WEBVTT - Sustaining the Equity Rally and a Biden-Trump Breakdown 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:46.280 the Bloomberg Terminal, and the Bloomberg Business App. 0:00:46.600 --> 0:00:50.200 Joining us ow Lori Calvasina, RBC Capital Markets, Laura. There's 0:00:50.200 --> 0:00:52.960 a brutal draw down in the standard and ports five 0:00:53.080 --> 0:00:58.120 hundred half a percent over the weekend, lots of gloom OMG. 0:00:58.480 --> 0:01:02.080 Big tech is done? Is big Tech done stuff? 0:01:02.160 --> 0:01:04.679 And I think, I you know, I do think ultimately 0:01:04.760 --> 0:01:08.200 this market will rotate, But I also understand why it's 0:01:08.240 --> 0:01:10.480 having trouble doing so. And I think part of the 0:01:10.480 --> 0:01:12.760 reason why it's having trouble doing so is all the 0:01:12.800 --> 0:01:15.680 economic excitement that we were seeing, you know, I think 0:01:15.720 --> 0:01:17.360 we saw a lot of it in February where we 0:01:17.400 --> 0:01:20.520 saw GDP forecasts for twenty twenty four just ratcheted up 0:01:20.680 --> 0:01:22.920 really really fast, in a hurry, in a big way. 0:01:23.240 --> 0:01:25.240 We're just not getting that. If I look at the 0:01:25.319 --> 0:01:28.800 twenty twenty five GDP forecast on the on the ECFS, 0:01:28.880 --> 0:01:31.280 I think it's ECFC on Bloomberg is the function you 0:01:31.280 --> 0:01:34.680 can track what the cell side economists are saying every week, 0:01:35.120 --> 0:01:37.800 and that's and stuff from one point seven to one 0:01:37.800 --> 0:01:41.520 point eight percent, and that's still a below trend level. 0:01:41.560 --> 0:01:43.440 If you look at some of the quarterly numbers, we're 0:01:43.480 --> 0:01:46.280 headed into kind of a softer patch of below trend 0:01:46.360 --> 0:01:49.920 type GDP that is just not the kind of macro 0:01:50.080 --> 0:01:54.160 backdrop that typically sees cyclical small caps and value be 0:01:54.400 --> 0:01:56.840 large caps and growth. So I think there's this itch 0:01:57.000 --> 0:02:00.880 that this growth trade is over valued. It's crowded, you know, 0:02:00.920 --> 0:02:04.280 it's sort of the earnings expectations are decelerating. On the 0:02:04.280 --> 0:02:06.280 one hand, that all suggests you should be moving out, 0:02:06.480 --> 0:02:08.400 But on the other hand, you really need these economic 0:02:08.400 --> 0:02:10.600 tailwinds and they're just not there. So you've just got 0:02:10.639 --> 0:02:13.240 these cross currents that are fighting with each other right now. 0:02:14.000 --> 0:02:17.000 Laurie, are you surprised that in a world where we 0:02:17.080 --> 0:02:19.480 came into this twenty twenty four and the mark was 0:02:19.520 --> 0:02:22.920 discounting six FED rate cuts and now we're down to 0:02:22.960 --> 0:02:26.560 something like one or two despite that trend in you 0:02:26.639 --> 0:02:29.040 know FED out look the S and P five hundred 0:02:29.040 --> 0:02:31.120 sup fifteen percent. Does that surprise you? 0:02:32.760 --> 0:02:36.079 So I think that it makes sense to me, again 0:02:36.200 --> 0:02:39.760 in the context of that ratcheting up of economic expectations 0:02:39.760 --> 0:02:42.240 that we saw for twenty twenty four earlier. If you 0:02:42.280 --> 0:02:44.600 go back and look at the GDP forecast for twenty 0:02:44.600 --> 0:02:47.240 four last summer, it was tracking at point six percent. 0:02:47.680 --> 0:02:50.280 Zero to two percent is a lousy environment for the 0:02:50.320 --> 0:02:52.920 equity market. You typically see stocks go down when you're 0:02:52.960 --> 0:02:55.800 an economic purgatory like that. But two to four percent 0:02:55.880 --> 0:02:58.200 and now twenty twenty four is tracking around two point 0:02:58.240 --> 0:03:01.480 four that's typically a very solid environment for the stock market. 0:03:01.560 --> 0:03:03.800 The average changes, I think you're like twelve thirteen percent 0:03:03.840 --> 0:03:06.840 somewhere in there. So we transitioned from that idea that 0:03:06.880 --> 0:03:09.320 we're stuck in economic purgatory to it's actually going to 0:03:09.320 --> 0:03:11.360 be a pretty good year economically, and I think that 0:03:11.520 --> 0:03:14.720 really overcame the you know, the kind of ratcheting down 0:03:14.800 --> 0:03:17.320 of FED hopes and dreams because it was happening for 0:03:17.400 --> 0:03:18.200 good reasons. 0:03:19.680 --> 0:03:22.519 So in a world where it seems higher for longer 0:03:22.520 --> 0:03:26.200 in terms of rates, here what sectors screen well for 0:03:26.280 --> 0:03:26.720 you guys. 0:03:28.200 --> 0:03:31.240 I don't think that it's you know, it's any one 0:03:31.400 --> 0:03:33.959 sector that you can point to because of that. I 0:03:34.000 --> 0:03:36.240 think you've got to look at a lot of different factors, 0:03:36.240 --> 0:03:39.440 and I think sector choices are very very difficult these days. 0:03:40.160 --> 0:03:41.800 I do think that if we can sort of get 0:03:41.800 --> 0:03:45.040 the economic tailwinds back on track, then a sector like 0:03:45.080 --> 0:03:48.720 financials makes a lot of sense. It's very positively correlated 0:03:48.760 --> 0:03:52.160 with consumer confidence trends tends to outperform when consumer confidence 0:03:52.240 --> 0:03:54.600 is rising. These companies don't have a lot of just 0:03:54.640 --> 0:03:57.320 sort of innate growth anymore, but they tend to really 0:03:57.360 --> 0:03:59.440 be kind of viewed as the plumbing of the economy. 0:03:59.760 --> 0:04:01.760 So I think that's one area you can look at, 0:04:01.800 --> 0:04:05.440 and valuations are still very favorable. I think other than that, 0:04:05.520 --> 0:04:07.320 if you think about sort of higher for longer, you 0:04:07.400 --> 0:04:09.080 have to go to the root causes of that, And 0:04:09.080 --> 0:04:11.720 I do think inflation ultimately is a little bit higher 0:04:11.760 --> 0:04:13.600 than what we've been used to, which would point you 0:04:13.640 --> 0:04:16.440 to I think things like energy materials, you know, some 0:04:16.480 --> 0:04:17.400 of the commodity sectors. 0:04:17.440 --> 0:04:20.039 Well, that's where I want to go. Bank of America. 0:04:20.200 --> 0:04:23.520 Laurie just published Nea Coda over in Europe, and you 0:04:23.560 --> 0:04:26.440 know qu she says, buy the French dip. You know 0:04:26.720 --> 0:04:29.480 it's a B fund and what special sauce and all that, 0:04:29.839 --> 0:04:31.720 but she's going to buy the French dip with all 0:04:31.760 --> 0:04:35.760 that politics, Laurie in the American markets, Now, where is 0:04:35.800 --> 0:04:39.800 your French dip? Where is the opportunity of something that's 0:04:39.839 --> 0:04:42.840 pulled back and you say, well, finally I can buy. 0:04:44.360 --> 0:04:46.680 So you know, if we look at valuations, I do 0:04:46.760 --> 0:04:49.560 again go back to energy, I go back to financials. 0:04:49.600 --> 0:04:53.000 Those are still screening very very well on our valuation framework, 0:04:53.279 --> 0:04:55.080 and energy, while it got off to a great start 0:04:55.120 --> 0:04:57.400 of the year in terms of relative performance, has really 0:04:57.400 --> 0:04:59.760 faded recently. So that's one that we're keeping an eye 0:04:59.760 --> 0:05:02.160 on that. You know, I think that people keep looking 0:05:02.200 --> 0:05:05.200 at small caps. I'm sort of sticking on the sidelines 0:05:05.200 --> 0:05:08.320 with those for now. But you know, we have noticed 0:05:08.320 --> 0:05:10.240 that if you look at the funds flow data, you're 0:05:10.279 --> 0:05:13.080 starting to see passive money come back into the small 0:05:13.080 --> 0:05:15.280 caps space recently. If you look at the latest CPF 0:05:15.360 --> 0:05:17.480 our Data. So I think that's an area to watch. 0:05:17.520 --> 0:05:19.800 But frankly, I'm just not convinced that it's going to 0:05:19.880 --> 0:05:21.880 really be able to take off in a sustainable way 0:05:21.960 --> 0:05:24.359 until the economic tail winds are back and until you 0:05:24.400 --> 0:05:25.240 get the cuts in sight. 0:05:25.440 --> 0:05:40.240 G Lori Kelvisina ce Michelle, Principal asset Management, and she's 0:05:40.279 --> 0:05:43.800 got a wonderful, wonderful global perspective tied into what do 0:05:43.839 --> 0:05:47.200 you do domestically as well? Is the rest of the 0:05:47.240 --> 0:05:51.400 world in love with us big caps? Do they love 0:05:51.480 --> 0:05:55.719 does the city? Does the city love Nvidia as much 0:05:55.760 --> 0:05:56.280 as we do? 0:05:56.880 --> 0:05:57.200 Yes? 0:05:57.360 --> 0:05:58.960 I think they have to look at the numbers and 0:05:59.000 --> 0:06:03.160 it's undeniable the strength. And I think the thing that 0:06:03.200 --> 0:06:05.799 you continue to see is frustration, maybe that people hadn't 0:06:05.839 --> 0:06:08.280 increased their exposure before so. 0:06:08.200 --> 0:06:11.719 It was only ras. So this is important. You started this, 0:06:11.880 --> 0:06:14.839 you know, as like third week or whatever. Finance. Do 0:06:14.839 --> 0:06:17.760 you believe in window dressing against June whatever? Twenty five, 0:06:18.520 --> 0:06:21.400 Paul June thirty. I know if I don't want enough Apple, 0:06:21.480 --> 0:06:23.479 I look like an idiot, exactly right. 0:06:23.560 --> 0:06:26.240 So I mean you get Nvidio bigger than Apple, bigger 0:06:26.240 --> 0:06:28.080 in some of these other names. I mean it kind 0:06:28.080 --> 0:06:29.880 of came out of nowhere. But how do you think 0:06:29.920 --> 0:06:33.080 about those big tech names these days? To do we 0:06:33.200 --> 0:06:36.000 chase them or do we try to find some other opportunities. 0:06:36.320 --> 0:06:39.200 So we think that you if you don't already have exposure, 0:06:39.279 --> 0:06:41.520 it's probably not the best time to be adding exposure. 0:06:41.560 --> 0:06:43.320 But you also don't want to be reducing your exposure. 0:06:43.320 --> 0:06:43.920 At this point. 0:06:44.360 --> 0:06:47.400 We do think there's other opportunities in the market. We 0:06:47.440 --> 0:06:49.280 are expecting a broadening out in the rating, but again, 0:06:49.279 --> 0:06:50.719 this is not going to be anything which is like 0:06:50.760 --> 0:06:52.600 what you've seen for the big cap space. It's not 0:06:52.640 --> 0:06:55.640 going to be such a significant move in the broader market. 0:06:55.880 --> 0:06:59.559 But given the valuations where they are today, and given 0:06:59.640 --> 0:07:02.400 you still got a fairly strong backdrop. Okay, the macromatrup 0:07:02.480 --> 0:07:04.720 is slowing, but it's fairly strong. So you do want 0:07:04.720 --> 0:07:07.000 to have exposure to other parts of the market. And 0:07:07.839 --> 0:07:09.640 I think you know, if you look at financials, if 0:07:09.640 --> 0:07:11.600 you look at industrials, I think there are pockets which 0:07:11.640 --> 0:07:13.600 can do well, but not only just in the US. 0:07:13.640 --> 0:07:16.320 I think you can look outside the US, Latin America, 0:07:16.440 --> 0:07:18.280 parts of Asia. They also look pretty attractive. 0:07:18.960 --> 0:07:21.239 How do we think about valuation here just broadly defined. 0:07:21.280 --> 0:07:23.480 I mean I would argue that it seems like the 0:07:23.600 --> 0:07:27.520 US market would be fully valued to be generous, and 0:07:27.560 --> 0:07:30.480 then I need to be looking at Europe or Asia. 0:07:30.760 --> 0:07:33.200 I mean when you talk to your global clients and 0:07:33.680 --> 0:07:35.040 is that what they're talking about? 0:07:35.320 --> 0:07:37.080 Yeah, I mean it's always been a situation that they 0:07:37.080 --> 0:07:38.720 look across as the global map and they say, Wow, 0:07:38.760 --> 0:07:41.720 the US is so expensive. Why is there nobody nowhere 0:07:41.720 --> 0:07:44.000 else that you can increase exposure to? And I think 0:07:44.000 --> 0:07:47.320 certainly for this year there has been opportunities Europe. You 0:07:47.400 --> 0:07:50.440 mentioned it is relatively cheap, but actually at this point 0:07:50.440 --> 0:07:53.880 in time, somewhat concerned about where that is going, and 0:07:53.880 --> 0:07:57.000 actually preferences said Latin America, pockets of Asia which has 0:07:57.000 --> 0:08:00.520 still got their exposure to the tech cycle, which we 0:08:00.560 --> 0:08:01.800 think can continue to do well. 0:08:02.640 --> 0:08:05.920 One of the things I look at here is over 0:08:05.960 --> 0:08:09.920 the weekend, a lot of people again desperately wanting to 0:08:10.000 --> 0:08:15.120 trade or market time the big tech, the big stocks. 0:08:15.560 --> 0:08:18.160 I saw a lot of research this weekend. Now's the 0:08:18.200 --> 0:08:20.520 time to get out, Now's the time to lighten up 0:08:20.560 --> 0:08:25.200 in that. What's your study at LLC of market timing 0:08:26.000 --> 0:08:29.680 not so much buy and hold, but just extending your 0:08:29.680 --> 0:08:34.160 belief I own somebody listening right now owns Microsoft. They 0:08:34.200 --> 0:08:36.640 got lucky, somebody gave it to them. Whatever, How do 0:08:36.679 --> 0:08:40.480 you extend your timeline and not market time? 0:08:41.160 --> 0:08:43.079 Well, first, I think I think it's a fool's game 0:08:43.120 --> 0:08:44.640 almost to try and think that you're going to have 0:08:44.720 --> 0:08:47.120 perfect timing in this kind of market. And I think 0:08:47.160 --> 0:08:49.240 what's more difficult about the big tech is that I 0:08:49.280 --> 0:08:51.480 think that the microagnostic, so you almost have to look 0:08:51.520 --> 0:08:52.360 away from the microphone. 0:08:52.400 --> 0:08:54.600 What do you mean by the macroagnostics? Y, I lost 0:08:54.640 --> 0:08:55.319 it in the accent. 0:08:55.440 --> 0:09:00.960 You know, macro agnostic. It doesn't matter what the growth outlokas, 0:09:01.040 --> 0:09:03.720 it doesn't almost matter what the fed outlooka is. Those 0:09:03.760 --> 0:09:06.400 companies are almost creating their own demand now with the 0:09:06.440 --> 0:09:09.200 advent of AI. So actually, what we're doing almost is 0:09:09.240 --> 0:09:13.040 becoming an individual stockpicker and having to understand the dynamics 0:09:13.080 --> 0:09:18.400 of those specific companies, and to us, it's very Difficult's cool, 0:09:18.440 --> 0:09:19.719 but I think that party's going to keep going on 0:09:19.760 --> 0:09:19.920 for it. 0:09:19.960 --> 0:09:24.240 So this goes to Michael Mobison and capital allocation in 0:09:24.320 --> 0:09:28.120 the standard discounted cash flow analysis. Mobison would say, and 0:09:28.160 --> 0:09:30.240 I agree with them. I think you have to put 0:09:30.320 --> 0:09:34.679 more weight on the individual quarter, the individual years, and 0:09:34.840 --> 0:09:38.720 less weight on fancy plug in math plugin chuck math 0:09:39.200 --> 0:09:42.959 and the terminal value. I think there's too much analysis 0:09:43.120 --> 0:09:46.920 on what's Microsoft going to be doing seven years and 0:09:46.960 --> 0:09:48.839 not enough weight or what are they going to be 0:09:48.920 --> 0:09:50.520 doing in the next ninety days. 0:09:50.720 --> 0:09:53.559 And I think that's even more important for technology because 0:09:53.600 --> 0:09:56.280 you're seeing that people are trying to understand on a month, 0:09:56.320 --> 0:09:59.240 my month, call to my quarter basis of where things 0:09:59.240 --> 0:10:01.000 are moving. And the thing is, with tech, it's moving 0:10:01.000 --> 0:10:04.320 so quickly. The progress that you've already seen is advancing 0:10:04.320 --> 0:10:07.400 really quickly. That actually, yes, that shorter timescale becomes more important. 0:10:07.840 --> 0:10:09.920 All right, Let's think about fixed income here, because a 0:10:09.920 --> 0:10:11.360 lot of folks are saying they can go to a 0:10:11.480 --> 0:10:14.840 US Treasury two year get close to five percent. 0:10:15.960 --> 0:10:17.199 Is that enough or do I. 0:10:17.160 --> 0:10:18.559 Try to take some credit risk here and get a 0:10:18.559 --> 0:10:19.480 little bit more creative? 0:10:20.160 --> 0:10:23.400 So I think at this point, with Treasury especially, duration 0:10:23.800 --> 0:10:28.440 is not particularly attractive at these levels. I think, even 0:10:28.440 --> 0:10:30.640 though you're likely to see FED cuts this year, with 0:10:30.679 --> 0:10:32.880 a continuation with it, actually with a shadow cutting cycle 0:10:32.880 --> 0:10:36.280 most likely for twenty twenty five, plus, concerns around term premium, 0:10:36.320 --> 0:10:39.480 the discussions around fiscal deficit that actually yields and not 0:10:39.559 --> 0:10:43.000 going to come much lower from here for credit, though 0:10:43.040 --> 0:10:46.440 there is certainly interesting parts. IG is one error that 0:10:46.440 --> 0:10:49.480 we are sunny. We do have an overweight to but 0:10:49.480 --> 0:10:51.000 we're looking sunny at the quality space. 0:10:51.160 --> 0:10:54.640 You've lit up the live shared on YouTube worldwide. People 0:10:54.679 --> 0:10:56.640 are listening to you and they're saying wait. Seem as 0:10:56.640 --> 0:11:00.960 Sure is saying ignore macro. Let's be careful about this. 0:11:01.559 --> 0:11:04.800 Do you think this bull market of twelve stocks, twenty stocks, 0:11:04.840 --> 0:11:10.720 whatever is removed from FED analysis where it's just about 0:11:10.760 --> 0:11:12.080 their individual stories. 0:11:12.360 --> 0:11:14.640 I do. I don't think the FED has an impact 0:11:14.760 --> 0:11:16.599 on these companies. I don't think if the FED is 0:11:16.640 --> 0:11:21.360 going to cut in Septener vers December, this is a. 0:11:21.400 --> 0:11:25.040 Huge deal, because I'm halfway there. I think it's way overrated. 0:11:25.080 --> 0:11:27.240 At least Brama, when I go on this all the time, 0:11:27.559 --> 0:11:30.600 she's like following the FED thing up down. So I'm like, no, 0:11:30.679 --> 0:11:34.080 it doesn't matter. But you've gone full boat. You've just 0:11:34.120 --> 0:11:37.439 said you don't care what chairman Paula says. 0:11:37.800 --> 0:11:40.880 I think that it matters for the other four hundred 0:11:40.880 --> 0:11:43.560 and ninety three stocks, But I think for those seven 0:11:43.679 --> 0:11:44.959 or haven't. Maybe you want to call it now the 0:11:45.000 --> 0:11:49.160 magnificent ones. The FED is not relevant inter that analysis, 0:11:49.520 --> 0:11:51.600 But for that broadening in the raalley, the FED doesn't matter. 0:11:51.679 --> 0:11:54.640 Yep, Hey Shiman, How do you think about alternative investments, 0:11:54.720 --> 0:11:58.880 private equity, private credit, hedge funds, things like that. Where 0:11:58.880 --> 0:12:01.440 do you think that those belong in that portfolio today? 0:12:01.880 --> 0:12:04.600 I mean they absolutely need some kind of allocation, okay, 0:12:04.960 --> 0:12:08.400 the returns to get the returns that people are looking 0:12:08.400 --> 0:12:10.040 for over the next five to ten year period. If 0:12:10.040 --> 0:12:11.880 you don't have exposure to big tech and then are 0:12:11.880 --> 0:12:13.760 going to keep delivering at the same pace that they've had, 0:12:14.040 --> 0:12:17.600 you need to look outside your traditional errors. So we 0:12:17.679 --> 0:12:19.720 are looking at the alternative space. I mean even within 0:12:19.760 --> 0:12:22.360 the alternatives, a lot of focus on real asets because 0:12:22.360 --> 0:12:25.360 of inflation mitigation, but certainly in the private space, I 0:12:25.360 --> 0:12:27.719 think there has to be allocation in private credit in. 0:12:27.679 --> 0:12:31.560 The time we've got left. You are of Aldrich and 0:12:32.120 --> 0:12:35.880 London school of economics. How do you play the election 0:12:36.320 --> 0:12:39.599 in the United Kingdom? Is it a foot sea opportunity? 0:12:39.720 --> 0:12:43.840 Is it a guilt opportunity? I get all the consensus 0:12:43.880 --> 0:12:47.240 and then forget about the gaming of the election, But 0:12:47.320 --> 0:12:51.120 is there an opportunity there for investors looking for three years? 0:12:51.880 --> 0:12:54.079 So it depends what the I'm assume the Labor is 0:12:54.120 --> 0:12:55.880 going to win, if the Labor Party is really going 0:12:55.880 --> 0:12:57.480 to think about what is going to make the UK 0:12:57.520 --> 0:13:00.800 attractive investor to investors again, whether that's thinking about the 0:13:00.840 --> 0:13:04.160 EU trade relationship, whether it's thinking about capital gainst tax. 0:13:04.280 --> 0:13:07.000 That has the potential to really improve the attractiveness of 0:13:07.040 --> 0:13:09.480 the UK. But we're still waiting to hear it because 0:13:09.480 --> 0:13:11.360 they haven't said much about it in the manifesto. 0:13:12.400 --> 0:13:15.280 Have the pro Brexit people have they admitted that maybe 0:13:15.320 --> 0:13:18.680 that it hasn't worked, it's not the right decision, or 0:13:18.720 --> 0:13:19.880 is it still so partisan? 0:13:20.920 --> 0:13:23.040 It is still quite partisan, but you are seeing more 0:13:23.080 --> 0:13:26.120 and more people becoming fairly quiet about the subject, which 0:13:26.160 --> 0:13:27.839 I think is an admission that it didn't work out 0:13:27.880 --> 0:13:28.240 so well. 0:13:28.280 --> 0:13:29.920 And is that kind of what the data is showing 0:13:29.920 --> 0:13:32.280 you that in fact it has not worked. 0:13:32.880 --> 0:13:35.280 The data is showing that all the promises that were 0:13:35.320 --> 0:13:37.800 made in the event and the event of breaksit have 0:13:37.920 --> 0:13:40.800 not come to fruition and as a result, the economy 0:13:40.880 --> 0:13:41.920 has not benefited. 0:13:42.040 --> 0:13:43.640 You guys can't fix that overnight. 0:13:43.679 --> 0:13:45.960 Can you see her. She could be on ITV or Sky. 0:13:47.440 --> 0:13:50.040 She worked with Treasury, so you know, oh boy, she 0:13:50.080 --> 0:13:50.840 could be a pundit. 0:13:52.360 --> 0:13:54.200 I need to go to the London School of Economics then. 0:13:54.559 --> 0:13:57.360 Oh it's great schools. To great school. Thank you, mister Robbins. 0:13:58.000 --> 0:14:02.400 Darren Door from the rest share of Principal Asset Management 0:14:13.080 --> 0:14:16.400 with Fordam Global Insight. A three hour conversation is in order. 0:14:16.480 --> 0:14:19.400 Tina Fordham joins us this morning. Tina, it's a quiet 0:14:19.440 --> 0:14:23.600 summer in Europe. My word, Tina, let me get to 0:14:23.640 --> 0:14:28.880 the July thirty French election. I guess it's impact on 0:14:28.960 --> 0:14:31.320 all of us. There are two does a pro like 0:14:31.400 --> 0:14:34.280 you just ignore it and move right on to July seventh. 0:14:35.560 --> 0:14:39.240 Oh I wish we could ignore it, but no. 0:14:39.800 --> 0:14:42.840 In fact, the first round is this coming Sunday, and 0:14:42.880 --> 0:14:47.400 the second round is July seventh, so we've got the 0:14:47.440 --> 0:14:50.960 two rounds, the first one in just a few days. 0:14:52.160 --> 0:14:57.400 Macraln gave himself the least time possible really to call 0:14:57.440 --> 0:15:00.880 these snap elections, and it's thrown the whole French political 0:15:00.880 --> 0:15:04.800 spectrum into disarray and woken up those of us who 0:15:04.840 --> 0:15:08.000 haven't spent a lot of time focusing on French politics. 0:15:09.160 --> 0:15:12.280 I mean really since Macron took office in two thousand 0:15:12.280 --> 0:15:15.200 and seven with his Central Party. 0:15:16.080 --> 0:15:19.760 My basic take looking at all of the sun including 0:15:19.800 --> 0:15:24.440 the US debate, and that is that if Macron is defeated, 0:15:25.040 --> 0:15:29.800 it's some form of conservative right wing coalition. Is that 0:15:30.040 --> 0:15:34.160 feasible or the polarity so fractious even that's not going 0:15:34.240 --> 0:15:34.640 to happen. 0:15:36.160 --> 0:15:42.240 Well, first of all, the French political landscape is highly 0:15:42.400 --> 0:15:48.000 charged and highly fractious, and lots of the political party's 0:15:48.240 --> 0:15:51.000 names start with R, so they sound the same for 0:15:51.080 --> 0:15:55.280 outside observers. It's going to be confusing or renaissance, rassmn, 0:15:55.760 --> 0:15:57.640 re conquet, this. 0:15:57.520 --> 0:15:58.160 Sort of thing. 0:15:59.440 --> 0:16:04.720 Macron Party is center right, so you know that's worth restating. 0:16:05.120 --> 0:16:09.880 It's the populist right under Marine la Penn that has 0:16:10.520 --> 0:16:14.400 been working hard over the years to normalize and kind 0:16:14.400 --> 0:16:17.000 of mainstream itself that looks like. 0:16:16.920 --> 0:16:18.400 It stands to benefit. 0:16:18.560 --> 0:16:23.200 But the mathematics on this two round race and the 0:16:23.720 --> 0:16:27.720 five hundred and something mini elections that take place make 0:16:27.760 --> 0:16:30.960 the calculations really difficult. And so first of all, just 0:16:31.000 --> 0:16:34.760 coming up with scenarios, which is what you would normally 0:16:34.840 --> 0:16:37.600 do in this situation, is difficult. 0:16:37.880 --> 0:16:41.040 Paul's looking for dissage tickets down the sen River at 0:16:41.040 --> 0:16:42.680 the Olympics. Paul, what do you have. 0:16:43.160 --> 0:16:45.600 Let's go to the UK here, tell us what we 0:16:45.600 --> 0:16:50.400 should be thinking about here, Tina. With the UK elections. 0:16:51.760 --> 0:16:53.760 Well, the UK elections are on the fourth of July, 0:16:53.880 --> 0:16:56.000 so right between two rounds. 0:16:56.440 --> 0:16:59.480 I have been saying for some time. 0:16:59.560 --> 0:17:01.720 I mean, first of all, the UK elections were due 0:17:01.760 --> 0:17:04.080 this year, they had to be called. They could have 0:17:04.119 --> 0:17:07.960 been called by January at the latest. Still the timing is, 0:17:08.480 --> 0:17:10.800 you know, a bit of a head scratcher. It's not 0:17:11.000 --> 0:17:14.000 usual to try to make people come to the polls 0:17:14.040 --> 0:17:17.240 in the height of summer and mess up everyone's summer vacations. 0:17:18.600 --> 0:17:20.920 Sunak, you know, is widely. 0:17:20.680 --> 0:17:25.240 Rumored here in the UK to be you know, be 0:17:25.320 --> 0:17:29.000 looking to get back to California and join Nick Clegg 0:17:29.080 --> 0:17:33.320 somewhere like Meta in the Silicon Valley. But he insists 0:17:33.400 --> 0:17:38.360 he wants to remain in his Yorkshire constituency as an MP. 0:17:38.680 --> 0:17:42.679 That's something that's unusual about the British system that politicians 0:17:42.680 --> 0:17:46.480 stick around the reason May has stayed on as a 0:17:46.480 --> 0:17:51.639 as an MP. But in this case, the UK is 0:17:51.760 --> 0:17:54.520 bucking the trend for the rest of Europe, which is 0:17:54.680 --> 0:17:59.560 moving far right in fact, and looks likely to vote 0:17:59.560 --> 0:18:03.240 in a late government by a landslide. 0:18:03.440 --> 0:18:05.240 And that's kind of where I wanted to get to. 0:18:05.320 --> 0:18:07.520 How do we, you know, for our audience here in 0:18:07.600 --> 0:18:10.080 the United States, how do we think about you know, 0:18:10.520 --> 0:18:13.040 some of these European countries really moving to the right, 0:18:13.720 --> 0:18:16.600 and you mentioned we were talking about France earlier and 0:18:16.720 --> 0:18:19.040 the UK going more to the left. What does that 0:18:19.280 --> 0:18:20.560 tell us? How do we think about that? 0:18:21.840 --> 0:18:25.000 Well, so the UK is an outlier in the wider 0:18:25.080 --> 0:18:28.720 European trend. With that in mind, but we've had fourteen 0:18:28.800 --> 0:18:32.399 years of a Conservative Party government. Fourteen years that is 0:18:32.440 --> 0:18:36.400 a very long stretch. So first of all, it's an 0:18:36.400 --> 0:18:42.399 anti incumbent move. Secondly, eight years ago yesterday and I 0:18:42.440 --> 0:18:44.840 can't believe it was this long ago, we had the 0:18:44.880 --> 0:18:48.080 Brexit result. And Brexit has been the elephant in the 0:18:48.160 --> 0:18:50.679 room during this campaign because nobody wants to. 0:18:50.680 --> 0:18:52.720 Tell voters they voted for something that. 0:18:53.160 --> 0:18:57.240 You know, went the wrong direction and then they possibly 0:18:57.400 --> 0:19:02.199 misjudged the outcome. But it has undoubtedly made people in 0:19:02.240 --> 0:19:06.440 Britain poorer, and they do understand that it breaks it 0:19:06.520 --> 0:19:10.040 is the main cause of what ails them. 0:19:10.440 --> 0:19:13.840 It just hasn't featured in the campaign, which is odd. 0:19:14.200 --> 0:19:16.280 Tina. One final question, I'll drag you back to the 0:19:16.400 --> 0:19:19.480 United States of America. What will you look for in 0:19:19.560 --> 0:19:20.960 the Thursday debate? 0:19:23.280 --> 0:19:25.720 Well, signs of life. 0:19:26.440 --> 0:19:29.639 Will all be looking for sentience and signs of life. 0:19:29.760 --> 0:19:33.120 One of my clients in private equity in the US 0:19:34.080 --> 0:19:39.040 described the races between demented and dementia. I don't know 0:19:39.080 --> 0:19:41.919 if you know use these kinds of technical terms on 0:19:41.960 --> 0:19:44.120 Bloomberg Radio, but I think a. 0:19:44.080 --> 0:19:46.359 Lot of Americans see it that way. 0:19:46.400 --> 0:19:49.119 And you're going to have the two of them side 0:19:49.119 --> 0:19:52.920 by side. You know, people like me will be getting 0:19:52.960 --> 0:19:58.600 the popcorn out as well as covering it. Arguably, the 0:19:58.640 --> 0:20:02.720 bar is higher for Joe Biden because there has been 0:20:02.760 --> 0:20:07.280 this relentless kind of narrative about him being a daughtering 0:20:07.680 --> 0:20:12.040 you know, old fool, and Trump comes out guns blazing 0:20:12.280 --> 0:20:18.240 with you know what is really also a meandering way 0:20:18.240 --> 0:20:22.200 of expressing himself. But the other side of it will 0:20:22.200 --> 0:20:26.719 be how does this work without a studio audience. Someone 0:20:26.800 --> 0:20:30.200 like Donald Trump really, I think needs the energy of 0:20:30.240 --> 0:20:30.800 the crowd. 0:20:31.000 --> 0:20:33.040 But this was a condition. 0:20:32.760 --> 0:20:40.480 That reportedly President Biden required. So the debates rarely move 0:20:40.560 --> 0:20:44.560 the needle on poles. But it will generate headlines and 0:20:44.640 --> 0:20:47.400 perhaps it will mean a bit more in a race 0:20:47.640 --> 0:20:53.240 like this where so many Americans really don't like either candidate. 0:20:53.960 --> 0:20:57.800 Tina, thank you so much, Tina Fordham. With this Fordham 0:20:59.359 --> 0:21:02.359 Global ands, I should say for Global Insight in London. 0:21:12.920 --> 0:21:14.639 I'm looking for a man in finance. 0:21:15.000 --> 0:21:17.480 Trust fun six five they eyes. 0:21:18.000 --> 0:21:21.360 I'm looking for a man in finance, just fine, six 0:21:21.480 --> 0:21:26.840