1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,240 Speaker 2: with Lisa Bromwitz and a Marie hort Ern. Join us 4 00:00:18,280 --> 00:00:21,280 Speaker 2: each day for insight from the best in markets, economics, 5 00:00:21,320 --> 00:00:24,440 Speaker 2: and geopolitics from our global headquarters in New York City. 6 00:00:24,680 --> 00:00:27,360 Speaker 2: We are live on Bloomberg Television weekday mornings from six 7 00:00:27,400 --> 00:00:30,400 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 8 00:00:30,520 --> 00:00:33,440 Speaker 2: Spotify or anywhere else you listen, and as always on 9 00:00:33,479 --> 00:00:36,960 Speaker 2: the Bloomberg Terminal and the Bloomberg Business App. Brian Leavitt 10 00:00:37,120 --> 00:00:39,440 Speaker 2: of Vanvesco Joints surround the table here in New York. Brian, 11 00:00:39,479 --> 00:00:41,760 Speaker 2: good morning to you. We're looking ahead to economics eight 12 00:00:41,840 --> 00:00:43,720 Speaker 2: this morning at eight thirty Eastern Time. We're looking back 13 00:00:43,720 --> 00:00:46,680 Speaker 2: at payrolls from last Friday, bloom out payrolls for important 14 00:00:46,760 --> 00:00:48,560 Speaker 2: and we're attempting to look ahead to more of the same. 15 00:00:48,960 --> 00:00:50,720 Speaker 2: I just wonder how messy the days is going to 16 00:00:50,760 --> 00:00:53,160 Speaker 2: be after the one two punch we've seen across several 17 00:00:53,200 --> 00:00:56,360 Speaker 2: states in America, Hurricane Alean onto Hurricane Milton. 18 00:00:56,800 --> 00:00:58,640 Speaker 3: Yes, some of the data may be messy, but I 19 00:00:58,680 --> 00:01:01,760 Speaker 3: think the law larger themes are still in place, and 20 00:01:01,800 --> 00:01:03,880 Speaker 3: I know that there's a lot of focus on today's 21 00:01:04,000 --> 00:01:07,720 Speaker 3: CPI report. The reality is, I continue to believe that 22 00:01:07,760 --> 00:01:10,199 Speaker 3: the inflation story is largely behind us. 23 00:01:10,040 --> 00:01:10,760 Speaker 4: It's passe. 24 00:01:11,080 --> 00:01:14,080 Speaker 3: If you look at the Fed's preferred measure of inflation 25 00:01:14,319 --> 00:01:16,600 Speaker 3: very much in the comfort zone. If you look at 26 00:01:16,600 --> 00:01:19,600 Speaker 3: the inflation break evens, which give you the bond markets 27 00:01:19,640 --> 00:01:23,559 Speaker 3: expectation of inflation relatively benign. I mean, the inflation story 28 00:01:23,680 --> 00:01:26,520 Speaker 3: was one of large stimulus and a pandemic that caused 29 00:01:26,840 --> 00:01:30,920 Speaker 3: supply challenges. I don't think it's something that is re emerging. Rather, 30 00:01:31,440 --> 00:01:34,919 Speaker 3: it's a market that's responded to some good economic activity. 31 00:01:34,440 --> 00:01:36,320 Speaker 2: And it's responded as follows, a two year back at 32 00:01:36,319 --> 00:01:38,840 Speaker 2: four percent, a ten year back at four percent. How 33 00:01:38,880 --> 00:01:40,560 Speaker 2: do you think about the influence of the bond market 34 00:01:40,600 --> 00:01:42,039 Speaker 2: and the equity market alignment. 35 00:01:42,160 --> 00:01:43,600 Speaker 4: I'm okay with that. 36 00:01:44,040 --> 00:01:47,560 Speaker 3: I would rather see better economic data and less rate 37 00:01:47,640 --> 00:01:50,600 Speaker 3: cuts than bad economic data and a lot of ray cuts. 38 00:01:50,920 --> 00:01:53,280 Speaker 4: You know, the markets. The bond market's. 39 00:01:52,920 --> 00:01:55,040 Speaker 3: Been moving in this three and a half to four 40 00:01:55,040 --> 00:01:57,600 Speaker 3: and a half percent range, give or take this year, 41 00:01:58,000 --> 00:02:00,240 Speaker 3: depending on the direction of the data. Now, if you 42 00:02:00,280 --> 00:02:04,080 Speaker 3: think of four percent is a general proxy for what 43 00:02:04,200 --> 00:02:06,720 Speaker 3: nominal growth will be in this country two percent real, 44 00:02:06,720 --> 00:02:10,760 Speaker 3: two percent inflation, So that seems like a reasonable value. 45 00:02:10,880 --> 00:02:13,560 Speaker 3: Is things deteriorate and growth you come down a little bit, 46 00:02:13,680 --> 00:02:15,880 Speaker 3: So I think we're probably at the upper end of 47 00:02:15,880 --> 00:02:18,560 Speaker 3: that range. Again, Yeah, we had a good payroll report, 48 00:02:18,600 --> 00:02:21,240 Speaker 3: but if you look at survey data, it's somewhat mixed 49 00:02:21,480 --> 00:02:24,120 Speaker 3: and doesn't seem like an economy heading into a recession, 50 00:02:24,120 --> 00:02:26,600 Speaker 3: but doesn't seem like one that's reaccelerating either. 51 00:02:26,560 --> 00:02:28,440 Speaker 5: Which raises a question. Did the sell off in the 52 00:02:28,480 --> 00:02:30,280 Speaker 5: bond market that we've seen over the past few. 53 00:02:30,160 --> 00:02:32,480 Speaker 6: Weeks actually raise the specter of. 54 00:02:32,440 --> 00:02:34,840 Speaker 5: A pretty big rally if you get a downside surprise 55 00:02:34,880 --> 00:02:37,360 Speaker 5: and CPI In other words, does inflation start to matter 56 00:02:37,560 --> 00:02:38,240 Speaker 5: a whole lot more? 57 00:02:38,240 --> 00:02:41,520 Speaker 3: Again, maybe in the short term, but I would say 58 00:02:41,560 --> 00:02:44,440 Speaker 3: in the long term or in the intermediate term, it's 59 00:02:44,440 --> 00:02:46,080 Speaker 3: going to be more about growth. And one of the 60 00:02:46,080 --> 00:02:47,760 Speaker 3: ways to think about it is just look at the 61 00:02:47,760 --> 00:02:52,640 Speaker 3: correlations between stocks and bonds, which have become negatively correlated. Again, 62 00:02:52,720 --> 00:02:55,399 Speaker 3: so it's become a good news as good news bad 63 00:02:55,440 --> 00:02:56,760 Speaker 3: news is bad news. 64 00:02:56,720 --> 00:02:57,600 Speaker 4: Type of environment. 65 00:02:57,639 --> 00:03:00,799 Speaker 3: And so I'm focused on the growth side of this story. 66 00:03:00,840 --> 00:03:03,960 Speaker 3: You know, when I see a good payroll report or 67 00:03:04,639 --> 00:03:07,720 Speaker 3: a CPI report, that's you know, even a little bit 68 00:03:07,720 --> 00:03:10,480 Speaker 3: above of what the expectation is. To me, I'm thinking 69 00:03:10,480 --> 00:03:13,880 Speaker 3: that's a good nominal growth backdrop. That's good for corporate profitability. 70 00:03:13,880 --> 00:03:17,440 Speaker 3: It doesn't increase concerns to me significantly that this FED 71 00:03:17,520 --> 00:03:19,959 Speaker 3: can ease or the FED may have to raise rates again, 72 00:03:20,040 --> 00:03:22,760 Speaker 3: or inflation's coming back again. I think that's a twenty 73 00:03:22,800 --> 00:03:23,720 Speaker 3: twenty two story. 74 00:03:23,840 --> 00:03:25,720 Speaker 5: So you like treasure is here in terms of where 75 00:03:25,720 --> 00:03:28,080 Speaker 5: they're at and the value that they're giving. That's what 76 00:03:28,080 --> 00:03:30,280 Speaker 5: I'm getting from you. We just heard Bill Waddell talk 77 00:03:30,320 --> 00:03:33,079 Speaker 5: about potential four hundred and fifty billion dollars in recovery 78 00:03:33,080 --> 00:03:35,400 Speaker 5: funds needed to pay for what's going on in Florida. 79 00:03:35,480 --> 00:03:36,840 Speaker 5: This isn't going to be the last. A lot of 80 00:03:36,840 --> 00:03:38,880 Speaker 5: people saying these storms coming a lot more frequently, and 81 00:03:39,160 --> 00:03:41,080 Speaker 5: aside from just the storms and paying for all of this, 82 00:03:41,200 --> 00:03:43,200 Speaker 5: it raises a question of how much more spending needs 83 00:03:43,240 --> 00:03:46,920 Speaker 5: to happen and whether that spending can really be tolerated 84 00:03:46,960 --> 00:03:48,720 Speaker 5: by a treasuring market where the auctions are starting to 85 00:03:48,720 --> 00:03:49,360 Speaker 5: get messier. 86 00:03:49,480 --> 00:03:49,960 Speaker 4: Well, they may be. 87 00:03:49,960 --> 00:03:52,200 Speaker 3: Getting a little bit messier, but we haven't seen the 88 00:03:52,360 --> 00:03:56,160 Speaker 3: treasury break from nominal growth potential. I mean people view 89 00:03:56,280 --> 00:04:00,720 Speaker 3: treasuries as perhaps trading like a credit They don't measury market. 90 00:04:01,040 --> 00:04:03,520 Speaker 3: It largely trades on the direction of the economy and 91 00:04:03,560 --> 00:04:05,400 Speaker 3: what the Federal Reserve is going to do. So I'm 92 00:04:05,440 --> 00:04:10,280 Speaker 3: not concerned that additional spending will cause rates to jump 93 00:04:10,360 --> 00:04:15,280 Speaker 3: because we're concerned about the credit worthiness of the US 94 00:04:15,280 --> 00:04:17,599 Speaker 3: A rate that's going to continue to move in line 95 00:04:17,640 --> 00:04:19,400 Speaker 3: with inflation and with growth. 96 00:04:19,440 --> 00:04:20,920 Speaker 4: And you know, it's sort of like. 97 00:04:20,839 --> 00:04:23,520 Speaker 3: Every time rates come down, you say to investors, well, 98 00:04:23,560 --> 00:04:25,120 Speaker 3: you've been sitting in money markets. 99 00:04:25,160 --> 00:04:26,080 Speaker 4: You should have locked in. 100 00:04:26,360 --> 00:04:28,800 Speaker 3: This is like the third or fourth bite at the 101 00:04:28,800 --> 00:04:31,359 Speaker 3: app Well they've gotten People used to beg me for 102 00:04:31,480 --> 00:04:33,840 Speaker 3: four percent, right, and now this is the third or 103 00:04:33,880 --> 00:04:37,680 Speaker 3: fourth time they've had the opportunity to take advantage of 104 00:04:37,720 --> 00:04:40,479 Speaker 3: that beyond thirty days, maybe think about it for five 105 00:04:40,560 --> 00:04:42,200 Speaker 3: years or ten years. 106 00:04:42,240 --> 00:04:44,040 Speaker 4: So I think investors should take advantage of it. 107 00:04:44,160 --> 00:04:46,240 Speaker 7: Hurricanes are not just going to be expensive, but the 108 00:04:46,279 --> 00:04:48,760 Speaker 7: fact is they can also increase fuel costs. We are 109 00:04:48,800 --> 00:04:51,680 Speaker 7: seeing this risk in the oil market, not just domestically 110 00:04:51,720 --> 00:04:53,960 Speaker 7: but also internationally. What's going on in the Middle East. 111 00:04:54,160 --> 00:04:54,680 Speaker 4: What kind of. 112 00:04:54,600 --> 00:04:57,320 Speaker 7: Impact you see from the price of oil, not just 113 00:04:57,320 --> 00:04:59,920 Speaker 7: on inflation data, potentially also its relationship with the bond. 114 00:05:00,320 --> 00:05:03,040 Speaker 3: Well, we know energy prices tend to rise late cycle, right, 115 00:05:03,080 --> 00:05:05,440 Speaker 3: so that's a phenomenon where you get these moves and 116 00:05:05,520 --> 00:05:08,520 Speaker 3: energy prices and that's when the consumer rolls over. 117 00:05:08,920 --> 00:05:10,919 Speaker 6: But let's think of the starting point. 118 00:05:11,040 --> 00:05:13,800 Speaker 3: So the starting point is the US is producing or 119 00:05:13,839 --> 00:05:16,520 Speaker 3: is drilling more oil right now than any country in 120 00:05:16,560 --> 00:05:19,440 Speaker 3: the history of the world ever, right, some thirteen million 121 00:05:19,480 --> 00:05:20,320 Speaker 3: barrels per. 122 00:05:20,200 --> 00:05:21,440 Speaker 4: Day or more. 123 00:05:21,839 --> 00:05:25,560 Speaker 3: And we started this environment or we've you know, the 124 00:05:25,920 --> 00:05:28,520 Speaker 3: expansion of the Middle East war into Lebanon and Israel 125 00:05:28,560 --> 00:05:33,480 Speaker 3: and Iran, and these hurricanes with oil in the sixties 126 00:05:33,560 --> 00:05:36,880 Speaker 3: in the United States, so we've moved up into the 127 00:05:36,920 --> 00:05:40,279 Speaker 3: mid seventies, but certainly not the one hundred and twenty 128 00:05:40,320 --> 00:05:42,479 Speaker 3: dollars that we were looking at when ahead of the 129 00:05:42,560 --> 00:05:46,359 Speaker 3: global financial crisis. I drive around my neighborhood gasolines, you know, 130 00:05:46,480 --> 00:05:49,760 Speaker 3: two seventy five, you know, two eighties, So we're not 131 00:05:49,839 --> 00:05:52,680 Speaker 3: at a level that's you know, prohibitive. In fact, that's 132 00:05:52,680 --> 00:05:54,880 Speaker 3: part of the soft landing story. Consumer networth at an 133 00:05:54,920 --> 00:05:58,040 Speaker 3: all time high gasoline beflow three. But yes, if this 134 00:05:58,120 --> 00:06:01,200 Speaker 3: were to skyrocket significantly, don't think that it's an inflation story. 135 00:06:01,480 --> 00:06:04,560 Speaker 3: That's a tax on the US consumer story. But US 136 00:06:04,680 --> 00:06:06,320 Speaker 3: drilling hopefully prevents that. 137 00:06:06,560 --> 00:06:09,640 Speaker 7: So what's your biggest risk then, to the soft landing scenario. 138 00:06:09,920 --> 00:06:12,480 Speaker 3: The biggest risk would be a rollover in economic activity. 139 00:06:12,520 --> 00:06:15,480 Speaker 3: I mean, we've had interest rates high for a very 140 00:06:15,600 --> 00:06:18,000 Speaker 3: long period of time, and you know, usually when the 141 00:06:18,040 --> 00:06:20,720 Speaker 3: yield curve inverts, you wait eighteen months for the Fed 142 00:06:20,760 --> 00:06:22,560 Speaker 3: to have to normalize the yell curve and you go 143 00:06:22,600 --> 00:06:25,839 Speaker 3: into a recession. And this time that has not happened. 144 00:06:25,839 --> 00:06:28,600 Speaker 3: The bankers were tightening lending standards, now they're not. Corporate 145 00:06:28,600 --> 00:06:31,560 Speaker 3: bond spreads are very benign, so it doesn't feel like 146 00:06:31,600 --> 00:06:36,200 Speaker 3: a recession, largely because most American households have fixed rate mortgages, 147 00:06:36,480 --> 00:06:39,000 Speaker 3: so the increase in rates hasn't hit. Now those are 148 00:06:39,000 --> 00:06:42,159 Speaker 3: famous last words. Right anytime you're two years after tightening cycle, 149 00:06:42,200 --> 00:06:44,919 Speaker 3: you're saying no overseet you know, you say, well, I 150 00:06:44,920 --> 00:06:45,880 Speaker 3: guess we got through this. 151 00:06:46,000 --> 00:06:47,280 Speaker 4: So that would be the risk. 152 00:06:48,080 --> 00:06:50,359 Speaker 3: I'm laser focused on the growth side, not on the 153 00:06:50,360 --> 00:06:54,400 Speaker 3: inflation side. But right now, the evidence suggests it's an 154 00:06:54,440 --> 00:06:55,679 Speaker 3: economy that's pretty resilient. 155 00:06:55,800 --> 00:06:59,000 Speaker 2: Let's finish on Nanning's Importan twenty four as Delta JP 156 00:06:59,120 --> 00:07:01,600 Speaker 2: Morgan wels FONC Bank of America's Vita subramanium. 157 00:07:01,680 --> 00:07:03,919 Speaker 6: The bar isn't high, do you agree? 158 00:07:04,200 --> 00:07:05,479 Speaker 4: Yeah, the bar isn't high. 159 00:07:05,520 --> 00:07:08,239 Speaker 3: It's you know, the expectations are fairly low. We're likely 160 00:07:08,320 --> 00:07:12,040 Speaker 3: to surpass expectations on earnings as we as we tend 161 00:07:12,040 --> 00:07:14,960 Speaker 3: to do. And again it's a good nominal growth back job. 162 00:07:15,000 --> 00:07:17,600 Speaker 3: You know, investors sitting here looking at the equity market 163 00:07:17,680 --> 00:07:21,680 Speaker 3: saying all time highs on the equity market, can I invest? 164 00:07:21,840 --> 00:07:23,680 Speaker 4: You know, we've had, you know. 165 00:07:24,120 --> 00:07:26,280 Speaker 3: Twelve hundred all time highs since the S and P 166 00:07:26,400 --> 00:07:27,400 Speaker 3: five hundred went live. 167 00:07:27,480 --> 00:07:29,640 Speaker 4: And you know people say buy low, sell high. 168 00:07:29,680 --> 00:07:31,960 Speaker 3: I say, by high, sell higher, And I think we're 169 00:07:32,000 --> 00:07:34,600 Speaker 3: in a I think we're in a or maybe never sell. 170 00:07:34,680 --> 00:07:37,720 Speaker 3: I think we're in a bowl market. And peak inflation, 171 00:07:37,800 --> 00:07:40,280 Speaker 3: peak tightening, peak rates should be good for equities. 172 00:07:40,280 --> 00:07:42,680 Speaker 2: He's still but it's just pro vescot Pran is going 173 00:07:42,720 --> 00:07:54,080 Speaker 2: to say, I get the thank you, say, Tom, welcome 174 00:07:54,120 --> 00:07:56,720 Speaker 2: back to the program, set giant step back. Can we 175 00:07:56,760 --> 00:07:58,920 Speaker 2: just spend some time from thirty five thousand feet. Can 176 00:07:58,960 --> 00:08:02,520 Speaker 2: you explain to us how different this universe will lurk 177 00:08:02,880 --> 00:08:04,760 Speaker 2: in ten, fifteen, twenty years time. 178 00:08:06,440 --> 00:08:10,120 Speaker 1: Yeah, certainly. You know, today the auto industry is about 179 00:08:10,120 --> 00:08:12,800 Speaker 1: a two point seven trillion dollar industry. It's essentially a 180 00:08:12,840 --> 00:08:17,320 Speaker 1: box with wheels industry with about ten percent operating margins. 181 00:08:18,000 --> 00:08:21,320 Speaker 1: The robotaxi industry will be about a one point seven 182 00:08:21,360 --> 00:08:25,920 Speaker 1: trillion dollar industry, but massively more profitable. Right you and I. 183 00:08:25,960 --> 00:08:28,240 Speaker 1: When we take an uber pay about a dollar to 184 00:08:28,280 --> 00:08:31,239 Speaker 1: two dollars a mile, it only costs about thirty cents 185 00:08:31,280 --> 00:08:35,280 Speaker 1: to operate one of these per mile, So it's it 186 00:08:35,320 --> 00:08:39,560 Speaker 1: becomes a software business, a subscription based business, and the 187 00:08:39,720 --> 00:08:43,400 Speaker 1: multiples that these companies will trade it will be tech multiples. 188 00:08:43,760 --> 00:08:46,920 Speaker 1: So I have Tesla at something like two hundred and 189 00:08:47,000 --> 00:08:50,480 Speaker 1: fifty billion out of the one point seven trillion, but 190 00:08:50,640 --> 00:08:54,160 Speaker 1: you apply a tech multiple to it, and now all 191 00:08:54,160 --> 00:08:56,760 Speaker 1: of a sudden, it's more than half of my entire 192 00:08:56,880 --> 00:09:02,640 Speaker 1: Tesla valuation. So it dramatically increases the valuation of the 193 00:09:02,679 --> 00:09:06,880 Speaker 1: mobility sector, the auto sector, because it gives all of 194 00:09:06,960 --> 00:09:11,040 Speaker 1: us as consumers greater utility. We don't have to own 195 00:09:11,040 --> 00:09:13,680 Speaker 1: a car, get chased by the cops, deal with parking, 196 00:09:14,240 --> 00:09:19,600 Speaker 1: don't get into accidents. It's really a transformational thing for society. 197 00:09:19,679 --> 00:09:22,320 Speaker 1: I'm sure we'll hear a lot about that tonight. It 198 00:09:22,679 --> 00:09:26,160 Speaker 1: help solve the urban housing crisis. No more parking garages, etc. 199 00:09:27,559 --> 00:09:31,679 Speaker 1: Really a breakthrough type thing for society. The real question, 200 00:09:31,720 --> 00:09:33,400 Speaker 1: obviously is when is it's going to happen. 201 00:09:33,480 --> 00:09:34,280 Speaker 6: Well, let's talk about that. 202 00:09:34,320 --> 00:09:36,000 Speaker 2: So how quick did you think we'll see the shift 203 00:09:36,040 --> 00:09:39,280 Speaker 2: from consumers just pulling away from buying a single automobile 204 00:09:39,559 --> 00:09:42,199 Speaker 2: and maybe buying a subscription to one of these services. 205 00:09:43,600 --> 00:09:46,600 Speaker 1: Yeah, I think this will be a very slow process. 206 00:09:47,240 --> 00:09:49,599 Speaker 1: This is not years, This could even be decades. 207 00:09:50,000 --> 00:09:53,360 Speaker 8: It will happen, though, you know, we had Carlos Stavars 208 00:09:53,360 --> 00:09:55,400 Speaker 8: from Stilantis at our conference a couple of years ago, 209 00:09:55,480 --> 00:09:59,040 Speaker 8: and he said, you'll have to re engineer cities entirely, 210 00:09:59,240 --> 00:10:01,640 Speaker 8: you know, not the example of the champ Sela, say, 211 00:10:02,040 --> 00:10:04,520 Speaker 8: where it's really a human decision of how to drive, 212 00:10:05,640 --> 00:10:08,959 Speaker 8: and so cities left to re engineer themselves. 213 00:10:09,360 --> 00:10:13,120 Speaker 1: Regulatory will be the big question mark that we'll need, 214 00:10:13,160 --> 00:10:16,560 Speaker 1: and that's always a slow process. It will happen, but 215 00:10:16,679 --> 00:10:20,160 Speaker 1: it will be years, maybe decades. Before we get kind 216 00:10:20,160 --> 00:10:23,439 Speaker 1: of full ubiquity, but certain cities you'll see it happen 217 00:10:23,520 --> 00:10:24,360 Speaker 1: quicker than others. 218 00:10:24,640 --> 00:10:26,440 Speaker 5: Tim, I want to pick up on that this question 219 00:10:26,600 --> 00:10:29,080 Speaker 5: of the sheer technology of it versus the regulation of 220 00:10:29,120 --> 00:10:32,800 Speaker 5: it versus the oversight, especially to time, where the host 221 00:10:32,840 --> 00:10:35,200 Speaker 5: of data that you're going to need to make this happen, 222 00:10:35,200 --> 00:10:38,240 Speaker 5: as well as the oversight and the potential manipulation of 223 00:10:38,280 --> 00:10:41,000 Speaker 5: people's driving patterns is going to become in cold relief 224 00:10:41,000 --> 00:10:43,760 Speaker 5: when everything is a national security issue, how high are 225 00:10:43,760 --> 00:10:45,600 Speaker 5: the hurdles. Do you have a sense of who's even 226 00:10:45,679 --> 00:10:48,440 Speaker 5: working on trying to get some sort of regulatory framework 227 00:10:48,520 --> 00:10:51,600 Speaker 5: and oversight into how this would operate, let alone whether 228 00:10:51,640 --> 00:10:52,280 Speaker 5: it even could. 229 00:10:53,880 --> 00:10:56,160 Speaker 1: Yeah, I mean I was at cs a couple of 230 00:10:56,200 --> 00:11:00,760 Speaker 1: years back, and there were congressmen from you know, US 231 00:11:01,360 --> 00:11:05,600 Speaker 1: states who were speaking about this topic. So there is 232 00:11:05,640 --> 00:11:09,320 Speaker 1: a political movement to get this happening, even in the US. 233 00:11:09,480 --> 00:11:11,600 Speaker 1: It is a state by state issue in the US. 234 00:11:12,360 --> 00:11:17,120 Speaker 1: But remember we're saving thousands of lives, you know, hundreds 235 00:11:17,120 --> 00:11:20,880 Speaker 1: of millions of dollars in productivity, etc. So there is 236 00:11:20,920 --> 00:11:23,960 Speaker 1: a political motivation to get it done. But obviously you 237 00:11:23,960 --> 00:11:27,760 Speaker 1: have questions about liability, the automaker get the liability, does 238 00:11:27,840 --> 00:11:30,520 Speaker 1: the person driving get the liability? So the US it's 239 00:11:30,520 --> 00:11:34,000 Speaker 1: somewhat complicated. Europe is even more difficult to get this. 240 00:11:34,080 --> 00:11:36,720 Speaker 1: On the finishing line, you have the European Commission, which 241 00:11:36,720 --> 00:11:39,600 Speaker 1: is a multiple countries have to all agree together. We 242 00:11:39,640 --> 00:11:42,640 Speaker 1: all know how difficult that is. China, however, is I 243 00:11:42,679 --> 00:11:45,480 Speaker 1: think we're ground zero where this will happen. We're already 244 00:11:45,520 --> 00:11:48,720 Speaker 1: seeing it happen. It's a you know, obviously central government 245 00:11:48,800 --> 00:11:51,960 Speaker 1: can actually make this happen, So we'll see it happen 246 00:11:52,000 --> 00:11:54,760 Speaker 1: in China. Quicker. My numbers have China with a much 247 00:11:54,760 --> 00:11:59,520 Speaker 1: bigger robotaxi number than Europe or the US. Then it'll 248 00:11:59,559 --> 00:12:02,000 Speaker 1: gradually happens state by state, I think in the US, 249 00:12:02,240 --> 00:12:04,760 Speaker 1: and then finally, we do think it will eventually happen 250 00:12:04,800 --> 00:12:05,280 Speaker 1: in Europe. 251 00:12:05,360 --> 00:12:07,840 Speaker 5: And John, the person who's leading the charge here is 252 00:12:07,920 --> 00:12:10,560 Speaker 5: a politically polarizing human being, Elon Musk, and he's making 253 00:12:10,600 --> 00:12:14,040 Speaker 5: himself more so. And I wonder whether that puts Tesla 254 00:12:14,120 --> 00:12:16,920 Speaker 5: in a better position or a worse position when it 255 00:12:16,920 --> 00:12:19,320 Speaker 5: comes to still being the leader of the whole robo 256 00:12:19,360 --> 00:12:20,679 Speaker 5: taxi movement in the future. 257 00:12:22,800 --> 00:12:25,920 Speaker 1: Yeah, I mean you guys probably know that I can 258 00:12:25,960 --> 00:12:28,439 Speaker 1: answer that question better than I can, But what I 259 00:12:28,520 --> 00:12:33,200 Speaker 1: would say is, I don't anticipate him doing something completely 260 00:12:33,200 --> 00:12:35,719 Speaker 1: different than what we've seen already, at least in your 261 00:12:35,800 --> 00:12:40,640 Speaker 1: term from ROBOTAXI fleets from Cruz and from Weimo. I 262 00:12:40,720 --> 00:12:44,120 Speaker 1: expect them to announce tonight a fleet service similar to 263 00:12:44,160 --> 00:12:49,760 Speaker 1: that with their vehicle. Those programs already have approval right 264 00:12:49,840 --> 00:12:54,320 Speaker 1: in the US by those certain cities and states. I 265 00:12:54,360 --> 00:12:57,160 Speaker 1: can see that being a similar path forward. But I 266 00:12:57,200 --> 00:12:59,760 Speaker 1: do want to stress the technology that Tesla has with 267 00:12:59,800 --> 00:13:04,959 Speaker 1: that SD is different. It is AI base. We have 268 00:13:05,120 --> 00:13:08,200 Speaker 1: it on the roads in Level two plus and people's cars. 269 00:13:08,559 --> 00:13:11,559 Speaker 1: It is very different and it is better, quite frankly 270 00:13:11,679 --> 00:13:14,400 Speaker 1: than a lot from a lot of Level two plus 271 00:13:14,440 --> 00:13:16,320 Speaker 1: on the road that we have. And there is an 272 00:13:16,400 --> 00:13:20,120 Speaker 1: arms race for Nvidia chips and Tesla has quite a lot. 273 00:13:20,400 --> 00:13:23,559 Speaker 1: So you know, over time, I think people will look 274 00:13:23,600 --> 00:13:26,920 Speaker 1: at the kind of proof in the pudding and see 275 00:13:27,000 --> 00:13:29,760 Speaker 1: obviously the data that will bear it out. We have 276 00:13:29,880 --> 00:13:34,240 Speaker 1: to see the safety statistics and what happens. But you know, 277 00:13:34,280 --> 00:13:37,440 Speaker 1: it's an arms racer GPUs. Tesla has a lot of them. 278 00:13:37,720 --> 00:13:40,040 Speaker 1: FSC is a great product there's a lot of people 279 00:13:40,080 --> 00:13:42,720 Speaker 1: working in this company, not just one individual. I think 280 00:13:42,760 --> 00:13:44,760 Speaker 1: we all have friends who work there who are very 281 00:13:44,800 --> 00:13:48,960 Speaker 1: interesting in dynamic people, and it's a dynamic company first 282 00:13:48,960 --> 00:13:49,600 Speaker 1: and foremost. 283 00:13:49,720 --> 00:13:52,720 Speaker 7: Well, no one said Elon Musk wasn't dynamic. Tom, You're 284 00:13:53,000 --> 00:13:55,160 Speaker 7: very optimistic when it comes to a long term. Can 285 00:13:55,160 --> 00:13:57,840 Speaker 7: we really narrow this to the short term? This event 286 00:13:58,080 --> 00:14:00,680 Speaker 7: is delayed by two months? How hi is the bar 287 00:14:00,760 --> 00:14:03,000 Speaker 7: for Elon Musk and Tesla this evening? 288 00:14:04,400 --> 00:14:07,000 Speaker 1: Sure? You know I've said that near term. I don't 289 00:14:07,000 --> 00:14:11,439 Speaker 1: actually expect this to be a big a big catalyst 290 00:14:11,480 --> 00:14:13,880 Speaker 1: for the stock. It had run into the event. We 291 00:14:13,960 --> 00:14:16,360 Speaker 1: had a delivery number that was in line, and the 292 00:14:16,360 --> 00:14:18,840 Speaker 1: stock still kind of sold off a bit. I think 293 00:14:18,920 --> 00:14:22,160 Speaker 1: there was some folks who moved into Tesla because of 294 00:14:22,240 --> 00:14:28,120 Speaker 1: all the carnage happening from you know, the German OEM's 295 00:14:28,160 --> 00:14:30,880 Speaker 1: profit warning never let a good crisis go to waste. 296 00:14:30,920 --> 00:14:35,440 Speaker 1: I think I was the person who said that, thank you, Tom, sorry, credit, 297 00:14:35,560 --> 00:14:38,520 Speaker 1: I no worries, and so a lot of that happened, 298 00:14:39,080 --> 00:14:42,240 Speaker 1: and basically, you know, the stock pulled back, so it 299 00:14:42,320 --> 00:14:44,800 Speaker 1: showed you that the stock ran into the event. So 300 00:14:44,840 --> 00:14:47,080 Speaker 1: I don't anticipate a big up move, but I do 301 00:14:47,160 --> 00:14:50,600 Speaker 1: expect that people like myself will finally get numbers on 302 00:14:50,600 --> 00:14:53,680 Speaker 1: how to model robotaxis. I also think they could talk 303 00:14:53,680 --> 00:14:57,280 Speaker 1: about optimist because on the invitation it said we robot 304 00:14:58,360 --> 00:15:01,040 Speaker 1: So I do wonder if we could hear more about optimists. 305 00:15:01,080 --> 00:15:04,240 Speaker 1: It's definitely not in people's numbers, so it could be 306 00:15:04,280 --> 00:15:07,440 Speaker 1: a catalyst more longer term, as we start putting these things, 307 00:15:07,720 --> 00:15:11,520 Speaker 1: these higher multiple non auto things in our models, we'll 308 00:15:11,520 --> 00:15:14,000 Speaker 1: remember this day of you know, in the future and 309 00:15:14,040 --> 00:15:17,560 Speaker 1: look back as opposed to tomorrow seeing the stock price, 310 00:15:17,880 --> 00:15:19,680 Speaker 1: you know, demonstrably higher or lower. 311 00:15:19,720 --> 00:15:21,120 Speaker 6: Tell them how strong do you think some of the 312 00:15:21,120 --> 00:15:21,960 Speaker 6: hands in this stock are? 313 00:15:22,080 --> 00:15:22,240 Speaker 4: Now? 314 00:15:22,240 --> 00:15:24,960 Speaker 2: Given the Elon Musk himself said basically, if you don't 315 00:15:24,960 --> 00:15:27,560 Speaker 2: believe in autonomous driving, don't hold this name. That was 316 00:15:27,640 --> 00:15:29,560 Speaker 2: basically what he came out within the last twelve months. 317 00:15:29,600 --> 00:15:31,320 Speaker 2: How strong do you think the hands are in this name? 318 00:15:31,440 --> 00:15:33,120 Speaker 2: Given them riding we've seen off the Eighthril low. 319 00:15:34,600 --> 00:15:37,360 Speaker 1: Yeah, but I think people are starting to believe, if 320 00:15:37,480 --> 00:15:40,600 Speaker 1: not starting to believe, they have been believing in the 321 00:15:40,640 --> 00:15:42,840 Speaker 1: past several months. I mean, you can't get to a 322 00:15:42,880 --> 00:15:45,960 Speaker 1: market cap close to whatever eight hundred billion dollars just 323 00:15:46,040 --> 00:15:48,520 Speaker 1: on a car business. It just doesn't work. The math 324 00:15:48,600 --> 00:15:51,680 Speaker 1: isn't there. You have to believe it's a tech company, 325 00:15:52,240 --> 00:15:54,920 Speaker 1: and autonomy is one of the only ways you can 326 00:15:54,960 --> 00:15:57,320 Speaker 1: really get there. I mean, not even with energy storage, 327 00:15:57,360 --> 00:16:01,120 Speaker 1: not with regulatory credits. One of me is a real 328 00:16:01,200 --> 00:16:05,360 Speaker 1: software subscription based business. People clearly giving credit for it 329 00:16:05,400 --> 00:16:09,200 Speaker 1: based on where the stock is right. So I actually 330 00:16:09,240 --> 00:16:12,560 Speaker 1: think folks are believers in it. We just need details 331 00:16:12,960 --> 00:16:16,000 Speaker 1: more than anything, and not just PowerPoint slide. So we'll 332 00:16:16,000 --> 00:16:18,200 Speaker 1: see the vehicle, I think tonight we'll see what it 333 00:16:18,240 --> 00:16:20,640 Speaker 1: looks like. I mean that in of itself is not 334 00:16:20,680 --> 00:16:22,920 Speaker 1: going to get folks excited, but I think it'll give 335 00:16:23,040 --> 00:16:26,520 Speaker 1: credibility that this is real. And then this is happening 336 00:16:26,600 --> 00:16:29,400 Speaker 1: and could happen. We could have a service maybe within 337 00:16:29,440 --> 00:16:31,080 Speaker 1: the next six or twelve months. 338 00:16:31,360 --> 00:16:33,600 Speaker 2: We hope been promised that for a long time. Tom 339 00:16:33,640 --> 00:16:36,240 Speaker 2: to run a s some thank you, sir, appreciate the 340 00:16:36,320 --> 00:16:47,960 Speaker 2: up day. Dan Gun has a SOUS alternative asset management, 341 00:16:48,000 --> 00:16:50,560 Speaker 2: saying the stock market still looks good to me. Broadening 342 00:16:50,600 --> 00:16:53,840 Speaker 2: gains are encouraging and despite all the worries over everything 343 00:16:54,200 --> 00:16:57,480 Speaker 2: market camp and equal weighted and decease reach essentially at 344 00:16:57,560 --> 00:16:59,560 Speaker 2: high stand joined, nap for more dank and morning. 345 00:17:00,040 --> 00:17:01,320 Speaker 4: Good morning, sir, how are you going to see? 346 00:17:01,320 --> 00:17:02,920 Speaker 6: Why do you always act surprised. 347 00:17:03,000 --> 00:17:04,640 Speaker 9: Because I'm not listening to start? 348 00:17:05,600 --> 00:17:10,240 Speaker 2: Thanks, you're listening now now call life on sav good. 349 00:17:10,240 --> 00:17:11,080 Speaker 6: It's good to see. 350 00:17:11,359 --> 00:17:11,600 Speaker 4: Look. 351 00:17:11,680 --> 00:17:15,320 Speaker 2: Equity spread, equities a record highs. Credit spreads are incredibly tired. 352 00:17:15,480 --> 00:17:17,520 Speaker 2: I think we should start in credit. When you look 353 00:17:17,520 --> 00:17:20,480 Speaker 2: at credit right now, how tight are things at the moment? 354 00:17:20,640 --> 00:17:23,440 Speaker 9: Yeah, listen, they are. I think depending on your index, 355 00:17:23,480 --> 00:17:26,080 Speaker 9: you're effectively at all time tights. I mean that's not 356 00:17:26,160 --> 00:17:29,040 Speaker 9: exactly true. If you use the JP Morgan index, for instance, 357 00:17:29,560 --> 00:17:32,440 Speaker 9: their IG indexes called ten or so basis points away 358 00:17:32,440 --> 00:17:35,040 Speaker 9: from all time tights. The high Yealed indexes ninety basis 359 00:17:35,040 --> 00:17:37,639 Speaker 9: points away from all time tights. Bloomberg obviously has an 360 00:17:37,680 --> 00:17:40,399 Speaker 9: index that's similarly close to all time tights. But but 361 00:17:40,440 --> 00:17:42,200 Speaker 9: I don't think in that sense the credit market tells 362 00:17:42,240 --> 00:17:44,600 Speaker 9: you anything that the equity market is not. We're obviously, 363 00:17:44,960 --> 00:17:48,160 Speaker 9: as we've discussed and you discussed with other guests, pricing 364 00:17:48,160 --> 00:17:50,280 Speaker 9: in for lack of a better word, of soft landing 365 00:17:50,359 --> 00:17:53,280 Speaker 9: or just a continuation of the expansion and risk assets 366 00:17:53,280 --> 00:17:55,600 Speaker 9: in general or appreciating in that type of environment. 367 00:17:55,840 --> 00:17:58,359 Speaker 2: Is it sufficient that they're even talking about interest right cards? 368 00:17:58,400 --> 00:17:59,960 Speaker 2: Is that just good enough? The fact that we've got 369 00:18:00,160 --> 00:18:01,800 Speaker 2: bank drop for growth and we've got a central bank 370 00:18:01,800 --> 00:18:05,240 Speaker 2: that's even having a conversation about lower and interest right small. 371 00:18:05,119 --> 00:18:07,080 Speaker 9: Well, let's just state the obvious. We're not just having 372 00:18:07,080 --> 00:18:09,480 Speaker 9: a conversation about it. We've already realized a fifty basis 373 00:18:09,480 --> 00:18:12,960 Speaker 9: point reduction, We're probably going to realize two more twenty 374 00:18:12,960 --> 00:18:15,600 Speaker 9: five basis point reductions this year. There's obviously a debate 375 00:18:15,640 --> 00:18:18,480 Speaker 9: about whether that's completely necessary or not, but from a 376 00:18:18,680 --> 00:18:21,760 Speaker 9: expected value standpoint, that's probably should be your baseline. And 377 00:18:21,800 --> 00:18:24,359 Speaker 9: so it's again, we're not just discussing it. It's happening. 378 00:18:24,400 --> 00:18:26,760 Speaker 9: And so the more important thing for risk assets is 379 00:18:26,800 --> 00:18:28,840 Speaker 9: not whether rates are going up or down. It's what's 380 00:18:28,880 --> 00:18:32,000 Speaker 9: the broader economic and earnings backdrop. And in that sense, yes, 381 00:18:32,080 --> 00:18:35,000 Speaker 9: rates are coming down, and that's an added benefit, certainly 382 00:18:35,000 --> 00:18:37,280 Speaker 9: for companies that have to refinance and the maturity wall 383 00:18:37,320 --> 00:18:39,879 Speaker 9: and the credit market, et cetera. But ultimately what matters 384 00:18:39,920 --> 00:18:42,240 Speaker 9: is that cash flows still look pretty good and the 385 00:18:42,240 --> 00:18:44,520 Speaker 9: economy still looks pretty good, and so from that standpoint, 386 00:18:44,520 --> 00:18:46,640 Speaker 9: why shouldn't risk assets appreciate. 387 00:18:46,400 --> 00:18:49,359 Speaker 5: There's a question about whether the bond market, treasury market 388 00:18:49,400 --> 00:18:52,400 Speaker 5: in particular, is increasingly kind of dancing to its own music. 389 00:18:52,440 --> 00:18:54,639 Speaker 5: As long as good data comes out, even if fields 390 00:18:54,640 --> 00:18:57,520 Speaker 5: go higher, it doesn't really matter for risk assets. At 391 00:18:57,560 --> 00:19:00,640 Speaker 5: what point is that sort of a threat that gets 392 00:19:00,680 --> 00:19:02,840 Speaker 5: crossed as yields continue to grind up war it well. 393 00:19:02,840 --> 00:19:05,000 Speaker 9: I think it's also important for investors to remember that 394 00:19:05,040 --> 00:19:08,840 Speaker 9: the relationship between yields in the treasury market and risk 395 00:19:08,920 --> 00:19:12,840 Speaker 9: assets is a moving target, and in particular in the 396 00:19:12,880 --> 00:19:18,520 Speaker 9: post two thousand period, roughly higher yields, which are associated 397 00:19:18,520 --> 00:19:21,119 Speaker 9: with higher growth and not necessarily higher inflation, have been 398 00:19:21,160 --> 00:19:23,960 Speaker 9: a positive for risk assets. They can move in tandem, 399 00:19:24,160 --> 00:19:25,840 Speaker 9: and I think you had a period of time obviously 400 00:19:25,880 --> 00:19:29,480 Speaker 9: where inflation was spiking, where that relationship was inverted. People 401 00:19:29,520 --> 00:19:32,199 Speaker 9: were concerned about inflation. But as we've moved now towards 402 00:19:32,240 --> 00:19:35,520 Speaker 9: growth concerns. Right now, I think higher yields are not 403 00:19:35,600 --> 00:19:39,000 Speaker 9: necessarily a problem for the equity market in the sense 404 00:19:39,040 --> 00:19:41,280 Speaker 9: that if they are corroborating the idea that the economy 405 00:19:41,359 --> 00:19:43,359 Speaker 9: is continuing to grow, maybe the FED. A lot of 406 00:19:43,359 --> 00:19:45,560 Speaker 9: what's happened, obviously, is that the FED can cut as 407 00:19:45,600 --> 00:19:48,399 Speaker 9: much as was originally priced in stupidly, I might add, 408 00:19:48,400 --> 00:19:51,399 Speaker 9: but in that environment, why wouldn't equities appreciate even if 409 00:19:51,400 --> 00:19:53,080 Speaker 9: the yield in the tenure goes from three to fifty 410 00:19:53,160 --> 00:19:53,760 Speaker 9: to let's say four. 411 00:19:53,960 --> 00:19:57,680 Speaker 5: So to pair that with credit is solas thinking that structurally, 412 00:19:57,720 --> 00:19:59,960 Speaker 5: credit spreads are going to be tighter this time around 413 00:20:00,320 --> 00:20:04,960 Speaker 5: relative to the higher benchmark yield, simply because the higher 414 00:20:05,040 --> 00:20:07,800 Speaker 5: yield reflects how good the momentum in the economy is, 415 00:20:07,800 --> 00:20:10,480 Speaker 5: which should all things being considered, make a lot of 416 00:20:10,480 --> 00:20:13,520 Speaker 5: the companies who even are lower rated look more credit worth. 417 00:20:13,560 --> 00:20:16,000 Speaker 9: You know, that's one hundred percent accurate. I would also add, 418 00:20:16,440 --> 00:20:18,439 Speaker 9: and we've discussed this in the past, this is not 419 00:20:18,600 --> 00:20:21,760 Speaker 9: your mother's credit market. It's more highly I don't know 420 00:20:21,800 --> 00:20:24,639 Speaker 9: that my mother had a really, really impressive colid market, 421 00:20:24,400 --> 00:20:26,040 Speaker 9: but I mean it is true. 422 00:20:26,240 --> 00:20:27,879 Speaker 1: The market is more highly rated. 423 00:20:28,280 --> 00:20:30,600 Speaker 9: You have a higher proportion of debt at the top 424 00:20:30,640 --> 00:20:33,879 Speaker 9: of the high yield structure than at the bottom. Companies 425 00:20:33,920 --> 00:20:37,720 Speaker 9: have higher cash and lower debt to ebitar ratios, leverage radios. 426 00:20:37,800 --> 00:20:41,080 Speaker 9: So there's all sorts of reasons why the market should 427 00:20:41,080 --> 00:20:44,200 Speaker 9: be in a sustainable way, tighter than what we've seen historically, 428 00:20:44,600 --> 00:20:47,000 Speaker 9: and in conjunction with that, you have, to your point, 429 00:20:47,359 --> 00:20:51,119 Speaker 9: the better economic backdrop, which improves the environment. The faults 430 00:20:51,160 --> 00:20:55,639 Speaker 9: are relatively constrained, So all of that together makes for 431 00:20:55,720 --> 00:20:58,720 Speaker 9: a more attractive credit market and should over time obviously 432 00:20:58,760 --> 00:21:01,080 Speaker 9: if you have a receessioned this change, but over time 433 00:21:01,119 --> 00:21:03,399 Speaker 9: should support higher valuations in the credit market as well 434 00:21:03,400 --> 00:21:04,200 Speaker 9: as the equity market. 435 00:21:04,240 --> 00:21:06,280 Speaker 2: Given everything we've said, what's your advice to people who 436 00:21:06,280 --> 00:21:07,280 Speaker 2: have missed out on all of this? 437 00:21:07,359 --> 00:21:09,000 Speaker 6: In the Satin cash? What did they do? 438 00:21:09,960 --> 00:21:11,320 Speaker 4: High society? 439 00:21:11,320 --> 00:21:11,879 Speaker 6: Where do they go? 440 00:21:12,040 --> 00:21:14,399 Speaker 9: This is like the Sasquatch. I don't think those people exist. 441 00:21:14,680 --> 00:21:15,600 Speaker 6: You don't think exists. 442 00:21:15,680 --> 00:21:16,679 Speaker 1: No, I don't think they know. 443 00:21:16,760 --> 00:21:18,640 Speaker 6: Some persons tell us what you meane. 444 00:21:18,840 --> 00:21:22,000 Speaker 9: Well, Lisa might know one person who has sat in 445 00:21:22,080 --> 00:21:22,840 Speaker 9: cash for some time. 446 00:21:22,880 --> 00:21:24,120 Speaker 6: I think it's Lisa for what it's worth. 447 00:21:25,160 --> 00:21:26,160 Speaker 1: But I don't think. 448 00:21:26,800 --> 00:21:30,000 Speaker 9: I don't think after a bull market so to speak, 449 00:21:30,000 --> 00:21:32,320 Speaker 9: in both equity and credit that has lasted this long 450 00:21:32,840 --> 00:21:35,399 Speaker 9: has not sucked in most investors at this point, and 451 00:21:35,440 --> 00:21:37,479 Speaker 9: I think you're at a point in the cycle now 452 00:21:38,080 --> 00:21:40,240 Speaker 9: where I don't think we should be having the conversation, 453 00:21:40,720 --> 00:21:42,520 Speaker 9: is it a bull market, is it about to end? 454 00:21:42,560 --> 00:21:43,320 Speaker 4: Et cetera, et cetera. 455 00:21:43,560 --> 00:21:45,760 Speaker 9: I think the conversation now should be considerably more nuanced 456 00:21:45,800 --> 00:21:48,600 Speaker 9: than has been for some time, in the sense that, Okay, 457 00:21:48,680 --> 00:21:52,240 Speaker 9: things are doing okay, risk assets continue to appreciate. Where's 458 00:21:52,240 --> 00:21:54,720 Speaker 9: the outperformance going to come from? Is it still tech stocks? 459 00:21:54,800 --> 00:21:58,159 Speaker 9: Should I rotate into energy? Is it defensives? What factors 460 00:21:58,160 --> 00:22:00,520 Speaker 9: should I be overweighting, et cetera, et cetera. Where in 461 00:22:00,560 --> 00:22:03,520 Speaker 9: the capital structure should I be positioned? Triple c's have 462 00:22:03,560 --> 00:22:05,760 Speaker 9: had a very good year. Obviously that's not a market 463 00:22:05,760 --> 00:22:08,040 Speaker 9: so much as a bunch of idiosyncratic names. But those 464 00:22:08,080 --> 00:22:11,360 Speaker 9: are the types of discussions that asset managers have all 465 00:22:11,400 --> 00:22:13,159 Speaker 9: the time. But I think for a lot of viewers 466 00:22:13,160 --> 00:22:15,359 Speaker 9: out there are watching should be happening to a greater 467 00:22:15,400 --> 00:22:15,920 Speaker 9: degree today. 468 00:22:15,920 --> 00:22:18,200 Speaker 2: When you say that money doesn't exist, you're not saying 469 00:22:18,200 --> 00:22:19,760 Speaker 2: that money is not real. You're just saying that that's 470 00:22:19,800 --> 00:22:21,399 Speaker 2: not the kind of capital that's going to get deployed 471 00:22:21,400 --> 00:22:21,680 Speaker 2: to risk. 472 00:22:21,800 --> 00:22:23,080 Speaker 9: Which money did I say doesn't exist? 473 00:22:23,080 --> 00:22:23,960 Speaker 6: Money market funds? 474 00:22:24,080 --> 00:22:24,159 Speaker 1: Oh? 475 00:22:24,800 --> 00:22:27,960 Speaker 9: Yes, sure, no, Well listen, that's listen. This is a 476 00:22:27,960 --> 00:22:30,960 Speaker 9: favorite topic of mind that six trillion exists. But I 477 00:22:30,960 --> 00:22:33,520 Speaker 9: think we people come on television and write notes and 478 00:22:33,560 --> 00:22:38,720 Speaker 9: talk about it as if it's this monolithic item which 479 00:22:38,760 --> 00:22:42,280 Speaker 9: is going to spur equities higher as cash goes from 480 00:22:42,320 --> 00:22:44,720 Speaker 9: six trillion to t That's not how it works. First 481 00:22:44,760 --> 00:22:46,920 Speaker 9: of all, a portion of that money is institutional, a 482 00:22:46,960 --> 00:22:48,960 Speaker 9: portion of that money is retail, some of it's in 483 00:22:49,040 --> 00:22:52,160 Speaker 9: tax advantage funds. It's not like they're all comparable to Nvidia. 484 00:22:52,240 --> 00:22:54,000 Speaker 9: But the most important point I would make, and I've 485 00:22:54,000 --> 00:22:56,000 Speaker 9: made repeatedly, and I will do it until I die, 486 00:22:56,440 --> 00:22:59,439 Speaker 9: that's six trillion needs to be scaled for something because 487 00:22:59,560 --> 00:23:03,520 Speaker 9: number up. So you can't compare today's six trillion to 488 00:23:03,560 --> 00:23:05,879 Speaker 9: six trillion five years ago. What do you compare it to? 489 00:23:06,000 --> 00:23:08,640 Speaker 9: My preference is the S ANDP market cap? How much 490 00:23:08,680 --> 00:23:10,480 Speaker 9: is on the sidelines compared to the market cap. So 491 00:23:10,560 --> 00:23:13,480 Speaker 9: let's do the math real quick. There's six trillion or 492 00:23:13,520 --> 00:23:15,680 Speaker 9: so of money and market there's six trillion of cash 493 00:23:15,760 --> 00:23:17,719 Speaker 9: or show in money markets. Let's treat it like it's 494 00:23:17,760 --> 00:23:21,040 Speaker 9: a monolith of total equity market cap SB five hundreds 495 00:23:21,040 --> 00:23:23,439 Speaker 9: called fifty trillion or so. So that's I don't know, 496 00:23:23,520 --> 00:23:27,200 Speaker 9: ten twelve, something percent of the equity market cap. That's 497 00:23:27,240 --> 00:23:29,680 Speaker 9: not out of step with what we've seen over the 498 00:23:29,760 --> 00:23:31,639 Speaker 9: last ten or fifteen years. Yes, there's a lot of 499 00:23:31,680 --> 00:23:34,360 Speaker 9: money on the sideline, but there's a share of biable 500 00:23:34,400 --> 00:23:36,159 Speaker 9: assets in the s and P five hundred. If that's 501 00:23:36,200 --> 00:23:39,200 Speaker 9: your argument, it's not necessarily high. That's not to say 502 00:23:39,200 --> 00:23:41,520 Speaker 9: that it will not come down. It will at some 503 00:23:41,600 --> 00:23:44,080 Speaker 9: point six trillion will go to five trillion, and some 504 00:23:44,160 --> 00:23:46,080 Speaker 9: of that will go into the equity market. But do 505 00:23:46,160 --> 00:23:47,840 Speaker 9: I think that is a reason for me to be 506 00:23:47,920 --> 00:23:49,960 Speaker 9: even more bullish or bullish at all? 507 00:23:50,040 --> 00:23:50,800 Speaker 1: No, I don't think I. 508 00:23:50,760 --> 00:23:52,240 Speaker 2: Can tell you that was such so much better ounser 509 00:23:52,240 --> 00:23:53,879 Speaker 2: than the first one exists. 510 00:23:54,160 --> 00:23:55,600 Speaker 6: Well, all I can say is I love this. We 511 00:23:55,600 --> 00:23:56,159 Speaker 6: should comput it. 512 00:23:56,240 --> 00:23:58,720 Speaker 9: I don't. I must have had a Will Ferrell moment. 513 00:23:58,800 --> 00:24:01,639 Speaker 9: I don't remember saying the sixth this morning. 514 00:24:01,720 --> 00:24:03,919 Speaker 5: DA Honestly to me, that sort of we should get 515 00:24:03,920 --> 00:24:05,879 Speaker 5: clips of everyone's saying money on the sidelines is a 516 00:24:05,880 --> 00:24:07,480 Speaker 5: reason to buy, and then all the people saying money 517 00:24:07,520 --> 00:24:11,000 Speaker 5: on the sidelines is a fiction. Stop it already next time, Okay, 518 00:24:11,520 --> 00:24:12,960 Speaker 5: just I am curious. I want to get to this 519 00:24:13,040 --> 00:24:16,840 Speaker 5: because Solis really specializes in distressed investing right now the 520 00:24:16,840 --> 00:24:19,480 Speaker 5: world that you just pictured, no distress there. 521 00:24:19,520 --> 00:24:21,119 Speaker 1: What do you guys do well? 522 00:24:21,200 --> 00:24:24,840 Speaker 9: Listen, distress managers have been wrestling with this for many, 523 00:24:24,880 --> 00:24:27,879 Speaker 9: many years, and I don't think SOLIS is any different 524 00:24:27,880 --> 00:24:30,159 Speaker 9: in that regard. That is to say that when you 525 00:24:30,960 --> 00:24:34,639 Speaker 9: the traditional distress manager in previous cycles probably doesn't exist 526 00:24:34,720 --> 00:24:37,879 Speaker 9: much today. SOLAS does as much investing up the capital 527 00:24:37,920 --> 00:24:40,440 Speaker 9: structure these days as we do down the capital structure. 528 00:24:40,800 --> 00:24:44,280 Speaker 9: So we're capable and have owned not Visa, but like 529 00:24:44,359 --> 00:24:48,760 Speaker 9: we could own Visa, and we could own dish unsecured bonds. 530 00:24:49,080 --> 00:24:50,879 Speaker 9: And when you have an environment like we've had for 531 00:24:50,960 --> 00:24:54,720 Speaker 9: some time where the dish unsecured bond equivalent is few 532 00:24:54,760 --> 00:24:57,280 Speaker 9: and far between, has been the case these days. There's 533 00:24:57,320 --> 00:25:02,240 Speaker 9: not so much workouts, there's not so many structurings. You 534 00:25:02,320 --> 00:25:05,479 Speaker 9: have to find risk adjustede returns elsewhere. And we've done that, 535 00:25:05,520 --> 00:25:08,480 Speaker 9: increasing in the equity market and up the capital structure, 536 00:25:08,640 --> 00:25:10,280 Speaker 9: and I think that's been rewarding for us over the 537 00:25:10,359 --> 00:25:13,080 Speaker 9: last few years. I think we're pretty pleased with our performance. 538 00:25:14,119 --> 00:25:16,000 Speaker 9: The way that I talk about it is we're taking 539 00:25:16,000 --> 00:25:18,359 Speaker 9: what the market gives us. There might have been a 540 00:25:18,400 --> 00:25:20,159 Speaker 9: time where we were trying to force the issue in 541 00:25:20,200 --> 00:25:23,919 Speaker 9: saying distress managers, multi billion dollar distress managers, this is 542 00:25:23,920 --> 00:25:27,440 Speaker 9: the only sandbox in which we can play. We've traditionally 543 00:25:27,440 --> 00:25:29,360 Speaker 9: played in that sandbox. We must stay there. I don't 544 00:25:29,400 --> 00:25:32,680 Speaker 9: think we have that view and have in for a decade. 545 00:25:33,359 --> 00:25:35,520 Speaker 9: We're all over the capital structure, and I would argue, 546 00:25:35,560 --> 00:25:36,880 Speaker 9: justifiably so our. 547 00:25:36,760 --> 00:25:39,439 Speaker 5: Distressed hedge fund's being made out of business by some 548 00:25:39,480 --> 00:25:42,160 Speaker 5: of the big private capital funds that are out there 549 00:25:42,200 --> 00:25:43,400 Speaker 5: doing a lot of rescue finance. 550 00:25:44,359 --> 00:25:45,080 Speaker 1: That doesn't help. 551 00:25:45,200 --> 00:25:48,119 Speaker 9: But I think the bigger issue for distressed investors in 552 00:25:48,160 --> 00:25:51,439 Speaker 9: general is there's just not been very much distress. The 553 00:25:51,480 --> 00:25:54,400 Speaker 9: maturity wall, which everyone keeps talking about, hasn't been binding. 554 00:25:55,359 --> 00:26:00,600 Speaker 9: Restructurings get done, and the lack of covenance in in 555 00:26:00,640 --> 00:26:03,720 Speaker 9: the loan market and elsewhere make it easier for companies 556 00:26:03,760 --> 00:26:06,760 Speaker 9: to go longer before they enter court restructurings, and when 557 00:26:06,760 --> 00:26:09,280 Speaker 9: they do, there's fewer assets to fight over, which gave 558 00:26:09,320 --> 00:26:12,760 Speaker 9: birth elemies with this whole separate conversation. But yeah, listen again, 559 00:26:12,920 --> 00:26:15,040 Speaker 9: I think we're finding stuff to do. We've talked about 560 00:26:15,040 --> 00:26:18,520 Speaker 9: the energy market. Oil is twenty bucks off its Highs, 561 00:26:18,560 --> 00:26:20,159 Speaker 9: but a lot of those names, or a lot of 562 00:26:20,200 --> 00:26:22,399 Speaker 9: those stock names, are basically AD Highs. 563 00:26:22,840 --> 00:26:23,440 Speaker 4: We continue. 564 00:26:23,560 --> 00:26:25,920 Speaker 9: We talked about the consumer ad nauseam on here. There's 565 00:26:25,960 --> 00:26:28,000 Speaker 9: any different number of ways you could play the consumer. 566 00:26:28,160 --> 00:26:30,720 Speaker 9: We've talked about cruise lines, We've talked about in the 567 00:26:30,760 --> 00:26:33,600 Speaker 9: media space where we sold this as a history. It's 568 00:26:33,640 --> 00:26:35,840 Speaker 9: well known that we were a large holder of MGM Studios, 569 00:26:35,840 --> 00:26:38,600 Speaker 9: so we having expertise in that area. There's stuff to 570 00:26:38,640 --> 00:26:41,520 Speaker 9: do there. I don't think there's any shortage of stuff 571 00:26:41,520 --> 00:26:43,520 Speaker 9: to do. Again, if you don't sit here and say 572 00:26:43,520 --> 00:26:45,160 Speaker 9: that's the only sandbox in which we can. 573 00:26:45,080 --> 00:26:46,960 Speaker 6: Play, Dan, this was great. It's going to see it. 574 00:26:47,080 --> 00:26:48,440 Speaker 4: My pleasure is always good. It was real. 575 00:26:48,600 --> 00:26:49,080 Speaker 6: It happened. 576 00:26:49,160 --> 00:26:52,160 Speaker 2: Dan green House of Solis Alternative Assett. 577 00:26:52,040 --> 00:26:53,240 Speaker 1: I'm gonna have to watch the tape. 578 00:26:53,880 --> 00:26:57,440 Speaker 2: This is the Bloomberg Sevenance podcast, bringing you the best 579 00:26:57,440 --> 00:27:00,520 Speaker 2: in market economics, Angie of politics. You can watch the 580 00:27:00,560 --> 00:27:03,639 Speaker 2: show live on Bloomberg TV weekday mornings from six am 581 00:27:03,680 --> 00:27:06,840 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, 582 00:27:07,119 --> 00:27:09,960 Speaker 2: Spotify or anywhere else you listen, and as always on 583 00:27:10,000 --> 00:27:12,480 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.