WEBVTT - Biden Passes Baton to Harris, Markets React 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.600 the Bloomberg Terminal, and the Bloomberg Business App. Tina Fordam 0:00:47.600 --> 0:00:52.239 we can talk about. She populates Mayfair and the fancy 0:00:52.280 --> 0:00:58.120 climes of London. She joins us now for Fordham Global Insight, 0:00:58.400 --> 0:01:02.920 and far more importantly, as a visceral understanding of where 0:01:02.920 --> 0:01:04.520 the Vice president came from. 0:01:04.600 --> 0:01:05.559 When you come out of San. 0:01:05.480 --> 0:01:10.440 Francisco State, you understand San Francisco, Tina, from where you 0:01:10.560 --> 0:01:17.320 sit in the wild liberal progressive hell of California. Where 0:01:17.360 --> 0:01:19.559 does Vice President Harris fit in? 0:01:21.920 --> 0:01:23.760 Well, she's a hometown girl. 0:01:23.840 --> 0:01:27.400 I'm a San Francisco Bay Area native, but in London 0:01:27.440 --> 0:01:31.280 for twenty two years. So I think the first thought 0:01:31.319 --> 0:01:33.520 I have is that she's definitely not going to be 0:01:33.640 --> 0:01:38.000 choosing Gavin Newsom, the California governor, as her running mate, 0:01:38.560 --> 0:01:44.000 So that's off the table. She is going to try 0:01:44.040 --> 0:01:48.760 to work hard to strengthen her bona fides as a 0:01:48.800 --> 0:01:52.000 prosecutor and as a California district attorney. 0:01:53.200 --> 0:01:55.640 She's going to try to be tough on law and order, 0:01:55.720 --> 0:01:56.200 I think. 0:01:56.560 --> 0:02:00.280 But I think what's most important here is that what 0:02:00.280 --> 0:02:04.080 we've seen with the momentum since Biden's announcement is the 0:02:04.240 --> 0:02:08.320 huge appetite for just some energy in this race. 0:02:09.760 --> 0:02:13.880 So is that energy? How can Vice President Hires take 0:02:13.919 --> 0:02:18.320 that energy and form a real coherent message. What do 0:02:18.320 --> 0:02:23.440 you expect to hear from her as a presidential candidate, Well, it. 0:02:23.400 --> 0:02:27.480 Certainly looks like her operation has hit the ground running. 0:02:28.400 --> 0:02:32.359 It's if you're not online or on what we now 0:02:32.400 --> 0:02:35.240 call X, you're missing out because you can see in 0:02:35.360 --> 0:02:39.120 real time how her campaign headquarters, you know, virtually been 0:02:39.160 --> 0:02:42.440 set up with some branding echoes. 0:02:42.000 --> 0:02:47.000 That are very familiar to gen Z and younger people. 0:02:47.960 --> 0:02:50.680 There are a lot of you know, politically homeless people, 0:02:51.360 --> 0:02:58.880 disenfranchised constituencies, you know, never trumpers people who are who 0:02:58.919 --> 0:03:04.200 are open to ideas, and I wonder if the pressed 0:03:04.240 --> 0:03:09.160 time frame doesn't actually work a little bit to her advantage. 0:03:09.440 --> 0:03:12.240 So what do you think I mean? I guess one 0:03:12.320 --> 0:03:15.040 of the first decisions she needs to make as a 0:03:15.040 --> 0:03:19.600 candidate is to select a vice presidential candidate. How do 0:03:19.600 --> 0:03:20.560 you think she'll go there? 0:03:22.560 --> 0:03:26.520 Midwestern white guy. I think that that has to be 0:03:26.680 --> 0:03:30.679 the choice. I don't think it'll be Pete Bootage Edge. 0:03:30.760 --> 0:03:34.960 That's too much change, too much, you know, perceived progressiveness 0:03:35.360 --> 0:03:39.720 on one ticket. But Tom mentioned Mark Kelly, a senator 0:03:39.760 --> 0:03:47.200 from Arizona, NASA astronaut, naval officer, pilot, husband of Gabby Gifford's. 0:03:47.480 --> 0:03:50.760 He would be an interesting choice, and obviously Arizona is 0:03:50.960 --> 0:03:58.640 a key battleground state. Beasher is another interesting candidate, could 0:03:58.640 --> 0:04:02.520 go head to head with Vance on Appalachia. There are 0:04:02.560 --> 0:04:05.920 some good names in the mix, but that's the kind 0:04:05.960 --> 0:04:08.440 of ticket that I would expect to see. Someone who 0:04:08.440 --> 0:04:12.600 would compliment Harris and ideally could deliver a big swing state. 0:04:12.840 --> 0:04:13.480 Tina Fordham. 0:04:13.520 --> 0:04:18.320 We are advantaged at Bloomberg with Wendy Benjaminson, who is 0:04:18.360 --> 0:04:23.160 in Washington, d C. She Folks is the definitive old 0:04:23.240 --> 0:04:29.040 school newspaper editor, supporting young reporters, nurturing people. 0:04:29.120 --> 0:04:30.840 And I asked you this question yesterday. 0:04:30.880 --> 0:04:35.760 Tina, you are without question the most qualified Transatlantic voice 0:04:35.880 --> 0:04:40.800 on this. In England, nobody's sweating that there's Prime Minister 0:04:40.960 --> 0:04:44.160 may or even the train wreck that was Prime Minister Trusts. 0:04:45.000 --> 0:04:46.200 No one's sweating. 0:04:47.080 --> 0:04:51.000 Marie La penn is a fixture within French politics or 0:04:51.000 --> 0:04:54.200 the reality of Anglo America. Paul, what was it fourteen years? 0:04:54.200 --> 0:04:57.760 I think ye is Chancellor Tina Fordham. Why does America 0:04:57.800 --> 0:05:01.960 have so much trouble electing a woman president from both 0:05:02.080 --> 0:05:04.280 party persuasions? 0:05:05.880 --> 0:05:11.240 It's remarkable and I'm not sure guys that Americans really 0:05:11.240 --> 0:05:16.280 appreciate what an outlier we are in being seemingly unable 0:05:16.360 --> 0:05:18.599 to elect a female head of state. 0:05:18.760 --> 0:05:21.039 As you say, the UK has had. 0:05:20.960 --> 0:05:25.679 Three female prime ministers, one one only for a few minutes, 0:05:25.720 --> 0:05:31.880 but nevertheless, and numerous OECU D countries have. 0:05:32.000 --> 0:05:34.360 Had so the US is an outlier. 0:05:34.600 --> 0:05:38.000 But again, I do think the wrong question is is 0:05:38.120 --> 0:05:40.640 America ready for a black female president. 0:05:40.800 --> 0:05:44.560 I think the question has to be in this, you. 0:05:44.520 --> 0:05:50.120 Know, fairly high stakes race, whether the United States wants 0:05:50.160 --> 0:05:55.480 to re elect Donald Trump or wants broad political continuity, 0:05:56.080 --> 0:06:00.920 which a Harris plus Midwestern guy ticket would bring. 0:06:02.240 --> 0:06:05.720 Tina, do you how do you think Kamala Harris will 0:06:05.760 --> 0:06:09.080 stack up against one on one against former President Trump, 0:06:09.200 --> 0:06:11.240 whether it be in debates or just the day to 0:06:11.320 --> 0:06:11.960 day messaging. 0:06:14.120 --> 0:06:17.520 Well, the first thing is that as a former prosecutor, 0:06:18.080 --> 0:06:23.240 she's tough. You know, watch the replays of her questioning 0:06:23.480 --> 0:06:28.799 on during these Supreme Court hearings for Brett Kavanaugh. She's 0:06:28.839 --> 0:06:33.160 you know, she's perhaps not as smooth and slick as 0:06:33.160 --> 0:06:39.200 of Bill Clinton, but she's a tough questioner and respondent. 0:06:40.320 --> 0:06:42.880 What is her messaging going to be? You know, I'm 0:06:42.880 --> 0:06:46.040 not Donald Trump? Does it need to be much more 0:06:46.080 --> 0:06:50.800 advanced than that? She's the continuity candidate? Interesting to me though, 0:06:50.960 --> 0:06:54.760 was that Trump seemed to be you know, back peddling 0:06:55.279 --> 0:06:58.159 from the next debate September tenth. Did you see that 0:06:58.880 --> 0:07:01.800 and also complaining that they want their money back? 0:07:01.920 --> 0:07:04.920 Is they prepared for a campaign against a different guy? 0:07:06.080 --> 0:07:08.159 This is just so important. My theme that I focus 0:07:08.200 --> 0:07:10.920 is a turnout. It's not my opinion, it's a fancy 0:07:10.920 --> 0:07:15.000 people like Tina Fordham saying turnout it really matters. Tina Fordham, 0:07:15.360 --> 0:07:20.200 how do you suggest the former president and the senator 0:07:20.200 --> 0:07:25.120 from Ohio enhance their turnout after what we saw on 0:07:25.160 --> 0:07:28.640 a ninety minute convention speech, and after all the emotion 0:07:28.720 --> 0:07:32.200 of the assassination, attempting that how do they enhance their 0:07:32.240 --> 0:07:34.960 turnout against the vice. 0:07:34.720 --> 0:07:40.280 President, probably by stoking fear about what she might do. 0:07:40.680 --> 0:07:43.400 The difficulty for them is that they are going to 0:07:43.440 --> 0:07:47.080 have to resort to some pretty unpleasant language and tactics 0:07:47.320 --> 0:07:51.240 to do so. Do their supporters care It's hard to say, 0:07:51.320 --> 0:07:55.920 but it can't be underestimated how they will have been 0:07:56.080 --> 0:07:58.800 somewhat blindsided about this change. 0:07:59.280 --> 0:07:59.920 In the ticket. 0:08:00.120 --> 0:08:04.920 Now Donald Trump's the old guy in the race, and 0:08:05.080 --> 0:08:08.640 you know, can Trump continue with the momentum he's had 0:08:08.680 --> 0:08:10.920 in attracting you know, black. 0:08:10.640 --> 0:08:11.760 Men and others. 0:08:12.760 --> 0:08:16.840 The constituencies that were pro Obama, that came out for Obama, 0:08:17.680 --> 0:08:18.880 we're coming. 0:08:18.600 --> 0:08:22.200 Out for Biden. Will they turn up for Harris? 0:08:22.640 --> 0:08:25.560 That's what the next you know, six weeks in particular, 0:08:25.760 --> 0:08:28.760 is going to be about. It's also why I think 0:08:28.760 --> 0:08:32.640 the shorter time frame just helps less time for everyone 0:08:32.679 --> 0:08:33.320 to get bored. 0:08:33.640 --> 0:08:35.319 This is this, I agree with this. 0:08:35.440 --> 0:08:38.520 It's very British, okay, and only Tina Fordham in London. 0:08:38.559 --> 0:08:42.080 Good say that, Tina, fabulous, Thank you so much. Tina Fordham, 0:08:42.160 --> 0:08:45.000 of course, the iconic and city group Fordham Global Insights 0:08:45.640 --> 0:08:58.760 out of London, less of Benjamina, out of the Welseyon 0:08:58.840 --> 0:09:03.040 Complex is a Chatta house in London, hugely prestigious when 0:09:03.080 --> 0:09:06.320 she speaks on America, the United Kingdom and the continent. 0:09:06.800 --> 0:09:09.160 Stop or thrilled that doctor Vinja Marie could join us 0:09:10.080 --> 0:09:14.800 this morning, Leslie, the market really hasn't moved across equities, bonds, 0:09:14.840 --> 0:09:19.160 currency's commodities. What does that signal of our political system? 0:09:20.400 --> 0:09:22.760 Well, I guess some sense that this is going to 0:09:22.800 --> 0:09:27.000 be continuity, that there's a sort of weight and see attitude. 0:09:27.000 --> 0:09:31.400 Probably also it doesn't feel like continuity to those of 0:09:31.480 --> 0:09:33.840 us who are looking at the political world. It seems 0:09:33.920 --> 0:09:39.640 like a rather significant moment of change. But I guess 0:09:39.720 --> 0:09:42.400 you know, if you're trying to gain this out from 0:09:42.400 --> 0:09:45.600 the markets, you know that really, whether it's Joe Biden 0:09:45.760 --> 0:09:49.000 or likely Kamala Harris, the economic policy is likely to 0:09:49.040 --> 0:09:50.840 be one that's continuous. 0:09:51.040 --> 0:09:54.240 Lord O'Neil, Jim o'neilla Goldman Sachs, with his contribution to 0:09:54.320 --> 0:09:57.359 Chatham Mouse, told me that people like you and Chathamouse 0:09:57.400 --> 0:10:00.440 are still dipping a quill in the ink pot to 0:10:00.480 --> 0:10:03.680 write when you can. And the answer, Leslie Vigemri is 0:10:04.240 --> 0:10:06.240 Trump and Harris have to. 0:10:06.240 --> 0:10:07.880 Deal with the modern media. 0:10:08.040 --> 0:10:13.200 This isn't Eisenhower Stevenson of nineteen fifty two. How do 0:10:13.280 --> 0:10:15.360 they deal with the speed of news today? 0:10:16.200 --> 0:10:19.160 Now this is extraordinary. I mean in every single time 0:10:19.240 --> 0:10:22.880 somebody endorses or uses a specific word, it's on the media. 0:10:22.960 --> 0:10:26.360 And people will now be watching every move that Kamala 0:10:26.400 --> 0:10:29.880 Harris makes as she takes her campaign forward and looking 0:10:29.920 --> 0:10:32.880 to see whether the Democrats unify behind her. And they're 0:10:32.920 --> 0:10:35.439 going to do that all not only on national television, 0:10:35.480 --> 0:10:38.160 but on world television. And people are also looking to 0:10:38.200 --> 0:10:43.200 see how Donald Trump will signal his response. Clearly they're 0:10:43.200 --> 0:10:46.720 going to have to shift their campaign strategy. I think 0:10:46.760 --> 0:10:49.880 for many people, they will be trying to get a 0:10:49.920 --> 0:10:52.720 sense of who the vice presidential candidate will be for 0:10:52.800 --> 0:10:56.120 Kamala Harris, assuming she moves forward, which certainly looks likely, 0:10:56.720 --> 0:10:59.280 and also what kind of leader she would be. What 0:10:59.280 --> 0:11:02.920 would her poly not only at home, which I think 0:11:03.000 --> 0:11:05.800 is more well known, but especially on the global stage, 0:11:05.840 --> 0:11:12.719 and here she's relatively unknown and has relatively little experience. 0:11:12.800 --> 0:11:16.320 That said, she's had a very strong voice with some 0:11:17.120 --> 0:11:20.600 difficult moments, not least in those early days of her 0:11:20.679 --> 0:11:24.080 role as vice president when it came to immigration and 0:11:24.160 --> 0:11:25.040 the southern border. 0:11:25.960 --> 0:11:26.400 Leslie. 0:11:26.440 --> 0:11:29.719 Was this a good weekend for the Democratic Party? Was 0:11:29.760 --> 0:11:32.559 it a weekend where they turned the page or was 0:11:32.600 --> 0:11:35.920 it a weekend showing the disarray of the party. How 0:11:35.960 --> 0:11:37.520 do you view this past weekend? What happened? 0:11:38.280 --> 0:11:41.280 I think the disarray for the Democratic Party played out 0:11:41.320 --> 0:11:46.040 over the last three weeks since that very difficult presidential debate, 0:11:47.400 --> 0:11:50.880 and yesterday was really a moment of clarity where President 0:11:50.960 --> 0:11:54.080 Biden made a decision that people had been waiting for 0:11:54.160 --> 0:11:57.960 and wondering about for quite some time, and where he 0:11:58.400 --> 0:12:01.800 quickly thereafter endorsed Kamala Harris. And then we saw many 0:12:02.000 --> 0:12:04.760 leading figures, including some of those who would have run 0:12:04.760 --> 0:12:09.040 against her, saying that they supported her. And so I 0:12:09.080 --> 0:12:13.200 think people are breathing, you know, tentatively, a sigh of relief, 0:12:13.960 --> 0:12:17.120 knowing that that moment is over, understanding that there's still 0:12:17.200 --> 0:12:19.840 great certainty ahead as to whether or not she can 0:12:19.920 --> 0:12:24.440 actually compete. And you know, we watched the Republican National 0:12:24.480 --> 0:12:29.040 Convention we watched former President Trump and Jade Vance double 0:12:29.120 --> 0:12:32.800 down on a very powerful but actually a very narrow 0:12:32.880 --> 0:12:37.280 agenda and speak really primarily to their base, and broadening 0:12:37.320 --> 0:12:39.840 that out will be the Essentially That's exactly where. 0:12:39.640 --> 0:12:40.120 I wanted to go. 0:12:40.200 --> 0:12:44.040 I mean, I'm playing off of fabulous research on who votes, 0:12:44.320 --> 0:12:47.440 how we vote, when we vote, from pure research and 0:12:47.480 --> 0:12:50.480 doctor vin Ja Murray. Everything's focused on Harris. 0:12:50.520 --> 0:12:50.679 Now. 0:12:50.720 --> 0:12:52.840 I get that, it's in the news, it's new, it's fresh, 0:12:53.240 --> 0:12:54.480 you know, ratings and all that. 0:12:54.600 --> 0:12:55.400 Forget about it. 0:12:55.920 --> 0:13:01.199 How does President Trump and Senator Vance move You've center 0:13:01.679 --> 0:13:06.040 off the message of Milwaukee to get the marginal vote, 0:13:06.320 --> 0:13:08.880 or do you perceive they have absolutely no interest in 0:13:08.920 --> 0:13:09.440 doing that. 0:13:10.440 --> 0:13:12.920 I think they actually do have some interest. If you've 0:13:12.960 --> 0:13:17.400 watched President Trump move his position sort of dial it 0:13:17.440 --> 0:13:21.920 down a little bit on abortion, for example, he's tried 0:13:21.920 --> 0:13:25.600 to distance himself from a Project twenty twenty five, which 0:13:25.600 --> 0:13:31.120 many people have viewed as very radical or extreme, and 0:13:31.200 --> 0:13:34.760 so there's already signs that he recognizes. You know, Donald 0:13:34.800 --> 0:13:37.480 Trump is always looking to see where he can make 0:13:37.520 --> 0:13:39.600 something stick and where he can get a win. He 0:13:39.720 --> 0:13:42.840 likes to think of himself as doing deals, and I 0:13:42.880 --> 0:13:46.920 suspect that they are really, you know, recalibrating in a 0:13:47.040 --> 0:13:52.520 very significant way. If they're smart, they will recognize the 0:13:53.360 --> 0:13:59.400 diversity that Jade Vance's wife brings to the broader platform. 0:13:59.640 --> 0:14:04.199 Not a of course, but that's a very significant female 0:14:04.520 --> 0:14:07.920 presence in the platform. They're low on female presence at 0:14:07.920 --> 0:14:10.160 the top, and now with Kamala Harris on the ticket, 0:14:10.200 --> 0:14:14.760 that is a significant point of a difference between the 0:14:14.760 --> 0:14:16.520 two parties. So there's a lot of things, but they 0:14:16.520 --> 0:14:20.680 are going to be recalibrating. They clearly chose JD events 0:14:20.720 --> 0:14:25.560 in part in contrast to President Biden's age leslie. 0:14:25.680 --> 0:14:27.600 Should voters read anything into the fact that we have 0:14:27.680 --> 0:14:29.880 not yet heard from former President Obama. 0:14:31.160 --> 0:14:31.960 No, not at all. 0:14:32.400 --> 0:14:35.920 President Obama is wise to know that he shouldn't get 0:14:35.960 --> 0:14:38.080 out in front of the party. He has a very 0:14:38.120 --> 0:14:41.080 specific role to play. He's tended to come in on 0:14:41.280 --> 0:14:45.440 these major decisions once he can read the room and 0:14:45.480 --> 0:14:48.680 then try to shift it subtly. He has said that 0:14:48.760 --> 0:14:53.120 he believes that the Democrats should have a process for 0:14:53.240 --> 0:14:56.000 the next candidate, but he hasn't said an open process, 0:14:56.040 --> 0:14:59.080 and that's a very important distinction for a former president 0:14:59.120 --> 0:15:04.160 who uses his words with great care is very meticulous 0:15:04.160 --> 0:15:07.480 and a detail oriented, so I think he is waiting 0:15:07.600 --> 0:15:10.160 to see where the party goes. The one thing that 0:15:10.640 --> 0:15:13.560 all Democrats at that level, certainly there aren't many at 0:15:13.600 --> 0:15:17.160 that level, but all Democrats know is that the most 0:15:17.200 --> 0:15:19.720 important thing, the single most important thing for the party 0:15:19.920 --> 0:15:23.400 is to choose a candidate and to be absolutely unified 0:15:23.440 --> 0:15:27.760 behind that candidate. People have watched the party disintegrate. It's 0:15:27.800 --> 0:15:30.400 looked in coherent for three weeks, and now they really 0:15:30.440 --> 0:15:33.960 need momentum if they're going to stand a chance of 0:15:34.280 --> 0:15:35.200 victory in November. 0:15:35.480 --> 0:15:38.280 Leslie, thank you so much, doctor Vigiluary with the Chathamhouse 0:15:42.440 --> 0:15:45.280 Edward yard Denny your Denny research, and I'm not going 0:15:45.360 --> 0:15:48.720 to mince words, folks. He writes like it's still CJ. 0:15:48.880 --> 0:15:52.680 Lawrence of a few years ago, and you are advantaged 0:15:52.880 --> 0:15:56.760 with the yard Denny report that comes out. He's even 0:15:56.760 --> 0:15:58.600 got some people help with him out now he was 0:15:58.920 --> 0:16:01.520 like doing it by himself, and we're thrilled to ed 0:16:01.560 --> 0:16:05.040 jar Denny could join us now with this optimism on 0:16:05.080 --> 0:16:09.200 the American experiment. I reframe that to begin with, Right now, 0:16:09.400 --> 0:16:12.960 do you actually model out if I extrapolate a dow Jones 0:16:13.000 --> 0:16:17.360 industrial average over fifty thousand a number of years out. 0:16:18.000 --> 0:16:20.280 Yeah, I think we could get to sixty thousand by 0:16:20.320 --> 0:16:22.800 the end of the year that we're at forty thousand. 0:16:22.840 --> 0:16:26.440 It's not a stretch to believe that over the remaining 0:16:26.600 --> 0:16:30.200 decade we could get to sixty thousand. And I've got 0:16:30.240 --> 0:16:32.920 the S and P five hundred going to eight thousand 0:16:33.560 --> 0:16:37.080 by the end of the decades, So it's a bull market. 0:16:38.000 --> 0:16:41.080 Look just take a look at a long term chart 0:16:41.120 --> 0:16:42.800 of the S and P five hundred, and what you 0:16:42.840 --> 0:16:46.800 see is that bear markets occur every now and then, 0:16:46.920 --> 0:16:50.600 but they don't last very long, and that the fundamental 0:16:50.640 --> 0:16:53.760 trend of the market is upwards along with the economy. 0:16:54.640 --> 0:16:57.080 So you had to get to those kind of levels 0:16:57.080 --> 0:16:59.440 that you're talking about. Does it have to be a 0:16:59.480 --> 0:17:01.920 tech led US stock market. 0:17:01.720 --> 0:17:03.840 No, No, it doesn't. 0:17:03.920 --> 0:17:07.320 Though since the beginning of the decade, I've noted that 0:17:07.920 --> 0:17:12.040 there's a certain rhyming between the twenty twenties and the 0:17:12.119 --> 0:17:16.640 nineteen twenties, and I do think that there are similarities. 0:17:16.840 --> 0:17:19.920 Hopefully it doesn't end as badly as it did in 0:17:20.000 --> 0:17:22.840 the nineteen twenties, but for now I think we're in 0:17:22.840 --> 0:17:28.400 the Roaring twenty twenties. The technology and environment is very 0:17:28.440 --> 0:17:32.040 conducive to that. But look, I think every company now 0:17:32.080 --> 0:17:34.520 is a technology company that you either make it or 0:17:34.560 --> 0:17:35.080 you use it. 0:17:35.119 --> 0:17:36.639 If you don't use it, you lose it. 0:17:37.680 --> 0:17:42.119 So I think technology is a major driver of the economy, 0:17:42.119 --> 0:17:44.359 but it doesn't have to be the technology companies are 0:17:44.400 --> 0:17:45.520 the only ones that benefit. 0:17:46.320 --> 0:17:47.679 We had a little bit of a I think a 0:17:47.680 --> 0:17:49.760 lot of folks are calling a rotation maybe out of 0:17:49.800 --> 0:17:52.800 some of those tech names into some other sectors, maybe 0:17:52.960 --> 0:17:55.680 even some small caps had some real strong out performance 0:17:55.680 --> 0:17:57.400 over the past couple of weeks. What did you make 0:17:57.400 --> 0:17:57.560 of that? 0:17:58.800 --> 0:18:01.360 Yeah, well, it's been a very fusing a couple of weeks. 0:18:01.800 --> 0:18:05.600 It really started, I think on July eleventh with the 0:18:05.880 --> 0:18:10.800 better than expected CPI convincing everybody, including the Fed that 0:18:11.119 --> 0:18:14.520 they were going to lower interest rates probably in September. 0:18:14.960 --> 0:18:17.400 And so instead of just kind of debating how many 0:18:17.680 --> 0:18:21.119 rate cuts will eventually occur, now there's almost one hundred 0:18:21.119 --> 0:18:25.560 percent probability agreement that they're going to start cutting in September. 0:18:25.640 --> 0:18:30.720 And that led to a tremendous rotation out of the 0:18:30.800 --> 0:18:34.160 Magnificent seven and into some of the smaller cap stocks. 0:18:35.000 --> 0:18:39.000 But I think the other event that occurred is the 0:18:39.680 --> 0:18:44.040 Biden administration announced that they were going to take some 0:18:44.160 --> 0:18:50.960 draconian measures against companies that sell semiconductor equipment to China. 0:18:51.080 --> 0:18:53.960 So it's been a whole mix of things going on here. 0:18:54.800 --> 0:18:57.880 Jo Jenny, I want to go back to introductory economics 0:18:57.880 --> 0:18:59.760 at YEL. You get there and you got to toss 0:18:59.760 --> 0:19:02.879 out a core equation. Why equals C plus I plus 0:19:02.920 --> 0:19:07.159 G and you throw on international exports minus imports. You 0:19:07.240 --> 0:19:11.800 have been a multi decade optimist, There's no question about that. 0:19:12.000 --> 0:19:14.880 You found your moments of gloom. But they're rare, rare, rare. 0:19:15.600 --> 0:19:21.359 Once again, Atlanta GDP now a present indicator. She tells the. 0:19:21.200 --> 0:19:22.840 Gloom crew they're wrong. 0:19:23.480 --> 0:19:27.440 Where in that core economic function did the gloom crew 0:19:27.560 --> 0:19:28.920 get growth wrong? 0:19:30.520 --> 0:19:34.960 Well, look, I think that it really started in twenty 0:19:35.040 --> 0:19:39.400 twenty two when the Fed started raising interest rates. March 0:19:39.440 --> 0:19:43.280 twenty two through the summer of the twenty twenty three 0:19:43.320 --> 0:19:45.800 the FED raised the Fed funds rate by five hundred 0:19:45.800 --> 0:19:48.920 and twenty five basis points from zero to five point 0:19:48.960 --> 0:19:53.119 two five percent. I think where the gloom crew was 0:19:53.760 --> 0:19:58.520 perfectly logical, wasn't expecting that that would cause a recession. 0:19:58.640 --> 0:20:00.800 It kind of makes sense. You get that kind of tightening, 0:20:01.480 --> 0:20:03.520 you get a recession. I think what they missed, though, 0:20:03.600 --> 0:20:06.600 is that we started at zero. In other words, sure, 0:20:06.640 --> 0:20:09.320 the FED tightening, but they also normalized. I mean it 0:20:09.359 --> 0:20:12.199 was zero though, was the abnormality not five? And are 0:20:12.320 --> 0:20:15.359 quarter percent? And the economy has proven to be remarkably 0:20:15.400 --> 0:20:18.760 resilient notwithstanding that tightening. 0:20:18.960 --> 0:20:22.119 Did you ever teach econ one O eight Yale? 0:20:22.240 --> 0:20:25.720 I mean, Yelle has three different levels of economics. They 0:20:25.720 --> 0:20:29.600 got econ one fifteen for nerds, they got econ one ten, 0:20:30.000 --> 0:20:33.600 which is for PhD track yard Denny types, and then 0:20:33.640 --> 0:20:37.320 they got econ one O eight for theater majors. 0:20:37.359 --> 0:20:40.040 Did you ever teach that at your Denny? Well? 0:20:40.200 --> 0:20:43.879 What I what I would teach if they if they 0:20:43.920 --> 0:20:46.520 took me back there as a professor, is common sense. 0:20:49.520 --> 0:20:53.679 I think there's too much math being taught to economists 0:20:53.720 --> 0:20:56.960 and not enough common sense, and certainly not they don't 0:20:56.960 --> 0:21:00.480 get their hands dirty enough with the data. So much 0:21:00.560 --> 0:21:03.280 data out there that just they don't have really a 0:21:03.320 --> 0:21:05.040 real sense of it. So I think you've got to 0:21:05.080 --> 0:21:08.080 start out with the raw material, which is data. So 0:21:08.680 --> 0:21:10.879 start out with the data and then come up with 0:21:10.480 --> 0:21:13.879 the theories and the models the other way around. 0:21:14.000 --> 0:21:16.840 And Paul's shout out here on someone that really helped 0:21:16.840 --> 0:21:20.840 form Bloomberg on the economy. In Bloomberg Surveillance, Tim Besley 0:21:21.480 --> 0:21:27.560 at Yale, before Les single handedly turned around common sense 0:21:27.640 --> 0:21:32.439 study of economic history in America. Besley at Yale was 0:21:32.480 --> 0:21:36.399 a curcible who said stop with the mathemambo jumbo and 0:21:36.480 --> 0:21:38.600 teach Jevins of the nineteenth century. 0:21:38.920 --> 0:21:41.480 So, ed, what do you make of this this economy here? 0:21:41.520 --> 0:21:44.320 I mean, I you know, as Tom's pointing out, the 0:21:44.359 --> 0:21:47.960 Atlantic GDP number looks pretty solid, Inflation seems to be 0:21:48.200 --> 0:21:50.560 coming down. We have a FED it's probably can be 0:21:50.600 --> 0:21:52.879 cutting rates at some point. What do you tell your 0:21:52.880 --> 0:21:53.960 clients these days? 0:21:55.160 --> 0:21:58.080 Well, I tell them that we're in a bullmarket. You know, 0:21:58.119 --> 0:22:02.600 we had a bear market back in twenty twenty two 0:22:02.840 --> 0:22:06.359 as there was widespread expectations of a recession. It turned 0:22:06.359 --> 0:22:08.440 out to be the good dough recession. 0:22:08.760 --> 0:22:09.720 It was a no show. 0:22:10.960 --> 0:22:14.600 And typically, you know, we get sell offs as we 0:22:15.240 --> 0:22:19.840 had last week, And the question is whether they become corrections, 0:22:19.880 --> 0:22:23.760 and they become corrections when there's peers that a recession's 0:22:23.800 --> 0:22:26.119 coming and then it doesn't show up, and then we 0:22:26.160 --> 0:22:29.879 get bear markets typically when recession does show up. What 0:22:29.960 --> 0:22:31.960 was unique about twenty twenty two is we had a 0:22:32.000 --> 0:22:34.960 bear market without the recession is showing up, and I 0:22:34.960 --> 0:22:37.520 think we're in a bull market. I think this bull market. Look, 0:22:37.560 --> 0:22:40.240 I can't guarantee there won't be some corrections or even 0:22:40.280 --> 0:22:43.960 another bear market along the way, but yeah, I'm sort 0:22:44.000 --> 0:22:47.119 of in the Warren Buffett and Jeremy Siegeal camp that 0:22:47.440 --> 0:22:49.359 stocks are meant to be held for the long run. 0:22:49.640 --> 0:22:51.399 Ed your Durney whether us We're going to continue an 0:22:51.520 --> 0:22:53.720 entire half hour with Edge Jenney, Paul, get one more 0:22:53.800 --> 0:22:55.160 question in with doctor your Donny. 0:22:55.400 --> 0:22:56.800 I want to come back and talk. 0:22:56.600 --> 0:22:59.760 About the new model of these big tech companies. 0:23:00.119 --> 0:23:02.399 I'd love to just have your opinion on valuation. What 0:23:02.400 --> 0:23:04.400 are you telling your clients these days about the valuation 0:23:04.760 --> 0:23:05.439 of this market. 0:23:06.640 --> 0:23:10.280 Well, I've been doing this for a while and I feel, 0:23:10.520 --> 0:23:13.760 you know, one of these biggest strategists, it's easy. You 0:23:13.840 --> 0:23:17.280 only have to predict two variables, their earnings and the 0:23:17.359 --> 0:23:21.960 valuation multiple pe and you know, getting them right, of 0:23:22.000 --> 0:23:25.760 course is the challenge. But earning seems to be easier 0:23:25.800 --> 0:23:28.520 than the pepes, like beauty is in the eyes of 0:23:28.560 --> 0:23:33.760 the beholder. I guess these days of political correctness, we 0:23:33.800 --> 0:23:38.400 should cite a talent contest. But the reality is that 0:23:39.480 --> 0:23:44.280 the valuation multiple can be elevated as long as there's 0:23:44.280 --> 0:23:47.760 no recession up ahead here, and it's particularly elevated for 0:23:47.880 --> 0:23:51.200 the magnificence. Take them out you get something more reasonable, 0:23:51.200 --> 0:23:53.640 like eighteen or nineteen for the S and P. Four 0:23:53.760 --> 0:23:54.720 hundred and ninety three. 0:23:55.600 --> 0:23:58.800 I am going edjar Denny Beck is a lesson, and 0:23:58.840 --> 0:24:02.520 I'm reading Michael Mobison from leg Mason and credit sueezs 0:24:02.560 --> 0:24:07.040 forward now at Morgan Stanley on our world torn asunder 0:24:07.200 --> 0:24:11.400