WEBVTT - 100-Year Bonds Could Alter How Rate Risk Is Traded 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor, find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.960 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:22.959 at Bloomberg dot com. Every six months or so, the 0:00:23.079 --> 0:00:25.840 debate about whether the U s should sell fifty two 0:00:25.840 --> 0:00:29.200 a hundred year bonds emerges, and once again we have 0:00:29.360 --> 0:00:33.519 that battle raging, Treasury Secretary Steve Manuchin weighing in and 0:00:33.520 --> 0:00:37.040 saying that it seemed really like a logical thing to 0:00:37.080 --> 0:00:40.120 do for the US to sell ultralong dated bonds in 0:00:40.159 --> 0:00:42.760 the face of just how low interest rates have gone, 0:00:42.800 --> 0:00:45.400 and his advisers are looking into it and are expected 0:00:45.400 --> 0:00:48.720 to recommend against it. But Paul, it really raises this question, 0:00:49.040 --> 0:00:52.159 you know, again and again, what is the hold up? 0:00:52.280 --> 0:00:55.480 If the borrowing costs are so low, and if the 0:00:55.480 --> 0:00:57.800 hold up is that compelling, why do we have this 0:00:57.880 --> 0:01:00.720 debate every six months? Joining us at a discussed Marcus 0:01:00.760 --> 0:01:03.520 Ashworth columnists covering European markets, as well as bond markets 0:01:03.560 --> 0:01:07.800 globally for Bloomberg opinion joining us from London. So Marcus, 0:01:08.040 --> 0:01:11.679 let's just start with why did Treasury Secretary Stephen mcnuchin 0:01:12.040 --> 0:01:15.160 revive this debate that seems to sort of bubble up 0:01:15.240 --> 0:01:18.319 every six months or so because he was told to 0:01:20.720 --> 0:01:23.840 behind you, behind you, behind the curtain. Who knows? Um. 0:01:24.000 --> 0:01:27.080 The great thing is is that the Treasury Borrowing Advisory 0:01:27.080 --> 0:01:30.120 Committee the key word they're being advisory m keeps on 0:01:30.200 --> 0:01:32.679 trying to push this back because look, and I've been 0:01:32.720 --> 0:01:36.080 a years Treasury pod dealer, and it's difficult enough trying 0:01:36.080 --> 0:01:38.039 to trade thirty years. Can you imagine trying to trade 0:01:38.560 --> 0:01:41.200 hundred years or even stripped hundred years. All of a 0:01:41.200 --> 0:01:44.039 sudden someone comes along lets you out of five hundred million, 0:01:44.200 --> 0:01:46.080 you have no hope of getting them back, and cleep 0:01:46.120 --> 0:01:49.480 paying five points higher. It's a disaster to try and 0:01:49.520 --> 0:01:52.320 manage this type of risk from a dealer market maker 0:01:52.360 --> 0:01:54.880 put point of view. They know also that of a 0:01:55.280 --> 0:01:57.760 client buys this stuff, they're gonna look it away not 0:01:57.840 --> 0:02:01.360 come back for what hundred years, So you know it 0:02:01.480 --> 0:02:05.680 kills liquidity, it kills their sense of controlling risk. It can, 0:02:05.760 --> 0:02:08.000 of course created a whole bunch of other stuff. I mean, look, 0:02:08.280 --> 0:02:10.000 to make this sort of sector work, you'd have to 0:02:10.000 --> 0:02:13.440 have hundred your futures, uh and options and all after 0:02:13.480 --> 0:02:16.440 other stuff. It could be great, It could really stretch 0:02:16.520 --> 0:02:20.359 the way that the people trade risk and trade duration convexity, 0:02:20.560 --> 0:02:22.160 and it could do all sorts of things. But the U. S. 0:02:22.200 --> 0:02:24.560 Treasury has to be committed to it for a longer 0:02:24.680 --> 0:02:28.079 term clear plan. This trouble is that Trump could be 0:02:28.080 --> 0:02:30.680 out of office in little every years time and then 0:02:30.800 --> 0:02:34.040 new treasure secretary could do the opposite. So that's what 0:02:34.240 --> 0:02:36.840 scares people, because you know, once you go down this route, 0:02:36.840 --> 0:02:38.360 you've got to stay committed to it and there has 0:02:38.400 --> 0:02:40.400 to be a rational reason for it. Now they can 0:02:40.400 --> 0:02:42.440 be wrong. Yield are incredibly low. It makes sense for 0:02:42.480 --> 0:02:44.760 as far as the government's concerned. But you have to 0:02:44.800 --> 0:02:48.360 have your client base and pensions funds with you. And 0:02:48.520 --> 0:02:50.200 though they may be in Europe and sent in the 0:02:50.280 --> 0:02:53.400 UK because of actual eril and different reasons, there's less 0:02:53.520 --> 0:02:57.200 demand and requirement in the US because you already have 0:02:57.280 --> 0:02:59.440 strip thirty years, which give you a duration of final 0:02:59.680 --> 0:03:02.639 exactly thirty years. Its coomed to a fifty year regular bond, 0:03:02.720 --> 0:03:05.720 so there's less real need for it. But still this 0:03:05.919 --> 0:03:09.359 is a government intent on doing different things. So Marcus, 0:03:09.440 --> 0:03:12.600 are there other developed markets that have longer dated bonds 0:03:13.400 --> 0:03:17.560 years and can we take anything away from those? Sure? Okay, 0:03:17.600 --> 0:03:21.440 Look so in Europe, Germany doesn't go over thirty years. Um, 0:03:21.680 --> 0:03:25.160 we were starting to see other countries around it go there. 0:03:25.200 --> 0:03:28.400 So we know austri has done a one hundred year bond, uh, 0:03:28.639 --> 0:03:31.880 Italy has done a fifty year bond, tapped it again, um, 0:03:32.040 --> 0:03:34.800 France has done fifty years. UK goes out as far 0:03:34.880 --> 0:03:38.240 as as fifty years, Sweden's about to look at possibly 0:03:38.240 --> 0:03:41.600 doing a hundred years, Ireland in Belgium just a private 0:03:41.640 --> 0:03:44.600 places the last couple of years in one hundred years. 0:03:44.640 --> 0:03:47.240 But they're so like one offs, so they really and 0:03:47.400 --> 0:03:50.160 you can look at maybe Italy toward certain degree, UK 0:03:50.360 --> 0:03:53.800 definitely and possibly France of having any form of liquidity 0:03:54.440 --> 0:03:57.120 further out. But it's becoming more and more popular because 0:03:57.400 --> 0:04:00.560 there is a huge, huge hunt for yield in your 0:04:00.840 --> 0:04:03.120 much more extreme than you see in your in the US. 0:04:03.160 --> 0:04:06.360 And then you're on it's definitely there. But but Marcus, 0:04:06.440 --> 0:04:09.000 I mean, how much is the obstacle for the US, 0:04:09.040 --> 0:04:12.280 the fact that US rates are such an important benchmark, 0:04:12.720 --> 0:04:15.280 and that you know, a shift in the whole curve 0:04:15.720 --> 0:04:19.600 creates a much more challenging situation than say in some 0:04:19.680 --> 0:04:22.760 of these nations in Europe that where there's more of 0:04:22.800 --> 0:04:26.120 a composite type rate that is sort of the benchmark 0:04:26.200 --> 0:04:27.919 for a lot of other debt. In other words, it 0:04:27.960 --> 0:04:30.760 won't matter as much to the whole structure of of 0:04:30.800 --> 0:04:33.640 a huge debt market if they issue longer dated debt 0:04:33.680 --> 0:04:36.560 as it would in the US. Lisa, you've clearly been 0:04:36.600 --> 0:04:39.920 doing bonds and fixes quite a while. Spots on exactly right, 0:04:39.960 --> 0:04:41.799 and that is that is the number of the argument. 0:04:41.839 --> 0:04:44.080 I couldn't put it better. You know, look it does 0:04:44.200 --> 0:04:45.840 he cares if Ireland does it all think good for 0:04:45.920 --> 0:04:49.000 them Austria. Likewise, that the reason why Germany hasn't done it. 0:04:49.080 --> 0:04:51.960 Perhaps in Europe they don't really need the money and 0:04:52.160 --> 0:04:55.120 that all and not have the potential sort of liquidity 0:04:55.120 --> 0:04:56.960 out there. And this is that this is exactly the point. 0:04:57.440 --> 0:04:59.720 If you go out to a hundred years, you've got 0:04:59.720 --> 0:05:03.280 to be convinced it's it's it's a worthwhile thing. There 0:05:03.360 --> 0:05:05.680 is huge demand for it, and it's gonna be sudden, 0:05:05.720 --> 0:05:07.440 it's hangs around, and you're gonna be able to issue 0:05:07.480 --> 0:05:10.400 them courtly, you know, for decent amounts of money, and 0:05:10.440 --> 0:05:12.360 you're gonna be able to create a features market and 0:05:12.400 --> 0:05:15.839 blah blah blah. You are the world's interest rate benstion mark. 0:05:16.520 --> 0:05:18.320 Do you mess with that? At your peril? You have 0:05:18.400 --> 0:05:23.839 a fantastic thirty liquid um bond which has strips off it, 0:05:23.880 --> 0:05:26.920 which has tips off it, It's everything works perfectly. Why 0:05:27.000 --> 0:05:31.120 mess for something which is perfection in liquidity terms? And 0:05:31.120 --> 0:05:33.479 and you know for what benefit? Yeah? Okay, I get 0:05:33.480 --> 0:05:35.400 the point that it's looking at very low rates for 0:05:35.400 --> 0:05:38.880 a long, very long while. But you know, thirty years 0:05:38.880 --> 0:05:41.640 not enough here, alright. So my my, my takeaway, Lisa's 0:05:41.680 --> 0:05:45.960 Marcus is not a big fan of Nike, unlikely want 0:05:45.960 --> 0:05:47.560 to trade it. I will never want to be you know. 0:05:47.800 --> 0:05:49.839 Please make me make me a market a hundred million 0:05:51.000 --> 0:05:53.440 Marcus Ashur, thank you so much for joining us. Marcus 0:05:53.520 --> 0:05:57.080 is the Calamus covering European markets for Bloomberg Opinion from London. 0:05:57.120 --> 0:05:58.920 You can read more on this and other stories from 0:05:58.920 --> 0:06:03.560 Bloomberg Opinion at Bloomberg dot com, slash Opinion and on 0:06:03.600 --> 0:06:21.400 the terminotorl by typing O P I n go. Well, 0:06:21.440 --> 0:06:25.040 as investors come back next week from the long holiday weekend, 0:06:25.040 --> 0:06:27.279 they're gonna take a look at their portfolios and they're 0:06:27.279 --> 0:06:30.040 gonna say, hey, we're ten plus years into this economic cycle. 0:06:30.480 --> 0:06:33.240 Trade uncertainty is out there weighing on my portfolio. But 0:06:33.279 --> 0:06:36.040 I've got a dubbish fed What should I do? Uh? 0:06:36.080 --> 0:06:37.880 Maybe to get some answers, we welcome our next guest, 0:06:37.920 --> 0:06:41.239 Deepak Puri, chief investment Officer for the Americas for Deutsche 0:06:41.240 --> 0:06:43.600 Bank Wealth Management, joins us here in O Bloomberg Interacted 0:06:43.640 --> 0:06:47.159 Broker Studio. Deepak, thanks so much for joining us. So again, 0:06:47.240 --> 0:06:49.240 we kind of look at the SMP and it's kind 0:06:49.279 --> 0:06:50.960 of flat over the last twelve months. We've had a 0:06:50.960 --> 0:06:53.200 great rally this year, but again if you look at 0:06:53.200 --> 0:06:55.919 it over the trailing twelve months, kind of flat. What 0:06:56.000 --> 0:07:00.320 are you telling the Deutsche Bank Wealth investors how should 0:07:00.320 --> 0:07:04.000 be position a portfolio right now? Great? Thank you, Paul. 0:07:04.400 --> 0:07:06.560 I think a couple of things. A what we have 0:07:06.640 --> 0:07:09.280 seen over the last one year, especially year to date 0:07:09.800 --> 0:07:12.880 is primarily driven by what we would call a PE expansion. 0:07:13.040 --> 0:07:15.840 You know, it's not really driven by corporate earnings going up, 0:07:16.760 --> 0:07:19.800 so keep that in mind as you've positioned yourself for 0:07:19.840 --> 0:07:23.480 the next few quarters. Um. Having said that, I think 0:07:23.520 --> 0:07:25.760 there's certain things for the next couple of months that 0:07:25.840 --> 0:07:28.080 makes us take a little bit of a cautious stance. 0:07:28.560 --> 0:07:30.760 You know, you look at the trade war that's going on. 0:07:30.840 --> 0:07:33.760 Even though there was an olive branch yesterday from the Chinese, 0:07:34.160 --> 0:07:37.960 we feel this is a you know, protracted sort of 0:07:38.400 --> 0:07:41.000 give and take one step forward, two steps back kind 0:07:41.000 --> 0:07:44.320 of situation, and we really don't expect a comprehensive trade 0:07:44.360 --> 0:07:47.920 deal anytime soon. On top of that, the next couple 0:07:47.960 --> 0:07:49.960 of quarters, the third quarter is going to be by 0:07:50.040 --> 0:07:53.120 far the worst quarter for this calendar year, for the 0:07:53.120 --> 0:07:56.320 earning season, and then the fourth quarter could be the 0:07:56.600 --> 0:07:59.600 low watermark for the g d P. So the next 0:07:59.600 --> 0:08:02.400 couple of course, are definitely something to keep an eye on. 0:08:03.000 --> 0:08:06.000 Having said that, I think a longer term, uh, you know, 0:08:06.080 --> 0:08:09.320 things look much better for equities, especially we haven't seen 0:08:09.480 --> 0:08:11.440 a top. You know, when you look at how the 0:08:11.440 --> 0:08:14.360 equity markets end, they usually end up with the bank. 0:08:14.840 --> 0:08:16.920 You know, last twelve months, as you just pointed out, 0:08:17.080 --> 0:08:20.760 has been relatively flattished. So this is not really a 0:08:20.960 --> 0:08:24.120 very top heavy kind of an equity market. We still 0:08:24.120 --> 0:08:27.400 see legs in this markets are twelve month forecast remains 0:08:27.520 --> 0:08:30.240 around three thousand, but that is primarily drivened by a 0:08:30.240 --> 0:08:33.160 little bit better earnings than a pe expansion that we 0:08:33.280 --> 0:08:37.920 have seen them more recently. One counterpoint is that a 0:08:37.960 --> 0:08:41.199 lot of the bearishness that you talk about has been 0:08:41.200 --> 0:08:44.640 baked into valuations currently, and we've seen a sell off 0:08:44.679 --> 0:08:48.160 that really has stemmed from the recognition of some of 0:08:48.200 --> 0:08:51.120 those pesstomistic kind of developments that you were talking about. 0:08:51.520 --> 0:08:54.280 Bank of America came out this morning and recommends buying 0:08:54.320 --> 0:08:56.679 stocks right now because they say that the bearishness has 0:08:56.720 --> 0:08:59.800 gotten so extreme that it makes sense. What do you 0:09:00.040 --> 0:09:03.320 day to that. I wouldn't say that the bearishness is 0:09:03.360 --> 0:09:05.920 to an extreme. I think there's you know, and you 0:09:06.080 --> 0:09:08.920 have to take into account what the other asset classes 0:09:08.920 --> 0:09:11.480 are telling your signaling. So I think the bearishness is 0:09:11.480 --> 0:09:13.680 really at an extreme. When you look at the fixed 0:09:13.720 --> 0:09:17.240 income markets, you know, they are really highlighting a really 0:09:17.600 --> 0:09:21.760 pessimistic scenario for the for inflation, for growth, and so forth. 0:09:22.080 --> 0:09:24.720 On the equity market side, you know, currently you're trading 0:09:24.760 --> 0:09:28.240 at seventeen eighteen times multiple, which is to my mind, 0:09:28.720 --> 0:09:30.880 is pretty much where it should be. Um. You know, 0:09:30.880 --> 0:09:34.280 when you look at how to assign a PE multiple 0:09:34.360 --> 0:09:36.679 on markets, you have to look at both what I 0:09:36.720 --> 0:09:40.160 would call structural forces at play and then the technical trend. 0:09:40.440 --> 0:09:42.840 The cyclical trend is what we call earning s curve. 0:09:43.080 --> 0:09:45.200 You know, there's a lot of talk about yield curves 0:09:45.400 --> 0:09:47.800 and yield curve inversion, but I see a lot less 0:09:47.840 --> 0:09:51.560 focus on earning s curve, which is simply put next 0:09:51.559 --> 0:09:54.920 twelve month earning, subtracting the trailing twelve months earning, and 0:09:54.960 --> 0:09:57.760 what's the trajectory for that earning scurve? And that still 0:09:57.920 --> 0:10:00.560 is positive. So that's a I think to extent a 0:10:00.640 --> 0:10:03.960 positive take on the PE. On the other side, when 0:10:03.960 --> 0:10:07.360 you look at the more structural forces at work, that 0:10:07.480 --> 0:10:10.920 could be a little bit of a downside. UM. So 0:10:11.120 --> 0:10:13.760 that is, you know, you're looking at inflation, prognosis and 0:10:13.800 --> 0:10:17.440 so forth. So overall, that seventeen and a half multiple 0:10:17.520 --> 0:10:21.240 seems reasonably fair to us, and that's what we're saying 0:10:21.280 --> 0:10:24.920 that for the next round months it stays where it's at. UM. 0:10:24.960 --> 0:10:27.800 I would be recommending a little bit of an underweight 0:10:27.840 --> 0:10:30.720 position to your neutral at this stage, given the next 0:10:30.960 --> 0:10:33.400 couple of quarters could be a little bit shaky, as 0:10:33.400 --> 0:10:36.439 I said earlier. So you know, if you have a 0:10:37.440 --> 0:10:40.600 fifty percent neutral allocation to equity, maybe this is the 0:10:40.679 --> 0:10:43.240 time you take some profits of the table markets are 0:10:43.320 --> 0:10:47.720 up fifteen sixt and reallocate or keep some extra money 0:10:48.080 --> 0:10:52.640 in cash. So in your scenario, in your outlook for 0:10:52.760 --> 0:10:55.160 the markets, how aggressive do you think the Fed is 0:10:55.200 --> 0:10:57.480 going to be and how aggressive do you think they 0:10:57.520 --> 0:11:00.480 need to be to kind of support your outlook. So 0:11:00.520 --> 0:11:02.440 I think there is a little bit of a disconnect 0:11:02.480 --> 0:11:04.960 in terms of what the FED futures market is saying 0:11:05.120 --> 0:11:07.600 and what the reality is. You know, you look at 0:11:07.600 --> 0:11:11.400 the numbers, especially from the consumers coming in yesterday today. 0:11:11.840 --> 0:11:14.880 You know, yesterday's the revision on the GDP side. You know, 0:11:14.920 --> 0:11:17.680 you see the consumer spending number at four point seven 0:11:18.000 --> 0:11:21.480 multi year high. This morning we saw the core pc 0:11:21.640 --> 0:11:24.480 E number, you know, inching a little bit upwards. I 0:11:24.520 --> 0:11:29.559 think the FED has has to act given the Jackson 0:11:29.559 --> 0:11:32.560 Old speech and also the preemptive insurance rate cut that 0:11:32.600 --> 0:11:36.319 they started the July meeting with UM so they probably 0:11:36.320 --> 0:11:39.960 go for a cut here in September meeting. But after that, 0:11:40.040 --> 0:11:42.840 I think the incoming data dictates and um, you know, 0:11:42.880 --> 0:11:45.200 our viewers to rate cuts for the next twelve months, 0:11:45.240 --> 0:11:47.800 which is a little bit uh, you know, not as 0:11:47.800 --> 0:11:51.280 aggressive at what the STEAD is expecting. And primarily our 0:11:51.440 --> 0:11:54.920 take is dependent on the fact that we see consuming 0:11:54.960 --> 0:11:58.040 a much better health than what the FED is looking at. 0:11:58.080 --> 0:12:00.960 I think the FED is very myopically looking at and 0:12:01.120 --> 0:12:05.280 it's maybe not asthmiopic, but they're really concerned about the 0:12:05.320 --> 0:12:08.440 overseas market. You know, what's the other central banks doing 0:12:08.800 --> 0:12:12.520 the manufacturing slump in the global economy, and that's creating 0:12:12.559 --> 0:12:15.040 some level of anxiety. On top of that the trade 0:12:15.360 --> 0:12:19.000 war that has the potential of really you know, having 0:12:19.040 --> 0:12:21.880 a second, a third derivative effect that no one really 0:12:21.920 --> 0:12:24.720 has the policy measures to counteract. So I think that's 0:12:24.840 --> 0:12:27.040 really where the FED comes into play. But we still 0:12:27.080 --> 0:12:29.840 think of this as a sort of an insurance policy 0:12:29.880 --> 0:12:32.600 cut phase. So two to three rate cuts or all 0:12:32.720 --> 0:12:37.040 similar to and not really start off an easing cycle, 0:12:37.120 --> 0:12:39.679 which would be two thousand, two thousand two or two 0:12:39.720 --> 0:12:43.080 thousand eight. Deepa poor thank you so much for being 0:12:43.080 --> 0:12:45.760 with us. Debak Pouri is chief investment officer for the 0:12:45.760 --> 0:12:48.360 America's at Deutsche Bank Wealth Management joining us here in 0:12:48.360 --> 0:12:52.360 our Bloomberg Inactive broker studios, talking about a bit of 0:12:52.440 --> 0:12:55.640 cautiousness heading into the next few months. Right now, we're 0:12:55.640 --> 0:12:58.400 seeing a bit of cautiousness clawing back some of the 0:12:58.440 --> 0:13:01.679 earlier games that we saw in the US equities nazdac 0:13:01.760 --> 0:13:04.960 up now just four basis points, so almost flat on 0:13:05.000 --> 0:13:07.800 the day after starting solidly in the green. We are 0:13:07.840 --> 0:13:11.200 seeing bond yields coming off their earlier highs as well. 0:13:11.240 --> 0:13:13.880 It seems like people are getting a little more skeptical 0:13:14.040 --> 0:13:32.640 ahead of trade talks this weekend. Art investing should it 0:13:32.720 --> 0:13:35.760 be a part of your portfolio? Our next guest thinks 0:13:35.760 --> 0:13:38.319 maybe it should be. Dr Carvey Manus. He is an 0:13:38.400 --> 0:13:41.960 art collector, board member of the namesake and the namesake 0:13:42.000 --> 0:13:44.400 of the Manace Art and Education Center at the Nassau 0:13:44.440 --> 0:13:47.480 County Museum of Art. Dr Manis, thanks so much for 0:13:47.600 --> 0:13:51.560 joining us here in a Bloomberg Interactive broker studio. So again, 0:13:52.080 --> 0:13:53.520 we've heard about it from time, like when I think 0:13:53.520 --> 0:13:55.280 about investing in art, I think about these big hedge 0:13:55.320 --> 0:13:57.760 fund managers going out and spending you know, gazillions of 0:13:57.800 --> 0:13:59.920 dollars on art. Do you think it should be part 0:14:00.080 --> 0:14:04.640 of maybe the average investors portfolio. Well, thank you for 0:14:04.640 --> 0:14:07.600 inviting me, and uh, I think it's a good a 0:14:07.600 --> 0:14:09.880 good investment. As a matter of fact, that the Wall 0:14:09.880 --> 0:14:13.600 Street Journal came out a couple of months ago stating 0:14:13.640 --> 0:14:16.319 that art was the best investment for two thousand eighteen. 0:14:17.040 --> 0:14:20.120 Art work was up uh ten point six percent while 0:14:20.160 --> 0:14:24.240 the SMP was down five And through the years, art 0:14:24.280 --> 0:14:27.000 has been quite a good investment. I've been collecting for 0:14:27.240 --> 0:14:30.880 over forty years and I've I've purchased pieces that were 0:14:31.280 --> 0:14:34.680 let's say one thousand, five thousand, ten thousand, and they've 0:14:34.760 --> 0:14:40.160 increased twenty and thirtyfold. And during uh good times, people 0:14:40.160 --> 0:14:43.040 have money and they can they can buy art. And 0:14:43.040 --> 0:14:45.760 and if you look at the graph of prices of art, 0:14:46.000 --> 0:14:49.080 it continues to rise. Very rarely does it go down. 0:14:49.160 --> 0:14:51.560 All right, let's let's start with how you got into 0:14:51.560 --> 0:14:55.160 this in the first place. You're an orthopedic surgeon by day, 0:14:56.360 --> 0:14:59.440 investor by night, and then perhaps if you have a 0:14:59.480 --> 0:15:03.000 few then your back at your carpentry roots. So how 0:15:03.000 --> 0:15:05.680 did you get into this sort of art in casting world? Well, 0:15:05.760 --> 0:15:08.480 I always love art. As a as a child, I 0:15:08.480 --> 0:15:11.600 would my father would take me to the Brooklyn Museum. 0:15:11.640 --> 0:15:13.520 And uh, I I lived in a kind of a 0:15:13.600 --> 0:15:17.840 rough area, a rough neighborhood. It was Crown Heights, and uh, 0:15:17.880 --> 0:15:20.960 and my friends were not interested in museums. Nobody around 0:15:21.000 --> 0:15:23.720 they was interested in museums except when my father would 0:15:23.760 --> 0:15:26.800 take me. I loved looking around at the old Masters 0:15:26.840 --> 0:15:29.640 and the Impressionists and and and the different paintings. I 0:15:29.680 --> 0:15:32.640 just loved art. And when I went to college, I 0:15:33.120 --> 0:15:35.720 was a pre med major, but I actually majored in 0:15:35.840 --> 0:15:39.360 art history. So I took a lot of art history classes. Uh. 0:15:39.480 --> 0:15:42.600 Then when I finished medical school and I was able 0:15:42.640 --> 0:15:47.720 to save a few shekels, I started buying art. So 0:15:47.840 --> 0:15:53.720 how would you suggest that someone gets started in the 0:15:53.880 --> 0:15:58.160 art business and the kind of art investing in art? Okay, 0:15:58.240 --> 0:16:00.560 that's a very good question. There are many anyways to 0:16:00.720 --> 0:16:03.240 buy art. You can buy art at the auctions, you 0:16:03.280 --> 0:16:06.960 can buy at galleries art fairs, you can buy online. Now, 0:16:07.240 --> 0:16:10.680 buying online is is a very good venue. Uh. And 0:16:10.720 --> 0:16:13.000 you don't have to spend a lot of money. Of course, 0:16:13.040 --> 0:16:15.400 you can spend hundreds of millions like some of the 0:16:15.480 --> 0:16:19.880 Matisse and Picassos. And actually, couldn't excuse me that you 0:16:19.960 --> 0:16:23.040 who bought that the Da Vinci looked like that person 0:16:24.000 --> 0:16:27.920 a little bit back at my records. Anyway, carryout, so 0:16:28.000 --> 0:16:31.880 you can buy a lithograph. A lithograph, let's say, from Chicalo, Picasso, 0:16:32.000 --> 0:16:35.520 famous artists that I just happened to mention, could be 0:16:35.520 --> 0:16:39.280 between one thousand and a hundred thousand. So if you 0:16:39.360 --> 0:16:41.720 have a you know, just a few thousand dollars to invest, 0:16:42.160 --> 0:16:45.920 buy a litho from one of the famous artists. Now, Uh, 0:16:46.200 --> 0:16:49.120 there are certain parts of an areas of art that 0:16:49.280 --> 0:16:52.600 go up faster than other areas. So we have the 0:16:52.600 --> 0:16:55.560 old masters that increase in value maybe four or five 0:16:55.600 --> 0:16:58.720 percent a year. We have the modern artists like Picasso 0:16:58.920 --> 0:17:02.440 and Uh and Jay and Dolly that increase in value 0:17:02.680 --> 0:17:05.280 I don't know, six seven, eight percent per year. And 0:17:05.320 --> 0:17:08.439 then you have the contemporary. The contemporary market is hot, 0:17:08.480 --> 0:17:11.560 as am I llowed to say hell and say that 0:17:12.240 --> 0:17:15.359 is really hot. And we have artists like Damien Hurst 0:17:15.400 --> 0:17:20.280 and Jeff Coon's and especially well Walhole Lichtenstein. The pop 0:17:20.359 --> 0:17:23.840 artists are still very hot, but the graffiti artists are 0:17:23.960 --> 0:17:31.359 doing amazingly well. Artists like Basku, Yacht, Keith, Harry, Kenny Scharff, Uh, 0:17:31.400 --> 0:17:35.199 and now fellow called cause k A W S they 0:17:35.200 --> 0:17:38.240 are so hot. Uh. You buy a piece now and 0:17:38.400 --> 0:17:40.960 within a year or two it they will definitely increase 0:17:41.000 --> 0:17:43.200 in value. So if you if it, let's say it's 0:17:43.240 --> 0:17:47.040 not one of the top names. How do you determine 0:17:47.080 --> 0:17:51.920 whether something's good? Also a good question. First of all, 0:17:51.920 --> 0:17:54.199 you're gonna this is a collection, and you have to 0:17:54.240 --> 0:17:58.119 really like what you buy. You just can't buy because 0:17:58.160 --> 0:18:00.480 you think it's an investment. You're gonna have to hold 0:18:00.520 --> 0:18:03.080 onto these pieces for a while. It's not a flip 0:18:03.320 --> 0:18:06.600 type of thing. Let's say like real estate or or stocks. 0:18:07.320 --> 0:18:08.919 You have to hold onto it so you're gonna live 0:18:08.960 --> 0:18:10.960 with it. So you have to find a piece that 0:18:11.000 --> 0:18:14.520 you really like, uh, the color of the design, whatever, 0:18:14.760 --> 0:18:17.880 a piece that you like. Then and then as far 0:18:17.920 --> 0:18:21.119 as I'm sorry, what what I but how did you know? 0:18:22.119 --> 0:18:24.439 I was thinking? I'm just thinking about you know, if 0:18:24.560 --> 0:18:27.600 you ask, you asked the dealer, you you asked the 0:18:27.640 --> 0:18:31.359 auction house, You get prices, you do due diligence. You 0:18:31.440 --> 0:18:35.359 do your due diligence. Go online, put the artist name in. 0:18:35.640 --> 0:18:38.680 Let's say the artist is John Smith. Put it online 0:18:38.840 --> 0:18:41.680 and you'll see the prices uh if he's sold in 0:18:42.000 --> 0:18:44.920 galleries and auctions. But if you if you're talking about 0:18:44.920 --> 0:18:48.360 an up and coming artist that has not had any 0:18:48.440 --> 0:18:53.240 UH sales at auctions or or major galleries, then it's difficult. 0:18:53.520 --> 0:18:57.320 Then it's a crapshoot. But I try to buy like stocks. 0:18:57.320 --> 0:19:00.879 I try to buy blue chip artists and UH and 0:19:00.880 --> 0:19:04.040 and and occasionally I'll buy like an overd uh what 0:19:04.440 --> 0:19:06.680 did they call us? The pink sheets? Occasionally I'll buy 0:19:06.840 --> 0:19:09.520 an artist like on a pink sheet. But that's then 0:19:09.560 --> 0:19:11.520 you're taking a risk. So all right, how about for 0:19:11.560 --> 0:19:15.119 someone like me with little too absolutely no experience, how 0:19:15.160 --> 0:19:18.440 do I spot fakes? Or is that a risk that 0:19:18.480 --> 0:19:20.280 I have to really deal with something that's just you know, 0:19:20.280 --> 0:19:24.320 it's it's not it's a fake, it's not authentic. Well, 0:19:24.480 --> 0:19:29.159 Thomas Hoving, the director of the Modern Art Museum UH, 0:19:29.200 --> 0:19:32.919 said that of the art and museums are fake. So 0:19:32.960 --> 0:19:35.320 it's very hard to really stay away from fakes. But 0:19:35.680 --> 0:19:38.280 what you need is provenance. You buy a piece, and 0:19:38.320 --> 0:19:41.200 you need the papers from the gallery, from the auction, 0:19:42.080 --> 0:19:46.360 provenance that this is an authentic piece. Where is the 0:19:46.440 --> 0:19:50.760 bid coming from? That keeps prices continually marching higher. Is 0:19:50.800 --> 0:19:53.840 there sort of the Chinese buyer that's been coming in 0:19:53.960 --> 0:19:56.960 or the European buyer, or is it you know, everywhere, 0:19:56.960 --> 0:19:59.439 And just the more that it becomes sort of you know, 0:19:59.680 --> 0:20:05.080 pop pularised online, etcetera, the more everything is worth well, 0:20:05.160 --> 0:20:08.440 you you have people who buy art who are very 0:20:08.480 --> 0:20:11.360 wealthy and it's kind of a prestige type of thing. 0:20:12.320 --> 0:20:15.000 Uh So that that pushes the prices up as well. 0:20:15.240 --> 0:20:19.880 But there are more museums opening up every year, more 0:20:19.920 --> 0:20:23.720 people are educated, more people are going to museums every year, 0:20:24.320 --> 0:20:28.040 and people want to you know, have art in their 0:20:28.080 --> 0:20:31.280 in their life. It's beautiful to be surrounded by, you know, 0:20:31.320 --> 0:20:34.280 wonderful pieces of art. Besides the fact that it's a 0:20:34.359 --> 0:20:37.080 very good investment. So if I go to an auction, 0:20:37.160 --> 0:20:39.399 just real quickly, what do I need to know? Do 0:20:39.480 --> 0:20:44.880 I just wave my little paddle when I like something? Well, yeah, 0:20:44.920 --> 0:20:51.880 I guess no. You that's a big paddle, okay, but 0:20:52.119 --> 0:20:56.280 uh you are that you look before you bid? You 0:20:56.320 --> 0:20:58.800 have to you look up the artists and the auction 0:20:59.359 --> 0:21:02.479 catalog will have a low estimate and a high estimate, 0:21:03.040 --> 0:21:06.000 so they they do a lot of the due diligence 0:21:06.000 --> 0:21:09.479 for you. Uh. Let's say a piece is estimated between 0:21:09.480 --> 0:21:12.560 ten and twenty thousand, so you know, you you look 0:21:12.560 --> 0:21:15.399 it up and and and online and see if this is, uh, 0:21:15.640 --> 0:21:18.280 you know, within your price range. And if you see 0:21:18.320 --> 0:21:20.480 if it's you think it's fair. And you could call 0:21:20.680 --> 0:21:24.120 the auction or the gallery and ask for previous prices 0:21:24.240 --> 0:21:27.320 and asked them how they came up with this particular estimate. 0:21:27.960 --> 0:21:30.080 Dr Harvey Mannus, thank you so much for spending time 0:21:30.080 --> 0:21:34.600 with us. My book collected. We're going to get there. 0:21:34.640 --> 0:21:37.400 Don't worry. Dr Harvey man This is an art collector 0:21:37.440 --> 0:21:39.760 of board member and the namesake of the Mannis Art 0:21:39.760 --> 0:21:42.360 and Educations that are at the Nassau County Museum of Art. 0:21:42.440 --> 0:21:45.520 And he has a book collecting Art for Pleasure and 0:21:45.680 --> 0:21:48.400 a profit that he is holding up and you can 0:21:48.560 --> 0:22:07.000 find it on Amazon and others. Hurricane Dorian continues to 0:22:07.080 --> 0:22:09.959