WEBVTT - Surveillance: Post-Trump Future With Munson 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.640 --> 0:00:27.680 Bloomberg dot Com, and of course, on the Bloomberg Robert 0:00:27.800 --> 0:00:30.480 Dalla is with us. He's in no vinesset management, and 0:00:30.560 --> 0:00:32.839 he is the guy who kept you in the market. 0:00:33.200 --> 0:00:37.000 To enjoy a ten year per year return of fifteen 0:00:37.120 --> 0:00:40.640 percent plus the doll mandate, you gotta be in the 0:00:40.680 --> 0:00:44.160 markets to play described to play this morning, Bob Doll. 0:00:44.280 --> 0:00:48.680 Why should I be in the equity markets? Because the 0:00:48.720 --> 0:00:51.040 economy and earnings this year are going to be off 0:00:51.040 --> 0:00:53.680 the charts. We're gonna have the strongest economic growth this 0:00:53.760 --> 0:00:56.120 year and at least twenty could be as many as 0:00:56.320 --> 0:00:59.760 the strongest growth in thirty six years. That will carry 0:01:00.040 --> 0:01:01.640 things long. This will be a great year for the 0:01:01.680 --> 0:01:04.520 economy and earnings. I think it's just a good year 0:01:04.600 --> 0:01:06.919 for the stock market. In other words, I think multiples 0:01:07.160 --> 0:01:10.839 are held back a bit, Tom, because of modestly rising 0:01:10.840 --> 0:01:14.440 interest rates and inflation. Behind you is the logo of 0:01:14.480 --> 0:01:17.959 the Esteem Novine of Chicago, owned by T I a 0:01:17.959 --> 0:01:22.280 a craft. You know the retirement combine. Good morning, Roger Ferguson, 0:01:22.680 --> 0:01:26.640 Bob Dole. Do you need to raise your actuarial assumption 0:01:27.360 --> 0:01:33.000 with double digit returns? Democratic President? How Senate do you 0:01:33.080 --> 0:01:38.080 begin to lift up our actuary return? Oh? Maybe for 0:01:38.120 --> 0:01:41.400 the next few months, Tom, But longer term, I don't 0:01:41.440 --> 0:01:45.800 think so. Stocks and bonds are both expensive relative to 0:01:45.840 --> 0:01:49.080 their history. Therefore, the next five and ten years, the 0:01:49.160 --> 0:01:51.880 return is probably going to be a lot lower than 0:01:51.880 --> 0:01:54.040 it was for the last five or ten years. That's 0:01:54.080 --> 0:01:56.320 the law of averages. So it's gonna be a harder 0:01:56.320 --> 0:01:59.040 to make a buck going forward. How much? How much harder? 0:01:59.040 --> 0:02:01.920 In other words, are we look at a future? Are 0:02:01.920 --> 0:02:04.200 we're looking at a three or four percent future? It 0:02:04.200 --> 0:02:08.000 makes a difference when you know somebilities agreed. So if 0:02:08.000 --> 0:02:10.480 stocks were fifteen for the last ten years, I'll guess 0:02:10.560 --> 0:02:13.680 half that for the next ten years seven on a 0:02:13.680 --> 0:02:16.240 good day, eight bonds are gonna be a lot lower 0:02:16.240 --> 0:02:20.480 because their coupon. You can't take rates lower than where 0:02:20.480 --> 0:02:23.680 we were. And therefore, if rates climb higher, we're gonna 0:02:23.760 --> 0:02:26.320 road the coupon. So return on and treasury bonds are 0:02:26.320 --> 0:02:30.000 going to be close to zero. Meanwhile we have the 0:02:30.120 --> 0:02:32.280 US continuing to borrow money. And Tom and I were 0:02:32.320 --> 0:02:35.800 just talking about how the Hawks have been defeated, have disappeared. 0:02:35.880 --> 0:02:38.200 However you want to frame it, Are we moving towards 0:02:38.320 --> 0:02:41.760 a modern, modern monetary theory world and what does that 0:02:41.800 --> 0:02:46.520 mean for markets? I suspect we are in that world, 0:02:46.639 --> 0:02:49.359 and whether we've called it that or not, look that. 0:02:49.760 --> 0:02:52.359 I think the question I get from financial advisors most 0:02:52.440 --> 0:02:54.480 of the last five years is what about the debt 0:02:54.480 --> 0:02:57.600 and the deficits? And my response was, and still is, 0:02:57.960 --> 0:03:02.240 it doesn't matter yet. You see, interest rates have fallen 0:03:02.480 --> 0:03:06.200 faster than the debt has gone up, so interest expense 0:03:06.360 --> 0:03:09.600 is a percentage of our economy has actually gone nowhere, 0:03:09.880 --> 0:03:12.560 and therefore it's not been an issue. If we pile 0:03:12.680 --> 0:03:15.560 up the debt, interest rates star climbing higher, then we're 0:03:15.560 --> 0:03:17.799 gonna have a day of reckoning. Bob Dolan, time Keene 0:03:17.880 --> 0:03:20.440 reading a Hio Runner and Bernstein this was a few 0:03:20.520 --> 0:03:22.799 years ago. And the debt and the deficit which was 0:03:22.840 --> 0:03:27.079 a gospel, and the confusion of cash in actual royal accounting. 0:03:27.360 --> 0:03:29.320 Bob Dol, I want to get back to the markets. 0:03:29.360 --> 0:03:32.600 You know, the acclaimed Ibbotson chart out of Yale University. 0:03:32.639 --> 0:03:35.640 But within that lower left to the upper right there 0:03:35.800 --> 0:03:39.800 is rotation. How do you play the rotation of two 0:03:39.800 --> 0:03:45.400 thousand twenty one after a decade where economic growth globally 0:03:45.440 --> 0:03:50.160 has been so so at best, which has favored the US, 0:03:50.160 --> 0:03:53.840 our economy, our markets, and our currency. Because we are 0:03:53.880 --> 0:03:57.840 the most defensive economy in the world, we have fewer cyclicals. 0:03:58.200 --> 0:04:01.760 We are now reflating, thank central banks all over the world, 0:04:02.040 --> 0:04:05.320 We're gonna have some stronger growth and therefore batons are 0:04:05.360 --> 0:04:09.520 getting passed from growth to value, from big too small, 0:04:09.760 --> 0:04:13.600 from US to non US. What about the battle of 0:04:13.720 --> 0:04:17.880 active in index NVENE really takes both parts of that equation, 0:04:17.960 --> 0:04:20.599 But there's just a general feeling out there about stock 0:04:20.680 --> 0:04:25.080 picking or sector picking, or the value of buying indexes 0:04:25.240 --> 0:04:29.280 or sub indexes. Which is it so in a year 0:04:29.520 --> 0:04:33.200 like last year when the big five stocks outperformed by 0:04:33.560 --> 0:04:37.800 massive amounts, that's a year for the index. If this 0:04:37.880 --> 0:04:41.239 is a year when those have dozen stocks don't perform 0:04:41.320 --> 0:04:44.760 as well as the averages, which is our guests, then 0:04:44.839 --> 0:04:48.000 the average stock begins to do better and active managers 0:04:48.040 --> 0:04:50.960 have a better chance. I think the average active manager 0:04:51.000 --> 0:04:54.520 will outperform well. Everyone wants to be an active manager, 0:04:54.560 --> 0:04:55.839 at least if you take a look at the robin 0:04:55.880 --> 0:04:58.479 Hood accounts and people sitting home getting their stimulus checks 0:04:58.800 --> 0:05:01.800 and putting them into to individual equity. I was, I 0:05:01.880 --> 0:05:05.080 was looking at one statistic yesterday that a handful of 0:05:05.120 --> 0:05:08.920 penny stocks accounted for a fifth of all US equity 0:05:08.960 --> 0:05:11.920 trading on Monday. How much do you think about that? 0:05:12.080 --> 0:05:15.240 Increased retail presence in equity trading? When you think about 0:05:15.240 --> 0:05:19.880 acid allocation is definitely a force out there. It's a 0:05:19.960 --> 0:05:23.000 narrower group of stocks as you hinted at, and therefore 0:05:23.040 --> 0:05:25.720 you have to know kind of where are they playing now. 0:05:25.880 --> 0:05:28.599 Some of those rebinating investors actually did very well. They 0:05:28.680 --> 0:05:31.960 bought into the decline last March and they bought high 0:05:31.960 --> 0:05:35.000 beta stocks, so they've done reasonably well. We got to 0:05:35.000 --> 0:05:38.760 watch them carefully them. That group, along with the algorithms, 0:05:39.240 --> 0:05:41.960 create the issues for buying and selling stocks all day. 0:05:41.960 --> 0:05:44.560 You gotta you gotta be really careful, all right. In meantime, 0:05:44.720 --> 0:05:46.400 you have these I p o s. The tech I 0:05:46.480 --> 0:05:48.640 PO is coming out. We were talking about a firm 0:05:48.760 --> 0:05:52.400 earlier with incredible valuation, some people saying they're worth it, 0:05:52.480 --> 0:05:55.760 other saying signs of froth, including Jeff Gunlock of Double 0:05:55.760 --> 0:05:57.880 Line Capital. Where do you weigh in? I mean, how 0:05:57.920 --> 0:05:59.520 are you playing in some of these I p o 0:05:59.600 --> 0:06:03.120 s At least I think that there is merit to 0:06:03.160 --> 0:06:06.599 the fact that the size of them, the number of them, 0:06:06.640 --> 0:06:10.560 the premium that that they're selling at means we've got 0:06:10.640 --> 0:06:14.320 some speculation. Now it's easy to compare it to where 0:06:14.400 --> 0:06:17.839 we were at the tech dot com bubble. Were nowhere 0:06:17.880 --> 0:06:20.680 near that level in terms of valuations. Remember there were 0:06:20.720 --> 0:06:22.960 no earnings then, there were a few sales. It was 0:06:23.040 --> 0:06:25.840 priced the clicks, priced the eyeballs. Now we can at 0:06:25.920 --> 0:06:29.440 least touch the revenues of these companies. So I don't 0:06:29.440 --> 0:06:31.680 want to sound the alarm like we could have or 0:06:31.680 --> 0:06:34.600 should have or did sound back Man, Bob Dole, you've 0:06:34.600 --> 0:06:37.799 been such a sane voice for participating in the markets 0:06:37.839 --> 0:06:40.600 over the years. Richard Edelman joined us an hour and 0:06:40.640 --> 0:06:44.080 a half ago as well with his famed Edelman Trust Barometer, 0:06:44.520 --> 0:06:49.120 and it's about media distrust, distrust of politicians, distrust wrapped 0:06:49.160 --> 0:06:53.200 around vaccination. I want you to talk about your world 0:06:53.920 --> 0:06:57.880 in the Friday onset of gloom that's out there, you know, 0:06:58.560 --> 0:07:01.680 there's a rule every day the gloom crew comes out 0:07:02.080 --> 0:07:05.240 to beat up Bob Dole. How do we get back 0:07:05.360 --> 0:07:09.880 the trust of Wall Street strategists who have enjoyed this 0:07:09.960 --> 0:07:14.680 blue market? How do we get a belief in that optimism. 0:07:14.720 --> 0:07:17.280 I think it's gonna take some time, Tom and and 0:07:17.440 --> 0:07:21.880 some returns that are good. Look, last March February March 0:07:22.240 --> 0:07:25.480 destroyed a lot of people's faith in all the things 0:07:25.520 --> 0:07:28.000 you just mentioned. All they had to do is hang 0:07:28.040 --> 0:07:30.640 around or blink. I mean, if you were Van Winkle, 0:07:30.960 --> 0:07:33.440 you thought last year was a good, calm, quiet year 0:07:34.080 --> 0:07:36.840 because nothing really happened from from beginning year to end 0:07:36.840 --> 0:07:39.200 of the year. But of course the the in between, 0:07:39.320 --> 0:07:44.440 volatility kills people's confidence. But volatility is when you can 0:07:44.560 --> 0:07:46.960 make a buck. Bob do I have to leave it there, 0:07:47.040 --> 0:07:49.239 Robert Dole, thank you so much. With nlvin just wonderful 0:07:49.240 --> 0:07:57.160 to kick what we're really good at, Lisa Bram, It's John, 0:07:57.680 --> 0:08:01.080 Jonathan Faraoh and myself. We right to get out front 0:08:01.080 --> 0:08:03.960 and we've got a team that puts together guests and 0:08:03.960 --> 0:08:06.840 then we know when the news changes, when the facts change, 0:08:07.160 --> 0:08:09.000 we tell the guests to change. We can do that 0:08:09.040 --> 0:08:12.680 with Lester Monthson would be gr group with a distinguished 0:08:12.720 --> 0:08:16.800 career in Washington in foreign policy Lester months and we 0:08:16.920 --> 0:08:19.200 learned moments ago from what I think is the most 0:08:19.200 --> 0:08:23.720 important signal from the nascent Biden administration that they will 0:08:23.760 --> 0:08:28.640 take John Fitzgerald Kennedy's US AID program, which has been 0:08:28.680 --> 0:08:32.960 a political football for fifty sixty years, and they will 0:08:33.040 --> 0:08:37.000 restructure it and elevate it to a White House position. 0:08:37.520 --> 0:08:43.800 With Samantha Power, what is President elect Biden signaling Well, 0:08:43.960 --> 0:08:47.200 for the for folks who follow foreign assistance issues and 0:08:47.320 --> 0:08:50.800 soft power and uh and these kind of more obscure 0:08:50.880 --> 0:08:55.960 aspects of American diplomacy, it's terrific news. Samantha Power is 0:08:55.960 --> 0:09:00.080 is a force. She's an intellectual powerhouse. I'm not, and 0:09:00.120 --> 0:09:04.319 she's right about every single issue. But she's dynamic, she's interesting. 0:09:04.480 --> 0:09:07.040 She's going to bring a lot of energy and verve 0:09:07.240 --> 0:09:10.000 to what has been, frankly a sleepy agency in the 0:09:10.120 --> 0:09:12.760 US government. I think it's a It's a huge opportunity 0:09:12.920 --> 0:09:16.120 for President Biden to make a difference around the world, 0:09:16.160 --> 0:09:18.880 particularly the developing world, a place where we haven't really 0:09:18.880 --> 0:09:21.280 been present for the last four years. If we assume, 0:09:21.360 --> 0:09:25.000 whatever our politics, that we are restructuring U s A, 0:09:25.200 --> 0:09:28.760 I d are we going to restructure state? And do 0:09:28.840 --> 0:09:34.280 you look for the same drama from a new State Department? Uh? 0:09:34.320 --> 0:09:36.600 You know, that's a great question. One of the things 0:09:36.600 --> 0:09:39.280 that President Biden appears to be doing is really strengthening 0:09:39.320 --> 0:09:42.880 the NSC, which means he's he's pulling power into the 0:09:42.880 --> 0:09:46.160 White House. That's not great for the State Department. Tony 0:09:46.200 --> 0:09:49.319 Blincoln is a trusted advisor. If he's confirmed as secretaries, 0:09:49.480 --> 0:09:51.679 I expect he will be. That will be a plus 0:09:51.720 --> 0:09:53.839 for the department, But there there could be rocky times 0:09:53.840 --> 0:09:56.559 ahead for the State Department. Lester as a never Trump 0:09:56.600 --> 0:10:00.400 Republican yourself who still considers himself a republic In who 0:10:00.440 --> 0:10:05.439 worked in the Bush administration. How does the the Republican 0:10:05.480 --> 0:10:11.760 Party without Trump distinguish itself from the Democratic Party of today. Well, 0:10:11.800 --> 0:10:14.640 I think there's plenty of issues where that can happen. Uh, 0:10:15.160 --> 0:10:20.960 economic issues, social issues, Uh, foreign policy. Republicans are a 0:10:21.080 --> 0:10:26.000 hawkish national security party. We need to find that voice again. 0:10:26.120 --> 0:10:29.959 It's been modulated and muddied up during the Trump years. 0:10:30.640 --> 0:10:33.640 Liz Cheney is as good a carrier of that message 0:10:33.720 --> 0:10:36.280 is anyone. Adam Kinzinger who's going to be supporting her 0:10:36.960 --> 0:10:41.120 in voting for impeachment of the president is another excellent 0:10:41.200 --> 0:10:43.800 voice in that regard. So I see some of these younger, 0:10:44.760 --> 0:10:48.000 more dynamic Republicans are emerging from this chaos. Do you 0:10:48.000 --> 0:10:51.200 think that those younger and more dynamic Republicans will vote 0:10:51.200 --> 0:10:53.840 in tandem with Democrats to get some sort of fiscal 0:10:53.840 --> 0:10:56.920 stimulus through, to get some of other aspects of Joe 0:10:56.920 --> 0:11:00.920 Biden's administration through, even if it's sort of muddies this 0:11:01.040 --> 0:11:05.040 line as they try to re establish their identity. I 0:11:05.040 --> 0:11:07.000 think that's going to be on a case by case basis. 0:11:07.240 --> 0:11:11.760 Republicans are occasionally fiscal conservatives, not so for the last 0:11:11.840 --> 0:11:14.559 four years. They seem to be rediscovering that, as they 0:11:14.600 --> 0:11:16.480 often do when they're not in the White House. So 0:11:16.480 --> 0:11:19.520 there's a little bit of cynicism there. But I expect 0:11:19.520 --> 0:11:23.200 that Republicans will be more skeptical of massive payments UH 0:11:23.320 --> 0:11:27.280 in response to the pandemic. But but they'll be places 0:11:27.280 --> 0:11:32.719 where Republicans, never Trumpers, and even some pro Trump Republicans 0:11:32.760 --> 0:11:34.840 will find a way to vote with the Biden administration. 0:11:34.920 --> 0:11:37.960 I expect there to be more bipartisanship than people think 0:11:38.000 --> 0:11:39.920 in the next few months, let's do I don't want 0:11:39.960 --> 0:11:43.880 you to game what we see after five pm is today, 0:11:43.920 --> 0:11:47.880 But can the Senate find seventeen Republican votes to convict 0:11:48.360 --> 0:11:50.760 the President of the United States. I know that's an 0:11:50.840 --> 0:11:53.079 unfair question to you, but that is the question of 0:11:53.160 --> 0:11:57.280 the moment. It is the question is what everyone's reading 0:11:57.280 --> 0:12:01.120 between the lines for It's it's a very difficult goal. 0:12:01.160 --> 0:12:02.920 It's a high bar to get over. The fact that 0:12:02.960 --> 0:12:06.480 Mitch McConnell is out there signaling that he might embrace 0:12:06.559 --> 0:12:10.240 this process is very telling. He does not do things 0:12:10.880 --> 0:12:13.559 on a whim. He would only be sending that signal 0:12:14.320 --> 0:12:17.080 if it looked like there was progress towards that goal. 0:12:17.320 --> 0:12:19.640 Now there's there's plenty of road to go down here. 0:12:19.679 --> 0:12:22.600 Even though it's just a few days. Uh, there's there's 0:12:22.600 --> 0:12:23.840 a lot of work to be done. There's a lot 0:12:23.880 --> 0:12:25.680 of voices we need to hear from. But it does 0:12:25.760 --> 0:12:27.920 seem like things are trending in that direction. I still 0:12:27.920 --> 0:12:30.800 think it's it's probably too difficult to quite get there. 0:12:31.280 --> 0:12:34.760 But we're on the way, you know. I look, we're 0:12:34.760 --> 0:12:36.880 on the way, and you know we're on to do changes. 0:12:36.920 --> 0:12:40.520 I want to circle back luster two. Our foreign policy. 0:12:40.800 --> 0:12:44.400 What again, is there going to be a strategy or 0:12:44.400 --> 0:12:47.760 a theme that you can glean now from Biden foreign 0:12:47.800 --> 0:12:52.080 policy or not. Uh, It's it's hard to say. You know, 0:12:52.160 --> 0:12:54.959 during the campaign and during the transition, the Biden people 0:12:54.960 --> 0:12:57.800 would put out a kind of boilerplate statements saying they 0:12:57.800 --> 0:13:00.080 wanted to restore US leadership in the world. And I 0:13:00.080 --> 0:13:02.880 think those of us who are in the swamp are 0:13:02.880 --> 0:13:05.120 a little more cynical kind of dismissed that. But that's 0:13:05.120 --> 0:13:07.120 a very real thing right now. Given the events of 0:13:07.200 --> 0:13:10.400 last week, the President Biden is going to have to 0:13:10.400 --> 0:13:16.040 take active steps to restore the image, the posture, and 0:13:16.080 --> 0:13:18.080 the leadership of the US. And you're just gonna have 0:13:18.080 --> 0:13:20.320 to do that. It's gonna take one time. Lester, thank 0:13:20.320 --> 0:13:22.280 you so much. Particularly on that breaking news of a 0:13:22.320 --> 0:13:25.800 new U. S a I D program for President elect Biden. 0:13:25.880 --> 0:13:31.760 Lister Munson would be gr group. It is time for 0:13:31.800 --> 0:13:35.199 a reset. We're doing this within the huge distractions of Washington, 0:13:35.679 --> 0:13:39.000 of course, his agony of a pandemic. Michelle Meyer joins 0:13:39.280 --> 0:13:42.920 from Bank of America Securities, Head of US Economics. Michelle, 0:13:42.920 --> 0:13:46.959 and you're a claimed spreadsheet out to June and dare 0:13:47.000 --> 0:13:49.840 I say, out to the end of two thousand twenty one, 0:13:50.520 --> 0:13:53.520 what numbers have you tweaked? What are you changing at 0:13:53.559 --> 0:13:57.360 the margin? Given the just to the outrage of this 0:13:57.480 --> 0:14:02.319 January earth So um he sam hi suka to be 0:14:02.440 --> 0:14:07.000 here this morning, And you know, I think on the upside, certainly, 0:14:07.280 --> 0:14:09.680 it's what you all have been very focused on, which 0:14:09.720 --> 0:14:11.960 is the news coming out of Washington around the prospects 0:14:12.040 --> 0:14:15.840 of additional stimulus UM and the extent to which that 0:14:16.000 --> 0:14:19.360 is passed quickly in the year UM with you know, 0:14:19.400 --> 0:14:22.560 additional quote unquote transfer patments either through unemployd insurance or 0:14:22.560 --> 0:14:25.720 another round of checks or agency and local governments that 0:14:25.840 --> 0:14:29.040 can provide a real big uh you know jold to 0:14:29.120 --> 0:14:32.400 the economy UM in the spring. So that's certainly the 0:14:32.520 --> 0:14:36.800 upside story, and it's an important one. UM. On the downside, UH, 0:14:37.000 --> 0:14:39.080 we have to continue to pay attention to the virus. 0:14:39.120 --> 0:14:42.640 The virus cases are rising, restrictions are ongoing. We did 0:14:43.360 --> 0:14:47.840 pretty clear moderation of growth at the end of UM. 0:14:47.960 --> 0:14:51.960 So it's these these offsetting factors UM, which I think 0:14:52.000 --> 0:14:54.960 are extremely important as we love in few months. I 0:14:55.000 --> 0:14:57.440 want to go back to your first acclaim, which is 0:14:57.440 --> 0:15:01.600 analysis of the American housing market. Is the housing boom 0:15:01.680 --> 0:15:08.600 right now only about the halves removed from this pandemic. Yeah, so, 0:15:08.720 --> 0:15:10.760 you know, I do think part of what's happened in 0:15:10.760 --> 0:15:15.520 the housing market reflects the quote unquote case shaped recovery UM. 0:15:15.760 --> 0:15:18.440 The fact that those folks that have been able to 0:15:18.600 --> 0:15:23.120 keep their jobs through this UM horrific time have done 0:15:23.120 --> 0:15:27.080 so with pretty stable wage growth UM and a lot 0:15:27.120 --> 0:15:30.920 of you know, unintentional savings as a result of restrictions 0:15:30.920 --> 0:15:33.080 and the inability to spend on certain services. And that 0:15:33.320 --> 0:15:36.720 clearly has led to greater investment in housing and housing 0:15:36.760 --> 0:15:40.600 gleted items. Whereas those that you know have have had 0:15:40.600 --> 0:15:43.920 a harder time accessing the housing market have been more 0:15:43.960 --> 0:15:46.760 inclined to be renters, have seen greater stress. So I 0:15:46.800 --> 0:15:49.880 do think that's part of the story that said, Um, 0:15:50.080 --> 0:15:53.880 there's been a broad, you know pick up in in 0:15:53.880 --> 0:15:56.400 in housing activity. You know, it's not just the very 0:15:56.480 --> 0:15:59.040 high end of the market. You have seen the movement 0:15:59.080 --> 0:16:01.040 as well on the lower end of the housing market. 0:16:01.080 --> 0:16:05.479 And just looks this morning, mortgage applications uh nearly seventeen 0:16:05.480 --> 0:16:08.440 percent increased week over a week, purchase applications of eight 0:16:08.480 --> 0:16:11.320 percent week over a week, So you know, it looks 0:16:11.360 --> 0:16:13.080 like we're going to be maybe heading into that spring 0:16:13.200 --> 0:16:14.960 selling season with a bit more momentum as well for 0:16:15.040 --> 0:16:18.040 how things given where we are with mortgage rates. So, Michelle, 0:16:18.040 --> 0:16:19.920 when you talk about the K shaped recovery and the 0:16:19.960 --> 0:16:23.440 halves and the have nots, as Tom said very well, 0:16:23.560 --> 0:16:26.920 there's a question of how important the rally and asset prices, 0:16:26.960 --> 0:16:30.080 which really is a feature of the halves is for 0:16:30.240 --> 0:16:33.120 the broader economy for both the halves and the have nots. 0:16:33.120 --> 0:16:35.840 How crucial is it the asset prices continue to go 0:16:35.960 --> 0:16:38.560 up or at least stay high for the economy to 0:16:38.600 --> 0:16:43.760 gain steam. So that's one of the transmission mechanisms I 0:16:43.800 --> 0:16:46.800 guess you may say of monetary policy is that by 0:16:46.880 --> 0:16:51.080 keeping interest rates extraordinarily low, um, they're yes, lowering the 0:16:51.160 --> 0:16:53.520 cross of capital, making it easy to bar, but they're 0:16:53.800 --> 0:16:57.960 also helping to inflate asset prices and build wealth and 0:16:58.240 --> 0:17:02.280 that wells ultimately should be spent to some expense um 0:17:02.400 --> 0:17:07.280 and support the broad economy. UM. So elevated asset prices, 0:17:07.359 --> 0:17:10.159 I would say, is you know, comes with easy or 0:17:10.200 --> 0:17:14.520 financial conditions, which is one of the very important mechanisms 0:17:14.560 --> 0:17:17.520 by which monetary policies supports the economy. Well, I guess 0:17:17.560 --> 0:17:19.200 the reason why I asked this is in light of 0:17:19.240 --> 0:17:21.280 the inflation data that we were just talking about c 0:17:21.480 --> 0:17:23.880 p I, which rends and housing prices are a part 0:17:23.920 --> 0:17:27.960 of There's this feeling that the inflation that we've seen, 0:17:28.000 --> 0:17:30.880 the money that's been printed has gone almost entirely into 0:17:30.920 --> 0:17:34.080 the financial markets and hasn't been able to really trickle 0:17:34.080 --> 0:17:36.440 out into the right into the real economy that much, 0:17:36.520 --> 0:17:39.240 just because so much of it's been shut down. How 0:17:39.359 --> 0:17:41.920 much is it important? I mean, how what's the risk 0:17:42.000 --> 0:17:44.439 here that if we do get a disinflation or a 0:17:44.480 --> 0:17:47.879 deflation of asset prices sell off a bust that could 0:17:47.880 --> 0:17:52.520 really disable the economy in a massive way. So I 0:17:52.520 --> 0:17:55.159 would say there's there's there's yes. Looking at asset prices 0:17:55.280 --> 0:17:58.280 is one important, you know, channel, but also think about 0:17:58.320 --> 0:18:01.119 the money supply that's more kind of the real economy, 0:18:01.160 --> 0:18:04.080 and that reflects the fiscal policies have been put inflation. 0:18:04.080 --> 0:18:07.040 There's been a dramatic increase in the money supplies. None 0:18:07.040 --> 0:18:09.560 of that asset price inflation or the money suffy gain 0:18:09.640 --> 0:18:13.080 has yet to filter in to underlying inflation, but it 0:18:13.160 --> 0:18:17.280 can over time. If it works to support higher economic 0:18:17.320 --> 0:18:20.520 growth and an increase in GDP growth, which ultimately leads 0:18:20.600 --> 0:18:24.000 that browning of labor market um growth and and and 0:18:24.240 --> 0:18:26.719 prompt the higher inflation. But that's not the story for today. 0:18:26.800 --> 0:18:30.040 You know, we saw from today's CPI report underlying measures 0:18:30.080 --> 0:18:33.040 of inflation are still extremely teams given that we have 0:18:33.119 --> 0:18:35.159 this lack in the economy. And to your point, what 0:18:35.240 --> 0:18:38.400 if we have, you know, a big kind of sell 0:18:38.440 --> 0:18:40.359 off in the market or this kind of cool quote 0:18:40.359 --> 0:18:43.080 deflation and asset markets. I think it highly depends on 0:18:43.359 --> 0:18:46.560 you know what that looks like. A short term correction 0:18:47.160 --> 0:18:49.760 is fine from an economics perspective. You know, yes, we 0:18:49.800 --> 0:18:52.960 get a little bit hit to confidence, but the link 0:18:53.000 --> 0:18:55.960 in to the economy is fairly limited. But a sustained 0:18:56.000 --> 0:19:00.200 one obviously would be problematic. Bushell Meyer's secretary of and 0:19:00.440 --> 0:19:03.959 we'll have to deal with what seemed to be big 0:19:04.040 --> 0:19:08.880 fiscal packages. Does a marginal hundred billion matter? I mean, 0:19:09.040 --> 0:19:11.720 Ethan Harrison, you are wonderful at this. I mean, we 0:19:11.760 --> 0:19:14.520 talked about trillions in the drama of what we say, 0:19:14.560 --> 0:19:17.439 But do you nuance a hundred billion here, a hundred 0:19:17.440 --> 0:19:25.720 billion there? Yeah? Um, you know, the uh the support 0:19:25.760 --> 0:19:28.400 to the economy from fiscal stimula. Right now, Obviously it's 0:19:28.440 --> 0:19:31.120 been extreme the dollars I've been pumped into the into 0:19:31.160 --> 0:19:33.639 the economy, but we would argue that it was necessary 0:19:33.640 --> 0:19:37.200 and probably will continue the necess very. Ultimately that leads 0:19:37.240 --> 0:19:40.280 to a higher deficit, which at some point in time 0:19:40.359 --> 0:19:43.560 the road will be problematic. But I don't think it's 0:19:43.840 --> 0:19:46.879 it's an issue that policymakers are paying too much attention 0:19:46.920 --> 0:19:49.360 to right now, and I would think that that that 0:19:49.400 --> 0:19:52.040 sentiment will be continued as Treasury and the said for 0:19:52.080 --> 0:19:56.040 the next years until the economy has fully deals. Thanks 0:19:56.080 --> 0:19:59.440 so so, I thanks so much, Michelle, greatly greatly appreciate that. 0:20:03.800 --> 0:20:06.880 Right now, folks, this is the most conversation, the most 0:20:06.880 --> 0:20:11.600 important conversation of the day on the mental foundation of 0:20:11.640 --> 0:20:14.560 the market. And let's not mince words, it's founded on 0:20:14.560 --> 0:20:17.960 one stock. We speak to Daniel Ives on what was 0:20:18.000 --> 0:20:22.240 wrought in Cupertino. He's with web Bush. Dan Ives, you've 0:20:22.359 --> 0:20:24.800 left it up two hundred and sixty dollars a share 0:20:24.840 --> 0:20:27.920 an Apple, and I want you to talk about your 0:20:28.119 --> 0:20:32.320 core belief that they will innovate, and Dan Ives, I 0:20:32.400 --> 0:20:36.119 want to go to the latest incarnation the M one chip, 0:20:36.240 --> 0:20:38.199 and folks, I'm not because the time, I'm not going 0:20:38.280 --> 0:20:41.640 to go into this. The M one chip is getting 0:20:42.200 --> 0:20:48.040 rave reviews and the technology zeitgeist. Dan ives, how do 0:20:48.119 --> 0:20:54.440 they do that? That's where the magic happens. And if 0:20:54.480 --> 0:20:56.520 you look at what they've done from the innovation, I 0:20:56.520 --> 0:20:58.800 think M one is a good example. That's a shot 0:20:58.800 --> 0:21:03.040 across about Intel and the semiconductor industry in terms of 0:21:03.040 --> 0:21:06.320 Apple controlling more and more of their ecosystem. And I 0:21:06.320 --> 0:21:08.320 think what you've seen in the stock and you're seeing 0:21:08.320 --> 0:21:12.480 in the innovation really across the whole food chain Apples 0:21:12.480 --> 0:21:17.080 continuing to flex their muscles and expanded more and more, 0:21:17.240 --> 0:21:21.240 especially with the supercycle now a reality playing out. But 0:21:21.400 --> 0:21:25.960 the great great miscall of the Apple gloom crew, Dan Eyes, 0:21:26.359 --> 0:21:29.399 has been the innovation is going to end. And the 0:21:29.480 --> 0:21:32.040 fact is the M one it appears, I'm speaking as 0:21:32.080 --> 0:21:35.000 an amateur, looks like a ball over the wall, over 0:21:35.040 --> 0:21:38.000 the turnpike, over the cask and flagon as well, Dan Eyes, 0:21:38.040 --> 0:21:40.960 that's red Sox talking case you know it. The bottom 0:21:41.040 --> 0:21:44.040 line is, Dan is what is in the pixie dust 0:21:44.160 --> 0:21:49.880 that gives you confidence that they can continue to innovate? Well, 0:21:50.160 --> 0:21:52.440 do a step back into golden and scaled. These the 0:21:52.600 --> 0:21:56.240 best consumed products company in the world. That penetration, we've 0:21:56.280 --> 0:22:00.640 seen it with AirPods, weaving AirPods over nine this year 0:22:00.920 --> 0:22:03.040 you're seeing with the M one ship, and then ultimately 0:22:03.080 --> 0:22:05.399 the next few years we see them partnering on e 0:22:05.560 --> 0:22:08.399 V with the likes of a Volkswagen or hun they 0:22:08.480 --> 0:22:11.840 potentially at Tessa. It just speaks to why our opinion 0:22:11.880 --> 0:22:14.240 a year from now we're looking at a three trillion 0:22:14.280 --> 0:22:17.679 dollar stock for Apple as this all plays out, Remember 0:22:17.920 --> 0:22:21.080 what the haters will hate, but they continue to innovatag 0:22:21.160 --> 0:22:23.520 think evil will see over the next month as they 0:22:23.560 --> 0:22:26.960 continued execute China, that continues to be the win of 0:22:26.960 --> 0:22:29.480 the growth. You have, guys, have no idea. When the 0:22:29.560 --> 0:22:32.240 haters hate, what it means they're danny. Is the garbage 0:22:32.280 --> 0:22:35.760 you get some people anti Apple is well? Is you 0:22:35.840 --> 0:22:38.679 model out a hundred and sixty target and then you 0:22:38.760 --> 0:22:42.320 extrapolate out. I mean three trillion is unimaginable to those 0:22:42.359 --> 0:22:45.600 of two trillion or way back at one trillion as well. 0:22:46.119 --> 0:22:49.720 What are your linear functions look out five years, ten 0:22:49.800 --> 0:22:54.679 years out for Coupertino. Yeah, first to services business. I 0:22:54.720 --> 0:22:56.840