1 00:00:05,120 --> 00:00:07,119 Speaker 1: This is the Bloomberg Surveillance Podcast. 2 00:00:07,160 --> 00:00:11,080 Speaker 2: I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. 3 00:00:11,280 --> 00:00:15,760 Speaker 2: Join us each day for insight from the best an economics, geopolitics, 4 00:00:15,760 --> 00:00:20,720 Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 5 00:00:20,960 --> 00:00:25,439 Speaker 2: Spotify and anywhere you get your podcasts, and always on 6 00:00:25,520 --> 00:00:29,880 Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. 7 00:00:30,440 --> 00:00:32,800 Speaker 2: They were different out at UCLA. And there was a 8 00:00:32,800 --> 00:00:36,480 Speaker 2: guy who died at eighty eight last year, Excellanovud, who 9 00:00:36,520 --> 00:00:38,400 Speaker 2: was a hero in my house. And as someone once 10 00:00:38,440 --> 00:00:41,519 Speaker 2: said to me, he was the marine coming out of 11 00:00:41,560 --> 00:00:45,440 Speaker 2: the trenches. Andrew Hollenhorst has been the marine in this 12 00:00:45,600 --> 00:00:50,319 Speaker 2: odd on FED cycle. You have taken shrapnel for your 13 00:00:50,400 --> 00:00:51,320 Speaker 2: high yield call. 14 00:00:51,440 --> 00:00:52,159 Speaker 1: People are like. 15 00:00:52,720 --> 00:00:57,280 Speaker 2: Not and yet you reaffirm the FED higher this morning, 16 00:00:57,320 --> 00:00:57,680 Speaker 2: don't you. 17 00:00:58,280 --> 00:00:59,960 Speaker 3: I think if you just look at this economic day, 18 00:01:00,240 --> 00:01:00,920 Speaker 3: the MIC's over here. 19 00:01:00,920 --> 00:01:03,880 Speaker 1: Come on, all right, I'm starting the first time on 20 00:01:03,920 --> 00:01:04,200 Speaker 1: the show. 21 00:01:04,240 --> 00:01:06,759 Speaker 3: Yeah, thanks to If you look at the economic data, 22 00:01:06,760 --> 00:01:09,160 Speaker 3: I mean, it just keeps coming in showing a tight 23 00:01:09,240 --> 00:01:12,440 Speaker 3: labor market. We keep getting these numbers strong spending. I 24 00:01:12,480 --> 00:01:14,119 Speaker 3: agree with Mike, I don't think we're going to get 25 00:01:14,280 --> 00:01:16,600 Speaker 3: five to six percent GDP this quarter, but we're probably 26 00:01:16,600 --> 00:01:18,520 Speaker 3: going to get at least two percent GDP and maybe 27 00:01:18,520 --> 00:01:21,119 Speaker 3: three percent GDP growth. And I think you did hear 28 00:01:21,240 --> 00:01:24,080 Speaker 3: some of that coming out of Jackson Hole. You look 29 00:01:24,120 --> 00:01:26,559 Speaker 3: at the core inflation numbers, they've slowed for a couple months. 30 00:01:26,800 --> 00:01:29,280 Speaker 3: That's good news. Headline inflation has slowed, so there is 31 00:01:29,319 --> 00:01:31,920 Speaker 3: some good news in terms of price pressure. That's a 32 00:01:31,959 --> 00:01:34,560 Speaker 3: little bit more subdued now. But when you look at 33 00:01:34,600 --> 00:01:38,240 Speaker 3: this economy, tight labor market, it's going to drive wages. 34 00:01:38,360 --> 00:01:39,720 Speaker 1: Wages are going to drive harder. 35 00:01:39,720 --> 00:01:42,200 Speaker 2: Your academics and frankly it goes to Catherine Mann now 36 00:01:42,200 --> 00:01:44,320 Speaker 2: at the Bank of England as well, is a real 37 00:01:44,400 --> 00:01:48,280 Speaker 2: humility about what we don't know. Olivier Blanchard calls it 38 00:01:48,400 --> 00:01:52,480 Speaker 2: other factors. What are the other factors that the low 39 00:01:52,560 --> 00:01:54,920 Speaker 2: yield people, the rate cut people get wrong. 40 00:01:55,760 --> 00:01:58,360 Speaker 3: Yeah, So I think the other factors that we have 41 00:01:58,440 --> 00:02:02,080 Speaker 3: at play here in the US economy includes some of 42 00:02:02,080 --> 00:02:03,960 Speaker 3: the domestic strength that I was talking about, which is 43 00:02:04,000 --> 00:02:06,880 Speaker 3: not just the tight labor market, but also the tight 44 00:02:07,000 --> 00:02:09,519 Speaker 3: housing market. And this is an odd one, and I 45 00:02:09,560 --> 00:02:11,480 Speaker 3: think you described the cycle as being odd, and it 46 00:02:11,480 --> 00:02:14,840 Speaker 3: certainly is. Usually you would think mortgage rates move higher, 47 00:02:15,200 --> 00:02:16,799 Speaker 3: we get to slow down in housing, and we get 48 00:02:16,800 --> 00:02:19,120 Speaker 3: to slow down in house prices, and that happened. But 49 00:02:19,200 --> 00:02:21,520 Speaker 3: the issue we have now is supply has actually become 50 00:02:21,560 --> 00:02:25,519 Speaker 3: more constrained in the housing sector than demand. So those 51 00:02:26,080 --> 00:02:28,799 Speaker 3: households that have an existing home that are paying a 52 00:02:28,840 --> 00:02:31,400 Speaker 3: three percent mortgage rate, not a lot of incentive to 53 00:02:31,400 --> 00:02:33,240 Speaker 3: put that home on the market. So that's applies being 54 00:02:33,320 --> 00:02:36,440 Speaker 3: really constrained. Case Shiller Price index came out this week. 55 00:02:36,880 --> 00:02:40,800 Speaker 3: We're up again close to double digit percentage increases on 56 00:02:40,840 --> 00:02:42,720 Speaker 3: an annualized basis, and that's just not going to be 57 00:02:42,720 --> 00:02:44,120 Speaker 3: consistent with two percent inflation. 58 00:02:44,600 --> 00:02:46,920 Speaker 4: Yeah, there's just no inventory in the existing home market 59 00:02:47,000 --> 00:02:48,639 Speaker 4: at all, is in the new market, which is why 60 00:02:48,639 --> 00:02:51,200 Speaker 4: you're seeing that bycation and housing. Just on the subject 61 00:02:51,200 --> 00:02:53,959 Speaker 4: of demand outside of housing, and coming back to the 62 00:02:54,040 --> 00:02:56,160 Speaker 4: data of this morning, with personal spending up eight tenths 63 00:02:56,200 --> 00:02:59,120 Speaker 4: of one percent at the same time that personal income 64 00:02:59,520 --> 00:03:04,639 Speaker 4: actually grew less than expected, how much longer realistically could 65 00:03:04,639 --> 00:03:07,079 Speaker 4: the US consumer live above their means If we're talking 66 00:03:07,120 --> 00:03:09,400 Speaker 4: about a savings pile that has dwindled, which is what 67 00:03:09,480 --> 00:03:12,760 Speaker 4: was helping fuel this in the first place. And your 68 00:03:12,800 --> 00:03:15,160 Speaker 4: income not growing as fast wea is barely keeping up 69 00:03:15,160 --> 00:03:17,400 Speaker 4: with inflation. Isn't the spending going to have to come 70 00:03:17,400 --> 00:03:18,239 Speaker 4: to a halt at some point? 71 00:03:18,400 --> 00:03:21,560 Speaker 3: Yeah, and don't forget student loan repayments restarted yeah October. Yeah, 72 00:03:21,600 --> 00:03:24,000 Speaker 3: so there are some headwinds that the consumer is facing here. 73 00:03:24,800 --> 00:03:27,200 Speaker 3: I think what has happened, though, is we had such 74 00:03:27,240 --> 00:03:31,239 Speaker 3: an extended period of low interest rates, such an extended 75 00:03:31,320 --> 00:03:35,160 Speaker 3: period of ample liquidity. You saw credit card debt go 76 00:03:35,280 --> 00:03:38,120 Speaker 3: down significantly during the pandemic, and now those levels have 77 00:03:38,160 --> 00:03:40,440 Speaker 3: built back up. Now you're seeing delinquency rates that are 78 00:03:40,440 --> 00:03:43,360 Speaker 3: getting back to more normal delinquency rates that we would 79 00:03:43,400 --> 00:03:46,720 Speaker 3: expect and kind of a normally functioning economy. To your point, 80 00:03:46,960 --> 00:03:49,080 Speaker 3: as the Fed leaves rates higher, we're going to see 81 00:03:49,080 --> 00:03:51,120 Speaker 3: more tightening of credit. That's going to be a head 82 00:03:51,160 --> 00:03:54,240 Speaker 3: wind for consumers eventually that will slow the economy. We 83 00:03:54,280 --> 00:03:56,640 Speaker 3: still think we could see a significant economic slowdown in 84 00:03:56,680 --> 00:03:59,240 Speaker 3: twenty twenty four, perhaps a recession in twenty twenty four. 85 00:03:59,760 --> 00:04:02,640 Speaker 3: But you have to take seriously the data that are 86 00:04:02,640 --> 00:04:05,200 Speaker 3: coming in, and we still see this really strong spending. 87 00:04:05,240 --> 00:04:07,840 Speaker 3: Like you point, out eight tenths of a percentage point 88 00:04:08,000 --> 00:04:10,840 Speaker 3: up on personal spending. I mean, it's just a really 89 00:04:10,880 --> 00:04:12,040 Speaker 3: strong consumer right now. 90 00:04:12,280 --> 00:04:14,800 Speaker 4: So if we do get that recession in twenty twenty four, 91 00:04:14,880 --> 00:04:17,479 Speaker 4: but you still don't get two percent inflation, is the 92 00:04:17,520 --> 00:04:20,760 Speaker 4: Federal Reserve going to tolerate the pain ultimately? Do you think? 93 00:04:21,000 --> 00:04:21,120 Speaker 2: So? 94 00:04:21,160 --> 00:04:22,960 Speaker 3: That's a really tough scenario for the Fed. I think 95 00:04:23,000 --> 00:04:25,600 Speaker 3: if you get a significant enough slow down, you will 96 00:04:25,600 --> 00:04:28,920 Speaker 3: see some deflationary pressure. But we could have a period 97 00:04:29,000 --> 00:04:30,640 Speaker 3: of time, and maybe it's going to be an extended 98 00:04:30,640 --> 00:04:33,760 Speaker 3: period of time where you see the economy slowing, and 99 00:04:33,800 --> 00:04:36,200 Speaker 3: to some extent, you see this with the credit that 100 00:04:36,279 --> 00:04:38,640 Speaker 3: is tightening already. Right we have some signs that things 101 00:04:38,640 --> 00:04:42,360 Speaker 3: are going to slow down eventually. If inflation was stably 102 00:04:42,400 --> 00:04:44,880 Speaker 3: at two percent, then the Fed might be a lot 103 00:04:44,920 --> 00:04:47,560 Speaker 3: more comfortable thinking about cutting rates. I think what we 104 00:04:47,640 --> 00:04:50,440 Speaker 3: heard from Chair Powell last week at Jackson Hole was 105 00:04:50,480 --> 00:04:53,320 Speaker 3: that although they'll be attentive to both growth and inflation 106 00:04:54,000 --> 00:04:55,760 Speaker 3: right now, they really do have to concentrate on those 107 00:04:55,800 --> 00:04:58,200 Speaker 3: upside risks to inflation. That's where you're coming from. We 108 00:04:58,240 --> 00:05:01,520 Speaker 3: still have various measures of col or underlying inflation that 109 00:05:01,560 --> 00:05:03,800 Speaker 3: are running too high, and that means that there could 110 00:05:03,800 --> 00:05:05,799 Speaker 3: be a period of time when you see somewhat weaker 111 00:05:05,839 --> 00:05:08,240 Speaker 3: growth data, but the FED is still holding rates higher. 112 00:05:08,560 --> 00:05:12,520 Speaker 2: Richard Clarita is identified with this thing DSGE. All you 113 00:05:12,600 --> 00:05:14,800 Speaker 2: need to know on a Labor Day Thursday is we're 114 00:05:14,800 --> 00:05:16,359 Speaker 2: not going to do the math either. 115 00:05:16,520 --> 00:05:18,240 Speaker 1: I can't do the math. It's that fancy. 116 00:05:18,640 --> 00:05:20,960 Speaker 2: But the bottom line is I mentioned actually on of 117 00:05:21,000 --> 00:05:24,800 Speaker 2: it earlier, that article from years ago beyond DSG models, 118 00:05:25,160 --> 00:05:27,760 Speaker 2: where he and a team really go after the math, 119 00:05:28,320 --> 00:05:32,640 Speaker 2: the math certitude, the mathiness of the Andrew Hollenhorst world. 120 00:05:33,120 --> 00:05:35,680 Speaker 2: Do we have operative models right now? Do we in 121 00:05:35,800 --> 00:05:37,280 Speaker 2: God's name know what we're doing? 122 00:05:37,760 --> 00:05:40,480 Speaker 3: So I think that is one of the big challenges here. 123 00:05:41,080 --> 00:05:44,080 Speaker 3: What is the theoretical framework that we're using to assess 124 00:05:44,080 --> 00:05:47,480 Speaker 3: the economy and to assess monetary policy. And you heard 125 00:05:47,560 --> 00:05:50,960 Speaker 3: Powell point to that uncertainty in his comments there's a 126 00:05:51,000 --> 00:05:53,560 Speaker 3: non economist as a non economist, Yeah, and so he 127 00:05:54,080 --> 00:05:57,400 Speaker 3: talked about this, you're navigating according to the stars under 128 00:05:57,440 --> 00:05:59,760 Speaker 3: a cloudy sky. And what does he mean by the 129 00:05:59,800 --> 00:06:04,160 Speaker 3: star the underlying neutral rate of interest that would neither 130 00:06:04,240 --> 00:06:10,080 Speaker 3: be restrictive nor stimulative. The underlying natural rate of unemployment. 131 00:06:10,279 --> 00:06:13,520 Speaker 3: These are important theoretical concepts, but we really don't have 132 00:06:13,560 --> 00:06:15,520 Speaker 3: a good way of evaluating them in real time. We 133 00:06:15,560 --> 00:06:17,120 Speaker 3: don't know where they are, so it is going to 134 00:06:17,120 --> 00:06:19,280 Speaker 3: be this kind of responding to the data just comes 135 00:06:19,320 --> 00:06:21,400 Speaker 3: back to data dependency. If you don't have a strong 136 00:06:21,440 --> 00:06:23,600 Speaker 3: theoretical framework, then you follow the data. 137 00:06:23,720 --> 00:06:26,479 Speaker 4: Yeah, setting monetary policy can be a tricky business in 138 00:06:26,520 --> 00:06:28,600 Speaker 4: an environment like this one. Can I just quickly ask 139 00:06:28,600 --> 00:06:30,480 Speaker 4: you about fiscal policy as well, because we hear a 140 00:06:30,480 --> 00:06:32,719 Speaker 4: lot about we have not yet seen things like the 141 00:06:32,760 --> 00:06:35,479 Speaker 4: Chips Act, Inflation Reduction Act that actually being realized in 142 00:06:35,520 --> 00:06:38,080 Speaker 4: the economy and making a difference. At what point does 143 00:06:38,320 --> 00:06:41,680 Speaker 4: what theoretically could be a driver actually become a drive 144 00:06:41,720 --> 00:06:44,640 Speaker 4: because the FED might have to respond to those new injections. 145 00:06:44,640 --> 00:06:45,640 Speaker 4: How are you thinking about that? 146 00:06:45,760 --> 00:06:47,400 Speaker 3: Yeah, it's a great point. We're starting to see some 147 00:06:47,440 --> 00:06:49,400 Speaker 3: things in the data that are at least suggestive. Then 148 00:06:49,440 --> 00:06:51,800 Speaker 3: maybe you're seeing some of this showing up. We did 149 00:06:51,839 --> 00:06:55,160 Speaker 3: see stronger investment in manufacturing. Maybe that's related to the 150 00:06:55,279 --> 00:06:57,359 Speaker 3: Chips Act. But you're right, these things are going to 151 00:06:57,360 --> 00:06:59,000 Speaker 3: take a long time to actually play out. Is going 152 00:06:59,040 --> 00:07:01,159 Speaker 3: to take time for that money to come into the economy. 153 00:07:02,480 --> 00:07:04,359 Speaker 3: At the end of the day, the FED is not 154 00:07:04,480 --> 00:07:06,680 Speaker 3: going to kind of look at fiscal policy and then 155 00:07:06,960 --> 00:07:09,800 Speaker 3: try to directly offset fiscal policy with monetary policy. Not 156 00:07:09,840 --> 00:07:12,160 Speaker 3: their business, exactly. The FED doesn't want to be in 157 00:07:12,160 --> 00:07:13,440 Speaker 3: that business. So what the FED is going to do 158 00:07:13,480 --> 00:07:15,120 Speaker 3: is just look at the data. Look at the data 159 00:07:15,160 --> 00:07:17,840 Speaker 3: like we got today. If inflation stays cooler, then that's 160 00:07:17,880 --> 00:07:20,480 Speaker 3: great news, and that's more reason to think that the 161 00:07:20,480 --> 00:07:22,480 Speaker 3: FED can be a little bit more dubbish here. I 162 00:07:22,480 --> 00:07:25,320 Speaker 3: think they're pretty comfortable with the level of policy rates. 163 00:07:25,840 --> 00:07:27,440 Speaker 3: We still think they're probably going to hike one more 164 00:07:27,480 --> 00:07:29,080 Speaker 3: time in November, but that's probably going to be the 165 00:07:29,160 --> 00:07:30,800 Speaker 3: end of the cycle. And then it really comes back 166 00:07:30,840 --> 00:07:33,240 Speaker 3: to this question of when do they make that first cut. 167 00:07:33,640 --> 00:07:34,680 Speaker 1: Andrew honor. 168 00:07:38,760 --> 00:07:42,360 Speaker 5: John stelfhis chief Investment Strategies to Oppenheimer Asset Management Joints 169 00:07:42,400 --> 00:07:44,680 Speaker 5: us Now, John, wonderful to have a bull on the program. 170 00:07:44,800 --> 00:07:47,520 Speaker 5: Let's talk about why you're still so bullish and reflect 171 00:07:47,520 --> 00:07:49,240 Speaker 5: on the economic take of the week, sir, if we can. 172 00:07:49,520 --> 00:07:52,600 Speaker 5: There is a feeling that bad news is somewhat good news. 173 00:07:52,800 --> 00:07:55,280 Speaker 5: Is there a tipping point when bad news just becomes 174 00:07:55,520 --> 00:07:56,120 Speaker 5: bad news. 175 00:07:56,800 --> 00:08:00,240 Speaker 6: Well, thanks for having me on the show. John, It's 176 00:08:00,240 --> 00:08:03,320 Speaker 6: always great to be on surveillance. Have to say, you know, 177 00:08:03,400 --> 00:08:04,320 Speaker 6: when we look at. 178 00:08:04,200 --> 00:08:09,200 Speaker 7: It, things are to continue to get better, offsetting negativity. 179 00:08:09,280 --> 00:08:11,760 Speaker 6: That's why bad Nudes has been good news. 180 00:08:11,760 --> 00:08:15,040 Speaker 7: In essence, we're seeing the economy is genuinely slowing some, 181 00:08:15,760 --> 00:08:18,800 Speaker 7: but it's not falling off the cliff, whether it's the consumer, 182 00:08:18,920 --> 00:08:23,800 Speaker 7: whether it's jobs, whether it's it's our Q two earnings, 183 00:08:23,840 --> 00:08:25,560 Speaker 7: even though you had to drop in earnings for the 184 00:08:25,640 --> 00:08:27,800 Speaker 7: S and P five hundred least. I looked at my 185 00:08:27,840 --> 00:08:31,720 Speaker 7: Bloomberg a few minutes ago, but negative six percent on 186 00:08:31,760 --> 00:08:36,800 Speaker 7: the quarter. It's three sectors have the negative earnings growth. 187 00:08:36,840 --> 00:08:40,600 Speaker 7: Y're double digit and its energy, materials, and healthcare. It's 188 00:08:40,679 --> 00:08:43,959 Speaker 7: not tech or consumer discretionary or industrial. 189 00:08:44,960 --> 00:08:46,840 Speaker 2: John, you've been one of the great bulls. You've been 190 00:08:46,880 --> 00:08:48,679 Speaker 2: one of the great great bulls. Where are you right now? 191 00:08:48,760 --> 00:08:52,559 Speaker 2: For four thousand and one, forty nine hundred for the 192 00:08:52,679 --> 00:08:54,400 Speaker 2: end of the year remains our target. 193 00:08:54,840 --> 00:08:59,160 Speaker 7: We did lower our projection to what earnings will look 194 00:08:59,280 --> 00:09:02,240 Speaker 7: like for this year from two thirty down to two twenty, 195 00:09:03,080 --> 00:09:07,120 Speaker 7: but overall we're looking more support to the S and p. 196 00:09:07,280 --> 00:09:09,920 Speaker 6: Five hundred to remain remarkably strong. 197 00:09:10,080 --> 00:09:12,960 Speaker 2: What do you need to do to get to five thousand? 198 00:09:13,080 --> 00:09:14,760 Speaker 2: I mean, I got to make some news here today. 199 00:09:14,800 --> 00:09:16,440 Speaker 2: What do you need to do to up that the 200 00:09:16,480 --> 00:09:18,000 Speaker 2: five thousand time? 201 00:09:18,080 --> 00:09:21,760 Speaker 8: You're egging me on, you know, I think we need 202 00:09:21,800 --> 00:09:27,200 Speaker 8: to do to have some remarkable news related to the 203 00:09:27,240 --> 00:09:32,960 Speaker 8: feds achievements against inflation and a real clear signal that 204 00:09:33,080 --> 00:09:35,760 Speaker 8: it's the end of the cycle with a pause, not 205 00:09:35,880 --> 00:09:38,840 Speaker 8: because the economy is falling apart, but rather than it's 206 00:09:38,960 --> 00:09:39,960 Speaker 8: achieved its goal. 207 00:09:40,320 --> 00:09:42,280 Speaker 6: I don't think that happens this year. I think that 208 00:09:42,400 --> 00:09:44,080 Speaker 6: happens twenty twenty four. 209 00:09:44,760 --> 00:09:46,800 Speaker 4: Well, And in twenty twenty four is when this market 210 00:09:46,880 --> 00:09:50,439 Speaker 4: increasingly and earlier is expecting the FED to start cutting rates. 211 00:09:50,440 --> 00:09:52,240 Speaker 4: So if we do get to forty nine hundred or 212 00:09:52,240 --> 00:09:55,320 Speaker 4: potentially even five thousand, John, can we stay up there? 213 00:09:55,600 --> 00:09:58,200 Speaker 4: If the reason they're cutting is because things have turned 214 00:09:58,240 --> 00:10:01,240 Speaker 4: south and the tightening has taken perhaps more effect than 215 00:10:01,280 --> 00:10:03,600 Speaker 4: they would have wanted to if they overshoot. 216 00:10:03,679 --> 00:10:06,400 Speaker 7: Well, I think the key word there, the awkward word, 217 00:10:06,480 --> 00:10:08,840 Speaker 7: is if things have turned south. It's if things have 218 00:10:09,040 --> 00:10:11,840 Speaker 7: basically gone so that we really are are entering a 219 00:10:11,880 --> 00:10:16,920 Speaker 7: period of sustainable economic growth at a at a slow 220 00:10:17,040 --> 00:10:21,400 Speaker 7: or moderate case, I don't think that we'll be seen 221 00:10:21,559 --> 00:10:26,200 Speaker 7: the FED cut drastically, and this might be one of those, 222 00:10:26,520 --> 00:10:28,800 Speaker 7: just because when we look at it, the inflation is 223 00:10:28,840 --> 00:10:32,319 Speaker 7: caused by overstimulation and fiscal policies. What we look at 224 00:10:32,960 --> 00:10:36,000 Speaker 7: we think of two administrations, and they did that. 225 00:10:36,040 --> 00:10:37,360 Speaker 6: They were concerned. 226 00:10:36,880 --> 00:10:40,080 Speaker 7: About the effects of COVID on the economy, and likely 227 00:10:40,160 --> 00:10:43,199 Speaker 7: all that stimulation is what is enabling us to get 228 00:10:43,200 --> 00:10:45,760 Speaker 7: through this period of a FED fund's hip cycle as 229 00:10:45,760 --> 00:10:48,640 Speaker 7: well as we are. So we think at this point, 230 00:10:49,040 --> 00:10:51,840 Speaker 7: we think this is it continues to be a workout market, 231 00:10:52,240 --> 00:10:56,480 Speaker 7: and a workout market is always has considerable uncertainty to 232 00:10:56,559 --> 00:10:59,280 Speaker 7: it in terms of its outcome. But we wouldn't bet 233 00:10:59,320 --> 00:11:03,400 Speaker 7: against the American consumer, and we wouldn't bet against American business, 234 00:11:03,480 --> 00:11:04,600 Speaker 7: the American economy. 235 00:11:04,880 --> 00:11:05,560 Speaker 6: We think we're. 236 00:11:07,120 --> 00:11:09,520 Speaker 7: The sunlight is at the end of the tunnel, not 237 00:11:09,600 --> 00:11:10,920 Speaker 7: an oncoming locomotive. 238 00:11:11,120 --> 00:11:13,360 Speaker 5: Well, John's hope that's the case. The colodiale will for 239 00:11:13,520 --> 00:11:15,920 Speaker 5: the same way he said the consumer. Don't bet against 240 00:11:15,960 --> 00:11:19,080 Speaker 5: the American consumer. Plenty of retailers have flaked up plenty 241 00:11:19,120 --> 00:11:21,480 Speaker 5: of issues over the last couple of weeks. What you 242 00:11:21,520 --> 00:11:22,280 Speaker 5: read into that. 243 00:11:22,880 --> 00:11:26,199 Speaker 7: Most certainly, and yet consumer discretionary as the sector is 244 00:11:26,559 --> 00:11:29,400 Speaker 7: doing very well. I think it reflects the services end 245 00:11:29,480 --> 00:11:33,319 Speaker 7: of the economy versus the goods. A lot of that 246 00:11:33,559 --> 00:11:36,920 Speaker 7: is related to at this period in the cycle and 247 00:11:37,040 --> 00:11:40,319 Speaker 7: still the experiential adventure for the consumer. 248 00:11:40,360 --> 00:11:43,160 Speaker 6: In many ways the consumer has slowed. 249 00:11:43,200 --> 00:11:46,840 Speaker 7: And then if you look at the individual retailers, it 250 00:11:46,880 --> 00:11:50,760 Speaker 7: really has to do it. Who is balancing e commerce 251 00:11:51,040 --> 00:11:54,080 Speaker 7: and bricks and mortar or ecarmas and some kind of 252 00:11:54,280 --> 00:11:58,600 Speaker 7: touch with their consumer and meeting the consumers. 253 00:11:58,920 --> 00:12:00,800 Speaker 6: And so you know that's John. 254 00:12:00,840 --> 00:12:02,520 Speaker 2: What do you do with big Tech? I mean, let's 255 00:12:02,520 --> 00:12:04,720 Speaker 2: say I own shares have got a big gain. I mean, 256 00:12:05,080 --> 00:12:08,200 Speaker 2: do you have a a rationalization of owning those big 257 00:12:08,240 --> 00:12:12,040 Speaker 2: seven stocks where you just take a terminal value three years, 258 00:12:12,040 --> 00:12:14,000 Speaker 2: five years, hold your nose and say let's go. 259 00:12:15,080 --> 00:12:18,280 Speaker 6: I think you know it's not quite hold hold your nose. 260 00:12:18,480 --> 00:12:20,920 Speaker 7: It's take a look at look at the companies and 261 00:12:21,080 --> 00:12:24,880 Speaker 7: consider what businesses they have that are deeply embedded in 262 00:12:24,920 --> 00:12:28,640 Speaker 7: the lives and both the consumer as well as in business. 263 00:12:28,880 --> 00:12:30,720 Speaker 6: And amongst those Big seven. 264 00:12:30,960 --> 00:12:34,760 Speaker 7: It's a fairly recurring trend that you see or a 265 00:12:34,880 --> 00:12:39,040 Speaker 7: trend that keeps rolling forward in an upward direction. They 266 00:12:39,200 --> 00:12:42,920 Speaker 7: remain companies that are very deeply embedded in our lives, 267 00:12:42,960 --> 00:12:46,319 Speaker 7: both as consumers and as business people, and so revenue 268 00:12:46,320 --> 00:12:50,280 Speaker 7: growth is likely to continue. It'll ebb and flow at 269 00:12:50,280 --> 00:12:52,800 Speaker 7: different points that you know, it's trees don't grow to 270 00:12:52,840 --> 00:12:55,199 Speaker 7: the sky at all, but a general. 271 00:12:54,840 --> 00:12:58,319 Speaker 6: Trend looks like this is parallel. 272 00:12:57,840 --> 00:13:00,559 Speaker 7: To where the automobile was in the early twentieth century 273 00:13:00,960 --> 00:13:09,599 Speaker 7: after Ford had, you know, essentially improved. 274 00:13:05,040 --> 00:13:10,400 Speaker 6: The manufacturing process to. 275 00:13:12,400 --> 00:13:16,160 Speaker 7: Increase the ability of the automobile in terms of quality 276 00:13:16,480 --> 00:13:17,560 Speaker 7: and lower the price. 277 00:13:17,960 --> 00:13:19,720 Speaker 6: Technology easily accessible. 278 00:13:20,480 --> 00:13:23,760 Speaker 7: That makes it deeply embedded in our lives, and it's profitable. 279 00:13:24,160 --> 00:13:26,840 Speaker 4: So, John, what role does that small group of stocks 280 00:13:26,840 --> 00:13:28,920 Speaker 4: play in the four hundred point gap between where we 281 00:13:29,000 --> 00:13:30,960 Speaker 4: are now and where you think we're going to get 282 00:13:31,000 --> 00:13:33,439 Speaker 4: in forty nine hundred. Considering that they have been the 283 00:13:33,440 --> 00:13:36,560 Speaker 4: biggest point contributors to the games we've seen this year, 284 00:13:36,600 --> 00:13:38,599 Speaker 4: can they continue to provide that leadership? 285 00:13:39,080 --> 00:13:43,160 Speaker 7: Well, you know, I think in essence, when we look 286 00:13:43,200 --> 00:13:47,120 Speaker 7: at it, you've got to realize that technology is not 287 00:13:47,360 --> 00:13:52,320 Speaker 7: unto itself. Rather, it contributes to all eleven sectors. So 288 00:13:52,440 --> 00:13:56,320 Speaker 7: within the eleven sectors. I mean, we own some industrial stocks. 289 00:13:56,320 --> 00:13:58,320 Speaker 7: I can't mention the name. The firm doesn't allow me 290 00:13:58,360 --> 00:14:02,559 Speaker 7: to pitch one. Got that, but but but we own 291 00:14:03,120 --> 00:14:09,000 Speaker 7: stocks in the industrial sector, in consumer discretionary, uh and uh, 292 00:14:09,640 --> 00:14:12,720 Speaker 7: within within the space of other sectors that have done 293 00:14:12,760 --> 00:14:13,640 Speaker 7: remarkably well. 294 00:14:14,320 --> 00:14:14,400 Speaker 8: Uh. 295 00:14:14,480 --> 00:14:16,120 Speaker 6: And it just has to do with UH. 296 00:14:16,720 --> 00:14:20,800 Speaker 7: It's it's a combination of alpha generation as well as 297 00:14:20,880 --> 00:14:22,480 Speaker 7: as playing the broader sectors. 298 00:14:22,640 --> 00:14:24,360 Speaker 5: John, I get you can't do single names, but can 299 00:14:24,400 --> 00:14:28,160 Speaker 5: you just describe in great detail what's within consumer discretionary, 300 00:14:28,480 --> 00:14:32,000 Speaker 5: given that it's such a broad space within. 301 00:14:31,880 --> 00:14:34,840 Speaker 7: Consumer discretionary, you know, it has to do again with 302 00:14:34,960 --> 00:14:39,640 Speaker 7: leisure stocks. It has to do with stocks related to 303 00:14:41,240 --> 00:14:47,320 Speaker 7: gaming to travel, has to do with the the electrification 304 00:14:47,440 --> 00:14:51,400 Speaker 7: of the automobile and the process of that transition that's 305 00:14:51,480 --> 00:14:54,800 Speaker 7: reflected within all kinds of products that are sold in stores. 306 00:14:55,240 --> 00:14:55,600 Speaker 6: Uh. 307 00:14:55,640 --> 00:14:58,240 Speaker 7: And it also has to do there's there's a certain 308 00:14:58,280 --> 00:15:01,040 Speaker 7: element here coming up where there is a back to 309 00:15:01,080 --> 00:15:03,880 Speaker 7: the office trend that is not back to the office 310 00:15:03,960 --> 00:15:07,240 Speaker 7: like we used to be, but certainly where people are 311 00:15:07,240 --> 00:15:11,080 Speaker 7: coming out of the caves, going back to going back 312 00:15:11,120 --> 00:15:15,920 Speaker 7: to a more normalized environment where they show up at 313 00:15:15,920 --> 00:15:17,240 Speaker 7: the office three days a week. 314 00:15:17,480 --> 00:15:19,400 Speaker 5: Hey, John, get to hear from you as it wise. 315 00:15:19,520 --> 00:15:21,359 Speaker 5: John stelf Is of Oppenheimen. 316 00:15:31,840 --> 00:15:35,400 Speaker 2: Cameron Dawson joining a cio at Red Bull Formula one Racing, 317 00:15:35,960 --> 00:15:37,800 Speaker 2: joins us this morning. Thank you so much for your 318 00:15:37,800 --> 00:15:41,160 Speaker 2: patience with Max for stepping greatly appreciate it. You've got 319 00:15:41,200 --> 00:15:43,560 Speaker 2: one single sentence and you go right to the heart 320 00:15:43,600 --> 00:15:47,280 Speaker 2: of it. September is the worst month, and yet you're 321 00:15:47,400 --> 00:15:48,960 Speaker 2: hardwired optimistic. 322 00:15:49,040 --> 00:15:50,320 Speaker 1: You got to be in the market. 323 00:15:50,600 --> 00:15:52,760 Speaker 2: Do you go to cash in September? 324 00:15:52,880 --> 00:15:55,800 Speaker 9: No, because September being the worst month is just because 325 00:15:55,800 --> 00:15:59,160 Speaker 9: it's below average returns. It's not necessarily that it's all 326 00:15:59,200 --> 00:16:02,320 Speaker 9: going to employ. And even the correction that we had 327 00:16:02,360 --> 00:16:05,720 Speaker 9: in August was below average, meaning it was so small 328 00:16:05,760 --> 00:16:08,800 Speaker 9: in its magnitudes, so it doesn't really warrant making big 329 00:16:08,840 --> 00:16:11,400 Speaker 9: portfolio changes. I think at the end of the day, 330 00:16:11,440 --> 00:16:14,480 Speaker 9: this correction has not been about growth, and in fact, 331 00:16:14,520 --> 00:16:18,520 Speaker 9: we've actually seen EPs growth estimates going up in recent weeks, 332 00:16:18,720 --> 00:16:20,720 Speaker 9: and I think that's one of the reasons for these shorter, 333 00:16:20,800 --> 00:16:24,240 Speaker 9: shallow corrections. It's when the revision cycle turns down that 334 00:16:24,320 --> 00:16:26,240 Speaker 9: you should be more concerned of a deeper correction. 335 00:16:26,480 --> 00:16:28,960 Speaker 5: Ian lingn Be months ago, we just played the clip 336 00:16:29,000 --> 00:16:31,440 Speaker 5: he said, screaming by ten years. It's actually my words 337 00:16:31,480 --> 00:16:33,240 Speaker 5: that I put in his math, but we agreed with it. 338 00:16:33,280 --> 00:16:34,720 Speaker 5: Do you agree it's a screaming by. 339 00:16:34,720 --> 00:16:37,200 Speaker 9: Well, if the ten years are screaming by, then credit 340 00:16:37,360 --> 00:16:40,960 Speaker 9: is a screaming cell, and equities, at least the riskiest 341 00:16:40,960 --> 00:16:43,520 Speaker 9: parts of equities would be a screaming cell. Because we 342 00:16:43,560 --> 00:16:46,400 Speaker 9: think that for the tenure to go back to three percent, 343 00:16:46,840 --> 00:16:50,240 Speaker 9: you would actually have to see much weaker economic environment. 344 00:16:50,320 --> 00:16:52,640 Speaker 9: You'd need to see the whites of the eyes of 345 00:16:52,680 --> 00:16:56,280 Speaker 9: a recession, and that likely means then that those economic 346 00:16:56,520 --> 00:16:59,400 Speaker 9: or those earning productions for twenty twenty four, which have 347 00:16:59,520 --> 00:17:03,720 Speaker 9: about double digit growth are way too high. So if 348 00:17:03,880 --> 00:17:05,879 Speaker 9: the tenure goes back to three percent, we think it 349 00:17:05,880 --> 00:17:07,440 Speaker 9: would be bad for risk assets. 350 00:17:07,560 --> 00:17:10,600 Speaker 4: Do you see that recession not wives of the eyes? 351 00:17:10,760 --> 00:17:13,600 Speaker 9: No, not yet, though you know there's all this discussion 352 00:17:13,640 --> 00:17:17,400 Speaker 9: about GDP versus GDI and if GDP will catch down 353 00:17:17,480 --> 00:17:20,240 Speaker 9: and really what is the underlying growth rate. But for 354 00:17:20,320 --> 00:17:23,160 Speaker 9: right now, we don't see enough evidence that a recession 355 00:17:23,200 --> 00:17:25,520 Speaker 9: is emminent, and there's still our calls that will enter 356 00:17:25,560 --> 00:17:27,760 Speaker 9: one in the fourth quarter. We think if we do 357 00:17:27,840 --> 00:17:30,400 Speaker 9: have one, it's much more of a twenty twenty four scenario, 358 00:17:30,440 --> 00:17:32,800 Speaker 9: which just means that it's not being priced in yet. 359 00:17:33,119 --> 00:17:35,240 Speaker 4: If we don't have one, though, couldn't that also be 360 00:17:35,320 --> 00:17:37,800 Speaker 4: bad news if the landing is too soft, couldn't that 361 00:17:37,840 --> 00:17:40,840 Speaker 4: mean the FED has to do more and then eventually 362 00:17:40,880 --> 00:17:41,560 Speaker 4: has to force it. 363 00:17:41,600 --> 00:17:44,800 Speaker 9: Anyway, Yeah, it is very peculiar because that is actually 364 00:17:44,880 --> 00:17:47,560 Speaker 9: what's happened in twenty twenty three. The Fed has had 365 00:17:47,560 --> 00:17:50,160 Speaker 9: to do more than what was projected. The bond market 366 00:17:50,200 --> 00:17:52,800 Speaker 9: has had to price in more hikes less cuts. You've 367 00:17:52,840 --> 00:17:55,720 Speaker 9: seen yields go up. Yields since or the pricing of 368 00:17:55,760 --> 00:17:59,520 Speaker 9: the December twenty twenty three FED rate has gone up 369 00:17:59,520 --> 00:18:02,800 Speaker 9: one hundred seventy basis points since the March low. Since 370 00:18:02,840 --> 00:18:07,440 Speaker 9: that time, the Nasdaq PE multiple is up thirty six percent. 371 00:18:07,960 --> 00:18:11,560 Speaker 9: So I don't know going forward if the path of 372 00:18:11,600 --> 00:18:15,000 Speaker 9: the FED matters as much for equity valuations as it did, 373 00:18:15,119 --> 00:18:16,560 Speaker 9: let's say in twenty one or twenty two. 374 00:18:16,720 --> 00:18:19,919 Speaker 2: We talked a few days ago about the cost of 375 00:18:19,960 --> 00:18:23,760 Speaker 2: real estate renting, the struggle for a huge body of 376 00:18:23,800 --> 00:18:26,800 Speaker 2: America to find a down payment for real estate We 377 00:18:26,880 --> 00:18:30,640 Speaker 2: had a huge response on that discussion. Do you advocate 378 00:18:31,440 --> 00:18:35,560 Speaker 2: margin here within this bull market? This question doesn't come 379 00:18:35,640 --> 00:18:38,399 Speaker 2: up enough. I think everybody's out there selling the idea 380 00:18:38,400 --> 00:18:43,120 Speaker 2: of leverage up margin, options, margin, future's margin, margin margin. 381 00:18:43,520 --> 00:18:47,520 Speaker 2: Do you advocate using margin within the growth sphere? 382 00:18:47,840 --> 00:18:49,960 Speaker 9: Well, margin is a heck of a lot more expensive 383 00:18:50,040 --> 00:18:52,440 Speaker 9: than it was just a few years ago, given rates 384 00:18:52,440 --> 00:18:54,880 Speaker 9: are higher, So you have to factor that into the equation. 385 00:18:55,400 --> 00:18:58,200 Speaker 9: We have seen. You can see measures in finrid data 386 00:18:58,240 --> 00:19:00,760 Speaker 9: about the usage of margin debt and that's come off 387 00:19:00,800 --> 00:19:03,359 Speaker 9: of the twenty twenty win peaks, which is not surprising. 388 00:19:03,720 --> 00:19:06,000 Speaker 9: But the real question is how much of that is 389 00:19:06,040 --> 00:19:10,840 Speaker 9: being replaced by options, which are a form of margins roughly, 390 00:19:11,000 --> 00:19:14,679 Speaker 9: and so you've seen so much option activities, surging call options, 391 00:19:14,720 --> 00:19:18,160 Speaker 9: through zero data expiration options. So margin is always something 392 00:19:18,160 --> 00:19:20,879 Speaker 9: that you have to play with very very carefully because it, 393 00:19:20,960 --> 00:19:23,400 Speaker 9: of course can work against you very quickly. 394 00:19:23,640 --> 00:19:25,080 Speaker 5: Memories sometimes that can go back. 395 00:19:25,920 --> 00:19:26,840 Speaker 1: Cameras just nailed them. 396 00:19:26,920 --> 00:19:29,200 Speaker 5: Can we talk about a different kind of margin? Profit margins? 397 00:19:29,400 --> 00:19:32,399 Speaker 5: At Dollar General, they've come out and basically said earnings 398 00:19:32,400 --> 00:19:34,159 Speaker 5: are going to tumble as much as thirty four percent 399 00:19:34,480 --> 00:19:36,760 Speaker 5: on a share basis during the current fiscal year. It's 400 00:19:36,800 --> 00:19:39,639 Speaker 5: pretty brutal stuff. They're not alone. Are you taking what 401 00:19:39,680 --> 00:19:43,199 Speaker 5: the retailers are saying seriously? Is this more important than 402 00:19:43,200 --> 00:19:45,560 Speaker 5: what the hard data is tanagus right now, which is 403 00:19:45,720 --> 00:19:47,480 Speaker 5: retail consumption is better than good. 404 00:19:47,760 --> 00:19:50,640 Speaker 9: Well, there's some retailers that have pricing power and some 405 00:19:50,800 --> 00:19:54,080 Speaker 9: that don't. And I think that Dollar General probably falls 406 00:19:54,119 --> 00:19:57,919 Speaker 9: into that category where the elasticity of the demand of 407 00:19:57,960 --> 00:20:01,960 Speaker 9: their customers is much different than the higher end retail 408 00:20:01,960 --> 00:20:05,000 Speaker 9: where they can continue to push price, they can continue 409 00:20:05,000 --> 00:20:08,199 Speaker 9: to pass on those higher costs to their customers. So 410 00:20:08,320 --> 00:20:11,040 Speaker 9: the areas where you don't have pricing powers where you're 411 00:20:11,040 --> 00:20:12,080 Speaker 9: seeing the margin pressure. 412 00:20:12,200 --> 00:20:13,840 Speaker 4: Yeah, And of course, when we're talking about the different 413 00:20:13,840 --> 00:20:18,000 Speaker 4: areas within discretionary in pricing power, travel airlines, they've been 414 00:20:18,040 --> 00:20:20,800 Speaker 4: able to exercise pricing power in such a material ways 415 00:20:20,800 --> 00:20:23,400 Speaker 4: we've seen demand recover out of the pandemic. And John 416 00:20:23,440 --> 00:20:25,399 Speaker 4: you earlier this week pointed to when we got the 417 00:20:25,440 --> 00:20:29,440 Speaker 4: consumer confidence data, which was weaker, people were still willing to. 418 00:20:29,400 --> 00:20:31,879 Speaker 5: Travel, planning vacations, put it on their credit card. Now, 419 00:20:31,920 --> 00:20:33,560 Speaker 5: I don't know whether to believe that dates or not. 420 00:20:33,760 --> 00:20:36,080 Speaker 5: I'm wondering whether They just saw Instagram posts and were like, 421 00:20:36,119 --> 00:20:38,520 Speaker 5: I'm planning one too, right. I wonder how that data 422 00:20:38,560 --> 00:20:41,439 Speaker 5: is put together. We're going to see that vacation boom continue. 423 00:20:41,640 --> 00:20:43,920 Speaker 9: Yeah, the fomo is real. And there's all this talk 424 00:20:43,960 --> 00:20:46,520 Speaker 9: about all of the summer that we've had with the concerts, 425 00:20:46,600 --> 00:20:49,400 Speaker 9: the hot girls summer. If that's coming to an end. 426 00:20:50,000 --> 00:20:51,760 Speaker 9: I think at the end of the day, the question 427 00:20:51,880 --> 00:20:55,639 Speaker 9: going forward is can the consumer continue to live beyond means. 428 00:20:55,640 --> 00:20:58,840 Speaker 9: We've seen credit usage go up, but it's that savings 429 00:20:58,920 --> 00:21:01,480 Speaker 9: rate that's coming down, and in the savings balance that 430 00:21:01,560 --> 00:21:02,640 Speaker 9: has been whittled down. 431 00:21:02,720 --> 00:21:04,080 Speaker 1: Did you see how chill just. 432 00:21:04,040 --> 00:21:06,560 Speaker 2: Came into our offices here at seven point thirty one. 433 00:21:06,600 --> 00:21:08,560 Speaker 2: I saw hollendhorse walk by Andrea. 434 00:21:08,600 --> 00:21:10,960 Speaker 1: It's like the black Colt Loud of high interest rates. 435 00:21:11,320 --> 00:21:13,200 Speaker 5: Because the lights on in the corner. 436 00:21:14,520 --> 00:21:16,639 Speaker 2: The room when Hollendhorst shows up. If we get an 437 00:21:16,640 --> 00:21:20,520 Speaker 2: Andrew Hollenhorst world of higher interest rates, what does that 438 00:21:20,600 --> 00:21:22,040 Speaker 2: do to your stock portfolio? 439 00:21:22,840 --> 00:21:25,359 Speaker 9: Well, I think it does increasingly create a challenge. But 440 00:21:25,400 --> 00:21:28,399 Speaker 9: as we just just talked about, is that we have 441 00:21:28,520 --> 00:21:32,520 Speaker 9: seen this divergence of yields and growth valuations. For example, 442 00:21:32,840 --> 00:21:35,320 Speaker 9: in the past, we would say that if yields continue 443 00:21:35,359 --> 00:21:38,480 Speaker 9: to climb higher, we should be concerned that growth valuations 444 00:21:38,520 --> 00:21:42,439 Speaker 9: trading up near twenty twenty one highs would not be sustainable. Now, 445 00:21:42,480 --> 00:21:46,359 Speaker 9: if yields are higher because growth is better, inflation's higher, 446 00:21:46,600 --> 00:21:49,200 Speaker 9: that is good for the earning side of the scenario, 447 00:21:49,359 --> 00:21:51,280 Speaker 9: but then you get that offset from valuation. 448 00:21:51,720 --> 00:21:54,480 Speaker 5: The aerostour has been the most mainingful electric experience of 449 00:21:54,480 --> 00:21:55,960 Speaker 5: my life so far. I'm I of a joy to 450 00:21:56,000 --> 00:21:57,720 Speaker 5: Tandy that will be coming to the big screen soon 451 00:21:58,080 --> 00:22:02,040 Speaker 5: starting October thirteenth, to experience the concert, film and theaters 452 00:22:02,080 --> 00:22:03,160 Speaker 5: tom in North America? 453 00:22:03,560 --> 00:22:04,080 Speaker 10: Do you like that? 454 00:22:04,359 --> 00:22:05,280 Speaker 4: This is Taylor Swift? 455 00:22:05,840 --> 00:22:09,399 Speaker 5: John? I need definitely is a direct? 456 00:22:09,480 --> 00:22:11,200 Speaker 2: Do I need a friendship bracelet? 457 00:22:11,320 --> 00:22:13,280 Speaker 5: What's a friendship something? 458 00:22:14,680 --> 00:22:16,920 Speaker 1: Have you seen this, Cameron? Have you seen miss Swifts to. 459 00:22:16,840 --> 00:22:17,639 Speaker 5: Buy them on beaches? 460 00:22:17,760 --> 00:22:18,000 Speaker 2: No? 461 00:22:18,080 --> 00:22:20,399 Speaker 9: No, I'm we're looking. 462 00:22:20,160 --> 00:22:23,320 Speaker 2: At Paris tickets. Paris tickets in May of next year. 463 00:22:23,800 --> 00:22:27,000 Speaker 2: A decent seats nine hundred bucks and somewhere back near 464 00:22:27,080 --> 00:22:30,320 Speaker 2: Lyon is seven hundred dollars. 465 00:22:30,520 --> 00:22:33,080 Speaker 5: Cameron, Thank you, Cameron Dawson. New watch. 466 00:22:37,600 --> 00:22:40,800 Speaker 2: Someone is esoteric and wonderful as maxt for staff and 467 00:22:41,000 --> 00:22:44,480 Speaker 2: Sean Patrick Byner is in frankfort here any no Swiss banking. 468 00:22:44,520 --> 00:22:48,240 Speaker 2: He's worked within the banking racket and provides journalistic services 469 00:22:48,280 --> 00:22:51,600 Speaker 2: to Bloomberg News. Were you surprised by these announcements? John, 470 00:22:51,640 --> 00:22:53,920 Speaker 2: I mean, come on, you buy the bank. It's a 471 00:22:53,960 --> 00:22:57,680 Speaker 2: shotgun marriage, you know how that's funny accounting and all that. 472 00:22:57,920 --> 00:23:00,520 Speaker 2: Am I supposed to be surprised at twenty nine billion 473 00:23:00,600 --> 00:23:01,960 Speaker 2: dollar statistic? 474 00:23:04,040 --> 00:23:04,119 Speaker 7: No? 475 00:23:04,240 --> 00:23:04,840 Speaker 10: Absolutely not. 476 00:23:04,880 --> 00:23:08,080 Speaker 11: That's accounting, Shenanig, And we all know that they bought 477 00:23:08,080 --> 00:23:09,720 Speaker 11: credits with on the cheap when it comes to the 478 00:23:09,800 --> 00:23:11,879 Speaker 11: pure purchase price, and there are a lot of risks 479 00:23:11,880 --> 00:23:14,120 Speaker 11: that associated with the years of the twenty nine billion 480 00:23:14,200 --> 00:23:16,480 Speaker 11: number is not not very surprising, but what you can 481 00:23:16,560 --> 00:23:18,720 Speaker 11: be surprised about a little bit, or at least I was, 482 00:23:18,760 --> 00:23:21,000 Speaker 11: and I feel like some market participants as well. It's 483 00:23:21,080 --> 00:23:24,280 Speaker 11: like how firm the management of UBS already is in 484 00:23:24,359 --> 00:23:26,600 Speaker 11: their idea and their vision on how they want the 485 00:23:26,640 --> 00:23:27,480 Speaker 11: merger to play out. 486 00:23:27,480 --> 00:23:30,280 Speaker 10: That's very unusual. As you said, it was a shotgun marriage. 487 00:23:30,280 --> 00:23:32,680 Speaker 11: It was just barely six months ago, and I feel 488 00:23:32,720 --> 00:23:35,200 Speaker 11: like they're giving us really good content and good ideas 489 00:23:35,280 --> 00:23:37,520 Speaker 11: on how they want to shape up this merger where 490 00:23:37,520 --> 00:23:39,639 Speaker 11: they want the bank to position, And that's a very 491 00:23:39,640 --> 00:23:41,520 Speaker 11: surprising thing to me that they're able to do this. 492 00:23:41,720 --> 00:23:44,920 Speaker 2: When you're popping a twenty euro bowl of soup and 493 00:23:45,000 --> 00:23:48,879 Speaker 2: brasserie lip, you people are gossiping about who from Credit 494 00:23:49,000 --> 00:23:53,160 Speaker 2: Suite survived? Did many people from Credit SUITEE survive? 495 00:23:55,240 --> 00:23:57,680 Speaker 10: Well, for the time being, that is still the case. 496 00:23:57,720 --> 00:23:59,399 Speaker 11: I mean, we heard that they are cutting three thousand 497 00:23:59,440 --> 00:24:02,360 Speaker 11: jobs in in Switzerland, and as you mentioned before, that's 498 00:24:02,400 --> 00:24:05,320 Speaker 11: probably not the end of the of the of the 499 00:24:05,400 --> 00:24:07,359 Speaker 11: number here and we will get something much much higher, 500 00:24:07,359 --> 00:24:09,280 Speaker 11: and they will like feed this to the market and 501 00:24:09,320 --> 00:24:12,840 Speaker 11: to the politicians, to the general public, especially step by step, 502 00:24:12,880 --> 00:24:15,199 Speaker 11: not to lose their the cover for the merger or 503 00:24:15,200 --> 00:24:17,720 Speaker 11: to create any any storm that they don't want. On 504 00:24:17,800 --> 00:24:20,280 Speaker 11: the other hand, I also feel like while they're giving 505 00:24:20,320 --> 00:24:21,880 Speaker 11: us a good idea on where they want the bank 506 00:24:21,920 --> 00:24:24,200 Speaker 11: to be any position and how they want to move forward, 507 00:24:24,480 --> 00:24:26,560 Speaker 11: is that they haven't figured out all the details. And 508 00:24:26,600 --> 00:24:29,040 Speaker 11: we've heard the CEO today that's saying he is surprised 509 00:24:29,080 --> 00:24:33,479 Speaker 11: by how many good additional business credits is bringing in 510 00:24:33,560 --> 00:24:37,040 Speaker 11: that is fitting into the overall picture. So I think 511 00:24:37,080 --> 00:24:38,879 Speaker 11: like they have not fully figured out like where do 512 00:24:38,880 --> 00:24:40,359 Speaker 11: we want to keep the talent and where do we 513 00:24:40,440 --> 00:24:42,560 Speaker 11: have like the real oval app that we need to 514 00:24:42,560 --> 00:24:43,080 Speaker 11: get rid of. 515 00:24:43,480 --> 00:24:46,280 Speaker 4: So there's clearly still work left to be done. What 516 00:24:46,440 --> 00:24:49,040 Speaker 4: timeline realistically are we looking at? How much longer is 517 00:24:49,040 --> 00:24:49,800 Speaker 4: this going to take? 518 00:24:51,359 --> 00:24:53,840 Speaker 11: Well, it's still going to take years, that's that's for sure. 519 00:24:53,840 --> 00:24:56,119 Speaker 11: But again as is doing the right thing here in 520 00:24:56,600 --> 00:24:58,719 Speaker 11: terms of that they are giving us like step by 521 00:24:58,800 --> 00:25:01,080 Speaker 11: step and on every meeting they are speaking, they're giving 522 00:25:01,160 --> 00:25:03,399 Speaker 11: us something to deal with and to see like in 523 00:25:03,640 --> 00:25:07,120 Speaker 11: which direction the bank is heading the whole merger until 524 00:25:07,160 --> 00:25:09,080 Speaker 11: we get like the final picture is probably still going 525 00:25:09,080 --> 00:25:11,120 Speaker 11: to be next year or even like twenty twenty five, 526 00:25:11,680 --> 00:25:14,399 Speaker 11: until they have figured everything out. But they promise they 527 00:25:14,400 --> 00:25:17,200 Speaker 11: give us more details on the fourth quarter earnings, which 528 00:25:17,200 --> 00:25:20,200 Speaker 11: will be somewhere in January or February of next year. 529 00:25:20,240 --> 00:25:22,240 Speaker 11: So that's the next milestone to watch. And at the 530 00:25:22,280 --> 00:25:24,440 Speaker 11: end of the analyst coll search a multi, the CEO 531 00:25:24,560 --> 00:25:26,800 Speaker 11: also said like there's plenty of time to speak to 532 00:25:26,800 --> 00:25:28,760 Speaker 11: each other in case there are any questions until the 533 00:25:28,800 --> 00:25:32,400 Speaker 11: third quarter earnings. So again they understand that the market 534 00:25:32,560 --> 00:25:35,120 Speaker 11: is desperate for information and wants to see like every 535 00:25:35,119 --> 00:25:37,520 Speaker 11: new development what they're doing, and they have understood this, 536 00:25:37,560 --> 00:25:39,840 Speaker 11: and I'm pretty sure they will if they have good news, 537 00:25:40,119 --> 00:25:41,879 Speaker 11: they will feed this to us step by step in 538 00:25:41,920 --> 00:25:42,840 Speaker 11: as early as possible. 539 00:25:43,240 --> 00:25:45,800 Speaker 4: If they have good news, Where are the potential opportunities 540 00:25:45,800 --> 00:25:49,040 Speaker 4: for bad news? What are the biggest risks here? 541 00:25:49,800 --> 00:25:50,000 Speaker 1: Yeah? 542 00:25:50,040 --> 00:25:51,480 Speaker 10: Yeah, absolutely, and there are plenty. 543 00:25:51,520 --> 00:25:53,919 Speaker 11: And it was funny again the CEO saying on the 544 00:25:53,920 --> 00:25:56,239 Speaker 11: call that they are are not naive and they are 545 00:25:56,240 --> 00:25:58,520 Speaker 11: not like painting a blue sky scenario here. 546 00:25:59,000 --> 00:26:00,640 Speaker 10: There are obstacles along the way. 547 00:26:00,840 --> 00:26:02,800 Speaker 11: One is like with the risk weighted assets that they 548 00:26:02,800 --> 00:26:06,480 Speaker 11: have now outsourced into the so called noncre and legacy unit, 549 00:26:06,680 --> 00:26:09,320 Speaker 11: that's fifty five billion dollars, So that's a lot of 550 00:26:09,480 --> 00:26:11,000 Speaker 11: stuff that can potentially blow up. 551 00:26:11,040 --> 00:26:12,760 Speaker 10: They said it won't, but you never know. 552 00:26:12,960 --> 00:26:14,760 Speaker 11: The other thing is like they still don't know how 553 00:26:14,760 --> 00:26:17,280 Speaker 11: the clients will behave It's looking pretty solid right now 554 00:26:17,280 --> 00:26:20,080 Speaker 11: in terms of clients coming back to the combined lender, 555 00:26:20,560 --> 00:26:22,679 Speaker 11: but we need at least like two or three more 556 00:26:22,760 --> 00:26:25,399 Speaker 11: quarters to see if, like if this trend is sustained. 557 00:26:25,920 --> 00:26:28,080 Speaker 11: And also like they were very short on details on 558 00:26:28,119 --> 00:26:30,720 Speaker 11: telling us like how do you want to win back 559 00:26:30,760 --> 00:26:33,360 Speaker 11: the clients, how do you want to align your business 560 00:26:33,359 --> 00:26:35,720 Speaker 11: in details in certain areas. Of course it's a bit 561 00:26:35,840 --> 00:26:38,399 Speaker 11: much to ask, again just six months since the merger 562 00:26:38,440 --> 00:26:41,320 Speaker 11: was announced, but a little bit more details here would 563 00:26:41,359 --> 00:26:43,160 Speaker 11: be helpful. And there are still like some areas where 564 00:26:43,160 --> 00:26:44,240 Speaker 11: they could surprise. 565 00:26:44,080 --> 00:26:47,040 Speaker 1: Now that they're one. Who's their arch competitor? 566 00:26:47,240 --> 00:26:49,600 Speaker 2: I mean, obviously I'm going to say Deutsche Bank, but 567 00:26:49,680 --> 00:26:53,000 Speaker 2: inform me who are they competing against other Swiss banks 568 00:26:53,040 --> 00:26:56,439 Speaker 2: I don't know, or Deutsche Bank or JP Morgan. 569 00:26:56,520 --> 00:26:58,120 Speaker 1: Who's you bees competing against? 570 00:27:00,000 --> 00:27:01,359 Speaker 11: That's a very good question. I mean, like they have 571 00:27:01,440 --> 00:27:03,719 Speaker 11: nobody like on the same level here in Europe. But 572 00:27:03,760 --> 00:27:05,280 Speaker 11: of course you have a lot of niche players or 573 00:27:05,280 --> 00:27:07,960 Speaker 11: small wealth management players will try to get a share 574 00:27:07,960 --> 00:27:10,760 Speaker 11: and who will try to benefit of that client behavior 575 00:27:10,800 --> 00:27:12,879 Speaker 11: where clients lost certainly not going to have like a 576 00:27:13,240 --> 00:27:16,640 Speaker 11: concentration risk from their assets at credits with and ubs. 577 00:27:16,680 --> 00:27:20,040 Speaker 11: So I guess like everybody will try to get a 578 00:27:20,040 --> 00:27:22,560 Speaker 11: big cake here. But I was just like thinking about 579 00:27:22,560 --> 00:27:25,240 Speaker 11: this for a broader story, like every European bank, maybe 580 00:27:25,240 --> 00:27:27,679 Speaker 11: you want to watch this merger very closely because you 581 00:27:27,720 --> 00:27:31,439 Speaker 11: suddenly see even though it was forced, it somehow seems 582 00:27:31,440 --> 00:27:34,000 Speaker 11: to work. And you have now a major, major bank 583 00:27:34,040 --> 00:27:37,560 Speaker 11: here with like five trillion dollars of assets under management, 584 00:27:38,160 --> 00:27:41,359 Speaker 11: and you need to compete against them. So the question is, like, 585 00:27:41,400 --> 00:27:43,200 Speaker 11: for all the other big players out there, do you 586 00:27:43,240 --> 00:27:45,120 Speaker 11: want to consider a merger maybe as well to get 587 00:27:45,160 --> 00:27:48,320 Speaker 11: to the same scale, because otherwise competing against ubs in 588 00:27:48,400 --> 00:27:50,720 Speaker 11: terms of wealth management at least seems to be a 589 00:27:50,800 --> 00:27:52,159 Speaker 11: very hard and upward battle. 590 00:27:52,160 --> 00:27:54,479 Speaker 5: I would say, yeah, isn't this unique though? Didn't they 591 00:27:54,480 --> 00:27:56,160 Speaker 5: get a dance partner essentially for free? 592 00:27:59,280 --> 00:28:01,760 Speaker 11: Well, I mean, yeah, you could come to that conclusion, 593 00:28:01,800 --> 00:28:03,600 Speaker 11: I would say, of course. I mean the price was 594 00:28:03,760 --> 00:28:06,480 Speaker 11: very cheap. But again, like there are still risks associated 595 00:28:06,480 --> 00:28:08,720 Speaker 11: with this merger. It's not a done deal yet. It's 596 00:28:08,760 --> 00:28:11,080 Speaker 11: looking pretty well for the time being. But again you 597 00:28:11,119 --> 00:28:13,680 Speaker 11: could see, like the final quarter results that we had 598 00:28:13,680 --> 00:28:16,119 Speaker 11: from credits Is today had a ten billion dollar loss 599 00:28:16,160 --> 00:28:18,879 Speaker 11: in it, sorry, ten billion Swiss Franks loss in it. 600 00:28:19,080 --> 00:28:21,119 Speaker 11: So there's still like a huge burden that they now 601 00:28:21,160 --> 00:28:23,920 Speaker 11: have on the balance sheet. Again, there are fifty five 602 00:28:23,960 --> 00:28:26,520 Speaker 11: billion dollars in this non core unit that they need 603 00:28:26,560 --> 00:28:29,159 Speaker 11: to run down, and again they still don't know how 604 00:28:29,200 --> 00:28:30,320 Speaker 11: clients will behave. 605 00:28:30,160 --> 00:28:32,919 Speaker 10: So it's looking good right now. They're doing the right things. 606 00:28:33,000 --> 00:28:35,960 Speaker 11: But this is not in dry papers now and there 607 00:28:35,960 --> 00:28:37,960 Speaker 11: could still go something wrong. So I would say like 608 00:28:38,160 --> 00:28:39,840 Speaker 11: telling them this was for free and of course this 609 00:28:39,920 --> 00:28:40,440 Speaker 11: is going well. 610 00:28:40,520 --> 00:28:41,640 Speaker 10: Is too short? 611 00:28:42,000 --> 00:28:44,880 Speaker 5: Well said then? Patrick? Thank you, said them, Patrick Bounder. 612 00:28:45,040 --> 00:28:58,800 Speaker 5: I've blown back on evs Max with Stappan of Red 613 00:28:58,840 --> 00:29:01,400 Speaker 5: Bull Racing Joint us right now. Max, good morning buddy. 614 00:29:01,400 --> 00:29:03,720 Speaker 5: It's great to catch up with you, sir. Nine wins 615 00:29:04,200 --> 00:29:06,280 Speaker 5: in a row just phenomenal. You're trying to make it 616 00:29:06,360 --> 00:29:08,600 Speaker 5: ten at Monster. How special would that be? 617 00:29:10,120 --> 00:29:12,000 Speaker 12: Yeah, I mean, of course it's something that I never 618 00:29:12,040 --> 00:29:15,120 Speaker 12: even you know, told about that that is even possible. Right, 619 00:29:15,120 --> 00:29:16,920 Speaker 12: But now that we have one nine in a row, 620 00:29:17,320 --> 00:29:20,320 Speaker 12: tying the record, of course you want more, and I 621 00:29:20,360 --> 00:29:22,440 Speaker 12: think we have a we have a good opportunity. But 622 00:29:23,280 --> 00:29:26,600 Speaker 12: if on reasons are never straightforward, a lot of things 623 00:29:26,600 --> 00:29:30,000 Speaker 12: that can can happen. But yeah, I'm excited, of course 624 00:29:30,000 --> 00:29:30,560 Speaker 12: for the weekend. 625 00:29:30,640 --> 00:29:30,840 Speaker 10: Max. 626 00:29:30,920 --> 00:29:33,200 Speaker 5: Let's go back a couple of decades. Tell me back 627 00:29:33,240 --> 00:29:35,400 Speaker 5: to the days when you're in a go car and 628 00:29:35,440 --> 00:29:38,240 Speaker 5: you've got to be around people like Michael Schumacher and 629 00:29:38,280 --> 00:29:40,640 Speaker 5: your father for that matter as well. Is that where 630 00:29:40,640 --> 00:29:44,720 Speaker 5: this hunger desire comes from to dominate even after you 631 00:29:44,760 --> 00:29:45,640 Speaker 5: get win after win. 632 00:29:47,200 --> 00:29:48,120 Speaker 6: Yeah, I think it's. 633 00:29:48,120 --> 00:29:50,280 Speaker 12: I mean, of course you need you you you really 634 00:29:50,800 --> 00:29:54,000 Speaker 12: want it from a young age. But I think also 635 00:29:54,000 --> 00:29:56,720 Speaker 12: the way I grew up, you know, having the experience 636 00:29:56,760 --> 00:29:59,880 Speaker 12: with my dad by my side. Yeah, for sure, from 637 00:29:59,880 --> 00:30:03,000 Speaker 12: a at a young age, I think you you know, 638 00:30:03,240 --> 00:30:05,680 Speaker 12: get prepared in a in a different way, I guess. 639 00:30:05,760 --> 00:30:07,480 Speaker 12: And yeah, for me, it's never good enough, you know, 640 00:30:07,520 --> 00:30:11,120 Speaker 12: even you try to, you know, look for the little 641 00:30:11,120 --> 00:30:13,160 Speaker 12: details that can go better. I mean, for sure, this 642 00:30:13,240 --> 00:30:17,320 Speaker 12: year so far I think has been amazing, but yeah, 643 00:30:17,400 --> 00:30:20,280 Speaker 12: I will never be satisfied at the end of the day. 644 00:30:20,480 --> 00:30:22,640 Speaker 5: Max, Tom and I were talking about Marco van Bastard 645 00:30:22,920 --> 00:30:25,400 Speaker 5: retiring from football at twenty eight, and I always hear 646 00:30:25,440 --> 00:30:27,719 Speaker 5: people talk about you. They say things like he's going 647 00:30:27,760 --> 00:30:29,680 Speaker 5: to get bored, he's going to get bored by this 648 00:30:29,760 --> 00:30:32,680 Speaker 5: or potentially step away. Do the records that Shu Mack 649 00:30:32,720 --> 00:30:35,400 Speaker 5: has set and they worth sticking around for you, Max, 650 00:30:35,480 --> 00:30:36,600 Speaker 5: is that's something that drives you. 651 00:30:39,640 --> 00:30:45,000 Speaker 12: Like I never really targeted like records. I of course 652 00:30:45,080 --> 00:30:47,520 Speaker 12: really enjoy what I'm doing now and for me at 653 00:30:47,520 --> 00:30:49,560 Speaker 12: the moment is the opposite. This for me is not boring. 654 00:30:49,600 --> 00:30:52,640 Speaker 12: This is really exciting. Like I'm always very motivated to 655 00:30:52,680 --> 00:30:55,960 Speaker 12: get to the track. I think it's more when you're 656 00:30:55,960 --> 00:30:58,560 Speaker 12: not winning anymore, and there is also no real plan 657 00:30:58,640 --> 00:31:01,600 Speaker 12: in place or a few where you see yourself winning again, 658 00:31:01,640 --> 00:31:05,040 Speaker 12: then probably you get bored. But I think retiring at 659 00:31:05,080 --> 00:31:08,280 Speaker 12: twenty eight for me is probably a bit too soon. 660 00:31:08,960 --> 00:31:12,280 Speaker 2: Max John Faraoh is steeped in all that you do. 661 00:31:12,360 --> 00:31:15,160 Speaker 2: He grew up in England and lives Formula one. I'm 662 00:31:15,200 --> 00:31:18,160 Speaker 2: your ugly American. I'm new to this. I'm the one 663 00:31:18,200 --> 00:31:21,520 Speaker 2: you need at Las Vegas, you needed Austin, Miami, wherever. 664 00:31:21,800 --> 00:31:23,800 Speaker 2: And in reading about this, and I go to the 665 00:31:23,920 --> 00:31:28,240 Speaker 2: great journalist Peter Windsor on this, he says, you do 666 00:31:28,600 --> 00:31:33,560 Speaker 2: corners and k turns like nobody. He talks of silverstone 667 00:31:34,000 --> 00:31:36,840 Speaker 2: in the three turns of Maggots and Becketts. 668 00:31:37,240 --> 00:31:39,600 Speaker 1: How do you approach the tight. 669 00:31:39,360 --> 00:31:43,080 Speaker 2: Turns of Formula one? Peter Windsor says, that's the difference. 670 00:31:45,360 --> 00:31:47,800 Speaker 12: I think, you know, everyone has their own driving style, 671 00:31:47,840 --> 00:31:50,200 Speaker 12: but also I think what is key in our sport 672 00:31:50,280 --> 00:31:52,760 Speaker 12: is that you're able to adapt to whatever is needed. 673 00:31:52,840 --> 00:31:54,840 Speaker 12: So you know, every year we have a new car, 674 00:31:54,960 --> 00:31:58,840 Speaker 12: different looking car, and every single car drives a bit differently, 675 00:31:58,880 --> 00:32:02,160 Speaker 12: and I think, yeah, you always have to adapt and 676 00:32:02,240 --> 00:32:04,640 Speaker 12: learn and try to grow, try to be different, try 677 00:32:04,640 --> 00:32:06,680 Speaker 12: to really get the most out of the car. And 678 00:32:06,720 --> 00:32:09,560 Speaker 12: if the car is driven the fastest way in a 679 00:32:09,600 --> 00:32:11,280 Speaker 12: different way than what you're used to, you have to 680 00:32:11,360 --> 00:32:13,160 Speaker 12: try and adjust to that. 681 00:32:13,560 --> 00:32:16,400 Speaker 2: Do you wish for a smaller, lighter. 682 00:32:16,040 --> 00:32:20,320 Speaker 12: Car, Of course that would be ideal, but you also 683 00:32:20,400 --> 00:32:22,760 Speaker 12: have to be realistic. I think with the safety standards 684 00:32:22,800 --> 00:32:25,680 Speaker 12: that are always improving every single year, that is not 685 00:32:25,840 --> 00:32:29,040 Speaker 12: always possible to go lighter. But I'm sure you know 686 00:32:29,080 --> 00:32:32,960 Speaker 12: we are looking into the future regulations as well to 687 00:32:33,040 --> 00:32:34,800 Speaker 12: try and make it better. 688 00:32:35,200 --> 00:32:37,920 Speaker 5: Maxial Glasses. Thinking about the commercial stuff, we caught up 689 00:32:37,920 --> 00:32:39,920 Speaker 5: with Christian Horner. It's great to talk to Christian a 690 00:32:39,960 --> 00:32:42,160 Speaker 5: month or so ago, and we were talking about the 691 00:32:42,240 --> 00:32:44,480 Speaker 5: race Canada and how many races are now in new 692 00:32:44,520 --> 00:32:47,120 Speaker 5: places like in the United States, like in Vegas. For 693 00:32:47,120 --> 00:32:50,520 Speaker 5: a man like yourself, can you compare say a Monza 694 00:32:50,720 --> 00:32:54,120 Speaker 5: to a Miami a Las Vegas and mactually get excited 695 00:32:54,160 --> 00:32:57,200 Speaker 5: about it, when for some people the purists might complain 696 00:32:57,280 --> 00:32:59,480 Speaker 5: about this. Just be at a commercial event, moving away 697 00:32:59,480 --> 00:33:01,720 Speaker 5: from the tradition, you know, race car racing and places 698 00:33:01,760 --> 00:33:03,280 Speaker 5: like Monta and Silverstone. 699 00:33:04,640 --> 00:33:07,160 Speaker 12: Well, the beautiful thing is is that we have a 700 00:33:07,160 --> 00:33:09,680 Speaker 12: lot of different Grand Prix still, and I think it 701 00:33:09,720 --> 00:33:12,360 Speaker 12: would be very boring if they're all the same, right, 702 00:33:12,400 --> 00:33:14,920 Speaker 12: And yes, I am very aware that you know, we 703 00:33:14,920 --> 00:33:18,440 Speaker 12: shouldn't go to all the let's say, the commercial places, 704 00:33:18,440 --> 00:33:21,440 Speaker 12: but I think also Las Vegas gives you a unique 705 00:33:21,520 --> 00:33:24,040 Speaker 12: opportunity and then time will tell you know if it's 706 00:33:24,080 --> 00:33:25,600 Speaker 12: the right way to go or not. But for sure, 707 00:33:25,640 --> 00:33:28,760 Speaker 12: from my side, you know, I like the pure racetres. 708 00:33:28,800 --> 00:33:30,520 Speaker 12: I think an F one car as well, it really 709 00:33:30,520 --> 00:33:34,280 Speaker 12: comes alive on the proper racetres, like Monza, like Spa, 710 00:33:34,600 --> 00:33:37,240 Speaker 12: like Silverstone. So for sure, you know we need to 711 00:33:37,320 --> 00:33:40,440 Speaker 12: keep these kind of tracks on the calendar. 712 00:33:40,640 --> 00:33:43,479 Speaker 5: Max. They're always trying to rework the format. When a 713 00:33:43,520 --> 00:33:45,960 Speaker 5: car a team goes through a period of dominance. I 714 00:33:45,960 --> 00:33:48,240 Speaker 5: remember when it just used to be qualifying thirty minutes, 715 00:33:48,600 --> 00:33:51,680 Speaker 5: fastest driver, fastest car. They get polled and they try 716 00:33:51,720 --> 00:33:54,440 Speaker 5: to make qualifying more interesting. Do you think tweaking the 717 00:33:54,480 --> 00:33:57,560 Speaker 5: format with sprint racing in one weekend not the other? 718 00:33:58,000 --> 00:33:59,600 Speaker 5: Is that something that frustrates she was a driver. 719 00:34:01,000 --> 00:34:03,760 Speaker 12: Yeah, I'm not really excited by these things because I 720 00:34:03,760 --> 00:34:06,160 Speaker 12: think when something works really well, why do you need 721 00:34:06,240 --> 00:34:10,160 Speaker 12: to try and tweak it? And yeah, this is I 722 00:34:10,160 --> 00:34:13,480 Speaker 12: think a constant discussion and for sure that some things 723 00:34:13,800 --> 00:34:17,120 Speaker 12: got well, some don't. But yeah, for me, trying to 724 00:34:17,200 --> 00:34:20,320 Speaker 12: keep it like it is, you know, probably is the 725 00:34:20,360 --> 00:34:23,120 Speaker 12: best thing forward because I always thought the qualifying format 726 00:34:23,360 --> 00:34:25,680 Speaker 12: and you know, before you get into the single race, 727 00:34:25,719 --> 00:34:27,160 Speaker 12: I think is very exciting. 728 00:34:27,719 --> 00:34:28,600 Speaker 1: Max. I agree with you. 729 00:34:28,640 --> 00:34:30,840 Speaker 2: I'm a complete hack at this, but I totally agree 730 00:34:30,880 --> 00:34:33,040 Speaker 2: with you. The sprint thing is ridiculous. I just don't 731 00:34:33,120 --> 00:34:36,240 Speaker 2: understand it. I love the qualification thing the day before. 732 00:34:36,280 --> 00:34:37,359 Speaker 2: I love to tune into that. 733 00:34:37,760 --> 00:34:38,000 Speaker 1: Max. 734 00:34:38,040 --> 00:34:40,640 Speaker 2: For step, and are you in a place is completely 735 00:34:40,680 --> 00:34:44,719 Speaker 2: dominant in the sports, involving all the money and the egos. 736 00:34:45,040 --> 00:34:49,719 Speaker 2: Where can you control the future of who your teammate is? 737 00:34:50,160 --> 00:34:54,080 Speaker 2: I understand there's autosport gossip in all that, but are 738 00:34:54,080 --> 00:34:57,160 Speaker 2: you in a position now, Max where you can dictate, 739 00:34:57,560 --> 00:35:01,080 Speaker 2: discuss or say who a future your teammate will be? 740 00:35:02,680 --> 00:35:05,200 Speaker 6: Well, this is always up to the bosses and the team. 741 00:35:05,239 --> 00:35:07,319 Speaker 12: I mean, of course, I'm a team member now for 742 00:35:07,360 --> 00:35:09,520 Speaker 12: a long time, and of course things. You know, you 743 00:35:09,600 --> 00:35:11,839 Speaker 12: talk about stuff, but I'm not the one who is 744 00:35:12,600 --> 00:35:15,160 Speaker 12: telling them what to do or deciding things. At the 745 00:35:15,239 --> 00:35:16,640 Speaker 12: end of the day, I need to focus on my 746 00:35:16,760 --> 00:35:18,879 Speaker 12: job and try and drive as quick as I can 747 00:35:19,120 --> 00:35:20,000 Speaker 12: every single weekend. 748 00:35:20,080 --> 00:35:21,600 Speaker 5: We do a good job at that, Max, A good 749 00:35:21,680 --> 00:35:24,360 Speaker 5: job of that, but particularly this season, Max, how close 750 00:35:24,400 --> 00:35:25,720 Speaker 5: are you with Checko? 751 00:35:27,360 --> 00:35:30,480 Speaker 12: Yeah, we are very close. Honestly, I think we are 752 00:35:30,560 --> 00:35:33,040 Speaker 12: very similar in a way. Also how we're approaching our 753 00:35:33,080 --> 00:35:35,360 Speaker 12: life outside of Formula one. And you know, he's a 754 00:35:35,360 --> 00:35:38,040 Speaker 12: real family person. Of course he has his kids as well, 755 00:35:39,160 --> 00:35:40,720 Speaker 12: and yeah, I'm pretty similar. 756 00:35:40,760 --> 00:35:41,400 Speaker 10: I think it's good to. 757 00:35:42,160 --> 00:35:44,600 Speaker 12: Try and you know, sometimes switch off and just you know, 758 00:35:44,680 --> 00:35:47,000 Speaker 12: not think about Formula one. And I think that's where 759 00:35:47,000 --> 00:35:48,160 Speaker 12: we can really relate. 760 00:35:48,600 --> 00:35:49,879 Speaker 5: You know, what people are like. They like to stir 761 00:35:50,000 --> 00:35:52,720 Speaker 5: up gossip and tell stories. And Max, you've been reluctant 762 00:35:52,760 --> 00:35:54,799 Speaker 5: to get involved in the Netflix series, which has been 763 00:35:54,880 --> 00:35:58,160 Speaker 5: massive here Stateside. Max, what's behind that reluctance? Why don't 764 00:35:58,200 --> 00:35:59,600 Speaker 5: you like doing those things so much? 765 00:36:01,719 --> 00:36:04,080 Speaker 12: I mean, I think at one point, you know, certain 766 00:36:04,120 --> 00:36:06,719 Speaker 12: things are also a bit more private. Privacy for me 767 00:36:07,000 --> 00:36:10,480 Speaker 12: is very important, and you know, I like things to 768 00:36:10,520 --> 00:36:14,120 Speaker 12: be portrayed like they actually are and not with a 769 00:36:14,160 --> 00:36:18,000 Speaker 12: lot of let's say spice to it. But you know 770 00:36:18,040 --> 00:36:19,719 Speaker 12: every year now, I mean we had a good chat 771 00:36:19,719 --> 00:36:20,080 Speaker 12: every year. 772 00:36:20,120 --> 00:36:20,279 Speaker 6: I do. 773 00:36:20,600 --> 00:36:22,640 Speaker 12: I do have an interview and I explain my side 774 00:36:22,640 --> 00:36:24,560 Speaker 12: of the story, and I think that's important. I know 775 00:36:24,640 --> 00:36:27,640 Speaker 12: how Netflix is in a way, of course to try 776 00:36:27,680 --> 00:36:31,080 Speaker 12: and attract new fans, but of course you had it's 777 00:36:31,080 --> 00:36:34,200 Speaker 12: important also to to really see the reality of the sport. 778 00:36:34,560 --> 00:36:35,560 Speaker 1: John, I'll let you ask. 779 00:36:35,640 --> 00:36:37,480 Speaker 2: I mean, we're in London, we come back, and that 780 00:36:37,560 --> 00:36:40,760 Speaker 2: gives us just enough time to go to Las Vegas. 781 00:36:40,840 --> 00:36:43,719 Speaker 2: I want to November, but you know, if Max can 782 00:36:43,719 --> 00:36:46,359 Speaker 2: pull some strings for us, I think possibly we could 783 00:36:46,360 --> 00:36:47,839 Speaker 2: be all Las Vegas with Red Bull. 784 00:36:47,880 --> 00:36:50,120 Speaker 5: You want to ask him yourself, I'd let you please. 785 00:36:50,800 --> 00:36:53,160 Speaker 5: Max would prefers to ask Christian Horner and we'll ask 786 00:36:53,239 --> 00:36:54,160 Speaker 5: christin a little bit later. 787 00:36:54,280 --> 00:36:54,480 Speaker 2: Max. 788 00:36:54,480 --> 00:36:56,080 Speaker 5: I wanted to squeeze this in. I wanted your side 789 00:36:56,080 --> 00:36:57,719 Speaker 5: of the story. I don't want to talk about the 790 00:36:57,760 --> 00:37:00,360 Speaker 5: last race. I want to go back to Austria. Final 791 00:37:00,400 --> 00:37:02,840 Speaker 5: lap of the Grand Prix. You have the opportunity to 792 00:37:02,880 --> 00:37:05,879 Speaker 5: set the fastest lap. You make the call to make 793 00:37:05,880 --> 00:37:08,440 Speaker 5: a pit to put on fresh tires and go around 794 00:37:08,440 --> 00:37:10,520 Speaker 5: and set the fastest lab for a single point. Max. 795 00:37:11,080 --> 00:37:13,600 Speaker 5: From your perspective, walk me through the thinking. There is 796 00:37:13,640 --> 00:37:15,840 Speaker 5: that something you've planned ahead of the race. Is that 797 00:37:15,920 --> 00:37:18,600 Speaker 5: something you think about in the moment And where does 798 00:37:18,600 --> 00:37:21,640 Speaker 5: that confidence, that conviction come from to go against the 799 00:37:21,680 --> 00:37:23,279 Speaker 5: team who would like you to stay out and just 800 00:37:23,320 --> 00:37:25,040 Speaker 5: make the call yourself. I can do it. I know 801 00:37:25,080 --> 00:37:26,840 Speaker 5: I can do it. I've got the control, the ability 802 00:37:26,880 --> 00:37:28,160 Speaker 5: to perform. Where does that come from? 803 00:37:28,239 --> 00:37:28,520 Speaker 2: Max? 804 00:37:29,920 --> 00:37:30,120 Speaker 6: Yeah? 805 00:37:30,320 --> 00:37:32,560 Speaker 12: I mean I always tried to maximize everything I can, 806 00:37:32,880 --> 00:37:35,959 Speaker 12: and you know, I saw the opportunity for the extra points, 807 00:37:35,960 --> 00:37:37,919 Speaker 12: so I was like, well why not. Of course, there's 808 00:37:37,920 --> 00:37:40,600 Speaker 12: always a bit of a risk with these kind of things, 809 00:37:40,600 --> 00:37:42,839 Speaker 12: but at the other hand, no risk, no fun, right, 810 00:37:42,920 --> 00:37:45,600 Speaker 12: So that's what was also going through by am my 811 00:37:45,680 --> 00:37:46,360 Speaker 12: head at the time. 812 00:37:46,520 --> 00:37:49,239 Speaker 5: Max. Good luck for race weekend during the team fantastically 813 00:37:49,320 --> 00:37:51,759 Speaker 5: catch up with you, sir, Max for stepping a red 814 00:37:51,760 --> 00:37:52,320 Speaker 5: bull racing. 815 00:37:52,680 --> 00:37:56,520 Speaker 2: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 816 00:37:56,640 --> 00:38:00,840 Speaker 2: anywhere else you get your podcasts. Listen live every weekday 817 00:38:01,120 --> 00:38:04,600 Speaker 2: starting at seven am Eastern. I'm Bloomberg dot Com. The 818 00:38:04,719 --> 00:38:09,239 Speaker 2: iHeartRadio app Tune in and the Bloomberg Business App. You 819 00:38:09,280 --> 00:38:12,840 Speaker 2: can watch us live on Bloomberg Television and always. 820 00:38:13,200 --> 00:38:17,040 Speaker 1: I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, 821 00:38:17,239 --> 00:38:19,040 Speaker 1: and this is Bloomberg