WEBVTT - Israel Talks, China Markets 0:00:02.440 --> 0:00:09.119 Bloomberg Audio Studios, Podcasts, radio News. You're listening to the 0:00:09.160 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.360 --> 0:00:16.360 Eastern on Appo, Cardplay and Android Auto with the Bloomberg 0:00:16.400 --> 0:00:19.840 Business app. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:22.800 or watch us live on YouTube. 0:00:23.400 --> 0:00:25.800 All right, let's go to geopolitics for a moment. Dan 0:00:25.840 --> 0:00:29.960 Williams is standing by his reporter based in Jerusalem. Israel 0:00:30.040 --> 0:00:32.360 is holding talks in Washington, and that's as the country 0:00:32.400 --> 0:00:34.479 is weighing how to respond to an Iranian missile tech 0:00:34.880 --> 0:00:37.200 about a week ago. And this comes as a year 0:00:37.240 --> 0:00:42.840 anniversary of what happened in Israel and Gaza. Okay, so Dan, 0:00:43.000 --> 0:00:46.360 what are where are we in terms of the actual talks. 0:00:46.400 --> 0:00:49.360 We kind of know where the military fighting is. What 0:00:49.440 --> 0:00:50.159 about the talks? 0:00:51.720 --> 0:00:54.520 Well, Israel's Defense min So you have Gallant will this 0:00:54.760 --> 0:00:59.440 evening set off for Washington for talks with his US counterpart, 0:01:00.560 --> 0:01:03.280 Lloyd Austin. And also we hear other members of the 0:01:03.280 --> 0:01:07.679 Biden administration. This is an especially brought period in this 0:01:07.840 --> 0:01:12.720 alliance because while the Biden administration very supportive of Israel's 0:01:12.760 --> 0:01:17.320 war effort in terms of supplying weaponry, moral support diplomatic support. 0:01:17.880 --> 0:01:21.919 The sides have been locking horns at times about specific moods, 0:01:22.480 --> 0:01:24.880 including this move into Lebanon on the ground over the 0:01:24.959 --> 0:01:28.880 last week by the Israelis, including how Israel might carry 0:01:28.920 --> 0:01:32.399 out its threat and retaliation for Iran's one hundred and 0:01:32.400 --> 0:01:36.000 eighty ballistic missiles that were fired also just a few 0:01:36.080 --> 0:01:39.800 days ago. So they're expected to discuss that, try to 0:01:39.840 --> 0:01:42.600 work out something they might agree on that the Americans 0:01:42.600 --> 0:01:46.360 would not see as needlessly rattling the region, perhaps setting 0:01:46.360 --> 0:01:49.680 off an energy shop and a major shipping crisis and 0:01:49.800 --> 0:01:54.120 terrorism crisis, just as the United States is in the 0:01:54.200 --> 0:01:56.920 last weeks of the selection campaign ahead of the vote 0:01:56.920 --> 0:01:57.440 in November. 0:02:00.520 --> 0:02:03.720 Should we be surprised, Dan, that Israel has not yet 0:02:03.800 --> 0:02:07.160 responded against Iran for that missile attack. I kind of 0:02:07.160 --> 0:02:08.840 thought we would have seen something by now. 0:02:10.360 --> 0:02:13.239 That has been said. On the other hand, this is 0:02:13.280 --> 0:02:17.200 a pretty weighty period attacking Iran. Again, It's worth remembering 0:02:17.200 --> 0:02:19.840 that the Iranian ballistic missile salver of last week was 0:02:19.840 --> 0:02:23.040 the second such attack by Iran. It conducted one in 0:02:23.080 --> 0:02:26.600 mid April, to which Israel responded with a very low signature. 0:02:26.639 --> 0:02:29.000 In fact that these raleised to my knowledge, never acknowledged it. 0:02:29.400 --> 0:02:32.280 They somehow managed to get some kind of strike vehicle 0:02:32.720 --> 0:02:36.840 into Iran to hit a radar at a key air base, 0:02:37.160 --> 0:02:39.200 but at the time they kept it very low key. 0:02:39.720 --> 0:02:41.680 So the question is would they do it again now 0:02:41.840 --> 0:02:44.680 or would it have to be something pretty spectacular in 0:02:44.760 --> 0:02:49.280 order to register as a deterrent. Now within Israel there 0:02:49.280 --> 0:02:52.040 as open discussion of whether Israel should go all the 0:02:52.040 --> 0:02:55.320 way and strike Iran's nuclear facilities. This is something that's 0:02:55.360 --> 0:02:58.240 been threatened for years, never carried out, or the oil 0:02:58.280 --> 0:03:01.720 facilities or goo for something more limited military politics and 0:03:01.760 --> 0:03:04.639 all that. This is really not something anyone would enter 0:03:04.639 --> 0:03:07.600 into rashly. I think these Reelis will be very careful 0:03:07.639 --> 0:03:10.360 to keep the Americans on side, and that is the 0:03:10.400 --> 0:03:13.600 reason for this trip. And with the pace of this war, 0:03:13.639 --> 0:03:15.959 I imagine even if the attack is carried out today, 0:03:16.040 --> 0:03:19.160 next week, in a month, it will still be seen 0:03:19.480 --> 0:03:22.320 as half of the course when it comes for this 0:03:23.360 --> 0:03:26.240 current standoff or I should say face off between Israel 0:03:26.240 --> 0:03:29.160 and i Ram. 0:03:29.200 --> 0:03:31.040 All right, Dan, we really appreciate it. Thank you very much. 0:03:31.120 --> 0:03:34.400 Dan Williams, reporter for Bloomberg News based in Jerusalem, joining 0:03:34.440 --> 0:03:37.120 us there on the latest An Israel response to that 0:03:37.240 --> 0:03:38.520 Iranian missile attack. 0:03:40.040 --> 0:03:43.960 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:03:44.040 --> 0:03:47.080 weekdays at ten am Eastern on Apple card Play and 0:03:47.080 --> 0:03:50.000 Android Otto with a Bloomberg Business app. You can also 0:03:50.080 --> 0:03:53.560 listen live on Amazon Alexa from our flagship New York station. 0:03:53.920 --> 0:03:56.680 Just say Alexa, play Bloomberg eleven thirty. 0:03:58.200 --> 0:04:00.120 Let's stay on that China story for a moment, and 0:04:00.400 --> 0:04:04.680 Bloomberg News and the current joins us now on China. So, 0:04:05.320 --> 0:04:08.000 and you lived in China for many, many years, you 0:04:08.040 --> 0:04:11.800 are obviously has an economics background. What we heard out 0:04:11.800 --> 0:04:14.720 of China today felt a little same old, same old. 0:04:14.800 --> 0:04:17.160 These are the things that we normally seem to think 0:04:17.160 --> 0:04:19.360 about when it comes to China stimulus. Is that a 0:04:19.400 --> 0:04:20.400 fair assessment? 0:04:21.600 --> 0:04:24.440 Yeah, good morning. I think they had raised expectations because 0:04:24.440 --> 0:04:28.800 the officials from the National Development Reformer Commission said they 0:04:28.800 --> 0:04:30.520 were going to hold a press conference on the first 0:04:30.560 --> 0:04:33.640 Tuesday back after the week long holiday. And given that 0:04:33.760 --> 0:04:35.480 last week and the week before we had news about 0:04:36.200 --> 0:04:39.040 pending China stimulus and expectations of warwide, this might be 0:04:39.080 --> 0:04:41.440 the next leg. Here comes the government to explain things 0:04:41.440 --> 0:04:44.760 further and announced new measures. But what happened was they 0:04:44.760 --> 0:04:49.760 didn't announce any new measures. They spoke about bringing forward 0:04:49.839 --> 0:04:52.800 and spending maybe tune out billion worth of spending, some 0:04:52.800 --> 0:04:55.960 support for businesses and for some support for the less 0:04:56.040 --> 0:04:59.279 privileged and poor in society, but not much by way 0:04:59.320 --> 0:05:02.359 of detail. And I think that lack of detail on 0:05:02.360 --> 0:05:05.040 the spending side is what this point in markets and 0:05:05.240 --> 0:05:06.240 up ended trading. 0:05:06.000 --> 0:05:06.520 The way he sought. 0:05:06.600 --> 0:05:09.400 But to be clear, though, what they did say was 0:05:09.440 --> 0:05:12.960 that they reaffirmed the commitment to meeting their five percent 0:05:13.200 --> 0:05:17.039 growth target. That might sound like nothing to people living 0:05:17.080 --> 0:05:18.920 from overseas, but it does mean the government's going to 0:05:19.040 --> 0:05:22.599 hit that political sense of target, you know, at all costs, 0:05:22.640 --> 0:05:24.240 and that means that at the very least they will 0:05:24.279 --> 0:05:26.920 continue to support the economy. And remember, the five percent 0:05:26.960 --> 0:05:30.560 growth target for China is obviously slower than double edgit 0:05:30.640 --> 0:05:32.440 a decade ago, but it's five percent on a much 0:05:32.480 --> 0:05:34.360 bigger base than it was a decade ago as well, 0:05:34.400 --> 0:05:35.200 so it's not nothing. 0:05:37.800 --> 0:05:40.760 And in reality, I guess from a political standpoint, maybe 0:05:40.800 --> 0:05:44.599 from economic standpoint. In reality, what can President Jijiping do 0:05:44.680 --> 0:05:48.680 in terms of fiscal stimulus, Well. 0:05:48.560 --> 0:05:51.800 They have room and certainly room to borrow and spend 0:05:52.279 --> 0:05:54.440 at the central government level. And now when you get 0:05:54.440 --> 0:05:57.239 into the local governments and the provinces, and that's where 0:05:57.320 --> 0:06:00.000 a lot of the property stress is located. That's where 0:06:00.040 --> 0:06:03.360 the business model of selling landolf to developers raise finances 0:06:03.520 --> 0:06:05.560 that seems to be broken at the moment. So that's 0:06:05.600 --> 0:06:08.120 where your debt pile is. But the central government has 0:06:08.120 --> 0:06:11.360 a lot of it of physical space. Use the jargon, 0:06:11.440 --> 0:06:15.360 they could intervene. They could start shoring up projects or 0:06:15.760 --> 0:06:17.880 recapitalizing the banks, which you have not of that in 0:06:17.880 --> 0:06:20.640 recent weeks, or make sure that they get those property 0:06:20.680 --> 0:06:23.000 construction sites finished. So there's a lot they could do. 0:06:23.320 --> 0:06:26.640 There's a feeling though that they're still being cautious because 0:06:26.640 --> 0:06:28.560 of the legacy of debt and leverage that was left 0:06:28.560 --> 0:06:30.920 by previous rounds of China Stimmus and not just the 0:06:30.960 --> 0:06:32.320 Flantic crisis, but also over the. 0:06:32.360 --> 0:06:33.120 Last decade or so. 0:06:33.279 --> 0:06:35.000 They didn't want to go on that road again. And 0:06:35.040 --> 0:06:36.880 also there's a view that maybe they're holding their powder 0:06:36.920 --> 0:06:39.640 somewhat dry. They want to get past the US elections 0:06:39.640 --> 0:06:41.719 see what comes out of that, because that could also. 0:06:41.560 --> 0:06:42.520 Be material for China. 0:06:44.960 --> 0:06:47.880 So to that point, the market reaction was quite swift. 0:06:47.880 --> 0:06:49.520 So the way you're talking about is like, look, they're 0:06:49.520 --> 0:06:51.560 a little long term strategic. They don't want to make 0:06:51.560 --> 0:06:53.000 any mistakes. They want to kind of see how the 0:06:53.040 --> 0:06:56.440 election pans out. Golden Dragon indexes down, commodities are getting 0:06:56.480 --> 0:06:58.920 hit really hard. Paul was pointing out Ali Baba's down 0:06:58.920 --> 0:07:01.080 and by about eight percent. That's a proxy for the 0:07:01.160 --> 0:07:06.800 China consumer. Is that market reaction legit? Like? Does it 0:07:06.839 --> 0:07:09.680 measure up with what we actually heard in your experience 0:07:09.720 --> 0:07:11.840 and understanding Chinese economic policy? 0:07:12.840 --> 0:07:16.320 Well, typically the top policymakers in China, you know, markets 0:07:16.400 --> 0:07:18.600 are not necessarily their number one concern. That's a rough 0:07:18.680 --> 0:07:20.360 rule of thumb. But I think what happened over the 0:07:20.400 --> 0:07:23.559 past couple of weeks was China's economy had reached such 0:07:23.600 --> 0:07:26.400 a kind of a funk that when the officials came 0:07:26.440 --> 0:07:28.040 out with the measures that they did, which is bringing 0:07:28.040 --> 0:07:30.640 them boring costs, talking about putting money back into the banks, 0:07:30.840 --> 0:07:34.360 the measures they announced for the Chinese break heighten explications 0:07:34.600 --> 0:07:37.080 that more money might be under way real physical spending. 0:07:37.080 --> 0:07:38.680 And that's when the market's went to open a tear. 0:07:38.920 --> 0:07:40.600 And now we've reached a point where a wait a minute, 0:07:40.760 --> 0:07:43.240 what exactly are they saying here. They're obviously putting support 0:07:43.240 --> 0:07:45.800 into the economy. They obviously want to hit that five 0:07:45.840 --> 0:07:48.840 percent growth target. That's a political target. But are they 0:07:48.880 --> 0:07:51.280 going to actually go out and borrow and spend more money, 0:07:51.320 --> 0:07:53.800 like real new money. We're not there yet. They may 0:07:53.880 --> 0:07:55.720 yet do that. The anthem might yet be coming, but 0:07:56.000 --> 0:07:58.040 that's not the signal for now. I think that's where 0:07:58.080 --> 0:08:00.800 both the disappointment and they can fusion has come into 0:08:00.800 --> 0:08:04.000 the market side of things. Is clearly not planning to 0:08:04.080 --> 0:08:06.320 rep things up the way they have in previous downturns. 0:08:06.440 --> 0:08:08.160 They're going to take their time working the way out 0:08:08.160 --> 0:08:08.360 of this. 0:08:11.320 --> 0:08:13.280 And I mean, just real quickly. 0:08:14.480 --> 0:08:19.720 For me, it's the long term issues with their population aging. 0:08:19.720 --> 0:08:22.280 I mean, some of those issues are just long standing. 0:08:22.320 --> 0:08:24.000 I don't know how you get around those things. 0:08:24.640 --> 0:08:26.960 Yeah, no, absolutely right. I mean I should have mentioned 0:08:26.960 --> 0:08:29.880 the structural issues. You've got the demographics, you've got the 0:08:29.920 --> 0:08:34.720 long term death story, You've got the system of political control, 0:08:34.760 --> 0:08:37.480 which some people will argue will ultimately keep a cap 0:08:37.520 --> 0:08:39.760 on Chinese economic potential. That's the point of debate, but 0:08:39.800 --> 0:08:42.000 it's one of the structural challenges that people talk about, 0:08:42.280 --> 0:08:45.240 all of which is weighing on China's growth. There's a 0:08:45.320 --> 0:08:47.680 view out there that over the past four decades, the 0:08:47.720 --> 0:08:50.760 low hanging fruit was picked. China had a manufacturing export model. 0:08:50.800 --> 0:08:53.280 It was gangbusters. It all went well, throw in a 0:08:53.360 --> 0:08:55.920 property boom to finish it off. But now we're the 0:08:55.920 --> 0:08:58.440 point where, of course, making those gains so much harder, 0:08:58.600 --> 0:09:01.800 aging workforce, a lot of debt, and giopolitical tensions means 0:09:01.800 --> 0:09:03.640 the China story is going to be much more more 0:09:03.640 --> 0:09:06.160 complicated in years ahead. 0:09:06.960 --> 0:09:08.080 Hi, very good, end the current. 0:09:08.080 --> 0:09:10.200 Thank you so much for joining us endocurrent Bloomberg Global 0:09:10.200 --> 0:09:14.520 Economy reporter, giving us the latest on China. 0:09:14.800 --> 0:09:18.680 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:18.760 --> 0:09:21.840 weekdays at ten am Eastern on Apple Card playing Android 0:09:21.880 --> 0:09:24.960 Auto with the Bloomberg Business App. Listen on demand wherever 0:09:25.040 --> 0:09:28.880 you get your podcasts, or watch us live on YouTube. 0:09:30.080 --> 0:09:34.000 Alex Steele Paul Sweeney, we are live broadcasting live in 0:09:34.080 --> 0:09:35.520 Orlando with the World Center. 0:09:35.640 --> 0:09:35.960 Merit. 0:09:36.000 --> 0:09:38.560 This place is huge, huge, I mean, how many steps 0:09:38.559 --> 0:09:39.440 did you clock yesterday? 0:09:40.320 --> 0:09:41.199 Fifteen thousand? 0:09:41.480 --> 0:09:41.560 What? 0:09:42.080 --> 0:09:44.760 Yeah, it's crazy and that's you know, but I'm all 0:09:44.760 --> 0:09:47.560 over the theme parks. We're common Well's national conference for 0:09:47.600 --> 0:09:50.520 financial advisors. I got like twenty twenty three hundred folks here. 0:09:50.720 --> 0:09:52.720 A lot of smart folks come in here trying to 0:09:52.720 --> 0:09:56.080 talk about the business and helping their clients with their 0:09:56.080 --> 0:09:58.319 financial advice. Brad McMillan joins us here today. He's a 0:09:58.400 --> 0:10:01.720 managing principal Wealth and Investment Management and the CIO at 0:10:01.720 --> 0:10:06.200 Commonwealth Financial Network. Brett Aside from the coming hurricane, what 0:10:06.280 --> 0:10:10.320 are your registered investment advisors asking you at this conference 0:10:10.400 --> 0:10:12.800 this year? I mean it, I know it's S and 0:10:12.840 --> 0:10:15.040 P's up twenty percent. I'm making money on my bonds, 0:10:15.080 --> 0:10:16.840 making money on my cash. It's probably a good time 0:10:16.880 --> 0:10:17.800 to be a financial advisor. 0:10:17.840 --> 0:10:19.240 But what are they asking you going forward? 0:10:19.559 --> 0:10:22.360 Well, the real question is always what happens next? Paul, 0:10:22.679 --> 0:10:25.320 And you know, we've heard a lot of news. I mean, 0:10:25.520 --> 0:10:27.960 the hurricane coming in is a great kind of metaphor 0:10:28.120 --> 0:10:31.400 for impending doom. You know, we've got wars. 0:10:31.080 --> 0:10:34.240 We get blue sky, so there's something that there, but 0:10:34.280 --> 0:10:34.800 a little bit. 0:10:34.720 --> 0:10:37.280 Of a mixed message, you get that, right, But you know, 0:10:37.360 --> 0:10:39.200 so there's a lot of stuff that can go wrong. 0:10:39.280 --> 0:10:41.679 The FED cut by fifty basis points. What do they 0:10:41.760 --> 0:10:45.360 know that we don't so the question is everything looks okay, 0:10:45.600 --> 0:10:48.440 but is it really you know, is there a hurricane 0:10:48.440 --> 0:10:51.240 out there despite the blue skies we see? And I 0:10:51.320 --> 0:10:53.960 think the answer to that is, actually, things are okay. 0:10:54.000 --> 0:10:56.000 There's still a lot that can go wrong and we 0:10:56.080 --> 0:10:58.280 need to keep an eye on it. But my talk 0:10:58.360 --> 0:11:01.360 this conference was actually going to be it's gonna be okay. 0:11:01.679 --> 0:11:03.040 But I think that's the real takeaway. 0:11:03.200 --> 0:11:04.800 And to be fair, you're gonna speak tomorrow, but you 0:11:04.800 --> 0:11:07.360 guys had to cancel the morning because of the hurricane. 0:11:07.400 --> 0:11:10.080 So if if your talk is yeah, it's stormy, but 0:11:10.120 --> 0:11:12.840 we're gonna be okay, how how is that reflected in 0:11:12.880 --> 0:11:14.040 a portfolio allocation? 0:11:14.600 --> 0:11:16.800 Well, I think you can actually see it in what's 0:11:16.800 --> 0:11:18.760 happening in the market today. I mean, one of the 0:11:18.800 --> 0:11:21.400 things out there were was we're gonna have a recession. 0:11:21.440 --> 0:11:23.320 We've got to get defensive, We've got to go with 0:11:23.400 --> 0:11:26.240 value rather than growth. And that's not actually what we're 0:11:26.240 --> 0:11:29.280 seeing in the market today. We're seeing the Nasdaq out performing, 0:11:29.679 --> 0:11:33.160 and we're seeing the now which is relatively defensive, underperforming. 0:11:33.200 --> 0:11:35.640 Now one day, of course, does not make a market. 0:11:36.120 --> 0:11:39.360 But the real message of the jobs report, as I 0:11:39.440 --> 0:11:42.040 read it, was that the economy is going to keep going. 0:11:42.240 --> 0:11:45.480 We're gonna see earnings keep growing and growth. You know, 0:11:45.559 --> 0:11:48.359 you don't have to get defensive. There are still opportunities 0:11:48.400 --> 0:11:49.880 on the growth side going forward. 0:11:50.440 --> 0:11:52.160 A lot of folks when that we saw the short 0:11:52.240 --> 0:11:53.120 term rates go higher. 0:11:53.120 --> 0:11:54.800 I mean, you're able to get I don't know, if 0:11:54.800 --> 0:11:56.840 you're a Marcus customer, Goldmen Sex, you're going to get 0:11:56.880 --> 0:11:59.079 five percent on a money market or something four point 0:11:59.080 --> 0:11:59.880 two five, four. 0:11:59.720 --> 0:12:00.360 Point two five. 0:12:00.400 --> 0:12:02.640 Now, how do you get your RAS or what's the 0:12:02.640 --> 0:12:05.400 message for your RAS about is it okay to be 0:12:05.520 --> 0:12:08.319 in cash or now you need to be in this market. 0:12:08.559 --> 0:12:10.839 I think at this point, given where you're getting paid 0:12:10.880 --> 0:12:12.920 in the money markets, you know, and in the bond 0:12:13.000 --> 0:12:17.520 market depending, it's okay to sit out. You know, there 0:12:17.559 --> 0:12:20.480 are opportunities out there, but you look at valuations, there 0:12:20.480 --> 0:12:22.960 are also risks. I mean, this is not a cloud 0:12:23.000 --> 0:12:26.240 free sky, you know, go back to the weather metaphor, so, 0:12:26.520 --> 0:12:28.280 you know, I look at this and I'm saying, if 0:12:28.320 --> 0:12:31.000 I'm an older client or if I'm somebody who's really 0:12:31.080 --> 0:12:33.880 risk adverse, I'm happy to sit at four or five 0:12:33.960 --> 0:12:37.880 percent and just take it easy. You know, for the 0:12:37.920 --> 0:12:41.040 first time, in a long time bonds are actually be 0:12:41.280 --> 0:12:45.800 worth being in for their return. Not great, but it's safe, right, 0:12:46.040 --> 0:12:46.920 that's important to. 0:12:46.880 --> 0:12:50.000 Be fair, Paul, I am thinking about Munie's just so 0:12:50.040 --> 0:12:52.840 you know, little diversification. That money sitting in Marcus is 0:12:53.080 --> 0:12:55.360 you know, being very risk averse. I'm still thinking about it. 0:12:55.960 --> 0:12:58.480 So where does that leave And you were mentioned sort 0:12:58.480 --> 0:13:01.000 of the sickle goal versus value, except to growth versus value, 0:13:01.040 --> 0:13:03.360 I should say, where does that leave you in thinking 0:13:03.360 --> 0:13:06.719 about mid cap and small caps? Because if things are 0:13:06.880 --> 0:13:09.920 okay ish, but there are worries but we're okay, that's 0:13:09.960 --> 0:13:12.600 a really weird spot for the small caps. 0:13:12.840 --> 0:13:14.480 It is a really weird spot. 0:13:14.520 --> 0:13:16.200 And I think when you look at that, you have 0:13:16.280 --> 0:13:19.600 to start thinking about sector exposure rather than you know, 0:13:19.800 --> 0:13:20.920 company size. 0:13:21.160 --> 0:13:21.320 You know. 0:13:21.360 --> 0:13:23.640 And there's a lot of discussion out there about oh, 0:13:23.640 --> 0:13:26.080 we've got MidCap, we've got small cap, you know. 0:13:26.160 --> 0:13:27.200 I think you need to look at it. 0:13:27.240 --> 0:13:29.960 Okay, is at a financial well they've been doing pretty well, 0:13:30.040 --> 0:13:32.920 you know, and small cap or MidCap that matters, but 0:13:33.000 --> 0:13:36.000 perhaps less than the fact that it's the financial sector 0:13:36.120 --> 0:13:39.040 or the industrial sector or whatever the sector exposure is. 0:13:39.360 --> 0:13:43.000 So I don't think it's a time for cap level discussion. 0:13:43.000 --> 0:13:45.360 I think it's time for sector exposure discussion. 0:13:45.679 --> 0:13:47.800 What are some of the sectors that screen well for 0:13:47.840 --> 0:13:48.240 you guys. 0:13:48.800 --> 0:13:50.840 Well, when you look at it, I think anything that's 0:13:50.880 --> 0:13:53.800 exposed to growth. You look at technology, you know, one 0:13:53.800 --> 0:13:56.000 of the things we're seeing is companies are trying to 0:13:56.120 --> 0:13:58.480 manage their costs. I mean, one of the messages of 0:13:58.520 --> 0:14:01.079 the jobs report was that no, we're not going to 0:14:01.120 --> 0:14:03.600 be able to hire lots of people cheaply. So any 0:14:03.640 --> 0:14:08.679 kind of technology that lets companies leverage capital expenditures rather 0:14:08.760 --> 0:14:10.880 than hiring, I think that's going to go. And that 0:14:10.920 --> 0:14:13.920 speaks directly to a lot of the megacap stocks. It's 0:14:13.920 --> 0:14:17.480 probably a tailwind for the AI bubble. Excuse me, shouldn't 0:14:17.480 --> 0:14:19.680 have said bubble, but you know, it's a tailwind for 0:14:19.720 --> 0:14:23.360 the AI industry. You know, it's a tailwind for companies 0:14:23.440 --> 0:14:27.120 that really enable companies to do more with less, you know. 0:14:27.160 --> 0:14:29.440 At the same time, I think when you look at that, 0:14:29.440 --> 0:14:33.480 that's also probably a tailwind for real estate because you've 0:14:33.520 --> 0:14:37.560 got to put all these workers somewhere. And that indicates, 0:14:37.600 --> 0:14:40.400 along with for example, Amazon going back to five days 0:14:40.400 --> 0:14:42.480 a week, we may be through the worst of it 0:14:42.600 --> 0:14:45.680 for the commercial real estate market that maybe early I 0:14:45.720 --> 0:14:47.360 don't know, but you can see signs. 0:14:47.480 --> 0:14:48.920 Well, we've been talking to a lot of commercial real 0:14:49.000 --> 0:14:51.240 estate people and they've been saying something similar like, there's 0:14:51.240 --> 0:14:53.280 still going to be that ten percent portion. That's not great, 0:14:53.320 --> 0:14:56.240 but on the other hand, it's going to be okay. 0:14:56.480 --> 0:14:59.080 So to your point about storms. So when you take 0:14:59.080 --> 0:15:02.360 a look at that theme, though, there is a narrative 0:15:02.360 --> 0:15:04.440 out there that once we get past the election, you 0:15:04.520 --> 0:15:06.640 could see a lot of capex come into the market 0:15:06.680 --> 0:15:08.760 because one might think that there would be more clarity 0:15:08.800 --> 0:15:11.440 on state corporate taxes than tariffs. Do you see that 0:15:11.480 --> 0:15:15.520 as a headwind tailwind for the economy or hope instead 0:15:15.560 --> 0:15:16.040 of reality. 0:15:16.320 --> 0:15:17.480 I think it's more hope. 0:15:17.520 --> 0:15:20.480 But the thing I would say about that is we're 0:15:20.520 --> 0:15:23.680 already seeing massive investment. I mean, again, one of the 0:15:23.720 --> 0:15:26.480 things that's driving it is the demographics. 0:15:26.560 --> 0:15:28.000 We don't have enough workers. 0:15:28.080 --> 0:15:30.520 Yeah, the market is software, so you're being forced to 0:15:30.560 --> 0:15:34.720 do capital investment. Regardless of who wins the election, you're 0:15:34.720 --> 0:15:36.680 going to have a situation where we're going to be 0:15:36.720 --> 0:15:41.119 continued to deglobalise. We're going to continue to restrict immigration, 0:15:41.640 --> 0:15:44.400 and that's going to require more capital investment. We are 0:15:44.480 --> 0:15:47.120 now in a position where we're generating most of the 0:15:47.560 --> 0:15:50.400 natural guess, which means an enormous amount of the chemicals 0:15:50.400 --> 0:15:53.680 industry is coming to the United States, and that requires 0:15:53.840 --> 0:15:55.240 massive capital investment. 0:15:55.520 --> 0:15:57.920 This is going to happen regardless of Washington. 0:15:58.800 --> 0:16:03.800 So how do you discuss the political landscape the election 0:16:03.880 --> 0:16:05.600 coming up this year? Because it's coming up in a 0:16:05.640 --> 0:16:08.280 matter of days. It seems like I'm sure you're getting 0:16:08.280 --> 0:16:10.760 some questions some comments from your financial advisors here. 0:16:11.240 --> 0:16:13.480 One of the things that goes with my job is 0:16:13.560 --> 0:16:17.080 getting questions from people on both sides. And every single 0:16:17.120 --> 0:16:20.040 election cycle, I have people on both sides saying if 0:16:20.040 --> 0:16:21.960 the other side wins, it's going to be a disaster. 0:16:22.880 --> 0:16:25.800 And I've heard that for the past, you know, twenty years. 0:16:25.840 --> 0:16:28.280 I've been doing this, and it's always been wrong. One 0:16:28.360 --> 0:16:30.560 of the things that you have to remember as an 0:16:30.600 --> 0:16:35.520 investor is the US economy is largely decoupled from Washington. 0:16:35.600 --> 0:16:38.000 Any effects it has, it has at the margin. 0:16:38.160 --> 0:16:40.400 But isn't that the irony though it's not because a 0:16:40.440 --> 0:16:42.600 fiscal spend, so like a lot of the hiring is 0:16:42.640 --> 0:16:45.240 in government workers, like the money that's being pumped in 0:16:45.520 --> 0:16:49.040 is through government programs, et cetera. So in a weird way, 0:16:49.720 --> 0:16:50.080 it's not. 0:16:50.960 --> 0:16:53.200 But you're wrong, because how am I wrong? That is 0:16:53.240 --> 0:16:55.560 a relatively small part of the economy, and that. 0:16:55.560 --> 0:16:56.560 Is the workers. 0:16:57.240 --> 0:16:59.760 Yeah, small part of the economy, and all the money. 0:16:59.600 --> 0:17:02.280 Small part, yes, And you look at all of the 0:17:02.640 --> 0:17:05.240 spend out there, And the question is even if you 0:17:05.520 --> 0:17:08.040 even if you're correct, is that going to change up 0:17:08.080 --> 0:17:10.440 or down significantly depending on the administration. 0:17:10.800 --> 0:17:14.000 It's not. You know, they're not going to No. 0:17:13.920 --> 0:17:17.119 It's going to keep growing that like, and deficits are 0:17:17.119 --> 0:17:17.480 going to grow. 0:17:17.520 --> 0:17:19.880 That is that a tailwind or a headwind for some economy? 0:17:19.920 --> 0:17:22.160 It's a tailwind, okay, as we've seen. 0:17:22.200 --> 0:17:23.840 I mean one of the interesting things, and I'll go 0:17:23.840 --> 0:17:26.480 back to history a little bit, is you go back 0:17:26.520 --> 0:17:29.960 to the seaquester and how that was supposed to cut 0:17:30.000 --> 0:17:32.719 spending and stop the growth of the deficit. You know what, 0:17:32.800 --> 0:17:36.680 it worked. So we've seen that before when federal spending cuts, 0:17:36.680 --> 0:17:39.280 that slows growth down. But if you say the federal 0:17:39.320 --> 0:17:41.399 spending is going to increase, that is a tailwind for 0:17:41.440 --> 0:17:42.480 growth going forward. 0:17:43.440 --> 0:17:44.560 So what do we do here? 0:17:44.600 --> 0:17:47.399 If I'm the federal Reserve, I feel pretty comfortable that 0:17:47.560 --> 0:17:49.840 just that fifty basis points and then you can kind 0:17:49.840 --> 0:17:51.199 of do their twenty fives as they like. 0:17:51.680 --> 0:17:53.639 I'm comfortable with that. Are you comfortable with that? 0:17:54.520 --> 0:17:57.159 I think fifty basis points was a mistake. I was 0:17:57.240 --> 0:18:00.560 really surprised they did that, and the reason I was prizes. 0:18:00.600 --> 0:18:01.639 You've got two mandates. 0:18:01.680 --> 0:18:05.080 Okay, you've got employment, which, as we've seen, slowed down 0:18:05.119 --> 0:18:07.560 a little bit, but it's still at boom levels historically 0:18:07.680 --> 0:18:10.240 and is coming back up. And then you've got inflation, 0:18:10.359 --> 0:18:12.200 which is not where they want it to be. It's 0:18:12.240 --> 0:18:15.080 moving there. But then you look at the components. Housing 0:18:15.200 --> 0:18:17.679 is not going to We've been saying how I've been 0:18:17.720 --> 0:18:20.120 saying housing is gonna Inflation is going to get down 0:18:20.160 --> 0:18:21.120 for the past three years. 0:18:21.119 --> 0:18:22.560 Guess what it hasn't. 0:18:23.160 --> 0:18:26.000 And then you're gonna have inflationary things like you know, 0:18:26.160 --> 0:18:28.920 reduced immigration. You look at wage growth that's still up. 0:18:29.480 --> 0:18:31.679 So I think the Fed is going to end up 0:18:31.680 --> 0:18:33.840 having to reverse sometime in the next year or two. 0:18:34.119 --> 0:18:37.399 You mean stop cutting or hiking hiking. Wow, Okay, that 0:18:37.440 --> 0:18:40.639