1
00:00:00,040 --> 00:00:02,400
Speaker 1: The resilience of the US economy has a pride sum,

2
00:00:02,720 --> 00:00:05,320
Speaker 1: and it comes as the economic and financial gap with

3
00:00:05,360 --> 00:00:09,479
Speaker 1: Europe continues to widen. Now GDP growth and productivity levels

4
00:00:09,680 --> 00:00:12,280
Speaker 1: are now much further ahead in the US, something which

5
00:00:12,360 --> 00:00:15,760
Speaker 1: my next guest says is a once in a generation phenomenon. Well,

6
00:00:15,840 --> 00:00:19,440
Speaker 1: Daniel Pinto is the chairman and chief executive of Stanhope

7
00:00:19,440 --> 00:00:22,280
Speaker 1: Capital and asset management firm. He started in two thousand

8
00:00:22,320 --> 00:00:24,959
Speaker 1: and four with more than forty one billion dollars of

9
00:00:25,000 --> 00:00:27,520
Speaker 1: assets under management. So Daniel, as always thank you so

10
00:00:27,600 --> 00:00:29,800
Speaker 1: much for joining us and welcome back to the pulse.

11
00:00:30,040 --> 00:00:32,080
Speaker 1: When you look at what you're expecting from the Fed,

12
00:00:32,120 --> 00:00:34,200
Speaker 1: I mean it's a little bit of an outlier call.

13
00:00:34,640 --> 00:00:37,560
Speaker 1: You're expecting the Fed to cut quicker than the market

14
00:00:37,600 --> 00:00:40,880
Speaker 1: is pricing. Would they cut because there's a slowdown or

15
00:00:40,880 --> 00:00:42,600
Speaker 1: because of inflation is under control?

16
00:00:43,479 --> 00:00:46,280
Speaker 2: My first comment for Seeinge is that who would have

17
00:00:46,320 --> 00:00:49,120
Speaker 2: said that watching central bankers would have become as exciting

18
00:00:49,159 --> 00:00:55,000
Speaker 2: as watching Gothrilla. We listen to each and every word. Look,

19
00:00:55,880 --> 00:00:58,319
Speaker 2: my sense is that the US economy is slowing down.

20
00:00:58,360 --> 00:01:00,520
Speaker 2: It's still doing okay, but it is slowing down. Let's

21
00:01:00,560 --> 00:01:03,800
Speaker 2: remember that the market was expecting two point five percent

22
00:01:03,840 --> 00:01:06,319
Speaker 2: GDP growth for Q one, it came out at one

23
00:01:06,319 --> 00:01:09,720
Speaker 2: point six percent, So it is slowing down. You have

24
00:01:10,280 --> 00:01:13,880
Speaker 2: pmis coming down, which is a short sign that there

25
00:01:13,920 --> 00:01:17,440
Speaker 2: is a slowdown. You have unemployment picking up a bit,

26
00:01:17,680 --> 00:01:20,320
Speaker 2: still very low, but picking up a bit, and two

27
00:01:20,319 --> 00:01:22,920
Speaker 2: more things which in my view are very important. The

28
00:01:22,959 --> 00:01:25,759
Speaker 2: first one is that saving rates in America have collapsed.

29
00:01:26,760 --> 00:01:31,039
Speaker 2: Post COVID. Americans had plenty of savings and that sustained

30
00:01:31,040 --> 00:01:33,800
Speaker 2: the economy for the last two years. Right now they

31
00:01:33,840 --> 00:01:37,039
Speaker 2: have three point five percent of savings, which is the

32
00:01:37,120 --> 00:01:40,520
Speaker 2: lowest point in the last ten or fifteen years, which

33
00:01:40,560 --> 00:01:43,600
Speaker 2: basically means that you no longer have this buffer in

34
00:01:43,640 --> 00:01:47,640
Speaker 2: the form of the domestic consumer to support economy growth

35
00:01:47,680 --> 00:01:49,200
Speaker 2: in the next few months. And I think the FED

36
00:01:49,320 --> 00:01:51,600
Speaker 2: knows that, and the FED will cut rate in my

37
00:01:51,640 --> 00:01:53,880
Speaker 2: opinion September probably twice.

38
00:01:54,200 --> 00:01:56,520
Speaker 1: So Daniel, we allspoke to Jamie Damond yesterday and he

39
00:01:56,640 --> 00:02:00,000
Speaker 1: was saying, look, it's the market makes it a give up,

40
00:02:00,240 --> 00:02:03,919
Speaker 1: that we have a slowdown, that is a soft landing,

41
00:02:04,080 --> 00:02:06,840
Speaker 1: and that's not given. But is there the worst case

42
00:02:06,840 --> 00:02:10,519
Speaker 1: scenarios that inflation actually stays up and that these indicators

43
00:02:10,560 --> 00:02:13,400
Speaker 1: come down. So what does the FED choose then, and

44
00:02:13,480 --> 00:02:15,079
Speaker 1: what kind of economy are we left with.

45
00:02:15,680 --> 00:02:18,959
Speaker 2: I think the FED will be under pressure for another reason,

46
00:02:19,040 --> 00:02:21,200
Speaker 2: which is that, let's remember that a year ago we

47
00:02:21,280 --> 00:02:25,280
Speaker 2: had a banking crisis in the US. We are not

48
00:02:25,480 --> 00:02:28,520
Speaker 2: hearing anything about it anymore, but you have dozens of

49
00:02:28,639 --> 00:02:32,760
Speaker 2: small regional banks in America that are exposed to real estate,

50
00:02:33,800 --> 00:02:39,200
Speaker 2: writing our loans, and the longer for the higher, for

51
00:02:39,280 --> 00:02:43,680
Speaker 2: longer a phenomenon is having a direct impact on this

52
00:02:44,400 --> 00:02:47,720
Speaker 2: second tier of the banking sector in America, and I

53
00:02:47,760 --> 00:02:50,119
Speaker 2: think that the FED will in addition to the slowdown

54
00:02:50,120 --> 00:02:53,400
Speaker 2: that I described, the FED will very much be aware

55
00:02:53,520 --> 00:02:56,440
Speaker 2: that if they keep raised at this high level, they

56
00:02:56,480 --> 00:03:00,800
Speaker 2: may have another banking crisis on their hands, which obviously

57
00:03:00,800 --> 00:03:01,720
Speaker 2: they would like to avoid.

58
00:03:02,120 --> 00:03:03,600
Speaker 1: There's also a question of why the fact is not

59
00:03:03,639 --> 00:03:06,120
Speaker 1: pushing back against some of the market exuberants that we've seen.

60
00:03:06,639 --> 00:03:08,440
Speaker 1: Do you see this as being problematic.

61
00:03:09,919 --> 00:03:11,800
Speaker 2: I don't think it is problematic. I mean, there is

62
00:03:11,840 --> 00:03:14,440
Speaker 2: some exuberants in the market, but I don't think that

63
00:03:14,600 --> 00:03:17,440
Speaker 2: we are in bubble territory. If you look at stocks

64
00:03:17,440 --> 00:03:21,080
Speaker 2: in America, they are trading on multiples of about twenty times,

65
00:03:21,120 --> 00:03:23,919
Speaker 2: which is higher than the average. But if you streep

66
00:03:23,960 --> 00:03:28,000
Speaker 2: out the technology sector of the Magnificent seven, the valuation

67
00:03:28,080 --> 00:03:30,760
Speaker 2: levels in the US are in line with the average

68
00:03:30,760 --> 00:03:32,360
Speaker 2: of the last twenty five years. You don't have a

69
00:03:32,360 --> 00:03:34,280
Speaker 2: bubble in the equity market in the US.

70
00:03:35,040 --> 00:03:37,080
Speaker 1: I don't believe so, Daniel. I know. There are some

71
00:03:37,520 --> 00:03:39,680
Speaker 1: charts actually that you look at, which we love showing

72
00:03:39,680 --> 00:03:41,760
Speaker 1: because it gives us a glimpse into kind of what

73
00:03:41,880 --> 00:03:43,800
Speaker 1: kind of template you look at to look at growth

74
00:03:43,800 --> 00:03:46,880
Speaker 1: and valuations. There's a mismatch between the US and Europe.

75
00:03:47,040 --> 00:03:49,440
Speaker 1: I mean, if you're expecting, actually the US to slow

76
00:03:49,480 --> 00:03:53,680
Speaker 1: down significant, not significantly, but enough to pull forward expectations

77
00:03:53,720 --> 00:03:56,360
Speaker 1: of a count where do you see the biggest play

78
00:03:56,360 --> 00:03:58,360
Speaker 1: do you get into European stocks?

79
00:03:58,840 --> 00:04:01,680
Speaker 2: So European stocks cheap at the moment as compared to

80
00:04:01,720 --> 00:04:04,120
Speaker 2: the US. In fact, you are at the point where

81
00:04:04,160 --> 00:04:07,440
Speaker 2: the discount between Europe and the US is at its

82
00:04:07,560 --> 00:04:11,400
Speaker 2: highest in the last probably twenty years. You basically have

83
00:04:11,440 --> 00:04:14,280
Speaker 2: a thirty five percent discount between the valuation of European

84
00:04:14,280 --> 00:04:18,560
Speaker 2: stocks and the valuation of US stocks. It makes certain

85
00:04:18,600 --> 00:04:23,120
Speaker 2: segments of the European equity markets attractive, and it could be,

86
00:04:23,160 --> 00:04:25,000
Speaker 2: and we've seen that in the last few months that

87
00:04:25,400 --> 00:04:28,560
Speaker 2: for a short period of time European equities could outperform

88
00:04:28,600 --> 00:04:33,839
Speaker 2: the US. But for any long term investor, I would

89
00:04:33,880 --> 00:04:37,840
Speaker 2: recommend having the majority of their exposure to US stocks

90
00:04:38,080 --> 00:04:40,760
Speaker 2: for reasons that have to do both with the US

91
00:04:40,800 --> 00:04:46,440
Speaker 2: economy that has decaupled from the European economy and as

92
00:04:46,480 --> 00:04:51,840
Speaker 2: a result as well of market dynamics which are much

93
00:04:51,880 --> 00:04:55,800
Speaker 2: better in the US than in Europe. So short term, yes,

94
00:04:56,240 --> 00:04:59,360
Speaker 2: European equity is attractive. Long term, I think investors should

95
00:04:59,440 --> 00:05:02,279
Speaker 2: keep the vast majority of their equity exposure into the US.

96
00:05:02,440 --> 00:05:04,200
Speaker 1: I mean this, and this is actually the chart of

97
00:05:04,200 --> 00:05:06,119
Speaker 1: the day that we're just showing, one of the charts

98
00:05:06,160 --> 00:05:08,839
Speaker 1: that you're looking at. I mean, does this explain why

99
00:05:08,880 --> 00:05:12,000
Speaker 1: certain companies, I mean we're talking with actually chief executive

100
00:05:12,080 --> 00:05:15,479
Speaker 1: of Total Energy just on Tuesday, but other companies would

101
00:05:15,520 --> 00:05:17,279
Speaker 1: look at a listing in the US and does that

102
00:05:17,320 --> 00:05:20,040
Speaker 1: even make sense for big European companies.

103
00:05:20,279 --> 00:05:25,040
Speaker 2: They would, and it should worry a lot of politicians

104
00:05:25,040 --> 00:05:28,160
Speaker 2: in Europe when you hear Total Energy, which is kind

105
00:05:28,200 --> 00:05:31,680
Speaker 2: of a national champion for France, saying we would like

106
00:05:31,760 --> 00:05:34,480
Speaker 2: to move to list in the US. It is a

107
00:05:34,480 --> 00:05:37,400
Speaker 2: shock when you hear a shell saying the same thing.

108
00:05:37,520 --> 00:05:39,520
Speaker 2: It is a shock. And the reason why they are

109
00:05:39,560 --> 00:05:42,880
Speaker 2: saying that is very simple. The capital markets in the

110
00:05:42,960 --> 00:05:46,680
Speaker 2: US are so much deeper that they get better valuations.

111
00:05:46,680 --> 00:05:49,479
Speaker 2: You cannot blame them for saying, I'm working for my

112
00:05:49,560 --> 00:05:53,560
Speaker 2: shareholders and with shaholders in mind, our interests is to

113
00:05:53,640 --> 00:05:57,599
Speaker 2: list in the US. And the reason why the capital

114
00:05:57,640 --> 00:06:00,840
Speaker 2: markets are so much deeper is that they have a

115
00:06:00,880 --> 00:06:06,120
Speaker 2: pension system the drive savings into the real economy, whereas

116
00:06:06,160 --> 00:06:08,960
Speaker 2: in Europe, in most countries, we have a pension system

117
00:06:09,000 --> 00:06:13,880
Speaker 2: that is still public and is not driving savings into

118
00:06:13,880 --> 00:06:16,400
Speaker 2: the productive economy. And that's a major issue. Just take

119
00:06:16,440 --> 00:06:20,320
Speaker 2: the case of the UK. Twenty five years ago, pension

120
00:06:20,320 --> 00:06:23,840
Speaker 2: funds in the UK were investing forty five percent of

121
00:06:23,880 --> 00:06:28,120
Speaker 2: their portfolios into UK equities. Now it is four percent

122
00:06:28,240 --> 00:06:33,880
Speaker 2: five percent, and that has a massive impact on appetite

123
00:06:33,880 --> 00:06:38,320
Speaker 2: for equities overall and therefore valuations. And that is something

124
00:06:38,400 --> 00:06:42,359
Speaker 2: that the CEOs across the UK and across Europe have

125
00:06:42,480 --> 00:06:43,200
Speaker 2: in mind.

126
00:06:43,440 --> 00:06:45,880
Speaker 1: I mean, what should be the priorities of politicians and

127
00:06:45,920 --> 00:06:49,200
Speaker 1: policy makers in Europe to be more competitive and keep

128
00:06:49,240 --> 00:06:50,360
Speaker 1: the good companies here.

129
00:06:50,880 --> 00:06:53,320
Speaker 2: So most of the savings in Europe are in the

130
00:06:53,360 --> 00:06:57,279
Speaker 2: hands of insurance companies and pension funds, and right now

131
00:06:57,320 --> 00:07:01,040
Speaker 2: this capital is locked up and able to deploy itself

132
00:07:01,279 --> 00:07:06,120
Speaker 2: in private equity, public equities, et cetera. That's a major

133
00:07:06,160 --> 00:07:08,120
Speaker 2: difference with what's going on in the US. And I

134
00:07:08,120 --> 00:07:10,560
Speaker 2: think it is happening not just as valuations, but the

135
00:07:10,560 --> 00:07:13,440
Speaker 2: capacity of these company is to invest, and that's really

136
00:07:13,800 --> 00:07:16,360
Speaker 2: not just in economic issues, a political issue as well.

137
00:07:16,800 --> 00:07:20,360
Speaker 2: So I think the priority for politicians right now should

138
00:07:20,400 --> 00:07:23,679
Speaker 2: be to address this very issue. Make sure that insurance

139
00:07:23,760 --> 00:07:28,000
Speaker 2: companies have more leeway to invest in you know, private

140
00:07:28,000 --> 00:07:31,640
Speaker 2: equity and public equity. Make sure that pension funds are

141
00:07:31,680 --> 00:07:35,400
Speaker 2: not just focused on investing in bonds which are not

142
00:07:35,600 --> 00:07:39,360
Speaker 2: necessarily helping the economy at large, but investing more in

143
00:07:39,440 --> 00:07:42,800
Speaker 2: smaller n kepped companies and in large companies. That should

144
00:07:42,800 --> 00:07:43,560
Speaker 2: be the priority.

145
00:07:43,640 --> 00:07:45,480
Speaker 1: Yeah, it's not easy because it goes really to the

146
00:07:45,520 --> 00:07:47,600
Speaker 1: heart of risk taking. But talk to me a little

147
00:07:47,600 --> 00:07:49,440
Speaker 1: bit about what you're seeing the pipeline. Are there more

148
00:07:49,480 --> 00:07:52,400
Speaker 1: IPOs or is there more mina deal? Is it waking up?

149
00:07:52,760 --> 00:07:57,160
Speaker 2: So clearly after eighteen months two years of a pretty

150
00:07:57,200 --> 00:07:59,640
Speaker 2: much just stand still in the IPO market, sleeping bin

151
00:08:00,160 --> 00:08:03,480
Speaker 2: absolutely and private equity funds not doing much. Frankly, what

152
00:08:03,600 --> 00:08:06,600
Speaker 2: you see now is private equally funds being very keen

153
00:08:06,680 --> 00:08:11,480
Speaker 2: to deploy more and sellers more open to selling. So

154
00:08:11,680 --> 00:08:14,640
Speaker 2: you'll see deal flow picking up, which is great news.

155
00:08:15,040 --> 00:08:18,640
Speaker 2: The IPO market is slowly opening up, more in the

156
00:08:18,760 --> 00:08:21,560
Speaker 2: US than in Europe. I was supposed to see that

157
00:08:21,720 --> 00:08:25,400
Speaker 2: the Chinese company Shine is contemplating doing an IPO in

158
00:08:25,400 --> 00:08:27,840
Speaker 2: London as opposed to the US. It's a good sign,

159
00:08:27,920 --> 00:08:30,440
Speaker 2: but sadly we have to do notted on deal and

160
00:08:30,480 --> 00:08:33,200
Speaker 2: we need to do much much more to make London

161
00:08:33,200 --> 00:08:37,319
Speaker 2: more attractive. But clearly the trend is going in the

162
00:08:37,360 --> 00:08:39,880
Speaker 2: right direction in terms of IPOs and deals.

163
00:08:40,120 --> 00:08:42,240
Speaker 1: I mean, does it make a difference who comes into

164
00:08:42,280 --> 00:08:44,400
Speaker 1: power in terms of businesses right now or.

165
00:08:44,320 --> 00:08:45,920
Speaker 2: Do you see both parties in the UK?

166
00:08:46,080 --> 00:08:47,520
Speaker 1: In the UK pretty much in the middle.

167
00:08:48,240 --> 00:08:53,120
Speaker 2: I think the two sides want to reform London and

168
00:08:53,160 --> 00:08:55,480
Speaker 2: the city in general. The question is, well, they've been

169
00:08:55,480 --> 00:08:58,640
Speaker 2: talking about it for a while, not much has happened.

170
00:08:59,360 --> 00:09:03,240
Speaker 2: The question is that any new government, probably from Labor,

171
00:09:03,440 --> 00:09:06,600
Speaker 2: would actually implement the reforms that are absolutely necessary. I

172
00:09:06,600 --> 00:09:08,600
Speaker 2: hope they will if they seem to be more market

173
00:09:08,640 --> 00:09:12,240
Speaker 2: friendly than people expected. Let's see what do.

174
00:09:12,240 --> 00:09:13,760
Speaker 1: You do with gold right now? So it's a play

175
00:09:13,800 --> 00:09:16,280
Speaker 1: against everything, but it's also I guess, you know, there's

176
00:09:16,360 --> 00:09:20,440
Speaker 1: movements maybe from other countries to such treasures and by.

177
00:09:20,320 --> 00:09:25,480
Speaker 2: Gold, So there is something structural happening in the gold market.

178
00:09:25,559 --> 00:09:28,439
Speaker 2: But beyond the gold market, in trade in general and

179
00:09:28,960 --> 00:09:32,160
Speaker 2: currencies in general. You've seen the price of gold going

180
00:09:32,240 --> 00:09:36,280
Speaker 2: up dramatically over the last I would say twelve months

181
00:09:36,760 --> 00:09:40,840
Speaker 2: as a result of central banks buying more and more gold.

182
00:09:41,559 --> 00:09:46,079
Speaker 2: And the biggest buyers of gold have been probably the Chinese.

183
00:09:46,400 --> 00:09:48,400
Speaker 2: And the reason why they are buying more gold is

184
00:09:48,440 --> 00:09:50,439
Speaker 2: that they don't want to be in the position of

185
00:09:50,480 --> 00:09:54,240
Speaker 2: the Russian Central Bank, which given what was going on

186
00:09:54,280 --> 00:09:57,880
Speaker 2: in Ukraine, ended up being sanctioned and ended up having

187
00:09:57,920 --> 00:10:02,560
Speaker 2: their reserves frozen by the US. The Chinese have trillions

188
00:10:02,559 --> 00:10:05,960
Speaker 2: of reserves. The last thing they want is to, you know,

189
00:10:06,040 --> 00:10:09,000
Speaker 2: here one morning that the Federal Reserve decided to block

190
00:10:09,720 --> 00:10:12,280
Speaker 2: this money, so they buy more and more gold. The

191
00:10:12,280 --> 00:10:15,000
Speaker 2: Indian Central Bank is doing the same and that is

192
00:10:15,040 --> 00:10:19,280
Speaker 2: what's sustaining the gold market. Beyond that, I think we

193
00:10:19,320 --> 00:10:24,480
Speaker 2: should read behind, you know, the rise of gold, an

194
00:10:24,520 --> 00:10:28,200
Speaker 2: increasing riek of currency walls, and an increasing rieks of

195
00:10:28,320 --> 00:10:32,400
Speaker 2: trade wars. Tariffs, that would be my biggest concern for

196
00:10:32,440 --> 00:10:37,880
Speaker 2: the next twelve eighteen months. You had President Biden announcing

197
00:10:38,679 --> 00:10:45,000
Speaker 2: last week very high tariffs on electric vehicles, hundred percent tariffs,

198
00:10:45,320 --> 00:10:49,240
Speaker 2: tariffs on microschips made in China, and then you heard

199
00:10:49,280 --> 00:10:51,600
Speaker 2: Trump basically saying we one hundred percent is not enough,

200
00:10:51,640 --> 00:10:54,800
Speaker 2: it should be two hundred percent. So that rhetoric is

201
00:10:54,840 --> 00:10:57,640
Speaker 2: giving you the direction of travel. Direction of travel is

202
00:10:57,679 --> 00:11:01,320
Speaker 2: more and more trade tension and trade time and tariffs

203
00:11:01,400 --> 00:11:04,480
Speaker 2: are a very very bad thing for everyone. We should

204
00:11:04,480 --> 00:11:05,480
Speaker 2: be very careful about.

205
00:11:05,280 --> 00:11:07,559
Speaker 1: That and possibly inflationary. Daniel, thank you so much as

206
00:11:07,559 --> 00:11:09,920
Speaker 1: always for joining. Is Staniel Pinto there the Chairman and

207
00:11:10,000 --> 00:11:12,120
Speaker 1: chief executive of Stanhope Capital