1 00:00:05,120 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,880 Speaker 1: for insight from the best an economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,079 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:31,600 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. In nineteen 7 00:00:31,760 --> 00:00:35,960 Speaker 1: ninety nine, Mike Mayo got hiss butt fired at a 8 00:00:36,080 --> 00:00:39,960 Speaker 1: major bank. It was a testament to all of us 9 00:00:40,000 --> 00:00:45,280 Speaker 1: in the racket about independent securities analysis. The culmination of 10 00:00:45,320 --> 00:00:49,040 Speaker 1: that was the Forestall Award, John's the number one award 11 00:00:49,040 --> 00:00:53,159 Speaker 1: at the CFA and I can't tell you. In twenty thirteen, 12 00:00:53,600 --> 00:00:59,160 Speaker 1: the symbolism of Mike Mayo fired one evening for being independent, 13 00:00:59,480 --> 00:01:03,360 Speaker 1: winning top ward CFA on ethics. This is a guy 14 00:01:03,400 --> 00:01:05,800 Speaker 1: to speak to, mister Solomon. 15 00:01:05,360 --> 00:01:08,400 Speaker 2: The star analyst at whilst Fango. Now my Mayo joins 16 00:01:08,440 --> 00:01:10,280 Speaker 2: us Mike Wander for to catch up with you, sir. 17 00:01:10,520 --> 00:01:13,160 Speaker 2: Let's talk about this story and the criticism around the 18 00:01:13,160 --> 00:01:15,400 Speaker 2: Goldman Sachs leader. Do you get the sense this is 19 00:01:15,440 --> 00:01:17,280 Speaker 2: strategic or deeply personal. 20 00:01:17,840 --> 00:01:19,880 Speaker 3: Thanks for having me on and thanks for bringing up 21 00:01:19,920 --> 00:01:23,160 Speaker 3: the CFA, which is the pre eminent accreditation for a 22 00:01:23,240 --> 00:01:25,880 Speaker 3: financial analyst. And I actually go back to those roots 23 00:01:25,959 --> 00:01:30,000 Speaker 3: to think how should I approach the situation about the 24 00:01:30,040 --> 00:01:37,560 Speaker 3: CEO Goldman Sachs and the differentiation between the external metrics 25 00:01:37,800 --> 00:01:42,640 Speaker 3: which are good, and potential internal metrics which might not 26 00:01:42,720 --> 00:01:46,440 Speaker 3: be so good. The issue here is I'm not seeing 27 00:01:46,680 --> 00:01:49,880 Speaker 3: these metrics. I don't have these internal metrics. The company 28 00:01:49,960 --> 00:01:53,919 Speaker 3: said they've not had any unusual turnover in the partner 29 00:01:54,040 --> 00:01:58,640 Speaker 3: ranks relative by the numbers, So I'd say, look, what 30 00:01:58,680 --> 00:02:00,960 Speaker 3: it comes down to is winning cures. 31 00:02:01,040 --> 00:02:01,240 Speaker 4: All. 32 00:02:02,040 --> 00:02:06,040 Speaker 3: Goldman's had recent performance issues. They've missed expectations two of 33 00:02:06,080 --> 00:02:09,359 Speaker 3: the last three quarters, and when that happens, other issues 34 00:02:09,680 --> 00:02:12,040 Speaker 3: moved more to the four And if I were to 35 00:02:12,120 --> 00:02:15,400 Speaker 3: summarize the three issues, it'd be the three fs. One 36 00:02:15,520 --> 00:02:19,760 Speaker 3: is the consumer expansion that was a debacle. Second is 37 00:02:19,800 --> 00:02:24,840 Speaker 3: the cultural change David Salman running Goldman more like a 38 00:02:24,880 --> 00:02:28,640 Speaker 3: public company almost twenty five years after they went public. 39 00:02:28,919 --> 00:02:33,400 Speaker 3: And the third would be his character and some attacks 40 00:02:33,400 --> 00:02:35,760 Speaker 3: and the press on that character. So I'll go wherever 41 00:02:35,800 --> 00:02:36,400 Speaker 3: you'd like to go. 42 00:02:36,600 --> 00:02:38,760 Speaker 5: Well, Mike, I want to go to what has to 43 00:02:38,840 --> 00:02:41,760 Speaker 5: happen in order for the character issues to not be 44 00:02:42,040 --> 00:02:44,440 Speaker 5: center stage anymore. In other words, has he lost the 45 00:02:44,520 --> 00:02:47,000 Speaker 5: room to such degree that they need to have blowout 46 00:02:47,080 --> 00:02:49,360 Speaker 5: performance and growth in an area that has yet to 47 00:02:49,360 --> 00:02:50,120 Speaker 5: be identified. 48 00:02:51,200 --> 00:02:55,799 Speaker 3: Well, going back to the CFA the basis on how 49 00:02:55,840 --> 00:02:58,640 Speaker 3: I should perform my job. It is the job of 50 00:02:58,680 --> 00:03:02,280 Speaker 3: a CEO to up hold the reputation of the firm. 51 00:03:02,680 --> 00:03:05,360 Speaker 3: But that is important. But when we talk about upholding 52 00:03:05,360 --> 00:03:08,320 Speaker 3: the reputation in the firm, we're talking about being number 53 00:03:08,360 --> 00:03:11,639 Speaker 3: one in advisory for the last twenty years. For talking 54 00:03:11,680 --> 00:03:16,040 Speaker 3: about Goldman growing capital markets twice the pace of Peers 55 00:03:16,560 --> 00:03:19,160 Speaker 3: over the last you know, three or so years. We're 56 00:03:19,200 --> 00:03:25,040 Speaker 3: talking about reputation of the firm to their multinational companies, 57 00:03:25,360 --> 00:03:29,640 Speaker 3: to governments, to their most important investors. So where it 58 00:03:29,680 --> 00:03:33,320 Speaker 3: matters the most, they are upholding the reputation the firm 59 00:03:33,360 --> 00:03:36,640 Speaker 3: based on the business that they're doing. But could there 60 00:03:36,680 --> 00:03:40,920 Speaker 3: be a point where there's enough upheaval that, you know, 61 00:03:41,040 --> 00:03:45,760 Speaker 3: the media the tail wags the dog. I suppose it's possible. 62 00:03:45,800 --> 00:03:48,440 Speaker 3: It's just not going to happen, you know, right now. 63 00:03:48,280 --> 00:03:50,960 Speaker 5: Mike, you said the turnover that we've seen the partner 64 00:03:51,040 --> 00:03:54,160 Speaker 5: ranks hasn't been that unusual. And yet we're hearing about 65 00:03:54,240 --> 00:03:58,400 Speaker 5: Lloyd Blankfeind being brought back to the firm and really 66 00:03:58,480 --> 00:04:01,800 Speaker 5: going after David sala Men having some pretty strong words 67 00:04:01,800 --> 00:04:02,200 Speaker 5: for him. 68 00:04:02,680 --> 00:04:03,720 Speaker 6: What do you make of that? 69 00:04:03,840 --> 00:04:06,240 Speaker 5: I mean, do you think that just basically there are 70 00:04:06,240 --> 00:04:10,520 Speaker 5: a lot of bitter people talking to members of the media. 71 00:04:10,680 --> 00:04:12,480 Speaker 3: You know what I really think is happening here. I 72 00:04:12,520 --> 00:04:16,280 Speaker 3: think it's and I don't have the numbers back this up, 73 00:04:16,279 --> 00:04:18,080 Speaker 3: so I'm just going to get ballpark numbers. But I 74 00:04:18,080 --> 00:04:21,280 Speaker 3: think it's like, you know, traders who are earning six 75 00:04:21,320 --> 00:04:23,800 Speaker 3: million dollars a year who got paid down last year 76 00:04:23,839 --> 00:04:26,120 Speaker 3: to four million dollars a year or something like that, 77 00:04:26,839 --> 00:04:29,760 Speaker 3: just zip code wise. I mean, they had a blowout 78 00:04:29,880 --> 00:04:32,839 Speaker 3: year in twenty twenty one. Last year was a bad 79 00:04:32,960 --> 00:04:35,760 Speaker 3: year for Goldman. People were paid down when they had 80 00:04:35,800 --> 00:04:39,640 Speaker 3: great years. They were partly subsidizing this failed foray in 81 00:04:39,680 --> 00:04:43,240 Speaker 3: consumer banking, and they're they're upset and they're taking their 82 00:04:43,520 --> 00:04:46,239 Speaker 3: and they probably go to the CEO, and the CEO 83 00:04:46,400 --> 00:04:48,839 Speaker 3: it's like, look, when it's the Goldman tax CEO have 84 00:04:48,880 --> 00:04:51,960 Speaker 3: been a warm and fuzzy person David Solomon. I mean, 85 00:04:51,960 --> 00:04:55,880 Speaker 3: you have to have strong opinions to change your culture 86 00:04:55,960 --> 00:04:59,360 Speaker 3: like he's doing while trying to generate profitability. I think 87 00:04:59,400 --> 00:05:01,719 Speaker 3: a lot of people or are upset about what they're 88 00:05:01,720 --> 00:05:03,240 Speaker 3: getting paid. They're going to the press with it. 89 00:05:03,600 --> 00:05:06,480 Speaker 1: Mike, you're expert on board analysis. We have a new 90 00:05:06,480 --> 00:05:10,920 Speaker 1: board member, mister Montag obviously Goldman Sex Timber over at 91 00:05:10,920 --> 00:05:14,200 Speaker 1: Bank of America. He returns. You've got someone like David 92 00:05:14,279 --> 00:05:16,360 Speaker 1: vinnie Or who ran the ship in two thousand and 93 00:05:16,440 --> 00:05:21,520 Speaker 1: seven under crisis, color the board makeup and decision right now? 94 00:05:21,600 --> 00:05:24,200 Speaker 1: How do you look at the Golden Sex board. 95 00:05:27,400 --> 00:05:30,799 Speaker 3: Tom, You know, I've been a critic of bank boards, 96 00:05:30,800 --> 00:05:34,800 Speaker 3: and it probably represents corporate boards, you know, more generally, 97 00:05:35,000 --> 00:05:39,039 Speaker 3: I feel like they're soft. They don't really hold managements accountable, 98 00:05:39,960 --> 00:05:43,040 Speaker 3: they don't listen to shareholder concerns. So when I look 99 00:05:43,080 --> 00:05:46,480 Speaker 3: at Goldman Sachs board more than anything else, like any 100 00:05:46,560 --> 00:05:52,240 Speaker 3: bank board, I think their push for change is probably 101 00:05:52,440 --> 00:05:56,599 Speaker 3: not that much. That's the reality of corporate America. And 102 00:05:56,640 --> 00:05:59,400 Speaker 3: you know, I've wrote my book about it and I 103 00:05:59,480 --> 00:06:02,480 Speaker 3: still see it. And you know, there's some other banks today. 104 00:06:02,480 --> 00:06:04,960 Speaker 3: I'm happy to talk about where I think there's much 105 00:06:05,000 --> 00:06:08,680 Speaker 3: more need for change than than at Goldman Sachs. So uh, 106 00:06:08,960 --> 00:06:10,920 Speaker 3: you know, and wait in mind, and I do want 107 00:06:10,960 --> 00:06:14,800 Speaker 3: to address your Lloyd blank Bind comment. You know, he 108 00:06:15,080 --> 00:06:18,200 Speaker 3: Lloyd's lif find started to push a consumer seven years 109 00:06:18,240 --> 00:06:21,200 Speaker 3: ago and he amplified and it took up, you know, 110 00:06:21,360 --> 00:06:25,040 Speaker 3: all the discussion in the room almost in the meetings. 111 00:06:25,160 --> 00:06:28,279 Speaker 3: And now David thom A doubled down on consumer, but 112 00:06:28,360 --> 00:06:31,599 Speaker 3: it was Lloyd originally. And Lloyd probably doesn't like to 113 00:06:31,640 --> 00:06:33,800 Speaker 3: be you know, tainted with some of these you know, 114 00:06:33,839 --> 00:06:37,159 Speaker 3: three billion dollars of losses they're getting out of you know, 115 00:06:37,200 --> 00:06:40,960 Speaker 3: the Marcus business, aside from the deposits. So you know, 116 00:06:41,040 --> 00:06:44,280 Speaker 3: his hands aren't completely clean in this whole situation either. 117 00:06:44,400 --> 00:06:46,360 Speaker 2: Mike, we've got about sixty seconds left. If we could 118 00:06:46,360 --> 00:06:48,680 Speaker 2: finish by asking you appointed question that would be good. 119 00:06:49,279 --> 00:06:51,880 Speaker 2: How would this stock respond if that headline dropped across 120 00:06:51,880 --> 00:06:53,200 Speaker 2: the Bloomberg that he was out. 121 00:06:54,880 --> 00:06:56,640 Speaker 3: I don't think the stock would go up. The fact 122 00:06:56,680 --> 00:06:59,920 Speaker 3: that stock might even go down. So that's remember I 123 00:07:00,680 --> 00:07:04,120 Speaker 3: called for the to have the City Group CEO fired 124 00:07:05,400 --> 00:07:08,200 Speaker 3: back around after the global fancier crisis, and I think 125 00:07:08,200 --> 00:07:10,280 Speaker 3: the stock went up that day, and that was a 126 00:07:10,280 --> 00:07:14,800 Speaker 3: good moment, and we've seen that other places where the 127 00:07:14,840 --> 00:07:18,480 Speaker 3: CEO goes. But if David Solomon were to be fired today, 128 00:07:18,600 --> 00:07:20,480 Speaker 3: I think the stock would actually go down because it 129 00:07:20,480 --> 00:07:22,600 Speaker 3: don't be like, Wow, you're running the company based on 130 00:07:22,640 --> 00:07:25,560 Speaker 3: media reports as opposed to financial results. And by the way, 131 00:07:25,600 --> 00:07:28,600 Speaker 3: when I talk to investors, investors aren't saying, oh, get 132 00:07:28,680 --> 00:07:31,200 Speaker 3: rid of David Tobam. They were really asking the questions 133 00:07:31,200 --> 00:07:36,040 Speaker 3: You're asking, Hey, does the media impact their performance? I'd 134 00:07:36,080 --> 00:07:39,720 Speaker 3: say no so far. Having said that David Salmon has 135 00:07:39,760 --> 00:07:42,200 Speaker 3: to earn his job every day, and so I can 136 00:07:42,200 --> 00:07:44,320 Speaker 3: come back in three months or six months and he 137 00:07:44,360 --> 00:07:46,880 Speaker 3: doesn't get the job done, I'll be on the other side. 138 00:07:46,960 --> 00:07:50,640 Speaker 2: We appreciate your opinion. Mike, as always of welsh Sonco, 139 00:08:01,720 --> 00:08:04,560 Speaker 2: Sebastian Phase joined us now head a global modi asset 140 00:08:04,640 --> 00:08:07,800 Speaker 2: and CIO at t ro Price. Sebastian, you can be 141 00:08:07,840 --> 00:08:10,080 Speaker 2: one of the five this morning. What's behind that bond 142 00:08:10,080 --> 00:08:11,640 Speaker 2: market move higher? 143 00:08:11,680 --> 00:08:16,560 Speaker 4: Inflation expectations? Look, we're all seeing inflation coming down. But 144 00:08:16,760 --> 00:08:19,320 Speaker 4: when I look at my one year break events this 145 00:08:19,480 --> 00:08:22,520 Speaker 4: morning on my Bloomberg, I see one point five six 146 00:08:22,600 --> 00:08:26,640 Speaker 4: percent to me, that is too low. If I think 147 00:08:26,680 --> 00:08:30,720 Speaker 4: of the risk to inflation, it's not to the downside, 148 00:08:30,880 --> 00:08:34,440 Speaker 4: it's to the upside. And Jonathan, you nail the reason. 149 00:08:35,080 --> 00:08:39,600 Speaker 4: It's the commodities oil prices being up quietly twenty percent. 150 00:08:40,320 --> 00:08:44,240 Speaker 4: You need energy to produce goods and services, and I 151 00:08:44,280 --> 00:08:49,199 Speaker 4: think sometimes we underestimate the impact on even core inflation 152 00:08:49,559 --> 00:08:54,520 Speaker 4: of higher energy prices. So I'm not saying inflation's coming 153 00:08:54,559 --> 00:08:57,400 Speaker 4: back to the levels we see, you know, a year ago, 154 00:08:57,400 --> 00:08:59,280 Speaker 4: a year and a half ago. But to me, I 155 00:08:59,280 --> 00:09:01,280 Speaker 4: look at this in the risk is to the upside, 156 00:09:01,320 --> 00:09:04,160 Speaker 4: and that's what the bond market, even in the long end, 157 00:09:04,280 --> 00:09:05,800 Speaker 4: is starting to smell. 158 00:09:06,040 --> 00:09:08,760 Speaker 1: Sebastian and for radio, this is my most important chart 159 00:09:08,840 --> 00:09:11,160 Speaker 1: right now. It's a Bloomberg total return chart. This is 160 00:09:11,200 --> 00:09:15,160 Speaker 1: the all in soup the nuts chart as well. And 161 00:09:15,320 --> 00:09:17,520 Speaker 1: in the bottom line here is we're about ready to 162 00:09:17,520 --> 00:09:20,800 Speaker 1: break down to new price weakness off the carnage of 163 00:09:20,840 --> 00:09:24,080 Speaker 1: two or three years ago. And I just, you know, 164 00:09:24,120 --> 00:09:27,040 Speaker 1: I just don't know what to say here about price down. 165 00:09:27,480 --> 00:09:29,719 Speaker 1: If we get the bond market to break down to 166 00:09:29,800 --> 00:09:33,160 Speaker 1: lower prices, what does that do to equities. 167 00:09:34,240 --> 00:09:38,640 Speaker 4: It's always a risk to equities because you're revaluing and 168 00:09:38,880 --> 00:09:42,280 Speaker 4: year today, equities have rallied on the price earnings ratio 169 00:09:42,280 --> 00:09:45,719 Speaker 4: and the evaluation and that is sensitive to rates, and 170 00:09:45,920 --> 00:09:50,200 Speaker 4: earnings are kind of soft down seven percent year over year, 171 00:09:50,320 --> 00:09:53,120 Speaker 4: So it is a risk to equities tom But one 172 00:09:53,120 --> 00:09:55,280 Speaker 4: thing I want to say is this isn't the time 173 00:09:55,320 --> 00:09:58,440 Speaker 4: to panic about duration. If anything, now you have a 174 00:09:58,440 --> 00:10:02,400 Speaker 4: better entry point on our fixed income portfolios. We have 175 00:10:02,720 --> 00:10:06,760 Speaker 4: added duration this year. It is a quote unquote and 176 00:10:06,800 --> 00:10:11,440 Speaker 4: I use quotation marks hedge against a real growth shock. 177 00:10:11,880 --> 00:10:15,200 Speaker 4: We know that the most anticipated recession in history is 178 00:10:15,240 --> 00:10:19,280 Speaker 4: becoming the most delayed recession in history. But there's pressure 179 00:10:19,320 --> 00:10:21,880 Speaker 4: building in the system. So here's what we're doing in 180 00:10:21,920 --> 00:10:25,480 Speaker 4: our fixed income portfolios. We're not panicking about duration right now. 181 00:10:25,679 --> 00:10:30,240 Speaker 4: I think we have duration and we're pairing it with credit. 182 00:10:30,360 --> 00:10:33,079 Speaker 4: I call this the magic Barbelle. But I'm getting nine 183 00:10:33,160 --> 00:10:35,920 Speaker 4: percent total yield out of high yield. So I like 184 00:10:35,960 --> 00:10:39,040 Speaker 4: my fixed income factors to be diversified. And now you 185 00:10:39,080 --> 00:10:42,599 Speaker 4: get paid. You get paid for the protection of treasuries. 186 00:10:43,000 --> 00:10:45,400 Speaker 4: If you get a growth shock, it won't protect you 187 00:10:45,440 --> 00:10:47,400 Speaker 4: for an inflation shock, which is kind of we're not 188 00:10:47,400 --> 00:10:50,040 Speaker 4: talking about an inflation shock but inflation pressures, which is 189 00:10:50,080 --> 00:10:52,000 Speaker 4: kind of what you're seeing now. But I think you 190 00:10:52,080 --> 00:10:55,200 Speaker 4: have to step back and look at what's the greater 191 00:10:55,320 --> 00:10:58,679 Speaker 4: risk right now? Is yes, sell off in stocks. 192 00:10:58,920 --> 00:11:01,320 Speaker 6: Okay a second, let me try to make sure that 193 00:11:01,360 --> 00:11:01,920 Speaker 6: I understand this. 194 00:11:02,000 --> 00:11:05,280 Speaker 5: You're saying that the risk with inflation is an upside 195 00:11:05,280 --> 00:11:07,800 Speaker 5: surprise that it could reaccelerate, and yet you're leaning into 196 00:11:07,880 --> 00:11:11,360 Speaker 5: duration because it's not inflation shock, it's just an inflation 197 00:11:11,480 --> 00:11:12,240 Speaker 5: grind higher. 198 00:11:12,360 --> 00:11:13,400 Speaker 6: What is the difference? 199 00:11:14,080 --> 00:11:17,920 Speaker 4: So we're using duration as a hedge to a growth shock. 200 00:11:17,960 --> 00:11:21,520 Speaker 4: We're not going fully overweight duration. To me, the risks 201 00:11:21,520 --> 00:11:25,840 Speaker 4: to inflation is three six months. It starts speaking back up, 202 00:11:26,600 --> 00:11:28,520 Speaker 4: but at the end of the day, if you take 203 00:11:28,559 --> 00:11:30,960 Speaker 4: a six to eighteen month horizon, So Lisa, it's a 204 00:11:30,960 --> 00:11:34,000 Speaker 4: difference in horizon here. You do want some hedges in 205 00:11:34,040 --> 00:11:37,040 Speaker 4: your portfolio, and where do you get those hedges right now? 206 00:11:37,080 --> 00:11:40,200 Speaker 4: You get them a little cheaper than you have in 207 00:11:40,240 --> 00:11:43,840 Speaker 4: the past. So it's nuanced, right. It's just diversifying the 208 00:11:43,840 --> 00:11:45,000 Speaker 4: different risk factors. 209 00:11:45,240 --> 00:11:47,000 Speaker 5: And one thing that you talked about is the commodity 210 00:11:47,040 --> 00:11:49,360 Speaker 5: is pressure to really fuel some of the reinflation, and 211 00:11:49,400 --> 00:11:51,520 Speaker 5: this comes as we take a look at China and 212 00:11:51,559 --> 00:11:55,280 Speaker 5: the potential threats there, the risks to growth if let's 213 00:11:55,320 --> 00:11:58,360 Speaker 5: say there is a reversal in oil prices and that 214 00:11:58,440 --> 00:12:01,319 Speaker 5: comes with a lot of weakness. How do you rearrange 215 00:12:01,360 --> 00:12:04,240 Speaker 5: the time where you're preferring high yeald ponds over equities, 216 00:12:04,240 --> 00:12:07,160 Speaker 5: where you're preferring sort of some Barbell approach, to really 217 00:12:07,200 --> 00:12:10,960 Speaker 5: being a more conservative kind of acid allocator right now? 218 00:12:11,559 --> 00:12:14,280 Speaker 4: Yeah, look at the spread for high yield it's not 219 00:12:14,440 --> 00:12:19,440 Speaker 4: particularly attractive, although if you adjust it for forecasted default risks, 220 00:12:19,559 --> 00:12:22,480 Speaker 4: it's not bad. But I'm an asset allocator. I really 221 00:12:22,520 --> 00:12:26,040 Speaker 4: care about the total yield, and Lisa, the comparison with 222 00:12:26,120 --> 00:12:31,439 Speaker 4: the earnings yield is really advantageous. Eightieth ninetieth personile in 223 00:12:31,559 --> 00:12:35,240 Speaker 4: favor of high yield bonds. I'm getting nine percent out 224 00:12:35,280 --> 00:12:38,080 Speaker 4: of high yield bonds globally, and the earnings yield is 225 00:12:38,120 --> 00:12:41,880 Speaker 4: down to say, five percent on stocks. That's spread right 226 00:12:41,920 --> 00:12:46,680 Speaker 4: now is really advantageous. We're not forecasting a really hard 227 00:12:46,760 --> 00:12:51,400 Speaker 4: landing wave of defaults, even if things slow down in China, 228 00:12:51,520 --> 00:12:54,680 Speaker 4: which they are so on a relative basis. Look, we 229 00:12:54,720 --> 00:12:57,840 Speaker 4: always invested in stocks, but we're close to neutral right now. 230 00:12:57,880 --> 00:13:00,800 Speaker 4: Slightly underway. If we're going to add the portfolio on 231 00:13:00,840 --> 00:13:02,560 Speaker 4: the risk side, might as well do it high yield. 232 00:13:02,679 --> 00:13:06,000 Speaker 1: Sebastian very quickly your acclaimed book, which is folks. I 233 00:13:06,040 --> 00:13:09,160 Speaker 1: can't say enough about this effort by Sebastian bay Page, 234 00:13:09,160 --> 00:13:13,199 Speaker 1: A really sophisticated effort. Do I want to be diversified 235 00:13:13,400 --> 00:13:16,600 Speaker 1: or do I want to be more acutely focused right now? 236 00:13:17,360 --> 00:13:22,200 Speaker 4: Look, I think diversification remains critically important when you're going 237 00:13:22,320 --> 00:13:25,840 Speaker 4: through a regime shift, Tom, which is what we're going through. 238 00:13:25,880 --> 00:13:28,880 Speaker 4: You've talked about this on the show. Gravity is back 239 00:13:28,920 --> 00:13:32,000 Speaker 4: in financial markets. We have a ton of cash in 240 00:13:32,080 --> 00:13:34,720 Speaker 4: the sidelines. So you don't want to go all the 241 00:13:34,720 --> 00:13:38,120 Speaker 4: way to cash right and just miss the upside of 242 00:13:38,160 --> 00:13:40,520 Speaker 4: stocks in the long run. I don't think you want 243 00:13:40,559 --> 00:13:43,000 Speaker 4: to go all the way to stocks right now, and 244 00:13:43,080 --> 00:13:47,679 Speaker 4: there are other opportunities. Look, Tom, let's just think about valuations. Okay. 245 00:13:47,679 --> 00:13:51,640 Speaker 4: The tech sector's trading at a price earnings ratio of thirty. 246 00:13:52,040 --> 00:13:54,160 Speaker 4: So let's say you missed the rally. Do you want 247 00:13:54,200 --> 00:13:56,880 Speaker 4: to chase that momentum or maybe wait to buy the dip. 248 00:13:57,040 --> 00:14:00,640 Speaker 4: You actually have a third option which speaks to diversification, 249 00:14:01,160 --> 00:14:03,480 Speaker 4: which is to get in parts of the markets that 250 00:14:03,559 --> 00:14:07,920 Speaker 4: have really not participated. Quality small caps price earnings ratio 251 00:14:08,000 --> 00:14:12,520 Speaker 4: of thirteen, that's hard recession level. Emerging market stocks price 252 00:14:12,559 --> 00:14:16,400 Speaker 4: earnings ratio at eleven. We mentioned hyal bonds yields at 253 00:14:16,480 --> 00:14:21,320 Speaker 4: nine percent, you know, so the energy sector trading at 254 00:14:21,440 --> 00:14:24,040 Speaker 4: twelve pe ratio. So there are ways to get in 255 00:14:24,080 --> 00:14:28,440 Speaker 4: the market where you're not just chasing the momentum. And 256 00:14:28,480 --> 00:14:30,440 Speaker 4: I saw I call this the third option. Either you 257 00:14:30,520 --> 00:14:33,560 Speaker 4: chase the momentum, wait for the dip, or take a 258 00:14:33,600 --> 00:14:37,080 Speaker 4: diversified approach to your question, Tom and get in parts 259 00:14:37,080 --> 00:14:40,560 Speaker 4: of the market that haven't participated. Energy em in a 260 00:14:40,680 --> 00:14:45,440 Speaker 4: very high yield, higher yield in the high yield bond space. 261 00:14:45,520 --> 00:14:48,440 Speaker 4: So there are opportunities to get into and diverse five. 262 00:14:48,600 --> 00:14:51,600 Speaker 2: Sebastian, Always enjoy your insights, sir, good friend of this program. 263 00:14:51,600 --> 00:14:53,840 Speaker 2: Sebast I page there a t row price. 264 00:14:58,480 --> 00:15:00,720 Speaker 1: We are going to migrate now to an importan conversation. 265 00:15:00,840 --> 00:15:03,280 Speaker 1: This is our conversation of the day on foreign exchange, 266 00:15:03,320 --> 00:15:06,280 Speaker 1: the limits paper of the system. Else a Lingos brings 267 00:15:06,360 --> 00:15:10,240 Speaker 1: serious ECV and EU credit to RBC Capital. Marcus Global 268 00:15:10,240 --> 00:15:14,080 Speaker 1: head of Foreign Exchange Strategy, also open question right now, 269 00:15:14,160 --> 00:15:16,880 Speaker 1: what is your biggest mystery in sleepy August. You're the 270 00:15:16,880 --> 00:15:21,520 Speaker 1: only one in Europe working what's your biggest mystery right now? Forward? 271 00:15:21,600 --> 00:15:22,720 Speaker 1: In foreign exchange? 272 00:15:24,360 --> 00:15:26,800 Speaker 7: I think you touched on it earlier Tom at the 273 00:15:26,800 --> 00:15:30,160 Speaker 7: top of the hour. The uncertainty around what's going on 274 00:15:30,200 --> 00:15:32,200 Speaker 7: in China, and part of the struggle for us as 275 00:15:32,200 --> 00:15:35,200 Speaker 7: outside is trying to understand the reality on the ground 276 00:15:35,240 --> 00:15:38,720 Speaker 7: when there's actually been a move away from sharing information. 277 00:15:39,520 --> 00:15:42,400 Speaker 7: The underlying GDP data, the kind of the breakdown of 278 00:15:42,480 --> 00:15:45,080 Speaker 7: components just isn't there. And on top of that, we 279 00:15:45,200 --> 00:15:48,440 Speaker 7: just don't have the visibility onto these trouble developers and 280 00:15:48,480 --> 00:15:49,880 Speaker 7: asset managers balance sheets. 281 00:15:50,040 --> 00:15:53,560 Speaker 1: Does China bring in instability? I was talking about euro 282 00:15:53,680 --> 00:15:56,240 Speaker 1: yen to one sixty and through a strong euro week, 283 00:15:56,440 --> 00:16:00,520 Speaker 1: en dollar yen back up towards one fifty. Can you 284 00:16:00,560 --> 00:16:03,800 Speaker 1: see that instability out there? Given the events in China? 285 00:16:05,480 --> 00:16:08,280 Speaker 7: And I think people are reluctant to take positions. As 286 00:16:08,320 --> 00:16:10,960 Speaker 7: you kind of mentioned, it's the middle of August. A 287 00:16:10,960 --> 00:16:13,280 Speaker 7: lot of investors we speak to have just shut up shop, 288 00:16:13,360 --> 00:16:15,800 Speaker 7: particularly if they've had a good summer so far. They're 289 00:16:15,840 --> 00:16:18,240 Speaker 7: just not seeing the opportunities out there. You know, you've 290 00:16:18,240 --> 00:16:20,920 Speaker 7: got effex very much in a tight range. I mean, 291 00:16:20,960 --> 00:16:23,120 Speaker 7: you're a dollar to the PIP is almost exactly where 292 00:16:23,120 --> 00:16:25,640 Speaker 7: it was a month ago. And even when we do 293 00:16:25,800 --> 00:16:28,880 Speaker 7: attempt to get breakouts, as we did earlier in July, 294 00:16:29,240 --> 00:16:31,280 Speaker 7: it just doesn't seem to follow through. And I think 295 00:16:31,280 --> 00:16:33,600 Speaker 7: people are really struggling with that dynamic at the moment. 296 00:16:33,920 --> 00:16:36,080 Speaker 7: Just leaves us all looking at carry trades and selling 297 00:16:36,120 --> 00:16:37,120 Speaker 7: well ELSA. 298 00:16:37,160 --> 00:16:39,320 Speaker 5: If everybody's just basically on the beach right now, does 299 00:16:39,360 --> 00:16:41,160 Speaker 5: that mean when everybody comes back you start to see 300 00:16:41,200 --> 00:16:44,640 Speaker 5: more concern about the potential for contagion from China and 301 00:16:44,680 --> 00:16:48,160 Speaker 5: all of the potential in financial instability in certain sectors. 302 00:16:49,560 --> 00:16:52,520 Speaker 7: I think we need to see bit more information. I mean, clearly, 303 00:16:52,520 --> 00:16:56,440 Speaker 7: the fact that you're seeing developers missing interest payments on 304 00:16:56,480 --> 00:16:59,600 Speaker 7: their bonds has people concerned. But more than anything, you know, 305 00:16:59,640 --> 00:17:01,880 Speaker 7: we've been in this situation. I mean, I could go 306 00:17:02,000 --> 00:17:04,960 Speaker 7: back ten years when people were panicking about the big 307 00:17:05,080 --> 00:17:07,520 Speaker 7: China cliff and suddenly growth was going to collapse, And 308 00:17:07,760 --> 00:17:09,879 Speaker 7: there've been people that have cried wolf one too many times, 309 00:17:09,920 --> 00:17:12,320 Speaker 7: and so markets are just naturally reluctant to believe that 310 00:17:12,359 --> 00:17:15,320 Speaker 7: this time it could be happening for real. What I 311 00:17:15,320 --> 00:17:17,760 Speaker 7: think we're missing in order to get bigger trends is 312 00:17:17,800 --> 00:17:20,080 Speaker 7: a bit of global divergence. You know, at the moment, 313 00:17:20,119 --> 00:17:21,920 Speaker 7: it feels like a lot of the themes are affecting 314 00:17:21,960 --> 00:17:23,959 Speaker 7: a lot of countries in a very similar fashion. If 315 00:17:24,000 --> 00:17:26,600 Speaker 7: I look at developed markets in particular, whether it's the 316 00:17:26,680 --> 00:17:28,800 Speaker 7: UCB or the FED, or the Bank of Canada, the OBBA, 317 00:17:28,840 --> 00:17:31,080 Speaker 7: they all seem to be in very similar positions. We 318 00:17:31,200 --> 00:17:33,080 Speaker 7: need that to break down and diverge in order to 319 00:17:33,080 --> 00:17:33,880 Speaker 7: get those trends. 320 00:17:34,080 --> 00:17:36,400 Speaker 5: But aren't we seeing that in the actual data, Elsa, 321 00:17:36,480 --> 00:17:39,440 Speaker 5: and I'm talking about, for example, the US and Europe 322 00:17:39,520 --> 00:17:40,600 Speaker 5: Germany in particular. 323 00:17:40,680 --> 00:17:42,240 Speaker 6: We are seeing that divergence. 324 00:17:42,400 --> 00:17:44,199 Speaker 5: We're just not seeing it when it comes to a 325 00:17:44,240 --> 00:17:46,760 Speaker 5: currency that seems to have flatlined because everyone's on vacation. 326 00:17:48,640 --> 00:17:51,000 Speaker 7: I mean, it's a great question, Lisa, because even more 327 00:17:51,000 --> 00:17:53,440 Speaker 7: so than the currency, what I find really perplexing is 328 00:17:53,480 --> 00:17:56,919 Speaker 7: if you look ahead, you look at twenty twenty four expectations, 329 00:17:57,280 --> 00:18:00,159 Speaker 7: there's still this widespread consensus that the UR area is 330 00:18:00,160 --> 00:18:03,639 Speaker 7: going to outperform the US, and cyclically that doesn't seem 331 00:18:03,640 --> 00:18:05,199 Speaker 7: to ad up At the moment. I mean, yes, the 332 00:18:05,240 --> 00:18:08,360 Speaker 7: FED has delivered more tightening, but the US also delivered 333 00:18:08,520 --> 00:18:12,000 Speaker 7: a whole lot more fiscal stimulus. And actually the titening 334 00:18:12,040 --> 00:18:14,239 Speaker 7: delivered by the US is not that much more than 335 00:18:14,240 --> 00:18:18,480 Speaker 7: the UCB for the local realities on the ground. Though. 336 00:18:18,520 --> 00:18:22,760 Speaker 7: I do think eventually we will get that unexpected break 337 00:18:22,760 --> 00:18:25,400 Speaker 7: lower in euro dollar. That's not the consensus. Everybody's looking 338 00:18:25,400 --> 00:18:27,320 Speaker 7: for it to trade up at one thirteen by year ed. 339 00:18:27,600 --> 00:18:29,119 Speaker 7: I just think we may need to wait for the 340 00:18:29,160 --> 00:18:31,000 Speaker 7: autumn for that to really start taking hold. 341 00:18:31,280 --> 00:18:33,320 Speaker 1: I need to rip up the script. Also, Lingos so 342 00:18:33,320 --> 00:18:35,320 Speaker 1: and I can do this with you. There's a number 343 00:18:35,359 --> 00:18:36,960 Speaker 1: of ways to look at the fiction known as the 344 00:18:37,040 --> 00:18:41,240 Speaker 1: Russian ruble, dollar, ruble, euro ruble, and also a basket 345 00:18:41,280 --> 00:18:44,480 Speaker 1: of ruble. I'm just going to go to the headline drama. Also, 346 00:18:44,560 --> 00:18:49,919 Speaker 1: Lingos of dollar is compared to Russian ruble through one hundred. 347 00:18:49,960 --> 00:18:52,400 Speaker 1: I just did a lord regression of it back twenty years. 348 00:18:52,440 --> 00:18:55,440 Speaker 1: Ecuse me back to seven. Also, what do I make 349 00:18:55,520 --> 00:18:59,560 Speaker 1: of the newly weakened ruble? What does its signal? Given 350 00:18:59,600 --> 00:19:02,840 Speaker 1: the lack of flows, the lack of information that we. 351 00:19:02,840 --> 00:19:07,399 Speaker 7: Have, and it's very clear that if this is a 352 00:19:07,440 --> 00:19:11,680 Speaker 7: war of attrition that puts Russian a weaker state visa 353 00:19:11,800 --> 00:19:13,560 Speaker 7: vi the rest of the world. You know the fact 354 00:19:13,600 --> 00:19:17,200 Speaker 7: that it relies on foreign currency, hard currency in order 355 00:19:17,280 --> 00:19:21,280 Speaker 7: to buy whether it's military goods and so on, and 356 00:19:21,320 --> 00:19:23,240 Speaker 7: then it relies on help from partners. 357 00:19:23,240 --> 00:19:23,600 Speaker 1: You know, it. 358 00:19:23,560 --> 00:19:26,320 Speaker 7: Relies on high oil prices, and we've seen a wild 359 00:19:26,400 --> 00:19:28,800 Speaker 7: trying to break higher, but it's not really following through. 360 00:19:29,040 --> 00:19:30,960 Speaker 7: And so I do think that in terms of that 361 00:19:31,000 --> 00:19:33,560 Speaker 7: war of attrition, it does all else equal just put 362 00:19:33,600 --> 00:19:36,240 Speaker 7: Russian in a slightly weaker spot. Can you read anything 363 00:19:36,440 --> 00:19:39,000 Speaker 7: in terms of capital flow? Is almost sadly not. You know, 364 00:19:39,040 --> 00:19:42,200 Speaker 7: it's a kind of controlled currency at the moment. 365 00:19:42,119 --> 00:19:44,199 Speaker 1: But it's unraveling. I'm not going to say it's a 366 00:19:44,240 --> 00:19:47,119 Speaker 1: Zimbabeli equivalent because it's not. Or you know, even the 367 00:19:47,119 --> 00:19:51,399 Speaker 1: complexities of the Turkish lira, how do they respond to 368 00:19:51,480 --> 00:19:52,640 Speaker 1: it or does no one care? 369 00:19:54,400 --> 00:19:56,439 Speaker 7: I don't think there is a response as such. I 370 00:19:56,440 --> 00:20:00,199 Speaker 7: mean it's it's a very different economy to even say 371 00:20:00,240 --> 00:20:04,040 Speaker 7: the Turkish lera, where it's an economy turkysh an economy 372 00:20:04,040 --> 00:20:06,359 Speaker 7: that's dependent on commodity imports. I mean being in a 373 00:20:06,400 --> 00:20:08,919 Speaker 7: position where you're a commodity exporter does put you in 374 00:20:08,960 --> 00:20:11,320 Speaker 7: a position of relative strength, and so there will always 375 00:20:11,320 --> 00:20:15,119 Speaker 7: be some hard currency coming in, and so in that sense, 376 00:20:15,160 --> 00:20:17,720 Speaker 7: the currency the ruble is less of a signal for 377 00:20:17,800 --> 00:20:20,240 Speaker 7: the underlying strength or state of the Russian economy. 378 00:20:20,359 --> 00:20:23,440 Speaker 2: A Selenos, thank you of ABC Capital Markets and the 379 00:20:23,480 --> 00:20:24,679 Speaker 2: latest in the FX market. 380 00:20:35,680 --> 00:20:38,840 Speaker 1: Speaking of an immoderate Capitol Hill. Henrietta Trace joins now 381 00:20:38,840 --> 00:20:42,560 Speaker 1: economic policy research director Data Partners, who was on fire 382 00:20:42,640 --> 00:20:45,800 Speaker 1: last week, get a dragger back here this morning to 383 00:20:45,920 --> 00:20:50,480 Speaker 1: talk about exactly where we are, Henrietta, is a broad statement. 384 00:20:50,720 --> 00:20:53,720 Speaker 1: Is the debt debate now the same old, same old 385 00:20:53,800 --> 00:20:57,800 Speaker 1: you've heard for years? Or is there something new about 386 00:20:57,840 --> 00:20:59,920 Speaker 1: our worry of our debt and our debt. 387 00:21:01,600 --> 00:21:05,560 Speaker 8: I had a really interesting conversation with some senior counsel 388 00:21:05,640 --> 00:21:08,280 Speaker 8: on the Hell late last week that I would share 389 00:21:08,320 --> 00:21:11,560 Speaker 8: with y'all. The conversation around the debt and a government 390 00:21:11,640 --> 00:21:14,280 Speaker 8: shut down in federal spending has obviously been with us 391 00:21:14,280 --> 00:21:17,480 Speaker 8: for a couple of months now, since the Republicans came 392 00:21:17,480 --> 00:21:19,959 Speaker 8: into control of the House. And that's great, you want 393 00:21:20,000 --> 00:21:23,800 Speaker 8: to see that conversation, But the tension that we see 394 00:21:23,840 --> 00:21:27,720 Speaker 8: between a small faction of House Republicans and the moderate 395 00:21:28,000 --> 00:21:30,760 Speaker 8: or sort of middle ground of the House Caucus and 396 00:21:30,840 --> 00:21:34,520 Speaker 8: certainly the Senate is so far apart that the dialogue 397 00:21:34,520 --> 00:21:37,440 Speaker 8: on the hell now is not about reducing federal spending 398 00:21:37,480 --> 00:21:39,360 Speaker 8: as a way to get over this impast that we're 399 00:21:39,400 --> 00:21:41,600 Speaker 8: going to face at the end of September. It's about 400 00:21:41,680 --> 00:21:44,960 Speaker 8: who can we impeach, can we get money for the border, 401 00:21:45,359 --> 00:21:47,760 Speaker 8: what do we need to do to draw attention to immigration? 402 00:21:48,280 --> 00:21:51,920 Speaker 8: And it is a dialogue that is really markedly important 403 00:21:51,920 --> 00:21:54,200 Speaker 8: for your exact question, because it's not about the debt, 404 00:21:54,240 --> 00:21:57,720 Speaker 8: it's not about deficit spending. It's about whatever they can 405 00:21:57,800 --> 00:22:00,000 Speaker 8: get from a political perspective to score away. 406 00:22:00,400 --> 00:22:02,720 Speaker 1: If there are tea leaves out there, like something in 407 00:22:02,800 --> 00:22:07,240 Speaker 1: a state fair, Okay, fine, iower name another state, or 408 00:22:07,320 --> 00:22:09,840 Speaker 1: if it's something like the vote in Ohio last week 409 00:22:09,840 --> 00:22:12,879 Speaker 1: that we talked about last week, is there a point 410 00:22:13,040 --> 00:22:15,919 Speaker 1: where the middle ground of the two parties put the 411 00:22:15,960 --> 00:22:20,120 Speaker 1: extremes in their place and we move forward to some 412 00:22:20,240 --> 00:22:22,840 Speaker 1: kind of true political discourse. 413 00:22:24,040 --> 00:22:25,280 Speaker 8: You know, I don't think we're going to see that 414 00:22:25,320 --> 00:22:28,239 Speaker 8: until we get into the general election, and probably not 415 00:22:28,400 --> 00:22:30,160 Speaker 8: if Donald Trump is at the top of the ticket 416 00:22:30,160 --> 00:22:34,639 Speaker 8: on the Republican side. The opportunity for Democrats to stress 417 00:22:34,640 --> 00:22:37,840 Speaker 8: the extremism of the right when it comes to abortion 418 00:22:38,359 --> 00:22:42,000 Speaker 8: and the inability to move beyond it from the right 419 00:22:42,080 --> 00:22:45,200 Speaker 8: during primary season means at least for the next six 420 00:22:45,280 --> 00:22:48,920 Speaker 8: to eight months, we're going to be in these hyperpartisan camps. 421 00:22:49,320 --> 00:22:52,200 Speaker 8: And the issue of abortion, as you suggest from Ohio 422 00:22:52,480 --> 00:22:57,119 Speaker 8: last week, is so telling. It moves not just Democratic 423 00:22:57,200 --> 00:23:00,080 Speaker 8: voters to get out, but the pendulum swing that we 424 00:23:00,119 --> 00:23:04,280 Speaker 8: see from Republican voters, just for example in Arizona, is 425 00:23:04,320 --> 00:23:08,720 Speaker 8: a four percentage point swing of the voter base from 426 00:23:08,760 --> 00:23:12,280 Speaker 8: twenty sixteen when they elected Trump to twenty twenty when 427 00:23:12,320 --> 00:23:15,000 Speaker 8: they elected Biden, and then the twenty twenty two mid terms. 428 00:23:15,080 --> 00:23:18,880 Speaker 8: That is abortion. It has moved the needle so substantially 429 00:23:18,920 --> 00:23:22,680 Speaker 8: that in tight margin states like Ohio, like excuse me, 430 00:23:22,760 --> 00:23:26,800 Speaker 8: not Ohio, but Arizona, Pennsylvania, Georgia, Nevada, in those states 431 00:23:26,840 --> 00:23:30,040 Speaker 8: the margin is so razor thin. But the pendulum swing 432 00:23:30,080 --> 00:23:33,840 Speaker 8: that you're suggesting as they turn from partisan politics towards 433 00:23:33,920 --> 00:23:37,440 Speaker 8: the moderate center is really the tell. And that's where 434 00:23:37,480 --> 00:23:41,800 Speaker 8: you see the shift from Republican voters independent voters. Sixty 435 00:23:41,840 --> 00:23:44,399 Speaker 8: three percent of FOAM or seventy even in some cases 436 00:23:44,560 --> 00:23:47,400 Speaker 8: believe that abortion should be legalized. This is a voter 437 00:23:47,520 --> 00:23:50,359 Speaker 8: issue that has tremendous impact in red states and blue 438 00:23:50,640 --> 00:23:53,880 Speaker 8: Ohio would be a perfect example in Kansas last year. 439 00:23:53,920 --> 00:23:56,879 Speaker 2: First debate nine days away. Let's set the stage. Who's 440 00:23:56,920 --> 00:23:57,199 Speaker 2: on it? 441 00:23:58,680 --> 00:24:01,359 Speaker 8: That's a great question. I don't know that Trump's going 442 00:24:01,440 --> 00:24:03,920 Speaker 8: to be on it. I think that based off how 443 00:24:03,960 --> 00:24:06,800 Speaker 8: he's treating these indictments, he clearly wants to be at 444 00:24:06,800 --> 00:24:09,320 Speaker 8: center stage, So it looks to me a little bit 445 00:24:09,400 --> 00:24:12,720 Speaker 8: like he should be there. I would recommend, if I 446 00:24:12,800 --> 00:24:15,400 Speaker 8: was on his campaign, not to go because his next 447 00:24:15,440 --> 00:24:18,480 Speaker 8: closest competitor, rond De Santis, is the one to beat. 448 00:24:19,080 --> 00:24:21,440 Speaker 8: He's at about fifteen percent in the polls, which makes 449 00:24:21,480 --> 00:24:23,800 Speaker 8: him far and away the front runner of the sort 450 00:24:23,840 --> 00:24:26,440 Speaker 8: of second tier candidates. Everybody else is locked in sort 451 00:24:26,440 --> 00:24:29,120 Speaker 8: of those low single digits. So I would say to Trump, 452 00:24:29,200 --> 00:24:31,040 Speaker 8: you know, stay home if you can avoid the spotlight. 453 00:24:31,119 --> 00:24:33,679 Speaker 8: Let Rhonda Santis take the last couple of hits. The 454 00:24:33,840 --> 00:24:38,400 Speaker 8: potential for the Gavin Newsom Randa Stantis debate in November 455 00:24:38,400 --> 00:24:42,400 Speaker 8: eighth to be canceled. If this can't be pulled off, 456 00:24:42,520 --> 00:24:44,679 Speaker 8: is something that I think is really important to watch 457 00:24:45,119 --> 00:24:47,399 Speaker 8: and Lisa to the conversation we had last week. It 458 00:24:47,440 --> 00:24:50,280 Speaker 8: really opens the door for a third, another candidate that 459 00:24:50,320 --> 00:24:52,160 Speaker 8: maybe is not in the race right now, to jump in. 460 00:24:52,320 --> 00:24:53,879 Speaker 6: And that's something a lot of people are looking for. 461 00:24:54,119 --> 00:24:57,400 Speaker 5: When you talk about Trump being a pro conventional candidate, 462 00:24:57,440 --> 00:24:59,680 Speaker 5: he is not, as we all know, and he probably 463 00:25:00,200 --> 00:25:02,800 Speaker 5: isn't listening to conventional advice. At a time where he 464 00:25:02,880 --> 00:25:07,000 Speaker 5: stopped by the Iowa State Fair, broke with convention pretty directly. 465 00:25:07,160 --> 00:25:09,040 Speaker 5: He wasn't supposed to be there, and he did this 466 00:25:09,200 --> 00:25:14,120 Speaker 5: to try to basically lambast his opponent, Rond de Santis, 467 00:25:14,320 --> 00:25:18,119 Speaker 5: and people applauded him, and they booed Rond de Santis. 468 00:25:18,200 --> 00:25:19,880 Speaker 6: How long can this playbook work? 469 00:25:20,119 --> 00:25:23,239 Speaker 5: Where people don't need Donald Trump to flip burgers and 470 00:25:23,320 --> 00:25:26,160 Speaker 5: to hold babies and to go around and shake people's hands. 471 00:25:26,160 --> 00:25:28,359 Speaker 5: He can just swoop in for about an hour and 472 00:25:28,440 --> 00:25:31,160 Speaker 5: basically give a stump speech, fly off, and everybody says, 473 00:25:31,160 --> 00:25:32,440 Speaker 5: we like that he's unconventional. 474 00:25:33,600 --> 00:25:34,400 Speaker 1: It's a TV. 475 00:25:34,280 --> 00:25:36,239 Speaker 8: Show and he's an expert at it. I mean, it 476 00:25:36,280 --> 00:25:39,719 Speaker 8: makes for excellent television. The booing gets more stories than 477 00:25:39,760 --> 00:25:42,879 Speaker 8: the actual candidates. Whether that's Mike Pence, Chris Christi or 478 00:25:43,000 --> 00:25:46,000 Speaker 8: Rondi Santis. I mean it's the playbook works. I would 479 00:25:46,000 --> 00:25:46,880 Speaker 8: say keep doing it. 480 00:25:47,240 --> 00:25:50,320 Speaker 2: Does wrapping eminem work Henrietta? Does that help? 481 00:25:51,720 --> 00:25:56,000 Speaker 8: No, it's just not that I would like tother maybe 482 00:25:56,040 --> 00:25:58,120 Speaker 8: not directed from the internet. I would love to see 483 00:25:58,119 --> 00:26:00,320 Speaker 8: that for him. I don't give a lot of credit 484 00:26:00,480 --> 00:26:01,119 Speaker 8: credence to that. 485 00:26:01,280 --> 00:26:03,600 Speaker 2: Heacy, and thank you. 486 00:26:04,400 --> 00:26:08,240 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 487 00:26:08,359 --> 00:26:12,560 Speaker 1: anywhere else you get your podcasts. Listen live every weekday 488 00:26:12,840 --> 00:26:16,320 Speaker 1: starting at seven am Eastern, on Bloomberg dot Com, the 489 00:26:16,440 --> 00:26:21,000 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 490 00:26:21,040 --> 00:26:25,080 Speaker 1: can watch us live on Bloomberg Television and always. I'm 491 00:26:25,080 --> 00:26:29,119 Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and 492 00:26:29,200 --> 00:26:30,760 Speaker 1: this is Bloomberg