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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keene, along with Jonathan Farrell and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app.

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Speaker 3: Slew A FED speak today Collins Bouman, Harker Jefferson on

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Speaker 3: Tap Cleveland FED, President of Rundamessa, speaking to the ft

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Speaker 3: and saying, quote, I don't really see a compelling reason

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Speaker 3: to pause. I would see more of a compelling case

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Speaker 3: for bringing rates up and then holding for a while

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Speaker 3: until you get less uncertain about where the economy is going.

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Speaker 3: There's some good news. Bob Michael takes the other side

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Speaker 3: of that of JP Morgan Asset Management, saying that we

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Speaker 3: are going to get a pause. We expect the FED

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Speaker 3: to pause hiking rates at the June f MC meeting

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Speaker 3: and believe we have seen the last rate hike for

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Speaker 3: this cycle. And the good news for Bob Michael is

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Speaker 3: it sounds like his boss agrees with him to listen.

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Speaker 4: You know, my simple view is that you know, the

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Speaker 4: the right to pause at this point has been a

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Speaker 4: big increase, you know, five hundred basis points, so take

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Speaker 4: a pause. But I do think it's possible they're going

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Speaker 4: to raise a little bit more.

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Speaker 3: Take a pull.

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Speaker 1: It sounds like a fish ready to go out.

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Speaker 3: He looks secretary right. Okay, he looks melon like ready

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Speaker 3: to sell the country.

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Speaker 2: Andrew Mellon, Yeah, did you see Bob Michael is under secretary?

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Speaker 3: I can see see.

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Speaker 1: That joining us now, Robert Michael.

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Speaker 2: Bob Michael had a fixed income JP Morgan Asset Management.

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Speaker 2: And I want to go back to nineteen eighty four.

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Speaker 2: You're a youngling at bankers Trust. Ian Rush is with Liverpool.

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Speaker 2: They're doing better than good. This is way way back.

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Speaker 2: And the basic idea is we used to clip coupons.

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Speaker 2: Would you be sitting with mister Diamond now saying that

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Speaker 2: we can make coupon and total return?

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Speaker 5: Now?

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Speaker 2: Are we going to see price up yeeld down in

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Speaker 2: a basic bond portfolio.

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Speaker 6: I can't tell you how relieved I am not to

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Speaker 6: hear him tell me that I should be preparing for

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Speaker 6: seven percent. So I'll take what I can from him

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Speaker 6: that we're due for a pause and that should relax

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Speaker 6: the markets. No, one hundred percent. This is the time

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Speaker 6: where you clip coupons because yields have reset materially higher

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Speaker 6: from where they were at the end of twenty twenty one. Actually,

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Speaker 6: when you look at real yields in the bond market,

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Speaker 6: they're the highest level going back fifteen seventeen years. We're

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Speaker 6: going to get some capital appreciation on top of the

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Speaker 6: coupon clipping. I'm looking for close to double digit returns

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Speaker 6: on the Bloomberg aggregate over the next year.

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Speaker 1: This is the key statement.

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Speaker 2: And what's important about this is mister Diamond back to

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Speaker 2: bank when actually knows what an.

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Speaker 1: SMP blue book is. I mean, you have a blue

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Speaker 1: book and you have bonds in it.

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Speaker 2: You go through and you try to buy bonds for

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Speaker 2: price up, yield down.

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Speaker 1: Which kind of bonds will give you.

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Speaker 2: The best pop there to get your double digit return.

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Speaker 6: Well, we're currently intermediate government bonds look good to us,

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Speaker 6: So we're thinking the five year treasury. We feel we've

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Speaker 6: been given a gift in here with the backup in yields. Sure,

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Speaker 6: we swung a little bit low and yields the market

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Speaker 6: got all excited. Now it's going the other way. We

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Speaker 6: do think that we're going to see three percent across

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Speaker 6: the coupon curve by the end of the summer, and

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Speaker 6: the five year seems to be the sweet spot, so

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Speaker 6: we like that, and then we like high quality credit,

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Speaker 6: so for sure we're going into investment grade corporates. We're

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Speaker 6: actually starting to see a lot of overseas investors returning

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Speaker 6: to the US investment grade corporate bond market. They're attracted

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Speaker 6: by the yields there.

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Speaker 2: The yields you jentlemor folds right into the disinflation deflationary

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Speaker 2: Chinese impulse.

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Speaker 3: Some of this you would state just on the yield

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Speaker 3: curve for people who aren't familiar with what drives different

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Speaker 3: parts of the yield curve. What is special about a

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Speaker 3: five year maturity? Why is that the sweet spot for you?

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Speaker 6: Because it gives you a couple of things. One, it

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Speaker 6: gives you a reasonably high level of yield. Sure it's

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Speaker 6: not cash. Cash is sitting out there at over five percent,

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Speaker 6: but that's the cash trap. At this part of the cycle.

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Speaker 6: You put money there and then a year from now

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Speaker 6: it's gone. Your cash run rate is probably below four

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Speaker 6: percent a year from now, so you've lost all of that,

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Speaker 6: and then the yell curve starts to adjust to a

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Speaker 6: central bank that's cutting rates again. We still think we're

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Speaker 6: going to be in recession by the end of the year.

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Speaker 6: Everything that's happened so far this year continues to tell

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Speaker 6: us end of the year recession and first FED rate

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Speaker 6: cut in September, and I know the recent data throw

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Speaker 6: some of that into speculation. Not in our book. Things

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Speaker 6: are playing out the way they should exactly.

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Speaker 3: So five year in the treasury market one got it, okay,

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Speaker 3: ig ton of amount coming from abroad, got that, okay.

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Speaker 3: High yield you've got within your call a rate cut

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Speaker 3: coal in September. Does it make sense to be buying

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Speaker 3: high yield and taking more more credit risk at a

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Speaker 3: time whether Fed's going to be cutting rights because you

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Speaker 3: anticipate the economy is going to weaken.

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Speaker 6: So I'm listening to the conversation at the start about

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Speaker 6: the equity market and how we're isolating. Nvidia and a

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Speaker 6: couple things have driven this rally, but there are other

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Speaker 6: things that are lagging.

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Speaker 7: Now.

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Speaker 6: I'm a bond guy, which makes me an equity market expert,

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Speaker 6: but I see a lot of I see a lot

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Speaker 6: of Yeah, exactly, I see a lot of what's going

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Speaker 6: on the equity market, in the high yield market, and

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Speaker 6: we've parsed through all of this, and what you're looking

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Speaker 6: at is the triple C universe is a thousand basis

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Speaker 6: points over, so it's already coming under pressure, and the

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Speaker 6: double B universe is in the three hundreds over, so

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Speaker 6: that differentiation is already occurring. This is very different than

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Speaker 6: where we were back in August September. Whenever we hit

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Speaker 6: six hundred basis points. Oh, for pretty much most of

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Speaker 6: the market was about six hundred basis points over. That

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Speaker 6: was probably the time to take a shot over the

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Speaker 6: near term. Now is not. Now the market is telling

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Speaker 6: you there is differentiation beneath the surface. Investors are seeing

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Speaker 6: cracks forming and they're trying to get out of the way.

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Speaker 8: You said that things are playing out as they should

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Speaker 8: to get to a recession by the end of the

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Speaker 8: year and to get a fed to cut rates by September.

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Speaker 8: Does that mean that we're in this sort of inflection

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Speaker 8: point that we're going to see a rapid deceleration in

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Speaker 8: some of the economic data in a way that we

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Speaker 8: just haven't yet with all the upside surprises.

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Speaker 6: Absolutely, and we've talked about this before, from the last

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Speaker 6: FED rate hike until recession, it's historically averaged about a

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Speaker 6: thirteen month period, so that long and variable takes time.

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Speaker 6: We're now getting into a year and a quarter. We're

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Speaker 6: going to start hitting the window when the four to

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Speaker 6: seventy five basis point rate hikes start to hit. And

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Speaker 6: you're already hearing about the funding pressure to businesses and

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Speaker 6: households at a higher rate level, it's causing them to

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Speaker 6: rethink things, and then the higher cost of everything that's

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Speaker 6: causing them to rededicate where their spending goes to. So

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Speaker 6: that catch up is coming. And some of the inflation

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Speaker 6: data we're looking at Europe overnight or this morning came

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Speaker 6: in so often. I know Italy surprised a little bit

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Speaker 6: to the upside, but everything seems to be slowing down.

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Speaker 6: The one thing that seems to have gone under the radar.

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Speaker 6: Forget about what's going on in China. Look at the

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Speaker 6: Bloomberg Commodities Index. It was one hundred and forty ish

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Speaker 6: about a year ago. It's below one hundred now, and

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Speaker 6: the trend is diving south at a rate that you

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Speaker 6: only see headed into recession. So the weakness is there,

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Speaker 6: the cumulative and lagged or catching up.

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Speaker 8: This is important. A lot of people push back against

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Speaker 8: commodities being a real signal this time around. This time

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Speaker 8: is different with a lot of different things than I

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Speaker 8: could see.

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Speaker 6: Right, you don't use them for anything.

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Speaker 8: But hold on a second.

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Speaker 7: But here's the issue.

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Speaker 8: People saying that because of China and the inability to

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Speaker 8: get that right, because of Russia and their willingness to

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Speaker 8: pump much more than their allotted amount to try to

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Speaker 8: get money to fund the war. Because of all of

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Speaker 8: these issues, you're seeing distortions in the commodity market that

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Speaker 8: do not comply with what they're seeing on the ground.

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Speaker 8: How much are you using this as a key signal

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Speaker 8: saying or where we should be?

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Speaker 6: Well, you still have very low unemployment in the US.

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Speaker 6: Everyone's talking about three and a half percent unemployment. Everyone's

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Speaker 6: talking about wages have gone up and that there's a

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Speaker 6: stickiness to core inflation. Everyone's talking about consumers want to

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Speaker 6: spend on travel and leisure so that the demand is there.

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Speaker 6: But if the demand is at a high enough level,

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Speaker 6: you are going to see commodities prices pushed higher. People

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Speaker 6: are spending on things. In buying things, it's just not

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Speaker 6: a rate that sustains itself with the amount of supply.

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Speaker 6: We're now seeing the bottlenecks have cleared.

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Speaker 3: Well, this is awesome by Michael jpmorganism management.

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Speaker 2: We're going to go to the congressman from in between

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Speaker 2: the Cubs and the Brewers, Jamesville, Wisconsin. Brian Style joins

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Speaker 2: us now Republican from Wisconsin with all that heritage of

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Speaker 2: former Speaker Paul Ryan. Congressman, I'm going to go back

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Speaker 2: to the election of twenty eighteen. You won with fifty one,

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Speaker 2: maybe fifty two percent of the vote. You've done better

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Speaker 2: in recent elections, doing better like sixty percent or whatever.

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Speaker 2: I want you to comment on the vociferous conservative Republicans

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Speaker 2: and what they're doing to Republicans who are more middle

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Speaker 2: of the road. What is the damage being done by

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Speaker 2: the strident Republicans to the oh more in the middle

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Speaker 2: of the road.

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Speaker 5: This vote is going to be a little bit of

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Speaker 5: a vote of strange bedfellows. I think what you're going

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Speaker 5: to see is, at the end of the day, there's

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Speaker 5: some members that are going to allow perfection to be

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Speaker 5: the enemy of the good all of us, I think

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Speaker 5: would like to see us get our true fiscal house

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Speaker 5: in order in the United States. This bill is only

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Speaker 5: a step in the right direction, but it's a step

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Speaker 5: in the right direction. It's the largest spending cuts that

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Speaker 5: we're going to ever see in the United States of America.

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Speaker 5: It has work requirements, it helps workers get back to work,

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Speaker 5: and it does all this without raising taxes. And so

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Speaker 5: at the end of the day, there's some people that

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Speaker 5: would like to see a perfect bill, but I think

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Speaker 5: if we have a good bill, you got to vote

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Speaker 5: for it.

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Speaker 2: Congressman Jim Garretty in the Washington Post had a brilliant

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Speaker 2: half paragraph yesterday which said, Look, the Republicans have a

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Speaker 2: narrow majority in the House. Can you expand that power

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Speaker 2: in Washington with President Trump? After this budget debate? Can

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Speaker 2: you get there with Donald Trump November of twenty twenty

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Speaker 2: four to move beyond a narrow majority in the House.

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Speaker 5: We're going to see now to the election in twenty

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Speaker 5: twenty four is a lot of voices coming to the table,

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Speaker 5: and I think the one that's going to be successful

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Speaker 5: is the candidate that's going to talk about the future

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Speaker 5: of the United States of America, about how we're going

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Speaker 5: to grow the economy and address the fiscal situation that

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Speaker 5: we're in. We're going to have a number of voices

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Speaker 5: at the table. I don't think that's a bad thing,

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Speaker 5: because I think we need to dramatically change course in Washington,

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Speaker 5: in particular, following two years of dramatic increases of spending.

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Speaker 8: A lot of people talk about the real discussion being

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Speaker 8: entitlements and whether Social Security checks are going to have

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Speaker 8: to be reduced, whether Medicare and Medicaid are going to

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Speaker 8: have to receive less funding. Are you putting those things

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Speaker 8: on the table in your discussion about further fiscal restraint.

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Speaker 5: In this bill, we're only really dealing with eleven percent

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Speaker 5: of the federal budget, and dealing with eleven percent, we

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Speaker 5: got one point five trillion dollars of savings for the

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Speaker 5: American people. But you're right, at the end of the day,

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Speaker 5: it's the entitlement programs that are driving costs higher. This

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Speaker 5: is going to be an opportunity here to bring Democrats

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Speaker 5: and Republicans to the table to address those programs and

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Speaker 5: really protect in particular social Security and Medicare for generations

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Speaker 5: to come. But that's going to require a bipartisan approach

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Speaker 5: of folks coming to the table, encourage of candidates who

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Speaker 5: are running for president in twenty twenty four to talk

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Speaker 5: about the reforms that are ultimately going to be needed.

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Speaker 8: There's a large question around whether that will actually happen,

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Speaker 8: and we've been having it with a lot of cynicism.

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Speaker 8: I'm sure you have your own with insight from inside

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Speaker 8: the Beltway. Wendy Schiller of Brown University was on the

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Speaker 8: show earlier and she said Kevin McCarthy will remain Speaker

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Speaker 8: of the House simply because the Democrats will back him

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Speaker 8: if the Republicans won't, because at least it will be

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Speaker 8: some sort of cohesive voice that is better than the alternative.

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Speaker 8: Does that concern you that Kevin McCarthy will remain speaker,

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Speaker 8: but perhaps only at the behest of Democrats who are

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Speaker 8: concerned about the alternative.

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Speaker 5: I actually disagree with the analysis. I think Kevin McCarthy

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Speaker 5: will remain Speaker with Republican votes. I actually don't even

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Speaker 5: think you'll see a motion to vacate. We had a

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Speaker 5: robust family conversation last night intil the late hours of

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Speaker 5: the evening talking about this legislation. And while it's true

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Speaker 5: there are some Republicans that would like to see a

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Speaker 5: better bill. They think that they could get a perfect bill.

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Speaker 5: At the end of the day, I think everybody in

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Speaker 5: the room recognizes that this bill is a step in

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Speaker 5: the right direction, and they're appreciative of the Republican negotiating

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Speaker 5: team that moved the ball forward. You got to remember

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Speaker 5: we started with the president saying that he was going

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Speaker 5: to refuse to negotiate. He put his head in the sand,

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Speaker 5: he went to Delaware, went off to Japan rather than negotiating,

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Speaker 5: and at the end of the day, we came back

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Speaker 5: with one comp five trillion dollars in savings.

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Speaker 2: Car you sound like Paul Ryan on an off day.

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Speaker 2: Come on, congressman, let's be come on. What I'm hearing

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Speaker 2: in the zeitgeist right now from Anne Marie Horden is

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Speaker 2: Democrats are taking a victory lap because they pretty much.

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Speaker 1: Got what they wanted.

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Speaker 2: Modern Republicans like you are saying, Okay, let's get this

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Speaker 2: done and move on, and you got a bunch of

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Speaker 2: people trying to block this and shut down the government.

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Speaker 2: I got to go back to the fact you lived

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Speaker 2: Paul Ryan's decline as Speaker.

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Speaker 1: Of the House.

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Speaker 2: I want to go from Bayer to Ryan to McCarthy.

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Speaker 2: What does a speaker have to do now? Not to

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Speaker 2: be Paul Ryan, not to be John Bahner.

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Speaker 5: I think, actually the Republicans are quite unified in the

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Speaker 5: House right now, and I think that shows when we

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Speaker 5: passed the Limit Save Grow Act, many people across the

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Speaker 5: United States underestimated the ability of Republicans to come together

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Speaker 5: and unify and pass a bill. In fact, President Biden

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Speaker 5: didn't think we could do it either. That was part

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Speaker 5: of his negotiating tactics, and at the end of the day,

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Speaker 5: we came together. I think the Republican conference in the

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Speaker 5: House is quite unified to address the spending challenges that

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Speaker 5: we face.

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Speaker 2: But you know the speaker, Okay, I'll go with that,

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Speaker 2: But the answer is John, the speaker, the speakership here.

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Speaker 1: Is under real threat and it comes up suddenly?

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Speaker 2: Did it come up suddenly? Congressman for Paul Ryan, was

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Speaker 2: everything fine? And then boom, you're his aid in office,

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Speaker 2: and all of a sudden, boom, he's under threat by

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Speaker 2: these Republicans.

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Speaker 5: I was working in the private sector for quite some time,

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Speaker 5: so I wasn't on Capitol Hill for about twenty years

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Speaker 5: before I ran for office. But I think what you

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Speaker 5: see is at the end of the day that these

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Speaker 5: things can rise on. Okay, but if you talk to

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Speaker 5: Republican members, we're unified in the House Representatives. I think

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Speaker 5: everyone recognizes that this is a good bill. There's just

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Speaker 5: some conservative and Republican members that would like to have

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Speaker 5: a better bill. That's not the bill that's on the table.

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Speaker 3: Congressman, I'm just a spectator and watching this play out

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Speaker 3: for a long time, both within the United States and

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Speaker 3: abroad as well, and every single time we get into

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Speaker 3: this tobacco, we just raised the debt seating again and

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Speaker 3: again and again and again. Whether that's a Republican president

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Speaker 3: or a Democratic president, it's the same outcome. We raise

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Speaker 3: the debt ceiling. Bron You heard JP Morgan's Jamie Diamond

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Speaker 3: come in from the break there saying, I wish one

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Speaker 3: day they'd get rid of the whole debt ceiling thing.

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Speaker 3: Why do we still have it? And isn't it somewhat

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Speaker 3: embarrassing for the president, whether Republican or Democrat, to go

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Speaker 3: abroad to places like Japan for the G seven to

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Speaker 3: try and lead the global effort on a whole bunch

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Speaker 3: of issues to then be looking back and have this

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Speaker 3: em type tobacco playing out at home.

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Speaker 5: In a period of time of dividing government, there's actually

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Speaker 5: a few opportunities to negotiate the spending reforms that are needed,

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Speaker 5: in particular a period of time when executive authority has

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Speaker 5: grown so dramatically. In this bill, we actually address the

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Speaker 5: fact that the President tried to dramatically alter student loan

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Speaker 5: payments that never went through Congress in the first place. Unfortunately,

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Speaker 5: based on executive overreach, what we have is so few

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Speaker 5: opportunities to get spending under control where the executives both

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Speaker 5: parties are absolutely right continue to spend money through executive action.

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Speaker 5: And this negotiation allows us to actually bring the president

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Speaker 5: to the table and have a conversation about how we're

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Speaker 5: going to get spending under control. And I think again,

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Speaker 5: at the end of the day, this is overall a

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Speaker 5: good bill moving us in the right direction.

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Speaker 3: Yeah, the one bill assigned Congressman, don't you see where

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Speaker 3: this is coming though? That ultimately, and we're out of time,

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Speaker 3: So if you want to continue this conversation, by all means,

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Speaker 3: come back another time. It just feels like we're in

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Speaker 3: the process now of deliberately manufacturing crises to do exactly

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Speaker 3: what you just explained it. At some point that's going

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Speaker 3: to write the confidence in this country and potentially the

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Speaker 3: ust market too. So we've got to leave it that, Congressman,

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Speaker 3: if you want to continue, happy to do that another time,

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Speaker 3: Congressman Brian style of that of Wisconsin.

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Speaker 2: Right now, we're going to talk the talk of the

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Speaker 2: moment in video with Angelo Zeno, senior equity analyst at CFIRA, who,

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Speaker 2: in a brilliant note, has a courage to write what

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Speaker 2: everybody's thinking. Which is the only way you can justify

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Speaker 2: this is to extend your timeline.

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Speaker 1: Angelo, you go right out to twenty.

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Speaker 2: Twenty four, and you say, look, with a twenty five

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Speaker 2: percent growth pop, you're buying a forty multiple stock, why

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Speaker 2: don't you extrapolate out to twenty twenty five?

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Speaker 9: Yeah, I mean, listen, I think you can. I think

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Speaker 9: there's always danger with kind of trappling the numbers out right,

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Speaker 9: But I will say this, we are believers in kind

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Speaker 9: of the entire video story, in kind of the AI story,

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Speaker 9: the fact that kind of GPU's going to increasingly represent

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Speaker 9: a bigger percentage of CAPEX dollars for these cloud companies.

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Speaker 9: We do think over time over the next three to

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Speaker 9: five years, the comhid and annual growth rate for GPUs

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Speaker 9: and specifically that of Nvidia on the accelerator side of

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Speaker 9: things in the cloud can grow at an annualized piece

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Speaker 9: of north of kind of twenty to twenty five percent,

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Speaker 9: and that can kind of get you to an EPs.

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Speaker 1: Growth rate over time for in Vidia.

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Speaker 9: Again north of twenty percent. If you're a believer that

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Speaker 9: you know the top line for this company can continue

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Speaker 9: to grow at a mid to high teams percentage pace.

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Speaker 1: Are there other invidias out there?

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Speaker 9: So we actually wrote a piece back in late March

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Speaker 9: about kind of the biggest winners of kind of the

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Speaker 9: generative AI boom within the semiconductor industry, and we kind

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Speaker 9: of pointed to four names at that point in late March.

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Speaker 9: And those four names were one, of course, in Nvidia,

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Speaker 9: AMD is another name clearly a beneficiary and the GPU

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Speaker 9: side of things over time as well. And then the

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Speaker 9: other two names are more kind of network connectivity type names,

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Speaker 9: and they were there were Marvel as well as Broadcom,

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Speaker 9: a name that we think is highly underappreciated, a number

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Speaker 9: a name that's going to report tomorrow.

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Speaker 8: Night at the close, I'm wondering what a tech company

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Speaker 8: is right now and which companies can actually take advantage

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Speaker 8: of artificial intelligence. Some of this technology very clear cut

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Speaker 8: AMD or in Nvidia, but what about Meta what about

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Speaker 8: just in a broader sense, other companies that could potentially

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Speaker 8: gain from the productivity of investments and artificial intelligence? How

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Speaker 8: do you value which companies will gain and which actually

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Speaker 8: won't at all and potentially could even lose.

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Speaker 9: Yeah, listen, I think that's probably the most important question

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Speaker 9: we get from investors right now. It's from a monetization perspective,

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Speaker 9: who are going to be the biggest winners kind of

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Speaker 9: from this AI boom? And that's really ant you know,

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Speaker 9: it's a tough question to answer and say, you know,

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Speaker 9: to your point, kind of the easy answer right now

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Speaker 9: is on the semiconductor side of things, That is on

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Speaker 9: the infrastructure side of the and kind of playing that

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Speaker 9: and that's clearly where the kind of the the action

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Speaker 9: has been.

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Speaker 1: Here in recent weeks.

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Speaker 9: Now when you kind of look kind of more forward

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Speaker 9: looking in nature, when we think about some of the

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Speaker 9: larger capaning stocks, I'd say Microsoft clearly at the top

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Speaker 9: of the list in our view. I mean with with

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Speaker 9: copilot out there with the potential to kind of see

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Speaker 9: significant pricing power on that side of things. We think

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Speaker 9: the light of line of sight is highly visible in

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Speaker 9: when where over the next decade should be a clear

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Speaker 9: winner in our view. Now, other names like an alphabet

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Speaker 9: as well as menta, we think they're going to be

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Speaker 9: a little bit tougher calls. And that's why you don't

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Speaker 9: see kind of the multiple to the extent where you

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Speaker 9: see that of the Microsoft's of the world. And the

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Speaker 9: big reason for that is, you know, are they going

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Speaker 9: to get really get the ROI potential or are they

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Speaker 9: going to give advertisers out there the ROI from this AI.

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Speaker 9: But we think there is some kind of positives out there,

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Speaker 9: but I don't think it's as clear as potentially a

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Speaker 9: name like Microsoft out there.

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Speaker 8: So you can be a believer in this story, and

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Speaker 8: I think that anyone who sees the way that people

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Speaker 8: are using chat GPT like artificial intelligence has to be

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Speaker 8: something of a believer, if not at least a very

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Speaker 8: open recipient of this information. But you do have some

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Speaker 8: naysayers out there about the valuation, basically saying that the

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Speaker 8: rally that you have seen so far thirty one percent

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Speaker 8: in big tech stocks so far this year is at

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Speaker 8: risk of petering out. This according to City Analysts, basically

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Speaker 8: saying that positioning is just such that it's rife for

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Speaker 8: profit taking. I mean, do you sort of play into that?

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Speaker 7: Do you just sort of look past that?

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Speaker 8: Do you think that anything like that will just be

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Speaker 8: a buying opportunity? How are you playing sort of the

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Speaker 8: tactical ride up that we've seen in prices that can't

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Speaker 8: really continue at this pace.

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Speaker 9: Yeah, I mean, listen, I mean, in terms of the

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Speaker 9: performance here that there is we think going to be

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Speaker 9: some sort of AI fatigue here potentially in the coming weeks,

440
00:21:45,480 --> 00:21:48,320
Speaker 9: some sort of digestion that's probably going to be needed.

441
00:21:48,520 --> 00:21:51,840
Speaker 9: Now that said, I mean, we remain very big believers

442
00:21:51,880 --> 00:21:55,320
Speaker 9: that the valuation actually is not as extended I think

443
00:21:55,320 --> 00:21:57,919
Speaker 9: as many people out there think, especially as you kind

444
00:21:57,960 --> 00:22:00,840
Speaker 9: of look out to a calendar twenty twenty four bases

445
00:22:01,040 --> 00:22:03,960
Speaker 9: for names like in Nvidia and others where kind of

446
00:22:03,960 --> 00:22:07,159
Speaker 9: there are within their five to ten year historic historical ranges,

447
00:22:07,240 --> 00:22:09,719
Speaker 9: Especially when you start thinking about kind of the growth

448
00:22:10,200 --> 00:22:12,560
Speaker 9: tied to a number of these names. I'd also point to,

449
00:22:12,920 --> 00:22:17,359
Speaker 9: you know, names like a Microsoft and others where Listen,

450
00:22:18,000 --> 00:22:19,639
Speaker 9: at this point in time, I'd say, kind of, the

451
00:22:19,720 --> 00:22:24,680
Speaker 9: risk of the downside on EPs estimates are probably very low,

452
00:22:24,720 --> 00:22:28,359
Speaker 9: and there's probably upside potential to those estimates, So we

453
00:22:28,480 --> 00:22:30,720
Speaker 9: kind of continue to we want to be one on

454
00:22:30,760 --> 00:22:33,159
Speaker 9: a lot of these names that are AI related, and

455
00:22:33,200 --> 00:22:36,119
Speaker 9: I would say, kind of, you kind of want to

456
00:22:36,119 --> 00:22:37,840
Speaker 9: have a basket of names. You don't want to grow

457
00:22:37,920 --> 00:22:39,919
Speaker 9: your eggs in one basket, and you want to be

458
00:22:40,040 --> 00:22:43,680
Speaker 9: buying kind of on any any pullbacks. But listen, it's

459
00:22:43,680 --> 00:22:46,520
Speaker 9: definitely gotten a bit hot to an extent, especially on

460
00:22:46,560 --> 00:22:49,199
Speaker 9: the semi side of things. But the four names that

461
00:22:49,240 --> 00:22:51,639
Speaker 9: we highlighted, we think continue to be the biggest winners

462
00:22:51,640 --> 00:22:53,440
Speaker 9: and the names you want to buy on those pullbacks.

463
00:22:53,440 --> 00:22:55,360
Speaker 3: So you want to belong. Some people feel like they

464
00:22:55,680 --> 00:22:58,600
Speaker 3: have to be longer. It's just going through the ambust recommendations.

465
00:22:58,600 --> 00:23:01,840
Speaker 3: I love this forty nine buys, eight holds and one

466
00:23:01,840 --> 00:23:05,040
Speaker 3: guy who cann't care less about career risk with the South. Now, Angelo,

467
00:23:05,119 --> 00:23:07,320
Speaker 3: that's what wanted to finish on. Do you sense the

468
00:23:07,359 --> 00:23:10,439
Speaker 3: so called career risk associated with this given how quickly

469
00:23:10,520 --> 00:23:14,120
Speaker 3: it's moving, is there pressure that you have to be long?

470
00:23:15,560 --> 00:23:17,280
Speaker 9: I think that's a great point. I mean, listen, I

471
00:23:18,119 --> 00:23:21,959
Speaker 9: think listen. I think there's always risk of kind of

472
00:23:23,560 --> 00:23:26,440
Speaker 9: you know, there's always risk on that side of things,

473
00:23:26,480 --> 00:23:30,040
Speaker 9: but you know, we are fundamental by nature and to

474
00:23:30,160 --> 00:23:32,720
Speaker 9: us the fundamentals that are screaming by right now, and

475
00:23:32,760 --> 00:23:34,960
Speaker 9: for that reason, I think you continue to need to

476
00:23:35,640 --> 00:23:37,800
Speaker 9: pound the table on these type of names. And I

477
00:23:37,800 --> 00:23:40,360
Speaker 9: think especially on a name like Nvidio, when you kind

478
00:23:40,400 --> 00:23:43,240
Speaker 9: of look at the multiples at about forty low forties

479
00:23:43,240 --> 00:23:45,840
Speaker 9: on a calendar twenty four basis, and then you look

480
00:23:45,880 --> 00:23:48,520
Speaker 9: at the growth tied to it three to five years

481
00:23:48,520 --> 00:23:50,320
Speaker 9: from now, and you kind of look at how early

482
00:23:50,440 --> 00:23:52,840
Speaker 9: we are. If you're a believer of kind of let's say,

483
00:23:52,920 --> 00:23:57,800
Speaker 9: autonomous vehicles and what have you, there is risk to

484
00:23:57,840 --> 00:24:01,160
Speaker 9: potentially having a cell to be tactical the nature rather

485
00:24:01,520 --> 00:24:03,879
Speaker 9: than kind of a beating kind of the you know,

486
00:24:03,920 --> 00:24:07,080
Speaker 9: the table on the longer term outlook on these areas.

487
00:24:07,160 --> 00:24:09,119
Speaker 9: And I think that's what you need to do for

488
00:24:09,240 --> 00:24:10,520
Speaker 9: investors out there right now.

489
00:24:10,520 --> 00:24:13,360
Speaker 3: Interesting, Angela, always great to hear from you. Thank you,

490
00:24:13,440 --> 00:24:27,200
Speaker 3: Angela Zena, the of cf RA. We've got to catch

491
00:24:27,280 --> 00:24:31,160
Speaker 3: up with Emily Rowland Co. Chief Investment strategistic John Hancock Investments,

492
00:24:31,400 --> 00:24:34,520
Speaker 3: Emily credit where it's due. I've been speaking to you

493
00:24:34,600 --> 00:24:38,240
Speaker 3: all year. You push back against that europe euphoria. You

494
00:24:38,359 --> 00:24:41,719
Speaker 3: remained committed to the growth equity story the United States

495
00:24:41,760 --> 00:24:43,280
Speaker 3: over the rest of the world, not the rest of

496
00:24:43,320 --> 00:24:45,439
Speaker 3: the world over the United States. Emily. Are you're sticking

497
00:24:45,480 --> 00:24:45,760
Speaker 3: with it?

498
00:24:47,040 --> 00:24:49,679
Speaker 10: Yeah, John, we are, absolutely, And it does feel like

499
00:24:49,800 --> 00:24:52,320
Speaker 10: markets are sort of getting the memo right now.

500
00:24:52,359 --> 00:24:54,720
Speaker 7: In terms of the macroeconomic environment.

501
00:24:54,840 --> 00:24:57,920
Speaker 10: You know, we're looking at decelerating growth, as you all

502
00:24:57,920 --> 00:25:02,000
Speaker 10: have mentioned, disappointing data in China. This morning we saw

503
00:25:02,119 --> 00:25:06,400
Speaker 10: japan industrial production and retail sales both disappointing.

504
00:25:06,400 --> 00:25:09,840
Speaker 7: And you've seen this big rotation into US markets.

505
00:25:09,400 --> 00:25:11,480
Speaker 10: And that's been exhibited by a lot of the cross

506
00:25:11,520 --> 00:25:15,960
Speaker 10: asset action, seeing a bid for treasuries. Finally, over the

507
00:25:16,040 --> 00:25:18,560
Speaker 10: last couple of days here you're seeing the dollar get

508
00:25:18,560 --> 00:25:21,800
Speaker 10: a bid. And of course this massive rotation into US

509
00:25:21,920 --> 00:25:25,560
Speaker 10: quality growth stops, which we've talked about for some time.

510
00:25:25,640 --> 00:25:28,840
Speaker 10: So that's got some key implications for portfolios, especially if

511
00:25:28,880 --> 00:25:31,440
Speaker 10: you think about, you know, some of these trend following

512
00:25:31,480 --> 00:25:35,399
Speaker 10: strategies that have bought you know, the Japan they've bought

513
00:25:35,440 --> 00:25:38,800
Speaker 10: Europe based on positive price momentum. You might see that

514
00:25:38,880 --> 00:25:42,200
Speaker 10: reverse and actually exacerbate some of the flows out of

515
00:25:42,200 --> 00:25:43,119
Speaker 10: those areas of the market.

516
00:25:43,280 --> 00:25:44,359
Speaker 1: You're going to get me in trouble.

517
00:25:44,440 --> 00:25:48,119
Speaker 2: Mentioned the trend following strategies, Emily, I'm glad you mentioned Japan.

518
00:25:48,200 --> 00:25:52,320
Speaker 2: We haven't mentioned that this morning, and those are shocking numbers.

519
00:25:52,400 --> 00:25:56,840
Speaker 2: Within this is sticky inflation. Everybody's doing real analysis, but

520
00:25:56,920 --> 00:25:59,040
Speaker 2: we live in a nominal world. Are we going to

521
00:25:59,080 --> 00:26:03,840
Speaker 2: be surprised by okay, revenue growth that supports US blue chips?

522
00:26:04,560 --> 00:26:07,640
Speaker 10: Well, I think it's a great point because inflation has

523
00:26:07,760 --> 00:26:11,080
Speaker 10: definitely helped these companies that have a lot of pricing power,

524
00:26:11,440 --> 00:26:14,640
Speaker 10: especially companies that have high operating leverage, and we've seen

525
00:26:14,680 --> 00:26:18,760
Speaker 10: that be absolutely critical in terms of supporting margins. We

526
00:26:18,800 --> 00:26:21,399
Speaker 10: think it's going to be hard to sustain that going forward.

527
00:26:21,440 --> 00:26:24,199
Speaker 10: Of course, bottom line costs are elevated, whether it's the

528
00:26:24,240 --> 00:26:28,119
Speaker 10: cost of capital. Wage growth still fairly elevated, though there

529
00:26:28,119 --> 00:26:31,200
Speaker 10: are signs that that's coming down, and then clearly demand

530
00:26:31,240 --> 00:26:32,119
Speaker 10: is starting to slow.

531
00:26:32,160 --> 00:26:34,280
Speaker 7: We're seeing that way back in the supply chain.

532
00:26:34,320 --> 00:26:36,919
Speaker 10: If you look at things like the ISM index of

533
00:26:37,000 --> 00:26:40,600
Speaker 10: new orders, which is our favorite leading indicator, no offense.

534
00:26:40,640 --> 00:26:42,960
Speaker 10: I know everybody has a favorite leading indicator, but that's

535
00:26:42,960 --> 00:26:46,080
Speaker 10: our the John Hancock and that's going to put up

536
00:26:46,440 --> 00:26:49,120
Speaker 10: pressure on margins. It's going to cause companies to need

537
00:26:49,119 --> 00:26:52,080
Speaker 10: to defend their margins going forward, and that's ultimately going

538
00:26:52,119 --> 00:26:53,040
Speaker 10: to result.

539
00:26:53,040 --> 00:26:54,800
Speaker 7: And the unemployment rate rising.

540
00:26:54,880 --> 00:26:57,080
Speaker 10: We haven't seen that happen yet, but we think that

541
00:26:57,080 --> 00:26:59,400
Speaker 10: that's something that comes in the next couple of quarters here.

542
00:26:59,520 --> 00:27:01,680
Speaker 8: There's been growing theme in a lot of the notes

543
00:27:01,680 --> 00:27:03,720
Speaker 8: that I've been reading about this inflection point that we

544
00:27:03,760 --> 00:27:05,520
Speaker 8: seem to be coming up upon, not that just that

545
00:27:05,560 --> 00:27:07,959
Speaker 8: we've been halfway through the year, but also that some

546
00:27:08,000 --> 00:27:11,200
Speaker 8: of the main factors driving the first half are shifting.

547
00:27:11,560 --> 00:27:13,159
Speaker 8: Do you see that as well, and we're going to

548
00:27:13,200 --> 00:27:14,760
Speaker 8: be the features of this inflection point.

549
00:27:15,760 --> 00:27:15,960
Speaker 7: Yeah.

550
00:27:16,000 --> 00:27:18,440
Speaker 10: Well, some of the main drivers that have been supporting

551
00:27:18,480 --> 00:27:21,680
Speaker 10: the market we've talked about it was really China reopening

552
00:27:22,080 --> 00:27:24,439
Speaker 10: back in the fourth quarter of last year and better

553
00:27:24,480 --> 00:27:29,320
Speaker 10: weather in Europe, which causes massive rotation into European equities.

554
00:27:29,320 --> 00:27:33,360
Speaker 10: It caused a dollar to weaken, which really supported risk assets.

555
00:27:33,400 --> 00:27:36,879
Speaker 10: There's been almost a perfect correlation with the dollar weakening

556
00:27:36,920 --> 00:27:40,520
Speaker 10: and risk assets rallying and vice versa, and you're seeing

557
00:27:40,560 --> 00:27:43,480
Speaker 10: some of those things shift now again as this rotation

558
00:27:43,600 --> 00:27:46,800
Speaker 10: comes back to the US. The economic data not great

559
00:27:46,800 --> 00:27:49,280
Speaker 10: across the globe, but it's actually better in the US

560
00:27:49,440 --> 00:27:51,640
Speaker 10: right now, which is a big shift over the last

561
00:27:51,640 --> 00:27:55,240
Speaker 10: couple of quarters. So stronger dollar bid for treasuries. We

562
00:27:55,320 --> 00:27:58,080
Speaker 10: think that's where some of the opportunities are from here.

563
00:27:58,119 --> 00:28:01,000
Speaker 10: And I think that again, the market action of the

564
00:28:01,000 --> 00:28:03,320
Speaker 10: past couple of days to us makes a ton of

565
00:28:03,359 --> 00:28:06,080
Speaker 10: sense given the fact that we are in a decelerating

566
00:28:06,119 --> 00:28:08,960
Speaker 10: growth environment and that recession is likely to unfold.

567
00:28:09,119 --> 00:28:11,800
Speaker 3: Emily great, cool so far here today on the equity market,

568
00:28:11,840 --> 00:28:14,360
Speaker 3: together with the same Thank you, Emily Rowland of John

569
00:28:14,359 --> 00:28:16,240
Speaker 3: Hancock Investment Management.

570
00:28:20,560 --> 00:28:24,639
Speaker 2: William Lee joins US now chief economist and Milken Institute. Billy,

571
00:28:24,720 --> 00:28:27,399
Speaker 2: let's start with green Spanny in one oh one is

572
00:28:27,480 --> 00:28:32,040
Speaker 2: China and they're slow down, going to export, disinflation and deflation.

573
00:28:33,160 --> 00:28:35,280
Speaker 11: Well, China cannets for much of anything right now, but

574
00:28:35,400 --> 00:28:37,920
Speaker 11: I hope what they do with is disinflation for the

575
00:28:37,960 --> 00:28:41,280
Speaker 11: rest of the world. Right now, China's recovery has really faltered.

576
00:28:41,920 --> 00:28:44,560
Speaker 11: We can see that the piet not only is manufacturing down,

577
00:28:44,800 --> 00:28:47,560
Speaker 11: but it looks like the consumption is on its way

578
00:28:47,640 --> 00:28:50,840
Speaker 11: going to go down as well, with unemployment rates at

579
00:28:50,840 --> 00:28:53,560
Speaker 11: twenty percent for youth unemployment, So China is not in

580
00:28:53,640 --> 00:28:56,400
Speaker 11: good shape right now. And I think we are looking

581
00:28:56,440 --> 00:28:59,000
Speaker 11: around and seeing what is going to pull China out

582
00:28:59,000 --> 00:28:59,719
Speaker 11: of the douldrums.

583
00:29:00,280 --> 00:29:03,400
Speaker 2: What is the degrees of freedom and autocracy has Sunday

584
00:29:03,440 --> 00:29:07,880
Speaker 2: afternoon New York time when they're supposed to provide stimulus.

585
00:29:08,680 --> 00:29:11,600
Speaker 11: It's pretty limited, right because not only is the federal

586
00:29:11,960 --> 00:29:15,239
Speaker 11: debt out of control, the municipal level debt is out

587
00:29:15,280 --> 00:29:18,760
Speaker 11: of control. So the general channels for fiscal policy have

588
00:29:18,880 --> 00:29:21,960
Speaker 11: been through the municipal governments to try to hire more people,

589
00:29:22,040 --> 00:29:24,560
Speaker 11: build more projects and stuff like that. Well, right now

590
00:29:24,800 --> 00:29:28,720
Speaker 11: they can't do that. So the amount of fiscal policy

591
00:29:28,720 --> 00:29:31,920
Speaker 11: that we have is really limited. And monetary policy, I mean,

592
00:29:31,960 --> 00:29:33,760
Speaker 11: you can lower rates, but people are just going to

593
00:29:35,120 --> 00:29:37,320
Speaker 11: stay there and not borrow because they're going to ask

594
00:29:37,320 --> 00:29:39,600
Speaker 11: themselves where am I going to spend the money in

595
00:29:39,680 --> 00:29:41,719
Speaker 11: order to make money in the future if the demand

596
00:29:41,760 --> 00:29:44,960
Speaker 11: is so slow. So China right now is snowballing into

597
00:29:45,440 --> 00:29:48,160
Speaker 11: a fairly bad static plateau.

598
00:29:49,000 --> 00:29:53,920
Speaker 8: Static plateau that's been priced in or not Bill.

599
00:29:52,520 --> 00:29:55,440
Speaker 11: You know, I think one of the things that we

600
00:29:55,520 --> 00:29:57,240
Speaker 11: have to look at is where is it being priced.

601
00:29:57,320 --> 00:29:58,880
Speaker 11: One of the things we talked about at the Milking

602
00:29:58,880 --> 00:30:01,440
Speaker 11: conference that just end a month ago was that a

603
00:30:01,440 --> 00:30:03,080
Speaker 11: lot of the investors going into China going into the

604
00:30:03,120 --> 00:30:05,960
Speaker 11: private markets, and we really can't see a lot of that.

605
00:30:06,720 --> 00:30:08,640
Speaker 11: But in order to get into the private markets, one

606
00:30:08,640 --> 00:30:11,440
Speaker 11: thing that everyone made clear was they need a good surpose.

607
00:30:11,600 --> 00:30:13,640
Speaker 11: They needed someone to guide them through to find good

608
00:30:13,680 --> 00:30:16,880
Speaker 11: investment opportunities. And a lot of the investors claim they've

609
00:30:16,880 --> 00:30:19,200
Speaker 11: got some good sharpers there and they're getting good bargains

610
00:30:20,080 --> 00:30:23,520
Speaker 11: because the slowdown is affecting valuations both in the public

611
00:30:23,560 --> 00:30:26,080
Speaker 11: and private markets. But the real question to ask is

612
00:30:26,280 --> 00:30:28,600
Speaker 11: will you get the kind of returns you're hoping for?

613
00:30:28,840 --> 00:30:31,520
Speaker 11: And there I have my doubts because the democratics are

614
00:30:31,560 --> 00:30:36,240
Speaker 11: working against them. And on top of that, the possibility

615
00:30:36,240 --> 00:30:38,320
Speaker 11: of technological change, which would be the one thing that

616
00:30:38,360 --> 00:30:40,720
Speaker 11: boosts the Johnny's economy, is also not going to be

617
00:30:40,720 --> 00:30:45,800
Speaker 11: there because policy has been really anti innovation, anti technology,

618
00:30:46,480 --> 00:30:48,280
Speaker 11: and it's hard to see that changing.

619
00:30:48,160 --> 00:30:49,800
Speaker 8: Which is John what you were pointing to when you

620
00:30:49,800 --> 00:30:51,440
Speaker 8: were taking a look at the tech indexes over in

621
00:30:51,520 --> 00:30:53,440
Speaker 8: China versus the tech indexes in the US and that

622
00:30:53,560 --> 00:30:57,640
Speaker 8: huge bifurcation between the two. Bill that's maybe on a

623
00:30:57,640 --> 00:31:00,760
Speaker 8: domestic level, What about internationally has this been priced in

624
00:31:00,760 --> 00:31:03,320
Speaker 8: in terms of the impulse that China had on Europe?

625
00:31:03,320 --> 00:31:05,040
Speaker 8: We were talking about the euro and how much has

626
00:31:05,040 --> 00:31:06,880
Speaker 8: come off some of its earlier highs.

627
00:31:07,560 --> 00:31:09,400
Speaker 11: Well, the RIM and be right now is weaker that

628
00:31:09,480 --> 00:31:12,479
Speaker 11: it's been for godd knows how long, and so in

629
00:31:12,480 --> 00:31:14,320
Speaker 11: that sense it's being priced it. But for me, the

630
00:31:14,720 --> 00:31:17,440
Speaker 11: EFS market is very short term. The real question is

631
00:31:18,000 --> 00:31:22,160
Speaker 11: are investors pricing in growth opportunities over the next five years.

632
00:31:22,320 --> 00:31:24,640
Speaker 11: Are they putting the marginal dollar into China or a

633
00:31:24,640 --> 00:31:26,640
Speaker 11: they're putting it somewhere else? And I think more often

634
00:31:26,640 --> 00:31:28,000
Speaker 11: than not they're looking somewhere else.

635
00:31:28,560 --> 00:31:31,320
Speaker 2: Bill, You've got a great ability to move away from

636
00:31:31,360 --> 00:31:34,239
Speaker 2: the Pacific RIM in the three cities we focus on

637
00:31:34,440 --> 00:31:37,640
Speaker 2: all the time. What's the rest of China look like?

638
00:31:38,040 --> 00:31:40,000
Speaker 2: With the unemployment rates that are.

639
00:31:39,840 --> 00:31:43,960
Speaker 11: Being reported, that's a great question. Up until now, I

640
00:31:44,000 --> 00:31:47,720
Speaker 11: would have said the prospects for any kind of innovation,

641
00:31:47,880 --> 00:31:51,000
Speaker 11: any kind of employment growth are going to come out west.

642
00:31:51,080 --> 00:31:55,040
Speaker 11: Because the Milkton study for the greatest performing cities in

643
00:31:55,160 --> 00:32:00,120
Speaker 11: China landed on Chindu as a small innovation hub, and

644
00:32:00,680 --> 00:32:03,400
Speaker 11: we still stand by those numbers. But unfortunately these numbers

645
00:32:03,400 --> 00:32:06,000
Speaker 11: are getting dated, and right now I'm not sure if

646
00:32:06,080 --> 00:32:08,280
Speaker 11: even out west the innovation helps will be able to

647
00:32:08,320 --> 00:32:09,600
Speaker 11: give the kind of employment that the way that they

648
00:32:09,600 --> 00:32:09,920
Speaker 11: hope for.

649
00:32:10,080 --> 00:32:13,720
Speaker 2: We've been here before and the answer is Beijing always

650
00:32:13,800 --> 00:32:18,880
Speaker 2: blinks and moves away from a totalitarian mindset, the autocracy

651
00:32:19,000 --> 00:32:22,080
Speaker 2: of President g and they move to some form of

652
00:32:22,160 --> 00:32:23,880
Speaker 2: liberality and capitalism.

653
00:32:24,240 --> 00:32:26,400
Speaker 1: You're saying, it's not going to happen this time. See

654
00:32:26,400 --> 00:32:27,840
Speaker 1: he's points out on radio.

655
00:32:27,920 --> 00:32:30,760
Speaker 2: You can't see that, Professor Lee is I'm gonna I

656
00:32:30,760 --> 00:32:32,760
Speaker 2: gotta duck because the chart's coming in.

657
00:32:33,960 --> 00:32:38,440
Speaker 11: Tom. President she's blinking, is gonna involve maybe a slightly

658
00:32:38,480 --> 00:32:43,360
Speaker 11: different wrinkle. He's going to rely on nationalism, perhaps some militarism,

659
00:32:44,040 --> 00:32:47,240
Speaker 11: some expansion of Huberts into the rest of Asia, because

660
00:32:47,320 --> 00:32:50,080
Speaker 11: after all, he wants Asia to be the currency area

661
00:32:50,120 --> 00:32:52,520
Speaker 11: for the China for the rem and be so. So

662
00:32:52,560 --> 00:32:54,240
Speaker 11: I think these are the kind of places we should

663
00:32:54,280 --> 00:33:00,000
Speaker 11: look for any kind of resuscitation of you of Chinese nationalisms,

664
00:33:00,160 --> 00:33:02,520
Speaker 11: which is they're going to try to instill pride in

665
00:33:02,560 --> 00:33:05,600
Speaker 11: the Chinese people without giving them jobs, and that's going

666
00:33:05,680 --> 00:33:06,560
Speaker 11: to be a cute trick.

667
00:33:06,760 --> 00:33:08,000
Speaker 8: Well, how do what does that mean in terms of

668
00:33:08,040 --> 00:33:10,239
Speaker 8: international business? And I say this is JP Morgan has

669
00:33:10,280 --> 00:33:14,240
Speaker 8: their conference and plays nice, albeit in a brilliantly diplomatic

670
00:33:14,360 --> 00:33:17,040
Speaker 8: pro American but also pro China kind of speech by

671
00:33:17,120 --> 00:33:21,000
Speaker 8: Jamie Diamond. How much can you really see a decoupling

672
00:33:21,080 --> 00:33:23,800
Speaker 8: or a willingness to exacerbate that on the Chinese side

673
00:33:23,840 --> 00:33:25,360
Speaker 8: in light of the economic challenges.

674
00:33:25,920 --> 00:33:28,760
Speaker 11: Well, Lisa, we have a love fest by US CEOs,

675
00:33:29,600 --> 00:33:32,160
Speaker 11: going back to Tim Cook and now Elon Musk and

676
00:33:32,560 --> 00:33:34,600
Speaker 11: Jamie Diamond is very slick and being able to say

677
00:33:34,760 --> 00:33:37,600
Speaker 11: I'm a true American. I really am a patriot. So

678
00:33:37,680 --> 00:33:39,520
Speaker 11: when you vote for me, remember that even though I'm

679
00:33:39,520 --> 00:33:41,400
Speaker 11: asking you to come to China and support my people.

680
00:33:42,080 --> 00:33:44,560
Speaker 11: And I think going forward we're going to see more

681
00:33:44,600 --> 00:33:47,560
Speaker 11: of that, because the question is the people who are

682
00:33:47,560 --> 00:33:50,440
Speaker 11: in China have to con their maintain their business and

683
00:33:51,000 --> 00:33:55,760
Speaker 11: really contain what they've gained. But the marginal dollar the investors.

684
00:33:55,800 --> 00:33:58,400
Speaker 11: He's sitting here in the West thinking of going to China,

685
00:33:58,960 --> 00:34:00,680
Speaker 11: what are they going to see? And I think They're

686
00:34:00,680 --> 00:34:02,800
Speaker 11: going to see a lot of opportunities in osion in

687
00:34:02,920 --> 00:34:07,080
Speaker 11: Korea and in the quad country surrounding Charla, because that's

688
00:34:07,120 --> 00:34:10,640
Speaker 11: where a lot of the innovative industries are moving to.

689
00:34:11,520 --> 00:34:13,359
Speaker 8: I want to end the conversation where we began, where

690
00:34:13,360 --> 00:34:16,239
Speaker 8: you're talking about sort of a stagnant plateau. What is

691
00:34:16,280 --> 00:34:19,440
Speaker 8: that stagnant plateau in China? What is that rate of

692
00:34:19,480 --> 00:34:21,879
Speaker 8: growth that's going to be the new normal and going

693
00:34:21,880 --> 00:34:24,280
Speaker 8: to drive demand for the luxury goods that have gotten

694
00:34:24,280 --> 00:34:26,560
Speaker 8: bid up for commodities that have surprised a lot of

695
00:34:26,560 --> 00:34:27,879
Speaker 8: people to downside this year.

696
00:34:28,560 --> 00:34:31,640
Speaker 11: Well, Lisa, the official number is a five handle for

697
00:34:31,760 --> 00:34:33,879
Speaker 11: growth going forward, and I think you're going to see

698
00:34:33,880 --> 00:34:36,319
Speaker 11: more likely a three handle than five. So I think

699
00:34:36,320 --> 00:34:38,440
Speaker 11: that's the kind of order magnitude you're thinking of, because

700
00:34:38,520 --> 00:34:42,600
Speaker 11: with population stagnant, any kind of massive productivity growth can't

701
00:34:42,640 --> 00:34:43,480
Speaker 11: get them above.

702
00:34:43,239 --> 00:34:46,239
Speaker 3: Three for obvious reasons. Bill market participants are going to

703
00:34:46,280 --> 00:34:48,880
Speaker 3: be very interested in the next move on stimulus to

704
00:34:48,880 --> 00:34:52,160
Speaker 3: get the PMI back above fifty. As you know, that's

705
00:34:52,200 --> 00:34:54,040
Speaker 3: not what the leader of the Chinese Commuist Party is

706
00:34:54,040 --> 00:34:55,879
Speaker 3: going to be focused on. They're going to be taking

707
00:34:55,920 --> 00:34:58,680
Speaker 3: a multi decade view, and Bill, I'm far more interested

708
00:34:58,719 --> 00:35:01,359
Speaker 3: in the kind of FIS school moves that they make

709
00:35:01,880 --> 00:35:05,600
Speaker 3: to stimulate more investment in certain parts of the economy

710
00:35:05,920 --> 00:35:08,120
Speaker 3: that are going to be highly competitive with the United

711
00:35:08,160 --> 00:35:12,280
Speaker 3: States and Europe, particularly as the US retrenches and refuses

712
00:35:12,320 --> 00:35:15,799
Speaker 3: in some parts to do business with the Chinese government. Now, Bill,

713
00:35:16,120 --> 00:35:17,840
Speaker 3: what are you focused on with regards to that?

714
00:35:18,800 --> 00:35:19,120
Speaker 1: Well?

715
00:35:19,160 --> 00:35:21,720
Speaker 11: Absolutely, In fact, if you look at where the Chinese

716
00:35:21,760 --> 00:35:23,600
Speaker 11: are meeting and where they or not, they're not meeting

717
00:35:23,640 --> 00:35:26,520
Speaker 11: with Defense Secretary of Austin, so they don't want to

718
00:35:26,520 --> 00:35:28,719
Speaker 11: talk military because we know what they're going to do

719
00:35:28,719 --> 00:35:31,960
Speaker 11: there is not very powerful for the US. But I

720
00:35:32,000 --> 00:35:34,720
Speaker 11: think the place that they're meeting with is Genial Romando.

721
00:35:34,840 --> 00:35:38,319
Speaker 11: It's the Commerce Secretary. They're hoping to leverage some action

722
00:35:38,480 --> 00:35:41,719
Speaker 11: on the tariffs. They're hoping to leverage some action on

723
00:35:42,200 --> 00:35:47,239
Speaker 11: cutting the semiconductor restrictions, and their information blackout is going

724
00:35:47,280 --> 00:35:51,440
Speaker 11: to leverage what our investors actually see. They're going to

725
00:35:51,480 --> 00:35:54,320
Speaker 11: shape the story for global investors to be so wonderful

726
00:35:54,480 --> 00:35:58,440
Speaker 11: that that investors carries is coming. But in order to

727
00:35:58,520 --> 00:36:02,360
Speaker 11: do the due diligence require information to do the due diligence.

728
00:36:02,400 --> 00:36:05,200
Speaker 11: It's something that's being restricted as we speak by the

729
00:36:05,280 --> 00:36:08,400
Speaker 11: Chinese government and going forward, I don't see that lifting.

730
00:36:08,280 --> 00:36:12,239
Speaker 3: That last point is so important Bill, clarity transparency. How

731
00:36:12,239 --> 00:36:15,440
Speaker 3: do I know what the unemployment rate actually is in China?

732
00:36:15,719 --> 00:36:18,040
Speaker 3: Measuring it is hard enough. But when we hear youth

733
00:36:18,120 --> 00:36:20,480
Speaker 3: unemployment something like twenty percent, just how bad is it?

734
00:36:20,520 --> 00:36:20,719
Speaker 1: Bill?

735
00:36:21,800 --> 00:36:24,360
Speaker 11: It is that bad or worse? And if it wasn't worse,

736
00:36:24,400 --> 00:36:28,960
Speaker 11: we would hear more about informal data. But instead we

737
00:36:29,040 --> 00:36:31,960
Speaker 11: see companies like Win being wound down by the government.

738
00:36:32,160 --> 00:36:36,919
Speaker 11: We see due diligence, companies like Bane being queried by

739
00:36:36,960 --> 00:36:40,239
Speaker 11: the officials. So I think the Chinese will making very

740
00:36:40,280 --> 00:36:42,960
Speaker 11: clear We're going to feed you the information you need,

741
00:36:43,120 --> 00:36:43,879
Speaker 11: but it's from us.

742
00:36:44,239 --> 00:36:47,000
Speaker 3: Bill lake Milkin, Hi. Bill got to catch up.

743
00:36:47,320 --> 00:36:49,359
Speaker 1: As always, subscribe.

744
00:36:48,800 --> 00:36:52,600
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745
00:36:52,600 --> 00:36:57,000
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746
00:36:57,000 --> 00:37:01,560
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747
00:37:01,920 --> 00:37:02,600
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748
00:37:02,760 --> 00:37:04,200
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749
00:37:04,640 --> 00:37:08,320
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750
00:37:08,680 --> 00:37:12,560
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751
00:37:12,760 --> 00:37:14,520
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