1 00:00:00,240 --> 00:00:04,040 Speaker 1: Runt You by Bank of America Mary Lynch. With virtual reality, 2 00:00:04,320 --> 00:00:09,719 Speaker 1: virtually everything will change. Discover opportunities in a transforming world 3 00:00:10,119 --> 00:00:14,440 Speaker 1: be of a mL dot Com, slash VR, Mary Lynch, 4 00:00:14,520 --> 00:00:28,120 Speaker 1: Pierced Fenner and Smith Incorporated. Ye, Welcome to the Bloomberg 5 00:00:28,160 --> 00:00:32,360 Speaker 1: Surveillance Podcast. I'm Tom Keene with David Gura. Daily we 6 00:00:32,440 --> 00:00:36,080 Speaker 1: bring you insight from the best of economics, finance, investment, 7 00:00:36,120 --> 00:00:42,200 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 8 00:00:42,280 --> 00:00:49,920 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. Joining 9 00:00:49,960 --> 00:00:52,479 Speaker 1: us now from the Bloomberg Investorm in New York, Brian Belski, 10 00:00:52,880 --> 00:00:55,760 Speaker 1: Chief investment strategy of Demo Capital Market's great to see 11 00:00:55,800 --> 00:00:58,360 Speaker 1: here amid the hustle and bustle of the link as 12 00:00:58,360 --> 00:01:01,800 Speaker 1: we call at the pantry, here's the real people do. Right, 13 00:01:02,080 --> 00:01:04,720 Speaker 1: run around outside the camp of the cortemins of our 14 00:01:04,840 --> 00:01:07,280 Speaker 1: radio studio. Right. Let me ask you about how you're 15 00:01:08,120 --> 00:01:10,720 Speaker 1: regarding what's going to happen tomorrow. It's not a risk event, 16 00:01:10,840 --> 00:01:14,040 Speaker 1: I suppose it's it's three big risk events. How much 17 00:01:14,080 --> 00:01:15,720 Speaker 1: how much attention you paining to what's happened with the 18 00:01:15,720 --> 00:01:18,280 Speaker 1: ECB with Capitol Hill and indeed, with the election in 19 00:01:18,280 --> 00:01:21,080 Speaker 1: the UK tomorrow, I probably say that the e CBS 20 00:01:21,160 --> 00:01:25,679 Speaker 1: number one with respect to what happens fundamentally because we've 21 00:01:25,720 --> 00:01:30,759 Speaker 1: had um, you know, kind of growth, um, let's say, 22 00:01:31,040 --> 00:01:34,759 Speaker 1: volatility in terms of Europe. What's happened from not only 23 00:01:35,000 --> 00:01:37,880 Speaker 1: an economic earnings but demographic side of things, and things 24 00:01:37,880 --> 00:01:39,959 Speaker 1: have changed in Europe the last twelve months. So from 25 00:01:39,959 --> 00:01:42,120 Speaker 1: a from an investment standpoint, David, I mean, how are 26 00:01:42,120 --> 00:01:43,920 Speaker 1: we going to position there? And then what does what 27 00:01:44,000 --> 00:01:46,800 Speaker 1: does that mean for emerging markets? Because I remember Europe 28 00:01:46,840 --> 00:01:51,280 Speaker 1: and emerging markets are very tightly correlated. Europe's I'm sorry, 29 00:01:51,280 --> 00:01:54,400 Speaker 1: emerging markets number one client in Europe, So you know, 30 00:01:54,880 --> 00:01:58,280 Speaker 1: I think it's important, especially considering that the US and 31 00:01:58,440 --> 00:02:01,480 Speaker 1: in the UK led the revive goal inequities in the 32 00:02:01,480 --> 00:02:03,880 Speaker 1: fourth quarter at the beginning of this year. Then you're 33 00:02:04,000 --> 00:02:08,040 Speaker 1: played along and now emerging markets have cotten some cotton 34 00:02:08,080 --> 00:02:09,600 Speaker 1: a bid, so to speak, and so a lot of 35 00:02:09,600 --> 00:02:12,320 Speaker 1: people are getting getting excited about emerging markets. What that means. 36 00:02:12,320 --> 00:02:14,440 Speaker 1: So I think the big thing tomorrow is gonna be ECP. 37 00:02:14,560 --> 00:02:17,880 Speaker 1: With respect to the noise out of Washington, noise just 38 00:02:18,040 --> 00:02:20,440 Speaker 1: it's a noise, how libretting will it be to get 39 00:02:20,480 --> 00:02:22,799 Speaker 1: through the UK election when you look at political risk, 40 00:02:22,960 --> 00:02:24,920 Speaker 1: does that does that stand as a marker to you 41 00:02:24,960 --> 00:02:26,840 Speaker 1: that you're gonna get past it? Yeah? I think so. 42 00:02:26,880 --> 00:02:28,840 Speaker 1: You can take a look at it's a it's a 43 00:02:28,919 --> 00:02:31,600 Speaker 1: it's a great question. You see what happened in France 44 00:02:31,600 --> 00:02:34,440 Speaker 1: and how the volatility Actually we did not see the 45 00:02:34,440 --> 00:02:38,240 Speaker 1: big volatility spike post the French election. Prey the French election. 46 00:02:38,320 --> 00:02:39,960 Speaker 1: You know, we had the pre election and then the 47 00:02:39,960 --> 00:02:44,000 Speaker 1: real election. So you know it's a foregone conclusion that 48 00:02:44,040 --> 00:02:46,480 Speaker 1: May is gonna win. But but at the end of 49 00:02:46,520 --> 00:02:49,320 Speaker 1: the day, again, how many seats to do do the 50 00:02:49,360 --> 00:02:51,519 Speaker 1: Conservatives win and retain and things like that. So, and 51 00:02:51,720 --> 00:02:53,760 Speaker 1: what's the direction with respect of Brexon and what does 52 00:02:53,800 --> 00:02:57,560 Speaker 1: that mean for the total eurosone gdp so, and then 53 00:02:57,639 --> 00:02:59,040 Speaker 1: go back to the e c B. I think that's 54 00:02:59,040 --> 00:03:01,280 Speaker 1: gonna be the key thing to morrow. You've you've written 55 00:03:01,320 --> 00:03:03,720 Speaker 1: that over these last six months or so, what we've 56 00:03:03,720 --> 00:03:05,720 Speaker 1: seen in terms of price returns has been dreamed bymentum 57 00:03:05,720 --> 00:03:08,680 Speaker 1: and rhetoric, not by fundamentals in process. How does that 58 00:03:08,760 --> 00:03:11,760 Speaker 1: complicate things for you as in as an investor. It's 59 00:03:11,760 --> 00:03:17,280 Speaker 1: horrible it's horrible. I mean no, I mean it's it's 60 00:03:17,360 --> 00:03:21,960 Speaker 1: literally impossible to be writing about the market every week 61 00:03:22,000 --> 00:03:25,800 Speaker 1: and try to provide this great, grandiose value add that 62 00:03:25,840 --> 00:03:28,720 Speaker 1: everybody thinks they're doing because nothing's really happening. The market 63 00:03:28,720 --> 00:03:31,160 Speaker 1: has been in this tight training range the last couple 64 00:03:31,240 --> 00:03:33,280 Speaker 1: of months, and everybody wants to try to make this 65 00:03:33,360 --> 00:03:35,120 Speaker 1: big call about what's going to happen in the market. 66 00:03:35,160 --> 00:03:36,960 Speaker 1: But at the end of the day, we still think 67 00:03:37,000 --> 00:03:39,360 Speaker 1: it's about buying stocks and being in the right industries 68 00:03:39,400 --> 00:03:41,320 Speaker 1: and sectors. And I think there's a there's a big 69 00:03:41,360 --> 00:03:43,440 Speaker 1: contingent of what people that do what we do and 70 00:03:43,520 --> 00:03:46,360 Speaker 1: investors that just don't get that. Within this is the 71 00:03:46,400 --> 00:03:49,600 Speaker 1: mode of investors. Do they feel like they've missed the market? 72 00:03:49,720 --> 00:03:52,440 Speaker 1: Do they feel like they're in the market? Is there 73 00:03:52,440 --> 00:03:56,880 Speaker 1: an irrational Zuberance team and I were talking about this yesterday. 74 00:03:56,880 --> 00:04:00,520 Speaker 1: I I we're getting the sense that more and more 75 00:04:00,560 --> 00:04:02,600 Speaker 1: investors that we talked to, more and more clients feel 76 00:04:02,640 --> 00:04:04,680 Speaker 1: like they need to be in the market, then want 77 00:04:04,720 --> 00:04:07,080 Speaker 1: to be in the market, especially considering the kind of 78 00:04:07,120 --> 00:04:10,600 Speaker 1: move that we've seen, and there I hate to use 79 00:04:10,640 --> 00:04:13,480 Speaker 1: this word complacency, Tom that I just think that people 80 00:04:13,520 --> 00:04:15,600 Speaker 1: are kind of boring themselves to death in terms of 81 00:04:15,600 --> 00:04:18,760 Speaker 1: owning the same stocks. There's no original thought. And again 82 00:04:18,800 --> 00:04:22,120 Speaker 1: I think the I think there's so many binary opinions 83 00:04:22,120 --> 00:04:24,760 Speaker 1: out there. It's either either or there's nothing in between. 84 00:04:24,839 --> 00:04:26,920 Speaker 1: What we say is on Friday, David, all the gloom 85 00:04:26,960 --> 00:04:29,000 Speaker 1: comes out right. I mean, you're I know you're looking 86 00:04:29,040 --> 00:04:31,560 Speaker 1: at you know, Kale sales in Brooklyn. Brian and I 87 00:04:31,560 --> 00:04:33,880 Speaker 1: are looking at the gloom reports coming out on Friday 88 00:04:33,880 --> 00:04:35,880 Speaker 1: and four pm. World's gonna end and it makes a 89 00:04:35,880 --> 00:04:39,680 Speaker 1: great weekend reading Brian Belsky with us. We are within 90 00:04:40,160 --> 00:04:46,479 Speaker 1: our world headquarters. We're not in our studios were there's 91 00:04:46,520 --> 00:04:50,080 Speaker 1: people in Bloomingdale's often the distance. Good morning to all 92 00:04:50,160 --> 00:04:54,240 Speaker 1: of Bloomingdale's. Of course we're here are special coverage. Are 93 00:04:54,240 --> 00:04:58,440 Speaker 1: Bloomberg invest Conference. Take us through your your portfolio right now? 94 00:04:58,440 --> 00:05:00,880 Speaker 1: What's what's been doing well? Even you've had a lot 95 00:05:00,880 --> 00:05:04,480 Speaker 1: of success with technology. Are you overweight financials as well? 96 00:05:04,480 --> 00:05:07,159 Speaker 1: What's detractive about the financials right now? You know we're 97 00:05:07,160 --> 00:05:09,920 Speaker 1: over eight financials and we're wrong right now. And I'm 98 00:05:09,920 --> 00:05:11,760 Speaker 1: not ashamed to say we're wrong because you know, the 99 00:05:11,800 --> 00:05:14,760 Speaker 1: bond markets and control everything, and and what we've seen 100 00:05:14,800 --> 00:05:16,960 Speaker 1: with short rates, you know, the twos and tens we've 101 00:05:16,960 --> 00:05:19,880 Speaker 1: talked about on on the television program here just recently 102 00:05:19,920 --> 00:05:22,200 Speaker 1: are in the last few minutes. So you know, we're 103 00:05:22,240 --> 00:05:24,360 Speaker 1: positioned for the next to all day, t months minimum 104 00:05:24,520 --> 00:05:26,320 Speaker 1: and over the next three to five years. We think 105 00:05:26,360 --> 00:05:29,320 Speaker 1: financials are are the best place to be because everyone 106 00:05:29,440 --> 00:05:32,359 Speaker 1: is so negative, David, and they're not positioned there and 107 00:05:32,360 --> 00:05:35,600 Speaker 1: they're under their underweight. We think financials in the way 108 00:05:35,600 --> 00:05:38,159 Speaker 1: to be. But I think our best call so far 109 00:05:38,240 --> 00:05:40,599 Speaker 1: this year is is to be overweight healthcare. It's been 110 00:05:40,640 --> 00:05:43,480 Speaker 1: our contrarian call heading into this year, and in our 111 00:05:43,520 --> 00:05:45,839 Speaker 1: theme for healthcare as we buy stocks that keep us alive, 112 00:05:45,920 --> 00:05:48,440 Speaker 1: you know. So we like the biotechs and the drugs 113 00:05:48,480 --> 00:05:52,680 Speaker 1: and some in certain um big h mos um. But 114 00:05:53,160 --> 00:05:55,760 Speaker 1: you know, I think what's gonna end up happening is 115 00:05:56,640 --> 00:05:58,840 Speaker 1: I think the biggest call right now is everybody thinks 116 00:05:58,839 --> 00:06:01,200 Speaker 1: that growth is scarce and growth outperforms, and we're gonna 117 00:06:01,200 --> 00:06:04,320 Speaker 1: buy the fangs. It's say the same old crap and 118 00:06:04,839 --> 00:06:06,560 Speaker 1: for lack of a better way, I mean, let's have 119 00:06:06,600 --> 00:06:08,640 Speaker 1: some original thought, man, I mean, let's go out and 120 00:06:08,680 --> 00:06:11,200 Speaker 1: buy some stocks and and own a portfolio and manage 121 00:06:11,200 --> 00:06:12,920 Speaker 1: a portfolio. So what we've been doing in the real 122 00:06:12,960 --> 00:06:15,440 Speaker 1: live money that we that we run for our Canadian 123 00:06:15,440 --> 00:06:19,560 Speaker 1: investors for the bank up in Canada, is that, you know, 124 00:06:20,080 --> 00:06:23,920 Speaker 1: we run portfolio stocks. All four of our products are 125 00:06:23,920 --> 00:06:26,640 Speaker 1: all performing our mandate, just principally, because Marcot goes down 126 00:06:26,640 --> 00:06:28,320 Speaker 1: a little bit, we buy more of our favorite names, 127 00:06:28,600 --> 00:06:30,599 Speaker 1: Margret goes up a little bit. We've been peeling back. 128 00:06:30,600 --> 00:06:33,360 Speaker 1: So we actually this past month peeled back a little 129 00:06:33,360 --> 00:06:36,720 Speaker 1: bit in some of those fang names, uh, principally because 130 00:06:36,720 --> 00:06:39,040 Speaker 1: they've had big runs and and we don't think that 131 00:06:39,120 --> 00:06:41,440 Speaker 1: type of price momentum can continue over the next three 132 00:06:41,440 --> 00:06:43,720 Speaker 1: to six months eighteen months, yes, three or six months. 133 00:06:43,720 --> 00:06:46,279 Speaker 1: Probably not strikes me that that's so workman like. That's 134 00:06:46,279 --> 00:06:50,760 Speaker 1: so old school to an old soul. I mean, so 135 00:06:50,800 --> 00:06:52,520 Speaker 1: many of people that do what I do are so 136 00:06:52,600 --> 00:06:55,599 Speaker 1: focused on the macro macro macro and quant quant quan, 137 00:06:55,720 --> 00:06:58,080 Speaker 1: and nobody knows how to talk about stocks or themes 138 00:06:58,160 --> 00:07:00,880 Speaker 1: or invest anymore. There's a public one talk about stocks. 139 00:07:00,920 --> 00:07:03,040 Speaker 1: Are they all bundled up in passive funds? I think 140 00:07:03,040 --> 00:07:06,760 Speaker 1: they're all bundled up in passive funds. I think, uh again, 141 00:07:06,800 --> 00:07:09,520 Speaker 1: more E T F questions from taxi cab drivers and 142 00:07:09,560 --> 00:07:12,240 Speaker 1: car drivers and we do stocks. Yeah, I mean, you know, 143 00:07:12,280 --> 00:07:14,680 Speaker 1: I go back to the nineties when cab drivers are 144 00:07:14,680 --> 00:07:17,080 Speaker 1: given a stock picks here in this town. And yeah, 145 00:07:17,120 --> 00:07:19,040 Speaker 1: I think we will get back to that point. But 146 00:07:19,440 --> 00:07:22,080 Speaker 1: I think still we're we're more focused on I mean 147 00:07:22,120 --> 00:07:24,560 Speaker 1: that the public is more focused on the headlines and 148 00:07:24,600 --> 00:07:27,240 Speaker 1: the big picture stuff, and that's what's causing all the 149 00:07:27,280 --> 00:07:30,400 Speaker 1: noise financials. And I just wonder what you see there? 150 00:07:30,560 --> 00:07:32,960 Speaker 1: There is all the negativity that you describe. What do 151 00:07:33,040 --> 00:07:36,800 Speaker 1: you see that others others down't well in the financial 152 00:07:36,840 --> 00:07:38,720 Speaker 1: side of things. We want to be in those companies 153 00:07:38,800 --> 00:07:41,200 Speaker 1: what we call the big box retailers that have the 154 00:07:41,280 --> 00:07:45,880 Speaker 1: complete menu. Right. So, what has been the crown jewel 155 00:07:45,920 --> 00:07:48,960 Speaker 1: of the financial services industry the big box retailers the 156 00:07:49,000 --> 00:07:52,480 Speaker 1: last two to three quarters, it's been it's been the 157 00:07:52,520 --> 00:07:55,720 Speaker 1: capital markets business. Right, So we had big trading volumes 158 00:07:55,800 --> 00:07:58,040 Speaker 1: last year, we had M and A activity COASI. Capital 159 00:07:58,040 --> 00:08:00,160 Speaker 1: markets done right well. So why have they done very well? 160 00:08:00,200 --> 00:08:02,640 Speaker 1: Because two years ago we cut cut, cut, cut cut costs. 161 00:08:02,840 --> 00:08:04,680 Speaker 1: So if you look at the big box retailers now 162 00:08:04,720 --> 00:08:07,240 Speaker 1: where they've been cutting costs wealth management, So where's the 163 00:08:07,240 --> 00:08:09,000 Speaker 1: flow is going to come the next several years gonna 164 00:08:09,000 --> 00:08:11,360 Speaker 1: be into the wealth manager channel. Okay, Brian Bellski with 165 00:08:11,400 --> 00:08:13,360 Speaker 1: this pimo very quickly here. And of course, our coverage 166 00:08:13,360 --> 00:08:15,840 Speaker 1: of Bloomberg invest conference on Bloomberg Radio brought you by 167 00:08:16,280 --> 00:08:20,120 Speaker 1: s CI which means we get celebrities. That is, they 168 00:08:20,160 --> 00:08:23,480 Speaker 1: come in at seven oh five a m. Joining us 169 00:08:23,480 --> 00:08:27,720 Speaker 1: out Scarlett Food in its seven oh five. Do you 170 00:08:27,720 --> 00:08:30,760 Speaker 1: have a question for Mr Belski? Are we talking are retailers? 171 00:08:30,760 --> 00:08:32,920 Speaker 1: Are we talking banks? I just walked in and Tom 172 00:08:32,920 --> 00:08:36,480 Speaker 1: waves me over while meeting my banana. That's a good idea. 173 00:08:36,760 --> 00:08:38,720 Speaker 1: Scarlett used to get up early in the morning. Now 174 00:08:38,800 --> 00:08:40,480 Speaker 1: she's a big shot. She just comes in later. And 175 00:08:41,679 --> 00:08:44,760 Speaker 1: what about the retailers. Dana Telsey Dana Chelsea out with 176 00:08:44,840 --> 00:08:48,280 Speaker 1: a really jepid note on Macy's after their meeting. So 177 00:08:48,320 --> 00:08:50,760 Speaker 1: we just published a piece on consumer discretionary as you 178 00:08:50,800 --> 00:08:53,079 Speaker 1: know that consumer discretionary is the most e collectic sector 179 00:08:53,120 --> 00:08:55,760 Speaker 1: in the US market, right, most eclectic sector in the 180 00:08:55,800 --> 00:08:58,320 Speaker 1: US market. And we mentioned we had no mention of 181 00:08:58,360 --> 00:09:01,600 Speaker 1: retailers in that in that secretory in sector. No, because 182 00:09:02,160 --> 00:09:04,880 Speaker 1: we're really worried from a secular basis longer term, what's 183 00:09:04,920 --> 00:09:07,720 Speaker 1: structurally what's happening in retail? I mean clearly Amazon. If 184 00:09:07,720 --> 00:09:09,920 Speaker 1: you take a look at consumer discretionary sector so far 185 00:09:10,000 --> 00:09:14,000 Speaker 1: this year, Amazon's four hundred basis points, meaning four percentage 186 00:09:14,000 --> 00:09:17,160 Speaker 1: points of the full full UH performance of the second 187 00:09:17,160 --> 00:09:20,640 Speaker 1: If you take a consumers underperforming, we gotta go, Brian Belski, 188 00:09:20,720 --> 00:09:22,720 Speaker 1: thank you so much. If we lose the lun chust 189 00:09:22,800 --> 00:09:28,200 Speaker 1: Jersey where a natural predators Jersey, David gurl, We're gonna 190 00:09:28,200 --> 00:09:30,520 Speaker 1: come back with Brian Belski, David Cura and Tom Keane 191 00:09:30,760 --> 00:09:34,200 Speaker 1: are Bloomberg invest Summit For those of you that just 192 00:09:34,240 --> 00:09:37,080 Speaker 1: got through the CFA exam. We're gonna talk not seemed 193 00:09:37,120 --> 00:09:41,560 Speaker 1: TALEB a little bit and Gaussian and plus on distributions, 194 00:09:41,559 --> 00:09:43,280 Speaker 1: which is a good way to get to Brian Belski 195 00:09:43,320 --> 00:09:46,720 Speaker 1: a bemo. Capital markets talb, of course, is the mathematics 196 00:09:46,720 --> 00:09:50,760 Speaker 1: of rare events. By definition, you don't see the rare 197 00:09:50,880 --> 00:09:54,360 Speaker 1: event coming. What are the set of rare events you're 198 00:09:54,400 --> 00:09:57,120 Speaker 1: worried about in the equity markets? Well, I think so 199 00:09:57,160 --> 00:10:00,760 Speaker 1: many people are laser focused Tom on what's happened in Washington, 200 00:10:00,840 --> 00:10:03,760 Speaker 1: and so that's not a rare event. No, it's not 201 00:10:03,800 --> 00:10:06,760 Speaker 1: a rare Where where are they? Well the other thing too, 202 00:10:06,800 --> 00:10:08,960 Speaker 1: is we just hate this whole notion of black swans. 203 00:10:08,960 --> 00:10:11,360 Speaker 1: I mean, corrections happen when you least expect them. It 204 00:10:11,400 --> 00:10:13,800 Speaker 1: seems to us like everyone is still looking for the correction, 205 00:10:13,760 --> 00:10:15,960 Speaker 1: of looking for the correctional we stopped talking about the correction. 206 00:10:16,000 --> 00:10:17,960 Speaker 1: That's when the correction is gonna happen. It's super incident. 207 00:10:18,000 --> 00:10:20,200 Speaker 1: It's not there. Is it's not there? Do you see? 208 00:10:20,200 --> 00:10:23,080 Speaker 1: I don't see, they don't know. And so it's gonna 209 00:10:23,080 --> 00:10:25,080 Speaker 1: be something that we least expect. I mean, you know, 210 00:10:25,440 --> 00:10:27,120 Speaker 1: it's not gonna be North Korea, it's not going to 211 00:10:27,200 --> 00:10:29,200 Speaker 1: be something out of Europe's not gonna be Washington. It's 212 00:10:29,200 --> 00:10:31,959 Speaker 1: gonna be something else. That's all I know. To attacks 213 00:10:31,960 --> 00:10:37,199 Speaker 1: in Iran today, Maybe maybe no. But seriously, the you 214 00:10:37,280 --> 00:10:41,320 Speaker 1: and I have these recollections, I would respectfully suggest Brian Belski, 215 00:10:41,400 --> 00:10:44,079 Speaker 1: it starts in the bond market, where there's a bonb 216 00:10:44,120 --> 00:10:47,240 Speaker 1: transaction that gets left on a wall street desk. There's 217 00:10:47,280 --> 00:10:50,600 Speaker 1: some form of short could be short five year convertible 218 00:10:50,679 --> 00:10:54,840 Speaker 1: zero coupon bond. Something doesn't work in the savvy bond market, 219 00:10:54,920 --> 00:10:57,200 Speaker 1: and then that comes over to the equity market. Savvy 220 00:10:57,200 --> 00:10:59,439 Speaker 1: bond market has been right for thirty five years now, 221 00:10:59,480 --> 00:11:02,199 Speaker 1: and so it's something probably in the bond market. But 222 00:11:02,640 --> 00:11:05,680 Speaker 1: I have not fear, but just trepidation. Tom, that's going 223 00:11:05,720 --> 00:11:08,400 Speaker 1: to be a liquidity event, right, some sort of a 224 00:11:08,440 --> 00:11:11,839 Speaker 1: liquidity event. Is it private equity not happening? I'm something 225 00:11:11,960 --> 00:11:15,360 Speaker 1: not connecting there so much. So many assets since two 226 00:11:15,360 --> 00:11:17,920 Speaker 1: thousand and eight two thousand nine have moved out of 227 00:11:17,960 --> 00:11:22,559 Speaker 1: the hedge fund world with respect to UM derivatives into 228 00:11:22,640 --> 00:11:25,880 Speaker 1: private equity. Is it's something in private equity that occurs? 229 00:11:25,880 --> 00:11:29,199 Speaker 1: I mean again, I'm just speculating. We're not talking enough 230 00:11:29,240 --> 00:11:31,880 Speaker 1: about that. So it's either something that we've become so 231 00:11:31,960 --> 00:11:35,560 Speaker 1: dependent on, Tom, meaning bonds, bonds, bonds, bonds, or something 232 00:11:35,600 --> 00:11:38,080 Speaker 1: that we're not expecting because of our Bloomberg invest conference. 233 00:11:38,120 --> 00:11:40,000 Speaker 1: I'm going to rip up the script here buying bells. 234 00:11:40,559 --> 00:11:45,319 Speaker 1: The basic idea of the passive active debate. You're getting 235 00:11:45,360 --> 00:11:48,079 Speaker 1: paid to say active. I get that where to pass 236 00:11:48,120 --> 00:11:50,640 Speaker 1: the funds fit in and I'm getting paid to be right, Tom, 237 00:11:50,880 --> 00:11:58,079 Speaker 1: And so ask them about the Viking's where passive funds fitting. 238 00:11:58,120 --> 00:12:00,600 Speaker 1: Where does buying the index fitted well? I think buying 239 00:12:00,600 --> 00:12:04,520 Speaker 1: the index fits in when when creating credibility and feeling 240 00:12:04,559 --> 00:12:07,800 Speaker 1: better about buying buying equities. Again, it's it's a process, 241 00:12:07,880 --> 00:12:10,199 Speaker 1: or as we like to say in Canada, it's a process. 242 00:12:10,240 --> 00:12:12,560 Speaker 1: So we're gonna we're gonna buy index funds first, We're 243 00:12:12,600 --> 00:12:14,800 Speaker 1: gonna feel comfortable buying equities, and then we're gonna move 244 00:12:14,840 --> 00:12:17,960 Speaker 1: into something a little bit more quote unquote sexy that 245 00:12:18,000 --> 00:12:20,880 Speaker 1: we are interested in. I think investors in general are 246 00:12:21,000 --> 00:12:23,600 Speaker 1: still worried about stocks. They still think we're the bad guys. 247 00:12:23,600 --> 00:12:26,040 Speaker 1: They're still worried about corporate America. So if they make 248 00:12:26,040 --> 00:12:27,599 Speaker 1: a little money in an e t F, whether or 249 00:12:27,640 --> 00:12:29,800 Speaker 1: not it's a spider or a diamond or whatever, and 250 00:12:29,800 --> 00:12:33,319 Speaker 1: then they slowly kind of transigate back into part like 251 00:12:33,360 --> 00:12:37,480 Speaker 1: a gateway. It's a gateway. You're going to use the 252 00:12:37,480 --> 00:12:39,520 Speaker 1: second round of that, but it's a gateway. You've got 253 00:12:39,720 --> 00:12:42,000 Speaker 1: you've got these forties stocks in the port place. How 254 00:12:42,040 --> 00:12:43,760 Speaker 1: are you how are you picking them? What are you 255 00:12:43,840 --> 00:12:46,920 Speaker 1: looking at principally to decide what you're gonna invest in this? Well, 256 00:12:46,960 --> 00:12:49,040 Speaker 1: we start and stop with what we think with respect 257 00:12:49,080 --> 00:12:51,640 Speaker 1: to the overall market, what our sectors are, and then 258 00:12:51,679 --> 00:12:53,720 Speaker 1: build it from the bottoms up. So I mean, you know, 259 00:12:53,760 --> 00:12:55,360 Speaker 1: we have the very good fortune of going a lot 260 00:12:55,360 --> 00:12:57,320 Speaker 1: of analysts around the streets, so we look at how 261 00:12:57,360 --> 00:13:01,280 Speaker 1: these stocks fen into sectors and we rush out. We 262 00:13:01,280 --> 00:13:03,080 Speaker 1: we touch base with some of these annis, but we 263 00:13:03,120 --> 00:13:05,480 Speaker 1: also use some of our own models and looking at stocks. 264 00:13:05,760 --> 00:13:08,920 Speaker 1: I have one final question, if I can you are Canadian, Bemo, 265 00:13:09,000 --> 00:13:12,199 Speaker 1: Capital Markets, Bank of Montreal and all that. I mean, 266 00:13:12,200 --> 00:13:14,679 Speaker 1: you've got to look at the fact, once again there's 267 00:13:14,800 --> 00:13:17,319 Speaker 1: no Canadian team in the Stanley Cups. This is a 268 00:13:17,840 --> 00:13:21,640 Speaker 1: national embarrassment. But you gotta find solace that Mike Fisher 269 00:13:21,679 --> 00:13:25,880 Speaker 1: of Peterborough, Ontario is a Nashville Predator and he's Mr 270 00:13:26,000 --> 00:13:28,840 Speaker 1: carry Underwood. That's sort of a good thing, you know what. 271 00:13:28,920 --> 00:13:33,440 Speaker 1: It's a really good thing on several accounts. But last 272 00:13:33,520 --> 00:13:41,120 Speaker 1: year was the embarrassment because no Canadian team made me Yeah, well, 273 00:13:41,240 --> 00:13:43,160 Speaker 1: very good. We'll leave it at that. Brian Bellski, thank 274 00:13:43,160 --> 00:13:45,800 Speaker 1: you for the hockey update with Mr carry Underwood. I'm 275 00:13:46,000 --> 00:13:47,959 Speaker 1: I gotta be honest, Folks like you gotta root for 276 00:13:47,960 --> 00:13:50,360 Speaker 1: the predators. They don't even know. They don't even know. 277 00:13:50,400 --> 00:13:53,320 Speaker 1: In the arena, they're going absolutely mental, like it's football 278 00:13:53,400 --> 00:13:56,800 Speaker 1: or NASCAR, and some of them are like, you gotta go, okay, offside? 279 00:13:56,800 --> 00:13:59,439 Speaker 1: That was offside. It's not like a big deal. Somebody 280 00:13:59,480 --> 00:14:01,439 Speaker 1: just stepped over the blue leg. I mean, it's a 281 00:14:01,480 --> 00:14:03,280 Speaker 1: whole day. It's great. I love it. I love what 282 00:14:03,400 --> 00:14:07,959 Speaker 1: NBC is doing with with my camera. Can don't you 283 00:14:08,040 --> 00:14:13,559 Speaker 1: care about this day? Following it? We're Scarlett, get Scarlett, 284 00:14:13,600 --> 00:14:16,200 Speaker 1: We'll get back, We'll talk, you know, hockey. What are 285 00:14:16,240 --> 00:14:19,200 Speaker 1: we doing? Can we go from the Stanley Cup finals 286 00:14:19,240 --> 00:14:23,160 Speaker 1: to the super Bowl tomorrow? Washington d C Greguar yesterday, 287 00:14:23,240 --> 00:14:25,600 Speaker 1: noting that the sense of weariness settling, and he says, 288 00:14:25,600 --> 00:14:27,080 Speaker 1: we're sick of this. You're sick of this and most 289 00:14:27,120 --> 00:14:29,600 Speaker 1: voters are as well. But a big data Washington this 290 00:14:29,920 --> 00:14:35,760 Speaker 1: note talking about the Vice President Da Milby Washington past today. Yeah, 291 00:14:35,840 --> 00:14:50,200 Speaker 1: I think watching Mr Pence will be good sport. Yeah, 292 00:14:50,280 --> 00:14:52,960 Speaker 1: David Garr The President tries to get out front of 293 00:14:53,000 --> 00:14:55,280 Speaker 1: the festivities tomorrow. Yeah, Tom, you and I stay on 294 00:14:55,320 --> 00:14:57,080 Speaker 1: top of the President's Twitter feed. Here's a tweet of 295 00:14:57,120 --> 00:14:59,600 Speaker 1: relevance to our audience this morning President Trump tweeting I 296 00:14:59,640 --> 00:15:02,720 Speaker 1: will be in nominating Christopher A. Ray w R. A 297 00:15:02,840 --> 00:15:04,800 Speaker 1: y A man of impeccable credentials, to be the new 298 00:15:05,080 --> 00:15:07,640 Speaker 1: director of the FBI, the President deciding on him after 299 00:15:07,680 --> 00:15:09,800 Speaker 1: meeting with him and John Pistol, the former head of 300 00:15:09,800 --> 00:15:11,920 Speaker 1: the the t S. A. Let's take a look at 301 00:15:11,920 --> 00:15:14,200 Speaker 1: some of those impeccable credentials, as the President calls him, 302 00:15:14,200 --> 00:15:16,600 Speaker 1: He's a graduate of Yale and Yale Law School as well, 303 00:15:16,640 --> 00:15:18,920 Speaker 1: and perhaps most important for the job he is being 304 00:15:18,960 --> 00:15:20,960 Speaker 1: nominated for, he was the head of the Criminal Division 305 00:15:21,280 --> 00:15:25,200 Speaker 1: at the Federal Bureau of Investigation. So this gets that 306 00:15:25,240 --> 00:15:27,400 Speaker 1: process underway, something the President was keen to do a 307 00:15:27,440 --> 00:15:29,440 Speaker 1: couple of weeks ago. We then a quick read of 308 00:15:29,480 --> 00:15:35,400 Speaker 1: a lengthy, accomplished biography. I don't see political service. That 309 00:15:35,520 --> 00:15:38,800 Speaker 1: was Senator Lieberman and others of Connecticut. That was one 310 00:15:38,800 --> 00:15:40,440 Speaker 1: of the issues is do we want someone with a 311 00:15:40,440 --> 00:15:43,480 Speaker 1: political heritage, and I believe we see less of that, 312 00:15:43,520 --> 00:15:46,080 Speaker 1: if not none of that with Mr Ray. He's now 313 00:15:46,120 --> 00:15:48,320 Speaker 1: a partner at King and Spalding, the big law firm. 314 00:15:48,560 --> 00:15:50,080 Speaker 1: As I said, head to the criminal Division, and in 315 00:15:50,080 --> 00:15:53,520 Speaker 1: that capacity, according to his official bio, he led investigations, prosecutions, 316 00:15:53,520 --> 00:15:58,000 Speaker 1: and policy development in nearly all areas of federal criminal laws. 317 00:15:58,120 --> 00:16:01,440 Speaker 1: So we will continue to follow this news throughout the morning, UH, 318 00:16:01,440 --> 00:16:03,400 Speaker 1: and we'll watch as the White House formerly tender as 319 00:16:03,480 --> 00:16:07,120 Speaker 1: that nomination, and again our coverage tomorrow David gurd David Weston, 320 00:16:07,160 --> 00:16:12,920 Speaker 1: and Kevin SURRELLI will be tomorrow UH in Washington for 321 00:16:13,000 --> 00:16:16,360 Speaker 1: the ten o'clock ten a m. Comy coverage. Right now, 322 00:16:16,400 --> 00:16:18,240 Speaker 1: after all that, we try to get back to what 323 00:16:18,320 --> 00:16:21,000 Speaker 1: we do each and every day with economics, Finance investment 324 00:16:21,560 --> 00:16:24,200 Speaker 1: with Charles Duma of T. S. Lombard. Charles, you are 325 00:16:24,200 --> 00:16:27,160 Speaker 1: a qualified as anyone in the world for the important 326 00:16:27,240 --> 00:16:30,320 Speaker 1: question of where is our nominal GDP? Where is that 327 00:16:30,440 --> 00:16:35,280 Speaker 1: combination of economic growth in price elevation. Have you brought 328 00:16:35,440 --> 00:16:41,680 Speaker 1: down your nominal GDP belief in the last number of days? Yeah, 329 00:16:41,760 --> 00:16:45,640 Speaker 1: The wage state and you had in the United States 330 00:16:46,520 --> 00:16:55,160 Speaker 1: yesterday morning for um for total compensation were extraordinarily changed 331 00:16:55,360 --> 00:16:58,480 Speaker 1: from the same number months before and months ago. They 332 00:16:58,480 --> 00:17:00,760 Speaker 1: said the first quarter was up three point nine per 333 00:17:00,760 --> 00:17:04,840 Speaker 1: cent in terms of le pay um, and yesterday morning 334 00:17:04,840 --> 00:17:06,919 Speaker 1: they said, actually know the first quarter was only up 335 00:17:06,920 --> 00:17:10,399 Speaker 1: to the event, which is like a luge reduction, and 336 00:17:10,480 --> 00:17:14,480 Speaker 1: so we have to assume here that nominal GDP will 337 00:17:14,560 --> 00:17:17,840 Speaker 1: be a weaker. But we don't think that real GDP 338 00:17:18,000 --> 00:17:19,920 Speaker 1: is going to be any this. We just think that 339 00:17:20,040 --> 00:17:23,439 Speaker 1: information will be less. This is a really important dynamic, folks. 340 00:17:23,440 --> 00:17:25,520 Speaker 1: And again there's four ways to go. He're both up, 341 00:17:25,560 --> 00:17:29,760 Speaker 1: both down, or a mixture either way. Do the central 342 00:17:29,840 --> 00:17:34,160 Speaker 1: banks in any way think nominal GDP even if they 343 00:17:34,200 --> 00:17:39,720 Speaker 1: won't admit it. Um Well, To be quite honest, I'm 344 00:17:39,760 --> 00:17:42,360 Speaker 1: not probably the right person to talk to about how 345 00:17:42,440 --> 00:17:45,160 Speaker 1: central banks think. We try to figure out what they're 346 00:17:45,160 --> 00:17:48,280 Speaker 1: going to have to think ahead of time, and in 347 00:17:48,320 --> 00:17:51,639 Speaker 1: this case, um, you know, we we think that probably 348 00:17:52,240 --> 00:17:54,760 Speaker 1: m Mrs Yellen will want to get the funds rate 349 00:17:54,920 --> 00:17:59,840 Speaker 1: up to something that's roughly matches inflation, which means, you know, 350 00:18:00,000 --> 00:18:03,919 Speaker 1: about two more hikes this year and be ready in 351 00:18:04,000 --> 00:18:06,520 Speaker 1: case there is an inflation we pick up next year, 352 00:18:06,560 --> 00:18:10,040 Speaker 1: which I'm dancy looks more likely than not. Charles, you've 353 00:18:10,080 --> 00:18:11,960 Speaker 1: been advocating for a long time here for a plan 354 00:18:12,080 --> 00:18:14,080 Speaker 1: B when it comes to to Brexit for the UK 355 00:18:14,160 --> 00:18:17,160 Speaker 1: exiting the European Union. I don't know if we're any 356 00:18:17,200 --> 00:18:19,040 Speaker 1: closer to getting that or if we will be after 357 00:18:19,040 --> 00:18:21,080 Speaker 1: the election results tomorrow. But what would you want to 358 00:18:21,080 --> 00:18:23,679 Speaker 1: see in that? What would a Plan B look like? 359 00:18:23,880 --> 00:18:27,800 Speaker 1: What's your ideal Plan B? Well, I mean I don't 360 00:18:27,800 --> 00:18:30,960 Speaker 1: think anything's ideal here, neither Plan A nor Plan B. 361 00:18:32,520 --> 00:18:35,439 Speaker 1: The main point about Plan B is visit it should 362 00:18:35,440 --> 00:18:40,200 Speaker 1: exist because at the moment the British being told by 363 00:18:40,280 --> 00:18:44,359 Speaker 1: the EU people, the EU negotias that actually they have 364 00:18:44,440 --> 00:18:48,120 Speaker 1: no option but to pay last sums of money and 365 00:18:48,640 --> 00:18:51,840 Speaker 1: in order to get free trade. Now it may well 366 00:18:51,920 --> 00:18:54,720 Speaker 1: be that we should pay substantial sums of money to 367 00:18:54,760 --> 00:18:58,040 Speaker 1: get free trade. Um. And it may well be that's 368 00:18:58,080 --> 00:19:01,440 Speaker 1: how it ends up, but the bargaining position is substantially 369 00:19:01,480 --> 00:19:04,280 Speaker 1: weaker until such time as it's clear that we can 370 00:19:04,359 --> 00:19:07,840 Speaker 1: survive and do okay if there isn't is no agreement. 371 00:19:08,960 --> 00:19:11,320 Speaker 1: What's what's this economy look like that the next Prime 372 00:19:11,359 --> 00:19:13,520 Speaker 1: Minister is going to inherit be that and mis maybe that, 373 00:19:13,800 --> 00:19:16,720 Speaker 1: Mr Corbyn? What what's the UK economy look like? What 374 00:19:16,760 --> 00:19:20,800 Speaker 1: are the biggest deficits in that economy as you see them? Well, 375 00:19:20,840 --> 00:19:23,880 Speaker 1: there's the biggest risk by far, it seems to me, 376 00:19:24,080 --> 00:19:27,440 Speaker 1: is that if we don't have a well conducted negotiating 377 00:19:27,480 --> 00:19:31,960 Speaker 1: process about breakshit. Then you're going to see suddenly a 378 00:19:33,280 --> 00:19:37,520 Speaker 1: confidence problem in the financial markets and in the business sector, 379 00:19:38,000 --> 00:19:40,480 Speaker 1: and people starting to say, well, look, this really doesn't 380 00:19:40,520 --> 00:19:43,680 Speaker 1: look like a well managed to exit, and so we're 381 00:19:43,680 --> 00:19:46,879 Speaker 1: going to get out first. At the moment, people are 382 00:19:46,920 --> 00:19:50,320 Speaker 1: assuming the worst in making their business plans, but they 383 00:19:50,320 --> 00:19:52,240 Speaker 1: don't actually have to fix their plans all the end 384 00:19:52,280 --> 00:19:54,679 Speaker 1: of the year. So the government's got about six months 385 00:19:54,680 --> 00:19:59,480 Speaker 1: to particulately first of all, what it's really looking for, 386 00:20:00,080 --> 00:20:04,840 Speaker 1: and obviously that's a negotiating positions visit the the EU, 387 00:20:05,359 --> 00:20:10,040 Speaker 1: but also what happens if the negotiations don't work or breakdown, 388 00:20:10,080 --> 00:20:12,800 Speaker 1: in which case we've got to get by on our own. 389 00:20:12,840 --> 00:20:15,800 Speaker 1: And it's a perfectly feasible thing to do, but there 390 00:20:15,800 --> 00:20:19,800 Speaker 1: needs to be a details and convincing plan. Charles, you 391 00:20:19,800 --> 00:20:22,920 Speaker 1: have a number of books on China. They have been 392 00:20:22,960 --> 00:20:26,600 Speaker 1: remarkably pression about. Everybody, get over the doom and gloom 393 00:20:26,760 --> 00:20:30,720 Speaker 1: and fear. Is China is resilient? Is when you wrote 394 00:20:30,720 --> 00:20:35,679 Speaker 1: those books a few years ago. Well, we were fairly 395 00:20:35,720 --> 00:20:39,240 Speaker 1: negative about China when we wrote those books, and I 396 00:20:39,280 --> 00:20:42,080 Speaker 1: think it's fair to say that some of that negative 397 00:20:42,119 --> 00:20:46,000 Speaker 1: feeling has become the consensus um at this stage, I 398 00:20:46,040 --> 00:20:48,840 Speaker 1: would say that China is going to be fine at 399 00:20:48,920 --> 00:20:51,560 Speaker 1: least until the other side of the big Congress is 400 00:20:51,600 --> 00:20:56,080 Speaker 1: autumn um and in fact, in all probabilities, they are 401 00:20:56,119 --> 00:21:00,760 Speaker 1: going to modify their target growth rates from the six 402 00:21:00,800 --> 00:21:02,639 Speaker 1: and a half percent they have at the moment to 403 00:21:02,760 --> 00:21:06,359 Speaker 1: something much for achievable, like four or five percent, and 404 00:21:06,440 --> 00:21:11,320 Speaker 1: thereby giving themselves a decent chance of curbing the rapid 405 00:21:11,359 --> 00:21:14,800 Speaker 1: increase of depth's been going on until recently. So that's 406 00:21:14,840 --> 00:21:18,520 Speaker 1: that's really a crucial issue, is how they plan to 407 00:21:18,600 --> 00:21:21,720 Speaker 1: the trade off because they can't at the same time 408 00:21:21,840 --> 00:21:24,760 Speaker 1: have fast growth and a relatively high exchange rate and 409 00:21:25,600 --> 00:21:27,879 Speaker 1: curb the depth growth. So they want to curb the 410 00:21:27,880 --> 00:21:29,920 Speaker 1: depth croaks, They've either got to have floating growth or 411 00:21:29,960 --> 00:21:32,879 Speaker 1: a big evaluation, and we know they don't want a 412 00:21:32,920 --> 00:21:35,520 Speaker 1: big devaluation, so chances are they're going to have to 413 00:21:35,840 --> 00:21:39,200 Speaker 1: go for a simply lower growth target. Now that doesn't 414 00:21:39,240 --> 00:21:43,480 Speaker 1: mean that they're in trouble. It just means that they've 415 00:21:43,640 --> 00:21:47,520 Speaker 1: they've got face up to reality. Charles Dumont, thank you 416 00:21:47,560 --> 00:21:49,800 Speaker 1: so much for the briefing. Here is with ts lomboard 417 00:21:50,400 --> 00:22:00,560 Speaker 1: in London Branch. You by Bank of America Mary Lynch 418 00:22:00,840 --> 00:22:06,320 Speaker 1: with virtual reality, virtually everything will change. Discover opportunities in 419 00:22:06,359 --> 00:22:10,960 Speaker 1: a transforming world via a mL dot Com slash VR, 420 00:22:11,840 --> 00:22:20,879 Speaker 1: Mary Lynch, Pierced Fenner and Smith Incorporated. William Gross is 421 00:22:20,920 --> 00:22:23,520 Speaker 1: with us, which is often, and he's been generous at 422 00:22:23,560 --> 00:22:26,800 Speaker 1: Jannis Henderson of of being with us for Jobs Day 423 00:22:26,880 --> 00:22:29,199 Speaker 1: and such. But it is wonderful to have Bill Gross 424 00:22:29,240 --> 00:22:32,119 Speaker 1: in our New York headquarters today. He's here for the 425 00:22:32,119 --> 00:22:35,679 Speaker 1: Bloomberg invest conference and that's brought you by s E I. 426 00:22:35,840 --> 00:22:38,200 Speaker 1: But we thank Bill Gross for being with it. Did 427 00:22:38,200 --> 00:22:40,160 Speaker 1: you come by grayhound bus? You don't like to fly, 428 00:22:40,320 --> 00:22:42,760 Speaker 1: do you? Well? Um, I don't like to fly. My 429 00:22:42,800 --> 00:22:46,320 Speaker 1: white and Nuckleric actually was an early Navy pilot that 430 00:22:46,520 --> 00:22:50,439 Speaker 1: bailed out, so speak and I took the gray hund Bus. 431 00:22:50,440 --> 00:22:54,520 Speaker 1: I didn't go as far as yeah, famous football commentator 432 00:22:54,600 --> 00:22:58,760 Speaker 1: that takes the bush the time. But I okay, I 433 00:22:58,800 --> 00:23:02,200 Speaker 1: creep slowly over. We should say. Bloomberg Surveillance today brought 434 00:23:02,280 --> 00:23:05,400 Speaker 1: you by Janice Henderson and Greyhound Bus. They see each 435 00:23:05,400 --> 00:23:08,520 Speaker 1: other often. Phil. When the last time I saw you 436 00:23:08,600 --> 00:23:11,120 Speaker 1: in New York, I believe it was a long time ago, 437 00:23:11,320 --> 00:23:14,800 Speaker 1: we met at the Waldorf story in the middle of 438 00:23:14,840 --> 00:23:18,080 Speaker 1: an ugly bond bear market. I believe that's where prices 439 00:23:18,160 --> 00:23:21,080 Speaker 1: go down and yields go higher. You and the rest 440 00:23:21,119 --> 00:23:24,280 Speaker 1: of the world wait and wait and wait for a 441 00:23:24,320 --> 00:23:28,280 Speaker 1: bond bear market. When will we see that? Well, um, 442 00:23:28,680 --> 00:23:30,520 Speaker 1: that's the question of the day, in the year, in 443 00:23:30,560 --> 00:23:34,159 Speaker 1: the last several years. Actually, um, well, we'll see it. 444 00:23:34,240 --> 00:23:37,920 Speaker 1: I think when central banks start to ease up in 445 00:23:38,040 --> 00:23:41,440 Speaker 1: terms of their current policies, not only quantity of easing, 446 00:23:41,520 --> 00:23:47,080 Speaker 1: but ec being but bank in Japan. But you know, 447 00:23:47,200 --> 00:23:51,639 Speaker 1: more tightening by the FED and and less reinvestment of treasury. 448 00:23:51,760 --> 00:23:54,600 Speaker 1: So that's the key question. Hots Yes, at Goldman Sachs 449 00:23:54,680 --> 00:23:57,359 Speaker 1: is now linked tightly those two, as does Robert Kaplan 450 00:23:57,400 --> 00:24:01,840 Speaker 1: at the Dallas FED. How do you link yield changes 451 00:24:01,920 --> 00:24:05,840 Speaker 1: by the Federal Open Market Committee with the balance sheet 452 00:24:05,840 --> 00:24:08,560 Speaker 1: adjustments to come? How do you put those two disparate 453 00:24:08,680 --> 00:24:11,520 Speaker 1: flows together. It's very hard to do that. And of 454 00:24:11,520 --> 00:24:13,960 Speaker 1: course for the Fed as well, I know that uh 455 00:24:14,160 --> 00:24:20,320 Speaker 1: FED research since they instigated quantitative easing, suggested that basis 456 00:24:20,359 --> 00:24:24,400 Speaker 1: points on the tenure was the ultimate result. Now, the 457 00:24:24,400 --> 00:24:27,680 Speaker 1: the exit or the potential exit which I've always been um, 458 00:24:28,320 --> 00:24:31,639 Speaker 1: you know, disparaging of the possibility that they really reduced 459 00:24:31,680 --> 00:24:33,960 Speaker 1: their balance sheet. But if they begin to exit later 460 00:24:34,000 --> 00:24:36,960 Speaker 1: in the year, um, they'll do it slowly. And so 461 00:24:37,000 --> 00:24:39,760 Speaker 1: we're talking about five fifteen basis points on the curve 462 00:24:39,800 --> 00:24:42,920 Speaker 1: and the tenure perhaps over the next year or two. 463 00:24:43,359 --> 00:24:47,480 Speaker 1: You know. The important central banks and I consider are 464 00:24:47,600 --> 00:24:51,080 Speaker 1: the again the Bank of Japan and UH, the e 465 00:24:51,200 --> 00:24:53,320 Speaker 1: c B and to the extent that they're pumping in 466 00:24:53,720 --> 00:24:56,880 Speaker 1: a trillion dollars plus a year into the global economy 467 00:24:56,880 --> 00:25:00,560 Speaker 1: and global equidity. It's been critical in terms of tread rerates, 468 00:25:00,560 --> 00:25:02,879 Speaker 1: and I've been critical in terms of stock prices and 469 00:25:02,920 --> 00:25:07,120 Speaker 1: critical in terms of all assets because UH liquidity seeks 470 00:25:07,119 --> 00:25:10,520 Speaker 1: to haven and and prices move higher as it does. 471 00:25:10,800 --> 00:25:12,879 Speaker 1: We have Bloomberg News reporting this morning the ECB is 472 00:25:12,880 --> 00:25:14,320 Speaker 1: going to cut its inflation out and look at the 473 00:25:14,320 --> 00:25:16,960 Speaker 1: meeting this week, we're talking about what I'm wanting. The 474 00:25:16,960 --> 00:25:20,119 Speaker 1: balance sheet is gonna gonna look like. What's your timetable 475 00:25:20,160 --> 00:25:21,879 Speaker 1: for that happening? Do you think? What do you think 476 00:25:21,920 --> 00:25:25,320 Speaker 1: we're gonna get to a more normal role for central banks? Well, 477 00:25:25,359 --> 00:25:26,919 Speaker 1: I hope later in the year for the ECB, and 478 00:25:26,960 --> 00:25:29,560 Speaker 1: it's true that the ECB is primary focus is opposed 479 00:25:29,600 --> 00:25:32,040 Speaker 1: to a duel or try focus on the part of 480 00:25:32,040 --> 00:25:35,600 Speaker 1: the FED is inflation, and inflation is not really picked 481 00:25:35,680 --> 00:25:38,480 Speaker 1: up in the last few months, certainly in Euroland, and 482 00:25:38,840 --> 00:25:42,520 Speaker 1: so you can imagine the drug is simply not concerned 483 00:25:42,520 --> 00:25:45,680 Speaker 1: and wants to air on the side of caution. Um. Yeah, 484 00:25:46,000 --> 00:25:48,639 Speaker 1: perhaps later this year, I know, or I don't know, 485 00:25:48,760 --> 00:25:52,160 Speaker 1: but I think, as you know, I've been quite negative 486 00:25:52,200 --> 00:25:55,600 Speaker 1: in terms of the effects of central bank policies, not 487 00:25:56,119 --> 00:25:59,240 Speaker 1: simply because they've raised asset prices in some cases to 488 00:25:59,720 --> 00:26:04,199 Speaker 1: bull whole territory, but also because it degrades business models 489 00:26:04,200 --> 00:26:06,399 Speaker 1: such as insurance companies and pension funds and the like, 490 00:26:06,560 --> 00:26:09,600 Speaker 1: because they can't earn what disposed earn in terms of 491 00:26:09,600 --> 00:26:12,480 Speaker 1: their liabilities. And we begin to see that with Puerto 492 00:26:12,560 --> 00:26:17,040 Speaker 1: Rico and Illinois and Detroit and ongoing problems with pension funds. 493 00:26:17,040 --> 00:26:19,600 Speaker 1: But it's the same situation where the insurance companies, it's 494 00:26:19,600 --> 00:26:22,879 Speaker 1: sort of masked. As we move on in the future, 495 00:26:23,280 --> 00:26:24,879 Speaker 1: get the sense to three percent growth. The is this 496 00:26:24,880 --> 00:26:27,600 Speaker 1: administration's white whale, and they talk about it so much. 497 00:26:27,600 --> 00:26:29,439 Speaker 1: Maybe they're willing it willing it to happen here when 498 00:26:29,480 --> 00:26:31,159 Speaker 1: you look at the tools at their disposal and what 499 00:26:31,200 --> 00:26:33,880 Speaker 1: they're doing. Aren't they using the right ones? Are they? 500 00:26:33,880 --> 00:26:35,480 Speaker 1: Are they going down the right path to get to 501 00:26:35,520 --> 00:26:38,120 Speaker 1: that level of growth? Do you think? Well? Not yet. 502 00:26:38,400 --> 00:26:41,560 Speaker 1: Among the proposals I suppose in fiscal policy, which is 503 00:26:41,640 --> 00:26:44,760 Speaker 1: something that I've been asking for and others UH for 504 00:26:45,000 --> 00:26:49,960 Speaker 1: several years, even with Obama. UM heard certainly of the works. UM, 505 00:26:50,000 --> 00:26:55,600 Speaker 1: I'm suspicious of tax policy, but trillion dollar UH infrastructure 506 00:26:55,960 --> 00:26:59,000 Speaker 1: policy may help. But I think ultimately the growth is 507 00:26:59,000 --> 00:27:02,160 Speaker 1: a functional, productive and productivit as a function of investment, 508 00:27:02,160 --> 00:27:04,840 Speaker 1: and we simply haven't had that. You know, my thesis 509 00:27:05,000 --> 00:27:07,960 Speaker 1: this month in terms of the investment outlook, I said, Um, 510 00:27:08,000 --> 00:27:11,440 Speaker 1: you know, money is making money with money, but money 511 00:27:11,520 --> 00:27:14,439 Speaker 1: doesn't lead to investment in the real economy. And I 512 00:27:14,480 --> 00:27:17,240 Speaker 1: think that's the problem that Trump and the U. S. 513 00:27:17,280 --> 00:27:20,200 Speaker 1: Economy will face the next several years. And Bill Gross 514 00:27:20,200 --> 00:27:22,800 Speaker 1: with Janis Anderson. He's with us now at our Bloomberg 515 00:27:22,880 --> 00:27:25,360 Speaker 1: invest conference on Bloomberg Radio, of course, brought you by 516 00:27:25,800 --> 00:27:27,240 Speaker 1: s C I. Bill, I just looked up if you 517 00:27:27,359 --> 00:27:29,920 Speaker 1: really booked now two hundred and thirty five dollars greyhound 518 00:27:30,359 --> 00:27:32,160 Speaker 1: l A to New York. You can get it back 519 00:27:32,240 --> 00:27:34,800 Speaker 1: if you delay a little bit with Bloomberg Television. It 520 00:27:34,800 --> 00:27:37,840 Speaker 1: may cost you two hundred and seventy one dollar. When 521 00:27:37,880 --> 00:27:40,960 Speaker 1: you came here, you went out north Platts or Des Moines, 522 00:27:41,520 --> 00:27:43,359 Speaker 1: and then you got up to I eight and you 523 00:27:43,440 --> 00:27:46,600 Speaker 1: take it over east when you when you do this bill, 524 00:27:46,800 --> 00:27:48,800 Speaker 1: you get a sense of the nation. And you've been 525 00:27:48,840 --> 00:27:53,000 Speaker 1: dead right about the nation's financial repression. Don't talk to 526 00:27:53,080 --> 00:27:55,840 Speaker 1: the fancy people in Newport. Don't talk to the fancy 527 00:27:55,880 --> 00:27:57,840 Speaker 1: people like us in New York. Talk to the rest 528 00:27:57,880 --> 00:28:01,280 Speaker 1: of America about financial repri Well, you're right, and and 529 00:28:01,400 --> 00:28:05,440 Speaker 1: Des Moines has been my favorite metaphorical use the location. Well, 530 00:28:05,480 --> 00:28:08,800 Speaker 1: because it's in Iowa, and because it's Midwest, and because 531 00:28:08,840 --> 00:28:14,439 Speaker 1: there's corn there and then and because restaurants to because becames. 532 00:28:14,520 --> 00:28:17,760 Speaker 1: People depend on savings ultimately, not not just in the 533 00:28:17,840 --> 00:28:19,639 Speaker 1: moin but the rest of the country. And why do 534 00:28:19,680 --> 00:28:22,960 Speaker 1: people depend on savings? Well, for education, for retirement, for health. 535 00:28:23,240 --> 00:28:26,920 Speaker 1: And when you can't earn more than fifty basis points 536 00:28:26,920 --> 00:28:29,240 Speaker 1: on your savings in a bank account or with a 537 00:28:29,359 --> 00:28:32,119 Speaker 1: six month c D, then there are problems of plenty 538 00:28:32,200 --> 00:28:36,280 Speaker 1: in terms of the ability of des Moines and other, um, 539 00:28:36,320 --> 00:28:39,400 Speaker 1: you know, middle class Americans to reach their goals. I mean, 540 00:28:39,400 --> 00:28:41,240 Speaker 1: I look at this bill, and what you and I 541 00:28:41,280 --> 00:28:43,360 Speaker 1: have been talking about since that meeting at the water 542 00:28:43,480 --> 00:28:47,280 Speaker 1: for story and certainly since August of oh seven, is 543 00:28:47,520 --> 00:28:50,120 Speaker 1: it's not in fibosi, it's not in the books that 544 00:28:50,200 --> 00:28:53,520 Speaker 1: you when I studied on bond dynamics. How do you 545 00:28:53,560 --> 00:28:58,200 Speaker 1: do Janie Henderson, day after day after day realizing none 546 00:28:58,240 --> 00:29:01,720 Speaker 1: of where we are now has a fury or a foundation. Well, 547 00:29:02,080 --> 00:29:04,840 Speaker 1: you know, it's sort of a it's sort of a 548 00:29:04,920 --> 00:29:08,680 Speaker 1: brail like a type of process where, um, you feel 549 00:29:08,720 --> 00:29:10,479 Speaker 1: your way along in Central Banks are trying to do 550 00:29:10,520 --> 00:29:13,760 Speaker 1: that too. But you're right when you talk about demographics 551 00:29:13,760 --> 00:29:17,480 Speaker 1: and debt and uh leveraging up and when you talk 552 00:29:17,520 --> 00:29:21,920 Speaker 1: about the displacement of workers by robots and robotizations, and 553 00:29:22,080 --> 00:29:26,840 Speaker 1: these are non measurable factors historically, and so you sort 554 00:29:26,880 --> 00:29:29,240 Speaker 1: of have to touch and feel and know that over 555 00:29:29,360 --> 00:29:32,920 Speaker 1: time these factors will work their way into a slower 556 00:29:32,960 --> 00:29:36,480 Speaker 1: economy in the US and even globally. You were talking 557 00:29:36,480 --> 00:29:38,760 Speaker 1: about infrastructure just a moment ago. The President wants to 558 00:29:38,760 --> 00:29:41,680 Speaker 1: get more private investment in infrastructure. What are the challenges 559 00:29:41,720 --> 00:29:44,080 Speaker 1: to doing that? How does he make that successful? Getting 560 00:29:44,080 --> 00:29:47,040 Speaker 1: more public private partnership, getting more private investors to invest 561 00:29:47,080 --> 00:29:49,760 Speaker 1: in American infrastructure. Well, there's a political problem. That's not 562 00:29:49,840 --> 00:29:54,160 Speaker 1: my area of expertise, but you're right, um, Trump's eymphasis 563 00:29:54,240 --> 00:29:57,040 Speaker 1: has been on public private and uh, I think there 564 00:29:57,080 --> 00:29:59,720 Speaker 1: are a lot of willing private partners, a lot of 565 00:30:00,040 --> 00:30:03,520 Speaker 1: private equity firms of geared up to take advantage to 566 00:30:03,600 --> 00:30:07,280 Speaker 1: make money from infrastructure problems. And so you know, if 567 00:30:07,280 --> 00:30:10,520 Speaker 1: you combine that with the congressional action, then I think 568 00:30:10,560 --> 00:30:13,600 Speaker 1: you have something to go with. But the twillion dollars 569 00:30:13,640 --> 00:30:16,400 Speaker 1: is over a long period of time. It takes time 570 00:30:16,440 --> 00:30:18,560 Speaker 1: to put these into effect, and so it may take 571 00:30:18,560 --> 00:30:21,200 Speaker 1: a long very quickly build. Does the drama of Washington 572 00:30:21,280 --> 00:30:24,240 Speaker 1: diminished g d P and damp in the animal sphere 573 00:30:24,360 --> 00:30:26,080 Speaker 1: of the nation? Yeah, I think so, to the extent 574 00:30:26,200 --> 00:30:30,640 Speaker 1: that risk is a factor in terms of forward looking investment. Hope, 575 00:30:30,800 --> 00:30:33,520 Speaker 1: is that really the essence of capitalism into the extent 576 00:30:33,640 --> 00:30:36,760 Speaker 1: that you have turned one on Washington and turmoil on 577 00:30:36,760 --> 00:30:39,520 Speaker 1: a global basis, I think that's a problem. Gross, Thank 578 00:30:39,560 --> 00:30:41,640 Speaker 1: you so much. I've got it from Thank you Grahound 579 00:30:41,640 --> 00:30:45,160 Speaker 1: for email with the two days, seventeen hours, thirty minutes 580 00:30:45,520 --> 00:30:48,600 Speaker 1: is your fastest trip back? Bill Gross is with Janice 581 00:30:48,680 --> 00:31:06,040 Speaker 1: Anderson from our Bloomberg invest conference. This is Bloomberg. David 582 00:31:06,040 --> 00:31:09,120 Speaker 1: gerin to Keener Bloomberg invest Conference and after the c 583 00:31:09,360 --> 00:31:11,520 Speaker 1: f A exam and the level of mathewness of it, 584 00:31:11,520 --> 00:31:13,480 Speaker 1: it's a good time to speak with Jim McCahon of 585 00:31:13,560 --> 00:31:16,160 Speaker 1: the Principal Group. I want to talk a little bit 586 00:31:16,160 --> 00:31:18,000 Speaker 1: of math here, and then if you've got a curve 587 00:31:18,080 --> 00:31:20,560 Speaker 1: on a chart, you go to logs to make the 588 00:31:20,600 --> 00:31:23,880 Speaker 1: curve a straight line, and then all years of my 589 00:31:24,040 --> 00:31:28,040 Speaker 1: radar go up when the log chart becomes curved as well. 590 00:31:28,120 --> 00:31:30,320 Speaker 1: Is this when I hear you yell slope matters, slope matters, 591 00:31:30,440 --> 00:31:32,360 Speaker 1: and then all of a sudden, instead of a straight 592 00:31:32,440 --> 00:31:36,440 Speaker 1: log rhythmic line, you've got a curve line. I've got 593 00:31:36,480 --> 00:31:39,160 Speaker 1: that now in the two tents spread, I've got curve 594 00:31:39,200 --> 00:31:43,800 Speaker 1: flattening and I have accelerating curve flattening. What does that 595 00:31:43,840 --> 00:31:46,480 Speaker 1: mean the Principle Group? What does it mean to equity 596 00:31:46,520 --> 00:31:51,680 Speaker 1: investors when they see an acceleration occur flattening? Curve flattening 597 00:31:51,800 --> 00:31:54,520 Speaker 1: is a sign that you're getting towards the end of 598 00:31:54,560 --> 00:31:56,560 Speaker 1: a good spell for the economy, You're getting to the 599 00:31:56,680 --> 00:31:59,440 Speaker 1: end of a recovery. It means it's a straw in 600 00:31:59,520 --> 00:32:01,680 Speaker 1: the wind that there may be a recession out there. 601 00:32:02,000 --> 00:32:04,360 Speaker 1: I don't think the other indicators point to a recession 602 00:32:04,440 --> 00:32:06,680 Speaker 1: within the next two to three years, but it's one 603 00:32:06,680 --> 00:32:09,240 Speaker 1: of the reasons you have to watch if the vectors 604 00:32:09,280 --> 00:32:11,600 Speaker 1: going to zero to an inverted yield curve. We don't 605 00:32:11,600 --> 00:32:13,360 Speaker 1: need to do it on radio. People drive off the 606 00:32:13,400 --> 00:32:17,480 Speaker 1: Garden State Parkway. But where's the tip point where all 607 00:32:17,520 --> 00:32:19,560 Speaker 1: of a sudden, you say to yourself, I'm at eighty 608 00:32:19,600 --> 00:32:22,959 Speaker 1: five basis points. It's like a countdown, folks. The Rangers 609 00:32:23,000 --> 00:32:27,800 Speaker 1: satellite to the moon five seventy five sixty five. When 610 00:32:27,800 --> 00:32:29,640 Speaker 1: do you start sweating or are you gonna get to 611 00:32:29,640 --> 00:32:32,200 Speaker 1: go to an inversion. I think you start sweating when 612 00:32:32,200 --> 00:32:36,440 Speaker 1: it gets totally flat and yeah, and I think that 613 00:32:36,440 --> 00:32:40,320 Speaker 1: that's when you really have the the the imminent signs 614 00:32:40,360 --> 00:32:44,120 Speaker 1: of recession. Now, the most likely outturn on the Fed 615 00:32:44,160 --> 00:32:47,880 Speaker 1: funds rate right now is maybe two bases point increases 616 00:32:47,920 --> 00:32:50,680 Speaker 1: this year and maybe two more next year. That would 617 00:32:50,680 --> 00:32:53,480 Speaker 1: get you to somewhere about one on the on the 618 00:32:53,520 --> 00:32:56,560 Speaker 1: FED funds, right, I don't see that that means that 619 00:32:56,640 --> 00:32:58,960 Speaker 1: the tenure would be nothing very different from two ten 620 00:32:59,040 --> 00:33:01,560 Speaker 1: to two twenty, which is what it is now. I 621 00:33:01,600 --> 00:33:04,600 Speaker 1: think what you're seeing is late stage growth in the 622 00:33:04,640 --> 00:33:08,480 Speaker 1: economy which gets accommodated and interest rate terms by yield 623 00:33:08,480 --> 00:33:11,120 Speaker 1: curve flattening. So I think this is actually pretty normal 624 00:33:11,160 --> 00:33:13,440 Speaker 1: at this stage of the economy. We need to be 625 00:33:13,440 --> 00:33:16,840 Speaker 1: a bit on recession watch as we go into twenty eighteen. 626 00:33:17,160 --> 00:33:19,640 Speaker 1: I don't think it's imminent. However, we have a two 627 00:33:19,680 --> 00:33:23,040 Speaker 1: day FED meeting next week and it's it's likely, or 628 00:33:23,160 --> 00:33:24,720 Speaker 1: one would hope we'd get some more indication here of 629 00:33:24,720 --> 00:33:27,000 Speaker 1: how the balance sheet unwind is going to go. What 630 00:33:27,040 --> 00:33:29,040 Speaker 1: are you most worried about in the context of that, 631 00:33:29,120 --> 00:33:31,480 Speaker 1: what's the riskiest facet of that to you? Yeah, David, 632 00:33:31,520 --> 00:33:34,160 Speaker 1: I'm not at all worried about the balance sheet unwind. 633 00:33:34,600 --> 00:33:37,560 Speaker 1: You know, the build up of the FED balance sheet 634 00:33:37,640 --> 00:33:39,600 Speaker 1: was you know, two thousand, eight, nine ten, and it 635 00:33:39,680 --> 00:33:42,320 Speaker 1: was done by maximum of ten year bombs. Those are 636 00:33:42,320 --> 00:33:45,160 Speaker 1: going to start rolling off next year, naturally, just naturally. 637 00:33:45,200 --> 00:33:47,320 Speaker 1: I don't think they need to sell much in the market, 638 00:33:47,600 --> 00:33:50,480 Speaker 1: so the unwind doesn't really bother me. I think we're 639 00:33:50,480 --> 00:33:54,760 Speaker 1: at a point where the economy has self sustaining growth, 640 00:33:55,080 --> 00:33:59,360 Speaker 1: though not particularly vibrant, and that's an okay position to 641 00:33:59,400 --> 00:34:01,760 Speaker 1: be in because it's when the economy over heats that 642 00:34:01,840 --> 00:34:05,240 Speaker 1: you bring about capacity constraints and a recession. So I 643 00:34:05,280 --> 00:34:09,360 Speaker 1: feel fairly positive about the next year or so for equities. 644 00:34:09,640 --> 00:34:11,239 Speaker 1: The o e c D was out today with its 645 00:34:11,239 --> 00:34:13,680 Speaker 1: new economic outlook, and it was a fairly rosy picture 646 00:34:14,080 --> 00:34:16,880 Speaker 1: that rose within one might have thought, perhaps, but one 647 00:34:16,880 --> 00:34:18,640 Speaker 1: of the things the o c D flags is the 648 00:34:18,680 --> 00:34:20,799 Speaker 1: need for more global participation. And I wonder in light 649 00:34:20,840 --> 00:34:22,600 Speaker 1: of what we've seen here over the last week two 650 00:34:22,640 --> 00:34:25,279 Speaker 1: weeks with the President strip to Europe, with the US 651 00:34:25,320 --> 00:34:28,040 Speaker 1: with drawing from from the parisupporting, what that portends were 652 00:34:28,040 --> 00:34:31,040 Speaker 1: the kind of participatory global economy we've become accustomed to. Well, 653 00:34:31,040 --> 00:34:34,360 Speaker 1: there's no question that this administration in the US wants 654 00:34:34,360 --> 00:34:37,919 Speaker 1: to see bilateral, not multilateral deals. Let's hope they get 655 00:34:37,920 --> 00:34:41,160 Speaker 1: the bilaterals done because to your point about participation, it 656 00:34:41,200 --> 00:34:44,600 Speaker 1: would still happen in a bilateral world. So I'm not 657 00:34:44,880 --> 00:34:48,040 Speaker 1: yet in any kind of panic about that. On the 658 00:34:48,080 --> 00:34:50,359 Speaker 1: O E C D numbers. The two things I would take. 659 00:34:50,680 --> 00:34:53,680 Speaker 1: I would question Europe. Is Europe as self sustaining a 660 00:34:53,760 --> 00:34:57,319 Speaker 1: recovery as it looks? The positive signs from Germany I 661 00:34:57,360 --> 00:34:59,840 Speaker 1: think are largely a result of last year's weakness in 662 00:34:59,840 --> 00:35:02,720 Speaker 1: the Euro. I think it remains to be seen whether 663 00:35:03,040 --> 00:35:06,839 Speaker 1: the core Eurozone can carry on growing in spite of 664 00:35:06,880 --> 00:35:09,280 Speaker 1: getting to a point where the euro is a bit stronger. 665 00:35:09,480 --> 00:35:11,840 Speaker 1: So that'll be one of my questions. The other is China. 666 00:35:12,080 --> 00:35:14,719 Speaker 1: Will China continue growing at the rate they expect? Is 667 00:35:14,760 --> 00:35:18,759 Speaker 1: there exuberance out there? Is there institutional exuberance? Is there 668 00:35:18,840 --> 00:35:22,200 Speaker 1: retail exuberance? Not really, Tom, I think this is the 669 00:35:22,200 --> 00:35:25,440 Speaker 1: bullmarket nobody loves, and it just it just can't end 670 00:35:25,440 --> 00:35:28,560 Speaker 1: because there's not a blow off there's there isn't And 671 00:35:29,000 --> 00:35:31,799 Speaker 1: you know, if I look at equities, what will end 672 00:35:31,840 --> 00:35:34,520 Speaker 1: the BULLMARKT Well, I think you have to get to 673 00:35:34,600 --> 00:35:37,759 Speaker 1: a point where everybody is in or most people are in. 674 00:35:38,000 --> 00:35:40,440 Speaker 1: And to me, that feels like twenty five times earnings, 675 00:35:40,440 --> 00:35:43,200 Speaker 1: not eighteen if you know to and change is the 676 00:35:43,280 --> 00:35:46,799 Speaker 1: time you're yield eighteen times earnings feels fairly cheap to me. 677 00:35:47,040 --> 00:35:50,080 Speaker 1: I think US equities remain a buy on setbacks, Jim, 678 00:35:50,280 --> 00:35:52,080 Speaker 1: just because you're going to show up. I had an 679 00:35:52,080 --> 00:35:59,520 Speaker 1: extra hat trick of walkers short for you. In Scotland. 680 00:35:59,719 --> 00:36:02,000 Speaker 1: We be rude if we did not ask you how 681 00:36:02,080 --> 00:36:04,719 Speaker 1: snap this snappy election is going to be. We can't 682 00:36:04,719 --> 00:36:06,960 Speaker 1: talk about it tomorrow, so we're doing now. What does 683 00:36:06,960 --> 00:36:09,879 Speaker 1: it mean for Scotland? Please um for Scotland. I think 684 00:36:09,920 --> 00:36:13,120 Speaker 1: it's an interesting question. I'm hoping that the Scots don't 685 00:36:13,239 --> 00:36:17,600 Speaker 1: go for another independence referendum. I think Theresa May, if 686 00:36:17,640 --> 00:36:21,840 Speaker 1: she's reasonably powerful after tomorrow, will probably try to postpone 687 00:36:21,880 --> 00:36:24,799 Speaker 1: and deny that because I think once you've got a 688 00:36:24,800 --> 00:36:28,200 Speaker 1: big change like Brexit going on to have the disentangling 689 00:36:28,200 --> 00:36:31,960 Speaker 1: of Scotland would be very, very disruptive. I'd also point 690 00:36:32,000 --> 00:36:35,280 Speaker 1: out Brexit one in a referendum by about three percent 691 00:36:35,920 --> 00:36:39,239 Speaker 1: remain in the case of Scotland one by over ten 692 00:36:39,719 --> 00:36:42,640 Speaker 1: a ten percent win looks pretty decisive. It seems very 693 00:36:42,640 --> 00:36:45,680 Speaker 1: early to go re examining it. So I I think 694 00:36:45,719 --> 00:36:48,480 Speaker 1: for Scotland this probably plays out as a bit of 695 00:36:48,480 --> 00:36:51,279 Speaker 1: a non event, but a rather ill natured one. How 696 00:36:51,280 --> 00:36:53,960 Speaker 1: heavinly does this interregnum, this two year waiting period for 697 00:36:54,160 --> 00:36:57,880 Speaker 1: action on Brexit way on the UK economy, well, I 698 00:36:57,920 --> 00:37:01,280 Speaker 1: think it's not weighed very much because it's been saved 699 00:37:01,320 --> 00:37:04,560 Speaker 1: by the weakness of Sterling. The weakness of Sterling is 700 00:37:04,600 --> 00:37:08,239 Speaker 1: what's meant that the economic impact has not yet been negative. 701 00:37:08,760 --> 00:37:11,440 Speaker 1: I think there is the likelihood if there is a 702 00:37:11,480 --> 00:37:15,120 Speaker 1: serious impairment of trade relations with the Eurozone, which you 703 00:37:15,160 --> 00:37:17,279 Speaker 1: know looks likely. All the talk is of a hard 704 00:37:17,280 --> 00:37:20,880 Speaker 1: breaxit no deal or a difficult deal. If that's the case, 705 00:37:21,000 --> 00:37:24,239 Speaker 1: then you either need further weakness in Sterling or you 706 00:37:24,280 --> 00:37:28,080 Speaker 1: will see a pretty seriously impaired UK economy two years out. 707 00:37:28,440 --> 00:37:29,960 Speaker 1: I think this is one of the tail risks in 708 00:37:30,000 --> 00:37:32,759 Speaker 1: the world economy right now. Jim mccov thanks so much, 709 00:37:32,800 --> 00:37:37,399 Speaker 1: greatly appreciated principal group today from our Bloomberg Investment. Thank 710 00:37:37,400 --> 00:37:39,719 Speaker 1: you so much. I love how he shows up every 711 00:37:39,719 --> 00:37:47,239 Speaker 1: time as a UK Actually, yeah, that's coincidence. Toney's working 712 00:37:47,239 --> 00:37:49,480 Speaker 1: here with Julia Chatterley, our colleague, on populace and policy 713 00:37:49,480 --> 00:37:52,000 Speaker 1: and positioning the macro view. So we look forward to 714 00:37:52,040 --> 00:37:55,000 Speaker 1: that on Bloomberg Television Bloombergradio. It is a Bloomberg invest 715 00:37:55,040 --> 00:38:07,080 Speaker 1: converence from our world Headquarters on Bloomberg Radio. Thanks for 716 00:38:07,160 --> 00:38:11,319 Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to 717 00:38:11,360 --> 00:38:17,440 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 718 00:38:17,960 --> 00:38:21,040 Speaker 1: I'm on Twitter at Tom Keene. David Gura is at 719 00:38:21,160 --> 00:38:26,000 Speaker 1: David Gura. Before the podcast, you could always catch us worldwide. 720 00:38:26,200 --> 00:38:40,520 Speaker 1: I'm Bloomberg Radio. 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