WEBVTT - Washington Turmoil May Slow Economic Growth, Bill Gross Says 0:00:00.240 --> 0:00:04.040 Runt You by Bank of America Mary Lynch. With virtual reality, 0:00:04.320 --> 0:00:09.719 virtually everything will change. Discover opportunities in a transforming world 0:00:10.119 --> 0:00:14.440 be of a mL dot Com, slash VR, Mary Lynch, 0:00:14.520 --> 0:00:28.120 Pierced Fenner and Smith Incorporated. Ye, Welcome to the Bloomberg 0:00:28.160 --> 0:00:32.360 Surveillance Podcast. I'm Tom Keene with David Gura. Daily we 0:00:32.440 --> 0:00:36.080 bring you insight from the best of economics, finance, investment, 0:00:36.120 --> 0:00:42.200 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:42.280 --> 0:00:49.920 Bloomberg dot Com, and of course, on the Bloomberg. Joining 0:00:49.960 --> 0:00:52.479 us now from the Bloomberg Investorm in New York, Brian Belski, 0:00:52.880 --> 0:00:55.760 Chief investment strategy of Demo Capital Market's great to see 0:00:55.800 --> 0:00:58.360 here amid the hustle and bustle of the link as 0:00:58.360 --> 0:01:01.800 we call at the pantry, here's the real people do. Right, 0:01:02.080 --> 0:01:04.720 run around outside the camp of the cortemins of our 0:01:04.840 --> 0:01:07.280 radio studio. Right. Let me ask you about how you're 0:01:08.120 --> 0:01:10.720 regarding what's going to happen tomorrow. It's not a risk event, 0:01:10.840 --> 0:01:14.040 I suppose it's it's three big risk events. How much 0:01:14.080 --> 0:01:15.720 how much attention you paining to what's happened with the 0:01:15.720 --> 0:01:18.280 ECB with Capitol Hill and indeed, with the election in 0:01:18.280 --> 0:01:21.080 the UK tomorrow, I probably say that the e CBS 0:01:21.160 --> 0:01:25.679 number one with respect to what happens fundamentally because we've 0:01:25.720 --> 0:01:30.759 had um, you know, kind of growth, um, let's say, 0:01:31.040 --> 0:01:34.759 volatility in terms of Europe. What's happened from not only 0:01:35.000 --> 0:01:37.880 an economic earnings but demographic side of things, and things 0:01:37.880 --> 0:01:39.959 have changed in Europe the last twelve months. So from 0:01:39.959 --> 0:01:42.120 a from an investment standpoint, David, I mean, how are 0:01:42.120 --> 0:01:43.920 we going to position there? And then what does what 0:01:44.000 --> 0:01:46.800 does that mean for emerging markets? Because I remember Europe 0:01:46.840 --> 0:01:51.280 and emerging markets are very tightly correlated. Europe's I'm sorry, 0:01:51.280 --> 0:01:54.400 emerging markets number one client in Europe, So you know, 0:01:54.880 --> 0:01:58.280 I think it's important, especially considering that the US and 0:01:58.440 --> 0:02:01.480 in the UK led the revive goal inequities in the 0:02:01.480 --> 0:02:03.880 fourth quarter at the beginning of this year. Then you're 0:02:04.000 --> 0:02:08.040 played along and now emerging markets have cotten some cotton 0:02:08.080 --> 0:02:09.600 a bid, so to speak, and so a lot of 0:02:09.600 --> 0:02:12.320 people are getting getting excited about emerging markets. What that means. 0:02:12.320 --> 0:02:14.440 So I think the big thing tomorrow is gonna be ECP. 0:02:14.560 --> 0:02:17.880 With respect to the noise out of Washington, noise just 0:02:18.040 --> 0:02:20.440 it's a noise, how libretting will it be to get 0:02:20.480 --> 0:02:22.799 through the UK election when you look at political risk, 0:02:22.960 --> 0:02:24.920 does that does that stand as a marker to you 0:02:24.960 --> 0:02:26.840 that you're gonna get past it? Yeah? I think so. 0:02:26.880 --> 0:02:28.840 You can take a look at it's a it's a 0:02:28.919 --> 0:02:31.600 it's a great question. You see what happened in France 0:02:31.600 --> 0:02:34.440 and how the volatility Actually we did not see the 0:02:34.440 --> 0:02:38.240 big volatility spike post the French election. Prey the French election. 0:02:38.320 --> 0:02:39.960 You know, we had the pre election and then the 0:02:39.960 --> 0:02:44.000 real election. So you know it's a foregone conclusion that 0:02:44.040 --> 0:02:46.480 May is gonna win. But but at the end of 0:02:46.520 --> 0:02:49.320 the day, again, how many seats to do do the 0:02:49.360 --> 0:02:51.519 Conservatives win and retain and things like that. So, and 0:02:51.720 --> 0:02:53.760 what's the direction with respect of Brexon and what does 0:02:53.800 --> 0:02:57.560 that mean for the total eurosone gdp so, and then 0:02:57.639 --> 0:02:59.040 go back to the e c B. I think that's 0:02:59.040 --> 0:03:01.280 gonna be the key thing to morrow. You've you've written 0:03:01.320 --> 0:03:03.720 that over these last six months or so, what we've 0:03:03.720 --> 0:03:05.720 seen in terms of price returns has been dreamed bymentum 0:03:05.720 --> 0:03:08.680 and rhetoric, not by fundamentals in process. How does that 0:03:08.760 --> 0:03:11.760 complicate things for you as in as an investor. It's 0:03:11.760 --> 0:03:17.280 horrible it's horrible. I mean no, I mean it's it's 0:03:17.360 --> 0:03:21.960 literally impossible to be writing about the market every week 0:03:22.000 --> 0:03:25.800 and try to provide this great, grandiose value add that 0:03:25.840 --> 0:03:28.720 everybody thinks they're doing because nothing's really happening. The market 0:03:28.720 --> 0:03:31.160 has been in this tight training range the last couple 0:03:31.240 --> 0:03:33.280 of months, and everybody wants to try to make this 0:03:33.360 --> 0:03:35.120 big call about what's going to happen in the market. 0:03:35.160 --> 0:03:36.960 But at the end of the day, we still think 0:03:37.000 --> 0:03:39.360 it's about buying stocks and being in the right industries 0:03:39.400 --> 0:03:41.320 and sectors. And I think there's a there's a big 0:03:41.360 --> 0:03:43.440 contingent of what people that do what we do and 0:03:43.520 --> 0:03:46.360 investors that just don't get that. Within this is the 0:03:46.400 --> 0:03:49.600 mode of investors. Do they feel like they've missed the market? 0:03:49.720 --> 0:03:52.440 Do they feel like they're in the market? Is there 0:03:52.440 --> 0:03:56.880 an irrational Zuberance team and I were talking about this yesterday. 0:03:56.880 --> 0:04:00.520 I I we're getting the sense that more and more 0:04:00.560 --> 0:04:02.600 investors that we talked to, more and more clients feel 0:04:02.640 --> 0:04:04.680 like they need to be in the market, then want 0:04:04.720 --> 0:04:07.080 to be in the market, especially considering the kind of 0:04:07.120 --> 0:04:10.600 move that we've seen, and there I hate to use 0:04:10.640 --> 0:04:13.480 this word complacency, Tom that I just think that people 0:04:13.520 --> 0:04:15.600 are kind of boring themselves to death in terms of 0:04:15.600 --> 0:04:18.760 owning the same stocks. There's no original thought. And again 0:04:18.800 --> 0:04:22.120 I think the I think there's so many binary opinions 0:04:22.120 --> 0:04:24.760 out there. It's either either or there's nothing in between. 0:04:24.839 --> 0:04:26.920 What we say is on Friday, David, all the gloom 0:04:26.960 --> 0:04:29.000 comes out right. I mean, you're I know you're looking 0:04:29.040 --> 0:04:31.560 at you know, Kale sales in Brooklyn. Brian and I 0:04:31.560 --> 0:04:33.880 are looking at the gloom reports coming out on Friday 0:04:33.880 --> 0:04:35.880 and four pm. World's gonna end and it makes a 0:04:35.880 --> 0:04:39.680 great weekend reading Brian Belsky with us. We are within 0:04:40.160 --> 0:04:46.479 our world headquarters. We're not in our studios were there's 0:04:46.520 --> 0:04:50.080 people in Bloomingdale's often the distance. Good morning to all 0:04:50.160 --> 0:04:54.240 of Bloomingdale's. Of course we're here are special coverage. Are 0:04:54.240 --> 0:04:58.440 Bloomberg invest Conference. Take us through your your portfolio right now? 0:04:58.440 --> 0:05:00.880 What's what's been doing well? Even you've had a lot 0:05:00.880 --> 0:05:04.480 of success with technology. Are you overweight financials as well? 0:05:04.480 --> 0:05:07.159 What's detractive about the financials right now? You know we're 0:05:07.160 --> 0:05:09.920 over eight financials and we're wrong right now. And I'm 0:05:09.920 --> 0:05:11.760 not ashamed to say we're wrong because you know, the 0:05:11.800 --> 0:05:14.760 bond markets and control everything, and and what we've seen 0:05:14.800 --> 0:05:16.960 with short rates, you know, the twos and tens we've 0:05:16.960 --> 0:05:19.880 talked about on on the television program here just recently 0:05:19.920 --> 0:05:22.200 are in the last few minutes. So you know, we're 0:05:22.240 --> 0:05:24.360 positioned for the next to all day, t months minimum 0:05:24.520 --> 0:05:26.320 and over the next three to five years. We think 0:05:26.360 --> 0:05:29.320 financials are are the best place to be because everyone 0:05:29.440 --> 0:05:32.359 is so negative, David, and they're not positioned there and 0:05:32.360 --> 0:05:35.600 they're under their underweight. We think financials in the way 0:05:35.600 --> 0:05:38.159 to be. But I think our best call so far 0:05:38.240 --> 0:05:40.599 this year is is to be overweight healthcare. It's been 0:05:40.640 --> 0:05:43.480 our contrarian call heading into this year, and in our 0:05:43.520 --> 0:05:45.839 theme for healthcare as we buy stocks that keep us alive, 0:05:45.920 --> 0:05:48.440 you know. So we like the biotechs and the drugs 0:05:48.480 --> 0:05:52.680 and some in certain um big h mos um. But 0:05:53.160 --> 0:05:55.760 you know, I think what's gonna end up happening is 0:05:56.640 --> 0:05:58.840 I think the biggest call right now is everybody thinks 0:05:58.839 --> 0:06:01.200 that growth is scarce and growth outperforms, and we're gonna 0:06:01.200 --> 0:06:04.320 buy the fangs. It's say the same old crap and 0:06:04.839 --> 0:06:06.560 for lack of a better way, I mean, let's have 0:06:06.600 --> 0:06:08.640 some original thought, man, I mean, let's go out and 0:06:08.680 --> 0:06:11.200 buy some stocks and and own a portfolio and manage 0:06:11.200 --> 0:06:12.920 a portfolio. So what we've been doing in the real 0:06:12.960 --> 0:06:15.440 live money that we that we run for our Canadian 0:06:15.440 --> 0:06:19.560 investors for the bank up in Canada, is that, you know, 0:06:20.080 --> 0:06:23.920 we run portfolio stocks. All four of our products are 0:06:23.920 --> 0:06:26.640 all performing our mandate, just principally, because Marcot goes down 0:06:26.640 --> 0:06:28.320 a little bit, we buy more of our favorite names, 0:06:28.600 --> 0:06:30.599 Margret goes up a little bit. We've been peeling back. 0:06:30.600 --> 0:06:33.360 So we actually this past month peeled back a little 0:06:33.360 --> 0:06:36.720 bit in some of those fang names, uh, principally because 0:06:36.720 --> 0:06:39.040 they've had big runs and and we don't think that 0:06:39.120 --> 0:06:41.440 type of price momentum can continue over the next three 0:06:41.440 --> 0:06:43.720 to six months eighteen months, yes, three or six months. 0:06:43.720 --> 0:06:46.279 Probably not strikes me that that's so workman like. That's 0:06:46.279 --> 0:06:50.760 so old school to an old soul. I mean, so 0:06:50.800 --> 0:06:52.520 many of people that do what I do are so 0:06:52.600 --> 0:06:55.599 focused on the macro macro macro and quant quant quan, 0:06:55.720 --> 0:06:58.080 and nobody knows how to talk about stocks or themes 0:06:58.160 --> 0:07:00.880 or invest anymore. There's a public one talk about stocks. 0:07:00.920 --> 0:07:03.040 Are they all bundled up in passive funds? I think 0:07:03.040 --> 0:07:06.760 they're all bundled up in passive funds. I think, uh again, 0:07:06.800 --> 0:07:09.520 more E T F questions from taxi cab drivers and 0:07:09.560 --> 0:07:12.240 car drivers and we do stocks. Yeah, I mean, you know, 0:07:12.280 --> 0:07:14.680 I go back to the nineties when cab drivers are 0:07:14.680 --> 0:07:17.080 given a stock picks here in this town. And yeah, 0:07:17.120 --> 0:07:19.040 I think we will get back to that point. But 0:07:19.440 --> 0:07:22.080 I think still we're we're more focused on I mean 0:07:22.120 --> 0:07:24.560 that the public is more focused on the headlines and 0:07:24.600 --> 0:07:27.240 the big picture stuff, and that's what's causing all the 0:07:27.280 --> 0:07:30.400 noise financials. And I just wonder what you see there? 0:07:30.560 --> 0:07:32.960 There is all the negativity that you describe. What do 0:07:33.040 --> 0:07:36.800 you see that others others down't well in the financial 0:07:36.840 --> 0:07:38.720 side of things. We want to be in those companies 0:07:38.800 --> 0:07:41.200 what we call the big box retailers that have the 0:07:41.280 --> 0:07:45.880 complete menu. Right. So, what has been the crown jewel 0:07:45.920 --> 0:07:48.960 of the financial services industry the big box retailers the 0:07:49.000 --> 0:07:52.480 last two to three quarters, it's been it's been the 0:07:52.520 --> 0:07:55.720 capital markets business. Right, So we had big trading volumes 0:07:55.800 --> 0:07:58.040 last year, we had M and A activity COASI. Capital 0:07:58.040 --> 0:08:00.160 markets done right well. So why have they done very well? 0:08:00.200 --> 0:08:02.640 Because two years ago we cut cut, cut, cut cut costs. 0:08:02.840 --> 0:08:04.680 So if you look at the big box retailers now 0:08:04.720 --> 0:08:07.240 where they've been cutting costs wealth management, So where's the 0:08:07.240 --> 0:08:09.000 flow is going to come the next several years gonna 0:08:09.000 --> 0:08:11.360 be into the wealth manager channel. Okay, Brian Bellski with 0:08:11.400 --> 0:08:13.360 this pimo very quickly here. And of course, our coverage 0:08:13.360 --> 0:08:15.840 of Bloomberg invest conference on Bloomberg Radio brought you by 0:08:16.280 --> 0:08:20.120 s CI which means we get celebrities. That is, they 0:08:20.160 --> 0:08:23.480 come in at seven oh five a m. Joining us 0:08:23.480 --> 0:08:27.720 out Scarlett Food in its seven oh five. Do you 0:08:27.720 --> 0:08:30.760 have a question for Mr Belski? Are we talking are retailers? 0:08:30.760 --> 0:08:32.920 Are we talking banks? I just walked in and Tom 0:08:32.920 --> 0:08:36.480 waves me over while meeting my banana. That's a good idea. 0:08:36.760 --> 0:08:38.720 Scarlett used to get up early in the morning. Now 0:08:38.800 --> 0:08:40.480 she's a big shot. She just comes in later. And 0:08:41.679 --> 0:08:44.760 what about the retailers. Dana Telsey Dana Chelsea out with 0:08:44.840 --> 0:08:48.280 a really jepid note on Macy's after their meeting. So 0:08:48.320 --> 0:08:50.760 we just published a piece on consumer discretionary as you 0:08:50.800 --> 0:08:53.079 know that consumer discretionary is the most e collectic sector 0:08:53.120 --> 0:08:55.760 in the US market, right, most eclectic sector in the 0:08:55.800 --> 0:08:58.320 US market. And we mentioned we had no mention of 0:08:58.360 --> 0:09:01.600 retailers in that in that secretory in sector. No, because 0:09:02.160 --> 0:09:04.880 we're really worried from a secular basis longer term, what's 0:09:04.920 --> 0:09:07.720 structurally what's happening in retail? I mean clearly Amazon. If 0:09:07.720 --> 0:09:09.920 you take a look at consumer discretionary sector so far 0:09:10.000 --> 0:09:14.000 this year, Amazon's four hundred basis points, meaning four percentage 0:09:14.000 --> 0:09:17.160 points of the full full UH performance of the second 0:09:17.160 --> 0:09:20.640 If you take a consumers underperforming, we gotta go, Brian Belski, 0:09:20.720 --> 0:09:22.720 thank you so much. If we lose the lun chust 0:09:22.800 --> 0:09:28.200 Jersey where a natural predators Jersey, David gurl, We're gonna 0:09:28.200 --> 0:09:30.520 come back with Brian Belski, David Cura and Tom Keane 0:09:30.760 --> 0:09:34.200 are Bloomberg invest Summit For those of you that just 0:09:34.240 --> 0:09:37.080 got through the CFA exam. We're gonna talk not seemed 0:09:37.120 --> 0:09:41.560 TALEB a little bit and Gaussian and plus on distributions, 0:09:41.559 --> 0:09:43.280 which is a good way to get to Brian Belski 0:09:43.320 --> 0:09:46.720 a bemo. Capital markets talb, of course, is the mathematics 0:09:46.720 --> 0:09:50.760 of rare events. By definition, you don't see the rare 0:09:50.880 --> 0:09:54.360 event coming. What are the set of rare events you're 0:09:54.400 --> 0:09:57.120 worried about in the equity markets? Well, I think so 0:09:57.160 --> 0:10:00.760 many people are laser focused Tom on what's happened in Washington, 0:10:00.840 --> 0:10:03.760 and so that's not a rare event. No, it's not 0:10:03.800 --> 0:10:06.760 a rare Where where are they? Well the other thing too, 0:10:06.800 --> 0:10:08.960 is we just hate this whole notion of black swans. 0:10:08.960 --> 0:10:11.360 I mean, corrections happen when you least expect them. It 0:10:11.400 --> 0:10:13.800 seems to us like everyone is still looking for the correction, 0:10:13.760 --> 0:10:15.960 of looking for the correctional we stopped talking about the correction. 0:10:16.000 --> 0:10:17.960 That's when the correction is gonna happen. It's super incident. 0:10:18.000 --> 0:10:20.200 It's not there. Is it's not there? Do you see? 0:10:20.200 --> 0:10:23.080 I don't see, they don't know. And so it's gonna 0:10:23.080 --> 0:10:25.080 be something that we least expect. I mean, you know, 0:10:25.440 --> 0:10:27.120 it's not gonna be North Korea, it's not going to 0:10:27.200 --> 0:10:29.200 be something out of Europe's not gonna be Washington. It's 0:10:29.200 --> 0:10:31.959 gonna be something else. That's all I know. To attacks 0:10:31.960 --> 0:10:37.199 in Iran today, Maybe maybe no. But seriously, the you 0:10:37.280 --> 0:10:41.320 and I have these recollections, I would respectfully suggest Brian Belski, 0:10:41.400 --> 0:10:44.079 it starts in the bond market, where there's a bonb 0:10:44.120 --> 0:10:47.240 transaction that gets left on a wall street desk. There's 0:10:47.280 --> 0:10:50.600 some form of short could be short five year convertible 0:10:50.679 --> 0:10:54.840 zero coupon bond. Something doesn't work in the savvy bond market, 0:10:54.920 --> 0:10:57.200 and then that comes over to the equity market. Savvy 0:10:57.200 --> 0:10:59.439 bond market has been right for thirty five years now, 0:10:59.480 --> 0:11:02.199 and so it's something probably in the bond market. But 0:11:02.640 --> 0:11:05.680 I have not fear, but just trepidation. Tom, that's going 0:11:05.720 --> 0:11:08.400 to be a liquidity event, right, some sort of a 0:11:08.440 --> 0:11:11.839 liquidity event. Is it private equity not happening? I'm something 0:11:11.960 --> 0:11:15.360 not connecting there so much. So many assets since two 0:11:15.360 --> 0:11:17.920 thousand and eight two thousand nine have moved out of 0:11:17.960 --> 0:11:22.559 the hedge fund world with respect to UM derivatives into 0:11:22.640 --> 0:11:25.880 private equity. Is it's something in private equity that occurs? 0:11:25.880 --> 0:11:29.199 I mean again, I'm just speculating. We're not talking enough 0:11:29.240 --> 0:11:31.880 about that. So it's either something that we've become so 0:11:31.960 --> 0:11:35.560 dependent on, Tom, meaning bonds, bonds, bonds, bonds, or something 0:11:35.600 --> 0:11:38.080 that we're not expecting because of our Bloomberg invest conference. 0:11:38.120 --> 0:11:40.000 I'm going to rip up the script here buying bells. 0:11:40.559 --> 0:11:45.319 The basic idea of the passive active debate. You're getting 0:11:45.360 --> 0:11:48.079 paid to say active. I get that where to pass 0:11:48.120 --> 0:11:50.640 the funds fit in and I'm getting paid to be right, Tom, 0:11:50.880 --> 0:11:58.079 And so ask them about the Viking's where passive funds fitting. 0:11:58.120 --> 0:12:00.600 Where does buying the index fitted well? I think buying 0:12:00.600 --> 0:12:04.520 the index fits in when when creating credibility and feeling 0:12:04.559 --> 0:12:07.800 better about buying buying equities. Again, it's it's a process, 0:12:07.880 --> 0:12:10.199 or as we like to say in Canada, it's a process. 0:12:10.240 --> 0:12:12.560 So we're gonna we're gonna buy index funds first, We're 0:12:12.600 --> 0:12:14.800 gonna feel comfortable buying equities, and then we're gonna move 0:12:14.840 --> 0:12:17.960 into something a little bit more quote unquote sexy that 0:12:18.000 --> 0:12:20.880 we are interested in. I think investors in general are 0:12:21.000 --> 0:12:23.600 still worried about stocks. They still think we're the bad guys. 0:12:23.600 --> 0:12:26.040 They're still worried about corporate America. So if they make 0:12:26.040 --> 0:12:27.599 a little money in an e t F, whether or 0:12:27.640 --> 0:12:29.800 not it's a spider or a diamond or whatever, and 0:12:29.800 --> 0:12:33.319 then they slowly kind of transigate back into part like 0:12:33.360 --> 0:12:37.480 a gateway. It's a gateway. You're going to use the 0:12:37.480 --> 0:12:39.520 second round of that, but it's a gateway. You've got 0:12:39.720 --> 0:12:42.000 you've got these forties stocks in the port place. How 0:12:42.040 --> 0:12:43.760 are you how are you picking them? What are you 0:12:43.840 --> 0:12:46.920 looking at principally to decide what you're gonna invest in this? Well, 0:12:46.960 --> 0:12:49.040 we start and stop with what we think with respect 0:12:49.080 --> 0:12:51.640 to the overall market, what our sectors are, and then 0:12:51.679 --> 0:12:53.720 build it from the bottoms up. So I mean, you know, 0:12:53.760 --> 0:12:55.360 we have the very good fortune of going a lot 0:12:55.360 --> 0:12:57.320 of analysts around the streets, so we look at how 0:12:57.360 --> 0:13:01.280 these stocks fen into sectors and we rush out. We 0:13:01.280 --> 0:13:03.080 we touch base with some of these annis, but we 0:13:03.120 --> 0:13:05.480 also use some of our own models and looking at stocks. 0:13:05.760 --> 0:13:08.920 I have one final question, if I can you are Canadian, Bemo, 0:13:09.000 --> 0:13:12.199 Capital Markets, Bank of Montreal and all that. I mean, 0:13:12.200 --> 0:13:14.679 you've got to look at the fact, once again there's 0:13:14.800 --> 0:13:17.319 no Canadian team in the Stanley Cups. This is a 0:13:17.840 --> 0:13:21.640 national embarrassment. But you gotta find solace that Mike Fisher 0:13:21.679 --> 0:13:25.880 of Peterborough, Ontario is a Nashville Predator and he's Mr 0:13:26.000 --> 0:13:28.840 carry Underwood. That's sort of a good thing, you know what. 0:13:28.920 --> 0:13:33.440 It's a really good thing on several accounts. But last 0:13:33.520 --> 0:13:41.120 year was the embarrassment because no Canadian team made me Yeah, well, 0:13:41.240 --> 0:13:43.160 very good. We'll leave it at that. Brian Bellski, thank 0:13:43.160 --> 0:13:45.800 you for the hockey update with Mr carry Underwood. I'm 0:13:46.000 --> 0:13:47.959 I gotta be honest, Folks like you gotta root for 0:13:47.960 --> 0:13:50.360 the predators. They don't even know. They don't even know. 0:13:50.400 --> 0:13:53.320 In the arena, they're going absolutely mental, like it's football 0:13:53.400 --> 0:13:56.800 or NASCAR, and some of them are like, you gotta go, okay, offside? 0:13:56.800 --> 0:13:59.439 That was offside. It's not like a big deal. Somebody 0:13:59.480 --> 0:14:01.439 just stepped over the blue leg. I mean, it's a 0:14:01.480 --> 0:14:03.280 whole day. It's great. I love it. I love what 0:14:03.400 --> 0:14:07.959 NBC is doing with with my camera. Can don't you 0:14:08.040 --> 0:14:13.559 care about this day? Following it? We're Scarlett, get Scarlett, 0:14:13.600 --> 0:14:16.200 We'll get back, We'll talk, you know, hockey. What are 0:14:16.240 --> 0:14:19.200 we doing? Can we go from the Stanley Cup finals 0:14:19.240 --> 0:14:23.160 to the super Bowl tomorrow? Washington d C Greguar yesterday, 0:14:23.240 --> 0:14:25.600 noting that the sense of weariness settling, and he says, 0:14:25.600 --> 0:14:27.080 we're sick of this. You're sick of this and most 0:14:27.120 --> 0:14:29.600 voters are as well. But a big data Washington this 0:14:29.920 --> 0:14:35.760 note talking about the Vice President Da Milby Washington past today. Yeah, 0:14:35.840 --> 0:14:50.200 I think watching Mr Pence will be good sport. Yeah, 0:14:50.280 --> 0:14:52.960 David Garr The President tries to get out front of 0:14:53.000 --> 0:14:55.280 the festivities tomorrow. Yeah, Tom, you and I stay on 0:14:55.320 --> 0:14:57.080 top of the President's Twitter feed. Here's a tweet of 0:14:57.120 --> 0:14:59.600 relevance to our audience this morning President Trump tweeting I 0:14:59.640 --> 0:15:02.720 will be in nominating Christopher A. Ray w R. A 0:15:02.840 --> 0:15:04.800 y A man of impeccable credentials, to be the new 0:15:05.080 --> 0:15:07.640 director of the FBI, the President deciding on him after 0:15:07.680 --> 0:15:09.800 meeting with him and John Pistol, the former head of 0:15:09.800 --> 0:15:11.920 the the t S. A. Let's take a look at 0:15:11.920 --> 0:15:14.200 some of those impeccable credentials, as the President calls him, 0:15:14.200 --> 0:15:16.600 He's a graduate of Yale and Yale Law School as well, 0:15:16.640 --> 0:15:18.920 and perhaps most important for the job he is being 0:15:18.960 --> 0:15:20.960 nominated for, he was the head of the Criminal Division 0:15:21.280 --> 0:15:25.200 at the Federal Bureau of Investigation. So this gets that 0:15:25.240 --> 0:15:27.400 process underway, something the President was keen to do a 0:15:27.440 --> 0:15:29.440 couple of weeks ago. We then a quick read of 0:15:29.480 --> 0:15:35.400 a lengthy, accomplished biography. I don't see political service. That 0:15:35.520 --> 0:15:38.800 was Senator Lieberman and others of Connecticut. That was one 0:15:38.800 --> 0:15:40.440 of the issues is do we want someone with a 0:15:40.440 --> 0:15:43.480 political heritage, and I believe we see less of that, 0:15:43.520 --> 0:15:46.080 if not none of that with Mr Ray. He's now 0:15:46.120 --> 0:15:48.320 a partner at King and Spalding, the big law firm. 0:15:48.560 --> 0:15:50.080 As I said, head to the criminal Division, and in 0:15:50.080 --> 0:15:53.520 that capacity, according to his official bio, he led investigations, prosecutions, 0:15:53.520 --> 0:15:58.000 and policy development in nearly all areas of federal criminal laws. 0:15:58.120 --> 0:16:01.440 So we will continue to follow this news throughout the morning, UH, 0:16:01.440 --> 0:16:03.400 and we'll watch as the White House formerly tender as 0:16:03.480 --> 0:16:07.120 that nomination, and again our coverage tomorrow David gurd David Weston, 0:16:07.160 --> 0:16:12.920 and Kevin SURRELLI will be tomorrow UH in Washington for 0:16:13.000 --> 0:16:16.360 the ten o'clock ten a m. Comy coverage. Right now, 0:16:16.400 --> 0:16:18.240 after all that, we try to get back to what 0:16:18.320 --> 0:16:21.000 we do each and every day with economics, Finance investment 0:16:21.560 --> 0:16:24.200 with Charles Duma of T. S. Lombard. Charles, you are 0:16:24.200 --> 0:16:27.160 a qualified as anyone in the world for the important 0:16:27.240 --> 0:16:30.320 question of where is our nominal GDP? Where is that 0:16:30.440 --> 0:16:35.280 combination of economic growth in price elevation. Have you brought 0:16:35.440 --> 0:16:41.680 down your nominal GDP belief in the last number of days? Yeah, 0:16:41.760 --> 0:16:45.640 The wage state and you had in the United States 0:16:46.520 --> 0:16:55.160 yesterday morning for um for total compensation were extraordinarily changed 0:16:55.360 --> 0:16:58.480 from the same number months before and months ago. They 0:16:58.480 --> 0:17:00.760 said the first quarter was up three point nine per 0:17:00.760 --> 0:17:04.840 cent in terms of le pay um, and yesterday morning 0:17:04.840 --> 0:17:06.919 they said, actually know the first quarter was only up 0:17:06.920 --> 0:17:10.399 to the event, which is like a luge reduction, and 0:17:10.480 --> 0:17:14.480 so we have to assume here that nominal GDP will 0:17:14.560 --> 0:17:17.840 be a weaker. But we don't think that real GDP 0:17:18.000 --> 0:17:19.920 is going to be any this. We just think that 0:17:20.040 --> 0:17:23.439 information will be less. This is a really important dynamic, folks. 0:17:23.440 --> 0:17:25.520 And again there's four ways to go. He're both up, 0:17:25.560 --> 0:17:29.760 both down, or a mixture either way. Do the central 0:17:29.840 --> 0:17:34.160 banks in any way think nominal GDP even if they 0:17:34.200 --> 0:17:39.720 won't admit it. Um Well, To be quite honest, I'm 0:17:39.760 --> 0:17:42.360 not probably the right person to talk to about how 0:17:42.440 --> 0:17:45.160 central banks think. We try to figure out what they're 0:17:45.160 --> 0:17:48.280 going to have to think ahead of time, and in 0:17:48.320 --> 0:17:51.639 this case, um, you know, we we think that probably 0:17:52.240 --> 0:17:54.760 m Mrs Yellen will want to get the funds rate 0:17:54.920 --> 0:17:59.840 up to something that's roughly matches inflation, which means, you know, 0:18:00.000 --> 0:18:03.919 about two more hikes this year and be ready in 0:18:04.000 --> 0:18:06.520 case there is an inflation we pick up next year, 0:18:06.560 --> 0:18:10.040 which I'm dancy looks more likely than not. Charles, you've 0:18:10.080 --> 0:18:11.960 been advocating for a long time here for a plan 0:18:12.080 --> 0:18:14.080 B when it comes to to Brexit for the UK 0:18:14.160 --> 0:18:17.160 exiting the European Union. I don't know if we're any 0:18:17.200 --> 0:18:19.040 closer to getting that or if we will be after 0:18:19.040 --> 0:18:21.080 the election results tomorrow. But what would you want to 0:18:21.080 --> 0:18:23.679 see in that? What would a Plan B look like? 0:18:23.880 --> 0:18:27.800 What's your ideal Plan B? Well, I mean I don't 0:18:27.800 --> 0:18:30.960 think anything's ideal here, neither Plan A nor Plan B. 0:18:32.520 --> 0:18:35.439 The main point about Plan B is visit it should 0:18:35.440 --> 0:18:40.200 exist because at the moment the British being told by 0:18:40.280 --> 0:18:44.359 the EU people, the EU negotias that actually they have 0:18:44.440 --> 0:18:48.120 no option but to pay last sums of money and 0:18:48.640 --> 0:18:51.840 in order to get free trade. Now it may well 0:18:51.920 --> 0:18:54.720 be that we should pay substantial sums of money to 0:18:54.760 --> 0:18:58.040 get free trade. Um. And it may well be that's 0:18:58.080 --> 0:19:01.440 how it ends up, but the bargaining position is substantially 0:19:01.480 --> 0:19:04.280 weaker until such time as it's clear that we can 0:19:04.359 --> 0:19:07.840 survive and do okay if there isn't is no agreement. 0:19:08.960 --> 0:19:11.320 What's what's this economy look like that the next Prime 0:19:11.359 --> 0:19:13.520 Minister is going to inherit be that and mis maybe that, 0:19:13.800 --> 0:19:16.720 Mr Corbyn? What what's the UK economy look like? What 0:19:16.760 --> 0:19:20.800 are the biggest deficits in that economy as you see them? Well, 0:19:20.840 --> 0:19:23.880 there's the biggest risk by far, it seems to me, 0:19:24.080 --> 0:19:27.440 is that if we don't have a well conducted negotiating 0:19:27.480 --> 0:19:31.960 process about breakshit. Then you're going to see suddenly a 0:19:33.280 --> 0:19:37.520 confidence problem in the financial markets and in the business sector, 0:19:38.000 --> 0:19:40.480 and people starting to say, well, look, this really doesn't 0:19:40.520 --> 0:19:43.680 look like a well managed to exit, and so we're 0:19:43.680 --> 0:19:46.879 going to get out first. At the moment, people are 0:19:46.920 --> 0:19:50.320 assuming the worst in making their business plans, but they 0:19:50.320 --> 0:19:52.240 don't actually have to fix their plans all the end 0:19:52.280 --> 0:19:54.679 of the year. So the government's got about six months 0:19:54.680 --> 0:19:59.480 to particulately first of all, what it's really looking for, 0:20:00.080 --> 0:20:04.840 and obviously that's a negotiating positions visit the the EU, 0:20:05.359 --> 0:20:10.040 but also what happens if the negotiations don't work or breakdown, 0:20:10.080 --> 0:20:12.800 in which case we've got to get by on our own. 0:20:12.840 --> 0:20:15.800 And it's a perfectly feasible thing to do, but there 0:20:15.800 --> 0:20:19.800 needs to be a details and convincing plan. Charles, you 0:20:19.800 --> 0:20:22.920 have a number of books on China. They have been 0:20:22.960 --> 0:20:26.600 remarkably pression about. Everybody, get over the doom and gloom 0:20:26.760 --> 0:20:30.720 and fear. Is China is resilient? Is when you wrote 0:20:30.720 --> 0:20:35.679 those books a few years ago. Well, we were fairly 0:20:35.720 --> 0:20:39.240 negative about China when we wrote those books, and I 0:20:39.280 --> 0:20:42.080 think it's fair to say that some of that negative 0:20:42.119 --> 0:20:46.000 feeling has become the consensus um at this stage, I 0:20:46.040 --> 0:20:48.840 would say that China is going to be fine at 0:20:48.920 --> 0:20:51.560 least until the other side of the big Congress is 0:20:51.600 --> 0:20:56.080 autumn um and in fact, in all probabilities, they are 0:20:56.119 --> 0:21:00.760