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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Allow

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Speaker 1: me to get you up to speed. Tariff Man making

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Speaker 1: a comeback, hitting Argentina and Brazil with steel levies and

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Speaker 1: then retaliating against France's digital tags with a threat to

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Speaker 1: slap tariffs on two point four billion dollars of French goods.

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Speaker 1: France then retaliating, threatening to retaliate against America's threats of

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Speaker 1: retaliation against France. Are you confused? So am I? It

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Speaker 1: all comes just twelve days from a deadline before the

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Speaker 1: White House hits China with another round of trade penalties,

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Speaker 1: the President telling reporters in London this morning that you

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Speaker 1: might have to wait a whole lot longer for a deal.

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Speaker 1: I have no I think it's better than way to

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Speaker 1: after the election. You want to another truth, I think

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Speaker 1: in some ways it's better than a week or after

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Speaker 1: the election. Was Joe equity futures dropping off the back

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Speaker 1: of that the SMP five hundred down by a quarter

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Speaker 1: of one percent, Tom Keane, you might have to wait

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Speaker 1: until after. It was really sudden, three headlines in a row,

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Speaker 1: and we've come back a little bit. But I'll tell

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Speaker 1: you there was an immediate reaction to that headline in China.

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Speaker 1: This was two thirds of the way through this extraordinary

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Speaker 1: press conference that Mr Stoltonberg was there as well of NATO,

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Speaker 1: and he sat and sat and sat where the president went.

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Speaker 1: It was a press conference forty minutes. It lasted that

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Speaker 1: conversation and a whole lot more coming up through the

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Speaker 1: daily So a series of bilaterals between the President and

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Speaker 1: NATO leaders, and trade very much the focus at the moment.

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Speaker 1: Look out nne M Eastern, the French president and the

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Speaker 1: US leader sitting down together, a bilateral that I think

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Speaker 1: is going to get a whole lot more attention. The

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Speaker 1: key question to me this morning is how much optimism

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Speaker 1: still is baked into the market based on the idea

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Speaker 1: that we would get some sort of deal between the

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Speaker 1: US and China by year end. Because yes, you are

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Speaker 1: seeing stocks turned negative, but not that negative. And yes

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Speaker 1: we saw a sell off that was the biggest in

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Speaker 1: since October yesterday, but we had been making new highs

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Speaker 1: day after day after day. There still is so much

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Speaker 1: enthusiasm built into stocks. How how far does it have

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Speaker 1: to go to be unwound? At this point, let's bring

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Speaker 1: in Troy as we have Scott Bridys dropping by the

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Speaker 1: studio here in New York, Troit right to see you.

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Speaker 1: How do you digest the last twenty four hours? It's

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Speaker 1: getting a little bit messy at the Yeah. Well, I

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Speaker 1: think the two narratives that have started to break the

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Speaker 1: first on trade, right, so we've had a narrative develop

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Speaker 1: where you know, phase one trade deal is pretty much done.

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Speaker 1: Obviously well be face saving, nothing like substantive, but but

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Speaker 1: at least it doesn't escalate further. And you know, whether

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Speaker 1: you look at Brazil, Argentina now France and you know

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Speaker 1: the talk of it going past, clearly there is risk

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Speaker 1: again of its cleaning further. You know. Secondarily, and this

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Speaker 1: is another big narrative, was that global manufacturing was bottoming

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Speaker 1: and starting to look like it was turning. You had

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Speaker 1: the decent data out of China, not so bad data

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Speaker 1: out of Europe, which means you know, things aren't collapsing,

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Speaker 1: which has taken is not so bad news out of Europe. Um.

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Speaker 1: And then the I s M number came out yesterday

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Speaker 1: in the US and that throw cold water on that

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Speaker 1: as well. So Um. The other point of make at

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Speaker 1: least so you bring this up is the price action

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Speaker 1: has not been that violent, right, and what we think

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Speaker 1: is going on there is in the backdrop rather quietly,

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Speaker 1: as you know, the FET has been dramatically expanding their

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Speaker 1: balance sheet. Um, it's not QUI don't call qi. But

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Speaker 1: the reality is they've added two seventy billion dollars and

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Speaker 1: are on pace to add another you know, six billion

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Speaker 1: over the next call. It's five six, seven months. So um.

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Speaker 1: You know that arguably is masking downside volatility in the

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Speaker 1: short term. Um. But clearly, if we do get a

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Speaker 1: complete break of China, you can look for three to

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Speaker 1: five more downside. Had a lot of people messaging me

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Speaker 1: in the last four hours word about a repeat of December,

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Speaker 1: and I think to your point, it's the Federal Reserve

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Speaker 1: and the position of monetary policy right now that makes

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Speaker 1: December very different correct to December. As we go into though, Troy,

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Speaker 1: your conviction tright, Now, what is it after the big

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Speaker 1: run up we've had him risk assets through this year yes.

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Speaker 1: So if you're focused like we are, on developed generating

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Speaker 1: returns to have as lower beata possible and very little duration. Um.

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Speaker 1: You know, we continue to focus on consumer related credit

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Speaker 1: with offset by shorts and high yield and I G.

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Speaker 1: And as we were discussing, you know on tim shows before,

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Speaker 1: I mean, hedges have been brutal this year. I mean

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Speaker 1: the cost of hedging has been off the charts. But

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Speaker 1: if you think of where spreads and absolute yields are

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Speaker 1: now in I G and high yield, we see much

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Speaker 1: less downside on that side of the portfolio. And then

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Speaker 1: the data for the U S economy continues to be

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Speaker 1: relatively strong with the consumer balance sheet in relatively good shape. Um,

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Speaker 1: that's our favorite setup. We'd say one of the consensus

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Speaker 1: traits for the industry is that your only going to

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Speaker 1: see the dollar weekend next year. Uh. That's been a widowmaker,

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Speaker 1: so to speak, for quite some time. Uh. You know,

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Speaker 1: the viewpoint is with the FEDS expansion the balance sheet,

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Speaker 1: the dollars finally topped out, um, and if growth slows

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Speaker 1: down further in the US were stabilizers overseas, you could

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Speaker 1: finally see a round of dollar weakness. Is there ever

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Speaker 1: a widower makers we can we can discuss the sexism

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Speaker 1: of it offline. I will say, I want to pick

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Speaker 1: up on the idea of the balance sheet, the Fed's

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Speaker 1: balance sheet. I'm looking right now contracting contracting, contracting reaching

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Speaker 1: a low at the end of August August, and since

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Speaker 1: then it's at a nearly three hundred billion dollars system

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Speaker 1: most under a told story of the market action we

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Speaker 1: put we focus on the trade headlines. So if the

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Speaker 1: FED continues to build its balance sheet like this, which

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Speaker 1: is mostly coming through the REPO operations, which they say

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Speaker 1: is not quantitative easing, is this going to support risk

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Speaker 1: assets indefinitely for as long as they do this? Well,

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Speaker 1: remember the goal now is to get the balance sheet

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Speaker 1: from what the FED has said, So take that somewhat

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Speaker 1: with a grain of salt to back ups around four

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Speaker 1: point four or four point five trillion, and that should

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Speaker 1: be complete by the end of Q two. To be clear,

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Speaker 1: it's right now, it's a four point five trillion, that's right,

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Speaker 1: that's right. Yeah, I think thanks for point now. So

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Speaker 1: so there's quite a bit of scope to expand further.

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Speaker 1: So that's part of the narrative fueling why um many

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Speaker 1: think will have a risk on Q one early Q two,

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Speaker 1: and then from there we get back to the framework

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Speaker 1: we were in the most of the post crisis period

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Speaker 1: was when quis running risk, assets do well. When QUI stops,

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Speaker 1: you have a correction. Bad news becomes bad news, right,

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Speaker 1: And what happened is the seventeen eighteen period UH was

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Speaker 1: much more about the fundamentals of fiscal policy reform out

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Speaker 1: of Washington, and so for like an eighteen twenty one

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Speaker 1: month period, markets are much more focused on that. And

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Speaker 1: then of course the FED tightening became the driver in

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Speaker 1: Q four and now FedEx engine is once again the

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Speaker 1: primary driver. We think UH in late nineteen going into

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Speaker 1: trigger ask hedge on business the great fear as market

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Speaker 1: draw down. You're up at a high, you go down

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Speaker 1: and it's not worth keeping the hedge fund going because

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Speaker 1: you sit down so far you can't come back a

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Speaker 1: year after year in this bull market of market draw

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Speaker 1: ups where they just can't catch up, They just can't

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Speaker 1: catch up. When's the shell game over, Tom, It's a

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Speaker 1: it's a pretty tough terve shell game, my friend. But

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Speaker 1: come on, they get Look, I'm an institution, I'm a

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Speaker 1: hammer in aut This year within our squared of one

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Speaker 1: point oh with costs next to nothing. And I understand

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Speaker 1: you keep the game going, but it's the perceptionist. It's

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Speaker 1: year after year after year when the institutions just say enough. Look,

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Speaker 1: I mean, first of all, fees have come down pretty significant. Industry,

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Speaker 1: you know our way to average fees about one point

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Speaker 1: one and twelve. Well, okay, well what's a game? And

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Speaker 1: if I make a game, are we still no? No?

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Speaker 1: So one point one and twelve. I think the industry

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Speaker 1: is sevent so there's less less than centi fee. But

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Speaker 1: but the point you make is a good one. I

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Speaker 1: think if any institution looks at the last ten years

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Speaker 1: and extrapolates that out to infinity right along the lines

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Speaker 1: of what you were mentioned with the FED balance sheet,

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Speaker 1: well then there's no reason to do anything. Would be

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Speaker 1: a long equities right. But but the whole point of

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Speaker 1: asset allocation is that you don't know the future. Right,

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Speaker 1: Equities ten annualize the eight percent over a full market cycle.

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Speaker 1: Guess what this cycle they've been annualizing much higher than that, right,

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Speaker 1: which means by definition, the next five ten years have

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Speaker 1: to be worse. Now we could talk about you know,

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Speaker 1: the tenure going to minus two and my three percent

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Speaker 1: short end rates and what does that mean for assets?

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Speaker 1: But but in a in a zero bound world in

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Speaker 1: the US, everyone knows the future returns are gonna be less. Uh.

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Speaker 1: And the other point that's uh supportive of the hedge industry, um,

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Speaker 1: is that bonnils are so low. Right, it's very hard

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Speaker 1: to make a living in bonds, right, certainly anything high quality.

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Speaker 1: Uh So so we do think again, we are in

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Speaker 1: the industry, so we're somewhat biased. But if you think

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Speaker 1: of the future, Uh, the reality is if hedge funds

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Speaker 1: can comfortably out perform fixed income, even if they trail equities,

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Speaker 1: they're still value to be had there. If you have

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Speaker 1: a relatively low data, great to say you thank you,

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Speaker 1: better catch you out, okay, John, For anybody joining the

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Speaker 1: conversation this morning, I want to summarize here President Tenato,

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Speaker 1: we pretty much thought closed meetings, pressers, photo ops in

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Speaker 1: that not and in the five am hour we enjoyed

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Speaker 1: a forty minute plus press conference in the presence of

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Speaker 1: Mr Stoltenberg for to market the focus not on security,

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Speaker 1: the focus on trade, the prospect of a trade deal

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Speaker 1: before the December fifteenth, line of the sand, that is

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Speaker 1: when tariffs is set to go on a hundred and

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Speaker 1: sixty billion dollars of Chinese imports. The President said there

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Speaker 1: is no deadline. I might wait until after twenty to

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Speaker 1: get this deal done. Equity futures roll over, so we're

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Speaker 1: doubtned by five tenths of one percent. I think you've

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Speaker 1: got to start the story at the start of the week,

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Speaker 1: at the start of the month, where issue after issue

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Speaker 1: just slowly started to build up, one on top of another,

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Speaker 1: tarifs and Argentina on Brazil retaliation with France, the just

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Speaker 1: a little bit softer tariff man making a big comeback,

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Speaker 1: and the equity market making a move. Love but the

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Speaker 1: Wall Street Journal to my friendly to Republican politics with

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Speaker 1: a scathing editorial today on the president one year run

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Speaker 1: from terrorists. Lisa mentioned December fifteenth coming up, but there

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Speaker 1: was a lot more in that press conference. Maybe it

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Speaker 1: didn't move markets, but I found absolutely stunning Lisa where

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Speaker 1: he basically stated, he said, I'm gonna I'm gonna get

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Speaker 1: this wrong. I don't ever run of me. I'm the

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Speaker 1: one that has. If it wasn't for me, there would

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Speaker 1: be a war in Asia. Something like that. I thought

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Speaker 1: that just stunning. It highlights yet again he is the

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Speaker 1: one person controlling all of the negotiations and this is

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Speaker 1: the key. So so really any deal lives or dies

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Speaker 1: on how he feels on any of the day. Henritta

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Speaker 1: Treys joining us now and really important conversation because something

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Speaker 1: has shifted and this is actually uh notable in markets

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Speaker 1: that they have not yet, uh not yet recognized this.

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Speaker 1: Henri to Treys a Veta Partners. Why are we now

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Speaker 1: talking about escalating trade wars? I think we're talking about

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Speaker 1: escalation because the market had become very optimistic that we're

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Speaker 1: going to get not just a small scale pause, but

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Speaker 1: a robust phase one deal and as I heard from

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Speaker 1: several clients in the run up to Thanksgiving, even an

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Speaker 1: indication that Phase two could be completed. UM. So I

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Speaker 1: don't know where a lot of investors are getting those views,

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Speaker 1: but that was something that ran across my desk several

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Speaker 1: times um in just recent weeks. And I think that

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Speaker 1: it was this building optimism that we were going to

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Speaker 1: get this major trade deal that we don't see any

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Speaker 1: evidence for um. And obviously the President, in our view,

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Speaker 1: has lost his appetite for tariffs against China, but clearly

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Speaker 1: not against Brazil, Argentina, France, UM. And obviously that does

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Speaker 1: not vode well for let's say, auto tariffs against the

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Speaker 1: EU or other nations. And Rietta, what makes you think

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Speaker 1: that he's lost his appetite for tariffs against China. Our

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Speaker 1: ongoing conversations with the U s d A, with the

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Speaker 1: manufacturing institutions, with farmers, with Senate Republican Agriculture Committee staff,

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Speaker 1: the pressure on the administration to not impose tariffs is

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Speaker 1: larger than it ever has been, and I think that's

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Speaker 1: serving as a very effective dampener on the President's willingness

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Speaker 1: to impose additional tariffs, specifically on China. US farmers literally

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Speaker 1: cannot take it, and the manufacturers are very concerned about

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Speaker 1: that escalation threat to and have not factored that into

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Speaker 1: their supply chain expectations and will not septa. You mentioned

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Speaker 1: all times in Europe. Does the same approach apply to

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Speaker 1: Europe or is it a different approach? We're about to say,

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Speaker 1: this is what's happening right now with the digital tax

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Speaker 1: is entirely different, and interestingly, in extraordinary unifier on Capitol Hill,

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Speaker 1: if you ask any member of the Senate Finance Committee,

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Speaker 1: and so I'll tell you that they absolutely hate when

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Speaker 1: the European Union thinks that they can tax any American

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Speaker 1: company that goes all the way back to Apple in

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Speaker 1: Ireland so many years ago. So this digital services tax

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Speaker 1: is something that the administration has support for both Democrats

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Speaker 1: and Republicans to rebuff, and I expect that they will

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Speaker 1: continue to. But that's a tiref on wine, keys, et cetera,

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Speaker 1: not on automobile, careful French wine cheese. Don't you know

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Speaker 1: the important things for the important things resting in there

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Speaker 1: and what matters, Henrietta, to your good point, and with

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Speaker 1: your wonderful knowledge of Congress, does Congress believe this president

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Speaker 1: is acting by himself? Is he alluded to multiple times

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Speaker 1: in this press conference. I think that when it comes

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Speaker 1: to trade policy, that's absolutely the case to me. And

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Speaker 1: he's obviously got a very competent team in USTR, Bob

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Speaker 1: Lifeheiser and he surrounded. I didn't hear them in this

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Speaker 1: press conference. I heard a president said it's me, right

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Speaker 1: of course, And I wouldn't expect him to name anybody

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Speaker 1: unless they're physically in the room with him, and he

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Speaker 1: can sort of pass off some of the pressure on them.

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Speaker 1: That's historically his tactic. But it would be impossible for

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Speaker 1: President Trump to pull any of these tariffs off without

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Speaker 1: the knowledge and UM ground laying that us t R

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Speaker 1: lifetiser has given to him. And you think that the

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Speaker 1: markets are correct, then being optimistic that we're not going

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Speaker 1: to see the December fifteenth tariffs correct. My odds are

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Speaker 1: that we will see the December fifteen pariffs at some point,

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Speaker 1: which means that I don't think we're going to see

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Speaker 1: it specifically on December fifteenth. UM, y'all have been reading

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Speaker 1: my research for a while, you know that is very

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Speaker 1: bullish for me. It means that I am not expecting

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Speaker 1: to see the tariffs um overwhelmingly that is own from

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Speaker 1: my odds of s and higher over the summer when

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Speaker 1: the President was very enthusiastic about tariffs. So I think

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Speaker 1: the market's appropriate to assume that the December fifteenth tariffs

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Speaker 1: will not happen that day. As you guys were discussing earlier,

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Speaker 1: it's a totally manufactured date. It has no relevance to

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Speaker 1: any underlying key deadline. It's just something that USTR life

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Speaker 1: fives are created. As he has for so many of

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Speaker 1: these other tariff lists, So December fifteenth could easily, in

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Speaker 1: my opinion, become February or March or what have you.

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Speaker 1: But that doesn't mean that the tariffs are going to

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Speaker 1: go on December fifteenth. I'd also like to say to investors,

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Speaker 1: don't expect for whole baskets the tariffs to come off

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Speaker 1: in the next two weeks, which is what I think

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Speaker 1: a lot of investors have been pricing in, and I

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Speaker 1: don't think that's appropriate. What's the tipping point, What's the issue,

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Speaker 1: the pivotal issue that would shift those odds back to

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Speaker 1: something more substantial in favor of the tariffs in December fifteenth.

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Speaker 1: I would be really heartened if the administration signaled at

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Speaker 1: all to the House or the Senate that they wanted

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Speaker 1: them to stop taking these very poison votes poicsonous to

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Speaker 1: Beijing anyway, votes on Hong Kong human rights and democracy,

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Speaker 1: or the weaker bill that the House is going to

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Speaker 1: pass via unanimous consent after the close this evening, those

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Speaker 1: kinds of small pieces, and the knowledge that Senators Rubio

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Speaker 1: and Kennedy and a whole handful of others are trying

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Speaker 1: to restrict Chinese investment or US pension investments in Chinese companies, etcetera.

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Speaker 1: That tip for cat. You know, it's not so much

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Speaker 1: one thing as a tiny compendium of so many small

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Speaker 1: things that leads us to have huge concerns about reaching

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Speaker 1: a Phase one deal at all our odds there are

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Speaker 1: only fifteen percent, and those really started to come together attent,

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Speaker 1: you know, very low rates when the poultry deal was reached.

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Speaker 1: Of course, there were good reasons for the poultry deal

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Speaker 1: to be reached, but having it done separately and outside

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Speaker 1: of the Phase one deal was the first and a

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Speaker 1: string of indicators that pointed in the wrong direction for

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Speaker 1: a Phase one deal in our view. He tries always

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Speaker 1: great to get your view on this program. Vata Parts

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Speaker 1: director of Economic Policy joining us on the lightest and

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Speaker 1: they tried to you. It was a distressing email that

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Speaker 1: came across the other day, which was that the addiction

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Speaker 1: of Wall Street is retiring. Let me frame this John

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Speaker 1: and you can bring him Mr Gartman. There is an

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Speaker 1: acclaimed single photo of the collapse of Lehman Brothers, and

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Speaker 1: it is the young troops where their backs against the

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Speaker 1: glass wall of that skyscraper and their screens and their

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Speaker 1: Bloombergs are all in front of them, and there's the

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Speaker 1: research capability of Lehman at the time, which was magnificent,

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Speaker 1: and they're in the screen as they listened to. Their

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Speaker 1: fate is the Gartman letter. That is the dirty little

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Speaker 1: secret of Wall Street. They may love them, they may

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Speaker 1: hate them, but boy do they all read them. And

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Speaker 1: it will end suit and often more than thirty years

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Speaker 1: it will be returned at South they got. I don't

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Speaker 1: believe it, but Dennis Gallama joins us on the phone.

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Speaker 1: Dennis walkers through the decision. Oh well, thank you for

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Speaker 1: the for the nice introduction, Very very pleasant of y'all.

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Speaker 1: It's been a hard decision. But quite honestly, the simply,

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Speaker 1: the simple fact is the getting of information has become

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Speaker 1: so will ubiquitous. You guys, everybody else are are able

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Speaker 1: to get up the news so much more efficiently, so

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Speaker 1: much more regularly, so much more quickly, and in many respects,

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Speaker 1: so much better than I I started. When I started

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Speaker 1: this thirty five years ago, I used to tell people

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Speaker 1: that I got this China People's Daily mailed to me

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Speaker 1: three days late, and I was still two days ahead

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Speaker 1: of everybody else. Now everybody gets the China People's Daily

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Speaker 1: or the South China Morning Post on their email every morning.

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Speaker 1: So keeping up with the news and being ahead, and

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Speaker 1: that was always my forte was to try to be

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Speaker 1: ahead of what everybody else understood. Has become almost impossible.

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Speaker 1: And finally, I'm almost seventy years old, after getting up, well,

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Speaker 1: after getting up every morning for thirty five years, in

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Speaker 1: on every business day and writing for five hours, my

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Speaker 1: hands are tired. And then finally having gone from a

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Speaker 1: four handicap to a fourteen, there we go. That's probably

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Speaker 1: closer to the truth. Well, but Dennis, you raise a

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Speaker 1: really interesting point the speed of markets and how much

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Speaker 1: that's shifted, and how everyone has a glut of information

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Speaker 1: that they're facing an onslaught every morning. Has that made

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Speaker 1: markets better or worse? From your perspective, I think it's

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Speaker 1: made I think it's made it better. I think it's

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Speaker 1: made it more difficult, but I do information is always

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Speaker 1: better there in the old days, years ago, I used

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Speaker 1: to say that my job was to be the sieve

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Speaker 1: of information. I I read as much as I could

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Speaker 1: get my hands on, read different newspapers, read different news wires,

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Speaker 1: listening to different news broadcasts, and tried to hold out

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Speaker 1: what I thought was the important pieces and say here,

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Speaker 1: look at this, this is what this means. Now there's

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Speaker 1: just so much information and so many people pointing out

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Speaker 1: to the same thing. Here, look at this. This is

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Speaker 1: what this means. That the competition is difficult, the markets

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Speaker 1: are far more liquid, the markets are far more efficient

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Speaker 1: than they've ever been. It's just a little more difficult

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Speaker 1: to do what I do. And so you know there

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Speaker 1: comes a time, Dennis, one of your great charms as

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Speaker 1: you actually show your recommendations on the back of your letter,

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Speaker 1: and when you go down in flames, you're the first

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Speaker 1: to report it. There detractors reporting it, and as well,

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Speaker 1: you have a dearth of equity wisdom right now, long

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Speaker 1: or short? Can you give us a game on the

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Speaker 1: stock market into next year? After up this year? It

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Speaker 1: ain't gonna be up next year, that we know for certain.

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Speaker 1: It's probably going to be down, and rather abundantly. I'm

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Speaker 1: afraid the the war that's going on over trade is

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Speaker 1: already ill and ugly. The same thing is it's probably

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Speaker 1: going to get more ill and more ugly, and and

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Speaker 1: any any inhibitions on world trade foreign trade is going

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Speaker 1: to be delitarious to stock prices, plus people who really

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Speaker 1: have no business trading, no business investing, and our novices.

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Speaker 1: I think that it's so easy to make money and

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Speaker 1: it's not that easy. And when when the novices become

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Speaker 1: the experts. That's one final question, Dennis. Of course we're

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Speaker 1: gonna have Mr Gartman back here within his retirement, probably

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Speaker 1: from the fifteenth hold of one of the eight golf

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Speaker 1: courses he plays in Republican Virginia. You tear the president

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Speaker 1: to shreds this morning on round two or around five,

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Speaker 1: whatever it is, on tariffs. How can run of the

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Speaker 1: mill Republicans support this guy? If Dennis Gartman, who it's

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Speaker 1: the GOP golf ball, says, this guy is so wrong

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Speaker 1: on trade, it is difficult, isn't it. He he has

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Speaker 1: the Republican Party has ceased to be the Republican Party,

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Speaker 1: is now the Trump the Trump Party, and and lesser

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Speaker 1: Republicans are fearful of of taking him on. I'm lucky

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Speaker 1: enough to be able to say you're wrong because I

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Speaker 1: don't have to fear what the President has to say

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Speaker 1: other than positions that I put on in the market.

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Speaker 1: But if I were a Republican senator, I'd be scared

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Speaker 1: to death about what the President might say, because Republicans

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Speaker 1: are supposed to be believers in free trade and and

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Speaker 1: and und deregulated trade, free or trade around the world,

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Speaker 1: and we have becoming a party of regulated trade and

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Speaker 1: and uh protected trade. And sadly that's just not who

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Speaker 1: we are. And and so the Senators and congressmen are

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Speaker 1: running fearful of them, and then are being quiet when

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Speaker 1: they should be loud and saying this is not who

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Speaker 1: we are. The grind of one am and three am

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Speaker 1: to write the note will end, but Dennis Gartment will

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Speaker 1: be more than visible, particularly here on Bloomberg surveillance. Mr Gartman,

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Speaker 1: thank you, and of course we protect the copyright of

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Speaker 1: our guests. Margaret Botell, good morning. It has been a

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Speaker 1: double digit year. Did you get your fair share? Yes,

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Speaker 1: we did amazingly. Even in the high yield market, double

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Speaker 1: digit returns or were given. So it was a great

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Speaker 1: year all around stocks and bonds. What happens after a

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Speaker 1: great year in bonds? I would guess our listeners in

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Speaker 1: me eighty nine point seven percent of my focus is

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Speaker 1: on the year after in equities. What happens after a

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Speaker 1: bang up year in bonds? Well, I think they will

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Speaker 1: basically look for just the return of the coupon income

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Speaker 1: and not so much capital appreciation. So mid single digits

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Speaker 1: kind of the best scenario for two and twenty. So, Margaret,

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Speaker 1: we saw, you know, with the sell off in the

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Speaker 1: fourth quarter last year, it appeared that a lot of

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Speaker 1: people had cash on the sidelines and we're willing to

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Speaker 1: jump back in. If you take a look at the

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Speaker 1: performance in you think that's the case this year. As

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Speaker 1: you talk to your clients, do they have cash and

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Speaker 1: maybe they're just waiting for a pullback in the market

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Speaker 1: that maybe we got like a year ago. Yes, cash

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Speaker 1: and hoping for that big pullback. I think this is

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Speaker 1: a replay of last year, A big A great time

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Speaker 1: to jump in because the fundamentals are still pretty good.

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Speaker 1: So if I were to jump in, I guess the

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Speaker 1: question is how much risk do I want to take?

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Speaker 1: Do I want to, you know, go into the defensive sectors,

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Speaker 1: whether it's real estate, reads, consumers, staples, or I want

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Speaker 1: to take on a little more risk saying technology or

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00:24:10,520 --> 00:24:13,600
Speaker 1: some of the industrials. Well, I think a Barbell approach.

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00:24:13,640 --> 00:24:16,359
Speaker 1: I think the interest rate sensitive sectors like utilities, like

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00:24:16,400 --> 00:24:18,399
Speaker 1: some of the reachs are going to do well because

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Speaker 1: we had a little rate push up. I think we'll

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Speaker 1: see rates pushed down against next year. And in the

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Speaker 1: equity market, I think we have to still look for

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Speaker 1: growthy sustainable growth sectors because econed me will be a

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Speaker 1: lot slower next year. Is a dividend growth a yield equivalent?

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Speaker 1: It looks very bond like to me, Tom, because the

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Speaker 1: returns are about where you'll get an investment great bonds.

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Speaker 1: What do you model for dividend growth? Do you have

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Speaker 1: a collar that you work with, Like, if it's too

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00:24:43,480 --> 00:24:46,600
Speaker 1: high a dividend growth, your radar goes up, and certainly

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Speaker 1: if there's not enough dividend growth, you don't like it.

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Speaker 1: Did there a Margie Btel collar to that statistic? No.

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Speaker 1: I like to look at total return, and you know,

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00:24:55,119 --> 00:24:58,159
Speaker 1: the capital growth is a dog, and the dividend is

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Speaker 1: really the tale. So I don't like to put much

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Speaker 1: emphasis on the dividends. A level three exactly, So Margaret

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Speaker 1: appears at the you know, the market's kind of discounting

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Speaker 1: a one rate cut maybe in two. Do you think

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Speaker 1: that's enough to kind of support some of the risk

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Speaker 1: your assets, and you know, the credit side and the

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Speaker 1: equity side. I think the fair having a steady state

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Speaker 1: policy doing nothing. We're making a mild rate cut because

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Speaker 1: rate to do look a little on the high side

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Speaker 1: compared to global rates and the slow growth. But I

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Speaker 1: think as long as I don't do too much, that

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Speaker 1: will market will be very attractive. Bloomberg Surveillance Worldwide. We

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Speaker 1: bring your margat Patella Wells Capital Management. We await comments

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Speaker 1: by Mr mccrall and Mr Trump. Paul. Sure, Margaret, you know,

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Speaker 1: it's interesting. It's been such a great year for bonds

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Speaker 1: for equities. You know, it's it's some of the people

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Speaker 1: that we talked to are saying, geez, you really have

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Speaker 1: to moderate your outlook for twenty maybe even kind of

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Speaker 1: a mid single digit return type environment. Is that or

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Speaker 1: in Tom's case, triple leverage cash. What is your sense

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Speaker 1: as to maybe expectations for well I think mid digit

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Speaker 1: returns would be just fine after the returns we've had

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Speaker 1: this year, and with inflation being low and interest rates

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Speaker 1: being low. So if it's a five percent year that

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00:26:17,320 --> 00:26:20,000
Speaker 1: won't be bad. It's still positive and the growth is

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Speaker 1: still positive in the economy. Mark, if we don't speak

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Speaker 1: to you before the end of the year. Thank you

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00:26:24,080 --> 00:26:26,359
Speaker 1: so much for your support of Bloomberg Surveillance and your

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00:26:26,400 --> 00:26:30,600
Speaker 1: wisdom and perspective on capturing a greater yield. Margat Patel

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Speaker 1: with Wells Capital Management in Boston. Thanks for listening to

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Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on

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00:26:40,000 --> 00:26:45,840
Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm

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00:26:45,880 --> 00:26:49,160
Speaker 1: on Twitter at Tom Keane before the podcast. You can

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Speaker 1: always catch us worldwide. I'm Bloomberg Radio