1 00:00:00,080 --> 00:00:12,960 Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,280 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. The 5 00:00:27,400 --> 00:00:29,800 Speaker 1: data right now is sub two percent. To be polite, 6 00:00:30,480 --> 00:00:32,320 Speaker 1: there may be a lot worse than that. Of course, 7 00:00:32,360 --> 00:00:36,680 Speaker 1: Home Depot guides to that the President would like something better, 8 00:00:36,800 --> 00:00:39,600 Speaker 1: he tweets overnight. At my meeting with j Pal this morning, 9 00:00:39,880 --> 00:00:42,240 Speaker 1: I possessed the fact that our fed rate is too 10 00:00:42,320 --> 00:00:45,560 Speaker 1: high relative to the interest rates of other competitive countries. 11 00:00:45,560 --> 00:00:48,400 Speaker 1: In fact, outright should be lower than all others. Too 12 00:00:48,400 --> 00:00:52,120 Speaker 1: stronger dollar, hurting manufacturers and grux. And then Paul Turning said, well, 13 00:00:52,120 --> 00:00:54,680 Speaker 1: I'm gonna blame it on Jim Karen and he joins us. 14 00:00:54,680 --> 00:00:57,840 Speaker 1: Now Morgan Stanley Investment Management, fixed income portfolio manager, Jim 15 00:00:57,840 --> 00:01:01,120 Speaker 1: your thoughts on the president pushing against the chairman of 16 00:01:01,200 --> 00:01:03,120 Speaker 1: the Federals of well, like, I mean, you know, I 17 00:01:03,480 --> 00:01:06,800 Speaker 1: think Trump is snow secret he wants a week er 18 00:01:06,880 --> 00:01:08,840 Speaker 1: dollar and anything that interest rates are the way to 19 00:01:08,840 --> 00:01:10,720 Speaker 1: do it. What I think is being misunderstood in the 20 00:01:10,760 --> 00:01:15,040 Speaker 1: whole conversation is effectively that the interest rate is really 21 00:01:15,080 --> 00:01:17,080 Speaker 1: just one piece of the puzzle. Right, So we have 22 00:01:17,160 --> 00:01:19,920 Speaker 1: to really think about financial conditions when we look at 23 00:01:20,080 --> 00:01:22,520 Speaker 1: interest rates and we say, is this the right interest 24 00:01:22,600 --> 00:01:24,959 Speaker 1: rate for the U? S. Economy? We have to look 25 00:01:25,000 --> 00:01:26,640 Speaker 1: at what equities are doing, we have to look at 26 00:01:26,640 --> 00:01:28,560 Speaker 1: what credit spreads are doing, we have to look at 27 00:01:28,600 --> 00:01:31,840 Speaker 1: what other I'm sure is what President Trump is thinking 28 00:01:31,840 --> 00:01:34,200 Speaker 1: about and saying and what it was his point and 29 00:01:34,280 --> 00:01:36,920 Speaker 1: having J Powell come well, you know, look, I don't 30 00:01:36,920 --> 00:01:38,759 Speaker 1: know it was. It was a surprise meeting. But let's 31 00:01:38,760 --> 00:01:40,840 Speaker 1: think about the people who were there, right, So you 32 00:01:40,880 --> 00:01:43,960 Speaker 1: had J. Powell, you had the Treasury Secretary Manuchum, Right, 33 00:01:44,000 --> 00:01:46,400 Speaker 1: so you've got the person who sets the interest rate, 34 00:01:46,440 --> 00:01:48,280 Speaker 1: and then you've got the person, which is you know, 35 00:01:48,320 --> 00:01:52,080 Speaker 1: the Treasury, who can actually affect dollar policy. So my 36 00:01:52,160 --> 00:01:54,760 Speaker 1: guess is at the behind the scenes conversation was how 37 00:01:54,800 --> 00:01:57,640 Speaker 1: can you two guys work together to get the dollar weaker? 38 00:01:57,720 --> 00:02:00,520 Speaker 1: Now that's just conjecture. I don't know, I wasn't the air, 39 00:02:00,600 --> 00:02:02,680 Speaker 1: but it would seem that that would be consistent with 40 00:02:02,720 --> 00:02:05,360 Speaker 1: what Trump has been trying to do. For a period 41 00:02:05,400 --> 00:02:07,320 Speaker 1: of time. And what and what the FED is saying 42 00:02:07,360 --> 00:02:10,640 Speaker 1: is completely appropriate in my opinion, which is that you 43 00:02:10,760 --> 00:02:13,160 Speaker 1: have to look at rates relative to other assets. If 44 00:02:13,200 --> 00:02:15,240 Speaker 1: you push rates down too much, you're gonna get an 45 00:02:15,280 --> 00:02:18,360 Speaker 1: equity bubble? Is that what you want? You know? Could 46 00:02:18,360 --> 00:02:21,040 Speaker 1: that create a bigger crash down you know, down the line, 47 00:02:21,120 --> 00:02:23,360 Speaker 1: or a bigger you know, declined down the line. We 48 00:02:23,400 --> 00:02:25,400 Speaker 1: don't want that. We want stability. And I think that's 49 00:02:25,400 --> 00:02:27,440 Speaker 1: what the that's where the FED is coming out on 50 00:02:27,480 --> 00:02:29,560 Speaker 1: this whole thing. But look, you know, if you ever 51 00:02:29,560 --> 00:02:31,440 Speaker 1: met a real estate guy that ever thought that interest 52 00:02:31,520 --> 00:02:33,040 Speaker 1: rates were too you know, you know, we're too low. 53 00:02:33,080 --> 00:02:35,119 Speaker 1: I mean, they always want rates low. So I think 54 00:02:35,160 --> 00:02:37,079 Speaker 1: that's where um, I think that's where Trump is coming 55 00:02:37,080 --> 00:02:38,400 Speaker 1: out on the whole thing, and he's trying to get 56 00:02:38,440 --> 00:02:40,840 Speaker 1: Minution to work with it. But look, I think this 57 00:02:40,919 --> 00:02:43,360 Speaker 1: is really just um, you know, the dollar is going 58 00:02:43,440 --> 00:02:46,760 Speaker 1: to move through global growth and expectations and other things. 59 00:02:46,840 --> 00:02:49,360 Speaker 1: It's bigger than just what j Powe can do. But 60 00:02:49,440 --> 00:02:52,120 Speaker 1: let's be fed, Jim and ASA moves. I'm right differentials, 61 00:02:52,240 --> 00:02:55,200 Speaker 1: We'll get taught that FX one. I want right differentials, 62 00:02:55,280 --> 00:02:58,359 Speaker 1: right differentials. The FED funds right once seventy five, the 63 00:02:58,480 --> 00:03:01,560 Speaker 1: policy right, the deepot right now, the CP negative fifty 64 00:03:01,560 --> 00:03:04,799 Speaker 1: paces points. You kind of make the argument that if 65 00:03:04,800 --> 00:03:06,320 Speaker 1: the FED looked at the rest of the world and 66 00:03:06,360 --> 00:03:09,320 Speaker 1: wanted a weak a dollar, they can do that through rights. Sure, 67 00:03:09,400 --> 00:03:12,160 Speaker 1: I understand the broader considerations, but the president's point on 68 00:03:12,200 --> 00:03:16,240 Speaker 1: a strong, good dollar and right differentials does stand. It 69 00:03:16,280 --> 00:03:18,840 Speaker 1: does stand right, it does. It does hold water in 70 00:03:19,080 --> 00:03:21,959 Speaker 1: that principle that you could push rates lower to the 71 00:03:22,000 --> 00:03:24,120 Speaker 1: extent that you could weaken the dollar. But the thing 72 00:03:24,200 --> 00:03:26,239 Speaker 1: is is we have to look at collateral damaging. Yes, 73 00:03:26,320 --> 00:03:28,040 Speaker 1: you could do that, and I think the argument back 74 00:03:28,040 --> 00:03:29,880 Speaker 1: from the Fed is, of course we could do that. 75 00:03:29,919 --> 00:03:33,000 Speaker 1: Interest rate differentials do matter, but then what other damage 76 00:03:33,000 --> 00:03:35,720 Speaker 1: do you create later on? So let's say, for example, 77 00:03:35,760 --> 00:03:37,840 Speaker 1: we get the first impulse, the dollar gets weaker, global 78 00:03:37,880 --> 00:03:40,200 Speaker 1: growth gets a little bit better. Everything is fine. But 79 00:03:40,240 --> 00:03:42,640 Speaker 1: then you create an asset bubble in a lot of 80 00:03:42,640 --> 00:03:44,920 Speaker 1: other places. Could be housing, could be equities, could be 81 00:03:44,960 --> 00:03:48,720 Speaker 1: other areas. Then the economy slows dramatically, the dollar and 82 00:03:48,760 --> 00:03:51,320 Speaker 1: if the if global growth souls dramatically at the same time, 83 00:03:51,600 --> 00:03:54,920 Speaker 1: the dollar is actually gonna appreciate by even more so 84 00:03:55,000 --> 00:03:57,680 Speaker 1: the argument could be that, look, you know, we are 85 00:03:57,720 --> 00:04:00,000 Speaker 1: trying to get the dollar a bit weaker. We understand 86 00:04:00,000 --> 00:04:01,400 Speaker 1: in the view, but it's going to be a very 87 00:04:01,480 --> 00:04:04,880 Speaker 1: very slow process. Please have patients this very conversation underlying, 88 00:04:05,080 --> 00:04:08,520 Speaker 1: underlying the need to have federal reserve independence as a house. 89 00:04:08,560 --> 00:04:11,200 Speaker 1: Though Morgan Stanley been calling for a Wika dolla for 90 00:04:11,280 --> 00:04:13,640 Speaker 1: Quanta wild Jim still calling for a wik of dollar, 91 00:04:13,880 --> 00:04:16,279 Speaker 1: what's driving it? Yeah, so look it's it's my good 92 00:04:16,279 --> 00:04:18,000 Speaker 1: friend Hans Rhecker, who I think is one of the 93 00:04:18,000 --> 00:04:20,400 Speaker 1: best in the in the business as an effect strategist. 94 00:04:20,480 --> 00:04:22,680 Speaker 1: And you know, his idea behind the whole thing is 95 00:04:22,920 --> 00:04:25,039 Speaker 1: it's really about the fiscal It's really about debt in 96 00:04:25,160 --> 00:04:28,720 Speaker 1: supply of of of U. S. Treasuries and a fiscal deficit. 97 00:04:29,120 --> 00:04:32,040 Speaker 1: And ultimately what his belief is is that as a 98 00:04:32,160 --> 00:04:34,080 Speaker 1: US takes on more and more debt, the debt to 99 00:04:34,160 --> 00:04:37,080 Speaker 1: GDP rises, at some point there has to be an 100 00:04:37,080 --> 00:04:39,400 Speaker 1: adjustment with the rest of the world and that is 101 00:04:39,440 --> 00:04:42,039 Speaker 1: probably going to come in the form of a of 102 00:04:42,040 --> 00:04:46,640 Speaker 1: a currency devaluation. Perfectly logical. Yesterday there were some calls 103 00:04:46,720 --> 00:04:49,880 Speaker 1: out of your house about the cracks in credit in 104 00:04:49,920 --> 00:04:53,520 Speaker 1: particular lower rated credit and people have been expecting this 105 00:04:53,680 --> 00:04:56,560 Speaker 1: for a long time. We've seen those cracks. What would 106 00:04:56,600 --> 00:04:59,760 Speaker 1: make you more bullish? So look, I mean for me 107 00:05:00,000 --> 00:05:02,200 Speaker 1: and I understand that if you look, for example, at 108 00:05:02,200 --> 00:05:04,599 Speaker 1: the high yield markets, right you look at single bees 109 00:05:04,640 --> 00:05:07,960 Speaker 1: and triple c's and they have severely, severely underperformed the 110 00:05:08,000 --> 00:05:10,440 Speaker 1: double B segment of the high yield market. So the 111 00:05:10,520 --> 00:05:14,159 Speaker 1: lower quality credits, for example, all across the spectrum have 112 00:05:14,360 --> 00:05:17,560 Speaker 1: done a lot worse. Now why is that? The reason 113 00:05:17,600 --> 00:05:20,280 Speaker 1: why that is is because the cyclical parts of the 114 00:05:20,320 --> 00:05:23,680 Speaker 1: market right now, more of the industrials, more of the chemicals, 115 00:05:23,720 --> 00:05:26,800 Speaker 1: the materials, all these other manufacturing. Look at what the 116 00:05:26,839 --> 00:05:28,240 Speaker 1: I s M s have done, which have done very 117 00:05:28,320 --> 00:05:31,000 Speaker 1: very poorly, have given a read through to the market 118 00:05:31,160 --> 00:05:33,800 Speaker 1: over the next six to twelve months that earnings are 119 00:05:33,800 --> 00:05:36,080 Speaker 1: going to be weak in those sectors. Now, listen to 120 00:05:36,120 --> 00:05:38,960 Speaker 1: what I'm saying, which is something very very different, which 121 00:05:38,960 --> 00:05:40,440 Speaker 1: is I think that we're going to get a mini 122 00:05:40,480 --> 00:05:45,039 Speaker 1: cyclical recovery and that those unloved sectors could actually do better. So, 123 00:05:45,040 --> 00:05:47,159 Speaker 1: so what would change is if you do get the 124 00:05:47,200 --> 00:05:49,679 Speaker 1: cyclical recovery, you get I S M s back above fifty, 125 00:05:49,720 --> 00:05:51,640 Speaker 1: which I think is very very doable over the next 126 00:05:51,680 --> 00:05:54,080 Speaker 1: couple of months. P m I is back there, then 127 00:05:54,120 --> 00:05:56,760 Speaker 1: you're gonna get those cyclicals. Chemicals in particular as a 128 00:05:56,800 --> 00:06:00,919 Speaker 1: sector could do extraordinarily well. So I would take UM 129 00:06:00,960 --> 00:06:03,440 Speaker 1: from an investor's perspective, I'm gonna say, a lot of 130 00:06:03,480 --> 00:06:05,560 Speaker 1: bad stuff is in the price. Am I buying this 131 00:06:05,600 --> 00:06:07,520 Speaker 1: at the right price to take this back? If you 132 00:06:07,560 --> 00:06:10,960 Speaker 1: get marginally higher interest rates, does that marginally bring the 133 00:06:11,000 --> 00:06:14,440 Speaker 1: p multiple in over in the stock world? And Mike Wilson, well, 134 00:06:14,640 --> 00:06:16,920 Speaker 1: you know, it depends on why rates are going up. 135 00:06:16,960 --> 00:06:19,240 Speaker 1: So if we have to go back to to think 136 00:06:19,240 --> 00:06:21,320 Speaker 1: about this, Tom right. So so the last I don't 137 00:06:21,320 --> 00:06:24,960 Speaker 1: remember if we were you were five years old UM 138 00:06:25,000 --> 00:06:26,719 Speaker 1: at the time. But but the but no, but look, 139 00:06:26,720 --> 00:06:30,320 Speaker 1: I mean in nine, the FED went through a mid 140 00:06:30,360 --> 00:06:33,360 Speaker 1: cycle reset where they hike rates three basis points in 141 00:06:33,440 --> 00:06:36,680 Speaker 1: nine and through ninety five into January of ninety six, 142 00:06:36,720 --> 00:06:40,160 Speaker 1: they cut rates as an insurance cut for UM, you know, 143 00:06:40,440 --> 00:06:42,440 Speaker 1: you know, for the markets three times, so they cut 144 00:06:42,440 --> 00:06:46,200 Speaker 1: by seventy five basis points. What followed was higher yield, 145 00:06:46,320 --> 00:06:49,919 Speaker 1: a steeper yield curve, a better equity market UM better, 146 00:06:50,880 --> 00:06:54,520 Speaker 1: tighter credit spreads right exactly so effectively what you can 147 00:06:54,560 --> 00:06:57,600 Speaker 1: get when you when you place this big insurance um 148 00:06:57,720 --> 00:07:00,320 Speaker 1: premium out the light cutting rates and you don't get 149 00:07:00,320 --> 00:07:03,040 Speaker 1: the recession that what you've ended up doing is bolstering 150 00:07:03,080 --> 00:07:06,600 Speaker 1: the economy for the next My log extrapolation on Dow 151 00:07:06,720 --> 00:07:10,920 Speaker 1: thirty thousand is September at ten pm next year. Can 152 00:07:10,960 --> 00:07:14,520 Speaker 1: you go with me on that? Look, I'm optimistic, okay, Um, 153 00:07:15,200 --> 00:07:17,960 Speaker 1: you know at this point again, looking at cash flows, 154 00:07:18,000 --> 00:07:22,720 Speaker 1: looking at how I discount cash flows, it seems to leave. 155 00:07:22,720 --> 00:07:26,560 Speaker 1: While you're thank you so much of Morgan Stanley, greatly 156 00:07:27,200 --> 00:07:43,000 Speaker 1: appreciate it. We are here knowing that the three of 157 00:07:43,080 --> 00:07:44,800 Speaker 1: us have not been in a home depot and what 158 00:07:45,040 --> 00:07:49,120 Speaker 1: eight months nine months one da stairs. I know it 159 00:07:49,280 --> 00:07:55,320 Speaker 1: sounds I fixed my own door, hinge, I did go in, 160 00:07:55,560 --> 00:07:57,600 Speaker 1: I bought a hinge, I brought my old one. And 161 00:07:58,600 --> 00:08:00,720 Speaker 1: I just want to put that phase a drill. And 162 00:08:00,800 --> 00:08:03,200 Speaker 1: all that now is Manuel, you just trying to drag 163 00:08:03,280 --> 00:08:08,400 Speaker 1: us down with you into your elitist world. Spurred on 164 00:08:08,480 --> 00:08:11,560 Speaker 1: this is Sarah Halsick, who joins us now from Bloomberg. 165 00:08:11,680 --> 00:08:15,160 Speaker 1: She knows a difference between cabinet grade plywood panel at 166 00:08:15,200 --> 00:08:19,160 Speaker 1: thirty five dollars thirty six aboard versus the garbage stuff 167 00:08:19,160 --> 00:08:22,640 Speaker 1: I buy. She knows that every day Sarah Home Depot. 168 00:08:23,280 --> 00:08:26,760 Speaker 1: Is it about the traditional home depot stuff we think about, 169 00:08:27,320 --> 00:08:30,840 Speaker 1: or are there challenges like a new project that's not 170 00:08:30,920 --> 00:08:33,720 Speaker 1: working out. Yeah, So what they called out in the 171 00:08:33,720 --> 00:08:36,880 Speaker 1: press release was that this initiative they have called one 172 00:08:36,960 --> 00:08:40,520 Speaker 1: Home Depot, that progress is progress is moving slower on 173 00:08:40,520 --> 00:08:42,600 Speaker 1: it than they thought. So essentially this is their name 174 00:08:42,640 --> 00:08:45,240 Speaker 1: for their long term strategic plan to kind of bridge 175 00:08:45,760 --> 00:08:48,160 Speaker 1: the physical stores and the online stores that for a 176 00:08:48,200 --> 00:08:51,959 Speaker 1: long time, uh, those businesses had existed in separate silos, 177 00:08:52,040 --> 00:08:54,240 Speaker 1: and that they need to break that down both from 178 00:08:54,240 --> 00:08:56,920 Speaker 1: a consumer facing perspective and behind the scenes. So they've 179 00:08:56,960 --> 00:08:58,800 Speaker 1: been doing a lot of work to make sure the 180 00:08:58,840 --> 00:09:01,760 Speaker 1: I T and supply chain is more seamless between those 181 00:09:01,800 --> 00:09:04,240 Speaker 1: two things, and that it's easier for customers to ping 182 00:09:04,240 --> 00:09:07,560 Speaker 1: pong back and forth between browsing online and coming to 183 00:09:07,600 --> 00:09:09,640 Speaker 1: the store to buy something or perhaps doing something like 184 00:09:09,679 --> 00:09:12,480 Speaker 1: buy online, pickup in the store. And so this was 185 00:09:12,600 --> 00:09:14,520 Speaker 1: unusual for Home Depot. You know, this has been a 186 00:09:14,559 --> 00:09:18,679 Speaker 1: retailer that is just remarkably consistent over the last several years, 187 00:09:18,720 --> 00:09:23,880 Speaker 1: despite these retail apocalypse conditions, and here they were essentially 188 00:09:23,920 --> 00:09:26,480 Speaker 1: conceding that that they had held the market b I mean, John, 189 00:09:26,520 --> 00:09:29,160 Speaker 1: I never knew this. You can buy quarter quarter inch 190 00:09:29,520 --> 00:09:33,000 Speaker 1: premium Baltic birch plywood from Amazon. Who would have funk? 191 00:09:33,080 --> 00:09:35,000 Speaker 1: Who would have thought? Who would have thought? So, Sarah, 192 00:09:35,080 --> 00:09:38,000 Speaker 1: Whenever anything over delivers or under delivers, I always asked 193 00:09:38,040 --> 00:09:40,959 Speaker 1: the question, is it execution or lack of execution or 194 00:09:41,000 --> 00:09:44,840 Speaker 1: the broader market which one is in. It appears to 195 00:09:44,880 --> 00:09:46,760 Speaker 1: be lack of execution. And I think we're going to 196 00:09:46,840 --> 00:09:49,040 Speaker 1: get more detail from them on their call at nine o'clock. 197 00:09:49,080 --> 00:09:51,920 Speaker 1: The press release was very vague, just saying that, you know, 198 00:09:52,040 --> 00:09:55,559 Speaker 1: the pace of this strategic plan was not what they 199 00:09:55,600 --> 00:09:58,280 Speaker 1: expected it to be, but we know that the consumers 200 00:09:58,280 --> 00:10:00,480 Speaker 1: in pretty good shape right now. We saw really strong 201 00:10:00,520 --> 00:10:03,679 Speaker 1: results from Walmart last week, and we saw color from 202 00:10:03,720 --> 00:10:07,480 Speaker 1: their senior executive saying, yeah, consumer to be in good shape, 203 00:10:07,760 --> 00:10:10,120 Speaker 1: and so I don't think that should be be able 204 00:10:10,120 --> 00:10:12,160 Speaker 1: to be a call out for them. Everything is. You know, 205 00:10:12,240 --> 00:10:15,480 Speaker 1: we had heard earlier from them this year about concerns 206 00:10:15,480 --> 00:10:17,840 Speaker 1: about the macro environment. They had taken their guidance down 207 00:10:17,840 --> 00:10:21,240 Speaker 1: by twenty basis points. They said, just conservatism around tariffs, 208 00:10:21,280 --> 00:10:23,960 Speaker 1: and then a few more basis points around lumber deflation. 209 00:10:24,120 --> 00:10:26,680 Speaker 1: We didn't hear that name. We just heard, just heard 210 00:10:26,679 --> 00:10:29,600 Speaker 1: the execution call out. At least if you get the 211 00:10:29,640 --> 00:10:33,319 Speaker 1: hardcover copy, it's fabulous boat building with plywood, Glen Wit 212 00:10:34,040 --> 00:10:37,000 Speaker 1: super book. Thank you. I'm still and I went home 213 00:10:37,480 --> 00:10:40,840 Speaker 1: that Amazon is that, you know, I'm still thinking about 214 00:10:40,840 --> 00:10:43,000 Speaker 1: one Hume Deep. It's out there in the Hudson River 215 00:10:43,880 --> 00:10:46,880 Speaker 1: trust falls with senior executives. I do have to wonder though, 216 00:10:47,120 --> 00:10:51,000 Speaker 1: going forward, Sarah Hall Zack um the whole idea of 217 00:10:51,160 --> 00:10:54,439 Speaker 1: execution at a time of tariffs and trade wars, etcetera, 218 00:10:54,800 --> 00:10:58,640 Speaker 1: how much is that uncertainty affecting the business versus Perhaps 219 00:10:58,720 --> 00:11:01,720 Speaker 1: not as robust how sing market as people had expected, 220 00:11:01,720 --> 00:11:06,200 Speaker 1: because we are seeing some persistent pockets of of weakening. Yeah, 221 00:11:06,240 --> 00:11:08,360 Speaker 1: I would expect that the housing market is playing more 222 00:11:08,400 --> 00:11:10,719 Speaker 1: a role than tariffs at this point, because especially a 223 00:11:10,800 --> 00:11:13,560 Speaker 1: retailer is large as home depot, they have such a 224 00:11:13,720 --> 00:11:17,600 Speaker 1: negotiating power with their suppliers and vendors that, uh, they 225 00:11:17,600 --> 00:11:21,080 Speaker 1: should be able to sort of shoulder at those burdens 226 00:11:21,120 --> 00:11:23,880 Speaker 1: a little more easily than a medium or small retailer. 227 00:11:24,000 --> 00:11:25,360 Speaker 1: I think the other thing that will be interesting to 228 00:11:25,400 --> 00:11:28,880 Speaker 1: see tomorrow when Lowe's reports is if perhaps there's some 229 00:11:28,920 --> 00:11:31,880 Speaker 1: additional competitive pressure going on here. Lows has for the 230 00:11:31,960 --> 00:11:35,080 Speaker 1: last several years kind of been the bride'smaid to Home Depot. 231 00:11:35,559 --> 00:11:37,600 Speaker 1: It has always done well, but not quite as well 232 00:11:37,640 --> 00:11:39,959 Speaker 1: as Home Depot. They have a new CEO who has 233 00:11:39,960 --> 00:11:43,360 Speaker 1: a new uh turnaround planning place for that company UM 234 00:11:43,360 --> 00:11:45,840 Speaker 1: and there's been some discussion that perhaps that is starting 235 00:11:45,880 --> 00:11:47,960 Speaker 1: to bear fruit. And so if we see Low's ramping 236 00:11:48,000 --> 00:11:50,840 Speaker 1: up its comps tomorrow, that could be an indication that 237 00:11:50,840 --> 00:11:52,800 Speaker 1: that's some of what's going on with Home Depot this 238 00:11:52,880 --> 00:11:56,640 Speaker 1: morning as well. Sarah, thank you so much. Sarah really appreciated, 239 00:12:10,559 --> 00:12:12,880 Speaker 1: and this is an absolute joy. Usually we're hearing from 240 00:12:12,880 --> 00:12:16,120 Speaker 1: her from New Orleans, Washington wherever she is. Henrietta Tres 241 00:12:16,200 --> 00:12:18,800 Speaker 1: darkens the door with Data Partners, and I want to 242 00:12:18,800 --> 00:12:20,880 Speaker 1: get in a moment you're john to the really the 243 00:12:20,920 --> 00:12:23,160 Speaker 1: topic at hand on Kong. I have to ask you, 244 00:12:23,200 --> 00:12:26,559 Speaker 1: for all of our global Wall Street audience and particularly 245 00:12:26,559 --> 00:12:30,160 Speaker 1: those older, you had the immense privilege out of school 246 00:12:30,720 --> 00:12:34,560 Speaker 1: of working for swag dementa. What was it like having 247 00:12:34,600 --> 00:12:38,120 Speaker 1: Marty's wag dark the giant Marty's wag darkened the door 248 00:12:38,160 --> 00:12:40,320 Speaker 1: every once in a while. It was amazing. It was 249 00:12:40,360 --> 00:12:42,280 Speaker 1: such an honor to be able to be in that 250 00:12:42,400 --> 00:12:45,280 Speaker 1: office and learned so much from the great folks. That 251 00:12:45,360 --> 00:12:47,200 Speaker 1: did he ever say to you, don't fight the Fed? 252 00:12:47,800 --> 00:12:50,760 Speaker 1: He never did. Those those words never came out. But 253 00:12:51,320 --> 00:12:53,080 Speaker 1: I feel like that's something that I would have heard. 254 00:12:53,360 --> 00:12:55,680 Speaker 1: Very cool. What what what did you learn there about 255 00:12:55,760 --> 00:12:57,920 Speaker 1: investment in pulling it over to your world you're in 256 00:12:58,080 --> 00:13:01,080 Speaker 1: right now, pay attended to the detail. That's the most 257 00:13:01,120 --> 00:13:03,920 Speaker 1: important thing. And nothing is too small to overlook. Right now, 258 00:13:03,960 --> 00:13:06,600 Speaker 1: there's a small overlook, John, and it's called Hong Kong, 259 00:13:06,880 --> 00:13:09,240 Speaker 1: and Congress is looking at Well, let's talk about the details. 260 00:13:09,240 --> 00:13:11,240 Speaker 1: The bill has already gone through the House. A different bill, 261 00:13:11,320 --> 00:13:13,720 Speaker 1: slightly different bill is about to go to through the Senate, 262 00:13:13,760 --> 00:13:15,560 Speaker 1: could pass as soon as today. Talk to us about 263 00:13:15,559 --> 00:13:18,760 Speaker 1: the content. Talk to us about the content of that bill, Henriette, 264 00:13:19,040 --> 00:13:21,000 Speaker 1: and what it could make. The content of the bill 265 00:13:21,240 --> 00:13:25,520 Speaker 1: is part of the problem. Obviously, it aims to make 266 00:13:25,559 --> 00:13:29,600 Speaker 1: sure that Hong Kong has autonomy in China, but The 267 00:13:29,640 --> 00:13:32,600 Speaker 1: biggest issue that I have with it is that China, 268 00:13:32,800 --> 00:13:35,120 Speaker 1: even though as you mentioned, the House bill was watered 269 00:13:35,120 --> 00:13:37,800 Speaker 1: down substantially and allowed for the White House and the 270 00:13:37,840 --> 00:13:41,679 Speaker 1: President specifically to override any decision or determination of the 271 00:13:41,679 --> 00:13:44,040 Speaker 1: State Department of the House of the Senate made about 272 00:13:44,080 --> 00:13:46,840 Speaker 1: the autonomy and the ability of Hong Kong to be 273 00:13:46,920 --> 00:13:51,280 Speaker 1: independent and received preferential trade status. Beijing responded very negatively 274 00:13:51,280 --> 00:13:53,200 Speaker 1: to the fact that we even held the vote, and 275 00:13:53,360 --> 00:13:55,559 Speaker 1: has been very clear that a Senate vote would be 276 00:13:55,640 --> 00:13:59,320 Speaker 1: extraordinarily problematic meddling in their independence. And I think even 277 00:13:59,360 --> 00:14:02,000 Speaker 1: the vote it's self is a problem, let alone passing it. 278 00:14:02,000 --> 00:14:05,200 Speaker 1: It could happen today. Emphasize it could happen today. Let's 279 00:14:05,200 --> 00:14:07,200 Speaker 1: talk about where it would leave the President of the 280 00:14:07,240 --> 00:14:09,840 Speaker 1: United States, who at the moment is trying to negotiate 281 00:14:10,160 --> 00:14:13,080 Speaker 1: a trade truce, right. I mean, I think the biggest 282 00:14:13,080 --> 00:14:14,480 Speaker 1: thing we need to focus on is the fact that 283 00:14:14,480 --> 00:14:17,319 Speaker 1: the trade truce has not come together. We are, as 284 00:14:17,320 --> 00:14:19,440 Speaker 1: you mentioned before, on week six, it was supposed to 285 00:14:19,480 --> 00:14:22,040 Speaker 1: be three to five weeks. I think we're in arguably 286 00:14:22,080 --> 00:14:24,360 Speaker 1: already a delay phase uh, and I don't know that 287 00:14:24,400 --> 00:14:27,360 Speaker 1: phase one is necessarily going to come. I think a 288 00:14:27,440 --> 00:14:31,760 Speaker 1: vote on the Rubio legislation would be very real risk 289 00:14:31,880 --> 00:14:34,400 Speaker 1: to China continuing to stay at the negotiating table. I 290 00:14:34,480 --> 00:14:36,320 Speaker 1: think that they need to buy pork, they need to 291 00:14:36,320 --> 00:14:38,640 Speaker 1: buy protein from us right now, and so it's this 292 00:14:38,760 --> 00:14:41,840 Speaker 1: unique little window of time where everybody can get along. 293 00:14:42,280 --> 00:14:44,960 Speaker 1: But it's pretty heavily problematic to even have the vote. 294 00:14:45,000 --> 00:14:48,160 Speaker 1: To be clear here, Henrietta, even if the President vetos this, 295 00:14:48,520 --> 00:14:50,240 Speaker 1: which you may well veto it, and if it passes 296 00:14:50,240 --> 00:14:51,520 Speaker 1: the Senate, it's still got to go back to the 297 00:14:51,560 --> 00:14:53,560 Speaker 1: House and pass again, which could take another few weeks 298 00:14:53,600 --> 00:14:56,720 Speaker 1: because of the Thanksgiving recess. But even if the President 299 00:14:56,840 --> 00:14:59,320 Speaker 1: vetos it, you think this could upset the Chinese enough 300 00:14:59,360 --> 00:15:01,480 Speaker 1: that it just is the Senate and they could walk 301 00:15:01,480 --> 00:15:03,760 Speaker 1: away from the negotiated title. Just having the vote is 302 00:15:03,800 --> 00:15:07,520 Speaker 1: extraordinarily problematic because of the optics. Um. The bill obviously 303 00:15:07,560 --> 00:15:09,600 Speaker 1: will not pass immediately, it doesn't become law, and it 304 00:15:09,600 --> 00:15:11,600 Speaker 1: gives the State Department a year to do these audits, 305 00:15:11,600 --> 00:15:14,960 Speaker 1: so it's not an immediate ramification that China then has 306 00:15:15,000 --> 00:15:17,760 Speaker 1: to accept or tolerate with regards to Hong Kong and 307 00:15:17,800 --> 00:15:20,480 Speaker 1: their trade relationship there. Um, it's not like the section 308 00:15:20,480 --> 00:15:22,840 Speaker 1: three of one tires would immediately apply to China, But 309 00:15:23,000 --> 00:15:26,000 Speaker 1: it is the optics that I think China most aggressively opposes. Well, 310 00:15:26,040 --> 00:15:28,000 Speaker 1: if you take a step forward and just sort of 311 00:15:28,040 --> 00:15:32,120 Speaker 1: extrapolate out, if the escalation in Hong Kong continues, what 312 00:15:32,400 --> 00:15:36,280 Speaker 1: is the impact untrained negotiations that could be potentially detrimental 313 00:15:36,480 --> 00:15:39,040 Speaker 1: in a way that markets are not pricing in right now. 314 00:15:39,080 --> 00:15:42,800 Speaker 1: I think it's really the pressure that the senators and 315 00:15:43,040 --> 00:15:46,080 Speaker 1: lawmakers in the House and outside external forces, kind of 316 00:15:46,080 --> 00:15:47,840 Speaker 1: like what we saw with the NBA. The longer you 317 00:15:47,960 --> 00:15:51,240 Speaker 1: have this tension brewing in Hong Kong and the threat 318 00:15:51,280 --> 00:15:54,360 Speaker 1: of China stepping in in a more aggressive fashion makes 319 00:15:54,360 --> 00:15:58,360 Speaker 1: it impossible for lawmakers to stay silent, and that silence 320 00:15:58,560 --> 00:16:00,920 Speaker 1: is what allows for the president to made silent, and 321 00:16:01,120 --> 00:16:04,080 Speaker 1: the domino effect of that is really the biggest problem. 322 00:16:04,120 --> 00:16:06,640 Speaker 1: All of the trade wars so heavily about optics and 323 00:16:06,680 --> 00:16:10,080 Speaker 1: about especially in China, about face, and I think having 324 00:16:10,320 --> 00:16:14,800 Speaker 1: even the vote uh and the messaging is a huge risk, 325 00:16:14,800 --> 00:16:16,800 Speaker 1: probably the biggest risks. We were actually in London last 326 00:16:16,800 --> 00:16:18,640 Speaker 1: week meeting with clients and they woke up and said, 327 00:16:18,880 --> 00:16:20,440 Speaker 1: you know, the first thing I look up in the morning. 328 00:16:20,520 --> 00:16:22,200 Speaker 1: Is not the FED. We don't care about interest rates 329 00:16:22,280 --> 00:16:23,960 Speaker 1: right now, it's what's going on in Hong Kong. Are 330 00:16:24,000 --> 00:16:26,440 Speaker 1: they going to escalate? If they do? What does the 331 00:16:26,480 --> 00:16:29,280 Speaker 1: United States feel pressure to do? Do you think, and 332 00:16:29,320 --> 00:16:31,320 Speaker 1: we have the threat of a more aggressive Congress is 333 00:16:31,360 --> 00:16:34,360 Speaker 1: actually tempering China's response to what is happening in Hong 334 00:16:34,440 --> 00:16:38,520 Speaker 1: Kong at the moment. It's a good question. I mean possibly, 335 00:16:38,640 --> 00:16:41,440 Speaker 1: I wouldn't say that our senators are the most impactful 336 00:16:41,480 --> 00:16:42,840 Speaker 1: thing in the world to them, but I think they 337 00:16:42,880 --> 00:16:45,600 Speaker 1: know that there's a fine line. I also think that 338 00:16:45,680 --> 00:16:48,760 Speaker 1: the unrest has the potential to be a positive for 339 00:16:48,960 --> 00:16:52,240 Speaker 1: President she as he is able to illustrate. You know, 340 00:16:52,320 --> 00:16:54,320 Speaker 1: this is the United States or other countries trying to 341 00:16:54,320 --> 00:16:57,120 Speaker 1: meddle in our sovereignty. Certainly you don't support that. You've 342 00:16:57,120 --> 00:16:58,960 Speaker 1: got to support me. You mentioned the MB and I 343 00:16:58,960 --> 00:17:01,000 Speaker 1: actually think that's one of the most interesting developments of 344 00:17:01,000 --> 00:17:02,600 Speaker 1: the last couple of months. And not tell any why. 345 00:17:03,000 --> 00:17:05,480 Speaker 1: I believe that multinational companies are really going to struggle 346 00:17:05,520 --> 00:17:08,760 Speaker 1: in the coming decade to please a progressive base at 347 00:17:08,800 --> 00:17:12,320 Speaker 1: home in countries like the United States and maintain a 348 00:17:12,400 --> 00:17:17,679 Speaker 1: presence in repressive states, repressive countries like China. What do 349 00:17:17,720 --> 00:17:21,160 Speaker 1: you think that is heading, Henrietta, It's that's a fantastic question. 350 00:17:21,200 --> 00:17:23,400 Speaker 1: I've just been having conversations about that with staff. They're 351 00:17:23,400 --> 00:17:26,320 Speaker 1: all thinking about how are we going to be able 352 00:17:26,359 --> 00:17:31,000 Speaker 1: to regulate or keep these multinationals, particularly on the Republican side, 353 00:17:31,119 --> 00:17:33,760 Speaker 1: from getting too aggressive on things like China, of course, 354 00:17:33,800 --> 00:17:36,080 Speaker 1: but also climate change or any of this proactive stuff 355 00:17:36,080 --> 00:17:38,560 Speaker 1: that's being driven by either the shareholders of the consumers 356 00:17:38,560 --> 00:17:41,520 Speaker 1: and the purchasers of their products. And it's something that 357 00:17:42,000 --> 00:17:45,520 Speaker 1: they are hoping the multinationals don't get to a head on. 358 00:17:45,600 --> 00:17:50,560 Speaker 1: But the multinationals clearly feel pressured to act regardless of legislation. 359 00:17:50,840 --> 00:17:53,160 Speaker 1: What will is Using Ping do with that power if 360 00:17:53,200 --> 00:17:55,919 Speaker 1: he gets it, if it does solidify due to what 361 00:17:55,960 --> 00:17:59,000 Speaker 1: we're seeing in Hong Kong, I mean, I think President 362 00:17:59,080 --> 00:18:02,600 Speaker 1: she is doing exactly what he would like to do, 363 00:18:02,600 --> 00:18:06,520 Speaker 1: which is advanced his own platform in China, is solidifying 364 00:18:06,560 --> 00:18:10,960 Speaker 1: support domestically, UM continuing to act in a really assertive 365 00:18:11,000 --> 00:18:13,600 Speaker 1: fashion on a global stage, get involved with the EU, 366 00:18:13,720 --> 00:18:16,600 Speaker 1: get involved with Italy, getting involved with the Czech Republic 367 00:18:16,920 --> 00:18:20,199 Speaker 1: UM and make as much headway on the global stage 368 00:18:20,240 --> 00:18:23,920 Speaker 1: for his own UM advancement of China, which is, in 369 00:18:24,040 --> 00:18:26,600 Speaker 1: my opinion, their long term goal. What is the linkage 370 00:18:26,680 --> 00:18:30,520 Speaker 1: right now, with your expertise, Henriette of Capitol Hill with 371 00:18:30,600 --> 00:18:34,720 Speaker 1: the Pentagon. The President's relationship with the Pentagon is extraordinary, 372 00:18:34,760 --> 00:18:38,000 Speaker 1: witness the War Crime Board over the week and the pardons. 373 00:18:38,520 --> 00:18:41,600 Speaker 1: But what does the relationship the Senate leadership and House 374 00:18:41,760 --> 00:18:45,560 Speaker 1: leadership with a Pentagon? Are they remotely on the same page. 375 00:18:46,080 --> 00:18:48,919 Speaker 1: I think that the loss of General Mattis was a 376 00:18:48,920 --> 00:18:52,440 Speaker 1: pretty big deal in connecting the Capital to that side 377 00:18:52,440 --> 00:18:55,960 Speaker 1: of the federal government. UM. One of the more interesting 378 00:18:55,960 --> 00:18:59,119 Speaker 1: developments is the entities list that we and the export 379 00:18:59,160 --> 00:19:02,560 Speaker 1: control restrictions that we're working on, which I understand is 380 00:19:02,600 --> 00:19:05,840 Speaker 1: being driven largely by the State Department, by Pentagon, by Sephius, 381 00:19:05,920 --> 00:19:09,879 Speaker 1: by Treasury and the military. Aspects of restricting trade with 382 00:19:10,000 --> 00:19:13,240 Speaker 1: China is something that lawmakers on Capitol Hill are very 383 00:19:13,280 --> 00:19:16,200 Speaker 1: supportive of. Indeed, there was a bill introduced yesterday, UM 384 00:19:16,240 --> 00:19:19,679 Speaker 1: to try to get more clarity on what those agencies, 385 00:19:19,680 --> 00:19:22,960 Speaker 1: what the Pentagon is doing, in order to you said, John, 386 00:19:23,000 --> 00:19:26,800 Speaker 1: we make it a vote today. Is that the possibility Washington, 387 00:19:27,600 --> 00:19:30,960 Speaker 1: What happens after the vote. I mean, can you guest 388 00:19:31,040 --> 00:19:34,280 Speaker 1: estimate out the response of China to that moment that 389 00:19:34,400 --> 00:19:37,040 Speaker 1: John mentions, I mean, what we've seen so far is 390 00:19:37,080 --> 00:19:41,040 Speaker 1: they issue very public rebukes, strongly condemning the move, calling 391 00:19:41,080 --> 00:19:45,200 Speaker 1: the United States arrogant um meddling. And I think that 392 00:19:45,520 --> 00:19:49,720 Speaker 1: in turn advances President She's ability to say, look, we're 393 00:19:49,760 --> 00:19:52,080 Speaker 1: not going to deal with the United States, they're the aggressor. 394 00:19:52,200 --> 00:19:54,080 Speaker 1: It makes it incumbent upon the White House to take 395 00:19:54,119 --> 00:19:57,120 Speaker 1: more of their tariffs off and generally complicates the work 396 00:19:57,160 --> 00:19:59,520 Speaker 1: of usd R Lifehiser and I mean, just to wrap 397 00:19:59,600 --> 00:20:02,600 Speaker 1: this all up just shortly, what do you think the 398 00:20:02,680 --> 00:20:05,280 Speaker 1: chances of a short term truce are in the next 399 00:20:05,640 --> 00:20:09,440 Speaker 1: month or so. I think there's a chance we either 400 00:20:09,560 --> 00:20:12,040 Speaker 1: delay into the end of this year or maybe even 401 00:20:12,080 --> 00:20:14,280 Speaker 1: to the first quarter of next year, and or get 402 00:20:14,320 --> 00:20:16,800 Speaker 1: a Phase one deal done that will be very small. 403 00:20:16,840 --> 00:20:19,440 Speaker 1: With ods, we expect that there will be more TIFFs, 404 00:20:19,760 --> 00:20:22,080 Speaker 1: and for me, that's pretty bullish. That's that's pretty optimistic 405 00:20:22,119 --> 00:20:24,719 Speaker 1: for me. In Ritta, great to catch you you henr 406 00:20:26,280 --> 00:20:28,760 Speaker 1: in New York. Absolutely fantastic, And there is a line 407 00:20:28,800 --> 00:20:31,760 Speaker 1: of the stand here for this Phase one negotiation process, Tom, 408 00:20:31,760 --> 00:20:34,159 Speaker 1: and that phase one negotiate a process. Line in the 409 00:20:34,160 --> 00:20:51,359 Speaker 1: sand is December fift If you are a value investor, 410 00:20:51,680 --> 00:20:54,280 Speaker 1: if you are someone waiting for the great shift away 411 00:20:54,320 --> 00:20:57,520 Speaker 1: from the seven stocks that are moonshots, this is without 412 00:20:57,600 --> 00:21:00,399 Speaker 1: question the interview of the day. David Harrow is with 413 00:21:00,480 --> 00:21:04,840 Speaker 1: Oakmark and Harris Associates. He has had an absolutely exquisite 414 00:21:04,840 --> 00:21:07,720 Speaker 1: tack record, including in the last three months in the 415 00:21:08,800 --> 00:21:12,960 Speaker 1: percentile that's pretty good, except it's been a real slog 416 00:21:13,000 --> 00:21:15,520 Speaker 1: for the last couple of years. David, to cut to 417 00:21:15,600 --> 00:21:19,280 Speaker 1: the chase, is value finally back in vogue and can 418 00:21:19,320 --> 00:21:24,120 Speaker 1: the international shift that's a glimmer now can sustain over 419 00:21:24,160 --> 00:21:28,640 Speaker 1: the next twenty four months. I don't think good morning Tom. 420 00:21:28,680 --> 00:21:30,639 Speaker 1: By the way, I can't believe you haven't mentioned the 421 00:21:30,640 --> 00:21:33,080 Speaker 1: Green Bay Packers being eight and too. But we'll forget 422 00:21:33,119 --> 00:21:40,080 Speaker 1: about that. We'll get there anyway. You know, I think 423 00:21:40,119 --> 00:21:45,280 Speaker 1: this is a very early stage of a value recovery. Clearly, 424 00:21:45,320 --> 00:21:47,720 Speaker 1: what we've seen over almost the better part of a 425 00:21:47,760 --> 00:21:51,639 Speaker 1: decade is a huge separation between you know, what is 426 00:21:51,680 --> 00:21:55,200 Speaker 1: known as growth stocks, momentum stocks, and value and we've 427 00:21:55,200 --> 00:21:57,560 Speaker 1: seen a couple at least a couple of standard deviations. 428 00:21:57,600 --> 00:22:03,240 Speaker 1: You've seen huge differentials and valuations of the businesses, and 429 00:22:03,280 --> 00:22:05,679 Speaker 1: now in the last couple of months, we've seen, you know, 430 00:22:05,720 --> 00:22:09,000 Speaker 1: the curves narrow a slightly a little bit. And I 431 00:22:09,040 --> 00:22:13,520 Speaker 1: think given where valuation differentials still exists today in past 432 00:22:14,000 --> 00:22:17,520 Speaker 1: price performance, we're like in the second or first inning 433 00:22:17,800 --> 00:22:22,639 Speaker 1: of what I think should be more realistic prices of 434 00:22:22,720 --> 00:22:27,520 Speaker 1: equities around the globe. But what does that mean. What 435 00:22:27,520 --> 00:22:29,800 Speaker 1: it means is you're going to see at some point 436 00:22:29,840 --> 00:22:34,160 Speaker 1: over the next few years convergence and valuations, whereas over 437 00:22:34,200 --> 00:22:36,800 Speaker 1: the last five, six, seven or eight you've seen just 438 00:22:36,920 --> 00:22:41,480 Speaker 1: the opposite. You've seen valuations drift apart between various sectors. 439 00:22:41,680 --> 00:22:44,440 Speaker 1: Think of a barbell or an hour glass. You had 440 00:22:44,560 --> 00:22:53,480 Speaker 1: extremely heavy weighted valuations and staples and healthcare stocks and utilities, etcetera. 441 00:22:53,720 --> 00:22:58,400 Speaker 1: And you had very very low valuations and consumer discretionary financials. 442 00:22:58,280 --> 00:23:02,280 Speaker 1: And I'm not saying they trade at a premium to 443 00:23:02,520 --> 00:23:07,480 Speaker 1: the expensive sectors, but the differential which just way too large. 444 00:23:07,720 --> 00:23:09,920 Speaker 1: So does that mean that you're gonna see text sell 445 00:23:09,960 --> 00:23:16,199 Speaker 1: off and you're gonna see uh say, industrials outperform. I 446 00:23:16,240 --> 00:23:19,040 Speaker 1: think what you're gonna see is companies that have decent 447 00:23:19,160 --> 00:23:22,919 Speaker 1: cash flow streams that trade at very very low valuations, 448 00:23:23,200 --> 00:23:27,880 Speaker 1: with good dividend yields and efficient cash generation will be revalued. 449 00:23:28,200 --> 00:23:31,760 Speaker 1: And those companies which you are paying, in some cases 450 00:23:31,800 --> 00:23:34,640 Speaker 1: like a Tesla an infinite price for the cash floor 451 00:23:34,680 --> 00:23:37,480 Speaker 1: streams because there's zero free cash flow and it has 452 00:23:37,480 --> 00:23:40,800 Speaker 1: to what sixty or seventy billion enterprise value companies are 453 00:23:40,840 --> 00:23:45,000 Speaker 1: like that, and other companies that cannot justify the price 454 00:23:45,040 --> 00:23:48,879 Speaker 1: you're paying for a stream of cash will come down. David, 455 00:23:48,880 --> 00:23:50,840 Speaker 1: in the time we've got left, please speak on the 456 00:23:50,880 --> 00:23:54,080 Speaker 1: European banks. What an ugly setup it is. You're not 457 00:23:54,119 --> 00:23:57,960 Speaker 1: a Deutsche Bank, are you? You're smarter than that? I 458 00:23:58,000 --> 00:23:59,879 Speaker 1: don't know if it's smarter luck, but no, we're not 459 00:24:00,040 --> 00:24:02,159 Speaker 1: in Deutsche Bank. We're not in Deutsche Bank. But it 460 00:24:02,280 --> 00:24:04,800 Speaker 1: was just the argument I would make for not being 461 00:24:04,800 --> 00:24:07,160 Speaker 1: in it is the business that makes money is not 462 00:24:07,359 --> 00:24:10,320 Speaker 1: very transparent, and where they should be making money in 463 00:24:10,359 --> 00:24:13,720 Speaker 1: their home German retail market, they don't make any money. 464 00:24:13,840 --> 00:24:16,840 Speaker 1: So why we invest in that company when there's quality 465 00:24:16,960 --> 00:24:21,639 Speaker 1: banks like being Pan and Tessa and Lloyd's, etcetera. Yeah, Okay, 466 00:24:21,840 --> 00:24:27,320 Speaker 1: Green Bay Packers eight and two is too old to 467 00:24:27,359 --> 00:24:29,959 Speaker 1: move this thing forward. I mean, you no, but they 468 00:24:30,000 --> 00:24:31,920 Speaker 1: have to protect him. You know, in the games where 469 00:24:31,920 --> 00:24:34,199 Speaker 1: they look so good, he was under pressure and the 470 00:24:34,280 --> 00:24:37,760 Speaker 1: defense doesn't look quite as like an eight and two teams. Yeah, 471 00:24:37,840 --> 00:24:39,320 Speaker 1: I mean, I mean they're not on the edge of 472 00:24:39,359 --> 00:24:43,280 Speaker 1: being as good as the Patriots, right, I don't think so. 473 00:24:43,359 --> 00:24:45,240 Speaker 1: And they're going to have a fight against the Vikings 474 00:24:45,240 --> 00:24:48,720 Speaker 1: in December. See that. See that, that's football talk, John, 475 00:24:48,800 --> 00:24:54,720 Speaker 1: that's American foot North fantastic Kings at the moment. Yeah. 476 00:24:55,600 --> 00:25:00,840 Speaker 1: David Harrod, David Harrow. David Harrow told you pim Bank stuff, 477 00:25:00,880 --> 00:25:03,840 Speaker 1: and you know, just check where the packers are. David, 478 00:25:04,800 --> 00:25:07,679 Speaker 1: thank you so much. He's had a really long patience 479 00:25:07,680 --> 00:25:10,600 Speaker 1: and we should point out, you know, by by perspectives, 480 00:25:10,600 --> 00:25:12,919 Speaker 1: he blows up about every six years. I mean, it 481 00:25:12,960 --> 00:25:15,439 Speaker 1: just doesn't work, and then it works like a charm 482 00:25:15,440 --> 00:25:18,840 Speaker 1: and he's got some terrific turker. There a lot of 483 00:25:18,840 --> 00:25:21,640 Speaker 1: people coming to him. Yes, over the last of months, 484 00:25:22,760 --> 00:25:25,440 Speaker 1: clear about that. His view is a little lonely for 485 00:25:25,480 --> 00:25:27,440 Speaker 1: a while. A lot of people are starting to join him. 486 00:25:27,440 --> 00:25:29,840 Speaker 1: He is not lonely to me to your point, and 487 00:25:29,840 --> 00:25:32,560 Speaker 1: this I think is critical the year view forward. This 488 00:25:32,680 --> 00:25:34,840 Speaker 1: is maybe the call of the year if you get 489 00:25:34,920 --> 00:25:37,800 Speaker 1: the international call right. I'm not going to suggest what 490 00:25:37,880 --> 00:25:40,600 Speaker 1: it should be, but it's a huge deal. We have 491 00:25:40,640 --> 00:25:42,720 Speaker 1: had a massive move off the August slows. If you 492 00:25:42,720 --> 00:25:44,560 Speaker 1: look at the banks listed on the stock six hundred, 493 00:25:44,600 --> 00:25:47,240 Speaker 1: we had a move of almost twenty percent off the 494 00:25:47,280 --> 00:25:50,560 Speaker 1: August How do you do that on some quick charting 495 00:25:50,720 --> 00:25:55,720 Speaker 1: on the the stock six hundred bank index. I'm struggling 496 00:25:55,760 --> 00:26:00,600 Speaker 1: to understand though, how the chemistry this intern action well 497 00:26:00,600 --> 00:26:03,520 Speaker 1: that that that I don't but the consolidation among the 498 00:26:03,560 --> 00:26:06,119 Speaker 1: European banks, I mean, honestly, how is that going to 499 00:26:06,160 --> 00:26:07,960 Speaker 1: affect some of the evaluation here? Is that going to 500 00:26:08,040 --> 00:26:09,480 Speaker 1: be good? Is it going to be allowed if it 501 00:26:09,520 --> 00:26:11,560 Speaker 1: doesn't happen? You can see in solvent if we do 502 00:26:11,600 --> 00:26:13,959 Speaker 1: indeed get that consolidation. We've been talking about it for 503 00:26:14,040 --> 00:26:17,440 Speaker 1: a long long time, particularly on the periphery in places 504 00:26:17,520 --> 00:26:20,720 Speaker 1: like Italy where there is a serious problem with over 505 00:26:20,800 --> 00:26:23,560 Speaker 1: banking and the over bank We've been talking about that 506 00:26:23,600 --> 00:26:25,720 Speaker 1: for years. A lot of people would love to see 507 00:26:25,720 --> 00:26:28,440 Speaker 1: a resolution. Let's be clear. We tried it in Germany 508 00:26:28,440 --> 00:26:30,359 Speaker 1: for about five minutes. Deutsche Bank wanted to have a go. 509 00:26:30,600 --> 00:26:33,040 Speaker 1: I couldn't find a dance partner Commas Bank. We were 510 00:26:33,040 --> 00:26:35,320 Speaker 1: talking about finding a dance partner a Commas Bank for 511 00:26:35,400 --> 00:26:37,000 Speaker 1: much of the last couple of years too. I mean 512 00:26:37,080 --> 00:26:40,360 Speaker 1: BMP perry By. You get a five point nine percent dividend, 513 00:26:40,440 --> 00:26:42,840 Speaker 1: but really on a total return basis over xt number 514 00:26:42,960 --> 00:26:45,800 Speaker 1: years gone nowhere, you know, and that's one of the 515 00:26:45,800 --> 00:26:50,600 Speaker 1: best best banks financial performance in Europe. David Harro, thank 516 00:26:50,600 --> 00:27:05,520 Speaker 1: you so much. This is gonna be a lot of fun. 517 00:27:05,560 --> 00:27:09,840 Speaker 1: Gregory Zuckerman stopped Financial News a number of years ago 518 00:27:09,880 --> 00:27:12,800 Speaker 1: with the greatest trade to everyone to talk about the frackers, 519 00:27:13,400 --> 00:27:15,080 Speaker 1: and now he's come out with a book with a 520 00:27:15,080 --> 00:27:17,679 Speaker 1: lot of fancy mathematics on the cover. It's got some 521 00:27:17,760 --> 00:27:20,560 Speaker 1: partial differentials out here, a little bit of Ryman action 522 00:27:21,200 --> 00:27:25,119 Speaker 1: going as well. It's all very PhD, which is what 523 00:27:25,200 --> 00:27:29,000 Speaker 1: you would expect from Jim Simons, of course of Renaissance, 524 00:27:29,040 --> 00:27:32,120 Speaker 1: and of course the mathematics of trying to get it right. 525 00:27:32,520 --> 00:27:37,400 Speaker 1: Hllarion says it is well written. Jim Grant says Zuckerman 526 00:27:37,480 --> 00:27:40,600 Speaker 1: of course has done it again. But far more importantly, 527 00:27:41,359 --> 00:27:44,280 Speaker 1: a guy named Ed Thorpe said, shut up and read 528 00:27:44,320 --> 00:27:47,359 Speaker 1: this book. Who is ed Thorpe and why does he 529 00:27:47,400 --> 00:27:50,879 Speaker 1: think Greg's upper Zuckerman. You've pit it out of the 530 00:27:50,960 --> 00:27:54,840 Speaker 1: park on Jim Simon's So ed Thorpe is one of 531 00:27:54,880 --> 00:27:59,400 Speaker 1: the pioneers of quantitative trading, the whole idea of turning 532 00:27:59,440 --> 00:28:02,359 Speaker 1: decision making in the markets over to systems, and that's 533 00:28:02,400 --> 00:28:05,880 Speaker 1: what Jim Simons dominates, that's what he does, That's how 534 00:28:05,880 --> 00:28:11,160 Speaker 1: he's conquered the market sixty a year since night. And 535 00:28:11,440 --> 00:28:14,879 Speaker 1: he's sort of the reason why so many on Wall Street, 536 00:28:15,400 --> 00:28:18,159 Speaker 1: of all trading today is quantitative. People want to be 537 00:28:18,200 --> 00:28:20,560 Speaker 1: like I want to be like Jim Simon's The appendix 538 00:28:20,600 --> 00:28:24,560 Speaker 1: you have the track record is absolutely extraordinary and unexplainable. 539 00:28:24,960 --> 00:28:28,480 Speaker 1: It's not Monte Carlo. It's not bringing in tons of 540 00:28:28,600 --> 00:28:32,160 Speaker 1: data massaging it. Getting to an answer is that there's 541 00:28:32,200 --> 00:28:35,960 Speaker 1: something more than just a vanilla Monte Carlo approach, isn't there? 542 00:28:36,200 --> 00:28:39,640 Speaker 1: It is not vanilla. Yes, it's Originally it's digesting data. 543 00:28:39,720 --> 00:28:41,800 Speaker 1: Originally it was just pricing data. And they got it 544 00:28:41,840 --> 00:28:44,320 Speaker 1: before others. They believed in big data we called big 545 00:28:44,360 --> 00:28:47,160 Speaker 1: data today. They were crunching data, they were cleaning data 546 00:28:47,400 --> 00:28:49,840 Speaker 1: before anyone even thought of this we're talking about when 547 00:28:49,880 --> 00:28:52,880 Speaker 1: Mark Zuckerberg was in grade school in the early eighties 548 00:28:52,960 --> 00:28:55,720 Speaker 1: and Jim Simons, who was a scientist, who was a mathematician, 549 00:28:55,760 --> 00:28:58,640 Speaker 1: one of the greatest jometers of the last hundred years, 550 00:28:58,920 --> 00:29:01,440 Speaker 1: had the sense that the structure in the market, there 551 00:29:01,440 --> 00:29:06,160 Speaker 1: are patterns that investors, average investors, specistic and investors just 552 00:29:06,200 --> 00:29:08,400 Speaker 1: aren't aware of, and you set out to find them. 553 00:29:08,520 --> 00:29:10,240 Speaker 1: So this book landed on my desk in the last 554 00:29:10,240 --> 00:29:11,760 Speaker 1: twenty four hours. I look at the front page, the 555 00:29:11,800 --> 00:29:14,120 Speaker 1: man who solved the market, How Jim Simons launched the 556 00:29:14,160 --> 00:29:16,720 Speaker 1: quant revolution. I did what Tom did, looked at the back, 557 00:29:16,760 --> 00:29:19,920 Speaker 1: saw Mohammad al Arian there called Mohammed. Said to Mohammed, 558 00:29:19,960 --> 00:29:21,840 Speaker 1: you've read the book. What do you think? He said, 559 00:29:21,840 --> 00:29:26,240 Speaker 1: Greg's phenomenal. Ask him how we went about learning the 560 00:29:26,320 --> 00:29:31,120 Speaker 1: concepts that Jim Simons uses the math behind all of this. 561 00:29:31,160 --> 00:29:33,440 Speaker 1: Because Jim, you're like me and not a mathematician. Greg, 562 00:29:33,880 --> 00:29:35,760 Speaker 1: you're like me and not a mathematician. Where did you 563 00:29:35,800 --> 00:29:38,480 Speaker 1: go away and learn all of these concepts? It was 564 00:29:38,480 --> 00:29:40,280 Speaker 1: really difficult, the hardest thing you ever did, because I'm 565 00:29:40,280 --> 00:29:42,680 Speaker 1: not a math guy. Um, what I did was pick 566 00:29:42,800 --> 00:29:46,160 Speaker 1: the brains of mathematicians all over the country, Um some 567 00:29:46,560 --> 00:29:49,440 Speaker 1: many of them were just really generous with their time. Finally, 568 00:29:49,480 --> 00:29:52,800 Speaker 1: even Jim Simons worked with me half the time, the 569 00:29:52,840 --> 00:29:54,880 Speaker 1: concepts went over my head. I have to turn to 570 00:29:54,960 --> 00:29:59,000 Speaker 1: other experts and mathematicians. So people were generous with their time, 571 00:29:59,080 --> 00:30:01,800 Speaker 1: sat down and expelling the me quant people because frankly, 572 00:30:02,000 --> 00:30:04,040 Speaker 1: this is the story that they wanted to hear. They 573 00:30:04,040 --> 00:30:07,840 Speaker 1: wanted to understand how Jim Simons and his colleagues, colorful, 574 00:30:08,080 --> 00:30:11,440 Speaker 1: interesting colleagues have pulled this thing off at its most 575 00:30:11,440 --> 00:30:15,440 Speaker 1: basic core. What's the secret? Well, there are many secrets. 576 00:30:15,680 --> 00:30:18,840 Speaker 1: The key I would argue is that they shifted from 577 00:30:18,880 --> 00:30:22,360 Speaker 1: long term short term trading and that they look for patterns. 578 00:30:22,480 --> 00:30:25,600 Speaker 1: And the lesson here is that human behavior repeats and 579 00:30:25,640 --> 00:30:28,480 Speaker 1: they're aware of many more factors. We all talk about 580 00:30:28,520 --> 00:30:31,680 Speaker 1: factor investing. There are many more factors that that impact 581 00:30:31,800 --> 00:30:34,280 Speaker 1: investing than you and I are aware of, and they're 582 00:30:34,320 --> 00:30:36,720 Speaker 1: aware of them more more than anybody else. When you 583 00:30:36,760 --> 00:30:39,760 Speaker 1: talk about patterns, are you talking about in terms of 584 00:30:39,800 --> 00:30:43,120 Speaker 1: when people sell on an inter day basis? Are you 585 00:30:43,200 --> 00:30:46,640 Speaker 1: talking about over years? I mean, how what's the time 586 00:30:46,640 --> 00:30:48,880 Speaker 1: from here? So the average to holding period is about 587 00:30:48,880 --> 00:30:50,800 Speaker 1: two days, they'll go a little shorter, they'll go a 588 00:30:50,800 --> 00:30:54,120 Speaker 1: little bit longer. These aren't high frequency flash boy kind 589 00:30:54,120 --> 00:30:57,480 Speaker 1: of things. Is generally speaking, short term patterns, but not 590 00:30:57,720 --> 00:31:01,240 Speaker 1: excessively short term. And the whole idea behind their genius 591 00:31:01,400 --> 00:31:04,480 Speaker 1: is that they believe in systems and not stories, meaning 592 00:31:04,520 --> 00:31:06,760 Speaker 1: that you and I, or maybe I can speak for myself, 593 00:31:06,840 --> 00:31:08,920 Speaker 1: I get caught up sometimes you get caught up in 594 00:31:08,920 --> 00:31:10,960 Speaker 1: an uber. You get caught up, and we work tharaos 595 00:31:11,120 --> 00:31:13,280 Speaker 1: And the whole idea is to remove the human emotion 596 00:31:13,600 --> 00:31:16,760 Speaker 1: from investing and to turn the decision making over two 597 00:31:16,800 --> 00:31:20,280 Speaker 1: systems is a rules based investors. My favorite page is 598 00:31:20,360 --> 00:31:26,600 Speaker 1: page one only Greg Zuckerman could get Derman Mandel brought 599 00:31:26,800 --> 00:31:30,560 Speaker 1: Toleb bar Rosenberg, the giant all on the same page 600 00:31:30,560 --> 00:31:35,840 Speaker 1: which ed Thorpe. What kind of mathematics is Professor Simon's doing. 601 00:31:35,920 --> 00:31:39,800 Speaker 1: There's a lot of different math between Mandel brought Talb, 602 00:31:39,880 --> 00:31:42,040 Speaker 1: who you know, everyone knows. I'm a huge fan of 603 00:31:42,040 --> 00:31:44,720 Speaker 1: his work. Bar Rosenberg as well, one of one of 604 00:31:44,720 --> 00:31:48,600 Speaker 1: the great giants of this What flavor of math leads 605 00:31:48,600 --> 00:31:52,000 Speaker 1: to this mass out performance over a theate of forty 606 00:31:52,040 --> 00:31:54,959 Speaker 1: eight hours? So what he originally was as a jometer, 607 00:31:55,360 --> 00:31:58,320 Speaker 1: and he's a groundbreaking mathematician. A lot of his work 608 00:31:58,400 --> 00:32:02,240 Speaker 1: is still Stony Brook for exactly developed the department there 609 00:32:02,360 --> 00:32:04,640 Speaker 1: and he hasn't still impacted all kinds of areas physics 610 00:32:04,640 --> 00:32:08,719 Speaker 1: and others. And he again, how's the math makes for 611 00:32:08,760 --> 00:32:11,680 Speaker 1: this excellence? It's a combination of things. But I guess 612 00:32:11,720 --> 00:32:15,080 Speaker 1: to simplify, they seem to look at the market as 613 00:32:15,160 --> 00:32:17,680 Speaker 1: something of a hidden Markov model, and but it's it's 614 00:32:17,720 --> 00:32:20,520 Speaker 1: got above that and beyond that, And to me, it's 615 00:32:20,560 --> 00:32:23,880 Speaker 1: it's a combination of different approaches that they blend into one. 616 00:32:23,880 --> 00:32:27,800 Speaker 1: It's almost an engineering approach on engineering approach and spherical 617 00:32:27,840 --> 00:32:30,479 Speaker 1: geometry and the x y z space. Are they in 618 00:32:30,560 --> 00:32:33,200 Speaker 1: some way going regression to the mean? I mean, that 619 00:32:33,240 --> 00:32:35,640 Speaker 1: would be the question. I mean to some extent, But 620 00:32:35,680 --> 00:32:40,400 Speaker 1: it's more of a sense of of finding hidden patterns 621 00:32:40,440 --> 00:32:43,160 Speaker 1: that other people aren't aware of, and that's they use 622 00:32:43,280 --> 00:32:44,960 Speaker 1: math for that. But you don't want to go it's 623 00:32:44,960 --> 00:32:48,520 Speaker 1: not all math in any way. So Jim Simon's arguably 624 00:32:48,760 --> 00:32:51,840 Speaker 1: solved the market. He certainly made a ton of money 625 00:32:51,920 --> 00:32:56,000 Speaker 1: from it, but he also transformed it. And I'm wondering 626 00:32:56,120 --> 00:32:59,600 Speaker 1: what he said about that so his it's funny. He's 627 00:32:59,600 --> 00:33:03,000 Speaker 1: a quat and his it's all about um setting human 628 00:33:03,080 --> 00:33:06,840 Speaker 1: motion aside. And yet the whole story, the Renaissance story, 629 00:33:06,960 --> 00:33:10,080 Speaker 1: is about fighting these emotions, even they panic, even they 630 00:33:10,080 --> 00:33:12,080 Speaker 1: get nervous. And there are all kinds of periods. Two 631 00:33:12,080 --> 00:33:14,960 Speaker 1: thousand and seven, two thousand, even late last year, Jim 632 00:33:14,960 --> 00:33:18,240 Speaker 1: Simmons were twenty three billion dollars. He's the pre eminent quants. 633 00:33:18,320 --> 00:33:20,800 Speaker 1: He panicked last year in his own private account. He 634 00:33:20,920 --> 00:33:24,080 Speaker 1: called his, his broker, his, the guy who runs his, his, 635 00:33:24,080 --> 00:33:28,400 Speaker 1: his family and not not quite, not like I do. UM. 636 00:33:28,520 --> 00:33:30,360 Speaker 1: He's got a family office, he calls the guy who 637 00:33:30,400 --> 00:33:32,640 Speaker 1: runs his family office. Late last year, he's on vacation 638 00:33:32,640 --> 00:33:34,840 Speaker 1: in Beverly Hills. He says, shouldn't we be buying some 639 00:33:34,880 --> 00:33:38,840 Speaker 1: protection here? The market's going down? And his his guide, 640 00:33:38,880 --> 00:33:41,360 Speaker 1: his his advisers as well, maybe let's wait a few days. 641 00:33:41,400 --> 00:33:43,680 Speaker 1: But the irony of the rich irony is that here's 642 00:33:43,720 --> 00:33:47,200 Speaker 1: the quant he he's made his billions, He's changed Wall 643 00:33:47,240 --> 00:33:49,920 Speaker 1: Street by setting human motion aside, and even he has 644 00:33:49,960 --> 00:33:53,240 Speaker 1: to fight those emotions. Where's he on long short? I mean, 645 00:33:53,280 --> 00:33:55,000 Speaker 1: a lot of guys are out there and over a 646 00:33:55,040 --> 00:33:57,000 Speaker 1: three year thing and they blow up. You know, they'll 647 00:33:57,040 --> 00:33:59,040 Speaker 1: do great, and then they got to draw down. Is 648 00:33:59,120 --> 00:34:01,040 Speaker 1: killing in the might as well shut down and reset 649 00:34:01,120 --> 00:34:03,960 Speaker 1: up again. On Classic long short, what did he say 650 00:34:04,000 --> 00:34:07,840 Speaker 1: about more traditional alternative investment approach? You mean he'll do 651 00:34:07,960 --> 00:34:10,360 Speaker 1: some of that and his personal account. But that's not 652 00:34:10,360 --> 00:34:12,320 Speaker 1: what they do. They've got a sharp of about seven. 653 00:34:12,640 --> 00:34:16,400 Speaker 1: Their whole point is how they don't they get throughout. 654 00:34:16,480 --> 00:34:18,680 Speaker 1: That's the story, that's the book. But basically they hold 655 00:34:18,719 --> 00:34:21,440 Speaker 1: about four to five thousand and stock short four to 656 00:34:21,480 --> 00:34:24,920 Speaker 1: five thousand long, and they're looking for relationships among groups 657 00:34:25,040 --> 00:34:28,359 Speaker 1: of equities they don't do Where is Apple going? Where 658 00:34:28,400 --> 00:34:30,480 Speaker 1: is Google going? Don't even know sometimes the names of 659 00:34:30,480 --> 00:34:32,920 Speaker 1: the companies. It's it's it's early machine learning. So they 660 00:34:33,000 --> 00:34:35,520 Speaker 1: really often don't even know why their own system is 661 00:34:35,560 --> 00:34:37,920 Speaker 1: doing what it's doing. Only in hindseight can they figure 662 00:34:37,920 --> 00:34:41,279 Speaker 1: it out. And they've been panicked lost. Then within such 663 00:34:41,320 --> 00:34:43,640 Speaker 1: a short theta and with an invisibility of what the 664 00:34:43,680 --> 00:34:47,600 Speaker 1: issues are stocks one way and the other way, how 665 00:34:47,600 --> 00:34:50,000 Speaker 1: do you stop loss out of that position? Well, there's 666 00:34:50,000 --> 00:34:52,920 Speaker 1: no one position. So it's it's a group of relationships, 667 00:34:53,120 --> 00:34:56,480 Speaker 1: and we're talking, let's say, one group versus another group, 668 00:34:56,560 --> 00:34:59,920 Speaker 1: one group versus a factor, one group versus an index um. 669 00:35:00,080 --> 00:35:02,719 Speaker 1: So it's it's complicated, but its relationships. And they don't 670 00:35:02,719 --> 00:35:04,799 Speaker 1: believe that one king. I don't think i've ever seen 671 00:35:05,440 --> 00:35:11,040 Speaker 1: Zuckerman this fired up. It's you know the story. Honestly, 672 00:35:11,200 --> 00:35:13,680 Speaker 1: it's a phenomenal, phenomenal story. I can't wait to dig 673 00:35:13,719 --> 00:35:15,400 Speaker 1: in a little bit more. Can you solve the New 674 00:35:15,480 --> 00:35:18,320 Speaker 1: York Knicks? Jim Simon by the New York It's very simple. 675 00:35:18,320 --> 00:35:21,879 Speaker 1: I just getting rid of dole and start off even 676 00:35:21,960 --> 00:35:24,920 Speaker 1: I can figure out, Yeah, fight human emotion. Honestly, I 677 00:35:24,960 --> 00:35:28,520 Speaker 1: love I love that idea. It's all about fighting human emotion, 678 00:35:28,719 --> 00:35:31,359 Speaker 1: even within the walls of Renaissance capital, even with Jim 679 00:35:31,400 --> 00:35:34,520 Speaker 1: Simon's that's the thing, right, I thought these guys are quants, 680 00:35:34,560 --> 00:35:36,279 Speaker 1: and they set motion to sign at the whole point, 681 00:35:36,520 --> 00:35:38,840 Speaker 1: and yet when you dig into the story, they panic 682 00:35:38,920 --> 00:35:40,440 Speaker 1: like you and I do. They get on each other's 683 00:35:40,440 --> 00:35:42,600 Speaker 1: nerves and they fight it fight it out. Has Adam 684 00:35:42,640 --> 00:35:44,839 Speaker 1: McKay called you yet about doing a movie on this? 685 00:35:45,120 --> 00:35:49,680 Speaker 1: I'm waiting, yes, anytime anyway, the Big Quan it'll be 686 00:35:49,680 --> 00:35:54,000 Speaker 1: a great Yeah. Congratulations Gregory Gregory Zuckerman, the Man of 687 00:35:54,080 --> 00:35:56,359 Speaker 1: Saw the Market, Jim Simon's of course, with his great 688 00:35:56,360 --> 00:36:00,160 Speaker 1: philanthropy in New York and just stunning success. We or 689 00:36:00,200 --> 00:36:02,560 Speaker 1: you read the book and you must go to the 690 00:36:02,560 --> 00:36:06,080 Speaker 1: back and look at the appendix, which beautifully lays out 691 00:36:06,680 --> 00:36:12,520 Speaker 1: the out performance of what Professor Simons is doing. Really 692 00:36:12,560 --> 00:36:14,560 Speaker 1: love and I love how you bring all the other 693 00:36:14,880 --> 00:36:18,279 Speaker 1: great mathematicians struggling with this in Greg zuckam In, the 694 00:36:18,320 --> 00:36:22,040 Speaker 1: Man who Solved the Market. Thanks for listening to the 695 00:36:22,040 --> 00:36:28,560 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 696 00:36:28,920 --> 00:36:33,120 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 697 00:36:33,160 --> 00:36:37,440 Speaker 1: Tom Keane before the podcast. You can always catch us worldwide. 698 00:36:37,880 --> 00:36:39,000 Speaker 1: I'm Bloomberg Radio.