WEBVTT - Moelis Vice Chairman Eric Cantor

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>We'll begin this sound with stock slower and Crewed rising

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<v Speaker 2>as peace talks in the Middle East remain idle. Eric

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<v Speaker 2>Cancer of Molus and Company writing, energy dependence and domestic

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<v Speaker 2>production are key to insulating the US from global shocks.

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<v Speaker 2>Eric Johns to now for more. Eric, good morning. It's

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<v Speaker 2>good to see you. That's great to be here in

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<v Speaker 2>the present. It's tough in the future. Things looking better.

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<v Speaker 2>Recording to financial markets, what's going to shake this market

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<v Speaker 2>after such a powerful forward looking mindset?

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<v Speaker 3>You know, Look, if you think about where we are,

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<v Speaker 3>and I know the discussion around the table this morning

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<v Speaker 3>has been the incredible resilience of the American economy. And

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<v Speaker 3>I think that if you look at it, a lot

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<v Speaker 3>of it has to do with some shock absorbers that, frankly,

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<v Speaker 3>the Trump administration in Washington has been put into place.

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<v Speaker 3>You've just experienced big tax refunds that came out of

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<v Speaker 3>the one big, beautiful bill. You now have a shock absorber,

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<v Speaker 3>if you will, that is going to be afforded to

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<v Speaker 3>the corporate community in the terms of one hundred and

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<v Speaker 3>sixty billion dollar tairaff refunds. You've got actions on the

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<v Speaker 3>part of this president said Hey, we're going to go

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<v Speaker 3>and ease this oil crunch by releasing more strategic petroleum reserves,

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<v Speaker 3>the waivers on the Russian oil, and ultimately you've got

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<v Speaker 3>a very pro business administration in Washington, so you've got

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<v Speaker 3>a regulatory construct that is much more constructive than we've

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<v Speaker 3>had in the past. So I think all that helps

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<v Speaker 3>when you see these earnings, helps explain where we are.

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<v Speaker 2>Do you think underestimating the momentum going into this war?

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<v Speaker 3>Well, I do think so, and I think that there's

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<v Speaker 3>not been a lot of credit given to this construct,

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<v Speaker 3>the policy construct we've operated in. Certainly, the liquidity that's

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<v Speaker 3>out there with a high end consumer has not abated yet.

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<v Speaker 3>But look, I don't think we've necessarily gotten to peak

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<v Speaker 3>shortage yet. And just as your guests have been discussing

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<v Speaker 3>on the show this morning, I do think that we've

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<v Speaker 3>got real uncertainty as to where and how you're going

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<v Speaker 3>to see these oil flows were resumed so that you

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<v Speaker 3>can get back to normal.

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<v Speaker 1>Blackstunge just came out with earnings, so they said this

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<v Speaker 1>is going to be the year of the IPO. They

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<v Speaker 1>still think it's going to be an unprecedented year for IPOs.

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<v Speaker 1>We've heard that from a number of companies that mergers

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<v Speaker 1>and acquisitions going incredibly strong. When you talk to companies

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<v Speaker 1>given the uncertainty out there that you just reflected, how

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<v Speaker 1>much are people willing to carry through with some of

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<v Speaker 1>these plans given that things could change a lot in

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<v Speaker 1>the next couple of months.

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<v Speaker 3>I think, you know, the market's clearly looking through the

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<v Speaker 3>short term uncertainty in the golf I mean, there's no

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<v Speaker 3>question about that, and it's undergraded by the earnings. But

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<v Speaker 3>you know, if you look at the forces that have

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<v Speaker 3>been at work, and I talked about some of the

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<v Speaker 3>policy forces, but if you see in the commercial world

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<v Speaker 3>and where companies are with this technological revolution that we're

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<v Speaker 3>experiencing with the AI boom, you know, companies are thinking

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<v Speaker 3>how am I going to position myself boards and manage

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<v Speaker 3>when are saying, hey, what do we have to do

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<v Speaker 3>to take advantage of this? And you've got that tailwind

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<v Speaker 3>that continues to push forward in terms of people saying, hey,

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<v Speaker 3>maybe we should transact, maybe we should accomplish more scale

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<v Speaker 3>in order to take advantage of this situation. And then

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<v Speaker 3>obviously in the world of private equity, you constantly have

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<v Speaker 3>this need of recycling capital, You constantly have a need

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<v Speaker 3>for return of liquidity to the LPs. That hasn't gone

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<v Speaker 3>away either. So in many ways, the structural pillars that

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<v Speaker 3>have supported the environment to transact have not gone away either.

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<v Speaker 1>So you don't think that what we're seeing right now

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<v Speaker 1>in the Middle East is going to deter the pace

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<v Speaker 1>and frankly, the pipeline that people were talking about, which

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<v Speaker 1>was unprecedented heading into this year.

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<v Speaker 3>Well, I mean, look, there's no question that there're going

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<v Speaker 3>to be specific areas. I mean, individuals, entities in the

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<v Speaker 3>Middle East are certainly not in the same state of

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<v Speaker 3>mind as they were eight weeks ago. So there are

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<v Speaker 3>going to be geographies, and they're going to be certain areas.

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<v Speaker 3>I mean, with the AI situation and private credit and software,

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<v Speaker 3>certainly that's going to have an impact right now. But

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<v Speaker 3>that I think is a short term sort of thought.

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<v Speaker 3>That longer term, you've got these structural tailwinds that are

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<v Speaker 3>continued to propel people's willingness to say, hey, we want

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<v Speaker 3>to do something. Things are moving too rapidly.

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<v Speaker 2>So many people in this industry are incentivized to keep

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<v Speaker 2>on bouncing. We could say three of the biggest ipis

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<v Speaker 2>we've ever seen in the history of this country, Open Eye,

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<v Speaker 2>an thro pick SpaceX Old in the next nine months, and.

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<v Speaker 1>It potentially could change the dynamic that we've seen in

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<v Speaker 1>terms of assets in the US, where people were talking

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<v Speaker 1>about a scarcity of stocks and the buybacks that have

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<v Speaker 1>been going on for so long, and suddenly we're going

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<v Speaker 1>to see the biggest expansion of US equities public equities

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<v Speaker 1>that we've seen in many, many years. So there are

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<v Speaker 1>a lot of structural questions that are facing this market

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<v Speaker 1>later this year.

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<v Speaker 2>We've struggled with reality versus hype. I'd like your view

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<v Speaker 2>on that. When I say everyone's incentivized to keep on bouncing,

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<v Speaker 2>it's a little bit of snock in that as well.

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<v Speaker 2>I think everyone's incentivized to things are maybe better than

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<v Speaker 2>they are at the same time because they've once got

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<v Speaker 2>to make some money later this year, particularly off those

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<v Speaker 2>three big IPOs. Potentially, what is real and what is

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<v Speaker 2>hypen What.

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<v Speaker 3>Is real is we are we have sort of an

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<v Speaker 3>error of revolution right now. You think about sort of

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<v Speaker 3>the geopolitical revolution, the trade revolution that's come into play

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<v Speaker 3>with this present. You think about the technological revolution that

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<v Speaker 3>we are experiencing all these forces are coming to bear.

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<v Speaker 3>That really is the reality. People are trying to understand

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<v Speaker 3>how the best position themselves, their capital, their companies to

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<v Speaker 3>take on these new times. And I think that is reality,

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<v Speaker 3>and there is incentive for sure to try and benefit

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<v Speaker 3>from a lot of a lot of the changes.

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<v Speaker 2>You call them forces. Other people might call it friction.

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<v Speaker 2>And with that increased friction comes increased costs. What's your

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<v Speaker 2>reaction to that, Well, I.

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<v Speaker 3>Mean, I do think it's increased costs if you do

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<v Speaker 3>it the old way. If you're going to go in

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<v Speaker 3>and try and embrace the new way, that's where everyone's

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<v Speaker 3>trying to get to. And that's exactly the point. That's

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<v Speaker 3>the dynamic. Whether you call it friction or whether you

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<v Speaker 3>call it, you know, a tailwind or a force, that

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<v Speaker 3>is the mechanism that is saying to people, hey, we

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<v Speaker 3>need to stand up, look at where the opportunities are,

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<v Speaker 3>otherwise we're going to be left by hand.

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<v Speaker 2>Which is why there is such an aggressive, forward looking

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<v Speaker 2>mindset in this market right now. We spoke to Jim's

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<v Speaker 2>out of Apollo in the last month several weeks ago.

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<v Speaker 2>He sat in your chair and he said, we all

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<v Speaker 2>need to take a walk, because in six months time,

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<v Speaker 2>we won't even be talking about the crisis in the Middle least,

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<v Speaker 2>we'll be talking about how wide open financial markets are,

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<v Speaker 2>how much dealmaking we'll we get getting done. I can't

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<v Speaker 2>remember the full list from Jim, but it went something

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<v Speaker 2>like that, you agree with that.

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<v Speaker 3>I one hundred percent agree with that. And again, I

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<v Speaker 3>do think you've got a regulatory construct. You've got the SEC,

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<v Speaker 3>You've got the FTC, the DOJA, You've got all these

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<v Speaker 3>you know, regulators in Washington that are primed to want

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<v Speaker 3>to help the growth in this economy.

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<v Speaker 1>Do you think that in this environment it's appropriate for

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<v Speaker 1>the government to take a stake and say a struggling

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<v Speaker 1>airline maker, like an airline operator like Spirit Given the

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<v Speaker 1>fact that most people are saying this is a short

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<v Speaker 1>term issue that you can look through.

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<v Speaker 3>Well, look, there's a difference between what this administration has

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<v Speaker 3>has implemented its policy on critical sectors, you know, critical sectors,

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<v Speaker 3>whether they be those that are central to the discussions

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<v Speaker 3>with China. How do we go make our supply chain secure?

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<v Speaker 3>How do we make sure we have a biopma supply

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<v Speaker 3>chain here so the next time we've got a shortage

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<v Speaker 3>or a pandemic. We're not relying on China for inputs

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<v Speaker 3>for our drugs. I mean, I do think that there

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<v Speaker 3>is almost a bipartisan recognition that, hey, we got to

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<v Speaker 3>do that. I'm not so sure that there is a

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<v Speaker 3>bipartisan recognition that hey, we've got to step in and

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<v Speaker 3>help whatever domestic industry there is. And you know, we'll

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<v Speaker 3>have to see whether these discussions come to fruition and

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<v Speaker 3>what the reasoning, what the reasoning is, mind.

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<v Speaker 2>I mean, what happened to the Republican pency?

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<v Speaker 3>Come on, listen right now, Jonathan's not a good topic

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<v Speaker 3>with me because I just experienced in my state of

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<v Speaker 3>Virginia a very very narrow loss in a very extreme

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<v Speaker 3>partisan gerrymandering that the other side put into place. And

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<v Speaker 3>I do think people are going to have a reaction

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<v Speaker 3>and there will be a backlash to some of the

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<v Speaker 3>extremity that's going on.

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<v Speaker 2>You think that'll showup in a bit sense.

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<v Speaker 3>Well, I hope so, because there was no question where

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<v Speaker 3>the intensity was on the part of the two sides

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<v Speaker 3>in Virginia on Tuesday. They were on my side because

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<v Speaker 3>of the extremity and the just insane.

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<v Speaker 2>I don't know all the words, both parties guilty of that.

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<v Speaker 2>Why was this Differentia, Well.

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<v Speaker 3>This one in Virginia. You have to get granular and specific,

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<v Speaker 3>but it was thirty six changes to the law. There

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<v Speaker 3>was a waiver of the constitution just four or five

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<v Speaker 3>years so that they could go against Trump and respond

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<v Speaker 3>to his alleged moves. I mean these things, most people

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<v Speaker 3>are not living that partisan lens. And I do think

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<v Speaker 3>allultimately people are going to be worried about how they

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<v Speaker 3>get ahead in their life. And I think this discussion

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<v Speaker 3>about prices and gas pump prices, that's what is going

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<v Speaker 3>to ultimately determine all of this as well as the

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<v Speaker 3>outcome of the midterms. Is are we going to get

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<v Speaker 3>these prices of the pump down?

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<v Speaker 2>Eric, it's going to see you, It's going to catch up.

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<v Speaker 2>Thank you, sir, as always, Eric Cantade of Molus and Company.