1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,119 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:47,600 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Tina Fordam 11 00:00:47,600 --> 00:00:52,239 Speaker 2: we can talk about. She populates Mayfair and the fancy 12 00:00:52,280 --> 00:00:58,120 Speaker 2: climes of London. She joins us now for Fordham Global Insight, 13 00:00:58,400 --> 00:01:02,920 Speaker 2: and far more importantly, as a visceral understanding of where 14 00:01:02,920 --> 00:01:04,520 Speaker 2: the Vice president came from. 15 00:01:04,600 --> 00:01:05,559 Speaker 3: When you come out of San. 16 00:01:05,480 --> 00:01:10,440 Speaker 2: Francisco State, you understand San Francisco, Tina, from where you 17 00:01:10,560 --> 00:01:17,320 Speaker 2: sit in the wild liberal progressive hell of California. Where 18 00:01:17,360 --> 00:01:19,559 Speaker 2: does Vice President Harris fit in? 19 00:01:21,920 --> 00:01:23,760 Speaker 4: Well, she's a hometown girl. 20 00:01:23,840 --> 00:01:27,400 Speaker 5: I'm a San Francisco Bay Area native, but in London 21 00:01:27,440 --> 00:01:31,280 Speaker 5: for twenty two years. So I think the first thought 22 00:01:31,319 --> 00:01:33,520 Speaker 5: I have is that she's definitely not going to be 23 00:01:33,640 --> 00:01:38,000 Speaker 5: choosing Gavin Newsom, the California governor, as her running mate, 24 00:01:38,560 --> 00:01:44,000 Speaker 5: So that's off the table. She is going to try 25 00:01:44,040 --> 00:01:48,760 Speaker 5: to work hard to strengthen her bona fides as a 26 00:01:48,800 --> 00:01:52,000 Speaker 5: prosecutor and as a California district attorney. 27 00:01:53,200 --> 00:01:55,640 Speaker 4: She's going to try to be tough on law and order, 28 00:01:55,720 --> 00:01:56,200 Speaker 4: I think. 29 00:01:56,560 --> 00:02:00,280 Speaker 5: But I think what's most important here is that what 30 00:02:00,280 --> 00:02:04,080 Speaker 5: we've seen with the momentum since Biden's announcement is the 31 00:02:04,240 --> 00:02:08,320 Speaker 5: huge appetite for just some energy in this race. 32 00:02:09,760 --> 00:02:13,880 Speaker 6: So is that energy? How can Vice President Hires take 33 00:02:13,919 --> 00:02:18,320 Speaker 6: that energy and form a real coherent message. What do 34 00:02:18,320 --> 00:02:23,440 Speaker 6: you expect to hear from her as a presidential candidate, Well, it. 35 00:02:23,400 --> 00:02:27,480 Speaker 5: Certainly looks like her operation has hit the ground running. 36 00:02:28,400 --> 00:02:32,359 Speaker 5: It's if you're not online or on what we now 37 00:02:32,400 --> 00:02:35,240 Speaker 5: call X, you're missing out because you can see in 38 00:02:35,360 --> 00:02:39,120 Speaker 5: real time how her campaign headquarters, you know, virtually been 39 00:02:39,160 --> 00:02:42,440 Speaker 5: set up with some branding echoes. 40 00:02:42,000 --> 00:02:47,000 Speaker 4: That are very familiar to gen Z and younger people. 41 00:02:47,960 --> 00:02:50,680 Speaker 5: There are a lot of you know, politically homeless people, 42 00:02:51,360 --> 00:02:58,880 Speaker 5: disenfranchised constituencies, you know, never trumpers people who are who 43 00:02:58,919 --> 00:03:04,200 Speaker 5: are open to ideas, and I wonder if the pressed 44 00:03:04,240 --> 00:03:09,160 Speaker 5: time frame doesn't actually work a little bit to her advantage. 45 00:03:09,440 --> 00:03:12,240 Speaker 6: So what do you think I mean? I guess one 46 00:03:12,320 --> 00:03:15,040 Speaker 6: of the first decisions she needs to make as a 47 00:03:15,040 --> 00:03:19,600 Speaker 6: candidate is to select a vice presidential candidate. How do 48 00:03:19,600 --> 00:03:20,560 Speaker 6: you think she'll go there? 49 00:03:22,560 --> 00:03:26,520 Speaker 5: Midwestern white guy. I think that that has to be 50 00:03:26,680 --> 00:03:30,679 Speaker 5: the choice. I don't think it'll be Pete Bootage Edge. 51 00:03:30,760 --> 00:03:34,960 Speaker 5: That's too much change, too much, you know, perceived progressiveness 52 00:03:35,360 --> 00:03:39,720 Speaker 5: on one ticket. But Tom mentioned Mark Kelly, a senator 53 00:03:39,760 --> 00:03:47,200 Speaker 5: from Arizona, NASA astronaut, naval officer, pilot, husband of Gabby Gifford's. 54 00:03:47,480 --> 00:03:50,760 Speaker 5: He would be an interesting choice, and obviously Arizona is 55 00:03:50,960 --> 00:03:58,640 Speaker 5: a key battleground state. Beasher is another interesting candidate, could 56 00:03:58,640 --> 00:04:02,520 Speaker 5: go head to head with Vance on Appalachia. There are 57 00:04:02,560 --> 00:04:05,920 Speaker 5: some good names in the mix, but that's the kind 58 00:04:05,960 --> 00:04:08,440 Speaker 5: of ticket that I would expect to see. Someone who 59 00:04:08,440 --> 00:04:12,600 Speaker 5: would compliment Harris and ideally could deliver a big swing state. 60 00:04:12,840 --> 00:04:13,480 Speaker 3: Tina Fordham. 61 00:04:13,520 --> 00:04:18,320 Speaker 2: We are advantaged at Bloomberg with Wendy Benjaminson, who is 62 00:04:18,360 --> 00:04:23,160 Speaker 2: in Washington, d C. She Folks is the definitive old 63 00:04:23,240 --> 00:04:29,040 Speaker 2: school newspaper editor, supporting young reporters, nurturing people. 64 00:04:29,120 --> 00:04:30,840 Speaker 3: And I asked you this question yesterday. 65 00:04:30,880 --> 00:04:35,760 Speaker 2: Tina, you are without question the most qualified Transatlantic voice 66 00:04:35,880 --> 00:04:40,800 Speaker 2: on this. In England, nobody's sweating that there's Prime Minister 67 00:04:40,960 --> 00:04:44,160 Speaker 2: may or even the train wreck that was Prime Minister Trusts. 68 00:04:45,000 --> 00:04:46,200 Speaker 3: No one's sweating. 69 00:04:47,080 --> 00:04:51,000 Speaker 2: Marie La penn is a fixture within French politics or 70 00:04:51,000 --> 00:04:54,200 Speaker 2: the reality of Anglo America. Paul, what was it fourteen years? 71 00:04:54,200 --> 00:04:57,760 Speaker 2: I think ye is Chancellor Tina Fordham. Why does America 72 00:04:57,800 --> 00:05:01,960 Speaker 2: have so much trouble electing a woman president from both 73 00:05:02,080 --> 00:05:04,280 Speaker 2: party persuasions? 74 00:05:05,880 --> 00:05:11,240 Speaker 5: It's remarkable and I'm not sure guys that Americans really 75 00:05:11,240 --> 00:05:16,280 Speaker 5: appreciate what an outlier we are in being seemingly unable 76 00:05:16,360 --> 00:05:18,599 Speaker 5: to elect a female head of state. 77 00:05:18,760 --> 00:05:21,039 Speaker 4: As you say, the UK has had. 78 00:05:20,960 --> 00:05:25,679 Speaker 5: Three female prime ministers, one one only for a few minutes, 79 00:05:25,720 --> 00:05:31,880 Speaker 5: but nevertheless, and numerous OECU D countries have. 80 00:05:32,000 --> 00:05:34,360 Speaker 4: Had so the US is an outlier. 81 00:05:34,600 --> 00:05:38,000 Speaker 5: But again, I do think the wrong question is is 82 00:05:38,120 --> 00:05:40,640 Speaker 5: America ready for a black female president. 83 00:05:40,800 --> 00:05:44,560 Speaker 4: I think the question has to be in this, you. 84 00:05:44,520 --> 00:05:50,120 Speaker 5: Know, fairly high stakes race, whether the United States wants 85 00:05:50,160 --> 00:05:55,480 Speaker 5: to re elect Donald Trump or wants broad political continuity, 86 00:05:56,080 --> 00:06:00,920 Speaker 5: which a Harris plus Midwestern guy ticket would bring. 87 00:06:02,240 --> 00:06:05,720 Speaker 6: Tina, do you how do you think Kamala Harris will 88 00:06:05,760 --> 00:06:09,080 Speaker 6: stack up against one on one against former President Trump, 89 00:06:09,200 --> 00:06:11,240 Speaker 6: whether it be in debates or just the day to 90 00:06:11,320 --> 00:06:11,960 Speaker 6: day messaging. 91 00:06:14,120 --> 00:06:17,520 Speaker 5: Well, the first thing is that as a former prosecutor, 92 00:06:18,080 --> 00:06:23,240 Speaker 5: she's tough. You know, watch the replays of her questioning 93 00:06:23,480 --> 00:06:28,799 Speaker 5: on during these Supreme Court hearings for Brett Kavanaugh. She's 94 00:06:28,839 --> 00:06:33,160 Speaker 5: you know, she's perhaps not as smooth and slick as 95 00:06:33,160 --> 00:06:39,200 Speaker 5: of Bill Clinton, but she's a tough questioner and respondent. 96 00:06:40,320 --> 00:06:42,880 Speaker 5: What is her messaging going to be? You know, I'm 97 00:06:42,880 --> 00:06:46,040 Speaker 5: not Donald Trump? Does it need to be much more 98 00:06:46,080 --> 00:06:50,800 Speaker 5: advanced than that? She's the continuity candidate? Interesting to me though, 99 00:06:50,960 --> 00:06:54,760 Speaker 5: was that Trump seemed to be you know, back peddling 100 00:06:55,279 --> 00:06:58,159 Speaker 5: from the next debate September tenth. Did you see that 101 00:06:58,880 --> 00:07:01,800 Speaker 5: and also complaining that they want their money back? 102 00:07:01,920 --> 00:07:04,920 Speaker 4: Is they prepared for a campaign against a different guy? 103 00:07:06,080 --> 00:07:08,159 Speaker 2: This is just so important. My theme that I focus 104 00:07:08,200 --> 00:07:10,920 Speaker 2: is a turnout. It's not my opinion, it's a fancy 105 00:07:10,920 --> 00:07:15,000 Speaker 2: people like Tina Fordham saying turnout it really matters. Tina Fordham, 106 00:07:15,360 --> 00:07:20,200 Speaker 2: how do you suggest the former president and the senator 107 00:07:20,200 --> 00:07:25,120 Speaker 2: from Ohio enhance their turnout after what we saw on 108 00:07:25,160 --> 00:07:28,640 Speaker 2: a ninety minute convention speech, and after all the emotion 109 00:07:28,720 --> 00:07:32,200 Speaker 2: of the assassination, attempting that how do they enhance their 110 00:07:32,240 --> 00:07:34,960 Speaker 2: turnout against the vice. 111 00:07:34,720 --> 00:07:40,280 Speaker 5: President, probably by stoking fear about what she might do. 112 00:07:40,680 --> 00:07:43,400 Speaker 5: The difficulty for them is that they are going to 113 00:07:43,440 --> 00:07:47,080 Speaker 5: have to resort to some pretty unpleasant language and tactics 114 00:07:47,320 --> 00:07:51,240 Speaker 5: to do so. Do their supporters care It's hard to say, 115 00:07:51,320 --> 00:07:55,920 Speaker 5: but it can't be underestimated how they will have been 116 00:07:56,080 --> 00:07:58,800 Speaker 5: somewhat blindsided about this change. 117 00:07:59,280 --> 00:07:59,920 Speaker 4: In the ticket. 118 00:08:00,120 --> 00:08:04,920 Speaker 5: Now Donald Trump's the old guy in the race, and 119 00:08:05,080 --> 00:08:08,640 Speaker 5: you know, can Trump continue with the momentum he's had 120 00:08:08,680 --> 00:08:10,920 Speaker 5: in attracting you know, black. 121 00:08:10,640 --> 00:08:11,760 Speaker 4: Men and others. 122 00:08:12,760 --> 00:08:16,840 Speaker 5: The constituencies that were pro Obama, that came out for Obama, 123 00:08:17,680 --> 00:08:18,880 Speaker 5: we're coming. 124 00:08:18,600 --> 00:08:22,200 Speaker 4: Out for Biden. Will they turn up for Harris? 125 00:08:22,640 --> 00:08:25,560 Speaker 5: That's what the next you know, six weeks in particular, 126 00:08:25,760 --> 00:08:28,760 Speaker 5: is going to be about. It's also why I think 127 00:08:28,760 --> 00:08:32,640 Speaker 5: the shorter time frame just helps less time for everyone 128 00:08:32,679 --> 00:08:33,320 Speaker 5: to get bored. 129 00:08:33,640 --> 00:08:35,319 Speaker 3: This is this, I agree with this. 130 00:08:35,440 --> 00:08:38,520 Speaker 2: It's very British, okay, and only Tina Fordham in London. 131 00:08:38,559 --> 00:08:42,080 Speaker 2: Good say that, Tina, fabulous, Thank you so much. Tina Fordham, 132 00:08:42,160 --> 00:08:45,000 Speaker 2: of course, the iconic and city group Fordham Global Insights 133 00:08:45,640 --> 00:08:58,760 Speaker 2: out of London, less of Benjamina, out of the Welseyon 134 00:08:58,840 --> 00:09:03,040 Speaker 2: Complex is a Chatta house in London, hugely prestigious when 135 00:09:03,080 --> 00:09:06,320 Speaker 2: she speaks on America, the United Kingdom and the continent. 136 00:09:06,800 --> 00:09:09,160 Speaker 2: Stop or thrilled that doctor Vinja Marie could join us 137 00:09:10,080 --> 00:09:14,800 Speaker 2: this morning, Leslie, the market really hasn't moved across equities, bonds, 138 00:09:14,840 --> 00:09:19,160 Speaker 2: currency's commodities. What does that signal of our political system? 139 00:09:20,400 --> 00:09:22,760 Speaker 7: Well, I guess some sense that this is going to 140 00:09:22,800 --> 00:09:27,000 Speaker 7: be continuity, that there's a sort of weight and see attitude. 141 00:09:27,000 --> 00:09:31,400 Speaker 7: Probably also it doesn't feel like continuity to those of 142 00:09:31,480 --> 00:09:33,840 Speaker 7: us who are looking at the political world. It seems 143 00:09:33,920 --> 00:09:39,640 Speaker 7: like a rather significant moment of change. But I guess 144 00:09:39,720 --> 00:09:42,400 Speaker 7: you know, if you're trying to gain this out from 145 00:09:42,400 --> 00:09:45,600 Speaker 7: the markets, you know that really, whether it's Joe Biden 146 00:09:45,760 --> 00:09:49,000 Speaker 7: or likely Kamala Harris, the economic policy is likely to 147 00:09:49,040 --> 00:09:50,840 Speaker 7: be one that's continuous. 148 00:09:51,040 --> 00:09:54,240 Speaker 2: Lord O'Neil, Jim o'neilla Goldman Sachs, with his contribution to 149 00:09:54,320 --> 00:09:57,359 Speaker 2: Chatham Mouse, told me that people like you and Chathamouse 150 00:09:57,400 --> 00:10:00,440 Speaker 2: are still dipping a quill in the ink pot to 151 00:10:00,480 --> 00:10:03,680 Speaker 2: write when you can. And the answer, Leslie Vigemri is 152 00:10:04,240 --> 00:10:06,240 Speaker 2: Trump and Harris have to. 153 00:10:06,240 --> 00:10:07,880 Speaker 3: Deal with the modern media. 154 00:10:08,040 --> 00:10:13,200 Speaker 2: This isn't Eisenhower Stevenson of nineteen fifty two. How do 155 00:10:13,280 --> 00:10:15,360 Speaker 2: they deal with the speed of news today? 156 00:10:16,200 --> 00:10:19,160 Speaker 7: Now this is extraordinary. I mean in every single time 157 00:10:19,240 --> 00:10:22,880 Speaker 7: somebody endorses or uses a specific word, it's on the media. 158 00:10:22,960 --> 00:10:26,360 Speaker 7: And people will now be watching every move that Kamala 159 00:10:26,400 --> 00:10:29,880 Speaker 7: Harris makes as she takes her campaign forward and looking 160 00:10:29,920 --> 00:10:32,880 Speaker 7: to see whether the Democrats unify behind her. And they're 161 00:10:32,920 --> 00:10:35,439 Speaker 7: going to do that all not only on national television, 162 00:10:35,480 --> 00:10:38,160 Speaker 7: but on world television. And people are also looking to 163 00:10:38,200 --> 00:10:43,200 Speaker 7: see how Donald Trump will signal his response. Clearly they're 164 00:10:43,200 --> 00:10:46,720 Speaker 7: going to have to shift their campaign strategy. I think 165 00:10:46,760 --> 00:10:49,880 Speaker 7: for many people, they will be trying to get a 166 00:10:49,920 --> 00:10:52,720 Speaker 7: sense of who the vice presidential candidate will be for 167 00:10:52,800 --> 00:10:56,120 Speaker 7: Kamala Harris, assuming she moves forward, which certainly looks likely, 168 00:10:56,720 --> 00:10:59,280 Speaker 7: and also what kind of leader she would be. What 169 00:10:59,280 --> 00:11:02,920 Speaker 7: would her poly not only at home, which I think 170 00:11:03,000 --> 00:11:05,800 Speaker 7: is more well known, but especially on the global stage, 171 00:11:05,840 --> 00:11:12,719 Speaker 7: and here she's relatively unknown and has relatively little experience. 172 00:11:12,800 --> 00:11:16,320 Speaker 7: That said, she's had a very strong voice with some 173 00:11:17,120 --> 00:11:20,600 Speaker 7: difficult moments, not least in those early days of her 174 00:11:20,679 --> 00:11:24,080 Speaker 7: role as vice president when it came to immigration and 175 00:11:24,160 --> 00:11:25,040 Speaker 7: the southern border. 176 00:11:25,960 --> 00:11:26,400 Speaker 3: Leslie. 177 00:11:26,440 --> 00:11:29,719 Speaker 6: Was this a good weekend for the Democratic Party? Was 178 00:11:29,760 --> 00:11:32,559 Speaker 6: it a weekend where they turned the page or was 179 00:11:32,600 --> 00:11:35,920 Speaker 6: it a weekend showing the disarray of the party. How 180 00:11:35,960 --> 00:11:37,520 Speaker 6: do you view this past weekend? What happened? 181 00:11:38,280 --> 00:11:41,280 Speaker 7: I think the disarray for the Democratic Party played out 182 00:11:41,320 --> 00:11:46,040 Speaker 7: over the last three weeks since that very difficult presidential debate, 183 00:11:47,400 --> 00:11:50,880 Speaker 7: and yesterday was really a moment of clarity where President 184 00:11:50,960 --> 00:11:54,080 Speaker 7: Biden made a decision that people had been waiting for 185 00:11:54,160 --> 00:11:57,960 Speaker 7: and wondering about for quite some time, and where he 186 00:11:58,400 --> 00:12:01,800 Speaker 7: quickly thereafter endorsed Kamala Harris. And then we saw many 187 00:12:02,000 --> 00:12:04,760 Speaker 7: leading figures, including some of those who would have run 188 00:12:04,760 --> 00:12:09,040 Speaker 7: against her, saying that they supported her. And so I 189 00:12:09,080 --> 00:12:13,200 Speaker 7: think people are breathing, you know, tentatively, a sigh of relief, 190 00:12:13,960 --> 00:12:17,120 Speaker 7: knowing that that moment is over, understanding that there's still 191 00:12:17,200 --> 00:12:19,840 Speaker 7: great certainty ahead as to whether or not she can 192 00:12:19,920 --> 00:12:24,440 Speaker 7: actually compete. And you know, we watched the Republican National 193 00:12:24,480 --> 00:12:29,040 Speaker 7: Convention we watched former President Trump and Jade Vance double 194 00:12:29,120 --> 00:12:32,800 Speaker 7: down on a very powerful but actually a very narrow 195 00:12:32,880 --> 00:12:37,280 Speaker 7: agenda and speak really primarily to their base, and broadening 196 00:12:37,320 --> 00:12:39,840 Speaker 7: that out will be the Essentially That's exactly where. 197 00:12:39,640 --> 00:12:40,120 Speaker 3: I wanted to go. 198 00:12:40,200 --> 00:12:44,040 Speaker 2: I mean, I'm playing off of fabulous research on who votes, 199 00:12:44,320 --> 00:12:47,440 Speaker 2: how we vote, when we vote, from pure research and 200 00:12:47,480 --> 00:12:50,480 Speaker 2: doctor vin Ja Murray. Everything's focused on Harris. 201 00:12:50,520 --> 00:12:50,679 Speaker 3: Now. 202 00:12:50,720 --> 00:12:52,840 Speaker 2: I get that, it's in the news, it's new, it's fresh, 203 00:12:53,240 --> 00:12:54,480 Speaker 2: you know, ratings and all that. 204 00:12:54,600 --> 00:12:55,400 Speaker 3: Forget about it. 205 00:12:55,920 --> 00:13:01,199 Speaker 2: How does President Trump and Senator Vance move You've center 206 00:13:01,679 --> 00:13:06,040 Speaker 2: off the message of Milwaukee to get the marginal vote, 207 00:13:06,320 --> 00:13:08,880 Speaker 2: or do you perceive they have absolutely no interest in 208 00:13:08,920 --> 00:13:09,440 Speaker 2: doing that. 209 00:13:10,440 --> 00:13:12,920 Speaker 7: I think they actually do have some interest. If you've 210 00:13:12,960 --> 00:13:17,400 Speaker 7: watched President Trump move his position sort of dial it 211 00:13:17,440 --> 00:13:21,920 Speaker 7: down a little bit on abortion, for example, he's tried 212 00:13:21,920 --> 00:13:25,600 Speaker 7: to distance himself from a Project twenty twenty five, which 213 00:13:25,600 --> 00:13:31,120 Speaker 7: many people have viewed as very radical or extreme, and 214 00:13:31,200 --> 00:13:34,760 Speaker 7: so there's already signs that he recognizes. You know, Donald 215 00:13:34,800 --> 00:13:37,480 Speaker 7: Trump is always looking to see where he can make 216 00:13:37,520 --> 00:13:39,600 Speaker 7: something stick and where he can get a win. He 217 00:13:39,720 --> 00:13:42,840 Speaker 7: likes to think of himself as doing deals, and I 218 00:13:42,880 --> 00:13:46,920 Speaker 7: suspect that they are really, you know, recalibrating in a 219 00:13:47,040 --> 00:13:52,520 Speaker 7: very significant way. If they're smart, they will recognize the 220 00:13:53,360 --> 00:13:59,400 Speaker 7: diversity that Jade Vance's wife brings to the broader platform. 221 00:13:59,640 --> 00:14:04,199 Speaker 7: Not a of course, but that's a very significant female 222 00:14:04,520 --> 00:14:07,920 Speaker 7: presence in the platform. They're low on female presence at 223 00:14:07,920 --> 00:14:10,160 Speaker 7: the top, and now with Kamala Harris on the ticket, 224 00:14:10,200 --> 00:14:14,760 Speaker 7: that is a significant point of a difference between the 225 00:14:14,760 --> 00:14:16,520 Speaker 7: two parties. So there's a lot of things, but they 226 00:14:16,520 --> 00:14:20,680 Speaker 7: are going to be recalibrating. They clearly chose JD events 227 00:14:20,720 --> 00:14:25,560 Speaker 7: in part in contrast to President Biden's age leslie. 228 00:14:25,680 --> 00:14:27,600 Speaker 6: Should voters read anything into the fact that we have 229 00:14:27,680 --> 00:14:29,880 Speaker 6: not yet heard from former President Obama. 230 00:14:31,160 --> 00:14:31,960 Speaker 3: No, not at all. 231 00:14:32,400 --> 00:14:35,920 Speaker 7: President Obama is wise to know that he shouldn't get 232 00:14:35,960 --> 00:14:38,080 Speaker 7: out in front of the party. He has a very 233 00:14:38,120 --> 00:14:41,080 Speaker 7: specific role to play. He's tended to come in on 234 00:14:41,280 --> 00:14:45,440 Speaker 7: these major decisions once he can read the room and 235 00:14:45,480 --> 00:14:48,680 Speaker 7: then try to shift it subtly. He has said that 236 00:14:48,760 --> 00:14:53,120 Speaker 7: he believes that the Democrats should have a process for 237 00:14:53,240 --> 00:14:56,000 Speaker 7: the next candidate, but he hasn't said an open process, 238 00:14:56,040 --> 00:14:59,080 Speaker 7: and that's a very important distinction for a former president 239 00:14:59,120 --> 00:15:04,160 Speaker 7: who uses his words with great care is very meticulous 240 00:15:04,160 --> 00:15:07,480 Speaker 7: and a detail oriented, so I think he is waiting 241 00:15:07,600 --> 00:15:10,160 Speaker 7: to see where the party goes. The one thing that 242 00:15:10,640 --> 00:15:13,560 Speaker 7: all Democrats at that level, certainly there aren't many at 243 00:15:13,600 --> 00:15:17,160 Speaker 7: that level, but all Democrats know is that the most 244 00:15:17,200 --> 00:15:19,720 Speaker 7: important thing, the single most important thing for the party 245 00:15:19,920 --> 00:15:23,400 Speaker 7: is to choose a candidate and to be absolutely unified 246 00:15:23,440 --> 00:15:27,760 Speaker 7: behind that candidate. People have watched the party disintegrate. It's 247 00:15:27,800 --> 00:15:30,400 Speaker 7: looked in coherent for three weeks, and now they really 248 00:15:30,440 --> 00:15:33,960 Speaker 7: need momentum if they're going to stand a chance of 249 00:15:34,280 --> 00:15:35,200 Speaker 7: victory in November. 250 00:15:35,480 --> 00:15:38,280 Speaker 2: Leslie, thank you so much, doctor Vigiluary with the Chathamhouse 251 00:15:42,440 --> 00:15:45,280 Speaker 2: Edward yard Denny your Denny research, and I'm not going 252 00:15:45,360 --> 00:15:48,720 Speaker 2: to mince words, folks. He writes like it's still CJ. 253 00:15:48,880 --> 00:15:52,680 Speaker 2: Lawrence of a few years ago, and you are advantaged 254 00:15:52,880 --> 00:15:56,760 Speaker 2: with the yard Denny report that comes out. He's even 255 00:15:56,760 --> 00:15:58,600 Speaker 2: got some people help with him out now he was 256 00:15:58,920 --> 00:16:01,520 Speaker 2: like doing it by himself, and we're thrilled to ed 257 00:16:01,560 --> 00:16:05,040 Speaker 2: jar Denny could join us now with this optimism on 258 00:16:05,080 --> 00:16:09,200 Speaker 2: the American experiment. I reframe that to begin with, Right now, 259 00:16:09,400 --> 00:16:12,960 Speaker 2: do you actually model out if I extrapolate a dow Jones 260 00:16:13,000 --> 00:16:17,360 Speaker 2: industrial average over fifty thousand a number of years out. 261 00:16:18,000 --> 00:16:20,280 Speaker 8: Yeah, I think we could get to sixty thousand by 262 00:16:20,320 --> 00:16:22,800 Speaker 8: the end of the year that we're at forty thousand. 263 00:16:22,840 --> 00:16:26,440 Speaker 8: It's not a stretch to believe that over the remaining 264 00:16:26,600 --> 00:16:30,200 Speaker 8: decade we could get to sixty thousand. And I've got 265 00:16:30,240 --> 00:16:32,920 Speaker 8: the S and P five hundred going to eight thousand 266 00:16:33,560 --> 00:16:37,080 Speaker 8: by the end of the decades, So it's a bull market. 267 00:16:38,000 --> 00:16:41,080 Speaker 8: Look just take a look at a long term chart 268 00:16:41,120 --> 00:16:42,800 Speaker 8: of the S and P five hundred, and what you 269 00:16:42,840 --> 00:16:46,800 Speaker 8: see is that bear markets occur every now and then, 270 00:16:46,920 --> 00:16:50,600 Speaker 8: but they don't last very long, and that the fundamental 271 00:16:50,640 --> 00:16:53,760 Speaker 8: trend of the market is upwards along with the economy. 272 00:16:54,640 --> 00:16:57,080 Speaker 6: So you had to get to those kind of levels 273 00:16:57,080 --> 00:16:59,440 Speaker 6: that you're talking about. Does it have to be a 274 00:16:59,480 --> 00:17:01,920 Speaker 6: tech led US stock market. 275 00:17:01,720 --> 00:17:03,840 Speaker 3: No, No, it doesn't. 276 00:17:03,920 --> 00:17:07,320 Speaker 8: Though since the beginning of the decade, I've noted that 277 00:17:07,920 --> 00:17:12,040 Speaker 8: there's a certain rhyming between the twenty twenties and the 278 00:17:12,119 --> 00:17:16,640 Speaker 8: nineteen twenties, and I do think that there are similarities. 279 00:17:16,840 --> 00:17:19,920 Speaker 8: Hopefully it doesn't end as badly as it did in 280 00:17:20,000 --> 00:17:22,840 Speaker 8: the nineteen twenties, but for now I think we're in 281 00:17:22,840 --> 00:17:28,400 Speaker 8: the Roaring twenty twenties. The technology and environment is very 282 00:17:28,440 --> 00:17:32,040 Speaker 8: conducive to that. But look, I think every company now 283 00:17:32,080 --> 00:17:34,520 Speaker 8: is a technology company that you either make it or 284 00:17:34,560 --> 00:17:35,080 Speaker 8: you use it. 285 00:17:35,119 --> 00:17:36,639 Speaker 3: If you don't use it, you lose it. 286 00:17:37,680 --> 00:17:42,119 Speaker 8: So I think technology is a major driver of the economy, 287 00:17:42,119 --> 00:17:44,359 Speaker 8: but it doesn't have to be the technology companies are 288 00:17:44,400 --> 00:17:45,520 Speaker 8: the only ones that benefit. 289 00:17:46,320 --> 00:17:47,679 Speaker 6: We had a little bit of a I think a 290 00:17:47,680 --> 00:17:49,760 Speaker 6: lot of folks are calling a rotation maybe out of 291 00:17:49,800 --> 00:17:52,800 Speaker 6: some of those tech names into some other sectors, maybe 292 00:17:52,960 --> 00:17:55,680 Speaker 6: even some small caps had some real strong out performance 293 00:17:55,680 --> 00:17:57,400 Speaker 6: over the past couple of weeks. What did you make 294 00:17:57,400 --> 00:17:57,560 Speaker 6: of that? 295 00:17:58,800 --> 00:18:01,360 Speaker 8: Yeah, well, it's been a very fusing a couple of weeks. 296 00:18:01,800 --> 00:18:05,600 Speaker 8: It really started, I think on July eleventh with the 297 00:18:05,880 --> 00:18:10,800 Speaker 8: better than expected CPI convincing everybody, including the Fed that 298 00:18:11,119 --> 00:18:14,520 Speaker 8: they were going to lower interest rates probably in September. 299 00:18:14,960 --> 00:18:17,400 Speaker 8: And so instead of just kind of debating how many 300 00:18:17,680 --> 00:18:21,119 Speaker 8: rate cuts will eventually occur, now there's almost one hundred 301 00:18:21,119 --> 00:18:25,560 Speaker 8: percent probability agreement that they're going to start cutting in September. 302 00:18:25,640 --> 00:18:30,720 Speaker 8: And that led to a tremendous rotation out of the 303 00:18:30,800 --> 00:18:34,160 Speaker 8: Magnificent seven and into some of the smaller cap stocks. 304 00:18:35,000 --> 00:18:39,000 Speaker 8: But I think the other event that occurred is the 305 00:18:39,680 --> 00:18:44,040 Speaker 8: Biden administration announced that they were going to take some 306 00:18:44,160 --> 00:18:50,960 Speaker 8: draconian measures against companies that sell semiconductor equipment to China. 307 00:18:51,080 --> 00:18:53,960 Speaker 8: So it's been a whole mix of things going on here. 308 00:18:54,800 --> 00:18:57,880 Speaker 2: Jo Jenny, I want to go back to introductory economics 309 00:18:57,880 --> 00:18:59,760 Speaker 2: at YEL. You get there and you got to toss 310 00:18:59,760 --> 00:19:02,879 Speaker 2: out a core equation. Why equals C plus I plus 311 00:19:02,920 --> 00:19:07,159 Speaker 2: G and you throw on international exports minus imports. You 312 00:19:07,240 --> 00:19:11,800 Speaker 2: have been a multi decade optimist, There's no question about that. 313 00:19:12,000 --> 00:19:14,880 Speaker 3: You found your moments of gloom. But they're rare, rare, rare. 314 00:19:15,600 --> 00:19:21,359 Speaker 2: Once again, Atlanta GDP now a present indicator. She tells the. 315 00:19:21,200 --> 00:19:22,840 Speaker 3: Gloom crew they're wrong. 316 00:19:23,480 --> 00:19:27,440 Speaker 2: Where in that core economic function did the gloom crew 317 00:19:27,560 --> 00:19:28,920 Speaker 2: get growth wrong? 318 00:19:30,520 --> 00:19:34,960 Speaker 8: Well, look, I think that it really started in twenty 319 00:19:35,040 --> 00:19:39,400 Speaker 8: twenty two when the Fed started raising interest rates. March 320 00:19:39,440 --> 00:19:43,280 Speaker 8: twenty two through the summer of the twenty twenty three 321 00:19:43,320 --> 00:19:45,800 Speaker 8: the FED raised the Fed funds rate by five hundred 322 00:19:45,800 --> 00:19:48,920 Speaker 8: and twenty five basis points from zero to five point 323 00:19:48,960 --> 00:19:53,119 Speaker 8: two five percent. I think where the gloom crew was 324 00:19:53,760 --> 00:19:58,520 Speaker 8: perfectly logical, wasn't expecting that that would cause a recession. 325 00:19:58,640 --> 00:20:00,800 Speaker 8: It kind of makes sense. You get that kind of tightening, 326 00:20:01,480 --> 00:20:03,520 Speaker 8: you get a recession. I think what they missed, though, 327 00:20:03,600 --> 00:20:06,600 Speaker 8: is that we started at zero. In other words, sure, 328 00:20:06,640 --> 00:20:09,320 Speaker 8: the FED tightening, but they also normalized. I mean it 329 00:20:09,359 --> 00:20:12,199 Speaker 8: was zero though, was the abnormality not five? And are 330 00:20:12,320 --> 00:20:15,359 Speaker 8: quarter percent? And the economy has proven to be remarkably 331 00:20:15,400 --> 00:20:18,760 Speaker 8: resilient notwithstanding that tightening. 332 00:20:18,960 --> 00:20:22,119 Speaker 3: Did you ever teach econ one O eight Yale? 333 00:20:22,240 --> 00:20:25,720 Speaker 2: I mean, Yelle has three different levels of economics. They 334 00:20:25,720 --> 00:20:29,600 Speaker 2: got econ one fifteen for nerds, they got econ one ten, 335 00:20:30,000 --> 00:20:33,600 Speaker 2: which is for PhD track yard Denny types, and then 336 00:20:33,640 --> 00:20:37,320 Speaker 2: they got econ one O eight for theater majors. 337 00:20:37,359 --> 00:20:40,040 Speaker 3: Did you ever teach that at your Denny? Well? 338 00:20:40,200 --> 00:20:43,879 Speaker 8: What I what I would teach if they if they 339 00:20:43,920 --> 00:20:46,520 Speaker 8: took me back there as a professor, is common sense. 340 00:20:49,520 --> 00:20:53,679 Speaker 8: I think there's too much math being taught to economists 341 00:20:53,720 --> 00:20:56,960 Speaker 8: and not enough common sense, and certainly not they don't 342 00:20:56,960 --> 00:21:00,480 Speaker 8: get their hands dirty enough with the data. So much 343 00:21:00,560 --> 00:21:03,280 Speaker 8: data out there that just they don't have really a 344 00:21:03,320 --> 00:21:05,040 Speaker 8: real sense of it. So I think you've got to 345 00:21:05,080 --> 00:21:08,080 Speaker 8: start out with the raw material, which is data. So 346 00:21:08,680 --> 00:21:10,879 Speaker 8: start out with the data and then come up with 347 00:21:10,480 --> 00:21:13,879 Speaker 8: the theories and the models the other way around. 348 00:21:14,000 --> 00:21:16,840 Speaker 2: And Paul's shout out here on someone that really helped 349 00:21:16,840 --> 00:21:20,840 Speaker 2: form Bloomberg on the economy. In Bloomberg Surveillance, Tim Besley 350 00:21:21,480 --> 00:21:27,560 Speaker 2: at Yale, before Les single handedly turned around common sense 351 00:21:27,640 --> 00:21:32,439 Speaker 2: study of economic history in America. Besley at Yale was 352 00:21:32,480 --> 00:21:36,399 Speaker 2: a curcible who said stop with the mathemambo jumbo and 353 00:21:36,480 --> 00:21:38,600 Speaker 2: teach Jevins of the nineteenth century. 354 00:21:38,920 --> 00:21:41,480 Speaker 6: So, ed, what do you make of this this economy here? 355 00:21:41,520 --> 00:21:44,320 Speaker 6: I mean, I you know, as Tom's pointing out, the 356 00:21:44,359 --> 00:21:47,960 Speaker 6: Atlantic GDP number looks pretty solid, Inflation seems to be 357 00:21:48,200 --> 00:21:50,560 Speaker 6: coming down. We have a FED it's probably can be 358 00:21:50,600 --> 00:21:52,879 Speaker 6: cutting rates at some point. What do you tell your 359 00:21:52,880 --> 00:21:53,960 Speaker 6: clients these days? 360 00:21:55,160 --> 00:21:58,080 Speaker 8: Well, I tell them that we're in a bullmarket. You know, 361 00:21:58,119 --> 00:22:02,600 Speaker 8: we had a bear market back in twenty twenty two 362 00:22:02,840 --> 00:22:06,359 Speaker 8: as there was widespread expectations of a recession. It turned 363 00:22:06,359 --> 00:22:08,440 Speaker 8: out to be the good dough recession. 364 00:22:08,760 --> 00:22:09,720 Speaker 3: It was a no show. 365 00:22:10,960 --> 00:22:14,600 Speaker 8: And typically, you know, we get sell offs as we 366 00:22:15,240 --> 00:22:19,840 Speaker 8: had last week, And the question is whether they become corrections, 367 00:22:19,880 --> 00:22:23,760 Speaker 8: and they become corrections when there's peers that a recession's 368 00:22:23,800 --> 00:22:26,119 Speaker 8: coming and then it doesn't show up, and then we 369 00:22:26,160 --> 00:22:29,879 Speaker 8: get bear markets typically when recession does show up. What 370 00:22:29,960 --> 00:22:31,960 Speaker 8: was unique about twenty twenty two is we had a 371 00:22:32,000 --> 00:22:34,960 Speaker 8: bear market without the recession is showing up, and I 372 00:22:34,960 --> 00:22:37,520 Speaker 8: think we're in a bull market. I think this bull market. Look, 373 00:22:37,560 --> 00:22:40,240 Speaker 8: I can't guarantee there won't be some corrections or even 374 00:22:40,280 --> 00:22:43,960 Speaker 8: another bear market along the way, but yeah, I'm sort 375 00:22:44,000 --> 00:22:47,119 Speaker 8: of in the Warren Buffett and Jeremy Siegeal camp that 376 00:22:47,440 --> 00:22:49,359 Speaker 8: stocks are meant to be held for the long run. 377 00:22:49,640 --> 00:22:51,399 Speaker 2: Ed your Durney whether us We're going to continue an 378 00:22:51,520 --> 00:22:53,720 Speaker 2: entire half hour with Edge Jenney, Paul, get one more 379 00:22:53,800 --> 00:22:55,160 Speaker 2: question in with doctor your Donny. 380 00:22:55,400 --> 00:22:56,800 Speaker 3: I want to come back and talk. 381 00:22:56,600 --> 00:22:59,760 Speaker 2: About the new model of these big tech companies. 382 00:23:00,119 --> 00:23:02,399 Speaker 6: I'd love to just have your opinion on valuation. What 383 00:23:02,400 --> 00:23:04,400 Speaker 6: are you telling your clients these days about the valuation 384 00:23:04,760 --> 00:23:05,439 Speaker 6: of this market. 385 00:23:06,640 --> 00:23:10,280 Speaker 8: Well, I've been doing this for a while and I feel, 386 00:23:10,520 --> 00:23:13,760 Speaker 8: you know, one of these biggest strategists, it's easy. You 387 00:23:13,840 --> 00:23:17,280 Speaker 8: only have to predict two variables, their earnings and the 388 00:23:17,359 --> 00:23:21,960 Speaker 8: valuation multiple pe and you know, getting them right, of 389 00:23:22,000 --> 00:23:25,760 Speaker 8: course is the challenge. But earning seems to be easier 390 00:23:25,800 --> 00:23:28,520 Speaker 8: than the pepes, like beauty is in the eyes of 391 00:23:28,560 --> 00:23:33,760 Speaker 8: the beholder. I guess these days of political correctness, we 392 00:23:33,800 --> 00:23:38,400 Speaker 8: should cite a talent contest. But the reality is that 393 00:23:39,480 --> 00:23:44,280 Speaker 8: the valuation multiple can be elevated as long as there's 394 00:23:44,280 --> 00:23:47,760 Speaker 8: no recession up ahead here, and it's particularly elevated for 395 00:23:47,880 --> 00:23:51,200 Speaker 8: the magnificence. Take them out you get something more reasonable, 396 00:23:51,200 --> 00:23:53,640 Speaker 8: like eighteen or nineteen for the S and P. Four 397 00:23:53,760 --> 00:23:54,720 Speaker 8: hundred and ninety three. 398 00:23:55,600 --> 00:23:58,800 Speaker 2: I am going edjar Denny Beck is a lesson, and 399 00:23:58,840 --> 00:24:02,520 Speaker 2: I'm reading Michael Mobison from leg Mason and credit sueezs 400 00:24:02,560 --> 00:24:07,040 Speaker 2: forward now at Morgan Stanley on our world torn asunder 401 00:24:07,200 --> 00:24:11,400 Speaker 2: in finance and investment and part of that ed Yardnny 402 00:24:11,400 --> 00:24:14,800 Speaker 2: and you've been brilliant at this of moving on from 403 00:24:14,800 --> 00:24:18,640 Speaker 2: the conventional wisdom, say railroad stocks and Graham Dot and Coddle. 404 00:24:19,520 --> 00:24:22,240 Speaker 2: And one of the things Michael Mobison talks about is 405 00:24:22,280 --> 00:24:26,360 Speaker 2: the new network effect, which is Robert Metcalf who invented 406 00:24:26,359 --> 00:24:30,800 Speaker 2: the ethernet, in that the network effect of what Apple does, 407 00:24:31,160 --> 00:24:36,680 Speaker 2: what Google does, what tech does is radically different than 408 00:24:36,800 --> 00:24:41,040 Speaker 2: what Johnson and Johnson does, or Colgate, palm olaver Indocona 409 00:24:41,119 --> 00:24:45,199 Speaker 2: copper from another time and place. Do we understand in 410 00:24:45,240 --> 00:24:49,480 Speaker 2: our fear and gloom the new network effect over the 411 00:24:49,560 --> 00:24:50,919 Speaker 2: last twenty thirty years. 412 00:24:52,400 --> 00:24:56,320 Speaker 8: Well, I think what the technology companies do better than 413 00:24:56,359 --> 00:25:01,920 Speaker 8: anyone else's what Joseph Schumpeter called the creative destruction. They 414 00:25:01,920 --> 00:25:06,240 Speaker 8: are constantly innovating, They're constantly bringing out new technologies, and 415 00:25:06,280 --> 00:25:09,119 Speaker 8: as soon as they become hits that are working on 416 00:25:09,520 --> 00:25:13,080 Speaker 8: destroying them by creating something new or the next version 417 00:25:13,800 --> 00:25:19,560 Speaker 8: of that technology. So frealingly competitive industry, the margins are 418 00:25:19,600 --> 00:25:23,760 Speaker 8: great initially, and the margins kind of evaporate very quickly 419 00:25:24,400 --> 00:25:28,359 Speaker 8: as they move on to the next iteration of the innovation. 420 00:25:29,080 --> 00:25:30,800 Speaker 8: AI we all benefit from that. 421 00:25:31,000 --> 00:25:35,240 Speaker 3: Will AI creatively destruct? Well? 422 00:25:35,640 --> 00:25:40,280 Speaker 8: Artificial intelligence is certainly artificial, but I'm not convinced it's 423 00:25:40,359 --> 00:25:44,040 Speaker 8: all that intelligent. But I want to be very precise 424 00:25:44,080 --> 00:25:47,159 Speaker 8: about that. I think there's two versions of AI that 425 00:25:47,240 --> 00:25:50,680 Speaker 8: we need to consider. One is so called open AI 426 00:25:50,840 --> 00:25:52,840 Speaker 8: and the other one is something that I would call 427 00:25:52,920 --> 00:25:58,439 Speaker 8: closed AI. Open AI basically is open to all the 428 00:25:58,480 --> 00:26:01,399 Speaker 8: information available on the end Internet. And as we know, 429 00:26:01,480 --> 00:26:04,399 Speaker 8: there's a lot of junk on the Internet, and open 430 00:26:04,400 --> 00:26:06,280 Speaker 8: AI is going to contribute to it. It's going to 431 00:26:06,640 --> 00:26:09,640 Speaker 8: kind of start making up some stories and some sources, 432 00:26:09,680 --> 00:26:12,440 Speaker 8: and you know, I mean, we can fact check the 433 00:26:12,680 --> 00:26:14,560 Speaker 8: fact check it along the way, but it's still going 434 00:26:14,640 --> 00:26:17,160 Speaker 8: to be making a lot of mistakes. Closed the eye 435 00:26:17,600 --> 00:26:23,960 Speaker 8: is basically big data on steroids and speed using GPU 436 00:26:24,119 --> 00:26:28,399 Speaker 8: chips as supercomputers. Elon Musk is a genius and he 437 00:26:28,560 --> 00:26:31,440 Speaker 8: figured out that maybe we don't need quantum computers. Maybe 438 00:26:31,440 --> 00:26:36,000 Speaker 8: we can do fast computing supercomputing with just the video 439 00:26:36,080 --> 00:26:39,679 Speaker 8: chips that in video makes. Just slap them all together 440 00:26:39,760 --> 00:26:42,639 Speaker 8: and you get a supercomputer. So I think a combination 441 00:26:42,840 --> 00:26:47,560 Speaker 8: of a massive amount of data placed on these supercomputers 442 00:26:47,880 --> 00:26:52,520 Speaker 8: is in fact going to be a major productivity enhancser 443 00:26:52,600 --> 00:26:54,680 Speaker 8: For every company that has a lot of. 444 00:26:54,680 --> 00:26:58,439 Speaker 6: Data forecast for the indexes, how much of that is 445 00:26:58,640 --> 00:27:02,000 Speaker 6: earning driven versus fed driven. A lot of investors are 446 00:27:02,040 --> 00:27:04,560 Speaker 6: not sure what to really focus on as we get 447 00:27:04,560 --> 00:27:05,840 Speaker 6: into the meat of this earning season. 448 00:27:06,520 --> 00:27:08,840 Speaker 8: Well, I think at this point it's got to be 449 00:27:08,920 --> 00:27:13,280 Speaker 8: earnings driven. It's hard to imagine that valuation multiples over 450 00:27:13,359 --> 00:27:16,840 Speaker 8: time can get a lot higher than where they are already. 451 00:27:17,720 --> 00:27:20,920 Speaker 8: You know, we're talking about the Magnificent seven are at 452 00:27:21,200 --> 00:27:22,680 Speaker 8: a thirty forward pe. 453 00:27:22,960 --> 00:27:24,399 Speaker 3: We're talking about the s and P. 454 00:27:24,560 --> 00:27:29,240 Speaker 8: Five hundred at a twenty two forward pe and excluding 455 00:27:29,560 --> 00:27:34,520 Speaker 8: the Magnificent seven, we're at about eighteen forward pe. So 456 00:27:35,560 --> 00:27:39,879 Speaker 8: evaluation is already pretty rich. I don't think it necessarily 457 00:27:40,000 --> 00:27:42,760 Speaker 8: has to take a dive, but I think I'm looking 458 00:27:42,800 --> 00:27:45,800 Speaker 8: at earnings as being the driver of the bullmarket from 459 00:27:45,840 --> 00:27:46,159 Speaker 8: here on. 460 00:27:47,320 --> 00:27:50,120 Speaker 6: Does this market for the longer term pull need a 461 00:27:50,240 --> 00:27:54,320 Speaker 6: pullback here of five, ten, fifteen percent? Is that something 462 00:27:54,359 --> 00:27:56,680 Speaker 6: that you expect in the I don't know, six to 463 00:27:56,800 --> 00:27:57,600 Speaker 6: nine month time frame. 464 00:27:58,119 --> 00:28:00,280 Speaker 8: Yeah, well, you know, if you look at the long 465 00:28:00,440 --> 00:28:04,720 Speaker 8: history of the stock market, bear markets don't happen that often, 466 00:28:04,800 --> 00:28:08,320 Speaker 8: and corrections don't happen that often. I guess just over 467 00:28:08,400 --> 00:28:11,399 Speaker 8: the past several years, we got used to the idea 468 00:28:11,440 --> 00:28:15,800 Speaker 8: that corrections occur on a regular basis, but they're not inevitable. 469 00:28:15,920 --> 00:28:19,800 Speaker 8: History shows that some bull markets had one or two 470 00:28:19,840 --> 00:28:25,240 Speaker 8: they didn't have, you know, five, corrections along the way. 471 00:28:26,080 --> 00:28:28,399 Speaker 8: So it's not inevitable that we have to have a 472 00:28:28,400 --> 00:28:31,560 Speaker 8: bear market. We have to have corrections, but you have 473 00:28:31,640 --> 00:28:34,080 Speaker 8: to be realistic. They do happen along the way, and 474 00:28:34,480 --> 00:28:38,280 Speaker 8: they're hard to forecast. The geniuses who tell you when 475 00:28:38,320 --> 00:28:40,320 Speaker 8: to get out at the top more often than not, 476 00:28:40,440 --> 00:28:42,440 Speaker 8: we get to tell you to get back in at 477 00:28:42,480 --> 00:28:42,960 Speaker 8: the bottom. 478 00:28:43,160 --> 00:28:45,760 Speaker 2: I got to get back to the one final question answer, Donny, 479 00:28:45,800 --> 00:28:47,960 Speaker 2: I got to get back to the trenches called everybody's 480 00:28:48,000 --> 00:28:50,400 Speaker 2: in the trenches on this. Everybody's got a different prism, 481 00:28:50,720 --> 00:28:55,040 Speaker 2: different view. And then Friday happens, and Lisa Miteo's told 482 00:28:55,040 --> 00:28:57,720 Speaker 2: me this Fridays when the gloom Crew shows up, they 483 00:28:57,720 --> 00:29:02,080 Speaker 2: published for the weekend, et cetera. How do you synthesize 484 00:29:03,000 --> 00:29:08,120 Speaker 2: intelligent discussion from those cautious How do you read the 485 00:29:08,160 --> 00:29:11,760 Speaker 2: cautious fear crew in a constructive way? 486 00:29:12,640 --> 00:29:15,960 Speaker 8: Well, I think they do a great job. The problem 487 00:29:16,080 --> 00:29:19,400 Speaker 8: is they just have this bias towards being perma bears. 488 00:29:20,160 --> 00:29:22,920 Speaker 8: And I guess I've been accused of being a perma bull. 489 00:29:23,040 --> 00:29:26,240 Speaker 8: But I think that's a consequence of reading what the 490 00:29:26,240 --> 00:29:29,440 Speaker 8: perma bears are saying and just trying to provide some balance. 491 00:29:29,880 --> 00:29:32,800 Speaker 8: So if you provide some balance, you come out as 492 00:29:32,840 --> 00:29:35,160 Speaker 8: a perma bull. And again, if you look at the 493 00:29:35,160 --> 00:29:38,040 Speaker 8: long history of the stock market, makes more sense to 494 00:29:38,080 --> 00:29:43,200 Speaker 8: be bullish on a more often than bearish. But the crew, 495 00:29:43,680 --> 00:29:46,920 Speaker 8: I think provides some very good intelligent analysis of what 496 00:29:47,200 --> 00:29:51,280 Speaker 8: could possibly go wrong. And then I step in and say, okay, 497 00:29:51,320 --> 00:29:53,040 Speaker 8: well where might they be wrong? 498 00:29:53,640 --> 00:29:55,400 Speaker 3: And you're Doney, Thank you so much. 499 00:29:55,600 --> 00:29:59,440 Speaker 2: Congratulations on your call from October of twenty twenty two. 500 00:29:59,480 --> 00:30:01,560 Speaker 3: I call it our Denny and Kompor. 501 00:30:01,640 --> 00:30:13,960 Speaker 2: I couldn't just say you are Denny, and it's really 502 00:30:14,000 --> 00:30:16,920 Speaker 2: Andrew Slimmy who join us from Chicago this morning. Andrew, 503 00:30:16,960 --> 00:30:19,800 Speaker 2: I'm gonna take a well known portfolio. You know, fifty 504 00:30:19,840 --> 00:30:23,040 Speaker 2: six percent is in their top ten holdings. I'm gonna 505 00:30:23,080 --> 00:30:29,600 Speaker 2: round up and down folks. Facebook fourteen percent, Nvidia eight percent, 506 00:30:30,080 --> 00:30:35,360 Speaker 2: Microsoft six percent, Amazon six percent of zempic Eli Lilly 507 00:30:35,440 --> 00:30:39,840 Speaker 2: three percent, Apple three percent, except they got nine percent 508 00:30:39,840 --> 00:30:43,440 Speaker 2: in Berkshire Hathaway, so Apple's easily out with the Berkshire 509 00:30:43,440 --> 00:30:47,040 Speaker 2: Hathaway piece. It's six percent. Andrew, is this anyway to 510 00:30:47,120 --> 00:30:50,160 Speaker 2: run a portfolio? Or do we need to get used 511 00:30:50,680 --> 00:30:52,680 Speaker 2: to large cap concentration? 512 00:30:55,720 --> 00:30:58,360 Speaker 3: Good morning? Yes and no. 513 00:30:58,720 --> 00:31:02,400 Speaker 1: On the one hand, the reason for yes, this is 514 00:31:02,440 --> 00:31:05,680 Speaker 1: a way to run a portfolio is I mean, a 515 00:31:06,040 --> 00:31:12,920 Speaker 1: simple statistic is the Magnificent seven stocks comprise thirty percent 516 00:31:12,920 --> 00:31:17,240 Speaker 1: of the SMP. But if I look at their earnings 517 00:31:17,320 --> 00:31:23,240 Speaker 1: growth over the last year, they of the SMP those 518 00:31:23,280 --> 00:31:27,160 Speaker 1: seven socks have comprised eighty nine percent of the earnings growth. 519 00:31:27,760 --> 00:31:31,640 Speaker 1: So the point I'm trying to make is, hey, the 520 00:31:31,680 --> 00:31:37,400 Speaker 1: fundamentals of these companies validate big positions. And then because 521 00:31:37,440 --> 00:31:43,240 Speaker 1: they are some of the best performing fundamentally driven socks. 522 00:31:43,320 --> 00:31:46,200 Speaker 1: And so it's really tough to say, oh, you know, 523 00:31:46,280 --> 00:31:48,760 Speaker 1: I should sell these socks just because they're big weights 524 00:31:48,800 --> 00:31:51,920 Speaker 1: when you know, I look at what's you know, my 525 00:31:52,120 --> 00:31:56,120 Speaker 1: success and over time in this business has always been 526 00:31:56,680 --> 00:31:59,640 Speaker 1: focused on what companies are doing less so than you know, 527 00:31:59,720 --> 00:32:03,520 Speaker 1: kind of top down. That's the yes, the know of 528 00:32:03,680 --> 00:32:08,360 Speaker 1: it is no to the extent that these stocks are 529 00:32:08,400 --> 00:32:13,320 Speaker 1: all highly highly correlated to each other. They move together, 530 00:32:14,200 --> 00:32:17,480 Speaker 1: and we have learned in the last week and a 531 00:32:17,520 --> 00:32:23,200 Speaker 1: half that when there is a rotation, you better own 532 00:32:23,600 --> 00:32:29,160 Speaker 1: stocks in your portfolio beyond just megacap Tech because you're 533 00:32:29,160 --> 00:32:33,840 Speaker 1: going to hurt your investors. So yes, fundamentally, but you 534 00:32:33,920 --> 00:32:38,400 Speaker 1: better go find some other good, fundamentally driven companies that 535 00:32:38,440 --> 00:32:41,120 Speaker 1: are not all correlated to megacap Tech. 536 00:32:41,520 --> 00:32:44,000 Speaker 6: So you bring up the correlation, Andrew, and that brings 537 00:32:44,080 --> 00:32:46,760 Speaker 6: up a risk that a lot of investors talk about, 538 00:32:46,760 --> 00:32:49,120 Speaker 6: which is, well, if any of these big names whether 539 00:32:49,160 --> 00:32:54,080 Speaker 6: it's an Nvidia or Microsoft disappoints, either on earnings or guidance, 540 00:32:54,280 --> 00:32:56,959 Speaker 6: that could bring not only that particular security down, but 541 00:32:57,040 --> 00:33:00,400 Speaker 6: also of the broader market. Is that a value concern? 542 00:33:01,360 --> 00:33:05,120 Speaker 1: Absolutely, we've learned that. I'm dating myself. I've been this 543 00:33:05,200 --> 00:33:08,080 Speaker 1: business a long time. But that's what That's what caused 544 00:33:08,120 --> 00:33:12,000 Speaker 1: the end of the dot com bubble is stocks. It 545 00:33:12,040 --> 00:33:17,880 Speaker 1: was great and greater concentration. Socks got expensive, but most importantly, 546 00:33:18,320 --> 00:33:23,200 Speaker 1: they started missing sales estimates. They weren't that the expectation 547 00:33:23,480 --> 00:33:28,080 Speaker 1: of the capex spend in the late nineties ran out 548 00:33:28,120 --> 00:33:33,200 Speaker 1: of steam, and that because those stocks had such big 549 00:33:33,280 --> 00:33:36,520 Speaker 1: waiting in the S and P, it brought down the 550 00:33:36,760 --> 00:33:40,120 Speaker 1: S and P. Although you know, the value part of 551 00:33:40,160 --> 00:33:43,120 Speaker 1: the S and P did just fine. So yes, I 552 00:33:43,160 --> 00:33:48,480 Speaker 1: think fundamentals matter, but pay attention if in fact, these 553 00:33:48,480 --> 00:33:51,600 Speaker 1: companies start to say, hey, you know what, our customers 554 00:33:51,680 --> 00:33:55,280 Speaker 1: aren't spending as quickly as Wall Street expected on this 555 00:33:55,840 --> 00:33:59,480 Speaker 1: tech buildout, that's going to be a problem for the market. 556 00:34:00,120 --> 00:34:03,280 Speaker 2: Well, in the pandemic, terrible revenue growth thirteen percent. They 557 00:34:03,320 --> 00:34:07,840 Speaker 2: rebounded in twenty twenty one forty one percent revenue growth, 558 00:34:08,200 --> 00:34:11,960 Speaker 2: then ten percent, then nine percent, then twelve percent, modeling 559 00:34:11,960 --> 00:34:14,720 Speaker 2: out twenty twenty five, eleven percent. 560 00:34:15,080 --> 00:34:15,800 Speaker 3: I'm sorry. 561 00:34:15,960 --> 00:34:21,279 Speaker 9: It's it's double GDP double nominal GDP revenue growth, and 562 00:34:21,320 --> 00:34:24,960 Speaker 9: it accumulates over a number of years, and that's how 563 00:34:25,120 --> 00:34:26,920 Speaker 9: Andrew can buy the Chicago Cubs. 564 00:34:26,960 --> 00:34:30,200 Speaker 6: That's exactly right. It's compounding and it's YouTube. 565 00:34:30,239 --> 00:34:30,479 Speaker 3: Tom. 566 00:34:30,520 --> 00:34:33,600 Speaker 1: There you go, So Andrew, it might be on sale 567 00:34:33,640 --> 00:34:35,720 Speaker 1: right now, Tom, Andrew. 568 00:34:35,760 --> 00:34:40,239 Speaker 6: If I want some non tech correlated exposure and some 569 00:34:40,719 --> 00:34:43,120 Speaker 6: strong earnings behind it, where. 570 00:34:43,000 --> 00:34:43,479 Speaker 3: Do I look? 571 00:34:44,680 --> 00:34:47,600 Speaker 1: Well, I mean, look at just all you have to do, 572 00:34:47,960 --> 00:34:50,839 Speaker 1: very simple. Go look at what's worked, what's out before 573 00:34:50,840 --> 00:34:54,879 Speaker 1: in the market since since the CPI print came out 574 00:34:55,000 --> 00:34:58,080 Speaker 1: at Thursday when the market said, oh wait maybe the 575 00:34:58,120 --> 00:35:03,880 Speaker 1: Fed will cut in se it is financials uh, it 576 00:35:04,040 --> 00:35:10,600 Speaker 1: is industrials, right, I think following the Infrastructure Act, because 577 00:35:10,600 --> 00:35:12,880 Speaker 1: I don't think it merely matters. He's president, We're gon, 578 00:35:13,120 --> 00:35:16,600 Speaker 1: we're gonna, We're going to fulfill the Infrastructure Act. Those 579 00:35:16,640 --> 00:35:21,120 Speaker 1: sacks have all worked. So I sit back, Oh, thank 580 00:35:21,160 --> 00:35:27,040 Speaker 1: God for our portfolios. We have understood that these megacap 581 00:35:27,080 --> 00:35:30,840 Speaker 1: tech socks are doing great. But when there is a rotation, 582 00:35:31,000 --> 00:35:33,040 Speaker 1: you better make sure you own some other things, and 583 00:35:33,400 --> 00:35:36,520 Speaker 1: I've said for a long time I think the industrials 584 00:35:36,719 --> 00:35:40,200 Speaker 1: are a great balance versus megacap tech. 585 00:35:40,360 --> 00:35:42,799 Speaker 3: How much cash in a portfolio ander right now? 586 00:35:44,840 --> 00:35:49,719 Speaker 1: Well, you know, look, I run long equity portfolios. If 587 00:35:49,760 --> 00:35:53,880 Speaker 1: Tom Kem allocates to my portfolios, he's not allocating for 588 00:35:54,000 --> 00:35:56,880 Speaker 1: me to carry, you know, thirty percent cash. I'm opposed 589 00:35:56,880 --> 00:35:59,960 Speaker 1: to be your equity guy. I think they're I think 590 00:36:00,080 --> 00:36:03,440 Speaker 1: the market is going to continue to rally until we 591 00:36:03,480 --> 00:36:06,720 Speaker 1: get through the second quarter earnings, because I do think 592 00:36:06,960 --> 00:36:10,920 Speaker 1: they're going to be good, but that I get nervous 593 00:36:12,360 --> 00:36:15,040 Speaker 1: as we get into August because there's kind of a 594 00:36:15,160 --> 00:36:18,080 Speaker 1: lot of fundamental news. The other thing that I would 595 00:36:18,120 --> 00:36:21,439 Speaker 1: tell you is at a time when seasonally it makes 596 00:36:21,480 --> 00:36:24,000 Speaker 1: sense to kind of get a little bit more conservative. 597 00:36:24,080 --> 00:36:26,680 Speaker 1: If you look at what's worked, not only value, but 598 00:36:26,719 --> 00:36:30,240 Speaker 1: it's the highest of the high beta spots. Doesn't seem 599 00:36:30,280 --> 00:36:31,840 Speaker 1: to me in the time of year you want to 600 00:36:31,920 --> 00:36:33,600 Speaker 1: chase high risk thoncts. 601 00:36:33,840 --> 00:36:36,720 Speaker 2: One final question thirty seconds, how come the white socks 602 00:36:36,960 --> 00:36:40,040 Speaker 2: are so much fun to watch and the cubs it's. 603 00:36:39,880 --> 00:36:42,440 Speaker 3: Like pulling teeth? What is going because of. 604 00:36:42,680 --> 00:36:48,680 Speaker 1: Cognations, because of expectations, the Cubs are ex No one 605 00:36:48,760 --> 00:36:50,319 Speaker 1: expects the White Sox to do well. 606 00:36:51,280 --> 00:36:53,680 Speaker 3: It right, Andrew Sivin, thank you so much. 607 00:36:53,800 --> 00:36:57,000 Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best 608 00:36:57,000 --> 00:37:01,800 Speaker 2: in economics, finance, investment, and international relations. 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