WEBVTT - Middle Ease Tensions Have Markets in Wait-and-See Mode 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:12.000 --> 0:00:15.600 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.640 --> 0:00:19.000 with Paul Sweeney. Join us each day for insight from 0:00:19.000 --> 0:00:23.159 the best in economics, finance, investment, and international relations. You 0:00:23.200 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.320 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.320 --> 0:00:34.360 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.040 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.400 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.120 --> 0:00:47.600 the Bloomberg Terminal, and the Bloomberg Business App. We need voices, 0:00:48.240 --> 0:00:51.720 we need people with experience. And they said, well who, 0:00:51.760 --> 0:00:54.160 And I said, can you get that young Miller kid 0:00:54.520 --> 0:00:57.040 who was with George Schultz and James Baker just a 0:00:57.040 --> 0:01:01.600 few years ago, like Aaron David Miller thirty years ago, 0:01:02.040 --> 0:01:06.000 joining us now, a bit wiser, a bit older, Aaron 0:01:06.120 --> 0:01:08.679 David Miller out of Tulane and of course definitive at 0:01:08.720 --> 0:01:12.720 the Carnegie Endowment for International Peace. I want you to 0:01:12.760 --> 0:01:16.240 tell me how the facts change, Aaron David Miller. If 0:01:16.280 --> 0:01:20.080 I go directly west of Jerusalem, almost to the Mediterranean, 0:01:20.800 --> 0:01:21.839 to I think it's genera. 0:01:21.880 --> 0:01:22.920 I don't have it in front of me. 0:01:23.000 --> 0:01:26.880 A little village thirty one thousand people directly south of 0:01:26.959 --> 0:01:29.800 Tel Aviv, where a missile took out a school in 0:01:29.840 --> 0:01:30.479 the dead of night. 0:01:30.560 --> 0:01:32.479 No one was hurt. But how does that. 0:01:32.480 --> 0:01:36.080 Missile, Aaron David Miller landing on that school in a 0:01:36.120 --> 0:01:39.200 small town, how does that change the dialogue? 0:01:39.680 --> 0:01:43.280 Yeah, it has a ton of caderra and whether that 0:01:43.400 --> 0:01:47.880 was a strike or a shrapnel from an interceptor is unclear. 0:01:47.880 --> 0:01:49.160 But look, I think there are two things. 0:01:49.560 --> 0:01:51.200 And by the way, thanks for having me and I 0:01:51.200 --> 0:01:57.920 really appreciate that the kudos. Number one. What happened yesterday 0:01:58.000 --> 0:02:03.040 is virtually unprecedented, certainly in the air of Israeli Iranian 0:02:03.120 --> 0:02:07.120 Israeli conflict. Iran Locke launched one hundred and eighty plus 0:02:07.160 --> 0:02:11.840 ballistic missiles, and unlike cruise missiles, these take only twelve 0:02:11.880 --> 0:02:15.520 minutes roughly to travel from Iran to impact to an 0:02:15.560 --> 0:02:20.360 Israeli airspace. And it was a saturation attack. It covered 0:02:20.440 --> 0:02:23.320 much of the country. Yes, it was directed primarily at 0:02:23.360 --> 0:02:26.400 several military bases and most out headquarters, but I've been 0:02:26.400 --> 0:02:29.160 to most out headquarters. It is not in some isolated 0:02:29.240 --> 0:02:34.720 area so this could have been, to say the least, 0:02:35.240 --> 0:02:41.320 a catastrophe, and yet Israel's an early air defense Iron 0:02:41.360 --> 0:02:47.040 Dome David sling Arrow managed to intercept most the US 0:02:47.160 --> 0:02:51.200 two destroyers shut down a dozen or so. The Jordanians 0:02:51.240 --> 0:02:55.360 contributed as well, and I think that's the good news. 0:02:55.400 --> 0:02:59.080 That Iran may have three thousand ballistic missiles, but it 0:02:59.160 --> 0:03:04.400 took a huge shot yesterday and it essentially failed. At 0:03:04.400 --> 0:03:10.079 the same time, this is the second direct attack Aaron 0:03:10.120 --> 0:03:14.240 on Israelia. One was a thirteen fourteen. Israelis are are 0:03:14.280 --> 0:03:17.799 going to respond. I don't think there's any doubt. They 0:03:17.800 --> 0:03:20.960 cannot allow a quote new normal to be created. And 0:03:21.000 --> 0:03:25.280 even while they're degrading to his balla to a point 0:03:25.320 --> 0:03:31.120 where it is a hollowed out shadow of itself, they 0:03:31.120 --> 0:03:35.560 are They're going to respond. Biden's going to talk to 0:03:35.560 --> 0:03:39.320 to Ntagnell shortly before the beginning at Rossia Shano, which. 0:03:39.440 --> 0:03:41.560 Okay, see Aaron, just because of the time, because I 0:03:41.560 --> 0:03:43.240 know Paul wants to gain her. I got one more question. 0:03:43.280 --> 0:03:45.200 Paul's got a bunch of important questions. 0:03:45.440 --> 0:03:45.840 Robert T. 0:03:46.000 --> 0:03:48.520 Kaplan air and David Miller would say, get out the 0:03:48.600 --> 0:03:52.080 map from Armenia down to the tip of the Persian 0:03:52.120 --> 0:03:55.640 Gulf is five hundred miles and then it's another five 0:03:55.720 --> 0:03:59.680 hundred miles one thousand miles total across from Dubai. That's 0:03:59.720 --> 0:04:05.680 the western border of Iran. Where should Israel attack, Well. 0:04:05.560 --> 0:04:08.840 I think the strikes will be multiple. I think there 0:04:08.840 --> 0:04:15.040 will be economic targets, there will be strategic conventional military facilities. 0:04:15.560 --> 0:04:21.240 They'll be IRGC command and control facilities, the nuclear sites. 0:04:21.760 --> 0:04:25.720 I'm sure there's an argument being made that now is 0:04:25.760 --> 0:04:29.039 the time Isabella is weakened and no longer has the 0:04:29.080 --> 0:04:35.080 deterrent capacity. Amasa's organized military structure has gone. Iran's defenses 0:04:35.240 --> 0:04:41.800 are weak, So do it now. I'm taking a fire here, 0:04:41.839 --> 0:04:45.600 but I think the Israelis this time around will avoid 0:04:45.680 --> 0:04:48.280 Non Taz and the enrichment facilities. 0:04:48.360 --> 0:04:50.560 Okay, because I mean Aaron. I think a lot of 0:04:50.560 --> 0:04:52.880 folks just were coming up to the one year anniversary 0:04:52.880 --> 0:04:56.400 of the October seventh attack here, and the scope and 0:04:56.480 --> 0:05:00.720 the aims of this response from Israel gone from decapitating 0:05:00.800 --> 0:05:03.840 Hamas and getting the hostages back to something much much 0:05:04.000 --> 0:05:07.560 broader in the region, And as you suggest, perhaps the 0:05:07.640 --> 0:05:10.839 thinking is, if not now, when do we deal a 0:05:10.920 --> 0:05:14.640 really severe blow to Iran. What are the chances of 0:05:14.640 --> 0:05:16.720 that in terms of the nuclear facilities do you think? 0:05:17.480 --> 0:05:17.680 You know? 0:05:17.839 --> 0:05:20.880 I think the argument can be made us elections coming, 0:05:21.000 --> 0:05:27.120 the Israelis have more margin for maneuver and operational capacity now. 0:05:27.279 --> 0:05:30.479 They probably will never have a more provicious moment. Question 0:05:30.640 --> 0:05:34.280 is whether or not this would be coordinated with the 0:05:34.400 --> 0:05:39.000 United States. Again, I'm assuming they'll be. The Iranians are 0:05:39.000 --> 0:05:41.720 going to respond to whatever the Israelis do. Most likely 0:05:42.560 --> 0:05:46.880 there may be ample opportunities. But again I'm thinking opportunity 0:05:46.960 --> 0:05:50.480 or not, Israeli can set the program back. They do 0:05:50.560 --> 0:05:55.360 not have the capacity to fundamentally destroy it and permanently 0:05:56.400 --> 0:06:01.680 prevent its rebuilding. And remember, iran Is nuclear rimes told 0:06:01.760 --> 0:06:05.120 State they don't yet have a clear weapon, and I 0:06:05.120 --> 0:06:07.320 think that has to be taken into the mix. 0:06:07.520 --> 0:06:09.520 Aaron, I've got to get this in with great respect 0:06:09.600 --> 0:06:13.479 to your public service. Back thirty years ago, what would 0:06:13.520 --> 0:06:15.880 it zach Rabin say right now? 0:06:17.960 --> 0:06:22.120 Raben would not have handled October seventh the way this 0:06:22.440 --> 0:06:25.560 current Israeli government would have handled it. Raben would have responded, 0:06:25.600 --> 0:06:29.200 probably as forcefully. But during the course of that conflict, 0:06:29.880 --> 0:06:34.120 this man who had a sense of strategy, understood the 0:06:34.160 --> 0:06:41.279 relationship between the application of military force and achievable political endgames. 0:06:41.720 --> 0:06:44.799 Rabina would have understood that Israel's involved in three wars 0:06:44.800 --> 0:06:47.600 of attrition, one with Hamas, one with his bow, and 0:06:47.640 --> 0:06:50.719 obviously one with thereon, and I think he would have 0:06:50.760 --> 0:06:55.520 begun to understand and to work with or rather rather 0:06:55.600 --> 0:06:58.960 than not against the United States and other regional allies, 0:06:59.000 --> 0:07:03.080 the amidies that by Rainy's Saudi's, I'm trying to figure 0:07:03.120 --> 0:07:07.240 out a way to create an alternative to Hamas in Gaza, 0:07:08.640 --> 0:07:13.360 and an alternative political reality over time in Lebanon. That's 0:07:13.400 --> 0:07:16.320 the difference I think between this is rarely prime minister 0:07:16.440 --> 0:07:18.800 on trial for bribery, fraud and reach of trust, and 0:07:18.800 --> 0:07:22.880 it drew from this court whose entire world is driven 0:07:22.960 --> 0:07:27.680 largely by his political future or the absence of one, 0:07:27.800 --> 0:07:30.640 if he should be convicted and have to cut a 0:07:30.680 --> 0:07:33.160 plea deal by prison time. 0:07:33.480 --> 0:07:34.400 That's the difference. 0:07:34.560 --> 0:07:36.920 This has been wonderful, Aaron David Miller, thank you for 0:07:36.960 --> 0:07:40.880 your contribution. With Carnegie, there's no other way to put it. 0:07:40.960 --> 0:07:44.080 His wonderful book years ago out as well, The much 0:07:44.120 --> 0:07:48.280 too Promised Land, Aaron David Miller. 0:07:57.880 --> 0:07:59.680 With US now is someone who runs some. 0:07:59.640 --> 0:08:03.040 Money in charge of all the dividend complex, a federated 0:08:03.040 --> 0:08:07.720 Pittsburgh and also an author. I've said a lot about 0:08:07.800 --> 0:08:14.080 the immense intellectual challenge of Daniel Parris's The Ownership Dividend. 0:08:14.320 --> 0:08:19.360 It is a dense short read on what's really interesting 0:08:19.600 --> 0:08:23.600 about how equity stocks became in This is a quote 0:08:23.600 --> 0:08:27.040 from the book. US stocks began moving in the direction 0:08:27.760 --> 0:08:32.400 of becoming nearly cashless investments. Wonderful to have you here. 0:08:32.440 --> 0:08:36.320 You mentioned buybacks. Maybe we've reached a peak. Can Apple 0:08:36.480 --> 0:08:40.960 just keep buying backstock? Mathematically? Why can't they just keep 0:08:41.000 --> 0:08:43.520 giving profits buy in backstock? 0:08:44.320 --> 0:08:46.800 Thank you having me on the show, Tom and Paul. 0:08:47.520 --> 0:08:50.480 You know, I would dispute the notion that they're buying back, 0:08:50.559 --> 0:08:53.679 that they're giving profits back to shareholders. I can take 0:08:53.679 --> 0:08:56.200 a different view of buybacks. But right now buybacks are very, 0:08:56.280 --> 0:08:57.719 very popular. They're going to continue to do it. I 0:08:57.760 --> 0:09:02.920 think their last authorization was one hundred billion dollars. It's 0:09:02.960 --> 0:09:05.000 a stunning amount of money. We're heading towards a trillion 0:09:05.040 --> 0:09:09.679 dollars in buybacks this year in fiscal or calendar twenty 0:09:09.720 --> 0:09:12.240 twenty four, dividends from the s and P five hundred 0:09:12.280 --> 0:09:14.520 will be about six hundred and six twenty or so 0:09:14.640 --> 0:09:20.600 six twenty five. So buybacks are just wildly acceptable from 0:09:20.640 --> 0:09:26.000 a shareholder perspective, though a business owner perspective, investing through 0:09:26.040 --> 0:09:30.040 the stock market, buybacks don't really work for with fewer 0:09:30.120 --> 0:09:34.880 shares if you do now, most companies announce share backs 0:09:35.000 --> 0:09:38.760 very loudly, but the amount of the share capital that 0:09:38.760 --> 0:09:40.760 they take out of circulation is always lower because they're 0:09:40.760 --> 0:09:44.160 issuing shares out the back door, and they're timing of buybacks. 0:09:44.240 --> 0:09:47.000 You know, the market center all time high. The timing 0:09:47.000 --> 0:09:51.080 of buybacks is generally fairly poor. Companies initiate buybacks when 0:09:51.120 --> 0:09:54.080 they are flushed with cash. It would be better if 0:09:54.080 --> 0:09:56.080 they did it when they were in the swale of 0:09:56.120 --> 0:09:58.559 their cycle, not at the peak. So there are lots 0:09:58.600 --> 0:10:03.120 of reasons why the backboard math of buybacks, which in 0:10:03.160 --> 0:10:06.880 the academy is neutral to a dividend. I write books 0:10:06.880 --> 0:10:08.280 and books and books, and why that's not the case, 0:10:08.280 --> 0:10:11.080 but why that's just not the case in the market. 0:10:11.160 --> 0:10:12.920 I got to bring in our guest here because we 0:10:12.960 --> 0:10:16.960 go into a three am meeting. Bloomberg Surveillance and Sweeney's 0:10:17.000 --> 0:10:21.400 like a robot get parason, Get parason, Get parason, Paul, 0:10:21.559 --> 0:10:23.000 this is your guest exactly. 0:10:23.280 --> 0:10:24.880 Hey, Dan, I mean you know when I was a 0:10:24.920 --> 0:10:26.520 research channels to Wall Street that you know, had my 0:10:26.640 --> 0:10:29.679 income model, I had my balance sheet model, but by 0:10:29.760 --> 0:10:31.880 far the most important model for me was my cash 0:10:31.880 --> 0:10:33.920 flow model. I wanted to know where the cash was 0:10:33.960 --> 0:10:36.400 coming from and where it's going. So, when you sit 0:10:36.440 --> 0:10:39.480 down with a management team, do you have a preferred 0:10:40.160 --> 0:10:43.280 strategy of Hey, you've got x dollars of free cash 0:10:43.280 --> 0:10:46.079 fl overy year, we think this much to go to buyback, 0:10:46.200 --> 0:10:48.800 this much to go to dividends. Do you have a 0:10:48.840 --> 0:10:50.839 policy you like to talk to management teams about it. 0:10:51.080 --> 0:10:53.560 We are not in the interest of starving companies of capital. 0:10:53.840 --> 0:10:57.400 That is the number one acquisition made against business owners 0:10:57.440 --> 0:10:59.680 in the stock market, Minority business owners in the stock 0:10:59.720 --> 0:11:02.320 market seeking a cash payment for the capital. It is 0:11:02.320 --> 0:11:04.679 not that we're trying to bankrupt these companies. But there 0:11:04.760 --> 0:11:08.400 is a reasonable allocation for the US stock market for decades. 0:11:08.679 --> 0:11:11.600 US economy for decades, indeed, better part of two centuries 0:11:11.679 --> 0:11:14.120 was able to grow very, very rapidly and have a 0:11:14.160 --> 0:11:17.920 dividend payout ratio of approximately fifty percent. So we're able 0:11:17.960 --> 0:11:23.000 to build an industrial juggernaut and still pay out cash dividends. 0:11:23.280 --> 0:11:26.320 Now you have tech companies and others saying, oh, if 0:11:26.360 --> 0:11:27.959 I pay a dividend, I won't be able to grow. 0:11:28.280 --> 0:11:30.439 The fact is they're using the money for other purposes. 0:11:31.080 --> 0:11:33.240 But I would say that we've been around a third 0:11:33.360 --> 0:11:35.760 for a while, for the last decade or two. I 0:11:35.800 --> 0:11:40.920 think the more appropriate level for a business owner approaching 0:11:41.120 --> 0:11:43.839 the stock market as an opportunity to own businesses over 0:11:43.880 --> 0:11:46.240 the long term is something closer to about half. And 0:11:46.240 --> 0:11:49.640 that's free cash though, as you know, that earnings payout 0:11:50.080 --> 0:11:53.320 of nominal book earnings at this point is so polluted 0:11:53.360 --> 0:11:58.360 with the accounting challenges and the Shenanigans of adjusted EPs 0:11:58.400 --> 0:12:02.280 and so forth, that we really at free cash flow. 0:12:02.679 --> 0:12:06.079 So for you know, our stock market has been for 0:12:06.320 --> 0:12:08.719 a couple of decades at least driven almost entirely by 0:12:08.760 --> 0:12:12.040 big technology companies. Even more so over the less few years. 0:12:12.840 --> 0:12:15.800 They'll give you a token dividend Apple Meta, you know, 0:12:15.880 --> 0:12:18.120 less than one percent. What do you say to those 0:12:18.160 --> 0:12:22.120 management teams who have literally almost countless free cash flow 0:12:22.240 --> 0:12:23.080 every single year? 0:12:23.240 --> 0:12:25.079 Yeah, And so this year we saw a couple of 0:12:25.120 --> 0:12:28.320 companies move in that direction symbolically token, no more than that, 0:12:28.440 --> 0:12:32.920 so I don't want to discourage that behavior. But they're 0:12:32.960 --> 0:12:35.240 not part of the dividend universe yet because the cash 0:12:35.240 --> 0:12:39.520 flows simply aren't there to the minority shareholder. So we 0:12:40.200 --> 0:12:42.959 like the movement in that direction, but it's not material yet, 0:12:43.200 --> 0:12:45.960 and so it's a journey, not a moment. It would 0:12:45.960 --> 0:12:47.959 be stunning if one of those large companies were to 0:12:48.000 --> 0:12:50.959 announce a dividend payment that amounted to three or four 0:12:51.000 --> 0:12:55.200 percent of their share price of their market capitalization, and 0:12:55.280 --> 0:12:57.600 announced that they were backing off of the buybacks, but 0:12:57.760 --> 0:12:58.960 that would get our attention. 0:13:00.040 --> 0:13:03.080 Discuss Duke Energy. Good morning, Tim Cook. 0:13:03.160 --> 0:13:06.600 I know you're listening in your commute today out in Coopertino. 0:13:07.080 --> 0:13:11.240 Duke Energy with a three point six percent yield. Their 0:13:11.600 --> 0:13:16.680 persistency of excellence over twenty years is jaw dropping, coming 0:13:16.720 --> 0:13:19.760 out to about a ten percent return, but their five 0:13:19.880 --> 0:13:23.679 year dividend growth is two point zero two percent, which 0:13:23.720 --> 0:13:26.480 matters more the yield or the dividend growth. 0:13:27.040 --> 0:13:29.080 I'm not going to discuss individual securities, but I will 0:13:29.080 --> 0:13:32.680 answer the question. When you operate with a high yield, 0:13:32.679 --> 0:13:35.440 the hard part is dividend growth. So the US stock 0:13:35.440 --> 0:13:38.040 market has a yolda around one point three percent. We 0:13:38.120 --> 0:13:40.960 target in our portfolios a gross yield between four and 0:13:41.000 --> 0:13:45.040 five percent. Duke meets that standard. Other companies do as. 0:13:44.920 --> 0:13:46.319 Well at that level. 0:13:46.480 --> 0:13:49.160 The hard part's dividend growth, where we spend almost all 0:13:49.200 --> 0:13:51.319 of our time is trying to figure out those companies 0:13:51.320 --> 0:13:53.480 that do have a reasonable cash flow pad are they 0:13:53.480 --> 0:13:57.600 in a position to grow better? You ask about utilities 0:13:57.600 --> 0:14:01.120 in general, they have been among the less rapidly growing 0:14:01.160 --> 0:14:04.640 dividend companies are the last couple decades. However, watch out 0:14:04.720 --> 0:14:07.440 over the next couple decades. The demand for electricity is 0:14:07.520 --> 0:14:12.160 finally stopped being flatlined, its kicked up, and these companies 0:14:12.160 --> 0:14:14.480 are well positioned to benefit from them. 0:14:14.520 --> 0:14:16.920 Okay, so Totel of Paris, I mean, I don't want 0:14:16.920 --> 0:14:19.120 you to go into the individual stack, Paul, but I 0:14:19.200 --> 0:14:22.320 got a five point one percent yield in a dividend 0:14:22.320 --> 0:14:26.120 growth like Duke energy of three point five percent. When 0:14:26.160 --> 0:14:28.520 do you know you're a yield hog or a dividend 0:14:28.600 --> 0:14:32.400 hog versus doing something intelligent like Paul does. 0:14:32.280 --> 0:14:33.280 In his five oh one k. 0:14:34.080 --> 0:14:38.000 So Total has its enter its analyst day today in 0:14:38.040 --> 0:14:40.920 New York. I'm heading to that right after we sign off, 0:14:41.360 --> 0:14:44.040 and so we will find out what they're announcing, but 0:14:44.120 --> 0:14:47.440 they do that company can't discuss individual securities, but I 0:14:47.440 --> 0:14:49.720 can say the numbers that you presented have a reasonably 0:14:49.760 --> 0:14:54.160 good balance of dividing yield and dividend growth. But your 0:14:54.240 --> 0:14:57.480 question again, where the risk of being a dividend investor 0:14:57.520 --> 0:15:00.920 in a stock market is exactly what you identify, Tom, 0:15:00.960 --> 0:15:03.560 and that is the risk of being too yielding and 0:15:03.560 --> 0:15:05.400 not enough dividend growth. And that's what we work on 0:15:05.520 --> 0:15:07.120 sort of every day in the portfolio. 0:15:07.160 --> 0:15:08.520 So what is that balance for you? 0:15:08.680 --> 0:15:11.400 I mean for us, it's roughly fifty to fifty, meaning 0:15:11.480 --> 0:15:14.560 we are looking for an even four to five percent 0:15:15.880 --> 0:15:19.840 yield at the portfolio level, not individual securities, and roughly 0:15:19.880 --> 0:15:22.240 the same and dividend growth and the harder part, I 0:15:22.280 --> 0:15:24.120 will tell you, in a one and a half percent 0:15:24.200 --> 0:15:28.120 yielding market which is all oriented towards buybacks and flashy, 0:15:28.400 --> 0:15:30.880 shiny new objects, the hard parts of the dividend growth 0:15:30.880 --> 0:15:33.120 and that's where we spend most of our times. 0:15:33.200 --> 0:15:33.920 Thank you so much. 0:15:33.960 --> 0:15:36.800 Great to have you in our studios here from Pittsburgh 0:15:37.160 --> 0:15:38.480 Baseball Park in America. 0:15:38.600 --> 0:15:40.840 A question about that with the Pirates, the. 0:15:40.800 --> 0:15:44.840 Book is the ownership dividend is he manages the dividend portfolio. 0:15:45.400 --> 0:15:46.120 It federated. 0:15:46.200 --> 0:15:50.520 Daniel Paris, thanks so much for being with us this morning. 0:15:53.640 --> 0:15:56.000 With the tensions of the world, maybe a little bit 0:15:56.000 --> 0:15:59.600 of Erning's as well. Nike and Humanna very difficult this morning. 0:16:00.080 --> 0:16:02.640 Future is negative ten to futures negative one forty one. 0:16:02.680 --> 0:16:07.320 The VIX out over twenty nineteen point four five. Right 0:16:07.320 --> 0:16:07.760 now on. 0:16:07.760 --> 0:16:10.920 The VIX Paul Sweeney's yield the two year yield three 0:16:10.960 --> 0:16:14.520 point six y one percent. Higher yields three point seven 0:16:14.640 --> 0:16:17.560 six percent. You had a three ninety nine to thirty 0:16:17.640 --> 0:16:21.880 year now four point one one, so a higher set 0:16:21.880 --> 0:16:24.720 of yields across a full faith and credit curve. 0:16:25.200 --> 0:16:27.600 On oil, Brent crued up two point eight. 0:16:27.480 --> 0:16:30.760 Percent, up of full two dollars. It's gone negative two 0:16:30.760 --> 0:16:35.920 standard deviations out the plus two standard deviations eloquently, It's 0:16:35.960 --> 0:16:38.960 seventy five point six zero. 0:16:39.760 --> 0:16:42.120 There was a debate last night. 0:16:42.000 --> 0:16:44.480 Different I did not, but I got the highlights this morning. 0:16:44.560 --> 0:16:46.440 Much like you would go to ESPN for sports highlights, 0:16:46.520 --> 0:16:50.760 I went to guess some most highlights. It seemed pretty reasonable. 0:16:50.800 --> 0:16:53.360 They'd act like reasonable adults. There's some politic. 0:16:53.320 --> 0:16:57.960 Aed Mills they were polite, cordial, deferential, joining us now 0:16:58.000 --> 0:17:02.479 the polite, cordial, deferential Ed Mills, policy analyst. 0:17:02.200 --> 0:17:03.760 At Raymond James. 0:17:03.840 --> 0:17:08.919 I was thunderstruck Ed Mills by the decorum almost to 0:17:08.960 --> 0:17:12.320 the edge of Kennedy Nixon just a few years ago, 0:17:13.119 --> 0:17:16.479 ed before your time. Is that where we're going in 0:17:16.640 --> 0:17:19.480 five years when all of this anger recedes? 0:17:21.040 --> 0:17:21.320 Tom? 0:17:21.359 --> 0:17:21.720 I hope. 0:17:21.760 --> 0:17:25.520 So you know, I was struck, and I have folks 0:17:25.560 --> 0:17:28.360 on my team who are kind of somewhat newer, kind 0:17:28.359 --> 0:17:30.119 of I don't go back to Kennedy Nixon, but I've 0:17:30.160 --> 0:17:33.920 been watching for my adult life the all of the debates, 0:17:34.440 --> 0:17:36.840 and it's been remarkable. You go back to twenty sixteen, 0:17:36.880 --> 0:17:38.520 you go back to twenty twenty, and it seems like 0:17:38.600 --> 0:17:41.359 this is the conversation we had. The more substant to 0:17:41.400 --> 0:17:45.320 debate was at the vice presidential level, and when you 0:17:45.480 --> 0:17:48.960 turn on the commentary afterwards, there is a lot of 0:17:48.960 --> 0:17:54.639 conversation of would the American people prefer these as their candidates. 0:17:55.000 --> 0:17:57.720 I do think it's nice to actually have a debate 0:17:57.760 --> 0:18:00.399 where you have candidates turned to each other and say, 0:18:00.440 --> 0:18:02.919 I actually agree with what you said, but here's my vision. 0:18:03.880 --> 0:18:06.159 And we had that multiple times last night. 0:18:07.080 --> 0:18:11.000 So Ed, I mean, the reality is vice president debates 0:18:11.040 --> 0:18:15.200 have little impact generally on the broader general election. As 0:18:15.200 --> 0:18:19.080 we make this sprint here towards No. Fifth, what is 0:18:19.119 --> 0:18:21.000 the goal of each campaign do you think? 0:18:22.000 --> 0:18:25.760 Yeah, Paul, I think that that's absolutely correct. What we 0:18:25.800 --> 0:18:28.359 wrote in our note at Raymond James was the goal 0:18:28.480 --> 0:18:31.760 of a vice presidential candidate is to get the American 0:18:31.800 --> 0:18:35.280 people to have comfort with him or her on whether 0:18:35.440 --> 0:18:38.120 or not they could be president. And I think both 0:18:38.119 --> 0:18:42.160 of those candidates clearly cleared that bar last night. 0:18:42.880 --> 0:18:44.760 As we look to your question and. 0:18:44.880 --> 0:18:48.600 What the sprint is to the end of the month 0:18:48.680 --> 0:18:52.840 here into November fifth is trying to get momentum back 0:18:52.920 --> 0:18:55.800 for the Trump vance team and trying to maintain the 0:18:55.880 --> 0:18:59.960 momentum for the Harris Walls team. And I continue to 0:19:00.119 --> 0:19:03.439 believe we have seven swing states, but as I do 0:19:03.520 --> 0:19:07.399 my maps, it's very hard to see one side winning 0:19:07.640 --> 0:19:11.560 unless they capture Pennsylvania. So it's going to be essentially 0:19:12.040 --> 0:19:15.560 all four of those candidates should take up residency, either 0:19:15.600 --> 0:19:18.640 in Philadelphia or in Pittsburgh and see what they can 0:19:18.640 --> 0:19:20.960 get out of that state to see who can win 0:19:21.000 --> 0:19:21.439 this election. 0:19:21.840 --> 0:19:24.040 So Ed, I mean, you know, Tom and I by it, 0:19:24.080 --> 0:19:26.480 by our math, we think there's forty two people maybe 0:19:26.480 --> 0:19:29.280 in state of Pennsylvania that are going to decide this selection. 0:19:29.640 --> 0:19:34.399 I just don't recall it ever being so tight. It 0:19:34.440 --> 0:19:36.480 seems like a new world of campaigning, a new world 0:19:36.520 --> 0:19:39.840 of politics seemingly gets tighter and tighter. What in fact 0:19:39.960 --> 0:19:43.439 can be done between now November fifth by either side? 0:19:44.040 --> 0:19:47.000 Well, I think it's an important question because we do 0:19:47.160 --> 0:19:50.480 have the fact that we are just started the month 0:19:50.480 --> 0:19:54.159 of October, and we have a list of potential October surprises. 0:19:54.200 --> 0:19:56.800 So for Harris, I think it is about trying to 0:19:56.840 --> 0:20:01.000 contain those surprises, trying to contain some of the momentum 0:20:01.040 --> 0:20:03.040 that she's had since she's announced. 0:20:02.640 --> 0:20:03.560 As a candidate. 0:20:04.040 --> 0:20:06.200 And for Trump, what we're watching is back in twenty 0:20:06.240 --> 0:20:08.840 sixteen and twenty twenty he had a surge at the end. 0:20:09.320 --> 0:20:13.000 Is he able to capitalize on this and get that 0:20:13.080 --> 0:20:13.840 surge once again? 0:20:13.920 --> 0:20:14.120 Yeah? 0:20:14.119 --> 0:20:16.840 I mean Walter's note out at Cook Political Report at 0:20:16.880 --> 0:20:20.040 this morning is jaw dropping on the closeness of this 0:20:20.160 --> 0:20:23.920 and the dynamics here. She takes undecided in swing states 0:20:24.119 --> 0:20:27.840 from ten percent down to five percent at Mills twenty 0:20:27.960 --> 0:20:34.520 twenty NPR quote just forty four thousand votes in Georgia, Arizona, 0:20:34.520 --> 0:20:39.240 and Wisconsin separated Biden and Trump from a tie in 0:20:39.320 --> 0:20:42.240 the electoral College? Are we closer now? 0:20:43.400 --> 0:20:43.960 Potentially? 0:20:44.080 --> 0:20:45.959 And I look at that and I say, if it 0:20:46.000 --> 0:20:48.960 does come down to Pennsylvania, Tom, there's a law in 0:20:49.000 --> 0:20:52.400 Pennsylvania that does not allow you to open up ballots 0:20:52.440 --> 0:20:55.320 that have been mailed in until seven pm on election night. 0:20:56.160 --> 0:20:58.760 And so it's very possible that we would have the 0:20:59.119 --> 0:21:02.280 repeat of twenty two twenty in Pennsylvania where same day 0:21:02.400 --> 0:21:05.560 votes favor Trump. You have an election if and it 0:21:05.640 --> 0:21:08.520 hinges on Pennsylvania. What I am concerned for from a 0:21:08.560 --> 0:21:12.720 market perspective, from a voters in the American people accepting 0:21:12.760 --> 0:21:15.040 the outcome of this election is I don't want to 0:21:15.080 --> 0:21:17.960 come down to one state and have that lead windle 0:21:18.119 --> 0:21:22.280 as kind of votes get counted and then a doubt 0:21:22.320 --> 0:21:22.760 set in. 0:21:23.520 --> 0:21:25.320 And a civis question. 0:21:25.680 --> 0:21:28.880 With your expertise here and folks at Mills for decades, 0:21:29.320 --> 0:21:33.760 legislative experience and of courses work at Raymond James, when 0:21:33.800 --> 0:21:39.880 someone says to you mail order votes are shady, uncountable, whatever. 0:21:39.600 --> 0:21:41.840 Other language you want to do, how do you respond 0:21:41.880 --> 0:21:42.080 to that? 0:21:44.040 --> 0:21:46.800 I point to the literature that shows that they are 0:21:47.080 --> 0:21:51.479 incredibly kind of safe and easy way of doing it. 0:21:51.880 --> 0:21:56.160 We have a couple of states Utah, Washington State that 0:21:56.359 --> 0:21:57.920 kind of almost. 0:21:57.520 --> 0:21:59.800 Exclusively vote by mail. 0:22:00.040 --> 0:22:04.280 When I started in campaigns, it was the exact opposite. 0:22:04.320 --> 0:22:08.520 It was disproportionately Democrats that showed up on the same day, 0:22:08.560 --> 0:22:11.800 and a lot of conversations was how do we shift 0:22:11.880 --> 0:22:15.480 that kind of politically one way or another, depending upon 0:22:15.520 --> 0:22:16.680 which side you're working on. 0:22:17.240 --> 0:22:18.560 So it's pretty remarkable. 0:22:18.560 --> 0:22:21.399 It's only in recent years where you've had those concerns 0:22:21.840 --> 0:22:23.840 pop up into our conversation. 0:22:24.000 --> 0:22:26.760 Ed, what should we be looking for down ballot for 0:22:26.840 --> 0:22:29.320 each of these parties? Here are there certain states, certain 0:22:29.359 --> 0:22:31.360 seats that you're focusing on. 0:22:32.280 --> 0:22:34.399 Yeah, So in the House of Representatives, I think the 0:22:35.000 --> 0:22:37.920 switch from Biden to Harris has probably had the biggest impact. 0:22:38.600 --> 0:22:41.359