WEBVTT - Markets Await Inflation Data 0:00:00.080 --> 0:00:01.800 You don't want to buy Nvidia, you don't want to 0:00:01.840 --> 0:00:02.400 buy Apple? 0:00:02.560 --> 0:00:03.200 What are you going to do? 0:00:03.480 --> 0:00:07.360 Story and the joints? Now the RBC Capital markets. Do 0:00:07.440 --> 0:00:10.120 you ascribe to the idea mord that the market's lifting 0:00:10.600 --> 0:00:12.040 even away from the normous? 0:00:12.080 --> 0:00:20.960 This is the Bloomberg Surveillance podcast from the best of Economics, Finance, investment, 0:00:21.239 --> 0:00:24.439 and the International Relations. You can also watch to show 0:00:25.040 --> 0:00:31.600 on YouTube The Bloomberg Podcast on YouTube. Just see Weekday Morning. 0:00:33.200 --> 0:00:39.680 Actually City people subscribe to the podcast on Spotify. 0:00:39.920 --> 0:00:42.840 Tell us you listen on Bloomberg Radio. 0:00:45.000 --> 0:00:48.880 Retailers including Walmart and some others. What's your takeaway from 0:00:49.200 --> 0:00:51.800 earning here? The Corporate America kind of earned their way 0:00:51.840 --> 0:00:52.720 into the multiple thing. 0:00:54.360 --> 0:00:56.920 So look, I think that reporting season was fine. It 0:00:56.960 --> 0:00:59.560 wasn't anything to get too excited about either way. 0:01:00.400 --> 0:01:00.600 You know. 0:01:00.640 --> 0:01:02.000 I think if you go through and you look at 0:01:02.040 --> 0:01:05.480 the beats on both earnings and revenues, we saw very 0:01:05.520 --> 0:01:08.840 strong rates of earning speats. They were less strong on sales, 0:01:09.200 --> 0:01:11.080 and we've seen that for a while now. But what 0:01:11.120 --> 0:01:13.480 that's telling me is that Corporate America is finding a 0:01:13.480 --> 0:01:15.319 way to get it done, and we should applaud them 0:01:15.319 --> 0:01:17.560 for that. But we should also recognize that they are 0:01:17.640 --> 0:01:19.080 finding a way to get it done and they're really 0:01:19.160 --> 0:01:22.280 navigating through a tough cost environment. So I think the 0:01:22.360 --> 0:01:25.679 numbers are good. We've seen the consensus estimate for SMP 0:01:25.800 --> 0:01:27.600 this year go up to two forty five. Again, that's 0:01:27.600 --> 0:01:30.840 basically where we were last summer. Usually that bottom up 0:01:30.880 --> 0:01:33.280 consensus is in the right neighborhood by the time we 0:01:33.319 --> 0:01:36.640 get through this recording season and into June. So I 0:01:36.680 --> 0:01:38.880 think that we've managed to go through it without too 0:01:38.959 --> 0:01:40.640 much damage. And there were a lot of bears who 0:01:40.640 --> 0:01:42.880 were saying the numbers were crazily too high, needed to 0:01:42.920 --> 0:01:45.120 come down, that was going to destroy the market. Well 0:01:45.120 --> 0:01:45.880 that didn't happen. 0:01:46.720 --> 0:01:48.360 Hey, Laurie, I know you and your team, you kind 0:01:48.400 --> 0:01:50.800 of you really go through the earning transcripts to kind 0:01:50.800 --> 0:01:53.640 of get a sense of what corporate management teams are 0:01:53.720 --> 0:01:55.559 are focused on these days. What did you take away 0:01:55.560 --> 0:01:57.280 from the most recent round of earnings? 0:01:58.320 --> 0:02:00.280 You know, it was it was an interesting excerpt, size 0:02:00.320 --> 0:02:01.880 it always is. We've been doing this for a few 0:02:01.920 --> 0:02:03.560 years now. I would say, you know, one of my 0:02:03.640 --> 0:02:06.320 main thoughts as we've got these big inflation prints coming 0:02:06.360 --> 0:02:09.440 out this week is that while companies, you know, certainly 0:02:09.440 --> 0:02:11.880 weren't saying that the cost environment was good. It was 0:02:11.919 --> 0:02:15.440 a pretty balanced discussion. So we had some company saying well, 0:02:15.480 --> 0:02:17.920 cost or elevated. Others were saying, well, input costs have 0:02:17.960 --> 0:02:20.600 come down, or things are normalizing, or things are moderating, 0:02:21.400 --> 0:02:23.600 or we're maybe calling out something like freight expense that 0:02:23.639 --> 0:02:26.680 had gotten a little bit easier. That really contrasts with 0:02:26.800 --> 0:02:28.960 me with what we heard in the last reporting season 0:02:29.000 --> 0:02:32.680 in January through March, when it was almost very uniformly 0:02:32.880 --> 0:02:35.640 a kind of hot inflation commentary, if you will, where 0:02:35.680 --> 0:02:38.680 it was just nothing but negative, negative, negative. So that 0:02:38.720 --> 0:02:40.880 makes me feel a little bit better heading into these prints. 0:02:40.919 --> 0:02:44.120 I'm still a little bit nervous, you know that the economists, 0:02:44.160 --> 0:02:45.800 you know, haven't figured out what they got wrong in 0:02:45.840 --> 0:02:48.840 the first quarter, but admittedly the company commentary has been 0:02:48.880 --> 0:02:50.520 a little bit better on that point. 0:02:50.919 --> 0:02:52.920 So all right, So, given the fact that we've got 0:02:53.000 --> 0:02:55.560 yields pulling back just a little bit here from a 0:02:55.600 --> 0:02:58.320 sector perspective, Laurie, where do you think the best opportunities 0:02:59.000 --> 0:02:59.880 are right here? 0:03:01.160 --> 0:03:02.760 Well, I think that when you're in one of these 0:03:02.880 --> 0:03:06.640 environments right where the macro cross currents right in the narratives, 0:03:06.680 --> 0:03:09.040 it feels like they're just whiplashing, right. It feels like 0:03:09.080 --> 0:03:11.200 they change every few weeks. I think you want to 0:03:11.240 --> 0:03:14.480 really stay focused on things like valuation, things like earning 0:03:14.600 --> 0:03:17.399 revision momentum, and where you're starting to see no more 0:03:17.440 --> 0:03:21.040 frankly upside revisions to analyst estimates than other sectors. And 0:03:21.120 --> 0:03:22.960 a couple of sectors that really jump out to me 0:03:23.000 --> 0:03:26.000 are both energy and financials. We've got very strong valuation 0:03:26.120 --> 0:03:28.640 stories in both. The earnings revisions are improving in both, 0:03:29.240 --> 0:03:31.440 and while materials isn't quite as strong on the earning's 0:03:31.480 --> 0:03:34.520 revision front, we still really like the valuations there. And 0:03:34.520 --> 0:03:36.680 I think when you're getting whiplashed by all these narratives, 0:03:36.720 --> 0:03:38.560 you know, you really just want to stay focused on 0:03:38.600 --> 0:03:39.000 the data. 0:03:39.480 --> 0:03:42.119 I mean, Paul's been going on here with you, It's 0:03:42.120 --> 0:03:48.000 been really, really interesting. I'm looking at the materials sector 0:03:48.720 --> 0:03:51.880 and I'm as guilty as anyone Larie Kelvisina of having 0:03:51.960 --> 0:03:57.120 tech on the brain lynd And Danbury, Connecticut, Dow Chemical 0:03:57.280 --> 0:04:01.600 in others, Sherwin Williams. I mean, materials, how quaint, Paul. 0:04:01.720 --> 0:04:03.680 I know it's from my ute when Laurie was like 0:04:03.720 --> 0:04:04.839 in third grade. 0:04:05.000 --> 0:04:07.120 Went back when she was on the lawn at Uva. 0:04:07.880 --> 0:04:11.040 Laurie talk to us about valuation here, I mean the 0:04:11.120 --> 0:04:12.880 stock market, the S and P five findal let's just 0:04:12.920 --> 0:04:14.160 look at the S and P five hundred's had a 0:04:14.160 --> 0:04:17.720 big move off of those October levels. Has the valuation 0:04:17.880 --> 0:04:19.559 got in front of it? Do I need to strip 0:04:19.600 --> 0:04:21.839 out some of those the handful of the big tech 0:04:21.960 --> 0:04:25.600 names and then get to get more comfortable with valuations 0:04:25.600 --> 0:04:26.119 in these markets? 0:04:26.120 --> 0:04:26.880 How do you think about that? 0:04:28.000 --> 0:04:29.839 So we think about it in a couple of different ways. 0:04:29.839 --> 0:04:32.159 There's forward pees and trailing pees. So let's look at 0:04:32.200 --> 0:04:34.520 forward pees for just a moment, which is what most 0:04:34.560 --> 0:04:37.279 people's preferred gauge. Is not mine actually, but what most 0:04:37.279 --> 0:04:39.480 people like to look at. And if you do that 0:04:39.600 --> 0:04:41.400 for the broader market. To be honest, I haven't looked 0:04:41.440 --> 0:04:42.960 at it for the SMP in a little while, so 0:04:43.000 --> 0:04:44.840 I don't know exactly what that number is. But we 0:04:44.960 --> 0:04:47.480 watch every week the top ten names in the SMP 0:04:48.160 --> 0:04:50.599 versus the rest of the market, and what you see 0:04:50.640 --> 0:04:52.520 on the top ten names is we're right back up 0:04:52.520 --> 0:04:54.240 to twenty seven times. Again, it got as low as 0:04:54.279 --> 0:04:56.080 twenty five times recently. If you just look at a 0:04:56.120 --> 0:04:59.400 median pe of that bucket. It's way about average. It's 0:04:59.440 --> 0:05:02.400 bumping up against recent highs. You can get really scared 0:05:02.440 --> 0:05:04.520 in a hurry if you look at that stat If 0:05:04.560 --> 0:05:06.200 you look at the rest of the market, we're trading 0:05:06.240 --> 0:05:09.520 around sixteen times, so it's a little above average, nowhere 0:05:09.520 --> 0:05:12.280 near past peaks. And it looks to me when you 0:05:12.320 --> 0:05:14.800 see those charts side by side like there's a catch 0:05:14.839 --> 0:05:18.000 up trade that needs to happen. You see this off recoveries. 0:05:18.040 --> 0:05:20.240 One thing typically runs harder off the bottom than at 0:05:20.279 --> 0:05:22.760 some point it digests and pauses, and the other thing 0:05:22.839 --> 0:05:24.760 catches up. And I think that's where we are for 0:05:24.800 --> 0:05:26.240 the rest of the market. And by the way, if 0:05:26.279 --> 0:05:29.080 you ask your typical bysider where they think the market 0:05:29.160 --> 0:05:31.440 should be trading at, they'll tell you fifteen sixteen times 0:05:31.440 --> 0:05:33.960 on forward earnings, And that's exactly where the broad market 0:05:34.040 --> 0:05:36.480 is if you strip out those top ten names. 0:05:36.640 --> 0:05:39.240 Laurie, thank you, Laurie Calvicina with US head of US 0:05:39.320 --> 0:05:43.560 Equity Strategy or RBC Capital Markets trying to get us 0:05:43.880 --> 0:05:47.960 away from Nvidia on the brain, not that any of 0:05:48.000 --> 0:06:02.479 us would be guilty of it. I was waxing philosophical 0:06:02.520 --> 0:06:05.400 with a beverage of my choice in my hands. About 0:06:06.000 --> 0:06:08.520 the legs of a bull market and the support in 0:06:08.640 --> 0:06:12.760 resistance dynamics are different in each leg of a bull market. 0:06:13.279 --> 0:06:16.120 In idiots, Oh excuse me, I didn't say that. Idiots 0:06:16.120 --> 0:06:21.280 that draw little lines pretending to John Maggie amateur. You know, 0:06:21.600 --> 0:06:24.000 it's a good way to get in trouble. Here is 0:06:24.040 --> 0:06:28.200 the word now on support and resistance. Chrisopher own joins 0:06:28.640 --> 0:06:32.920 uh with strtiguas is the support to this great bull 0:06:33.040 --> 0:06:36.160 market different than it was two octobers ago? 0:06:36.600 --> 0:06:40.000 Well, I think the support to this bullmarket is what 0:06:40.120 --> 0:06:42.760 has generally been very supportive leadership. I mean, look at 0:06:42.760 --> 0:06:46.360 the move we've seen these global industrials. Industrials working industrials 0:06:46.360 --> 0:06:48.600 have the highest correlation to the market itself. So when 0:06:48.600 --> 0:06:51.120 industrials are working, the markets generally in pretty good hands. 0:06:51.360 --> 0:06:52.840 We still have that going for us here and I 0:06:52.880 --> 0:06:56.560 think underappreciated, particularly the last six eight weeks as the 0:06:56.600 --> 0:07:00.200 markets come out of this oversoul condition, are the financials 0:07:00.200 --> 0:07:02.919 doctor breaking out not just domestically, but look at the 0:07:02.920 --> 0:07:05.760 European banks. The Japanese banks have resumed the uptrend as well. 0:07:05.839 --> 0:07:09.680 So if you think about industrials and banks as important 0:07:09.760 --> 0:07:11.760 tenets of a bull market. I think this one is 0:07:11.760 --> 0:07:12.680 alive and well. 0:07:12.560 --> 0:07:16.240 My metric is the Sweeney Dow forty thousand. Then what 0:07:16.280 --> 0:07:20.480 does resistance look like? What is the character of resistance 0:07:20.520 --> 0:07:24.760 as we butted us up SPX dial in Nasdaq one hundred. 0:07:24.800 --> 0:07:26.680 Yeah, so fifty two to sixty five I think is 0:07:26.720 --> 0:07:29.800 the high from late March on S and P. What's 0:07:29.800 --> 0:07:31.600 important for us. We wrote about it this morning. You 0:07:31.640 --> 0:07:33.240 still have eighty percent of the S and P above 0:07:33.240 --> 0:07:35.040 the two undred day moving average, so eight out of 0:07:35.080 --> 0:07:37.560 ten names are still trending. That's not where your big 0:07:37.600 --> 0:07:41.240 problems tend to emerge from. Your big problems tend to 0:07:41.240 --> 0:07:44.360 come about when the internal conditions are deteriorating even as 0:07:44.400 --> 0:07:46.640 the market grinds higher. That is not the case here. 0:07:46.880 --> 0:07:49.800 If there's maybe one thing recently that's been on our 0:07:49.880 --> 0:07:52.600 radar that I think deserves perhaps a little bit of pause. 0:07:52.880 --> 0:07:55.520 Consumer discretionary has started to soften here a little bit, 0:07:55.560 --> 0:07:58.600 and it's a juxtapose against the narrative of the consumer 0:07:58.680 --> 0:08:01.600 being very strong. So we're always kind of aware or 0:08:01.640 --> 0:08:05.120 alert to the price action, not necessarily agreeing with the 0:08:05.160 --> 0:08:08.080 consensus story. I think that's the one blemish, but otherwise 0:08:08.120 --> 0:08:09.200 it's a pretty good bull market. 0:08:09.440 --> 0:08:11.840 Hey, Chris, you know, I think most of our listeners, 0:08:11.840 --> 0:08:14.720 most of our viewers on YouTube, they've only known a 0:08:14.760 --> 0:08:18.560 market that's been led by tech. Can tech still lead 0:08:18.600 --> 0:08:21.200 this market higher the next leg up? Or are you 0:08:21.240 --> 0:08:24.120 looking for other areas that you mentioned financials and others. 0:08:24.320 --> 0:08:27.440 I think at best here tech is neutral in terms 0:08:27.480 --> 0:08:32.000 of its leadership bonafides at the moment, and you know 0:08:32.240 --> 0:08:34.520 that I think has been a little underappreciated the last 0:08:34.520 --> 0:08:36.640 six weeks as we kind of corrected and have started 0:08:36.679 --> 0:08:39.400 to come out of the correction, Tech really hasn't returned 0:08:39.440 --> 0:08:42.959 as the as the pronounced leadership of this move. Where 0:08:42.960 --> 0:08:45.880 else is it coming from. It's coming from materials, which 0:08:46.080 --> 0:08:48.480 globally look fantastic. We see the moving copper or the 0:08:48.559 --> 0:08:51.840 chemical stock. So I don't think tech not leading to 0:08:51.880 --> 0:08:54.960 the same extent is ominous. I just think it's a 0:08:55.000 --> 0:08:59.400 reflection of some leadership rotation that's underway. I don't think 0:08:59.400 --> 0:09:01.200 that's something to fear, but people have a lot of 0:09:01.200 --> 0:09:02.760 Tech on it, and I might be a little bit 0:09:02.800 --> 0:09:05.480 more careful there and discretionary relative to some of the 0:09:05.480 --> 0:09:07.040 other leadership that's happening. 0:09:06.720 --> 0:09:08.880 What a yield charts describe right now. 0:09:09.040 --> 0:09:11.840 So I feel against the grain here, and I never 0:09:11.960 --> 0:09:14.440 like going to bed at night feeling I'm fighting against 0:09:14.480 --> 0:09:16.520 the tape. I don't mind fighting against the consensus. I 0:09:16.559 --> 0:09:20.400 don't like fighting the tape. I like bond yield lower here. 0:09:20.960 --> 0:09:22.800 I don't think I'm fighting the tape, but I do 0:09:22.840 --> 0:09:25.160 think I'm fighting the consensus, and I like yields lower 0:09:25.160 --> 0:09:26.880 because look at some of these global ten year yields 0:09:27.040 --> 0:09:30.839 UK ten's, German tens, Swiss tens, Italian tens. They all 0:09:30.880 --> 0:09:34.040 point lower, not higher. So I'm thinking about I'm having 0:09:34.080 --> 0:09:36.320 our team to think about what would be the news 0:09:36.360 --> 0:09:39.480 flow over the next six months if we woke up 0:09:39.520 --> 0:09:40.400 in ten yureed yields for. 0:09:40.320 --> 0:09:42.400 Three Well, was it Wednesday at eight thirty Not to 0:09:42.440 --> 0:09:46.000 pitch the show, but tune in Wednesday at eight thirty CPI. 0:09:46.840 --> 0:09:49.520 It doesn't it seem like the bar is very high 0:09:49.920 --> 0:09:53.199 for yields to surprise on the upside here. That's our suspicion, 0:09:53.240 --> 0:09:55.000 particularly when we look at the global yields. When I 0:09:55.040 --> 0:09:57.480 go back three years ago, we were lucky to get 0:09:57.520 --> 0:10:00.319 the yield up call correct and I think, why do 0:10:00.440 --> 0:10:02.480 we get it right? We got it right because all 0:10:02.480 --> 0:10:05.880 these global yields were telling us bonds everywhere we're gonna weaken, 0:10:05.960 --> 0:10:08.000 and yields would rise. I think it's a bit of 0:10:08.040 --> 0:10:10.079 the opposite set up right here. And then you kind 0:10:10.120 --> 0:10:13.360 of compare that with you know, utilities outperforming a little 0:10:13.400 --> 0:10:16.160 bit better from consumer staples the financials. As we talked about, 0:10:16.200 --> 0:10:18.640 that doesn't sound like leadership where you would expect to 0:10:19.080 --> 0:10:19.680 running away. 0:10:20.200 --> 0:10:22.040 Hey, Chris, you know when we had that big move 0:10:22.080 --> 0:10:23.760 in the S and P five hundred off of that 0:10:23.840 --> 0:10:27.000 October level here, twenty five percent move, A lot of 0:10:27.000 --> 0:10:29.280 folks are saying, hey, we need to see. 0:10:29.080 --> 0:10:30.199 A little bit of a pullback here. 0:10:30.240 --> 0:10:33.000 That would be healthy for a longer term up trend? 0:10:34.360 --> 0:10:37.760 Was that for five percent pullback we had in April? 0:10:37.800 --> 0:10:38.160 Was that it? 0:10:38.200 --> 0:10:38.600 Do you think? 0:10:39.200 --> 0:10:40.480 I think it was a model? 0:10:41.559 --> 0:10:44.000 I mean, we forty eight to fifty was kind of 0:10:44.000 --> 0:10:46.760 the big breakout level from back earlier. The year we 0:10:46.760 --> 0:10:48.320 were traced back to forty nine to fifty. I think 0:10:48.360 --> 0:10:50.560 we got close enough all of our what I would 0:10:50.600 --> 0:10:53.560 describe internal oversould conditions started to flash. We're at a 0:10:53.559 --> 0:10:55.839 minimum when you're in an up trend. Don't get too 0:10:55.880 --> 0:10:58.000 cute about what level your bier at because the trend 0:10:58.080 --> 0:10:59.839 is up. And I still think those are the rules. 0:11:00.000 --> 0:11:01.000 That's where we are right now. 0:11:01.400 --> 0:11:02.920 Absolutely, Okay, we're gonna go technical. 0:11:03.000 --> 0:11:06.839 Now we can do this with Chris Arne. Earl Bloomenthal 0:11:06.960 --> 0:11:08.480 was one of my heroes. I never met on me 0:11:08.520 --> 0:11:11.520 he was a generation before me. But what he've said 0:11:11.720 --> 0:11:15.640 was you could gets as a constructive reaffirmation of a trend. 0:11:16.160 --> 0:11:18.120 And he had a double high pole top and a 0:11:18.160 --> 0:11:21.840 double high pole bottom, and the answer is a La Nvidia, 0:11:22.360 --> 0:11:25.000 you're there and it's OMG, down you go and then 0:11:25.040 --> 0:11:28.280 you come back and that's a bottom. Are we seeing 0:11:29.600 --> 0:11:34.320 catharsis internally within the popular stocks of the day that 0:11:34.440 --> 0:11:37.240 will allow them to drive harder or are we in 0:11:37.280 --> 0:11:40.280 a zombie lethargy, as Lisa Matteo says. 0:11:40.000 --> 0:11:40.319 We are. 0:11:40.520 --> 0:11:42.839 I think we're in a little bit of a rotational 0:11:42.920 --> 0:11:45.320 way from the stocks that have driven this move for 0:11:45.360 --> 0:11:47.960 the first You know, fourteen fifteen months off October twenty 0:11:47.960 --> 0:11:50.400 twenty two is low into something else, and I think 0:11:50.440 --> 0:11:54.080 you see that reflected in materials, working in industrials, working 0:11:54.080 --> 0:11:57.000 in financials working. I think this is less about tech 0:11:57.000 --> 0:11:59.520 and discretionary, which were kind of the early cycle moves. 0:11:59.559 --> 0:12:03.400 Now are these things done? Is is Google done? Is 0:12:03.480 --> 0:12:06.120 Nvidia done? I don't think so. I just don't think 0:12:06.120 --> 0:12:08.600 they're returning as the same leadership coming out of this 0:12:08.679 --> 0:12:11.840 correction that they once were. And I think ultimately, to 0:12:11.880 --> 0:12:14.000 make the case that those stocks should be sold or 0:12:14.000 --> 0:12:17.600 that they're finished, you need to see bigger volatility systems 0:12:17.640 --> 0:12:20.480 break when volve gets too heavy or too big, and 0:12:20.520 --> 0:12:22.240 you don't have that yet with those names. We spent 0:12:22.280 --> 0:12:23.559 a lot of time in the last couple of months 0:12:23.559 --> 0:12:26.320 going back and evaluating how all the big tech stocks 0:12:26.320 --> 0:12:28.800 at ninety nine, how they peaked in two thousand and 0:12:28.840 --> 0:12:30.640 the one thing they all had in common was they 0:12:30.720 --> 0:12:33.920 ended on big volatility. Is six months it was, you know, 0:12:34.040 --> 0:12:36.960 three percent up, four percent down, five percent up. We 0:12:36.960 --> 0:12:37.760 don't have that here yet. 0:12:37.800 --> 0:12:41.600 But Paul, we don't have the dearth of cash flow 0:12:41.800 --> 0:12:44.080 that we had in nineteen ninety nine, got real cash 0:12:44.080 --> 0:12:46.800 lo I look at the cash flow statements of these companies. 0:12:47.320 --> 0:12:50.520 None of the textbooks I studied have that. It's an 0:12:50.559 --> 0:12:52.120 original thing that we're dealing with. 0:12:52.360 --> 0:12:55.000 I actually wondered Tom if that ultimately is going to 0:12:55.040 --> 0:12:58.520 be the psychological hurdle for people if these stocks actually 0:12:58.600 --> 0:13:00.760 begin to weaken at some point down them the line, 0:13:00.760 --> 0:13:02.840 they're going to fall too back on. Oh well, at 0:13:02.920 --> 0:13:04.960 least they have cash flow. At least they still earn 0:13:05.000 --> 0:13:08.400 I agree, And you know that's not dissimilar the nifty 0:13:08.400 --> 0:13:11.160 to fifty as they peaked in seventy three, seventy four. 0:13:11.640 --> 0:13:14.559 They had earnings, they had revenue, they had cash flow. 0:13:14.960 --> 0:13:17.040 Just what the market was willing to pay for them changed, 0:13:17.160 --> 0:13:19.920 and that I think is ultimately the bigger question down 0:13:19.960 --> 0:13:20.440 the line. 0:13:20.559 --> 0:13:23.480 Okay, what's your single best idea right now? All the charts. 0:13:23.520 --> 0:13:26.520 You look at Jason Trent and sitting there when Olivia 0:13:26.640 --> 0:13:29.280 in hand, and he says, what's the single best idea? 0:13:29.360 --> 0:13:29.640 Chris? 0:13:29.720 --> 0:13:32.400 I think these breakouts in the global material charts are 0:13:33.080 --> 0:13:34.760 hands down the best thing in our work. I think 0:13:34.840 --> 0:13:38.160 the reflection of an improving China. We were early there. 0:13:38.559 --> 0:13:42.040 So you're lung copper, I'm long copper, I'm long Chinese equities. 0:13:42.160 --> 0:13:43.640 Put my foot on the pedal. 0:13:43.679 --> 0:13:47.959 There, very good Chris outstandings. Tatigez So, I can't say 0:13:48.040 --> 0:13:52.120 enough about this, folks. There's two kinds of technical analysis 0:13:52.160 --> 0:13:56.480 trend based and stochastic, and Chris Verona and I have 0:13:56.600 --> 0:14:00.400 sampled the kool aid at the trend based and that's 0:14:00.440 --> 0:14:08.040 the technical analysis driving the ship and truly the New 0:14:08.080 --> 0:14:11.720 City Group. Jason Riquet joins us right now global head 0:14:11.720 --> 0:14:14.160 of Corporate Banking for all of City Group. And this 0:14:14.280 --> 0:14:18.760 after a tour duty including being in Tokyo is early 0:14:19.480 --> 0:14:25.720 is January is well? You have the heritage and pedigree 0:14:25.760 --> 0:14:28.760 of your company. John Reid would say, this is a 0:14:28.800 --> 0:14:32.880 guy we built. What's the New City Group look like 0:14:33.080 --> 0:14:34.040 in corporate banking? 0:14:35.280 --> 0:14:37.880 Love the question. I think the short answer is it's 0:14:37.920 --> 0:14:39.400 not changed. From that perspective. 0:14:39.400 --> 0:14:42.560 We have retained the most important element of our DNA 0:14:42.800 --> 0:14:46.640 in this gigantic reorganization, which is our globality, our reach, 0:14:46.760 --> 0:14:50.080 our ability to serve multinational companies across the world. 0:14:51.080 --> 0:14:54.800 And Jason, I know you did your tour in Japan. 0:14:55.240 --> 0:14:57.880 I did my Somber Wilders tour there back in the 0:14:58.040 --> 0:15:00.680 very early nineties. Then it fell off the we haven't 0:15:00.680 --> 0:15:03.400 talked about Japan for like twenty five years. Why are 0:15:03.400 --> 0:15:05.000 we now talking about Japan? 0:15:06.240 --> 0:15:09.320 Japan is back. It's fantastic right now. Why is it back? 0:15:09.360 --> 0:15:10.000 How is it back? 0:15:10.120 --> 0:15:12.760 Well, I think they Japan's been doing the hard yards 0:15:12.800 --> 0:15:16.160 for many years. In this long period of deflation of 0:15:16.200 --> 0:15:19.120 a sort of a stagged an economy which didn't feel great. 0:15:19.680 --> 0:15:23.560 The Japanese companies, the banks, the multinationals were continuing to 0:15:23.600 --> 0:15:26.480 press forward with investment, with reshaping the economy, knowing they 0:15:26.520 --> 0:15:28.120 had some demographic issues they are going to have to 0:15:28.120 --> 0:15:31.760 sort out. The outbound investment from Japan became more and 0:15:31.800 --> 0:15:35.200 more fundamental to their sort of overall strategy as a country. 0:15:35.800 --> 0:15:37.680 I think what's happened is the world has caught up 0:15:37.720 --> 0:15:40.480 and figured it out. I mean, there's some important developments there. 0:15:40.760 --> 0:15:43.760 I think one thing that really helped, honestly was in 0:15:43.880 --> 0:15:46.000 terms of just bringing attention to Japan and the market, 0:15:46.000 --> 0:15:48.560 there was Warren Buffet's investment in the five Trading companies. 0:15:49.720 --> 0:15:52.240 It just made people say, what exactly are those companies 0:15:52.240 --> 0:15:54.760 and why are they interesting? We've known about them for years, 0:15:54.800 --> 0:15:56.400 We've been banks to them for fifteen years. 0:15:56.480 --> 0:15:58.680 I know, City you guys have been. I mean, but 0:15:58.960 --> 0:16:02.200 it's just amazing. All right, Head of corporate banking at City, 0:16:02.480 --> 0:16:03.600 that is it? 0:16:03.760 --> 0:16:04.080 Man? 0:16:04.480 --> 0:16:05.600 Are you are you? 0:16:05.720 --> 0:16:07.920 Are you guys making loans? Are your customers do they 0:16:07.960 --> 0:16:09.800 need capital, are you guys making loans? 0:16:09.960 --> 0:16:13.240 What our customers need is everything. I mean, lending is 0:16:13.240 --> 0:16:15.120 an important part of it, and that's what we use 0:16:15.240 --> 0:16:18.280 to sort of cement and create the foundation of those relationships. 0:16:18.320 --> 0:16:20.520 But what we do as a firm is goes way 0:16:20.520 --> 0:16:22.760 beyond that are and what we do in corporate banking 0:16:22.880 --> 0:16:24.640 is trying to make sure we deliver the entire firm, 0:16:24.680 --> 0:16:27.840 a big global enterprise to them. So they need risk 0:16:27.920 --> 0:16:30.960 management tools, they need cash management, they need advisory, they 0:16:30.960 --> 0:16:33.200 need access to capital markets, and that's what we want 0:16:33.240 --> 0:16:35.760 to make sure that we deliver it wherever they need it, 0:16:35.800 --> 0:16:38.680 whatever currency they need, whatever sort of risk exposure they've got. 0:16:38.960 --> 0:16:41.160 I've got to talk to you about the New City Group, 0:16:41.160 --> 0:16:43.200 which I just think is so important because those of 0:16:43.280 --> 0:16:46.400 us weaned on John Reid and Walter Riston and the rest. 0:16:46.520 --> 0:16:49.160 I'm sorry, it's a bank that's lost this way. A 0:16:49.240 --> 0:16:52.200 woman from Scotland and the United Kingdom has coming and 0:16:52.360 --> 0:16:56.840 raised raised Hell and Jane Frasier. The New City Group. 0:16:56.920 --> 0:17:01.280 What is its global distinction when on the door of 0:17:01.360 --> 0:17:04.360 the many different kinds of corporate clients you have. 0:17:04.720 --> 0:17:07.359 It's not a hard it's not a hard discussion to 0:17:07.359 --> 0:17:09.159 have with clients because they know us already, they know 0:17:09.200 --> 0:17:11.320 what we do. I think what our clients we're looking 0:17:11.320 --> 0:17:13.000 for is to make sure this is the discussion I've 0:17:13.000 --> 0:17:13.680 had with lots of them. 0:17:13.800 --> 0:17:15.200 How are you different? How are you the same? 0:17:15.240 --> 0:17:17.560 And the question is the things we've done have been 0:17:17.640 --> 0:17:20.280 very internally focused at making sure we're simpler, we're easier 0:17:20.280 --> 0:17:23.879 to operate, and that we've removed some areas of bureaucracy 0:17:23.920 --> 0:17:24.560 that are. 0:17:24.560 --> 0:17:27.480 You the boutique of the major banks? Is that what 0:17:27.560 --> 0:17:28.399 this is really kind of. 0:17:28.400 --> 0:17:29.760 Not at all, not at all. 0:17:29.760 --> 0:17:31.280 In fact, some of the things we do for our 0:17:31.320 --> 0:17:34.000 clients are things that no other bank can do. We 0:17:34.320 --> 0:17:36.959 operate in more countries, we have the biggest cash management 0:17:37.040 --> 0:17:40.760 network where we're participating in every corner of the capital market. 0:17:40.840 --> 0:17:42.280 So not just the easy stuff, not just the G 0:17:42.359 --> 0:17:45.159 three currencies, but all the exotics, all the emerging markets. 0:17:45.200 --> 0:17:50.240 So then explain your Saudi Arabian relationship that was fracticed 0:17:50.240 --> 0:17:53.960 for years. Explain the New City Group into Saudi Arabia 0:17:54.080 --> 0:17:56.840 or the New City Group into Mexico where retail walked 0:17:56.840 --> 0:18:01.480 away years ago. Explain the strategic corporate banking effort in 0:18:01.560 --> 0:18:02.520 some of these countries. 0:18:03.640 --> 0:18:06.760 It's it's it's incredibly important to look at both both 0:18:06.800 --> 0:18:08.680 Saudi and the and the rest of the region there 0:18:08.720 --> 0:18:13.120 because the capital formation coming out of Saudi, the UAE, Qatar, Kuwait, 0:18:13.680 --> 0:18:16.000 what's happening there is critical because what we see on 0:18:16.040 --> 0:18:18.680 these companies, these countries and the companies that exist in 0:18:18.720 --> 0:18:22.159 them is an ability to export capital and technology and 0:18:22.280 --> 0:18:25.119 know how, we're seeing some of the most important investments 0:18:25.119 --> 0:18:28.280 in things like renewable energy coming from that region. So 0:18:28.960 --> 0:18:32.640 from our perspective, helping those those companies and those countries 0:18:32.720 --> 0:18:34.720 move outside of their home markets is really important. 0:18:34.760 --> 0:18:37.280 Paul, jump in here, but the next time you're in Dubai, 0:18:37.320 --> 0:18:41.240