WEBVTT - Triple-Witching and Risk-Off Trades 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.919 the Bloomberg Terminal, and the Bloomberg Business App. David Biancle 0:00:48.640 --> 0:00:51.640 joined us right now. Good morning, sir, It's good to 0:00:51.680 --> 0:00:56.000 have you here with DWS. It's like a Deutsche Bank 0:00:56.080 --> 0:01:00.800 wing right, Yes, Management, what are you gonna down thirty? 0:01:01.000 --> 0:01:03.440 What I see right now is a lot of window dressing. 0:01:03.520 --> 0:01:07.960 People are going, oops, I'm behind I better buy some things. 0:01:08.040 --> 0:01:09.319 Is that what's going on right now? 0:01:10.040 --> 0:01:13.200 Yeah, there's definitely been anxiety of market and to try 0:01:13.200 --> 0:01:14.600 to figure out a way to keep up with this 0:01:14.680 --> 0:01:17.920 market without being overly concentrated, because how do you do that? Well, 0:01:17.959 --> 0:01:20.800 that's the challenge. The benchmarks have become concentrated, and you know, 0:01:20.840 --> 0:01:24.160 we've got to relentless momentum market. The thing is, the 0:01:24.160 --> 0:01:27.319 fundamentals are good in terms of earnings growth at those stocks, 0:01:27.360 --> 0:01:29.760 those magnificent seven Grade eight. Maybe it's going to go 0:01:29.800 --> 0:01:32.880 from G eight to G ten, G twelve, But you know, 0:01:33.200 --> 0:01:34.880 so much of the rest of the market has had 0:01:34.920 --> 0:01:38.360 really sluggish earnings growth, particularly sluggish real I think you'll 0:01:38.360 --> 0:01:40.679 see the same thing in two Q results. You know, 0:01:40.760 --> 0:01:43.640 maybe three percent growth at the S and P four 0:01:43.720 --> 0:01:46.800 ninety two, but ten percent growth with the benefit of 0:01:46.840 --> 0:01:47.320 the grade eight. 0:01:47.440 --> 0:01:50.000 Let's take up magnificent eight whatever they are, right, and 0:01:50.280 --> 0:01:54.160 so there's another four hundred eighty stocks left. Let's take 0:01:54.160 --> 0:01:57.560 them down to one hundred random stocks. How many of 0:01:57.640 --> 0:01:59.800 one hundred of the rest of the S and P 0:02:00.800 --> 0:02:04.040 have earnings growth, have free cash flow growth. 0:02:04.920 --> 0:02:10.400 The majority do have scant earnings and free cash flow growth, 0:02:10.639 --> 0:02:14.200 not the healthy mid to upper single digit earnings growth 0:02:14.240 --> 0:02:17.760 you'd expect, particularly when you have had inflation and pricing 0:02:17.800 --> 0:02:20.639 power at companies as we have over the past couple 0:02:20.680 --> 0:02:23.320 of years. I'm not saying things are bad. I'm just 0:02:23.360 --> 0:02:27.760 saying earnings growth, particularly setting the grade eight a side, 0:02:28.200 --> 0:02:30.280 is not something that really justifies a twenty two to 0:02:30.360 --> 0:02:33.520 twenty three PE multiple. Now, I do think that a 0:02:33.639 --> 0:02:36.680 twenty ish PE is sustainable as long as ten year 0:02:36.760 --> 0:02:39.400 yields stay closer to four rather than five, which is 0:02:39.400 --> 0:02:41.359 a risk, as long as the ten year tips yield 0:02:41.400 --> 0:02:43.960 stays under two, which it is right this moment. But 0:02:44.240 --> 0:02:46.880 I do think right now is a good time to 0:02:47.120 --> 0:02:50.960 de risk and diversify. And I say d risk because 0:02:50.960 --> 0:02:53.800 there's still a very good opportunity at one two three 0:02:53.919 --> 0:02:56.440 year points on the curve and taking a little bit 0:02:56.480 --> 0:02:58.760 of credit risk, you'll make your five percent. And I'm 0:02:58.840 --> 0:03:01.120 doubtful that over the next two two and a half 0:03:01.240 --> 0:03:04.680 years there's anything more than five percent total return upside 0:03:04.800 --> 0:03:07.880 annualized at the S and P. And for the summer, okay, 0:03:08.040 --> 0:03:09.920 for the summer, I think we're about to turn our 0:03:09.960 --> 0:03:12.440 attention even more to the elections. We've got the debate 0:03:12.480 --> 0:03:15.160 next week, we've got the conventions coming up, obviously, the 0:03:15.200 --> 0:03:18.600 elections in November. What we'll hear more about is that 0:03:18.680 --> 0:03:22.960 fiscal policy needs to be addressed after this election if 0:03:23.000 --> 0:03:25.600 it's not, and I think it'd be unwise for the 0:03:25.600 --> 0:03:28.080 FED to cut before the election, not knowing the outcome. 0:03:28.360 --> 0:03:31.240 This is an important event, and it's very important for 0:03:31.360 --> 0:03:35.320 fiscal conditions and thus ten year yields, and I don't 0:03:35.360 --> 0:03:36.600 think the FED should cut before that. 0:03:36.960 --> 0:03:37.640 So should we? 0:03:38.080 --> 0:03:41.119 So we're de risking in part because some of the 0:03:41.160 --> 0:03:42.800 political uncertainties exactly. 0:03:42.880 --> 0:03:44.640 And those who think the Fed's going to cut this 0:03:44.680 --> 0:03:47.560 summer or even in September, I don't think so. Those 0:03:47.560 --> 0:03:49.880 who think that there's going to be this broadening of 0:03:50.440 --> 0:03:53.840 health to healthy, strong earnings growth beyond the magnificent seven, 0:03:53.880 --> 0:03:54.720 I don't think so. 0:03:54.840 --> 0:03:55.320 Not yet. 0:03:55.320 --> 0:03:58.640 Maybe next year, and these valuations, you go from twenty 0:03:58.680 --> 0:04:02.120 two and a half to twenty twenty times this year's 0:04:02.120 --> 0:04:05.160 earnings is forty nine hundred, okay, and so you can 0:04:05.200 --> 0:04:07.000 easily have a ten to fifteen percent decline. 0:04:07.040 --> 0:04:09.760 All right, So do we park ourselves into your treasury 0:04:09.760 --> 0:04:10.840 at four point seven percent? 0:04:10.880 --> 0:04:13.680 Do we not a bad idea? To not a bad 0:04:13.720 --> 0:04:16.400 idea to overweight that? We know we're always in equities, 0:04:16.440 --> 0:04:18.800 but the preference now is for the shorter end of 0:04:18.839 --> 0:04:21.440 the curve and a little bit of credit risk, and 0:04:21.480 --> 0:04:24.880 then not that we have our the ones we like 0:04:24.920 --> 0:04:26.480 and the ones we're concerned about. When it comes to 0:04:26.800 --> 0:04:30.160 magnificent seven, But we are trying to diversify away from 0:04:30.200 --> 0:04:34.719 the Magnificent seven because portfolios do benefit from diversification. You 0:04:34.760 --> 0:04:36.760 never know what's going to happen. And we're adding to 0:04:36.800 --> 0:04:40.280 the others, and we're adding to foreign equities, but we're 0:04:40.320 --> 0:04:42.720 not adding to small caps. Or actually we've gotten more 0:04:42.760 --> 0:04:44.400 cautious than small caps for the summer. 0:04:44.440 --> 0:04:48.960 With Europe blowing up. I thank yesterday Adrian Wooldridge was 0:04:49.000 --> 0:04:53.280 great on London and the United Kingdom and Leonard Laurento 0:04:53.320 --> 0:04:56.640 and France. What a half hour that was on these elections. 0:04:56.920 --> 0:04:59.200 Do you buy straw hats in winter and that means 0:04:59.240 --> 0:05:01.680 you buy europe blue chips? 0:05:02.560 --> 0:05:05.480 Well, yes, I would stick with the larger cap blue 0:05:05.560 --> 0:05:10.599 chip companies in Europe. And while we do expect European 0:05:10.640 --> 0:05:14.040 earnings to get back to growth as soon as the 0:05:14.080 --> 0:05:16.359 second quarter and third quarter, and they've been in a 0:05:16.360 --> 0:05:20.640 profit recession for a long time, the thing about the 0:05:20.640 --> 0:05:25.600 European market is it's your typical or quintessential value investors market. 0:05:25.960 --> 0:05:27.560 And so as long as you think things are going 0:05:27.640 --> 0:05:32.520 to be okay politically or geopolitically and even economically, and 0:05:32.880 --> 0:05:35.160 we think things are improving on the earnings front out 0:05:35.200 --> 0:05:39.040 of Europe as long as things are okay, and it's 0:05:39.040 --> 0:05:41.400 hard to crush the European economy. It's a resilient economy, 0:05:41.440 --> 0:05:44.440 albeit it doesn't grow strongly. As long as things are okay, 0:05:44.800 --> 0:05:48.839 the valuations provide provide upside, and we think Europe continues 0:05:48.839 --> 0:05:52.599 to generate strong returns and it offers that diversification. We 0:05:52.680 --> 0:05:55.240 also like Japan, so i'd say EFA in general. 0:05:55.880 --> 0:06:02.839 Japan again coming he is, he's very big again kind 0:06:02.839 --> 0:06:05.080 of how I mentioned to Tom. I mean, you know, 0:06:05.160 --> 0:06:07.200 we haven't talked about Japan for twenty five or thirty years, 0:06:07.200 --> 0:06:09.920 and now it's almost every day I hear someone in 0:06:09.960 --> 0:06:13.560 your position. So you're looking at Japan. What's really changed there? 0:06:13.760 --> 0:06:17.360 Well, you've heard the government story. They finally got religion on, 0:06:17.440 --> 0:06:20.920 return on capital and corporate discipline. But they do have 0:06:20.960 --> 0:06:26.640 good businesses and finally the banks or anticipating a higher 0:06:26.640 --> 0:06:28.720 interest rate environment, even a little bit higher than here. 0:06:28.800 --> 0:06:30.680 That will take time. But they have a lot of 0:06:30.680 --> 0:06:37.120 good industrial companies machine tools and automation, and even components 0:06:37.520 --> 0:06:41.920 and materials that are important to semi conductors. The valuations 0:06:41.960 --> 0:06:45.240 are very reasonable. These are good businesses. It's a diversified index. 0:06:45.520 --> 0:06:48.039 The yen is really really weak, and it makes Japanese 0:06:48.040 --> 0:06:52.320 products affordable. Also, it's under the US security umbrella, which 0:06:52.360 --> 0:06:56.240 means that's the beach hold for investors into Asia. 0:06:56.040 --> 0:06:58.440 Right right, I mean just wing it back to Europe. Semens, 0:06:58.440 --> 0:07:01.080 which I haven't looked at in ages a moonshot off 0:07:01.120 --> 0:07:04.320 the pandemic folks. Semens of Munich three hundred and twenty 0:07:04.360 --> 0:07:10.440 three thousand employees. Basically, it's ginormous dividend growth, single digit. 0:07:10.560 --> 0:07:13.640 It's there, but I'm sorry, with a limited capex, they 0:07:13.680 --> 0:07:17.440 get some serious free cash flow. And everybody's like beyond 0:07:17.520 --> 0:07:20.560 gloomy about the German manufacturing model. 0:07:20.840 --> 0:07:24.160 And the German economy has been sluggish, and there are 0:07:24.160 --> 0:07:27.000 probably concerns to be had about auto given the. 0:07:27.640 --> 0:07:29.400 Semens is not all exactly so. 0:07:29.720 --> 0:07:33.000 The thing about it is there are European companies that 0:07:33.040 --> 0:07:38.320 are very well positioned for the transition to electrification, like 0:07:38.360 --> 0:07:39.600 the one you said, and I can think of a 0:07:39.640 --> 0:07:44.280 few others I can talk about. I can, but the 0:07:45.160 --> 0:07:49.880 point is Europe is well positioned for electrification. I think 0:07:49.880 --> 0:07:52.200 that's known in many of these industrial companies in the 0:07:52.320 --> 0:07:55.560 US and do well. But look at utility companies that 0:07:55.600 --> 0:07:58.560 I think is an underappreciated play, not just on electric 0:07:58.640 --> 0:07:59.920 vehicles but on data center. 0:08:00.520 --> 0:08:03.520 Paul, I haven't said this in ages the forward multiple 0:08:03.520 --> 0:08:08.760 and semens sixteen. Yeah, remember that it's been a while. 0:08:08.800 --> 0:08:12.040 We used to go, I don't know, it's twelve multiple. 0:08:12.280 --> 0:08:15.000 I think they can span out to sixteen. And now 0:08:15.040 --> 0:08:16.120 what are we looking at? Yeah? 0:08:16.160 --> 0:08:18.240 But when I think a semens and I think, I 0:08:18.280 --> 0:08:20.480 think of the German economy, and I think of the export, 0:08:20.520 --> 0:08:23.480 and I think at the reliance upon Chinamens twelve percent 0:08:23.480 --> 0:08:25.560 of the revenue thanks to you to the pg EO 0:08:25.720 --> 0:08:28.000 function on the Bloomberg trimninal twelve percent of the revenue 0:08:28.040 --> 0:08:31.840 from China seamen gregious to me. I mean, I mean, 0:08:31.880 --> 0:08:33.600 I guess that's a little bit of a discount the multiple. 0:08:33.600 --> 0:08:36.320 But it's amazing how that has become something that people 0:08:36.360 --> 0:08:38.440 toa concern with and discount the multiple over the China 0:08:38.480 --> 0:08:40.960 exposure of the foreign exposure used to be the other 0:08:41.000 --> 0:08:45.000 way around. But electrifications alive and well there are industrial 0:08:45.000 --> 0:08:47.640 companies US and Europe exposed to it. The other thing 0:08:47.679 --> 0:08:49.839 that's going on in Europe and maybe it comes. Let's 0:08:49.840 --> 0:08:53.080 watch the elections in the United States are carbon credits 0:08:53.280 --> 0:08:56.679 and utility companies. Electricity prices are going to be going 0:08:56.760 --> 0:09:00.120 up a lot unless the government figures out a way 0:09:00.160 --> 0:09:02.440 to help subsidize this, and clarbon corts could help. 0:09:02.520 --> 0:09:04.880 We had to run David Biancochitz, thank you so much. 0:09:15.040 --> 0:09:20.920 Bulletproof Engineering. Katie Kaminski joins Alpha Cineplex right now on 0:09:21.120 --> 0:09:25.240 Trench double and also, as Paul mentioned, operational research out 0:09:25.280 --> 0:09:29.400 of a school in the Charles River in Boston. Katie, 0:09:29.800 --> 0:09:32.360 we could go for three hours this morning, but just 0:09:32.440 --> 0:09:36.800 basically have we reversed to finally trend in place higher 0:09:36.920 --> 0:09:39.400 fixed income prices in lower. 0:09:39.480 --> 0:09:43.440 In the process of pivoting, the signals have been switching 0:09:43.600 --> 0:09:46.640 more to long particularly in international fixed income. 0:09:47.040 --> 0:09:49.520 But I'd say that you're still seeing a little bit of. 0:09:49.480 --> 0:09:54.640 Residual signal short and fixed income for the US because 0:09:54.679 --> 0:09:59.080 of the recent moves not being enough relative to long 0:09:59.160 --> 0:10:02.559 term trends. So it's definitely feels like an inflection point 0:10:02.559 --> 0:10:03.040 this month. 0:10:03.320 --> 0:10:05.560 The general rule I get thanks to zero It for 0:10:05.600 --> 0:10:08.360 great work on this every week is on a Friday, 0:10:08.360 --> 0:10:11.960 these sort of assess the bet it's out there. It 0:10:12.000 --> 0:10:15.439 seems to me that retail is betting America big cap, 0:10:15.520 --> 0:10:19.400 large cap Nvidia blah blah blah, and hedge funds are 0:10:19.480 --> 0:10:22.600 maybe not on that page, they're on a different page. 0:10:23.040 --> 0:10:25.680 What is the bet right now that you observe in 0:10:25.720 --> 0:10:27.079 the CTA community. 0:10:28.400 --> 0:10:31.640 So right now, it's been interesting because this year, most 0:10:31.679 --> 0:10:33.440 of the year, it's been a hedged bet in the 0:10:33.480 --> 0:10:36.240 sense that you've seen long equity signals. That's been one 0:10:36.280 --> 0:10:39.480 of the best momentum plays this year till now. But 0:10:39.559 --> 0:10:44.480 you've also seen some changes in the commodity sector, so 0:10:44.520 --> 0:10:49.040 the copper trade, the positioning in gold, a lot of 0:10:49.040 --> 0:10:52.839 commodities has been long but has been dissipating, and then 0:10:52.920 --> 0:10:56.960 this month you've seen suddenly now energy is moving upwards again. 0:10:57.040 --> 0:11:00.720 So there's this disjoint in the commodity sector. Fixed income 0:11:00.760 --> 0:11:02.280 has been short most. 0:11:02.080 --> 0:11:04.760 Of the year except for now. Recently you're starting to 0:11:04.760 --> 0:11:05.800 see that pivot. 0:11:06.679 --> 0:11:09.440 The US dollar again a tricky one has now been 0:11:09.640 --> 0:11:13.800 rallying again. We can talk about that, but in general, 0:11:14.120 --> 0:11:16.360 it does feel a little bit like a pivot or 0:11:16.400 --> 0:11:19.840 an inflection for current trends into what could be the 0:11:20.040 --> 0:11:21.640 trend going in the second half of the year. 0:11:22.480 --> 0:11:25.880 So I mean, broadly speaking, Katie, the folks you talk to, 0:11:26.360 --> 0:11:28.760 Is it a risk on environment? Do why would be 0:11:28.800 --> 0:11:31.920 long stocks, bonds things like that? Or are people just 0:11:31.960 --> 0:11:35.680 too concerned here about where the global economy is going. 0:11:36.679 --> 0:11:40.160 So this is a very good question because before June 0:11:40.440 --> 0:11:43.280 my answer would be yeah, it's pretty risk one with 0:11:43.360 --> 0:11:46.439 the exception of short fixed income positioning. But this month 0:11:46.960 --> 0:11:51.840 we have seen several synchronous sell off periods for some 0:11:51.920 --> 0:11:55.320 of the prevailing trends, and we've seen some consistent risk 0:11:55.400 --> 0:11:59.440 off days, meaning that people are running to bonds when 0:11:59.559 --> 0:12:02.079 things are looking bad. And I think this is an 0:12:02.080 --> 0:12:05.760 indication that they're actually starting to get concerned about some 0:12:05.800 --> 0:12:09.360 of the weaker data, particularly on the economic side. And 0:12:09.400 --> 0:12:12.880 so to me, it feels like sentiment has shifted some 0:12:14.000 --> 0:12:16.600 in the markets and the signals are adjusting to that. 0:12:17.679 --> 0:12:20.839 So in the fixing can market, Katie, do you want 0:12:20.880 --> 0:12:23.760 to just I don't know, sitting it to your treasury 0:12:23.760 --> 0:12:25.760 you can get close to five percent yield? Or do 0:12:25.760 --> 0:12:27.320 you want to take some credit risk on here? And 0:12:27.320 --> 0:12:28.240 if so where? 0:12:29.559 --> 0:12:30.680 Oh, that's a good question. 0:12:30.840 --> 0:12:33.000 I mean, I think a lot of in terms of 0:12:33.040 --> 0:12:36.199 the credit space is not something we are focused on. 0:12:36.320 --> 0:12:39.120 But what you have seen is that you know there 0:12:39.200 --> 0:12:42.760 is this trade off between locking in that higher yield 0:12:43.040 --> 0:12:45.439 if you do think that rates are going to come down. 0:12:45.840 --> 0:12:48.720 So I think a lot of investors are also considering that, like, 0:12:48.960 --> 0:12:51.360 could this be the moment if things do calm down? 0:12:52.200 --> 0:12:54.960 And so if you're seeing a significant enough spread in 0:12:55.000 --> 0:12:59.199 a credit product, that may make sense. But of course 0:12:59.240 --> 0:13:02.680 there's always issue that if we do actually see a 0:13:02.760 --> 0:13:07.520 longer time to get lower rates, their substantial volatility around 0:13:07.520 --> 0:13:09.120 the bond positioning in general. 0:13:09.200 --> 0:13:13.040 Right now, should we go double honor? Sure? Okay, ladies 0:13:13.080 --> 0:13:17.040 and gentlemen. For the first time ever on Bloomberg Surveillance, 0:13:17.480 --> 0:13:22.679 Brownian motion in drift function with Katie Kaminski. Katie, I 0:13:22.880 --> 0:13:28.440 look at bitdog and I can't find a legitimate time series. 0:13:28.760 --> 0:13:32.600 This is Hamilton, folks, out of University California, San Diego. 0:13:33.280 --> 0:13:39.440 It doesn't drift within a random sense like most time series. 0:13:40.040 --> 0:13:43.880 Can you chart? Can you get actual time series motion 0:13:44.600 --> 0:13:46.960 out of bitcoin? Well? 0:13:46.960 --> 0:13:50.040 I mean I think so, because bitcoin just has way 0:13:50.080 --> 0:13:52.960 more volatility. So I think you just got to have 0:13:53.000 --> 0:13:57.439 a different input function to that drift process. And notoriously, 0:13:57.520 --> 0:14:00.960 it's difficult to estimate the mean of a Brownian motion. 0:14:01.720 --> 0:14:03.319 It's easier to estimate the ball. 0:14:03.840 --> 0:14:06.360 So I'd say that, you know, you can definitely be 0:14:06.480 --> 0:14:08.680 sure that you're going to have much higher volatility in 0:14:08.679 --> 0:14:11.240 those type of assets, right, not to mention the fact 0:14:11.320 --> 0:14:14.320 we don't have as much data that haven't been around exactly. 0:14:13.960 --> 0:14:18.400 Is it maturing though? And on the Kaminsky Mit timeline, 0:14:18.720 --> 0:14:24.680 when does bitcoin start to drift like Microsoft or Sweeney 0:14:24.800 --> 0:14:27.320 algamated the metal company out in a Jersey. 0:14:28.400 --> 0:14:30.680 Well, I think that's what you know. 0:14:30.760 --> 0:14:33.800 Initially, people like to think that something is so different, 0:14:33.920 --> 0:14:36.480 and it's not. It's different from everything else. And I 0:14:36.520 --> 0:14:40.040 think that bitcoin has really shown as an asset. It's 0:14:40.120 --> 0:14:42.960 just a highly volatile asset, but it does have drift 0:14:43.200 --> 0:14:46.320 and it does behave in some sense less like a 0:14:46.760 --> 0:14:50.080 you know, risk off asset, less uncorrelated to stock markets 0:14:50.160 --> 0:14:52.840 than anything else. So people thought, oh, this is totally different. 0:14:53.120 --> 0:14:56.120 It's an uncorrelated process. But it actually does have a 0:14:56.120 --> 0:14:58.920 lot of inputs to people's demand because who's buying it, 0:14:59.080 --> 0:15:01.160 people buy it, Therefore. 0:15:00.840 --> 0:15:03.440 It's still connected to the general economy. 0:15:03.640 --> 0:15:05.440 Was this too much for Friday? 0:15:06.480 --> 0:15:09.400 Katie commits can go away with Alpha Simplex. There are 0:15:09.400 --> 0:15:12.160 Brownie in Motion and bit Dog. I love that I mean, 0:15:12.240 --> 0:15:15.840 we're gon frame that right right there, Katie commitsy just 0:15:15.880 --> 0:15:31.360 truly outstanding. This is a wonderful conversation now and we pause, 0:15:31.440 --> 0:15:33.680 and I'm going to do my annual lecture. It's summer. 0:15:35.040 --> 0:15:37.800 You have kids at home, they're in high school, they're bored. 0:15:38.400 --> 0:15:42.160 They're in college, they're bored. They're out of college, they're bored. 0:15:42.720 --> 0:15:48.600 You start screaming Daniel Kurt's Falin, Daniel Kurtz Fhalin, and 0:15:48.680 --> 0:15:52.520 you throw a subscription to Foreign Affairs Magazine at them 0:15:52.920 --> 0:15:55.200 and say they don't get lunch money for the next 0:15:55.240 --> 0:15:59.400 Gen and Tonic until they read two articles joining us 0:15:59.440 --> 0:16:02.720 from foreign fairs. Always might read it the summer, Daniel 0:16:02.800 --> 0:16:07.920 Kurtz Phalen, Daniel, congratulations on the issue, and you brilliantly 0:16:08.040 --> 0:16:14.080 frame out Biden and Trump foreign policy with Ben Rhodes 0:16:14.280 --> 0:16:18.400 In O'Brien of the Trump administration. Tell me the distance 0:16:18.560 --> 0:16:20.040 between those two articles. 0:16:21.240 --> 0:16:23.720 Yeah, thanks Tom. First of all, for the new the 0:16:23.720 --> 0:16:26.160 new marketing pitch. I'll send it over to our business. 0:16:26.400 --> 0:16:27.200 See what they think. 0:16:28.720 --> 0:16:28.960 I mean. 0:16:28.960 --> 0:16:30.640 I think that there are a lot of fascinating things 0:16:30.640 --> 0:16:32.560 as you read through these two articles you have I 0:16:32.600 --> 0:16:35.240 think Robert O'Brien, who is the last national advisor in 0:16:35.280 --> 0:16:38.240 the Trump administration, laying out probably in more detail and 0:16:38.320 --> 0:16:41.760 more specificity than we've seen from anyone in the Trump camp, 0:16:41.800 --> 0:16:44.200 what a second Trump term would do. And then Ben Rhodes, 0:16:44.200 --> 0:16:48.320 who was one of the most senior foreign policy advisors Obama, 0:16:48.920 --> 0:16:51.360 kind of laying out I think a slight difference from 0:16:51.360 --> 0:16:54.400 the Biden administration, but you know, broadly sympathetic to the immigration. 0:16:54.960 --> 0:16:57.240 And what's kind of fascinating about both of them is 0:16:57.280 --> 0:17:01.600 they both are kind of reacting to a sense of 0:17:01.680 --> 0:17:05.159 failures of American foreign policy and proceeding decades that they 0:17:05.200 --> 0:17:08.399 go in slightly different directions. Brian, you know some of 0:17:08.440 --> 0:17:10.919 the hawkish impulses that you get from Trump at a 0:17:11.000 --> 0:17:13.600 very very high level, you know, in a kind of 0:17:14.040 --> 0:17:17.159 very abstract way in some sense, with a lot of specificity. 0:17:17.240 --> 0:17:20.359 So he talks about going back to testing nuclear weapons, 0:17:20.400 --> 0:17:24.440 something we haven't done actively in a long time, fold 0:17:24.480 --> 0:17:29.120 decoupling with China and really ramping up pressure there. 0:17:30.440 --> 0:17:33.600 That's where I wanted to go. Daniel, your claim is 0:17:33.960 --> 0:17:38.119 still will Onto Marshall in our distance from China, and 0:17:38.160 --> 0:17:42.120 I'm going to say nineteen forty eight nothing's changed, right, 0:17:42.200 --> 0:17:46.400 these two candidates really want a distance from China, right. 0:17:47.840 --> 0:17:50.280 That's exactly right. And just to flag one other thing 0:17:50.280 --> 0:17:52.159 in the issue. You know, Tom, we had talked in 0:17:52.160 --> 0:17:55.000 the past about and Escay. We ran by Matt Pottinger, 0:17:55.040 --> 0:17:58.040 who was the kind of chief Chinahan in the Trump administration, 0:17:58.160 --> 0:18:03.320 and Matt Gallagher, former Republican congressman who ran the China Subcommittee, 0:18:03.480 --> 0:18:06.600 laying out a really hardline policy, hardline strategy against China 0:18:06.600 --> 0:18:10.720 that included call for really weakening the Chinese Communist Party. 0:18:10.920 --> 0:18:13.880 They it's regime change has become a dirty word because 0:18:13.920 --> 0:18:16.280 of its association with the Rock and American foreign policy, 0:18:16.320 --> 0:18:18.439 but they call for trying to change the nature of 0:18:18.440 --> 0:18:21.520 power in China. And there's an exchange between Pottinger and 0:18:21.560 --> 0:18:24.199 Gallagher on the one hand, with rush Doshi, who just 0:18:24.320 --> 0:18:27.200 left the Biden administration working on China policy. What's really 0:18:27.240 --> 0:18:29.679 amazing is how much agreement there is. So they split 0:18:29.720 --> 0:18:33.600 on that question of weakening the regime, but there's a 0:18:33.600 --> 0:18:36.080 lot more agreement than disagreement, which I think reflects where 0:18:36.080 --> 0:18:37.159 we are on the China debate. 0:18:38.080 --> 0:18:42.400 Daniel, if you're President Biden, you're obviously an election year. 0:18:44.960 --> 0:18:47.959 What are the to do list for President Biden here 0:18:47.960 --> 0:18:52.879 in an election year. From a geopolitical perspective, You've got China, 0:18:52.920 --> 0:18:55.440 You've got obviously the Middle East, and you've got Ukraine. 0:18:56.800 --> 0:18:58.320 What's the strategy here, do you think? 0:18:58.920 --> 0:18:59.200 Yeah? 0:18:59.240 --> 0:19:01.280 I mean it's it's it's not a moment where you 0:19:01.440 --> 0:19:03.359 envy people are kind of sitting in the in the 0:19:03.480 --> 0:19:06.240 US government trying to manage these three crises. You know, 0:19:06.240 --> 0:19:09.840 I think what they're trying to do on China, which 0:19:10.000 --> 0:19:12.159 you know, remains, as we've talked about in the past, 0:19:12.320 --> 0:19:15.159 the really the kind of framing the dominant issue for 0:19:15.200 --> 0:19:18.720 American foreign policy, even in with with other crises and 0:19:18.760 --> 0:19:21.119 hot wars going on. I think on China there's this 0:19:21.200 --> 0:19:24.280 desire to just keep it as calm as possible for 0:19:25.040 --> 0:19:28.639 UH through November. So Chi Jimpang and Joe Biden met 0:19:28.880 --> 0:19:32.880 in San Francisco in California last last November, and it's 0:19:32.880 --> 0:19:35.520 not that they settled any of the really deep fissures 0:19:35.520 --> 0:19:38.920 and tensions in the relationship, but they did basically say, look, 0:19:39.000 --> 0:19:42.280 let's let's let's clumb this right now. We both have 0:19:42.359 --> 0:19:44.480 reasons for doing it. The Chinese economy, as you all know, 0:19:44.520 --> 0:19:47.560 extremely well is in terrible shape, so there's a mutual 0:19:47.600 --> 0:19:50.560 interest in not stirring the pot too much at this moment. 0:19:50.600 --> 0:19:53.679 But it doesn't really solve any of the basic issues. 0:19:53.680 --> 0:19:56.000 So I think Biden would like to keep that at 0:19:56.040 --> 0:20:00.520 a low boil even as he finds some way to 0:20:00.160 --> 0:20:03.199 to get through what are still these kind of you know, 0:20:03.320 --> 0:20:06.200 frozen terrible status quos in both Gaza and Ukraine. So 0:20:06.520 --> 0:20:09.439 the Hail Mary and Gaza is of course a Saudi 0:20:09.520 --> 0:20:14.040 normalization deal. They're still pursuing really aggressively, which you know 0:20:14.520 --> 0:20:16.520 what the odds of that are. It's really hard to say. 0:20:16.520 --> 0:20:18.840 It seems like seems like a long shot to me, 0:20:19.080 --> 0:20:23.359 but it would really be transformative, similar in Ukraine, hoping 0:20:23.359 --> 0:20:26.320 that the battlefield shifts a bit and things don't look 0:20:26.400 --> 0:20:27.560 quite as grim as they do right now. 0:20:27.600 --> 0:20:29.560 I got to leave it there, Daniel Chris Fahn, thank 0:20:29.600 --> 0:20:32.040 you so much. With foreigners affairs, I can't say enough 0:20:32.040 --> 0:20:44.399 about it. From school, Lisa, what do you have? 0:20:44.720 --> 0:20:45.040 All right? 0:20:45.080 --> 0:20:47.720 We wh are we talking about? Missing out on that? 0:20:47.960 --> 0:20:51.320 Nvidios stock right? The big Yeah? Tom So SoftBank CEO 0:20:51.600 --> 0:20:53.920 Masi Yoshi's son. He's known for some of the most 0:20:53.960 --> 0:20:58.560 successful investments in technology history. But he made that mistake. Okay. 0:20:58.640 --> 0:21:01.240 At the company's shareholder meeting, he talked about missing out 0:21:01.240 --> 0:21:04.440 on one hundred and fifty billion dollars after selling in 0:21:04.560 --> 0:21:08.600 video shares in twenty nineteen. Okay, so you have the breakdown. 0:21:08.640 --> 0:21:11.200 It was SoftBank's Vision Fund. They sold an entire four 0:21:11.200 --> 0:21:14.000 point nine steak in Nvidia. They booked a three point 0:21:14.040 --> 0:21:16.159 three billion return on the investment, so it seemed like 0:21:16.200 --> 0:21:18.919 a good thing because they spent about seven hundred million 0:21:18.960 --> 0:21:21.399 for the steak. But if he had held on to 0:21:21.520 --> 0:21:23.920 that in Vidia steak, it would be worth around one 0:21:23.960 --> 0:21:26.480 hundred and sixty billion dollars today. 0:21:27.320 --> 0:21:31.200 There will be a biography Linel Barber, who wrote the 0:21:31.320 --> 0:21:35.520 ft for years. Lionel Barber out with a one volume. 0:21:35.560 --> 0:21:37.760 I think it's the beginning of the year Gambling Man, 0:21:37.840 --> 0:21:43.760 The Secret Story of Masa yoshiks Son. I don't have 0:21:43.800 --> 0:21:45.280 a really informed opinion. 0:21:46.600 --> 0:21:49.840 There's some big winners and some big losers. 0:21:50.960 --> 0:21:53.240 You nailed that a big steak and arm and Alibaba, 0:21:53.320 --> 0:21:57.399 so that's not too bad. O. What else you missed? 0:21:57.400 --> 0:21:57.760 The train? 0:21:58.640 --> 0:21:58.960 Okay? 0:21:59.119 --> 0:22:03.040 Taylor Swifty on me has landed in Europe. Tom, Yes, 0:22:03.320 --> 0:22:06.480 the European summer tours kicked off today. Actually she's performed 0:22:06.480 --> 0:22:09.400 the first of eight shows at London, London's Wembley Stadium. 0:22:09.760 --> 0:22:11.880