WEBVTT - Bond Selloff Leading the Rotation on Equity Front 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor, find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:23.920 at Bloomberg dot com. Stocks are up, giving a little 0:00:23.920 --> 0:00:26.600 bit of a pop, although you know, really the action 0:00:27.120 --> 0:00:30.200 is underneath the surface. There has been a rotation out 0:00:30.240 --> 0:00:34.080 of those momentum names tech for example, and into value 0:00:34.240 --> 0:00:37.200 led by banks. Interestingly enough, we are getting a little 0:00:37.200 --> 0:00:40.080 bit of yield curve skeepening, but not not a whole 0:00:40.120 --> 0:00:42.640 lot to justify the move that we have seen. We 0:00:42.680 --> 0:00:45.080 are so lucky to have with us on Wheti Bajugana. 0:00:45.200 --> 0:00:47.320 She is senior portfolio manager and a head of multi 0:00:47.360 --> 0:00:52.080 asset Strategy at Columbia thread Needle Investments, which oversees almost 0:00:52.080 --> 0:00:54.560 five hundred billion dollars on wheat. Thank you so much 0:00:54.600 --> 0:00:57.400 for being with us. I want to just start with 0:00:57.600 --> 0:01:00.400 what's getting you excited right now? I mean this sort 0:01:00.400 --> 0:01:03.960 of trade out of momentum and into value. Do you 0:01:03.960 --> 0:01:08.199 think of this is something that has legs very short 0:01:08.360 --> 0:01:13.000 term Li Sa I have been watching this rotation as well, 0:01:13.240 --> 0:01:17.720 and on the equity front, it's value versus growth. But 0:01:17.880 --> 0:01:20.480 if you look at the bond market, it's really quite 0:01:20.480 --> 0:01:25.040 correlated to what's happening to rate. And we have seen 0:01:25.200 --> 0:01:30.680 a few days now of sustained sell off in UM bonds, 0:01:30.720 --> 0:01:35.600 which is leading this rotation UM in the stocks also, 0:01:36.480 --> 0:01:40.160 and really the drivers for both markets is the same. 0:01:40.440 --> 0:01:46.920 It is some sense um in the markets of reduced risk, 0:01:47.480 --> 0:01:51.360 the escalation of some of the issues that had dominated 0:01:51.480 --> 0:01:57.920 UM folks mindset in August. So and we we've seen, 0:01:57.960 --> 0:02:01.560 as you mentioned, some rotation driven by rates. What is 0:02:01.600 --> 0:02:05.280 your kind of economic backdrop in your base case, We've 0:02:05.320 --> 0:02:10.120 seen the consumer really kind of supporting in this economy 0:02:10.200 --> 0:02:12.840 in the face of kind of what some weakening manufacturing data. 0:02:13.960 --> 0:02:18.240 Right So that's why I'm a little uh skeptical of 0:02:18.440 --> 0:02:21.720 the rotation that we are seeing right now. It's definitely 0:02:21.720 --> 0:02:25.240 worth watching. But what would get me really excited to 0:02:25.280 --> 0:02:28.720 answer Lisa's question, would be if we begin to see 0:02:28.960 --> 0:02:33.680 some improvement on the economic front, and that Paul still 0:02:33.720 --> 0:02:36.920 remains to be seen In fact, if you look at 0:02:36.919 --> 0:02:41.440 the data that's been released in September so far, we're 0:02:41.480 --> 0:02:45.600 beginning to see cracks on the consumer side of the economy. Also, 0:02:45.960 --> 0:02:48.800 we saw a leg down in the consumer sentiment in 0:02:48.840 --> 0:02:52.640 the Michigan survey for August, and if we look at 0:02:52.680 --> 0:02:56.840 the payroll report, we're seeing slow down in hiring also. 0:02:57.080 --> 0:03:00.720 So I would be super excited if we see improvement 0:03:00.840 --> 0:03:04.520 in economic data. That would give me confidence that the 0:03:04.560 --> 0:03:07.919 movie you're seeing in Rapes is sustainable, and that would 0:03:07.960 --> 0:03:12.880 make more sense to me than one that's probably based 0:03:13.080 --> 0:03:18.000 more on um, you know, a sense of the escalation, 0:03:18.440 --> 0:03:21.160 even though none of the underlying issues in my mind 0:03:21.200 --> 0:03:23.200 have been resolved. Okay, So, given the fact that you 0:03:23.240 --> 0:03:26.840 don't necessarily see a sea change underpinning the move that 0:03:26.880 --> 0:03:30.120 we have seen, are you selling, for example, bank stocks 0:03:30.160 --> 0:03:33.919 into the rally and are you buying bonds? We are 0:03:34.000 --> 0:03:38.760 maintaining very much the mindset we had in August, which 0:03:38.840 --> 0:03:42.400 is that we are slightly underweight equities and for us 0:03:42.480 --> 0:03:46.560 Lisa at an aggregate level, that would be selling equities 0:03:46.560 --> 0:03:49.200 on rallies and buying bonds. So that's what that's that's 0:03:49.440 --> 0:03:52.840 what you've been doing. For example, yes, that's right. So 0:03:52.880 --> 0:03:55.520 and we just you know, we talked about, you know, 0:03:55.600 --> 0:03:57.800 what are the key drivers for this market, and you know, 0:03:57.880 --> 0:04:02.240 we can't escape the fact that global trade tensions discussions 0:04:02.280 --> 0:04:05.360 between the US and China more likely than not, are 0:04:05.480 --> 0:04:07.520 you know, kind of influencing day to day moves in 0:04:07.560 --> 0:04:10.040 the market. How are you discounting kind of in Europe 0:04:10.040 --> 0:04:12.920 base case outlook kind of what is a very uncertain 0:04:13.160 --> 0:04:17.240 trade environment between US and China. UM, it happened very 0:04:17.240 --> 0:04:20.560 difficult to get that call, right, Paul Um. So we 0:04:20.640 --> 0:04:25.480 are staying out of it. We don't see any improvement 0:04:25.600 --> 0:04:28.600 other than really just the mood music on on the 0:04:28.640 --> 0:04:33.640 trade front. That it's no real substantial movement on the 0:04:33.680 --> 0:04:36.720 trade front. There's a lot of back and forth. We 0:04:36.760 --> 0:04:40.719 don't believe we would see a substantial deal anytime soon, 0:04:41.440 --> 0:04:45.000 and so we are staying on the way risk affettes 0:04:45.120 --> 0:04:49.680 in our portfolios. It would be helpful if um we 0:04:49.920 --> 0:04:53.599 see the breaksit issues get resolved. But you know, even there, 0:04:54.440 --> 0:04:57.640 the only positive that I've seen is that there is 0:04:57.800 --> 0:05:02.680 some lowering of the risk of UM no deal hard brexit. 0:05:03.400 --> 0:05:07.280 But by and large, the thing that's giving us most 0:05:07.320 --> 0:05:10.200 confidence really is the fact that the FED is thing 0:05:10.240 --> 0:05:14.480 accommodative threads, not of its not complete pivot on their 0:05:14.560 --> 0:05:18.600 strategy since the beginning of the year, and is um 0:05:18.640 --> 0:05:22.960 maintaining a policy stance which is supportive of risk that 0:05:23.480 --> 0:05:29.679 prevents us from getting up two nervous about the market 0:05:30.360 --> 0:05:33.880 because there is a backstop. So, given the fact that 0:05:33.920 --> 0:05:37.080 the FED is likely to remain accommodative and perhaps provide 0:05:37.080 --> 0:05:39.920 even more accommodation in the very near near term, I'm 0:05:39.920 --> 0:05:42.240 wondering how you feel about credit right now. You talked 0:05:42.279 --> 0:05:45.640 about buying bonds. Does that extend to risk your bonds 0:05:45.680 --> 0:05:48.680 at a time when companies such as for example today 0:05:48.760 --> 0:05:51.080 Kraft Heins is looking to push out their maturities so 0:05:51.240 --> 0:05:55.240 longer dated debt and lock in these lower borrowing costs. Yes, 0:05:55.279 --> 0:05:59.159 I think completely so doing a really good UM, you 0:05:59.200 --> 0:06:03.000 know the job taking advantage of the yield environment. I 0:06:03.040 --> 0:06:06.239 think we still don't really like the risk are segments 0:06:06.279 --> 0:06:09.599 of the credit market such as high yield was staying 0:06:09.640 --> 0:06:13.719 in the investment grade and securitized space and reyn old 0:06:13.880 --> 0:06:20.080 treasury bonds, mainly because we can see more accommodation this 0:06:20.200 --> 0:06:23.760 year and even more next year. But that would really 0:06:23.800 --> 0:06:27.599 just mean that the economic conditions continue to deteriorate and 0:06:28.160 --> 0:06:32.719 the trade issues continue to escalate, So that is not 0:06:32.920 --> 0:06:37.000 really a very encouraging environment for longer term health of 0:06:37.080 --> 0:06:41.400 the economy. UM in that scenario, you know, spread easing 0:06:41.440 --> 0:06:45.880 even more aggressively or getting even more accommodative. That is 0:06:46.000 --> 0:06:49.440 likely because the other two issues have not been resolved, 0:06:49.760 --> 0:06:52.040 and that's not a great environment for the risk are 0:06:52.080 --> 0:06:54.520 segments of the board market. So I was that's kind 0:06:54.520 --> 0:06:57.400 of where I was going to go. Unwitty emerging markets. 0:06:57.440 --> 0:07:00.080 There's been some debate whether you know, the the that 0:07:00.120 --> 0:07:03.280 the lower rate environment we had been experiencing was conducive 0:07:03.360 --> 0:07:06.240 to emerging markets, but the performance just hasn't been there. 0:07:06.360 --> 0:07:10.560 What is your view on emerging markets? Very similar views 0:07:10.640 --> 0:07:14.119 as in high yield pole. I would also be uh 0:07:14.520 --> 0:07:17.920 cautious on emerging markets. You know, they are actually bearing 0:07:17.960 --> 0:07:22.600 the brunt of this trade trade escalation. Uh there is 0:07:22.640 --> 0:07:27.200 this location in their export and what's happening UM with 0:07:27.280 --> 0:07:30.400 the global trade flowdown, So there is no reason to 0:07:31.440 --> 0:07:34.160 uh take a lot of risk in that space. Also 0:07:34.320 --> 0:07:38.080 at this point in the cycle, we're speaking with Anuti Bahuganas, 0:07:38.120 --> 0:07:41.080 senior portfolio manager and head of multi asset strategy at 0:07:41.080 --> 0:07:44.440 Columbia thread Needle Investments, which overseas four hundred and sixty 0:07:44.480 --> 0:07:48.960 eight billion dollars based in Boston, Massachusetts. Uh and today 0:07:49.160 --> 0:07:52.760 is quite a day on Wall Street. We're remembering nine 0:07:52.760 --> 0:07:55.680 eleven and the interspersed throughout the day, we are having 0:07:55.720 --> 0:07:59.640 moments of silence that are incredibly appointed for everybody who 0:07:59.640 --> 0:08:03.120 experien arians what happened eighteen years ago. Hard to believe 0:08:03.160 --> 0:08:05.640 it was eighteen years ago and we did. I want 0:08:05.680 --> 0:08:08.160 to shift gears a little bit away from just sort 0:08:08.160 --> 0:08:11.000 of allocations to the ECB because everyone is on high 0:08:11.000 --> 0:08:13.760 alert for what the what the e c B is 0:08:13.800 --> 0:08:17.200 willing to do in terms of accelerating their stimulus, whether 0:08:17.200 --> 0:08:19.840 they're going to cut the deposit rate further, whether they're 0:08:19.880 --> 0:08:23.280 going to add some to their quantity of easy or 0:08:23.320 --> 0:08:25.680 purchase even stocks. What are you expecting out of the 0:08:25.680 --> 0:08:30.720 e c B. Um, not as much as I think 0:08:30.800 --> 0:08:34.560 the market is expecting. I think, you know, they will 0:08:35.040 --> 0:08:38.080 do some rate cards and maybe a little bit more queue. 0:08:38.280 --> 0:08:40.960 And I've seen lea a very different estimates of the 0:08:41.120 --> 0:08:44.720 range of QUEUEE deposit cuts of twenty basis points is 0:08:45.240 --> 0:08:49.439 quite likely. I think if they do a little more 0:08:49.520 --> 0:08:55.160 quee uh, that would be supportive of risk assets in Europe. 0:08:55.160 --> 0:08:57.960 But if you look at risk assets in Europe, and 0:08:58.000 --> 0:09:02.240 I mean away from bomb looking at European equities, they've 0:09:02.280 --> 0:09:05.199 been performing quite well, in fact, their neck to neck 0:09:05.280 --> 0:09:09.680 with the U S stock markets. So I think risk 0:09:09.720 --> 0:09:14.520 efforts are pricing in more accommodation from ECB, and that 0:09:14.559 --> 0:09:18.360 would be sort of druggs foreign gifts to UM monetary 0:09:18.440 --> 0:09:21.679 policy in that space. But what happens actually this raise 0:09:21.760 --> 0:09:24.800 is a good question, what happens if the ECB disappoints. 0:09:25.000 --> 0:09:26.360 I mean, how big of a sell off could we 0:09:26.400 --> 0:09:32.560 be looking at? Well, it's I wouldn't be able to 0:09:32.600 --> 0:09:35.880 give a sense of the sell off, but I really 0:09:35.920 --> 0:09:40.200 really doubt that they would disappoint enormously. I think they 0:09:40.200 --> 0:09:43.680 would still go through about thirty billion or so per 0:09:43.760 --> 0:09:47.400 month in QUEI, and I think that we would see 0:09:47.400 --> 0:09:51.840 deposit cut rate cuts, which is, you know, perhaps given 0:09:52.040 --> 0:09:57.199 the noise of some opposition by some of the shadow 0:09:57.240 --> 0:10:01.520 policymakers UM and a fair amount of debate within e 0:10:01.600 --> 0:10:03.600 CD on whether they should be doing this or not 0:10:03.880 --> 0:10:07.080 is not fully priced in. So and we you know, 0:10:07.520 --> 0:10:10.480 we seem to be having a global race to lower 0:10:10.600 --> 0:10:14.120 rate to the bottom. How effective do you think continued 0:10:14.240 --> 0:10:17.360 rate cuts are to address what could be slowing economies? 0:10:18.320 --> 0:10:22.280 So so there are they are small bandids, small and 0:10:22.320 --> 0:10:28.920 they can help if broader economic health remains um you know, 0:10:29.040 --> 0:10:34.319 well maintained. In other words, we are seeing this the 0:10:34.360 --> 0:10:37.000 deceleration of growth even in the US from where we 0:10:37.000 --> 0:10:39.240 were at three percent to now to do too in 0:10:39.240 --> 0:10:42.400 a quarter or so and you know, back to sort 0:10:42.400 --> 0:10:46.920 of trend growth around the best performing economies of the 0:10:46.960 --> 0:10:50.600 world are seeing below trend growth or trend trend growth, 0:10:50.679 --> 0:10:53.440 but we are not in recession and that sort of 0:10:53.480 --> 0:10:57.400 the support all this accommodation is providing. While at the 0:10:57.520 --> 0:11:00.760 same time we are seeing change, see change in how 0:11:00.840 --> 0:11:05.120 global trade is conducted. So there is to your point, 0:11:05.360 --> 0:11:09.599 limits to how much help they can give, they can support. 0:11:09.840 --> 0:11:13.199 They can be there with lower rates. Lower rates are 0:11:13.240 --> 0:11:17.040 not really holding back businesses. It's the uncertainty around the 0:11:17.160 --> 0:11:20.880 bigger question of trade that's holding back businesses. And who 0:11:20.960 --> 0:11:22.839 gonna thank you so much for joining us on what 0:11:23.000 --> 0:11:25.920 he is Senior portfolio manager and head of multi asset 0:11:25.960 --> 0:11:45.760 strategy for Columbia Threadneedle Investments, based in Boston, Massachusetts right now. 0:11:45.800 --> 0:11:48.720 It's interesting to just to remember that over the trailing 0:11:48.760 --> 0:11:53.040 twelve months, Uh, the SMP five hasn't really moved that much. 0:11:53.040 --> 0:11:55.360 We've had a tremendous amount of oility at that time, 0:11:55.400 --> 0:11:58.959 but essentially unchanged of the trailing twelve months. What But yeah, 0:11:59.000 --> 0:12:01.280 we are better a one and a half percent from 0:12:01.280 --> 0:12:03.160 the all time high. So the question is kind of 0:12:03.400 --> 0:12:05.480 where do we go from here and can we expect 0:12:05.559 --> 0:12:08.760 more volatility going forward? There's no one better to discuss 0:12:08.800 --> 0:12:11.200 some of those market issues. And Ken Fisher Ken as 0:12:11.240 --> 0:12:14.040 a founder, executive chairman and co c IO of Fisher 0:12:14.080 --> 0:12:19.040 Investments with one and seven billion dollars under management based 0:12:19.040 --> 0:12:21.120 on Whatside, California, but joining us here in our Bloomberg 0:12:21.120 --> 0:12:24.440 Interactive Broker studio. Thanks so much for being here. So 0:12:24.840 --> 0:12:27.040 there's a lot of folks, I think, trying to figure 0:12:27.040 --> 0:12:30.880 out what the next step is for the equity markets. 0:12:30.880 --> 0:12:34.400 For example, we've had trade issues, we've got an easing FED, 0:12:34.480 --> 0:12:37.400 we were ten plus years into an economic cycle. What 0:12:37.440 --> 0:12:39.880 are you advising your clients? Well, I certainly don't think 0:12:39.960 --> 0:12:41.880 we have an easy FED. I don't believe that for 0:12:41.920 --> 0:12:47.600 a heartbeat. I mean, the FED is um idiotic at best, 0:12:48.120 --> 0:12:50.160 uh and and always has been. I learned that for 0:12:50.240 --> 0:12:52.400 Milton Friedman when I was very young. He always said 0:12:52.400 --> 0:12:56.320 they always would be, and I'm gonna stick with that. 0:12:56.760 --> 0:13:00.000 But the fact is that right now it's fairly obvious 0:13:00.040 --> 0:13:02.720 if you think about it on a Bloomberg terminal, that 0:13:03.760 --> 0:13:06.080 the non US world for the first time is leading 0:13:06.080 --> 0:13:08.760 the American market. And if we think of what's going 0:13:08.800 --> 0:13:12.480 on overseas, what you were saying, which is true when 0:13:12.480 --> 0:13:18.440 we think of the American market, becomes more visibly directional 0:13:18.760 --> 0:13:25.000 if we think overseas, so whether it's Sweden, whether it's um, Germany, 0:13:25.080 --> 0:13:28.360 whether it's Britain, I mean Britain with all our bricks stuff, 0:13:28.400 --> 0:13:31.320 the UK markets doing better than the US market is right. 0:13:31.640 --> 0:13:35.440 Hold on, let's let's translate this basically. Basically, it's leading 0:13:35.559 --> 0:13:38.520 US in terms of the ECB, the Bank of England, 0:13:38.760 --> 0:13:43.560 the Swedish all The direction is easy. The direction of 0:13:43.600 --> 0:13:48.679 the market is positive and upward overseas more so than here. 0:13:48.800 --> 0:13:51.840 Here it looks like you're in that trading channel there 0:13:51.920 --> 0:13:53.960 it looks like it's broken out, because it's not that 0:13:54.000 --> 0:13:56.240 the economy is so much better there. Oh, I think 0:13:56.280 --> 0:14:01.200 it's because just simply there's this fairly st andrew economy 0:14:01.240 --> 0:14:03.960 being better. G Who in the heck needs a better economy? 0:14:04.040 --> 0:14:06.040 We have a near Goldilocks economy as it is. If 0:14:06.080 --> 0:14:08.480 you could grow the global economy at two percent with 0:14:08.559 --> 0:14:10.439 no inflation, that's kind of what in the nineties we 0:14:10.480 --> 0:14:13.280 thought Goldilocks should look like. The fact of the matter 0:14:13.400 --> 0:14:17.040 is they've been having enough problems over there that at 0:14:17.080 --> 0:14:22.360 every place you've got the almost equivalent of having recognized 0:14:22.360 --> 0:14:28.000 a recession. It's not a recession, but it's that quasi 0:14:28.840 --> 0:14:33.160 growth recession, which is almost as positive for stocks after 0:14:33.240 --> 0:14:37.400 that as an actual recession. The history of big slowdowns 0:14:37.600 --> 0:14:42.240 grinding through what what are what are recessions and bearer 0:14:42.280 --> 0:14:45.800 markets supposed to do. They're supposed to overcome and fix 0:14:45.880 --> 0:14:49.040 the excesses of the prior boom. That's what's supposed to happen. 0:14:49.680 --> 0:14:52.440 Right now, We've got a comparable period where we're doing 0:14:52.440 --> 0:14:54.920 the same thing over there. How about here in the U. 0:14:55.000 --> 0:14:57.080 S are you in the camp that it feels like 0:14:57.080 --> 0:15:02.440 a recession is av for the US? I would be 0:15:02.560 --> 0:15:06.680 stunned if we have a social care uh in that timeframe. Okay, 0:15:06.800 --> 0:15:11.120 The fact of the matter is that there's really other 0:15:11.160 --> 0:15:14.240 than the fact that things are going along pretty darn well. 0:15:14.840 --> 0:15:18.920 For example, folks point to uh manufacturing p m s, 0:15:19.920 --> 0:15:22.480 but if you think about its services are three times larger, 0:15:22.960 --> 0:15:25.120 and service p m I is are just fine, thank you. 0:15:25.960 --> 0:15:29.240 When if we're up to me and I would have fed, 0:15:30.600 --> 0:15:32.640 I would dump all those stupid bonds that they bought 0:15:32.680 --> 0:15:34.720 that they never should have bought in the first place. Well, okay, 0:15:34.720 --> 0:15:36.800 well let's let's let's talk about what you're actually doing 0:15:36.880 --> 0:15:38.680 or what you're actually advising your clients to do. And 0:15:38.720 --> 0:15:40.720 it sounds like you're bullish on Europe right now, given 0:15:40.760 --> 0:15:42.880 the fact that they're they're cheaper than the U S. No, 0:15:42.960 --> 0:15:45.200 I didn't say cheaper, that they that they're basically they 0:15:45.240 --> 0:15:48.800 have more bearishness sort of built into them. Uh so, 0:15:48.840 --> 0:15:53.160 therefore there's more potential upside the US maybe less so 0:15:53.680 --> 0:15:55.600 in terms of where we are in that cycle is 0:15:56.400 --> 0:15:58.160 right here, right now, And we're also with a stage 0:15:58.200 --> 0:16:01.400 in the American political cycle were normally the market slows 0:16:01.440 --> 0:16:03.640 down for a little bit in America. Okay, so then 0:16:03.680 --> 0:16:06.920 how much are you advising clients to overweight Europe over 0:16:07.040 --> 0:16:10.880 the US. You know, I'm not that extreme. So you know, 0:16:10.920 --> 0:16:14.560 I kind of have a overweight view. I don't want 0:16:14.600 --> 0:16:17.080 to be extreme. I don't have a you know, hit bigger, 0:16:17.120 --> 0:16:19.600 go home better in me, because too often you go 0:16:19.640 --> 0:16:21.840 home and you're wrong too often. I mean, I live 0:16:21.880 --> 0:16:24.920 in a world where it's a world of probabilities, not certainties, 0:16:24.960 --> 0:16:27.080 and I got to be able to live through mistakes, 0:16:27.240 --> 0:16:28.480 which I know I'm going to make a lot of. 0:16:28.680 --> 0:16:30.920 If I could, if I could be right seventy percent 0:16:31.040 --> 0:16:34.840 of history, which I can't, i'd be become a living legend. 0:16:35.200 --> 0:16:37.000 And so I got to be prepared to be wrong 0:16:37.040 --> 0:16:41.040 at least thirty percent of the time and lived through it. Okay, 0:16:41.040 --> 0:16:44.160 so close to a living legend, one could argue, certainly, 0:16:44.600 --> 0:16:47.760 giving your performance and the assets under management. But so 0:16:48.000 --> 0:16:50.040 the question, one of the questions is simply, we've had 0:16:50.040 --> 0:16:52.880 it just this week. It seems, at least on Bloomberg 0:16:52.960 --> 0:16:55.840 Radio a discussion and on Bloomberg News about maybe a 0:16:55.880 --> 0:16:58.560 little bit of rotation going on underneath the surface kind 0:16:58.600 --> 0:17:01.240 of what is your sent is that? Just to me, 0:17:01.360 --> 0:17:04.160 it seems like boy people are making a big deal 0:17:04.200 --> 0:17:06.480 about what might just be some anomalous trading over a 0:17:06.520 --> 0:17:09.320 couple of days. But that's something more and that might 0:17:09.359 --> 0:17:12.639 be true. But pretty often after you've had a trading 0:17:12.760 --> 0:17:17.520 range like this, where the prior leadership has stalled, you 0:17:17.560 --> 0:17:20.639 get a bounce back effect that's not extraordinary. And that 0:17:20.720 --> 0:17:24.640 bounce back effect in this case would be value over growth, 0:17:24.800 --> 0:17:28.520 smaller over big. That's been what's been going on in 0:17:28.520 --> 0:17:32.480 that rotation. My guess is, however, usually if we assume 0:17:32.560 --> 0:17:36.240 the bull market continues, usually the girl that brought you 0:17:36.280 --> 0:17:40.320 to the dance stays with you, and that probably is 0:17:40.800 --> 0:17:44.000 what happens, which is the leadership then eventually reverts back. 0:17:44.440 --> 0:17:46.119 I mean, normally, as you move towards the end of 0:17:46.119 --> 0:17:48.600 a bull market, you get what is referred to as 0:17:48.680 --> 0:17:51.800 narrowing breadth. Fewer and fewer big stocks lead the market 0:17:51.920 --> 0:17:55.400 higher and higher, typically of the same categories that led earlier. 0:17:55.640 --> 0:17:57.840 So I'd expect over the course of the rest of 0:17:57.840 --> 0:18:01.719 the year for that process to eventually revert. One thing 0:18:01.720 --> 0:18:04.880 I've been in wondering how often do you trade? How 0:18:04.920 --> 0:18:07.360 often do you trade? How often as little as I can? 0:18:07.480 --> 0:18:09.280 So when when I was young, there was a great 0:18:09.320 --> 0:18:12.919 columnist for Forbes magazine named Lucian Hooper. He was the 0:18:12.960 --> 0:18:16.240 third longest running columnists in Forbes History. Uh, and he 0:18:16.320 --> 0:18:17.840 had a lot of great he was in New England 0:18:17.920 --> 0:18:19.200 or he had a lot of great lines. And one 0:18:19.200 --> 0:18:21.400 of them is, you know, you make more money sitting 0:18:21.440 --> 0:18:23.200 on your hands and you do dancing on your feet. 0:18:23.600 --> 0:18:25.840 And there's a lot of truth to that. You you 0:18:26.040 --> 0:18:28.320 make your bets and unless you come to the realization 0:18:28.359 --> 0:18:30.040 that you were wrong in the first place, which should 0:18:30.040 --> 0:18:33.040 have some fundamental arguments to it, you let the volatility 0:18:33.200 --> 0:18:35.119 dance through you. So when was the last time that 0:18:35.160 --> 0:18:37.639 you traded? Oh? Well, we trade little bits all the 0:18:37.640 --> 0:18:40.760 time because we got a lot of money. But but yeah, 0:18:41.200 --> 0:18:43.640 big trades. You know, we haven't done anything other than 0:18:43.680 --> 0:18:48.880 trimming little things for months. Is it less than usual? Yeah, 0:18:48.880 --> 0:18:50.679 because the market is not that volatile. People think the 0:18:50.680 --> 0:18:53.680 markets volatile, but the markets volatility this year is actually subnormal. 0:18:54.240 --> 0:18:56.600 If you actually look at the markets, volatility this year 0:18:56.680 --> 0:18:58.199 is not high. How about I P S. Do you 0:18:58.200 --> 0:19:02.639 guys look at No. When I wrote a book thirty 0:19:02.640 --> 0:19:05.399 two years ago where I had a chapter that I 0:19:05.520 --> 0:19:08.119 P O S. I mean, it's probably overpriced, and I 0:19:08.160 --> 0:19:09.960 still believe that's true. The fact of the matter is 0:19:10.000 --> 0:19:11.560 I P O S or priced for the issuer. They're 0:19:11.560 --> 0:19:16.880 not priced for the consumer. And the fact is if 0:19:17.080 --> 0:19:18.800 if they want the history of I p o s 0:19:18.880 --> 0:19:21.000 is a short term pop. And you know, if you're 0:19:21.040 --> 0:19:23.000 gonna try to create a short term pop, usually that's 0:19:23.000 --> 0:19:24.920 going to go against you. Look at what happened with Uber, 0:19:24.960 --> 0:19:28.520 Look what happen would lift. Uh. The good part about 0:19:28.520 --> 0:19:30.199 I p o s right now is that we have 0:19:30.400 --> 0:19:35.800 not gotten to that part where we're floating garbage on 0:19:35.920 --> 0:19:39.600 top of the water like it's gold. Uh, the garbage 0:19:39.600 --> 0:19:41.960 in there. You know, we're not having manufactured i p 0:19:42.119 --> 0:19:44.160 o s for the purpose of going public in volume 0:19:44.240 --> 0:19:46.800 like you know we do when we have exuberance. The 0:19:46.920 --> 0:19:49.360 lack of that as a sign of a lack of exuberance, 0:19:49.400 --> 0:19:52.600 which is healthy. Ken Fisher, thank you so much for 0:19:52.640 --> 0:19:55.320 being with us. Thanks for having me. Ken Fisher is founder, 0:19:55.359 --> 0:19:58.400 our executive chairman, and co chief investment officer of Fisher Investments, 0:19:58.400 --> 0:20:01.640 which overseas a hundred and seven million dollars from Woodside, California. 0:20:01.680 --> 0:20:23.520 But he joins us here in our Bloomberg Interactive broker's studios. Well, 0:20:23.560 --> 0:20:27.160 we woke up to a surprise deal in financial services 0:20:27.200 --> 0:20:30.280 this morning. Hong Kong Exchange has made an unexpected thirty 0:20:30.359 --> 0:20:34.360 six point six billion dollar bid for the London Stock Exchange, 0:20:34.800 --> 0:20:37.760 a move there that would upend the UK Borses combination 0:20:38.080 --> 0:20:41.159 just announced recently with definitive. So to get the latest 0:20:41.200 --> 0:20:43.679 on what this means in the world of global exchanges, 0:20:43.720 --> 0:20:47.359 we welcome Sarah Siad. Sarah's a Bloomberg News reporter, UM 0:20:47.480 --> 0:20:50.359 to get her sense. Sarah, thanks so much for joining us. 0:20:50.760 --> 0:20:52.879 Just give us kind of the background and what happened here. 0:20:52.880 --> 0:20:56.239 This was really an unexpected announcement, wasn't. Yeah. I mean 0:20:56.280 --> 0:20:58.840 we're saying, UM, the words that are being used is 0:20:58.920 --> 0:21:02.600 the unexpected, the shark, the surprise. I mean definitely had 0:21:02.640 --> 0:21:07.280 London scrambling around. UM this morning. Certainly the deal's team 0:21:07.320 --> 0:21:09.680 woke up to to some big news this morning. I mean, 0:21:10.240 --> 0:21:12.480 as you mentioned, it is a bit of a shock. 0:21:12.920 --> 0:21:17.119 UM announcement. It wasn't one that any of us or 0:21:17.160 --> 0:21:19.679 our competitors broke. It was. It was an announcement that 0:21:19.720 --> 0:21:23.800 came directly from from the Hong Kong Exchange UM itself. 0:21:23.840 --> 0:21:29.399 I think, UM, the timing is quite interesting. It comes 0:21:29.440 --> 0:21:32.679 on the off the back of the the announcement about 0:21:32.800 --> 0:21:37.720 of the LSE refinitive deal. I think what's indicative of 0:21:38.480 --> 0:21:43.119 the timing of the announcement is UM. Had the refinitive 0:21:43.400 --> 0:21:46.480 LSE deal gone through, it would have made the LSE 0:21:47.200 --> 0:21:54.240 pretty much unaffordable for many other interested parties UM. But 0:21:54.359 --> 0:21:59.399 whilst the deal is still UM not completely through, buying 0:21:59.400 --> 0:22:02.440 else by itself makes it a more affordable play than 0:22:02.760 --> 0:22:06.400 with together with refinitive. What's the what's the larger here 0:22:06.480 --> 0:22:09.040 for the Hong Kong exchanges? Well, I think you know 0:22:09.119 --> 0:22:13.600 Hong Kong. These are two of the world's most significant 0:22:15.000 --> 0:22:19.040 UM exchanges, and it really depends on what I mean. 0:22:19.080 --> 0:22:21.120 It's clear what Hong Kong wants to do. They want 0:22:21.160 --> 0:22:27.000 to create an exchange powerhouse. The question is what does 0:22:27.040 --> 0:22:30.720 Elsie want to do. I mean the deal with refinitive 0:22:31.480 --> 0:22:36.439 meant would have meant that UM the London Exchange was 0:22:37.000 --> 0:22:42.800 not only reliant on on the exchange but diversifying into 0:22:42.920 --> 0:22:47.480 more data driven a more data driven business. They need 0:22:47.560 --> 0:22:51.399 to now ask themselves, do we want to continue on 0:22:51.480 --> 0:22:54.280 that path and and this strategy that we had in 0:22:54.359 --> 0:22:57.880 play to diversify into more data or do we want 0:22:57.920 --> 0:23:06.120 to grow and become a exchange powerhouse by by by 0:23:06.280 --> 0:23:10.320 being acquired by the Hong Kong Exchange. We should note 0:23:10.359 --> 0:23:13.920 that refinitive is the old Thompson Reuter's business, the icon 0:23:14.040 --> 0:23:20.720 terminal neck competed directly with Bloomberg LP. Uh, sir, give 0:23:20.800 --> 0:23:24.040 us the sense of what the political overtones maybe here, 0:23:24.080 --> 0:23:26.720 because this is, you know, the London Stock Exchanges a 0:23:26.800 --> 0:23:29.880 in a national treasure if you will, for the UK 0:23:30.040 --> 0:23:33.200 and Hong Kong coming in and maybe even by extension, 0:23:33.320 --> 0:23:37.360 China coming in and buying such an iconic UK asset. 0:23:37.560 --> 0:23:39.320 How do you think that's going to play up? It's 0:23:39.320 --> 0:23:42.160 definitely and it would be an understatement to say that 0:23:42.240 --> 0:23:48.399 it is a politically sensitive um UM scenario. For sure. 0:23:49.160 --> 0:23:54.439 Hong Kong Exchange is interestingly UM pitting itself as a 0:23:54.520 --> 0:23:58.840 global exchange, trying to move away from being a pure 0:23:58.880 --> 0:24:03.360 Hong Kong or Chinese UM entity. And I think that 0:24:03.560 --> 0:24:07.800 is to UM an extem placate London and the government 0:24:08.440 --> 0:24:12.399 UH here for any concerns there may be about UM 0:24:12.760 --> 0:24:16.520