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Speaker 2: We are so fortunate to join us now for an
Speaker 2: extensive conversation is Jason Trenner. He is intimately involved with
Speaker 2: some of the finance and indeed the politics of mister
Speaker 2: Besson and I would say tangentially mister drut and Miller
Speaker 2: as well. Jason, We are fortunate to have you here
Speaker 2: this morning.
Speaker 3: Mister Tigez, I'm fortunate to be here.
Speaker 2: Are you just your thoughts when you saw the essay
Speaker 2: from mister druck and Miller about the Treasury Secretary and
Speaker 2: yield management?
Speaker 4: Well, I have to say, just in purpose full disclosure,
Speaker 4: I know all these people pretty well, and so I'm
Speaker 4: probably gonna pull some punches here. But to answer your question,
Speaker 4: I was quite surprised, uh to see uh, mister Drucgonmiller
Speaker 4: write that essay. And that's simply that op ed simply
Speaker 4: because he worked obviously worked with Scott Besson and Kevin
Speaker 4: Walsh and all the rest. And it's a direct it's
Speaker 4: a direct hit on the administration.
Speaker 2: You and I could go for two hours on this
Speaker 2: without without taking a breath. Let me get this in here,
Speaker 2: because Alexis has six questions as simple as I can.
Speaker 2: How does this constrain Chairman Warsh at Jackson Hole? And frankly,
Speaker 2: how does it contain constrained Chairman Warsh to the next
Speaker 2: and the next and the next meetings?
Speaker 4: And so if you're talking about the bond market, uh
Speaker 4: bond market intervention, it makes Kevin Warsh's job harder. There's
Speaker 4: just no two ways about it. Because the cost of
Speaker 4: capital is is debt capital risk pree capital is artificially low.
Speaker 4: And I think what mister Druggonmiller was saying this morning,
Speaker 4: which I agree with, is that you know the price
Speaker 4: mech you know is a mondralize just the bedrock of
Speaker 4: capitalism and regulating supply and demand.
Speaker 3: And so if you keep, if you keep the price
Speaker 3: lower than it should be.
Speaker 2: This is why we love Ivan. Jason goes to the
Speaker 2: single sentence of the essay where I set up and listen.
Speaker 2: I'll get to it in a moment. Alexis Christophers with
Speaker 2: Jason trended across America.
Speaker 5: Let the bond market speak right, that's what drunk thro
Speaker 5: Miller basically, so, but I want to switch gears for
Speaker 5: him and still stick with Bessent though, because he talked
Speaker 5: yesterday yesterday about unleashing economic d day on Iran. Your
Speaker 5: thoughts on the US's plan here might a backfire? Are
Speaker 5: we on a collision course with China? S am analysts are.
Speaker 3: Saying, and Alexis, I'll just be here a Canady.
Speaker 4: This is not my lane, okay, so but by the
Speaker 4: same token, it seems to me like it might have
Speaker 4: a better chance of success than what we've been doing,
Speaker 4: which is I think unless you're going to put my
Speaker 4: this is my own personal opinion. I have no expertise here,
Speaker 4: but I think unless you're gonna put on the ground,
Speaker 4: is very very difficult.
Speaker 3: To use some sort of as they say.
Speaker 4: Kinetic kinetic approach and have it be successful. So this
Speaker 4: may indeed help in that regard to get what we
Speaker 4: want in the United States, which is a non nuclear Iran.
Speaker 3: It might have a better chance of doing it.
Speaker 4: I think aside from that, we would have to have
Speaker 4: a more robust military intervention, and I don't think anyone
Speaker 4: really wants that, whether it's the president or the American people.
Speaker 5: I want to stick with the economy and what's happening
Speaker 5: right now, with how the US is dealing with Canada,
Speaker 5: and what that might mean for us here in the US.
Speaker 5: Because we're already dealing with elevated inflation. This could, as
Speaker 5: canon now promising these retaliatory tariffs could raise prices here
Speaker 5: for the US consumer. So what does this mean if
Speaker 5: it becomes as long dragged out trade war as summer
Speaker 5: saying it might.
Speaker 4: Well, at the margin, clearly it will prompt inflationary.
Speaker 3: Pressure in the United States.
Speaker 4: And again, as I started off the segment by saying,
Speaker 4: I think prices are the best way to regulate supply
Speaker 4: and demand, and if you start adding to prices, adding costs,
Speaker 4: clearly one would think that demand would go down. Now,
Speaker 4: I have to say I'm more sympathetic to President Trump's
Speaker 4: tariffs and a lot of people in my business, and
Speaker 4: that's simply because I kind of know where he's coming from.
Speaker 4: If you look at any of these so called free
Speaker 4: trade agreements, they're a thousand pages long and have a
Speaker 4: million cutouts for various special interests and all the rest.
Speaker 4: So there's really no such thing. I think in a
Speaker 4: perfect world, free trade would be great, and the free
Speaker 4: trade agreement would be a paragraph law or go where
Speaker 4: sentns lawn right, And we don't really have that, So
Speaker 4: there's just a reality. I think that the president administration
Speaker 4: is addressing.
Speaker 2: A nice lift to the market today, Isabelle said Nvidia
Speaker 2: on fourteen, twenty thirty days straight. I'm kidding, folks, but anyways,
Speaker 2: a nice pop to the market and naasy cup eight
Speaker 2: tens of a percent. Jason Trentett here on the Druck
Speaker 2: and Miller absent moment that we're in. Buried in that
Speaker 2: essay is a nominal GDP statement, which is that where
Speaker 2: the ten year yield is right now is somewhat accommodative
Speaker 2: given our boom economy. The bottom line is we've got
Speaker 2: a nominal GDP like a banana republic, you know, five
Speaker 2: percent five and a half. John writings consumption investment out
Speaker 2: of an eight percent statistic. Here, we're not all that
Speaker 2: restrictive right now in our yields, are we?
Speaker 6: No?
Speaker 4: And I think I have to again to spread some
Speaker 4: of the blame around. I think FED policy in many
Speaker 4: ways is responsible to that since the global financial crisis,
Speaker 4: and that's because they had a perpetuation of financial oppression
Speaker 4: and the use of QE, which, in my opinion, as
Speaker 4: Stan says in this article, it greatly encouraged Congressman to
Speaker 4: spend money they don't have, which they'll they'll readily do.
Speaker 4: And that's both sides of the aisle. And that's happened
Speaker 4: to our long an equal opportunity, equal opportunity. And I
Speaker 4: can tell you there's not a lot of people in Washington,
Speaker 4: just given my own wanderings down there, that really see
Speaker 4: this is a threat that our debt level or.
Speaker 3: Really worry about it.
Speaker 4: And I'm not even sure they know that the FETE
Speaker 4: has been bailing them out jacks in.
Speaker 2: The heart of their optimism, and the best in optimism
Speaker 2: is we will continue to grow through innovation, the classic
Speaker 2: Stigletz equation that our growth rate will do better than
Speaker 2: our debt build up.
Speaker 4: Yeah, well that's you know, there's rein Hard and Rogueff
Speaker 4: talked about the ways you get out.
Speaker 2: I have Ken, Rogoff and Jackson, all folks last night
Speaker 2: wandering through this time is different that My first question
Speaker 2: to rogue Off and Jackson.
Speaker 4: Yeah, right, because, as they pointed out, there are a
Speaker 4: couple of ways to get out of this. You just default, Well,
Speaker 4: we don't have to do that because we're the reserve currency.
Speaker 4: You can do soft default of inflation. You could take
Speaker 4: over another country and take their resources, like rename like
Speaker 4: Ontario the Greenland or something right. Or you could erase
Speaker 4: taxes and at cut spending, which I think would be
Speaker 4: probably disadvantageous at this point. Or you can grow your
Speaker 4: way out, and I think grow your way out is
Speaker 4: always the best way right now. I think it's the
Speaker 4: only choice we have because you can't raise tack in
Speaker 4: my opinion, you can't raise tax is enough or cut
Speaker 4: spending enough.
Speaker 3: You could make a big difference.
Speaker 2: Alexis Custopers in time. Can you welcoming all of you
Speaker 2: across the nation, around the world. Jason Trinner with us
Speaker 2: with Statiga's research partners again the way you choose to
Speaker 2: listen to us every morning, We thank you. Ninety nine
Speaker 2: and one FM, Nathan Hager Radio in Washington, Good Morning,
Speaker 2: ninety two nine FM in Boston, Serious XM across all
Speaker 2: of America, in Canada including Alberta, Yes, which is a joke.
Speaker 2: I said is a fifty first date. We'll talk about
Speaker 2: that in an eight o'clock hour. But good morning, Alberta.
Speaker 2: On Serious xm Alexis Christophers with Jason Trinner.
Speaker 5: Jason, with the Treasury now intervening in the bond market,
Speaker 5: what does this do to our credibility when on the
Speaker 5: world stage.
Speaker 4: Well, it's certainly I would say, uh, it doesn't help.
Speaker 3: I mean, it would just be very candidate.
Speaker 4: It's and I do think if I'm I'm playing the markets,
Speaker 4: if I'm thinking as a speculator, I would be very
Speaker 4: careful in being short bonds here because the tool cut
Speaker 4: that Secretary Besset has talked about is large, and there
Speaker 4: are a lot of things he can do to hurt
Speaker 4: bond shorts. From a long term perspective, I you know,
Speaker 4: I don't. This is you're treating the symptom rather than
Speaker 4: it's aim.
Speaker 3: Yeah, you're you're not.
Speaker 4: You're not dealing with the underlying problem. And that's that's
Speaker 4: not Secretary Vestin's fault or even President Trump's fault. It's
Speaker 4: a collective fault of Washington.
Speaker 5: So if this is the landscape in which we're going
Speaker 5: to be navigating, and we're seeing now investors moving to
Speaker 5: other assets to hedge. Gold has been up lately. Bitcoin
Speaker 5: above a thousand dollars for the first time in three
Speaker 5: months at least earlier today. I think it's pulled back
Speaker 5: a little bit now. Is that the way to move forward?
Speaker 4: I think listen. I think that's probably going to continue
Speaker 4: until anyone gets any religion on spending, which is to say,
Speaker 4: you know, people talked about dedollarization earlier this year. I
Speaker 4: think it's more defeatization because I don't see another I
Speaker 4: don't see another fiat currency that.
Speaker 3: Will take the place of the US dollar.
Speaker 4: But I do think hard assets and I would put
Speaker 4: gold in that category much more than I would put bitcoin.
Speaker 4: But be that as it may, they're both going up,
Speaker 4: and I think you're absolutely right, Alexis that's where people
Speaker 4: are going the.
Speaker 2: Time that we've left. Can we ask g's normal question?
Speaker 5: Oh on normal? Would yes?
Speaker 7: Go ahead?
Speaker 2: Are you comfortable only large cap quality stocks Meg seven
Speaker 2: and others as well? That's a traditional question from.
Speaker 4: A FA and it it actually suggests that evaluation matters,
Speaker 4: which sometimes I wonder when I go into these meetings people, Well,
Speaker 4: you talk about Graham and Dodd and people look at
Speaker 4: you like they don't know what you're talking about. If
Speaker 4: you're if you're under forty, you know, that's a foreign concept.
Speaker 3: I think.
Speaker 4: I think for uh, I will say this, I am
Speaker 4: nervous about the hyperscalers in particular because it.
Speaker 3: Is discounting.
Speaker 4: Very rapid productivity and earning scrubs in the future, and
Speaker 4: that may very well happen, but it is there's no
Speaker 4: question about it that it's a bet that people are
Speaker 4: making and that if there's anything that's happened in the
Speaker 4: last thirty years for fifty years that would do it, it.
Speaker 3: Could be AI.
Speaker 4: But by the same token, Uh, there's not a lot
Speaker 4: of margin of safety, it seems to me there.
Speaker 2: I feel like George Burns. I got to ask Jason Trynner.
Speaker 3: Hey, look great, hey man, thanks, how you feeling.
Speaker 2: Everybody in Wall Street wants to know how you feel
Speaker 2: after battling an illness?
Speaker 4: Yeah, mercifully, everything's good, Thank you, yep. And you know,
Speaker 4: sunshine and being back in the office every day are
Speaker 4: the best medicines for me.
Speaker 2: Did your son survive Boulder? In his sink, I saw
Speaker 2: that he got a double major his academics at Boulder
Speaker 2: and a minor from the sink the bar.
Speaker 4: Yeah, exactly. Yeah, he's yeah, he's in New York. He's
Speaker 4: he's living with a couple of buddies downtown. Of course
Speaker 4: he's gonna find it. They are conditioning, they have air conditioning.
Speaker 4: But you know, it's it's all being in every case,
Speaker 4: it's being subsidized by the bank of Mom and Dad. Right,
Speaker 4: So all of his roommates familiar story, precisely. And so
Speaker 4: he's he's beating the bushes on Wall Street to follow
Speaker 4: in his dad's footsteps hopefully, And I'm thrilled about that.
Speaker 4: And he's anyway, he Bolder was what a great place
Speaker 4: that is. That's a pretty spris as you know, I.
Speaker 2: Enjoyed two years there before going to R A. T.
Speaker 2: And it's just as really really uh the fondest memories.
Speaker 3: Yeah, yeah, this was.
Speaker 2: This was right after they found gold, the Unsinkable Molly
Speaker 2: Brown found gold way back up in the mountains, way back.
Speaker 3: Jason T.
Speaker 2: Thank you so much, totigas Research Partners. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
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Speaker 2: Will tanged to speak to Samonomakuda, chief economists at State Street.
Speaker 2: Here wrapped around my exit tomorrow for Jackson All we'll
Speaker 2: have all our special coverage for you Friday, Simona. I'm
Speaker 2: with Ethan Harris, who's out on LinkedIn with brilliant notes
Speaker 2: each and every day that mister Warrish is going to
Speaker 2: do everything to make this a non event. Do you agree?
Speaker 8: If he wants to make it an event, there's not
Speaker 8: a whole lot he can do. And I think right
Speaker 8: now you don't want an event because chances are it
Speaker 8: would be a destabilizing event, not a friend market market
Speaker 8: friendly event. So yes, better through not rock the boat here.
Speaker 2: I mean rocktor broad is the economists what economy do
Speaker 2: you see? I mean, we forget that all of us
Speaker 2: is wrapped around a guesstimate a Q four and in
Speaker 2: the twenty twenty seven is it just more of the
Speaker 2: same or the State Street seeing abruptness and change to
Speaker 2: the American economy?
Speaker 8: No, I don't think so. I think the reality is
Speaker 8: still the same reality. We had a few months ago.
Speaker 8: It's a two speed economy, not just here in the US,
Speaker 8: but you know, in many places around the world the
Speaker 8: US outperforms. But it's not all smooth sailing. I remember
Speaker 8: last time you and I talked, we were, you know,
Speaker 8: just before the last payrols report, and we had a
Speaker 8: nasty surprise there. And I think you live in this
Speaker 8: world where like you're watching to see what every data
Speaker 8: point tells you about what is the true state of
Speaker 8: affairs here? And in that kind of a world, you
Speaker 8: it's just keeping the balance. You cannot have a very
Speaker 8: strong view either way because you can be contradicted by
Speaker 8: the next release. Trying to figure it out.
Speaker 5: I know we all are. Are we just biting off
Speaker 5: more than we can chew when it comes to Canada
Speaker 5: and this now seemingly escalating trade war. Can things backfire,
Speaker 5: especially when you consider the backdrop which could be could
Speaker 5: be higher interest rates in the months ahead.
Speaker 8: You know, I don't know. Can I have a very
Speaker 8: big sigh here, because that's exactly how I feel about
Speaker 8: this situation. It's you know, there are negotiations and there
Speaker 8: is a process here, and there is a back and
Speaker 8: forth and a tug of war to some extent. But
Speaker 8: you know, truly, I hope that we resolve this because
Speaker 8: of all the countries in the world, right in Mexico
Speaker 8: and Canada are here, right here, and they are the
Speaker 8: ones that we want to work with, because even some
Speaker 8: of the domestic ambitions, industrial reemergence ambitions of the US
Speaker 8: cannot truly work without these two neighbors. So you have
Speaker 8: to find a way forward that works for all three.
Speaker 2: But one of the differences here, folks, is so many
Speaker 2: people have a prism of comfort of the United States.
Speaker 2: Samona Macat is different out of West University of Timosaura, Romania.
Speaker 2: I mean some one of the view you have from
Speaker 2: your Romania is just flat out different. How are we
Speaker 2: perceived in our daily chaos in America across all of
Speaker 2: Eastern Europe from call it Helsinki, I'm down to the
Speaker 2: Black Sea in Romania?
Speaker 8: You know, I think there there's a multitude of feelings
Speaker 8: because there is still very much an undertone of admiration
Speaker 8: and recognition of what the US is capable of what
Speaker 8: it stands for. And yet I think, you know, hearing
Speaker 8: it from a lot of people in my personal circles,
Speaker 8: there is also a lot of confusion and you know
Speaker 8: the sense of what's going on to going back to
Speaker 8: what I said earlier, we are all trying to figure
Speaker 8: it out. I think the people outside the US are
Speaker 8: also trying to figure out the US itself.
Speaker 9: You know what.
Speaker 5: I'm actually just going to go off script for a
Speaker 5: moment and stick with Eastern Europe because I've just been
Speaker 5: reading so much about Poland right and now it's becoming
Speaker 5: sort of this economic superpower within the EU. What can
Speaker 5: we Americans learn from how Poland is doing it right now?
Speaker 8: Simona, Well, I'm not sure there is truly a lot
Speaker 8: of direct relevance there there. You know, Poland has some
Speaker 8: very specific advantages. It's a large nation on Eastern Europe,
Speaker 8: it has lower labor costs there. Those are big advantages,
Speaker 8: and you know, they are capitalizing on them. So I'm
Speaker 8: not sure it's necessarily a lesson for the US here.
Speaker 8: But I think a.
Speaker 5: Very tight and not a lot of immigration going on
Speaker 5: in Poland. I don't know if that's something that maybe
Speaker 5: the Trump administration point to.
Speaker 8: Well, you know, I would say there are perhaps the
Speaker 8: broader work ethic, the you know, coalition sustaining the engagement
Speaker 8: with the you know, the broader European nations. I think
Speaker 8: those that's where the values and the lessons perhaps lie
Speaker 8: a little more in my view.
Speaker 2: Simona Timosaura sort of like folks in the middle left
Speaker 2: center of Romania. It's called the Little Vienna. The photographs
Speaker 2: are gorgeous.
Speaker 8: It's a beautiful city. Yes, many places, I would you know.
Speaker 8: Now we are pushing me. I have to talk about
Speaker 8: my hometown. It's not just Timi shran I went to
Speaker 8: school there, but you should visit Alordia. It's it's absolutely studying.
Speaker 8: There is a lot of art involved.
Speaker 2: You know.
Speaker 8: I always feel a little bit of sadness because I
Speaker 8: talk to people and say, oh have you visited? Oh
Speaker 8: we all went up to Beauty Pest and then it's
Speaker 8: like an invisible wall is still there. Nobody there is
Speaker 8: to crossover. It's safe and it's beautiful. You should go,
Speaker 8: is it?
Speaker 2: This is wonderful, Samona Makutter, thank you so much. Stay
Speaker 2: with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 1: watch us live on YouTube.
Speaker 2: Steven Sastik here, who I can't say enough, is just
Speaker 2: just the perfect guy to talk to about this. What
Speaker 2: paragraph and the drug and miller essay got your attention.
Speaker 7: Oh he had me at the first sentence top. You know,
Speaker 7: it's funny because i'd been I wrote about this something
Speaker 7: similar after the En intervention, and to me it was
Speaker 7: always a bit odd. Now the EN intervention, I would
Speaker 7: say was probably a bit more necessary. But if anyone
Speaker 7: bess bessins, you know, bones were supposed to were supposed
Speaker 7: to be made working for sorows fighting you know, breaking
Speaker 7: the Bank of England, he should know as well as anybody.
Speaker 7: And this is where Druck and Miller started, was that
Speaker 7: you if the tides are moving in a certain direction,
Speaker 7: you can only fight them for so long if you're
Speaker 7: without something changing. And so in the case of the
Speaker 7: bond intervention, unless the unless the Fed, or the Treasure
Speaker 7: or or the fiscal authorities do something different, you're fighting
Speaker 7: this trend of people not wanting long bonds. And it's
Speaker 7: not because of credit quality. The credit to fault swaps
Speaker 7: on US treasuries are relatively unchanged. There's so much competition
Speaker 7: for long paper right now, you know, calling another one
Speaker 7: hundred trillion dollars from hyper scalers and the like. There's
Speaker 7: just too much. There's more paper coming on than than
Speaker 7: than than is available for the market, than the market conveyor.
Speaker 7: And you see three or three percent real rates on
Speaker 7: long treasuries. That's not a matter. That's just a matter
Speaker 7: of fighting the tide in the short term for for
Speaker 7: you know, for a very short term gain. Yeah.
Speaker 5: Well, when when you talk about long more, long more
Speaker 5: paper coming on, is that a threat to the stock rally?
Speaker 7: It can be the way the way I've been I
Speaker 7: wrote about this a couple of weeks ago and and
Speaker 7: basically said that, you know, for the basically fifteen years
Speaker 7: pretty much since the global financial crisis, we had low
Speaker 7: interest rates, we had very low inflation, and we also
Speaker 7: had companies doing massive buybacks reducing the flow of available
Speaker 7: the supply of available shares and private equity and other
Speaker 7: you know, m and A activity reducing the supply of
Speaker 7: available shares.
Speaker 3: Flip that on its head.
Speaker 7: Now, those companies that you have higher interest rates which
Speaker 7: kind of precludes a lot of private equity activity, and
Speaker 7: I think they would like to be sellers, considering some
Speaker 7: of them private credit woes that they're dealing with. Some
Speaker 7: of the biggest companies buying back shares are not aggressively
Speaker 7: doing it. They're basically now keeping their float stable and
Speaker 7: they have huge cash flow needs instead of spinning off
Speaker 7: tons of cash. So that tailwind has turned into a headwind. Well,
Speaker 7: is it strong enough to stop the market short term?
Speaker 7: Probably not, But you're now fighting this instead of having
Speaker 7: this pushing you forward.
Speaker 5: You know that we had one of the most read
Speaker 5: articles today on the Terminal was about private equity firms
Speaker 5: finding a new way to ride out the cash crunch.
Speaker 5: They're trying to placid investors because there's just no exit
Speaker 5: in sight, and they're doing something. They're blending stock and
Speaker 5: debt now to help boost I guess a key measure
Speaker 5: of fund performance. Does that make sense to you? Is
Speaker 5: this where we're at at this point?
Speaker 7: Unfortunately? Yes, I mean I give the immense credit to
Speaker 7: the financial engineering that these funds can do, but it
Speaker 7: tells us the basic problem is they would like to
Speaker 7: exit a lot of these investments. The whole point of
Speaker 7: private equity is to be you know, Yes, they'll say
Speaker 7: they're long term holders. But you want to exit and
Speaker 7: go on to the next deal, but you can't do
Speaker 7: that if if all your funds are tied up, you
Speaker 7: know in invest in investments that that are essentially very liquid.
Speaker 2: Steve Sasig with his chief market strategist Interactive Brokers. You know,
Speaker 2: I want to synthesize in here your Wharton abilities, which
Speaker 2: is this linkage here that we have of a financial
Speaker 2: system into our politics, into our markets. Verry, I can
Speaker 2: agree with my book of the Summer talks about financialization,
Speaker 2: and I think that's maybe what we're all screaming about,
Speaker 2: including mister Drucken Miller and mister Bessett with your wonderful perspective,
Speaker 2: Steve Sasnik, How financialized are we right now?
Speaker 3: Incredibly so?
Speaker 7: And I'm going to argue that on the margin we're
Speaker 7: actually more casinoized. If I'm gonna if I can coin
Speaker 7: a phrase, is I think you know.
Speaker 2: Love that John Tucker make a note? Can we steal
Speaker 2: this without real time?
Speaker 7: It's a foot an occasional It's occasional footnote is all
Speaker 7: I asked Tom.
Speaker 3: It's gradus.
Speaker 7: But basically, you know what's going on is is I
Speaker 7: think we've all fallen in love with markets and and
Speaker 7: fallen in love with financialization. And I think that's fair.
Speaker 7: It's it's it's created a lot of prosperity for a
Speaker 7: lot of people. So in some cases has ameliorated what
Speaker 7: I would call financial nihilism among a lot of my kids,
Speaker 7: friends and generation. But what what I think is going
Speaker 7: on now is because we've become so enamored of essentially
Speaker 7: an uninterrupted, almost two decade run in markets, I think
Speaker 7: a lot of that has become incredibly speculative. And you know,
Speaker 7: we're sort of bordering on, uh that that that fine
Speaker 7: line between speculation and just outright outright gambling.
Speaker 8: All right.
Speaker 5: You know I was going to ask you about FED direction. Yeah,
Speaker 5: we had Peter sheer on earlier. He actually says, you don't.
Speaker 5: He doesn't think we're in for a rate hike at
Speaker 5: all anytime soon. And he thinks the next thing we're
Speaker 5: going to see are a series of rate cuts from
Speaker 5: the Federal Reserve. What camp are you in?
Speaker 7: I'm in the camp of right now, Kevin Walsh is
Speaker 7: trying to play out the clock. I mean, I think
Speaker 7: he certainly doesn't want to be forced to do anything
Speaker 7: before the election. I think the working US bought him
Speaker 7: a lot of time.
Speaker 2: Sorry, no, no, you nailed it. You nailed it because
Speaker 2: we forget where the calendar is.
Speaker 6: Yeah.
Speaker 2: Yeah, and we're now into the idiocy of what do
Speaker 2: these people do up to the first Tuesday of November?
Speaker 2: Continues to so and so.
Speaker 7: The thing I would love to have him address, and
Speaker 7: I will basically say there's no chance of him addressing
Speaker 7: is are you and the Treasury secretary? You wash and
Speaker 7: the Treasury Secretary at odds because essentially the Treasury Secretary
Speaker 7: is doing Operation Twist, which was a form of QE,
Speaker 7: which seems to be at odds with what Worsh wants
Speaker 7: to do. I doubt that he'll touch that because it's
Speaker 7: not a press conference. It's just going to be an address.
Speaker 2: Steve Sastik, thank us so much, the Interactive Brokers, stay
Speaker 2: with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2: This is a joy. I grew up in a house
Speaker 2: that worshiped the guy named Nevill Shoot who was the
Speaker 2: author of Australia and frankly brought Australia to the Western world.
Speaker 2: His most famous book. With our question think Gregory Peck
Speaker 2: the movie on the Beach, a town like Alice and
Speaker 2: Beyond the Black Stump was his ability to go out
Speaker 2: to Western Australia and Perth. Joshua Krab joins us right
Speaker 2: now with Robko as well. Is Perth booming right now
Speaker 2: like say Brisbane's booming in the far Eastern Shore.
Speaker 6: I think the economy has been reasonably solid. I mean,
Speaker 6: morning industry has been pretty pretty solid for a number
Speaker 6: of years. Things like lithium are coming into a place,
Speaker 6: what we've seen in iron all.
Speaker 9: So I think the economy has been pretty good.
Speaker 6: Housing market's been pretty well supported, but it's been a
Speaker 6: while since I've been there. Yeah.
Speaker 2: Of course with Ribika, of course, the linkage always is
Speaker 2: on Asia Pacific to China. Link the different spheres of
Speaker 2: the Southeast Asia in Australia to China, which is the
Speaker 2: one you focus on most well, we.
Speaker 6: Look at the whole of the Asia pac region, you know,
Speaker 6: from New Zealand through Australia, Japan all the way up
Speaker 6: to sort of Pakistan, and I think there are a
Speaker 6: number of linkages that sort of sit there.
Speaker 2: Which is the most interesting linkage right now?
Speaker 6: I think probably the most interesting one is always what
Speaker 6: people are not talking about. So for me, that's Southeast Asia.
Speaker 6: Seven hundred million people genpp are capital as well behind
Speaker 6: what we see in other parts of the region in
Speaker 6: a sort of a nice place from the geopolitical perspective
Speaker 6: because they're far enough away that they can sort of
Speaker 6: benefit from both sides of that geopolitical divide, very very
Speaker 6: cheap stocks, so it be something that's very interesting, not
Speaker 6: a place that people are focused on. But as I
Speaker 6: always say to people, two years ago, no one was
Speaker 6: focused on Korea. If you remember at the time, we
Speaker 6: just had the martial law type of event, and people,
Speaker 6: no one should touch this market, no one should be interested,
Speaker 6: and we all know what's happened to that stock.
Speaker 2: So where's your next career right now?
Speaker 6: I think it's always hard to say what's going to
Speaker 6: be the next one now, but I think you definitely
Speaker 6: need to be looking at markets in Southeast Asia, Indonesia, Vietnam.
Speaker 6: You know, this type of marks have great long term
Speaker 6: trajectories coming out of them, that sort of structural growth.
Speaker 9: Sure, you get.
Speaker 6: Hiccups, these are emerging markets, but cheap valuations, big populations,
Speaker 6: lots of foreign direct investment benefit from these sort of
Speaker 6: strategies of supply chain diversification.
Speaker 9: So for me, you know, you've got to be looking
Speaker 9: at them. What do you think we.
Speaker 5: Can learn from the South Korean market because there's sort
Speaker 5: of the poster child or the single stock leveraged et
Speaker 5: if we saw it with Samsung sk hiinex. They're rebalancing
Speaker 5: that that. Forced don't know if regulators are going to
Speaker 5: move in to do anything, they're probably not. So what
Speaker 5: what can the greater markets learned from that?
Speaker 9: Yeah, I mean I do think this is the first one.
Speaker 6: Remember the zero day options that we had in markets
Speaker 6: like this, So I think the reality is is, you know,
Speaker 6: you've seen a great democratization of financial markets over the
Speaker 6: last twenty thirty years, and as a result of that,
Speaker 6: you do get these types of events. You know, people
Speaker 6: get excited, greed and fear still drive markets to a
Speaker 6: large extent, and you do see this in happening over
Speaker 6: and over again in various types of markets. So you know,
Speaker 6: I think it was an event that occurred and obviously
Speaker 6: created some extra volatility, you know, but there's also seen
Speaker 6: a lot of wealth creation in these markets.
Speaker 9: As I sort of said, I mean.
Speaker 6: That the wealth that's been spread not just in terms
Speaker 6: of the stock market, but also in terms of the
Speaker 6: earnings and how that's flowing through, you know, into the
Speaker 6: into the workers in those markets and spending that they do.
Speaker 2: How has the politics of America adjusted the investment and
Speaker 2: finance of Southeast Asia, the broad spectrum from New Zealand
Speaker 2: and Australia that Japan.
Speaker 6: Yeah, I mean, I think that's a real interesting question.
Speaker 6: I think there's always an element of politics, because obviously
Speaker 6: the political environment has changed, it's become more complex, and
Speaker 6: that's made people sort of think about, you know what
Speaker 6: that what does that mean for my currency exposures?
Speaker 9: What does it mean for them? You know the market
Speaker 9: volatility that's happening within that.
Speaker 6: But for me, honestly, I think the real the biggest
Speaker 6: question is not so much around the politics.
Speaker 9: It's been around the market environment.
Speaker 6: We've seen fifteen years of the US market outperforming everything
Speaker 6: else and until twenty twenty five, I don't.
Speaker 2: Mean to interrupt and running out of time This is
Speaker 2: the critical question. Do you need a rubiko dollar weakness
Speaker 2: to make this happen?
Speaker 9: Yeah, I don't think so.
Speaker 6: You've got cheap valuations in these markets, You've got an
Speaker 6: improvement in earnings that are coming through, like most of
Speaker 6: the markets in Asia. Going through this reporting season, we're
Speaker 6: seeing you know, six fifty to seventy percent of earnings
Speaker 6: beats the market on forward earnings to multiple is the
Speaker 6: cheapest that's been basically in the last ten years. And
Speaker 6: the valuation gap to the US has been the biggest
Speaker 6: as we've seen since two thousand and This is happening
Speaker 6: at a time when the US market is has been
Speaker 6: underperforming for the last eighteen months now. It's not saying
Speaker 6: the US market's bad, it's not saying it's bad companies,
Speaker 6: but sometimes there are opportunities after fifteen years of underperformance
Speaker 6: and cheap valuations to make some money.
Speaker 2: Thank you for joining us, Josh Sure, head of Asia
Speaker 2: Pacific Equities Ervico.
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