WEBVTT - Surveillance: S&P Not In Bubble, Patterson Says 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane, along 0:00:09.240 --> 0:00:13.080 with Jonathan Ferrell and Lisa Brownwitz Jay Leye. We bring 0:00:13.119 --> 0:00:17.159 you insight from the best and economics, finance, investment, and 0:00:17.280 --> 0:00:23.280 international relations. Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg 0:00:23.360 --> 0:00:28.440 dot com, and of course on the Bloomberg Terminal. Let's 0:00:28.440 --> 0:00:30.680 bringing out guest of this morning, Rebecca Pattison Bridge. What 0:00:30.720 --> 0:00:34.080 a director of investment research. Rebecca. Fantastic to start the 0:00:34.080 --> 0:00:35.800 show with you today, so thank you for joining us. 0:00:35.840 --> 0:00:38.240 Let's start with that one little line from Chairman Powell, 0:00:38.360 --> 0:00:41.040 the run up in Bonnio to statement of confidence. Do 0:00:41.080 --> 0:00:44.680 you agree with that for now? Absolutely? Yes. I mean 0:00:44.760 --> 0:00:50.680 you're having a huge fiscal stimulus, huge monetary stimulus. Um. 0:00:50.680 --> 0:00:54.120 It's not surprising given the issuance coming and the recovery coming, 0:00:54.120 --> 0:00:55.680 that bond yields are going to be higher and we're 0:00:55.680 --> 0:00:58.680 going to see the curve steeper. Rebecca, your colleague Bob 0:00:58.680 --> 0:01:00.920 Prince has talked about the chair lenges of working at 0:01:00.920 --> 0:01:04.680 the zero bound. I think we're creeping away from zero bound. 0:01:05.040 --> 0:01:08.920 How urgent is it for the investment community to get 0:01:08.959 --> 0:01:11.760 back to normal? Well, we can actually calculate a real 0:01:11.800 --> 0:01:17.560 sharp ratio. I mean, can we sustain this artificiality we're in, 0:01:18.120 --> 0:01:21.200 or does Ray Dalio, Bob Prince and Rebecca Petterson have 0:01:21.360 --> 0:01:25.000 to get back to something different. Well, we like to 0:01:25.040 --> 0:01:27.840 think that we can find opportunities regardless of the economic 0:01:27.959 --> 0:01:30.320 environment we're in, so we don't need to get back 0:01:30.360 --> 0:01:33.640 to something different. But certainly a lot of investors would 0:01:33.680 --> 0:01:36.080 be thrilled to have bond yields that could give them 0:01:36.200 --> 0:01:39.000 some income and return and diversification the way it did 0:01:39.280 --> 0:01:41.360 decades ago. I don't think we're going to get to 0:01:41.400 --> 0:01:44.720 that place anytime soon. Um. You know, as you all 0:01:44.760 --> 0:01:47.360 talked about at the top of the hour, Chairman Pale 0:01:47.520 --> 0:01:50.800 is being very clear that he's not unhappy with rising 0:01:50.840 --> 0:01:53.720 bond yields for now. He is very happy to see 0:01:53.720 --> 0:01:56.400 inflation coming back. And I think that's the big thing 0:01:56.440 --> 0:01:58.800 we want to be watching this year is do we 0:01:58.840 --> 0:02:01.360 get an inflation surprise us on the upside thanks to 0:02:01.760 --> 0:02:05.640 everything we're seeing, the recovering economy, the fiscal and monetary stimulus, 0:02:06.000 --> 0:02:08.760 the new FED framework, and as you just mentioned, and 0:02:08.800 --> 0:02:11.840 this is a secondary factor but still really important, what 0:02:11.919 --> 0:02:14.400 we're seeing with global supply chains. It's going to be 0:02:14.480 --> 0:02:18.040 a longer background factor, but it's definitely an inflationary one. 0:02:18.120 --> 0:02:19.799 All right, we'll get to that in one second. I 0:02:19.840 --> 0:02:22.639 do want to ask you about Ray Dalio, your colleague, 0:02:22.880 --> 0:02:25.680 speaking earlier this week in a LinkedIn post, saying that 0:02:25.760 --> 0:02:29.440 about five percent of the top one tho SMP stocks. 0:02:29.919 --> 0:02:32.959 Uh what top with thousand stocks in the United States, 0:02:33.040 --> 0:02:36.959 I should say, are in bubble territory. How does this end? 0:02:37.120 --> 0:02:40.320 Do these continue to climb upward or can they sort 0:02:40.320 --> 0:02:44.760 of be deflated without a broader correction? Well, agreed. We 0:02:44.760 --> 0:02:47.480 we try to look for bubbles all the time across 0:02:47.560 --> 0:02:50.480 every asset class, and as Ray said, we see maybe 0:02:50.480 --> 0:02:52.960 as much as ten or fifteen percent actually of total 0:02:53.040 --> 0:02:56.040 US stocks in what we define as bubble territory. These 0:02:56.080 --> 0:03:00.160 are mainly smaller emerging technology companies, often that have not 0:03:00.320 --> 0:03:04.040 had sustained profits yet, um a lot of leverage money 0:03:04.120 --> 0:03:07.160 going into these things. You know, bubbles can keep going 0:03:07.320 --> 0:03:09.040 up in the short term, but when you see all 0:03:09.040 --> 0:03:12.440 these indicators aligning, it tells you that their days are numbered. 0:03:12.960 --> 0:03:16.040 While a takedown the broader market, given how small this is, 0:03:16.400 --> 0:03:19.080 it doesn't need to, but it's definitely something we're keeping 0:03:19.080 --> 0:03:21.720 an eye on overall, the total SMP does not appear 0:03:21.760 --> 0:03:24.200 to be in a bubble in our view, you know, Rebecca, 0:03:24.400 --> 0:03:27.919 I'm gonna be honest here, Rydal you can pontificate about bitcoin, 0:03:28.000 --> 0:03:31.200 but he and I are. Knowledge on currency equivalences is 0:03:31.240 --> 0:03:33.799 about zero. And I'm going to suggest Mr Dale, you 0:03:34.400 --> 0:03:36.720 probably got a brief from the adult in the rum, 0:03:36.800 --> 0:03:42.160 Rebecca Patterson on currency equivalency? How can bitcoin be a currency? 0:03:42.360 --> 0:03:47.200 What is it? I wouldn't call bitcoin an alternative currency. 0:03:47.280 --> 0:03:50.800 I think if anything, it's an alternative to gold or 0:03:50.840 --> 0:03:54.720 a digital gold. I think that would be the better comparison. UM. 0:03:54.840 --> 0:03:58.240 You know, you do have the same or similar supply constraints, 0:03:58.480 --> 0:04:01.040 and it is something that investors have been looking to 0:04:01.200 --> 0:04:04.080 as they worry about fiat currencies being devalued by all 0:04:04.120 --> 0:04:08.480 this central bank printing. But bitcoin, you know, look, it's 0:04:08.600 --> 0:04:10.760 if you're speculating on it. A lot of people out 0:04:10.760 --> 0:04:13.040 there have made a lot of money on it. UM 0:04:13.080 --> 0:04:16.560 As an institutional investor, I think we don't know yet 0:04:16.600 --> 0:04:18.960 if it's going to be digital gold it Maybe it 0:04:19.040 --> 0:04:21.080 may be over time, but I don't think we can 0:04:21.120 --> 0:04:23.719 say that with confidence yet, And that affects our view 0:04:23.720 --> 0:04:25.600 on whether or not we think our clients should own 0:04:25.600 --> 0:04:28.000 it all right, so going forward will be the trigger 0:04:28.240 --> 0:04:30.880 that will signify that this is digital gold, and we'll 0:04:30.880 --> 0:04:33.120 give a green light to Bridgewater to start investing client 0:04:33.160 --> 0:04:35.960 money in it. Well, I don't think there's one green 0:04:36.040 --> 0:04:38.159 light that would have Bridgewater invest in it, but I 0:04:38.160 --> 0:04:39.880 think there are a couple of things we'd definitely be 0:04:39.920 --> 0:04:43.680 watching carefully. First, we wanted to see lower volatility. I mean, 0:04:44.000 --> 0:04:46.640 right now, bitcoin can move ten percent on a tweet. 0:04:47.080 --> 0:04:50.720 That's not exactly a storehold of wealth for most institutional investors. 0:04:51.040 --> 0:04:53.600 So the volatility of bitcoin is about ten times that 0:04:53.720 --> 0:04:56.800 of your dollar, it's still double that of the Venezuelan bolivar. 0:04:57.040 --> 0:04:59.240 So that gives you an idea. You want to see 0:04:59.240 --> 0:05:02.160 a lower volatility, more stable asset if you want to 0:05:02.200 --> 0:05:04.680 consider it as a store old of wealth, of diversifier. 0:05:04.880 --> 0:05:06.880 I think. Secondly, and these are related, you want to 0:05:06.880 --> 0:05:09.919 see greater liquidity, and I think, and that takes me 0:05:10.000 --> 0:05:13.360 the third thing, which is regulatory certainty. The more you 0:05:13.400 --> 0:05:18.640 get a real regulatory ecosystem developing around bitcoin and other cryptocurrencies, 0:05:18.960 --> 0:05:21.240 the more other types of investors are going to be 0:05:21.240 --> 0:05:24.560 comfortable coming in. That's going to bring the liquidity, that's 0:05:24.600 --> 0:05:26.600 going to reduce the volatility. So I guess if there 0:05:26.600 --> 0:05:29.760 were one thing I were watching first, it would be 0:05:29.920 --> 0:05:32.720 seeing more regulatory certainty, and I'm not sure when that's 0:05:32.720 --> 0:05:34.840 going to come in the US. Really important comments Rebect, 0:05:34.839 --> 0:05:36.359 We're always great to catch you out with you. Thank you, 0:05:36.440 --> 0:05:40.000 Rebettica Pacis, and that Rich Water, director of Investment Research. 0:05:47.560 --> 0:05:49.320 Right now. Of the politics at the moment, it's a 0:05:49.400 --> 0:05:52.360 very important to speak to a politician who actually had 0:05:52.400 --> 0:05:55.279 a payroll of meat and worked in a company. It 0:05:55.440 --> 0:05:58.919 is Charter any X Films of Milton, Wisconsin. Brian Style 0:05:59.000 --> 0:06:02.600 knows it well. A Republican from Wisconsin. Think Paul Ryan's 0:06:02.640 --> 0:06:06.760 old district Conection Style. What does business need from Washington? 0:06:06.839 --> 0:06:09.160 Now we've got to find a middle ground. We're gonna 0:06:09.200 --> 0:06:12.760 get a stimulus, you're not in power. What does business 0:06:12.800 --> 0:06:15.880 need from Washington? I think number one, we need to 0:06:15.880 --> 0:06:19.040 see our schools reopened. I talked to employers across the country. 0:06:19.040 --> 0:06:22.000 One of their largest struggles is finding workers. Our labor 0:06:22.000 --> 0:06:25.520 participation rate in the United States just over six is 0:06:25.520 --> 0:06:28.560 about the lowest since the Carter administration. The number of things, 0:06:28.680 --> 0:06:30.560 number one thing we can do to free up the 0:06:30.640 --> 0:06:32.920 labor market is to get our children back in school. 0:06:33.120 --> 0:06:35.039 Allow a lot of these parents with young children to 0:06:35.080 --> 0:06:39.480 return to the workforce. The vaccination program is clearly succeeding. 0:06:39.920 --> 0:06:43.560 Where do you perceive your district, the southern part of Wisconsin. 0:06:43.920 --> 0:06:46.080 Where do you perceive at the end of this summer? 0:06:47.320 --> 0:06:50.400 Hopefully we keep making progress. More and more folks sixty 0:06:50.440 --> 0:06:52.760 five years and older are getting their vaccines. My mom 0:06:52.800 --> 0:06:55.880 and dad got their first vaccine in line. I think 0:06:55.960 --> 0:06:58.600 this is a positive sign. We're also seeing the numbers 0:06:58.640 --> 0:07:02.240 of total COVID P sittivity come down. That's positive. If 0:07:02.240 --> 0:07:04.760 we continue to see this, we're moving in the right direction. 0:07:05.000 --> 0:07:07.120 And again, I think this is further evidence that we 0:07:07.160 --> 0:07:09.080 need to get our children back in school, and I 0:07:09.120 --> 0:07:10.640 think that's the number one thing we can do for 0:07:10.680 --> 0:07:13.120 our economy across the country. As a parent of two 0:07:13.160 --> 0:07:15.720 boys who are school age, I agree with you. It 0:07:15.760 --> 0:07:19.080 has definitely been a devastating year to have them out 0:07:19.120 --> 0:07:22.160 of school. In order to get the economy backup and running, 0:07:22.280 --> 0:07:24.480 pretty much across the board, people agree that there needs 0:07:24.520 --> 0:07:26.680 to be some sort of assistance. How do you feel 0:07:26.680 --> 0:07:30.280 about this? One point nine trillion dollar plan, given your position, 0:07:30.400 --> 0:07:33.640 your history with the manufacturing industry, and your expectation and 0:07:33.680 --> 0:07:37.560 hope of further edification of these areas later on in 0:07:37.560 --> 0:07:40.840 the year, potentially, I'm very concerned that there's a mismatch 0:07:40.880 --> 0:07:43.480 with the fiscal policy here in Washington, d c. Against 0:07:43.520 --> 0:07:45.280 the needs that are needed in our country. We need 0:07:45.320 --> 0:07:47.480 to make sure that we're driving forward with the vaccine. 0:07:47.680 --> 0:07:49.960 But what we don't need to do is overstimulate the 0:07:50.000 --> 0:07:54.240 economy with excessive spending that's not relative to the actual coronavirus. 0:07:54.360 --> 0:07:56.280 For example, in this bill, out of the billions of 0:07:56.320 --> 0:07:59.520 dollars being put towards education, only five per cent of 0:07:59.560 --> 0:08:02.760 the fun from this bill will be spent in one 0:08:02.840 --> 0:08:05.400 We need to reopen our schools. Today, what we're seeing 0:08:05.440 --> 0:08:08.160 as a one point nine trillion dollar liberal wish list 0:08:08.560 --> 0:08:11.720 rather than a targeted in direct But I don't mean 0:08:11.760 --> 0:08:14.600 to interrupt here, but Coxon, this is really really important. 0:08:14.920 --> 0:08:19.000 Do you support the Democrats in the allocation to small 0:08:19.040 --> 0:08:25.280 business and individual income replacement, income substitution, in rent substitution. 0:08:25.440 --> 0:08:29.080 Right now, what we're seeing is rather than a targeted approach, 0:08:29.120 --> 0:08:32.360 we're seeing abroad brushstrokes, so individuals will receive checks where 0:08:32.360 --> 0:08:35.120 maybe the couple together will be making over two hundred 0:08:35.240 --> 0:08:38.520 thousand dollars. That's far in excess of what's actually needed. 0:08:38.520 --> 0:08:40.679 We needed to have this targeted to those people who 0:08:40.679 --> 0:08:44.160 have been negatively impacted. Congressman, a lot of people are saying, though, look, 0:08:44.320 --> 0:08:47.520 borrowing costs are so low. Yes, they're rising, there's still 0:08:47.600 --> 0:08:51.040 historically low for the United States. Why not borrow now? 0:08:51.440 --> 0:08:54.880 Get our economy running hot and generate the economic growth 0:08:54.880 --> 0:08:57.240 that can pay down all this step more easily and 0:08:57.320 --> 0:09:00.600 not potentially risk people staying out of work for longer. 0:09:00.760 --> 0:09:02.600 I mean, how much do you rely on that type 0:09:02.600 --> 0:09:05.160 of argument? I think these are the questions that we're 0:09:05.160 --> 0:09:07.600 gonna have to have for Chairman Powell and Committee today. 0:09:07.920 --> 0:09:10.280 The question is are we going to overheat the economy again? 0:09:10.320 --> 0:09:12.400 We got to remember that over the past twelve months, 0:09:12.440 --> 0:09:16.880 Congress has allocated over four trillion dollars related to coronavirus. 0:09:16.960 --> 0:09:20.160 Of that, three trillion has been spent, one trillion has 0:09:20.240 --> 0:09:23.240 yet to be spent. Adding another one point nine trillion 0:09:23.320 --> 0:09:25.439 on top of that begins to leverage the future of 0:09:25.440 --> 0:09:28.560 our children and grandchildren will ultimately be held to pay 0:09:28.559 --> 0:09:32.160 for this debt. What do you think constraints further spending? Congressman, 0:09:32.200 --> 0:09:33.480 what do you think it is? Do you think it 0:09:33.600 --> 0:09:36.320 is the bond market rates? Do you think it is inflation? 0:09:36.360 --> 0:09:40.040 What do you think ultimately should constrain spending down in Washington? 0:09:41.000 --> 0:09:43.040 I think you need to have a needs based approach 0:09:43.120 --> 0:09:45.760 as we're looking at funds to reopen our schools. I'm 0:09:45.760 --> 0:09:48.320 supportive of getting the fund to reopen our schools today, 0:09:48.360 --> 0:09:50.720 but in a bill like this, we're looking at only 0:09:50.800 --> 0:09:54.520 five percent of those funds for education being spent this year. 0:09:54.679 --> 0:09:57.160 So that's a broad brush stroke approach rather than targeting 0:09:57.200 --> 0:09:59.640 the need of today making sure we're rolling out the vaccine, 0:10:00.120 --> 0:10:02.240 reopening our economy safely. So it's it fair to say 0:10:02.240 --> 0:10:04.880 it would be ideological. It would be political and not financial. 0:10:05.000 --> 0:10:06.840 The constraints around what you think we should and should 0:10:06.880 --> 0:10:09.280 not do well. I think what we've seen before is 0:10:09.320 --> 0:10:11.960 an approach to a needs based approach. So when you 0:10:12.000 --> 0:10:15.360 saw congress past five coronavirus relief bills, all in a 0:10:15.400 --> 0:10:18.559 bipartisan fashion, it was driven by the needs of the country. 0:10:18.960 --> 0:10:21.320 This bill that we're looking at, one point nine trillion 0:10:21.320 --> 0:10:23.800 dollar bill that by all indications, will be a party 0:10:24.000 --> 0:10:27.000 line vote here in Washington, d C. Is not focused 0:10:27.000 --> 0:10:29.240 on the needs of the country. It's focused on political 0:10:29.320 --> 0:10:32.680 priorities of the Democrats that they're trying to advance under 0:10:32.720 --> 0:10:35.520 the guise of coronavirus relief. Do you feel penerless to 0:10:35.559 --> 0:10:39.280 stop it. We're having conversations trying to win the hearts 0:10:39.280 --> 0:10:42.840 and minds of individuals and have them call their elected representatives. 0:10:42.920 --> 0:10:45.120 This is not a done deal until it passes. We 0:10:45.200 --> 0:10:48.400 need to make sure everyone understands what's in this bill 0:10:48.600 --> 0:10:50.720 so that they can call their representatives and see if 0:10:50.720 --> 0:10:52.600 we can put a stop to this trying. The problem 0:10:52.679 --> 0:10:55.640 you've got, Congressman, forgive me, sir, is that the electorate 0:10:55.720 --> 0:10:59.240 like kit done. They looking at the poll link. Well, 0:10:59.240 --> 0:11:01.560 it's one thing to to to like free money. I 0:11:01.559 --> 0:11:03.800 don't have a problem with and understand it's not hard 0:11:03.840 --> 0:11:05.960 to understand that people like receiving a check from the 0:11:05.960 --> 0:11:08.480 federal government. But at sometime we have to have an 0:11:08.480 --> 0:11:11.560 adult conversation that that check eventually comes back and do 0:11:12.040 --> 0:11:14.559 I'm very concerned about what our debt situation here is 0:11:14.600 --> 0:11:17.760 in the United States America approaching thirty trillion dollars and 0:11:17.760 --> 0:11:21.240 if we enter an inflationary period, payments on that debt 0:11:21.280 --> 0:11:24.800 will begin to squeeze important domestic spending. Congressman to come 0:11:24.800 --> 0:11:27.080 as you need to continue, Thank you, sir, fat time 0:11:27.120 --> 0:11:36.000 bron style that of Wisconsin. We've got a thirty year 0:11:36.040 --> 0:11:39.040 buying out six basis points. It's a huge move two 0:11:39.040 --> 0:11:42.240 point to four percent rounded up. David Leebos is very 0:11:42.480 --> 0:11:45.040 aware of that at JP Morgan Asset Manager. David, Let's 0:11:45.040 --> 0:11:47.280 go right there where the data is moving. What is 0:11:47.280 --> 0:11:50.079 the signal of the long end of the curve, far 0:11:50.200 --> 0:11:53.560 out the curb moving to a higher yield and reduced prices. 0:11:54.840 --> 0:11:57.280 So I think what you're seeing is as we get 0:11:57.280 --> 0:12:00.400 more and more evidence that the reflation trade is taking 0:12:00.400 --> 0:12:03.079 hold and the economy is really reopening here and then 0:12:03.120 --> 0:12:06.240 should continue to reopen over the course of the coming months, 0:12:06.240 --> 0:12:08.720 you're you're seeing assets begin to reprice and you know, 0:12:08.800 --> 0:12:11.480 frankly below one percent on the tenure where the thirty 0:12:11.520 --> 0:12:14.400 year has been trading. Those rates were reflecting a world 0:12:14.440 --> 0:12:16.200 where we were still in lockdown. And I think what 0:12:16.280 --> 0:12:18.840 you're seeing is that investors are finally beginning to wake 0:12:18.960 --> 0:12:21.679 up to the fact is going to be a year 0:12:21.720 --> 0:12:24.760 where the global economy booms were We're getting more stimulus 0:12:25.080 --> 0:12:27.600 here in the United States. It sounds like policy makers 0:12:27.640 --> 0:12:30.640 around the world are going to remain accommodative over the 0:12:30.640 --> 0:12:32.760 course of the next twelve months. And I think again, 0:12:32.800 --> 0:12:35.319 you know, fixed income was was too rich for that 0:12:35.360 --> 0:12:38.400 type of environment, and so again, very healthy repricing and 0:12:38.400 --> 0:12:40.520 a pretty positive story when you take a step back 0:12:40.520 --> 0:12:42.880 and think about what's really going on here, and sometimes 0:12:42.880 --> 0:12:44.840 talking to clients it's like therapy. You've got to keep 0:12:44.880 --> 0:12:46.400 them in the market, tell them why they've got to 0:12:46.480 --> 0:12:49.160 stay in the market. What's the conversation light right now? 0:12:50.320 --> 0:12:52.760 So you make a great point about the wall of worry, 0:12:52.760 --> 0:12:55.040 and and many have fallen off that wall when when 0:12:55.040 --> 0:12:58.120 trying to climate um, the conversation right now is really 0:12:58.160 --> 0:13:01.320 about inflation and how the FED is going to respond. 0:13:01.400 --> 0:13:04.679 I think the FED obviously was was spectacular in what 0:13:04.720 --> 0:13:08.440 they did in in terms of opening the credit facilities 0:13:08.480 --> 0:13:11.360 and re engaging with with fairly significant q E. But 0:13:11.600 --> 0:13:14.280 when we think about that that shift in their framework 0:13:14.320 --> 0:13:18.360 to an approach characterized by average inflation targeting, nobody really 0:13:18.400 --> 0:13:20.880 knows what that's going to look like. It's very difficult 0:13:20.920 --> 0:13:24.560 to build expectations around how the FED is going to respond, 0:13:24.600 --> 0:13:27.640 and so the biggest concern right now is effectively the 0:13:27.679 --> 0:13:29.719 inverse of what we talked about for the better part 0:13:29.760 --> 0:13:31.800 of the prior cycle. I mean, how many times did 0:13:31.880 --> 0:13:34.360 did we have the conversation of the FED wants to 0:13:34.440 --> 0:13:37.000 raise rates and the market says no way. Um, we're 0:13:37.040 --> 0:13:39.280 beginning to see the opposite, right the market is beginning 0:13:39.320 --> 0:13:42.000 to say how long will the FED stand? Pat are 0:13:42.040 --> 0:13:45.280 there forecasts realistic? That's really what's being called into question 0:13:45.320 --> 0:13:48.439 and dominating client conversations right now. So dominating the conversations 0:13:48.480 --> 0:13:51.480 we had, oh yeah coming into twenty one. In fact, 0:13:51.480 --> 0:13:53.240 for most of the back half was about the bomb 0:13:53.240 --> 0:13:55.800 how strategy having a second growth on one side, having 0:13:55.840 --> 0:13:58.120 a signal county on the other, as that whiting as 0:13:58.160 --> 0:14:01.720 that till that emphasis shifted divide. You know, we we 0:14:01.760 --> 0:14:05.800 are increasingly adding more cyclical assets to portfolios. But the 0:14:05.840 --> 0:14:08.679 one thing we do recognize is that big bursts in 0:14:08.840 --> 0:14:11.720 in cyclicality and big bursts and value tend to be 0:14:11.800 --> 0:14:15.480 relatively short lived. If you go back to really the 0:14:15.520 --> 0:14:18.560 only sustained period of value out performance was what we 0:14:18.600 --> 0:14:21.160 saw in the early two thousands. The rest of the 0:14:21.160 --> 0:14:23.200 time it tends to be you know, here today and 0:14:23.400 --> 0:14:26.240 gone tomorrow, so taking a bit more exposure on the 0:14:26.280 --> 0:14:29.080 cyclical side. We do think that those assets remain attractive 0:14:29.120 --> 0:14:32.000 on a relative valuation basis and should do pretty well 0:14:32.040 --> 0:14:35.280 given our expectations for the economy this year. But importantly 0:14:35.320 --> 0:14:39.400 not running away from growth, if anything, rethinking the composition 0:14:39.760 --> 0:14:42.040 of our growth exposure. We still like tech for the 0:14:42.120 --> 0:14:44.360 long run, We still like healthcare for the long run. 0:14:44.600 --> 0:14:47.040 We just don't want to own those super growthy mega 0:14:47.080 --> 0:14:50.480 cap names that obviously performed so well in We think 0:14:50.520 --> 0:14:54.040 that those might tread water here, David, we were talking 0:14:54.080 --> 0:14:57.120 about Cathy Wood earlier, the poster child for some of 0:14:57.160 --> 0:15:00.880 these high flyers, particularly in the text space, and in 0:15:00.960 --> 0:15:03.480 her interview yesterday with Bloomberg, she said, the strongest bull 0:15:03.560 --> 0:15:06.680 markets I've been in are built on walls of worry. 0:15:06.760 --> 0:15:08.560 Do you agree? Do we have enough of a wall 0:15:08.560 --> 0:15:12.920 of worry to keep this bullvarket going? Absolutely? I think 0:15:12.960 --> 0:15:14.600 you know. When when I was on a few weeks ago, 0:15:14.680 --> 0:15:16.520 one of the things we talked about was the fact 0:15:16.600 --> 0:15:20.240 that a pullback was becoming consensus. Right. People are very 0:15:20.280 --> 0:15:23.280 skeptical about the durability of what's happening in markets, and 0:15:23.320 --> 0:15:26.040 to me that that's always, you know, a pretty positive signal. 0:15:26.080 --> 0:15:28.760 So I think as long as people are asking the questions, 0:15:28.800 --> 0:15:31.280 how is the FED going to respond, what is inflation 0:15:31.320 --> 0:15:34.240 going to look like, what's the outlook for fiscal policy? 0:15:34.280 --> 0:15:36.680 Are we going to overheat? I mean, these are very 0:15:36.720 --> 0:15:39.920 relevant questions for investors to be asking at the current juncture. 0:15:39.920 --> 0:15:41.680 And I think at the end of the day, again, 0:15:41.720 --> 0:15:43.880 as long as we're viewing this rally with it with 0:15:43.920 --> 0:15:46.600 a healthy amount of skepticism, that suggests to me that 0:15:46.640 --> 0:15:49.320 it continues to have legs. We are not necessarily seeing 0:15:49.560 --> 0:15:52.320 outside of certain pockets in the market, really that that 0:15:52.440 --> 0:15:55.400 amount of it, or that that exuberance that makes us uncomfortable. 0:15:55.440 --> 0:15:58.360 We think everybody's still pretty measured, and again that makes 0:15:58.400 --> 0:16:00.640 us pretty positive on risk assets as we look across 0:16:00.680 --> 0:16:02.960 the next twelve eighteen months. David, thank you. I love 0:16:03.000 --> 0:16:05.840 how committed David Lebovitz is the JP Morgan Blue Wolves. 0:16:06.160 --> 0:16:12.800 Doesn't that just work just right? It's Jamie's so proud, David, 0:16:12.840 --> 0:16:15.760 Thank you, David Levitz there JP Morgan as in management. 0:16:15.760 --> 0:16:24.840 Thank you. I know we this time that we will 0:16:24.960 --> 0:16:28.560 create also the Office of the National Director of Food 0:16:28.640 --> 0:16:32.040 and Nutrition at the White House, almost with a seat 0:16:32.080 --> 0:16:35.080 on the National Security Council next to the President, and 0:16:35.240 --> 0:16:39.440 making sure that we bring the resources of every single department. 0:16:39.880 --> 0:16:42.720 Food is more than the U, S the A. We 0:16:42.800 --> 0:16:45.800 have all learned from the pandemic and we will never 0:16:45.880 --> 0:16:49.440 be the same after this pandemic is over. Jose Andres 0:16:49.480 --> 0:16:53.040 their World Central Kitchen. Of course. David Rubinstein show Peer 0:16:53.080 --> 0:16:56.840 to Peer Conversation tonight nine pm and Mr Rubinstein joins 0:16:56.920 --> 0:16:58.880 us right now. David, thank you so much for joining 0:16:58.960 --> 0:17:02.560 us interview because Lisa and I have viscerally seen the 0:17:02.680 --> 0:17:06.040 hunger on the streets of New York. How are we 0:17:06.160 --> 0:17:10.480 different in this pandemic? How are we different after this pandemic? 0:17:10.520 --> 0:17:14.760 According to Mr andreas Well, his view is that is 0:17:14.760 --> 0:17:16.879 amazing that in a country as wealthy as ours, we 0:17:16.920 --> 0:17:19.520 don't really distribute food very well in a situation like this. 0:17:19.720 --> 0:17:22.160 Who would have thought you'd have gigantic food lines in 0:17:22.280 --> 0:17:25.119 Dallas or Los Angeles with people who are middle class 0:17:25.240 --> 0:17:28.320 not having enough food. So he's worried about it, and 0:17:28.359 --> 0:17:30.440 what he'd like to do is to have a White 0:17:30.440 --> 0:17:33.760 House advisor on food near the President who can really 0:17:33.960 --> 0:17:36.359 focus on on the food distribution and make sure that 0:17:36.400 --> 0:17:39.399 people have appropriate types of food. Um. As you know, 0:17:39.480 --> 0:17:41.960 he's a great chef, a world class chef, but he's 0:17:41.960 --> 0:17:45.040 spending most of his time now on humanitarian types efforts, 0:17:45.080 --> 0:17:48.480 including feeding people around the world when there are tragedies 0:17:48.480 --> 0:17:51.760 in their countries. We have obesity in America because food 0:17:52.000 --> 0:17:54.800 is so darn cheap. If I go to asle five 0:17:54.880 --> 0:17:58.880 of my fancy whole foods, there's fourteen choices of rice. 0:17:59.280 --> 0:18:02.520 Thirteen choice is a mustard. How do we translate that 0:18:02.600 --> 0:18:06.280 to an empoverished world. Well, that's the problem in whole foods, 0:18:06.280 --> 0:18:09.119 which I think is great is uh is terrific for 0:18:09.119 --> 0:18:11.280 people that can afford it, But many people in this 0:18:11.320 --> 0:18:13.720 country and around the world really can't afford something like that. 0:18:14.440 --> 0:18:17.080 And it's a sad situation where when you have, even 0:18:17.080 --> 0:18:19.879 in this country, a crisis like the pandemic, you have 0:18:20.000 --> 0:18:22.920 to feed people who normally have food and access to food. 0:18:23.119 --> 0:18:25.320 We don't really have a very good distribution system for 0:18:25.359 --> 0:18:28.080 a pandemic like this. Well, David, it goes beyond just 0:18:28.119 --> 0:18:30.560 the pandemic. I mean, I'm thinking about food deserts, and 0:18:30.600 --> 0:18:33.720 that was definitely raised as an issue is people can't 0:18:33.760 --> 0:18:37.199 necessarily even buy easily some of the fresh foods that 0:18:37.200 --> 0:18:39.520 you're talking about. You said appropriate foods, right, it's not 0:18:39.560 --> 0:18:42.479 just anything to eat, it's something that will actually be healthy. 0:18:42.520 --> 0:18:45.840 I mean, what is Joss Andres proposing about what to 0:18:45.880 --> 0:18:48.040 do with those food desserts that we're seeing in many 0:18:48.080 --> 0:18:51.200 areas around the country. Well, there's no one simple answer. 0:18:51.240 --> 0:18:52.760 One of the things he points out is that there 0:18:52.760 --> 0:18:55.399 hasn't been a food conference or nutrition conference in the 0:18:55.440 --> 0:18:57.800 White House for fifty years, and he thinks it would 0:18:57.800 --> 0:19:00.000 be a good idea. He thinks the Department of aggriga 0:19:00.040 --> 0:19:02.639 Ulture shouldn't be the only people worrying about food, and 0:19:02.640 --> 0:19:04.800 he wants to make certain that people eat healthy food. 0:19:05.440 --> 0:19:07.919 Even if you have people who are not wealthy and 0:19:07.960 --> 0:19:10.120 they get enough food to eat, that's not the same 0:19:10.119 --> 0:19:12.359 as eating healthy food which enable them to live longer. 0:19:12.600 --> 0:19:15.119 At the moment, upper income people are focused more on 0:19:15.160 --> 0:19:17.159 healthy food than people who are at the bottom of 0:19:17.160 --> 0:19:20.560 the economic structure. There's also a question about the inflation 0:19:20.600 --> 0:19:24.000 that we've seen in food prices and some measures up 0:19:24.040 --> 0:19:26.560 to the highest levels since two thousand and thirteen. How 0:19:26.560 --> 0:19:29.560 does this affect the discussion. Well, there's no doubt that 0:19:29.600 --> 0:19:31.639 it makes it more difficult for people at the bottom 0:19:31.680 --> 0:19:34.639 to eat adequately. In the end, what everybody wants to 0:19:34.640 --> 0:19:36.480 do is to live a healthy and happy life, and 0:19:36.520 --> 0:19:38.200 one of the best ways of doing that is eating 0:19:38.240 --> 0:19:41.480 well and and eating healthy. And he's focused on that. 0:19:41.760 --> 0:19:43.800 It's an interesting phenomenon that he could make a lot 0:19:43.800 --> 0:19:47.080 of money as a restaurant tour He has about fifty restaurants. 0:19:47.080 --> 0:19:49.320 He's closed many of them because of the pandemic. But 0:19:49.359 --> 0:19:52.240 he's focused on his World's Central Kitchen, which goes to 0:19:52.280 --> 0:19:55.040 any place in the world that has a starvation problem 0:19:55.240 --> 0:19:57.719 and tries to feed these people without really a lot 0:19:57.760 --> 0:20:01.440 of government assistance. David Mr Solomon Goldman Sex is speaking 0:20:01.520 --> 0:20:04.000 right now at the credits WE conference, and he touches 0:20:04.080 --> 0:20:07.960 upon something that is immediate with your years of perspective. 0:20:08.520 --> 0:20:11.639 With the hundreds and hundreds of companies at Carlisle Group 0:20:11.680 --> 0:20:15.560 has advised where are you on this shift to work 0:20:15.640 --> 0:20:20.160 from home? HSBC says they will trim their office square footage. 0:20:20.520 --> 0:20:24.280 Mr Solomon says remote work is not a new normal. 0:20:24.440 --> 0:20:28.360