WEBVTT - Bloomberg Surveillance TV: July 18, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:38.199 Terminal and the Bloomberg Business App. J Pilowski of TPW 0:00:38.479 --> 0:00:40.599 Jay remember when summer was boor and wasn't that great? 0:00:40.640 --> 0:00:42.640 There is nothing boring about this right now, is there? 0:00:42.720 --> 0:00:43.680 No? Not at all? John. 0:00:43.720 --> 0:00:46.280 It's been really a crazy market just in the last 0:00:46.320 --> 0:00:48.440 couple of days, going back the last couple of months. 0:00:48.479 --> 0:00:51.400 I mean, when you talk about just as the crescendo 0:00:51.479 --> 0:00:54.320 about a narrow market in bad breath reaches its peak, 0:00:54.440 --> 0:00:57.160 right boom, massive reversal. 0:00:56.920 --> 0:00:58.880 Huge move in small caps that we can talk about 0:00:58.880 --> 0:01:01.120 throughout this morning, needs to talk about the politics as well, Ja, 0:01:01.240 --> 0:01:03.600 So let's get into it. The former president addressing the 0:01:03.600 --> 0:01:05.800 Republican Convention a little bit later, we need to talk 0:01:05.840 --> 0:01:08.800 about the pressure building on Joe Biden. The dam is 0:01:08.800 --> 0:01:10.600 breaking big time, and I'll go through just some of 0:01:10.640 --> 0:01:13.280 the reports we've had, not in the last twenty four hours, 0:01:13.480 --> 0:01:17.160 in the last twelve hours. This from ABC News reporting 0:01:17.160 --> 0:01:19.880 that both Senate Majority Leader Chuck Schumer and Minority Leader 0:01:19.880 --> 0:01:22.440 of the House at King Jeffries have indicated to the 0:01:22.480 --> 0:01:25.520 president it's time to step aside. CNN reporting the former 0:01:25.560 --> 0:01:28.319 House Speaker Nancy Pelosi is basically told President Biden the 0:01:28.360 --> 0:01:32.000 same thing in private conversation Semophore yesterday afternoon as well, 0:01:32.080 --> 0:01:36.400 Jay reporting that the campaign funding is essentially drying up. 0:01:36.680 --> 0:01:39.240 Has the pressure ever been greater on this president? 0:01:39.520 --> 0:01:39.679 Yeah? 0:01:39.760 --> 0:01:42.120 It's interesting, right, John, because I think Joe Biden is 0:01:42.160 --> 0:01:45.040 a fighter, and this is all making him dig in. 0:01:45.360 --> 0:01:48.000 Seems to be the case so far. And what's really 0:01:48.040 --> 0:01:51.080 surprising to me is you have this massive push, but 0:01:51.160 --> 0:01:52.800 on the other side of it, you have things like 0:01:52.840 --> 0:01:56.000 five thirty eight and they're pulling on the electoral college, 0:01:56.160 --> 0:01:59.040 which suggests Joe Biden today if the election was held today, 0:01:59.160 --> 0:02:01.840 Joe Biden would win with two hundred and seventy seven 0:02:01.880 --> 0:02:06.520 electoral votes versus two sixty three for former President Trump, 0:02:06.720 --> 0:02:09.120 and yet that seems to get lost in the perspective. 0:02:09.320 --> 0:02:11.120 The other thing that I think is really powerful, and 0:02:11.160 --> 0:02:12.359 I know we're going to talk about it over the 0:02:12.440 --> 0:02:15.800 course of the hour here, is that the economic policy 0:02:15.880 --> 0:02:19.160 mix between the two candidates is night and day. 0:02:19.639 --> 0:02:20.320 And one of. 0:02:20.240 --> 0:02:23.160 Them is very constructive for the United States, is I believe, 0:02:23.320 --> 0:02:26.440 and the other is very destructive from an economic point 0:02:26.440 --> 0:02:26.800 of view. 0:02:26.880 --> 0:02:28.639 Would you like to tell us which one's destructive and 0:02:28.680 --> 0:02:29.760 which one's constructive. 0:02:30.320 --> 0:02:32.120 Well, it's not just me, right, I mean, if you 0:02:32.120 --> 0:02:34.400 look at Goldman Sachs, if you look at Moody's, if 0:02:34.440 --> 0:02:36.560 you look at the Peterson Institute, if you look at 0:02:36.639 --> 0:02:39.720 sixteen Nobel laureates all have come out and said that 0:02:39.760 --> 0:02:43.920 Donald Trump's plan is bad for the United States. It 0:02:44.040 --> 0:02:46.680 means lower growth, it means higher inflation. 0:02:47.040 --> 0:02:47.200 Right. 0:02:47.240 --> 0:02:50.200 You have mass deportations that throws a wrench into the 0:02:50.280 --> 0:02:51.120 labor market. 0:02:51.360 --> 0:02:53.959 You have tariff hikes, you have. 0:02:54.360 --> 0:02:58.360 Extension of fiscal of tax cuts, you have essentially fiscal 0:02:58.400 --> 0:03:00.840 and continents. And I think it's sets up the real 0:03:01.000 --> 0:03:06.280 risk of a dollar crash, which sets the stage for 0:03:06.440 --> 0:03:09.639 a reversal of what has been a fifteen year run 0:03:10.000 --> 0:03:12.600 of massive US financial asset outperformed it. 0:03:12.680 --> 0:03:15.280 Donnar weakness appears to be the objective of the incoming 0:03:15.320 --> 0:03:19.320 administration if they win. Are you saying that US exceptionalism 0:03:19.440 --> 0:03:22.600 dollar dominance is going to be questioned come November if 0:03:22.600 --> 0:03:23.480 Donald Trump wins. 0:03:23.639 --> 0:03:25.800 Absolutely, that's I think that's the case, And you're already 0:03:25.800 --> 0:03:27.640 starting to see it a little bit right now. It 0:03:27.639 --> 0:03:31.200 hasn't really manifested because I think, notwithstanding the kind of 0:03:31.200 --> 0:03:34.080 the frenzy around Joe Biden, the polling. 0:03:33.680 --> 0:03:36.200 Is not at all a suggestive of the same. Right. 0:03:36.400 --> 0:03:39.880 Polling is extremely tight within the margin of error across 0:03:39.960 --> 0:03:43.080 the swing states as well as nationally, and so that's 0:03:43.120 --> 0:03:45.240 why I think the market hasn't quite moved in this. 0:03:45.600 --> 0:03:48.160 But it really does set the stage for things like, Okay, 0:03:48.400 --> 0:03:51.440 does this small cap rally have legs? Does this broadening 0:03:51.480 --> 0:03:53.640 out of the equity market is it sustainable? 0:03:53.920 --> 0:03:55.760 Or do we run kind of hard. 0:03:55.640 --> 0:03:58.520 Into the fall and then get smacked in the face 0:03:58.960 --> 0:04:02.960 with a from victory that leads people to question the 0:04:03.040 --> 0:04:06.200 policy mix of the United States and the FED gets 0:04:06.200 --> 0:04:08.120 put in a box, right, because the Fed is going 0:04:08.160 --> 0:04:10.640 to be cutting I think that's pretty clear. But if 0:04:10.680 --> 0:04:14.280 we get this situation, this worry, the dollar starts to fall, 0:04:14.640 --> 0:04:18.080 the Fed has to raise rates, the dollar continues to fall, 0:04:18.440 --> 0:04:21.719 rates have to go higher. And look, we're in a 0:04:21.760 --> 0:04:25.320 bond market that has not broken out. Equities have clearly 0:04:25.360 --> 0:04:27.520 broken out. And by the way, it's global, right, it's 0:04:27.520 --> 0:04:31.200 not narrow. It's not the magnificent seven AQUI all country 0:04:31.240 --> 0:04:35.680 world all time highs, IFA all time highs, aqui xus 0:04:35.920 --> 0:04:39.000 two year highs, emerging market two year highs. Okay, So 0:04:39.600 --> 0:04:42.400 we're in a situation where the other countries are starting 0:04:42.440 --> 0:04:45.400 to do reasonably well, and here we call them to 0:04:45.480 --> 0:04:48.280 question the policy mix of the United States and a 0:04:48.520 --> 0:04:53.039 massively over owned asset. Right, everybody is overweight US equities, 0:04:53.160 --> 0:04:57.160 everybody is overweight US treasuries. Okay, So you have things 0:04:57.200 --> 0:04:59.919 like the yen fair value is considered to be one hundred, 0:05:00.400 --> 0:05:01.080 it's now at. 0:05:01.000 --> 0:05:01.880 One fifty six. 0:05:02.240 --> 0:05:05.120 You look at the euro fair value is considered one twenty, 0:05:05.400 --> 0:05:07.839 it's at one o nine. You work at emerging market 0:05:07.839 --> 0:05:12.080 currency's absolutely bludgeoned. So I think there's it's not yet 0:05:12.120 --> 0:05:14.839 percolated in the minds of folks, but we got to 0:05:14.839 --> 0:05:16.760 be careful what we wish for if we wish for 0:05:16.839 --> 0:05:19.520 a week or dollar and we get a weeker dollar, 0:05:19.960 --> 0:05:22.320 then I think that suggests that the US is not 0:05:22.480 --> 0:05:25.039 going to be the place to be for the next 0:05:25.080 --> 0:05:25.640 several years. 0:05:25.680 --> 0:05:27.400 We've got a stronger dollar on the screen this morning, 0:05:27.400 --> 0:05:29.599 were Firmer by tent to one percent on the Dollar Index. 0:05:29.640 --> 0:05:31.320 We've got a lot to talk about this morning too. 0:05:31.360 --> 0:05:33.640 Through the hour with Ja Piloski, you recording market on 0:05:33.640 --> 0:05:35.480 the s and P five hundred just to touch Firmer 0:05:35.800 --> 0:05:38.560 trying to crawl back inchin Kai by just two points 0:05:38.640 --> 0:05:41.480 on the SMP up my zero point zero five percent 0:05:41.600 --> 0:05:43.840 in the bond market, yields creeping higher back towards four 0:05:43.960 --> 0:05:46.760 twenty four, eighteen twenty seven. We can talk a lot 0:05:46.760 --> 0:05:49.640 about foreign exchange. The Euro a little weaker going into 0:05:49.680 --> 0:05:52.200 that ECB decision a little bit later, Euro dollar at 0:05:52.200 --> 0:05:55.520 one on nine thirty, coming up this hour, and Marie 0:05:55.600 --> 0:05:58.880 joining us as Democratic leadership pushes Biden to step aside. 0:05:59.000 --> 0:06:02.839 Shila Coolu, Jeffries as deep discounting hits the airlines, and 0:06:02.920 --> 0:06:06.279 Louke kickmore of Aberdeen looking for a super September for 0:06:06.360 --> 0:06:09.640 global rate cuts. We begin with our top story, Biden 0:06:09.960 --> 0:06:12.760 can't catch a break. Just as illness forces the President 0:06:12.760 --> 0:06:16.160 to leave the campaign trail, the damn breaks. ABC News 0:06:16.200 --> 0:06:19.720 reporting both Senate Majority Leader Chuck Schumer and House Minority 0:06:19.800 --> 0:06:23.200 Leader Haqem Jeffries have indicated to President Biden it might 0:06:23.240 --> 0:06:26.080 be best to step aside. Am re joined us now 0:06:26.080 --> 0:06:29.680 from the R and C in Milwaukee, Wisconsin, and Marie, 0:06:29.680 --> 0:06:31.440 before we get to the events of where you are, 0:06:31.680 --> 0:06:34.679 we need to talk about what's happening elsewhere. How great 0:06:34.720 --> 0:06:37.159 is the pressure on President Biden to make a move. 0:06:39.760 --> 0:06:42.880 It's intensifying, that's for sure. Over the past twenty four hours. 0:06:42.920 --> 0:06:44.880 He had a really rough twenty four hours. Not to 0:06:44.960 --> 0:06:47.080 mention that the White House came out and said he 0:06:47.080 --> 0:06:50.600 tested positive for COVID nineteen. It is not just Senate 0:06:50.640 --> 0:06:53.560 Majority Leader Chuck Schumer going to Rehoba Beach over the 0:06:53.560 --> 0:06:56.359 weekend telling him we think you need to step aside, 0:06:56.560 --> 0:06:59.440 or the fact that Hakeem Jeffries as well, the House 0:06:59.480 --> 0:07:01.960 Minority Leader, saying to the President, if you stay in 0:07:01.960 --> 0:07:04.520 this race, this is going to hurt down ballot. This 0:07:04.640 --> 0:07:07.039 might mean we can lose the House. But then you 0:07:07.160 --> 0:07:10.440 have former Speaker of the House Nancy Pelosi. According to CNN, 0:07:10.520 --> 0:07:14.520 according to Politico, also having a direct conversation with the 0:07:14.560 --> 0:07:18.640 President saying, look, you're polling shows that this is going 0:07:18.720 --> 0:07:23.000 to be a loss against former President Donald Trump, and 0:07:23.360 --> 0:07:27.200 you are going to really ruin the ticket for House members. 0:07:27.480 --> 0:07:30.840 So these are three top Democrats. Now they're not saying 0:07:30.880 --> 0:07:34.000 this publicly, although if you read their statements of denials, 0:07:34.280 --> 0:07:37.400 these are not exactly straightforward denials to the press that 0:07:37.480 --> 0:07:40.840 these conversations took place. But what you are seeing is 0:07:41.040 --> 0:07:45.640 top three Democrats, especially Speaker Pelosi, who's very close to 0:07:45.680 --> 0:07:49.600 the President, telling him directly face to face that we 0:07:49.720 --> 0:07:50.320 think you need. 0:07:50.240 --> 0:07:50.840 To step aside. 0:07:50.880 --> 0:07:51.000 Now. 0:07:51.040 --> 0:07:54.320 The President is now isolating. He's back in Delaware, and 0:07:54.360 --> 0:07:57.440 I think the next few days we should note who 0:07:57.480 --> 0:07:59.800 he is meeting with. Is there going to be a 0:07:59.880 --> 0:08:04.040 family powwow? And could this potentially can he heed these 0:08:04.120 --> 0:08:07.120 calls and step aside at the moment, though it does 0:08:07.160 --> 0:08:09.720 sound like he is defiant. When you ask the White 0:08:09.720 --> 0:08:12.360 House what is going on, they say, this is his race. 0:08:12.600 --> 0:08:15.080 He's sticking with it. He has the delegates, and he 0:08:15.120 --> 0:08:16.760 will be on the ticket November fifth. 0:08:18.400 --> 0:08:21.240 Je Marie, I think that's really interesting. Jay Puloski here, 0:08:21.240 --> 0:08:22.960 I know, we like to talk to geopolitics. 0:08:23.800 --> 0:08:26.600 You know, it's funny. I think that Joe Biden. 0:08:26.360 --> 0:08:29.360 Is a fighter, right, and all this pressure is forcing 0:08:29.440 --> 0:08:31.320 him to dig in deeper. 0:08:31.840 --> 0:08:33.280 You talk about the down ballots. 0:08:33.280 --> 0:08:35.520 It's interesting, right, because when you look at the Senate 0:08:36.000 --> 0:08:40.280 races in the swing states, Democrats are pulling considerably above 0:08:40.640 --> 0:08:44.840 the Republican candidates. So in the Senate, which is arguably 0:08:45.160 --> 0:08:49.240 more important for the Democrats to hold than taking the House, 0:08:49.679 --> 0:08:52.280 they actually seem to be doing well. Biden, truly, as 0:08:52.280 --> 0:08:55.079 you note, is not pulling as well as those candidates. 0:08:55.120 --> 0:08:57.960 So I wonder if we're not getting over our skis 0:08:58.000 --> 0:09:03.920 a little bit and talking about Biden stepping away. 0:09:04.120 --> 0:09:06.880 Well, you're one hundred percent right that Biden is a fighter, 0:09:06.920 --> 0:09:09.560 and this is a man who's fueled really by the 0:09:09.600 --> 0:09:12.760 complications in his life, and he talks about the trial 0:09:12.800 --> 0:09:15.440 tribulations of his life and then he's always able to 0:09:15.480 --> 0:09:18.120 overcome it. He thinks he's still in the best position 0:09:18.520 --> 0:09:21.160 to beat Donald Trump when it comes to some of 0:09:21.160 --> 0:09:24.240 these swing states. This is where he's really struggling. But 0:09:24.280 --> 0:09:26.000 you're right, a lot of this is in the margin 0:09:26.040 --> 0:09:28.280 of error when you look at some of the different polling. 0:09:28.679 --> 0:09:31.920 But that is why you see the concern of individuals 0:09:32.080 --> 0:09:35.079 on the ballot, whether they're running for Senate, whether they're 0:09:35.120 --> 0:09:38.800 running for Congress, they think that Biden is actually potentially 0:09:38.840 --> 0:09:41.720 going to hurt their chances. There's something else that I 0:09:41.760 --> 0:09:45.400 think we should take it to consideration. Biden has changed 0:09:45.440 --> 0:09:49.080 his message three different times. When asked what would it 0:09:49.160 --> 0:09:52.400 take to drop out when he sat down with ABC. 0:09:52.760 --> 0:09:55.160 In that interview, he said he could only be convinced 0:09:55.480 --> 0:09:58.240 if the Lord Almighty came down and said, Joe get 0:09:58.240 --> 0:10:01.040 out of the race. Then the NATO press conference about 0:10:01.040 --> 0:10:03.360 a week later, he was pressed on this issue. 0:10:03.400 --> 0:10:04.520 I was in the room, This was. 0:10:04.480 --> 0:10:07.560 All anyone cared about, and he said, no, there's nothing 0:10:07.559 --> 0:10:09.960 that can make me get out of the race, except 0:10:10.000 --> 0:10:12.720 maybe they came back and they said there's no way 0:10:12.760 --> 0:10:13.079 to win. 0:10:13.200 --> 0:10:13.720 The polls. 0:10:13.760 --> 0:10:15.160 He says, if his team came to me and said 0:10:15.200 --> 0:10:17.280 the polls show there's no way to win, then In 0:10:17.320 --> 0:10:20.439 an interview with Beet that was on display last night 0:10:20.559 --> 0:10:23.600 was broadcasting is supposed to be this counter programming to 0:10:23.640 --> 0:10:26.080 the RNC, He said, if he had some sort of 0:10:26.160 --> 0:10:30.120 medical condition that emerged, if someone if doctors came to 0:10:30.160 --> 0:10:33.720 me and said, you got this problem and that problem anyway, 0:10:33.760 --> 0:10:36.440 he said that would potentially be a reason why drop out. 0:10:36.480 --> 0:10:38.679 So I do think there is a little bit more 0:10:38.720 --> 0:10:42.040 of wiggle room now because Joe Biden himself has changed 0:10:42.080 --> 0:10:44.439 the reasoning why he would get out of this race. 0:10:44.600 --> 0:10:47.480 And right after we saw those comments about the potential 0:10:47.520 --> 0:10:49.280 of a medical problem taking him out of the race, 0:10:49.520 --> 0:10:51.480 he gets a COVID diagnosis. Can we just look at 0:10:51.520 --> 0:10:55.200 the compare and contrast. It could not be staker Saturday evening, 0:10:55.559 --> 0:10:58.240 an attempt at assassination on the form of President of 0:10:58.280 --> 0:11:00.800 the United States walks away from it with this fists raised, 0:11:01.080 --> 0:11:03.679 American flag waving in the background, compared to say this 0:11:04.160 --> 0:11:06.520 and re I understand this brutal, But look at the 0:11:06.520 --> 0:11:11.080 pictures of yesterday evening, Yesterday afternoon, President Biden contracting COVID 0:11:11.120 --> 0:11:13.839 no musk, struggling to walk up the steps of Air 0:11:13.880 --> 0:11:17.439 Force one a little bit later on this evening, This 0:11:17.520 --> 0:11:20.040 president won't be able to count a program the former 0:11:20.080 --> 0:11:22.320 president of the United States when he addresses the RNC. 0:11:22.720 --> 0:11:24.280 How stark is that contrast going to be? 0:11:26.720 --> 0:11:30.040 It's incredibly stark because you also have a Republican party 0:11:30.080 --> 0:11:33.720 that's trying to tone down the rhetoric at this RNC, 0:11:33.960 --> 0:11:37.000 and they're trying to unify really the Maga wing of 0:11:37.040 --> 0:11:40.240 the party, this trump Ism that many Hawks and many 0:11:40.400 --> 0:11:46.719 fiscally conservative and more moderate Republicans were hoping potentially this 0:11:46.800 --> 0:11:50.400 would basically no longer be the brand of the Republican 0:11:50.440 --> 0:11:54.120 Party unless Trump was top of the ticket. But yesterday 0:11:54.160 --> 0:11:56.720 and that speech from JD Vance that just showed that 0:11:57.360 --> 0:11:59.240 Maga and trump Ism is. 0:11:59.280 --> 0:12:00.439 Here to stay. 0:12:00.520 --> 0:12:04.120 The populous wing of this Republican Party is now the 0:12:04.240 --> 0:12:07.480 majority of the Republican Party with this ticket, and this evening, 0:12:07.520 --> 0:12:11.400 we're just going to see that tonight with President Trump 0:12:11.480 --> 0:12:15.080 coming to the stage and formally accepting his party's nominee 0:12:15.400 --> 0:12:19.079 to face off against potentially what will be Joe Biden 0:12:19.440 --> 0:12:22.120 November fifth, and he's probably going to put his fist 0:12:22.120 --> 0:12:24.040 in the air and say fight, fight, fight, like he 0:12:24.080 --> 0:12:28.480 did after that former that assassination attempt on Saturday. And 0:12:28.520 --> 0:12:31.640 then in contrast to President Joe Biden, who cannot counter 0:12:31.720 --> 0:12:34.920 programming because he's self isolating in Delaware. And then it's 0:12:35.000 --> 0:12:37.800 just a drip treat of reports that members of his 0:12:37.920 --> 0:12:41.000 own party, senior members of his own party, and some 0:12:41.080 --> 0:12:43.880 of them who really love the president, like Nancy Pelosi, 0:12:44.200 --> 0:12:47.040 are telling him, we think it's time you step aside. 0:12:47.160 --> 0:12:49.040 Let's get into that address a little bit later. Let's 0:12:49.040 --> 0:12:50.719 talk about that and finish there. I want to talk 0:12:50.720 --> 0:12:54.200 about policy on Wall Street. For a long long time, 0:12:54.200 --> 0:12:56.800 we've always thought of the Republican Party is pro business. 0:12:57.320 --> 0:12:58.800 And you and I have been talking about this now 0:12:58.840 --> 0:13:00.920 for a number of weeks, been talking about how pro 0:13:01.040 --> 0:13:04.720 business this Republican administration may actually turn out to be. 0:13:05.520 --> 0:13:07.520 What is going to be in the address a little 0:13:07.520 --> 0:13:12.800 bit late to maybe settle that school on that front, Well, 0:13:12.800 --> 0:13:13.520 it's very different. 0:13:13.559 --> 0:13:15.400 I think if you hear what jd Vance has to 0:13:15.400 --> 0:13:18.040 say his VP pick and what President Trump has to say. 0:13:18.080 --> 0:13:20.600 So jd Vance last night said this is no longer 0:13:20.640 --> 0:13:23.040 the party of Wall Street. This is the party of 0:13:23.080 --> 0:13:27.280 the working class. He called out auto workers in Michigan, 0:13:27.640 --> 0:13:31.920 factory workers in Wisconsin, and energy workers in Pennsylvania. Donald 0:13:31.920 --> 0:13:34.959 Trump likely chose him to park him in these three 0:13:35.000 --> 0:13:37.680 states to try to win the election, because if Joe 0:13:37.679 --> 0:13:40.560 Biden cannot hold the Russ Belt, if he cannot hold 0:13:40.640 --> 0:13:43.199 the Blue Wall, then he is not winning re election. 0:13:43.360 --> 0:13:45.640 To see the White House again, but Donald Trump is 0:13:45.640 --> 0:13:47.880 going to go to the stage today after an interview 0:13:47.880 --> 0:13:50.280 with Bloomberg business Week, and he said he'd actually like 0:13:50.360 --> 0:13:53.839 the corporate tax rate at fifteen percent. So I am 0:13:53.960 --> 0:13:56.480 struggling in all of my conversations here. And I had 0:13:56.480 --> 0:13:59.880 this conversation yesterday with Virginia Governor Glenn Younkin, who they 0:14:00.080 --> 0:14:02.559 think Virginia is definitely in play when it comes to 0:14:02.600 --> 0:14:07.120 Republican Party about which Republican Party is good for business? 0:14:07.440 --> 0:14:10.360 And honestly, Jonathan, I still don't know the answer. It 0:14:10.400 --> 0:14:13.160 really depends who you ask, because someone like JD. Van's 0:14:13.600 --> 0:14:16.600 wants to see a higher corporate tax rate, while the 0:14:16.600 --> 0:14:19.400 top of the ticket wants as low as fifteen percent. 0:14:19.880 --> 0:14:21.560 So we're still struggling to. 0:14:21.480 --> 0:14:22.200 Figure this out. 0:14:22.280 --> 0:14:25.240 One thing that I'm continuously told when I ask about 0:14:25.480 --> 0:14:29.560 some of the rhetoric from Jdvans about the business community, 0:14:29.680 --> 0:14:34.080 everyone says the same thing. It's Trump's party. Jdvans is 0:14:34.080 --> 0:14:34.480 going to. 0:14:34.400 --> 0:14:35.080 Get in line. 0:14:35.280 --> 0:14:37.960 I might on the lights said the Republican Convention. I'm Marie, 0:14:38.040 --> 0:14:38.360 thank you. 0:14:38.720 --> 0:14:38.920 Jay. 0:14:38.920 --> 0:14:41.080 That's a question we keep asking just how business friendly 0:14:41.160 --> 0:14:42.840 is is government going to be if they get back 0:14:42.840 --> 0:14:43.360 into power. 0:14:44.840 --> 0:14:47.560 I think that there's a queer distinction between the two 0:14:47.600 --> 0:14:49.240 candidates and their economic policy. 0:14:49.320 --> 0:14:49.520 Ms. 0:14:49.560 --> 0:14:52.760 Biden has been probably the most successful president in terms 0:14:52.760 --> 0:14:55.240 of economic policy and outcomes in. 0:14:54.880 --> 0:14:56.000 Fifty years or more. 0:14:56.160 --> 0:15:00.960 Right and President former President Trump, I think is his 0:15:01.120 --> 0:15:04.880 policy mix is basically fiscal incontinence, where you're talking about 0:15:04.880 --> 0:15:08.600 mass deportation that destroyed the labor market, You're talking about 0:15:08.680 --> 0:15:13.680 raising tariff sixty percent, you're talking about extending tax cuts, 0:15:13.720 --> 0:15:16.520 you're talking about cutting taxes even further. So I think 0:15:16.600 --> 0:15:19.520 the situation is setting up for really it could be 0:15:19.560 --> 0:15:23.560 a significant shift, in a significant surprise in terms of 0:15:23.600 --> 0:15:26.320 the dollar, because if the dollar weekends, when we blow 0:15:26.360 --> 0:15:29.040 out the physical deficit here, the bed is in a box. 0:15:29.920 --> 0:15:32.680 I think people start to get worried about policy confusion 0:15:32.760 --> 0:15:35.600 and chaos, which was kind of the motif of the 0:15:35.640 --> 0:15:39.040 Trump first administration. Then I think you have a situation 0:15:39.080 --> 0:15:41.880 where you have a massively over owned asset, which is 0:15:41.960 --> 0:15:44.560 US financial assets represented. 0:15:44.040 --> 0:15:46.480 By the dollar, that could roll over. It's at one 0:15:46.560 --> 0:15:47.800 oh four to one oh three. 0:15:48.480 --> 0:15:52.600 People target ninety as a reasonable place if it really 0:15:52.640 --> 0:15:54.000 does start to sell off. 0:15:54.080 --> 0:15:57.000 J Piloskiv TPW Advisory is still optimistic. Rights In this 0:15:57.320 --> 0:16:00.320 they say rotation is the lifebud of Bullmark, and it 0:16:00.320 --> 0:16:02.680 sure seems like a broadening gown in rotation to x 0:16:02.720 --> 0:16:05.760 Tech would go a long way to sustaining the bull Jays. 0:16:05.800 --> 0:16:07.680 With us around the table through the rest of this hour, Jay, 0:16:07.720 --> 0:16:09.440 I want to talk about one name in particular, before 0:16:09.440 --> 0:16:11.760 we've broaden out ourselves. I want to talk about Taiwan 0:16:11.800 --> 0:16:14.280 Semi time on Semi gets Hamma yesterday. But this is 0:16:14.320 --> 0:16:17.280 a company putting up real numbers just this morning. This 0:16:17.360 --> 0:16:19.160 is what we learned. They now expect sales to grow 0:16:19.160 --> 0:16:22.240 more than the maximum mid twenty percent it had guided 0:16:22.320 --> 0:16:25.960 towards previously with things that buy yesterday for you, Yes. 0:16:25.920 --> 0:16:28.680 They were, John, I think you know markets that really extended. 0:16:28.720 --> 0:16:31.120 You live by the sword, you die by the sword. Right, 0:16:31.360 --> 0:16:33.560 So when you're up twenty thirty percent in a matter 0:16:33.600 --> 0:16:35.600 of a month or two, you come you pull back 0:16:35.640 --> 0:16:36.600 eight percent a day. 0:16:36.840 --> 0:16:38.000 That's just kind of normal. 0:16:38.200 --> 0:16:42.280 But the point you're making is fundamentally, these are solid, fast, 0:16:42.520 --> 0:16:44.160 rapidly growing stories. 0:16:43.840 --> 0:16:45.440 Which are unique in the world. 0:16:45.800 --> 0:16:49.360 Right, You're talking about forecasts that were made a couple 0:16:49.400 --> 0:16:52.280 of months ago, and they're already beating them and raising them. 0:16:52.280 --> 0:16:53.640 And this is a story we've seen with. 0:16:53.680 --> 0:16:56.760 N Video and other chip makers that are involved in 0:16:56.800 --> 0:17:00.240 AI for a year now, right, and so you've had 0:17:00.240 --> 0:17:03.640 massive moves, but the stocks are actually cheaper now than 0:17:03.680 --> 0:17:06.720 they were a year ago because earnings have outpaced the 0:17:06.760 --> 0:17:10.240 stock price appreciation. And so we have been and continue 0:17:10.240 --> 0:17:13.600 to be big believers in AI and big believers in 0:17:13.640 --> 0:17:15.040 the idea of the pick and shovel. 0:17:15.280 --> 0:17:15.520 Right. 0:17:15.800 --> 0:17:19.040 The pick and shovel for AI is the semiconductor space, 0:17:19.359 --> 0:17:22.200 and so when you have pullbacks, those are opportunities to. 0:17:22.119 --> 0:17:22.760 Add in our views. 0:17:22.880 --> 0:17:24.760 So this is what we've been rotating away from in 0:17:24.760 --> 0:17:26.960 the last week. Let's talk about what we've been rotating 0:17:27.080 --> 0:17:30.719 towards small caps. I've had questions around this table, conversations 0:17:30.720 --> 0:17:33.439 about whether we're going into a small cap presidency with 0:17:33.560 --> 0:17:36.119 Donald Trump the president in the White House, heading up 0:17:36.119 --> 0:17:39.280 the United States and driving small business in America and 0:17:39.280 --> 0:17:42.600 punishing big business big tech in particular. How do you 0:17:42.640 --> 0:17:43.240 frame that one? 0:17:43.400 --> 0:17:44.800 Yeah, I look at it differently. 0:17:44.840 --> 0:17:47.440 I look at it that small caps are big beneficiaries 0:17:47.440 --> 0:17:50.440 of lower interest rates. Right, fifty percent of small cap 0:17:50.520 --> 0:17:54.080 debt is floating rate versus ten percent for large cap, 0:17:54.280 --> 0:17:57.600 So they are big beneficiaries. And so we've seen this movie. 0:17:57.640 --> 0:17:59.679 We saw it in the fall. Right, small caps at 0:17:59.680 --> 0:18:02.960 are twenty seven percent move in three months October to December. 0:18:03.200 --> 0:18:06.600 I think they're set up for something similar. Small caps 0:18:06.640 --> 0:18:09.800 today trade at ten times twenty twenty five earnings on 0:18:09.840 --> 0:18:14.639 a medium basis, That is extremely cheap. They're massively under owned. Right, 0:18:14.680 --> 0:18:16.800 there's a massive short which is why this is moved 0:18:16.840 --> 0:18:19.040 so fast. Right, This is always the case. Right, it's 0:18:19.080 --> 0:18:22.320 a massive short covering, but you have fundamentals again like 0:18:22.400 --> 0:18:25.360 DSMC to support it. The other thing that I think 0:18:25.440 --> 0:18:28.320 is really really interesting, John, is that things are broadening 0:18:28.320 --> 0:18:32.199 out right. We just updated our model portfolios at TPW Advisory, 0:18:32.440 --> 0:18:35.240 and I go through all the positions, all the indices, 0:18:35.280 --> 0:18:37.840 and all the things we're thinking about. And what's interesting 0:18:37.880 --> 0:18:40.480 to me is that thematics are breaking out right. You 0:18:40.520 --> 0:18:43.359 look at biotech, you look at things like robotics, you 0:18:43.400 --> 0:18:47.120 look at things like security, cybersecurity, they're all breaking out 0:18:47.160 --> 0:18:49.720 to new all time highs. You also look at things 0:18:49.880 --> 0:18:53.440 like infrastructure and cap X. Right, we saw the industrial 0:18:53.480 --> 0:18:58.760 production numbers yesterday. Infrastructure pave all time highs, XLI all 0:18:58.800 --> 0:19:04.879 time highs, which is a smart energy for the grid system, 0:19:05.040 --> 0:19:07.640 all time highs. And so to me, you're looking at 0:19:07.640 --> 0:19:11.520 a situation where there's multiple parts of the market starting 0:19:11.520 --> 0:19:14.920