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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple car Play or Android Auto with the Bloomberg

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Speaker 1: Business app. Listen on demand wherever you get your podcasts,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Joining us now Edward YARDNNY for a two hour conversation.

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Speaker 2: I got eight ways to go here. You have a

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Speaker 2: young Turk in the green room with you this morning. Yeah,

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Speaker 2: what's your number one advice to a twenty year twenty

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Speaker 2: two year old kid? Who's my god? I'm sitting next

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Speaker 2: to Edward Yard, Denny, what do you tell the young

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Speaker 2: turks read my books?

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Speaker 3: I did buy them before you read that, right, You don't.

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Speaker 4: Have to buy them. They're open to the public, you know.

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Speaker 4: I share the knowledge that I've gained over the years.

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Speaker 4: So in twenty eighteen I wrote a book called predict

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Speaker 4: in the Markets, turned out to be six hundred pages long,

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Speaker 4: about what I learned in the first forty years of

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Speaker 4: my career. Now I'm working in the next four.

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Speaker 2: What's the maxim that's been most true across the emotion

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Speaker 2: of this bull market that won't go down?

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Speaker 4: Well, I think it's earnings. I mean, it won't go

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Speaker 4: down because earnings won't go down. I think the reason

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Speaker 4: earnings have been so resident is because the economy has

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Speaker 4: been so resident. You know, it's it's every time we

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Speaker 4: throw something at it, it just hangs in.

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Speaker 2: There. Are we getting a free launch from a set

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Speaker 2: of stimuli that have goosed revenues to generate their free

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Speaker 2: cash flow?

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Speaker 4: And I think there's certainly something to be said for

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Speaker 4: that one and a half to two trillion dollar government deficits.

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Speaker 4: Certainly are stimulative, but we've also had a very strong

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Speaker 4: consumer not kind of inconsistent with the so called K

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Speaker 4: economy thesis. I call it the G economy thesis. It's

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Speaker 4: really about the baby boomers that are keeping spending going

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Speaker 4: because they're retiring. They've got eighty nine trillion dollars of

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Speaker 4: retirement as the money.

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Speaker 2: Lawrence McDonald's talked about it. I mean, it's just there.

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Speaker 2: It's just a wall of money.

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Speaker 4: And then of course there's the AI capital spending boom,

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Speaker 4: and there's a lot of controversy about whether that's going

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Speaker 4: to pay off or whether it's not. And it's one

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Speaker 4: big bubble that's going to burst. I think it's going

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Speaker 4: to pay off.

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Speaker 5: So that's kind of where I want to go ed.

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Speaker 5: I mean, you've seen so many cycles, so many major

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Speaker 5: themes in this marketplace, whether it's the Internet or how

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Speaker 5: do you think about AI here? I mean, it seems

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Speaker 5: like a lot of folks are telling us this is

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Speaker 5: bigger than anything we've seen.

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Speaker 4: Well, that's that's my view. And the way I put

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Speaker 4: in perspective is AI is not a revolution, It's an

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Speaker 4: evolution in the digital revolution. The digital revolution started in

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Speaker 4: the mid nineteen sixties with the IBA mainframes, and the

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Speaker 4: digital revolution is all about processing as much information data

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Speaker 4: as we possibly can, as quickly as we can, as

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Speaker 4: cheaply as we can. And we've made a tremendous amount

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Speaker 4: of progress, growing from the IBM mainframe to be soon

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Speaker 4: as laptops, the cloud, and now AIS. I kind of

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Speaker 4: I think time will like this. I view us now

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Speaker 4: as having four factors of production land, labor, capital, and

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Speaker 4: data and data. And we never really thought of data

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Speaker 4: as a factor of production. And this ties into my

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Speaker 4: buzz like your theory to infinity and beyond, there will

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Speaker 4: never be a shortage.

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Speaker 5: Of data, right and Bloomberg, we are at our heart

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Speaker 5: a data nice.

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Speaker 2: And you're creating more and more data and the world

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Speaker 2: that was so good you get to work tomorrow.

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Speaker 5: And the analytics around all that data. This is kind

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Speaker 5: of what we do here at Bloomberg.

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Speaker 3: So what are we doing here?

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Speaker 5: Ed? I mean, can we feel comfortable with this earnings

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Speaker 5: environment out there to continue to support this market exploit

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Speaker 5: we just came through the last couple of quarters have

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Speaker 5: just been extraordinary for earnings.

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Speaker 4: Well, let me give you some some lingo on that.

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Speaker 4: I'm a believer that we're better off with a bull

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Speaker 4: market based on FEMO than FOMO. Fomo is fear of

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Speaker 4: missing out, and if people have fear of missing out,

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Speaker 4: that'll affect the pe. You'll get the valuation multiple too high,

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Speaker 4: You'll get a bubble and it's bound to burst. Femo

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Speaker 4: is fabulous earnings moment them, earnings have been absolutely fabulous,

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Speaker 4: and I'd rather have a melt up based on earnings

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Speaker 4: than one on evaluation multiples.

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Speaker 2: And that's what we have, EDJR. Denny with the Sacks,

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Speaker 2: and we continue. We welcome all of you across America.

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Speaker 2: So if I line up my ten most important dinners

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Speaker 2: across the yark of this privilege of the Bloomberg. One

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Speaker 2: of them was of the Richard Berner years ago, and

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Speaker 2: it was in the vicinity of twenty twelve, fourteen years ago.

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Speaker 2: This is Berner of Morgan Stanley building out that franchise

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Speaker 2: with Stephen Roach and then his public service to the nation,

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Speaker 2: and Dick Berner and I sat there and he was

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Speaker 2: on fire at yard Denny over the dots. The dots

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Speaker 2: go back to January twenty twelve. I would suggest we

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Speaker 2: had a shift tectonic. Will know in time. Were the

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Speaker 2: dots efficacious? Were they of Vailue?

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Speaker 4: Well, I'm kind of biased. I'm a Fed watchers. So

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Speaker 4: the more and the more noise they provide for me

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Speaker 4: to try to interpret for people, the better. I like

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Speaker 4: the dot plot. I think it's it's a good insight

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Speaker 4: into where the committee's meeting in the statistic. Yeah, the

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Speaker 4: medium is important, but I think so is the distribution.

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Speaker 4: To me, the funniest thing about the dot plot is

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Speaker 4: and when you ask them for their long term estimate

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Speaker 4: for the FED funds rate, and this is often called

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Speaker 4: the neutral rate, and you would think that there's some

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Speaker 4: science of the neutral rate at the Fed, but no

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Speaker 4: science at all. They just nineteen of them, tell them,

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Speaker 4: tell us what they think it is, and sometimes the

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Speaker 4: spread is between three and four percent. It's like, you

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Speaker 4: know that, Well, that's really helpful.

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Speaker 2: I look at where mister Worrish is taking us. Yes,

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Speaker 2: that much power, I mean, chairmany have that much power

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Speaker 2: to shift the dialogue, don't they.

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Speaker 4: Well, I think the dialogue stays the same, But then

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Speaker 4: how much of it gets communicated to the public is

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Speaker 4: what he seems to be focusing on. I mean, I

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Speaker 4: think the dialogue at the FED is going to actually

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Speaker 4: turn out to be more independent than it had been,

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Speaker 4: you know. But he's actually come around to the old

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Speaker 4: view that a FED chair needs to have a consensus.

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Speaker 4: I mean, he could have been the only dissenter at

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Speaker 4: that meeting, but he wasn't. He joined the committee. Email

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Speaker 4: comes in, Mike. He's on the parade roots somewhere. Mike,

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Speaker 4: thank you so much for emailing in today. Can you

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Speaker 4: reaffirm your roaring twenties scenario? And where is your SPI

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Speaker 4: statistic right now? Well, I'm looking for the S and

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Speaker 4: P five hundred to get the eight two hundred and

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Speaker 4: fifty by the end of the year and.

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Speaker 6: Still at the end of this year.

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Speaker 4: Yeah, yeah, yeah, I mean seventy seven hundred. I mean

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Speaker 4: we're at seventy five hundred, so we're moving the right direction.

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Speaker 4: And there's still several months left. And then by the

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Speaker 4: end of the decade, at the end of twenty twenty nine,

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Speaker 4: I'm you're still using ten thousand, and the Roaring twenty

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Speaker 4: twenties has worked out pretty well here for the first

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Speaker 4: sevent you think, yeah, yeah, I think so. You know,

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Speaker 4: it's getting to be more and more roaring.

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Speaker 2: Ed Jo Denny, thank you so much for joining us

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Speaker 2: today in historic day with signature at Versailles, Doctor Yard Denny.

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Speaker 2: Look for his spectacular note. Can't say enough about it.

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Speaker 3: Stay with us.

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Speaker 2: More from Bloomberg Surveillance coming up after this.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Anastasia, welcome to Bloomberg Surveillance, obviously with partners seek as well.

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Speaker 2: Once again, you nailed it by having the courage to

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Speaker 2: stay in the market. I want you to go back

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Speaker 2: and at the bottom of this war one hundred and

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Speaker 2: twenty dollars a barrel, et cetera. How did you know

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Speaker 2: don't go to cash?

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Speaker 7: Well, I guess it was a tough call to make,

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Speaker 7: or maybe a brave call to make right because a

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Speaker 7: lot of people at the peak were calling for recession

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Speaker 7: probabilities to go up, and there were calls for stressed

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Speaker 7: test scenarios of what if we stayed one hundred and

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Speaker 7: twenty plus a barrel of crude oil? And I think

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Speaker 7: what we ultimately looked at is, you know, fortunately we

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Speaker 7: went into this largest supply outage with buffers and whether

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Speaker 7: it's the inventories that we had on hand, and we

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Speaker 7: could cover two hundred days worth of net imports, and

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Speaker 7: so that you know, allowed for a lot of cushion

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Speaker 7: that in my view, would have prevented us from going

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Speaker 7: into recession.

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Speaker 3: And then the other side of that.

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Speaker 7: Is, you know, we never I don't think really anybody

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Speaker 7: thought that this conflict would drag on for quarters and

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Speaker 7: quarters in years. We know that there's a political time clock,

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Speaker 7: and you know, there's a level of market patients that

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Speaker 7: was going to force a resolution at some point. So

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Speaker 7: I'm glad to see that we are here and it's

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Speaker 7: been a stunning turn around to the price of oil.

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Speaker 7: Tom to your point, from one hundred and twenty to now,

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Speaker 7: you know the forward strip pricing and seventy.

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Speaker 6: Five dollars average for the back half of the year.

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Speaker 7: That is a much much better backdrop fortunately for risk

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Speaker 7: assets now.

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Speaker 5: So I guess investors are probably you know, over the

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Speaker 5: last several days, trying to reset a little bit. And

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Speaker 5: what do we focus on now?

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Speaker 2: Is it earnings? What do we focus at the Fed?

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Speaker 5: We heard from the Fed yesterday they're not going to

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Speaker 5: give us any any love there. So what are the

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Speaker 5: market's focusing on these days?

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Speaker 7: Well, I think it is that interplay between where we

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Speaker 7: are with the state of the economy and where we

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Speaker 7: are with a state of interest rates, and the focus

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Speaker 7: should be on the strength of economic activity first of all,

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Speaker 7: whether you look at the consumer and this continued momentum

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Speaker 7: that we see there, whether you look at the corporations

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Speaker 7: and the great earning season that we just came out of.

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Speaker 7: You know, you look at the upsizing of Varning's estimates

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Speaker 7: for example.

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Speaker 3: And then there's the Cappec story.

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Speaker 7: If you look at the last quarters GDP, you know,

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Speaker 7: the kind of the bright object there has actually been

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Speaker 7: the fixed asset investment. The capex is accelerating in the

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Speaker 7: US thanks to hyperscalers, but also others. So that's the

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Speaker 7: economic backdrop. That's why I think you stay in the markets.

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Speaker 7: The other side is the FED. And look my take

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Speaker 7: on that is the markets have interpreted this as in,

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Speaker 7: you know, this is hawkage guidance where we're going to

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Speaker 7: high grates. It's not guidance. As you know, there was

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Speaker 7: no forward guidance. And I think a lot is going

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Speaker 7: to change in the next few months.

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Speaker 2: Nasty chamorroso whaus we will continue, whether Edward jar Danny

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Speaker 2: to join, you know a moment futures of fifty five.

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Speaker 2: The vix is surprising. I thought it'd be in it's

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Speaker 2: in a stick seventeen point twenty seven, but it's screaming

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Speaker 2: sixteen handled to me. The Bank of England just does

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Speaker 2: a seven to two vote. Meghan Green, who's spent on

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Speaker 2: the show many times, and Hugh Pill a full time

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Speaker 2: a few Pill times over the years, but Meghan Green

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Speaker 2: in Pill vote against it, looking for a rate increase.

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Speaker 2: Bank of England stay static, Pound retreats, Guilts retreat and

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Speaker 2: Paul It goes to this idea of a backdrop of

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Speaker 2: fighting inflation, fighting inflation time.

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Speaker 5: So, Anastasia, one of the issues for this market is

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Speaker 5: AI and we're trying to figure out o've the investors

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Speaker 5: how to play it other than in Vidia, and it's

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Speaker 5: been an ongoing I think play for this marketplace to

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Speaker 5: figure out where do we go, how do we play it?

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Speaker 2: Are you guys thinking about series?

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Speaker 7: I mean, look, there's actually so much more to do

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Speaker 7: in both public and private markets beyond Nvidia. You know,

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Speaker 7: first of all, you know, one thing that's happened, Paul

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Speaker 7: is over the last few years, the total adressable market

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Speaker 7: for semiconductors because of AI has expanded. So it's started

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Speaker 7: with GPUs, but now as we know, the total addressable

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Speaker 7: market for CPUs for memberships, all of that is being

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Speaker 7: upside so that trade on its own has broadened out.

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Speaker 4: You know.

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Speaker 7: Then you think about the infrastructure, and you know, look,

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Speaker 7: there was the first leg I would say, of the

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Speaker 7: data center opportunity, and you know, there's some concern about

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Speaker 7: maybe we've done too much too fast, but the reality

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Speaker 7: is looking ahead, what's happening is we're transitioning from the

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Speaker 7: use of chatbots, the conversational commerce to the use of

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Speaker 7: agentic AI and workflow automation. And what that does is

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Speaker 7: it's likely to drive much more token consumption over the

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Speaker 7: next few years and that's going to require a whole

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Speaker 7: lot of compute. So the next phase of the data

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Speaker 7: center build out has to support this move to agentic AI.

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Speaker 7: So we're absolutely looking at data centers. We have several

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Speaker 7: portfolio companies in the space, and you know, they're seeing

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Speaker 7: very strong appetites for their compute capacity.

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Speaker 2: Partner Group is out of Switzerland. You've got to handle

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Speaker 2: on continental Europe because you have to go over there

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Speaker 2: and speak to people about American exceptionalism. Do they still

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Speaker 2: want to buy American after all we've been through with

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Speaker 2: the president in the war.

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Speaker 7: Yes, the answer is yes. And look, you know there's

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Speaker 7: been a kind of an evolution there, but absolutely, And

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Speaker 7: I was in Europe recently and look, when you think

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Speaker 7: about Europe, you've got extremely depressed consumer confidence, you have

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Speaker 7: sluggish consumer spending. You have the ECB that hiked rates

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Speaker 7: presumably or arguably they shouldn't have. You know, you don't

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Speaker 7: have the cap X momentum, you don't have the support

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Speaker 7: of corporate tax rates. And then if you flip all

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Speaker 7: of that around and look at to the United States.

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Speaker 7: We've checked all those boxes. So I think that's why

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Speaker 7: whether in Europe, whether you're Asian Asian investor, you continue

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Speaker 7: to look to the United States, not for the political

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Speaker 7: backdrop that we have, but for the economic backdrop that

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Speaker 7: we have.

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Speaker 5: What are we doing with emerging markets here, because that's

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Speaker 5: been a play really for the last I don't know,

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Speaker 5: a couple of years. Your merging markets have done very well.

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Speaker 7: Yeah, I think some parts of emerging markets are quite interesting.

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Speaker 7: And you know, let's let's kind of extend the AI

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Speaker 7: trade to Asia for example, and it was also recently

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Speaker 7: in Asian you know, you look around and sixty or

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Speaker 7: seventy percent of what we need to actually build out

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Speaker 7: AI infrastructure is manufactured right there in Asia, whether it's

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Speaker 7: you know, data center chips where, whether it's servers, you know,

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Speaker 7: whether it's all the components. So so I like emerging

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Speaker 7: markets that are enabling that tech trade. Then selectively, you know,

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Speaker 7: I wouldn't say that you just invest in all emergent markets,

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Speaker 7: but if you can identify a theme. For example, we

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Speaker 7: have invested in a company in Brazil which is a

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Speaker 7: fintech company, because it's what scaling in fintech is not

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Speaker 7: just a US story.

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Speaker 2: I don't care when you say you're in Europe, Are

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Speaker 2: you really talking about lining up? And Angelina's on the

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Speaker 2: root of Rivilee for that chocolate. Is that what we're

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Speaker 2: really talking about?

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Speaker 7: No, I'm not lining up there, but is absolutely easy.

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Speaker 2: Do we predict that Europe's going to have a huge summer.

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Speaker 2: I'd like some guests coming down, maybe the fair competition and.

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Speaker 6: Go into parts of Europe.

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Speaker 2: Parts. What does Kirby do this morning at United? His

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Speaker 2: head must be spinners? Fine, All good, all good, and

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Speaker 2: as as you're anam. Also, thank you so much and

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Speaker 2: congratulations on an important call for the last twelve months, Scuria.

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Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: Julie bial has been more than patient. We extended that

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Speaker 2: discussion because Sweeny was trying to get pass into the

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Speaker 2: city hall areas from the Comptroller features of sixty eight

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Speaker 2: Nancy Cup and now dancing in further one point six percent.

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Speaker 2: Julie feel's wonderful with a very different perspective with Kane

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Speaker 2: Anderson at Rodney, Julie, how do you deploy new cash

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Speaker 2: this morning?

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Speaker 8: I think that right now you really have to be

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Speaker 8: if you're in small and MidCap, you really have to

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Speaker 8: be thinking about quality.

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Speaker 3: The low quality to high quality.

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Speaker 8: Is kind of a pretty extreme levels right now, and

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Speaker 8: so I think it's a good opportunity to be able

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Speaker 8: to buy nice things for cheap. Normally we don't get

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Speaker 8: to have these things, these opportunities to buy things at

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Speaker 8: better prices, and so that's pretty attractive for us right now.

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Speaker 5: What did you hear from our new FED chair yesterday

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Speaker 5: and did that change kind of how you're thinking about

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Speaker 5: asset allocation?

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Speaker 3: I think, you know, it didn't really change very much.

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Speaker 3: I think that what we heard was less.

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Speaker 8: Which is an interesting dynamic for most of us, as

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Speaker 8: the trend has really been towards more disclosure, more words, more.

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Speaker 3: Graphs, more charts.

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Speaker 8: And I think that this kind of austerity of words

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Speaker 8: is probably a positive thing for markets, because I think

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Speaker 8: a lot of that can create a lot of noise,

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Speaker 8: and what really is driving most of the decision making

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Speaker 8: is the data that we can all see. So I

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Speaker 8: think it's an interesting posture. I think reducing the balance

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Speaker 8: sheet is probably a positive thing, particularly if it gives

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Speaker 8: us the opportunity if we do get into a stressful

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Speaker 8: situation in the markets.

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Speaker 3: To be able to add more liquidity.

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Speaker 8: So I think I agree, and I'm the hawkish tone

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Speaker 8: really shouldn't be surprising anyone. That was really the movement

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Speaker 8: and direction that we were going in. So I think

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Speaker 8: it's kind of in line with most people's expectations.

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Speaker 5: Where are you the stocks, bonds, commodities, alternatives, How are

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Speaker 5: you thinking about allocation these days?

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Speaker 8: I think that when you are looking at a broader portfolio,

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Speaker 8: the balance of it is really important. I think we

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Speaker 8: continue on the equity side to struggle in part because

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Speaker 8: credit looks pretty good. Parts of credit look really good.

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Speaker 8: But I do think that we have to be really

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Speaker 8: mindful of quality, the importance of making sure that you're

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Speaker 8: exposed to businesses that have the really strong cashlows and

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Speaker 8: that can withstand higher interest rates if that should happen.

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Speaker 3: I think it's pretty important, right.

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Speaker 8: I wouldn't want to be in a position where we're

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Speaker 8: significantly overlevered. And when we think about the AI trade,

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Speaker 8: now that we've moved past this point where everything was

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Speaker 8: funded with free cash flows, so need to worry. Now

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Speaker 8: there's a lot more debt, Now there's a lot more equity.

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Speaker 8: I think that that creates an important movement towards thinking

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Speaker 8: about fundamentals and earnings, not just growth.

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Speaker 2: What does the East Coast not get about the world

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Speaker 2: of Julie Bale. I mean, you look out at the

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Speaker 2: West Coast and I think for so many psychologically, it's

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Speaker 2: just really different at Julia. I mean, does this the

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Speaker 2: whole tech thing, Does it just to have a permanence

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Speaker 2: to you? Like you're not worried about a cyclic ending

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Speaker 2: of it? No?

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Speaker 3: I mean, look I was. I'm French originally, so.

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Speaker 8: I worry about literally everything that's just that's a lifestyle

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Speaker 8: for me, that's like a personality trade. And I think,

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Speaker 8: actually that's why I've been relatively successful. But no, I

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Speaker 8: think that what I really believe is that the opportunities

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Speaker 8: that we're being presented in AI to me look wonderful.

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Speaker 8: They look really positive, and they look like they can

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Speaker 8: be really profound in terms of the nature and quality

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Speaker 8: of work. But they're complicated and they're not without their

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Speaker 8: own costs. So while I'm really enthusiastic and excited about

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Speaker 8: AI for the very long term and the potential it

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Speaker 8: has to unlock things in healthcare and all the stuff

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Speaker 8: that they tell us is super important, what is a

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Speaker 8: little bit different about this build out from a Capex

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Speaker 8: standpoint is that what we're building and what we're spending

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Speaker 8: a lot of money on has a depreciation and a

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Speaker 8: utility that's much shorter than things like the big tech

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Speaker 8: you know, the big buildous that we had in telecom,

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Speaker 8: in railroads, et cetera. That's that creates a little bit

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Speaker 8: of a different dynamic in terms of the pressure to

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Speaker 8: create returns in the here and now, and I think

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Speaker 8: that that's something that's a little bit different than other

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Speaker 8: Capex cycles we've had.

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Speaker 5: Julie, how about US versus non US? We did have

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Speaker 5: a rotation I don't know, late last year early this year,

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Speaker 5: but it seemed like that's reversed a little bit. How

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Speaker 5: do you think about it?

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Speaker 8: I think that we saw a lot of valuation opportunities,

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Speaker 8: particularly outside the US.

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Speaker 3: It had gotten pretty extreme.

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Speaker 8: How overbought the US looked, and so I think that

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Speaker 8: broadly speaking, things look more in balance to me now

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Speaker 8: where you don't see the depth of the value that

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Speaker 8: is being that we could really find as particularly in Europe,

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Speaker 8: it's not quite as compelling to me now, particularly when

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Speaker 8: you think about the growth opportunities that.

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Speaker 3: Really feel like they're being unlocked in the US.

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Speaker 8: But I do think you want to have a certain

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Speaker 8: amount of balance, right because if our economy is over

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Speaker 8: levered to AI, and there is some vulnerability to that,

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Speaker 8: right anytime you're dependent on a single theme. So I

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Speaker 8: think that having a little bit of exposure internationally makes

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Speaker 8: sense because it is a little bit less leverage to

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Speaker 8: certain of the AI themes.

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Speaker 2: Julie, thank you so much. Julie bial so much. Are

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Speaker 2: you going to be watching France a rock? I mean,

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Speaker 2: is that what we're learning?

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Speaker 3: Of course? Gotta do it, Gotta do it.

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Speaker 2: I think it's on Monday. Julie Biale, thank you so much.

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Speaker 2: Respecting France out there, and you can't say enough about

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Speaker 2: her at work on market strategy. Stay with us. More

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Speaker 2: from Bloomberg Surveillance coming up after this.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast Catch US Live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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00:21:13,400 --> 00:21:17,040
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch US live on YouTube.

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Speaker 2: Joining us now in an election effort. He's been doing

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Speaker 2: this for a long time. The fifth fourth Controller of

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Speaker 2: New York State. Tom, I want to talk about in

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Speaker 2: America completely removed from politics. What was it? It's seventeen

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Speaker 2: that said to you, I need to run for public office.

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Speaker 9: Well, you know, I came of age in the late sixties,

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Speaker 9: early seventies, inspired by folks like Robert.

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Speaker 6: Kennedy, Sr.

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Speaker 9: And you know, it was a timeer, great division in

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Speaker 9: the country, a lot of issues, social issues, Vietnam War

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Speaker 9: and so on.

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Speaker 6: Eighteen year old vote just came in actually that I

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Speaker 6: could vote, and.

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Speaker 9: I said, you know what, I want to be part

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Speaker 9: of making this world a little bit better.

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Speaker 6: And I was very active in school issues. I went

439
00:22:02,960 --> 00:22:03,840
Speaker 6: to school board meetings.

440
00:22:03,840 --> 00:22:05,359
Speaker 9: I didn't like some of the things I heard, so

441
00:22:05,440 --> 00:22:08,000
Speaker 9: I said, you know, i'll take my civic pleasensis and.

442
00:22:07,960 --> 00:22:09,280
Speaker 6: I'll run for a school board.

443
00:22:09,560 --> 00:22:12,240
Speaker 9: And I had that unique experience, Tom of my very

444
00:22:12,240 --> 00:22:14,640
Speaker 9: first vote was for myself and I won.

445
00:22:14,840 --> 00:22:16,840
Speaker 6: So that kind very cool a path.

446
00:22:16,960 --> 00:22:19,520
Speaker 2: Yeah, the big change, Tom DiNapoli, and you know, the

447
00:22:19,520 --> 00:22:21,840
Speaker 2: people running against you and your critics and all that

448
00:22:21,960 --> 00:22:26,680
Speaker 2: say there's nobody watching over allbody watching over state government.

449
00:22:27,200 --> 00:22:31,520
Speaker 2: Back then there were tons of media coverage and local coverage,

450
00:22:31,520 --> 00:22:35,320
Speaker 2: and that now is a dearth of local coverage. Is

451
00:22:35,359 --> 00:22:39,480
Speaker 2: there scrutiny on our state processes now that you've been

452
00:22:39,520 --> 00:22:40,680
Speaker 2: doing this for decades?

453
00:22:41,840 --> 00:22:42,880
Speaker 6: Well, it's an interesting point.

454
00:22:42,880 --> 00:22:45,280
Speaker 9: You know, there's no doubt when you go to the

455
00:22:45,400 --> 00:22:49,360
Speaker 9: LCA area, the Legislative correspondence area in the state capitol,

456
00:22:49,680 --> 00:22:51,800
Speaker 9: it's probably got about half of the folks there that

457
00:22:52,359 --> 00:22:54,160
Speaker 9: they were there when I first started in the State

458
00:22:54,160 --> 00:22:55,440
Speaker 9: Assembly a number of years ago.

459
00:22:55,960 --> 00:22:58,200
Speaker 6: So and you see the coverage just generally.

460
00:22:57,920 --> 00:23:01,720
Speaker 9: Shrinking for many of our you know, mainstream newspapers and

461
00:23:01,800 --> 00:23:05,359
Speaker 9: radio and TV. So more press attention would be helpful.

462
00:23:05,480 --> 00:23:08,520
Speaker 9: But certainly in terms of our role, our oversight role,

463
00:23:08,600 --> 00:23:14,320
Speaker 9: the ordered authority overseeing state finances, the controller's tradition continues.

464
00:23:14,400 --> 00:23:18,800
Speaker 9: So you know, keep in mind we don't have any

465
00:23:18,880 --> 00:23:22,560
Speaker 9: enforcement power. We don't order the governor of the legislature

466
00:23:22,600 --> 00:23:25,840
Speaker 9: what to do. We can only comment on state fiscal practices,

467
00:23:25,840 --> 00:23:30,040
Speaker 9: on debt practices, on spending on covering wasteboard for ud

468
00:23:30,080 --> 00:23:33,720
Speaker 9: and abuse. We do that, and of course I always

469
00:23:33,720 --> 00:23:36,720
Speaker 9: appreciate it when the press pays attention to what we're doing.

470
00:23:37,119 --> 00:23:39,080
Speaker 9: But I think with everything going on in the world

471
00:23:39,119 --> 00:23:43,600
Speaker 9: these days, unfortunately, state politics generally does not get attention

472
00:23:43,760 --> 00:23:44,280
Speaker 9: that it should.

473
00:23:44,920 --> 00:23:47,960
Speaker 5: Tom, What do you believe is the key issue for

474
00:23:49,000 --> 00:23:51,480
Speaker 5: voters to focus in on as they think about the controller?

475
00:23:53,200 --> 00:23:54,840
Speaker 6: Well, you know, there are a couple.

476
00:23:54,880 --> 00:23:58,720
Speaker 9: I mean, one of the obvious ones is the responsibility

477
00:23:58,760 --> 00:24:01,879
Speaker 9: of overseeing the state pension fund. That is the fund

478
00:24:01,880 --> 00:24:05,359
Speaker 9: that is our investment fund to provide retirement security for

479
00:24:05,400 --> 00:24:08,520
Speaker 9: the one point three million New Yorkers public workers all

480
00:24:08,560 --> 00:24:11,720
Speaker 9: across the state. And keeping that fund safely secure and

481
00:24:11,800 --> 00:24:14,440
Speaker 9: keeping politics out of managing the fund, I think is

482
00:24:14,480 --> 00:24:18,760
Speaker 9: a very important responsibility, I think in terms of audits

483
00:24:18,800 --> 00:24:23,240
Speaker 9: and reports and analyzing state spending priorities. Recognizing that we're

484
00:24:23,359 --> 00:24:26,120
Speaker 9: going through a time of a change relationship between Washington

485
00:24:26,160 --> 00:24:28,120
Speaker 9: and the states, so particularly a state like New York

486
00:24:28,600 --> 00:24:31,120
Speaker 9: really starting to feel the effects of the Trump agenda,

487
00:24:31,200 --> 00:24:35,359
Speaker 9: the significant constant, especially in healthcare, nutrition programs, education, and

488
00:24:35,359 --> 00:24:38,719
Speaker 9: so on. So having a controller who could help identify

489
00:24:39,680 --> 00:24:41,760
Speaker 9: what those trends are and how we need to respond

490
00:24:41,800 --> 00:24:44,359
Speaker 9: to them, I think is a very important responsibility. And

491
00:24:44,440 --> 00:24:48,000
Speaker 9: of course, as always, when taxpayer money is being wasted,

492
00:24:48,240 --> 00:24:50,200
Speaker 9: you want a controller who could point out ways to.

493
00:24:50,119 --> 00:24:50,800
Speaker 6: Be more efficient.

494
00:24:50,800 --> 00:24:54,040
Speaker 9: And in the worst case where people are stealing public dollars,

495
00:24:54,080 --> 00:24:57,320
Speaker 9: and that happens too often, we've had a laser focus.

496
00:24:57,359 --> 00:25:02,080
Speaker 9: Will our investigator unit saving taxpayers money by getting restitution

497
00:25:02,200 --> 00:25:04,160
Speaker 9: from those who steal from the state. So a lot

498
00:25:04,160 --> 00:25:06,280
Speaker 9: of important issues this office is involved with.

499
00:25:06,560 --> 00:25:09,320
Speaker 2: Can I ask you Bloomberg surveillance question, I think we

500
00:25:09,800 --> 00:25:12,040
Speaker 2: can go down. We're here with Tom to Napoli. I

501
00:25:12,080 --> 00:25:13,800
Speaker 2: look at your pension fund and we had some of

502
00:25:13,840 --> 00:25:16,639
Speaker 2: the others in running for comptroller, and there you know

503
00:25:16,680 --> 00:25:19,679
Speaker 2: their critic is critical of active and passive management, and

504
00:25:19,760 --> 00:25:23,320
Speaker 2: that I'm looking at a three months return near ten percent,

505
00:25:23,840 --> 00:25:25,840
Speaker 2: five year a little bit lower. There was a small

506
00:25:25,880 --> 00:25:28,960
Speaker 2: matter of COVID, but I got a ten year annualized

507
00:25:29,000 --> 00:25:34,080
Speaker 2: return three hundred beeps above nominal GDP. My statistic is

508
00:25:34,119 --> 00:25:37,399
Speaker 2: eight point nine four percent. Mister Danapoli, maybe you have

509
00:25:37,440 --> 00:25:41,800
Speaker 2: a better statistic. How are you accomplishing that? How are

510
00:25:41,800 --> 00:25:46,640
Speaker 2: you getting a nominal GDP plus three hundred basis point return.

511
00:25:48,000 --> 00:25:51,640
Speaker 6: We have small professional management of the fund. We have

512
00:25:51,880 --> 00:25:53,680
Speaker 6: a strong belief in diversification.

513
00:25:53,800 --> 00:25:56,000
Speaker 9: As part of our asset allocation, we do a series

514
00:25:56,080 --> 00:25:59,560
Speaker 9: review every five years. The biggest part of the portfolio

515
00:25:59,880 --> 00:26:03,480
Speaker 9: is in public equity. Much of that is passively invested

516
00:26:03,480 --> 00:26:06,000
Speaker 9: through index funds, and then we have a little less

517
00:26:06,000 --> 00:26:08,679
Speaker 9: than twenty five percent in fixed income. It is in

518
00:26:08,720 --> 00:26:11,400
Speaker 9: the alternatives in the private markets, you know, real estate,

519
00:26:11,400 --> 00:26:17,240
Speaker 9: private equity, infrastructure, credit where not completely correlated to what's

520
00:26:17,240 --> 00:26:18,440
Speaker 9: happening in the public markets.

521
00:26:18,440 --> 00:26:20,359
Speaker 6: That we try to have that.

522
00:26:20,359 --> 00:26:23,640
Speaker 9: Balance so that even with the volatility that sometimes obviously

523
00:26:23,640 --> 00:26:26,520
Speaker 9: occurs in the public markets, we could still be steady.

524
00:26:26,720 --> 00:26:28,920
Speaker 9: I would say one of the things Tom, we have

525
00:26:28,960 --> 00:26:31,040
Speaker 9: a very conservative assumed rate of return.

526
00:26:31,119 --> 00:26:33,080
Speaker 6: So a long term assume rate of return is five

527
00:26:33,119 --> 00:26:35,840
Speaker 6: point nine percent. Most public pension funds.

528
00:26:35,600 --> 00:26:37,320
Speaker 9: Are much higher than that. I think we're one of

529
00:26:37,359 --> 00:26:40,480
Speaker 9: only three funds that are below six percent. So we're

530
00:26:40,560 --> 00:26:45,920
Speaker 9: more conservative. So therefore we don't take as much risk

531
00:26:46,000 --> 00:26:49,720
Speaker 9: to chase a higher kind of return assumption. And I

532
00:26:49,720 --> 00:26:54,520
Speaker 9: think that's been our strength diversification conservative firm goal and

533
00:26:54,640 --> 00:26:55,480
Speaker 9: it's worked for us.

534
00:26:56,040 --> 00:26:56,280
Speaker 3: Tom.

535
00:26:56,320 --> 00:27:00,480
Speaker 5: You mentioned the changing relationship with Washington. Get us a

536
00:27:00,520 --> 00:27:03,400
Speaker 5: sense of how that's really changed with a second Trump

537
00:27:03,440 --> 00:27:05,879
Speaker 5: administration from a dollars and cents perspective.

538
00:27:06,680 --> 00:27:08,879
Speaker 9: Well, I mean, just looking at the big beautiful, the

539
00:27:08,920 --> 00:27:11,399
Speaker 9: big ugly, as I would prefer to call it. You know,

540
00:27:11,440 --> 00:27:13,879
Speaker 9: you're talking about probably the next couple of years thirteen

541
00:27:13,960 --> 00:27:16,479
Speaker 9: fourteen billion dollars in health care cuts to the meth

542
00:27:16,600 --> 00:27:21,760
Speaker 9: paid program. That certainly it's a very expensive program, right

543
00:27:21,880 --> 00:27:23,440
Speaker 9: been growing part of the state budget. A lot of

544
00:27:23,440 --> 00:27:26,520
Speaker 9: people depend on that program, so it certainly has an

545
00:27:26,520 --> 00:27:29,720
Speaker 9: impact on our state finances, particularly because we're trying to

546
00:27:29,760 --> 00:27:32,680
Speaker 9: figure out how to box stop for those that will

547
00:27:32,720 --> 00:27:35,920
Speaker 9: lose health insurance coverage. You know, New York State went

548
00:27:35,960 --> 00:27:37,720
Speaker 9: from oh, a few years ago, about ten percent of

549
00:27:37,720 --> 00:27:40,720
Speaker 9: our population without health insurance coverage to less than five percent.

550
00:27:41,440 --> 00:27:43,440
Speaker 9: Now that folks are going to be moved off of MINTIC,

551
00:27:43,680 --> 00:27:45,840
Speaker 9: some of them will be able to get coverage in

552
00:27:45,880 --> 00:27:48,119
Speaker 9: the marketplace, some of them won't. Doesn't mean they're not

553
00:27:48,119 --> 00:27:49,720
Speaker 9: going to get health care. We'll probably have to pay

554
00:27:49,720 --> 00:27:53,000
Speaker 9: for it through the charity pools. So you know, these cuts,

555
00:27:53,080 --> 00:27:55,680
Speaker 9: which you know may at one level sound like we're

556
00:27:55,680 --> 00:27:57,600
Speaker 9: saving money in the long run is going to cost

557
00:27:57,640 --> 00:28:00,000
Speaker 9: it so and hurt people as well.

558
00:28:00,359 --> 00:28:00,560
Speaker 3: You know.

559
00:28:00,680 --> 00:28:03,159
Speaker 2: Time one final question. You know, we talked to Governor

560
00:28:03,240 --> 00:28:05,000
Speaker 2: Lamon in Connecticut every once in a while, and I

561
00:28:05,040 --> 00:28:07,919
Speaker 2: would suggest that mister Lamont grew up a little different

562
00:28:07,920 --> 00:28:11,520
Speaker 2: than mister Danapoli. But both of you are facing this

563
00:28:11,680 --> 00:28:16,000
Speaker 2: presumed migration out of New York State to Florida, Texas

564
00:28:16,240 --> 00:28:20,960
Speaker 2: and four other jurisdictions. How does New York State stop

565
00:28:21,240 --> 00:28:25,680
Speaker 2: the movement to these other areas. What's the DiNapoli formula

566
00:28:26,200 --> 00:28:27,880
Speaker 2: to keep New York State strong?

567
00:28:29,000 --> 00:28:31,359
Speaker 9: Well, it's an important question, and I think you need

568
00:28:31,400 --> 00:28:33,040
Speaker 9: to keep in mind when we look at the taxpayer

569
00:28:33,080 --> 00:28:36,760
Speaker 9: migration numbers. You're right, there isn't out migration, but it's

570
00:28:36,760 --> 00:28:39,600
Speaker 9: not as severe as the critics say. Are we losing

571
00:28:39,640 --> 00:28:42,400
Speaker 9: some folks at the upper end because of tax policy, Yeah,

572
00:28:42,440 --> 00:28:45,960
Speaker 9: a bit. What is a bigger issue is the affordability

573
00:28:46,040 --> 00:28:49,000
Speaker 9: question for people at the middle and lower end. So

574
00:28:49,280 --> 00:28:51,320
Speaker 9: I think it does get back to, you know, some

575
00:28:51,400 --> 00:28:54,280
Speaker 9: big macro national issues that we don't necessarily control. But

576
00:28:54,760 --> 00:28:57,000
Speaker 9: that's why it's important terms of the controller's role to

577
00:28:57,040 --> 00:28:59,520
Speaker 9: make sure that we are not wasting any taxpayer money.

578
00:28:59,560 --> 00:29:00,200
Speaker 6: Number one.

579
00:29:00,320 --> 00:29:02,560
Speaker 9: Number two, many people still want to come to New

580
00:29:02,640 --> 00:29:05,200
Speaker 9: York and that's where the issues of quality of life,

581
00:29:05,400 --> 00:29:08,760
Speaker 9: public safety, particularly for folks in the city, access to

582
00:29:08,840 --> 00:29:12,240
Speaker 9: public transit that's reliable, all of those issues I think

583
00:29:12,320 --> 00:29:15,520
Speaker 9: become very very important in terms of keeping people here.

584
00:29:15,920 --> 00:29:17,800
Speaker 9: But when you look at New York City, this is

585
00:29:17,840 --> 00:29:20,000
Speaker 9: the place where young creative people want to be and

586
00:29:20,040 --> 00:29:22,200
Speaker 9: I don't think that's changed. So we need to we

587
00:29:22,240 --> 00:29:24,160
Speaker 9: need to lean into those kinds of strengths.

588
00:29:24,280 --> 00:29:26,120
Speaker 2: Time to happily, Thank you so much. Love to get

589
00:29:26,120 --> 00:29:29,080
Speaker 2: you in the studio here at some point Lexington at

590
00:29:29,120 --> 00:29:33,520
Speaker 2: fifty ninth Street. Mister Danapoli is the New York State Controller.

591
00:29:33,880 --> 00:29:38,719
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592
00:29:38,840 --> 00:29:43,120
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593
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594
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595
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596
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597
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