1 00:00:02,600 --> 00:00:13,040 Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:28,680 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. So 5 00:00:28,840 --> 00:00:31,200 Speaker 1: the good news for Prime Minister Boris Johnson is that 6 00:00:31,240 --> 00:00:34,080 Speaker 1: some people believe he might have enough votes for his deal. 7 00:00:34,200 --> 00:00:36,519 Speaker 1: The bad news for the Prime Minister today is that 8 00:00:36,600 --> 00:00:39,480 Speaker 1: hardly anybody knows when Parliament might actually get to vote 9 00:00:39,520 --> 00:00:41,920 Speaker 1: on it. Johnny guests now from London is Edward Evans, 10 00:00:41,960 --> 00:00:45,760 Speaker 1: Bloomberg Managing editor in charge of Brexit. Quite a job, ed, 11 00:00:45,800 --> 00:00:48,440 Speaker 1: So let's talk about it. What happened this past weekend 12 00:00:48,680 --> 00:00:51,400 Speaker 1: and what's the sequencing of events over the next couple 13 00:00:51,400 --> 00:00:56,560 Speaker 1: of days. Parliament on Saturday rejected the deal that Johnson 14 00:00:56,720 --> 00:00:59,640 Speaker 1: struck with Brussels. He will try and put it again 15 00:01:00,040 --> 00:01:03,560 Speaker 1: Parliament today, but in doing so he risks a clash 16 00:01:03,600 --> 00:01:06,199 Speaker 1: with Speaker John Burko. There's a convention in the British 17 00:01:06,240 --> 00:01:09,320 Speaker 1: Parliament that once Parliament has voted on something, you can't 18 00:01:09,319 --> 00:01:12,959 Speaker 1: put it to Parliament again. Nevertheless, the government is going 19 00:01:13,000 --> 00:01:15,720 Speaker 1: to put forward the what's called the Withdrawal Agreement Bill. 20 00:01:15,800 --> 00:01:18,880 Speaker 1: This is the actual piece of legislation that implements breaks 21 00:01:18,920 --> 00:01:21,520 Speaker 1: it to Parliament this week and the idea is to 22 00:01:21,600 --> 00:01:25,399 Speaker 1: get that through the whole of Parliament by October thirty one. Now, 23 00:01:25,400 --> 00:01:27,200 Speaker 1: the problem for Johnson is going to be whether he 24 00:01:27,240 --> 00:01:30,560 Speaker 1: can get both either of those pieces of the legislation through, 25 00:01:31,240 --> 00:01:33,080 Speaker 1: but will probably with the second, whether it's going to 26 00:01:33,120 --> 00:01:35,720 Speaker 1: be subjected to amendments by his opponents. What do we 27 00:01:35,760 --> 00:01:37,759 Speaker 1: know about the numbers at the moment and how they've 28 00:01:37,840 --> 00:01:41,760 Speaker 1: changed since this past weekend. Well, the numbers are very 29 00:01:42,000 --> 00:01:44,720 Speaker 1: very close. It has to be stressed. To get his 30 00:01:44,800 --> 00:01:47,400 Speaker 1: deal over the line, Johnson needs to get sixty one 31 00:01:47,480 --> 00:01:50,360 Speaker 1: waiverers to fall in line behind. Now on our estimates, 32 00:01:50,440 --> 00:01:54,040 Speaker 1: we think he's got sixty two. Foreign sectually dominant RAB 33 00:01:54,200 --> 00:01:56,240 Speaker 1: over the weekend is saying that the government thinks it 34 00:01:56,400 --> 00:01:59,280 Speaker 1: has the numbers to do it. But you'd expect a 35 00:01:59,360 --> 00:02:01,800 Speaker 1: government in to say that. How often do you hear 36 00:02:01,800 --> 00:02:03,640 Speaker 1: a government in US to say they expect to lose 37 00:02:03,680 --> 00:02:06,360 Speaker 1: a piece of legislation in Westminster? I think the only 38 00:02:06,360 --> 00:02:08,440 Speaker 1: safe answer is that it's going to be very very 39 00:02:08,520 --> 00:02:11,519 Speaker 1: close and we're in for ten days of intense parliamentary 40 00:02:11,520 --> 00:02:13,960 Speaker 1: credit warfare. Here. A lot of rumors over the last 41 00:02:13,960 --> 00:02:16,640 Speaker 1: couple of days about the DUP, the Democratic Universt Party 42 00:02:16,680 --> 00:02:18,919 Speaker 1: and what they'll be pushing for in the next four 43 00:02:19,040 --> 00:02:22,079 Speaker 1: hours eight hours and whether they'll team up with Labor 44 00:02:22,120 --> 00:02:25,160 Speaker 1: at what do we know about that? Yeah, this is 45 00:02:25,160 --> 00:02:28,600 Speaker 1: a DP. They rejected Boris Johnson's initial deal. Their argument 46 00:02:28,720 --> 00:02:31,400 Speaker 1: they do not want to see Northern Ireland treated differently 47 00:02:31,440 --> 00:02:35,440 Speaker 1: to the rest of the UK. Now Johnson has because 48 00:02:35,440 --> 00:02:37,600 Speaker 1: he wants to leave the EU customs you need. He 49 00:02:37,840 --> 00:02:40,560 Speaker 1: that Ireland is dead opposed to that idea, so he 50 00:02:40,600 --> 00:02:44,560 Speaker 1: has had to fudge a Northern Ireland status essentially like 51 00:02:44,680 --> 00:02:46,799 Speaker 1: the UK will leave the customs you do, but it 52 00:02:46,800 --> 00:02:50,320 Speaker 1: will be forced to follow some new customs rules. Now 53 00:02:50,600 --> 00:02:54,480 Speaker 1: do you teem in? MPP says that the government party 54 00:02:54,639 --> 00:02:59,440 Speaker 1: meeting with with to discuss potential amendments to the government's legislation, 55 00:02:59,600 --> 00:03:01,960 Speaker 1: but he's ruled out back in any need to keep 56 00:03:02,040 --> 00:03:06,240 Speaker 1: the UK in the European Union's customs unit. That's something 57 00:03:06,240 --> 00:03:09,040 Speaker 1: that Labor has been looking to do. Ever very quickly here, 58 00:03:09,040 --> 00:03:11,400 Speaker 1: we're gonna we're gonna do a ballet here and I'm 59 00:03:11,440 --> 00:03:14,080 Speaker 1: beginning to your discussion of November there will be a 60 00:03:14,120 --> 00:03:21,239 Speaker 1: general election. Who wants a general election right now? Boris 61 00:03:21,320 --> 00:03:26,240 Speaker 1: Johnson in short? In short, but nobody else but Johnson. 62 00:03:26,400 --> 00:03:28,600 Speaker 1: It's it's the way that he can get this through, 63 00:03:28,680 --> 00:03:32,040 Speaker 1: go to the country, get a majority in parliament that 64 00:03:32,120 --> 00:03:35,920 Speaker 1: allows him to his Brexit deal through um. Everybody else 65 00:03:36,080 --> 00:03:39,200 Speaker 1: is very much more ambivalent about it, Labor. If you 66 00:03:39,240 --> 00:03:41,360 Speaker 1: look at where they're Poland, Corpin is no real in 67 00:03:41,440 --> 00:03:44,400 Speaker 1: no real position to go to the country. His party 68 00:03:44,480 --> 00:03:48,240 Speaker 1: is divided on Brexit and he resisted any chance to 69 00:03:48,280 --> 00:03:51,240 Speaker 1: do that. To do that so far Everard Evans, thank you. 70 00:03:51,360 --> 00:03:57,320 Speaker 1: Something really should say in working truly there's a cliche, 71 00:03:57,400 --> 00:04:14,000 Speaker 1: but they are ye. Let us continue this discussion. Maybe 72 00:04:14,040 --> 00:04:16,480 Speaker 1: brought it up. Meredith Sumter with us with your Asia group. 73 00:04:16,600 --> 00:04:18,520 Speaker 1: It was a joy to have Ian Bremer with us 74 00:04:18,600 --> 00:04:22,440 Speaker 1: last week, and we're raving about Meredith Sumpter's abilities not 75 00:04:22,560 --> 00:04:25,400 Speaker 1: only on Asia and on China, but really with a 76 00:04:25,440 --> 00:04:28,280 Speaker 1: holistic view for your Asia group. She joins us from 77 00:04:28,320 --> 00:04:32,760 Speaker 1: our studios in Washington. Uh, Meredith on on China right now, 78 00:04:33,000 --> 00:04:36,000 Speaker 1: what is the mood that you've seen within the Chinese media, 79 00:04:36,080 --> 00:04:41,000 Speaker 1: the Chinese speaking media. The Chinese speaking media is really 80 00:04:41,040 --> 00:04:46,279 Speaker 1: of of two minds. One, they are messaging constructively about 81 00:04:46,520 --> 00:04:50,640 Speaker 1: the interim deal that has been reached in principle with 82 00:04:50,720 --> 00:04:53,800 Speaker 1: the United States, and all eyes are on some kind 83 00:04:53,839 --> 00:04:58,039 Speaker 1: of arrangement being agreed to ahead of the APEC meeting 84 00:04:58,080 --> 00:05:01,279 Speaker 1: where Presidents She and Trump will meet UH and signed 85 00:05:01,360 --> 00:05:05,880 Speaker 1: the agreement. On the other hand, they're also messaging calm 86 00:05:06,440 --> 00:05:08,880 Speaker 1: UH and a medium to long term view of how 87 00:05:08,920 --> 00:05:10,840 Speaker 1: they're managing the economy. So we've seen a lot of 88 00:05:10,920 --> 00:05:15,080 Speaker 1: hyperventilation in the markets about China being at six percent growth. 89 00:05:15,080 --> 00:05:17,240 Speaker 1: This is this is something that look, you know, Chinese 90 00:05:17,240 --> 00:05:19,320 Speaker 1: contact on me. Look, we've been actually been below six 91 00:05:19,360 --> 00:05:22,719 Speaker 1: percent growth for some time. Nudge nudge, right, So they're 92 00:05:22,720 --> 00:05:26,000 Speaker 1: they're looking to just manage those expectations that higher quality 93 00:05:26,080 --> 00:05:30,400 Speaker 1: growth means a lower growth rate for China, and look 94 00:05:30,440 --> 00:05:33,080 Speaker 1: that with the trade confrontation going on, of course you're 95 00:05:33,120 --> 00:05:35,240 Speaker 1: going to see a downward pressure on their growth. I 96 00:05:35,279 --> 00:05:37,160 Speaker 1: want to bring what you just said with your your 97 00:05:37,200 --> 00:05:40,599 Speaker 1: core expertise on Asia over to Brexit, because it's the 98 00:05:40,680 --> 00:05:44,159 Speaker 1: same thing they're managing. The chaotic message in the United 99 00:05:44,240 --> 00:05:47,400 Speaker 1: Kingdom is well, do you just assume damp and growth 100 00:05:47,400 --> 00:05:50,520 Speaker 1: in the United Kingdom for the same reasons, frankly as China, 101 00:05:50,600 --> 00:05:54,839 Speaker 1: which is just a certain level of chaos the UK 102 00:05:55,000 --> 00:05:57,200 Speaker 1: economy is. They're going to have the government's going to 103 00:05:57,320 --> 00:05:59,400 Speaker 1: have to find some white Look like all the focus 104 00:05:59,400 --> 00:06:01,240 Speaker 1: has been on Yal or new deal. We're gonna get 105 00:06:01,240 --> 00:06:04,279 Speaker 1: this through. And as soon as this gets wrapped, then 106 00:06:04,360 --> 00:06:07,200 Speaker 1: I think you're going to see Westminster focusing on, oh 107 00:06:07,240 --> 00:06:08,599 Speaker 1: my goodness, now what do we have to do? And 108 00:06:08,640 --> 00:06:12,320 Speaker 1: not just on the economic front, like look, negotiating trade 109 00:06:12,320 --> 00:06:16,040 Speaker 1: agreements takes time, but also they're going to have an 110 00:06:16,040 --> 00:06:20,080 Speaker 1: eye towards Northern Ireland and towards Scotland as well to 111 00:06:20,400 --> 00:06:22,480 Speaker 1: think about what are the medium to long term effects 112 00:06:23,040 --> 00:06:27,359 Speaker 1: of all political effects of leaving leaving the European Union 113 00:06:27,400 --> 00:06:30,000 Speaker 1: on those two important parts. And jump in here because 114 00:06:30,080 --> 00:06:32,680 Speaker 1: with all this going on with burkau at to thirty, 115 00:06:32,760 --> 00:06:37,000 Speaker 1: there's a court ruling in Scotland basically out of nowhere. 116 00:06:37,040 --> 00:06:39,839 Speaker 1: I mean, Meredith, are we gonna end up talking about 117 00:06:39,839 --> 00:06:44,000 Speaker 1: Scotland having an independent vote leave the United Kingdom? I 118 00:06:44,040 --> 00:06:46,479 Speaker 1: do think momentum is heading that direction, but listen, I 119 00:06:46,480 --> 00:06:48,359 Speaker 1: want to give you a quick update on what the 120 00:06:48,360 --> 00:06:51,440 Speaker 1: Eurasia Group call is. It has been this way since 121 00:06:51,560 --> 00:06:55,440 Speaker 1: actually um Saturday, and that in lifting the threat of 122 00:06:55,480 --> 00:06:58,960 Speaker 1: a no deal, Oliver Letwin, who will now vote for 123 00:06:59,000 --> 00:07:02,040 Speaker 1: the agreement very well be remembered. Is the man who 124 00:07:02,040 --> 00:07:04,599 Speaker 1: paved the way for deal approval. Now, why do we 125 00:07:04,640 --> 00:07:06,760 Speaker 1: say that in our call is we think that Boris 126 00:07:06,839 --> 00:07:10,400 Speaker 1: is within touching distance of getting the majority that he needs. 127 00:07:11,640 --> 00:07:14,280 Speaker 1: So for those MPs who wanted to take no Deal 128 00:07:14,360 --> 00:07:16,440 Speaker 1: off the table, we think that they will now be 129 00:07:16,600 --> 00:07:20,080 Speaker 1: more ready to vote for a deal. This includes seventeen 130 00:07:20,760 --> 00:07:23,640 Speaker 1: former Tories who lost whip for back in the Band Act. 131 00:07:24,080 --> 00:07:27,240 Speaker 1: Same for the labor backbenchers that the government has now 132 00:07:27,280 --> 00:07:30,000 Speaker 1: been willing, we think that Boris needs an additional five 133 00:07:30,080 --> 00:07:32,600 Speaker 1: to six more labor votes to get to the number 134 00:07:32,640 --> 00:07:35,280 Speaker 1: that he needs. Meredith. What is lost on a lot 135 00:07:35,280 --> 00:07:38,160 Speaker 1: of people is that this is not the beginning of 136 00:07:38,160 --> 00:07:40,200 Speaker 1: the end. This is the end of the beginning. This 137 00:07:40,280 --> 00:07:41,679 Speaker 1: is going to go on for a whole lot longer. 138 00:07:41,720 --> 00:07:44,000 Speaker 1: Even once this deal passes, we then need to negotiate 139 00:07:44,040 --> 00:07:46,600 Speaker 1: with Europe what the future relationship looks like. Meredith. How 140 00:07:46,680 --> 00:07:49,800 Speaker 1: much longer is this going to go on for It 141 00:07:49,800 --> 00:07:53,200 Speaker 1: could take a couple of years, frankly, and during that 142 00:07:53,280 --> 00:07:55,320 Speaker 1: period of time, you know you're gonna have a year 143 00:07:55,320 --> 00:08:00,520 Speaker 1: of transition and the governments on both sides will be 144 00:08:00,600 --> 00:08:03,000 Speaker 1: trying to figure out a way to mitigate the negative 145 00:08:03,040 --> 00:08:06,920 Speaker 1: effects of the UK leaving while also they're preparing their 146 00:08:06,920 --> 00:08:09,400 Speaker 1: populations for what comes next. And this is not just 147 00:08:09,480 --> 00:08:13,440 Speaker 1: trade and investment, but it's also workforce issues. People are 148 00:08:13,480 --> 00:08:16,200 Speaker 1: going to be dislocated and we'll have to make plans 149 00:08:16,240 --> 00:08:18,280 Speaker 1: for their future. So you're gonna see all this attention 150 00:08:18,280 --> 00:08:19,680 Speaker 1: that we've had on are we going to get this 151 00:08:19,760 --> 00:08:22,640 Speaker 1: deal passed? It's now going to be turned to now 152 00:08:22,720 --> 00:08:24,600 Speaker 1: to what do we do to move forward at a 153 00:08:24,640 --> 00:08:26,720 Speaker 1: time when the year Zone growth is slowing and there's 154 00:08:26,760 --> 00:08:29,400 Speaker 1: concerns about the political will of country governments to do 155 00:08:29,480 --> 00:08:33,319 Speaker 1: the fiscal stimulus necessary to keep these key economies out 156 00:08:33,320 --> 00:08:36,920 Speaker 1: of recession. Meredith, thank you so much, too, Short group 157 00:08:36,960 --> 00:08:41,800 Speaker 1: with us today, greatly appreciate the perspective there on England. 158 00:08:56,000 --> 00:08:58,800 Speaker 1: One of our most popular guest darks the door, Charles Cancer, 159 00:08:58,880 --> 00:09:03,560 Speaker 1: is a Newberger Berman looking at along Short always gives 160 00:09:03,640 --> 00:09:07,160 Speaker 1: us good spirit. On the UH, the equity markets you 161 00:09:07,200 --> 00:09:10,120 Speaker 1: mentioned earlier to me, Charles, the idea that the gloom 162 00:09:10,120 --> 00:09:13,520 Speaker 1: out there is tangible give us the level of gloom 163 00:09:13,559 --> 00:09:17,000 Speaker 1: that you see right now. I think gloom in the 164 00:09:17,000 --> 00:09:22,199 Speaker 1: equity market UM. Despite ten years of excess returns for 165 00:09:22,320 --> 00:09:26,480 Speaker 1: both equities and credit, gloom is ubiquitous. I think you 166 00:09:26,480 --> 00:09:29,400 Speaker 1: see it in valuations. You see it in the record 167 00:09:29,440 --> 00:09:32,280 Speaker 1: amount of cash that flowed into money market funds the 168 00:09:32,360 --> 00:09:35,560 Speaker 1: last six months. I think it's about three billion dollars, 169 00:09:35,600 --> 00:09:38,080 Speaker 1: which is similar to what you saw in two thousand 170 00:09:38,160 --> 00:09:42,080 Speaker 1: and eight. So there's there's no lack of worry UM 171 00:09:42,120 --> 00:09:45,640 Speaker 1: in the stock market, whether it be global manufacturing recession, 172 00:09:45,720 --> 00:09:51,280 Speaker 1: slow in earnings, impeachment, Trump, brexit, pick your poison. UM. 173 00:09:51,320 --> 00:09:54,960 Speaker 1: I think. I think it's not lost on on equity 174 00:09:55,040 --> 00:09:59,800 Speaker 1: valuations UM in general, and I would say UM because 175 00:09:59,800 --> 00:10:04,360 Speaker 1: of that, for anyone that has an investment time arising 176 00:10:04,400 --> 00:10:07,319 Speaker 1: that can be measured in five and ten years UM, 177 00:10:07,360 --> 00:10:09,679 Speaker 1: I would just urge folks to stay the course because 178 00:10:09,679 --> 00:10:11,920 Speaker 1: I think the next five to ten years will produce 179 00:10:12,520 --> 00:10:16,600 Speaker 1: UM at minimum average equity like returns, which will more 180 00:10:16,640 --> 00:10:18,840 Speaker 1: than likely get the job done for most. Well, let's 181 00:10:18,840 --> 00:10:22,520 Speaker 1: talk about the risk reward proposition going into next year, 182 00:10:23,040 --> 00:10:26,520 Speaker 1: the low single digits, low single digit profit row? Does 183 00:10:26,559 --> 00:10:31,120 Speaker 1: that get it done? Is that good enough? So? UM, 184 00:10:31,280 --> 00:10:34,400 Speaker 1: next year is going to have a lot of idiosyncratic risk. 185 00:10:35,040 --> 00:10:37,040 Speaker 1: It's not lost on you that we have an election 186 00:10:37,080 --> 00:10:41,200 Speaker 1: at the back end of But I need to say this. 187 00:10:42,679 --> 00:10:46,640 Speaker 1: The ability of anyone in this chair to predict the 188 00:10:46,760 --> 00:10:51,240 Speaker 1: next one year return is a complete random walk. If 189 00:10:51,280 --> 00:10:53,760 Speaker 1: you believe in valuations, I can show you the data, 190 00:10:54,040 --> 00:10:57,360 Speaker 1: whether the starting multiple is high or low. Prospective one 191 00:10:57,440 --> 00:11:01,400 Speaker 1: year returns totally unpredicted. I know everyone wants to talk 192 00:11:01,440 --> 00:11:04,080 Speaker 1: about the next one year. I beg folks to look 193 00:11:04,080 --> 00:11:08,680 Speaker 1: a little longer. And because of the amount of pessimism 194 00:11:08,720 --> 00:11:12,679 Speaker 1: that is in the market today, UM, the likelihood that 195 00:11:13,040 --> 00:11:17,000 Speaker 1: that that that we enjoy attractive five to tenure returns 196 00:11:17,160 --> 00:11:19,480 Speaker 1: is very high. So chance this is really important for 197 00:11:19,480 --> 00:11:21,679 Speaker 1: anyone that stumbled across this channel and thought, you know, well, 198 00:11:21,720 --> 00:11:24,079 Speaker 1: I'll listen to this and I'll listen to this guy 199 00:11:24,160 --> 00:11:26,959 Speaker 1: talking about investing. I can't predict the next year with 200 00:11:27,000 --> 00:11:29,760 Speaker 1: any accuracy. Try and predict the next five years because 201 00:11:29,760 --> 00:11:33,360 Speaker 1: that's easier. Yes, that sounds counterintuitive to some people who 202 00:11:33,360 --> 00:11:35,560 Speaker 1: perhaps aren't in the market with the experience that you have. 203 00:11:36,040 --> 00:11:39,120 Speaker 1: Why does that make sense? It's it's all driven by 204 00:11:39,200 --> 00:11:43,680 Speaker 1: my philosophy um that starting points on valuation are the 205 00:11:43,760 --> 00:11:47,760 Speaker 1: most critical inputs and the more reasonable the starting point 206 00:11:47,960 --> 00:11:51,480 Speaker 1: is for anyone that has a long term investment horizon, Um, 207 00:11:51,520 --> 00:11:54,120 Speaker 1: the greater the likelihood that you're gonna enjoy at least 208 00:11:54,160 --> 00:11:57,559 Speaker 1: average equity like returns. And I can tell you based 209 00:11:57,600 --> 00:12:00,640 Speaker 1: on our work based on whether where valuations are, which 210 00:12:00,640 --> 00:12:03,520 Speaker 1: I know folcusing stock prices are high. Yes, stock prices 211 00:12:03,559 --> 00:12:06,280 Speaker 1: are high, but earnings growth has has more than caught 212 00:12:06,360 --> 00:12:09,000 Speaker 1: up with that. For anyone that believes that has a 213 00:12:09,080 --> 00:12:14,800 Speaker 1: cash flow earnings, economic profit valuation mindset, today's starting point 214 00:12:15,360 --> 00:12:18,600 Speaker 1: is more than attractive for anyone that has a five 215 00:12:18,679 --> 00:12:21,920 Speaker 1: to ten investment aising heart of this, this is so important. 216 00:12:22,040 --> 00:12:24,079 Speaker 1: The heart of this is Johnny has a good question. 217 00:12:24,120 --> 00:12:26,719 Speaker 1: They're in the blended market. You're not looking at the 218 00:12:26,760 --> 00:12:30,400 Speaker 1: blended market. You're looking at what five or ten or 219 00:12:30,600 --> 00:12:34,400 Speaker 1: fifteen percent of the stocks that are out there. The goal, 220 00:12:34,920 --> 00:12:38,200 Speaker 1: increasingly and thankfully for the first time in ten years, 221 00:12:38,520 --> 00:12:41,680 Speaker 1: has moved away from treasury yields being a put on 222 00:12:41,720 --> 00:12:45,920 Speaker 1: the market to actually understanding your company's UM understanding how 223 00:12:45,920 --> 00:12:49,120 Speaker 1: they're the deploy capital and the markets and the growth 224 00:12:49,160 --> 00:12:51,400 Speaker 1: that they're going after. So for us, it's kind of 225 00:12:51,600 --> 00:12:53,880 Speaker 1: like kids in a candy store right now because for 226 00:12:53,960 --> 00:12:59,599 Speaker 1: the first time in a while, there's wide dispersion between securities, 227 00:12:59,600 --> 00:13:03,079 Speaker 1: between growth and value, between large and small, and so 228 00:13:03,160 --> 00:13:07,439 Speaker 1: for our job, we feel like finally, UM certainly running 229 00:13:07,440 --> 00:13:10,040 Speaker 1: along short. We're playing a little golf. We playing golf 230 00:13:10,040 --> 00:13:12,480 Speaker 1: with a little wind. It's Monday, nobody's listening. Give us 231 00:13:12,520 --> 00:13:16,280 Speaker 1: one idea, Give us one company that needs the cantor prison, 232 00:13:17,120 --> 00:13:19,520 Speaker 1: one company that needs to just give us the name. 233 00:13:19,520 --> 00:13:22,680 Speaker 1: I don't know what about Brookville, ASCID Management, the real 234 00:13:22,800 --> 00:13:28,720 Speaker 1: estate people, real estate infrastructure UM to buy the Montreal Canadians. 235 00:13:28,960 --> 00:13:32,199 Speaker 1: They're probably not going to buy the Montreal Canadians UM, 236 00:13:32,240 --> 00:13:36,320 Speaker 1: but they all about alternative assets that own scale and 237 00:13:36,400 --> 00:13:40,720 Speaker 1: scope in long duration assets with inflation protection that most 238 00:13:40,760 --> 00:13:45,000 Speaker 1: folks don't. Their tenure track record is spectacular and there's 239 00:13:45,040 --> 00:13:47,440 Speaker 1: no reason to believe that that the next ten years 240 00:13:47,440 --> 00:13:51,520 Speaker 1: wouldn't be as good per year with five year dividend growth. 241 00:13:51,600 --> 00:13:54,679 Speaker 1: Charles Cantor, thank you so much, New New Burger Berman 242 00:13:54,720 --> 00:13:56,680 Speaker 1: there we didn't get to Amazon will do that next time. 243 00:13:57,800 --> 00:14:13,280 Speaker 1: A big week of earnings ahead. Let's bring in a guest, yeah, 244 00:14:13,320 --> 00:14:16,240 Speaker 1: with Laurie Calvassin or ILLBC Caunpital Markets, head of US 245 00:14:16,280 --> 00:14:18,600 Speaker 1: equity strategy. Laurie, do you find that that some people 246 00:14:18,600 --> 00:14:23,440 Speaker 1: have struggled to get over Q four even twelve months later? 247 00:14:23,840 --> 00:14:26,600 Speaker 1: I think, especially as we flipped the calendar into four Q, 248 00:14:26,840 --> 00:14:29,760 Speaker 1: those scars, as you mentioned, run pretty deep. Um. One 249 00:14:29,760 --> 00:14:31,720 Speaker 1: thing we noticed if you look back at sort of 250 00:14:31,800 --> 00:14:35,000 Speaker 1: late August early September, we had that weird style rotation 251 00:14:35,040 --> 00:14:37,280 Speaker 1: in the market that felt to a lot of people 252 00:14:37,600 --> 00:14:39,800 Speaker 1: similar to what we had seen late last year when 253 00:14:39,800 --> 00:14:41,760 Speaker 1: people were just starting to take profits on the names 254 00:14:41,760 --> 00:14:44,320 Speaker 1: that had done really well. Now that's all died down, 255 00:14:44,920 --> 00:14:46,600 Speaker 1: but there was a little bit if I wouldn't quite 256 00:14:46,640 --> 00:14:48,400 Speaker 1: call it panic, but there was a high level of 257 00:14:48,440 --> 00:14:50,960 Speaker 1: nervousness when you saw that profit taking trade happen. You 258 00:14:50,960 --> 00:14:53,920 Speaker 1: think the position unwind still has more to go. What 259 00:14:54,160 --> 00:14:56,400 Speaker 1: me through that? So you know, we're we're a little 260 00:14:56,400 --> 00:14:59,000 Speaker 1: bit less focused on the growth value discussion right now. 261 00:14:59,440 --> 00:15:01,360 Speaker 1: But in turn is of looking at sectors. You know, 262 00:15:01,400 --> 00:15:03,520 Speaker 1: one area that we've really been trying to focus people 263 00:15:03,560 --> 00:15:06,200 Speaker 1: has been on industrials, and we're quite simply looking at 264 00:15:06,240 --> 00:15:08,720 Speaker 1: it and saying, we've been fighting the trade war here 265 00:15:08,720 --> 00:15:10,680 Speaker 1: for a year and a half. You're at financial crisis 266 00:15:10,720 --> 00:15:13,000 Speaker 1: lows relative to the S and p um. You know, 267 00:15:13,080 --> 00:15:15,440 Speaker 1: so far earnings have been good. We'll see if that continues. 268 00:15:15,480 --> 00:15:17,440 Speaker 1: But really we feel like five years down the road, 269 00:15:17,480 --> 00:15:19,080 Speaker 1: we're all going to look back at this period in 270 00:15:19,120 --> 00:15:21,000 Speaker 1: time and say we should have been buying the machinery 271 00:15:21,040 --> 00:15:22,640 Speaker 1: stocks in the middle of the trade war. This is 272 00:15:22,640 --> 00:15:25,080 Speaker 1: your big cyclicals called at the moment, right right, And 273 00:15:25,280 --> 00:15:27,520 Speaker 1: I would just stress you know, we have enough nervousness 274 00:15:27,520 --> 00:15:29,920 Speaker 1: of our own. We we don't like where valuations are. 275 00:15:29,920 --> 00:15:32,640 Speaker 1: We have some positioning concerns. We are keeping some overweights 276 00:15:32,680 --> 00:15:35,040 Speaker 1: on defensives things like reads and utilities, but we want 277 00:15:35,040 --> 00:15:37,400 Speaker 1: those to be very balanced with cyclicals that we think 278 00:15:37,400 --> 00:15:39,680 Speaker 1: have been de risked, like financials and industrial. Yes, so 279 00:15:39,720 --> 00:15:41,760 Speaker 1: I'm looking at some of the otherweights in the large 280 00:15:41,760 --> 00:15:43,920 Speaker 1: cap sectors that you like at the moment and struggle 281 00:15:44,000 --> 00:15:48,520 Speaker 1: to reconcile the overwing financials with the position and utilities. 282 00:15:48,560 --> 00:15:51,080 Speaker 1: Those two things walk me through why you've you're strong 283 00:15:51,160 --> 00:15:52,800 Speaker 1: on one, is strong on the other. I think we 284 00:15:52,880 --> 00:15:55,240 Speaker 1: think about them in terms of different time horizons. So 285 00:15:55,280 --> 00:15:57,640 Speaker 1: it feels like utilities and reads are the things that 286 00:15:57,680 --> 00:15:59,840 Speaker 1: we want in our portfolio for say the next six 287 00:15:59,840 --> 00:16:02,400 Speaker 1: to twelve months, you know, and I would emphasize probably 288 00:16:02,400 --> 00:16:04,120 Speaker 1: more of the sixth than the twelve. But when we 289 00:16:04,160 --> 00:16:07,240 Speaker 1: think about things like financials and industrials, that feels more 290 00:16:07,280 --> 00:16:09,520 Speaker 1: like a longer term call where we're really gonna wish 291 00:16:09,520 --> 00:16:12,400 Speaker 1: we have been um when we look back in a year. Fortunately, 292 00:16:12,400 --> 00:16:14,720 Speaker 1: industrials are working right now. We'll see if that last 293 00:16:14,800 --> 00:16:17,960 Speaker 1: I just did October to October percent per year over 294 00:16:17,960 --> 00:16:20,400 Speaker 1: the last four years, fourteen percent per year over the 295 00:16:20,440 --> 00:16:22,800 Speaker 1: last three years, ten percent per year over the last 296 00:16:22,840 --> 00:16:27,400 Speaker 1: two years, ten percent over the last year as well? Forward, 297 00:16:27,880 --> 00:16:31,320 Speaker 1: are you gonna make double digit equity returns with the 298 00:16:31,360 --> 00:16:34,480 Speaker 1: same stocks of that one year, two year, three year, 299 00:16:34,560 --> 00:16:37,080 Speaker 1: four year excellence. I think when we we sort of 300 00:16:37,200 --> 00:16:39,680 Speaker 1: peer into twenty and we start to think about what's 301 00:16:39,680 --> 00:16:41,040 Speaker 1: to come, we feel like you're going to have a 302 00:16:41,080 --> 00:16:43,320 Speaker 1: whole heck of a lot of less multiple expansion than 303 00:16:43,360 --> 00:16:45,200 Speaker 1: what we've had. I mean, we've had just tremendous So 304 00:16:45,240 --> 00:16:47,320 Speaker 1: what does that mean? Because you see how she goes 305 00:16:47,360 --> 00:16:51,400 Speaker 1: partial differentials on a Monday, just like multiple expansion. Is 306 00:16:51,440 --> 00:16:53,720 Speaker 1: it a price movement or is it an earning spool? 307 00:16:53,840 --> 00:16:56,440 Speaker 1: So basically, this year we're going to have flattish earnings growth, 308 00:16:56,440 --> 00:16:58,320 Speaker 1: it looks like. But we've had this tremendous move in 309 00:16:58,360 --> 00:17:00,920 Speaker 1: the equity market. It's been multiplex pansion from the FED. 310 00:17:01,320 --> 00:17:03,000 Speaker 1: Um the next year, we don'k you're going to get 311 00:17:03,040 --> 00:17:04,280 Speaker 1: a lot less of that. We think the FED is 312 00:17:04,320 --> 00:17:06,119 Speaker 1: probably going to be on pause. We're looking for about 313 00:17:06,119 --> 00:17:08,720 Speaker 1: five six percent earnings growth next year, so you know, 314 00:17:08,720 --> 00:17:10,879 Speaker 1: I would say less exciting than where we've been. So 315 00:17:10,880 --> 00:17:13,760 Speaker 1: what's a twenty multiple stock? The price to earnings, price 316 00:17:13,840 --> 00:17:16,560 Speaker 1: to cash flow is to zero? Where is that migrate 317 00:17:16,640 --> 00:17:19,159 Speaker 1: to twelve months out? I think it's going to depend 318 00:17:19,200 --> 00:17:21,239 Speaker 1: sector by sector. You know, I'll tell you some some 319 00:17:21,320 --> 00:17:23,560 Speaker 1: of the areas where I am frankly very worried about 320 00:17:23,560 --> 00:17:25,560 Speaker 1: the multiples or things like software stocks, and a lot 321 00:17:25,560 --> 00:17:28,679 Speaker 1: of those are arguably Microsoft. Well I can't get into 322 00:17:28,720 --> 00:17:31,280 Speaker 1: individual names, but yeah, but come on, some of these 323 00:17:31,280 --> 00:17:33,359 Speaker 1: stocks are moon shots. You're telling me to sell the 324 00:17:33,359 --> 00:17:36,399 Speaker 1: moon shot. Um. I don't ever want to be recommending 325 00:17:36,400 --> 00:17:39,320 Speaker 1: to people that you buy things that are incredibly overvalued, 326 00:17:39,400 --> 00:17:42,359 Speaker 1: incredibly over owned in Hedge fun Land at a time 327 00:17:42,440 --> 00:17:44,919 Speaker 1: when we are starting to see pockets of the market 328 00:17:45,280 --> 00:17:49,000 Speaker 1: factor inside what's under own, what's under owned in hegel 329 00:17:49,400 --> 00:17:51,320 Speaker 1: So when we look at the industrial space, we think 330 00:17:51,320 --> 00:17:53,480 Speaker 1: that one has become a lot less owned. Have you 331 00:17:53,520 --> 00:17:58,040 Speaker 1: ever been to Hedge fund It's a Disney World, isn't it. 332 00:17:58,080 --> 00:17:59,600 Speaker 1: You go down there and it's like a one week 333 00:17:59,680 --> 00:18:02,160 Speaker 1: lacrois as campings of Disney as it is four days 334 00:18:02,520 --> 00:18:04,520 Speaker 1: and you know your daughter plays lacrosse and you go 335 00:18:04,560 --> 00:18:06,320 Speaker 1: to Hedge fund Land. Well, let me give you one 336 00:18:06,359 --> 00:18:08,440 Speaker 1: stat on the industrials. If you look at cell side 337 00:18:08,440 --> 00:18:12,959 Speaker 1: net by ratings, they are right back down to type lows. Now, 338 00:18:12,960 --> 00:18:15,120 Speaker 1: I don't know what three thirteen neaps are gonna look 339 00:18:15,119 --> 00:18:16,679 Speaker 1: like for three Q yet we'll have to see that 340 00:18:17,240 --> 00:18:20,280 Speaker 1: jargon in the last three sentences there, what's that let's 341 00:18:20,320 --> 00:18:23,359 Speaker 1: let's let's let's un what do they say, let's unwrap that? 342 00:18:23,520 --> 00:18:26,640 Speaker 1: Unwrap it on cell side? What if you get cell 343 00:18:26,680 --> 00:18:29,080 Speaker 1: side net by ratings? So just a gauge. So that's 344 00:18:29,119 --> 00:18:31,560 Speaker 1: like the analysts and what they think. It's looking at 345 00:18:31,560 --> 00:18:33,960 Speaker 1: the analysts. It's my favorite way to gauge positioning because 346 00:18:34,080 --> 00:18:36,560 Speaker 1: number one, I think it aggregates what you're seeing from 347 00:18:36,680 --> 00:18:40,040 Speaker 1: cell sider's, hedge funders, mutual fund investors. Everybody's kind of 348 00:18:40,040 --> 00:18:42,359 Speaker 1: baked into that number in terms of what they purely feel. 349 00:18:42,600 --> 00:18:44,720 Speaker 1: But we can also look at that on a daily basis, 350 00:18:44,760 --> 00:18:46,960 Speaker 1: so we get a very very fresh read. You are 351 00:18:47,000 --> 00:18:49,199 Speaker 1: back down to historical lows, which is in line with 352 00:18:49,240 --> 00:18:51,520 Speaker 1: twenty six teen lows. That's about as washed out as 353 00:18:51,520 --> 00:18:54,560 Speaker 1: anything we've seen. Consumer staples, by the way, we're right 354 00:18:54,560 --> 00:18:56,240 Speaker 1: there a year ago. That was one of the reasons 355 00:18:56,280 --> 00:18:58,359 Speaker 1: we liked staples last year. Let's talk about industrials a 356 00:18:58,400 --> 00:18:59,639 Speaker 1: little bit more, because I know you've got to run 357 00:18:59,640 --> 00:19:02,120 Speaker 1: at accoun per minutes. I'm looking at the economic data 358 00:19:02,200 --> 00:19:05,199 Speaker 1: worldwide at the moment. The South Korean export data was terrible. 359 00:19:05,640 --> 00:19:09,080 Speaker 1: The Japanese export data wasn't great either. The economic data 360 00:19:09,520 --> 00:19:12,520 Speaker 1: still without much conviction. I don't think many people can 361 00:19:12,520 --> 00:19:14,639 Speaker 1: make the argument that we've started to bottom out. I 362 00:19:14,720 --> 00:19:16,800 Speaker 1: think that's a low conviction. Cool, So what do you 363 00:19:16,840 --> 00:19:19,000 Speaker 1: see an industrials Apart from the valuation? Why do you 364 00:19:19,000 --> 00:19:21,159 Speaker 1: see stability? Well, the other thing we've noticed, if you 365 00:19:21,160 --> 00:19:22,960 Speaker 1: look at the rate of upward revision. So it's a 366 00:19:22,960 --> 00:19:25,960 Speaker 1: way to gauge sentiment around earnings that's been extremely low. 367 00:19:26,000 --> 00:19:27,639 Speaker 1: It's been one of the sectors where we've seen the 368 00:19:27,640 --> 00:19:31,520 Speaker 1: most downward revisions coming into this reporting season. Areas like technology, 369 00:19:31,520 --> 00:19:35,000 Speaker 1: consumer discretionary. You just haven't seen quite as many. And so, 370 00:19:35,080 --> 00:19:36,960 Speaker 1: you know, the other thing we've been saying about the 371 00:19:36,960 --> 00:19:39,879 Speaker 1: the economy and the broader outlook is if we lose 372 00:19:39,960 --> 00:19:43,320 Speaker 1: this economy. Everyone already knows the manufacturing sector is weak. 373 00:19:43,520 --> 00:19:46,840 Speaker 1: The consumer resiliency thesis is what's at risk. We haven't 374 00:19:46,880 --> 00:19:49,080 Speaker 1: seen the downward revisions there. We don't see the washed 375 00:19:49,080 --> 00:19:51,720 Speaker 1: out valuations there, we don't see the washed out sentiment there. 376 00:19:52,040 --> 00:19:54,560 Speaker 1: So if we see a tipping point as opposed to 377 00:19:54,640 --> 00:19:56,800 Speaker 1: a turning point out of a growth scare, we think 378 00:19:56,840 --> 00:20:00,119 Speaker 1: there's more risk in areas like consumer was per all 379 00:20:00,160 --> 00:20:03,199 Speaker 1: He say, well, Tom is still very bullish on the 380 00:20:03,240 --> 00:20:05,560 Speaker 1: economy for next year. But you know, if you talk 381 00:20:05,640 --> 00:20:07,480 Speaker 1: to him, he will tell you that the risk that 382 00:20:07,520 --> 00:20:10,600 Speaker 1: we talk ourselves into a recession has risen. Um So 383 00:20:10,680 --> 00:20:12,439 Speaker 1: I think he's still in the bullish camp, but he 384 00:20:12,520 --> 00:20:14,760 Speaker 1: has he has tempered that a little bit. Great to 385 00:20:14,800 --> 00:20:17,359 Speaker 1: see you, She used to go. She's got to go. 386 00:20:17,760 --> 00:20:38,680 Speaker 1: We've gotta let it. Govley's out front. This is a joy. 387 00:20:38,840 --> 00:20:43,960 Speaker 1: This is, without question, the quietest guy in New York. 388 00:20:44,160 --> 00:20:46,719 Speaker 1: It is the name you don't know. You know Hurst, 389 00:20:46,800 --> 00:20:49,359 Speaker 1: of course, and all that Frank Bennett has done for 390 00:20:49,400 --> 00:20:54,040 Speaker 1: them in the years. His leadership at New York Presbyterian 391 00:20:54,280 --> 00:20:58,000 Speaker 1: and at Lincoln Center particularly has been absolutely profound. And 392 00:20:58,040 --> 00:21:01,000 Speaker 1: he has put out a book that's based on culture, 393 00:21:01,040 --> 00:21:03,440 Speaker 1: which is something to talk about right now. But I 394 00:21:03,440 --> 00:21:05,320 Speaker 1: have to go because I'm in the room with Paul Sweeney, 395 00:21:05,359 --> 00:21:08,680 Speaker 1: who's expert on media. I gotta go to your your 396 00:21:08,800 --> 00:21:14,240 Speaker 1: harsh negotiating tactics. Here. Lb j'son a Lincoln, bombing down 397 00:21:14,280 --> 00:21:17,960 Speaker 1: the road with one hand, negotiating in a Lincoln out 398 00:21:17,960 --> 00:21:20,280 Speaker 1: in the l b J ranch. Dick, what do you 399 00:21:20,320 --> 00:21:24,439 Speaker 1: think our TV station and Austin is worth? Excuse me, Lyndon, 400 00:21:24,760 --> 00:21:26,680 Speaker 1: I want to take a picture of that bowl over 401 00:21:26,720 --> 00:21:29,720 Speaker 1: there later lb J. Not even want to be tonight. 402 00:21:29,840 --> 00:21:32,520 Speaker 1: Follow up, Dick, do you think in Austin station would 403 00:21:32,520 --> 00:21:35,080 Speaker 1: be worth as much as a Sin and Tonio station 404 00:21:35,160 --> 00:21:37,560 Speaker 1: that recently sold? Is that how business has done in 405 00:21:37,600 --> 00:21:41,200 Speaker 1: the insane media business? Well, business has done in so 406 00:21:41,240 --> 00:21:45,879 Speaker 1: many ways. That's certainly unique. However, and it's my view 407 00:21:46,000 --> 00:21:49,560 Speaker 1: that that President Johnson was not really trying to get 408 00:21:49,640 --> 00:21:52,920 Speaker 1: Dick to buy the station, but he was so opposed 409 00:21:53,000 --> 00:21:56,880 Speaker 1: to taking risks that that would entail that he had 410 00:21:56,920 --> 00:21:59,680 Speaker 1: this little man Ox camera that he would stop every 411 00:21:59,680 --> 00:22:02,720 Speaker 1: time that Johnson would try to nail him and take 412 00:22:02,720 --> 00:22:05,080 Speaker 1: a picture. So yeah, but but but I mean, Paul, 413 00:22:05,160 --> 00:22:07,119 Speaker 1: this goes back and this is the Maze family and 414 00:22:07,119 --> 00:22:10,600 Speaker 1: everybody media to San Antonio Tech. It's all transactional. It's 415 00:22:10,600 --> 00:22:13,520 Speaker 1: all transactional. Back in the day it was big media 416 00:22:13,640 --> 00:22:17,879 Speaker 1: tycoon's big media personalities. And of course Frank executive vice chairman, 417 00:22:18,000 --> 00:22:20,120 Speaker 1: former CEO of Hearst. And what I like about Frank 418 00:22:20,200 --> 00:22:22,360 Speaker 1: and the Hearst company, Tom is it's the biggest media 419 00:22:22,400 --> 00:22:25,760 Speaker 1: company that nobody's ever heard of. Um And they've owned print, 420 00:22:25,840 --> 00:22:28,720 Speaker 1: they've owned broadcasting, they've owned cable TV, including this little 421 00:22:28,760 --> 00:22:33,199 Speaker 1: cable network partial ownership ESPN. Frank, So give us a 422 00:22:33,200 --> 00:22:36,760 Speaker 1: sense of, you know, kind of how Hearst has evolved 423 00:22:36,960 --> 00:22:40,280 Speaker 1: and tried to stay on the forefront of media trends, 424 00:22:40,280 --> 00:22:42,960 Speaker 1: whether it was print to broadcast to cable. How do 425 00:22:43,000 --> 00:22:47,280 Speaker 1: you guys do it well. The generation of management said, 426 00:22:47,320 --> 00:22:52,480 Speaker 1: I represent got handed a wonderful opportunity. The company almost 427 00:22:52,600 --> 00:22:55,040 Speaker 1: Mr Hurst almost lost the company in the Great Depression. 428 00:22:55,960 --> 00:22:58,879 Speaker 1: Everybody knows it was an afternoon a newspaper company. When 429 00:22:59,160 --> 00:23:01,680 Speaker 1: I came to New York, we had three television stations. 430 00:23:02,280 --> 00:23:04,959 Speaker 1: And when I got the opportunity to run the company 431 00:23:05,040 --> 00:23:08,320 Speaker 1: beginning in nineteen seventy nine, I knew that the pivot 432 00:23:08,560 --> 00:23:11,680 Speaker 1: had to be made and that electronic was the place 433 00:23:11,760 --> 00:23:16,480 Speaker 1: to go. Initially, and incidentally and parenthetically, my successors will 434 00:23:16,520 --> 00:23:19,240 Speaker 1: be making yet another pivot because of course the world 435 00:23:19,320 --> 00:23:21,520 Speaker 1: is changing. What's the pivots too? Right now? And the 436 00:23:21,640 --> 00:23:25,720 Speaker 1: kids won't run a watch one advertising. In our case, 437 00:23:25,880 --> 00:23:30,679 Speaker 1: the pivot is to business media UH databases that people 438 00:23:30,800 --> 00:23:34,760 Speaker 1: use every day. For example, we acquired the Fitch Radio Agency, 439 00:23:34,840 --> 00:23:37,480 Speaker 1: which is one of the three largest radiators in the world. 440 00:23:38,080 --> 00:23:42,960 Speaker 1: We have databases for both the medical profession and for automobiles. 441 00:23:42,960 --> 00:23:46,800 Speaker 1: For example, if you have an auto wreck, God forbid, 442 00:23:47,119 --> 00:23:49,480 Speaker 1: when you go into the shop, the data that's used, 443 00:23:49,560 --> 00:23:51,919 Speaker 1: both parts, costs and where to get it, and the 444 00:23:51,960 --> 00:23:54,720 Speaker 1: amount of labor all come out of a database that 445 00:23:54,840 --> 00:23:57,600 Speaker 1: we offer. What do you think of all the young Turks. 446 00:23:57,640 --> 00:23:59,520 Speaker 1: I mean, you guys used to run things on price 447 00:23:59,600 --> 00:24:02,960 Speaker 1: to care slow in like actual accounting, and you try 448 00:24:03,040 --> 00:24:05,399 Speaker 1: to figure out down the income statement, there would be 449 00:24:05,440 --> 00:24:09,199 Speaker 1: the strange thing called profit. What do you think of 450 00:24:09,240 --> 00:24:14,280 Speaker 1: these guys with the revenue growth hopefully but no profit. Well, 451 00:24:14,640 --> 00:24:18,400 Speaker 1: some of them seems seem to have brought along, uh, 452 00:24:18,520 --> 00:24:23,280 Speaker 1: their their investment base, their shareholders. Uh. Certainly in the 453 00:24:23,320 --> 00:24:26,680 Speaker 1: case of Amazon, you have to say, what a phenomenal 454 00:24:26,760 --> 00:24:30,800 Speaker 1: job he's done in his shareholders staying with him during 455 00:24:30,800 --> 00:24:34,919 Speaker 1: a time where he wasn't returning a profit. Now of 456 00:24:34,960 --> 00:24:39,160 Speaker 1: course he's returning a profit. I think the system that 457 00:24:39,200 --> 00:24:43,640 Speaker 1: we have with public companies were earnings per share rather 458 00:24:43,680 --> 00:24:47,959 Speaker 1: than cash flow or most looked at. I think they 459 00:24:48,480 --> 00:24:51,560 Speaker 1: lend to that kind of an approach to business. And 460 00:24:52,480 --> 00:24:55,040 Speaker 1: I happen to think, how much is going to fall 461 00:24:55,040 --> 00:24:58,120 Speaker 1: out if you show should turn us upside down? I'm 462 00:24:58,240 --> 00:25:00,600 Speaker 1: We're going to fall out of our pocket. Is what 463 00:25:01,600 --> 00:25:05,040 Speaker 1: business is about. And so therefore there's no one that 464 00:25:05,119 --> 00:25:08,000 Speaker 1: puts a heavier emphasis on cash than we do. So 465 00:25:08,080 --> 00:25:10,000 Speaker 1: Frank and your career, you've seen, you know, the media 466 00:25:10,080 --> 00:25:13,920 Speaker 1: landscape transition from print to electronic. As you mentioned radio 467 00:25:14,000 --> 00:25:17,040 Speaker 1: TV broadcasting to cable television. Now we got this new 468 00:25:17,040 --> 00:25:19,520 Speaker 1: thing called the Internet and that seems to really be 469 00:25:20,320 --> 00:25:22,960 Speaker 1: changing the way people consume media and therefore the way 470 00:25:23,080 --> 00:25:25,760 Speaker 1: big media companies need to distribute their media. What do 471 00:25:25,800 --> 00:25:27,960 Speaker 1: I need to own? And we've seen your good friends 472 00:25:27,960 --> 00:25:31,479 Speaker 1: at the Walt Disney Company really change and pivot that company, 473 00:25:31,480 --> 00:25:34,240 Speaker 1: for example, to appeal to the new consumer and how 474 00:25:34,600 --> 00:25:38,240 Speaker 1: media is consumed. What's the Hirst Corporation thinking about streaming 475 00:25:38,320 --> 00:25:43,240 Speaker 1: and kind of embracing the Internet distributing their content. Happily, 476 00:25:43,400 --> 00:25:46,880 Speaker 1: we're part of that as it relates to our ownership 477 00:25:46,960 --> 00:25:50,360 Speaker 1: and ESPN right is one of the places that Disney 478 00:25:50,560 --> 00:25:54,359 Speaker 1: is making that pivot. But we're also independently and with 479 00:25:54,440 --> 00:25:58,480 Speaker 1: other other parts of our business putting a significant emphasis 480 00:25:58,600 --> 00:26:02,440 Speaker 1: on the web and on the Internet. And it's as 481 00:26:02,560 --> 00:26:05,119 Speaker 1: certain that we need to do that as it was 482 00:26:05,160 --> 00:26:08,400 Speaker 1: when we needed to go electronic. I want to talk 483 00:26:08,440 --> 00:26:10,439 Speaker 1: about the book. The book has leaves something on the 484 00:26:10,480 --> 00:26:13,320 Speaker 1: table and it is a wonderful history out of Texas 485 00:26:13,359 --> 00:26:17,480 Speaker 1: of Frank Bennick. I want to talk about culture right now. 486 00:26:17,520 --> 00:26:20,440 Speaker 1: You lead with culture is everything. How do you make 487 00:26:20,560 --> 00:26:23,679 Speaker 1: a culture in a rushed modern world. Well, it's all 488 00:26:23,720 --> 00:26:26,040 Speaker 1: about the respect that you have for the people who 489 00:26:26,080 --> 00:26:27,919 Speaker 1: work with you. That's how can you do that If 490 00:26:27,960 --> 00:26:30,879 Speaker 1: they're working eight hours a week, well we don't have 491 00:26:30,920 --> 00:26:34,720 Speaker 1: them working anybodus in it. That doesn't work for us. Uh. 492 00:26:34,840 --> 00:26:39,159 Speaker 1: We recognize that people are entitled to have lives at 493 00:26:39,200 --> 00:26:42,639 Speaker 1: their own and if management wants respect, it has to 494 00:26:42,680 --> 00:26:46,960 Speaker 1: show respect to the employees. So the first principle is 495 00:26:47,000 --> 00:26:50,880 Speaker 1: the company's larger than the employee. Let's build a culture 496 00:26:50,960 --> 00:26:54,960 Speaker 1: where everybody is inclined to be on the same page. Now, 497 00:26:54,960 --> 00:26:58,520 Speaker 1: there's no perfection, but I would argue that our culture 498 00:26:59,240 --> 00:27:02,320 Speaker 1: is by far the biggest item of the success of 499 00:27:02,359 --> 00:27:04,959 Speaker 1: the company. It's come from four hundred million to eleven 500 00:27:05,000 --> 00:27:09,480 Speaker 1: billion dollars over on my watch. And I think that 501 00:27:09,480 --> 00:27:13,000 Speaker 1: that the relationship and culture is at the heart of that. 502 00:27:13,160 --> 00:27:16,840 Speaker 1: I mean, you got pretty good blurbs for your book, 503 00:27:15,640 --> 00:27:19,960 Speaker 1: and think leaves something on the table only because of 504 00:27:20,000 --> 00:27:23,639 Speaker 1: this blurb He's coming back Frank Bennock's about decades running 505 00:27:23,640 --> 00:27:26,359 Speaker 1: a company at the center of American culture. Boy, is 506 00:27:26,400 --> 00:27:29,600 Speaker 1: that true? Leaves something on the table offers valuable lessons 507 00:27:29,920 --> 00:27:33,280 Speaker 1: and leadership by a great CEO and an even better storyteller. 508 00:27:33,680 --> 00:27:38,040 Speaker 1: That's true too, Michael Bloomberg Bloomberg of course, Mr Bloomberg, 509 00:27:38,640 --> 00:27:41,840 Speaker 1: principal owner of Bloomberg Radio and Bloomberg Television. We're gonna 510 00:27:41,880 --> 00:27:43,359 Speaker 1: leave it there, Frank Benneck, thank you so much to 511 00:27:43,400 --> 00:27:45,200 Speaker 1: leave something on the table. I really can't say enough 512 00:27:45,240 --> 00:27:48,040 Speaker 1: about it. From a childhood in Texas and driving down 513 00:27:48,080 --> 00:27:50,840 Speaker 1: country roads with lb J that with one hand on 514 00:27:50,880 --> 00:27:54,359 Speaker 1: the wheel, to dealing with the American Broadcasting Company and 515 00:27:54,440 --> 00:27:58,600 Speaker 1: his immense philanthropy in New York City, including tangible leadership 516 00:27:59,000 --> 00:28:03,680 Speaker 1: at Lincoln Center. Thanks for listening to the Bloomberg Surveillance podcast. 517 00:28:04,040 --> 00:28:09,000 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 518 00:28:09,119 --> 00:28:13,440 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 519 00:28:13,560 --> 00:28:17,440 Speaker 1: Keene before the podcast. You can always catch us worldwide. 520 00:28:17,880 --> 00:28:18,960 Speaker 1: I'm Bloomberg Radio.