Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Daily
Speaker 1: we bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. What
Speaker 1: you need to know is Andrew Card uh provided public
Speaker 1: service to the nation across numerous presidencies, including as a
Speaker 1: young kid out of Massachusetts wandering into the Reagan White House.
Speaker 1: And we're thrilled at Andy card could join us this morning. Andy,
Speaker 1: what was your first day like under the purview of
Speaker 1: President Reagan? Oh, it was tremendous excitement. I remember first
Speaker 1: of all, Uh, everybody was chipper. They had a wonderful
Speaker 1: attitude and there were there was It was a very
Speaker 1: positive experience from day one because we welcomed you. There
Speaker 1: was a celebration of our great democracy. And Uh. Ronald
Speaker 1: Reagan was a great communicator, not only with the public,
Speaker 1: he was a great communicated with his staff. So he
Speaker 1: made you feel as if you were very much part
Speaker 1: of the game, and he encouraged you to be candid
Speaker 1: with him and not to take his word as if
Speaker 1: it was gospel. With what you observed yesterday. Is it
Speaker 1: the reaffirmation of a republican Reaganism or did the Reagan
Speaker 1: era die yesterday in this unrest. Well, yesterday was a
Speaker 1: very sad day for our democracy. It was I was
Speaker 1: in tears, and it troubles me because I'm also the
Speaker 1: chairman of the National Endowment for Democracy, which Ronald Reagan
Speaker 1: founded almost thirty five years ago, and it was amazing
Speaker 1: for me to be part of the effort of creating
Speaker 1: a climate with democracy was going to be spread all
Speaker 1: around the world. And we were a shiny example. We
Speaker 1: were a city on the hill. And today we attarnished.
Speaker 1: Our democracy is tarnished, and the world is looking at
Speaker 1: us and say this is not right. Maybe democracy isn't
Speaker 1: the right way to go. Well, it is the right
Speaker 1: way to go. And we've got to get everybody in America,
Speaker 1: I don't care whether you're left or right, up or down,
Speaker 1: get involved and help polish our democracy. Let's restore confidence
Speaker 1: in our institutions of democracy and polished them so that
Speaker 1: the world will recognize it's the right way to go.
Speaker 1: We don't want autocracies or cleptocracies or communism. We want
Speaker 1: the people to have to say that was reaffirmed last
Speaker 1: night the speeches on the floor of the House and
Speaker 1: the Senate after the dust kind of settled and people
Speaker 1: the Congress got back to doing its constitutional business or
Speaker 1: remarkable speeches. They were saying polishized democracy. The people spoke,
Speaker 1: we have a new president. He's going to take the
Speaker 1: oath of office, and we know that as a fact.
Speaker 1: It's not a fraud, it's a fact. Andy, who is
Speaker 1: the leader of the Republican Party today? Well, first of all,
Speaker 1: Donald Trump stole the Republican Party, so yes, he used
Speaker 1: in a view used it. Um. I don't know who
Speaker 1: the leader of our party was is today. I do
Speaker 1: look at the kind of the former leaders of the
Speaker 1: party speaking up to say, do a little soul searching
Speaker 1: and take a look at what's been happening and see
Speaker 1: where you want to go. But I think it started
Speaker 1: with the speeches and the Senate last night, uh, where
Speaker 1: many senators kind of acknowledged the angst of America at
Speaker 1: the same time they said what happened yesterday was not
Speaker 1: good for our democracy. Were much better than that, and
Speaker 1: we can do it. So I think the party is
Speaker 1: it's gonna be. It's gonna be struggling right now. We're
Speaker 1: gonna have to struggle. But I look at outstanding governors
Speaker 1: like Charlie Baker and Chris Sunu this steady. They've done
Speaker 1: a great job even in the midst of the pandemic.
Speaker 1: And Charlie Baker is in a democratic state, Massachusetts, and
Speaker 1: he's doing a remarkable job of leading. And I think
Speaker 1: those people, those leaders helped give definition to the what
Speaker 1: it means to be a Republican. I'm a proud Republican.
Speaker 1: I was not a Trump Republican. Okay, you're a proud Republican.
Speaker 1: With the soul searching that you're talking about, what will
Speaker 1: people find what is the current soul of the Republican Party? Well,
Speaker 1: first of all, I hope that it's a respect for institutions,
Speaker 1: respect for democracy. You know, when I got involved in politics,
Speaker 1: the rug of American politics had more rugged than fringe.
Speaker 1: Today it has more fringe than rug. You really can't
Speaker 1: govern unless you find your way to stand on the
Speaker 1: rug and invite people to be part of a solution.
Speaker 1: And I think that's what we have to look for.
Speaker 1: Which about meeters today are looking to be part of
Speaker 1: a solution, not part of a problem. And that's that's right.
Speaker 1: We have to I think we can find it, Andrew
Speaker 1: card I think of the images across centuries of photographs.
Speaker 1: I think, say, of Queen Mary and the young Queen
Speaker 1: Elizabeth and the George's sixth funeral. You are part of
Speaker 1: one of the most famous photos in history, that of
Speaker 1: your whisper in the ear of President Bush on September eleven.
Speaker 1: If you were to whisper into the ear of President
Speaker 1: Trump this morning, what would you say? The humble acknowledge reality,
Speaker 1: celebrate our constitution and our great democracy, and celebrate how
Speaker 1: many votes you got. Even though you didn't win. You
Speaker 1: got the second most number of votes of anybody who
Speaker 1: ever ran for president. Unfortunately for you, Joe Biden got
Speaker 1: even more votes, but he had. Our democracy showed up
Speaker 1: in unbelievable numbers on election Day in two thousand twenty,
Speaker 1: and we should be celebrating that a record number of
Speaker 1: people showed the vote. And and yes, Donald Trump did
Speaker 1: not win, he lost, but he got a remarkable number
Speaker 1: of votes, and Joe Biden got even more votes, and
Speaker 1: that turned into an electrical college victory that made the difference.
Speaker 1: Andy Kurt, your comment on The Gentleman from Belmont, Mass
Speaker 1: Governor Romney's speech yesterday on the Senate floor. I tell
Speaker 1: you I've always been a fan of Mitt Romney. I
Speaker 1: thought he has been a real steady person who celebrates
Speaker 1: our democracy and invites speed to be part of the solution.
Speaker 1: I was very proud of Rodney yesterday. One final question,
Speaker 1: very quickly unfortunately, Mr card where's the common ground that
Speaker 1: you have with Howard Dean of the Democrats? Look at
Speaker 1: I've known Governor Dean for a long time, all the
Speaker 1: way back when he first became governor of Vermont, and
Speaker 1: I have great respect for him. You know, he and
Speaker 1: I have a lot of reason to disagree on policy,
Speaker 1: but we both celebrate the great country we live in.
Speaker 1: And I actually like Howard Dean and get along well
Speaker 1: with him. But I do remember talking to him literally
Speaker 1: the day that he became the governor of New Hampshire.
Speaker 1: I'm the governor of Vermont, and and UH followed with
Speaker 1: great interest when he was running for president. And remember
Speaker 1: he was a rocket out of the launch pad, but
Speaker 1: he was Andy Carr, thank you so much for joining us.
Speaker 1: A former chief of staff for President or thrilled to
Speaker 1: have him in to give republican perspective and the store
Speaker 1: twenty four hours. And to get perspective, it is important
Speaker 1: to speak to all. There is justice, There is a
Speaker 1: Supreme Court, the House, we had any number of legislative
Speaker 1: types today, and the executive branch. And then there is
Speaker 1: the Pentagon. James de Vitas, a serve nation as an
Speaker 1: admiral with NATO, were thrilled that he could join us
Speaker 1: this morning. Admirals Sdrvidas. There was in the misty memory
Speaker 1: a president who wanted a Fourth of July parade with
Speaker 1: tanks in the street off of the French parade of
Speaker 1: Macroft and others. I've actually witnessed the Friends Parade at
Speaker 1: Something to Behold yesterday. Selected Americans were looking for tanks
Speaker 1: in the street to defend the capital. Explain the Pentagon's
Speaker 1: relationship with the various police forces of our nation's capital.
Speaker 1: Let's start with the fact that the capitol is defended
Speaker 1: by the Capitol Police, which report to the federal government.
Speaker 1: And then within the District of Columbia, of course you
Speaker 1: have the d C Metropolitan Police and the deep back
Speaker 1: up tom as I'm sure you know, is the d
Speaker 1: C National Guard. So there's sort of three layers UH
Speaker 1: policing and security that should have been far better aware
Speaker 1: than they were. What you saw yesterday was a massive failure,
Speaker 1: I would say, at a nine eleven level, at a
Speaker 1: nine eleven level, and there's a Hollywood movies of helicopters
Speaker 1: overhead and somebody that looks a lot like handsome James
Speaker 1: Travitez comes to the rescue. Yesterday wasn't Hollywood. What was
Speaker 1: the optionality that the Pentagon had? They were waiting for
Speaker 1: direction from the Commander in chief because of the unique
Speaker 1: status of the District of Columbia not a state. Normally,
Speaker 1: a state governor could call his or her UH state
Speaker 1: Guard to quell a riot, and that's what we had. Unfortunately,
Speaker 1: it had to come from the Commander in Chief, who
Speaker 1: dithered all day. By all accounts, ultimately it was the
Speaker 1: Vice President of the United States who ordered the acting
Speaker 1: Secretary of Defense to deploy the d C Guard. So
Speaker 1: President Trump was clearly not only inciting the riot but
Speaker 1: then missing an action and trying to resolve it. Admiral
Speaker 1: with your global experience, how do you think our foes
Speaker 1: around the world, those that would, you know, not wish
Speaker 1: us well? How did they view yesterday, high fives, Beijing, Moscow, tyrant,
Speaker 1: pun Yang, caracous, greatest day in recent dictator history watching
Speaker 1: this unfold, and I'll give you two specifics to be
Speaker 1: aware of. Uh Russia will be leveraging this for intelligence
Speaker 1: gathering inside the United States, and they will seek to
Speaker 1: prolong this agony by getting into the social networks, getting
Speaker 1: into our cyber nets, as we saw them do just
Speaker 1: recently in the fire Eye hack China. I think, unfortunately,
Speaker 1: may miscalculate and decide this might be a good time
Speaker 1: to do something pretty dramatic in Asia. Could that be
Speaker 1: leaning in very hard on Taiwan. Could it be further
Speaker 1: crackdowns in Hong Kong? They just rounded up yet another
Speaker 1: round of the protesters in Hong Kong. Makes it pretty
Speaker 1: difficult for us as we turn to our allies, partners,
Speaker 1: and friends to generate a team that can stand in
Speaker 1: the face of this. When we can't even defend our
Speaker 1: own capital. It's a disgraceful day for the United States. So, Admiral,
Speaker 1: the average serviceman or woman serving on the high seas
Speaker 1: or some far flung army post, how do you think
Speaker 1: they're processing what they saw yesterday? Many of them are
Speaker 1: just you know, kind of waking up and seeing the images. Well,
Speaker 1: let's face one fundamental fact about those in the armed forces,
Speaker 1: their volunteers, who swear an oath to the Constitution of
Speaker 1: the United States to support and defend that constitution. What
Speaker 1: they saw yesterday was a blatant attempt by tens of
Speaker 1: thousands of rioters incited by the President, to interrupt that
Speaker 1: constitutional process. It's very significant that this occurred not just
Speaker 1: on any given Tuesday, but on the days which were
Speaker 1: certifying the democratic results of the entirely legitimate election. So
Speaker 1: I think the average serviceman and woman is shaking their
Speaker 1: head at disbelief at this threat to the constitution. I
Speaker 1: know they are, in fact. And one final questioned an
Speaker 1: updated on your thoughts is uh, the domination of General
Speaker 1: Lloyd Austin moves forward to be Defense Secretary. Some controversy there.
Speaker 1: You've written about it. Give us an update. Um, he
Speaker 1: will be confirmed. We ought to, as a general proposition,
Speaker 1: look for individuals to lead the Department of Defense who
Speaker 1: have been out of uniform for a long time. But
Speaker 1: General Austin brings a great deal of experience in the
Speaker 1: Middle East. I know him personally, extremely well. He's a
Speaker 1: rock solid professional. He will be confirmed. Um, we need
Speaker 1: to get the new team in place across the board
Speaker 1: as quickly as possible. The next thirteen days are going
Speaker 1: to be dangerous for this country until we do. James Trevitus,
Speaker 1: thank you so much to Emeralds Trevinus of course, with
Speaker 1: among others of Carlisle group. I can't say enough about
Speaker 1: his books. Maybe it's a good time, after what we
Speaker 1: saw yesterday to look at his leader's bookshop bookshelf. Further,
Speaker 1: it was a wonderful, wonderful, wonderful set of about fifty
Speaker 1: books from people like General Austin as well. The divise
Speaker 1: between a good senator from Texas and the gentleman from
Speaker 1: New York State, Cruz and Schumer going at it yesterday.
Speaker 1: I'm sure many view on radio and TV observe so
Speaker 1: much of this moment just extraordinary, the back and forth
Speaker 1: and of course off camera, some real emotions. Someone used
Speaker 1: to the emotion of politics is Kathy Hocle. She's from Buffalo,
Speaker 1: New York. She is the Lieutenant Governor of New York
Speaker 1: and joins us from a lockdown New York City as well.
Speaker 1: Governor Hocle, we have not touched the pandemic since about
Speaker 1: three pm yesterday afternoon. How locked down is your New
Speaker 1: York City right now? Well, basically, I would say the
Speaker 1: restaurants are still not open. We have I had outdoor
Speaker 1: dining last fight, had a hammoger on a street next
Speaker 1: to a heater, so that is available to people who
Speaker 1: are hungry. Not ideal, but it's in recognition that we're
Speaker 1: doing everything we can to keep the infection right down.
Speaker 1: If you just see your neighboring states were surrounded by
Speaker 1: states with the numbers of the go up. You clearly
Speaker 1: can't go to a Broadway play. You're not going to
Speaker 1: go to any man yet. But I didn't get the
Speaker 1: sense of lockdown because people are still working here still,
Speaker 1: you know, still a live city. So I think lockdown
Speaker 1: over the states where we are right now, Lieutenant Governor,
Speaker 1: we cannot ignore Washington. Matthew Pottinger resigning your midnight from
Speaker 1: the Trump White House, and moments ago se NBC mentioning
Speaker 1: that Mr Mulvaney will resign from a Trump administration. You
Speaker 1: are in the executive branch. When you d people an
Speaker 1: executive branch, Lieutenant Governor, how do you move forward? You
Speaker 1: just hold on. You have people around you, hopefully put
Speaker 1: the interest of this country first and do everything they
Speaker 1: can to personally contain Donald Trump until sanity reigns once
Speaker 1: again in this country and Joe Biden takes his zot
Speaker 1: of office on January Secies. We have to get to
Speaker 1: that date. It seems like an eternity from now, but
Speaker 1: if we can just get the people around him who
Speaker 1: understand that the verity of what he's done, inciting people
Speaker 1: to riot and leading an insurruction, they have to understand
Speaker 1: that there are consequences in our country. We have a
Speaker 1: constitution that must be adhered to. So I am an
Speaker 1: executive branch. This will never happen in the state of
Speaker 1: New York because we would never elect someone who has
Speaker 1: is destructive of our democracy as someone like Donald Trump.
Speaker 1: But that's what happened. He lost the election. I think
Speaker 1: that's the message around the world. He did not win,
Speaker 1: and in just a few short weeks we're going to
Speaker 1: have Democrats who have who put the constitution first, apparently
Speaker 1: over what Republicans are doing running the Senate, running the House,
Speaker 1: and now running the White House. So well have era
Speaker 1: that's going to allow us to sweep clean all the
Speaker 1: vestiges of Donald Trump and what he has done to
Speaker 1: our nation. Katthew, how much will a Senator Schumer led
Speaker 1: Senate help in the New York State budget? The New
Speaker 1: York State prospects going forward? Unbelievably, It's going to be great, Lisa,
Speaker 1: And what we talked about, you and I had this conversation.
Speaker 1: It's like twentieth visit on your on your show, and
Speaker 1: we talked about what's it going to take for New
Speaker 1: York to be able to come back. We have a
Speaker 1: fifteen billion dollar hole. We need that from the federal
Speaker 1: government and Senator Schumer, who knows New York State better
Speaker 1: than anybody. He goes all sixty two counties just like
Speaker 1: I do. He knows what this state need that he'll
Speaker 1: be in a position of power. Now. It's not just
Speaker 1: wishing we could get this done, it is being able
Speaker 1: to deliver with President Joe Biden, who also understands you
Speaker 1: can't starve the state and local governments when you're trying
Speaker 1: to get a vaccine in the arms of three million people,
Speaker 1: not once, but twice. So we need more resources to
Speaker 1: offset our our losses, our financial hits that we took
Speaker 1: in order for us to be able to fund programs
Speaker 1: like the vaccinine vaccine rollout, which is going to stave
Speaker 1: this country, and we get that into people's arms sooner,
Speaker 1: the sooner we come back, the sooner we can sooner
Speaker 1: we can supercharge our econmy So it's going to be
Speaker 1: very good having him that position. So, Cathy, where are
Speaker 1: we in terms of the vaccination schedule? When will you
Speaker 1: and I be able to go and get inoculated? At
Speaker 1: least I'm gonna assume that you are under the age
Speaker 1: of seventy five, so you'll not be in one A.
Speaker 1: You're not in one bould you know I would disabuse
Speaker 1: you of your notion, Kathy, carryad Tom you will be
Speaker 1: in the same categories I am. I'm not being a
Speaker 1: very good politician. You're killing it. Republican in New York, Please,
Speaker 1: we have one A people, the frontline health scare work
Speaker 1: is still being vaccinated in our hospitals. We've tripled the
Speaker 1: number of vaccines that have gone out just in the
Speaker 1: last week. So it all is a function of supply,
Speaker 1: so we get more vaccines where government right now, Kathy,
Speaker 1: I'm gonna cut you, Kathy, I'm gonna cut you off.
Speaker 1: This is so important. Peter Hotez of Baylor College of
Speaker 1: Medicine says, we need to open up Yankee Stadium, and
Speaker 1: the only way we can do that is money. Money, money.
Speaker 1: You Republicans, Democrats in every state don't have it. What
Speaker 1: do you need from the federal government to do a
Speaker 1: Hotez Yankee Stadium vaccination program? Oh, we we will do that.
Speaker 1: We're going to open up the Javits Center I we
Speaker 1: can do. We already have plans for this time. We
Speaker 1: have thirties six hundred and seventy two locations identified. We
Speaker 1: simply have to get to our first category of healthcare
Speaker 1: workers done in a priority. Are they go first when
Speaker 1: it comes time for mass vaccinations. There is no limit
Speaker 1: to the locations We're going to do this. It will
Speaker 1: be massive locations. What funding you need from the Biden administration?
Speaker 1: Come on, you've got democratic president right now. You need
Speaker 1: one billion to get this done. To get that done,
Speaker 1: but also to offset the loss and revenues so we
Speaker 1: can continue to fund these workers. We don't want to
Speaker 1: have cutbacks or police, law enforcement healthcare workers, which is
Speaker 1: what we're facing in our budget. In March, Lieutenant Governor Okay,
Speaker 1: this this has been an incredibly important conversation. None of
Speaker 1: it matters Bills cults first time since Can your Bills
Speaker 1: keep it on? Of course they can. The momentum is
Speaker 1: with us. You saw the energy and guess what we're
Speaker 1: going to actually have fans in the stand. We've accomplished
Speaker 1: being impossible this year, an amazing season, lifting the spirits
Speaker 1: of people, not just in Buffalo but all over the state.
Speaker 1: And I'm going to say this is America's due team.
Speaker 1: So America will be rooting for the Buffalo Bills this
Speaker 1: weekend as we have our first first playoff game at
Speaker 1: home in twenty five years. So I'm really energized by this.
Speaker 1: It's going to be a great game, Governor, no doubt.
Speaker 1: In the seventh row fifty yard line as well. Cathy Yako,
Speaker 1: thank you so much, greatly appreciate that. Uh this one
Speaker 1: the Russell two thousand, John from Capri emails in and says,
Speaker 1: talk about Penn National Gaming, Caesar's entertainment plug, power Sun Run.
Speaker 1: How about Darling Ingredients up twenty percent per year, A
Speaker 1: moonshot coming off of March for Darling Ingredients of Irvine
Speaker 1: Tech or Irving, Texas ten thousand employees. Good morning, Mr Stewart,
Speaker 1: Randall Stewart and and Darling Ingredients. They collect animal processing
Speaker 1: by products and used restaurant cookie oil. That's the moon
Speaker 1: shot of the Russell two thousand. That's the moon shot.
Speaker 1: Had not heard about it. You just sent it to me.
Speaker 1: Look at it. This has got a ten billion dollar
Speaker 1: market cap, Tom So this is this has been around,
Speaker 1: it's it's sizeable, and they're in the animal processing byproduct business.
Speaker 1: Tello meat, bone meal, all the good things John Gallab
Speaker 1: uses every day. John Gallab with credit sweez. This is
Speaker 1: an important conversation because of his view to two thousand
Speaker 1: twenty one, John, before we get to tech, in your
Speaker 1: view on the bigger market, how do you adapt and
Speaker 1: adjust to a small cap surge? You know, we we
Speaker 1: just did a note on this. In the consumer space,
Speaker 1: the small caps are a much better plays on reopening.
Speaker 1: And if you look at UM, you know, you know,
Speaker 1: like for consumer discretionary UM, the big cap you know,
Speaker 1: Internet retailers are are you know, very different than those
Speaker 1: mall retailers and restaurants and hotels that make up the
Speaker 1: small cap universe. And that's just one example on where
Speaker 1: I think there's real solid fundamentals here in the near term.
Speaker 1: I've got to get to your call. John, it's literally
Speaker 1: an outlier. I believe you told us the last time
Speaker 1: you visited stay with tech. Is that true? It was?
Speaker 1: And you know, we we just um today tom um
Speaker 1: up our number for the broad market. But we also
Speaker 1: took what we call tech plus that all that broadly
Speaker 1: defined tech basket from overweight to neutral. And I did that.
Speaker 1: I did that with such pain because I'm such a
Speaker 1: believer that over the long run you want to ride
Speaker 1: this trade hard reopening. I think they're gonna be a
Speaker 1: source of capital and this is what we love. Folks
Speaker 1: have Bloomberg surveillance, real news from a major house, John
Speaker 1: Galbin Credit Suite. With that shift, do you mean, particularly
Speaker 1: if it's a taxable event, do you cash it in
Speaker 1: or do you just reallocate new funds away from whatever
Speaker 1: your tech disbelief is. You know, most of our clients
Speaker 1: are running tax except um money, so they're not worrying
Speaker 1: about pension plan or endowment. If you're an individual, the
Speaker 1: if I believe that you're gonna want to be in
Speaker 1: tech for the next two or three years, you don't
Speaker 1: want to pay a lot of taxes to make that
Speaker 1: switch in your portfolio. However, if you have new funds
Speaker 1: today allocative to things that are more cyclical, um, that's
Speaker 1: the time you get paid over the new ye like
Speaker 1: the Boston Red Sox. So Jonathan. So if if I'm
Speaker 1: maybe taking a little off the table in tech or
Speaker 1: reallocating some capital, am I jumping both feet into that
Speaker 1: cyclical reopening trade? Well maybe maybe maybe let me like
Speaker 1: kind of twist your question a little bit. Where do
Speaker 1: you play the reopening trade most effectively? And I don't
Speaker 1: think it's the suff It's not in the stuff that
Speaker 1: I just upgraded. That the areas that think they're gonna
Speaker 1: be a big win are actually gonna be in healthcare
Speaker 1: and financials. And let me explain quickly why for each um,
Speaker 1: a lot of us have not been to the dentist
Speaker 1: or to a doctor. And when we go back out there, Um,
Speaker 1: you don't think about a healthcare company as being cyclical,
Speaker 1: but there's gonna be companies that process your your blood
Speaker 1: tests and and you know, or people who have held
Speaker 1: up putting braces on their kids. All those kinds of
Speaker 1: things get a big cyclical reopening jump. Even though they're
Speaker 1: not really cyclical companies. The banks. If you have interest
Speaker 1: rates move up a little like they did today, if
Speaker 1: the credit environment improved because of these checks, we're all
Speaker 1: gonna get people gonna pay their bills with that, those
Speaker 1: are all really great for the banks. So while I'm
Speaker 1: moving up your industrials and materials and energy, I still
Speaker 1: rather be in financials and healthcare in this environment, all right, Johnathan,
Speaker 1: want the questions to have about this rotation trade which
Speaker 1: has worked so well, and the folks that were on it,
Speaker 1: you know, kind of August September, We're suppression is kind
Speaker 1: of the legs that it has. I know, I could
Speaker 1: buy Amazon and Apple and stick them away for a
Speaker 1: decade and not have to think about the story. What's
Speaker 1: the Historically, how long does this rotation into cyclicals typically lasted? Well,
Speaker 1: you know, it's it's a funny thing if if you
Speaker 1: take a look at since let's say September one, um
Speaker 1: and values beaten growth over that period, it all came
Speaker 1: down to four days. Only the four days were the
Speaker 1: three days when you got big drug announcements from you know,
Speaker 1: Fiser and Maderna and Astra Zeneca, and the day that
Speaker 1: Janet Yellen was selected to head Treasury by by Joe Biden.
Speaker 1: If you took those four days out, there's no value
Speaker 1: rotation here whatsoever. And I do think there's gonna be
Speaker 1: a really a a cyclical trade. But it's going to
Speaker 1: be when you and I go and get airline tickets
Speaker 1: for our summer vacation because we realized that we're gonna
Speaker 1: have we we have been vascinated. That's the that's the
Speaker 1: mother of all trades. And the reason that I put
Speaker 1: this the the made the chain today is how close
Speaker 1: do you want to get to that May June July
Speaker 1: vaccine date for yourself before you rotate? The market's going
Speaker 1: to move ahead of that. My call today was don't
Speaker 1: be too cute, don't wait to the last minute, because
Speaker 1: somebody else will have made money on the trade. And
Speaker 1: this is really really important, John, I mean, the market
Speaker 1: always discounting them out. How far out is the market
Speaker 1: discounting now July of this year or next year or
Speaker 1: the year following. Where's the reach now, the mental reach
Speaker 1: of the market, you know, Tom, it's the single biggest
Speaker 1: question that we're getting from the smartest headge from guys,
Speaker 1: who do you think how long do you wait. How
Speaker 1: long do you wait before that July event before the
Speaker 1: market's going to discount it? Three months? Six months? And
Speaker 1: if you're going to try to get too cute and
Speaker 1: try to time it perfectly, you're gonna miss it. And
Speaker 1: if you wait for people to actually buy their concert
Speaker 1: tickets for a music festival this summer, the trade is
Speaker 1: already over. So that's why we put it in now.
Speaker 1: Even though I'm probably a little bit early, I just
Speaker 1: think I have no choice but to but to get
Speaker 1: in early, all right, just gives a quick overview of evaluation.
Speaker 1: And we've seen this market just rock it up from
Speaker 1: the March lows without a commensurate increase in earnings. Should
Speaker 1: should I be concerned? Um? No, I don't think it
Speaker 1: should be concerned evaluation. But here's what you have. At
Speaker 1: the beginning of the year, um the year last year
Speaker 1: you had, the market was trading at an eighteen multiple.
Speaker 1: At the end of the year, it was trading at
Speaker 1: a twenty two and a half um. The peak in
Speaker 1: the internet period was like is So this is a
Speaker 1: very high multiple, and it's also moved a lot. There's
Speaker 1: a whole bunch of reasons why I think that these
Speaker 1: multiples are gonna stay in overtime drift even higher. The
Speaker 1: first thing is there's a lot more tech in the
Speaker 1: market today than in the past, and those are higher
Speaker 1: pe names. It's just a mix of companies, that's number one.
Speaker 1: Number two, companies are doing a better job of generating
Speaker 1: cash flow from every dollar of earnings in sale, so
Speaker 1: you're actually getting more money back from companies over time
Speaker 1: when you invested them. And number three, interest rates are
Speaker 1: are a lot lower. And whether you look at that
Speaker 1: as a cost of capital for company or lack of
Speaker 1: an alternative, all of those things say that multiples are
Speaker 1: going to stay in the twenties, probably drift higher over interesting.
Speaker 1: John Gold, thank you so much. With Cardio Suite's hugely valuable.
Speaker 1: Uh there. Thanks for listening to the Bloomberg Surveillance podcast.
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