WEBVTT - Value in a Frothy Market 0:00:00.440 --> 0:00:03.840 Strap on your parachute. Is time for What Goes Up 0:00:04.120 --> 0:00:13.840 with Sarah Ponzick and Mike Reagan. Hello and welcome to 0:00:13.880 --> 0:00:17.640 What goes Up, a Bloomberg Weekly Markets podcast. I'm Sara Ponze, 0:00:17.960 --> 0:00:20.800 reporter on the Cross Asset team, and I'm Mike Reagan, 0:00:21.000 --> 0:00:24.960 a senior editor at Bloomberg and not the Mike Reagan 0:00:25.040 --> 0:00:27.520 who is just nominated to leave the e p A, 0:00:27.640 --> 0:00:30.680 the Environmental Production Agency. I will point out, did you 0:00:30.720 --> 0:00:34.200 actually get Twitter followers after the announcement night? After Wisenthal 0:00:34.800 --> 0:00:38.440 congratulated me for the new job As a joke, I 0:00:38.440 --> 0:00:42.880 I got about thirty new Twitter followers, So hopefully they'll 0:00:42.880 --> 0:00:45.760 stick around for the dad jokes and market commentary. Even 0:00:45.760 --> 0:00:48.080 though I don't have a lot to offer on the environment. 0:00:48.080 --> 0:00:49.879 I'm a fan of the environment. I'm just not the 0:00:49.880 --> 0:00:52.280 guy in charge of it, so we'll leave it at that. 0:00:52.280 --> 0:00:56.160 That's hysterical. That's hysterical. And for anyone who's not aware Wisenthal, 0:00:56.200 --> 0:00:59.680 that's Joe Wisenthal. He's the host of the Odd Lots 0:00:59.720 --> 0:01:02.560 podcas as step Bloombergigat does plenty of other things as 0:01:02.600 --> 0:01:04.840 well here, but if you haven't checked out the Odd 0:01:04.880 --> 0:01:08.160 Lads podcast please do. You can find it pretty much 0:01:08.160 --> 0:01:10.960 anywhere you get your podcasts. But this week on the show, 0:01:11.319 --> 0:01:14.160 the US dollar continues its decline as the M S 0:01:14.160 --> 0:01:16.640 c I All Country, World and Next trades a record highs. 0:01:16.920 --> 0:01:19.520 In addition to that, emerging market equities are on pace 0:01:19.600 --> 0:01:22.120 for their best quarter versus U S docks since two 0:01:22.160 --> 0:01:25.640 thousand and nine. Well, the momentum continue through next year 0:01:25.720 --> 0:01:29.200 and beyond. We get the state of play on international assets, 0:01:29.760 --> 0:01:32.080 and as always, will close out the episode with our 0:01:32.160 --> 0:01:36.520 tradition the craziest Thing I saw in markets this week, Sarah, 0:01:36.600 --> 0:01:40.080 I've got a contribution from none other than our Crazy 0:01:40.160 --> 0:01:44.560 Things correspondent Vildonna Hirich, who said to me, I'm not 0:01:44.600 --> 0:01:46.840 telling sorry about this one. I'm giving it right to you, 0:01:47.319 --> 0:01:48.920 So I don't know how you feel about that. Well, 0:01:49.000 --> 0:01:50.680 she didn't even tell me that she was going to 0:01:50.760 --> 0:01:52.280 do a roundabout and come to you. I had no 0:01:52.360 --> 0:01:54.960 idea this was coming. But I will say we also 0:01:55.040 --> 0:01:59.000 have a trifecta of guests rite ins. We have a voicemail. 0:01:59.360 --> 0:02:01.600 I got a ib which for those who do not 0:02:01.760 --> 0:02:04.600 have a Bloomberg terminal, it's like instant message. It's your 0:02:04.600 --> 0:02:07.160 instant Bloomberg. And then I also got a direct message 0:02:07.200 --> 0:02:10.000 on Twitter. So we've got plenty of crazy things. Thank 0:02:10.240 --> 0:02:13.680 thank goodness for that. Right, But let's first start with 0:02:13.680 --> 0:02:15.880 that market talk that we know you all came for. 0:02:16.120 --> 0:02:18.600 And uh happy to have a new guest this week 0:02:18.639 --> 0:02:22.519 on the show. He runs the International and Global Mutual 0:02:22.560 --> 0:02:27.800 Fund and EATF business at Davis Selected Advisors. His name 0:02:27.919 --> 0:02:30.840 is Danton, Go Eat Dance and welcome to the show. 0:02:31.040 --> 0:02:33.000 Thanks so much Mike for having me on on board. 0:02:33.240 --> 0:02:36.160 Very excited. Oh great, you know and Ted. And before 0:02:36.160 --> 0:02:38.520 we start talking about markets, I gotta say we get 0:02:38.600 --> 0:02:41.960 notes about the guests from you know, the PR people 0:02:42.000 --> 0:02:44.480 that you guys work with, our our good friend Tyler Bradford. 0:02:44.480 --> 0:02:47.320 In this case, I gotta ask you first about something 0:02:47.360 --> 0:02:50.360 he pointed out, which I think I think is fascinating. Says, 0:02:50.440 --> 0:02:54.160 every summer, Danton travels to a new international destination to 0:02:54.240 --> 0:02:58.280 live with his family until school starts back up. That's 0:02:58.280 --> 0:03:00.560 fascinating to me. For one thing, I'm glad my kids 0:03:00.600 --> 0:03:02.960 don't listen to the podcast because I don't want them 0:03:02.960 --> 0:03:05.720 to know that's an option for summer summer the kids. 0:03:07.080 --> 0:03:09.000 But I think that's a really cool tradition. Is that 0:03:09.160 --> 0:03:11.600 just for fun or is that as sort of uh 0:03:11.639 --> 0:03:14.919 an international equity specialist. Is it part of your research? 0:03:15.360 --> 0:03:16.800 You know? And and you don't have to tell me 0:03:16.880 --> 0:03:19.040 what you're expensing on your expense account or not. But 0:03:19.200 --> 0:03:21.639 I'm curious if it's if it ties into your work 0:03:21.720 --> 0:03:23.880 or if it's just for fun. Yeah. No, happy to 0:03:23.880 --> 0:03:26.200 talk to them, like to your kids about this, but 0:03:28.639 --> 0:03:32.680 he's he's gonna block you. It is absolutely part of 0:03:32.720 --> 0:03:36.280 our research process to go visit companies, you know, in 0:03:36.320 --> 0:03:39.400 their home markets, in their offices and talk to the companies, 0:03:39.440 --> 0:03:42.840 talk to the competitors or suppliers or customers. And since 0:03:42.880 --> 0:03:46.680 we are a global fund, those companies are around the globe, 0:03:46.720 --> 0:03:49.000 you know where our team is based here in New York, 0:03:49.360 --> 0:03:51.800 meaning that we travel a lot. But this is a 0:03:51.800 --> 0:03:54.560 way to really spend instead of you know, a week 0:03:54.680 --> 0:03:57.600 or two on the ground in the country, to spend 0:03:57.640 --> 0:04:01.320 two or three months. And so for the last dozen 0:04:01.440 --> 0:04:04.160 years we've been doing this with my wife, with the 0:04:04.280 --> 0:04:08.600 three kids, and we alternate between Asia one one year 0:04:08.840 --> 0:04:11.880 and Europe the other year. You know, I grew up 0:04:12.440 --> 0:04:16.440 in France and I was born in Germany, so you know, 0:04:16.480 --> 0:04:20.520 Europe and in some senses my home, but my family 0:04:20.839 --> 0:04:24.040 is in Adonesian Chinese, and I speak Mandarin, so I 0:04:24.080 --> 0:04:27.080 feel comfortable in Asia as well. So both places have 0:04:27.160 --> 0:04:29.360 a lot of contacts, and then the last dozen years 0:04:29.360 --> 0:04:31.640 have been able to build that network. So it's been 0:04:31.640 --> 0:04:33.480 a really fantastic way to kind of build a network 0:04:33.720 --> 0:04:35.560 over time and visit these companies and a lot of 0:04:35.600 --> 0:04:38.160 the companies that we own in the portfolio. So yeah, 0:04:38.480 --> 0:04:41.279 I would highly recommend it. So really quickly before we 0:04:41.320 --> 0:04:43.280 get to the market's talk, I have to ask them, 0:04:43.320 --> 0:04:45.800 do you have a favorite country or a favorite place 0:04:46.040 --> 0:04:48.640 that you you've ever lived? You know, I think right 0:04:48.640 --> 0:04:52.479 now one of the most exciting markets to be obviously, 0:04:53.200 --> 0:04:55.520 you know, it's sort of an asterisk is an unusual year, 0:04:55.560 --> 0:04:59.440 but has been China over the last few decades to watch, 0:04:59.520 --> 0:05:00.960 you know, the first time I went to China was 0:05:01.080 --> 0:05:06.520 nine and it was a totally different country and market 0:05:06.520 --> 0:05:09.080 than it is today. But be able to see the 0:05:09.200 --> 0:05:13.360 last three decades of evolution over there has been really fascinating. 0:05:13.760 --> 0:05:16.120 But of course I have a soft part in my 0:05:16.240 --> 0:05:19.360 heart for France. That's where I grew up, That's where 0:05:19.400 --> 0:05:22.480 all my high school friends are, so it is always 0:05:22.560 --> 0:05:24.520 nice to go back home. It's where my mother. My 0:05:24.560 --> 0:05:27.359 mother still lives there, so um it is nice to 0:05:27.360 --> 0:05:29.560 go home there as well. And of course the quality 0:05:29.560 --> 0:05:32.040 of life can't be beat over there and much more 0:05:32.040 --> 0:05:52.840 comfortable than China. It's a great tradition and your kids 0:05:52.880 --> 0:05:55.840 must really benefit from the education value of it. To 0:05:56.160 --> 0:05:58.800 uh Sarah I, I once was able to get a 0:05:58.800 --> 0:06:01.320 week in Jamaica to report about the stock exchange there, 0:06:01.320 --> 0:06:04.279 but Denton's got me beat hands down. I think this 0:06:04.279 --> 0:06:09.200 this is kids because my kids go to Chinese summer 0:06:09.240 --> 0:06:13.440 camp with the locals in China or Taiwan or Hong Kong, 0:06:13.600 --> 0:06:15.560 depending on where we are, and then they go to 0:06:15.720 --> 0:06:18.359 summer camp a French summer camp in France with the 0:06:18.400 --> 0:06:20.599 locals as well. You know, they've been kind of thrown 0:06:20.600 --> 0:06:25.640 in the deep end at an early age. That's that's 0:06:25.640 --> 0:06:28.919 great though. Well, one thing I wanted to ask you, 0:06:29.040 --> 0:06:31.640 let's let's dive into the markets now, and um, I 0:06:31.680 --> 0:06:34.000 was looking at the holdings of the Global Fund at 0:06:34.080 --> 0:06:38.320 Davis done very well, very very strong percentile performance, and 0:06:38.320 --> 0:06:40.400 correct me some of these numbers might be outdated. You know, 0:06:40.400 --> 0:06:43.039 we're we're working off of whatever the most recent filings was, 0:06:43.120 --> 0:06:47.400 but about of the global fund allocated to the US 0:06:47.720 --> 0:06:49.920 at least of the last reporting we have for it. 0:06:50.720 --> 0:06:53.360 And here we are as the year sort of closes 0:06:53.360 --> 0:06:55.120 out here, and I think a big theme I keep 0:06:55.120 --> 0:06:59.560 hearing from investors is that everyone's looking outside of the 0:06:59.640 --> 0:07:04.080 US for one, thinking that it's kind of time for international, 0:07:04.480 --> 0:07:07.799 for emerging markets to shine. Is that up your rethinking 0:07:08.000 --> 0:07:10.240 a big allocation to the US at all, or or 0:07:10.360 --> 0:07:12.440 you just you know, sticking with what's worked so far 0:07:12.800 --> 0:07:15.480 and and not worrying about sort of the the consensus 0:07:15.480 --> 0:07:17.840 and the zeitgeist out there with with what everyone's talking 0:07:17.840 --> 0:07:20.640 about rotating to international. Yeah, I mean, I think people 0:07:20.920 --> 0:07:24.440 for good reason are looking internationally. They have kind of 0:07:24.480 --> 0:07:26.600 said that, I think the last two or three years. 0:07:26.680 --> 0:07:29.880 But the US market is sort of is powered through anyways, 0:07:30.240 --> 0:07:32.840 but there is a good reason to look abroad. Right now. 0:07:32.880 --> 0:07:39.400 Evaluations are about lower international markets on average than the 0:07:39.480 --> 0:07:42.840 US market, So that's already a great starting point. And 0:07:42.880 --> 0:07:45.560 we know that the last decade the US market has 0:07:45.560 --> 0:07:48.080 been very strong. But these things go in cycles, so 0:07:48.120 --> 0:07:51.040 it's very possible in the next decade, you know, international 0:07:51.080 --> 0:07:55.000 markets do as well. If not better than US markets, 0:07:55.040 --> 0:07:58.800 but you know, we run a very focused portfolio of 0:07:59.600 --> 0:08:03.480 uh thirty five forty sort of best of breed companies. 0:08:03.960 --> 0:08:06.920 So when we're looking at the US market, we're not 0:08:07.000 --> 0:08:09.800 really investing in the overall market. We have a very 0:08:09.960 --> 0:08:12.720 concentrated and focused view of companies that we want to own, 0:08:13.280 --> 0:08:15.880 and we're finding, you know, very good opportunities there too. 0:08:15.920 --> 0:08:18.000 But we would say there's a lot of you know, 0:08:18.160 --> 0:08:21.600 froth also in the US market that you want to avoid, 0:08:22.240 --> 0:08:25.960 but underneath that there are some very good values for sure. 0:08:26.200 --> 0:08:28.720 You know, some companies that have done well recently are 0:08:28.720 --> 0:08:31.200 still relatively attractive. I would say we call them sort 0:08:31.240 --> 0:08:34.040 of the growth stalwarts, the sort of the Googles, the 0:08:34.080 --> 0:08:36.600 Facebooks of the world. You know, they continue to be 0:08:36.640 --> 0:08:40.319 attractive on evaluation basis, on long term basis. But then 0:08:40.360 --> 0:08:42.880 you've got a whole host of stocks that have been 0:08:42.920 --> 0:08:45.079 out of favor now for a decade plus, right the 0:08:45.160 --> 0:08:48.880 value stocks out there, and specifically we're thinking about the 0:08:48.960 --> 0:08:52.760 financials and the banks that have been really out of favor, 0:08:52.800 --> 0:08:55.240 you know, basically since the financial crisis and no. Eight 0:08:55.240 --> 0:08:58.040 oh nine, so that was a long time ago, that 0:08:58.080 --> 0:09:00.760 are trading at really low valuation. In fact, when you 0:09:00.760 --> 0:09:04.520 look at the difference between the Russell one thousand growth 0:09:05.000 --> 0:09:09.439 versus the Russell one thousand value performance, it's amazing. It's 0:09:09.440 --> 0:09:12.560 a record gap and difference. So I think, you know, 0:09:12.960 --> 0:09:16.439 owning the market overall in the US probably not recommended, 0:09:16.800 --> 0:09:19.760 but within that space some great values. Let's come back 0:09:19.800 --> 0:09:21.800 to something that you just walked us through. You mentioned 0:09:21.800 --> 0:09:23.880 the word froth that at the same time explained how 0:09:23.880 --> 0:09:26.360 there's growth stalwarts and just because you're a company that's 0:09:26.400 --> 0:09:28.959 performed very very well over the last year, over the 0:09:29.040 --> 0:09:32.880 last decade, it doesn't necessarily mean that your time is over. 0:09:33.000 --> 0:09:34.800 Can you give us a sense of where you do 0:09:34.880 --> 0:09:37.400 see the froth, the areas where you see risk or 0:09:37.440 --> 0:09:40.240 that you would avoid uh, and then maybe bring us 0:09:40.240 --> 0:09:42.679 through some of the misconceptions that there are. Yeah, I mean, 0:09:42.679 --> 0:09:44.640 there are a lot of companies that have done great 0:09:44.720 --> 0:09:47.800 in the past few years, and specifically in that have 0:09:48.040 --> 0:09:51.080 you know, up three, four or five, six times maybe 0:09:51.120 --> 0:09:54.440 even this year. But where the valuations in our mind 0:09:54.480 --> 0:09:57.920 and we're you know, we're value investors, don't make much sense. 0:09:58.080 --> 0:10:01.520 And they're great companies, they make great products, and I'm thinking, 0:10:01.520 --> 0:10:04.719 you know, specifically of a company like Tesla, which has 0:10:04.760 --> 0:10:07.560 done great, right, I mean, i'll test of shareholders have 0:10:07.600 --> 0:10:10.720 been very happy. But when we look at it and 0:10:10.920 --> 0:10:14.920 you know, and see that they manufacture something cars and 0:10:14.960 --> 0:10:17.920 have a over six billion market cap, and then you 0:10:17.920 --> 0:10:22.080 look at General Motors that manufactures seven point seven million 0:10:22.480 --> 0:10:25.040 vehicles and has a sixty billion you know, so one 0:10:25.720 --> 0:10:27.880 of the market cap, you know, one of those two 0:10:27.920 --> 0:10:31.160 things is probably wrong there in terms of how the 0:10:31.200 --> 0:10:34.120 numbers will play out over time. You know, we don't 0:10:34.160 --> 0:10:36.960 own some of these stalks, and they've done great, so 0:10:37.080 --> 0:10:40.960 kudos to whoever owns them, but we would say, just 0:10:41.040 --> 0:10:44.000 on evaluation basis, there's quite a bit of froth in 0:10:44.040 --> 0:10:46.080 some of these. You know, there's just momentum in some 0:10:46.320 --> 0:10:48.400 parts of the market. You know, it's in looking at 0:10:48.480 --> 0:10:51.200 some of the top holdings across a few of the 0:10:51.200 --> 0:10:54.120 funds of Davis, A lot of the big sort of 0:10:54.600 --> 0:10:59.199 market dominating firms in their industries are are pretty heavily 0:10:59.200 --> 0:11:04.920 weighted out Ali Baba and China, Amazon, Alphabet, Facebook here 0:11:04.920 --> 0:11:07.440 in the US, and at the same time, there's this 0:11:07.480 --> 0:11:10.599 big buzz about the anti trust issue, not only in 0:11:10.840 --> 0:11:13.280 the US but in China. You know, ten cent in 0:11:13.320 --> 0:11:17.120 Ali Baba recently getting fined because of some of their 0:11:17.120 --> 0:11:21.200 mergers in the past. I'm curious how you're thinking about 0:11:21.200 --> 0:11:24.240 that issue anti trust. Is it necessarily a scary thing 0:11:24.320 --> 0:11:27.680 to be threatened with an anti trust probe? Yeah, it's certainly, 0:11:28.120 --> 0:11:30.679 um something that's in the news, that's been you know, 0:11:30.760 --> 0:11:34.360 growing as an issue over the last four or five years. 0:11:34.800 --> 0:11:36.920 You know, one that some of these companies like Google 0:11:37.320 --> 0:11:39.040 has been dealing with actually for a while now. I 0:11:39.120 --> 0:11:43.199 in fact, they have been under investigation and dealing with 0:11:43.559 --> 0:11:47.480 sort of fines and remedies in the European Union for 0:11:47.760 --> 0:11:50.480 five years now already, and they've been operating under that. 0:11:51.080 --> 0:11:53.880 And actually, I mean that's a good case where despite 0:11:53.880 --> 0:11:58.440 all of that and a very strict and aggressive antitrust policy, 0:11:58.880 --> 0:12:01.080 they have actually done five and in Europe the market 0:12:01.080 --> 0:12:03.680 share is actually even stronger than in the US, and 0:12:03.679 --> 0:12:07.680 it's well over search market share, and their results have 0:12:07.760 --> 0:12:10.920 been very strong. So they've been able to adapt and 0:12:11.000 --> 0:12:14.560 operate well despite you know, despite that. I mean, in 0:12:14.600 --> 0:12:16.640 some ways, of course, it's a little bit of a 0:12:16.679 --> 0:12:19.560 badge of honor in the sense that you've become so big, 0:12:19.800 --> 0:12:23.240 so successful people will have become very worried about you. 0:12:23.480 --> 0:12:25.880 And it does make sense as a society that we 0:12:25.920 --> 0:12:29.439 are concerned about these you know, these these huge companies 0:12:29.679 --> 0:12:32.040 and they should be regulated. And so the regulators are 0:12:32.040 --> 0:12:34.640 definitely playing a little bit of catch up here. But 0:12:34.720 --> 0:12:38.120 in terms of an investor, you have to really think about, Okay, 0:12:38.160 --> 0:12:40.520 what you know, what has happened in the past. You know, 0:12:40.520 --> 0:12:43.600 it's been relatively benign. What are the possible risks And 0:12:43.640 --> 0:12:45.480 like you said, Mike, I mean that would be a 0:12:45.559 --> 0:12:49.199 draconian measure. We haven't really seen that happen before. Very 0:12:49.240 --> 0:12:51.560 often is sort of the breakup in sort of a 0:12:51.880 --> 0:12:54.240 you know, the d merger of companies that have been 0:12:54.320 --> 0:12:57.200 merged for several years. But even if that does happen, 0:12:57.280 --> 0:13:00.920 it doesn't mean like this business is being nationalized and confiscated. Right. 0:13:01.320 --> 0:13:04.120 And then China it's interesting. I mean, they've actually had 0:13:04.160 --> 0:13:08.360 a much laxer antitrust policy than even the US, so 0:13:08.400 --> 0:13:10.840 in some ways they've been sort of more capitalistic than 0:13:10.880 --> 0:13:13.839 even than the US, but now they're realizing that they 0:13:13.880 --> 0:13:17.080 need to Also, you know that some part some behaviors 0:13:17.120 --> 0:13:20.560 are gotten too extreme. You know, online retailers are forcing 0:13:20.559 --> 0:13:23.120 brands to choose one of the platforms. You know, that's 0:13:23.160 --> 0:13:26.439 probably not great for consumers, right that raises prices and 0:13:26.520 --> 0:13:30.280 reduce the selection they are intervening, And it does make sense. 0:13:30.960 --> 0:13:33.319 Antitrust concerns is a quasi badge of honor. That's a 0:13:33.320 --> 0:13:52.280 different way to look at it. I wanted to ask you, 0:13:52.360 --> 0:13:56.360 danton Um, say you are a a U S investor, 0:13:56.800 --> 0:13:59.520 and odds are you maybe have a home bias and 0:13:59.559 --> 0:14:02.559 you have a very very large allocation to the US. 0:14:02.679 --> 0:14:04.920 We talked about how maybe it's a good time to 0:14:04.960 --> 0:14:08.800 start allocating internationally, but can you walk us through certain areas, 0:14:09.160 --> 0:14:12.560 certain countries, certain regions that that you think are right 0:14:12.600 --> 0:14:14.200 for growth right now and maybe it would make a 0:14:14.240 --> 0:14:16.520 good investment at this point in time. Yeah, So I 0:14:16.559 --> 0:14:20.640 think when you go internationally you have to be extremely selective. 0:14:21.120 --> 0:14:23.400 You know, in our funds we really limit the number 0:14:23.440 --> 0:14:26.920 of countries that were invested in. You know, there's uh, 0:14:27.000 --> 0:14:30.440 for example, twenty six emerging markets. We're really only in 0:14:30.520 --> 0:14:33.120 s or three or four of them. And that's because 0:14:33.840 --> 0:14:38.640 you know, the concerns around economic growth, political stability, sort 0:14:38.640 --> 0:14:42.320 of market access, things like that are important things that 0:14:42.360 --> 0:14:44.400 you maybe worry a little less in the US. You 0:14:44.480 --> 0:14:46.360 have to pay a lot more attention to when you're 0:14:46.360 --> 0:14:49.080 looking at international markets. So when we when we look 0:14:49.120 --> 0:14:53.520 through that and see which markets we think look really interesting, 0:14:53.960 --> 0:14:57.320 you know, China continue to look interesting. It's had, i 0:14:57.320 --> 0:15:00.280 guess overall a pretty good year, but it's still under 0:15:00.320 --> 0:15:03.880 somewhat cloud. You know, you definitely still heal here. Sorry, 0:15:03.920 --> 0:15:08.720 rumblings of the US China geobolitical strain out their intention 0:15:09.320 --> 0:15:11.360 and that's not going away even if there's a change 0:15:11.520 --> 0:15:16.280 in administration happening right now. So that's definitely true. But 0:15:16.560 --> 0:15:19.760 the conditions over there for economic growth are still quite strong. 0:15:19.920 --> 0:15:22.200 I mean, in fact, this year, China is going to 0:15:22.280 --> 0:15:25.280 be there probably the only large economy that's going to grow. 0:15:25.640 --> 0:15:27.400 They're looking at sort of a two percent we know, 0:15:27.440 --> 0:15:29.920 which is still not heroic, but you know, with with 0:15:29.960 --> 0:15:32.400 what happened with COVID in the pandemic, that's still pretty 0:15:32.440 --> 0:15:35.680 strong two percent growth, whereas most countries, including the US, 0:15:35.880 --> 0:15:37.640 we're probably gonna you know where we're in the middle 0:15:37.640 --> 0:15:40.400 of a recession and the next year expectations are sort 0:15:40.440 --> 0:15:43.880 of seven eight percent growth, so obviously pretty strong rebound 0:15:44.320 --> 0:15:47.160 off of a slow year. You know, Increasingly the companies 0:15:47.200 --> 0:15:49.720 there because of course, you're not investing in the country 0:15:49.840 --> 0:15:53.200 or the market. You're investing individual companies. The management teams, 0:15:53.480 --> 0:15:55.320 you know, keep on getting better and better, really high 0:15:55.400 --> 0:15:58.040 quality entrepreneurial managed teams. And then the quality of the 0:15:58.080 --> 0:16:00.480 companies do you have some leading to all of these 0:16:00.520 --> 0:16:02.600 there If you think about you know who the top 0:16:02.640 --> 0:16:05.200 six cloud computing companies out there, of course you think 0:16:05.240 --> 0:16:08.800 of you know, Amazon and Microsoft and Google, but the 0:16:08.840 --> 0:16:12.400 fourth largest is now a Chinese company to Ali Baba. 0:16:12.520 --> 0:16:16.120 Outside of China, I think Southeast Asia also looks pretty attractive. 0:16:16.120 --> 0:16:19.800 I mean, it's a conglomeration of sort of six or 0:16:19.840 --> 0:16:22.960 seven countries, but together you have about a population around 0:16:22.920 --> 0:16:26.640 six hundred million people, so that's almost half the size 0:16:26.920 --> 0:16:30.280 of China, for example, so a very large market together. 0:16:30.760 --> 0:16:34.520 That is, the democraptics are favorable where the economic growth 0:16:34.600 --> 0:16:37.720 is strong. So I think that's a pretty interesting area 0:16:37.800 --> 0:16:41.120 to to look at. You know, then, uh, Latin America 0:16:41.760 --> 0:16:45.840 I think long term also would be interesting. It's pretty fascinating. 0:16:46.080 --> 0:16:48.160 Uh debts and to talk to a guy like you 0:16:48.240 --> 0:16:51.960 who has um sort of discretion to to invest anywhere 0:16:51.960 --> 0:16:54.600 in the world basically, uh, for for at least a 0:16:54.640 --> 0:16:56.800 few of these funds, and I'm just you know, it's 0:16:56.840 --> 0:17:00.240 such a huge universe of stocks out there around the world. 0:17:00.240 --> 0:17:03.920 I'm curious how your process works, you know, how do 0:17:03.960 --> 0:17:08.320 you start narrowing down that massive universe of stocks around 0:17:08.320 --> 0:17:10.800 the world. Is it sort of country by country like 0:17:10.840 --> 0:17:12.640 you were just saying, do you try to go by 0:17:12.760 --> 0:17:15.200 GDP growth? Is it a you know, run a screen 0:17:15.280 --> 0:17:18.679 of evaluations. What's what's the process like to hunt for 0:17:18.680 --> 0:17:21.480 that next by You're absolutely right, Like, you know, there's 0:17:21.880 --> 0:17:25.800 about three thousand companies in the Global Index. That's a 0:17:26.160 --> 0:17:28.800 huge amount of companies to follow and stay on top 0:17:28.840 --> 0:17:31.360 of and be familiar with. And of course in that 0:17:31.480 --> 0:17:34.080 there's lots of companies that you would never want to 0:17:34.119 --> 0:17:37.880 invest in, you know, state own enterprises, these old industrials 0:17:37.960 --> 0:17:42.480 and telecoms and utility companies or stay owned banks in general. 0:17:42.800 --> 0:17:45.560 We're gonna avoid already that big part of the market 0:17:45.560 --> 0:17:47.960 because they're not really run for shareholders, they have other 0:17:48.240 --> 0:17:51.520 interest at heart. But we really kind of focus on 0:17:51.680 --> 0:17:54.480 at the industry level, right, and so we're trying to 0:17:54.560 --> 0:18:00.760 understand whether it's consumer or industrials or sort of technology. 0:18:00.760 --> 0:18:05.080 Where are the great companies, where are you know, innovation. 0:18:06.080 --> 0:18:08.919 Where are the great brands anywhere in the world, and 0:18:08.960 --> 0:18:11.760 then so the world we'll follow that lead. With that said, Mike, 0:18:11.840 --> 0:18:15.200 I'm pretty sure it's that time. It is that time. 0:18:15.920 --> 0:18:19.520 Stand clear of the craziest things we saw in markets 0:18:19.600 --> 0:18:22.600 this week. Sir, why don't you get it started. You 0:18:22.680 --> 0:18:25.800 have a bunch of contributions from the voice. Oh, we 0:18:25.840 --> 0:18:29.360 have a voicemail. Let's play that. Hi, this is Tim. 0:18:29.480 --> 0:18:36.000 President Obama's high school basketball jersey got auctioned off for 0:18:36.359 --> 0:18:40.600 a hundred and ninety two thousand dollars. This is more 0:18:40.680 --> 0:18:43.520 than what Michael Jordan's was, Fred seventy three thousand. End 0:18:43.560 --> 0:18:46.359 of broad James was we're like a eighty five or 0:18:46.400 --> 0:18:51.920 something thousands. So President Obama's of high school jersey for 0:18:53.000 --> 0:18:56.520 thousand was the most expensive high school basketball jersey that 0:18:56.720 --> 0:18:59.560 has ever been auctioned. Always great to get a voicemail, 0:18:59.680 --> 0:19:01.920 every one. Remember if you want to give us a call, 0:19:01.960 --> 0:19:04.720 that number is six four six three two four three 0:19:04.800 --> 0:19:07.600 four nine zero. And just as you heard, we may 0:19:07.680 --> 0:19:10.000 even play your message on the show. But not only 0:19:10.000 --> 0:19:12.040 did we get a voicemail, as I said earlier, we 0:19:12.160 --> 0:19:15.680 also got other writings too. So first I'll read this one. 0:19:15.760 --> 0:19:18.160 This came through on the Bloomberg terminal from Stephen Kaminski 0:19:18.240 --> 0:19:21.360 of Jump Systems. Uh So, this is what he said. 0:19:21.359 --> 0:19:23.840 He said, we all already know one of the craziest 0:19:23.880 --> 0:19:27.600 moments in this crazy year was oil going negative in April. 0:19:27.920 --> 0:19:31.440 Perhaps even crazier, though, is nine traders at Vega Capital, 0:19:31.480 --> 0:19:34.080 whereas a group the biggest sellers of w t I 0:19:34.160 --> 0:19:37.040 futures and spreads. On that day they made six hundred 0:19:37.080 --> 0:19:39.920 sixty million dollars. Even the son of one of the 0:19:40.000 --> 0:19:43.320 Vega traders, who's in his early twenties with limited experience, 0:19:43.400 --> 0:19:47.879 made eight million all caps. Wild story, and I do 0:19:48.040 --> 0:19:50.480 encourage this is a great story. One of the reporters 0:19:50.480 --> 0:19:52.960 on this was Liam Vaughan. We had him as a 0:19:53.000 --> 0:19:55.800 guest on one of our prior podcasts. He's a great, 0:19:55.840 --> 0:19:59.159 great storyteller. Um So, I encourage you to go read it, 0:19:59.240 --> 0:20:01.080 and then uh I'll read the other one as well. 0:20:01.119 --> 0:20:05.359 This one came through on Twitter from at Term Management. 0:20:06.000 --> 0:20:09.919 He said, the craziest thing in markets this week full disclosure. 0:20:10.000 --> 0:20:12.320 He wrote this at the end of last week two, 0:20:12.400 --> 0:20:14.040 but didn't quite make it in because we had already 0:20:14.080 --> 0:20:16.480 recorded the podcast. He said, airb nb I p O 0:20:16.520 --> 0:20:19.680 getting plenty of attention for performance in early trading. Meanwhile, 0:20:20.040 --> 0:20:23.000 pebble Brook Hotel Trust, this is peb The ticker is 0:20:23.280 --> 0:20:26.800 priced four fifty million dollars of six year paper at 0:20:26.920 --> 0:20:30.000 one point seven five. And then you went on to 0:20:30.040 --> 0:20:32.320 explain you may be familiar, but the hotel reads carry 0:20:32.359 --> 0:20:35.119 basically all the operational leverage, and the operators don't actually 0:20:35.160 --> 0:20:38.159 have much downside exposure. Current hotel occupancy is in the 0:20:38.240 --> 0:20:40.720 upper thirties. Uh And then he went on, he goes 0:20:40.960 --> 0:20:44.639 and yet creditors underwriting a yield of less than two percent, 0:20:44.800 --> 0:20:48.119 limitless investor appetite for anything related to the quote unquote 0:20:48.119 --> 0:20:51.639 reopening trade. And it really is remarkable, Mike, it really is. 0:20:51.920 --> 0:20:54.520 That's I believe that's froth with a capital F right 0:20:54.560 --> 0:20:58.480 there for that mistake. But I'm curious what you think. 0:20:58.520 --> 0:21:01.560 You know, we've seen some really popping uh I p 0:21:01.760 --> 0:21:05.720 O debuts in the last week or so. You guys 0:21:05.720 --> 0:21:11.359 seem focused mainly on the more mature companies. How you 0:21:11.400 --> 0:21:14.080 know big of an IPO? How how attractive does an 0:21:14.119 --> 0:21:16.560 IPO have to be to sort of catch your attention 0:21:16.640 --> 0:21:18.280 or do you like to wait and see that the 0:21:18.359 --> 0:21:21.320 company's lasted a few years before you get involved. Yeah, 0:21:21.359 --> 0:21:23.320 I mean it depends. Um. You know, some of these 0:21:23.359 --> 0:21:26.199 I p O companies actually have been uh, you know, 0:21:26.359 --> 0:21:30.320 large companies operating at scale for many years. That might 0:21:30.320 --> 0:21:34.200 not have been the case years ago, because when you're 0:21:34.200 --> 0:21:37.320 that large, you know you've already come public. But now 0:21:37.320 --> 0:21:40.480 with the strength of the private markets, uh, these companies 0:21:40.520 --> 0:21:43.120 have not had too uh. And then you know there's 0:21:43.440 --> 0:21:45.720 other reasons. You know, the star bans Aukleys and things 0:21:45.720 --> 0:21:48.720 that like that have just sort of dissuaded people from 0:21:48.720 --> 0:21:51.399