WEBVTT - Surveillance: Retail Trading With Taft 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferrell and Lisa Brownwitz Jailey. We bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com, 0:00:23.920 --> 0:00:31.240 and of course on the Bloomberg terminal. Right now, a 0:00:31.440 --> 0:00:36.320 really really important conversation not long agoing far away, but 0:00:36.360 --> 0:00:38.360 a number of years ago, in my book of the Summer, 0:00:38.520 --> 0:00:42.279 was a sleeper. I did not expect the excellence of 0:00:42.479 --> 0:00:46.159 stewardship by John S. Taft. He is bared vice chairman. 0:00:46.560 --> 0:00:49.360 Of course, a legacy of this American politics in this 0:00:49.440 --> 0:00:52.240 Wall Street as well, and it was a primal call 0:00:52.400 --> 0:00:55.880 by John Taft about the state of Wall Street. We're 0:00:55.920 --> 0:00:59.320 thrilled that we could revisit with John Taft on stewardship 0:00:59.840 --> 0:01:03.279 in the time of free John. A year ago or so, 0:01:03.800 --> 0:01:06.200 I opened the Wall Street Journal and one page was 0:01:06.240 --> 0:01:09.520 free trading, and the next page was free trading, and 0:01:09.560 --> 0:01:12.840 the page after that was free trading. Everything's free now. 0:01:13.080 --> 0:01:15.520 And look at the mess we're in with order flow. 0:01:15.920 --> 0:01:20.520 How do we extract ourselves from all the disaster we've 0:01:20.520 --> 0:01:23.880 seen from order flow back to something or forward to 0:01:24.000 --> 0:01:29.399 something more normal. Well, you're talking about payment for order flow, 0:01:29.560 --> 0:01:32.800 which is the engine that powers a lot of these 0:01:32.880 --> 0:01:38.160 quote unquote free retail trading platforms, and tom I've always 0:01:38.240 --> 0:01:42.000 had uh I felt the payment for order flow was 0:01:42.520 --> 0:01:46.280 a smelly practice. It's legal. Um, it has to be 0:01:46.400 --> 0:01:49.280 married with all sorts of controls and assurances that you're 0:01:49.320 --> 0:01:55.000 getting best execution. But if you're selling off customer order 0:01:55.120 --> 0:01:59.320 flow and getting paid for that, how does that not 0:01:59.520 --> 0:02:03.680 create a conflict with your obligation to get the best 0:02:03.720 --> 0:02:07.200 execution for your clients. UM. I think you're seeing, on 0:02:07.280 --> 0:02:11.400 the part of our new very capable, very aggressive SEC Chairman, 0:02:11.440 --> 0:02:14.960 Gary Gensler, a commitment to look at that along with 0:02:15.080 --> 0:02:20.920 many of the other troubling UH issues surrounding retail trading. 0:02:21.240 --> 0:02:24.600 Would you suggest that the leadership of law Strata, which 0:02:24.680 --> 0:02:28.800 certainly you're a voice of and part of, support Mr Gensler, 0:02:28.960 --> 0:02:32.720 and let's get to this to get some confidence back 0:02:33.120 --> 0:02:38.919 in trading away from the meme stucks. Absolutely. I I 0:02:38.960 --> 0:02:42.519 think very highly of the SEC chairman. He's certainly one 0:02:42.560 --> 0:02:48.120 of the most knowledgeable, game ready SEC chairman we have had, 0:02:48.560 --> 0:02:52.280 and he's already laid out pretty clearly what his agenda 0:02:52.440 --> 0:02:58.480 is all makes sense to me. Greater transparency around UH 0:02:58.600 --> 0:03:02.079 short selling, greater trans parency around the use of total 0:03:02.080 --> 0:03:07.640 return swaps UH and UH payment for order flow gamification. 0:03:07.680 --> 0:03:10.080 They're all on his radar, And yes, I think we 0:03:10.080 --> 0:03:12.480 should get it all of this because Tom, what we 0:03:12.680 --> 0:03:15.560 found in the past, that we've seen it over and 0:03:15.600 --> 0:03:18.680 over and over against. Partly what stewardship is about is 0:03:18.720 --> 0:03:25.160 that our industry has a habit of of taking legitimate 0:03:25.960 --> 0:03:29.800 practices that that do make a positive difference in the 0:03:29.840 --> 0:03:33.280 world and and running them to excess. And every time 0:03:33.320 --> 0:03:36.360 we do that, we get in trouble, and our clients 0:03:36.360 --> 0:03:39.440 and customers get in trouble, and society gets in trouble. 0:03:39.920 --> 0:03:43.520 And you can see some some indications here of commercial 0:03:43.520 --> 0:03:47.440 excesses or reappearing in the financial markets, and I find 0:03:47.440 --> 0:03:50.800 those troubling and I look for regulators to try to 0:03:50.880 --> 0:03:53.560 tamp those down before they cause a big problem. John, 0:03:53.600 --> 0:03:56.160 the focus right now is shifting away from some of 0:03:56.160 --> 0:03:59.560 the trading activity to why there hasn't been more lending 0:03:59.600 --> 0:04:02.520 in the banking sector. And as someone who is perfect 0:04:02.560 --> 0:04:05.560 to speak to the nexus between banking and politics, given 0:04:05.600 --> 0:04:07.920 your great grandfather being the president of the United States. 0:04:08.200 --> 0:04:11.040 There is a question here of how banks will shape 0:04:11.040 --> 0:04:15.040 themselves going forward. As the lenders as helping to generate 0:04:15.080 --> 0:04:18.120 some of the recovery through UH through some of the 0:04:18.160 --> 0:04:20.919 extensions to main street, how do you expect that to 0:04:20.960 --> 0:04:24.280 be transformed in terms of the lack of lending demand, 0:04:24.480 --> 0:04:29.120 the lack of demand from borrowers to where we are now, well, 0:04:29.160 --> 0:04:31.960 a couple of things are going on. Obviously, the post 0:04:32.000 --> 0:04:35.680 COVID softness in the economy led to a decline in 0:04:35.880 --> 0:04:38.960 demand for traditional lending. But Lisa, one of the things 0:04:39.000 --> 0:04:42.279 that we've seen going on is there there's plenty money 0:04:42.839 --> 0:04:45.880 available to be lent. It's just being lent out of 0:04:45.920 --> 0:04:50.480 the non bank or shadow financial sector. Private equity funds, 0:04:51.080 --> 0:04:54.920 hedge funds are are lending. And part of the reason 0:04:55.000 --> 0:04:58.520 for that is that during the financial crisis, the focus 0:04:58.720 --> 0:05:04.880 was legitimately inappropriately on making sure that banks didn't behave 0:05:04.960 --> 0:05:09.039 in ways that that almost brought a systemic meltdown, and 0:05:09.080 --> 0:05:13.039 as a result, all sorts of capital requirements and restrictions 0:05:13.040 --> 0:05:16.560 were put on regulated financial institution. Just like squeezing a balloon, 0:05:17.000 --> 0:05:20.000 you squeeze it at one end. Uh, it grows at 0:05:20.040 --> 0:05:23.599 the other end. And so we've seen capital available for 0:05:23.720 --> 0:05:27.120 lending moving out of the regulator to the unregulated banking sector. 0:05:27.480 --> 0:05:30.560 What I would like to see is uh, and you're 0:05:30.600 --> 0:05:32.640 and and there is some of this going on or 0:05:32.760 --> 0:05:35.520 was let me put it during the Trump administration remains 0:05:35.560 --> 0:05:38.840 to be seen. What happens during the Biden administration is 0:05:38.839 --> 0:05:42.200 for regulators to take a take a deep breath, say, Okay, 0:05:42.320 --> 0:05:48.800 we actually here, UH oversaw a success story. We oversaw uh, 0:05:49.000 --> 0:05:52.479 the rebooting of the financial sector. We put it on 0:05:52.600 --> 0:05:56.640 sounder footing, safer, sounder, more stable than it's been in 0:05:56.680 --> 0:06:01.960 a long time. Can we takes the steps to make 0:06:02.000 --> 0:06:05.400 it easier for regulated financial institutions for you to do 0:06:05.480 --> 0:06:08.480 the job that society wants them to do. Are we 0:06:08.520 --> 0:06:12.520 being too restrictive? And that's sort of a counter intuitive 0:06:12.920 --> 0:06:16.400 to the regulators in place now under the Biden administration, 0:06:16.440 --> 0:06:19.360 But I think that's what's needed at this point. It's 0:06:19.360 --> 0:06:21.839 sort of a relook at DoD Frank, not a not 0:06:21.960 --> 0:06:25.440 a reinstitution of DoD Frank. So on the flip side, 0:06:25.440 --> 0:06:28.000 do you think that systemic risk has built up in 0:06:28.000 --> 0:06:31.760 the shadow banking system? Yeah, certainly, a lot of people 0:06:31.839 --> 0:06:37.120 are worried about that, and yes, I think that, um uh, 0:06:37.160 --> 0:06:42.800 there are indications that, as there always are, risk taking 0:06:43.400 --> 0:06:49.000 is UH being pushed to dangerous levels in some areas 0:06:49.160 --> 0:06:53.880 of the unregulated financial sector that you just saw one 0:06:54.560 --> 0:06:58.839 UH in the explosion of our articles, and UH what 0:06:58.880 --> 0:07:01.440 was the risk being aken there while it was embedded 0:07:01.480 --> 0:07:05.839 in total return swaps around which there isn't the same 0:07:05.880 --> 0:07:09.960 transparency and there aren't the same disclosure obligations as there 0:07:10.000 --> 0:07:14.760 are with with normal UH stock positions, major stock positions 0:07:14.760 --> 0:07:19.480 and publicly traded companies, and those kinds of holes in 0:07:19.560 --> 0:07:24.400 the system UH sometimes can can destabilize the financial system. 0:07:24.400 --> 0:07:27.840 And I wasn't big enough banks took heavy losses, but 0:07:27.960 --> 0:07:30.480 you know they weren't. They weren't system threatening, weren't even 0:07:30.480 --> 0:07:34.160 institution threatening. But yes, I worry about excess as building up. 0:07:34.200 --> 0:07:37.600 They always do. We have a number of organizations like 0:07:37.720 --> 0:07:42.240 f stock and various research capabilities that we didn't have 0:07:42.440 --> 0:07:45.880 going into the financial institution supposed to be scanning for risk. 0:07:46.240 --> 0:07:50.080 Are they, Let's hope. So you know, I was reading 0:07:50.720 --> 0:07:54.200 Jonah story yesterday about Representative Tom Swaltzney from New York, 0:07:54.240 --> 0:07:57.840 a case pushing for two and a half percent levy 0:07:57.880 --> 0:08:00.880 on wealth of more than fifty million in dollars. He 0:08:00.960 --> 0:08:03.880 says it's a one off, but we know how those 0:08:03.920 --> 0:08:07.960 things go. Interestingly, your great grandfather was a champion of 0:08:07.960 --> 0:08:11.559 the sixteenth Amendment, brought in the federal income tax for 0:08:11.560 --> 0:08:16.000 for really the first time, UM in nineteen thirteen. What 0:08:16.040 --> 0:08:21.040 do you think about now transitioning to or adding on 0:08:21.200 --> 0:08:26.720 a wealth tax. Boy, it never fails. You get me 0:08:26.760 --> 0:08:30.000 to talk about politics on on surveillance. You know, my 0:08:30.000 --> 0:08:33.120 my peer people say, don't talk about politics, don't don't, 0:08:33.320 --> 0:08:37.240 don't talk about your Republican legacy. I guess here, here's 0:08:37.240 --> 0:08:40.040 the way I feel. I'm uh, and I think a 0:08:40.040 --> 0:08:42.360 lot of a lot of Americans and people in financial 0:08:42.360 --> 0:08:47.479 services industry feel this way is we're we think taxes 0:08:48.200 --> 0:08:52.959 UH can make sense if they are used to invest 0:08:53.720 --> 0:08:58.080 in productive assets in the real economy that makes the 0:08:58.120 --> 0:09:01.160 economy grow faster, Let's face it, unless you want to 0:09:01.160 --> 0:09:05.160 look at something like long term inflation. UH. The only 0:09:05.800 --> 0:09:10.200 uh viable way out of the hole we've dug ourselves 0:09:10.240 --> 0:09:12.680 in the course of the last three or four years 0:09:12.760 --> 0:09:14.839 is to grow our way out of it. And if 0:09:14.920 --> 0:09:19.040 raising taxes and putting that money to work in a solid, 0:09:19.559 --> 0:09:23.600 uh legitimate infrastructure package is something that Congress can find 0:09:23.600 --> 0:09:26.080 their way to do, then that's great. If, on the 0:09:26.160 --> 0:09:29.760 other hand, wealth taxes being used to fund more social spending, 0:09:30.120 --> 0:09:32.440 then we're just digging the hole we're in deeper. And 0:09:32.480 --> 0:09:35.000 so it really depends what is going to be the 0:09:35.080 --> 0:09:38.800 use of a tax increase, uh, whether it's one time 0:09:39.120 --> 0:09:44.160 or capital gains or ongoing income tax increase. I would 0:09:44.160 --> 0:09:47.400 just point out that William Howard Taff, though his his 0:09:47.480 --> 0:09:50.720 focus was on corporate income tax it's not personal income taxes. 0:09:50.920 --> 0:09:53.440 John Taff, thank you so much. With Betarter, their vice chairman, 0:09:53.440 --> 0:09:56.160 they're on order flow and on some of the moments 0:09:56.160 --> 0:09:58.880 we've seen such as articles this morning. He is again 0:09:59.559 --> 0:10:08.920 with Beard right now. This is a really important conversation, 0:10:08.960 --> 0:10:11.800 Sarah Hunt, with us with el Pinewood's Capital investors, and 0:10:11.840 --> 0:10:14.640 what's so great about it. This is in the trenches 0:10:14.679 --> 0:10:19.120 of portfolio construction versus sort of the econo babble that's 0:10:19.160 --> 0:10:23.080 out there right now. Sarah Hunt, I am absolutely fascinated 0:10:23.520 --> 0:10:26.640 with how you perceived big tech. We saw the Apple 0:10:26.679 --> 0:10:30.560 surge yesterday. Is this big tech unloved or are we 0:10:30.760 --> 0:10:33.320 just climbing on board the mega move that we saw 0:10:33.320 --> 0:10:36.280 of eighteen months ago. Well, I think you had a 0:10:36.320 --> 0:10:38.400 long pause in some of those big tech stocks, and 0:10:38.440 --> 0:10:40.080 you look at Apple, you go back to September of 0:10:40.160 --> 0:10:42.199 last year, and you were basically at levels that were 0:10:42.240 --> 0:10:44.520 just around where we are now. So that's had some 0:10:44.600 --> 0:10:46.680 time to digest that fact that it was higher for 0:10:47.240 --> 0:10:49.240 they had a huge swing up, and then everything sort 0:10:49.280 --> 0:10:51.400 of slowed down and paused on the big tech side 0:10:51.400 --> 0:10:53.680 while people went and looked at what else is happening 0:10:53.679 --> 0:10:56.120 in the economy, So they started looking at cyclicals, I 0:10:56.160 --> 0:10:58.680 started looking in other areas. I think what you're seeing 0:10:58.679 --> 0:11:01.360 now is the realization that rates now starting to back 0:11:01.440 --> 0:11:03.880 off after reaching a high I think one seventy five 0:11:03.960 --> 0:11:06.480 on the tenure or the other day, or a couple 0:11:06.480 --> 0:11:08.600 of weeks ago, that you're starting to see people go 0:11:08.679 --> 0:11:11.040 back to those tech docs because the growth is still there. 0:11:11.120 --> 0:11:13.560 And in the end, I think that's what really matters, 0:11:13.880 --> 0:11:15.640 because as much as we can look at the different 0:11:15.640 --> 0:11:18.840 parts of the economy, there's still everything we have is 0:11:18.880 --> 0:11:21.720 more and more involved with tech. There's semiconductors in almost 0:11:21.760 --> 0:11:23.880 every single thing we buy these days, so I don't 0:11:23.920 --> 0:11:27.400 see that the tech space is not a good beneficiary 0:11:27.440 --> 0:11:29.440 of whatever is happening in the economy, as long as 0:11:29.480 --> 0:11:31.880 that's good news for the economy. Sarah, where is the 0:11:31.920 --> 0:11:37.360 greatest degree of undoe complacency and markets right now? Wow, 0:11:37.400 --> 0:11:40.280 that's a tough one. I think that. I think, you know, 0:11:40.400 --> 0:11:42.240 go back to your FED discussion. What do we what 0:11:42.400 --> 0:11:44.000 is the FED going to do? And how does that 0:11:44.040 --> 0:11:46.760 play into everything else? It has benefed driven market. All 0:11:46.800 --> 0:11:50.120 this liquidity has definitely been pushing people out of fixed 0:11:50.120 --> 0:11:53.440 income and lamentations of fixed income managers and has been 0:11:53.440 --> 0:11:57.040 pushing towards equities and other higher risky assets. How does 0:11:57.040 --> 0:11:59.160 that play out? How does the FED back away from that? 0:11:59.240 --> 0:12:01.840 I think that's going to be, to your point Lisa earlier, 0:12:01.840 --> 0:12:03.839 a very big question. And we don't know how that's 0:12:03.840 --> 0:12:05.960 going to play out just yet. I think the odds 0:12:06.000 --> 0:12:08.720 that it actually just ends up continuing in a more 0:12:08.800 --> 0:12:11.640 quiet way are pretty high to me. But in the end, 0:12:11.800 --> 0:12:13.559 at some point they're going to have to do something 0:12:13.559 --> 0:12:15.360 that's a little bit different than that, and how our 0:12:15.360 --> 0:12:17.559 markets going to take that? How our markets going to 0:12:17.679 --> 0:12:20.439 take that? And I wonder though, Sarah, whether that's so 0:12:20.480 --> 0:12:23.560 far afield in the future right now, any sort of 0:12:23.559 --> 0:12:27.000 normalization that we can continue down this road with regards 0:12:27.040 --> 0:12:29.360 to the pricing that we're seeing inequities, the pricing that 0:12:29.360 --> 0:12:31.480 we're seeing in fixed income, and the pricing that we're 0:12:31.480 --> 0:12:34.520 seeing frankly in some of these alternative assets. Well, I 0:12:34.520 --> 0:12:36.480 think if you'd asked anybody four or five years ago, 0:12:36.520 --> 0:12:38.400 even before the pandemic, you would have said, no, the 0:12:38.400 --> 0:12:40.280 Fed's going to have to exit their strategy and this 0:12:40.320 --> 0:12:42.640 is this can't continue forever. And here we are, you 0:12:42.679 --> 0:12:45.640 know how, many years after financial crisis, still with some 0:12:45.760 --> 0:12:49.640 very unusual monetary measures globally. And I think that just 0:12:49.679 --> 0:12:52.319 the rates coming down again in Europe also makes the 0:12:52.400 --> 0:12:54.600 US look more attractive. I mean, the German tenure got 0:12:54.679 --> 0:12:57.000 up to I think negative ten basis points and now 0:12:57.120 --> 0:12:59.720 is back lower than that. So I think the US 0:12:59.800 --> 0:13:02.680 does look better relatively speaking, but it's still really tough 0:13:02.679 --> 0:13:05.000 and I think it's going to be difficult to see 0:13:05.000 --> 0:13:06.680 how we get out of this. But at the same time, 0:13:07.000 --> 0:13:09.280 to your point, I think we could keep going with 0:13:09.280 --> 0:13:11.920 this a lot longer than people think we can. Sarah, 0:13:12.000 --> 0:13:16.079 do you have any earnings visibility fifteen days to June thirty, 0:13:16.200 --> 0:13:19.760 we regroup, ALCOHOLA comes out JP more Gon will start 0:13:19.800 --> 0:13:23.240 the bank earnings. Sara, do you have any visibility on 0:13:23.280 --> 0:13:26.360 what earnings look like coming up? I think this has 0:13:26.400 --> 0:13:29.160 been such an unusual time frame for so many reasons 0:13:29.160 --> 0:13:31.480 that it's very difficult to see earnings visibility. I was 0:13:31.520 --> 0:13:33.120 looking back at some of the banking earnings and what 0:13:33.160 --> 0:13:35.000 the estimates were and what they came out with were 0:13:35.000 --> 0:13:37.720 so wildly different. You know, some things are more easier, 0:13:38.160 --> 0:13:41.240 more simple to predict than banking earnings, which I think 0:13:41.240 --> 0:13:43.640 are very tough to predict. But in the scheme of things, no, 0:13:43.800 --> 0:13:45.800 I think it's very tough to say we know what 0:13:45.880 --> 0:13:47.800 earnings are going to be accepted right now. People are 0:13:47.800 --> 0:13:49.920 out there spending money, so they're going to be higher. 0:13:50.080 --> 0:13:52.760 The question is how much and for how long? Sarah, 0:13:52.760 --> 0:13:54.960 Thank you so much. Sarah hunt with us today with 0:13:55.080 --> 0:13:59.720 Alpine Woods Capital on a portfolio construction in the view 0:13:59.720 --> 0:14:07.400 four or he has seen this before. Michael Holland joins 0:14:07.440 --> 0:14:10.560 usself from Holland and Company, looking at the idea of 0:14:10.600 --> 0:14:15.360 careful securities analysis, listening to managements, and moving forward with 0:14:15.480 --> 0:14:19.760 a more calm and stable approach than the trading. Michael Holland, 0:14:19.920 --> 0:14:22.720 let's start with the mean trading. Now, when does this 0:14:22.840 --> 0:14:25.600 go away? Or are we gonna live with mean trading forever? 0:14:27.760 --> 0:14:30.160 Likely not for every time that we're good to see 0:14:30.200 --> 0:14:33.040 the three of you. Uh. The reality is that that 0:14:33.120 --> 0:14:35.360 all of these things do go away, but you just 0:14:35.400 --> 0:14:38.240 don't know how long they take to go away. So 0:14:38.360 --> 0:14:41.040 I wouldn't I wouldn't be real fast to get out 0:14:41.040 --> 0:14:43.680 of your cash position and start shorting things. Starts right now. 0:14:44.520 --> 0:14:47.920 So Michael, you just are saying music to Tom's ears. 0:14:48.280 --> 0:14:50.880 Why do you think that people ought to be holding 0:14:50.960 --> 0:14:53.680 some cash right now given the fact that there's extreme 0:14:53.720 --> 0:14:58.200 accommodation from central banks and ongoing fiscal spending at listen 0:14:58.240 --> 0:15:01.440 the uh the history of the time talks about the 0:15:01.720 --> 0:15:04.320 decades I've been What happens is when you get to 0:15:04.360 --> 0:15:07.680 this point where the complacency is is actually pretty well 0:15:07.720 --> 0:15:10.840 earned because the Federal Reserve right now is doing what 0:15:10.880 --> 0:15:14.320 it's doing. And listen to Carl Weinberg in his testimony 0:15:14.480 --> 0:15:16.320 in the last couple of days, I think you have 0:15:16.440 --> 0:15:20.360 very smart people saying things can be pretty good for 0:15:20.400 --> 0:15:23.040 an extended period of time because of the Fed. Having 0:15:23.080 --> 0:15:25.480 said that, Tom said earlier in the show, thirty nine 0:15:25.520 --> 0:15:29.880 percent increase over the last twelve months, name trading stocks, SPACs, ETCeteras, 0:15:29.920 --> 0:15:32.440 and all the stuff that the bears talk about. Both 0:15:32.600 --> 0:15:37.280 both camps have very smart people in them. Either or 0:15:37.320 --> 0:15:39.800 both could be right for some period of time. Having 0:15:39.800 --> 0:15:42.760 said that, I really like an all weather portfolio so 0:15:42.800 --> 0:15:46.400 that when things go in the direction no one expects. 0:15:46.680 --> 0:15:49.600 You're saying, I'm still okay. I'd like to be a 0:15:49.640 --> 0:15:52.160 survivor in these markets. All right, Well, let's talk about 0:15:52.160 --> 0:15:56.480 that survival here. I am curious, Michael, why would anyone 0:15:56.520 --> 0:15:58.800 buy into the case here that the FED can sort 0:15:58.800 --> 0:16:03.040 of orchestrate. That's verbial soft landing. I don't think you 0:16:03.160 --> 0:16:06.640 buy in remain a hundred percent. That's exactly the right question. 0:16:06.960 --> 0:16:10.240 In fact, the soft landing may not happen, and it 0:16:10.360 --> 0:16:13.680 may happen. I think it's it's probably in the school. 0:16:13.720 --> 0:16:16.160 It probably could be a little messy, but but I 0:16:16.200 --> 0:16:18.520 have no reason to thank my prediction would be any 0:16:18.520 --> 0:16:21.680 good or as good as the three of yours or 0:16:21.800 --> 0:16:25.160 Carl Weinberg's or anyone else's. So nobody knows the answer 0:16:25.200 --> 0:16:27.880 to that. Will it be a soft landing? Having said that, 0:16:28.200 --> 0:16:30.680 it might be, which means that to have a percent 0:16:30.800 --> 0:16:33.840 triple leverage is probably not the preferred position in the 0:16:33.960 --> 0:16:36.360 stock market. On the other hand, having some cash in 0:16:36.360 --> 0:16:39.760 case it's wrong, you're you'll feel better at the end 0:16:39.760 --> 0:16:42.560 of the day because you will survive. Michael Holland when 0:16:42.600 --> 0:16:47.000 you look at the accounting statements of these companies, it 0:16:47.080 --> 0:16:52.400 speaks of fundamental analysis. Does fund fundamental analysis have a 0:16:52.520 --> 0:16:56.480 value here? Securities analysis have a value here when you 0:16:56.520 --> 0:17:01.080 see the ratios we're living with abs salutely Tom, Because 0:17:01.160 --> 0:17:02.800 when you get to a time like this, if if 0:17:02.840 --> 0:17:05.639 you are going to inch back into the equity market 0:17:05.720 --> 0:17:07.879 sometime in the next decade, what you want to have 0:17:07.960 --> 0:17:11.520 as managements who have financial statements that tell you, as 0:17:11.520 --> 0:17:13.639 in the case of JP Morgan for example, you referred 0:17:13.640 --> 0:17:16.960 to them earlier in the show. UH, they show you 0:17:17.359 --> 0:17:21.359 why they have fortress like balance sheets, what the prospects 0:17:21.359 --> 0:17:25.399 are for their trading revenues, uh having been so great 0:17:25.440 --> 0:17:27.720 in the past. There's a there's a gold mine of 0:17:27.800 --> 0:17:31.040 information in those financial statements, and that's part of why 0:17:31.440 --> 0:17:34.119 I've been able to survive myself. By paying attention to 0:17:34.240 --> 0:17:36.320 things just like that, you can those are kind of 0:17:36.400 --> 0:17:40.080 immutable things that facts are stubborn things. Ass as it's 0:17:40.160 --> 0:17:44.480 consented Michael. There's a spectrum of risk and return, and 0:17:44.560 --> 0:17:47.520 the idea here of there are times to go hard 0:17:47.600 --> 0:17:50.560 into risk for that return of their times to accept 0:17:50.880 --> 0:17:53.440 very little return for not being very risky. I don't 0:17:53.480 --> 0:17:55.240 need to tell you this, but where are you right 0:17:55.280 --> 0:18:00.560 now on that spectrum? Perfect question, LESA, because so trees ago, 0:18:00.920 --> 0:18:04.640 a very successful investor named Rochild said, bye, when there's 0:18:04.680 --> 0:18:07.600 blood in the streets, we're certainly not seeing blood in 0:18:07.600 --> 0:18:09.720 the streets right now. We're seeing the opposite. We're seeing 0:18:09.920 --> 0:18:12.840 a federal reserve which is given a pass to anyone 0:18:12.880 --> 0:18:17.000 who wants to see uh, assets of any kind go up. 0:18:17.440 --> 0:18:19.399 So it's a time to have some cash. As you 0:18:19.480 --> 0:18:22.399 said before. So in the risk spect I'm saying, you know, 0:18:22.440 --> 0:18:24.679 you're tilding over the middle to the to the to 0:18:24.760 --> 0:18:27.160 the area where you have to show some caution lights 0:18:28.240 --> 0:18:31.080 for sure. Yeah, yeah, but I mean showing caution. Let's 0:18:31.080 --> 0:18:33.400 say you don't want to necessarily go into cash, remove 0:18:33.480 --> 0:18:36.200 a large allocation into cash here, you want to stay 0:18:36.200 --> 0:18:38.480 invested in the market, and hopefully I'll take part on 0:18:38.520 --> 0:18:42.000 whatever upside might actually be left here. Is there safety 0:18:42.160 --> 0:18:45.960 to be found in that thinking? Yeah right. I think 0:18:46.359 --> 0:18:50.600 Tom's question earlier about fundamental analysis is related to to 0:18:50.680 --> 0:18:53.159 the answer to your question, um Oracle is going to 0:18:53.240 --> 0:18:56.760 report after the close tonight. I saw that the stock 0:18:56.840 --> 0:18:59.800 there a few months ago, trading it quite low multiple 0:19:00.240 --> 0:19:03.719 the prospects for the company management that has shown itself 0:19:03.720 --> 0:19:07.720 over the years to get it right. And my guess 0:19:07.800 --> 0:19:09.760 is what they're doing. They have a report, and maybe 0:19:09.800 --> 0:19:12.080 there'll be a lousy report and it'll go straight down. 0:19:12.280 --> 0:19:14.920 But I think there are companies JP more going to 0:19:15.000 --> 0:19:17.719 be in that category. General Mortis with Mary Barrett, I 0:19:17.760 --> 0:19:20.159 think that there are there are places in the market 0:19:20.160 --> 0:19:22.280 where you can find opportunities, but you have to work 0:19:22.280 --> 0:19:25.440 at it. Like Holland, thank you so much, greatly, greatly 0:19:25.480 --> 0:19:28.520 appreciated this morning. With Holland and Company, the chairman and 0:19:28.560 --> 0:19:38.320 the founder there. Joseph's song joins working with Bank of 0:19:38.359 --> 0:19:42.000 America's their US economists with Ethan Harrison the team. Joseph, 0:19:42.000 --> 0:19:44.000 thank you so much for joining us. I like the 0:19:44.000 --> 0:19:46.919 Bank of America tweaks your g d P numbers. You 0:19:47.000 --> 0:19:50.840 go from a first quarter of prosperity to the boom. 0:19:50.880 --> 0:19:52.520 You know, a little bit of an adjustment here of 0:19:52.520 --> 0:19:54.960 the second quarter. What does the clarity that you and 0:19:55.040 --> 0:20:00.960 Michelle Meyer have on third quarter? G d P Thank me. Um. Look, 0:20:01.000 --> 0:20:03.399 we're still very bullish on the US economy right now. 0:20:03.440 --> 0:20:07.120 You know, we're still looking for seven percent growth this year. Obviously, 0:20:07.160 --> 0:20:09.960 today's retail sales report was definitely on the weaker side, 0:20:09.960 --> 0:20:12.400 but we were expecting that. We were expecting negative prints 0:20:12.440 --> 0:20:15.600 for all the major aggregates, um, but we still see 0:20:15.640 --> 0:20:18.520 strength in the consumer. If you look at our car data, 0:20:18.880 --> 0:20:21.640 everything outside of retail sales, you know, group were roughly 0:20:21.680 --> 0:20:23.720 around six percent on a month or a month basis. 0:20:23.760 --> 0:20:25.840 So all that service, it's all that spending. Is that 0:20:25.960 --> 0:20:28.080 happening on the service side. We saw a lot of 0:20:28.119 --> 0:20:31.959 strength uh the end of the month in May around 0:20:32.040 --> 0:20:37.280 Memorial Day with lodging, travel, restaurant spending really really picking 0:20:37.359 --> 0:20:40.000 up momentum. And early in June we're seeing that carry 0:20:40.000 --> 0:20:42.080 you do, so you get through June thirty, you go 0:20:42.119 --> 0:20:44.800 to Q three, I've got question marks on it for 0:20:44.960 --> 0:20:48.440 radio and TV. How do you guys frame up Q three? 0:20:48.600 --> 0:20:50.880 Is it a is it a better tone than where 0:20:50.920 --> 0:20:54.640 you were ninety days ago? Well, you know, we don't 0:20:54.680 --> 0:20:57.040 think that the strength that we've seen in the second 0:20:57.040 --> 0:21:00.800 core will necessarily continue, will be sustaining that at the 0:21:00.960 --> 0:21:03.560 very extraordinary levels that we're expecting, and Q two we're 0:21:03.560 --> 0:21:06.440 looking for double digit GDP growth, it will it will 0:21:06.480 --> 0:21:08.560 soften a bit, but I will still be well well 0:21:08.600 --> 0:21:12.240 above trend suggesting the consumer is spending. And remember there's 0:21:12.280 --> 0:21:15.720 actually more fiscal aid coming online in Q three with 0:21:15.800 --> 0:21:18.400 the child tax credits, so a lot of middleton lower 0:21:18.440 --> 0:21:21.920 income households will have more dollars to spend. Joseph, let's 0:21:21.960 --> 0:21:24.880 talk about the pendulum of stagflation, as Tom so elegantly 0:21:24.920 --> 0:21:28.040 put this question of whether people are less inclined to 0:21:28.080 --> 0:21:31.280 spend as prices go up. Are we seeing signs of 0:21:31.320 --> 0:21:33.760 that or is this to add a completely irrelevant to 0:21:33.800 --> 0:21:37.120 that based on this changing of the of the composition 0:21:37.240 --> 0:21:40.600 of spending. Yeah, I think Mike is correct and that 0:21:40.680 --> 0:21:43.000 it's it's tough to suss out what is the demand 0:21:43.080 --> 0:21:46.239 and supply effects going on right now. Um, you know, 0:21:46.240 --> 0:21:49.240 obviously there is probably some effect with higher prices in 0:21:49.320 --> 0:21:51.439 the good sector, but you know, when we look at 0:21:51.440 --> 0:21:54.159 our car data, real spending is still up double digits 0:21:54.240 --> 0:21:57.480 relative to twenty nineteen levels. So even if there's some 0:21:57.560 --> 0:22:00.800 softening in the good sector, clearly those dollars are being 0:22:00.800 --> 0:22:04.159 shifted over to areas where they're still really strong demand. 0:22:04.680 --> 0:22:06.200 All right, Yeah, I mean as we look at these 0:22:06.280 --> 0:22:08.880 uh main numbers here, Joseph, I mean we should point 0:22:08.880 --> 0:22:12.040 out these April numbers ticket revised higher here on a 0:22:12.080 --> 0:22:14.320 month over month number. Of course, we were pretty much 0:22:14.320 --> 0:22:17.480 flat on the previous reading that's being revised to up 0:22:17.720 --> 0:22:20.320 point nine percent. I am curious that when you look 0:22:20.359 --> 0:22:23.320 at the numbers that we've had here on the retail side, 0:22:23.480 --> 0:22:26.680 retail sales side, and the come down that we're having, now, 0:22:26.840 --> 0:22:30.119 how much are you factoring in the government support and 0:22:30.160 --> 0:22:32.720 the potential pullback of some of that support, meaning the 0:22:32.800 --> 0:22:35.439