WEBVTT - Progressive Squad Member Loses NY Primary; FedEx Delivers 0:00:02.480 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, Radio News. 0:00:09.760 --> 0:00:12.920 Good morning, I'm Nathan Hager and I'm Karen Moscow. Here 0:00:12.960 --> 0:00:14.680 are the stories we're following today. 0:00:15.080 --> 0:00:18.720 Karen, we begin with some key primary results across the country. 0:00:18.800 --> 0:00:21.720 First stop is New York, with results from the most 0:00:21.760 --> 0:00:26.000 expensive congressional primary in US history. Let's get the latest 0:00:26.000 --> 0:00:27.160 with Bloomberg's John Tucker. 0:00:27.160 --> 0:00:30.720 In New York, John Nathan, Westchester County's top elected official, 0:00:30.920 --> 0:00:36.080 Pro Israel centrist George Latimer defeated incumbent Jamal Bowman, a 0:00:36.120 --> 0:00:39.239 member of the so called squad at Progressive Democrats on 0:00:39.240 --> 0:00:43.120 Capitol Hill. Latimer's win is a boost of more moderate Democrats. 0:00:43.400 --> 0:00:45.680 His victory speech was an appeal for unity. 0:00:46.240 --> 0:00:48.560 We have to look at the arguments of the far 0:00:48.720 --> 0:00:52.360 right and the far left and say you cannot destroy 0:00:52.440 --> 0:00:55.320 this country with your rhetoric and your arguments. 0:00:55.480 --> 0:00:57.880 One of the top issues was the war in Gaza. 0:00:58.280 --> 0:01:01.760 Bowman hammered it home and his session speech, we. 0:01:01.880 --> 0:01:07.400 Will never stand for the bombing and killing of babies 0:01:07.480 --> 0:01:08.160 in Gaza. 0:01:08.400 --> 0:01:12.720 The closely watched campaign devolved into bittery infighting, but symbolized 0:01:12.800 --> 0:01:15.880 larger divisions within the party nationally, a riff that some 0:01:16.000 --> 0:01:20.080 Democrats Worr he could damage President Biden's reelection and spending 0:01:20.080 --> 0:01:22.840 in the race clocked in in and eye popping twenty 0:01:22.880 --> 0:01:26.040 three million dollars. With seventy one percent of the votes counted, 0:01:26.319 --> 0:01:29.679 Latimer was ahead fifty five point eight percent to forty 0:01:29.680 --> 0:01:33.000 four point three percent. His victory in the heavily democratic 0:01:33.080 --> 0:01:36.280 sixteenth District all but insures will win the general election 0:01:36.680 --> 0:01:38.759 in New York. I'm John Tucker, Bloomberg. 0:01:38.440 --> 0:01:41.319 Radio, All right, John, Thanks well. Besides New York, three 0:01:41.360 --> 0:01:45.080 other states held congressional primaries, and Republican candidates back by 0:01:45.120 --> 0:01:48.080 Donald Trump came up short in two of them. In 0:01:48.120 --> 0:01:51.640 South Carolina's third and district, Sherry Biggs defeated Mark Burns 0:01:51.680 --> 0:01:54.680 in a runoff election fifty one percent to forty nine percent. 0:01:55.040 --> 0:01:56.440 Biggs is a political. 0:01:56.040 --> 0:01:59.720 Newcomer who was backed by South Carolina's governor, Henry McMaster. 0:02:00.120 --> 0:02:03.040 Burns is a black pastor who supported Trump for nearly 0:02:03.120 --> 0:02:06.560 a decade, though the former president did not campaign for him. 0:02:06.760 --> 0:02:09.720 In Utah, hearen the race for Mitt Romney's open Senate 0:02:09.760 --> 0:02:13.440 seat goes to Congressman John Curtis. He won with fifty 0:02:13.480 --> 0:02:17.080 point seven percent, defeating a Trump endorsed Mayor Trent Staggs 0:02:17.280 --> 0:02:20.920 and two other Trump supporting candidates. And in Colorado, Congresswoman 0:02:21.040 --> 0:02:25.000 Lauren Bobert won her bid for reelection after switching districts 0:02:25.040 --> 0:02:28.520 to run for retiring Ken Buck's open house seat. Bobert 0:02:28.520 --> 0:02:31.799 defeated several lesser known candidates with forty three point three 0:02:31.880 --> 0:02:32.920 percent of the vote. 0:02:33.080 --> 0:02:36.160 Well, Nathan, as we continue to assess the primary results, 0:02:36.240 --> 0:02:38.520 we are now just one day away from the first 0:02:38.520 --> 0:02:42.079 presidential debate between Joe Biden and Donald Trump. The ninety 0:02:42.120 --> 0:02:45.560 minute debate will include no audience and the candidate's microphones 0:02:45.560 --> 0:02:47.919 will be turned off when it's not their turn to speak. 0:02:48.160 --> 0:02:51.200 Bloomberry. David Gurra is covering debate for US in Atlanta. 0:02:51.480 --> 0:02:53.760 It'll be strange it hearkens back to the debate in 0:02:53.919 --> 0:02:56.359 nineteen sixty and Mark Thompson, who runs CNN now, has 0:02:56.400 --> 0:02:59.280 been very clear about that he wants to return to 0:02:59.320 --> 0:03:02.200 the sort of Kennedy Nixon style intimate debate on a 0:03:02.240 --> 0:03:05.000 stage without the presence of an audience. And we're going 0:03:05.040 --> 0:03:07.040 to have the moderators of the debate, Dana Bash and 0:03:07.120 --> 0:03:09.360 Jake Tapper, with the ability to mute the candidates while 0:03:09.760 --> 0:03:12.880 each other is speaking. It'll be very interesting to see 0:03:12.919 --> 0:03:15.800 how each feeds off that lack of audience, if that 0:03:15.880 --> 0:03:18.280 makes sense. We know of Donald Trump, the former president, 0:03:18.320 --> 0:03:20.880 and how he loves to speak to big crowds, how 0:03:20.919 --> 0:03:23.679 that animates him. This will be an entirely different thing 0:03:23.720 --> 0:03:26.240 to be in this studio, in a room with just 0:03:26.280 --> 0:03:28.840 the moderators and his opponent, with the President, Joe Biden. 0:03:29.080 --> 0:03:31.880 Bloomberg's David Gerrol will be part of our special coverage 0:03:31.880 --> 0:03:34.720 of the CNN presidential debate. It all begins tomorrow night 0:03:34.720 --> 0:03:37.640 at eight pm Wall Street Time with this special edition 0:03:37.680 --> 0:03:40.280 of Balance of Power with Joe, Matthew and Kayley Lines 0:03:40.320 --> 0:03:43.280 in Washington. Listen to the debate on Bloomberg Radio or 0:03:43.360 --> 0:03:45.080 watch it on Bloomberg Television. 0:03:45.360 --> 0:03:47.080 Now Karen to the latest on the war in the 0:03:47.120 --> 0:03:49.840 Middle East. Defense Secretary Lloyd Austin is warning that a 0:03:49.880 --> 0:03:53.200 clash between Israel and Hesbelah could set off a new war. 0:03:53.320 --> 0:03:55.320 Bloomberg Zed Baxter has the story. 0:03:55.680 --> 0:03:59.640 Austin, standing beside Israeli Foreign Minister Jov Golan sent out 0:03:59.640 --> 0:04:03.960 the message to the globe generally and Israel specifically. This 0:04:04.080 --> 0:04:07.080 is Israeli Prime Minister Benjamin that Yahoo pulls troops to 0:04:07.120 --> 0:04:08.800 the north near has Bela. 0:04:09.040 --> 0:04:12.440 Another war between Israel and Hisbela could easily become a 0:04:12.480 --> 0:04:16.320 regional war with terrible consequences for the Middle East. 0:04:16.680 --> 0:04:19.960 Austin's message to has belaws that has provocations threatened to 0:04:20.040 --> 0:04:23.839 drag the Israeli and Lebanese people into a war they 0:04:23.960 --> 0:04:27.240 do not want. Ad Baxter, Bloomberg Radio. 0:04:27.400 --> 0:04:28.039 Right and thanks. 0:04:28.040 --> 0:04:30.279 We turned to the markets now in nearly seven percent 0:04:30.400 --> 0:04:34.440 rally and Nvidia shares HOWP tech stocks bounce back yesterday. 0:04:34.680 --> 0:04:37.800 The Nasdaq rose one point two percent and NASDAK futures 0:04:37.800 --> 0:04:41.440 are higher once again this morning. So Rebecca Patterson, former 0:04:41.560 --> 0:04:44.960 chief investment officer at Bridgewater Associate, says there could be 0:04:45.000 --> 0:04:46.800 some headwinds for investors. 0:04:47.080 --> 0:04:49.039 I do think as we get closer to the election, 0:04:49.600 --> 0:04:52.479 as we're higher for longer on fed funds for longer, 0:04:52.960 --> 0:04:55.800 that equity gains could be more limited. From here. We've 0:04:55.839 --> 0:04:58.680 had a huge run up already, notwithstanding the couple days 0:04:58.720 --> 0:05:03.320 pullback we got, so I'm not looking to reduce equities 0:05:03.400 --> 0:05:05.120 or get out of equities in the short term. 0:05:05.440 --> 0:05:08.880 And former Bridgewater CIO or Rebecca Patterson notes the S 0:05:08.920 --> 0:05:12.160 and P five hundred is up almost fifteen percent this year. 0:05:12.120 --> 0:05:14.720 And helping give a boost to the markets this morning 0:05:14.960 --> 0:05:18.920 is FedEx Karen. Those shares are higher by nearly thirteen percent. 0:05:19.000 --> 0:05:22.599 In early trading, the company delivered a profit forecast above 0:05:22.720 --> 0:05:26.080 Wall Street's expectations. More from Bloomberg's Doug Prisner. 0:05:26.560 --> 0:05:29.479 It comes after a slew of cost cutting measures aimed 0:05:29.480 --> 0:05:33.599 at increasing margins and coping with sluggish demand. FedEx is 0:05:33.640 --> 0:05:36.960 expecting two point two billion dollars of permanent cost savings 0:05:37.000 --> 0:05:39.599 in the fiscal year. The company also hinted at a 0:05:39.640 --> 0:05:43.919 possible divestiture of its freight business FedEx it's assessing the 0:05:44.000 --> 0:05:47.120 unit's place in the company's portfolio, and on top of that, 0:05:47.480 --> 0:05:49.800 FedEx is expecting to buy back two and a half 0:05:49.880 --> 0:05:53.360 billion dollars worth of common stock in fiscal twenty twenty five. 0:05:53.839 --> 0:05:57.120 The company is also forecasting capital spending of five point 0:05:57.200 --> 0:06:02.599 two billion. This will include fleet and facility modernization and automation. 0:06:03.160 --> 0:06:05.160 In New York, I'm Doug Prisner, Bloomberg Radio. 0:06:05.360 --> 0:06:07.480 All Right, Doug banks Well. Fedech's shares are not the 0:06:07.480 --> 0:06:10.200 only ones on the move this morning. Rivian a surging 0:06:10.240 --> 0:06:13.080 more than thirty seven percent. The ev maker is getting 0:06:13.080 --> 0:06:15.720 a much needed cash in fusion through a new partnership 0:06:15.720 --> 0:06:19.720 with Volkswagen. BW will make an initial billion dollar investment 0:06:19.760 --> 0:06:22.800 in Rivian and up to four billion dollars more over time. 0:06:23.240 --> 0:06:26.720 The Surprise TIAT provides Rivian with a financial lifeline after 0:06:26.800 --> 0:06:29.479 it has struggled to ramp up production and deliveries of 0:06:29.520 --> 0:06:31.760 its electric pickup and sub models. 0:06:32.000 --> 0:06:35.159 And Karen Disney maybe giving an even faster pass to 0:06:35.400 --> 0:06:38.520 visitors at Walt Disney World. Disney's Florida theme parks will 0:06:38.520 --> 0:06:41.360 now let park goers reserve a space in shorter lines 0:06:41.360 --> 0:06:44.400 for rides up to a week in advance. Right now, 0:06:44.480 --> 0:06:47.080 visitors can only book a day ahead on the Genie 0:06:47.080 --> 0:06:51.000 Plus reservation system. The new system will be called Lightning 0:06:51.080 --> 0:06:54.599 Lane Multipass. Guests at Disney hotels will be able to 0:06:54.600 --> 0:06:57.240 make seven day reservations fro up to three rides. Other 0:06:57.279 --> 0:06:59.680 guests will get to book three days ahead. Price is 0:06:59.800 --> 0:07:02.000 very depending on the park and time of day. The 0:07:02.040 --> 0:07:04.880 three day multi pass will start at fifteen dollars. The 0:07:04.880 --> 0:07:08.160 most popular rides can start at ten bucks. The changes 0:07:08.400 --> 0:07:10.120 take effect July twenty. 0:07:09.840 --> 0:07:13.440 Fourth, and my another note here, Nathan Bloomberg Business Week 0:07:13.560 --> 0:07:16.400 is out with a new monthly magazine that's redesigned from 0:07:16.400 --> 0:07:19.120 the ground up. Check out the cover story on Bloomberg 0:07:19.200 --> 0:07:22.040 dot com and the Bloomberg Terminal, featuring an interview with 0:07:22.080 --> 0:07:24.920 Bernard Arnault, the head of LVMH and. 0:07:25.080 --> 0:07:26.640 One of the richest people on Earth. 0:07:26.880 --> 0:07:29.960 The new magazine puts an emphasis on original photography and 0:07:30.040 --> 0:07:33.720 includes new story formats to give you context, analysis and 0:07:33.920 --> 0:07:36.520 perspectives that provide new ways. 0:07:36.240 --> 0:07:39.000 To think about the world. Check it all out the. 0:07:38.960 --> 0:07:46.040 New Bloomberg BusinessWeek at Bloomberg dot com. And it's time 0:07:46.080 --> 0:07:47.560 now for a look at some of the other stories 0:07:47.560 --> 0:07:49.520 making news in New York and around the world. From that, 0:07:49.560 --> 0:07:53.080 we're joined by Bloomberg So Michael Barr, Michael, good Morning, Good. 0:07:52.800 --> 0:07:56.520 Morning, Karen wall Street journal reporter Evan Gerskovich went on 0:07:56.600 --> 0:08:01.360 trial behind closed doors in the Russian EuroCity of Caterinberg, 0:08:01.720 --> 0:08:05.600 fifteen months after his arrest on espionage charges that he 0:08:05.760 --> 0:08:10.160 his employer and the US government vehemently denied. The thirty 0:08:10.200 --> 0:08:13.480 two year old journalist appeared in the court in a 0:08:13.480 --> 0:08:17.560 glass defendant's cage with his head shaved. Griskevich is the 0:08:17.560 --> 0:08:22.160 first Western journalist arrested on espionage charges in the post's 0:08:22.200 --> 0:08:26.920 Soviet Russia. The State Department has declared him wrongfully detained. 0:08:27.480 --> 0:08:30.239 Wiki Leak's founder, Julian Assage, is on a plane heading 0:08:30.240 --> 0:08:33.880 to his home country of Australia. Massage was sentenced time 0:08:34.080 --> 0:08:38.040 served all in Britain as part of a plea agreement 0:08:38.120 --> 0:08:42.160 with the US Justice Department that secures his freedom. The 0:08:42.240 --> 0:08:45.280 plea was entered in the US court in Saipan. The 0:08:45.360 --> 0:08:49.040 judge pronounced him a freeman after imposing the sentence. Lawyer 0:08:49.120 --> 0:08:52.920 Jennifer Robinson has been representing as Sage in Australia and 0:08:53.120 --> 0:08:53.640 the UK. 0:08:54.080 --> 0:08:57.199 Julane has suffered for more than fourteen years because of 0:08:57.240 --> 0:09:00.280 the risk of extradition to the United States. It's one 0:09:00.360 --> 0:09:03.760 hundred and seventy five years in prison for publishing evidence 0:09:03.800 --> 0:09:07.760 of war crimes, human rights abuse, and US wrongdoing around 0:09:07.760 --> 0:09:08.160 the world. 0:09:08.640 --> 0:09:12.760 In a no holds Barred report, the National Transportation Safety 0:09:12.760 --> 0:09:16.440 Board called out a rail giant, Norfolk Southern, and the 0:09:16.480 --> 0:09:20.600 handling of last year's train to railmen in East Palestine, Ohio. 0:09:21.080 --> 0:09:24.240 Norfolk Southern was criticized on everything from the faulty wheel 0:09:24.440 --> 0:09:27.240 that led to the trains going off the tracks to 0:09:27.400 --> 0:09:33.040 the company's lack of cooperation during the investigation. NTSB chair Jennifer. 0:09:32.600 --> 0:09:37.120 Hammedy Norfolk Southern tried to submit their investigation their own 0:09:37.240 --> 0:09:40.480 investigation under the guise of a party submission, not once, 0:09:41.080 --> 0:09:44.520 not twice, not three times, but four times. 0:09:44.679 --> 0:09:48.480 The NTSB's Jennifer Hammedy also pointed out it was unnecessary 0:09:48.520 --> 0:09:53.360 for Norfolk Southern to recommend firefighters perform a vent and burn, 0:09:53.720 --> 0:09:58.080 which potentially cause further health hazards. President Joe Biden will 0:09:58.080 --> 0:10:01.840 issue a proclamation giving back clemency the US service members 0:10:01.920 --> 0:10:05.920 convicted of charges under a Cold War era purge of 0:10:06.040 --> 0:10:09.880 gay and lesbian people, reversing a decades long policy of 0:10:09.880 --> 0:10:13.439 discrimination that forced and estimated one hundred thousand people from 0:10:13.480 --> 0:10:16.800 the military. Global News twenty four hours a day and 0:10:16.920 --> 0:10:19.839 whenever you want it with Bloomberg News Now. I'm Michael 0:10:19.880 --> 0:10:21.679 barn This is Bloomberg. 0:10:21.200 --> 0:10:28.760 Cart Jerry, Michael, thank you time for the Bloomberg Sports 0:10:28.840 --> 0:10:30.120 Update with John stash Hour. 0:10:30.240 --> 0:10:32.360 John, Good morning, Good morning Caroon. On the eve of 0:10:32.360 --> 0:10:35.240 the NBA Draft, It begins tonight in Brooklyn. A big trade. 0:10:35.320 --> 0:10:38.040 It was between the Knicks and the Nets. The Knicks 0:10:37.840 --> 0:10:40.400 had accumulated a boatload of draft picks, and most of 0:10:40.400 --> 0:10:43.680 those picks are now moving burrows Is. The Nets get 0:10:43.720 --> 0:10:46.560 the Knicks first rounder tonight and future first rounders in 0:10:46.600 --> 0:10:50.280 twenty twenty seven, twenty nine, and thirty one in exchange. 0:10:50.679 --> 0:10:53.120 The Nets traded to the Knicks. They're best player at 0:10:53.120 --> 0:10:56.640 Michael Bridges, so the Knicks have now yet another former 0:10:56.720 --> 0:11:00.640 Villanova stars. Bridges will be reunited with his college teammates 0:11:00.720 --> 0:11:04.160 Jalen Brunson, Josh Hart, and Dante Devencenzo. Atlanta has the 0:11:04.200 --> 0:11:07.000 first pick tonight, then Washington and both may take French 0:11:07.360 --> 0:11:11.280 teenager Zachary Reezushia and seven footer Alex Starr a top 0:11:11.320 --> 0:11:14.680 most mock draft boards. Another French teenager, Victor Wembinyama, was 0:11:14.679 --> 0:11:17.079 taken first a year ago. While the Knicks and Nets 0:11:17.120 --> 0:11:19.360 made the trade. The Mets played the Yankees and Mark 0:11:19.400 --> 0:11:22.560 Biento's came up fourth inning, heaving already homered. 0:11:22.240 --> 0:11:25.600 Once is cracked in the air on a line toward 0:11:25.720 --> 0:11:27.240 right center, it is. 0:11:27.360 --> 0:11:28.480 Off the top of the loaf. 0:11:28.640 --> 0:11:29.320 Thank god. 0:11:30.640 --> 0:11:35.319 Fientos hits an absolute laser to right center and hit 0:11:35.360 --> 0:11:38.000 the top of the wall and pumped into the Yankee bullpen, 0:11:38.880 --> 0:11:41.520 his second home run of the night on WCBS. 0:11:41.559 --> 0:11:44.600 Both Viento's homers came up Garrett Cole, who also served 0:11:44.679 --> 0:11:47.200 up homers by Harrison Vader and Brandon Nimo. The Mets 0:11:47.200 --> 0:11:49.520 built up a big lead and then held on after 0:11:49.559 --> 0:11:51.600 an Aaron Judge grand slam in the eighth inning. They 0:11:51.679 --> 0:11:53.719 beat the Yankees nine to seven. The Mets have won 0:11:53.760 --> 0:11:56.280 ten of their last twelve, and half those wins they've 0:11:56.280 --> 0:11:58.840 scored nine or more runs. Yanks have lost seven of nine. 0:11:58.880 --> 0:12:01.360 In six of the seven they've given up at least 0:12:01.360 --> 0:12:03.640 seven run series In tonight at City Field, seventh raight 0:12:03.679 --> 0:12:06.480 win for Cleveland ten six in Baltimore. Guardians of the 0:12:06.520 --> 0:12:09.760 best record in Baseball. John Stashedwer, Bloomberg Sports, Karen. 0:12:09.600 --> 0:12:16.000 Eathan Coast to Coast on Bloomberg Radio, nationwide on Sirius XM, 0:12:16.200 --> 0:12:19.120 and around the world on Bloomberg dot Com and the 0:12:19.160 --> 0:12:20.400 Bloomberg Business app. 0:12:20.600 --> 0:12:24.280 This is Bloomberg Daybreak. Good morning on Nathan Hager. We 0:12:24.320 --> 0:12:26.599 want to turn down to a conversation from the Bloomberg 0:12:26.720 --> 0:12:31.080 invest Conference in New York. Cliff Astez, founder managing principal 0:12:31.080 --> 0:12:34.680 and chief investment officer at AQR Capital Management, spoke to 0:12:34.720 --> 0:12:39.120 Bloomberg Shanali Bassek in a wide ranging conversation touching on 0:12:39.240 --> 0:12:42.600 active and passive investing and the rise of meme stocks. 0:12:42.880 --> 0:12:46.040 They began by talking about the efficiency of the market today. 0:12:46.120 --> 0:12:46.640 Let's listen. 0:12:46.640 --> 0:12:51.040 In efficient is this idea that prices are accurately reflecting fundamentals. 0:12:51.080 --> 0:12:53.520 This can get really geeky on how to define that, 0:12:53.559 --> 0:12:57.160 but let's just be colloquial. I do have a view. 0:12:57.559 --> 0:12:59.480 It's not a short term view. It's not a market 0:12:59.480 --> 0:13:04.920 call that again, markets are never perfectly efficient. But over 0:13:05.000 --> 0:13:09.240 my career, which is annoyingly about thirty two years now, 0:13:10.200 --> 0:13:12.160 I guess the opposite would be even more annoying, but 0:13:12.360 --> 0:13:14.840 it's a long time. I'm a little obsessed these days 0:13:14.840 --> 0:13:17.360 with those internet memes of when they show you like 0:13:17.400 --> 0:13:21.320 an actor like Ed Asner in Mary Tyler Moore was 0:13:21.400 --> 0:13:23.640 ten years younger than me when he did the World's 0:13:23.720 --> 0:13:28.439 Very Upsetting. But over my career, I actually think markets 0:13:28.480 --> 0:13:32.560 have gotten somewhat less efficient, meaning prices are a little 0:13:32.600 --> 0:13:34.280 bit more disconnected from reality. 0:13:34.600 --> 0:13:35.280 It ebbs and. 0:13:35.200 --> 0:13:38.000 Flows, It's never the same at each point in time. 0:13:38.920 --> 0:13:42.079 But I find that an odd view because one tends 0:13:42.120 --> 0:13:46.640 to think as technology in particular advances that things should 0:13:46.679 --> 0:13:52.160 march towards better, with better I think being efficiency in 0:13:52.200 --> 0:13:56.440 this case, and I actually, I actually think maybe I'm 0:13:56.440 --> 0:13:58.880 biased by having a front row seat, but I think 0:13:58.920 --> 0:14:01.320 over the last thirty so years, i'd say the market 0:14:01.360 --> 0:14:03.160 is somewhat less efficient than when I started. 0:14:03.360 --> 0:14:05.760 So why do you say that is what is causing 0:14:05.800 --> 0:14:06.560 it to be that way? 0:14:06.960 --> 0:14:11.160 It's well, first I start out by just observing a 0:14:11.160 --> 0:14:14.160 few facts, and I do, and I am of course 0:14:14.200 --> 0:14:16.599 biased by what I've lived through, but I love the 0:14:16.760 --> 0:14:22.480 genus presentation. The dot com bubble stuff was bringing, you know, 0:14:22.560 --> 0:14:27.560 PTSD like memories for me. We try to very formally 0:14:27.640 --> 0:14:31.600 measure how disconnected from reality or not, or how or 0:14:31.640 --> 0:14:35.000 how reasonable our stock prices, in particular, not the price 0:14:35.000 --> 0:14:38.000 of the whole market, but within the stock market, are 0:14:38.120 --> 0:14:40.760 you know, cheap versus expensive stocks? You could define that 0:14:40.880 --> 0:14:43.680 very narrowly in a quant sense, in terms of just multiples. 0:14:44.040 --> 0:14:45.840 You could define it more broadly in terms of a 0:14:45.880 --> 0:14:46.840 gram and DoD sense. 0:14:47.400 --> 0:14:48.200 Yeah you want to pay. 0:14:48.080 --> 0:14:49.960 A little multiple, but what's the quality of the stock, 0:14:50.000 --> 0:14:53.080 what's the risk of the stock. But either way, measured 0:14:53.200 --> 0:14:57.600 very formally, the dot com bubble saw by far the 0:14:57.720 --> 0:15:01.400 largest disparity between cheap and expensive we had ever seen 0:15:01.440 --> 0:15:02.720 in about fifty years of data. 0:15:03.400 --> 0:15:05.280 We survived that. It was a little ugly for a while, 0:15:05.320 --> 0:15:06.680 but we actually thrive through it. 0:15:06.680 --> 0:15:08.120 If you take the whole round trip, But when you 0:15:08.160 --> 0:15:11.240 almost die in the first half, you tend to remember that. 0:15:12.560 --> 0:15:15.160 If you had asked me in say two thousand and two, 0:15:15.480 --> 0:15:17.800 when all of that excess was pretty much worked off, 0:15:18.480 --> 0:15:20.360 are you going to see something more extreme than that 0:15:20.400 --> 0:15:24.560 in your career. I think I'm smart enough even back 0:15:24.600 --> 0:15:28.080 then to never say never. We don't live in a 0:15:28.080 --> 0:15:29.800 business where any of us should say never. It's a 0:15:29.880 --> 0:15:32.360 dangerous word, but I think I would have said, it's 0:15:32.400 --> 0:15:33.720 highly unlikely. 0:15:33.640 --> 0:15:35.840 That was the craziest thing we had seen in fifty years. 0:15:36.520 --> 0:15:39.120 I would have said, well, in twenty years, people like 0:15:39.160 --> 0:15:42.200 me will still be around. I hope who with some memory. 0:15:42.240 --> 0:15:45.400 It's not one hundred years where everyone is forgotten. And 0:15:45.440 --> 0:15:50.040 then pre COVID it was close. And then after COVID hitting, 0:15:50.120 --> 0:15:55.960 we saw things measured very similarly price price multiples or 0:15:55.960 --> 0:15:57.440 even price multiple scale by. 0:15:57.400 --> 0:16:01.320 Quality to go to level well beyond the. 0:16:01.280 --> 0:16:06.200 Tech bubble and lasting about doubly as long as the 0:16:06.240 --> 0:16:09.480 tech bubble if you ever have the misfortune to have 0:16:09.520 --> 0:16:12.680 an investment that ever goes down for any amount of time, 0:16:13.880 --> 0:16:16.320 you will learn something that they don't teach you in 0:16:16.360 --> 0:16:21.640 a PhD program. Severity is bad, but duration is underrated 0:16:21.640 --> 0:16:25.880 when it comes to pain. Three years of pain, even 0:16:25.960 --> 0:16:28.360 if it's cumulatively not worse than a year and a 0:16:28.400 --> 0:16:31.960 half of pain, is a ton worse. The first year, 0:16:32.000 --> 0:16:33.560 you go back to your clients and go, we think 0:16:33.600 --> 0:16:35.480 we're right, look what's going on here. 0:16:35.800 --> 0:16:37.000 They go, okay, okay. 0:16:37.280 --> 0:16:40.280 The second year they're like, that's the same thing you 0:16:40.320 --> 0:16:44.240 said a year ago, and you go, yeah, but it's 0:16:44.280 --> 0:16:46.040 still going on and we're still going to be right. 0:16:46.480 --> 0:16:51.120 The third year, I mean, your mom's still invested, but 0:16:51.320 --> 0:16:52.200 it's getting tougher. 0:16:52.720 --> 0:16:55.040 So duration counts. So we've seen both the severity and 0:16:55.080 --> 0:16:55.920 the duration of those. 0:16:56.120 --> 0:16:59.880 So I start out just observing facts and then trying 0:16:59.880 --> 0:17:02.480 to feel and why. Admittedly, this is a lot of 0:17:02.480 --> 0:17:05.239 op ed. This is very hard to prove. And I 0:17:05.280 --> 0:17:08.159 love to you know, I'm a card carrying quant I 0:17:08.200 --> 0:17:10.879 love to, you know, produce tables. I can show you 0:17:10.920 --> 0:17:15.480 these spreads, But why, and I tend to have I 0:17:15.560 --> 0:17:18.399 think it's a multitude of things. I think the number 0:17:18.480 --> 0:17:22.119 one thing is probably the thing we all love to blame, 0:17:22.280 --> 0:17:26.840 the Internet and social media. I think a lot of 0:17:26.840 --> 0:17:29.680 people naturally assume such a thing would bring us information 0:17:29.840 --> 0:17:33.880 so quickly and so ubiquitously knowing everything that prices would 0:17:33.920 --> 0:17:38.520 be very efficient. But that's never been the hard part. 0:17:38.920 --> 0:17:41.440 When I started in this industry, we got earnings and 0:17:41.480 --> 0:17:45.680 within twenty minutes they're missing twenty minutes, and a nanosecond 0:17:45.760 --> 0:17:48.560 matters to an HFT, it doesn't matter to almost every 0:17:48.560 --> 0:17:52.399 other investor. We didn't really materially get more. And I 0:17:52.440 --> 0:17:56.080 do think that level of information overload gives people a 0:17:56.080 --> 0:17:59.880 lot of illusion of control. You know, I don't want 0:17:59.880 --> 0:18:01.520 to go into this deeply because I know you'd like 0:18:01.560 --> 0:18:03.399 to get me going on this, but I think the 0:18:03.480 --> 0:18:07.479 Meme stock examples, I don't think they're a norm by 0:18:07.480 --> 0:18:09.960 any means, but I think they're the ultimate example of 0:18:10.040 --> 0:18:14.000 a little bit of information making you think you really 0:18:14.040 --> 0:18:16.640 know something very deeply, and I think that gets into 0:18:16.680 --> 0:18:17.440 market prices. 0:18:17.640 --> 0:18:19.639 I'll be careful to keep this a little rained in, 0:18:19.760 --> 0:18:20.960 but on the meme stock. 0:18:20.800 --> 0:18:23.040 Issue, I knew i'd get that started. 0:18:23.920 --> 0:18:26.919 How much are the retail traders that are bidding up 0:18:27.000 --> 0:18:30.159 prices of stocks like game stock, contributing to this idea 0:18:30.560 --> 0:18:31.960 that markets are less efficient. 0:18:32.000 --> 0:18:37.160 To you, I think they are very small part in dollars. 0:18:37.760 --> 0:18:40.480 They maybe post their children in some sense for the 0:18:40.480 --> 0:18:45.880 effect the whole idea that this disconnect in prices can 0:18:45.920 --> 0:18:48.320 come in a world where we have all the information 0:18:48.400 --> 0:18:53.080 at our fingertips. I think we're all raised at some 0:18:53.119 --> 0:18:55.600 point we've all read about the quote wisdom of crowds. 0:18:55.640 --> 0:18:57.480 The way you know, if you take a crowd that 0:18:57.560 --> 0:19:00.399 on average people have fifty one percent information, but you 0:19:00.440 --> 0:19:04.000 poll them. You hope many of us here are old 0:19:04.080 --> 0:19:07.320 enough to remember Regis Philbin and you know who wants 0:19:07.320 --> 0:19:10.680 to be a millionaire. The absolute best lifeline was always 0:19:10.680 --> 0:19:13.840 pull the crowd right, because because if they asked the question, 0:19:13.960 --> 0:19:15.320 you know, what does it say in the back of 0:19:15.320 --> 0:19:18.919 a quarter, eighty five percent of the people don't know, 0:19:19.600 --> 0:19:22.080 but they're evenly split, and the fifteen percent. 0:19:21.800 --> 0:19:23.000 Of do not all go one way. 0:19:23.440 --> 0:19:27.119 But there was always a little unspoken footnote to the 0:19:27.160 --> 0:19:30.360 wisdom of crowds. To have a wise crowd, it's got 0:19:30.400 --> 0:19:33.879 to be fairly independent. If everyone got to talk about 0:19:33.880 --> 0:19:35.919 the quarter, not look at a quarter, that's cheating, but 0:19:35.960 --> 0:19:38.480 talk about it. The people who are wrong convinced the 0:19:38.480 --> 0:19:42.640 people who are right, and whatnot. A crowd where everyone 0:19:42.720 --> 0:19:45.919 is coordinated and not independent has the risk of becoming 0:19:45.920 --> 0:19:46.800 a dangerous mob. 0:19:47.600 --> 0:19:49.160 And I don't know about you, guys, but. 0:19:49.160 --> 0:19:51.760 I can't think of anything better at turning a wise, 0:19:51.800 --> 0:19:55.639 independent crowd into a dangerous mob than the Internet and 0:19:55.680 --> 0:19:59.960 social media. So I do think they're kind of the 0:20:00.080 --> 0:20:03.960 poster child. I don't think economically they are they are that. 0:20:03.920 --> 0:20:05.080 Important they you know. 0:20:05.600 --> 0:20:07.679 I don't want to disparage either side of it, but 0:20:07.760 --> 0:20:10.879 it's nine dollars in terms of you know, in video 0:20:11.080 --> 0:20:14.320 laughs at that on a daily basis. The entire memestock 0:20:14.359 --> 0:20:16.840 phenomenon is like a little part of the day of Nvidia. 0:20:18.080 --> 0:20:19.720 But I think it is a poster child for the 0:20:19.720 --> 0:20:22.600 concept I'm talking about. There are other candidates. People talk 0:20:22.640 --> 0:20:26.720 about the role of passive. That's really complicated. I'm not 0:20:26.760 --> 0:20:29.120 one who just looks at passive and goes that that's 0:20:29.119 --> 0:20:30.760 causing all kinds of havoc. 0:20:31.040 --> 0:20:35.159 What is causing? Okay, I'll disappoint you here, people. 0:20:36.119 --> 0:20:39.880 I don't think we really quite know yet. First of all, 0:20:39.920 --> 0:20:42.679 here are the things we know about passive. Not everyone 0:20:42.720 --> 0:20:47.040 can be passive. The whole world breaks down. Even back 0:20:47.040 --> 0:20:49.639 when I was a PhD student, So this is the 0:20:49.760 --> 0:20:53.320 early nineties, a kind of stant This is what happens 0:20:53.320 --> 0:20:56.000 when PhD students in finance get drunk late at night. 0:20:56.760 --> 0:21:00.000 They sit around going, what if everybody tried to be passed? 0:21:01.000 --> 0:21:03.679 And that's a black hole, that's a singularity in finance. 0:21:03.800 --> 0:21:07.840 Nobody's looking at individual stocks, and that just can't work. 0:21:08.400 --> 0:21:10.840 Passive as a free rider is a free rider. 0:21:10.640 --> 0:21:14.679