1 00:00:09,720 --> 00:00:12,880 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene with 2 00:00:13,600 --> 00:00:16,520 Speaker 1: David Gura. Daily we bring you insight from the best 3 00:00:16,560 --> 00:00:22,239 Speaker 1: of economics, finance, investment, and international relations. Find Bloomberg Surveillance 4 00:00:22,320 --> 00:00:27,000 Speaker 1: on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course 5 00:00:27,320 --> 00:00:34,760 Speaker 1: on the Bloomberg. Good morning everyone, David Gurin, Tom Keene, 6 00:00:34,800 --> 00:00:39,000 Speaker 1: Bloomberg Surveillance, Mr Gurrow off, Michael McKee and for Mr Gurrow, 7 00:00:39,040 --> 00:00:41,760 Speaker 1: which is a good and beautiful thing. David Kotalk this 8 00:00:41,800 --> 00:00:45,199 Speaker 1: morning mentioned a New Jersey bond and I got a 9 00:00:45,360 --> 00:00:49,479 Speaker 1: lot of response negative response about New Jersey a good 10 00:00:49,479 --> 00:00:51,680 Speaker 1: man to speak to on that. Peter Hayes a black 11 00:00:51,760 --> 00:00:54,040 Speaker 1: rock Peter, let me rip up the script here, and 12 00:00:54,120 --> 00:00:57,279 Speaker 1: that the tone of particularly New York, New Jersey, Connecticut 13 00:00:57,360 --> 00:01:01,240 Speaker 1: listeners was hyper negative on the land of Chris Christie's 14 00:01:01,280 --> 00:01:07,120 Speaker 1: New Jersey a good credit. Jersey has some structural problems, 15 00:01:07,240 --> 00:01:09,480 Speaker 1: like some of the other states with big prinsion problems, 16 00:01:09,520 --> 00:01:12,200 Speaker 1: and that's that's where they really revolve around. So this 17 00:01:12,280 --> 00:01:15,480 Speaker 1: idea of tensions being able to pay the liabilities, it 18 00:01:15,520 --> 00:01:19,160 Speaker 1: seems to be getting shorter and shorter that I think 19 00:01:19,200 --> 00:01:22,080 Speaker 1: that they are reckoning if if you will, um, they 20 00:01:22,120 --> 00:01:24,319 Speaker 1: have to be addressed. Some states have done better jobs 21 00:01:24,319 --> 00:01:26,360 Speaker 1: in the states you mentioned have not done as good 22 00:01:26,400 --> 00:01:28,760 Speaker 1: a job, and New Jersey is certainly one of those, 23 00:01:28,800 --> 00:01:31,520 Speaker 1: and that's reflected in market spreads. They've spread it spread 24 00:01:31,520 --> 00:01:35,200 Speaker 1: out dramatically wider. So I think the market sniffed that 25 00:01:35,280 --> 00:01:38,520 Speaker 1: out and that will they default longer term? Unlikely? They 26 00:01:38,560 --> 00:01:41,520 Speaker 1: are a state, they're a large economy, etcetera. But in 27 00:01:41,560 --> 00:01:43,760 Speaker 1: the meantime you could see some volatility in the name. 28 00:01:44,040 --> 00:01:47,040 Speaker 1: Do do the name the state? And let's not pick 29 00:01:47,040 --> 00:01:49,920 Speaker 1: on New Jersey. There's X number of other states like that. 30 00:01:50,280 --> 00:01:53,920 Speaker 1: Does a shop like black Rock avoid a given state 31 00:01:54,560 --> 00:01:58,520 Speaker 1: or can you be choosy versus GEO general obligation and 32 00:01:58,640 --> 00:02:01,440 Speaker 1: revenue paper can pick and choose? Or do you just 33 00:02:01,520 --> 00:02:05,760 Speaker 1: walk away from some of these beleaguered states? Again, I 34 00:02:05,800 --> 00:02:08,919 Speaker 1: think you have to believe in the long term efficacy 35 00:02:09,000 --> 00:02:11,079 Speaker 1: of a of a state. Even Illinois, who has some 36 00:02:11,080 --> 00:02:14,560 Speaker 1: pretty significant problems, actually taking some steps over the last 37 00:02:14,560 --> 00:02:17,560 Speaker 1: couple of months to address the pension problem. They're a 38 00:02:17,560 --> 00:02:20,880 Speaker 1: long way from from home. But you know, in the meantime, 39 00:02:21,040 --> 00:02:24,239 Speaker 1: yields went up dramatically with prices going down and that's 40 00:02:24,280 --> 00:02:26,919 Speaker 1: actually reversed now over the last couple of months. You 41 00:02:26,919 --> 00:02:28,360 Speaker 1: can play it that way, but you're I think you're 42 00:02:28,360 --> 00:02:31,920 Speaker 1: a question around g os and revenues that tosses is 43 00:02:31,960 --> 00:02:34,600 Speaker 1: the bigger one revenue bond you can sort of identify 44 00:02:34,639 --> 00:02:37,080 Speaker 1: a revenue stream to pay back the bond, and geos 45 00:02:37,600 --> 00:02:40,120 Speaker 1: taking a bit of a political risk. Well, the Michael 46 00:02:40,160 --> 00:02:42,600 Speaker 1: McKee's taking a huge risk because he's got those triple 47 00:02:42,680 --> 00:02:46,000 Speaker 1: de rated ice rink bonds somewhere up by s part 48 00:02:46,000 --> 00:02:48,720 Speaker 1: of New Jersey. What's your yield on that side? It's 49 00:02:48,760 --> 00:02:52,480 Speaker 1: it's like tax free and you get New Jersey Devil 50 00:02:52,560 --> 00:02:55,680 Speaker 1: tickets like. But is there it's sort of a psychological 51 00:02:55,720 --> 00:03:01,360 Speaker 1: put in play here that uh yeah, Illinois or some 52 00:03:01,440 --> 00:03:03,720 Speaker 1: of these other states are in a lot of trouble, 53 00:03:03,800 --> 00:03:07,320 Speaker 1: but really they won't default, they won't go bankrupt, and 54 00:03:07,360 --> 00:03:11,560 Speaker 1: so why not take the yield? I think there's definitely 55 00:03:11,639 --> 00:03:14,800 Speaker 1: that mentality in the market, and it's a bit of 56 00:03:14,840 --> 00:03:16,680 Speaker 1: a rating risk. You know, do you want to own 57 00:03:16,800 --> 00:03:20,040 Speaker 1: the double D or the triple D name you get 58 00:03:20,080 --> 00:03:23,079 Speaker 1: paid and compensated for it if that's what you're after, 59 00:03:23,919 --> 00:03:26,359 Speaker 1: or other investors aren't comfortable with that. Type of risk, 60 00:03:26,400 --> 00:03:28,919 Speaker 1: and they see a little bit more of a doomsday scenario. 61 00:03:28,960 --> 00:03:31,519 Speaker 1: But states, states, first of all, don't have the ability 62 00:03:31,560 --> 00:03:34,640 Speaker 1: to declare bankruptcy. So if you think about the state defaulting, 63 00:03:35,120 --> 00:03:38,000 Speaker 1: I mean, that's just not in anybody's radar screen. So 64 00:03:38,040 --> 00:03:39,640 Speaker 1: I think it's a matter of that you're willing to 65 00:03:39,640 --> 00:03:42,960 Speaker 1: take the risk and see some volatility and your portfolio. 66 00:03:43,040 --> 00:03:44,840 Speaker 1: There's plenty of people who want the yield and willing 67 00:03:44,880 --> 00:03:46,280 Speaker 1: to take the rest. Mike, I want you ask the 68 00:03:46,280 --> 00:03:48,440 Speaker 1: next question, but this is too important to pass up. 69 00:03:48,640 --> 00:03:52,840 Speaker 1: Peter Haste. To be clear, a fifty states, they can't 70 00:03:52,960 --> 00:03:56,960 Speaker 1: do a Puerto Rico. They're different, right, that's right, territory 71 00:03:57,120 --> 00:04:00,280 Speaker 1: versus state. It's as a's part of the constitution. Now, 72 00:04:01,000 --> 00:04:05,480 Speaker 1: can most portfolios or at least I mean, we'll talk 73 00:04:05,640 --> 00:04:08,640 Speaker 1: black Rock, since we're talking to the man from black Rock, 74 00:04:08,680 --> 00:04:12,400 Speaker 1: but can you hold triple teas or things like that? 75 00:04:12,520 --> 00:04:14,600 Speaker 1: I mean, do your rules even allow you to have 76 00:04:14,720 --> 00:04:20,480 Speaker 1: something that that is that close to default rating? They do, Obviously, 77 00:04:20,520 --> 00:04:24,760 Speaker 1: reflating ratings are designed to reflect the fault risk of 78 00:04:24,880 --> 00:04:26,920 Speaker 1: the long term ability of an issue to pay back 79 00:04:26,960 --> 00:04:30,240 Speaker 1: their debt. But yes, we we can most institutional investors 80 00:04:30,279 --> 00:04:33,920 Speaker 1: can hold everything on the credit spectrum from high yield 81 00:04:34,120 --> 00:04:37,120 Speaker 1: to high quality and everything on the yield curve. SU's 82 00:04:37,160 --> 00:04:39,760 Speaker 1: just a matter of where do you own those type 83 00:04:39,800 --> 00:04:42,320 Speaker 1: of credits. I think you have to own them inappropriate 84 00:04:42,360 --> 00:04:46,200 Speaker 1: mandates who are investors understand the risks. Let me switch 85 00:04:46,240 --> 00:04:50,680 Speaker 1: from pension problems to hurricane problems. If you look at 86 00:04:50,680 --> 00:04:53,279 Speaker 1: a place like Houston, or you look at a place 87 00:04:53,600 --> 00:04:56,880 Speaker 1: like Miami, with the potential damage that we might see, 88 00:04:57,440 --> 00:05:00,480 Speaker 1: is there a possibility, you know, do do you get 89 00:05:00,480 --> 00:05:04,280 Speaker 1: a ratings change and impossibility that you might see either 90 00:05:04,320 --> 00:05:07,080 Speaker 1: default or delayed payment on some bonds because the revenue 91 00:05:07,120 --> 00:05:09,600 Speaker 1: is just not there if the economy is so badly damaged. 92 00:05:10,600 --> 00:05:15,479 Speaker 1: I think that that could be in very small instances, 93 00:05:15,520 --> 00:05:19,680 Speaker 1: with very small issuers, you could see an interruption of payments. 94 00:05:19,760 --> 00:05:22,000 Speaker 1: We think they're very unlikely. In history tells us that 95 00:05:22,040 --> 00:05:23,400 Speaker 1: you go back and look at some of the bigger 96 00:05:23,720 --> 00:05:28,080 Speaker 1: hurricanes that have impacted in the Southwest Louisiana, etcetera, and 97 00:05:28,120 --> 00:05:30,640 Speaker 1: you do see a bit of a downturn in economic 98 00:05:30,680 --> 00:05:34,080 Speaker 1: activity for the short term, which obviously impacts revenues, but 99 00:05:34,160 --> 00:05:36,479 Speaker 1: you don't see a big change in the market value 100 00:05:36,480 --> 00:05:39,359 Speaker 1: of the bonds, you don't see a big change in ratings. 101 00:05:39,360 --> 00:05:42,880 Speaker 1: If it's a single standalone project and for some reason, 102 00:05:43,040 --> 00:05:47,760 Speaker 1: some catastrophic event um damages the property to the extent 103 00:05:47,800 --> 00:05:49,680 Speaker 1: they can't continue to build it or build it out 104 00:05:49,720 --> 00:05:51,840 Speaker 1: and can't collect revenues, then that might be a little 105 00:05:51,839 --> 00:05:55,200 Speaker 1: bit differently different. But most of these revenue bonds have 106 00:05:55,520 --> 00:05:57,960 Speaker 1: reserved funds they can draw on the pay debt service, 107 00:05:58,040 --> 00:06:01,440 Speaker 1: and we we don't see a a big impact the bonds. 108 00:06:01,480 --> 00:06:04,320 Speaker 1: That's what history has told us. Where are we positioning 109 00:06:04,320 --> 00:06:09,240 Speaker 1: now on the relative yield and total return of a 110 00:06:09,279 --> 00:06:13,880 Speaker 1: single double triple tax free state portfolio at Black Rock 111 00:06:14,560 --> 00:06:19,080 Speaker 1: versus buying a national portfolio. That's always been a difficult 112 00:06:19,160 --> 00:06:22,960 Speaker 1: concept for the public. Explain where we are now. Should 113 00:06:23,000 --> 00:06:25,680 Speaker 1: I buy triple tax free whatever state or should I 114 00:06:25,680 --> 00:06:29,679 Speaker 1: buy a broader national portfolio. It depends on your state. 115 00:06:29,720 --> 00:06:32,200 Speaker 1: If you're in a state like California and New York 116 00:06:32,279 --> 00:06:35,960 Speaker 1: where these state income tax local income tax rates are 117 00:06:36,040 --> 00:06:38,840 Speaker 1: are very high, then the opportunity cost of going out 118 00:06:38,880 --> 00:06:41,600 Speaker 1: of state are pretty high. You can also diversify your 119 00:06:41,640 --> 00:06:44,839 Speaker 1: portfolio in those states. There's a lot of different issuers 120 00:06:44,880 --> 00:06:47,520 Speaker 1: that you can mitigate the risk and fully diverse five 121 00:06:47,520 --> 00:06:51,000 Speaker 1: portfolio into g O so particularly into revenue bonds, getting 122 00:06:51,040 --> 00:06:53,920 Speaker 1: back to earlier question. But when you get down the 123 00:06:53,960 --> 00:06:56,800 Speaker 1: spectrum a little bit into lower marginal tax brackets and 124 00:06:56,839 --> 00:06:59,280 Speaker 1: you get into states like New Jersey getting back to that, 125 00:06:59,680 --> 00:07:02,720 Speaker 1: if a little harder to fully diversify a portfolio and 126 00:07:02,800 --> 00:07:05,800 Speaker 1: the opportunity cost of going national, So we advise some 127 00:07:05,880 --> 00:07:09,000 Speaker 1: degree of diversification in the national and some of those 128 00:07:09,440 --> 00:07:11,640 Speaker 1: other states. Vector Mike McKie, I don't know, Mike. If 129 00:07:11,680 --> 00:07:14,400 Speaker 1: you see Greg Villiers note today, he devotes it entirely 130 00:07:14,960 --> 00:07:19,240 Speaker 1: to Irma, Harvey and fiscal policy. UM. I guess, Peter 131 00:07:19,440 --> 00:07:21,360 Speaker 1: is a question off of Luers note is if we 132 00:07:21,400 --> 00:07:24,960 Speaker 1: go to four or five deficit to GDP, does that 133 00:07:25,000 --> 00:07:29,040 Speaker 1: mean a lot more issuance of municipal bond paper? It could. 134 00:07:29,080 --> 00:07:31,000 Speaker 1: I mean you might even see more issuance in the 135 00:07:31,040 --> 00:07:34,000 Speaker 1: near term around Hurricane Harvey, and depending on how it 136 00:07:34,080 --> 00:07:37,480 Speaker 1: happens with Hurricane Irma. But clearly, if you get more 137 00:07:37,520 --> 00:07:40,320 Speaker 1: deficit tests, typically what we see is we see borrowing 138 00:07:40,400 --> 00:07:42,560 Speaker 1: begins to ramp up in the last couple of years. 139 00:07:42,560 --> 00:07:44,520 Speaker 1: I would say, for the last seven or eight years, 140 00:07:44,680 --> 00:07:47,520 Speaker 1: we've actually seen less borrowing, less borrowing than they really 141 00:07:47,520 --> 00:07:50,240 Speaker 1: should given how low rates are, but the fact that 142 00:07:50,320 --> 00:07:52,680 Speaker 1: revenues are up, they've borrowed a bit less. So the 143 00:07:52,680 --> 00:07:57,640 Speaker 1: the the inverse would hold true. When you look at 144 00:07:57,680 --> 00:08:01,280 Speaker 1: the overall um uni market these days, how would you 145 00:08:01,920 --> 00:08:05,760 Speaker 1: describe it as as as calm? I mean, it seems 146 00:08:05,760 --> 00:08:09,720 Speaker 1: to be a calm portion of the market while everybody 147 00:08:09,720 --> 00:08:12,680 Speaker 1: else is trying to figure out where we go from here. Yeah, 148 00:08:12,720 --> 00:08:15,760 Speaker 1: it's it's it's a really interesting question, and it gets 149 00:08:15,760 --> 00:08:18,320 Speaker 1: back a little bit to what Tom was touching on 150 00:08:18,360 --> 00:08:20,880 Speaker 1: as well as the returns this year. It's kind of 151 00:08:20,920 --> 00:08:23,480 Speaker 1: income versus price. And if you look at the breakdown 152 00:08:23,560 --> 00:08:27,000 Speaker 1: so far returns, it's almost fifty fifty. You get a 153 00:08:27,040 --> 00:08:29,239 Speaker 1: little bit more from income, a little less from price, 154 00:08:29,280 --> 00:08:32,160 Speaker 1: but you get about forty five percent of the returns 155 00:08:32,200 --> 00:08:34,880 Speaker 1: this year from price. And nobody was really expecting that 156 00:08:35,000 --> 00:08:38,320 Speaker 1: rates have gone lower, and as a result, people have 157 00:08:38,400 --> 00:08:40,480 Speaker 1: gotten more comfortable taking the race. You see a lot 158 00:08:40,520 --> 00:08:43,040 Speaker 1: of money moving into long Duracian funds, a lot of 159 00:08:43,200 --> 00:08:46,960 Speaker 1: money moving into high yield. People want more income when 160 00:08:47,040 --> 00:08:49,079 Speaker 1: when yields are low, And I would say, yeah, the 161 00:08:49,120 --> 00:08:53,600 Speaker 1: technical backdrop. We have very good demand issues remains. I 162 00:08:53,600 --> 00:08:56,199 Speaker 1: would say on the low side, we're off on a 163 00:08:56,280 --> 00:09:00,680 Speaker 1: year over year basis, so that dynamic does of the market. 164 00:09:01,280 --> 00:09:03,559 Speaker 1: I don't want to say complacent, but certainly at least 165 00:09:03,559 --> 00:09:05,199 Speaker 1: in a pretty good spot in near term and in 166 00:09:05,240 --> 00:09:07,840 Speaker 1: the meantime tragy rates continue to move lower. We had 167 00:09:07,880 --> 00:09:10,599 Speaker 1: a lowering two of six yesterday in the tenure to 168 00:09:10,760 --> 00:09:12,679 Speaker 1: US seven right now, and that's a lower yel of 169 00:09:12,679 --> 00:09:15,240 Speaker 1: the last tournament is Peter has a black rock driving 170 00:09:15,280 --> 00:09:17,600 Speaker 1: the full faith and credit yield lower. We're gonna come 171 00:09:17,600 --> 00:09:20,240 Speaker 1: back with. Peter has lots to talk about about taking 172 00:09:20,240 --> 00:09:23,320 Speaker 1: advantage of tax free bounds, because I know Mike's got 173 00:09:23,320 --> 00:09:25,400 Speaker 1: a lot of themes to talk about. Peter Hayes just 174 00:09:25,480 --> 00:09:29,680 Speaker 1: quickly here the mechanics of a portfolio. Can you be 175 00:09:30,000 --> 00:09:35,960 Speaker 1: too diversified in a municipal bond portfolio? I guess it 176 00:09:36,000 --> 00:09:38,880 Speaker 1: depends what you're what your goals are. If they're total returns, 177 00:09:38,920 --> 00:09:41,880 Speaker 1: there are income. I think our investment philosophy is the 178 00:09:41,920 --> 00:09:46,280 Speaker 1: more diversification, the better take advantage of the you know, 179 00:09:46,280 --> 00:09:50,480 Speaker 1: the audio syncrests syncratic nature of the market. That's how 180 00:09:50,480 --> 00:09:52,920 Speaker 1: we find a lot of value finding that a rated 181 00:09:53,120 --> 00:09:56,400 Speaker 1: hospital in the Midwest where we like the financials. So 182 00:09:56,559 --> 00:09:59,079 Speaker 1: we think there's a huge benefit in diversification. And then 183 00:09:59,120 --> 00:10:01,040 Speaker 1: sometimes you can get the is one off events that 184 00:10:01,960 --> 00:10:04,120 Speaker 1: I can have a big impact in your portfolio if 185 00:10:04,120 --> 00:10:07,199 Speaker 1: you're not diversified. So we we prefer diversification over not 186 00:10:07,360 --> 00:10:10,440 Speaker 1: being diversified. You sort of went where I wanted to 187 00:10:10,440 --> 00:10:13,680 Speaker 1: go there when you mentioned the hospital thing. I'm wondering 188 00:10:14,120 --> 00:10:19,840 Speaker 1: how the whole Obama Care UH thing to describe it otherwise, 189 00:10:20,440 --> 00:10:25,160 Speaker 1: uh is affects what you might want to invest in. 190 00:10:25,640 --> 00:10:29,920 Speaker 1: I note that, um, the trend in hospitals has been 191 00:10:30,040 --> 00:10:36,040 Speaker 1: to um, you know, to conglomerate and agglomerate whatever the 192 00:10:36,040 --> 00:10:38,960 Speaker 1: word you want is roll up into one hospital. You 193 00:10:39,080 --> 00:10:42,160 Speaker 1: said it exactly. That's the way that roll up. So 194 00:10:42,200 --> 00:10:45,600 Speaker 1: I'm just wondering, you know, if if healthcare becomes something 195 00:10:46,080 --> 00:10:50,160 Speaker 1: uh that is one way or the other more interesting. Yeah, 196 00:10:50,200 --> 00:10:53,800 Speaker 1: that that's been the play really has been around consolidation. 197 00:10:53,880 --> 00:10:56,760 Speaker 1: And we just saw in uh, we just saw in 198 00:10:56,840 --> 00:11:02,040 Speaker 1: New Jersey merger announced yesterday between uh some health systems 199 00:11:02,120 --> 00:11:05,560 Speaker 1: and going into these larger systems. Is the way that 200 00:11:05,760 --> 00:11:09,320 Speaker 1: a lot of these hospitals are actually mitigating some of 201 00:11:09,360 --> 00:11:11,560 Speaker 1: their risk. You know, these standalones that have a big 202 00:11:11,559 --> 00:11:15,360 Speaker 1: dependence on Medicare and Medicaid obviously becomes very vulnerable, vulnerable 203 00:11:15,400 --> 00:11:18,199 Speaker 1: to changes in what happens with with a c A 204 00:11:18,400 --> 00:11:20,079 Speaker 1: or not happens with a c A. And a lot 205 00:11:20,080 --> 00:11:22,240 Speaker 1: of it isn't only on the hospital level, it's also 206 00:11:22,320 --> 00:11:24,760 Speaker 1: on the state levels. So for instance, for a state, 207 00:11:24,800 --> 00:11:28,120 Speaker 1: they either opted in or opted out of a c A, 208 00:11:28,200 --> 00:11:31,120 Speaker 1: depending on what they chose to do and what happens 209 00:11:31,160 --> 00:11:34,160 Speaker 1: with ultimately with the health care law, that could mean 210 00:11:34,360 --> 00:11:37,679 Speaker 1: that millions of unasured go back on their their roles 211 00:11:37,720 --> 00:11:39,360 Speaker 1: and the question becomes what do they do with Then 212 00:11:39,400 --> 00:11:42,600 Speaker 1: it usually puts additional budget pressure on the states, so 213 00:11:42,600 --> 00:11:45,360 Speaker 1: there's sort of a double pronged impact. Potentially, you have 214 00:11:45,440 --> 00:11:48,280 Speaker 1: to think about the impact to the hospital and healthcare 215 00:11:48,280 --> 00:11:50,520 Speaker 1: sector and you think about the impact of the states 216 00:11:50,559 --> 00:11:52,760 Speaker 1: as well. How do you get that knowledge? I mean, 217 00:11:52,800 --> 00:11:56,720 Speaker 1: if there's u t X, Rockwellcollins, there's different government stuff 218 00:11:56,720 --> 00:11:58,320 Speaker 1: and everybody has a lot of pre work. But in 219 00:11:58,360 --> 00:12:01,960 Speaker 1: the Peter Hayes game of municipal bonds, how are you 220 00:12:02,080 --> 00:12:05,880 Speaker 1: knowledgeable on a given hospital? Here, in a given hospital, 221 00:12:05,960 --> 00:12:10,079 Speaker 1: forty miles away. It's the strength of our credit research staff, 222 00:12:10,120 --> 00:12:13,320 Speaker 1: to be honest that we have a terrific team of analysts, 223 00:12:13,440 --> 00:12:18,000 Speaker 1: uh that diversified by sectors. So we have healthcare analysts 224 00:12:18,040 --> 00:12:20,679 Speaker 1: who's been doing it twenty plus years and and they 225 00:12:20,720 --> 00:12:24,880 Speaker 1: know like four hundred hospitals. Like that healthcare analysts has 226 00:12:24,920 --> 00:12:30,440 Speaker 1: tattooed to their brain the working knowledge of how many hospitals. Oh, 227 00:12:30,600 --> 00:12:33,640 Speaker 1: I would say the good working knowledge of a hundred 228 00:12:33,679 --> 00:12:37,040 Speaker 1: plus hospitals. And we have a staff you know that 229 00:12:37,160 --> 00:12:40,320 Speaker 1: that works underneath them and helps give a lot of 230 00:12:40,320 --> 00:12:42,800 Speaker 1: the financials and information so you can disseminate and make 231 00:12:42,840 --> 00:12:45,199 Speaker 1: a informed decision. But we do that for each of 232 00:12:45,240 --> 00:12:47,559 Speaker 1: our sectors, whether it be airports or tow orlds, or 233 00:12:47,600 --> 00:12:50,960 Speaker 1: hospitals or higher ed universities, etcetera. And you know that's 234 00:12:51,040 --> 00:12:53,240 Speaker 1: one of the strengths of our franchise. Michael, Should we 235 00:12:53,240 --> 00:13:00,520 Speaker 1: ask about Legardi any day we're down like to a 236 00:13:00,559 --> 00:13:03,959 Speaker 1: fifth World airport there right now while it's under construction, 237 00:13:04,160 --> 00:13:07,320 Speaker 1: I would ask about with upside, with upside we're hoping 238 00:13:07,360 --> 00:13:13,600 Speaker 1: so before tim and night before, but I would ask 239 00:13:14,440 --> 00:13:17,760 Speaker 1: before we let you go about the impact of tax reform. 240 00:13:18,040 --> 00:13:22,520 Speaker 1: You don't hear anything about UM changing the tax status 241 00:13:22,520 --> 00:13:24,920 Speaker 1: of municipals for the most part, But I guess when 242 00:13:24,960 --> 00:13:28,679 Speaker 1: you open the door, anything can happen. How concerned are 243 00:13:28,720 --> 00:13:33,000 Speaker 1: you that this could impact one way or another, your uh, 244 00:13:33,400 --> 00:13:37,360 Speaker 1: your portfolios. It's been radio silence. If you I'm just 245 00:13:37,360 --> 00:13:39,839 Speaker 1: gonna go back a little bit. Post election, you think 246 00:13:39,840 --> 00:13:42,400 Speaker 1: about the the reaction of the market, I me and 247 00:13:42,480 --> 00:13:44,000 Speaker 1: you just sold off quite a bit, a lot of 248 00:13:44,040 --> 00:13:47,040 Speaker 1: outflows because people thought, oh, you have a one party control, 249 00:13:47,040 --> 00:13:49,559 Speaker 1: there's going to be tax re forming units could be impacted. 250 00:13:50,000 --> 00:13:53,120 Speaker 1: Fast forward to now, and that seems very very unlikely. 251 00:13:53,160 --> 00:13:55,599 Speaker 1: I mean when we've aside tax reformer tax cuts and 252 00:13:55,679 --> 00:13:58,400 Speaker 1: that discussion for now. But when you think about the 253 00:13:58,480 --> 00:14:02,520 Speaker 1: need to do infrastructure, and we've heard UM, we've heard 254 00:14:02,520 --> 00:14:06,439 Speaker 1: the Secretary of Treasury UH and others, even the President 255 00:14:06,480 --> 00:14:09,080 Speaker 1: himself talk about the need to push infrastructure to the 256 00:14:09,080 --> 00:14:11,520 Speaker 1: states and cities actually in some respects to it more 257 00:14:11,559 --> 00:14:13,960 Speaker 1: efficiently than the federal government. And what's the best place 258 00:14:14,000 --> 00:14:16,600 Speaker 1: to do that the municipal bond market. So we feel 259 00:14:16,760 --> 00:14:19,640 Speaker 1: very very strongly that tax retemption of municipals will not 260 00:14:19,680 --> 00:14:22,680 Speaker 1: be harmed should there be any type of tax reform. 261 00:14:22,720 --> 00:14:24,520 Speaker 1: Peter Harris, thank you so much of black Rock. Just 262 00:14:24,560 --> 00:14:39,040 Speaker 1: a nice briefing there on that mun Buns. You know 263 00:14:39,120 --> 00:14:41,640 Speaker 1: him from Kellogs, you know him as Secretary of Commerce. 264 00:14:42,040 --> 00:14:44,120 Speaker 1: But what you don't know And I love how Wikipedia 265 00:14:44,160 --> 00:14:48,920 Speaker 1: puts his secretary gaudierres quote, he and his family acquired 266 00:14:49,640 --> 00:14:55,080 Speaker 1: United States citizenship? Could you acquire United States citizenship today? 267 00:14:55,400 --> 00:14:59,040 Speaker 1: Given the move from Cuba to Mexico to the United States, 268 00:14:59,160 --> 00:15:01,440 Speaker 1: could you get a could you become a US citizen? 269 00:15:01,680 --> 00:15:07,760 Speaker 1: Today's secretary Goodier's? Uh? Well today, Actually with the new law, 270 00:15:08,480 --> 00:15:11,920 Speaker 1: I suppose the right word should have been obtained. But 271 00:15:12,280 --> 00:15:15,640 Speaker 1: with the new uh, the elimination of wet foot, dry 272 00:15:15,680 --> 00:15:23,280 Speaker 1: foot uh, refugees from Cuba don't obtain instant UH rights 273 00:15:23,400 --> 00:15:26,240 Speaker 1: to stay in the US. So no, I probably couldn't 274 00:15:26,240 --> 00:15:29,600 Speaker 1: have come over. I mean the things that your thoughts. 275 00:15:29,640 --> 00:15:32,280 Speaker 1: You and I had an historic interview X number of 276 00:15:32,360 --> 00:15:34,720 Speaker 1: years ago when Ted Kennedy and Orange Hatch tried to 277 00:15:34,760 --> 00:15:38,120 Speaker 1: do uh, tried to do something on immigration. Have we 278 00:15:38,200 --> 00:15:42,920 Speaker 1: learned anything since Kennedy Hatch, boy, we you know, we've 279 00:15:43,000 --> 00:15:46,120 Speaker 1: learned that there's nothing easy about this, that it is 280 00:15:46,200 --> 00:15:51,280 Speaker 1: so easy to kill this bill. It is so Uh, 281 00:15:51,320 --> 00:15:54,840 Speaker 1: it is so easy to make it more complex. Uh 282 00:15:54,960 --> 00:15:57,600 Speaker 1: it is. You know, the bill we had in two 283 00:15:57,640 --> 00:16:01,320 Speaker 1: thousand six was seven hundred pages long, and I was 284 00:16:01,360 --> 00:16:04,480 Speaker 1: just hearing someone yesterday saying, look, you need a couple 285 00:16:04,520 --> 00:16:08,480 Speaker 1: of sentences to put the DOCCA into law. No DOCCA 286 00:16:08,520 --> 00:16:12,520 Speaker 1: will probably turn into, you know, a long document. So 287 00:16:13,120 --> 00:16:16,040 Speaker 1: it is a complex process. I think we've learned a lot. 288 00:16:16,080 --> 00:16:17,800 Speaker 1: I think one of the things we have learned is 289 00:16:17,840 --> 00:16:21,680 Speaker 1: to focus, uh, not try to get everything done all 290 00:16:21,720 --> 00:16:26,120 Speaker 1: at once. And that's why I'm optimistic about this process 291 00:16:26,160 --> 00:16:29,040 Speaker 1: that immigration reform will be focused on one thing, and 292 00:16:29,080 --> 00:16:32,880 Speaker 1: that's the Dream Act. Well, pushback against the argument that 293 00:16:32,920 --> 00:16:37,120 Speaker 1: the administration makes that the United States is a nation 294 00:16:37,120 --> 00:16:41,720 Speaker 1: of laws and you cannot make policy based on executive orders. 295 00:16:41,800 --> 00:16:45,840 Speaker 1: You need Congress to pass the law. And certainly the 296 00:16:47,080 --> 00:16:51,520 Speaker 1: right wing Republican argument that the Dreamers are breaking the 297 00:16:51,600 --> 00:16:56,920 Speaker 1: law and letting them stay is amnesty. Yeah. I mean, 298 00:16:57,040 --> 00:17:00,760 Speaker 1: I think that's a very very unfortunate point of view. Uh, 299 00:17:00,800 --> 00:17:03,560 Speaker 1: you know, sort of time to step back and and 300 00:17:03,600 --> 00:17:06,800 Speaker 1: look at the big picture. The reason we have so 301 00:17:07,040 --> 00:17:12,680 Speaker 1: many undocumented people in the country is that our laws 302 00:17:13,000 --> 00:17:18,080 Speaker 1: don't serve the economy. So our economy, our laws don't 303 00:17:18,119 --> 00:17:21,840 Speaker 1: provide a legal way to bring in the workers we 304 00:17:21,920 --> 00:17:25,280 Speaker 1: need to grow our businesses. So you have a couple 305 00:17:25,320 --> 00:17:30,520 Speaker 1: of choices, go out of business or hire someone undocumented. Um. 306 00:17:30,560 --> 00:17:33,280 Speaker 1: And that's very unfortunate that we put businesses in those 307 00:17:33,400 --> 00:17:35,840 Speaker 1: in those positions. There are some some businesses that are 308 00:17:35,840 --> 00:17:38,480 Speaker 1: actually farms that have gone to Mexico, and R and 309 00:17:38,560 --> 00:17:40,720 Speaker 1: D centers that have gone to Canada. And that that's 310 00:17:40,760 --> 00:17:43,760 Speaker 1: the one thing that is, that's the one insight that 311 00:17:43,800 --> 00:17:47,080 Speaker 1: I don't hear enough of the problem with our immigration 312 00:17:47,160 --> 00:17:51,480 Speaker 1: system is our laws. And until we fix them, until 313 00:17:51,560 --> 00:17:54,639 Speaker 1: Congress does its job, we're going to continue to have 314 00:17:54,760 --> 00:17:58,800 Speaker 1: this problem. No matter how tall and beautiful the wall is. 315 00:17:58,880 --> 00:18:02,080 Speaker 1: It is the President in a way doing the right thing, 316 00:18:02,119 --> 00:18:05,159 Speaker 1: demanding a vote from Congress. Well, you know, it's an 317 00:18:05,160 --> 00:18:08,439 Speaker 1: interesting question because I think this is sort of the 318 00:18:08,480 --> 00:18:12,040 Speaker 1: second best thing. Uh and and maybe this is the 319 00:18:12,119 --> 00:18:17,360 Speaker 1: way to codify the Dream Act into law and uh 320 00:18:17,400 --> 00:18:21,120 Speaker 1: and do it the right way. So actually the President 321 00:18:21,320 --> 00:18:26,200 Speaker 1: has given this six months of life. Um and I 322 00:18:26,240 --> 00:18:29,119 Speaker 1: think I think Congress can do it. You've got people 323 00:18:29,160 --> 00:18:32,640 Speaker 1: like Lindsey Graham whore behind it. Paul Ryan. There are 324 00:18:32,760 --> 00:18:36,840 Speaker 1: people who want this done. People want this done. Carlo's 325 00:18:36,840 --> 00:18:38,800 Speaker 1: goodyear is if I go up to Battle Creek, Michigan, 326 00:18:38,840 --> 00:18:42,199 Speaker 1: an important state in the election tally was Mr Trump 327 00:18:43,880 --> 00:18:48,720 Speaker 1: Secretary Clinton. There's a lot of supporters of this president 328 00:18:48,960 --> 00:18:53,000 Speaker 1: worried about the bad Carlos Goodiers instead of the good 329 00:18:53,000 --> 00:18:56,240 Speaker 1: Carlos Goodiers that we all know. What do you say 330 00:18:56,240 --> 00:19:00,760 Speaker 1: to the people of Battle Creek who genuinely there is 331 00:19:00,800 --> 00:19:05,119 Speaker 1: a changed America and they don't like it. Yeah, you know, 332 00:19:05,160 --> 00:19:07,840 Speaker 1: And I on the one hand, I understand that, and 333 00:19:08,760 --> 00:19:11,600 Speaker 1: I think we need to understand each other's positions. But 334 00:19:12,200 --> 00:19:15,800 Speaker 1: we have to realize that that that sense that people 335 00:19:15,800 --> 00:19:18,680 Speaker 1: are coming in and they're changing the look of the country, 336 00:19:18,760 --> 00:19:20,719 Speaker 1: and they're going to change our culture, and they're going 337 00:19:20,760 --> 00:19:24,040 Speaker 1: to change our values. But we've been talking about that, 338 00:19:24,320 --> 00:19:29,080 Speaker 1: uh for for centuries, and with each new immigrant group 339 00:19:29,119 --> 00:19:31,159 Speaker 1: we get more and more nervous. We've had the N 340 00:19:31,840 --> 00:19:34,399 Speaker 1: four we cut off immigration because it was you know, 341 00:19:35,000 --> 00:19:38,080 Speaker 1: we were getting to or at least we reduced it dramatically. 342 00:19:38,160 --> 00:19:41,480 Speaker 1: So what we're going through today we've gone through before. 343 00:19:42,000 --> 00:19:46,360 Speaker 1: The one thing we have learned is that immigrants become Americans. 344 00:19:46,880 --> 00:19:51,280 Speaker 1: America changes immigrants, it's not the opposite. That's why we're 345 00:19:51,320 --> 00:19:54,160 Speaker 1: so great at this, and that's why we're the greatest 346 00:19:54,200 --> 00:19:58,120 Speaker 1: country in the world. People come here and they become Americans. 347 00:19:58,160 --> 00:20:01,480 Speaker 1: We shouldn't worry about that. We've had enough experience with it. 348 00:20:02,359 --> 00:20:05,960 Speaker 1: What would you, uh, how would you want Congress to proceed? 349 00:20:05,960 --> 00:20:07,639 Speaker 1: Should they just pass a law of say, the eight 350 00:20:07,680 --> 00:20:10,719 Speaker 1: hundred people who are here can stay, we'll give them 351 00:20:10,720 --> 00:20:14,399 Speaker 1: work permits and basically codify the Executive order. Or do 352 00:20:14,480 --> 00:20:19,560 Speaker 1: we need a much broader reform of immigration laws? Well, 353 00:20:19,600 --> 00:20:22,400 Speaker 1: eventually we do. Eventually we do need a much broader, 354 00:20:22,440 --> 00:20:26,240 Speaker 1: broader reform. Um for right now, I would say focus 355 00:20:26,280 --> 00:20:30,800 Speaker 1: on the Dream Act because the broader comprehensive reform is 356 00:20:30,880 --> 00:20:35,240 Speaker 1: so complex and I'm not sure that can be done 357 00:20:35,240 --> 00:20:39,560 Speaker 1: in six months. But the Dream Act, just that one 358 00:20:39,600 --> 00:20:41,879 Speaker 1: piece of it I think can be done. So I 359 00:20:41,880 --> 00:20:44,440 Speaker 1: would urge them to focus on Dream Act. But then 360 00:20:44,480 --> 00:20:47,480 Speaker 1: eventually we've got to get to broader reform. If not, 361 00:20:47,600 --> 00:20:52,040 Speaker 1: we're going to continue having illegal workers or we're going 362 00:20:52,080 --> 00:20:55,639 Speaker 1: to have a declining economy. Let's do one question in business, 363 00:20:55,680 --> 00:20:57,800 Speaker 1: if we could, Secretary Good of yours and this is 364 00:20:57,840 --> 00:21:01,440 Speaker 1: the idea of Amazon with key News. They all established 365 00:21:01,440 --> 00:21:04,480 Speaker 1: in Staten Island, New York, the first New York fulfillment 366 00:21:04,920 --> 00:21:09,160 Speaker 1: center two thousand, two hundred and fifty quote Newcomma. Full 367 00:21:09,200 --> 00:21:14,080 Speaker 1: time jobs for employees will be created. I guess Amazon's 368 00:21:14,160 --> 00:21:18,240 Speaker 1: creative destruction. I guess I can buy corn flakes through Amazon. 369 00:21:19,000 --> 00:21:21,680 Speaker 1: Where are we now in bricks and mortar America? Where 370 00:21:21,680 --> 00:21:26,520 Speaker 1: are we in retail or conventional cereal eating America? It's 371 00:21:26,520 --> 00:21:30,520 Speaker 1: all changing, isn't it. Yeah, they'll be retailing is going 372 00:21:30,520 --> 00:21:34,720 Speaker 1: through a major transformation. Um. You know, speaking of Battle Creek, 373 00:21:35,400 --> 00:21:37,479 Speaker 1: I was hearing about the mall and Battle Creek. It's 374 00:21:37,520 --> 00:21:40,560 Speaker 1: just it's a very different place. Uh. You know for 375 00:21:40,720 --> 00:21:43,080 Speaker 1: people that who are in the package goods industry, who 376 00:21:43,080 --> 00:21:46,760 Speaker 1: are selling through grocery stores. Uh. This really comes down 377 00:21:46,800 --> 00:21:49,560 Speaker 1: to the importance of the brand, because I would assume 378 00:21:49,600 --> 00:21:55,480 Speaker 1: that whole Foods will be selling whole food cereal um. 379 00:21:55,520 --> 00:21:59,200 Speaker 1: And then it comes down to brand versus brand. So 380 00:21:59,440 --> 00:22:05,600 Speaker 1: if any thing, brands are more, uh are more important 381 00:22:05,640 --> 00:22:10,320 Speaker 1: than ever. But you do have a totally new distribution 382 00:22:10,840 --> 00:22:13,679 Speaker 1: um set up, and companies are going to have to 383 00:22:13,720 --> 00:22:16,880 Speaker 1: adjust to that. There's there's no way around it, and 384 00:22:17,160 --> 00:22:20,600 Speaker 1: I think every package food company in the country is 385 00:22:20,640 --> 00:22:25,680 Speaker 1: looking at ways of digitizing their distribution and getting getting 386 00:22:25,680 --> 00:22:28,320 Speaker 1: in line with where the trends are going. You have 387 00:22:28,359 --> 00:22:30,480 Speaker 1: to go over in corn flax. Carlos Goodiers, thank you 388 00:22:30,560 --> 00:22:34,159 Speaker 1: so much, particularly for your continued comments to us on 389 00:22:34,400 --> 00:22:38,600 Speaker 1: America and immigration. He's a former Secretary of Commerce of 390 00:22:38,640 --> 00:22:41,760 Speaker 1: the United States. Always good Michael to speak to Mr Goodyears. 391 00:22:41,800 --> 00:22:56,240 Speaker 1: He clears the air. This is a joy. Keathy Fisher, 392 00:22:56,840 --> 00:22:59,640 Speaker 1: is that a story career in Wall Street? Including that 393 00:23:00,040 --> 00:23:04,200 Speaker 1: gonna have jobs doing security analysis on banks? She did 394 00:23:04,200 --> 00:23:06,879 Speaker 1: that at Morgan Stanley a few years that aged you 395 00:23:06,920 --> 00:23:10,800 Speaker 1: didn't it? Doing bank every every ninety days? Is uh? 396 00:23:11,000 --> 00:23:13,480 Speaker 1: I mean Brad Hands at Bernstein knows that every ninety 397 00:23:13,520 --> 00:23:16,000 Speaker 1: days is a miracle to see if you can even 398 00:23:16,000 --> 00:23:19,359 Speaker 1: get close to right. Kathy, put the microphone somewhat nearer you. 399 00:23:19,440 --> 00:23:22,119 Speaker 1: It's your first time on radio. I know. Um. I 400 00:23:22,160 --> 00:23:23,840 Speaker 1: want to rip up the script here first. I want 401 00:23:23,840 --> 00:23:27,200 Speaker 1: to talk about Bates College before Michael McKee dives into 402 00:23:27,760 --> 00:23:31,320 Speaker 1: your work at Alliance bursting you are Bates, You bleed Bates. 403 00:23:31,760 --> 00:23:34,760 Speaker 1: How are the little ivy's doing? It's back to school 404 00:23:35,240 --> 00:23:39,000 Speaker 1: everybody listening to this with kids that are junior seniors 405 00:23:39,000 --> 00:23:48,679 Speaker 1: in high school nationwide would kill to get into Bowden, Colby, AMers, Middlebury, Swathmore, Wesleyan, Williams, 406 00:23:48,720 --> 00:23:52,399 Speaker 1: and Bates. How is Bates surviving? Is that oddest of 407 00:23:52,480 --> 00:23:56,880 Speaker 1: non stem things liberal arts college? You know you've probably read. 408 00:23:56,920 --> 00:23:59,560 Speaker 1: There's a lot of debate about this topic, and more 409 00:23:59,560 --> 00:24:02,000 Speaker 1: and more or people are beginning to wonder if liberal 410 00:24:02,080 --> 00:24:05,920 Speaker 1: arts colleges can survive in this environment. But many are 411 00:24:05,960 --> 00:24:10,680 Speaker 1: also positing that liberal arts education actually creates the flexibility 412 00:24:10,760 --> 00:24:13,720 Speaker 1: that will be needed for jobs in the future, i e. 413 00:24:13,920 --> 00:24:16,720 Speaker 1: Not everyone can be an engineer, and as the world 414 00:24:16,720 --> 00:24:19,879 Speaker 1: continues to change, that the tools that people learn in 415 00:24:20,000 --> 00:24:23,840 Speaker 1: liberal arts education actually positioned them well for fluidity in 416 00:24:23,880 --> 00:24:30,000 Speaker 1: the job market in the decades to come down. A 417 00:24:30,040 --> 00:24:33,280 Speaker 1: lot of a lot of the smaller colleges that have 418 00:24:33,359 --> 00:24:37,359 Speaker 1: been more local have been shutting down. That you're exactly right, 419 00:24:37,520 --> 00:24:41,720 Speaker 1: but the national small liberal arts colleges continue to see 420 00:24:42,160 --> 00:24:47,400 Speaker 1: record applications because the quality of the education is indeed 421 00:24:47,440 --> 00:24:51,000 Speaker 1: so good, and let's face it, they are becoming more 422 00:24:51,080 --> 00:24:55,359 Speaker 1: aware of the need to provide job direction, shall we 423 00:24:55,440 --> 00:24:57,320 Speaker 1: say so. I think there's more and more of a 424 00:24:57,400 --> 00:25:02,760 Speaker 1: focus driven by parental may to have a focus on 425 00:25:02,800 --> 00:25:05,720 Speaker 1: what kids can do with their education when they come out. Mike, 426 00:25:05,800 --> 00:25:08,600 Speaker 1: don't let Kathy know that someone from Bowden is on 427 00:25:08,640 --> 00:25:13,320 Speaker 1: our teach Well, they're all excellent places and the same 428 00:25:13,400 --> 00:25:17,920 Speaker 1: themes applied. Uh. Can you get a job as a 429 00:25:17,960 --> 00:25:22,960 Speaker 1: liberal arts major? Uh? From Bates or Boden on Wall 430 00:25:22,960 --> 00:25:25,960 Speaker 1: Street these days? Yeah? You know, I actually yes, Um. 431 00:25:26,880 --> 00:25:31,040 Speaker 1: The demand for those skills is still there now. They 432 00:25:31,080 --> 00:25:33,520 Speaker 1: may not be obviously they're not for the quad jobs, 433 00:25:33,560 --> 00:25:36,199 Speaker 1: but for kids wanting to come in and get a 434 00:25:36,240 --> 00:25:40,560 Speaker 1: sort of trainee position. Absolutely, we're still looking for those backgrounds. Okay, 435 00:25:40,600 --> 00:25:43,040 Speaker 1: off the script here, let's get back to it with 436 00:25:43,119 --> 00:25:46,520 Speaker 1: Alliance Bernstein and the work they're on value for years. 437 00:25:47,119 --> 00:25:49,320 Speaker 1: It's not that value has been a value trapped, but 438 00:25:49,400 --> 00:25:53,400 Speaker 1: it's been a value under performer. When does value see 439 00:25:53,400 --> 00:25:58,440 Speaker 1: it's day. Value has underperformed significantly in the past several years. 440 00:25:58,520 --> 00:26:03,840 Speaker 1: It's not surprising in that investors have been looking for 441 00:26:04,400 --> 00:26:07,240 Speaker 1: growth in what seems to be a slow growth environment, 442 00:26:07,280 --> 00:26:12,159 Speaker 1: and therefore growth stocks have really outperformed dramatically to the 443 00:26:12,200 --> 00:26:15,280 Speaker 1: point where you know, there's no question it looks like 444 00:26:15,520 --> 00:26:20,200 Speaker 1: a relatively expensive asset class at this point. UM lots 445 00:26:20,200 --> 00:26:22,080 Speaker 1: of good companies. We still like a lot of them, 446 00:26:22,119 --> 00:26:26,720 Speaker 1: but value has been quite mysterious, although if you step back, 447 00:26:26,760 --> 00:26:29,600 Speaker 1: we would argue perhaps not so mysterious because think of 448 00:26:29,600 --> 00:26:33,040 Speaker 1: what has happened in recent years. There's so much uncertainty 449 00:26:33,080 --> 00:26:36,199 Speaker 1: about the future for so many industries because of disruption. 450 00:26:36,640 --> 00:26:40,800 Speaker 1: Whether it's retailing, whether it's banking, you name it. There's 451 00:26:40,840 --> 00:26:43,360 Speaker 1: lots of questions about what the new normal will look like. 452 00:26:43,920 --> 00:26:47,920 Speaker 1: And value investing requires that you can look at today's 453 00:26:48,000 --> 00:26:51,880 Speaker 1: controversies and get a sense of how the company gets 454 00:26:52,040 --> 00:26:55,800 Speaker 1: from today's challenges to a future that's more normal, and 455 00:26:55,800 --> 00:26:59,600 Speaker 1: therefore earnings improve. With that uncertainty we have today at 456 00:26:59,720 --> 00:27:02,439 Speaker 1: what the future looks like, it's harder for investors to 457 00:27:02,520 --> 00:27:05,520 Speaker 1: make that leap of faith and believe that reversion to 458 00:27:05,560 --> 00:27:08,120 Speaker 1: the mean will occur the way it has in the past. Well, 459 00:27:08,160 --> 00:27:11,960 Speaker 1: we're going to see, uh earnings continue to provide the 460 00:27:12,080 --> 00:27:15,199 Speaker 1: lift to the market that they have or has it started. 461 00:27:15,359 --> 00:27:17,800 Speaker 1: Has it sort of been priced in at this point? Yeah, 462 00:27:17,880 --> 00:27:20,600 Speaker 1: great question. Earnings, as you know, have been quite robust 463 00:27:20,640 --> 00:27:23,600 Speaker 1: in the past several quarters UM, and we expect that 464 00:27:23,880 --> 00:27:25,840 Speaker 1: momentum to taper off because some of it was a 465 00:27:25,920 --> 00:27:29,240 Speaker 1: lift off of the depressed energy prices in fourteen and fifteen. 466 00:27:29,920 --> 00:27:33,280 Speaker 1: But what I think related to value stocks's interesting is 467 00:27:33,320 --> 00:27:35,480 Speaker 1: if you start to see some of the cheap value 468 00:27:35,520 --> 00:27:38,040 Speaker 1: companies have better than expected earnings, of course that will 469 00:27:38,080 --> 00:27:41,359 Speaker 1: be a catalyst for them. It will be very idiosyncratic. Though. 470 00:27:41,640 --> 00:27:45,800 Speaker 1: Has the FED raising rates uh and obviously changing the 471 00:27:45,840 --> 00:27:49,560 Speaker 1: discount rate made a real impact in how you evaluate 472 00:27:49,760 --> 00:27:51,840 Speaker 1: stocks are and it's still so little that it it 473 00:27:51,920 --> 00:27:54,560 Speaker 1: doesn't matter over the long run at this stage, as 474 00:27:54,560 --> 00:27:57,000 Speaker 1: you know, the increases and rates have been quite modest, 475 00:27:57,119 --> 00:27:59,080 Speaker 1: and therefore it has not made a big impact. And 476 00:27:59,080 --> 00:28:01,600 Speaker 1: in fact, we were what we're dealing with now is 477 00:28:01,600 --> 00:28:03,720 Speaker 1: the fact that long rates have actually gone down since 478 00:28:03,800 --> 00:28:07,680 Speaker 1: year end, which is not when anyone would have expected. Well, 479 00:28:07,680 --> 00:28:11,080 Speaker 1: I look at that two point zero six nine as well. 480 00:28:11,160 --> 00:28:13,800 Speaker 1: David Kotak was in earlier and his arch theme as 481 00:28:13,880 --> 00:28:17,040 Speaker 1: someone who's enjoyed this bullmarket is I'm sure you have 482 00:28:17,760 --> 00:28:20,919 Speaker 1: is the idea of lower for longer. What does that 483 00:28:21,000 --> 00:28:23,560 Speaker 1: mean away from your value place? What does it mean 484 00:28:23,600 --> 00:28:27,280 Speaker 1: for a growthiness story like Amazon? What does lower for 485 00:28:27,400 --> 00:28:31,320 Speaker 1: longer mean for the high flyers, lower for longer is 486 00:28:31,359 --> 00:28:35,040 Speaker 1: indeed something that catches the attention of all of us, 487 00:28:35,200 --> 00:28:38,040 Speaker 1: because again, who would have guessed five years ago where 488 00:28:38,080 --> 00:28:41,680 Speaker 1: race would be today? That low right and low around 489 00:28:41,680 --> 00:28:45,040 Speaker 1: the globe, And and remember the we are a global 490 00:28:45,040 --> 00:28:48,760 Speaker 1: economy and um, and it's unlikely that the ECB will 491 00:28:48,800 --> 00:28:50,960 Speaker 1: move until the Fed moves, And so there's all kinds 492 00:28:50,960 --> 00:28:53,800 Speaker 1: of connections here that we have to think about. But 493 00:28:54,160 --> 00:28:56,280 Speaker 1: if you step back and say, if you have a 494 00:28:56,400 --> 00:29:00,080 Speaker 1: growing global economy, which we do, if you have a 495 00:29:00,120 --> 00:29:02,560 Speaker 1: low inflation which we do, and very low interest rates 496 00:29:02,560 --> 00:29:05,040 Speaker 1: which we do, you couldn't ask for a better environment 497 00:29:05,080 --> 00:29:09,000 Speaker 1: for stocks of all sorts. And it does indeed encourage 498 00:29:09,040 --> 00:29:11,600 Speaker 1: the growthier stocks when people are looking for something that 499 00:29:11,680 --> 00:29:15,160 Speaker 1: has that growth momentum to it in a relatively slow 500 00:29:15,200 --> 00:29:20,960 Speaker 1: growth environment. What has anybody at this point? Um, does 501 00:29:21,000 --> 00:29:24,680 Speaker 1: anyone stand out? Obviously you're looking at growth versus value, 502 00:29:24,720 --> 00:29:29,680 Speaker 1: But within growth, is any size of company stand out 503 00:29:29,720 --> 00:29:32,240 Speaker 1: at this point? That the big caps and the Dow 504 00:29:32,840 --> 00:29:37,120 Speaker 1: get all the publicity, but what are we seeing below them? Well, 505 00:29:37,400 --> 00:29:40,440 Speaker 1: again I would argue it's it's company by company. Uh. 506 00:29:41,200 --> 00:29:44,320 Speaker 1: For example, we do own Facebook. We don't own Amazon, 507 00:29:45,280 --> 00:29:47,600 Speaker 1: and you know, um, you know we we while the 508 00:29:47,680 --> 00:29:52,160 Speaker 1: Amazon story is well understood, we prefer companies where we 509 00:29:52,200 --> 00:29:54,640 Speaker 1: can really get a sense of where the earnings are 510 00:29:54,680 --> 00:29:56,800 Speaker 1: going over time, and as we all know, Amazon as 511 00:29:56,840 --> 00:30:01,400 Speaker 1: as far away from that. Um. The valuations, of course 512 00:30:01,440 --> 00:30:04,040 Speaker 1: are quite high for Amazon, and we think there's other 513 00:30:04,440 --> 00:30:08,360 Speaker 1: companies that give a much more clear connection between the 514 00:30:08,440 --> 00:30:12,520 Speaker 1: valuation and the future earnings potential. If the FED moves 515 00:30:12,640 --> 00:30:14,680 Speaker 1: very quickly here and we'll come back. If the FED 516 00:30:14,920 --> 00:30:19,600 Speaker 1: makes strategic moves, how the market price that will be 517 00:30:19,600 --> 00:30:22,280 Speaker 1: priced in a two minute space, and we'll get so 518 00:30:22,320 --> 00:30:25,640 Speaker 1: called jump conditions, or can they actually manage the glide path? 519 00:30:27,760 --> 00:30:32,440 Speaker 1: The expectations for the FED really cluster around a consensus 520 00:30:32,480 --> 00:30:34,640 Speaker 1: that I think the FED is very aware of and 521 00:30:34,680 --> 00:30:39,640 Speaker 1: therefore trying to manage to those expectations. The last hike 522 00:30:39,760 --> 00:30:41,920 Speaker 1: we had was kind of a non event, and I 523 00:30:41,960 --> 00:30:47,560 Speaker 1: think you're we're expecting very significant signaling of what the 524 00:30:47,560 --> 00:30:49,840 Speaker 1: FED expects to do, So we wouldn't expect too much 525 00:30:49,920 --> 00:30:54,400 Speaker 1: diggeriness unless something is much more rapid than expected or 526 00:30:54,320 --> 00:30:57,840 Speaker 1: or or larger than expect. Okay, there we are, Kathy Fisher, 527 00:30:57,880 --> 00:31:00,520 Speaker 1: were this with Alliance Burnstein. And what I would say, folks, 528 00:31:00,520 --> 00:31:03,360 Speaker 1: is there are two groups of strategists, those that strategize 529 00:31:03,360 --> 00:31:05,400 Speaker 1: and those that worked in the trenches. And I think 530 00:31:05,440 --> 00:31:08,800 Speaker 1: a Tobias left city group, a guy named Gibelly. And 531 00:31:08,880 --> 00:31:12,400 Speaker 1: there's just something about doing gut By Hold cell security 532 00:31:12,480 --> 00:31:15,720 Speaker 1: research that makes you different. One s craw Chuck a 533 00:31:15,720 --> 00:31:18,880 Speaker 1: few years ago at Bernstein. She'll admit to it every 534 00:31:18,920 --> 00:31:21,280 Speaker 1: once in a while that she was an analyst, and 535 00:31:21,360 --> 00:31:26,120 Speaker 1: so were you. You're a bank analyst banking today. Will 536 00:31:26,160 --> 00:31:30,240 Speaker 1: we see a consolidation in US banking? Well, first of all, 537 00:31:30,280 --> 00:31:32,560 Speaker 1: I was a bank analyst many many decades ago. But 538 00:31:32,640 --> 00:31:35,080 Speaker 1: it is a fast This is Albert Gallatin and you 539 00:31:35,120 --> 00:31:39,520 Speaker 1: know stopped continue it was. It's a fascinating sector. As 540 00:31:39,520 --> 00:31:43,000 Speaker 1: you know. UM, there are prohibitions against the larger banks 541 00:31:43,000 --> 00:31:45,160 Speaker 1: getting much larger. There's a deposit cap on what you 542 00:31:45,200 --> 00:31:48,040 Speaker 1: can have in terms of the ownership of deposits around 543 00:31:48,040 --> 00:31:50,600 Speaker 1: the country. We do think there will be consolidation on 544 00:31:50,680 --> 00:31:53,520 Speaker 1: the small end. We think that small banks will buy 545 00:31:53,560 --> 00:31:56,960 Speaker 1: even smaller banks. UM. But that's the way down in 546 00:31:57,000 --> 00:31:59,920 Speaker 1: the micro cap space. UM. At the larger end of 547 00:32:00,000 --> 00:32:02,200 Speaker 1: the market, it's it's It is a very interesting time 548 00:32:02,200 --> 00:32:05,120 Speaker 1: because banks are really figuring out how to adapt to 549 00:32:05,160 --> 00:32:09,120 Speaker 1: a very different world where technology plays a bigger role 550 00:32:09,120 --> 00:32:11,960 Speaker 1: in what their clients want. As you know, there's everybody 551 00:32:12,000 --> 00:32:16,360 Speaker 1: wants apps, they want immediate access to their banking services, 552 00:32:16,720 --> 00:32:19,240 Speaker 1: and that's increasing costs for banks as they start to 553 00:32:19,320 --> 00:32:21,280 Speaker 1: change that. But eventually it will become why is that? 554 00:32:21,760 --> 00:32:24,120 Speaker 1: How can digital be an increasing cost? All they gotta 555 00:32:24,120 --> 00:32:27,760 Speaker 1: do is starts closing down the five branches on every corner. Well, first, 556 00:32:27,800 --> 00:32:30,200 Speaker 1: you've got to get it right for eventually, we do 557 00:32:30,280 --> 00:32:33,000 Speaker 1: agree with you, there will be an interesting time when 558 00:32:33,040 --> 00:32:35,360 Speaker 1: bank branches start to close, and what that does for 559 00:32:35,400 --> 00:32:37,560 Speaker 1: real estate and places like New York City will be 560 00:32:37,600 --> 00:32:40,360 Speaker 1: interesting to see. But in the interim, if you're sort 561 00:32:40,360 --> 00:32:43,320 Speaker 1: of doing both right, you're building your technol technological platform 562 00:32:43,360 --> 00:32:46,080 Speaker 1: while you still have the human touch. There will be 563 00:32:46,160 --> 00:32:49,000 Speaker 1: a crossover point where that starts to change. But it 564 00:32:49,040 --> 00:32:52,680 Speaker 1: does create interesting, uh challenges for banks as as they're 565 00:32:52,720 --> 00:32:54,960 Speaker 1: dealing with both both low interest rates and the need 566 00:32:55,000 --> 00:32:58,520 Speaker 1: to upgrade their technological interface with their clients. Do you 567 00:32:58,560 --> 00:33:03,160 Speaker 1: buy banks at this point selectively? It's um, We we 568 00:33:03,160 --> 00:33:05,640 Speaker 1: actually like some of the payments companies better some of 569 00:33:05,680 --> 00:33:07,720 Speaker 1: the other financial kinds of companies. But yes, indeed we 570 00:33:07,760 --> 00:33:12,640 Speaker 1: own some banks, and um they are cheap. Unfortunately they 571 00:33:12,720 --> 00:33:16,520 Speaker 1: keep getting battered by the relatively flat Yeel curve and 572 00:33:16,520 --> 00:33:19,160 Speaker 1: and rates not rising to the extent that the market 573 00:33:19,160 --> 00:33:20,920 Speaker 1: has been waiting. Well, do you want to buy the 574 00:33:20,920 --> 00:33:23,840 Speaker 1: big banks and little banks because of the merger possibility? 575 00:33:23,920 --> 00:33:26,240 Speaker 1: I will say we have one fund that actually buys 576 00:33:26,440 --> 00:33:29,720 Speaker 1: very small banks because of their merger opportunities. But in 577 00:33:29,760 --> 00:33:33,240 Speaker 1: our large cap portfolios we have some of the large banks. 578 00:33:33,240 --> 00:33:35,520 Speaker 1: As why you didn't mention the regionals to me the 579 00:33:35,600 --> 00:33:38,560 Speaker 1: interesting story folks were guilty of this. I only talk 580 00:33:38,640 --> 00:33:41,200 Speaker 1: about six banks, it seems, and you know, I get 581 00:33:41,280 --> 00:33:44,400 Speaker 1: chestise for those there should be. The regionals are a 582 00:33:44,520 --> 00:33:47,720 Speaker 1: huge story, aren't they. I mean they just I mean 583 00:33:47,920 --> 00:33:51,560 Speaker 1: it's almost like an eighties Reducs we're waiting for Oh 584 00:33:51,640 --> 00:33:53,880 Speaker 1: you know they are and they aren't. And that I 585 00:33:53,880 --> 00:33:56,239 Speaker 1: would argue, these same themes are hitting them. That you know, 586 00:33:56,680 --> 00:34:00,479 Speaker 1: doing the technological investment, making sure you're doing what your 587 00:34:00,520 --> 00:34:04,320 Speaker 1: clients want is of great interest, because remember, young people 588 00:34:05,280 --> 00:34:08,440 Speaker 1: don't love banks. They need banking services. But if you 589 00:34:08,480 --> 00:34:10,319 Speaker 1: talk to anyone who's twenty five. They're doing all their 590 00:34:10,360 --> 00:34:13,000 Speaker 1: payments on Venmo, and I think there's a need to 591 00:34:13,040 --> 00:34:16,480 Speaker 1: figure out how to draw those millennials into a banking 592 00:34:16,560 --> 00:34:19,560 Speaker 1: relationship where the bank really does for all the directions. 593 00:34:19,640 --> 00:34:21,440 Speaker 1: He knows how the youngster walks in the room and 594 00:34:21,520 --> 00:34:24,960 Speaker 1: she talks of Venmo. I have no clue what venmo 595 00:34:25,239 --> 00:34:28,040 Speaker 1: is to me. It's an opportunity for you to have 596 00:34:28,080 --> 00:34:32,440 Speaker 1: to have your financial information stolen by hackers. But Venmo, 597 00:34:32,840 --> 00:34:35,319 Speaker 1: it's a new world. I read one survey that said 598 00:34:35,360 --> 00:34:39,280 Speaker 1: that millennials would put going to a bank one notch 599 00:34:39,360 --> 00:34:42,440 Speaker 1: below going to the dentist. Well, you don't have to 600 00:34:42,480 --> 00:34:46,440 Speaker 1: get a shot when you go to the bank. What 601 00:34:46,480 --> 00:34:49,040 Speaker 1: about healthcare? Then? If the dentist is as part of 602 00:34:49,640 --> 00:34:52,360 Speaker 1: the Affordable Care Act and the follow on, here, is 603 00:34:52,360 --> 00:34:56,440 Speaker 1: there a new opportunity in healthcare. Healthcare is a very 604 00:34:56,480 --> 00:35:00,279 Speaker 1: interesting sex industry group with lots of subsectors. So we 605 00:35:00,320 --> 00:35:04,600 Speaker 1: would argue that hospitals are actually very attractive because of 606 00:35:04,960 --> 00:35:09,239 Speaker 1: both demographics and increased demand no matter what happens with 607 00:35:09,520 --> 00:35:13,440 Speaker 1: changes to Obamacare. We would also argue that biotech, for 608 00:35:13,560 --> 00:35:17,359 Speaker 1: very different reasons, is in some cases attractive because there 609 00:35:17,360 --> 00:35:21,080 Speaker 1: are there is innovation? Um, there is. You might have 610 00:35:21,120 --> 00:35:24,680 Speaker 1: seen the FDA approved a drug therapy for no artists 611 00:35:24,680 --> 00:35:27,799 Speaker 1: that uses individual cells to attack cancer. And those kinds 612 00:35:27,840 --> 00:35:30,800 Speaker 1: of therapies. Pick out one that is going to maintain 613 00:35:30,840 --> 00:35:34,960 Speaker 1: its value because it's treatment actually works. Everybody rushes in 614 00:35:35,000 --> 00:35:37,480 Speaker 1: the stage two tests. But you know we don't have 615 00:35:37,480 --> 00:35:40,680 Speaker 1: a long run track record. Yeah, it is. It is tough, 616 00:35:40,760 --> 00:35:43,560 Speaker 1: and that's why. Um, you know, you can't make big 617 00:35:43,600 --> 00:35:45,839 Speaker 1: bets on one company, but rather I think look at 618 00:35:45,840 --> 00:35:48,879 Speaker 1: the history and the management acumen in having a good 619 00:35:48,880 --> 00:35:52,520 Speaker 1: track record over time and recognizing that there will be 620 00:35:52,560 --> 00:35:56,400 Speaker 1: some volatility in these names. Uh. It was speaking of 621 00:35:57,280 --> 00:36:00,960 Speaker 1: things that come out of Washington. Uh. In your about healthcare, 622 00:36:01,560 --> 00:36:04,440 Speaker 1: there was a big push to buy into stocks that 623 00:36:04,520 --> 00:36:07,920 Speaker 1: might be affected by infrastructure spending, which has sort of 624 00:36:08,040 --> 00:36:11,160 Speaker 1: dropped off the radar. Did you buy any of those 625 00:36:11,160 --> 00:36:13,960 Speaker 1: any sorry? Or do you think it will come around again. 626 00:36:16,080 --> 00:36:18,480 Speaker 1: Most of the themes that were popular at the end 627 00:36:18,520 --> 00:36:21,160 Speaker 1: of two thousand and sixteen post Trump election, of course, 628 00:36:21,200 --> 00:36:24,840 Speaker 1: have dissipated this year as the likelihood of getting things 629 00:36:25,280 --> 00:36:29,840 Speaker 1: past has waned. Um, everybody likes infrastructure and concept, but 630 00:36:29,880 --> 00:36:33,040 Speaker 1: nobody really knows what it means, and the momentum for 631 00:36:33,239 --> 00:36:35,560 Speaker 1: that has really come down a lot. What do you 632 00:36:35,560 --> 00:36:37,080 Speaker 1: see in US A Cash? I mean, it's a great 633 00:36:37,160 --> 00:36:40,840 Speaker 1: theme here, the driving forces and rising dividends, share buy backs, etcetera. 634 00:36:41,160 --> 00:36:44,400 Speaker 1: We all love that at seventeen thousand or fifteen thousand, 635 00:36:44,440 --> 00:36:46,319 Speaker 1: Can we love US A Cash or twenty two tho. 636 00:36:48,280 --> 00:36:51,040 Speaker 1: You know, one thing that's been visible is that stocks 637 00:36:51,120 --> 00:36:54,520 Speaker 1: doing buy backs are not rewarded the way they used 638 00:36:54,520 --> 00:36:58,279 Speaker 1: to be, because I think investors recognized they'd like to 639 00:36:58,280 --> 00:37:00,880 Speaker 1: see companies doing something with a hash that leads to 640 00:37:01,040 --> 00:37:03,720 Speaker 1: greater profits for the company down the road, as opposed 641 00:37:03,719 --> 00:37:07,200 Speaker 1: to just giving. There isn't a correlation of financial engineering 642 00:37:07,280 --> 00:37:10,239 Speaker 1: to the idea of I mean, financial engineering was was 643 00:37:10,360 --> 00:37:13,040 Speaker 1: very popular for quite some time, but I think there's 644 00:37:13,040 --> 00:37:15,520 Speaker 1: a sense now that especially companies who might be levering 645 00:37:15,600 --> 00:37:18,000 Speaker 1: up too much to do it, maybe it hit the 646 00:37:18,120 --> 00:37:20,080 Speaker 1: end of the road. On that we see U t 647 00:37:20,400 --> 00:37:22,960 Speaker 1: X c O L with fourteen times, which is a 648 00:37:23,040 --> 00:37:27,000 Speaker 1: ginormous number. Anybody including U t X would say that 649 00:37:27,160 --> 00:37:29,120 Speaker 1: is at this time? Is that another symbol of the 650 00:37:29,120 --> 00:37:32,120 Speaker 1: silly season to come? You know, one thing that we 651 00:37:32,200 --> 00:37:36,320 Speaker 1: have been watching is the gradual increase in net debt 652 00:37:36,360 --> 00:37:41,719 Speaker 1: to ebit across US companies, some sectors more than others. Um, 653 00:37:41,760 --> 00:37:44,200 Speaker 1: you're not seeing that overseas, we're seeing it here. It 654 00:37:44,239 --> 00:37:48,360 Speaker 1: does indeed make us pay more attention to debt burdens. 655 00:37:48,760 --> 00:37:50,120 Speaker 1: But it's sort of when you think about it, with 656 00:37:50,160 --> 00:37:52,640 Speaker 1: low rates for so many years, perhaps not surprising that 657 00:37:52,719 --> 00:37:55,160 Speaker 1: companies have done this. Mike, the D word slips in here. 658 00:37:55,160 --> 00:37:57,120 Speaker 1: Instead of a creative, all of a sudden, we're starting 659 00:37:57,120 --> 00:38:01,759 Speaker 1: to look at delutive, dilutive, deluded for we're getting that 660 00:38:02,600 --> 00:38:09,000 Speaker 1: cubes the the cliche question. But when I feel compelled 661 00:38:09,040 --> 00:38:11,839 Speaker 1: to ask, is um, does the good do the good 662 00:38:11,840 --> 00:38:14,960 Speaker 1: times continue? Or have we peeked? Now? We seem to 663 00:38:15,000 --> 00:38:16,879 Speaker 1: be on this sort of full crum point where people 664 00:38:16,920 --> 00:38:19,600 Speaker 1: are trying to decide whether okay, it's time for a 665 00:38:19,600 --> 00:38:22,720 Speaker 1: correction and we're just waiting for the trigger. Uh. And 666 00:38:23,120 --> 00:38:25,960 Speaker 1: the other side says, we keep having triggers and they 667 00:38:25,960 --> 00:38:29,120 Speaker 1: don't knock us down, So let's just keep dancing and 668 00:38:29,200 --> 00:38:32,560 Speaker 1: check Prince's words. That's the question of the hour, because 669 00:38:33,360 --> 00:38:35,560 Speaker 1: as you know, this is the what we're working on, 670 00:38:35,560 --> 00:38:38,799 Speaker 1: one of the longest economic and stock market recoveries. In 671 00:38:38,800 --> 00:38:42,600 Speaker 1: the US since the Great Crisis, and investors understandably are 672 00:38:42,640 --> 00:38:46,120 Speaker 1: looking for a pullback to occur since numbers and you know, 673 00:38:46,120 --> 00:38:49,840 Speaker 1: the data history applies, we're due. But um, when we 674 00:38:49,880 --> 00:38:53,480 Speaker 1: look around the globe, we see this, you know, synchronous 675 00:38:53,560 --> 00:38:57,960 Speaker 1: modest recovery that continues. Uh, and you know there's actually 676 00:38:58,000 --> 00:39:00,680 Speaker 1: a bit of a real re acceleration and earnings as 677 00:39:00,680 --> 00:39:04,280 Speaker 1: we've seen in recent quarters. So while we're looking very 678 00:39:04,320 --> 00:39:08,320 Speaker 1: carefully for some significant imbalances and things to worry about, 679 00:39:08,480 --> 00:39:11,880 Speaker 1: we simply don't see them. It will happen at some point, 680 00:39:12,080 --> 00:39:14,520 Speaker 1: but we simply don't see the imbalances that at this 681 00:39:14,600 --> 00:39:17,839 Speaker 1: point would cause a pullback of size. Any pulled back 682 00:39:17,840 --> 00:39:20,560 Speaker 1: and happen any time, but modest should be expected as 683 00:39:20,560 --> 00:39:23,480 Speaker 1: opposed to dramatic. Kathery Fisher, thanks so much for the lines. 684 00:39:23,520 --> 00:39:27,960 Speaker 1: Bernstein and wealth and equity strategy is well really across 685 00:39:28,000 --> 00:39:40,000 Speaker 1: all asset questions. Thanks for listening to the Bloomberg Surveillance podcast. 686 00:39:40,440 --> 00:39:45,680 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 687 00:39:45,760 --> 00:39:50,080 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene. 688 00:39:50,160 --> 00:39:54,520 Speaker 1: David Gura Is that David Gura? Before the podcast you 689 00:39:54,560 --> 00:40:02,200 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.