturn hits later this year 97 00:05:30,720 --> 00:05:33,560 Speaker 3: or early next, you still are in a robust cycle. 98 00:05:34,080 --> 00:05:36,880 Speaker 2: So to your people in everqure Isi, sector by sector, 99 00:05:36,920 --> 00:05:42,080 Speaker 2: you're the over strategists and that when you look at 100 00:05:42,279 --> 00:05:46,680 Speaker 2: the big tech companies, is the risk of revenue shortfall? 101 00:05:47,000 --> 00:05:49,600 Speaker 6: Is that really the sweat. 102 00:05:49,240 --> 00:05:53,279 Speaker 2: Out there about the magnificent seven maintaining the excellence of 103 00:05:53,360 --> 00:05:54,360 Speaker 2: thirty multiples? 104 00:05:54,400 --> 00:05:58,240 Speaker 3: Well, so you hit the nail on the head on 105 00:05:58,279 --> 00:06:02,359 Speaker 3: this tom. If we've been having this conversation four or 106 00:06:02,360 --> 00:06:06,360 Speaker 3: five years ago, the idea that a large kept technology 107 00:06:06,440 --> 00:06:12,400 Speaker 3: stock could persistently trade at thirty times would have been foolish, foolish. 108 00:06:12,480 --> 00:06:15,159 Speaker 6: Why is it now not? This is critical. 109 00:06:15,760 --> 00:06:20,520 Speaker 3: Essentially because there's a view and we share it that 110 00:06:20,680 --> 00:06:25,040 Speaker 3: the way the economy is developing, the way technology is developing, 111 00:06:25,440 --> 00:06:29,320 Speaker 3: is that you're going to have you know, revenue underpinnings. 112 00:06:29,320 --> 00:06:31,400 Speaker 3: In the other part of that is, if you think 113 00:06:31,440 --> 00:06:34,880 Speaker 3: about it right, you go back to late twenty twenty 114 00:06:34,920 --> 00:06:40,440 Speaker 3: two when several of the Magnificent Seven basically disclosed that yes, 115 00:06:40,800 --> 00:06:45,120 Speaker 3: they could in fact cut costs because they were stockpiling labor. 116 00:06:45,520 --> 00:06:49,320 Speaker 3: The fact is is that corporate America has been getting 117 00:06:49,400 --> 00:06:53,200 Speaker 3: ready for a recession that fortunately hasn't arrived yet for 118 00:06:54,000 --> 00:06:55,880 Speaker 3: a year and a half, almost two years. 119 00:06:55,920 --> 00:06:57,839 Speaker 4: So, Julian, I mean, Tom and I are still trying 120 00:06:57,839 --> 00:06:59,080 Speaker 4: to wrap our heads around AI. 121 00:06:59,440 --> 00:07:00,159 Speaker 6: What is it? 122 00:07:01,279 --> 00:07:03,040 Speaker 4: I guess we start there, what is it? But anyway, 123 00:07:03,320 --> 00:07:04,919 Speaker 4: how do we get exposure to it? Do we just 124 00:07:04,960 --> 00:07:08,920 Speaker 4: buy Nvidia? How are you talking to your clients about AI? 125 00:07:08,960 --> 00:07:10,960 Speaker 4: And maybe how to get exposure to it over time? 126 00:07:11,080 --> 00:07:15,480 Speaker 3: So what we think is important because again, look, it's 127 00:07:15,760 --> 00:07:19,840 Speaker 3: very difficult to buy stocks that have moved several hundred 128 00:07:19,920 --> 00:07:24,080 Speaker 3: percent psychologically if you don't have a core position. You know, 129 00:07:24,240 --> 00:07:26,560 Speaker 3: we think you should have a core position in those 130 00:07:26,680 --> 00:07:29,040 Speaker 3: kinds of stocks. But when you look at it right, 131 00:07:29,360 --> 00:07:35,400 Speaker 3: there is a number of companies that are proactively building 132 00:07:35,520 --> 00:07:39,520 Speaker 3: competitive motes, both on the cost reduction side, which we 133 00:07:39,560 --> 00:07:42,320 Speaker 3: all know that that will be part of the story 134 00:07:43,000 --> 00:07:49,960 Speaker 3: as jobs transform, but also importantly on the customer interaction, retention, 135 00:07:50,520 --> 00:07:54,600 Speaker 3: loyalty side. And these types of companies are very upfront 136 00:07:54,640 --> 00:07:58,680 Speaker 3: about talking about it in they're quarterly earnings calls. And 137 00:07:58,800 --> 00:08:02,360 Speaker 3: that's probably the most important thing that we as investors 138 00:08:02,400 --> 00:08:05,360 Speaker 3: can do is listen to what they say about AI 139 00:08:05,680 --> 00:08:08,440 Speaker 3: on the earnings calls. Those are the companies that you 140 00:08:08,520 --> 00:08:10,000 Speaker 3: want to be thinking about. 141 00:08:10,000 --> 00:08:10,720 Speaker 6: What's so important? 142 00:08:10,760 --> 00:08:12,680 Speaker 2: You're Julian and this goes back to the great work 143 00:08:12,720 --> 00:08:14,800 Speaker 2: of Ed your Denny and I'm calling this bull market 144 00:08:14,840 --> 00:08:17,200 Speaker 2: that your Denny at Kompora Bullmarket. 145 00:08:17,400 --> 00:08:19,320 Speaker 6: Edheimen will know who both those people are. 146 00:08:19,680 --> 00:08:22,240 Speaker 2: But the answer is this goes back to the optimism 147 00:08:22,280 --> 00:08:27,040 Speaker 2: to participate in the market. Allah, what CJ. Lawrence did 148 00:08:27,120 --> 00:08:30,880 Speaker 2: years ago and what you do it? Evercore and Evercore 149 00:08:31,000 --> 00:08:35,280 Speaker 2: Isi is well, I want you to speak to people 150 00:08:36,000 --> 00:08:39,079 Speaker 2: under the siren call. Barry Ridolts has been on fire 151 00:08:39,200 --> 00:08:44,120 Speaker 2: on this, the siren call of trying to time the market. 152 00:08:45,000 --> 00:08:48,000 Speaker 2: Please you want to add on, you gotta play if 153 00:08:48,000 --> 00:08:48,680 Speaker 2: you want to win. 154 00:08:49,360 --> 00:08:53,240 Speaker 3: My ninety three year old father in law recently departed, 155 00:08:53,360 --> 00:08:58,040 Speaker 3: lived a great life basically was in stocks until the 156 00:08:58,400 --> 00:09:02,120 Speaker 3: end as much is in stocks as he could possibly 157 00:09:02,440 --> 00:09:05,080 Speaker 3: because he believed that when you look at it and 158 00:09:05,120 --> 00:09:09,400 Speaker 3: the data supports this, through economic cycles, through you know, 159 00:09:09,800 --> 00:09:15,480 Speaker 3: political turmoil, through geopolitics, wars, all of these things that 160 00:09:15,640 --> 00:09:21,440 Speaker 3: stocks are the long term income producing asset, and frankly, 161 00:09:21,480 --> 00:09:23,640 Speaker 3: when you think about the things that we're trying to 162 00:09:23,679 --> 00:09:25,800 Speaker 3: hedge inflation. 163 00:09:27,200 --> 00:09:28,920 Speaker 5: Again some of these uncertainties. 164 00:09:29,120 --> 00:09:31,440 Speaker 3: The other fact is is that if you look at it, 165 00:09:31,840 --> 00:09:34,920 Speaker 3: the price chart of the S and P five hundred 166 00:09:35,480 --> 00:09:38,360 Speaker 3: mirrors the growth in earnings. And if you're going to 167 00:09:38,440 --> 00:09:42,480 Speaker 3: get long term earnings growth, which we do believe and fundamentally, 168 00:09:42,880 --> 00:09:44,280 Speaker 3: you must be in stocks. 169 00:09:44,920 --> 00:09:46,480 Speaker 6: Can you a year before? 170 00:09:46,720 --> 00:09:50,359 Speaker 2: I would like probably quit, But I mean the surveillance 171 00:09:50,400 --> 00:09:53,280 Speaker 2: casket folks, is I bet can you see me doing 172 00:09:53,320 --> 00:09:53,800 Speaker 2: this show? 173 00:09:54,160 --> 00:09:54,319 Speaker 6: Oh? 174 00:09:54,400 --> 00:10:02,719 Speaker 4: Yes, yes, I absolutely, no questions, exactly, no problem there, 175 00:10:02,920 --> 00:10:04,000 Speaker 4: one hundred. 176 00:10:05,120 --> 00:10:07,000 Speaker 6: So Julian, all. 177 00:10:06,960 --> 00:10:10,360 Speaker 4: Right, do I have to be I mean, tech has 178 00:10:10,480 --> 00:10:13,680 Speaker 4: led this market for twenty five years? You have to 179 00:10:13,720 --> 00:10:15,800 Speaker 4: be in tech, don't you? 180 00:10:15,800 --> 00:10:16,280 Speaker 5: You do? 181 00:10:16,320 --> 00:10:19,440 Speaker 4: You have to I mean, and it's almost like you 182 00:10:19,480 --> 00:10:21,240 Speaker 4: throw out the valuation. I hate to say that, but 183 00:10:22,800 --> 00:10:23,800 Speaker 4: how else do you play it? 184 00:10:23,840 --> 00:10:27,439 Speaker 3: So we talked about this earlier. There will come a time. 185 00:10:28,400 --> 00:10:32,320 Speaker 3: That time is not now when trimming a position in 186 00:10:32,360 --> 00:10:37,079 Speaker 3: technology and communication services, which are the only two sectors 187 00:10:37,120 --> 00:10:39,520 Speaker 3: out performing the S and P five hundred this year. 188 00:10:39,720 --> 00:10:42,480 Speaker 3: And you would think that on balance, that would be 189 00:10:42,520 --> 00:10:46,440 Speaker 3: a negative statement about the market. It is not looking 190 00:10:46,480 --> 00:10:47,960 Speaker 3: out on a twelve month basis. 191 00:10:47,960 --> 00:10:50,400 Speaker 2: We just got some hedge fund results and you know, 192 00:10:50,440 --> 00:10:53,199 Speaker 2: they're like like Sentinel, seems like they're getting it done. 193 00:10:53,240 --> 00:10:55,240 Speaker 2: And there's others as well, and you know, I mean, 194 00:10:55,280 --> 00:10:57,480 Speaker 2: the Mets are playing better, soer point seven to two. 195 00:10:57,400 --> 00:10:59,240 Speaker 6: Must be doing okay. 196 00:10:58,960 --> 00:11:03,480 Speaker 2: And the answer, Julian is these are fee base a 197 00:11:03,640 --> 00:11:05,280 Speaker 2: point two points. 198 00:11:04,880 --> 00:11:07,920 Speaker 6: Two and twenty whatever the math is. I'm looking at 199 00:11:07,960 --> 00:11:10,520 Speaker 6: a blended fund skewed to high tech. I'm gonna leave 200 00:11:10,559 --> 00:11:11,360 Speaker 6: the name out of it. 201 00:11:12,080 --> 00:11:16,480 Speaker 2: And their fee is zero point three three percent running 202 00:11:16,520 --> 00:11:20,720 Speaker 2: billions of dollars. I mean, I'm sorry. The fees add up, 203 00:11:20,840 --> 00:11:25,480 Speaker 2: don't they? To your equity return, particularly when dividends are reinvested. 204 00:11:25,679 --> 00:11:25,960 Speaker 6: They do. 205 00:11:26,280 --> 00:11:30,239 Speaker 3: Look Jack Bogel's entire career was built on that concept, 206 00:11:30,720 --> 00:11:34,199 Speaker 3: Tom founding Vanguard, and fees do add up. 207 00:11:34,200 --> 00:11:35,960 Speaker 5: But what I would say about. 208 00:11:35,640 --> 00:11:40,000 Speaker 3: That is, again, there are times in our lives when 209 00:11:40,160 --> 00:11:45,680 Speaker 3: diversifying away from stocks in a portfolio where stocks are 210 00:11:45,760 --> 00:11:50,520 Speaker 3: the bedrock actually allows you to buy more stock into weakness, 211 00:11:50,640 --> 00:11:54,480 Speaker 3: and frankly, a hedge fund that does well in all 212 00:11:54,559 --> 00:11:58,320 Speaker 3: weathers of market. There are certainly a number of them 213 00:11:58,360 --> 00:11:58,800 Speaker 3: out there. 214 00:11:59,400 --> 00:11:59,640 Speaker 5: You know. 215 00:12:00,080 --> 00:12:03,000 Speaker 3: That's part of a prudently built portfolio as well, and 216 00:12:03,120 --> 00:12:07,000 Speaker 3: there are a number of managers that have justified decades 217 00:12:07,040 --> 00:12:08,400 Speaker 3: of that kind of fee structure. 218 00:12:09,320 --> 00:12:11,760 Speaker 4: What is your quantitative strategy team telling you. 219 00:12:12,760 --> 00:12:15,760 Speaker 3: So interestingly enough, and if you think about it, this 220 00:12:15,800 --> 00:12:20,600 Speaker 3: is going to make sense. The last week we've certainly seen, 221 00:12:20,679 --> 00:12:25,679 Speaker 3: let's say politely, a good deal more political volatility, and 222 00:12:25,800 --> 00:12:28,120 Speaker 3: when you think about how the second half of the 223 00:12:28,200 --> 00:12:32,319 Speaker 3: year is likely to get underway, what we found is 224 00:12:32,800 --> 00:12:39,920 Speaker 3: that the valuation factor buying cheaper relatively stocks amongst sectors 225 00:12:40,040 --> 00:12:45,000 Speaker 3: versus being the more expensive stocks actually hasn't worked. And 226 00:12:45,040 --> 00:12:47,679 Speaker 3: that's not just a large cap tech concept. This is 227 00:12:47,720 --> 00:12:51,600 Speaker 3: across all sectors. Our view is that when you think 228 00:12:51,640 --> 00:12:55,640 Speaker 3: about in committing more capital stocks right now, you're probably 229 00:12:55,679 --> 00:12:59,800 Speaker 3: going to be more inclined to be more valuation sensitive, 230 00:13:00,360 --> 00:13:03,520 Speaker 3: considering that there's more political risk out there than normal. 231 00:13:03,960 --> 00:13:05,880 Speaker 6: Julian, thank you so much. This has been great. 232 00:13:05,920 --> 00:13:10,440 Speaker 7: Please really really appreciated. 233 00:13:18,960 --> 00:13:23,079 Speaker 2: We need no translation on the debate and the fractious 234 00:13:23,200 --> 00:13:27,640 Speaker 2: constructive debate at Morgan Stanley that, among others, Stephen Roach 235 00:13:28,120 --> 00:13:31,880 Speaker 2: invented it is a different house. Joining us now for 236 00:13:31,920 --> 00:13:36,600 Speaker 2: this half hour. Jim carron Cio, Cross Asset Solutions, Senior Officer, 237 00:13:36,760 --> 00:13:38,280 Speaker 2: argument at Morgan Stanley. 238 00:13:38,320 --> 00:13:39,240 Speaker 6: What is the distinction? 239 00:13:39,760 --> 00:13:42,920 Speaker 7: What is the number one point of debate at your shop? 240 00:13:43,800 --> 00:13:46,040 Speaker 8: I think what it is and by the way, I 241 00:13:46,080 --> 00:13:49,439 Speaker 8: think what it really is is the question of when 242 00:13:49,679 --> 00:13:53,240 Speaker 8: will the unemployment rates start to rise fast enough to 243 00:13:53,360 --> 00:13:57,559 Speaker 8: give the Fed confidence in order to cut interest rates? Right, 244 00:13:57,600 --> 00:14:00,760 Speaker 8: Because where the debate is today is there are various 245 00:14:00,800 --> 00:14:02,920 Speaker 8: forms of inflation that are out there. Right, You've got 246 00:14:02,920 --> 00:14:05,960 Speaker 8: the supercore which is running too hot. You've got core CPI, 247 00:14:06,080 --> 00:14:08,720 Speaker 8: which has made a lot of progress. You've got core PCE, 248 00:14:09,200 --> 00:14:10,959 Speaker 8: which is kind of like in the sweet spot. And 249 00:14:11,400 --> 00:14:14,440 Speaker 8: the FED would go on that. But the question, though, is, 250 00:14:14,559 --> 00:14:18,240 Speaker 8: with those three data points somewhat conflicting, where does the 251 00:14:18,280 --> 00:14:20,360 Speaker 8: FED have confidence to actually go. Now we think that 252 00:14:20,440 --> 00:14:23,760 Speaker 8: maybe the Fed will cut interest rates, it'll start in September, 253 00:14:24,240 --> 00:14:28,000 Speaker 8: but what's required for that to happen is for the 254 00:14:28,120 --> 00:14:30,880 Speaker 8: unemployment rate to actually start to show some progress higher. 255 00:14:30,920 --> 00:14:34,880 Speaker 8: And why that's important is because the declining trend in inflation, 256 00:14:35,000 --> 00:14:38,360 Speaker 8: and it is declining, will be viewed by the FED 257 00:14:38,560 --> 00:14:43,960 Speaker 8: as sustainable and anchored decline in inflation. If the unemployment 258 00:14:44,040 --> 00:14:47,720 Speaker 8: rate rises, which would then put pressure downwards on wages, 259 00:14:48,120 --> 00:14:52,360 Speaker 8: wage inflation slowing should create a more stable inflation environment. 260 00:14:52,640 --> 00:14:55,040 Speaker 8: So it's really a question about jobs creation, and it's 261 00:14:55,040 --> 00:14:59,880 Speaker 8: a question about the path and pace at which inflation falls. 262 00:15:00,560 --> 00:15:04,280 Speaker 4: That's interesting because again, I think most folks we talk 263 00:15:04,360 --> 00:15:06,280 Speaker 4: to just say the Fed's focused on inflation, the focus 264 00:15:06,360 --> 00:15:11,200 Speaker 4: on inflation and focused, but really it's labor component of inflation, 265 00:15:11,320 --> 00:15:14,320 Speaker 4: which is key here. Is there a kind of a 266 00:15:14,560 --> 00:15:17,320 Speaker 4: range and number of inflation that you think the FED 267 00:15:17,360 --> 00:15:20,680 Speaker 4: will kick them into saying okay, we've got some movement here. 268 00:15:20,760 --> 00:15:22,760 Speaker 4: Is at four point two percent? Is a four and 269 00:15:22,800 --> 00:15:23,400 Speaker 4: a half percent? 270 00:15:23,840 --> 00:15:26,160 Speaker 8: Yeah, so that's the output, right, So that's like I 271 00:15:26,160 --> 00:15:28,600 Speaker 8: would almost think of that as the residual, ok right, 272 00:15:28,680 --> 00:15:31,600 Speaker 8: I wouldn't really think of that as as as the appsolue. 273 00:15:31,600 --> 00:15:33,440 Speaker 8: I mean yes, I mean ultimately it will come down 274 00:15:33,480 --> 00:15:35,720 Speaker 8: to that number, and it's easiest way to understand it. 275 00:15:35,760 --> 00:15:38,840 Speaker 8: But the FED invented something called the super core for inflation, 276 00:15:38,920 --> 00:15:41,360 Speaker 8: and this is corehousing X services. This is really a 277 00:15:41,400 --> 00:15:44,600 Speaker 8: measure of inflation that's focused on more of the labor 278 00:15:44,640 --> 00:15:48,400 Speaker 8: intensive segments of the economy. So you're barber, you know 279 00:15:48,440 --> 00:15:51,200 Speaker 8: a janitor, you know somebody who's labor intensive in terms. 280 00:15:51,560 --> 00:15:54,360 Speaker 8: So basically it's really a way of measuring inflation that 281 00:15:54,480 --> 00:15:58,360 Speaker 8: is being contributed by wages. So you know that number 282 00:15:58,440 --> 00:16:00,680 Speaker 8: right now is still running pretty high at four point 283 00:16:00,760 --> 00:16:03,760 Speaker 8: eight percent, but it is but it is likely to decline. 284 00:16:04,120 --> 00:16:08,200 Speaker 8: So I would say that that to me is I 285 00:16:08,240 --> 00:16:11,200 Speaker 8: would I would think of that as as really the 286 00:16:11,240 --> 00:16:13,840 Speaker 8: measure that the Fed's going to watch. If that starts 287 00:16:13,840 --> 00:16:16,520 Speaker 8: to come down, the natural output of that, or the 288 00:16:16,560 --> 00:16:19,360 Speaker 8: residual of that, will be that the unemployment rate should 289 00:16:19,400 --> 00:16:22,000 Speaker 8: start to move up towards four point two four point three. 290 00:16:22,080 --> 00:16:24,320 Speaker 8: So I mean, if I simplified it, yeah, I'd say that, 291 00:16:24,400 --> 00:16:27,200 Speaker 8: you know, around four point three four point two, I 292 00:16:27,240 --> 00:16:29,360 Speaker 8: think the FED would feel comfortable. 293 00:16:29,120 --> 00:16:32,760 Speaker 2: In your process at universe, does sixty forty work or 294 00:16:32,840 --> 00:16:36,640 Speaker 2: is there a sixty forty amendment to not so much 295 00:16:36,640 --> 00:16:39,000 Speaker 2: a enhance return goose return. 296 00:16:39,320 --> 00:16:42,040 Speaker 7: But to avoid challenges? 297 00:16:42,120 --> 00:16:44,480 Speaker 6: What's the Karen sixty forty. 298 00:16:44,640 --> 00:16:47,080 Speaker 8: Yeah, no, that's a great question, and it's going to 299 00:16:47,120 --> 00:16:49,560 Speaker 8: be debated for a long time. But so it's not 300 00:16:49,560 --> 00:16:52,280 Speaker 8: that the sixty forty doesn't work. It's just I think 301 00:16:52,280 --> 00:16:54,960 Speaker 8: that the sixty forty will be suboptimal. And the reason 302 00:16:55,000 --> 00:16:57,880 Speaker 8: why the sixty forty portfolio will be suboptimals we have 303 00:16:57,920 --> 00:16:59,880 Speaker 8: to take a little bit of a trip through history. 304 00:17:00,160 --> 00:17:01,920 Speaker 8: If you go back to nineteen eighty one to twenty 305 00:17:01,920 --> 00:17:03,640 Speaker 8: twenty one, if you look at that forty year period 306 00:17:03,680 --> 00:17:07,359 Speaker 8: of time, bonds did very well during that period. Thirty 307 00:17:07,359 --> 00:17:09,640 Speaker 8: seven out of forty years, they made money so very stable, 308 00:17:09,800 --> 00:17:13,800 Speaker 8: very good returns. Your sharp ratio or your risk adjusted 309 00:17:13,840 --> 00:17:17,280 Speaker 8: return if you had a sixty forty portfolio was roughly 310 00:17:17,359 --> 00:17:20,439 Speaker 8: seven percent, which is great, you know, passive investing sixty 311 00:17:20,520 --> 00:17:22,520 Speaker 8: You know, sixty forty did really well for that forty 312 00:17:22,600 --> 00:17:25,560 Speaker 8: year period of time. If you look from twenty twenty two, 313 00:17:25,720 --> 00:17:28,760 Speaker 8: twenty three and into twenty four, what you're seeing is 314 00:17:28,760 --> 00:17:32,439 Speaker 8: that bonds are becoming less stable, less reliably you know, 315 00:17:32,560 --> 00:17:35,480 Speaker 8: producing good, solid returns, and that's likely. 316 00:17:35,240 --> 00:17:36,960 Speaker 1: To occur into the future. 317 00:17:37,320 --> 00:17:39,399 Speaker 8: So what it would suggest is that now the sixty 318 00:17:39,480 --> 00:17:41,920 Speaker 8: forty might not give you passive might not give you 319 00:17:41,960 --> 00:17:44,919 Speaker 8: seven percent, but it might actually only give you five, 320 00:17:45,560 --> 00:17:48,760 Speaker 8: and that's a meaningful difference in types of return. So 321 00:17:48,920 --> 00:17:51,560 Speaker 8: I would say that the new way of thinking about 322 00:17:51,600 --> 00:17:54,840 Speaker 8: how do we use bonds to hedge our portfolio needs 323 00:17:54,840 --> 00:17:56,560 Speaker 8: to be a lot more flexible. So it could be 324 00:17:56,600 --> 00:18:00,240 Speaker 8: seventy thirty, it could be thirty seventy in some instances. Really, 325 00:18:00,240 --> 00:18:02,760 Speaker 8: what we're trying to account for is the volatility of 326 00:18:02,800 --> 00:18:05,760 Speaker 8: returns in bonds, which we think will start to follow 327 00:18:05,760 --> 00:18:08,560 Speaker 8: the business cycle more than just being a forty year 328 00:18:09,040 --> 00:18:12,160 Speaker 8: downward trending rates and strong performance for that period of time. 329 00:18:12,440 --> 00:18:14,800 Speaker 8: So we have to account for the variability in bonds 330 00:18:14,840 --> 00:18:18,040 Speaker 8: going forward to make the adjustments in terms of the 331 00:18:18,320 --> 00:18:20,719 Speaker 8: allocation sixty forty. So it's not as simple as a 332 00:18:20,800 --> 00:18:23,240 Speaker 8: passive I would say that. And you might even want 333 00:18:23,240 --> 00:18:25,600 Speaker 8: to add alternative investments into the equation too. 334 00:18:26,400 --> 00:18:27,200 Speaker 1: Well, I mean, I'm. 335 00:18:27,080 --> 00:18:29,520 Speaker 8: Telling you because what it does is it creates a 336 00:18:29,560 --> 00:18:32,959 Speaker 8: diversification element that is attracting returns. 337 00:18:33,119 --> 00:18:36,479 Speaker 4: Jim Carreen, Cross Assets Solution, CIO, Morgan Stanley Investment Management. 338 00:18:36,520 --> 00:18:39,199 Speaker 4: Hey Jim, At least in Tom, they've both been in 339 00:18:39,200 --> 00:18:41,840 Speaker 4: the Magnificent seven stocks they're just laughing all the way 340 00:18:41,880 --> 00:18:44,480 Speaker 4: to the bank. I unfortunately have not What do you 341 00:18:44,560 --> 00:18:49,359 Speaker 4: tell equity investors to do? Who is it okay just 342 00:18:49,400 --> 00:18:52,159 Speaker 4: to belong these Magnificent seven or do we actually have 343 00:18:52,200 --> 00:18:52,959 Speaker 4: to do some homework? 344 00:18:53,080 --> 00:18:55,200 Speaker 8: Well, you know, Look, I mean the way I think 345 00:18:55,240 --> 00:18:58,280 Speaker 8: about this is follow the money. The Magnificent seven or 346 00:18:58,320 --> 00:19:00,400 Speaker 8: the Magnificent ten or whatever it is. 347 00:19:01,200 --> 00:19:03,160 Speaker 1: They're doing well because. 348 00:19:02,840 --> 00:19:06,480 Speaker 8: Their earnings and their earnings revisions have been exceptionally strong. 349 00:19:06,960 --> 00:19:09,119 Speaker 8: If you look at the S and P four ninety, 350 00:19:09,200 --> 00:19:11,520 Speaker 8: so if you x out those seven or ten stocks, 351 00:19:12,000 --> 00:19:16,000 Speaker 8: if you look at the earnings revisions in that category, 352 00:19:16,040 --> 00:19:17,399 Speaker 8: it's been pretty close to flat. 353 00:19:17,440 --> 00:19:18,600 Speaker 1: It's been relatively dismal. 354 00:19:18,640 --> 00:19:21,960 Speaker 8: So so it's not that the broadening or the broader 355 00:19:22,000 --> 00:19:25,840 Speaker 8: sectors of the market are these great opportunities that are 356 00:19:25,880 --> 00:19:28,520 Speaker 8: just minting cash and earnings are going up. I think 357 00:19:28,600 --> 00:19:30,919 Speaker 8: the market's rightfully so looking at it. So if you 358 00:19:30,920 --> 00:19:33,520 Speaker 8: look at the if you look at the equity market, 359 00:19:33,560 --> 00:19:37,280 Speaker 8: the SMP five hundred x the Magnificent seven, it's up 360 00:19:37,320 --> 00:19:40,040 Speaker 8: about seven percent year to date, which is pretty good. 361 00:19:40,080 --> 00:19:41,080 Speaker 1: I mean, that's not bad. 362 00:19:41,640 --> 00:19:44,520 Speaker 8: If you look at the SP five hundred total with 363 00:19:44,640 --> 00:19:46,840 Speaker 8: the magnificent seven in it. Then it's up, you know, 364 00:19:46,920 --> 00:19:48,400 Speaker 8: closer to fifteen percent. 365 00:19:48,160 --> 00:19:51,680 Speaker 1: Year to date. So you know, it's really a question 366 00:19:51,720 --> 00:19:52,560 Speaker 1: of following the money. 367 00:19:52,560 --> 00:19:54,639 Speaker 8: So I would have to say that the way that 368 00:19:54,680 --> 00:19:56,880 Speaker 8: I would look at this is that you still want 369 00:19:56,880 --> 00:20:00,080 Speaker 8: to look at the cap weighted SMP five hundred. I 370 00:20:00,160 --> 00:20:03,439 Speaker 8: want to incorporate that overweight to those, you know, to 371 00:20:03,520 --> 00:20:06,920 Speaker 8: those bigger stocks, because that's really what's capturing the earnings, 372 00:20:06,920 --> 00:20:09,640 Speaker 8: that's what's driving the markets mostly right now, I think 373 00:20:09,680 --> 00:20:12,239 Speaker 8: it's too early to say that we're going to have 374 00:20:12,280 --> 00:20:16,080 Speaker 8: this cyclical recovery, that that everything's going to start to 375 00:20:16,080 --> 00:20:18,320 Speaker 8: move higher, and therefore you can broaden out to the 376 00:20:18,320 --> 00:20:21,240 Speaker 8: other four ninety with a lot of confidence. That's really 377 00:20:21,280 --> 00:20:24,520 Speaker 8: not been the case for the last year plus, and 378 00:20:24,720 --> 00:20:27,760 Speaker 8: I don't think that that's changing anytime soon because a 379 00:20:27,800 --> 00:20:31,960 Speaker 8: big broad cyclical acceleration and recovery is not in our 380 00:20:32,080 --> 00:20:33,160 Speaker 8: it's not our base case. 381 00:20:33,640 --> 00:20:36,520 Speaker 4: How about evaluation here, I have earnings kept up with 382 00:20:36,600 --> 00:20:39,399 Speaker 4: this move we've seen off that I guess October twenty 383 00:20:39,440 --> 00:20:40,960 Speaker 4: three kind of level here. 384 00:20:41,119 --> 00:20:43,240 Speaker 8: Yeah, I mean, look, I mean, you know, you mentioned 385 00:20:43,280 --> 00:20:45,919 Speaker 8: in Vidia earlier, you know, and Jess, but but in 386 00:20:46,000 --> 00:20:48,040 Speaker 8: Vidia is a thirty pe stock. You know, it's not 387 00:20:48,160 --> 00:20:50,360 Speaker 8: like I mean, yeah, is that high. Sure it's high, 388 00:20:50,440 --> 00:20:53,119 Speaker 8: but it's not a but it's not something that is 389 00:20:53,240 --> 00:20:56,480 Speaker 8: astronomically high. A lot of the companies that are doing 390 00:20:56,560 --> 00:20:59,560 Speaker 8: well are actually making money. So people make parallels back 391 00:20:59,600 --> 00:21:02,439 Speaker 8: to the year twenty nineteen ninety nine, the dot com bubble. 392 00:21:02,880 --> 00:21:06,520 Speaker 8: Back then, these companies weren't making money. Today, these big 393 00:21:06,520 --> 00:21:09,120 Speaker 8: companies that are doing well are actually making a lot 394 00:21:09,119 --> 00:21:09,480 Speaker 8: of money. 395 00:21:09,440 --> 00:21:11,480 Speaker 1: Their ears are there to justify. So it's a big difference. 396 00:21:11,480 --> 00:21:13,119 Speaker 2: Oh, I want to talk here about free cash. So 397 00:21:13,160 --> 00:21:15,440 Speaker 2: I've been reading Michael Mobis and I've been going back 398 00:21:15,560 --> 00:21:19,000 Speaker 2: the credit spec he's now Morgan Stanley. Do you guys 399 00:21:19,040 --> 00:21:23,119 Speaker 2: talk Karen and Mobison talking talk about NERD Patrol. 400 00:21:23,880 --> 00:21:24,760 Speaker 1: I invest with them. 401 00:21:24,800 --> 00:21:26,359 Speaker 8: I mean, like, you know, I mean yeah, so so 402 00:21:26,359 --> 00:21:28,120 Speaker 8: so absolutely. I mean he's one of the smartest people 403 00:21:28,119 --> 00:21:30,480 Speaker 8: in the room. I mean, there's no question. So look, 404 00:21:30,520 --> 00:21:32,760 Speaker 8: I think some of the factors that we look at 405 00:21:33,240 --> 00:21:35,840 Speaker 8: to think about how we become let's say, defensive or 406 00:21:35,920 --> 00:21:37,439 Speaker 8: smart about approaching this market. 407 00:21:37,680 --> 00:21:38,600 Speaker 1: There's a couple factors. 408 00:21:38,840 --> 00:21:40,480 Speaker 8: You know, size is going to matter, right, So the 409 00:21:40,560 --> 00:21:42,920 Speaker 8: large cap companies are doing better than small They have 410 00:21:43,040 --> 00:21:46,560 Speaker 8: better balance sheets, good strong balance sheets, free cash flow yield. 411 00:21:46,600 --> 00:21:49,600 Speaker 8: So Mobison, you know, would be all over that earnings 412 00:21:49,600 --> 00:21:51,920 Speaker 8: for share growth and interest rate coverage. 413 00:21:52,000 --> 00:21:54,119 Speaker 2: Okay, so I want to go delta t on, you 414 00:21:54,200 --> 00:21:57,959 Speaker 2: go aerospace engineering, right, and Jim you can literally go 415 00:21:58,080 --> 00:22:02,240 Speaker 2: log log. You can throw a log on the axis here. 416 00:22:02,359 --> 00:22:05,639 Speaker 2: I'm going to suggest that this era is where the 417 00:22:05,760 --> 00:22:11,360 Speaker 2: terminal value is less important, and some form of waiting 418 00:22:12,040 --> 00:22:15,280 Speaker 2: of quarter by quarter or year by year free cash 419 00:22:15,280 --> 00:22:19,920 Speaker 2: flow excellence is getting us to these valuations. We've moved 420 00:22:19,960 --> 00:22:23,160 Speaker 2: away from a classic seven year DCF. 421 00:22:23,200 --> 00:22:24,600 Speaker 6: Do you agree? Yeah? Yeah. 422 00:22:24,640 --> 00:22:26,760 Speaker 1: So so the way that I would phrase I totally 423 00:22:26,800 --> 00:22:29,200 Speaker 1: hear you. So. So the way that I would phrase. 424 00:22:28,920 --> 00:22:32,320 Speaker 8: That is that when you look at companies that don't 425 00:22:32,320 --> 00:22:35,040 Speaker 8: have a lot of earnings, but you project a terminal 426 00:22:35,119 --> 00:22:37,360 Speaker 8: value into the future and say, well, I can look 427 00:22:37,400 --> 00:22:39,600 Speaker 8: past no earnings for a period of time because a 428 00:22:39,680 --> 00:22:43,280 Speaker 8: terminal value is high, then that's you know, that error 429 00:22:43,320 --> 00:22:44,840 Speaker 8: I think is that's not where we are. 430 00:22:44,960 --> 00:22:46,280 Speaker 6: What about the magnificent seven? 431 00:22:46,320 --> 00:22:49,479 Speaker 2: I mean Microsoft, let's just pick it is as Bomber 432 00:22:49,520 --> 00:22:50,240 Speaker 2: did pretty well. 433 00:22:50,520 --> 00:22:57,280 Speaker 6: You see that Microsoft, to me is not a seven year. 434 00:22:57,680 --> 00:23:00,199 Speaker 2: Where's that? Where are they going to be? But it's 435 00:23:00,240 --> 00:23:02,719 Speaker 2: a quarter to quarter slog of excellence? 436 00:23:03,200 --> 00:23:03,400 Speaker 6: Right? 437 00:23:03,480 --> 00:23:05,199 Speaker 1: Well, well, well let's turned into that. 438 00:23:05,280 --> 00:23:07,240 Speaker 8: So so I'd say that the terminal value for a 439 00:23:07,240 --> 00:23:10,200 Speaker 8: lot of these, you know, the magnificent seven. People debate 440 00:23:10,280 --> 00:23:12,399 Speaker 8: as to how high it could actually possibly be, but 441 00:23:12,600 --> 00:23:14,920 Speaker 8: it's a positive number, and it's a tangible positive number 442 00:23:14,920 --> 00:23:18,360 Speaker 8: because they're making their earnings. The issue, though, is because 443 00:23:18,400 --> 00:23:20,560 Speaker 8: they're valuations. And I think this gets to your point, Tom, 444 00:23:20,880 --> 00:23:24,760 Speaker 8: because their valuations are relatively high and there's high expectations 445 00:23:25,080 --> 00:23:27,800 Speaker 8: that they had better make their quarterly numbers, and if 446 00:23:27,840 --> 00:23:30,639 Speaker 8: they don't, they're subject to a correction. And that's what 447 00:23:30,680 --> 00:23:33,879 Speaker 8: makes the market relatively scary right now, is because you 448 00:23:33,920 --> 00:23:36,200 Speaker 8: have such a narrow group of stocks that are really 449 00:23:36,280 --> 00:23:39,439 Speaker 8: keeping up the index. If they miss a quarter, and 450 00:23:39,520 --> 00:23:42,440 Speaker 8: if prices adjust in one of those stocks, it could 451 00:23:42,440 --> 00:23:45,000 Speaker 8: have a meaningful impact on the overall index, and this 452 00:23:45,000 --> 00:23:46,600 Speaker 8: could add to volatility in the markets. 453 00:23:46,760 --> 00:23:49,400 Speaker 4: By the way, probably the best notes we get from 454 00:23:49,400 --> 00:23:51,480 Speaker 4: any you know guest is this guy. 455 00:23:51,640 --> 00:23:53,520 Speaker 6: I mean, he started Semanski. 456 00:23:53,600 --> 00:23:57,000 Speaker 2: If you got through serismands Semanski physics and. 457 00:23:57,000 --> 00:23:58,879 Speaker 4: You survive one thing jumps at me though, and I 458 00:23:58,920 --> 00:24:02,199 Speaker 4: got to ask bunch equities, Yeah, this will be the 459 00:24:02,200 --> 00:24:04,200 Speaker 4: only time this week I think we talked about French equities. 460 00:24:04,359 --> 00:24:05,800 Speaker 1: Yeah, what's going on there. 461 00:24:05,680 --> 00:24:06,480 Speaker 6: With the political minds? 462 00:24:06,640 --> 00:24:08,399 Speaker 8: So look, I mean, you know, this is an outlier 463 00:24:08,480 --> 00:24:11,800 Speaker 8: view on our portfolios, and when this political unrest took place, 464 00:24:11,880 --> 00:24:14,360 Speaker 8: you know, we saw this as a buying opportunity, primarily 465 00:24:14,359 --> 00:24:16,560 Speaker 8: in the equity space. And the reason is is I 466 00:24:16,600 --> 00:24:19,280 Speaker 8: think that there was an overreaction in the markets to 467 00:24:19,640 --> 00:24:22,359 Speaker 8: what happened in the French election. So yes, the National 468 00:24:22,440 --> 00:24:25,960 Speaker 8: Rally Party Marine Lepenz party may take over the lower 469 00:24:26,000 --> 00:24:28,480 Speaker 8: House of Congress and might have a majority state and 470 00:24:28,520 --> 00:24:32,159 Speaker 8: I respect that it creates some you know, disruption in 471 00:24:32,200 --> 00:24:37,199 Speaker 8: the political norms within France. But the reaction we had 472 00:24:37,240 --> 00:24:39,080 Speaker 8: in the market, if you look at the spreads between 473 00:24:39,080 --> 00:24:42,520 Speaker 8: French bonds and buns that spread, winding, widening over a 474 00:24:42,600 --> 00:24:46,560 Speaker 8: one week period, rivaled the twenty eleven twenty twelve period 475 00:24:47,000 --> 00:24:49,359 Speaker 8: when the European Union was in question. 476 00:24:49,680 --> 00:24:50,920 Speaker 1: You know, in the first. 477 00:24:50,680 --> 00:24:54,280 Speaker 8: Place, the equities fell to levels in terms of a 478 00:24:54,320 --> 00:24:56,479 Speaker 8: standard deviation move back to you'd have to go back 479 00:24:56,520 --> 00:24:59,040 Speaker 8: to twenty seventeen to see some of these moves. So 480 00:24:59,119 --> 00:25:02,080 Speaker 8: the extreme amount of move that took place over this 481 00:25:02,480 --> 00:25:04,560 Speaker 8: I just thought was just overdone. And if you look 482 00:25:04,600 --> 00:25:07,760 Speaker 8: at French equities year to date, they're about flat. 483 00:25:07,480 --> 00:25:09,560 Speaker 1: On the year. You know, they were negative on the year. 484 00:25:09,920 --> 00:25:11,879 Speaker 8: And if you look at the rest of the equity 485 00:25:11,880 --> 00:25:14,760 Speaker 8: markets across Europe, they're up about seven eight percent. You know, 486 00:25:14,960 --> 00:25:17,840 Speaker 8: us this is so far being contained just to France, 487 00:25:17,880 --> 00:25:20,120 Speaker 8: and I think that and also to a narrow set 488 00:25:20,160 --> 00:25:23,360 Speaker 8: of French companies. The broader French market, I still think 489 00:25:23,800 --> 00:25:26,040 Speaker 8: it is in good shape. And we saw this as 490 00:25:26,080 --> 00:25:29,840 Speaker 8: an opportunity to buy good quality assets on the cheap. 491 00:25:30,359 --> 00:25:31,679 Speaker 6: Jim Kurt, this has been enjoyed. 492 00:25:31,720 --> 00:25:46,600 Speaker 2: The joining US now always tan and rested from Brown University. 493 00:25:46,600 --> 00:25:50,639 Speaker 2: Wendy Schiller, Her books are definitive driving the Taubin Center 494 00:25:50,680 --> 00:25:56,040 Speaker 2: at Brown Forward. Wendy, I gotta ask about the size 495 00:25:56,040 --> 00:26:01,680 Speaker 2: of money in the donor culture than our modern politics. 496 00:26:02,240 --> 00:26:06,919 Speaker 2: Did JFK or LBJ or Frankly Clinton or you know, 497 00:26:07,000 --> 00:26:10,879 Speaker 2: Bush the younger bring in this kind of money the 498 00:26:11,000 --> 00:26:14,880 Speaker 2: President Biden's bringing in well, I. 499 00:26:14,840 --> 00:26:16,560 Speaker 9: Mean they didn't bring in the kind of money that 500 00:26:16,560 --> 00:26:19,239 Speaker 9: we see today because they weren't legally allowed to, you know, 501 00:26:19,480 --> 00:26:22,000 Speaker 9: have that kind of money contributed. You know, the rise 502 00:26:22,040 --> 00:26:24,880 Speaker 9: of super packs, as you know, and super super packs 503 00:26:25,560 --> 00:26:28,960 Speaker 9: make it possible for wealthy people to contribute hundreds of 504 00:26:28,960 --> 00:26:32,040 Speaker 9: millions of dollars, and that just didn't exist back then. 505 00:26:32,160 --> 00:26:33,919 Speaker 10: But as you well. 506 00:26:33,560 --> 00:26:36,200 Speaker 9: Know, Tom, because you know your history, you know, there 507 00:26:36,200 --> 00:26:39,879 Speaker 9: were other ways of coercive for gathering votes in those days. 508 00:26:39,880 --> 00:26:41,680 Speaker 10: It didn't require that much money. 509 00:26:41,680 --> 00:26:44,960 Speaker 9: But in Rhode Island in the eighteen nineties, you know, 510 00:26:45,080 --> 00:26:47,000 Speaker 9: Nelson Aldrich was a signer from Ronal and he was 511 00:26:47,000 --> 00:26:48,800 Speaker 9: also the sort of de factive majority leader in the 512 00:26:48,840 --> 00:26:49,600 Speaker 9: Center Republican. 513 00:26:49,840 --> 00:26:52,000 Speaker 10: He handled all the business stuff and all the trade. 514 00:26:52,080 --> 00:26:55,479 Speaker 10: He would have his lieutenant's pay people five dollars or 515 00:26:55,520 --> 00:26:57,120 Speaker 10: ten dollars, a lot of money in those days. 516 00:26:57,400 --> 00:27:00,520 Speaker 2: You show up to vote, there's one hundred one hundred 517 00:27:00,600 --> 00:27:03,840 Speaker 2: million dollars out there. Somebody raised it over three cups 518 00:27:03,840 --> 00:27:09,320 Speaker 2: of coffee whatever. That's in a bank account, right, Whose 519 00:27:09,440 --> 00:27:10,440 Speaker 2: money is that? 520 00:27:11,320 --> 00:27:15,600 Speaker 9: I mean, it's really really wealthy people contribute a ton 521 00:27:15,800 --> 00:27:19,400 Speaker 9: of money. But the question is really in this election, 522 00:27:20,160 --> 00:27:23,359 Speaker 9: I'm going into your field now, is this really a 523 00:27:23,400 --> 00:27:27,800 Speaker 9: good investment? Because voters know these two candidates really really well. 524 00:27:28,040 --> 00:27:31,040 Speaker 9: Money matters the most when one candidate is not as 525 00:27:31,080 --> 00:27:33,119 Speaker 9: well known. You get a lot of bang for the 526 00:27:33,119 --> 00:27:36,639 Speaker 9: buck from money and visibility. But here what is the 527 00:27:36,680 --> 00:27:40,080 Speaker 9: money buying? Particularly in Donald Trump's case, because Republicans don't 528 00:27:40,119 --> 00:27:41,600 Speaker 9: have the kind of infrastructure that the. 529 00:27:41,520 --> 00:27:43,360 Speaker 10: Democrats have to get out the vote. 530 00:27:43,359 --> 00:27:46,760 Speaker 9: They have strong enthusiasm and stronger loyalty, but they don't 531 00:27:46,760 --> 00:27:49,520 Speaker 9: have the operational advantage on the ground. What are they 532 00:27:49,720 --> 00:27:51,679 Speaker 9: ringing for? That's my question? 533 00:27:51,800 --> 00:27:53,359 Speaker 10: What do they need? What do they need the money? 534 00:27:53,359 --> 00:27:55,879 Speaker 2: If they don't spend this pall, where is the money 535 00:27:55,920 --> 00:27:56,760 Speaker 2: in five years? 536 00:27:56,800 --> 00:27:59,640 Speaker 4: Oh, that's a great ques Christmas plub account exactly. 537 00:28:00,480 --> 00:28:01,040 Speaker 5: But no. 538 00:28:01,080 --> 00:28:04,360 Speaker 10: But they've also changed the rules so it's a little dodgy. 539 00:28:04,600 --> 00:28:07,520 Speaker 9: But state party committees, for example, can now receive money 540 00:28:07,600 --> 00:28:10,720 Speaker 9: from federal party committees. They used to, but Congress passed 541 00:28:10,720 --> 00:28:12,760 Speaker 9: the law that lets them share that money. 542 00:28:12,920 --> 00:28:15,400 Speaker 10: So it's it's much easier to meld the money than 543 00:28:15,400 --> 00:28:15,919 Speaker 10: it used to be. 544 00:28:16,520 --> 00:28:20,080 Speaker 4: Wendy, what did you make of President Biden's commentary last night? 545 00:28:20,160 --> 00:28:23,440 Speaker 4: His speech last night in reaction to the Trump immunity ruling. 546 00:28:24,400 --> 00:28:27,560 Speaker 10: It was much more coherent than his first twenty. 547 00:28:27,359 --> 00:28:29,720 Speaker 9: Minutes of his big performance, which was a good thing 548 00:28:30,240 --> 00:28:34,480 Speaker 9: if you're a President Biden's team. So the immunity decision, 549 00:28:34,640 --> 00:28:37,000 Speaker 9: if you think about what the Framers wrote about what 550 00:28:37,000 --> 00:28:41,160 Speaker 9: they worried about the presidency, it actually hues pretty closely 551 00:28:41,320 --> 00:28:42,480 Speaker 9: to that text. 552 00:28:42,720 --> 00:28:44,960 Speaker 10: In other words, I think they probably did the best 553 00:28:45,000 --> 00:28:47,760 Speaker 10: they could with this immunity decision. People may disagree with. 554 00:28:47,720 --> 00:28:50,320 Speaker 9: Me, but if you look at what the founders worried about, 555 00:28:50,560 --> 00:28:52,880 Speaker 9: this is what they were trying to parse out, you know, 556 00:28:52,960 --> 00:28:57,160 Speaker 9: individual corruption versus sort of abuse of power, but the 557 00:28:57,200 --> 00:29:00,960 Speaker 9: prospect of Donald Trump unfettered with complete. 558 00:29:00,520 --> 00:29:02,240 Speaker 10: Immunity, and that's the way the media is sort of 559 00:29:02,280 --> 00:29:02,800 Speaker 10: portraying this. 560 00:29:03,240 --> 00:29:06,320 Speaker 9: I think it might shift some of those independents that fled, 561 00:29:06,400 --> 00:29:10,600 Speaker 9: perhaps on Thursday night, back into considering, you know, maybe 562 00:29:10,640 --> 00:29:14,040 Speaker 9: we have to pick Biden not Trump, because we are 563 00:29:14,040 --> 00:29:17,200 Speaker 9: concerned about having Donald Trump in office with the perception 564 00:29:17,440 --> 00:29:19,800 Speaker 9: in his mind of no holds bar that he can 565 00:29:19,840 --> 00:29:21,800 Speaker 9: do whatever he wants and he will go unpunished. 566 00:29:22,000 --> 00:29:25,520 Speaker 4: What's the status of the leadership in the Democratic Party 567 00:29:25,800 --> 00:29:29,040 Speaker 4: today as it relates to President Biden and his viability. 568 00:29:29,760 --> 00:29:30,560 Speaker 10: Well, Paul, that. 569 00:29:30,520 --> 00:29:33,560 Speaker 9: Would require identifying the leadership of the Democratic Party and 570 00:29:33,600 --> 00:29:35,960 Speaker 9: This has been the whole conundrum for the Democrats. The 571 00:29:36,000 --> 00:29:38,120 Speaker 9: President of the United States is typically the leader of 572 00:29:38,120 --> 00:29:41,080 Speaker 9: the party, so this is really this and Biden has 573 00:29:41,120 --> 00:29:44,080 Speaker 9: not really delegated in that respect. You know, Chuck Shimmer 574 00:29:44,080 --> 00:29:46,600 Speaker 9: does this thing again, Jeffries does his thing. But really, 575 00:29:46,640 --> 00:29:48,680 Speaker 9: if there's not even a Nancy Pelosi, whether you like 576 00:29:48,720 --> 00:29:50,840 Speaker 9: her or you don't like her, she was a vocal 577 00:29:50,920 --> 00:29:51,719 Speaker 9: leader in the party. 578 00:29:51,920 --> 00:29:53,760 Speaker 10: You know, it's unclear to me whether it's. 579 00:29:53,640 --> 00:29:56,680 Speaker 9: Barack Obama, it's form President Bill Clinton, who can talk 580 00:29:56,720 --> 00:29:59,600 Speaker 9: to Biden about whether he steps aside. But right now, 581 00:29:59,640 --> 00:30:01,640 Speaker 9: as a last night, he did not look like anybody 582 00:30:01,760 --> 00:30:02,800 Speaker 9: who was walking. 583 00:30:02,480 --> 00:30:05,720 Speaker 4: Out the door. So what should President Biden's strategy be 584 00:30:06,320 --> 00:30:08,280 Speaker 4: going forward in this campaign? 585 00:30:09,160 --> 00:30:11,480 Speaker 9: Whatever he did to prepare for his remarks yesterday, do 586 00:30:11,560 --> 00:30:13,640 Speaker 9: that every day. Make sure that when you were going 587 00:30:13,640 --> 00:30:16,960 Speaker 9: before the public, you sound and look vibrant. But also 588 00:30:17,160 --> 00:30:21,000 Speaker 9: Trump Trump, Trump, and the issues that the Democrats are 589 00:30:21,000 --> 00:30:23,680 Speaker 9: better on, particularly labor rights. You know, they have not 590 00:30:23,800 --> 00:30:26,360 Speaker 9: talked enough about what our Republican trifecta. 591 00:30:25,880 --> 00:30:27,440 Speaker 10: Will do to labor rights. 592 00:30:27,520 --> 00:30:29,760 Speaker 9: And I think these are the key voters in the 593 00:30:29,800 --> 00:30:33,080 Speaker 9: swing states, at least the fade West and Nevada for 594 00:30:33,120 --> 00:30:34,400 Speaker 9: President of Biden's campaign. 595 00:30:34,240 --> 00:30:37,920 Speaker 2: Professor Schuler of Providence for Rhode Island, explain to our 596 00:30:38,040 --> 00:30:42,680 Speaker 2: national audience and our global audience, who the former governor 597 00:30:42,800 --> 00:30:47,440 Speaker 2: of Rhode Island is some percolate. Henrietta Tre's mentioned this 598 00:30:47,520 --> 00:30:51,720 Speaker 2: the other day, Gina Romundo on the list out there? 599 00:30:52,160 --> 00:30:52,720 Speaker 6: Who is she? 600 00:30:54,160 --> 00:30:58,880 Speaker 9: Jenia Mundo is a practical politician. She is business friendly 601 00:30:59,600 --> 00:31:03,080 Speaker 9: and she it really solves things problem by problem she does. 602 00:31:03,280 --> 00:31:05,720 Speaker 9: I know people might get upset. Remind me a little 603 00:31:05,720 --> 00:31:08,560 Speaker 9: bit of President Obama. You know, she is not wedded 604 00:31:08,600 --> 00:31:11,560 Speaker 9: to a particular ideology. She takes things as they come 605 00:31:12,000 --> 00:31:15,520 Speaker 9: and tries to plan ahead and really take stands right. 606 00:31:15,600 --> 00:31:18,760 Speaker 9: So that's the way she thinks. That's great for governing. 607 00:31:19,240 --> 00:31:23,120 Speaker 9: Is it great for inspiring voters? That's a question mark 608 00:31:23,120 --> 00:31:24,200 Speaker 9: in a presidential campaign. 609 00:31:24,240 --> 00:31:27,840 Speaker 2: Can she appeal to the left of the Democratic Party? 610 00:31:27,920 --> 00:31:31,400 Speaker 2: Can she check the boxes if President Biden has to. 611 00:31:31,440 --> 00:31:33,840 Speaker 10: Check every day her record? 612 00:31:34,160 --> 00:31:36,920 Speaker 9: You know, public unions in Lorelan still don't like her 613 00:31:36,920 --> 00:31:40,520 Speaker 9: because of union of pension reform. But on things like 614 00:31:40,600 --> 00:31:45,360 Speaker 9: women's freedom of choice, abortion, gun control, education, she's a 615 00:31:45,480 --> 00:31:48,160 Speaker 9: very strong record as governor of Rhode Island. So you know, 616 00:31:48,240 --> 00:31:50,880 Speaker 9: it depends what she pitches. But if you ask me 617 00:31:50,920 --> 00:31:53,480 Speaker 9: to choose between Gina Romundo and Gretchen Whitmer, that's not 618 00:31:53,560 --> 00:31:56,360 Speaker 9: a contest, right. Gretchen Whitmer can win Michigan. She seems 619 00:31:56,400 --> 00:31:58,720 Speaker 9: reluctant to get into the fray, but she can bring 620 00:31:58,760 --> 00:32:02,000 Speaker 9: a swing state. That's something Genemndeau has yet to prove. 621 00:32:02,360 --> 00:32:04,480 Speaker 9: So if you're going to switch gears now, you know, 622 00:32:04,560 --> 00:32:08,240 Speaker 9: I don't see where you picked U over Gresha wimmer. 623 00:32:08,040 --> 00:32:22,000 Speaker 7: Cure's valuable ess A sure, thank you, Lisa, What do 624 00:32:22,040 --> 00:32:22,240 Speaker 7: you have? 625 00:32:22,480 --> 00:32:25,200 Speaker 11: All right? This is what we talked about before you 626 00:32:25,280 --> 00:32:28,120 Speaker 11: mentioned it. Paul Barry Dillar is back. Yes, he led 627 00:32:28,160 --> 00:32:30,960 Speaker 11: Paramount Pictures decades ago. He lost the bidding war for 628 00:32:31,000 --> 00:32:33,720 Speaker 11: the company. Now he's considering making an offer for control 629 00:32:33,800 --> 00:32:34,720 Speaker 11: of its parent company. 630 00:32:34,760 --> 00:32:34,880 Speaker 5: Though. 631 00:32:34,960 --> 00:32:37,040 Speaker 11: This is what the New York Times is reporting, sources 632 00:32:37,080 --> 00:32:40,160 Speaker 11: telling them that Dylan of digital media company IAC, he 633 00:32:40,280 --> 00:32:44,400 Speaker 11: signed a non disclosure agreement with National Amusements. But you know, 634 00:32:44,440 --> 00:32:47,479 Speaker 11: Paramount iac National Musements they have not commented on this, 635 00:32:47,600 --> 00:32:49,520 Speaker 11: but this is the word that is going out. I mean, 636 00:32:49,560 --> 00:32:51,720 Speaker 11: Paramoun's been weighing HISS options for months, you know, that. 637 00:32:52,320 --> 00:32:52,560 Speaker 6: Yeah. 638 00:32:52,600 --> 00:32:55,239 Speaker 4: I mean Barry Dillar, He's done everything there is to 639 00:32:55,240 --> 00:32:57,920 Speaker 4: do in media, including creating a little television network called 640 00:32:57,920 --> 00:33:01,800 Speaker 4: the Fox Network thanks to Bart Simpson. But that was 641 00:33:01,840 --> 00:33:04,920 Speaker 4: the eighties, that was the nineties. Again, in my opinion, 642 00:33:05,000 --> 00:33:07,120 Speaker 4: as much as Admira Barry Diller, he has not a 643 00:33:07,160 --> 00:33:09,720 Speaker 4: credible bidder. There has not been one credible bidder for 644 00:33:09,800 --> 00:33:13,480 Speaker 4: Paramount this entire process, and that's shocking and said, but 645 00:33:13,520 --> 00:33:15,680 Speaker 4: it just reflects kind of where we are in this 646 00:33:15,680 --> 00:33:16,840 Speaker 4: evolution of the media business. 647 00:33:16,880 --> 00:33:18,160 Speaker 6: It's a general statement. 648 00:33:18,280 --> 00:33:22,640 Speaker 2: Do you are experts like Rich Greenfield, Michael Nathanson, do 649 00:33:22,760 --> 00:33:26,400 Speaker 2: they assume somebody's gonna buy this and split break it up? 650 00:33:27,160 --> 00:33:28,560 Speaker 4: You know, I'm not sure. I think a lot of 651 00:33:28,560 --> 00:33:32,040 Speaker 4: people the real value here of Paramount is in the studio. 652 00:33:32,200 --> 00:33:35,480 Speaker 4: I mean, the Paramount Film and Television studio is one 653 00:33:35,520 --> 00:33:39,480 Speaker 4: of just three or four of that scale in the business. 654 00:33:39,720 --> 00:33:41,640 Speaker 4: So that has value. How much value, I don't know. 655 00:33:41,680 --> 00:33:44,040 Speaker 4: And how much value to put on the library, the 656 00:33:44,080 --> 00:33:46,720 Speaker 4: cable networks that are part of Viacom to think about 657 00:33:47,000 --> 00:33:50,480 Speaker 4: you know, MTV, Country Music, Television TENA and all those things. 658 00:33:50,840 --> 00:33:54,320 Speaker 4: Either the value is declining every single day as cord 659 00:33:54,320 --> 00:33:56,880 Speaker 4: cutting continues, so it's a real tough to value this asset. 660 00:33:56,920 --> 00:33:59,960 Speaker 2: And I saw Warner Brothers Discovery I having the challenge 661 00:34:00,120 --> 00:34:02,040 Speaker 2: to it yesterday afternoon. 662 00:34:02,080 --> 00:34:03,120 Speaker 6: Next Lison, all. 663 00:34:03,120 --> 00:34:06,920 Speaker 11: Right, we go from Powermount to Imagine Entertainment. That's Ron Howard, 664 00:34:06,960 --> 00:34:09,800 Speaker 11: Brian Grazer's company. They're looking for a buyer. This is 665 00:34:09,840 --> 00:34:11,719 Speaker 11: according to the Wall Street Journal. They're working with an 666 00:34:11,719 --> 00:34:14,640 Speaker 11: investment bank after receiving some interest, but a deal that 667 00:34:14,680 --> 00:34:17,560 Speaker 11: could allow Imagine's main financial backer, who is Rain Group, 668 00:34:17,680 --> 00:34:20,520 Speaker 11: to kind of exit. But there's been a lot going 669 00:34:20,560 --> 00:34:23,160 Speaker 11: on Hollywood studio streamers. They're pulling back on the number 670 00:34:23,160 --> 00:34:25,600 Speaker 11: of projects they take on. There was this big boom 671 00:34:25,600 --> 00:34:29,600 Speaker 11: and spending, so valuations for independent production companies while they're 672 00:34:29,600 --> 00:34:32,239 Speaker 11: starting to fall over the years. But it's not time 673 00:34:32,400 --> 00:34:34,560 Speaker 11: the first time they explore a sale. If in twenty 674 00:34:34,600 --> 00:34:37,720 Speaker 11: twenty two, Imagine talked about selling a more than seventy 675 00:34:37,880 --> 00:34:40,360 Speaker 11: percent stake in the company to a London based investment 676 00:34:40,400 --> 00:34:43,440 Speaker 11: firm for about six hundred million to eight hundred million dollars. 677 00:34:43,480 --> 00:34:45,720 Speaker 11: So that kind of puts a price range out there. 678 00:34:46,520 --> 00:34:48,760 Speaker 11: But this possibly could happen. 679 00:34:48,880 --> 00:34:51,200 Speaker 4: Yes, I mean this is I mean they have a quality, 680 00:34:51,280 --> 00:34:54,880 Speaker 4: huge quality of library here. But you know they're kind 681 00:34:54,920 --> 00:34:57,360 Speaker 4: of probably coming to the end of their high output years. 682 00:34:57,400 --> 00:34:59,480 Speaker 4: If you talked to Ron Howard and Brian Grazer, so 683 00:34:59,560 --> 00:35:04,160 Speaker 4: let's like a music musician, Tom would sell their catalog, 684 00:35:04,719 --> 00:35:06,719 Speaker 4: and we're seeing a lot of that these days. This 685 00:35:06,760 --> 00:35:08,600 Speaker 4: is a little bit along those lines here. 686 00:35:08,680 --> 00:35:09,480 Speaker 6: Somebody will buy Oh. 687 00:35:09,440 --> 00:35:10,280 Speaker 9: That's a good comparison. 688 00:35:11,880 --> 00:35:13,239 Speaker 11: But they have a few things. I mean, they have 689 00:35:13,280 --> 00:35:14,040 Speaker 11: a series. 690 00:35:13,760 --> 00:35:15,960 Speaker 4: For networks coming out. 691 00:35:15,440 --> 00:35:18,280 Speaker 6: Help we go next. 692 00:35:18,880 --> 00:35:21,640 Speaker 11: We've heard of shrink flation. We've talked about that, but 693 00:35:21,760 --> 00:35:25,520 Speaker 11: now more retailers using upflation to get Americans to buy Okay. 694 00:35:25,640 --> 00:35:28,719 Speaker 11: Upflation is when you find a new use for an 695 00:35:28,719 --> 00:35:31,920 Speaker 11: old product and then you charge more for it. Okay, 696 00:35:32,040 --> 00:35:34,160 Speaker 11: So this is being used. This is a great big 697 00:35:34,200 --> 00:35:36,040 Speaker 11: take article. You have to take a look at it. 698 00:35:36,080 --> 00:35:36,680 Speaker 4: On the terminal. 699 00:35:36,840 --> 00:35:40,120 Speaker 11: Here's an example Procter and Gamble. They're charging fourteen dollars 700 00:35:40,120 --> 00:35:43,120 Speaker 11: for this all over body deodorant, which is double the 701 00:35:43,200 --> 00:35:46,920 Speaker 11: cost of a standard stick. So they're saying people, people 702 00:35:46,960 --> 00:35:51,200 Speaker 11: are falling for it. Yes, the problem to consumer They're 703 00:35:51,200 --> 00:35:53,279 Speaker 11: getting tired of shrink flation, right, so they started doing 704 00:35:53,280 --> 00:35:56,200 Speaker 11: different things. You went to cheaper alternatives, you start to 705 00:35:56,200 --> 00:35:59,680 Speaker 11: buy fewer essential items. But now Procter and Gamble actually 706 00:35:59,719 --> 00:36:04,240 Speaker 11: found that revenue growth came from people buying fewer things 707 00:36:04,360 --> 00:36:06,960 Speaker 11: at higher prices. So they're willing to pay more if 708 00:36:07,000 --> 00:36:08,840 Speaker 11: they buy less of a few other things. 709 00:36:08,960 --> 00:36:11,440 Speaker 6: It used to be easy. The rich kids in the 710 00:36:11,440 --> 00:36:12,959 Speaker 6: neighborhood they had Irish. 711 00:36:12,680 --> 00:36:16,239 Speaker 2: Spring, right, and the rest of us said, you know, 712 00:36:16,280 --> 00:36:19,799 Speaker 2: I can't remember what BILLI was used to just does soap. 713 00:36:20,080 --> 00:36:23,680 Speaker 2: They have Irish spring three houses away. 714 00:36:23,719 --> 00:36:24,840 Speaker 11: You could smell at three houses. 715 00:36:26,560 --> 00:36:27,440 Speaker 10: That's a tough smell. 716 00:36:27,840 --> 00:36:28,160 Speaker 3: Okay. 717 00:36:28,200 --> 00:36:30,759 Speaker 11: At the same time, fast food chains, we've been talking 718 00:36:30,760 --> 00:36:33,879 Speaker 11: about this. They've been lowering prices to attract customers. So 719 00:36:33,920 --> 00:36:37,200 Speaker 11: now we have another entry into the value meal wars. 720 00:36:37,320 --> 00:36:43,440 Speaker 11: It is Sonic. Yes, Sonic says that unlike McDonald's, Burger King, 721 00:36:43,440 --> 00:36:46,160 Speaker 11: Taco Bell, who are doing these temporary value meals, Sonic 722 00:36:46,239 --> 00:36:50,719 Speaker 11: is saying their meal value is here to stay for good. Okay. 723 00:36:50,800 --> 00:36:52,960 Speaker 11: They're calling it a fun ninety nine menu, So you 724 00:36:53,040 --> 00:36:57,600 Speaker 11: have burgers, snacks, desserts, crunch wraps. They are a dollar 725 00:36:58,000 --> 00:37:00,279 Speaker 11: ninety nine just for tom Okay. 726 00:37:00,280 --> 00:37:02,680 Speaker 4: The dollar ninety nine menu will also introduce two new 727 00:37:02,719 --> 00:37:07,600 Speaker 4: items at bacon ranch, Caso rap and a Southwest Crunch 728 00:37:07,719 --> 00:37:12,799 Speaker 4: Caso wrap. He's gonna pull up in the Bentley at 729 00:37:12,800 --> 00:37:14,239 Speaker 4: in the Hampton's like. 730 00:37:14,400 --> 00:37:18,160 Speaker 6: Like they have tots for a dollar. How many touts 731 00:37:18,200 --> 00:37:18,719 Speaker 6: do you get? 732 00:37:19,320 --> 00:37:22,120 Speaker 11: It doesn't say which size it is. You can get 733 00:37:22,160 --> 00:37:24,680 Speaker 11: a shake too, They have those, like twelve different flavors 734 00:37:24,680 --> 00:37:25,719 Speaker 11: of shakes, Like. 735 00:37:25,680 --> 00:37:27,120 Speaker 6: How big is a. 736 00:37:28,600 --> 00:37:30,720 Speaker 4: Twelve or the sixteen into a sonic? 737 00:37:31,400 --> 00:37:33,960 Speaker 11: I went when they first started opening, but I haven't been. 738 00:37:34,000 --> 00:37:34,640 Speaker 6: I mean it's nice. 739 00:37:35,239 --> 00:37:37,440 Speaker 11: You drive, you drive up right, No, you pull in 740 00:37:37,560 --> 00:37:39,279 Speaker 11: and they the people come out to your car that 741 00:37:39,360 --> 00:37:40,680 Speaker 11: used to do it on roller skates. I don't know 742 00:37:40,719 --> 00:37:41,560 Speaker 11: they still do anymore. 743 00:37:41,760 --> 00:37:43,840 Speaker 6: They roller a job. 744 00:37:45,200 --> 00:37:45,600 Speaker 5: A while. 745 00:37:45,840 --> 00:37:46,560 Speaker 6: Can you see. 746 00:37:48,480 --> 00:37:50,319 Speaker 11: The servers come on the really anything else? 747 00:37:51,360 --> 00:37:52,200 Speaker 4: No, but that's it. 748 00:37:52,520 --> 00:37:56,160 Speaker 6: You mentioned butter, Yes, I mean, but butter is up. 749 00:37:56,640 --> 00:38:01,000 Speaker 11: It's up, they're saying because more they're focused more on cheese, 750 00:38:01,239 --> 00:38:01,800 Speaker 11: and that's. 751 00:38:01,680 --> 00:38:04,800 Speaker 6: Taking away decide what to do with their milks or cows. 752 00:38:04,840 --> 00:38:05,279 Speaker 6: Is what we want? 753 00:38:05,360 --> 00:38:07,000 Speaker 11: Yeah, And the problem is that it's coming at the 754 00:38:07,040 --> 00:38:10,280 Speaker 11: same time that you know, holiday season, baking season starting 755 00:38:10,320 --> 00:38:11,960 Speaker 11: to you know, I don't want to sell a holiday 756 00:38:11,960 --> 00:38:12,440 Speaker 11: in the summer. 757 00:38:12,480 --> 00:38:13,880 Speaker 6: But it's it's coming up. 758 00:38:13,960 --> 00:38:16,680 Speaker 2: It's coming up, Lisa Mateo, thank you so much the 759 00:38:16,719 --> 00:38:21,279 Speaker 2: newspapers today. This is a Bloomberg Surveillance podcast, bringing you 760 00:38:21,360 --> 00:38:25,960 Speaker 2: the best in economics, finance, investment, and international relations. You 761 00:38:26,000 --> 00:38:29,320 Speaker 2: can also watch the show live on YouTube. Visit the 762 00:38:29,360 --> 00:38:34,120 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 763 00:38:34,120 --> 00:38:37,160 Speaker 2: mornings from seven to ten am Eastern from our global 764 00:38:37,200 --> 00:38:41,839 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 765 00:38:42,200 --> 00:38:45,760 Speaker 2: or anywhere else you listen, and always on Bloomberg Radio, 766 00:38:45,920 --> 00:38:49,120 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.