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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot com, and of course on the Bloomberg. The

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Speaker 1: story in the equity market front end center is Twitter

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Speaker 1: right now down in the pre market with a Facebook

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Speaker 1: style disappointment. Joining me to discusses, Paul Sweeney, Bloomberg Intelligence,

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Speaker 1: Director of North American Research pull what went wrong? Users?

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Speaker 1: Monthly average active users declined in the quarter, and the

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Speaker 1: company is talking about the more declines on the third quarter,

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Speaker 1: and you know, they're they're talking up to their trying

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Speaker 1: to clean up the platform of you know, some bad accounts,

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Speaker 1: of fake accounts, some accounts that are just troublemakers. And

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Speaker 1: so the you know, the monthly active users has been

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Speaker 1: a metric that investors focus on for Twitter, you know,

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Speaker 1: it's it's it's kind of struggled to gain scale we

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Speaker 1: need we need compared to Facebook with a couple of

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Speaker 1: billion users and um, and so I think people are

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Speaker 1: concerned that ge if this, if the company is not

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Speaker 1: growing its user based then it's going to become less

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Speaker 1: attractive to advertisers, and that's kind of the concern going forward. So, UM,

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Speaker 1: you know, the monthly active users was disappointing here and

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Speaker 1: trying to understand the bullish view on this stalk this morning.

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Speaker 1: Monthly three active users stalled. They stall because they're cleaning

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Speaker 1: up the platform. They reset revenue expectations. Is there a

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Speaker 1: good story out there associated with this over the long term, pool, Well,

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Speaker 1: the good story is that you know, there are three

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Speaker 1: thirty five million users roughly, and they are a very active,

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Speaker 1: passionate users. UM. There's some influencers there if if you will, uh,

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Speaker 1: including uh Donald Trump. UM. So you know, if advertisers

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Speaker 1: want to reach a you know, a audience of over

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Speaker 1: three million, UM, passionate audience uh tends to be younger demos. Uh,

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Speaker 1: then this is a good audience. Uh. The problem, however,

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Speaker 1: in digital media is it's it seems to be if

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Speaker 1: you have less than a billion users, you're just not relevant. So,

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Speaker 1: you know, the good news for Facebook because they have

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Speaker 1: four platforms with Facebook and Messenger and WhatsApp and Instagram

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Speaker 1: all north of a billion users. UM. Obviously uh, Google

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Speaker 1: and and and even at Amazon Uh, you know, have

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Speaker 1: have that kind of scale, but anything sub a billion

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Speaker 1: users tends to be deemed not really an effective advertising

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Speaker 1: by for for advertising. What's your point called You've got

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Speaker 1: Facebook with four franchises with a billion users plus and

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Speaker 1: Twitter are struggling to get past the five hundred million mark.

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Speaker 1: There is a question mark about the whole sect of

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Speaker 1: the whole space today in social media. I notice his

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Speaker 1: Facebook pad it's gains after these Twitter results came out.

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Speaker 1: Are we finding out there's just limitations to growth in

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Speaker 1: terms of social medi idea? You know, it's um probably,

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Speaker 1: I mean there's certainly from a user perspective, you know,

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Speaker 1: there's some close to matrization in some of the more

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Speaker 1: mature markets such as the North American Western Europe, but

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Speaker 1: there's a you know, a lot of growth, uh and

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Speaker 1: and other parts of the world. But what we're seeing

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Speaker 1: is I still think the long term bowl case for

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Speaker 1: digital advertising is still very much intact because we see

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Speaker 1: across all me including Twitter today, their daily active users

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Speaker 1: are actually up eleven So people are spending more and

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Speaker 1: more time on the Internet, including social media, and the

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Speaker 1: advertisers are are are following. And I put a personal

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Speaker 1: note on this. I mean, I'm looking here at the

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Speaker 1: bold letters of the fabulous Bloomberg top live blog on Twitter. Folks,

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Speaker 1: I can't say enough about this. If you have a terminal,

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Speaker 1: these top live streams are unreal. And they say we

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Speaker 1: have made we wait, Twitter says, reflecting impact from decisions

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Speaker 1: we have made to prioritize the health of the platform.

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Speaker 1: I went down over two thousand followers, you know, in

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Speaker 1: my puny world, not not Donald Trump's world, but I

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Speaker 1: want to down two thousand followers one day. Is they

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Speaker 1: cleaned up the health of their platform. I would suggest

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Speaker 1: the the m a you miss there's a lot to

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Speaker 1: do with them getting these idiot bots and computer stuff off.

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Speaker 1: I think you're probably You're probably right. And I think, um,

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Speaker 1: you know, the bullish call here is this is for

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Speaker 1: the long term benefit of the platform and advertisers will

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Speaker 1: ultimately reward this platform down the road. Um so, And

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Speaker 1: I think you know what, I think what investors are

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Speaker 1: saying is g where where where? Where is the end

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Speaker 1: of this? We we saw it here in the second

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Speaker 1: quarter where they they kind of talked about it in

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Speaker 1: the third quarter. So again, I think concerns for it

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Speaker 1: for Twitter have been you know, you know, scale, it's

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Speaker 1: one of scale. Will they ever have scale to be

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Speaker 1: relevant to advertisers? And anytime you you talk about re

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Speaker 1: reducing the amount of users on there, I think that

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Speaker 1: just heightens the concern. And John, you've got a followers

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Speaker 1: size like area on a grand Did you lose like

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Speaker 1: seven year eight tho? I lost nothing, Seriously, I lost nothing.

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Speaker 1: I don't know I lost seriously. I was like one

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Speaker 1: oh seven, one oh eight and all of a sudden

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Speaker 1: boom and at one oh five, just one day. Help us.

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Speaker 1: Have you've seen this before? Facebook hysteria, Amazon omg, phenomenal,

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Speaker 1: Twitter hysteria. What's next? You know, I think the uh,

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Speaker 1: you know, what we're seeing out there in the tech

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Speaker 1: world is very high valuations. The stocks have been just

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Speaker 1: phenomenally just think about this like mar one hopefully not

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Speaker 1: hopefully not um although that was a good year for me,

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Speaker 1: but um. I think the you know, the Fank stocks

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Speaker 1: and and tech stocks in general, you know, they have

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Speaker 1: been one of the very few consistent areas of growth

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Speaker 1: that investors could feel confident about. And and and to

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Speaker 1: the extent that there's any miss there, whether it's a

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Speaker 1: you know, even you know, on users are on revenue

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Speaker 1: or EPs, the stocks get get hit hard. But let's

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Speaker 1: talk about the A and fang for most people. Amazon.

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Speaker 1: Amazon did this really interesting thing yesterday where they said,

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Speaker 1: don't look at that, Look how vega UM. We've been

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Speaker 1: looking at revenue and growth there for a long long time,

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Speaker 1: and that all of a sudden they said, look, we

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Speaker 1: can make big profits. How did they disappoint on revenue

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Speaker 1: but beat on profits. You know, it's it's an interesting story.

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Speaker 1: You're right. For for years and years and years that

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Speaker 1: the company has done a wonderful job of conditioning at

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Speaker 1: shareholder base to say, don't worry about profits, just focus

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Speaker 1: on the top line growth because we're playing this long

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Speaker 1: game for the growth of e commerce, and we are

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Speaker 1: the play in e commerce globally. UM. But every once

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Speaker 1: in a while they will dial down their expenses in

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Speaker 1: terms of opening up new fulfillment centers and distribution centers

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Speaker 1: and R and D and so on and so forth,

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Speaker 1: on all the crazy things they invest in, whether it's

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Speaker 1: groceries or whatever, they will dial that back a little bit,

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Speaker 1: and then the EPs will just explode and and and

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Speaker 1: really surprise people. And that's what happened again. Yesterday. So

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Speaker 1: you know, the the drivers for the improved profitability of

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Speaker 1: Amazon today versus just even two years ago are really

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Speaker 1: two areas. One is the cloud business, the Amazon Web

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Speaker 1: services business that has operating margins in the mid thirty

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Speaker 1: percent range versus low single digits for the core Amazon business. Uh.

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Speaker 1: And then the second thing is advertising. You know, they

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Speaker 1: they're advertising was up over a hundred percent last quarter.

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Speaker 1: We think advertising will be an eight billion dollar business

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Speaker 1: for them in two thousand and eighteen versus three billion

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Speaker 1: last year. That's a profitable business. So they are in

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Speaker 1: fact growing businesses that are profitable. Uh. So this is

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Speaker 1: a business that, whether investors wanted or not, are going

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Speaker 1: to show increased profitability. So um, the narrative is changing

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Speaker 1: a little bit here on Amazon is great to have

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Speaker 1: you with it, Seanna, You and I are really on

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Speaker 1: the same page. On Friday as a time to collect

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Speaker 1: your thoughts, particularly in the summer, and drive forward a

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Speaker 1: weekend thinking and getting to Monday. We have a guest

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Speaker 1: who can jump start the Yes, Steve Asman. It's always

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Speaker 1: great to catch up with Steve, of course, famed for

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Speaker 1: the big Shot I Sman's groups, new Berger Berman Signior

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Speaker 1: portfolio manager Stevis grab to catch up with you a

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Speaker 1: couple of shorts that you mentioned on TV a little

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Speaker 1: bit earlier. But for the benefit of our listeners, let's

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Speaker 1: begin with Tesla. It's kind of one of those stocks,

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Speaker 1: one of those stories that just separates the longs, which

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Speaker 1: are sort of called fans, and the shorts, which are

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Speaker 1: called the haters. Um, you're sort of in the latter

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Speaker 1: category right now, walk me through it. I'm not a hater,

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Speaker 1: I'm a lover. That's a joke. Um. Look, people who

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Speaker 1: love tests are like the point. They like to say,

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Speaker 1: he's a genius, and he's in my experience over the years,

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Speaker 1: there are a lot of smart people this world. Um,

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Speaker 1: But just because you're smart doesn't mean you're execute well.

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Speaker 1: And so far he's not executing well. Um. He's building

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Speaker 1: a whole bunch of cars in a tent. He's negative

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Speaker 1: cash flow, he's at war with his safety regulator after

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Speaker 1: the the unfortunate crash for his autonomous driving car. Um,

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Speaker 1: and he's and he's lost a tremendous number of executives

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Speaker 1: over the last two years. Those are all negative signs. Now,

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Speaker 1: maybe he can pull it out, but as of now,

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Speaker 1: it seems to me all the fundamentals are pointing negatively

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Speaker 1: and some really peculiar behavior elsewhere. Do you factor that

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Speaker 1: in when you have to create short thesis or is

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Speaker 1: that separate to what you're walking us through at the

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Speaker 1: moment um? I don't I factor some of that in.

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Speaker 1: I factor more in that. After the autonomous driving accident,

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Speaker 1: he announced two weeks later that he was no longer

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Speaker 1: cooperating with the National Safety Board. I thought that was

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Speaker 1: a very poor decision. And the other stuff I listened to,

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Speaker 1: but I don't pay that much attention to. Let's talk

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Speaker 1: about the execution of this short. How difficult is it

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Speaker 1: to execute? How expensive is it? Just walk us through this?

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Speaker 1: It's the fundamental short. It's a very liquid stock. You know,

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Speaker 1: you can put the position on before you go out

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Speaker 1: and get a cup of coffee and come back. So

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Speaker 1: it's for the easiest thing in the world, either by

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Speaker 1: tesla or short. It must talks about storemy weather and

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Speaker 1: short phil Quite often it's there a risk that you

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Speaker 1: do get that surprise to the upside and all of

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Speaker 1: a sudden the position gets wiped out, Steve, is that

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Speaker 1: something you account for? That's of course, I mean you

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Speaker 1: have to assize it appropriately. It's a very very volatile stock,

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Speaker 1: So it's not the biggest short my portfolio. Um, but

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Speaker 1: you know, I I think the stock could go down

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Speaker 1: about Is there a biggest short out there for you?

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Speaker 1: Then if it's not the biggest short in your portfolios,

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Speaker 1: but it's it's not the biggest short because of the motility.

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Speaker 1: Interstility is wild and the stock tends to move on nonsense.

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Speaker 1: So you know, just for I like to sleep at night,

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Speaker 1: so I've sized it in a way where it's sleep

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Speaker 1: is still possible. Could you explain what you mean by that?

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Speaker 1: That's a word I use when I get lecture and

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Speaker 1: people go, what what do you mean when you say sized?

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Speaker 1: I'm looking at It's called portfolio sizing. But what do

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Speaker 1: you mean when you say sized? Well, first of all,

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Speaker 1: my philosophy of investing generally longs and shorts is that

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Speaker 1: no position should be so large that your career is

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Speaker 1: at risk. So you know, as I said on the TV,

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Speaker 1: you know, my biggest long position is four and my

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Speaker 1: biggest short position is about three and a half percent. Um,

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Speaker 1: my smallest short position is about one and a half percent. Position.

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Speaker 1: You know, Tesla is is size more towards the smaller

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Speaker 1: end of the scale. Um, not because I don't think

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Speaker 1: there's a lot There isn't a lot of downside. I

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Speaker 1: do think potentially there's a lot of downside, but it

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Speaker 1: tends to be an extremely volable stock. And what tends

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Speaker 1: to happen with stocks like that is your day gets

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Speaker 1: consumed completely by that one stock, And when your day

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Speaker 1: is consumed by one stock, you can't think about the

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Speaker 1: rest of your portfolio, and so I try to avoid

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Speaker 1: situations like so, just to be clear here, the same

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Speaker 1: here at bloom Bogs reached down to testa for comment.

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Speaker 1: UM represent STIPs for for Tesla have not immediately returned

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Speaker 1: a co full comment on this position of yours. Steve,

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Speaker 1: Is it about the space that Tesla is operating in

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Speaker 1: or is it about Tesla? Do you think there could

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Speaker 1: be winners in this space, because quite clearly Elon Muski

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Speaker 1: is having a very difficult time rolling this out in

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Speaker 1: mass production. Well, look, I think when you look at

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Speaker 1: the the car space, the real future is going to

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Speaker 1: be autonomous driving. You know, he's gotten big in the

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Speaker 1: electric car space, but I really think that we're leap

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Speaker 1: frogging now towards autonomous driving, and the two largest players

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Speaker 1: in a Toronto's driving are Google and GM, and as

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Speaker 1: far as I can tell, um, Tesla is a very

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Speaker 1: distant party in that space. Your other short that you

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Speaker 1: mentioned to us, and there are longs, including your enthusiasm

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Speaker 1: for Mr Bezos and Amazon, was Zillo, which is a

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Speaker 1: whole different beast. It's again a smaller single story if

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Speaker 1: you would, how do you handle a given short like

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Speaker 1: a Zillo Z versus something with notoriety like a Tesla. Well,

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Speaker 1: Zilla was a larger short, and the vectors up. I mean,

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Speaker 1: you're really going against now, I'm going against I'm going

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Speaker 1: against a trend in the sense that Zillo is considered

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Speaker 1: to be what's called a platform, and the platform space

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Speaker 1: is the hottest space in the Internet, so that I

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Speaker 1: have going against me Um. But not all platforms are

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Speaker 1: created equal, and this is a platform where I think

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Speaker 1: the addressable market is much smaller than the company is saying.

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Speaker 1: The growth rate of the company has slowed in its

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Speaker 1: basic business enormously over the last year or so. And

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Speaker 1: then the thing that really took tilted me over the

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Speaker 1: edge with respect to Zillo was when they announced earlier

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Speaker 1: this year that they were entering a new business, which

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Speaker 1: was they were going to use their own capital to

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Speaker 1: buy houses and flip them. And you know, you could

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Speaker 1: have arguments about how good or bad the basic businesses,

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Speaker 1: but it's definitely a cash flow positive business doesn't require

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Speaker 1: a lot of capital. They're now entering into a low

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Speaker 1: margin cyclical business where if we go into recession, that

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Speaker 1: business will do particularly badly. Steve Osman, it has been

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Speaker 1: great to get your thoughts this morning. Thank you very much.

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Speaker 1: Iisman Group Newberger Berman, Senior portfolio manager. Why don't you

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Speaker 1: bring in mr rupt Gear as we see the the

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Speaker 1: yield come in a solid basis point two point nine

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Speaker 1: six Chris Rapki joining us NATCHI financial economist m uf

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Speaker 1: G a Union bank. You thought, she really thoughts Chris, Yeah,

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Speaker 1: it looks like a pretty terrific number. As they say,

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Speaker 1: it had a four handle. I was surprised by the

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Speaker 1: strength of consumers spending because it didn't look like car

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Speaker 1: and light truck sales were all that strong. I guess

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Speaker 1: we're of the teen point four million annual rate in June.

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Speaker 1: Um exports look like they're pretty strong. I still think

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Speaker 1: you can say that you can make the case that

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Speaker 1: this is the high water mark for growth here certainly

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Speaker 1: this year, and that everything clicked this quarter, um, and

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Speaker 1: we'll see what happens in the future. I think some

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Speaker 1: of the trade uncertainty is still a problem, even with

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Speaker 1: the agreement with the European Union. Well, Chris Let's unpacks

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Speaker 1: that first of all, as Tom says, going beneath the

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Speaker 1: headline number you've picked up on that trade story, how

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Speaker 1: much of a contribution did we get from a build

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Speaker 1: up ahead of tariffs being introduced that will likely not

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Speaker 1: be in the number in the back half. Just trying

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Speaker 1: to get my Bloomberg screen going here, Well, better get

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Speaker 1: going net ex Well, exports add at one point one

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Speaker 1: percentage point, and the drag from imports was minimal. So

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Speaker 1: does look like certainly, uh you know, they people we

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Speaker 1: exported more to the rest of the world to get

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Speaker 1: ahead of some of these made tariff uncertainty that one

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Speaker 1: percentage point. Yeah, I've got a first look at seven

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Speaker 1: point four percent current g d P. That's a whow statistic.

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Speaker 1: I've had a search here to figure out what that

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Speaker 1: gives us. US goes back to is seven point four

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Speaker 1: percent boom nominal GDP A healthy condition. Well, yeah, I

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Speaker 1: mean you can do the same thing by saying, uh,

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Speaker 1: you know, for some reason, inventories was a huge drag.

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Speaker 1: I mean, first off, we revised the data back to

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Speaker 1: um I wasn't there, so we'll have to study this

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Speaker 1: a little more. But I was surprised that inventories subtracted

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Speaker 1: one percentage point. So even though we missed at four

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Speaker 1: point one percent, it was actually five point one percent.

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Speaker 1: Which also, you know, if we take out inventories, which

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Speaker 1: are just you know, they go back and forth every quarter.

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Speaker 1: Uh so the underlying potential rate real growth is like five. Really,

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Speaker 1: the economy is quite strong with I think the Trump

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Speaker 1: administration has a reason to crow about it. I don't

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Speaker 1: know if they'll be crowing quite the same way. No,

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Speaker 1: but still real final sales John Ferrell or five and

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Speaker 1: that's a that's around statistic that uh is just absolutely

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Speaker 1: absolutely extraordinarius. Another way, overwhelmingly, the consensus view now is

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Speaker 1: this is as good as it gets. Chris, tell me

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Speaker 1: why this can't be self fulfilling. Why these kind of

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Speaker 1: numbers can inspire confidence in the economy and drive things

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Speaker 1: forward even more? Well, I mean it comes down to

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Speaker 1: the battle between the Trump administration. Remember the famous US

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Speaker 1: Treasury one page economic growth forecast that came out with

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Speaker 1: to justify the tax cuts. Now, the administration is looking

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Speaker 1: for three percent growth starting in two thousand and twenty

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Speaker 1: forever as far as the eye can see. But the

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Speaker 1: economics profession, as shown by FED official forecasts, have GDP

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Speaker 1: being two in two thousand and twenty. So the tax

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Speaker 1: cuts that economists see is one year phenomenon in trailing

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Speaker 1: out in two thousand nineteen. So the economics world say

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Speaker 1: has two percent growth starting two thou administrations say is three.

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Speaker 1: So I mean there's quite a difference. And the reason

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Speaker 1: between the two is the the economists have come down

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Speaker 1: on the idea of demographics are very big. They ignored

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Speaker 1: it for years now. They think the graying of society,

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Speaker 1: low birth rate, that's gonna doom economic growth, or at

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Speaker 1: least keep it down at load percent range. Chris Rob, you,

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Speaker 1: what's your run rate for for US GDP. I think

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Speaker 1: we're gonna get close to three percent, not quite in

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Speaker 1: the next couple of years. I haven't like two point

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Speaker 1: eight two point nine. I'm not quite as bearish as

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Speaker 1: some of the set official forecasts, but not quite as

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Speaker 1: uh as Blue Skies for the economy, I don't I

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Speaker 1: don't see the administration forecast is being that good either.

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Speaker 1: Thanks so much, Chris ROPPI greatly appreciate it, And for

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Speaker 1: the record, I would note that Mr Rupprie has been

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Speaker 1: an optimist on the American economy. Margie Battell looks at

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Speaker 1: the same day that we look at uh in a

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Speaker 1: high yield in bonds, in dividend, paying in dividend, and

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Speaker 1: growing equities at Wells Fargo Asset Management. Margat I happened

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Speaker 1: to be looking at contribution to g d P. Exports

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Speaker 1: is jaw dropping goods, boom services not bad, but export,

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Speaker 1: the export char coming off of two thousand and fifteen

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Speaker 1: and particularly coming off the election, is extraordinary. You are

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Speaker 1: very optimistic on the markets. Is it because we're an

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Speaker 1: export juggernaut? Uh? Well, really it's everything everything. US business

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Speaker 1: is extremely productive, globally competitive. Global growth is at least

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Speaker 1: okay to picking up a little bit. So conditions here

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Speaker 1: are great. Our manufacturers in particular have lowered their costs.

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Speaker 1: They have such a flexible cost structure they can compete

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Speaker 1: with anybody even if the dollar moves up, which of

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Speaker 1: course it has I mean the dollar dynamics are tangible.

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Speaker 1: Is a kind of report today in the interior data

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Speaker 1: of the report enough to shift the bond market priced down,

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Speaker 1: yield higher, Not as long as you have inflation so

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Speaker 1: well behaved, and not as long as the treasury market

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Speaker 1: is still has a competitive yield compared to yields of

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Speaker 1: other developed countries. It's incredible that our yields are so

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Speaker 1: much hard and say your yields in Europe. So I

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Speaker 1: think that for a safe haven for investors to get

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Speaker 1: something like a three percent is going to keep a

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Speaker 1: lid on how fast rates can go up, assuming inflation

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Speaker 1: days where it is. Have you changed your portfolio a

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Speaker 1: lot in the last ninety days? I mean the toxic

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Speaker 1: not toxic, the cocktail rather of booming economic growth four

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Speaker 1: point one percent with a real final sales folks nicely

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Speaker 1: above five. I mean, do does that make you change

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Speaker 1: your portfolio? Have you been you vacationing in Iceland? No?

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Speaker 1: I've been thinking for a long time that the market

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Speaker 1: is set up under estimating how strong and how sustainable

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Speaker 1: the growth is. And I think that a lot of

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Speaker 1: market players still are geared as if tomorrow is going

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Speaker 1: to be two thousand and eight. Again in the market's

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Speaker 1: going to drop. Where do you wrong on rates too?

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Speaker 1: They're not going to go up, that asked. Okay, they're

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Speaker 1: on rates as well, which means price stability. But what

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Speaker 1: does it mean for dividend growth? And where can you

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Speaker 1: find intelligent dividend growth backed by free cash flow? I

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Speaker 1: think in just about all sectors except for those that

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Speaker 1: are under structural pressure because of global forces. Um. I

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Speaker 1: think retailing is a sector that is continuing to suffer

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Speaker 1: because of the Internet trend. And I think, really you

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Speaker 1: look at a sector like autos. Yes, people have more

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Speaker 1: money to buying more cars, but too much global competition,

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Speaker 1: too much capacity. We have a headline out now Margie

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Speaker 1: Patel to speak on the American economy at eight one am,

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Speaker 1: and just behind that Bloomberg headline, President Trump will speak

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Speaker 1: to the nation a m this morning, uh New York

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Speaker 1: time on the US economy. Pim Fox, Why don't you

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Speaker 1: jump in here as we speak with Margie Patel, Wells Fargo, PIM.

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Speaker 1: I mean this is this is this is an economy

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Speaker 1: Pim from years in my childhood. Well, well, well we

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Speaker 1: won't go there. This is big numbers. These are big

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Speaker 1: numbers and market. One point to you is how much

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Speaker 1: do you believe the investors smart investors are willing to

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Speaker 1: pay for every dollar of earnings? Now do you think

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Speaker 1: that's changing? I think they should be willing to pay

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Speaker 1: a bit more um. If you say that, you know,

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Speaker 1: going forward, PE is roughly seventeen is. I see no

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Speaker 1: reason why they can't go up a turn or two.

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Speaker 1: You know, the argument that well as rates go up,

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Speaker 1: pees gets compressed. Again. I'm skeptical of the naysayers on

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Speaker 1: how well the economy is going to do, how all

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Speaker 1: the equity market is going to do. Is that because

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Speaker 1: they're going to have to be competitive in terms of

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Speaker 1: trying to actually purchase shares some companies. In other words,

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Speaker 1: why would they be willing to pay more? Because you

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Speaker 1: can see this cycle is different because it really doesn't

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Speaker 1: look cyclical, It looks more secular um. Just as Milton

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Speaker 1: Friedman said, if you have a passive monetary authority, you

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Speaker 1: can allow for more sustainable growth. And we're finally seeing

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Speaker 1: once again he's being true, and I think that's it.

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Speaker 1: And you're not going to see the kind of inflation

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Speaker 1: that would really cram down equity values or or put

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Speaker 1: the financial pressure on sectors. Financial sector, Do you believe

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Speaker 1: that that is going to be one industry group that's

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Speaker 1: going to perform. I'm extremely lukewarm on the financial sector

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Speaker 1: again because unless you have a boom and bus lending cycle,

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Speaker 1: I just do not see where the growth is coming from.

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Speaker 1: And this whole recovery has not been grown by increased leverage,

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Speaker 1: so I have very minimal exposure. That's really interesting in

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Speaker 1: the sense of how you get to that decision. You're

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Speaker 1: talking about lower rates than people expect, you're talking about

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Speaker 1: a better economy. Those those those bring on this ambiguity

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Speaker 1: within banks, and that's distilled to yield curve. Is it

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Speaker 1: just they can't make net margin, they don't have to

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Speaker 1: spread between long and short well exactly. That was a

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Speaker 1: big case for I think all the macro stories are

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Speaker 1: are pretty pretty wobbly. But just as far as what

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Speaker 1: sector is going to borrow, it doesn't look like housing,

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Speaker 1: it doesn't look like it's consumers, it doesn't look like

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Speaker 1: it's business. So who's left I didn't see much Markie.

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Speaker 1: One more question. I want to go to pim Fox

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Speaker 1: in this in a moment, if you look at the

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Speaker 1: first quarter corporate profits. It's amazing the tax effect, the

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Speaker 1: legislation effect. Can you say that this quarter was based

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Speaker 1: off Mr Trump's tax reform legislation. I think we're only

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Speaker 1: beginning to see the positive benefits of that on the

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Speaker 1: corporate side and then flowing ultimately over into consumers. So

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Speaker 1: I think this has very, very long life at the

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Speaker 1: beginning of it. Markt Ptel, thank you so much, greatly

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Speaker 1: appreciate it with her optimism on the American the County.

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Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and

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Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast

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Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.