1 00:00:05,800 --> 00:00:08,360 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim 2 00:00:08,400 --> 00:00:11,440 Speaker 1: Fox along with my co host Lisa Abramowitz. Each day 3 00:00:11,480 --> 00:00:15,000 Speaker 1: we bring you the most important, noteworthy, and useful interviews 4 00:00:15,040 --> 00:00:17,520 Speaker 1: for you and your money, whether you're at the grocery 5 00:00:17,560 --> 00:00:20,560 Speaker 1: store or the trading floor. Find the Bloomberg p m 6 00:00:20,680 --> 00:00:32,199 Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 7 00:00:32,240 --> 00:00:36,560 Speaker 1: Trade talks and updates to NAFTA. President Donald Trump saying 8 00:00:36,720 --> 00:00:40,240 Speaker 1: that there are signs of optimism. He said that we're 9 00:00:40,400 --> 00:00:43,800 Speaker 1: really doing well. He talked to reporters at the White 10 00:00:43,800 --> 00:00:45,960 Speaker 1: House talking about Canada. He says they want to be 11 00:00:46,040 --> 00:00:49,720 Speaker 1: part of the deal we've gotten until Friday, and he says, 12 00:00:49,920 --> 00:00:53,960 Speaker 1: the President says, I think we're probably on track. Well, 13 00:00:54,040 --> 00:00:55,920 Speaker 1: let's find out if we're really on track. We've got 14 00:00:55,960 --> 00:01:01,120 Speaker 1: Michael Dean, our senior analyst European Automotive for Bloomberg Intelligence. 15 00:01:01,200 --> 00:01:04,760 Speaker 1: Plus we've got Josh wind Grove. He's our Canadian government 16 00:01:04,800 --> 00:01:07,160 Speaker 1: reporter for Bloomberg and he just happens to be in 17 00:01:07,240 --> 00:01:11,160 Speaker 1: our nation's capital in Washington, d C. Josh wind Grove. 18 00:01:11,240 --> 00:01:15,800 Speaker 1: We got just a small comment from Christopher Freeland, the 19 00:01:15,800 --> 00:01:20,960 Speaker 1: Foreign Minister of Canada talking about intense negotiations with Robert Leitheiser. 20 00:01:21,480 --> 00:01:26,640 Speaker 1: Any update on what exactly is going on in those negotiations. Yeah, 21 00:01:26,680 --> 00:01:29,040 Speaker 1: you're getting a good window into the glamour of trade 22 00:01:29,040 --> 00:01:32,480 Speaker 1: reporting here, and I'm just calling from the streets of 23 00:01:32,480 --> 00:01:35,560 Speaker 1: Washington where we're loitering and hanging on every word that 24 00:01:35,640 --> 00:01:38,240 Speaker 1: Christie Freeland has to throw our way on the way 25 00:01:38,240 --> 00:01:40,800 Speaker 1: in and out of these meetings, to sort of swinging 26 00:01:40,880 --> 00:01:43,680 Speaker 1: in and out as they bringing the political figures and 27 00:01:43,720 --> 00:01:47,319 Speaker 1: bring sort of the technical experts who you might lovingly 28 00:01:47,360 --> 00:01:50,640 Speaker 1: call the true nerds, the nerds with three cred to 29 00:01:50,800 --> 00:01:54,200 Speaker 1: commast on these issues. But you know, there isn't a 30 00:01:54,240 --> 00:01:57,000 Speaker 1: sense of panic in the air. It's hard to finger 31 00:01:57,120 --> 00:01:59,480 Speaker 1: on the even there were twenty four hours or so 32 00:01:59,600 --> 00:02:04,559 Speaker 1: from this sort of quadline self imposed political deadline, which 33 00:02:04,640 --> 00:02:08,919 Speaker 1: is frankly all that not that real the deadline. Uh, 34 00:02:08,919 --> 00:02:12,320 Speaker 1: you know, there's there's not really uh back against the 35 00:02:12,320 --> 00:02:15,280 Speaker 1: wall field to it. Also, I think that's reflected in 36 00:02:15,600 --> 00:02:17,919 Speaker 1: the views you're hearing from Trump and Trudeau that maybe 37 00:02:17,919 --> 00:02:20,639 Speaker 1: they're untracked to get something. What's interesting is that it 38 00:02:20,720 --> 00:02:23,200 Speaker 1: a day where it does seem like there is progress 39 00:02:23,200 --> 00:02:25,720 Speaker 1: being made towards some kind of North American free trade agreement, 40 00:02:25,760 --> 00:02:28,160 Speaker 1: albeit not by that name. There does seem to be 41 00:02:28,160 --> 00:02:31,000 Speaker 1: a softening between the European Union and the US as well, 42 00:02:31,040 --> 00:02:35,480 Speaker 1: with the European Union proposing reportedly anyway, uh, that they 43 00:02:35,480 --> 00:02:39,680 Speaker 1: are willing to strip away all tariffs if the US 44 00:02:39,800 --> 00:02:42,920 Speaker 1: is willing to do the same. And Michael, I'd love 45 00:02:42,919 --> 00:02:46,079 Speaker 1: you to come on in here, how significant, how surious 46 00:02:46,160 --> 00:02:47,720 Speaker 1: is this, How seriously should we take this? And how 47 00:02:47,760 --> 00:02:52,040 Speaker 1: significant would it be for the auto industry in particular? Hi? There? Yes, So, 48 00:02:52,240 --> 00:02:55,520 Speaker 1: the German automakers set about one point two million cars 49 00:02:56,840 --> 00:02:59,520 Speaker 1: in the US. About half of these are imported from 50 00:02:59,560 --> 00:03:01,959 Speaker 1: the EU. So this would remove a two and a 51 00:03:01,960 --> 00:03:06,840 Speaker 1: half percent tariff, which isn't massive in the scheme of things. 52 00:03:06,880 --> 00:03:09,240 Speaker 1: But what I think the bigger issue here is if 53 00:03:09,280 --> 00:03:15,200 Speaker 1: it removes the threat that Donald Trump proposed in import tariff. 54 00:03:15,360 --> 00:03:19,079 Speaker 1: I think that's the bigger positive here for the European carmakers. Michael, 55 00:03:19,080 --> 00:03:22,560 Speaker 1: who would benefit more if all tariffs were done away 56 00:03:22,600 --> 00:03:24,880 Speaker 1: between the EU and the US. Would it be the 57 00:03:24,960 --> 00:03:29,280 Speaker 1: US automakers or the European automakers? Almost certainly the EU 58 00:03:29,480 --> 00:03:32,560 Speaker 1: given the numbers. I just talked about over half a 59 00:03:32,560 --> 00:03:37,400 Speaker 1: million vehicles being exported to the US each year. Michael, 60 00:03:37,920 --> 00:03:41,520 Speaker 1: does the United States really have an export strategy when 61 00:03:41,560 --> 00:03:46,640 Speaker 1: it comes to automobiles targeting the European Union? Well, they 62 00:03:46,720 --> 00:03:50,080 Speaker 1: have brands in Europe. They have fought which which still 63 00:03:50,120 --> 00:03:54,280 Speaker 1: does very well. UM as you know, GM sold Opal recently, 64 00:03:54,920 --> 00:03:57,560 Speaker 1: which wasn't such a success. So there hasn't really been 65 00:03:57,920 --> 00:04:01,440 Speaker 1: a major sort of export mark kids for the US 66 00:04:01,480 --> 00:04:04,160 Speaker 1: manufacturers into the EU EU, and I don't think that 67 00:04:04,160 --> 00:04:07,120 Speaker 1: will change all right, So we have that softening of 68 00:04:07,160 --> 00:04:10,160 Speaker 1: the European Union in the US. It seems like there 69 00:04:10,280 --> 00:04:12,600 Speaker 1: is a good rapport or at least not a bad 70 00:04:12,640 --> 00:04:16,719 Speaker 1: report between Canada and the US and Mexico. So Josh, 71 00:04:16,880 --> 00:04:19,400 Speaker 1: what are we looking for to determine whether or not 72 00:04:19,480 --> 00:04:21,240 Speaker 1: this is going to be a done deal, They're going 73 00:04:21,240 --> 00:04:24,120 Speaker 1: to meet the deadline, and whether or not this is 74 00:04:24,120 --> 00:04:28,400 Speaker 1: just basically nap to two point over a few tweaks. Yeah. 75 00:04:28,440 --> 00:04:32,520 Speaker 1: I think the parallel here is that it's less about 76 00:04:32,880 --> 00:04:35,440 Speaker 1: what can be achieved by deal and the threat that 77 00:04:35,520 --> 00:04:38,360 Speaker 1: comes off the table. It's the same thing with THEU 78 00:04:38,440 --> 00:04:40,200 Speaker 1: cars less about two and a half percent in the 79 00:04:40,240 --> 00:04:44,440 Speaker 1: shread and the same with NAFTA, because whatever they deal 80 00:04:44,560 --> 00:04:46,400 Speaker 1: get a deal on this Friday, will be a deal 81 00:04:46,400 --> 00:04:51,880 Speaker 1: in principle at best, subject a month of for the talks, 82 00:04:52,000 --> 00:04:54,719 Speaker 1: legal haggling, you know, in trade like single words in 83 00:04:54,720 --> 00:04:56,760 Speaker 1: a trade agreement can mean all the difference in the world. 84 00:04:57,440 --> 00:04:59,039 Speaker 1: So you know, it's just sort of looking for a 85 00:04:59,040 --> 00:05:02,800 Speaker 1: political wing to get Trump satisfied, I guess. And it's 86 00:05:02,800 --> 00:05:06,800 Speaker 1: gonna come down to dairy and dispute Panels. US wants 87 00:05:06,839 --> 00:05:11,040 Speaker 1: to basically do away with media dairy system and the Panels, 88 00:05:11,120 --> 00:05:13,719 Speaker 1: and I guess they're looking for a way to save 89 00:05:13,760 --> 00:05:16,960 Speaker 1: a little bit of both. Josh, is there any way 90 00:05:16,960 --> 00:05:20,719 Speaker 1: to disentangle US automobile production from what happens in Canada, 91 00:05:20,800 --> 00:05:28,680 Speaker 1: specifically in Ontario? Uh? Not painlessly? Um. You know, Canada 92 00:05:28,760 --> 00:05:30,760 Speaker 1: is a huge ex border of autos to the US 93 00:05:30,839 --> 00:05:34,520 Speaker 1: to supply chains or deeply integrated some parts across the 94 00:05:34,520 --> 00:05:37,000 Speaker 1: border six times before they actually end up in a car. 95 00:05:37,880 --> 00:05:40,920 Speaker 1: So if you started tariffing it, it would be US 96 00:05:40,920 --> 00:05:44,880 Speaker 1: automakers who would have would be certainly among those feeling 97 00:05:44,920 --> 00:05:47,960 Speaker 1: the pain. In US consumers would be among most paying 98 00:05:48,000 --> 00:05:50,720 Speaker 1: the price. Because I feel like this gets lost. It's 99 00:05:50,760 --> 00:05:52,800 Speaker 1: so timble, but it's like it gets lost in the 100 00:05:52,920 --> 00:05:55,800 Speaker 1: tariffs are paid by the country that applies book right, 101 00:05:55,839 --> 00:05:58,800 Speaker 1: So US tarrap is paid by the US people buying 102 00:05:58,839 --> 00:06:01,080 Speaker 1: the goods. John swing Grove, We're gonna let you go. 103 00:06:01,160 --> 00:06:03,279 Speaker 1: A lot of trade reporting to be down. Josh wyn 104 00:06:03,279 --> 00:06:06,560 Speaker 1: Grove is Canada government reporter for Bloomberg News. Michael stick 105 00:06:06,600 --> 00:06:08,440 Speaker 1: with US. I want to talk about the auto industry, 106 00:06:08,440 --> 00:06:09,560 Speaker 1: and I want to talk about the news that we 107 00:06:09,640 --> 00:06:12,920 Speaker 1: got out earlier today with the European Union. How credible 108 00:06:13,839 --> 00:06:16,839 Speaker 1: is what we learned today that the European Union would 109 00:06:16,880 --> 00:06:19,880 Speaker 1: be European Union will be willing to drop all tariffs 110 00:06:20,320 --> 00:06:22,360 Speaker 1: if the US were to do the same. Is that likely? 111 00:06:22,560 --> 00:06:26,720 Speaker 1: Is that realistic? I think it's possible. Given the magnitude 112 00:06:26,839 --> 00:06:29,960 Speaker 1: of the exports from the EU and how important the 113 00:06:30,400 --> 00:06:33,400 Speaker 1: German auto industry is to the EU, I think this 114 00:06:33,480 --> 00:06:36,600 Speaker 1: definitely is credible. How big is the auto industry for 115 00:06:36,640 --> 00:06:39,000 Speaker 1: the German economy? Can you give us some perspective? What 116 00:06:39,160 --> 00:06:42,880 Speaker 1: German auto makers have about a hundred billion dollars of 117 00:06:43,000 --> 00:06:49,200 Speaker 1: revenues from the US. About of that is directly for 118 00:06:49,320 --> 00:06:53,000 Speaker 1: exports to the US. So yes, it's it's very significant. 119 00:06:53,760 --> 00:06:57,719 Speaker 1: And what about hundred and twenty thousand Americans actually work 120 00:06:58,240 --> 00:07:03,240 Speaker 1: for European Union car companies in the United States and 121 00:07:03,360 --> 00:07:07,279 Speaker 1: states such as South Carolina, Alabama, Mississippi, and Tennessee. Right, 122 00:07:07,839 --> 00:07:11,600 Speaker 1: that's correct. So both BMW and Mercedes have made the 123 00:07:11,720 --> 00:07:16,800 Speaker 1: US their suv hub production base um globally, and therefore 124 00:07:16,840 --> 00:07:20,920 Speaker 1: they produce over six hundred thousand vehicles annually in the US. 125 00:07:20,960 --> 00:07:23,720 Speaker 1: Plus Folkswagon produces about two hundred thousand units, so it's 126 00:07:23,800 --> 00:07:27,240 Speaker 1: very significant. Thank you so much. Michael Dean senior analyst 127 00:07:27,520 --> 00:07:32,640 Speaker 1: covering the European automative automotive sector for Bloomberg Intelligence, coming 128 00:07:32,640 --> 00:07:49,920 Speaker 1: to us from London. Michael, thank you. He's an investor 129 00:07:49,960 --> 00:07:53,440 Speaker 1: who follows Warren Buffett. David Deets is the founder and 130 00:07:53,520 --> 00:07:56,880 Speaker 1: the chief investment strategist for Point View Wealth Management, helping 131 00:07:56,880 --> 00:08:00,360 Speaker 1: to manage more than three hundred million dollars of stomer 132 00:08:00,440 --> 00:08:03,560 Speaker 1: assets based in Summit, New Jersey. David diet is always 133 00:08:03,560 --> 00:08:09,000 Speaker 1: a pleasure. When did you first invest alongside Warren Buffett 134 00:08:09,080 --> 00:08:14,000 Speaker 1: and Berkshire Hathaway. Well, I've been a long term Berkshire 135 00:08:14,040 --> 00:08:19,080 Speaker 1: halfway holder. Uh, that goes back into the nineties. Part 136 00:08:19,120 --> 00:08:21,080 Speaker 1: of it is just so that I get tickets to 137 00:08:21,160 --> 00:08:25,120 Speaker 1: go out to Omaha um and see him in person. 138 00:08:25,280 --> 00:08:27,520 Speaker 1: And I was lucky enough to be in Omaha just 139 00:08:28,240 --> 00:08:32,280 Speaker 1: this past May. And uh, he's still as witty and 140 00:08:32,679 --> 00:08:36,079 Speaker 1: instructive and insightful as he's ever been. And of course 141 00:08:36,080 --> 00:08:41,440 Speaker 1: his sidekick there um Charles munger Is, is doing the 142 00:08:41,480 --> 00:08:44,319 Speaker 1: same thing. And over the years, I'd have to credit 143 00:08:44,440 --> 00:08:48,120 Speaker 1: him as being so informative to our investing strategy here 144 00:08:48,120 --> 00:08:50,680 Speaker 1: at Point View. All right, so let's talk about how 145 00:08:50,720 --> 00:08:54,760 Speaker 1: he has informed your strategy. In particular recently, he was 146 00:08:54,840 --> 00:08:58,040 Speaker 1: on earlier a couple of competing networks talking about how 147 00:08:58,040 --> 00:09:02,240 Speaker 1: he likes airlines, he prefers stocks over bonds. What's been 148 00:09:02,280 --> 00:09:05,080 Speaker 1: your biggest takeaway so far today? Well, you know, I 149 00:09:05,080 --> 00:09:07,600 Speaker 1: think the number one question everyone's mind here we are 150 00:09:07,600 --> 00:09:11,480 Speaker 1: in the longest bold market ever by some metrics, is 151 00:09:11,960 --> 00:09:15,000 Speaker 1: does he still like stocks today? And you know, I 152 00:09:15,080 --> 00:09:19,120 Speaker 1: felt he answered the question with yes for the long term. Um, 153 00:09:19,160 --> 00:09:22,000 Speaker 1: you know, he always wishes to buy things cheaper, but 154 00:09:22,160 --> 00:09:24,719 Speaker 1: he offered one comparison. He said, look, if you had 155 00:09:24,720 --> 00:09:27,640 Speaker 1: a chance to buy a thirty year treasury bond or 156 00:09:27,720 --> 00:09:31,440 Speaker 1: invest in a well diversified basia stocks. The stock choice 157 00:09:31,520 --> 00:09:34,280 Speaker 1: is a no brainer. So over the long haul, he 158 00:09:34,400 --> 00:09:37,400 Speaker 1: likes stocks, particularly relative to where interest rate start today. 159 00:09:37,760 --> 00:09:40,319 Speaker 1: Interestingly enough, he also opined in real estate, and he 160 00:09:40,400 --> 00:09:42,400 Speaker 1: thought stocks are cheaper than real estate. I know we 161 00:09:42,440 --> 00:09:44,240 Speaker 1: have lots of clients, a lot of people out there 162 00:09:44,440 --> 00:09:47,080 Speaker 1: are looking as an alternative to the stock market real estate. 163 00:09:47,320 --> 00:09:50,000 Speaker 1: He would inject a note of caution into that. What 164 00:09:50,080 --> 00:09:53,760 Speaker 1: about acquisitions. Do you believe that Warren Buffett is searching 165 00:09:53,840 --> 00:09:56,520 Speaker 1: for large acquisitions or is he going to be spending 166 00:09:56,559 --> 00:10:01,920 Speaker 1: time looking on bolt on acquisition small earth. Well, he's 167 00:10:02,000 --> 00:10:04,920 Speaker 1: looking at everything. You know. His problem is he's just 168 00:10:05,000 --> 00:10:08,680 Speaker 1: got this huge, massive cash hoard too, as he put it, 169 00:10:09,080 --> 00:10:11,800 Speaker 1: would put it move the needle. He needs to make 170 00:10:12,000 --> 00:10:16,720 Speaker 1: a big acquisition fifty billion or more, almost an S ANDP. 171 00:10:17,200 --> 00:10:21,120 Speaker 1: Having said that, of course, they're still opportunistic in areas 172 00:10:21,160 --> 00:10:22,959 Speaker 1: where they see a lot of growth. So for example, 173 00:10:23,000 --> 00:10:26,199 Speaker 1: we just learned that he, along with other tech giants, 174 00:10:26,200 --> 00:10:30,439 Speaker 1: have invested in an Indian company which focuses on mobile payments. 175 00:10:30,440 --> 00:10:33,040 Speaker 1: So I think he's he's open to everything, but he 176 00:10:33,120 --> 00:10:35,800 Speaker 1: really needs the big one. Okay, But David Diets in 177 00:10:35,960 --> 00:10:39,800 Speaker 1: his annual letter to investors. He talked about paying a 178 00:10:39,880 --> 00:10:44,080 Speaker 1: sensible purchase price for an acquisition, and he said that 179 00:10:44,720 --> 00:10:47,360 Speaker 1: this has been a barrier to virtually all the deals 180 00:10:47,400 --> 00:10:52,040 Speaker 1: that they reviewed. In he said, prices for decent companies, 181 00:10:52,360 --> 00:10:55,920 Speaker 1: far from spectacular have hit an all time high. You 182 00:10:55,920 --> 00:10:59,000 Speaker 1: think that still exists, Well, yeah, I do. I mean, 183 00:10:59,000 --> 00:11:02,120 Speaker 1: we haven't heard of any big acquisitions from him, and 184 00:11:02,520 --> 00:11:05,600 Speaker 1: that's why, um, you know, I think he made the 185 00:11:05,720 --> 00:11:08,600 Speaker 1: easy uh comparison in terms of where the stock markets 186 00:11:08,640 --> 00:11:11,520 Speaker 1: today by just comparing it against you know, these super 187 00:11:11,559 --> 00:11:15,160 Speaker 1: low interest rate bonds. Um. What has been as biggest 188 00:11:15,200 --> 00:11:18,199 Speaker 1: acquisition this year and recently is buying shares of Apple. 189 00:11:18,600 --> 00:11:21,680 Speaker 1: But with Apple now the largest company on the planet, 190 00:11:22,120 --> 00:11:24,880 Speaker 1: well over a trillion dollar market cap and hitting all 191 00:11:24,960 --> 00:11:28,400 Speaker 1: time highs as we speak, it's hard to argue that 192 00:11:28,400 --> 00:11:31,400 Speaker 1: that is a great value today. And even he has 193 00:11:31,440 --> 00:11:34,400 Speaker 1: said that when he's first started buying very heavily in 194 00:11:34,640 --> 00:11:37,320 Speaker 1: Q one, the stock price got away from him. He 195 00:11:37,440 --> 00:11:41,880 Speaker 1: didn't admit to buying a few shares this quarter. But certainly, 196 00:11:41,920 --> 00:11:45,600 Speaker 1: although he loves the business, I don't think that you'd, uh, 197 00:11:45,679 --> 00:11:47,920 Speaker 1: you know, you'd walk away and say he loves the 198 00:11:47,920 --> 00:11:50,920 Speaker 1: stock price right now? So over the years that you've 199 00:11:50,920 --> 00:11:54,440 Speaker 1: been following Warren Buffett, what's been the most valuable advice 200 00:11:54,520 --> 00:11:58,360 Speaker 1: that you've taken from him? You know, I think it's 201 00:11:58,600 --> 00:12:01,760 Speaker 1: it's two things. Really. One is to think long term. 202 00:12:02,360 --> 00:12:04,840 Speaker 1: You know, so many people on Wall Street they're they're 203 00:12:04,840 --> 00:12:06,880 Speaker 1: looking at a chart and looking at it. You know, 204 00:12:07,160 --> 00:12:09,480 Speaker 1: what can the stock market do for me? And the 205 00:12:09,559 --> 00:12:12,319 Speaker 1: next day, the next week, the next month, He argues, 206 00:12:12,640 --> 00:12:15,760 Speaker 1: you know, think about holding if think about holding companies 207 00:12:15,760 --> 00:12:19,200 Speaker 1: for a lifetime. And I think that gives him a 208 00:12:19,520 --> 00:12:23,319 Speaker 1: staying power um, which really works to his benefit when 209 00:12:23,360 --> 00:12:26,200 Speaker 1: the rest of us are so short term oriented. I 210 00:12:26,200 --> 00:12:28,280 Speaker 1: think the second thing, of course, is don't look at 211 00:12:28,280 --> 00:12:31,880 Speaker 1: stocks this pieces of paper, he says, Look underneath him, 212 00:12:31,880 --> 00:12:35,320 Speaker 1: look under the hood. They are operating businesses. You know, 213 00:12:35,760 --> 00:12:38,640 Speaker 1: if you wouldn't buy the stock if the stock market 214 00:12:38,720 --> 00:12:41,480 Speaker 1: was closed for the next six months, don't even consider 215 00:12:42,160 --> 00:12:45,720 Speaker 1: your purchase. These are operating businesses. Understand what makes them tick, 216 00:12:45,800 --> 00:12:48,840 Speaker 1: how the cash flows work. Only then can you make 217 00:12:48,920 --> 00:12:53,440 Speaker 1: an intelligent acquisition. David Deets. One of the quotes from 218 00:12:53,520 --> 00:12:57,240 Speaker 1: his annual letter is that Charlie Munger and warm Buffett 219 00:12:57,280 --> 00:13:00,280 Speaker 1: that he says they both sleep well, and they leave. 220 00:13:00,320 --> 00:13:03,600 Speaker 1: It is insane to risk what you have a need 221 00:13:03,679 --> 00:13:07,800 Speaker 1: in order to obtain what you don't need. Do you 222 00:13:07,840 --> 00:13:12,440 Speaker 1: believe that those words describe many of the acquisitions that 223 00:13:12,480 --> 00:13:16,920 Speaker 1: have been reported so far this year? Well, you know 224 00:13:17,000 --> 00:13:20,160 Speaker 1: that that's uh, there's been a lot of acquisitions out there. 225 00:13:20,480 --> 00:13:23,679 Speaker 1: But certainly, just in his comments this morning, you know, 226 00:13:23,760 --> 00:13:27,760 Speaker 1: he talked about debt and so forth, and and uh, 227 00:13:28,080 --> 00:13:32,640 Speaker 1: certainly the idea that you should leverage yourself deeply in 228 00:13:32,760 --> 00:13:35,880 Speaker 1: order to make an acquisition. UM. I think he's very 229 00:13:35,920 --> 00:13:39,240 Speaker 1: negative on if the company won't stand as own merits 230 00:13:39,600 --> 00:13:42,640 Speaker 1: and only makes sense if you leverage it to the hill, 231 00:13:42,960 --> 00:13:47,400 Speaker 1: he'd be very leery about UM. And so I think 232 00:13:47,440 --> 00:13:50,719 Speaker 1: that that's one great takeaway for for Wall Street investors. 233 00:13:51,000 --> 00:13:54,520 Speaker 1: Don't operate on margin. Don't use you know, next month's 234 00:13:54,559 --> 00:13:57,040 Speaker 1: rent money, only use money that you can afford to 235 00:13:57,120 --> 00:13:59,559 Speaker 1: ride with for a long period of time. David DIDs 236 00:13:59,559 --> 00:14:02,520 Speaker 1: stick with David DIDs is founder and chief investment strategistic 237 00:14:02,600 --> 00:14:06,520 Speaker 1: Point View Wealth Management, based in Summit, New Jersey. We 238 00:14:06,600 --> 00:14:09,400 Speaker 1: are about to head over and here from the Oracle 239 00:14:09,440 --> 00:14:12,360 Speaker 1: of Omaha himself, I personally am very interested to hear 240 00:14:12,480 --> 00:14:14,880 Speaker 1: what he might be saying about is more than one 241 00:14:14,960 --> 00:14:17,880 Speaker 1: hundred billion dollar cash pile where he is going to 242 00:14:17,880 --> 00:14:20,720 Speaker 1: put it. Also, he has made news to this year 243 00:14:20,880 --> 00:14:24,160 Speaker 1: talking about starting his own healthcare initiative with a number 244 00:14:24,160 --> 00:14:27,560 Speaker 1: of other companies. Perhaps he will give some insight into that. 245 00:14:27,640 --> 00:14:31,360 Speaker 1: He is sitting down with Bloomberg television anchor David Weston 246 00:14:31,520 --> 00:14:34,880 Speaker 1: at his annual charity lunch at Smith and Malensky in 247 00:14:34,920 --> 00:14:39,560 Speaker 1: New York City. Berkshire Hathaway chief executive Warren Buffett to 248 00:14:39,640 --> 00:14:44,080 Speaker 1: be speaking about everything from stocks, two bonds to what 249 00:14:44,200 --> 00:14:47,080 Speaker 1: he will do with this massive cash pile. Right, and 250 00:14:47,160 --> 00:14:49,760 Speaker 1: just to put it into context, the shares of Berkshire 251 00:14:49,800 --> 00:14:52,120 Speaker 1: Hathaway they are hired by about six percent so far 252 00:14:52,200 --> 00:14:56,520 Speaker 1: this year. And uh, Warren Buffett holds a thirty six 253 00:14:56,720 --> 00:15:00,440 Speaker 1: and a half percent stake in the company. Yeah, so 254 00:15:00,560 --> 00:15:04,800 Speaker 1: definitely really an interesting time. Also interesting will be whether 255 00:15:04,880 --> 00:15:08,120 Speaker 1: or not the good times are over, whether the opportunities 256 00:15:08,320 --> 00:15:12,640 Speaker 1: that Warren Buffett has experienced over his decades of a 257 00:15:12,680 --> 00:15:15,400 Speaker 1: track record, whether those have passed, Whether this is a 258 00:15:15,480 --> 00:15:20,360 Speaker 1: different time and that just cannot happen given where valuations are. Yeah, 259 00:15:20,440 --> 00:15:23,160 Speaker 1: and and to wonder whether the valuations are better here 260 00:15:23,160 --> 00:15:26,680 Speaker 1: in the United States or whether they're better overseas. Yeah, 261 00:15:26,720 --> 00:15:29,040 Speaker 1: I thought that it was really interesting. Without Indian acquisition, 262 00:15:29,800 --> 00:15:31,920 Speaker 1: I thought that that was compelling, especially at a time 263 00:15:31,920 --> 00:15:34,440 Speaker 1: when there's a lot of money going to startups in India. 264 00:15:34,800 --> 00:15:37,040 Speaker 1: But this sort of growing recognition that that is a 265 00:15:37,160 --> 00:15:41,080 Speaker 1: huge market that will surpass China in population in the 266 00:15:41,160 --> 00:15:44,880 Speaker 1: upcoming decade, not to mention it's sort of technological developments 267 00:15:44,960 --> 00:15:47,840 Speaker 1: and and the other advances in its economy. So it's 268 00:15:47,880 --> 00:15:49,720 Speaker 1: sort of interesting to see whether there is value to 269 00:15:49,760 --> 00:15:52,840 Speaker 1: be found there um and if so, where and how 270 00:15:52,880 --> 00:15:56,400 Speaker 1: as a foreign investor it is to get into that. Yes, 271 00:15:56,480 --> 00:15:59,200 Speaker 1: and also it will be interested to hear if he 272 00:15:59,240 --> 00:16:03,280 Speaker 1: has anything to say about tariffs and how tariffs supplied 273 00:16:03,280 --> 00:16:08,240 Speaker 1: by the United States will affect the prices that consumers 274 00:16:08,400 --> 00:16:12,760 Speaker 1: have to pay based on those pass along costs. David 275 00:16:13,080 --> 00:16:16,200 Speaker 1: David Deeds come back on in here, David Deed's founder 276 00:16:16,200 --> 00:16:19,400 Speaker 1: in chief investment strategist at Point View Wealth Management. Do 277 00:16:19,440 --> 00:16:23,040 Speaker 1: you expect, to Pim's point, do you expect Warren Buffett 278 00:16:23,040 --> 00:16:27,040 Speaker 1: to be political in any way? Um? Well, already in 279 00:16:27,120 --> 00:16:30,280 Speaker 1: some comments earlier today, quite frankly, he was asked the 280 00:16:30,360 --> 00:16:33,880 Speaker 1: question about the economy, and the issue of tariffs did 281 00:16:33,920 --> 00:16:36,080 Speaker 1: come up, and of course he's a long term holder 282 00:16:36,120 --> 00:16:39,400 Speaker 1: of Sherwin Williams, the famous paint company, and he did 283 00:16:39,440 --> 00:16:41,840 Speaker 1: allude to tariffs by talking about hey either having to 284 00:16:41,880 --> 00:16:45,960 Speaker 1: pay a lot more for their pails and so um uh. 285 00:16:46,040 --> 00:16:48,880 Speaker 1: You know, having been at the annual meeting in in 286 00:16:49,000 --> 00:16:51,920 Speaker 1: May and and and knowing how he feels about tariffs, 287 00:16:51,960 --> 00:16:55,520 Speaker 1: he is very much a free trader, and so that 288 00:16:55,600 --> 00:16:58,680 Speaker 1: was kind of availed backhand negative comment on the whole 289 00:16:58,720 --> 00:17:01,680 Speaker 1: concept of tariffs. Um. The other thing that I thought 290 00:17:01,760 --> 00:17:04,840 Speaker 1: was most interesting that the issue of Jerome Powell came up. 291 00:17:04,880 --> 00:17:08,200 Speaker 1: Of course, he's the chair of the Federal Reserve. Um, 292 00:17:08,480 --> 00:17:11,359 Speaker 1: we're in a period of slightly rising interest rates. But 293 00:17:11,520 --> 00:17:13,679 Speaker 1: what I really liked, I think boats well for the 294 00:17:13,720 --> 00:17:17,960 Speaker 1: Marcus as he expressed the most confidence in Mr Powell. 295 00:17:18,040 --> 00:17:20,560 Speaker 1: He said he's not perfect, but he's going to focus 296 00:17:20,600 --> 00:17:22,920 Speaker 1: on the job and he's well equipped to do the job. 297 00:17:23,000 --> 00:17:25,119 Speaker 1: And I thought that was a real plus for investors 298 00:17:25,119 --> 00:17:27,840 Speaker 1: going forward. Here David Deed's quick question to you, when 299 00:17:27,880 --> 00:17:32,560 Speaker 1: you are in Omaha attending the annual meeting of Berkshire Hathaway, 300 00:17:32,600 --> 00:17:38,679 Speaker 1: are you aficionado of dairy Queen. Well, you know, I 301 00:17:38,720 --> 00:17:41,000 Speaker 1: do smile, and I do like dairy Queen, to be 302 00:17:41,000 --> 00:17:43,159 Speaker 1: honest with you, and I do smile every time I 303 00:17:43,200 --> 00:17:45,520 Speaker 1: go there, knowing that in a very very small way, 304 00:17:45,520 --> 00:17:48,719 Speaker 1: I'm kind of benefiting from my purchase as a very 305 00:17:48,760 --> 00:17:51,920 Speaker 1: indirectly as a holder of Berkshire Hathway Stock. Hey, David 306 00:17:52,000 --> 00:17:55,040 Speaker 1: Dean's Point View Wealth Management and stick with us also 307 00:17:55,080 --> 00:17:57,320 Speaker 1: not only dairy Queen, but also Diet Coke, right, because 308 00:17:57,320 --> 00:18:00,159 Speaker 1: he's a very aficionado at the Oracle of Amaha of 309 00:18:00,480 --> 00:18:03,520 Speaker 1: Diet Coke. We seem to be having some technical difficulties 310 00:18:03,760 --> 00:18:06,359 Speaker 1: with respect to the interview, but a lot of really 311 00:18:06,440 --> 00:18:10,760 Speaker 1: interesting things. Pim uh that, Warren Buffett said there, and 312 00:18:10,800 --> 00:18:12,560 Speaker 1: just sort of digest some of these things. Let's bring 313 00:18:12,560 --> 00:18:15,320 Speaker 1: in David Deet's President, chief investment strategist at Point View 314 00:18:15,560 --> 00:18:22,879 Speaker 1: Wealth Management. Um, he sounded really bullish. What was your takeaway? Yeah, 315 00:18:22,920 --> 00:18:25,440 Speaker 1: I thought there's a couple of great things for investors 316 00:18:25,520 --> 00:18:29,360 Speaker 1: that we just heard. One is, don't time that market? 317 00:18:30,080 --> 00:18:32,680 Speaker 1: Is this a perfect time to invest? No, he said, 318 00:18:32,800 --> 00:18:35,320 Speaker 1: you know, it's not two thousand eight, nineteen seventy, it's 319 00:18:35,359 --> 00:18:37,879 Speaker 1: not nineteen seventy four, when was the cheapest period in 320 00:18:37,960 --> 00:18:42,200 Speaker 1: his lifetime. But still stocks look better than bonds. And 321 00:18:42,400 --> 00:18:45,560 Speaker 1: if you, you know, invest in a diverse array of stocks, 322 00:18:45,640 --> 00:18:48,080 Speaker 1: you're going to do well over the long haul. I 323 00:18:48,080 --> 00:18:49,919 Speaker 1: thought that was a great message. The second one is 324 00:18:49,960 --> 00:18:53,840 Speaker 1: always by quality. He talked about return on equities being 325 00:18:55,440 --> 00:19:00,320 Speaker 1: look for companies which are making good money, um, the Apple, 326 00:19:00,400 --> 00:19:03,600 Speaker 1: they are deploying to have a sensible business plans and 327 00:19:03,680 --> 00:19:08,520 Speaker 1: tremendous some defensible brands, and buy them and hold them. 328 00:19:08,520 --> 00:19:10,440 Speaker 1: I thought that was just a great message. But David, 329 00:19:10,480 --> 00:19:13,080 Speaker 1: hang on just a second. I mean, it's hardly likely 330 00:19:13,200 --> 00:19:17,160 Speaker 1: that he would say anything that would be contrary to that, right. 331 00:19:17,160 --> 00:19:19,720 Speaker 1: I mean, that would be the news if Warren Buffett 332 00:19:19,720 --> 00:19:21,359 Speaker 1: came out and said I want to spend money on 333 00:19:21,440 --> 00:19:26,000 Speaker 1: companies that deploy capital needlessly and heedlessly and spend it 334 00:19:26,040 --> 00:19:28,920 Speaker 1: on ridiculous things. I mean, that would be the headline. 335 00:19:28,960 --> 00:19:32,680 Speaker 1: I mean, it's not exactly Warren Buffett's forte to be 336 00:19:32,920 --> 00:19:35,880 Speaker 1: sort of tossing money around. I mean he's a kind 337 00:19:35,920 --> 00:19:39,840 Speaker 1: of parsimonious when it comes to his investment philosophy. Well, 338 00:19:40,000 --> 00:19:42,399 Speaker 1: I think you're exactly right, And if you read his 339 00:19:42,480 --> 00:19:46,159 Speaker 1: annual reports over the years and look at his latest activity. Obviously, 340 00:19:46,520 --> 00:19:48,800 Speaker 1: as he says, he's not out there with a shovel 341 00:19:48,880 --> 00:19:52,320 Speaker 1: putting money into the market. You know. Having said that, 342 00:19:52,440 --> 00:19:54,560 Speaker 1: of course, when you look at all the great investors 343 00:19:54,600 --> 00:19:57,240 Speaker 1: around the world and look at their track records, your 344 00:19:57,280 --> 00:20:01,520 Speaker 1: heart pressed to identify somemon who has better. So even 345 00:20:01,520 --> 00:20:05,560 Speaker 1: though you could say he's talking his book a little bit, nevertheless, 346 00:20:05,840 --> 00:20:07,760 Speaker 1: I think you have to give him the benefit of 347 00:20:07,760 --> 00:20:11,080 Speaker 1: adapt because of how well he has done. Yeah. One 348 00:20:11,119 --> 00:20:13,840 Speaker 1: thing that I thought was really interesting was when David 349 00:20:13,840 --> 00:20:17,640 Speaker 1: West of Liver Television asked him about a tool Goande, 350 00:20:17,640 --> 00:20:22,000 Speaker 1: the New Yorker writer and physician who Warren Buffett is 351 00:20:22,040 --> 00:20:25,480 Speaker 1: taped to head his healthcare initiative, and David West asked, 352 00:20:25,520 --> 00:20:29,119 Speaker 1: what's he doing? And Warren Buffett responded, he's thinking, what 353 00:20:29,200 --> 00:20:31,919 Speaker 1: did you make of that? Well, I mean, you know, 354 00:20:32,200 --> 00:20:37,920 Speaker 1: the healthcare issues are so far proved almost to be intractable. Um. 355 00:20:38,280 --> 00:20:40,879 Speaker 1: You know, the share of DDP in America keeps going 356 00:20:40,960 --> 00:20:43,679 Speaker 1: up this allocane net direction, and no one seems to 357 00:20:43,720 --> 00:20:46,240 Speaker 1: have the silver bullet as to how the rain cost 358 00:20:46,320 --> 00:20:49,040 Speaker 1: he had still provide Americans for the best healthcare possible. 359 00:20:49,359 --> 00:20:52,520 Speaker 1: That's why Warren and Jamie Diamond Uh and a couple 360 00:20:52,520 --> 00:20:54,679 Speaker 1: of others have teamed together to try and come up 361 00:20:54,680 --> 00:20:57,920 Speaker 1: with a solution. But from everything I heard this morning here, 362 00:20:58,320 --> 00:21:01,640 Speaker 1: no magic solution has been developed, but at least they're 363 00:21:01,680 --> 00:21:04,480 Speaker 1: working on it, and and that's where we are now 364 00:21:04,520 --> 00:21:07,320 Speaker 1: with the Warren's project there. Thanks very much for being 365 00:21:07,359 --> 00:21:09,960 Speaker 1: with us. David Diets is the founder and the chief 366 00:21:10,000 --> 00:21:15,040 Speaker 1: investment strategist for Point View Wealth Management, helping to manage 367 00:21:15,119 --> 00:21:18,879 Speaker 1: more than three million dollars of customer assets based in Summit, 368 00:21:18,920 --> 00:21:38,680 Speaker 1: New Jersey. This was the year that oil was going 369 00:21:38,760 --> 00:21:42,520 Speaker 1: to climb, possibly back to its prior highs, and yet 370 00:21:43,000 --> 00:21:46,120 Speaker 1: that was not to be. Joining us now to find 371 00:21:46,160 --> 00:21:48,960 Speaker 1: out what to expect in the months ahead for the 372 00:21:49,000 --> 00:21:52,040 Speaker 1: price of Crewed is Rob Hayworth, senior investment strategist at 373 00:21:52,080 --> 00:21:54,800 Speaker 1: us Bank Wealth Management, helping to oversee it more than 374 00:21:54,840 --> 00:21:57,680 Speaker 1: a hundred and fifty billion dollars of assets. Rob, thank 375 00:21:57,680 --> 00:21:59,880 Speaker 1: you so much for being with us. I'm looking right 376 00:21:59,880 --> 00:22:03,920 Speaker 1: now out crude just under seventy barrel, and I'm wondering, 377 00:22:04,000 --> 00:22:07,600 Speaker 1: from your perspective, are we going to break out significantly 378 00:22:07,640 --> 00:22:10,000 Speaker 1: to the upside of the downside, because frankly, it's been 379 00:22:10,080 --> 00:22:13,240 Speaker 1: split among the people we've spoken to, with people making 380 00:22:13,320 --> 00:22:17,000 Speaker 1: arguments on either side. Yeah, our point of view is 381 00:22:17,080 --> 00:22:19,399 Speaker 1: for the rest of this year, you're probably actually range 382 00:22:19,400 --> 00:22:22,000 Speaker 1: bound on oil at this point in time. There is 383 00:22:22,440 --> 00:22:25,199 Speaker 1: a tremendous amount of bullish sentiment in the in the 384 00:22:25,240 --> 00:22:29,280 Speaker 1: futures market, but you're starting to turn the calendar from 385 00:22:29,320 --> 00:22:33,040 Speaker 1: from peak demand summer season in into the softer demand 386 00:22:33,119 --> 00:22:36,600 Speaker 1: fall season, so that's going to limit the upside. But 387 00:22:36,680 --> 00:22:38,439 Speaker 1: there's a bit of a floor in here when you 388 00:22:38,480 --> 00:22:41,639 Speaker 1: think about the Iran sanctions, the cuts in production that 389 00:22:41,680 --> 00:22:44,600 Speaker 1: are going on in Iran. So we think right now 390 00:22:44,640 --> 00:22:48,560 Speaker 1: this market is kind of caught between these two factors. Uh, 391 00:22:48,920 --> 00:22:50,880 Speaker 1: and we're probably going to stay in this in this 392 00:22:51,000 --> 00:22:54,480 Speaker 1: price range for through the rest of the year. Well. 393 00:22:54,480 --> 00:22:58,240 Speaker 1: Obviously worth investing in domestic oil production, either in the 394 00:22:58,280 --> 00:23:02,600 Speaker 1: midstream or up stream. Yeah. A couple of months ago 395 00:23:02,640 --> 00:23:05,800 Speaker 1: we actually published a quick paper on an opportunity of 396 00:23:05,840 --> 00:23:10,280 Speaker 1: midstream energy infrastructure companies, and we think that opportunity still exists. 397 00:23:10,920 --> 00:23:14,159 Speaker 1: You've got oil prices hovering at this reasonable price range 398 00:23:14,960 --> 00:23:17,160 Speaker 1: as we can you know, see even in the Permian 399 00:23:17,960 --> 00:23:22,040 Speaker 1: infrastructure is fairly tight, meaning there's not enough storage, there's 400 00:23:22,040 --> 00:23:26,520 Speaker 1: not enough transportation UM and and so demand for these 401 00:23:26,600 --> 00:23:29,400 Speaker 1: UH for these services is fairly high. And you're coming 402 00:23:29,440 --> 00:23:33,720 Speaker 1: off a fairly rough patch for these midstream energy companies. 403 00:23:33,720 --> 00:23:38,240 Speaker 1: So valuations are fairly cheap, yields are attractive relative to 404 00:23:38,520 --> 00:23:42,600 Speaker 1: other things like high yield bonds UH and and now 405 00:23:42,600 --> 00:23:45,679 Speaker 1: with some of this recapitalization in the in the industry 406 00:23:45,680 --> 00:23:48,800 Speaker 1: and the change in structure from master limited partnership to 407 00:23:48,920 --> 00:23:52,040 Speaker 1: more seed corporations, we think that catalyst is there to 408 00:23:52,080 --> 00:23:54,760 Speaker 1: start to unlock that value. You know, one thing that 409 00:23:54,800 --> 00:23:57,280 Speaker 1: I'm curious about. If you think that oil prices are 410 00:23:57,280 --> 00:24:00,600 Speaker 1: going to remain range bound, what's the big risk to 411 00:24:00,640 --> 00:24:05,159 Speaker 1: your thesis. Yeah, that's a that's a great question. I 412 00:24:05,200 --> 00:24:09,679 Speaker 1: think there'll probably be two. One is US production deteriorates 413 00:24:09,680 --> 00:24:13,120 Speaker 1: a little faster than than we expect UM. That would 414 00:24:13,119 --> 00:24:18,240 Speaker 1: be a key problem I think for UH for oil prices. 415 00:24:18,320 --> 00:24:21,560 Speaker 1: And then and then the second is really to the 416 00:24:21,600 --> 00:24:24,680 Speaker 1: extent of this global trade war starts to impair global 417 00:24:24,720 --> 00:24:28,879 Speaker 1: economic activity UM. Right now, expectations in the market are 418 00:24:28,920 --> 00:24:32,960 Speaker 1: for demand to continue to grow and absorb this supply 419 00:24:33,080 --> 00:24:37,200 Speaker 1: coming online, particularly as as OPEC, especially Saudi Arabia and 420 00:24:37,200 --> 00:24:40,800 Speaker 1: and they're non OPEC partner Russia ramp up their production. Um, 421 00:24:40,880 --> 00:24:43,359 Speaker 1: you need that demand to continue to expand. And I 422 00:24:43,400 --> 00:24:47,280 Speaker 1: think if if we get a a surprise softening from 423 00:24:47,440 --> 00:24:52,480 Speaker 1: some you know, unforeseen escalation in the trade tip, um, 424 00:24:52,520 --> 00:24:55,080 Speaker 1: that would be that would be kind of problematic for 425 00:24:55,119 --> 00:24:57,640 Speaker 1: the for the global oil markets. Rob. I just want 426 00:24:57,640 --> 00:24:59,560 Speaker 1: you to look ahead a little bit, maybe you know, 427 00:24:59,600 --> 00:25:02,840 Speaker 1: two years, three years or so, because of new rules 428 00:25:02,920 --> 00:25:07,680 Speaker 1: that are going into effect in terms of shipping oil, uh, 429 00:25:07,720 --> 00:25:10,159 Speaker 1: you know on the nation on the world's oceans. Do 430 00:25:10,200 --> 00:25:11,920 Speaker 1: you believe that it's going to get more expensive to 431 00:25:11,960 --> 00:25:14,720 Speaker 1: actually transport oil and as a result, that's going to 432 00:25:14,840 --> 00:25:20,680 Speaker 1: filter into the price. Uh? Yeah, in general, we think 433 00:25:21,160 --> 00:25:24,560 Speaker 1: we would see that that is true, right, I mean 434 00:25:24,600 --> 00:25:27,080 Speaker 1: that that's one of the bottlenecks we still really have 435 00:25:27,560 --> 00:25:33,640 Speaker 1: in in this industry, is is this infrastructure. So ultimately 436 00:25:33,680 --> 00:25:37,000 Speaker 1: prices could take higher over time, but it's but we've 437 00:25:37,040 --> 00:25:41,400 Speaker 1: still you know that that's Uh, it's tough to price 438 00:25:41,440 --> 00:25:43,399 Speaker 1: at this point in time because oil is always priced 439 00:25:43,440 --> 00:25:45,560 Speaker 1: on what's going on right now, what is going on 440 00:25:45,600 --> 00:25:48,680 Speaker 1: with supply demand right now. But there's certainly that opportunity 441 00:25:48,680 --> 00:25:52,439 Speaker 1: in the future. Are there any places within the energy 442 00:25:52,560 --> 00:25:54,760 Speaker 1: complex where you think that there are securities that are 443 00:25:54,800 --> 00:26:00,840 Speaker 1: overvalued right now? Um, we're generally, you know, we we 444 00:26:00,960 --> 00:26:05,520 Speaker 1: have a pretty selective process around around security selection. We're 445 00:26:05,560 --> 00:26:10,560 Speaker 1: not heavy into the integrated space. We're not heavy um 446 00:26:10,640 --> 00:26:15,679 Speaker 1: into into a broad swath of of exploration and production. 447 00:26:15,680 --> 00:26:18,000 Speaker 1: We're probably more interested in domestic at this point than 448 00:26:18,040 --> 00:26:21,480 Speaker 1: we are everything else. So so we've been pretty selective 449 00:26:21,520 --> 00:26:26,600 Speaker 1: in terms of this midstream opportunity some exploration and production, uh, 450 00:26:26,960 --> 00:26:29,240 Speaker 1: but but avoiding many of the other segments for now. 451 00:26:29,840 --> 00:26:36,320 Speaker 1: Rob has investment in goal changed. Yes, I think sentiment 452 00:26:36,400 --> 00:26:39,280 Speaker 1: has finally rolled over. It's been such a rough road 453 00:26:39,320 --> 00:26:42,560 Speaker 1: for gold since it you know, touched touched its peak 454 00:26:42,600 --> 00:26:45,520 Speaker 1: a few years ago. And and as you've been breaking down, 455 00:26:45,520 --> 00:26:49,360 Speaker 1: we've finally seen futures market sentiment moved from that long 456 00:26:49,440 --> 00:26:53,040 Speaker 1: to net short uh. And I well, I think you've 457 00:26:53,040 --> 00:26:56,320 Speaker 1: seen a bounce in the last uh, the last couple 458 00:26:56,320 --> 00:26:59,960 Speaker 1: of weeks. Um. The struggle is the fundamental headwinds for 459 00:27:00,040 --> 00:27:02,840 Speaker 1: golden now against you, And I think the sentiment in 460 00:27:02,840 --> 00:27:05,160 Speaker 1: the market has rolled over and it's going to be 461 00:27:05,240 --> 00:27:08,840 Speaker 1: tough for it. To regain that bullish for until until 462 00:27:08,920 --> 00:27:11,480 Speaker 1: you you, you know, until prices are finally washed out. 463 00:27:12,000 --> 00:27:15,800 Speaker 1: So a higher interest rates from the Fed, a stronger 464 00:27:15,880 --> 00:27:19,119 Speaker 1: US dollar due to somewhat better US economic growth than 465 00:27:19,160 --> 00:27:23,240 Speaker 1: rest of world UM is going to keep providing that headwind, 466 00:27:23,320 --> 00:27:26,680 Speaker 1: and I think a sentiment probably remains negative for tom 467 00:27:26,800 --> 00:27:31,520 Speaker 1: sometime and keeps pressure on gold prices. Many thanks, Rob Hayworth, 468 00:27:32,000 --> 00:27:36,520 Speaker 1: Senior investment strategist, US Bank Wealth Management based in Seattle, 469 00:27:36,600 --> 00:27:39,119 Speaker 1: helping to manage more than a hundred and fifty billion 470 00:27:39,160 --> 00:27:59,479 Speaker 1: dollars of customer assets. Well, we marked ten years since 471 00:27:59,720 --> 00:28:04,359 Speaker 1: the financial crisis of two thousand and eight. Many people 472 00:28:04,400 --> 00:28:08,919 Speaker 1: remember it as the time when bear Stearns, Lehman Brothers disappeared, 473 00:28:09,680 --> 00:28:13,640 Speaker 1: But there were some winners in that two thousand eight crisis. 474 00:28:14,119 --> 00:28:17,200 Speaker 1: Any Massa is here now. She's our investing reporter for 475 00:28:17,359 --> 00:28:21,240 Speaker 1: Bloomberg News to tell us all about how one company 476 00:28:21,320 --> 00:28:25,880 Speaker 1: managed to transform itself taking advantage of some problems in 477 00:28:26,520 --> 00:28:28,840 Speaker 1: well other companies. And this has to do with black 478 00:28:28,960 --> 00:28:32,439 Speaker 1: Rock and Barkley start off. And he's great to have 479 00:28:32,480 --> 00:28:35,600 Speaker 1: you here. Maybe just talk a little bit about what 480 00:28:35,840 --> 00:28:41,480 Speaker 1: happened at Barkley's that ended up benefiting black Rock. Sure well, 481 00:28:41,760 --> 00:28:45,320 Speaker 1: So Barclay's did not accept UK government bail out money 482 00:28:45,320 --> 00:28:47,760 Speaker 1: and they were looking to shore up their capital reserves, 483 00:28:47,760 --> 00:28:50,640 Speaker 1: so they ended up putting up for sale their I 484 00:28:50,840 --> 00:28:54,720 Speaker 1: shares business and that was their e t F business. 485 00:28:54,800 --> 00:28:57,160 Speaker 1: And what ended up happening is that was a unit 486 00:28:57,160 --> 00:28:59,240 Speaker 1: of a bigger business called b g I, and black 487 00:28:59,240 --> 00:29:02,240 Speaker 1: Ock swept in with this thirteen point five billion dollar 488 00:29:02,320 --> 00:29:05,880 Speaker 1: deal to buy all of b g I and in 489 00:29:05,960 --> 00:29:08,480 Speaker 1: that acquisition it got into the e t F space 490 00:29:08,520 --> 00:29:10,880 Speaker 1: and now we think of it as such a huge player, 491 00:29:10,920 --> 00:29:13,360 Speaker 1: in fact, the world's largest player in e t F. 492 00:29:14,080 --> 00:29:17,400 Speaker 1: And this was the transformative moment. And you know when 493 00:29:17,440 --> 00:29:20,080 Speaker 1: they did this deal back in the throws of the crisis, 494 00:29:20,160 --> 00:29:23,479 Speaker 1: when that happened. It's so interesting, Annie, because this clearly 495 00:29:23,600 --> 00:29:26,280 Speaker 1: was a huge boom for black Rock when it comes 496 00:29:26,320 --> 00:29:28,960 Speaker 1: to how many assets they have with more than six 497 00:29:28,960 --> 00:29:33,560 Speaker 1: trillion dollars under management. What about profitability though, sure so 498 00:29:33,840 --> 00:29:38,280 Speaker 1: um obviously they are a highly profitable business and they 499 00:29:38,320 --> 00:29:41,680 Speaker 1: have basically paved the way in a couple of different 500 00:29:41,720 --> 00:29:45,760 Speaker 1: ways for that UM through e t S and various 501 00:29:45,800 --> 00:29:48,080 Speaker 1: other products. Et F are about a third of their 502 00:29:48,120 --> 00:29:51,000 Speaker 1: business now, but it's pretty stark if you consider that 503 00:29:51,360 --> 00:29:53,600 Speaker 1: they weren't in that space at all. In fact, they 504 00:29:53,600 --> 00:29:56,200 Speaker 1: had determined that they wouldn't be able to build it 505 00:29:56,240 --> 00:30:00,520 Speaker 1: from scratch in their own internal uh you a review, 506 00:30:00,720 --> 00:30:03,920 Speaker 1: and then once this came up for sale, they said, Hey, 507 00:30:03,920 --> 00:30:06,440 Speaker 1: we have a chance to get into this business that 508 00:30:06,800 --> 00:30:09,000 Speaker 1: that we want to be in, and that's how that 509 00:30:09,040 --> 00:30:12,880 Speaker 1: acquisition happened, and that piece of their business grew and 510 00:30:12,920 --> 00:30:18,760 Speaker 1: grew over the past decade. Financial risk software? What is it? 511 00:30:18,880 --> 00:30:24,280 Speaker 1: And what did black Rock do in order to capitalize 512 00:30:24,280 --> 00:30:27,120 Speaker 1: on everybody's fear. It's like, you know, after a hurricane, 513 00:30:27,160 --> 00:30:29,960 Speaker 1: everyone says, I got to go out and buy hurricane insurance. 514 00:30:30,560 --> 00:30:34,160 Speaker 1: After two th eight, people were worried about risk to 515 00:30:34,200 --> 00:30:39,360 Speaker 1: their financial assets exactly. So another way that this the 516 00:30:39,400 --> 00:30:41,959 Speaker 1: past ten years have been tied to their growth is 517 00:30:42,280 --> 00:30:46,160 Speaker 1: after the crisis and the crash, firms were looking for 518 00:30:46,240 --> 00:30:50,840 Speaker 1: ways to better assess their financial risk and and better 519 00:30:50,880 --> 00:30:55,920 Speaker 1: evaluate uh those types of risks. So black Rock already 520 00:30:55,960 --> 00:31:00,280 Speaker 1: had this Aladdin product that they sell which does just that, 521 00:31:00,400 --> 00:31:03,040 Speaker 1: helps helps you analyze all the risks in your portfolio, 522 00:31:03,600 --> 00:31:09,120 Speaker 1: and that business has uh really shown some growth over 523 00:31:09,160 --> 00:31:11,680 Speaker 1: the past decade, and they were able in a changing 524 00:31:11,680 --> 00:31:16,800 Speaker 1: regulatory environment to to i think, find some new customers 525 00:31:16,840 --> 00:31:19,280 Speaker 1: for that software, you know, just sort of taking a 526 00:31:19,320 --> 00:31:22,080 Speaker 1: step back. Black Rock certainly did benefit a lot in 527 00:31:22,120 --> 00:31:24,880 Speaker 1: the wake of the crisis from these specific businesses, but 528 00:31:25,480 --> 00:31:29,400 Speaker 1: in general, asset managers were big winners. I mean, yes, 529 00:31:29,400 --> 00:31:32,040 Speaker 1: there's a certainly consolidation now, but if you think about 530 00:31:32,080 --> 00:31:35,080 Speaker 1: it in general, because of some of the stimulus packages, 531 00:31:35,160 --> 00:31:39,240 Speaker 1: people flooded into asset managers and there was more business 532 00:31:39,280 --> 00:31:42,040 Speaker 1: that kind of went to the buy side from the 533 00:31:42,080 --> 00:31:44,560 Speaker 1: cell side as a result of this, right, I mean, 534 00:31:44,560 --> 00:31:47,240 Speaker 1: as black Rock kind of a sort of a lens 535 00:31:47,320 --> 00:31:51,440 Speaker 1: to view this shift through, that's exactly right. And one 536 00:31:51,520 --> 00:31:54,720 Speaker 1: other way that you might look at it is these 537 00:31:54,720 --> 00:31:57,200 Speaker 1: asset managers have not been given the too big to 538 00:31:57,240 --> 00:32:00,840 Speaker 1: fail stamp that the big banks have. Oh. I mean 539 00:32:00,880 --> 00:32:05,200 Speaker 1: that includes black Rock, but it also includes peers like Fidelity. Um. 540 00:32:05,240 --> 00:32:07,840 Speaker 1: You know, the asset management community has been able to 541 00:32:08,080 --> 00:32:10,920 Speaker 1: avoid being labeled too big to fail, even though they 542 00:32:10,960 --> 00:32:13,360 Speaker 1: did for a while they were a little bit in 543 00:32:13,400 --> 00:32:17,000 Speaker 1: limbo over whether that would happen. And ultimately that you know, 544 00:32:17,880 --> 00:32:21,120 Speaker 1: it seems like that scrutiny has tapered fifteen seconds on 545 00:32:21,200 --> 00:32:25,120 Speaker 1: Larry Fink and how important he has been to this success. Sure, well, 546 00:32:25,240 --> 00:32:29,320 Speaker 1: he's obviously the face of the company, and he's only 547 00:32:29,880 --> 00:32:34,600 Speaker 1: become more I think powerful and visible uh in in 548 00:32:34,640 --> 00:32:37,320 Speaker 1: these in the past decades. Thanks very much for being 549 00:32:37,320 --> 00:32:42,160 Speaker 1: with us. Annie massa investing reporter for Bloomberg. We encourage 550 00:32:42,200 --> 00:32:45,960 Speaker 1: you to read her story about Black Rocks decade, how 551 00:32:46,000 --> 00:32:51,320 Speaker 1: the crash helped forge a six point three trillion dollar giant. 552 00:32:51,400 --> 00:32:56,880 Speaker 1: Much appreciate it. Thanks for listening to the Bloomberg P 553 00:32:57,000 --> 00:32:59,920 Speaker 1: and L podcast. You can subscribe and listen to interviews 554 00:33:00,000 --> 00:33:04,040 Speaker 1: at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 555 00:33:04,440 --> 00:33:08,040 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 556 00:33:08,040 --> 00:33:11,360 Speaker 1: on Twitter at Lisa Abramo wits one. Before the podcast, 557 00:33:11,400 --> 00:33:14,000 Speaker 1: you can always catch us worldwide on Bloomberg Radio.