1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,880 Speaker 1: at Bloomberg dot com slash podcast. All right, today, we 7 00:00:22,880 --> 00:00:24,520 Speaker 1: woke up today and you looked at the tape. There 8 00:00:24,600 --> 00:00:26,720 Speaker 1: was a lot of news about the big Wall Street banks. 9 00:00:26,760 --> 00:00:29,680 Speaker 1: We had Goldman cutting jobs, a little bit muted though, 10 00:00:29,760 --> 00:00:31,800 Speaker 1: right because Goldman was supposed to cut like over four 11 00:00:31,840 --> 00:00:37,720 Speaker 1: thousands exactly, but you know, nonetheless of number Morgan Stanley, 12 00:00:37,800 --> 00:00:41,360 Speaker 1: John Bruz on their CEO stepping down. Uh. And then 13 00:00:41,720 --> 00:00:45,040 Speaker 1: Credit Swiss and Michael Klein negotiating for Chris Swiss to 14 00:00:45,080 --> 00:00:47,280 Speaker 1: buy Michael Klein's firm as part of this new Credit 15 00:00:47,320 --> 00:00:49,440 Speaker 1: Swiss First Boston. So let's break it down. Plus we 16 00:00:49,520 --> 00:00:51,560 Speaker 1: got earning coming up for these big banks at dinner 17 00:00:51,600 --> 00:00:53,760 Speaker 1: the week, so let's get a nice little round table 18 00:00:53,800 --> 00:00:58,080 Speaker 1: going force. Alison Williams, Sr Banks, analyst for Bloomberg Intelligence, 19 00:00:58,160 --> 00:01:01,000 Speaker 1: joins via the phone and Bloomberg News Alster reporter Shanale 20 00:01:01,040 --> 00:01:04,000 Speaker 1: bassik uh It joins us here in our Bloomberg in 21 00:01:04,040 --> 00:01:07,880 Speaker 1: Actor Broker studio. Allison, of the three news items we got, 22 00:01:07,880 --> 00:01:10,600 Speaker 1: the Goldman news, the Credit Swiss news, the Morgan Stanley, 23 00:01:10,680 --> 00:01:13,040 Speaker 1: which one is most important to you? Should we be 24 00:01:13,040 --> 00:01:17,000 Speaker 1: paying attention to these things? I mean, I think, uh, 25 00:01:17,560 --> 00:01:21,199 Speaker 1: Goldman confirming the head count cuts, I think is probably 26 00:01:21,240 --> 00:01:26,600 Speaker 1: the most important in terms of thinking about the environment. UM. 27 00:01:26,640 --> 00:01:28,559 Speaker 1: A couple of things I point out on the thirty 28 00:01:28,600 --> 00:01:31,840 Speaker 1: two hundred number, UM, only about a third of that 29 00:01:32,240 --> 00:01:34,880 Speaker 1: investment banking and trading, and a lot of those cuts 30 00:01:34,959 --> 00:01:40,240 Speaker 1: really going towards the consumer business, which was UM an 31 00:01:40,280 --> 00:01:45,000 Speaker 1: effort that they initiative they did several years ago. I 32 00:01:45,000 --> 00:01:47,680 Speaker 1: would say that, UM, you know, there was a lot 33 00:01:47,720 --> 00:01:52,559 Speaker 1: of skepticism, including myself, around the offering and the competitive um, 34 00:01:52,600 --> 00:01:56,600 Speaker 1: you know, the company's competitive advantage there really didn't seem 35 00:01:56,600 --> 00:01:58,320 Speaker 1: to make sense. That I think they are pulling back 36 00:01:58,360 --> 00:02:01,880 Speaker 1: and just refocusing that effort. Keep in mind, a lot 37 00:02:01,880 --> 00:02:04,360 Speaker 1: of the head count increases they've seen this year have 38 00:02:04,520 --> 00:02:08,600 Speaker 1: come from acquisitions, so scaling back and right sizing some businesses. 39 00:02:08,680 --> 00:02:13,040 Speaker 1: But on the investment banking side, this is something that UM, 40 00:02:13,080 --> 00:02:15,520 Speaker 1: you know, we're closely watching in the first quarter. The 41 00:02:15,560 --> 00:02:19,080 Speaker 1: pipelines were good all last year, UM, but we feel 42 00:02:19,080 --> 00:02:24,160 Speaker 1: like they're becoming a bit scale and across the industry Union, yes, 43 00:02:24,240 --> 00:02:27,639 Speaker 1: across the industry, UM and for Goldman SAX as well well. 44 00:02:27,639 --> 00:02:30,480 Speaker 1: But this is the thing, Alison, because so most of 45 00:02:30,480 --> 00:02:33,160 Speaker 1: the job cuts are going to be at basically Marcus, 46 00:02:33,240 --> 00:02:36,200 Speaker 1: the consumer facing division that they seem to have decided 47 00:02:36,480 --> 00:02:39,840 Speaker 1: that wasn't a great idea and now they're scaling back, UM, 48 00:02:39,919 --> 00:02:44,520 Speaker 1: and the other cuts that are coming and trading investment banking, Okay, 49 00:02:44,560 --> 00:02:46,800 Speaker 1: they haven't done that for a few years, right, And 50 00:02:46,840 --> 00:02:50,600 Speaker 1: they hired they've hired so many people. So this to 51 00:02:50,680 --> 00:02:54,880 Speaker 1: me isn't a sign that Wall Street is massively right sizing. 52 00:02:55,080 --> 00:02:57,320 Speaker 1: More like Goldman SACS is just getting back to business 53 00:02:57,320 --> 00:02:59,120 Speaker 1: as usual and taking care of some stuff they had 54 00:02:59,120 --> 00:03:02,000 Speaker 1: to do last year and didn't get around too well. 55 00:03:02,040 --> 00:03:03,560 Speaker 1: I do think, I mean, I don't think it's a 56 00:03:03,639 --> 00:03:07,360 Speaker 1: massive right sizing. I think that you know, as they said, 57 00:03:07,400 --> 00:03:09,800 Speaker 1: they haven't done their sort of typical five percent and 58 00:03:09,840 --> 00:03:12,280 Speaker 1: so that's coming back. And so if you you know, 59 00:03:12,360 --> 00:03:15,320 Speaker 1: look at the maths and you x out the market stuff. 60 00:03:15,400 --> 00:03:18,480 Speaker 1: It is the typical and so I think what's going 61 00:03:18,520 --> 00:03:21,919 Speaker 1: to be interesting is what's going to happen with compensation 62 00:03:22,080 --> 00:03:25,880 Speaker 1: at at Goldman and the firms, as well as head count. 63 00:03:25,960 --> 00:03:29,440 Speaker 1: Because what we had heard from Solomon UM, you know, 64 00:03:29,520 --> 00:03:33,080 Speaker 1: even just a month ago, I believe UM, is that 65 00:03:33,160 --> 00:03:36,320 Speaker 1: the cost to compete had not come down as much 66 00:03:36,320 --> 00:03:39,320 Speaker 1: as they would have thought. Daniel Pinto, who runs the 67 00:03:39,760 --> 00:03:44,120 Speaker 1: JP Morgan's Corporate and Investment bank, also said that they 68 00:03:44,160 --> 00:03:46,320 Speaker 1: were going to use comp as a lover rather than 69 00:03:47,880 --> 00:03:51,600 Speaker 1: so we will see UM, you know what the interplay 70 00:03:51,720 --> 00:03:54,440 Speaker 1: is between those two things. We do think that cost 71 00:03:54,480 --> 00:03:58,240 Speaker 1: pressure continues into next year, and that's the big variable 72 00:03:58,280 --> 00:04:01,800 Speaker 1: that we're here about during earnings because we can track 73 00:04:01,840 --> 00:04:04,920 Speaker 1: a lot of things. UM. We can track that equity 74 00:04:05,000 --> 00:04:07,920 Speaker 1: underwritings are down significantly, we can track that pick is 75 00:04:07,960 --> 00:04:12,920 Speaker 1: good and equities UM less so UM, but expenses really 76 00:04:12,960 --> 00:04:16,000 Speaker 1: involved management judgment in terms of the level of investments 77 00:04:16,000 --> 00:04:20,840 Speaker 1: that they're making, and that's really going to determine give 78 00:04:20,920 --> 00:04:23,039 Speaker 1: us a signal in terms of what they think about 79 00:04:23,040 --> 00:04:27,520 Speaker 1: ahead and also the profitability for the coming year. So 80 00:04:27,839 --> 00:04:30,400 Speaker 1: I want to switch gears a little bit. Shinali Um 81 00:04:30,520 --> 00:04:34,920 Speaker 1: John Pruzen, CEO of Morgan Stanley, one of the leaders, 82 00:04:34,920 --> 00:04:38,080 Speaker 1: one of the potential successors to Mr Gorman as CEO. 83 00:04:38,720 --> 00:04:41,280 Speaker 1: How being given piece of news is for Morgan Stanley. 84 00:04:41,520 --> 00:04:44,880 Speaker 1: Listen for Morgan Stanley and a standalone person story. It 85 00:04:44,960 --> 00:04:48,200 Speaker 1: is a huge story. On one hand, Jonathan Pruzin was 86 00:04:48,240 --> 00:04:50,800 Speaker 1: a CFO typically a spot of Morgan Stanley that has 87 00:04:50,839 --> 00:04:53,240 Speaker 1: gone on to great heights in corporate America. I think 88 00:04:53,320 --> 00:04:56,560 Speaker 1: roots pour at over an alphabet now formerly that same 89 00:04:56,560 --> 00:04:59,840 Speaker 1: spot as Jonathan Pruzenn. But also you know this is 90 00:05:00,000 --> 00:05:03,039 Speaker 1: a deputy to James Gorman for decades. Really he was 91 00:05:03,080 --> 00:05:05,120 Speaker 1: a key figure in two and eight. He was a 92 00:05:05,240 --> 00:05:07,359 Speaker 1: key figure when you think about the last couple of 93 00:05:07,440 --> 00:05:11,240 Speaker 1: years and the massive deals they've done. There, Uh, new 94 00:05:11,240 --> 00:05:13,520 Speaker 1: things for him ahead, I'm certain, But I would also 95 00:05:13,520 --> 00:05:17,560 Speaker 1: say I'm kind of a bigger macro picture here. Executive 96 00:05:17,640 --> 00:05:19,880 Speaker 1: comp not just comp at every level of the bank. 97 00:05:20,480 --> 00:05:22,760 Speaker 1: These banks, the CEO has made thirty or thirty five 98 00:05:22,760 --> 00:05:26,440 Speaker 1: million dollars last year in terms of their total compensation package. 99 00:05:26,600 --> 00:05:30,600 Speaker 1: It was sweet for them. There was some record, seriously 100 00:05:31,000 --> 00:05:33,960 Speaker 1: record record numbers here. So then do you start to 101 00:05:34,000 --> 00:05:36,000 Speaker 1: have that come down and then does the pay for 102 00:05:36,080 --> 00:05:38,559 Speaker 1: talent at the top ends of all these banks start 103 00:05:38,600 --> 00:05:41,160 Speaker 1: to get into a tougher space. There's some jobs that 104 00:05:41,200 --> 00:05:43,919 Speaker 1: are open when you think about the buy side president rolls, 105 00:05:44,040 --> 00:05:46,000 Speaker 1: CEO roles, when you think about even some of the 106 00:05:46,080 --> 00:05:48,960 Speaker 1: largest private equity friends in the world, and so there's 107 00:05:49,000 --> 00:05:51,760 Speaker 1: a lot of opportunities still out there for the talent 108 00:05:51,839 --> 00:05:55,960 Speaker 1: at the top. If you think about folks like Jonathan Bruzian, 109 00:05:56,880 --> 00:05:58,880 Speaker 1: I wonder what the remember the stories we had and 110 00:05:58,920 --> 00:06:02,240 Speaker 1: Alsie you might know this. Are they still have a 111 00:06:02,240 --> 00:06:04,280 Speaker 1: war for talent out there? Do you think are those 112 00:06:04,360 --> 00:06:09,200 Speaker 1: days over? I think there is still competition for talent 113 00:06:09,760 --> 00:06:13,159 Speaker 1: um as I said, I think Daniel Pinto, who runs 114 00:06:13,240 --> 00:06:16,640 Speaker 1: JP workins i'd be um you said that they're taking 115 00:06:16,640 --> 00:06:19,880 Speaker 1: the opportunity to pick up some talent. A lot of 116 00:06:19,920 --> 00:06:24,039 Speaker 1: the M and A boutiques are also still hiring. So 117 00:06:24,520 --> 00:06:29,560 Speaker 1: I think within certain businesses and for certain areas, it 118 00:06:29,720 --> 00:06:34,000 Speaker 1: still is competitive. And so again we're going to look 119 00:06:34,040 --> 00:06:37,040 Speaker 1: to see what the extents are of this cuts where 120 00:06:37,080 --> 00:06:40,719 Speaker 1: they're coming from. It does seem like with today's number 121 00:06:40,960 --> 00:06:44,880 Speaker 1: there perhaps less than um initially appeared. I think the 122 00:06:44,920 --> 00:06:48,359 Speaker 1: initial reporting was four thousand jobs and then even to 123 00:06:48,480 --> 00:06:53,120 Speaker 1: produce thirty two hundred of that a fair amount relates 124 00:06:53,240 --> 00:06:56,520 Speaker 1: to the consumer business. All right, guys, thanks so much 125 00:06:56,600 --> 00:07:00,400 Speaker 1: breaking that down. Good stuff and assignment do tell me 126 00:07:01,000 --> 00:07:04,760 Speaker 1: so citadel Is building apparently a gigantic new tower. Here, 127 00:07:05,080 --> 00:07:09,280 Speaker 1: get a tent and sleep outside. Who's gonna work there? 128 00:07:09,440 --> 00:07:11,760 Speaker 1: Like people kind of work for Cann Griffin maybe the 129 00:07:11,840 --> 00:07:15,480 Speaker 1: last year or two. But from home, right, don't or 130 00:07:15,520 --> 00:07:17,880 Speaker 1: from Palm Beach or from Miami wherever. Alison Williams, senior 131 00:07:17,880 --> 00:07:20,480 Speaker 1: bank analyst for Bloomberg Intelligence, joining us on the phone. 132 00:07:20,480 --> 00:07:22,960 Speaker 1: And Chinaldi Bastak, she's our Wall Street reporter joining us 133 00:07:22,960 --> 00:07:25,400 Speaker 1: here in a Bloomberg Interactive broker studio. Lots of news 134 00:07:25,400 --> 00:07:28,320 Speaker 1: crossing the tape regarding some of the Wall Street giants 135 00:07:32,360 --> 00:07:38,040 Speaker 1: cement Bloomberg Business Week. This week they highlight the fifty 136 00:07:38,360 --> 00:07:42,200 Speaker 1: stocks to watch in twenty fifty companies to watch in 137 00:07:43,120 --> 00:07:46,240 Speaker 1: three and this is a list of stocks selected by 138 00:07:46,280 --> 00:07:49,520 Speaker 1: the annalysts and Bloomberg Intelligence. Uh So, some really interesting 139 00:07:49,600 --> 00:07:52,480 Speaker 1: names across a variety of industries on a global scale. 140 00:07:53,080 --> 00:07:54,840 Speaker 1: So why don't we start off taking a look at 141 00:07:54,840 --> 00:07:57,680 Speaker 1: the tech sector with some of the names that they 142 00:07:57,720 --> 00:07:59,120 Speaker 1: put on the list that we can do that with 143 00:07:59,120 --> 00:08:03,680 Speaker 1: Bloomberg Intelligence senior tech analysts on a rock Rana and 144 00:08:03,920 --> 00:08:06,320 Speaker 1: Man Deep Sync Men Deep Singh is here in our 145 00:08:06,320 --> 00:08:11,560 Speaker 1: Bloomberg Naractor broker studio via zoom from somewhere. I'm calling 146 00:08:11,560 --> 00:08:14,400 Speaker 1: it in. Yeah, because it's Monday. You don't come to 147 00:08:14,440 --> 00:08:16,440 Speaker 1: the office on Monday. There's got a special thing going on. 148 00:08:16,480 --> 00:08:19,000 Speaker 1: He's got a special thing. Um Man Deep, Let's start 149 00:08:19,040 --> 00:08:21,520 Speaker 1: with you, you know, I know you and ONORAG and 150 00:08:21,560 --> 00:08:23,960 Speaker 1: the tech team of Blueberg Intelligence kind of look at 151 00:08:24,000 --> 00:08:28,880 Speaker 1: tech holistically. Let's start right there. How is tech looking 152 00:08:28,920 --> 00:08:32,520 Speaker 1: in terms of spending, in terms of trends in three 153 00:08:32,600 --> 00:08:35,719 Speaker 1: and what maybe somewhat of a recession year. Look, I 154 00:08:36,200 --> 00:08:39,800 Speaker 1: think the high level trends are cloud is still a 155 00:08:39,880 --> 00:08:43,440 Speaker 1: secular driver and more so on the infrastructure side. Thinks, 156 00:08:43,960 --> 00:08:46,880 Speaker 1: uh still look pretty good. Although a lot of the 157 00:08:46,920 --> 00:08:50,880 Speaker 1: cybersecurity companies, which so far as a segment that did 158 00:08:50,920 --> 00:08:54,480 Speaker 1: particularly well. I mean, everyone is concerned about cybertites. They 159 00:08:54,520 --> 00:08:58,320 Speaker 1: called longer sales cycles. So this is the first time 160 00:08:58,320 --> 00:09:01,000 Speaker 1: they started talking about it. That just goes to show 161 00:09:01,040 --> 00:09:04,520 Speaker 1: that I T spending will likely decelerate this year. It's 162 00:09:04,559 --> 00:09:07,320 Speaker 1: a given question is by how much, and we think 163 00:09:07,400 --> 00:09:10,400 Speaker 1: it will be more. The effects will be more pronounced 164 00:09:10,400 --> 00:09:13,240 Speaker 1: on the application side than the infrastructure side. So that's 165 00:09:13,320 --> 00:09:18,239 Speaker 1: one trend on the decelerating tech spend. It's so fascinating, 166 00:09:18,320 --> 00:09:22,520 Speaker 1: especially in the wake of the Southwest Um what we 167 00:09:22,600 --> 00:09:25,600 Speaker 1: what do we even call that fiasco? Right? They canceled 168 00:09:26,080 --> 00:09:29,120 Speaker 1: tens of thousands of flights because they didn't invest enough 169 00:09:29,160 --> 00:09:32,679 Speaker 1: in i T. They regret it and now have to 170 00:09:32,760 --> 00:09:34,880 Speaker 1: ramp up spending. Is everyone else going to be in 171 00:09:34,880 --> 00:09:37,720 Speaker 1: the same situation at the end of yes? And look, 172 00:09:37,760 --> 00:09:40,560 Speaker 1: there are certain sectors that are doing very well. I 173 00:09:40,559 --> 00:09:44,560 Speaker 1: mean energy sector prime example. They are at peak profitability, 174 00:09:44,679 --> 00:09:46,640 Speaker 1: they can afford to spend on a lot of these 175 00:09:46,679 --> 00:09:50,840 Speaker 1: digital transformation initiatives. And the other one being AD sector 176 00:09:50,920 --> 00:09:53,240 Speaker 1: on the other end of the spectrum. Right, all the 177 00:09:53,280 --> 00:09:57,160 Speaker 1: digital AD companies right now are cutting costs, their link 178 00:09:57,160 --> 00:10:00,440 Speaker 1: of employees and so it just goes to show that 179 00:10:00,559 --> 00:10:03,640 Speaker 1: every sector and market is different right now, and there 180 00:10:03,679 --> 00:10:07,760 Speaker 1: are some end markets that will continue to spend on 181 00:10:07,760 --> 00:10:10,640 Speaker 1: i T transformation and others have to pull back because 182 00:10:10,679 --> 00:10:13,079 Speaker 1: their core business isn't doing well. The one other trend 183 00:10:13,080 --> 00:10:16,200 Speaker 1: I would call out is digital ad spending will remain 184 00:10:16,280 --> 00:10:19,319 Speaker 1: weak and and that's where the likes of Meta and Alphabet. 185 00:10:19,840 --> 00:10:23,040 Speaker 1: There is no easy way out because companies find SILS 186 00:10:23,080 --> 00:10:25,440 Speaker 1: and marketing spend to be the easy one to pull 187 00:10:25,480 --> 00:10:27,840 Speaker 1: back on in times like these, and and that will 188 00:10:27,880 --> 00:10:31,760 Speaker 1: continue to hurt these companies. I know you spent you know, 189 00:10:31,920 --> 00:10:34,600 Speaker 1: most of your career focusing on software. What are some 190 00:10:34,760 --> 00:10:36,600 Speaker 1: what's the software named that we should be paying attention 191 00:10:36,640 --> 00:10:39,480 Speaker 1: to going forward? But I actually cheated and I went 192 00:10:39,520 --> 00:10:42,000 Speaker 1: ahead and looked in you did the Business Week? So 193 00:10:42,040 --> 00:10:44,760 Speaker 1: I know that Honora is writing about Microsoft, and what 194 00:10:44,920 --> 00:10:48,240 Speaker 1: he's saying runs pretty much counter what man Deep just 195 00:10:48,320 --> 00:10:51,400 Speaker 1: told us. Right, he starts out a recovery and spending 196 00:10:51,400 --> 00:10:54,439 Speaker 1: on cloud computing after a slowdown could spur surprises to 197 00:10:54,480 --> 00:10:59,160 Speaker 1: the upside. So while we're worried about, for man Deep's perspective, 198 00:10:59,240 --> 00:11:02,040 Speaker 1: crowd strike and it was a worry in two right 199 00:11:02,080 --> 00:11:03,640 Speaker 1: at the end of the year as well, you think 200 00:11:03,640 --> 00:11:05,760 Speaker 1: that there's going to be a recovery for a company 201 00:11:05,800 --> 00:11:09,280 Speaker 1: like Microsoft and the cloud operators. Yeah, I know I 202 00:11:09,360 --> 00:11:12,200 Speaker 1: did not have to go opposite DIP. I actually agree 203 00:11:12,200 --> 00:11:18,520 Speaker 1: with him heartedly that within technology, within software infrastructure area 204 00:11:18,760 --> 00:11:22,000 Speaker 1: is going to be far better than the application area. 205 00:11:22,559 --> 00:11:25,199 Speaker 1: And as far as Microsoft is concerned, you know, I 206 00:11:25,520 --> 00:11:27,760 Speaker 1: think over the next few quarters, I would say in 207 00:11:27,760 --> 00:11:30,199 Speaker 1: the next two to three quarters, they will see a 208 00:11:30,280 --> 00:11:33,880 Speaker 1: slow down in their club growth UM. But by the 209 00:11:34,000 --> 00:11:37,880 Speaker 1: end of this year, we do expect a rebound, partially 210 00:11:37,920 --> 00:11:41,720 Speaker 1: because of under investing in some of these areas, a 211 00:11:41,800 --> 00:11:45,520 Speaker 1: lower capex going into this year, as well as the 212 00:11:45,840 --> 00:11:48,559 Speaker 1: easier comparison. You know, cloud is one trend that is 213 00:11:48,600 --> 00:11:51,720 Speaker 1: not going anywhere. It's just a matter of respective growth rates. 214 00:11:52,080 --> 00:11:54,240 Speaker 1: For so for something that was growing in this case 215 00:11:54,320 --> 00:11:57,320 Speaker 1: for Microsoft as I was growing in the low forty 216 00:11:57,360 --> 00:12:00,480 Speaker 1: percent range, No, there is no logical there's a reason 217 00:12:00,520 --> 00:12:04,920 Speaker 1: why it shouldn't grow in the range next year, um, 218 00:12:04,960 --> 00:12:07,880 Speaker 1: even after accounting for the slowdown. I mean, I totally 219 00:12:07,920 --> 00:12:12,160 Speaker 1: get that, and I understand why more businesses would want 220 00:12:12,200 --> 00:12:14,319 Speaker 1: to move to the cloud or move more of their 221 00:12:14,360 --> 00:12:17,160 Speaker 1: business to the cloud. But if I'm moving more stuff 222 00:12:17,200 --> 00:12:20,440 Speaker 1: to the cloud, then I'm calling up crowd strike. I 223 00:12:20,480 --> 00:12:23,920 Speaker 1: need more security in that in that case, right, you 224 00:12:24,040 --> 00:12:28,240 Speaker 1: certainly go ahead, and right, I mean it's it's man 225 00:12:28,240 --> 00:12:30,200 Speaker 1: deep stock, So man deep, what do you I mean 226 00:12:31,720 --> 00:12:35,319 Speaker 1: is cybersecurity spending not gonna lift back up in three 227 00:12:35,440 --> 00:12:37,480 Speaker 1: or do you just think crowd Strike takes a bigger 228 00:12:37,520 --> 00:12:41,480 Speaker 1: piece of a smaller pie. Yes, And there is a 229 00:12:41,520 --> 00:12:45,760 Speaker 1: definite trend towards consolidation because cyber security is one market 230 00:12:45,840 --> 00:12:49,320 Speaker 1: that's extremely fragmented. You have hundreds of vendors and you 231 00:12:49,320 --> 00:12:51,600 Speaker 1: can take a look at how many vendors have revenue 232 00:12:51,640 --> 00:12:55,280 Speaker 1: over ten billion dollars in cybersecurity none pal Alto is 233 00:12:55,320 --> 00:12:58,360 Speaker 1: the largest vendor close to eight billions. So it just 234 00:12:58,400 --> 00:13:01,559 Speaker 1: goes to show that there aren't need pure play cybersecurity 235 00:13:01,559 --> 00:13:04,880 Speaker 1: companies with scale, and that is where there will be 236 00:13:04,920 --> 00:13:08,040 Speaker 1: a trend towards consolidation. We think CrowdStrike is a name 237 00:13:08,080 --> 00:13:11,240 Speaker 1: that will be a consolidator and whether it's through M 238 00:13:11,320 --> 00:13:14,560 Speaker 1: and A or them expanding uh, you know, organically their 239 00:13:14,600 --> 00:13:17,840 Speaker 1: product suite, which they are. Companies don't want to deal 240 00:13:17,880 --> 00:13:20,959 Speaker 1: with fifty hundreds of vendors when it comes to managing 241 00:13:20,960 --> 00:13:24,000 Speaker 1: cybersecurity because who do you pinpoint too if you get hacked, 242 00:13:24,320 --> 00:13:27,120 Speaker 1: and so that is the risk they want to um, 243 00:13:27,160 --> 00:13:29,720 Speaker 1: you know, deal with in terms of just dealing with 244 00:13:29,840 --> 00:13:32,360 Speaker 1: let's say five or ten vendors on the cybersecurity side, 245 00:13:32,400 --> 00:13:36,120 Speaker 1: and that's where scale matters, and we think cybersecurity CrowdStrike 246 00:13:36,200 --> 00:13:38,559 Speaker 1: is a good place. And you think they're looking at 247 00:13:38,920 --> 00:13:43,959 Speaker 1: thirty eight percent increase in revenue this year two billion 248 00:13:44,640 --> 00:13:47,880 Speaker 1: estimates have come down now it's more close to low thirties. 249 00:13:47,960 --> 00:13:51,720 Speaker 1: So since the time you wrote it, I mean, things 250 00:13:51,720 --> 00:13:53,439 Speaker 1: have come And that's what I mean by I t 251 00:13:53,640 --> 00:13:57,240 Speaker 1: spending will slow down. It's a given every company is 252 00:13:57,240 --> 00:13:59,760 Speaker 1: pulling back. But it's interesting to put this in context. 253 00:14:00,440 --> 00:14:02,760 Speaker 1: Even if they grow thirty percent to just under two 254 00:14:02,800 --> 00:14:07,000 Speaker 1: billion dollars um, Microsoft is only going to grow ten 255 00:14:07,080 --> 00:14:10,520 Speaker 1: percent on a rag to just over two hundred billion 256 00:14:10,520 --> 00:14:14,000 Speaker 1: dollars in sales. It's a gigantic I mean, that's the 257 00:14:14,040 --> 00:14:17,640 Speaker 1: difference when you talk about it, uh market, a market 258 00:14:17,679 --> 00:14:20,480 Speaker 1: with without anybody having scale, and then a market where 259 00:14:20,520 --> 00:14:22,880 Speaker 1: you've got like a duopoly basic and let me let 260 00:14:22,920 --> 00:14:25,760 Speaker 1: me tie in guys On and Mandy. We've been talking 261 00:14:25,800 --> 00:14:29,480 Speaker 1: dividends all morning, So on AAG, I'm looking at Microsoft. 262 00:14:29,480 --> 00:14:33,000 Speaker 1: It's got a one point one eight percent dividend yield. 263 00:14:33,920 --> 00:14:35,680 Speaker 1: Can you tell them to set that up a little 264 00:14:35,720 --> 00:14:39,000 Speaker 1: bit um? I think, Paul, I'm going to say the 265 00:14:39,000 --> 00:14:41,000 Speaker 1: same exact thing I said about Apple. I would rather 266 00:14:41,040 --> 00:14:44,480 Speaker 1: be buy back more shares at this point, because you 267 00:14:44,480 --> 00:14:47,560 Speaker 1: know that really does help the bottom line far more 268 00:14:47,640 --> 00:14:50,560 Speaker 1: than the dividend area. Um, they have it as a 269 00:14:50,600 --> 00:14:53,360 Speaker 1: token and that's fine, but but I really want to 270 00:14:53,360 --> 00:14:56,440 Speaker 1: see some far more buybacks going into this year by 271 00:14:56,480 --> 00:14:59,080 Speaker 1: all tech company. These tech guys, they just they're just 272 00:15:00,320 --> 00:15:03,520 Speaker 1: they just can't stand dividends. Dudend is sacred. Once you 273 00:15:03,560 --> 00:15:06,680 Speaker 1: start getting dividends, you can't look it back. So you know, 274 00:15:07,880 --> 00:15:11,120 Speaker 1: you look at BP, right, they cut their dividend. Another despise, 275 00:15:11,400 --> 00:15:14,440 Speaker 1: Man Deep, thirty seconds. Meta you mentioned it's kind of 276 00:15:14,560 --> 00:15:17,040 Speaker 1: a negative caveat, but it's one of the names you've got. Yes, 277 00:15:17,120 --> 00:15:21,040 Speaker 1: so gross margin pressure. Look, if you're growing at low 278 00:15:21,080 --> 00:15:24,640 Speaker 1: single digit and inflation is six seven, you've got a problem. 279 00:15:24,760 --> 00:15:27,480 Speaker 1: And that is where Meta has a growth problem. Also, 280 00:15:27,640 --> 00:15:30,400 Speaker 1: Apple's privacy issues and you know they have to pay, 281 00:15:30,560 --> 00:15:32,520 Speaker 1: so you think there's more risk to the Meta store. 282 00:15:32,560 --> 00:15:35,360 Speaker 1: There is more, alright, good stuff. Men Deep singh uh 283 00:15:35,520 --> 00:15:38,680 Speaker 1: he and Anorack Randa. They are senior technology analysts for 284 00:15:38,760 --> 00:15:41,520 Speaker 1: Bloomberg Intelligence. Men Deep joining us here in a Bloomberg 285 00:15:41,520 --> 00:15:44,560 Speaker 1: Interactive Broker studio and on a rock villa zoom talking 286 00:15:44,600 --> 00:15:47,160 Speaker 1: about some of the tech names to pay attention to 287 00:15:47,760 --> 00:15:50,880 Speaker 1: uh in And it's all part of the fifty companies 288 00:15:50,920 --> 00:15:54,080 Speaker 1: to watch Peace in Bloomberg Business Week that is on 289 00:15:54,600 --> 00:15:57,000 Speaker 1: stands right now, and it's on the dot com think 290 00:15:57,080 --> 00:16:01,760 Speaker 1: the intro web. You can get that. There be those 291 00:16:01,840 --> 00:16:05,400 Speaker 1: we all know. Now there's nowhere to hide. Stocks down, 292 00:16:06,160 --> 00:16:10,360 Speaker 1: bonds down double digits. Now it's a question, I guess three, 293 00:16:10,720 --> 00:16:13,440 Speaker 1: what's the FED do? Of course, how much earnings risk 294 00:16:13,600 --> 00:16:16,720 Speaker 1: is they're out there? How do you play this market 295 00:16:16,760 --> 00:16:19,920 Speaker 1: here early in the year. Let's check in with a professional, 296 00:16:20,000 --> 00:16:23,120 Speaker 1: David Boonson. He's a c I O at the Bonson Group. 297 00:16:23,640 --> 00:16:26,800 Speaker 1: So David, I mean and the dividends guy also, and 298 00:16:26,880 --> 00:16:29,280 Speaker 1: the dividends guy. We love the dividend story. David, how 299 00:16:29,320 --> 00:16:34,160 Speaker 1: do you how are you positioning yourself here? Your clients here. 300 00:16:35,680 --> 00:16:38,080 Speaker 1: You'll be shocked to know we're positioning them in dividend 301 00:16:38,120 --> 00:16:41,840 Speaker 1: growth equities, which is the same same place they were 302 00:16:41,920 --> 00:16:44,840 Speaker 1: positioned in two And I will say when we say 303 00:16:44,880 --> 00:16:47,280 Speaker 1: there was no place to hide last year. Our dividend 304 00:16:47,280 --> 00:16:50,640 Speaker 1: equity portfolio was up five percent last year, about twenty 305 00:16:50,720 --> 00:16:54,720 Speaker 1: five points better than SMP. Now, look, energy was gonna 306 00:16:54,760 --> 00:16:57,160 Speaker 1: say how much energy did you hold? There? We were 307 00:16:57,200 --> 00:16:59,600 Speaker 1: at fourteen percent and the index started off the year 308 00:16:59,640 --> 00:17:02,040 Speaker 1: at three percent, so it would have been pretty impossible 309 00:17:02,120 --> 00:17:04,440 Speaker 1: not to outperform. And you know, a bigger factor than 310 00:17:04,520 --> 00:17:08,480 Speaker 1: owning energy was not owning thing. And and when you're 311 00:17:08,520 --> 00:17:11,800 Speaker 1: in a cap weighted index like the SEP and five 312 00:17:11,920 --> 00:17:15,440 Speaker 1: stocks make up about of the index, that you're going 313 00:17:15,520 --> 00:17:19,560 Speaker 1: to um, sink or swim on those five stocks oftentimes. 314 00:17:19,560 --> 00:17:24,080 Speaker 1: But I just think philosophically that dividend growth represents a 315 00:17:24,160 --> 00:17:27,919 Speaker 1: really good risk adjusted solution to the problems people are 316 00:17:27,960 --> 00:17:31,280 Speaker 1: most concerned about, and the change David, I mean, M 317 00:17:31,480 --> 00:17:34,159 Speaker 1: Paul and Tom were just talking to Jeremy Schwartz and 318 00:17:34,160 --> 00:17:38,240 Speaker 1: Wisdom Tree and also talking about Jeremy Siegel's call that 319 00:17:38,800 --> 00:17:41,800 Speaker 1: this decade, in their opinion, is going to be the 320 00:17:41,840 --> 00:17:44,760 Speaker 1: dividend decade of the dividend. Do you agree that that 321 00:17:44,760 --> 00:17:48,840 Speaker 1: that investors are moving to that? Yes, I do, And 322 00:17:48,880 --> 00:17:52,320 Speaker 1: I think that the reasoning for that is both the 323 00:17:52,359 --> 00:17:56,120 Speaker 1: primacy of cash flow that people desperately need, the growth 324 00:17:56,200 --> 00:18:00,720 Speaker 1: of that cash flow outperforming inflation, but all the higher 325 00:18:00,800 --> 00:18:03,879 Speaker 1: quality of the underlying companies. If a company is able 326 00:18:03,920 --> 00:18:07,040 Speaker 1: to sustainably grow its dividend, it means it has the 327 00:18:07,119 --> 00:18:09,280 Speaker 1: free cash flow to do it. It means it has 328 00:18:09,320 --> 00:18:12,840 Speaker 1: a business model that is less cyclical and less lumpy, 329 00:18:13,400 --> 00:18:17,240 Speaker 1: less dependent on future technological innovation. So we kind of 330 00:18:17,240 --> 00:18:20,720 Speaker 1: refer to it as shorter duration stocks to use a 331 00:18:20,760 --> 00:18:24,440 Speaker 1: bond analogy. Do you miss out though, on the kind 332 00:18:24,480 --> 00:18:27,359 Speaker 1: of fan growth Because even though last year was horrible 333 00:18:27,800 --> 00:18:30,720 Speaker 1: for those big Tex stocks, Um, you know, if you'd 334 00:18:30,760 --> 00:18:33,480 Speaker 1: invested in them in two thousand ten, two thousand eleven, 335 00:18:33,480 --> 00:18:36,719 Speaker 1: two thousand twelve, you would be You wouldn't really regret it, 336 00:18:36,720 --> 00:18:41,480 Speaker 1: would you. Well, here's the thing, Um, we believe that 337 00:18:41,840 --> 00:18:47,320 Speaker 1: in twenty you had the golden era of those growth 338 00:18:47,359 --> 00:18:51,240 Speaker 1: type stocks saying etcetera. And in that decade there were 339 00:18:51,280 --> 00:18:54,000 Speaker 1: five years that we outperformed the SMP with dividend growth, 340 00:18:54,000 --> 00:18:56,680 Speaker 1: in five years we didn't. And when all was said 341 00:18:56,680 --> 00:18:58,480 Speaker 1: and done, for the decade it was neck and neck 342 00:18:58,600 --> 00:19:03,000 Speaker 1: with much less volatility and quadruple the cash flow. So 343 00:19:03,160 --> 00:19:05,480 Speaker 1: even in a golden era of thing, I think divin 344 00:19:05,520 --> 00:19:07,800 Speaker 1: growth is done very well. But I don't think the 345 00:19:07,880 --> 00:19:11,000 Speaker 1: last decade is a great example, because yes, Netflix at 346 00:19:11,000 --> 00:19:13,120 Speaker 1: one point went up ten times, and we know about 347 00:19:13,160 --> 00:19:15,879 Speaker 1: Apple and Facebook, but the reality is that you have 348 00:19:16,040 --> 00:19:19,040 Speaker 1: the FED at the zero bound the entire decade. Basically, 349 00:19:19,320 --> 00:19:22,800 Speaker 1: that's not going to happen again. That pushed multiple expansion 350 00:19:22,920 --> 00:19:26,880 Speaker 1: up and it created seven of the return. You're not 351 00:19:27,119 --> 00:19:31,000 Speaker 1: going to get that multiple expansion again. David, you said 352 00:19:31,000 --> 00:19:34,359 Speaker 1: your long overweight energy, it had a great two years. 353 00:19:34,359 --> 00:19:38,000 Speaker 1: I guess did I miss that trade? Where do you 354 00:19:38,000 --> 00:19:40,760 Speaker 1: have about twenty three? You know what I would really 355 00:19:40,760 --> 00:19:44,120 Speaker 1: recommend people look at as the mid stream side where um, 356 00:19:44,440 --> 00:19:46,280 Speaker 1: you know, look, Exon and Chevron are not going to 357 00:19:46,320 --> 00:19:48,480 Speaker 1: repeat the same returns they had last year. We're not 358 00:19:48,560 --> 00:19:50,960 Speaker 1: selling those type of names that we've trimmed them down 359 00:19:50,960 --> 00:19:54,480 Speaker 1: to target weight, made extraordinary profits, and we just keep 360 00:19:54,520 --> 00:19:56,479 Speaker 1: them at the way we want in the portfolio as 361 00:19:56,520 --> 00:20:00,400 Speaker 1: a risk management. But the mid stream, the pipeline, those 362 00:20:00,520 --> 00:20:03,520 Speaker 1: terminals that have to export l en G to UH 363 00:20:03,920 --> 00:20:07,879 Speaker 1: continents overseas that desperately need it. We like that story. 364 00:20:08,000 --> 00:20:11,760 Speaker 1: It's great capital discipline. Right now they finally have wonderful 365 00:20:12,280 --> 00:20:15,760 Speaker 1: debt ratios that are more responsible, and so I look 366 00:20:15,800 --> 00:20:18,240 Speaker 1: at mid stream energy is a really good spot right now. 367 00:20:18,520 --> 00:20:20,320 Speaker 1: What are the other names that you like. I mean, 368 00:20:21,080 --> 00:20:23,119 Speaker 1: what what gets you pumped when you wake up in 369 00:20:23,160 --> 00:20:26,199 Speaker 1: the morning in terms in terms of an actual you 370 00:20:26,240 --> 00:20:30,600 Speaker 1: know stock pitch. Well, look right now black Stone as 371 00:20:30,640 --> 00:20:32,720 Speaker 1: an asset manager, and I want to be queer because 372 00:20:32,720 --> 00:20:34,719 Speaker 1: it comes up all the time. We're talking about black Stone, 373 00:20:34,760 --> 00:20:38,160 Speaker 1: not black Rock, but black Stone UM was really hit 374 00:20:38,200 --> 00:20:40,960 Speaker 1: hard near the end of last year. We've owned it 375 00:20:41,000 --> 00:20:43,840 Speaker 1: for over ten years and we believe that they have 376 00:20:44,160 --> 00:20:48,480 Speaker 1: very repeatable dividend growth UM. But you get to enter 377 00:20:48,600 --> 00:20:52,280 Speaker 1: right now over a six percent yield and there's not 378 00:20:52,400 --> 00:20:56,560 Speaker 1: balance sheet risk. They're investing other investors money, real estate, 379 00:20:56,640 --> 00:20:59,840 Speaker 1: credit and with great free cash flow. As a management 380 00:20:59,880 --> 00:21:02,720 Speaker 1: in to t so UM, we think the story is 381 00:21:02,760 --> 00:21:04,960 Speaker 1: to why Blackstone came down last year near the end 382 00:21:05,000 --> 00:21:08,040 Speaker 1: of the year is very very wrong. And in the meantime, 383 00:21:08,080 --> 00:21:10,280 Speaker 1: there's so much dry powder that if you do get 384 00:21:10,280 --> 00:21:13,800 Speaker 1: a deeper recession than some anticipate, it will actually end 385 00:21:13,840 --> 00:21:17,679 Speaker 1: up benefiting returns over time. So we like Blackstone, and 386 00:21:17,680 --> 00:21:19,600 Speaker 1: then I do get very excited when I waked up 387 00:21:20,320 --> 00:21:23,040 Speaker 1: about the mid stream energy story. We use u m I, 388 00:21:23,600 --> 00:21:26,919 Speaker 1: which is an actively managed e t F that is 389 00:21:26,920 --> 00:21:30,920 Speaker 1: buying just certain high quality pipeline type companies. Hey, David 390 00:21:30,960 --> 00:21:35,679 Speaker 1: is someone who focuses on dividends. Are you frustrated that 391 00:21:35,840 --> 00:21:40,680 Speaker 1: Apple only has a dividend like point seven percent? Yet 392 00:21:40,720 --> 00:21:43,560 Speaker 1: they've got jillions of dollars of cash on the balance sheet. 393 00:21:43,560 --> 00:21:45,120 Speaker 1: They throw off a billion dollars a year in free 394 00:21:45,119 --> 00:21:47,800 Speaker 1: cash flow. Are you disappointed or frustrated that they don't 395 00:21:47,800 --> 00:21:49,960 Speaker 1: pay a two or three or four percent dividend? All 396 00:21:50,040 --> 00:21:52,719 Speaker 1: is mad and he's trying to get a group together 397 00:21:52,800 --> 00:21:56,560 Speaker 1: for a letter writing campaign. Exactly, Well, a bunch of 398 00:21:56,640 --> 00:21:59,560 Speaker 1: us tried that. You know, sometime back after Mr Mr 399 00:22:00,200 --> 00:22:02,600 Speaker 1: passed away. There was a big effort and and iron 400 00:22:02,640 --> 00:22:04,600 Speaker 1: Horn and others were behind it. They did end up 401 00:22:04,640 --> 00:22:07,920 Speaker 1: starting to pay a dividend um. But the fact of 402 00:22:07,960 --> 00:22:09,960 Speaker 1: the matter is that it's why we can't own it. 403 00:22:10,000 --> 00:22:14,080 Speaker 1: We sold the stock near its highs um. And the 404 00:22:14,480 --> 00:22:16,600 Speaker 1: entire reason had nothing to do with we believe it's 405 00:22:16,600 --> 00:22:18,520 Speaker 1: going to come down in two thousand twenty two, or 406 00:22:18,640 --> 00:22:21,240 Speaker 1: we think the p is gonna end up contracting. It 407 00:22:21,320 --> 00:22:23,520 Speaker 1: was just simply that they were not, in our opinion, 408 00:22:23,560 --> 00:22:26,480 Speaker 1: respecting the shareholder enough by sharing that cash flow. And 409 00:22:26,480 --> 00:22:28,679 Speaker 1: people say, well, look, Apple was making more money with 410 00:22:28,760 --> 00:22:30,840 Speaker 1: your money than you were making with your money. And 411 00:22:30,880 --> 00:22:33,440 Speaker 1: that's very true, but it's always true until it isn't, 412 00:22:33,960 --> 00:22:36,560 Speaker 1: and then you end up buying Dr Dre's headphones company 413 00:22:36,600 --> 00:22:39,760 Speaker 1: for three billion dollars and setting money on you set 414 00:22:39,800 --> 00:22:42,439 Speaker 1: money on fire is what you do over time. And 415 00:22:42,520 --> 00:22:46,320 Speaker 1: so I think it's fine that Apple has continued with 416 00:22:46,320 --> 00:22:49,320 Speaker 1: a high priority innovation and it's a well run company, 417 00:22:49,359 --> 00:22:51,800 Speaker 1: but it grew through the trees and they didn't keep 418 00:22:51,840 --> 00:22:54,439 Speaker 1: the dividend up with it, and we want dividend growth 419 00:22:54,680 --> 00:22:57,159 Speaker 1: to match the growth of the company. What are some 420 00:22:57,200 --> 00:22:59,119 Speaker 1: of the other big dividend players that you like? I 421 00:22:59,119 --> 00:23:03,119 Speaker 1: mean six percent Blackstone is pretty juicy. That that's the 422 00:23:03,240 --> 00:23:04,800 Speaker 1: juicy one. And you know a lot of the consumer 423 00:23:04,880 --> 00:23:08,720 Speaker 1: staples companies last year, which are traditionally great dividend growers, 424 00:23:09,240 --> 00:23:10,960 Speaker 1: you had those that were up on the year. In 425 00:23:11,000 --> 00:23:13,760 Speaker 1: the food and beverage business. We own Pepsi and did 426 00:23:13,840 --> 00:23:16,679 Speaker 1: very well there. We don't own General Mills, but we 427 00:23:16,760 --> 00:23:19,280 Speaker 1: wish we had. But then you have companies that weren't 428 00:23:19,320 --> 00:23:22,199 Speaker 1: just pure food and beverage consumer staples that were more 429 00:23:22,240 --> 00:23:25,840 Speaker 1: into household products and hygiene as well. And company we 430 00:23:26,359 --> 00:23:28,639 Speaker 1: entered Core Rox we think at a really good entry 431 00:23:28,680 --> 00:23:31,680 Speaker 1: point after a dip last year, and proper Gamble, which 432 00:23:31,720 --> 00:23:34,280 Speaker 1: we've owned, I think for twenty years now, um is 433 00:23:34,280 --> 00:23:37,520 Speaker 1: one of the great dividend growers in American history. These 434 00:23:37,560 --> 00:23:42,640 Speaker 1: companies have a really good ability for stickiness with prices. 435 00:23:43,119 --> 00:23:47,320 Speaker 1: The inputs come down as inflation is clearly headed grower, 436 00:23:47,640 --> 00:23:50,160 Speaker 1: but the consumer and the pricing power of the company 437 00:23:50,280 --> 00:23:52,800 Speaker 1: is more than willing to still pay ten cents more 438 00:23:52,840 --> 00:23:56,480 Speaker 1: in twenty cents more for diapers and laundry detergent and 439 00:23:56,520 --> 00:23:59,080 Speaker 1: these types of products. So generally, we think you're gonna 440 00:23:59,119 --> 00:24:02,440 Speaker 1: get margin expand ampsin in consumer staples that you're not 441 00:24:02,520 --> 00:24:04,840 Speaker 1: going to get in a lot of other sectors. What's 442 00:24:04,880 --> 00:24:07,560 Speaker 1: a good growth number that you like. I'm looking across 443 00:24:08,160 --> 00:24:11,520 Speaker 1: you know, Procter and Gamble and Clorox are like six seven, 444 00:24:12,440 --> 00:24:17,639 Speaker 1: five year net growth. Black Stone is five year net growth. 445 00:24:18,160 --> 00:24:21,760 Speaker 1: Is that an incredibly impressive number? Are you referring to 446 00:24:21,760 --> 00:24:24,879 Speaker 1: the growth of the dividend itself? Yes, yo, yeah, no, 447 00:24:25,000 --> 00:24:27,000 Speaker 1: we want to see somewhere from six to ten. So 448 00:24:27,000 --> 00:24:29,760 Speaker 1: it's funny it's exactly those numbers, and you get double 449 00:24:29,880 --> 00:24:33,439 Speaker 1: digit growers sometimes like black Stone and am Gin, and 450 00:24:33,480 --> 00:24:35,879 Speaker 1: that's because we bought them when they began paying a 451 00:24:36,000 --> 00:24:40,040 Speaker 1: dividend a decade ago, and so that growth rate may 452 00:24:40,080 --> 00:24:44,080 Speaker 1: slow down, um just because of the law. Big numbers. 453 00:24:44,119 --> 00:24:46,960 Speaker 1: But yeah, we want to see high single digit dividend growth. 454 00:24:47,000 --> 00:24:48,520 Speaker 1: And the only thing I would say is we want 455 00:24:48,560 --> 00:24:52,440 Speaker 1: to see it in bad periods too. Okay, we kicked 456 00:24:52,440 --> 00:24:54,879 Speaker 1: off more money to our clients in two thousand twenty 457 00:24:54,960 --> 00:24:58,000 Speaker 1: than we did in two thousand nineteen, and yet we 458 00:24:58,000 --> 00:25:00,600 Speaker 1: were not having a great year. In tw we were up, 459 00:25:00,800 --> 00:25:04,200 Speaker 1: but energy was killed and we didn't own fang. The 460 00:25:04,240 --> 00:25:07,400 Speaker 1: thing is, the dividends were still growing, and yet there 461 00:25:07,400 --> 00:25:10,840 Speaker 1: were seventy dividend cuts in the SMP five hundred and 462 00:25:10,880 --> 00:25:15,480 Speaker 1: nobody was buying back stock. And yet really good, reliable 463 00:25:15,560 --> 00:25:18,240 Speaker 1: dividend growers continue to do what they've done by Exxon 464 00:25:18,280 --> 00:25:21,359 Speaker 1: and Chevron grew their dividend. So that's the type of 465 00:25:21,359 --> 00:25:24,840 Speaker 1: stuff we look for, Alright, great stuff. Then the decade 466 00:25:24,840 --> 00:25:26,840 Speaker 1: of the dividend, and this is the morning of the dividends. 467 00:25:26,880 --> 00:25:29,360 Speaker 1: It's exciting, it's good stuff. We don't talk about dividends 468 00:25:29,400 --> 00:25:32,800 Speaker 1: that much. David Bonson, ce IO at the Bonson Group, 469 00:25:32,920 --> 00:25:38,719 Speaker 1: joins us here talking stocks and black Rocker box Stone, Blackstone, 470 00:25:38,840 --> 00:25:41,720 Speaker 1: black Stone, And that's a growth over the last five years. 471 00:25:41,760 --> 00:25:45,199 Speaker 1: And dividend dividends. What a great business. Private equity is, right, 472 00:25:45,240 --> 00:25:46,800 Speaker 1: even if you have a bad year, you still take 473 00:25:46,800 --> 00:25:48,959 Speaker 1: your take your fees. Yeah, I mean, I mean, you know, 474 00:25:49,000 --> 00:25:51,159 Speaker 1: and look who are the big owners of that stock. 475 00:25:51,359 --> 00:25:55,080 Speaker 1: You know. Mr Schwartzman likes to have his dividend income. 476 00:25:55,080 --> 00:25:57,480 Speaker 1: He'd rather have the capital gains income, I'm sure, but 477 00:25:57,560 --> 00:26:04,280 Speaker 1: he does quite well. There. Let's stop Canada. Let's well 478 00:26:04,359 --> 00:26:07,480 Speaker 1: and New York and New York because we are lucky 479 00:26:07,560 --> 00:26:09,600 Speaker 1: enough to have the Finance Minister of Ontario and here 480 00:26:09,640 --> 00:26:13,720 Speaker 1: Peter bethlen Falvey joining us in studio in New York. 481 00:26:13,840 --> 00:26:16,160 Speaker 1: And I note that you were also the former president 482 00:26:16,600 --> 00:26:19,359 Speaker 1: of the Canadian Society of New York. Wow, you do 483 00:26:19,440 --> 00:26:22,560 Speaker 1: your homework absolutely well. I'm just by that, I surmise 484 00:26:22,640 --> 00:26:24,679 Speaker 1: that you must know also a thing or two about 485 00:26:25,080 --> 00:26:28,560 Speaker 1: the glory of the old school cabs. You know, they 486 00:26:28,680 --> 00:26:31,359 Speaker 1: used to be like a really cool thing, a trademark. 487 00:26:31,400 --> 00:26:34,119 Speaker 1: They used to be, you know, uh, an icon of 488 00:26:34,160 --> 00:26:36,480 Speaker 1: New York City. And I don't think that's the case anymore. 489 00:26:36,600 --> 00:26:40,040 Speaker 1: I lived here for fifteen years. So from two tho 490 00:26:40,320 --> 00:26:43,879 Speaker 1: eight roughly, I was here for nine eleven, lived in Manhattan, 491 00:26:43,920 --> 00:26:46,920 Speaker 1: and uh, I struggled with everyone else to get a cab, 492 00:26:46,960 --> 00:26:49,200 Speaker 1: particularly when it was raining and snowing, because I lived 493 00:26:49,200 --> 00:26:51,440 Speaker 1: above ground. And then I figured out New York has 494 00:26:51,440 --> 00:26:54,200 Speaker 1: a subway, and then that's changed. All right. Well, my 495 00:26:54,280 --> 00:26:56,399 Speaker 1: thing that jumps out of a former president CEO of 496 00:26:56,440 --> 00:26:59,920 Speaker 1: t D Security is a great firm up there in Toronto. 497 00:27:00,160 --> 00:27:03,959 Speaker 1: Talked to us about the economics the finance for our 498 00:27:04,000 --> 00:27:06,560 Speaker 1: good friends in Ontario, Ontario. How are things going up there? 499 00:27:06,600 --> 00:27:09,400 Speaker 1: Because I know that I've learned recently in the last 500 00:27:09,480 --> 00:27:12,119 Speaker 1: year two how important the housing market is to the 501 00:27:12,160 --> 00:27:14,760 Speaker 1: Canadian economy relative to the U. S economy. But just 502 00:27:14,800 --> 00:27:17,400 Speaker 1: give us a sense how things are in Ontario. Well, 503 00:27:17,440 --> 00:27:19,119 Speaker 1: things are. You know, we're not immune. We're not an 504 00:27:19,160 --> 00:27:23,120 Speaker 1: island in Ontario. So in terms of global global supply chain, 505 00:27:23,240 --> 00:27:26,119 Speaker 1: geo political risks, uh, you know, COVID, I think we 506 00:27:26,240 --> 00:27:30,000 Speaker 1: fared better than most jurisdictions around the world and COVID. Uh. 507 00:27:30,080 --> 00:27:32,480 Speaker 1: The good news is that we've got a robust plan 508 00:27:33,000 --> 00:27:37,320 Speaker 1: to build Ontario. We're very focused on rebuilding the economy. 509 00:27:37,320 --> 00:27:41,760 Speaker 1: We're attracting investments into the auto sector, a battery manufacturing, 510 00:27:42,160 --> 00:27:46,159 Speaker 1: advanced manufacturing technology. We're considered the Silicon North, up and 511 00:27:46,720 --> 00:27:51,679 Speaker 1: up in Ontario. We've got a huge infrastructure plan to 512 00:27:51,680 --> 00:27:57,480 Speaker 1: build Ontario as well, public transit, subways, infrastructure, roads, hospitals. 513 00:27:57,520 --> 00:28:01,280 Speaker 1: Ontario has everything. It's got Ottawa, it'scot Toronto and Scott 514 00:28:01,320 --> 00:28:04,600 Speaker 1: Hamilton's we got. We got everything except for a Stanley Cup. 515 00:28:04,640 --> 00:28:06,960 Speaker 1: So we have to get the Stanley Cup. But I 516 00:28:06,960 --> 00:28:08,960 Speaker 1: Get'll tell you. The other thing is we've got people. 517 00:28:09,440 --> 00:28:12,680 Speaker 1: So last week the government can announced that four d 518 00:28:13,400 --> 00:28:17,040 Speaker 1: people had come into permanent residency in Canada. So people 519 00:28:17,080 --> 00:28:21,280 Speaker 1: around the world with great skills, great diversity of backgrounds 520 00:28:21,320 --> 00:28:24,480 Speaker 1: are coming to Canada and six of them come to Ontario. 521 00:28:24,560 --> 00:28:27,480 Speaker 1: So the federal government's target is five hundred thousand people 522 00:28:27,920 --> 00:28:34,000 Speaker 1: by come to Ontario. And where do they come? The 523 00:28:34,000 --> 00:28:36,159 Speaker 1: West coast of Canada's always had a big Asian presence 524 00:28:36,520 --> 00:28:39,120 Speaker 1: just geography, I guess, plus some other things. But where 525 00:28:39,120 --> 00:28:42,280 Speaker 1: are these people coming from? The Ton, from Asia, ton 526 00:28:42,320 --> 00:28:45,160 Speaker 1: from all over the world. They bring great skills, diversity 527 00:28:45,160 --> 00:28:47,680 Speaker 1: of background, but they helped build our economy and that's 528 00:28:47,680 --> 00:28:50,680 Speaker 1: why we're so focused on bringing people to Canada and 529 00:28:50,680 --> 00:28:54,200 Speaker 1: Ontario having the infrastructure, building, the healthcare, the schools, the 530 00:28:54,800 --> 00:28:57,760 Speaker 1: public transit, and it's a great place to invest. We've 531 00:28:57,760 --> 00:29:00,240 Speaker 1: been cutting red tape. And by the way, the other 532 00:29:00,280 --> 00:29:05,280 Speaker 1: thing is of Ontario's electricity is zero carbon emissions. We 533 00:29:06,320 --> 00:29:09,560 Speaker 1: is nuclear and we're doubling down on investing in nuclear. 534 00:29:09,760 --> 00:29:12,840 Speaker 1: So small modular reactors say interesting to tell us about 535 00:29:12,840 --> 00:29:14,920 Speaker 1: the technology there because Matt and I we've had people 536 00:29:14,960 --> 00:29:17,000 Speaker 1: in talking to us about some of the smaller modular 537 00:29:17,600 --> 00:29:20,960 Speaker 1: nuclear options. And then we know that Bill Gates has 538 00:29:21,000 --> 00:29:24,400 Speaker 1: worked for diy AIDS on developing nuclear technology that's clean, 539 00:29:24,640 --> 00:29:28,760 Speaker 1: that's safe, it sounds, uses spent fuel rods. So so 540 00:29:28,840 --> 00:29:32,600 Speaker 1: my writing in in in Ontario has a nuclear facility 541 00:29:32,600 --> 00:29:35,920 Speaker 1: and pickering of on Terra's electricity comes from there. And 542 00:29:36,000 --> 00:29:38,280 Speaker 1: just down the road we're building the first small modular 543 00:29:38,320 --> 00:29:42,479 Speaker 1: reactor already have shovels in the ground. Gem Us company 544 00:29:42,480 --> 00:29:45,760 Speaker 1: along with Attache. We're using their technology and this is 545 00:29:45,840 --> 00:29:47,920 Speaker 1: first of many that we're going to build in Ontario. 546 00:29:48,280 --> 00:29:51,440 Speaker 1: This one can can power three thousand homes. Now. Look, 547 00:29:51,520 --> 00:29:55,120 Speaker 1: small modular rectors have been on submarines and the aircraft 548 00:29:55,160 --> 00:29:58,720 Speaker 1: carriers for a while, very safe, good jobs, good technology, 549 00:29:58,760 --> 00:30:01,720 Speaker 1: and very clean. I will say I've been to Canada 550 00:30:01,840 --> 00:30:05,240 Speaker 1: probably ten times in my life, and every time now 551 00:30:05,400 --> 00:30:07,880 Speaker 1: I think about it was to Ontario. Whether whether I'm 552 00:30:07,920 --> 00:30:10,760 Speaker 1: going to Toronto to do some shopping and I love 553 00:30:10,840 --> 00:30:14,280 Speaker 1: the Hudson Bay they have these point blankets that are phenomenal, 554 00:30:15,120 --> 00:30:18,040 Speaker 1: or if I'm going, uh, you know, out into the wilderness. 555 00:30:18,040 --> 00:30:20,560 Speaker 1: I love the Algonquin uh Park up there, which I 556 00:30:20,560 --> 00:30:23,920 Speaker 1: spent a few weeks portaging my canoe around. UM. And 557 00:30:24,600 --> 00:30:28,560 Speaker 1: my very favorite car is built in Ontario. Oh that's 558 00:30:28,560 --> 00:30:32,000 Speaker 1: a Dodge Challenger, the hell Cat, which actually leads me 559 00:30:32,040 --> 00:30:34,640 Speaker 1: to ask a question about a sort of a shift 560 00:30:34,720 --> 00:30:37,040 Speaker 1: in the industry, because this is the last year that 561 00:30:37,040 --> 00:30:39,240 Speaker 1: the Dodge is going to build those big muscle cars 562 00:30:39,400 --> 00:30:41,880 Speaker 1: and a lot of um, internal combustion engines are going 563 00:30:41,920 --> 00:30:43,360 Speaker 1: to be phased out right, A lot of them are 564 00:30:43,400 --> 00:30:47,720 Speaker 1: built in Canada. Um, how are you prepared for the 565 00:30:47,760 --> 00:30:50,880 Speaker 1: shift to electric vehicles? It's a great question. Uh. And 566 00:30:50,920 --> 00:30:53,640 Speaker 1: what we're doing is we're attracting investments from all the 567 00:30:53,640 --> 00:30:56,720 Speaker 1: car companies the last two years over sixteen billion to 568 00:30:56,800 --> 00:31:00,480 Speaker 1: build electric vehicles in Ontario. Why are they're coming to 569 00:31:00,520 --> 00:31:04,400 Speaker 1: Ontario because we have a history of manufacturing in Ontario. 570 00:31:05,200 --> 00:31:08,480 Speaker 1: We also have some of the best talent in the 571 00:31:08,520 --> 00:31:12,719 Speaker 1: world in Ontario and education system that is providing skilled 572 00:31:12,720 --> 00:31:15,280 Speaker 1: trades and people with the skills to build these cars. 573 00:31:15,640 --> 00:31:20,520 Speaker 1: We're also attracting battery manufacturing. So the biggest investment in 574 00:31:20,560 --> 00:31:24,640 Speaker 1: Canada's history five billion into Windsor Ontario through STI Atlantists 575 00:31:24,680 --> 00:31:27,680 Speaker 1: and UH and l G out of South Korea to 576 00:31:27,720 --> 00:31:31,520 Speaker 1: build a five billion battery manufacturing plant. But we also 577 00:31:31,560 --> 00:31:35,480 Speaker 1: have the critical minerals, so your president doesn't have to 578 00:31:35,520 --> 00:31:39,240 Speaker 1: call China or Rush. I'd say, how about those critical 579 00:31:39,280 --> 00:31:41,440 Speaker 1: minerals that have to go into the battery. So we've 580 00:31:41,440 --> 00:31:44,000 Speaker 1: got it all in Ontario. Those minerals are there. It's 581 00:31:44,000 --> 00:31:45,960 Speaker 1: not we're gonna We're gonna be a big player. It's 582 00:31:46,000 --> 00:31:47,720 Speaker 1: not just minerals. You know. Last week Paul and I 583 00:31:47,800 --> 00:31:53,720 Speaker 1: were talking to some UH, some executives who are concerned 584 00:31:53,720 --> 00:31:56,719 Speaker 1: about the fact that the US isn't fast enough in 585 00:31:56,800 --> 00:32:01,479 Speaker 1: terms of granting workers visas to people who are highly 586 00:32:01,640 --> 00:32:04,080 Speaker 1: educated but just come from different countries. Right, A lot 587 00:32:04,080 --> 00:32:06,040 Speaker 1: of the a lot of the times they are educated here, 588 00:32:06,080 --> 00:32:08,160 Speaker 1: and then we won't let them work here. So some 589 00:32:08,240 --> 00:32:12,000 Speaker 1: businesses are moving to Canada because you're better at expediting 590 00:32:12,040 --> 00:32:14,520 Speaker 1: that kind of visa. Is that is that a priority? 591 00:32:14,560 --> 00:32:17,240 Speaker 1: Is that part of a plan, part of the priority, 592 00:32:17,360 --> 00:32:19,280 Speaker 1: part of the plan. I mean, you know, it's great 593 00:32:19,320 --> 00:32:22,400 Speaker 1: to have all this investment government money, private sector money 594 00:32:22,440 --> 00:32:24,280 Speaker 1: to build things, but if you don't have the labor 595 00:32:24,760 --> 00:32:26,440 Speaker 1: and the skilled labor. And by the way, these are 596 00:32:26,520 --> 00:32:29,720 Speaker 1: all high tech, really good paying job and sustainable jobs 597 00:32:29,720 --> 00:32:32,600 Speaker 1: for the future, They're not going away. So so you 598 00:32:32,640 --> 00:32:34,800 Speaker 1: have to you have to have a strategy for talent, 599 00:32:35,080 --> 00:32:37,960 Speaker 1: just like a private sector. I spent thirty plus years 600 00:32:37,960 --> 00:32:40,440 Speaker 1: in the private sector. You gotta have the same strategy 601 00:32:40,600 --> 00:32:42,600 Speaker 1: in government. One of the big problems with that kind 602 00:32:42,600 --> 00:32:45,720 Speaker 1: of growth. I'm from a small town in Ohio, Ohio, 603 00:32:45,920 --> 00:32:49,400 Speaker 1: and Intel is putting in a big new facility um 604 00:32:49,440 --> 00:32:51,800 Speaker 1: down the highway from US. So of course property prices 605 00:32:51,800 --> 00:32:55,000 Speaker 1: have doubled. Right in Toronto, I know, you've had a 606 00:32:55,080 --> 00:32:57,680 Speaker 1: huge boom and now is it a bust? I mean, 607 00:32:57,720 --> 00:33:00,200 Speaker 1: what's what's the story with the real estate pick You're 608 00:33:00,240 --> 00:33:03,160 Speaker 1: in Ontario and Toronto. The big challenge is that so 609 00:33:03,240 --> 00:33:07,040 Speaker 1: many people are coming to Ontario and we have young families. Uh, 610 00:33:07,120 --> 00:33:09,720 Speaker 1: there's no supply. So we've got a plan to build 611 00:33:09,720 --> 00:33:12,040 Speaker 1: a million and a half homes over the next ten years. 612 00:33:12,400 --> 00:33:14,880 Speaker 1: And and we're doing that with the private sector by 613 00:33:14,880 --> 00:33:18,160 Speaker 1: cutting red tape, by putting in incentives to build, making 614 00:33:18,160 --> 00:33:21,360 Speaker 1: it easier to build, the zoning and what those sort 615 00:33:21,400 --> 00:33:25,160 Speaker 1: of things. Because you know, my my I'm my first generation. 616 00:33:25,320 --> 00:33:28,200 Speaker 1: I'm my parents from Hungary. I was going to ask 617 00:33:28,240 --> 00:33:31,160 Speaker 1: you the we were challenged with your last name pronounced 618 00:33:31,200 --> 00:33:35,080 Speaker 1: We think we got it off your talking. Well, you're 619 00:33:35,120 --> 00:33:36,840 Speaker 1: smarter than I am, because it took me a couple 620 00:33:36,880 --> 00:33:39,400 Speaker 1: of years to figure out my name. Uh, but you 621 00:33:39,440 --> 00:33:42,680 Speaker 1: know my parents, Uh they made it. Bombs and bullets overhead. 622 00:33:42,720 --> 00:33:45,400 Speaker 1: Two are their their parents and uh and three of 623 00:33:45,480 --> 00:33:48,440 Speaker 1: their great grand great my great grandparents. Seven people in 624 00:33:48,480 --> 00:33:50,840 Speaker 1: a home. So you know, you've got to have housing. 625 00:33:50,880 --> 00:33:52,920 Speaker 1: And so the plan to build a lot of housing 626 00:33:53,120 --> 00:33:55,200 Speaker 1: because there's a supply issue. The price will keep going 627 00:33:55,280 --> 00:33:57,280 Speaker 1: up if we don't build. What's the status of the 628 00:33:57,600 --> 00:33:59,920 Speaker 1: health care system in Canada right now? Because I know 629 00:34:00,120 --> 00:34:02,240 Speaker 1: during the pandemic, everybody kind of was looking at every 630 00:34:02,240 --> 00:34:04,640 Speaker 1: other country saying how are they doing? How are they 631 00:34:04,640 --> 00:34:07,560 Speaker 1: dealing with It? Was one system working better than the other. 632 00:34:07,600 --> 00:34:10,400 Speaker 1: What's the status of the Canadian healthcare system. Well, like 633 00:34:10,440 --> 00:34:14,120 Speaker 1: any healthcare system around the world, it's the COVID really 634 00:34:14,120 --> 00:34:17,720 Speaker 1: exposed that, you know, both the complexity and the volume 635 00:34:17,800 --> 00:34:22,600 Speaker 1: of cases are fixed. Infrastructure was pushed through the brink um. 636 00:34:22,640 --> 00:34:26,040 Speaker 1: So we're we're investing heavily, not only on the infrastructure 637 00:34:26,080 --> 00:34:29,680 Speaker 1: long term care, homes, hospitals, home and community care, but 638 00:34:29,719 --> 00:34:33,839 Speaker 1: also the labor, the nurses, social It's one pair when 639 00:34:34,000 --> 00:34:37,600 Speaker 1: one taxpayer paid, so it doesn't matter if you make 640 00:34:37,800 --> 00:34:40,520 Speaker 1: no money or if you make ten billion dollars, you 641 00:34:40,560 --> 00:34:43,279 Speaker 1: can go into a hospital and get equal service. And 642 00:34:43,320 --> 00:34:45,400 Speaker 1: that has worked really well. Now a lot of the 643 00:34:45,440 --> 00:34:49,040 Speaker 1: healthcare system is delivered privately, meaning that the private sector 644 00:34:49,080 --> 00:34:51,920 Speaker 1: delivers it, but the taxpayer it's one credit card. It's 645 00:34:51,920 --> 00:34:55,000 Speaker 1: the taxpayer credit card, and that, by the way, reduces 646 00:34:55,040 --> 00:34:58,319 Speaker 1: the overall cost because we're basically pooling the risk of 647 00:34:58,320 --> 00:35:01,000 Speaker 1: who needs healthcare. Yeah, I've noted us actually after having 648 00:35:01,000 --> 00:35:03,480 Speaker 1: lived in Germany for the past six years that the 649 00:35:03,600 --> 00:35:06,560 Speaker 1: US our system, what we do is essentially pay the 650 00:35:06,600 --> 00:35:10,080 Speaker 1: highest prices in the world, and we fund we we 651 00:35:10,080 --> 00:35:11,719 Speaker 1: we make it possible for the rest of the world 652 00:35:11,719 --> 00:35:14,279 Speaker 1: to have cheaper drugs and cheaper services. Yeah, I'm not 653 00:35:14,280 --> 00:35:15,920 Speaker 1: gonna go to unwrap. But what are you doing here 654 00:35:16,000 --> 00:35:18,680 Speaker 1: in New York this week? Well, I'm here because you know, 655 00:35:18,719 --> 00:35:20,279 Speaker 1: I want to. I want to make sure people are 656 00:35:20,360 --> 00:35:22,719 Speaker 1: aware of the great things going on in Ontario. As 657 00:35:22,760 --> 00:35:25,520 Speaker 1: we talked about the economy, you know, we had our 658 00:35:25,560 --> 00:35:28,760 Speaker 1: payroll numbers like you did last week. We had forty 659 00:35:29,680 --> 00:35:33,880 Speaker 1: thousand new jobs created last week. Uh, full time jobs. 660 00:35:34,160 --> 00:35:37,359 Speaker 1: Forty three forty four thousand were full time jobs just 661 00:35:37,400 --> 00:35:41,120 Speaker 1: in Ontario. Um, we're building the infrastructure that I mentioned, 662 00:35:41,160 --> 00:35:44,319 Speaker 1: We're working with labor. I stand up on podiums with 663 00:35:44,360 --> 00:35:46,680 Speaker 1: the labor unions. You know when it was the last 664 00:35:46,680 --> 00:35:49,400 Speaker 1: time you saw a conservative in a labor union standing 665 00:35:49,400 --> 00:35:52,200 Speaker 1: on the same poem potium. Why Because we're investing and 666 00:35:52,239 --> 00:35:56,120 Speaker 1: trading them skilled trades, building things. And so I'm here 667 00:35:56,120 --> 00:35:59,279 Speaker 1: to talk about Ontario and how Ontario, the investment is 668 00:35:59,320 --> 00:36:02,680 Speaker 1: going in Ontario and our growth prospects, notwithstanding the risks 669 00:36:02,719 --> 00:36:06,960 Speaker 1: geopolitical and economic are out there, that Ontario is is 670 00:36:06,960 --> 00:36:08,839 Speaker 1: a place to invest in. Well, we're glad you could 671 00:36:08,840 --> 00:36:10,480 Speaker 1: come in here. Thanks so much for joining us. Peter 672 00:36:10,560 --> 00:36:13,879 Speaker 1: bethlen Falvey, the Finance Minister of Ontario. I will say 673 00:36:13,920 --> 00:36:16,759 Speaker 1: my goal, one of my goals for is to get 674 00:36:16,840 --> 00:36:19,680 Speaker 1: up to Brompton and pick up my Dodge Challenger before 675 00:36:19,680 --> 00:36:21,520 Speaker 1: they stopped. Maybe yeah, you're gonna have to yeah, and 676 00:36:21,560 --> 00:36:27,160 Speaker 1: then just come flying over the border. What is our 677 00:36:27,160 --> 00:36:30,400 Speaker 1: federal reserve going to do? Uh? That continues to be 678 00:36:30,520 --> 00:36:33,080 Speaker 1: a driver for this market. So what we like to 679 00:36:33,080 --> 00:36:35,279 Speaker 1: talk rates and one of the folks would love to 680 00:36:35,280 --> 00:36:38,080 Speaker 1: touch base with is Preamer, Managing director and head of 681 00:36:38,080 --> 00:36:42,160 Speaker 1: Global Rates Strategy at t D Securities. UM, I'm sure 682 00:36:42,400 --> 00:36:45,080 Speaker 1: you guys at t D wrote a very nice year 683 00:36:45,160 --> 00:36:49,320 Speaker 1: ahead outlook for rates. What was kind of the takeaway 684 00:36:49,320 --> 00:36:53,520 Speaker 1: that you want your clients to take? Thanks for having 685 00:36:53,520 --> 00:36:56,440 Speaker 1: me on. Um. So it was about uncertainty and I 686 00:36:56,440 --> 00:36:58,600 Speaker 1: mean the start of this year, does you we almost 687 00:36:58,640 --> 00:37:01,560 Speaker 1: reach focus and now we're almost a three fifty the tenure. 688 00:37:02,040 --> 00:37:04,120 Speaker 1: So we were highlighting how the market is going to 689 00:37:04,200 --> 00:37:06,680 Speaker 1: be really torn, just as central banks will be in 690 00:37:06,800 --> 00:37:09,960 Speaker 1: terms of the conflicting which you know could be conflicting 691 00:37:10,000 --> 00:37:12,680 Speaker 1: goals in terms of trying to get inflation back down 692 00:37:12,840 --> 00:37:17,399 Speaker 1: and uh, you know, maintain the unemployment picture. So our 693 00:37:17,480 --> 00:37:19,719 Speaker 1: view is that the economy is going to slow, but 694 00:37:19,840 --> 00:37:23,640 Speaker 1: the FED, I think will be unable to respond quickly 695 00:37:24,000 --> 00:37:26,439 Speaker 1: or preemptively, and so that's why I think the long 696 00:37:26,560 --> 00:37:30,280 Speaker 1: end is where we have rates much lower than consensus, 697 00:37:30,320 --> 00:37:32,680 Speaker 1: because I think that long duration risk is gonna look 698 00:37:32,680 --> 00:37:35,120 Speaker 1: attractive if the FED is unable to cut rate soon. 699 00:37:35,360 --> 00:37:36,880 Speaker 1: So we have the FED hiking to five and a 700 00:37:36,920 --> 00:37:39,600 Speaker 1: half by the middle of this year and then actually 701 00:37:40,360 --> 00:37:44,239 Speaker 1: staying put through the course of the economy heading into 702 00:37:44,280 --> 00:37:47,960 Speaker 1: a recession, but that still helps the longer and outperformed 703 00:37:48,000 --> 00:37:51,040 Speaker 1: because then the recession is longer deeper if you don't 704 00:37:51,080 --> 00:37:53,400 Speaker 1: have any policy support, and we don't think any physical 705 00:37:53,440 --> 00:37:56,920 Speaker 1: support either, So it's it's the outlook was one of 706 00:37:57,040 --> 00:37:59,560 Speaker 1: lower rates and the long end through the course of 707 00:37:59,600 --> 00:38:01,600 Speaker 1: the year, but keeping in the back of our mind 708 00:38:01,640 --> 00:38:05,480 Speaker 1: it is less conviction, lots of um I think cross 709 00:38:05,520 --> 00:38:08,840 Speaker 1: currents will make the market volatile, and I think the 710 00:38:08,880 --> 00:38:11,920 Speaker 1: first week show that it is a very volatile market. 711 00:38:12,360 --> 00:38:15,120 Speaker 1: And final point I'll stay is the global rate pictures 712 00:38:15,120 --> 00:38:19,040 Speaker 1: also extremely important. The BOJ moved, the CB is doing QT, 713 00:38:19,520 --> 00:38:21,520 Speaker 1: so I think it's important for us not only to 714 00:38:21,520 --> 00:38:24,040 Speaker 1: look at the FED in the US, but also keep 715 00:38:24,080 --> 00:38:26,120 Speaker 1: an eye out for what global rates are doing, because 716 00:38:26,160 --> 00:38:28,640 Speaker 1: that tends to have a big impact on the on 717 00:38:28,680 --> 00:38:31,560 Speaker 1: the treasury market. Let's bring in Daniel D. Martino Booth 718 00:38:32,000 --> 00:38:36,239 Speaker 1: see on Chief Strategistic Quill Intelligence to give us her 719 00:38:36,280 --> 00:38:39,080 Speaker 1: take as well, and you know, before we get to 720 00:38:39,239 --> 00:38:42,400 Speaker 1: just the basic calls danielle Um, because I'd love to 721 00:38:42,400 --> 00:38:44,400 Speaker 1: know both of your takes on doesn't the Fed have 722 00:38:44,520 --> 00:38:46,799 Speaker 1: to go fifty in February? Um, what do you think 723 00:38:46,800 --> 00:38:49,480 Speaker 1: about the global picture? How does that influence, if at all, 724 00:38:49,560 --> 00:38:52,880 Speaker 1: Jerome Powell and Co. Well, I don't know that it 725 00:38:53,000 --> 00:38:56,800 Speaker 1: influences Jerome Powell and Co. As much as it should 726 00:38:56,880 --> 00:39:00,920 Speaker 1: definitely play into investors thinking we forget that in in 727 00:39:01,000 --> 00:39:04,840 Speaker 1: two thousand seventeen there was two point one trillion dollars 728 00:39:04,880 --> 00:39:09,160 Speaker 1: of quantitative using globally injected into markets, and that two 729 00:39:09,520 --> 00:39:13,239 Speaker 1: eighteen really started to get hairy towards the end of 730 00:39:13,239 --> 00:39:16,320 Speaker 1: that year as other central banks we're jumping onto the 731 00:39:16,360 --> 00:39:20,439 Speaker 1: quantitative tightening bandwagon or shrinking their balance sheets. So it's 732 00:39:20,440 --> 00:39:23,719 Speaker 1: the cumulative effect regardless of how j. Powell reacts or 733 00:39:23,800 --> 00:39:28,080 Speaker 1: doesn't react, given he is, unlike his predecessors, much more 734 00:39:28,080 --> 00:39:31,719 Speaker 1: focused just on the domestic US income and inflation here 735 00:39:31,880 --> 00:39:35,160 Speaker 1: at home. So but but that doesn't change the calculus 736 00:39:35,160 --> 00:39:38,120 Speaker 1: for investors. And it's with good reason that we've never 737 00:39:38,160 --> 00:39:42,480 Speaker 1: seen a global yield curve as we're seeing it today inverted. 738 00:39:42,520 --> 00:39:45,000 Speaker 1: I mean, we've never seen M two growth back to 739 00:39:46,480 --> 00:39:49,040 Speaker 1: here in the United States at zero as of the 740 00:39:49,160 --> 00:39:53,120 Speaker 1: end of November. It's clear that liquidity flows matter to 741 00:39:53,160 --> 00:39:57,560 Speaker 1: the markets, and I think investors would be unwise to, uh, 742 00:39:57,960 --> 00:40:00,560 Speaker 1: really to dismiss them off hand. And I agree with 743 00:40:00,640 --> 00:40:04,399 Speaker 1: Prea that throughout the rest of this year, your long 744 00:40:04,600 --> 00:40:07,799 Speaker 1: maturity treasurers are just going to keep getting more attractive. Well, 745 00:40:08,200 --> 00:40:10,600 Speaker 1: I mean, I'm in the campus says, I think the 746 00:40:10,640 --> 00:40:15,040 Speaker 1: Fed has already done a pretty good job. They were aggressive. Um, 747 00:40:15,360 --> 00:40:18,399 Speaker 1: I don't think we're behind the curve anymore, and it's 748 00:40:18,400 --> 00:40:20,959 Speaker 1: actually working. To see the housing market rolling over, their 749 00:40:20,960 --> 00:40:26,359 Speaker 1: inflation coming down, clearly, peeking has peaked. Why can't they 750 00:40:26,400 --> 00:40:30,560 Speaker 1: pause some point earlier rather than later this year. I 751 00:40:30,600 --> 00:40:33,879 Speaker 1: think they have to be concerned about inflation expectations and 752 00:40:34,160 --> 00:40:37,560 Speaker 1: the service sector, you know, so I think they they 753 00:40:37,600 --> 00:40:41,360 Speaker 1: as you said, the intersensitive sectors are slowing. Like Daniel's 754 00:40:41,400 --> 00:40:44,359 Speaker 1: point on QT, I think the FED actually doesn't talk 755 00:40:44,440 --> 00:40:46,920 Speaker 1: much about QT, but that's doing a lot of the 756 00:40:46,960 --> 00:40:49,520 Speaker 1: tightening and conditions. So to your point, can they stop? 757 00:40:49,600 --> 00:40:51,839 Speaker 1: They can, but they're nervous about on what they call 758 00:40:51,960 --> 00:40:57,040 Speaker 1: unwarranted easing and financial conditions or the market misinterpretting their 759 00:40:57,440 --> 00:41:00,680 Speaker 1: action as an easier reaction function. I think they want 760 00:41:00,719 --> 00:41:04,200 Speaker 1: to say we will stop once we were convinced that 761 00:41:04,320 --> 00:41:07,040 Speaker 1: inflations heading back to two. And that's the thing we 762 00:41:07,080 --> 00:41:09,560 Speaker 1: struggle the most with. How do you get inflation in 763 00:41:09,600 --> 00:41:12,840 Speaker 1: the near term? Service inflation close to two percent with 764 00:41:12,880 --> 00:41:15,160 Speaker 1: such a tight labor market. Also, do they say, is 765 00:41:15,200 --> 00:41:17,719 Speaker 1: it heading back to two like around four or is 766 00:41:17,719 --> 00:41:20,040 Speaker 1: it heading back to two like around two and a half. 767 00:41:20,880 --> 00:41:23,560 Speaker 1: I can never really understand exactly what they're gonna do there. 768 00:41:23,560 --> 00:41:25,640 Speaker 1: Don't they have to do fifty by the way, at 769 00:41:25,680 --> 00:41:28,640 Speaker 1: the next meeting, I mean, if they run a real 770 00:41:28,719 --> 00:41:31,200 Speaker 1: risk if they do twenty five and inflation comes rowing back. 771 00:41:31,920 --> 00:41:33,960 Speaker 1: I think so? I think. I mean they've been very 772 00:41:34,000 --> 00:41:36,680 Speaker 1: noncommittal on this, and I think they're waiting for CPI. 773 00:41:37,440 --> 00:41:40,040 Speaker 1: Their labor markets ted. But we just did t clore 774 00:41:40,280 --> 00:41:42,720 Speaker 1: and then you have that is M services. We're calling 775 00:41:42,760 --> 00:41:45,640 Speaker 1: for fifty because we're also looking for course services CPI 776 00:41:45,719 --> 00:41:48,040 Speaker 1: to stay strong. But if you get a miss in 777 00:41:48,200 --> 00:41:50,719 Speaker 1: c p I, you know, even if it's a small miss, 778 00:41:50,719 --> 00:41:52,960 Speaker 1: I think the market is going to run with twenty 779 00:41:52,400 --> 00:41:55,399 Speaker 1: five and they'll need to really communicate that they can 780 00:41:55,400 --> 00:41:57,839 Speaker 1: go fifty. But we are calling for fifty and then 781 00:41:57,880 --> 00:42:02,759 Speaker 1: a shot a downship or the next two meetings. Danielle, 782 00:42:03,239 --> 00:42:07,400 Speaker 1: am I it's just I mean, am I just obsessed 783 00:42:07,440 --> 00:42:10,080 Speaker 1: with NEHRU because I can sometimes remember what the acronym 784 00:42:10,080 --> 00:42:13,839 Speaker 1: stands for or doesn't have any meaning in today's economics, 785 00:42:13,880 --> 00:42:16,279 Speaker 1: because it doesn't seem like anybody else cares at all. 786 00:42:16,520 --> 00:42:19,320 Speaker 1: We we all loved the FED number, are the jobs 787 00:42:19,400 --> 00:42:22,400 Speaker 1: number on Friday? And no one really gave two hoots 788 00:42:22,440 --> 00:42:26,120 Speaker 1: for the three point five percent unemployment rate. Well, but 789 00:42:26,280 --> 00:42:30,240 Speaker 1: I think you're mistaken in disregarding the unemployment rate because 790 00:42:30,920 --> 00:42:34,560 Speaker 1: Powell himself, who has excuse me, he has the most 791 00:42:34,560 --> 00:42:38,319 Speaker 1: power among everybody in the ECHOS building and throughout the 792 00:42:38,320 --> 00:42:43,279 Speaker 1: twelve districts, Powell himself continues to sight the unemployment rate. 793 00:42:43,400 --> 00:42:47,200 Speaker 1: And if they're saying that four point six is kind 794 00:42:47,200 --> 00:42:50,400 Speaker 1: of a theoretical trigger their target for this year and 795 00:42:50,440 --> 00:42:52,400 Speaker 1: the unemployment rate is being as sticky as it is 796 00:42:53,000 --> 00:42:55,920 Speaker 1: on the way up, then it matters, and it matters 797 00:42:55,920 --> 00:43:00,239 Speaker 1: a lot. And there are so many conflicting signal. Again, 798 00:43:00,239 --> 00:43:04,239 Speaker 1: You've got continuing claims thirty one north of their may 799 00:43:04,320 --> 00:43:08,320 Speaker 1: NAT here that matters. It matters that that that company 800 00:43:08,360 --> 00:43:11,960 Speaker 1: closings are already at a hundred more only a few 801 00:43:12,000 --> 00:43:14,239 Speaker 1: days into January for the month of January. So far, 802 00:43:14,640 --> 00:43:17,760 Speaker 1: all of these things matter. But what what market participant 803 00:43:17,760 --> 00:43:20,400 Speaker 1: should be paying attention to? Because I think Powell's focus 804 00:43:20,640 --> 00:43:27,120 Speaker 1: is on financial conditions and investors completely disregarding his his 805 00:43:27,120 --> 00:43:30,880 Speaker 1: his resoluteness to push forward. I think they have to 806 00:43:30,920 --> 00:43:34,040 Speaker 1: focus on what he's talking about. Despite the fact that 807 00:43:34,080 --> 00:43:36,000 Speaker 1: you had a ten percent excuse me, a ten point 808 00:43:36,000 --> 00:43:38,319 Speaker 1: decline in I S M services new orders that's never 809 00:43:38,360 --> 00:43:41,160 Speaker 1: occurred outside of recession. That's not what he's talking about. 810 00:43:41,160 --> 00:43:44,600 Speaker 1: So that's what investors should if they're looking for where 811 00:43:44,680 --> 00:43:47,359 Speaker 1: that policy is going. If if j PAL is going 812 00:43:47,400 --> 00:43:49,719 Speaker 1: to be dismissive of it, they should be as well. 813 00:43:49,840 --> 00:43:52,000 Speaker 1: Even though you always have to take the full picture 814 00:43:52,000 --> 00:43:54,279 Speaker 1: in the way I think you curve will tell you. 815 00:43:54,600 --> 00:43:57,480 Speaker 1: I think it's important to keep reminding people that we 816 00:43:57,560 --> 00:44:00,279 Speaker 1: had that I s M Services new orders to client 817 00:44:00,560 --> 00:44:03,560 Speaker 1: on on Friday because a lot of people kind of 818 00:44:03,600 --> 00:44:06,920 Speaker 1: overlooked it. ME included yes, um, but we were told 819 00:44:07,080 --> 00:44:09,400 Speaker 1: that if it gets to forty eight, you need to 820 00:44:09,400 --> 00:44:11,880 Speaker 1: start worrying. And it came in at forty and change right, true, 821 00:44:11,960 --> 00:44:14,200 Speaker 1: And we did point that, No, it came in at 822 00:44:14,480 --> 00:44:20,520 Speaker 1: forty five point to forty that's right, And I know, uh, 823 00:44:20,600 --> 00:44:22,560 Speaker 1: we did talk about it for a moment, but we 824 00:44:22,560 --> 00:44:24,360 Speaker 1: were all kind of carried away, I think by the 825 00:44:24,400 --> 00:44:28,280 Speaker 1: non farms payroll number and the fact that average hourly 826 00:44:28,320 --> 00:44:32,680 Speaker 1: earnings growth had slowed. But it's still growth, right, um. 827 00:44:32,880 --> 00:44:35,440 Speaker 1: And I you know, as a as a consumer, I 828 00:44:35,520 --> 00:44:38,400 Speaker 1: hope to always see that grow for everybody. But you 829 00:44:38,400 --> 00:44:40,400 Speaker 1: can understand why the Fed doesn't want it wanted to 830 00:44:40,400 --> 00:44:44,000 Speaker 1: continue growing, Daniel, real quick, just here on Thursday, the 831 00:44:44,040 --> 00:44:47,879 Speaker 1: CPI we're gonna consensus is six six point five, still high, 832 00:44:47,880 --> 00:44:50,400 Speaker 1: but it's below the seven point one percent less month. 833 00:44:51,320 --> 00:44:52,960 Speaker 1: How do you what's the number that you think J 834 00:44:53,080 --> 00:44:57,200 Speaker 1: pals we're really looking at realistically, Well, I do think 835 00:44:57,200 --> 00:44:59,600 Speaker 1: he's looking at what we call the core court quill intelligence, 836 00:44:59,600 --> 00:45:02,080 Speaker 1: and that's that the core neetive energy net of shelter 837 00:45:02,680 --> 00:45:05,399 Speaker 1: on a three month basis, that's south of five now 838 00:45:05,880 --> 00:45:07,680 Speaker 1: on a twelve month year over your basis, it used 839 00:45:07,680 --> 00:45:10,360 Speaker 1: to be north, but it's still much higher than what 840 00:45:10,440 --> 00:45:12,280 Speaker 1: he wants Swift to be. And if that's the metric 841 00:45:12,360 --> 00:45:14,279 Speaker 1: he's focused on them, we have to be focused on 842 00:45:14,719 --> 00:45:17,600 Speaker 1: It's good. That's good good advice. I think Danielle di Martino, 843 00:45:17,680 --> 00:45:21,720 Speaker 1: Booth CEO and Chief Strategist at Quill Intelligence UH also 844 00:45:21,800 --> 00:45:24,640 Speaker 1: pre a miserable mountaging director and head of Global rate 845 00:45:24,719 --> 00:45:28,160 Speaker 1: Strategy at TV Security, serving a little round table. Basically, 846 00:45:28,719 --> 00:45:32,000 Speaker 1: don't fight the Fed, and that is the absolute first 847 00:45:32,080 --> 00:45:38,799 Speaker 1: rule I learned on the job in June. Thanks for 848 00:45:38,840 --> 00:45:42,359 Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and 849 00:45:42,400 --> 00:45:46,480 Speaker 1: listen to interviews of Apple Podcasts or whatever podcast platform 850 00:45:46,480 --> 00:45:49,799 Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt 851 00:45:49,840 --> 00:45:54,200 Speaker 1: Miller three. On False Sweeney, I'm on Twitter at pt Sweeney. 852 00:45:54,239 --> 00:45:56,920 Speaker 1: Before the podcast, you can always catch us worldwide at 853 00:45:56,920 --> 00:45:57,920 Speaker 1: Bloomberg Radio