WEBVTT - US Jobless Rate Will Drop to 3.5% Next Year, Hyman Says 0:00:00.200 --> 0:00:04.040 Brunch 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 --> 0:00:42.160 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:42.280 --> 0:00:50.040 Bloomberg dot Com, and of course on the Bloomberg with 0:00:50.200 --> 0:00:52.200 Us Edward S. Hyman, who is a rumored to actually 0:00:52.200 --> 0:00:54.640 watch every once in a while. He's with ever Corps. 0:00:55.120 --> 0:00:57.040 I s I and I want to get back to 0:00:57.080 --> 0:01:01.680 the economy into what you many would say invented, and 0:01:01.720 --> 0:01:05.320 that is the linkage of the economy into the equity markets. 0:01:05.360 --> 0:01:07.679 This is a chart you and I know from Yale Management. 0:01:07.760 --> 0:01:09.399 I've put it in terms of the Dow and not 0:01:09.520 --> 0:01:13.200 the SMP on radio, folks, It's a gorgeous shot of 0:01:13.200 --> 0:01:17.800 the depression in nine percent change log chart and up 0:01:17.880 --> 0:01:21.440 we go and we just seem to prosper along the way. 0:01:21.720 --> 0:01:25.840 Do you still have a belief in American exceptionalism and 0:01:26.080 --> 0:01:31.560 in American capitalism way over my head. I'm I'm a practitioner, 0:01:32.200 --> 0:01:36.520 and right now it looks like it's continuing to prosper. Uh. 0:01:36.640 --> 0:01:40.399 This is a very important chart in that, uh, we're 0:01:40.959 --> 0:01:43.520 learning more and more that the more the stock market 0:01:43.560 --> 0:01:49.600 goes up, the more it helps uh optimism and consumer spending, 0:01:50.240 --> 0:01:54.360 capital spending, and that's what's been going on. Also, house 0:01:54.360 --> 0:01:57.120 prices have been going up, and the two together lift 0:01:57.120 --> 0:02:00.520 consumer net worth and that's been driving the economy. But 0:02:00.640 --> 0:02:04.120 that is an exceptional chart, and uh, well, I'd love 0:02:04.160 --> 0:02:06.160 to take credit for it, but I think Mr Ibbotson 0:02:06.240 --> 0:02:08.560 over at Yelle Management maybe would want to take credit 0:02:08.600 --> 0:02:13.799 for this iconic log chart pick really years ed Hyman. 0:02:13.919 --> 0:02:16.680 Within that, though, what's changed is the belief that there 0:02:16.720 --> 0:02:21.280 are John Edwards to America's can we prosper and can 0:02:21.360 --> 0:02:24.799 we all do better? Given the polarities that we see 0:02:24.800 --> 0:02:30.880 in our society like in the healthcare debate today. So uh, 0:02:30.919 --> 0:02:34.840 I think that if the economy keeps growing, uh, those 0:02:35.120 --> 0:02:40.880 disparities will uh dissipate a little bit. But the main 0:02:40.880 --> 0:02:43.040 thing I'm focused on is for the bottom of the 0:02:43.080 --> 0:02:46.720 economy to get better. The top is doing fine. Uh. 0:02:46.760 --> 0:02:50.160 And the main thing that needs to happen to get 0:02:50.160 --> 0:02:53.119 that to work is for wages to accelerate. And I've 0:02:53.120 --> 0:02:55.600 been disappointed in that. I thought wages by now would 0:02:55.639 --> 0:02:58.440 be over three and there's still about two and a 0:02:58.480 --> 0:03:01.720 half p uh at the unemployment rate today is four 0:03:01.760 --> 0:03:03.959 point three, as you know, and I think it will 0:03:04.000 --> 0:03:09.200 be three and a half a year from now. And uh, 0:03:09.240 --> 0:03:11.080 it's just you know, continue to press on that. And 0:03:11.120 --> 0:03:13.919 if that's true, Uh, then the odds are pretty good 0:03:13.919 --> 0:03:16.560 that wages will pick up and that will help the 0:03:16.560 --> 0:03:20.359 bottom of the economy. But how do you explain actually 0:03:20.400 --> 0:03:22.959 that there was almost no wage growth? Is it the 0:03:23.040 --> 0:03:26.160 quality of jobs being created in the US? Or is 0:03:26.200 --> 0:03:30.519 it that CEO still don't feel very bright about the future, 0:03:30.560 --> 0:03:32.960 that the animal spirits that we were talking about just 0:03:33.000 --> 0:03:35.760 having really fully taken shape, fransty And I was, I was. 0:03:35.880 --> 0:03:38.560 I was scared you would ask about that, because I 0:03:38.600 --> 0:03:42.040 really I can't figure it out. When I travel around, 0:03:42.120 --> 0:03:45.520 I don't hear about wages going up. Unemployment, like you know, 0:03:45.680 --> 0:03:48.720 is really low. Unemployment claims are really low. Uh. So 0:03:48.840 --> 0:03:50.920 my best guess is I just have to be patient 0:03:51.480 --> 0:03:54.760 and maybe in two thousand eighteen, wages will finally start 0:03:54.800 --> 0:03:58.240 to really pick up. But as your question alludes to, 0:03:58.640 --> 0:04:00.920 wages are not picking up in where they're not picking 0:04:01.000 --> 0:04:03.520 up in the UK and not picking up in Australia 0:04:03.720 --> 0:04:07.680 and Canada the other Anglo Saxon English speaking countries, all 0:04:07.760 --> 0:04:11.360 of which have low unemployment rates. But uh, I think 0:04:11.400 --> 0:04:15.040 it will happen later on in this cycle. But do 0:04:15.080 --> 0:04:16.760 you think it's and I know this is the impossible 0:04:16.839 --> 0:04:19.720 question because actually we we've been asking so many people 0:04:19.839 --> 0:04:21.719 and no one has the answer, which it goes back 0:04:21.760 --> 0:04:24.120 also to the productivity puzzle. But do you think it's 0:04:24.160 --> 0:04:27.680 psychological if central banks, for example, suddenly started raising rates 0:04:27.720 --> 0:04:30.520 when that shocks CEOs into thinking that their world was 0:04:30.600 --> 0:04:34.000 becoming harder, but but that the picture was rosier? No, 0:04:34.200 --> 0:04:36.919 I think I think francying what will make wages go 0:04:37.040 --> 0:04:40.919 up is that eventually you just won't have enough labor. Uh, 0:04:40.960 --> 0:04:44.920 And whether it's in the energy space or in educational space, 0:04:45.520 --> 0:04:48.600 people will start paying up or they'll start losing workers. 0:04:49.320 --> 0:04:51.760 I do think that technology has been playing a role 0:04:52.320 --> 0:04:56.640 were uh, technology has been replacing workers. And I think 0:04:56.640 --> 0:04:59.800 that you're still, as you've mentioned, an overhang where we 0:05:00.000 --> 0:05:03.520 they'll remember a little bit the O eight oh nine. Uh, 0:05:03.839 --> 0:05:07.640 you know, big depression and uh. People are scared about that, 0:05:07.720 --> 0:05:10.040 both in terms of asking for a pay increase and 0:05:10.120 --> 0:05:13.400 for managers giving a big pay increase. Him and I 0:05:13.400 --> 0:05:16.000 think the comments on the jobs are so important that 0:05:16.040 --> 0:05:17.640 I want to go to this chart. We give Dean 0:05:17.720 --> 0:05:21.120 macke formerly Barclay's point seven to a lot of credit 0:05:21.360 --> 0:05:24.640 for a four percent view on unemployment. Here's the recent 0:05:24.760 --> 0:05:28.360 leg down to a better unemployment and had to recapitulate 0:05:28.440 --> 0:05:30.880 this out a year or so. You see as a 0:05:31.040 --> 0:05:33.920 three and a half percent, which is better than we 0:05:33.920 --> 0:05:37.880 were in the glory times of two thousand. Do we 0:05:37.960 --> 0:05:41.359 get growth with that great unemployment rate? We get the 0:05:41.360 --> 0:05:43.960 same we've been having. You get something like two maybe 0:05:43.960 --> 0:05:46.960 three percent growth. But all during that big drop in 0:05:47.279 --> 0:05:49.800 on the unemployment rate from tan down to four point three, 0:05:50.080 --> 0:05:53.960 growth has been just about two. My view on unemployment 0:05:54.040 --> 0:05:58.880 going to feint appercent was inspired by Dean Mackie. That's so, 0:05:58.920 --> 0:06:00.719 that's funny you bring him up three and a half 0:06:00.760 --> 0:06:03.599 unemployment by next year. Tom, this took me by surprise. 0:06:03.640 --> 0:06:05.280 I know it took you by surprise. I just want 0:06:05.279 --> 0:06:08.320 to hear a little bit more from from ed where 0:06:08.360 --> 0:06:12.479 where are the industries that will lose the most jobs? Frency. 0:06:12.560 --> 0:06:16.240 Let me explain how I get there. Earlier we looked 0:06:16.279 --> 0:06:19.479 at the unemployment claims if you remember that chart down 0:06:19.560 --> 0:06:23.960 so much, and the unemployment rate and unemployment claims stack 0:06:24.080 --> 0:06:28.039 up pretty closely. And so the unemployment claims are the 0:06:28.080 --> 0:06:31.120 ticket to why I think unemployment is going to come 0:06:31.120 --> 0:06:34.760 down to three and a half percent. Uh. The places 0:06:34.800 --> 0:06:37.800 that jobs are being created, as I mentioned earlier, in 0:06:37.800 --> 0:06:41.920 the healthcare, higher education, the tech space, the new tech space, 0:06:42.240 --> 0:06:45.320 and then sports and entertainment. Those are the places where 0:06:45.800 --> 0:06:49.599 local economies are being driven. I mean, he claims Charter 0:06:49.640 --> 0:06:52.640 her Francine is extraordinary. Again, this is claims adjusted for 0:06:52.720 --> 0:06:56.560 population growth in America, and and it really talks about 0:06:56.640 --> 0:06:59.719 one part of America you mentioned earlier, bringing the bottom 0:06:59.760 --> 0:07:02.600 up as well. Is that done by policy or within 0:07:02.640 --> 0:07:05.320 a locky in society? Is it done by the corporations 0:07:05.320 --> 0:07:08.679 and investment? Has that become organic? We're in a self 0:07:08.680 --> 0:07:12.680 feeding expansion. Uh, and that's the end for the end 0:07:12.720 --> 0:07:16.280 of it. It It becomes pulling in. But right now these 0:07:16.280 --> 0:07:19.440 sectors that I mentioned are coming together, and you also 0:07:19.520 --> 0:07:22.920 have the millennials, and they're driving things. They're giving an 0:07:23.000 --> 0:07:25.680 energy to local economies like Denver is just sort of 0:07:25.720 --> 0:07:28.280 booming in the time we got left. I want to 0:07:28.320 --> 0:07:31.040 know your thoughts in the future of global Wall Street 0:07:31.160 --> 0:07:34.200 in New York, in London, and for that matter, in 0:07:34.200 --> 0:07:37.680 our other geographies like Hong Kong and Dubai. It's pretty tough, 0:07:37.880 --> 0:07:41.000 you know, the whole financial services business on the by side, 0:07:41.040 --> 0:07:44.040 on the South side, it's a tough industry. I'm not 0:07:44.080 --> 0:07:46.240 sure it's gonna get any better within the by side. 0:07:46.280 --> 0:07:48.760 Are they still gonna buy ed Hyman research than I hope? 0:07:48.800 --> 0:07:52.880 So this is important, but at a at a lower scale, 0:07:53.280 --> 0:07:57.520 at a lower scale, Roger Altman in Bonus, Roger Edheim 0:07:57.640 --> 0:07:59.880 is with us and the Red Sox are in first play. 0:08:00.400 --> 0:08:04.320 Fred Seed, Yeah, te him. I like that. We need 0:08:04.360 --> 0:08:06.880 to thank ed Edwards Great ed Hyman of eb CRIS. 0:08:06.880 --> 0:08:21.760 I sincerely hope you come back very soon. I don't 0:08:21.760 --> 0:08:23.640 want to start you with Mark Felli. He's the global 0:08:23.720 --> 0:08:26.840 Chief investment Officer at ubs A Wealth Management. Mark great 0:08:26.880 --> 0:08:28.720 to speak with you. As I mentioned, joining us from 0:08:29.040 --> 0:08:31.360 Zurich today, you look at the FT one and you 0:08:31.360 --> 0:08:33.040 look at it in dollar terms, it's back to where 0:08:33.040 --> 0:08:36.120 it was before that Brexit vote one year ago. Today. 0:08:36.120 --> 0:08:37.560 What does it tell us? What is what is this 0:08:37.600 --> 0:08:39.520 crazy journey of the last year. Say to you about 0:08:39.679 --> 0:08:43.920 about the market? Well, of course the uh, you know, 0:08:44.160 --> 0:08:46.920 the foot seats done okay, but the the tound has 0:08:47.000 --> 0:08:50.600 been whacked against the dollar or something like. And I 0:08:50.640 --> 0:08:54.760 think you know what we've seen post the Great Financial 0:08:54.800 --> 0:08:57.679 Crisis is just how much these currencies are the shock 0:08:57.760 --> 0:09:03.320 absorber for some of the more political geopolitical move what's 0:09:03.360 --> 0:09:05.760 your your outlook for sterling? How much has that changed 0:09:05.800 --> 0:09:07.839 here in recent months? As we had that speech that 0:09:07.880 --> 0:09:11.040 Theresa May gave before Parliament, as of course she had 0:09:11.080 --> 0:09:13.600 the snap elections. Are the results of that? Now she 0:09:13.640 --> 0:09:15.679 heads to Brussels for this EU as someone, how much 0:09:15.720 --> 0:09:19.679 has it changed? Yeah, So we think that a lot 0:09:20.000 --> 0:09:24.800 of the negative uh for the pound versus David dollar 0:09:25.360 --> 0:09:28.680 have been priced in as Terrason May had signaled she'd 0:09:28.679 --> 0:09:30.800 be willing to go for a hard Brexit. So we've 0:09:30.840 --> 0:09:34.240 got it at one spot thirty over the six months. 0:09:35.000 --> 0:09:38.320 And I think that what I would say though, is 0:09:38.440 --> 0:09:41.400 we do sort of think that this Brexit will be 0:09:41.440 --> 0:09:44.640 a ticking time bomb where you know, much like these 0:09:44.679 --> 0:09:47.280 grease negotiations, they kind of go along and go along, 0:09:47.320 --> 0:09:49.800 but nothing really gets done until you get down to 0:09:49.840 --> 0:09:53.520 the wire. So it's it's going to be interesting to trade, 0:09:54.160 --> 0:09:58.559 to trade around the UK assets for the next two years. 0:09:58.679 --> 0:10:00.160 What do you make of of what she had to 0:10:00.200 --> 0:10:03.040 say at this semit, ensuring the rights of those in 0:10:03.080 --> 0:10:05.480 the European Union who have been living in Britain for 0:10:05.520 --> 0:10:07.600 more than five years, providing a plan for those who 0:10:07.640 --> 0:10:10.480 have been there for less than five beginning to develop 0:10:10.520 --> 0:10:12.280 some of the strictures she'd like to see in place. 0:10:12.320 --> 0:10:14.760 I believe with the hopes here of appeasing those in 0:10:14.800 --> 0:10:17.080 the European Union and those who are from the European 0:10:17.120 --> 0:10:19.040 Union living in the UK who are worried about their 0:10:19.320 --> 0:10:22.520 their status there, does that provide more certainty just getting 0:10:22.520 --> 0:10:25.000 those broad contours of a plan that she outlined over 0:10:25.000 --> 0:10:27.960 the over the last couple of days. Yeah, I don't 0:10:27.960 --> 0:10:30.839 think it does. I think that what is I think 0:10:30.880 --> 0:10:35.640 that the UK is trying to uh awfer or negotiate. 0:10:35.760 --> 0:10:38.520 But you know that if you listen to what Europe saying, 0:10:38.520 --> 0:10:40.880 you know it's not a supermarket. You can't pick and choose. 0:10:41.240 --> 0:10:45.959 We're listening. They they have their own views, particularly around 0:10:46.000 --> 0:10:49.640 the free movement of people. Um and and I think 0:10:49.640 --> 0:10:52.040 they're going to end up dictating more of the terms 0:10:52.240 --> 0:10:56.959 than than the UK. Good morning, David Garra. Where were 0:10:56.960 --> 0:11:00.760 you a year ago? Watch all of the sunfold? I 0:11:00.840 --> 0:11:03.160 was actually at it. There was a British pub near 0:11:03.200 --> 0:11:08.880 murray Hill the early evening and why isn't a shocked 0:11:09.160 --> 0:11:12.319 girl was in a Brooklyn bar, probably having some overprice 0:11:12.440 --> 0:11:16.480 British Mark Mark Hafway with us with ubus Mark. Where 0:11:16.559 --> 0:11:19.920 were you a year ago? I remember it very well. 0:11:20.000 --> 0:11:22.760 I was on the shores of Lake Como meeting with 0:11:23.400 --> 0:11:26.960 fun managers, all watching the tape and and I remember 0:11:27.000 --> 0:11:30.560 we all went to bed very late, feeling rather sanguine, 0:11:30.920 --> 0:11:33.439 and we all started texting each other at four am. 0:11:33.720 --> 0:11:36.079 What you know? What is going on exactly? And that 0:11:36.280 --> 0:11:38.319 you know? First of all, let me commented, girls in 0:11:38.400 --> 0:11:41.440 a bar in Afway's in Lake Como and I'm stuck 0:11:41.520 --> 0:11:44.559 in I'm stuck at his studio in London with John Farrow. 0:11:44.920 --> 0:11:47.280 I don't know what that's about. Um. It was really 0:11:47.360 --> 0:11:49.760 remarkable to see that late night, David. And really there 0:11:49.840 --> 0:11:52.560 was a whisper at ten pm London time, and then 0:11:52.640 --> 0:11:56.160 the whole next day was just real. I remember folks 0:11:56.400 --> 0:12:00.720 having dinner exhausted after literally no sleep for thirty hours 0:12:01.120 --> 0:12:04.079 in Brown's Hotel over on the edge of Mayfair, and 0:12:04.200 --> 0:12:07.160 the quiet on the streets. David Gerrow, I will never 0:12:07.280 --> 0:12:11.400 forget the rest of my life. It was absolutely surreal. Mark. 0:12:11.520 --> 0:12:13.599 Let me ask you about what we learned about the 0:12:14.000 --> 0:12:17.320 euro Area today, recording its fastest expansion in six years 0:12:17.559 --> 0:12:20.880 in the second and second quarter. How optimistic are you 0:12:20.920 --> 0:12:23.040 about Europe right now? Where do you see opportunity in 0:12:23.080 --> 0:12:28.439 the Eurozone? Yeah, so we do like Europe. We are 0:12:28.640 --> 0:12:32.360 overweight the Euro versus the dollar, and we're overweight European 0:12:32.480 --> 0:12:38.160 equities versus UK equities. Uh and and and when you 0:12:38.200 --> 0:12:39.959 when you look more glad. We're gonna talk about emerging 0:12:39.960 --> 0:12:41.559 markets here in just a little while on the show. 0:12:41.600 --> 0:12:43.640 But where do you see opportunity in the emerging markets? 0:12:44.000 --> 0:12:46.520 Are you? Are you of the camp here saying that 0:12:46.880 --> 0:12:49.599 amid all of the concern over the central banking and 0:12:50.080 --> 0:12:52.120 the prospects of fiscal reform, tax reform here in the 0:12:52.200 --> 0:12:56.679 US developed markets, are emerging markets are more attractive. We're 0:12:56.720 --> 0:13:01.160 not saying that emerging markets are more attracts it currently 0:13:01.240 --> 0:13:05.000 as a group, I think for the emerging markets to 0:13:05.120 --> 0:13:08.920 do well, uh, we think they'll they'll do Okay, you 0:13:09.040 --> 0:13:12.280 need that base. We believe of the certainly the United 0:13:12.320 --> 0:13:14.559 States doing well, and I think, um, you know, we 0:13:14.840 --> 0:13:18.200 prefer to stay in developed markets, but certainly within within 0:13:18.880 --> 0:13:22.959 the emerging markets, uh, places like China should continue to 0:13:23.080 --> 0:13:25.640 do well. What do people do that aren't in the market. 0:13:25.920 --> 0:13:28.120 They look at the valuations. They keep it simple in 0:13:28.200 --> 0:13:31.240 their analysis. They look at price to earnings. How do 0:13:31.320 --> 0:13:36.320 you rationalize the acquisition of shares right now? Mark? Yeah, 0:13:36.400 --> 0:13:41.080 I think that the key sense the financial crisis has 0:13:41.440 --> 0:13:46.080 remained central bank policy as a driver. That's what's taken 0:13:46.160 --> 0:13:50.280 so much volatility out of this system. And to me, 0:13:50.960 --> 0:13:54.640 I don't want to over the over reductivist here, but 0:13:55.320 --> 0:13:59.280 with that inflation low, the central banks continue to have 0:13:59.640 --> 0:14:04.600 room to maintain this oversized stimulus and that has been 0:14:04.640 --> 0:14:08.320 supportive for markets and supportive of very low interest rates. 0:14:08.559 --> 0:14:12.040 So I think what's new that people have to somewhat 0:14:12.120 --> 0:14:15.400 new is people need to weigh that against when they 0:14:15.440 --> 0:14:18.599 want to call the end of this cycle. How do 0:14:18.720 --> 0:14:22.880 you counsel clients to to navigate the low volatility that 0:14:22.960 --> 0:14:25.080 we have seen and continue to see, how how do 0:14:25.160 --> 0:14:29.600 you deal with that particular challenge. Well, it uh. It 0:14:29.760 --> 0:14:34.720 has created an opportunity for investors who are concerned about 0:14:35.160 --> 0:14:41.920 draw downs to add some relatively cheap protection uh for 0:14:42.200 --> 0:14:45.480 you know, for equity industry. So that's a popular way 0:14:46.120 --> 0:14:49.440 of dealing with it um. And then you know the 0:14:49.600 --> 0:14:52.240 the other one. I think what we found is we 0:14:52.360 --> 0:14:56.680 actually just surveyed our clients and over them think that 0:14:56.920 --> 0:15:00.480 this is the most uncertain period in history. And and 0:15:00.760 --> 0:15:02.960 it's very interesting when you compare that what the markets 0:15:03.000 --> 0:15:06.960 are telling us new highs uh and very low volatility. 0:15:07.280 --> 0:15:09.080 And I think it I think it gets to this 0:15:09.280 --> 0:15:13.880 dynamic of forces that are extraordinary today, such as central 0:15:13.920 --> 0:15:16.680 bank polity, which we we know eventually will end, and 0:15:16.800 --> 0:15:20.080 our look out on a future which is much more uncertain, 0:15:20.160 --> 0:15:24.840 where governments are in play, national debt is high, and 0:15:25.200 --> 0:15:30.400 population changes are are moving demographics all over the world. 0:15:30.440 --> 0:15:33.280 And I think part of what we have the Council 0:15:33.440 --> 0:15:36.680 Investors on is to take those two separate buckets and 0:15:36.760 --> 0:15:39.280 separate them a little bit. Cubs at with a new 0:15:39.320 --> 0:15:42.960 white paper. Millennials, the global guardians of capital mark let 0:15:43.040 --> 0:15:46.280 me ask you, first of all, how millennials regard wealth, 0:15:46.320 --> 0:15:49.120 wealth creation, accruing wealth, and what they intend to do 0:15:49.200 --> 0:15:52.720 with them. It's a great question. What I think we 0:15:52.880 --> 0:15:55.200 found is so interesting is that there are a lot 0:15:55.280 --> 0:15:59.880 of stereotypes about millennials, this generation born between two and 0:16:00.760 --> 0:16:03.680 that they're very selfish and me centered, and actually we've 0:16:03.720 --> 0:16:07.520 found kind of the opposite. Uh. The majority of them 0:16:07.720 --> 0:16:11.120 are willing to forego, for example, some upshuntder turn in 0:16:11.160 --> 0:16:15.600 their investments if those investments are more sustainable or have 0:16:15.680 --> 0:16:18.920 a better impact on society. So that that is one 0:16:18.920 --> 0:16:21.040 of the trends that I think is very important for 0:16:21.680 --> 0:16:24.960 us to look at. And of course, millennials are increasingly 0:16:25.240 --> 0:16:28.360 inheriting from the baby boomer generation and soon are going 0:16:28.400 --> 0:16:31.760 to have twenty four trillion in wealth in their command. 0:16:32.520 --> 0:16:34.520 Do they have a different inclination of what they'd like 0:16:34.640 --> 0:16:37.560 to invest in? Uh? When it comes to the types 0:16:37.640 --> 0:16:40.120 of companies, the types of sectors they're interested in the 0:16:40.320 --> 0:16:43.120 social responsibility of those those companies in particular, how do 0:16:43.200 --> 0:16:46.520 you how do you adjust to deal with that? Well, 0:16:46.600 --> 0:16:49.560 it has forced us to adjust in in some ways, 0:16:49.640 --> 0:16:52.760 but I think in very positive ways of kind of 0:16:52.880 --> 0:16:56.480 helped us to be emboldened to make a commitment of 0:16:57.320 --> 0:17:00.440 investing five billion dollars over the next five years in 0:17:00.600 --> 0:17:04.800 impact investing too, to open that up investments that not 0:17:05.000 --> 0:17:08.320 just have a financial return but also help help society, 0:17:08.800 --> 0:17:11.359 and that I think for us is one of the 0:17:11.480 --> 0:17:14.840 key differences. But actually on some of these things like 0:17:15.040 --> 0:17:19.520 digital uptake and like sustainability, millennials may lead the way, 0:17:19.640 --> 0:17:22.919 but it's something that we see as a water shift 0:17:23.080 --> 0:17:26.920 for our entire investing. Really to me, folks, just so 0:17:27.080 --> 0:17:30.280 you know, the twenty four trillion dollar wealth transfer that's 0:17:30.320 --> 0:17:33.560 happening at the keen household, that's most of that most 0:17:34.000 --> 0:17:39.000 John Tucker, that's most of the transferrees are many many 0:17:39.080 --> 0:17:42.040 were their all their middle names or tuition um mark. 0:17:42.119 --> 0:17:43.880 When you when you look at the millennials, and I'm 0:17:43.880 --> 0:17:46.280 not sure the age bracket, to me, the distinctive feature, 0:17:46.359 --> 0:17:49.280 seriously is their lack of economic growth. We have so 0:17:49.480 --> 0:17:53.320 many kids in their twenties even in their thirties who 0:17:53.359 --> 0:17:57.159 have never known what we call normal g d P. 0:17:57.720 --> 0:18:01.000 Are they ever going to see the normal economic growth 0:18:01.160 --> 0:18:06.960 we all enjoyed? Well, you know, I think that this 0:18:07.320 --> 0:18:10.520 this view of what is normal, you know, three three 0:18:10.600 --> 0:18:14.879 percent growth plus in in the United States. We're all 0:18:14.960 --> 0:18:16.800 we're all waiting for the comeback of that. I think 0:18:16.840 --> 0:18:19.520 I think it's still possible if some of what the 0:18:19.560 --> 0:18:24.640 millennials are doing around connectivity uh starts to trickle out 0:18:24.720 --> 0:18:28.200 of our Look look just looking at social media and 0:18:28.320 --> 0:18:31.760 into things like more productivity in the health care sector 0:18:31.840 --> 0:18:34.239 for example, that that would be one of my one 0:18:34.280 --> 0:18:38.320 of my hopes, or more productivity and connected transportation systems 0:18:38.320 --> 0:18:40.800 and more automation there So that I do believe the 0:18:40.960 --> 0:18:43.960 still hope to get some of those millennials out of 0:18:44.040 --> 0:18:46.600 their parents basement, right, Mark Cafley, thank you so much, 0:18:46.720 --> 0:18:51.400 out of their parents based maybe with them paying their 0:18:51.400 --> 0:19:01.320 own phone bill. Well, Mark Cathley's with u BIS brought 0:19:01.400 --> 0:19:04.880 you by Bank of America. Mary Lynch with virtual reality 0:19:05.160 --> 0:19:10.560 virtually everything will change, Discover opportunities in a transforming world. 0:19:11.000 --> 0:19:15.280 B of a, mL dot Com, slash VR, Mary Lynch, 0:19:15.400 --> 0:19:24.639 Pierced Fenner and Smith Incorporated. We had a great conversation 0:19:24.720 --> 0:19:27.720 this morning with Edward Hyman of evercreps I S I 0:19:27.840 --> 0:19:30.080 Two things. First of all, he said he really cares 0:19:30.080 --> 0:19:33.000 about p M I S, Like when Bloomberg has a 0:19:33.040 --> 0:19:37.080 p M I S Hyman lean sorre. He really I 0:19:37.200 --> 0:19:41.200 was surprised. He really emphasized the value he gets out 0:19:41.240 --> 0:19:44.560 of p m I, purchasing managers, Indexes, and of course 0:19:44.600 --> 0:19:46.479 the other thing which I think will make global headlines 0:19:46.560 --> 0:19:49.440 this weekend. He believes in a three and a half 0:19:49.520 --> 0:19:55.280 percent unemployment. Right, we're not at full full full employment. Listen, 0:19:56.000 --> 0:20:01.920 very good, very good, closing the right now, closing. We 0:20:02.040 --> 0:20:05.359 wanted to get Craig Moffett in with Moffatt Nathanson, Uh, 0:20:05.840 --> 0:20:09.080 just just to talk about the chaos of the Michael 0:20:09.160 --> 0:20:13.119 Nathanson Craig Moffatt world. Craig, sort of an open discussion 0:20:13.200 --> 0:20:16.880 this morning, wonderful day. Have you with us? What part 0:20:16.920 --> 0:20:22.399 of your world is most chaotic? Now? Um? Well, I 0:20:22.720 --> 0:20:27.159 I can speak from my distribution side better than than Michael's, right, 0:20:27.240 --> 0:20:30.000 but we want both both, but both are pretty chaotic. 0:20:30.200 --> 0:20:32.399 Um And in some ways I think you know the 0:20:32.880 --> 0:20:36.080 real action is going on right at the intersection between 0:20:36.160 --> 0:20:40.280 the two, in that the launch of all of these 0:20:40.440 --> 0:20:44.040 new virtual um M v p d s as they're called, 0:20:44.160 --> 0:20:49.000 or or virtual cable operators, the the YouTube TVs and 0:20:49.200 --> 0:20:52.879 you lose and what have you. UM is a fascinating 0:20:52.960 --> 0:20:55.159 thing to watch, and there's you know, one of the 0:20:55.200 --> 0:20:58.520 simplest observations out of all of this is you've got 0:20:58.600 --> 0:21:00.760 all of these people that are in ring the business 0:21:01.000 --> 0:21:05.440 for seemingly some other reason besides that pedestrian objective of 0:21:05.480 --> 0:21:10.280 actually making money. Um. You know, you've got Google and 0:21:10.359 --> 0:21:12.600 YouTube that seemed to be entering it because they want 0:21:12.600 --> 0:21:16.640 to eventually leverage it for advertising revenue, so they don't 0:21:16.680 --> 0:21:18.639 care whether they make any money on the product itself. 0:21:19.400 --> 0:21:22.000 And you've got Hulu that's trying to do it, um 0:21:22.200 --> 0:21:25.480 to support distribution of the network, so they aren't interested 0:21:25.520 --> 0:21:30.000 in actually making any money on the distribution business. Um. 0:21:30.240 --> 0:21:33.320 You've got direct TV that's using it as a way 0:21:33.359 --> 0:21:36.280 now to help sell wireless subscriptions. And so you're getting 0:21:36.320 --> 0:21:38.439 products that used to be sold at a hundred dollars 0:21:38.520 --> 0:21:40.880 in the market for thirty five dollars and nobody's makes 0:21:40.880 --> 0:21:43.879 any money and it's driving down. Okay, this is exactly 0:21:43.920 --> 0:21:45.960 who I wanted to go. And and the dovetail of this, 0:21:46.040 --> 0:21:48.240 folks is I really look, I look like everybody else. 0:21:48.560 --> 0:21:50.520 I look at the ratings in the industry, and Craig 0:21:50.560 --> 0:21:53.760 I would suggest Mr Trump has been good for cable 0:21:53.840 --> 0:21:56.720 TV news like you know, good morning at MSNBC to 0:21:56.800 --> 0:22:01.200 Laurence O'Donnell, who's just killing it behind Rachel Maddow with 0:22:01.359 --> 0:22:04.280 his work. I mean, Larry's just killing it in TV. 0:22:05.160 --> 0:22:08.040 Can you subscribe, Craig to the idea that cable TV 0:22:08.320 --> 0:22:12.440 is done? Well, No, cable tv is not done. But 0:22:12.600 --> 0:22:16.560 remember when you say cable tv, cable tv is not 0:22:16.640 --> 0:22:19.480 a single business. It's really a whole value chain. It's 0:22:19.480 --> 0:22:22.840 a whole bunch of businesses, right. Um. When some people 0:22:22.960 --> 0:22:26.159 mean cable TV, they mean the video distribution coming from 0:22:26.240 --> 0:22:29.640 people like Comcast and Charter and Direct TV. Other people. 0:22:29.720 --> 0:22:32.399 When they say k the cable tv, they mean the 0:22:32.480 --> 0:22:37.720 networks themselves, Um, whether it's CNN or or UM or 0:22:38.040 --> 0:22:41.560 the smaller ones Bravo or the integrated ones like Turner 0:22:41.600 --> 0:22:44.480 in USA. Other people. When they say cable tv they 0:22:44.520 --> 0:22:47.920 mean the production of the shows, so HBO or what 0:22:48.040 --> 0:22:50.240 have you. Those are all part of a big ecosystem, 0:22:50.320 --> 0:22:53.600 and there's some strengths in there, some weaknesses in that ecosystem. Think, 0:22:53.720 --> 0:22:58.119 generally speaking, the production of content, so the studio side 0:22:58.240 --> 0:23:00.240 is actually quite healthy these days. There's a lot of 0:23:00.320 --> 0:23:03.440 good content being produced and they're still finding lots of 0:23:03.480 --> 0:23:08.440 places to sell it and make money. The the aggregation 0:23:08.600 --> 0:23:11.840 function of content, that is the concept of a cable 0:23:11.960 --> 0:23:15.960 network is less healthy. Um. The concept of taking a 0:23:16.080 --> 0:23:19.440 bunch of different shows and creating a schedule out of 0:23:19.480 --> 0:23:22.480 them that runs twenty four hours a day, is starting 0:23:22.560 --> 0:23:26.240 to be a pretty anachronistic concept, right, So, so the 0:23:26.440 --> 0:23:30.040 value of the of the network piece is not that hot. 0:23:30.600 --> 0:23:34.480 The value of the distribution sides falling apart. The physical 0:23:34.560 --> 0:23:38.680 layer of distributions great broadband and and if you're a 0:23:38.720 --> 0:23:41.920