1 00:00:05,120 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrell and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,880 Speaker 1: for insight from the best and economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,119 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:30,880 Speaker 1: the Bloomberg Terminal and the Bloomberg Business app. A hugely 7 00:00:31,200 --> 00:00:33,800 Speaker 1: popular guests, and I don't mean popular in terms of 8 00:00:33,840 --> 00:00:36,600 Speaker 1: fun and games, I mean insight and intellect. Peter Cher 9 00:00:36,720 --> 00:00:41,960 Speaker 1: joins now at a macro strategy at Academy Securities. Peter, 10 00:00:42,120 --> 00:00:45,080 Speaker 1: you were on fire last time. It was just really 11 00:00:45,120 --> 00:00:49,120 Speaker 1: brilliant about the dovetail of all these narratives. How is 12 00:00:49,200 --> 00:00:52,080 Speaker 1: your narrative changed, say, in ten days. 13 00:00:53,159 --> 00:00:55,400 Speaker 2: Well, we're all having to process what's going on with 14 00:00:55,560 --> 00:00:57,840 Speaker 2: Israel Hamas in the Middle East. So that's probably been 15 00:00:57,880 --> 00:01:01,320 Speaker 2: the biggest change. It's been clearly of very sensitive issue. 16 00:01:01,880 --> 00:01:04,720 Speaker 2: We think it's playing out right now kind of as 17 00:01:04,760 --> 00:01:08,679 Speaker 2: it should. That Israel will eventually, you know, secure their borders. 18 00:01:08,720 --> 00:01:11,120 Speaker 2: They will make sure that it is safe for their citizens, 19 00:01:11,319 --> 00:01:13,160 Speaker 2: but they'll do it in such a way that it 20 00:01:13,200 --> 00:01:17,319 Speaker 2: doesn't escalate this conflict beyond relatively small borders. 21 00:01:17,880 --> 00:01:19,959 Speaker 3: Localized p is that the word that comes up with 22 00:01:20,040 --> 00:01:22,399 Speaker 3: clients a again and again. Is there a belief that 23 00:01:22,440 --> 00:01:24,120 Speaker 3: this can remain localized? 24 00:01:25,240 --> 00:01:26,959 Speaker 2: Yeah, I think that is the belief, and I think 25 00:01:26,959 --> 00:01:28,760 Speaker 2: that's what the market is pricing in right now, and 26 00:01:28,800 --> 00:01:32,600 Speaker 2: it's rightfully so. Israel certainly has the capacity to eliminate 27 00:01:32,600 --> 00:01:34,760 Speaker 2: the threat. They said they will eliminate the threat, but 28 00:01:34,840 --> 00:01:36,720 Speaker 2: I think it's very positive that they are doing this 29 00:01:36,840 --> 00:01:41,200 Speaker 2: carefully and cautiously to minimize civilian casualties. The two risks 30 00:01:41,520 --> 00:01:44,200 Speaker 2: kind of that aren't priced in as an escalation with Iran. 31 00:01:44,280 --> 00:01:46,480 Speaker 2: It seems like we're trying to take some backdoor channels 32 00:01:46,560 --> 00:01:51,520 Speaker 2: to keep that threat low, or that something spurs the 33 00:01:51,680 --> 00:01:54,040 Speaker 2: change in sentiment in Saudi Arabia. Saudi Arabia has been 34 00:01:54,040 --> 00:01:56,520 Speaker 2: making a ton of progress in terms of westernizing their 35 00:01:56,520 --> 00:01:59,559 Speaker 2: economy in terms of the Abraham Accords, so we're watching 36 00:01:59,560 --> 00:02:02,080 Speaker 2: that very carefully and that's probably the main reason Israel 37 00:02:02,120 --> 00:02:03,320 Speaker 2: is being very cautious as well. 38 00:02:03,360 --> 00:02:05,880 Speaker 3: I think, do you believe America has the capacity to 39 00:02:05,960 --> 00:02:08,680 Speaker 3: support two military conflicts simultaneously. 40 00:02:10,480 --> 00:02:11,880 Speaker 4: We do, But. 41 00:02:12,120 --> 00:02:14,560 Speaker 2: As some of our General, General Taptool has been very 42 00:02:14,639 --> 00:02:16,040 Speaker 2: on top of this for a while. We have been 43 00:02:16,120 --> 00:02:18,359 Speaker 2: underfunding parts of the military, so we're going to be 44 00:02:18,400 --> 00:02:20,600 Speaker 2: a little bit stretched two fronts. I think is fine. 45 00:02:20,840 --> 00:02:23,000 Speaker 2: It does leave us a little bit vulnerable. We are 46 00:02:23,040 --> 00:02:25,240 Speaker 2: going to have to see a massive replenishment of our 47 00:02:25,280 --> 00:02:28,880 Speaker 2: weapon systems as we've been providing weapons to Ukraine. It 48 00:02:28,880 --> 00:02:31,360 Speaker 2: looks like we're going to help Israel in terms of 49 00:02:31,720 --> 00:02:34,880 Speaker 2: refilling the Iron Dome weapons. So there's going to be 50 00:02:34,880 --> 00:02:36,360 Speaker 2: a lot going on on the defense side for the 51 00:02:36,360 --> 00:02:37,520 Speaker 2: next years to come. 52 00:02:37,560 --> 00:02:39,920 Speaker 5: At this point, when it comes to refilling all of 53 00:02:39,919 --> 00:02:41,880 Speaker 5: these supplies, it does take money. And something we've been 54 00:02:41,919 --> 00:02:45,440 Speaker 5: talking about is there an appetite to expand defense spending 55 00:02:45,480 --> 00:02:47,520 Speaker 5: at a time where borrowing has gone up and interest 56 00:02:47,560 --> 00:02:50,320 Speaker 5: payments are going up as well. How does that factor 57 00:02:50,440 --> 00:02:52,519 Speaker 5: into your calculus at a time where a lot of 58 00:02:52,560 --> 00:02:56,280 Speaker 5: people are not fully understanding some of the gyrations, the 59 00:02:56,320 --> 00:02:57,639 Speaker 5: long end of the yield curve. 60 00:02:58,400 --> 00:02:58,560 Speaker 4: You know. 61 00:02:58,600 --> 00:03:00,840 Speaker 2: The one thing. So we've got the at retire General's 62 00:03:00,840 --> 00:03:03,160 Speaker 2: admirals and two astronauts to get to work with. The 63 00:03:03,400 --> 00:03:06,359 Speaker 2: unified message we get is that in terms of national 64 00:03:06,440 --> 00:03:10,440 Speaker 2: security issues, DC is actually very bipartisan, very smart. Right, 65 00:03:10,480 --> 00:03:12,560 Speaker 2: You do not get to sit on these high level 66 00:03:12,639 --> 00:03:19,000 Speaker 2: national security committees unless you've demonstrated intelligence bipartisanship. So I'm 67 00:03:19,000 --> 00:03:22,000 Speaker 2: actually very comfortable that when we have these real threats, 68 00:03:22,080 --> 00:03:23,920 Speaker 2: we will put together and do the right thing. So 69 00:03:23,960 --> 00:03:26,560 Speaker 2: there will be spending, it will be well done, and 70 00:03:26,600 --> 00:03:29,240 Speaker 2: it's necessary, and we have to kind of reinstate our 71 00:03:29,800 --> 00:03:31,480 Speaker 2: influence in the globe which has been waiting. 72 00:03:32,160 --> 00:03:34,280 Speaker 5: One thing that you do really well is you game 73 00:03:34,360 --> 00:03:36,840 Speaker 5: out what is priced in and what isn't priced in. 74 00:03:36,920 --> 00:03:40,880 Speaker 5: You said earlier that some sort of escalation with Iran 75 00:03:41,120 --> 00:03:43,880 Speaker 5: is not being priced into the market. How would it 76 00:03:44,000 --> 00:03:46,760 Speaker 5: be priced How do you see it percolating out in 77 00:03:46,840 --> 00:03:49,760 Speaker 5: the market. Should there be some sort of expansion in 78 00:03:49,760 --> 00:03:53,640 Speaker 5: the region with either RAN's, some of its proxy fighters, 79 00:03:53,760 --> 00:03:55,560 Speaker 5: or just the nation itself. 80 00:03:56,080 --> 00:03:58,440 Speaker 2: I think then you definitely see oil hit above one hundred, 81 00:03:58,520 --> 00:04:00,800 Speaker 2: and they're more importantly, it wouldn't just be a short 82 00:04:00,840 --> 00:04:03,240 Speaker 2: term spike. I think you'd start seeing futures build out 83 00:04:03,240 --> 00:04:05,240 Speaker 2: that a much higher price for a year or two years. 84 00:04:05,960 --> 00:04:07,360 Speaker 2: And that had given us some comfort on some of 85 00:04:07,360 --> 00:04:10,040 Speaker 2: these recent spikes. It was much more consolidating the front 86 00:04:10,120 --> 00:04:12,200 Speaker 2: end of the futures contract, not some of the longer 87 00:04:12,280 --> 00:04:15,880 Speaker 2: data contracts. But if we really are going to impose 88 00:04:15,920 --> 00:04:18,960 Speaker 2: sanctions on Iran, if they are going to potentially disrupt 89 00:04:19,240 --> 00:04:22,800 Speaker 2: oil flow in the Middle East, that would have a 90 00:04:22,920 --> 00:04:25,520 Speaker 2: much more serious impact. And I think the bond markets 91 00:04:25,520 --> 00:04:27,720 Speaker 2: can kind of shake off what's currently going on, but 92 00:04:27,839 --> 00:04:29,919 Speaker 2: that would probably push yields higher as we would be 93 00:04:29,960 --> 00:04:32,599 Speaker 2: facing much higher oil prices for much longer. 94 00:04:33,200 --> 00:04:38,039 Speaker 1: Peter with an economics, finance and investment, you are a 95 00:04:38,120 --> 00:04:43,080 Speaker 1: student of history. Amid war is a general rule. What 96 00:04:43,160 --> 00:04:44,080 Speaker 1: do stocks do? 97 00:04:46,040 --> 00:04:49,159 Speaker 2: You know? I think they get volatile and they are 98 00:04:49,279 --> 00:04:52,719 Speaker 2: fluctuating when there's a lot of uncertainty. But once it 99 00:04:52,760 --> 00:04:54,640 Speaker 2: looks like the path has come through, we generally tend 100 00:04:54,680 --> 00:04:56,560 Speaker 2: to rally. I think we had that just recently with 101 00:04:56,600 --> 00:04:59,760 Speaker 2: Russian Ukraine. There's that initial fear factor and then as 102 00:04:59,760 --> 00:05:01,680 Speaker 2: people say, Okay, this is what it looks like, this 103 00:05:01,760 --> 00:05:03,840 Speaker 2: is how it's controlled, this is what we do about it, 104 00:05:03,960 --> 00:05:06,440 Speaker 2: we can rally. And again, the position was fairly light 105 00:05:06,480 --> 00:05:08,520 Speaker 2: I think coming into this, so I'm not surprised that 106 00:05:08,560 --> 00:05:11,000 Speaker 2: we can get a nice rally if we maintain the 107 00:05:11,040 --> 00:05:14,200 Speaker 2: status quo and Saudi keeps making the right signals and 108 00:05:14,279 --> 00:05:15,400 Speaker 2: Iran doesn't escalate this. 109 00:05:15,800 --> 00:05:20,000 Speaker 1: Yeah, I look at the catharsis required and I'll let 110 00:05:20,040 --> 00:05:23,120 Speaker 1: somebody else smarter than me determine if we've had bond catharsis. 111 00:05:23,680 --> 00:05:25,640 Speaker 1: But I think we can certainly say we have not 112 00:05:25,839 --> 00:05:29,160 Speaker 1: seen equity catharsis. Is that required? 113 00:05:30,640 --> 00:05:34,000 Speaker 2: You know, we saw so much equity catharsis last time around, 114 00:05:34,040 --> 00:05:36,440 Speaker 2: you know, the last year, So I'm not sure how 115 00:05:36,480 --> 00:05:38,880 Speaker 2: much catharsis there is left to have. So it's hard 116 00:05:38,960 --> 00:05:41,680 Speaker 2: to get super bullish. You know, Forty forty six hundred 117 00:05:41,800 --> 00:05:44,559 Speaker 2: SMP seems tops. Maybe forty two hundred I think seems 118 00:05:44,560 --> 00:05:46,640 Speaker 2: to be a bottom right now, unless something happens in 119 00:05:46,640 --> 00:05:47,120 Speaker 2: the the least. 120 00:05:47,560 --> 00:05:48,960 Speaker 5: What are you hoping to hear from all of the 121 00:05:48,960 --> 00:05:51,320 Speaker 5: FED speakers? Do you think that they are that important 122 00:05:51,360 --> 00:05:54,400 Speaker 5: at this point with such heightened uncertainty as we get 123 00:05:54,400 --> 00:05:58,000 Speaker 5: the last gasp before the quiet period, I. 124 00:05:57,920 --> 00:05:59,720 Speaker 2: Think they're going to make it very clear that the 125 00:05:59,800 --> 00:06:03,120 Speaker 2: day has not been consistently strong enough to hike, that 126 00:06:03,160 --> 00:06:05,120 Speaker 2: they really don't want to hike. I like the fact 127 00:06:05,160 --> 00:06:07,120 Speaker 2: that they're talking about real yields. We've been talking about 128 00:06:07,160 --> 00:06:08,880 Speaker 2: that for a couple of months of how important that is. 129 00:06:09,120 --> 00:06:11,080 Speaker 2: We are starting to see this filter into the economy. 130 00:06:11,080 --> 00:06:12,840 Speaker 2: Were hearing more and more. I don't want to say 131 00:06:12,839 --> 00:06:15,080 Speaker 2: horror stories, but you know stories of companies that we're 132 00:06:15,120 --> 00:06:17,760 Speaker 2: borrowing at seven percent that are now facing fourteen percent 133 00:06:18,040 --> 00:06:20,240 Speaker 2: as their debt matures. So I think they're supposed to 134 00:06:20,279 --> 00:06:23,000 Speaker 2: pause and let this play out, especially now with the 135 00:06:23,040 --> 00:06:23,880 Speaker 2: global uncertainty. 136 00:06:24,760 --> 00:06:27,640 Speaker 1: Now, well, the global uncertainty is there, but then it's 137 00:06:27,680 --> 00:06:30,520 Speaker 1: by straw hats and winter. What are you acquiring today? 138 00:06:30,520 --> 00:06:33,280 Speaker 1: I mean, I'm assuming you're not one hundred percent in cash, 139 00:06:33,839 --> 00:06:34,680 Speaker 1: So what do you buy? 140 00:06:35,520 --> 00:06:37,240 Speaker 2: You know, I like bonds. Again, We've been trying to 141 00:06:37,560 --> 00:06:39,640 Speaker 2: raytrange this. As you know, we got to four eighty, 142 00:06:39,680 --> 00:06:40,880 Speaker 2: you want to buy a lot of tens. As you 143 00:06:40,920 --> 00:06:43,080 Speaker 2: get back to four fifty, you sell some same on 144 00:06:43,120 --> 00:06:45,120 Speaker 2: the stocks. Right, It's kind of that range. As you 145 00:06:45,200 --> 00:06:47,080 Speaker 2: start pushing towards forty five hundred, you want to be 146 00:06:47,120 --> 00:06:49,080 Speaker 2: reducing risk on the S and p. As you get 147 00:06:49,080 --> 00:06:50,719 Speaker 2: below forty three hundred, you want to be adding. So 148 00:06:50,720 --> 00:06:53,200 Speaker 2: I think it's a trader's market, and you do want 149 00:06:53,240 --> 00:06:55,520 Speaker 2: some hedges. My favorite hedges right now, I think are 150 00:06:55,520 --> 00:06:59,520 Speaker 2: buying calls on treasuries because if we get this geopolitical escalation, 151 00:07:00,440 --> 00:07:02,120 Speaker 2: although oil is going to go high on fed Canton 152 00:07:02,160 --> 00:07:03,720 Speaker 2: Nord at the front end, I think the back end 153 00:07:03,760 --> 00:07:05,279 Speaker 2: is going to start pricing in a true flight to 154 00:07:05,279 --> 00:07:06,480 Speaker 2: safety trade. 155 00:07:06,480 --> 00:07:08,080 Speaker 3: How are you getting a raid on the potential for 156 00:07:08,160 --> 00:07:11,040 Speaker 3: escalation if there's one particular voice you're following at the moment, 157 00:07:11,080 --> 00:07:11,920 Speaker 3: whose voice is it? 158 00:07:13,120 --> 00:07:15,200 Speaker 2: There's not one particular voice. So we're searching around and 159 00:07:15,240 --> 00:07:18,800 Speaker 2: again I've got the luxury that we've got sixteen specifically 160 00:07:18,840 --> 00:07:21,280 Speaker 2: generals and admirals who retired who are talking to people 161 00:07:21,720 --> 00:07:25,760 Speaker 2: across the US, across the world to the IDF. So 162 00:07:25,760 --> 00:07:28,200 Speaker 2: we're trying to distill this information that we get and 163 00:07:28,240 --> 00:07:30,239 Speaker 2: that's what we're trying to look for, these tiny little 164 00:07:30,240 --> 00:07:32,520 Speaker 2: signals that aren't on the radar screen. So it's a 165 00:07:32,560 --> 00:07:34,520 Speaker 2: little bit tricky, but I think we're trying to manage 166 00:07:34,560 --> 00:07:35,080 Speaker 2: it pretty well. 167 00:07:35,240 --> 00:07:38,080 Speaker 3: Pity chaer managing it very well. Thanks for being with 168 00:07:38,080 --> 00:07:40,760 Speaker 3: a acountby Securities. Pete appreciate it as a wiemke. 169 00:07:44,720 --> 00:07:47,360 Speaker 1: What's really great about this is our next guest, Lisa. 170 00:07:47,800 --> 00:07:49,240 Speaker 1: I said to him, Ike said, you know what do 171 00:07:49,320 --> 00:07:51,160 Speaker 1: you think? He says, I'm not coming on again until 172 00:07:51,200 --> 00:07:53,240 Speaker 1: the tots are in first place, so you know, as 173 00:07:53,240 --> 00:07:54,120 Speaker 1: it worked out well. 174 00:07:54,080 --> 00:07:57,680 Speaker 5: Well, fantastic congratulations Steven Major, Global head of Fixed Income 175 00:07:57,720 --> 00:08:00,600 Speaker 5: Research at HSBC, And really I am. I'm so glad 176 00:08:00,600 --> 00:08:02,600 Speaker 5: to speak with you. We're at a time of an 177 00:08:02,600 --> 00:08:07,040 Speaker 5: incredible bond bear market. You've been bullish. How can you 178 00:08:07,080 --> 00:08:10,960 Speaker 5: reconfirm that? Reaffirm that at a time we don't really 179 00:08:11,040 --> 00:08:13,520 Speaker 5: understand why the cell off has been so severe. 180 00:08:13,880 --> 00:08:17,320 Speaker 6: Yeah, there's been a capitulation, so there'll be people like me, 181 00:08:17,840 --> 00:08:20,080 Speaker 6: but people with skin in the game, people who are 182 00:08:20,120 --> 00:08:23,280 Speaker 6: actually long with bonds who have had to cut the position. 183 00:08:23,600 --> 00:08:27,400 Speaker 6: That could be for risk management considerations, it could be 184 00:08:27,400 --> 00:08:29,720 Speaker 6: because clients are taking their money out and they're having 185 00:08:29,720 --> 00:08:32,240 Speaker 6: to respond to that. So I think there's a capitulation. 186 00:08:32,280 --> 00:08:35,880 Speaker 6: There's evidence of capitulation in the way the term premium moved. 187 00:08:36,280 --> 00:08:39,440 Speaker 6: So it's the back end that's where the action is, 188 00:08:39,840 --> 00:08:42,520 Speaker 6: and I think there's a lot more safety in the 189 00:08:42,559 --> 00:08:43,000 Speaker 6: front end. 190 00:08:43,120 --> 00:08:43,480 Speaker 4: Right now. 191 00:08:43,480 --> 00:08:46,600 Speaker 6: You can see twos are behaving differently. Maybe for the 192 00:08:46,640 --> 00:08:49,559 Speaker 6: first time this year, twos have become safe, and I 193 00:08:49,640 --> 00:08:52,160 Speaker 6: think the mantra has been don't touch the twos all 194 00:08:52,240 --> 00:08:54,160 Speaker 6: year because you would have been going against the FED. 195 00:08:54,520 --> 00:08:57,280 Speaker 6: If the Fed's done now more or less, then you're 196 00:08:57,320 --> 00:09:00,360 Speaker 6: fairly safe entering twos. And that's how the bomb market 197 00:09:00,400 --> 00:09:02,760 Speaker 6: can start to perform better. Money will creep up from 198 00:09:02,800 --> 00:09:05,040 Speaker 6: the front. That's why people are leaving the back end 199 00:09:05,080 --> 00:09:05,880 Speaker 6: alone at the moment. 200 00:09:06,080 --> 00:09:07,920 Speaker 5: There's a lot there to unpack. I just want to 201 00:09:07,960 --> 00:09:10,320 Speaker 5: go to the whole capitulation story. You said there are 202 00:09:10,360 --> 00:09:14,120 Speaker 5: signs of capitulation where who is selling so aggressively at 203 00:09:14,160 --> 00:09:15,320 Speaker 5: a time when a lot of people are saying it's 204 00:09:15,320 --> 00:09:15,880 Speaker 5: a buyer strike. 205 00:09:16,320 --> 00:09:20,120 Speaker 6: Yeah, I think it's probably real money. And there's this 206 00:09:20,240 --> 00:09:23,920 Speaker 6: game in fixed income about discussing the marginal buyer and seller. 207 00:09:24,000 --> 00:09:26,400 Speaker 6: The truth is you never know to it afterwards. Right, 208 00:09:26,760 --> 00:09:30,120 Speaker 6: The bomb market is fairly sophisticated, but you don't know 209 00:09:30,640 --> 00:09:33,160 Speaker 6: the buyers until after it happened. You can see the 210 00:09:33,200 --> 00:09:36,760 Speaker 6: supply coming because it's published, but you don't know who 211 00:09:36,800 --> 00:09:37,319 Speaker 6: actually bought. 212 00:09:37,360 --> 00:09:39,360 Speaker 4: There's a lot of gaming of who's going to buy. Right. 213 00:09:39,920 --> 00:09:42,240 Speaker 6: It seems to me the marginal buyer has to be domestic, 214 00:09:42,480 --> 00:09:44,480 Speaker 6: so it has to be here in the US because 215 00:09:44,520 --> 00:09:47,280 Speaker 6: the official sector overseas is not sponsoring the market as 216 00:09:47,280 --> 00:09:50,079 Speaker 6: it was before the private sector isn't picking up enough, 217 00:09:50,320 --> 00:09:52,520 Speaker 6: so it has to be inside here. Now seventy percent 218 00:09:52,559 --> 00:09:54,920 Speaker 6: of treasuries are held in the US. Of course the 219 00:09:54,960 --> 00:09:57,600 Speaker 6: Fed's a big part of that. But the story is 220 00:09:57,600 --> 00:09:59,720 Speaker 6: it has to be here. It's probably not the banks. 221 00:10:00,480 --> 00:10:04,160 Speaker 6: Real money has already taken long positions and maybe adjusting, 222 00:10:04,240 --> 00:10:06,840 Speaker 6: So it has to go into retail. It has to 223 00:10:06,880 --> 00:10:09,800 Speaker 6: go to small investors. It has to go to those 224 00:10:09,800 --> 00:10:13,120 Speaker 6: who are inequities, so big investors on a multi asset basis, 225 00:10:13,160 --> 00:10:15,719 Speaker 6: so people coming out of stocks into bonds, people going 226 00:10:15,760 --> 00:10:16,959 Speaker 6: from cash into bonds. 227 00:10:17,200 --> 00:10:18,840 Speaker 4: That's where the marginal bone is. 228 00:10:19,360 --> 00:10:22,640 Speaker 1: The great furyre Steve Major is what I call the 229 00:10:22,679 --> 00:10:25,880 Speaker 1: Whalen silence. Chris Whalen, with this wonderful one volume of 230 00:10:25,920 --> 00:10:29,400 Speaker 1: America financial history. We're in the buyer amerket. You're trying 231 00:10:29,440 --> 00:10:31,000 Speaker 1: to do something, and all of a sudden, on the 232 00:10:31,000 --> 00:10:32,719 Speaker 1: other end of the phone, whether it's the eighteenth and 233 00:10:32,760 --> 00:10:36,720 Speaker 1: nineteen twentieth century, there's silence. Are we anywhere near that? 234 00:10:37,000 --> 00:10:37,440 Speaker 4: Yeah? 235 00:10:37,559 --> 00:10:41,280 Speaker 6: Well, that's a really good point because it does seem 236 00:10:41,679 --> 00:10:44,079 Speaker 6: that there's been a bit of a buyer strike, and 237 00:10:44,240 --> 00:10:46,200 Speaker 6: so the evidence for that is in the auctions, So 238 00:10:46,200 --> 00:10:48,240 Speaker 6: you look at the cover ratios, so how many people 239 00:10:48,280 --> 00:10:50,280 Speaker 6: showed up to buy the bonds at the auction. There's 240 00:10:50,360 --> 00:10:52,280 Speaker 6: less there, especially in the long end of the ten 241 00:10:52,320 --> 00:10:55,240 Speaker 6: and the thirty year vapor. But it gets to the 242 00:10:55,280 --> 00:10:59,400 Speaker 6: point where the value is just too obvious. You've mentioned 243 00:10:59,400 --> 00:11:02,160 Speaker 6: a real yield several times in the on the show, 244 00:11:02,800 --> 00:11:06,120 Speaker 6: and but when when the But you know, when the 245 00:11:06,160 --> 00:11:09,960 Speaker 6: real yield is comfortably above the trend GDP rate, the 246 00:11:10,000 --> 00:11:13,840 Speaker 6: actual trenched DP and the projected trendy DP, then you're 247 00:11:13,880 --> 00:11:17,280 Speaker 6: pretty covered. So the inflation piece is locked. When the 248 00:11:17,320 --> 00:11:19,640 Speaker 6: real yield is above the trenched DP, you're not going 249 00:11:19,679 --> 00:11:20,480 Speaker 6: to go too far wrong. 250 00:11:20,559 --> 00:11:20,640 Speaker 2: Now. 251 00:11:20,679 --> 00:11:24,080 Speaker 6: I'm not saying that today it's free money. It's just 252 00:11:24,120 --> 00:11:25,920 Speaker 6: that you'll look back in six months time and you 253 00:11:25,960 --> 00:11:28,280 Speaker 6: should be happy with the investment you made today. 254 00:11:28,520 --> 00:11:31,400 Speaker 1: Seven hundred pages at the imfter bluebook, the Green Book, 255 00:11:31,440 --> 00:11:34,240 Speaker 1: the Red Book. Gergiev says she's going to print a 256 00:11:34,280 --> 00:11:35,960 Speaker 1: copy just for me so I can read it. The 257 00:11:35,960 --> 00:11:42,839 Speaker 1: one appendix I read was Tobius Adrian Fiscal Instability, Liquidity 258 00:11:43,000 --> 00:11:47,640 Speaker 1: and Solvency. Does Steve Major have liquidity and solvency issues? 259 00:11:47,760 --> 00:11:49,640 Speaker 1: Is written in his appendix. 260 00:11:49,200 --> 00:11:53,040 Speaker 6: Get the solvency, the US is going to pay its bonds. 261 00:11:53,080 --> 00:11:56,880 Speaker 6: So the the idea that you have a ratings issue, 262 00:11:56,920 --> 00:11:58,640 Speaker 6: and the ratings explain the yould shift. 263 00:11:58,800 --> 00:12:00,520 Speaker 4: So what about liquidity. 264 00:12:00,800 --> 00:12:03,640 Speaker 6: Now, this is the price of getting stuff done in 265 00:12:03,679 --> 00:12:07,280 Speaker 6: plain English, right, that's what liquidity is. So when the 266 00:12:07,360 --> 00:12:09,920 Speaker 6: market is illiquid, it's more difficult to get a big 267 00:12:09,960 --> 00:12:12,160 Speaker 6: trade done, so you have to pay a bigger bid 268 00:12:12,200 --> 00:12:17,360 Speaker 6: office spread. That's my simplistic, plain English explanation. There is 269 00:12:17,400 --> 00:12:20,560 Speaker 6: a liquidity issue right now because the banks aren't prepared 270 00:12:20,600 --> 00:12:21,800 Speaker 6: to hold big inventory. 271 00:12:21,880 --> 00:12:23,760 Speaker 4: The intermediariesm are just not there. 272 00:12:24,200 --> 00:12:28,080 Speaker 6: And liquidity and risk premium tend to move together. So 273 00:12:28,480 --> 00:12:31,400 Speaker 6: if we have an ill liquid market, then the risk 274 00:12:31,400 --> 00:12:33,760 Speaker 6: premium goes up, and that's your term premium and the 275 00:12:33,840 --> 00:12:34,840 Speaker 6: higher yield in the long end. 276 00:12:34,880 --> 00:12:37,559 Speaker 4: That's what's happening right now. I look back at this and. 277 00:12:37,520 --> 00:12:40,040 Speaker 6: I think you've got record moves in the term premium, 278 00:12:40,080 --> 00:12:42,959 Speaker 6: even back to twenty thirteen. And don't forget the context 279 00:12:43,080 --> 00:12:46,160 Speaker 6: is important here, Tom and Lisa. Back in twenty thirteen, 280 00:12:46,200 --> 00:12:48,679 Speaker 6: the taper tantrum was like the main thing that happened. 281 00:12:49,080 --> 00:12:51,920 Speaker 6: Now you've had a two year bear market going into 282 00:12:51,960 --> 00:12:54,560 Speaker 6: a three year bear market, So rates moved up a lot. 283 00:12:54,840 --> 00:12:57,439 Speaker 6: Then the term premium flipped. You didn't have that back 284 00:12:57,480 --> 00:13:01,240 Speaker 6: in twenty thirteen, So you really are entering a good 285 00:13:01,320 --> 00:13:02,160 Speaker 6: level of yield. 286 00:13:01,960 --> 00:13:02,480 Speaker 4: At the moment. 287 00:13:02,960 --> 00:13:04,800 Speaker 5: Given the fact that you think that we're at a 288 00:13:04,800 --> 00:13:07,560 Speaker 5: good level of yield, how do you sort of lean 289 00:13:07,559 --> 00:13:09,160 Speaker 5: into the front end and not the back end? 290 00:13:09,240 --> 00:13:09,400 Speaker 7: Right? 291 00:13:09,440 --> 00:13:11,360 Speaker 5: Why aren't you just going all in on the ten years? 292 00:13:11,640 --> 00:13:12,920 Speaker 4: Let me be absolutely clear. 293 00:13:13,040 --> 00:13:15,400 Speaker 6: I think that investors who want to buy bonds for 294 00:13:15,480 --> 00:13:19,480 Speaker 6: the first time, who rather shy, can creep into the 295 00:13:19,480 --> 00:13:22,600 Speaker 6: two years out of a money market product, and they're 296 00:13:22,600 --> 00:13:25,040 Speaker 6: not going to lose a lot of money. If any, 297 00:13:25,920 --> 00:13:28,200 Speaker 6: you're safe in the two. So if you're shy and 298 00:13:28,240 --> 00:13:30,959 Speaker 6: you're going into bonds for the first time, you're safe 299 00:13:30,960 --> 00:13:33,440 Speaker 6: in twos. Then you creep up to threes. Now, for me, 300 00:13:33,600 --> 00:13:35,440 Speaker 6: if I'm making a call for the next six months, 301 00:13:35,480 --> 00:13:37,760 Speaker 6: of course i'd buy tens or thirties, because I'm going 302 00:13:37,800 --> 00:13:39,560 Speaker 6: to look back in six months time and think that 303 00:13:39,600 --> 00:13:41,440 Speaker 6: the yield's fallen one hundred bases. 304 00:13:41,520 --> 00:13:43,079 Speaker 5: Where's it going though at the end of the year. 305 00:13:43,320 --> 00:13:45,840 Speaker 6: Well, our forecast is three and a half. We're running 306 00:13:45,840 --> 00:13:49,559 Speaker 6: out of weeks and months of course, but three and 307 00:13:49,600 --> 00:13:52,200 Speaker 6: a half could be the right number in six months time. 308 00:13:52,920 --> 00:13:55,760 Speaker 6: So I don't think we've got the directional call wrong here. 309 00:13:55,800 --> 00:13:58,640 Speaker 6: I think yields will be lower. It's just that maybe 310 00:13:58,679 --> 00:13:59,720 Speaker 6: our timing could be off. 311 00:14:00,840 --> 00:14:02,920 Speaker 1: It's the same as I guess in West Ham's going 312 00:14:02,960 --> 00:14:05,480 Speaker 1: to do well. We're running out of time. Steve Major 313 00:14:05,559 --> 00:14:08,600 Speaker 1: One final question, a really just change. JP Morgan on 314 00:14:08,679 --> 00:14:11,040 Speaker 1: stage in Morocco says she's modeling out of two and 315 00:14:11,080 --> 00:14:14,600 Speaker 1: a half percent inflation adjusted yield. That took me back 316 00:14:14,640 --> 00:14:17,920 Speaker 1: that Seeman was elevated. Take your nominal lower yield call 317 00:14:18,000 --> 00:14:20,560 Speaker 1: and squeeze it into a real rate call. 318 00:14:20,760 --> 00:14:24,120 Speaker 6: Yeah, so the two percent inflation is locked. If there's 319 00:14:24,120 --> 00:14:26,440 Speaker 6: one thing that's come through all of this is that 320 00:14:26,480 --> 00:14:29,880 Speaker 6: inflation target targeting is credible. The two percent inflation has 321 00:14:29,920 --> 00:14:33,040 Speaker 6: not been been challenged in the break even forwards. So 322 00:14:33,160 --> 00:14:35,040 Speaker 6: for me, it's all about real yield. Two and a 323 00:14:35,080 --> 00:14:39,120 Speaker 6: half is just way above trend. Therefore we can take 324 00:14:39,120 --> 00:14:42,000 Speaker 6: one hundred basis points off of that. I think that 325 00:14:42,120 --> 00:14:44,840 Speaker 6: a fairer level for the real yield would be one 326 00:14:44,840 --> 00:14:46,480 Speaker 6: and a half, not the two and a half that 327 00:14:46,520 --> 00:14:48,440 Speaker 6: we're trading at at the moment, and by the way, 328 00:14:48,520 --> 00:14:50,920 Speaker 6: that would still be above one hundred over the Fed's 329 00:14:50,960 --> 00:14:54,240 Speaker 6: are star measures. So so you people are saying that 330 00:14:54,280 --> 00:14:56,920 Speaker 6: the real rate needs to be higher, Well, it's priced 331 00:14:57,040 --> 00:14:57,960 Speaker 6: as a lot higher. 332 00:14:58,080 --> 00:15:00,280 Speaker 1: We're going to go Stephen Major, a joint US for 333 00:15:00,360 --> 00:15:14,520 Speaker 1: the Hong Kong Shanghai Banking Corporation. We get expertise now 334 00:15:14,520 --> 00:15:16,320 Speaker 1: as we've done it. Thanks to our team for really 335 00:15:16,320 --> 00:15:19,000 Speaker 1: going internationally to get this done. Julie Norman is at 336 00:15:19,040 --> 00:15:23,200 Speaker 1: the University College London UCL Center on US Politics, but 337 00:15:23,440 --> 00:15:27,240 Speaker 1: also is weaned out of a PhD program and truly 338 00:15:27,280 --> 00:15:30,240 Speaker 1: one of the world's experts on terrorism. Julie, what an 339 00:15:30,240 --> 00:15:34,240 Speaker 1: honor to speak to you this morning. How is this terrorism? 340 00:15:35,240 --> 00:15:39,840 Speaker 1: How is this as the President mentions narrow stridency of Hamas, 341 00:15:40,280 --> 00:15:41,920 Speaker 1: how is it different this time? 342 00:15:43,680 --> 00:15:46,120 Speaker 8: Yeah, Tom, this is a very different tactic than we 343 00:15:46,120 --> 00:15:49,040 Speaker 8: see from Hamas obviously last weekend, and that's why the 344 00:15:49,080 --> 00:15:52,360 Speaker 8: response that's being considered right now I was also expected 345 00:15:52,400 --> 00:15:55,280 Speaker 8: to be very different, very different in scale, very different 346 00:15:55,320 --> 00:15:59,320 Speaker 8: in tactic and operation. And also AUSTI has the end 347 00:15:59,400 --> 00:16:03,680 Speaker 8: goal of quote unquote eliminating Hamas. That's I think going 348 00:16:03,720 --> 00:16:07,920 Speaker 8: to be a difficult endgame that's going to be tactically 349 00:16:07,920 --> 00:16:12,480 Speaker 8: difficult over these upcoming days weeks in Gaza and just 350 00:16:12,520 --> 00:16:15,200 Speaker 8: on a broader level. Also, you know, Hamas has a 351 00:16:15,200 --> 00:16:19,480 Speaker 8: lot of regional dispersal and they represent a certain type 352 00:16:19,480 --> 00:16:22,360 Speaker 8: of resistance and I think a lot of Israel's choices 353 00:16:22,400 --> 00:16:25,000 Speaker 8: in these next few days we have a lot of 354 00:16:25,040 --> 00:16:29,520 Speaker 8: both moral and pragmatic implications in terms of as we 355 00:16:29,560 --> 00:16:33,120 Speaker 8: see civilian casualties rise and whatnot, that will in some 356 00:16:33,200 --> 00:16:37,040 Speaker 8: ways galvanize much of what Hemas's goals have been. And 357 00:16:37,080 --> 00:16:39,040 Speaker 8: I think there are many who will step into their place. 358 00:16:39,120 --> 00:16:41,880 Speaker 8: So it's a very difficult needle to thread right now. 359 00:16:41,920 --> 00:16:44,000 Speaker 8: I think that's part of why we see Biden maybe 360 00:16:44,040 --> 00:16:47,240 Speaker 8: considering a trip there as to seeing how can Israel 361 00:16:47,240 --> 00:16:50,480 Speaker 8: respond to this but also try and avoid just a 362 00:16:50,560 --> 00:16:53,480 Speaker 8: longer term security security risk and to. 363 00:16:53,400 --> 00:16:55,680 Speaker 1: Play off one of your papers from a more peaceful 364 00:16:55,720 --> 00:16:59,640 Speaker 1: time beyond hunger Strikes, a Palestinian prisoner's movement and every 365 00:16:59,720 --> 00:17:03,840 Speaker 1: day resistance. Julie, you're as close to an expert on 366 00:17:03,880 --> 00:17:06,280 Speaker 1: this as we're going to get. How do you perceive 367 00:17:06,400 --> 00:17:10,760 Speaker 1: a military exercise from north to south in Gaza? 368 00:17:12,280 --> 00:17:15,720 Speaker 8: Yeah, so, as it has been noted many times Gaza 369 00:17:15,880 --> 00:17:19,399 Speaker 8: is an extremely difficult place to live but also to 370 00:17:19,440 --> 00:17:24,000 Speaker 8: carry out a military operation. We've obviously seen already the evacuation, 371 00:17:24,200 --> 00:17:27,520 Speaker 8: the movement of up to upwards of one million people 372 00:17:27,560 --> 00:17:31,000 Speaker 8: from the north to the south, but there's really nowhere 373 00:17:31,040 --> 00:17:34,600 Speaker 8: for people to go at this point, and so even 374 00:17:34,640 --> 00:17:37,360 Speaker 8: if the operations stay mostly in the north, we're still 375 00:17:37,359 --> 00:17:41,359 Speaker 8: looking at a very difficult humanitarian situation really throughout the strip, 376 00:17:41,520 --> 00:17:44,600 Speaker 8: as well as just a likely devastation of infrastructure that 377 00:17:44,920 --> 00:17:47,920 Speaker 8: I think makes an endgame very difficult to foresee here. 378 00:17:48,280 --> 00:17:51,600 Speaker 8: We heard Biden speaking yesterday about, you know, trying to 379 00:17:52,119 --> 00:17:56,080 Speaker 8: preclude a possible reoccupation of Gaza. It's very difficult to 380 00:17:56,119 --> 00:17:58,959 Speaker 8: see what what governing or administration look like in Gaza 381 00:17:59,280 --> 00:18:01,959 Speaker 8: after this. And again, most of the civilians where they 382 00:18:01,960 --> 00:18:04,520 Speaker 8: are not going to have anywhere to go, and it's 383 00:18:04,560 --> 00:18:07,800 Speaker 8: going to be very likely a very difficult situation for 384 00:18:08,280 --> 00:18:09,679 Speaker 8: anyone stepping into that space. 385 00:18:09,840 --> 00:18:12,840 Speaker 5: It's been incredibly difficult to understand what's going on, Julie, 386 00:18:12,840 --> 00:18:14,960 Speaker 5: not only because a lot of the conversations are going 387 00:18:15,040 --> 00:18:18,000 Speaker 5: down behind back channel discussions, but also because of a 388 00:18:18,119 --> 00:18:22,159 Speaker 5: vast slew of misinformation intentionally being put out from a 389 00:18:22,240 --> 00:18:24,879 Speaker 5: number of different sides. I'm wondering from your perspective, if 390 00:18:24,920 --> 00:18:27,560 Speaker 5: you have a better sense of where the red lines are. 391 00:18:27,600 --> 00:18:31,080 Speaker 5: We heard conflicting reports of Iran not wanting to get involved, 392 00:18:31,240 --> 00:18:33,439 Speaker 5: then saying as soon as the ground operation starts, so 393 00:18:33,520 --> 00:18:36,480 Speaker 5: ready to go in What have you gleaned over the weekend. 394 00:18:37,280 --> 00:18:39,640 Speaker 8: Yeah, well, you're absolutely right, Lisa, there's been a lot 395 00:18:39,680 --> 00:18:42,560 Speaker 8: of misinformation and I think all of us should be 396 00:18:42,680 --> 00:18:45,520 Speaker 8: kind of careful and double checking many of the sources 397 00:18:45,560 --> 00:18:48,600 Speaker 8: and whatnot. I would say in terms of Iran's movements 398 00:18:48,720 --> 00:18:52,600 Speaker 8: that I think will really be the deciding factor into 399 00:18:52,920 --> 00:18:56,680 Speaker 8: if and when and how this conflx escalates. Iran has 400 00:18:57,040 --> 00:18:59,720 Speaker 8: much closer ties with has the Law in to the 401 00:18:59,760 --> 00:19:02,800 Speaker 8: north and border of Israel than even to Hamas, and 402 00:19:03,119 --> 00:19:05,359 Speaker 8: I think it's really the question of if they would 403 00:19:05,640 --> 00:19:08,840 Speaker 8: activate Hasbelah open up a northern front that would that 404 00:19:08,880 --> 00:19:12,360 Speaker 8: would really change the contours of this war and make 405 00:19:12,400 --> 00:19:14,680 Speaker 8: it a much more of a regional conflict. We are 406 00:19:14,680 --> 00:19:17,600 Speaker 8: not at that point yet. Obviously, served to a state 407 00:19:17,640 --> 00:19:21,439 Speaker 8: blinkn has been a massive diplomacy run through the Arab 408 00:19:21,480 --> 00:19:25,800 Speaker 8: world this week to try and deter Iran or Hezbollah 409 00:19:26,000 --> 00:19:30,040 Speaker 8: or their proxies from further escalating this. But I think 410 00:19:30,720 --> 00:19:33,600 Speaker 8: that's not a given, and that's one reason again why 411 00:19:33,600 --> 00:19:36,280 Speaker 8: these conversations are going to keep continuing to see, Okay, 412 00:19:36,320 --> 00:19:38,600 Speaker 8: there's the operation on the ground, but also what can 413 00:19:38,640 --> 00:19:41,439 Speaker 8: we be doing simultaneously to try and deter other actors 414 00:19:41,440 --> 00:19:44,680 Speaker 8: and especially around or Hasblah from getting involved even further. 415 00:19:45,240 --> 00:19:47,880 Speaker 5: It's a tragedy and we all are seeing the tragedy unfold, 416 00:19:48,280 --> 00:19:53,560 Speaker 5: humanitarian tragedy on both Israeli families as well as in Gaza, 417 00:19:53,680 --> 00:19:56,880 Speaker 5: with people fleeing the north. I'm curious why, if we're 418 00:19:56,880 --> 00:19:59,840 Speaker 5: hearing this there are a hundred trucks backed up ready 419 00:19:59,880 --> 00:20:03,800 Speaker 5: to live our humanitarian aid to gasins that have gone south, 420 00:20:04,320 --> 00:20:05,640 Speaker 5: why they're not being let through. 421 00:20:06,960 --> 00:20:11,480 Speaker 8: Yeah, So my understanding on this is that Israel wants 422 00:20:11,520 --> 00:20:13,439 Speaker 8: to be able to check any of the trucks that 423 00:20:13,520 --> 00:20:16,440 Speaker 8: are coming through for security reasons, so they will not 424 00:20:16,600 --> 00:20:19,320 Speaker 8: give a guarantee that some of those trucks would not 425 00:20:19,359 --> 00:20:23,560 Speaker 8: potentially be that they would not be immune from targeting 426 00:20:23,600 --> 00:20:25,919 Speaker 8: and whatnot. So that's where the impast seems to be. 427 00:20:26,440 --> 00:20:28,640 Speaker 8: There is a lot of aid waiting on the other 428 00:20:28,720 --> 00:20:30,639 Speaker 8: side of the border to come in. There are a 429 00:20:30,680 --> 00:20:33,199 Speaker 8: lot of people in need waiting to come out. And 430 00:20:33,240 --> 00:20:36,280 Speaker 8: I think where a lot of Blincoln and Biden's conversations 431 00:20:36,320 --> 00:20:38,399 Speaker 8: with Israel will be is trying to negotiate some kind 432 00:20:38,400 --> 00:20:40,520 Speaker 8: of opening on that border to allow that passage. 433 00:20:40,680 --> 00:20:43,760 Speaker 1: Professor Norman, We're all falling back on our memories on 434 00:20:43,800 --> 00:20:45,959 Speaker 1: this and our knowledge. If you look at the present 435 00:20:46,080 --> 00:20:50,960 Speaker 1: day horror, and you look at Albert Harani's history of 436 00:20:51,000 --> 00:20:54,440 Speaker 1: the Arabs people, or Frompkins A peace to end all peace? 437 00:20:54,600 --> 00:20:58,320 Speaker 1: Are we now beyond the chain and linkage out of 438 00:20:58,359 --> 00:21:02,280 Speaker 1: World War Two? Of are we onto something new here? 439 00:21:03,480 --> 00:21:05,760 Speaker 8: I think we are, tom and this has been obviously 440 00:21:05,840 --> 00:21:08,320 Speaker 8: coming for a while. You know, this is a broader 441 00:21:08,359 --> 00:21:11,600 Speaker 8: regional question. I think the airp uprisings of the Arab 442 00:21:11,640 --> 00:21:14,480 Speaker 8: Spring that we saw ten years ago, you many thought 443 00:21:14,560 --> 00:21:16,520 Speaker 8: that would be a new direction. There was one, a 444 00:21:16,560 --> 00:21:19,560 Speaker 8: slightly different direction than many hoped or thought they would. 445 00:21:20,080 --> 00:21:22,359 Speaker 8: But we are seeing now, I think is a resetting. 446 00:21:22,440 --> 00:21:24,560 Speaker 8: And again a lot of this is in a context 447 00:21:24,600 --> 00:21:27,160 Speaker 8: of you know, steps forward and steps back. I think 448 00:21:27,160 --> 00:21:29,320 Speaker 8: there was a lot of hope this year around some 449 00:21:30,040 --> 00:21:33,280 Speaker 8: normalization between Arab states and Israel and you know, many 450 00:21:33,320 --> 00:21:36,679 Speaker 8: see this attacks as trying to be a spoiler to 451 00:21:36,760 --> 00:21:40,240 Speaker 8: that which it obviously has been. So there's been again 452 00:21:40,320 --> 00:21:42,280 Speaker 8: a lot of shifts in this region, and I think 453 00:21:42,359 --> 00:21:45,240 Speaker 8: this war will be very definitive of where the region 454 00:21:45,280 --> 00:21:45,840 Speaker 8: goes after this. 455 00:21:46,160 --> 00:21:50,119 Speaker 3: Judi Noilman of you, Siah, Jenny, thank you as so wise. 456 00:21:54,080 --> 00:21:56,520 Speaker 1: Joining us now to say the show Erica and Jerry 457 00:21:56,520 --> 00:21:59,760 Speaker 1: and large cap banks and consumer for Dance Equity Research 458 00:22:00,200 --> 00:22:02,520 Speaker 1: at UBS. She is not wearing a cast on one 459 00:22:02,520 --> 00:22:06,320 Speaker 1: of her ankles this morning. Erica, I do you know 460 00:22:06,880 --> 00:22:09,480 Speaker 1: I just said I did. Thank you. 461 00:22:09,480 --> 00:22:09,679 Speaker 4: You know. 462 00:22:09,960 --> 00:22:13,080 Speaker 1: I look, Erica, at where we are right now, and 463 00:22:13,119 --> 00:22:15,040 Speaker 1: if I look at the Keith Pride Index, we're down 464 00:22:15,119 --> 00:22:18,399 Speaker 1: forty eight percent from the nirvana that we did in 465 00:22:18,400 --> 00:22:21,879 Speaker 1: twenty twenty two, twenty one, and we've only got twenty 466 00:22:21,920 --> 00:22:24,600 Speaker 1: six percent down to go on a blended bank basis 467 00:22:25,119 --> 00:22:28,240 Speaker 1: to get to COVID lows what do they do to 468 00:22:28,320 --> 00:22:29,399 Speaker 1: turn the ship around. 469 00:22:31,440 --> 00:22:34,600 Speaker 9: So it's pretty simple, and I think that they essentially 470 00:22:34,680 --> 00:22:38,640 Speaker 9: have to disprove the negative, which is that higher rates 471 00:22:38,880 --> 00:22:41,640 Speaker 9: is only bad for banks, or higher rates are only 472 00:22:41,720 --> 00:22:44,520 Speaker 9: bad for banks, as you could see in the earnings 473 00:22:44,520 --> 00:22:47,720 Speaker 9: results so far, that's not actually the case. You know, 474 00:22:47,720 --> 00:22:50,320 Speaker 9: a lot of these banks have the raw material to 475 00:22:50,680 --> 00:22:53,320 Speaker 9: make more money in a higher interest rate environment, which 476 00:22:53,359 --> 00:22:56,720 Speaker 9: is a good deposit base. But what we've seen early 477 00:22:56,800 --> 00:22:59,760 Speaker 9: this year with the three bank failures is the dark 478 00:22:59,800 --> 00:23:02,920 Speaker 9: side to higher rates. What happens when you're off sides 479 00:23:03,080 --> 00:23:05,720 Speaker 9: and rates go up faster than you think. And so 480 00:23:05,800 --> 00:23:08,560 Speaker 9: what the market really needs to see is you're not 481 00:23:08,600 --> 00:23:12,840 Speaker 9: seeing massive capital losses. You're seeing deposit stability, and you're 482 00:23:12,840 --> 00:23:15,800 Speaker 9: seeing net interest income progress in the right you know, 483 00:23:15,840 --> 00:23:18,399 Speaker 9: in the right direction as they earn more on their 484 00:23:18,440 --> 00:23:19,720 Speaker 9: assets and their liabilities. 485 00:23:19,760 --> 00:23:21,720 Speaker 1: I mean, correct me if I'm wrong, But Erica, the 486 00:23:21,840 --> 00:23:24,800 Speaker 1: history to me is called synergies or cost cuts or 487 00:23:24,840 --> 00:23:27,320 Speaker 1: moving things. Are they gonna are they just the bone 488 00:23:27,359 --> 00:23:29,920 Speaker 1: now where they can't cut anymore? Are they going to 489 00:23:30,040 --> 00:23:34,440 Speaker 1: choose which divisions to participate in into twenty twenty four 490 00:23:34,840 --> 00:23:36,600 Speaker 1: or is it just going to be, you know, cut 491 00:23:36,640 --> 00:23:37,720 Speaker 1: four percent, let's go. 492 00:23:39,040 --> 00:23:42,639 Speaker 9: That might not be the right question to ask unless 493 00:23:42,680 --> 00:23:45,280 Speaker 9: it's someone like City Group that has a very specific 494 00:23:45,400 --> 00:23:48,760 Speaker 9: expense cutting plan. You know, keep in mind that these 495 00:23:48,800 --> 00:23:51,760 Speaker 9: banks are actually making a lot of money right now. 496 00:23:51,960 --> 00:23:54,280 Speaker 9: They're making a lot more in uninterest income than they 497 00:23:54,280 --> 00:23:58,840 Speaker 9: did last year. Trading has been resilient. Investment banking is cyclic. 498 00:23:59,119 --> 00:24:03,159 Speaker 9: Cyclically depress, but could bounce back, and so, you know, 499 00:24:03,240 --> 00:24:05,600 Speaker 9: a lot of these banks understand that you can't necessarily 500 00:24:05,640 --> 00:24:08,600 Speaker 9: cut your way to glory. And so while we think 501 00:24:08,600 --> 00:24:11,720 Speaker 9: they're going to be mindful of expense growth next year, 502 00:24:12,240 --> 00:24:14,880 Speaker 9: I think that the question really is, how do they, 503 00:24:15,320 --> 00:24:18,840 Speaker 9: you know, think about revenue resilience next year? How do they, 504 00:24:19,400 --> 00:24:23,080 Speaker 9: you know, maintain deposit costs at a certain level if 505 00:24:23,119 --> 00:24:26,959 Speaker 9: the FED does pause in order to enjoy fixed asset repricing. 506 00:24:27,320 --> 00:24:30,480 Speaker 9: I think the question is more about keeping deposit costs, 507 00:24:31,000 --> 00:24:34,400 Speaker 9: or rather keeping operating costs at a lower growth rate 508 00:24:34,680 --> 00:24:39,000 Speaker 9: than revenue growth, rather than outright expense cuts. 509 00:24:39,000 --> 00:24:42,240 Speaker 5: At this point, Erica, they're making bank. Let's be honest, right, 510 00:24:42,320 --> 00:24:44,800 Speaker 5: they just had record quarter as John as mentioning for 511 00:24:44,880 --> 00:24:48,160 Speaker 5: net interest income. If they're doing so well and they 512 00:24:48,160 --> 00:24:50,720 Speaker 5: have surprised the upside and they're not putting as much 513 00:24:50,840 --> 00:24:53,600 Speaker 5: to the side to cover loan losses as many people expected, 514 00:24:54,040 --> 00:24:55,399 Speaker 5: why aren't the shares doing better? 515 00:24:57,000 --> 00:25:02,000 Speaker 9: Because a lot of investors are still really fearful of 516 00:25:02,080 --> 00:25:04,960 Speaker 9: what could be the consequence of higher rates, you know, 517 00:25:05,080 --> 00:25:07,600 Speaker 9: and the you know, the rapid increase in rates, which 518 00:25:07,640 --> 00:25:10,000 Speaker 9: is a recession. And at the end of the day, 519 00:25:10,080 --> 00:25:12,480 Speaker 9: a lot of these banks are, like you say, making 520 00:25:12,520 --> 00:25:15,560 Speaker 9: bank from a revenue perspective, especially on net interest income. 521 00:25:15,880 --> 00:25:18,840 Speaker 9: But a lot of investors are fearful that we'll see 522 00:25:18,920 --> 00:25:22,159 Speaker 9: higher credit losses, whether it's on the commercial real estate 523 00:25:22,200 --> 00:25:25,920 Speaker 9: books or corporate books or you know, the consumer weakening. 524 00:25:26,359 --> 00:25:29,760 Speaker 9: So right now, the valuations are staying cheap because a 525 00:25:29,760 --> 00:25:32,320 Speaker 9: lot of investors are essentially saying, well, I'm going to 526 00:25:32,480 --> 00:25:35,320 Speaker 9: wait till I really understand the complexion of the downturn 527 00:25:35,600 --> 00:25:38,720 Speaker 9: before I really step in, and you know, really call 528 00:25:38,800 --> 00:25:40,120 Speaker 9: these stocks inexpensive. 529 00:25:40,560 --> 00:25:42,560 Speaker 5: So how much are you getting pushed back? How much 530 00:25:42,600 --> 00:25:46,000 Speaker 5: you're recommending to investors to buy certain bank stocks and 531 00:25:46,080 --> 00:25:49,359 Speaker 5: making the argument they're undervalued because of its uncertainty, and 532 00:25:49,440 --> 00:25:52,400 Speaker 5: yet they're increasingly acting like utilities because of how much 533 00:25:52,400 --> 00:25:54,679 Speaker 5: capital they've put aside and how regulated they've become. 534 00:25:56,160 --> 00:25:59,080 Speaker 9: Look, I think the reality is is that the banks 535 00:25:59,119 --> 00:26:01,360 Speaker 9: are in a little bit of a trading range at 536 00:26:01,359 --> 00:26:04,280 Speaker 9: this point. So you know, you brought up two points. 537 00:26:04,280 --> 00:26:07,159 Speaker 9: One is macro and one is regulation. Near term, we 538 00:26:07,240 --> 00:26:09,600 Speaker 9: do think that the rubber band has stretched a little 539 00:26:09,600 --> 00:26:11,280 Speaker 9: bit too far, and they're at the low end of 540 00:26:11,320 --> 00:26:14,760 Speaker 9: their trading range, and they are a little bit too inexpensive, 541 00:26:15,080 --> 00:26:18,400 Speaker 9: you know, relative to the reality of their earnings power today. 542 00:26:18,960 --> 00:26:21,560 Speaker 9: That being said, you know, you bring up a good point. 543 00:26:22,440 --> 00:26:25,400 Speaker 9: Not only is the uncertainty over the economy really tamping 544 00:26:25,440 --> 00:26:28,840 Speaker 9: down what their multiples could be, right, but also you 545 00:26:28,920 --> 00:26:31,359 Speaker 9: have a lot of new rules that are coming down 546 00:26:31,440 --> 00:26:33,560 Speaker 9: the pipeline, you know. That being said, I like to 547 00:26:33,600 --> 00:26:35,959 Speaker 9: describe the new rules in terms of what's coming down 548 00:26:36,040 --> 00:26:39,040 Speaker 9: the pipeline as tough, but not nearly as you know, 549 00:26:39,119 --> 00:26:41,800 Speaker 9: game changing as it was coming out of the financial crisis. 550 00:26:42,240 --> 00:26:45,320 Speaker 9: Is if for money center banks, you know, the regulatory 551 00:26:45,440 --> 00:26:48,879 Speaker 9: landscape went from zero to ten, I feel like Basil 552 00:26:48,960 --> 00:26:52,560 Speaker 9: three endgame and the upcoming liquidity rules, it's going from 553 00:26:52,600 --> 00:26:55,359 Speaker 9: ten to twelve, and perhaps from regional banks it's going 554 00:26:55,359 --> 00:26:58,160 Speaker 9: from eight to eleven and a half. But either way, 555 00:26:58,240 --> 00:27:00,879 Speaker 9: I think what I'm recommending to investor is, look, you know, 556 00:27:00,960 --> 00:27:03,679 Speaker 9: take advantage of these prices at the low end of 557 00:27:03,680 --> 00:27:07,280 Speaker 9: the trading range, but valuations are not really going to 558 00:27:07,320 --> 00:27:11,040 Speaker 9: be able to regrate meaningfully to normal levels relative to 559 00:27:11,080 --> 00:27:14,360 Speaker 9: the broad market until we get more certainty, more clarity 560 00:27:14,720 --> 00:27:17,280 Speaker 9: on what the economy looks like over the next twelve months. 561 00:27:17,480 --> 00:27:18,960 Speaker 3: Eric, I good to hear from you again. Let's do 562 00:27:19,000 --> 00:27:30,080 Speaker 3: it again soon, Eric and ajerin that of ups. 563 00:27:31,400 --> 00:27:35,240 Speaker 1: For anybody linked in to his valuable Twitter account. It 564 00:27:35,280 --> 00:27:40,400 Speaker 1: has been a visceral and direct week for Douglas pet 565 00:27:40,600 --> 00:27:45,840 Speaker 1: cast with family members and business associates in Israel. Doug 566 00:27:45,920 --> 00:27:48,359 Speaker 1: to take a broader view on this in a less 567 00:27:48,440 --> 00:27:53,520 Speaker 1: personal view. You are a nerd with the heritage of 568 00:27:53,680 --> 00:27:56,399 Speaker 1: Israel from nineteen forty eight to what I remember in 569 00:27:56,480 --> 00:28:00,760 Speaker 1: sixty seven and seventy three. I don't see how we 570 00:28:00,880 --> 00:28:06,000 Speaker 1: prosecute forward, whatever anyone's view, with the immediacy of the 571 00:28:06,040 --> 00:28:11,080 Speaker 1: media today, the immediacy of social media and the rest, 572 00:28:11,760 --> 00:28:15,520 Speaker 1: how would you suggest, with the damage your friends and 573 00:28:15,560 --> 00:28:19,640 Speaker 1: your family have had over the last week, how does 574 00:28:19,680 --> 00:28:24,840 Speaker 1: this work progress with the immediacy of the modern media. 575 00:28:25,680 --> 00:28:30,320 Speaker 10: You know, it's a heavyweight. To me, the most astonishing 576 00:28:30,440 --> 00:28:33,720 Speaker 10: thing is that the spiders closed it under four p 577 00:28:33,840 --> 00:28:38,240 Speaker 10: thirty on Friday, the day before the Hamas attack on Israel. 578 00:28:38,640 --> 00:28:41,480 Speaker 10: It's now trading four thirty three, and we can add 579 00:28:41,960 --> 00:28:46,560 Speaker 10: during the internim interval some unpleasant PPI and CPI releases 580 00:28:48,040 --> 00:28:55,600 Speaker 10: the market's extraordinaryly resilient look. I admire people that are 581 00:28:55,640 --> 00:28:59,600 Speaker 10: a confident of view, but I don't see, and I've 582 00:28:59,600 --> 00:29:02,360 Speaker 10: said this to you, for you and John and Paul 583 00:29:02,480 --> 00:29:06,080 Speaker 10: for about eighteen months. I don't see a backdrop that 584 00:29:06,120 --> 00:29:10,840 Speaker 10: can make one confident either being excessively bearish like Morgan 585 00:29:10,920 --> 00:29:15,520 Speaker 10: Stanley's Mike Wilson or Morgan Jack Morgan's Marco, or excessively 586 00:29:15,560 --> 00:29:18,840 Speaker 10: bullish like most of the commentators on the desk store 587 00:29:18,920 --> 00:29:21,720 Speaker 10: or Tom Lee at Funstratt. To me, the range of 588 00:29:21,760 --> 00:29:25,120 Speaker 10: outcomes is we've witnessed nine days ago in Israel as 589 00:29:25,160 --> 00:29:29,840 Speaker 10: wide and the events are unexpected. So the question really 590 00:29:29,920 --> 00:29:33,400 Speaker 10: is what is a hedge fund manager to do to 591 00:29:33,440 --> 00:29:35,360 Speaker 10: deliver superior investment returns? 592 00:29:35,760 --> 00:29:38,720 Speaker 1: How do you filter geopolitics? If we go back to 593 00:29:38,760 --> 00:29:42,000 Speaker 1: the desk at Kidder Peabody and you're doing cell side 594 00:29:42,040 --> 00:29:45,840 Speaker 1: security analysis, I mean, you know we're too young to 595 00:29:45,880 --> 00:29:48,560 Speaker 1: go back to Vietnam. But the answer is, how does 596 00:29:48,600 --> 00:29:53,320 Speaker 1: Doug Cass filter geopolitics or do you observe it while 597 00:29:53,320 --> 00:29:55,560 Speaker 1: you're discreet and separate in investment? 598 00:29:56,680 --> 00:29:57,200 Speaker 3: I think it. 599 00:29:57,240 --> 00:30:07,160 Speaker 10: Builds in Sir Thomas degree of uncertainty that it suggests that, 600 00:30:08,960 --> 00:30:14,880 Speaker 10: at least to us, the clear ramifications is that the 601 00:30:14,960 --> 00:30:19,000 Speaker 10: recent events support the message I just said that it 602 00:30:19,080 --> 00:30:24,120 Speaker 10: underscores why you should be managing your capital conservatively and 603 00:30:25,480 --> 00:30:30,040 Speaker 10: unfortunately without the confidence that is typical. And you superimpose 604 00:30:30,160 --> 00:30:35,440 Speaker 10: that with what Howard Marx has called a sea change, 605 00:30:36,320 --> 00:30:43,560 Speaker 10: specifically as it relates to higher interest rates, that the 606 00:30:43,600 --> 00:30:48,120 Speaker 10: fundamental investment environment has been altered. You don't assume the 607 00:30:48,160 --> 00:30:52,200 Speaker 10: investment strategies that have served you best since two thousand 608 00:30:52,200 --> 00:30:54,840 Speaker 10: and nine will do so in the years ahead. Most 609 00:30:54,880 --> 00:31:00,840 Speaker 10: hedge fund managers have really sought beta leverage long portfolios 610 00:31:00,880 --> 00:31:05,160 Speaker 10: in the last fourteen years. I think it's time to 611 00:31:05,160 --> 00:31:11,880 Speaker 10: seek alpha and to develop strategies perhaps more like and 612 00:31:11,960 --> 00:31:15,320 Speaker 10: we invoke, of course Alfred Winslow Jones, the father of 613 00:31:15,560 --> 00:31:22,640 Speaker 10: the hedged fund industry, who ran a true long short book, 614 00:31:22,680 --> 00:31:25,320 Speaker 10: and that's what we do on those Unlike most of 615 00:31:25,320 --> 00:31:25,920 Speaker 10: the right, this. 616 00:31:25,960 --> 00:31:27,840 Speaker 1: Is yeah, yeah, I don't mean interrupt, I want you 617 00:31:27,880 --> 00:31:30,360 Speaker 1: to jump in here. But what mister Cash just said, folks, 618 00:31:30,360 --> 00:31:33,800 Speaker 1: for those of you who aren't sophistic kids, is absolutely 619 00:31:33,880 --> 00:31:37,080 Speaker 1: critical and that people in the fancy world are talking 620 00:31:37,200 --> 00:31:40,120 Speaker 1: long short, but they're really not. They're not taking Jay 621 00:31:40,200 --> 00:31:44,240 Speaker 1: and Jay against pick A Stock, Pfizer or whatever. 622 00:31:44,360 --> 00:31:47,880 Speaker 10: They're not long short guys. Basically, Paul in the last 623 00:31:47,920 --> 00:31:49,840 Speaker 10: fourteen years have been leveraged long. 624 00:31:49,960 --> 00:31:50,120 Speaker 4: Yep. 625 00:31:50,440 --> 00:31:53,480 Speaker 10: You know I am very comfortable on the short side 626 00:31:53,480 --> 00:31:58,680 Speaker 10: at Sea Breeze. Short selling requires or mandates a degree 627 00:31:58,720 --> 00:32:02,920 Speaker 10: of creativity time concept of it requires a lot of 628 00:32:02,960 --> 00:32:06,480 Speaker 10: primary research because the cell research staffs our geared towards 629 00:32:06,600 --> 00:32:10,120 Speaker 10: lungs and importantly is I've often discussed in my past 630 00:32:10,200 --> 00:32:13,720 Speaker 10: lectures in doctor Shila's course in Yale School of Management, 631 00:32:13,800 --> 00:32:17,600 Speaker 10: short selling mandate strong risk management. 632 00:32:17,160 --> 00:32:21,560 Speaker 1: Skills, like you'd want to go Paul long, Diamondbacks, short 633 00:32:21,720 --> 00:32:24,280 Speaker 1: Dodgers just exactly well. 634 00:32:24,680 --> 00:32:26,800 Speaker 10: What you want to do in fantasy baseball is be 635 00:32:26,960 --> 00:32:32,880 Speaker 10: long curshore erlander and short everyone else. But you know, 636 00:32:33,360 --> 00:32:36,840 Speaker 10: you know typic where where we've moved from being that 637 00:32:37,040 --> 00:32:41,120 Speaker 10: short to being market neutral on the decline right before Hamas. 638 00:32:43,000 --> 00:32:47,960 Speaker 10: But you know, there's so many great opportunities because people 639 00:32:48,000 --> 00:32:51,400 Speaker 10: aren't really dealing in selecting, selecting stocks and making broad 640 00:32:51,440 --> 00:32:56,120 Speaker 10: market decisions like for vet bill, your two vet bills 641 00:32:56,160 --> 00:33:01,720 Speaker 10: and my two long can be long fresh pet and short. 642 00:33:01,200 --> 00:33:04,640 Speaker 1: This missus Keen sent me an email. The two of 643 00:33:04,680 --> 00:33:06,120 Speaker 1: them are set up for dog grooming. 644 00:33:06,320 --> 00:33:06,600 Speaker 7: Sure. 645 00:33:07,080 --> 00:33:09,840 Speaker 1: Mayor Adams team just emailed me he wanted to call 646 00:33:09,920 --> 00:33:13,480 Speaker 1: and thank me for moving the Leeds. New York City's economy. 647 00:33:13,640 --> 00:33:16,280 Speaker 7: So, Doug, I mean, as you think about geopolitical risk 648 00:33:16,400 --> 00:33:18,440 Speaker 7: is just one of the many things that investors have 649 00:33:18,520 --> 00:33:21,000 Speaker 7: to deal with. Are we kind of in a new 650 00:33:21,200 --> 00:33:23,120 Speaker 7: normal now? Because it feels like, at least in the 651 00:33:23,160 --> 00:33:26,200 Speaker 7: Middle East, we're gonna have a number of years where 652 00:33:26,840 --> 00:33:29,840 Speaker 7: it's just going to be very unstable. And I'm not 653 00:33:29,880 --> 00:33:32,560 Speaker 7: even sure about Europe, but certainly in the Middle East. 654 00:33:32,920 --> 00:33:37,959 Speaker 10: Right. Look, we start by saying that on a historical basis, 655 00:33:38,040 --> 00:33:43,720 Speaker 10: valuations are elevated, and we remain of the view that 656 00:33:44,560 --> 00:33:47,280 Speaker 10: credit is more It's not just the Mid East, it's 657 00:33:47,560 --> 00:33:52,600 Speaker 10: credit is more attractive in equities. Slugflation lies ahead, sluggish growth, 658 00:33:52,640 --> 00:33:57,840 Speaker 10: prickly inflation. Political and geopolitical problems are intensifying. I mean, 659 00:33:58,560 --> 00:34:04,120 Speaker 10: the lack of physical of partisanship and physical discipline reminds 660 00:34:04,200 --> 00:34:09,479 Speaker 10: me of that sketch with Laurrel Hardy. That's another fine 661 00:34:09,560 --> 00:34:12,360 Speaker 10: mess we're in it. Interest rates are going to be 662 00:34:12,400 --> 00:34:16,600 Speaker 10: higher for much longer earnings for share expectations of high 663 00:34:16,600 --> 00:34:20,400 Speaker 10: single digit load double digit growth next year. I was 664 00:34:20,440 --> 00:34:26,880 Speaker 10: listening to Jay at TPW Plaski and I mentioned that 665 00:34:26,920 --> 00:34:29,600 Speaker 10: my grandma Calfax had a phrase about his optimism, but 666 00:34:29,680 --> 00:34:34,360 Speaker 10: I can't repeat it on the radio. The upbeat economic 667 00:34:34,440 --> 00:34:37,640 Speaker 10: forecast within the context of rising real interest rates seem 668 00:34:37,719 --> 00:34:43,000 Speaker 10: fanciful to us that US dollar strength portends corporate profits vulnerability. 669 00:34:43,239 --> 00:34:45,399 Speaker 10: I think it's important to recognize that we're moving away 670 00:34:45,400 --> 00:34:49,759 Speaker 10: from globalization and towards nationalizations for obvious reasons. It holds 671 00:34:49,800 --> 00:34:53,480 Speaker 10: a future of lower than expected corporate profit and margins, 672 00:34:53,520 --> 00:34:58,040 Speaker 10: as well as producing more inflationary impulses. Finally, the yields 673 00:34:58,040 --> 00:35:00,520 Speaker 10: available and fixed income, you know, the one your Treasury 674 00:35:00,560 --> 00:35:03,759 Speaker 10: bill yields five point four percent. That's an equity like 675 00:35:03,840 --> 00:35:07,279 Speaker 10: return with little volatility of risk and premium, and risk 676 00:35:07,320 --> 00:35:11,759 Speaker 10: premium is paper thin and at multi decades low. I 677 00:35:11,760 --> 00:35:14,600 Speaker 10: think that the SMP dividend yield is only one point 678 00:35:14,600 --> 00:35:17,400 Speaker 10: sixty two percent. That compares to the one year yield 679 00:35:17,400 --> 00:35:20,160 Speaker 10: to five point four percent. And now we're getting the 680 00:35:20,200 --> 00:35:24,040 Speaker 10: same old crap that we got in twenty twenty one. 681 00:35:24,800 --> 00:35:27,880 Speaker 10: The end of twenty twenty one. Market leadership is narrowing, 682 00:35:29,040 --> 00:35:31,760 Speaker 10: but there are a lot of stocks now that are 683 00:35:31,800 --> 00:35:34,640 Speaker 10: starting to make new lows, that are starting to be 684 00:35:34,719 --> 00:35:38,320 Speaker 10: attractive away from the magnificent cent seven on a reward 685 00:35:38,400 --> 00:35:44,000 Speaker 10: versus risk opportunity. So we expect to see change, and 686 00:35:44,200 --> 00:35:48,120 Speaker 10: we believe that the successful strategies of being met long 687 00:35:48,239 --> 00:35:52,600 Speaker 10: since the Great Financial Crisis is not the desirable strategy. 688 00:35:53,040 --> 00:35:55,600 Speaker 1: Doug, We're out of time, but Paul Sween and I 689 00:35:55,640 --> 00:35:57,440 Speaker 1: say thank you to you for your wisdom here on 690 00:35:57,520 --> 00:36:00,960 Speaker 1: the market, right or wrong, and also heartfelt thank you 691 00:36:01,040 --> 00:36:05,040 Speaker 1: to your reporting of your family and your business associates 692 00:36:05,040 --> 00:36:08,480 Speaker 1: f MI Israel. It's really been of immense value. Douglas 693 00:36:08,560 --> 00:36:13,360 Speaker 1: Cast the Seabreeze Partners. Subscribe to the Bloomberg Surveillance podcast 694 00:36:13,440 --> 00:36:17,239 Speaker 1: on Apple, Spotify and anywhere else you get your podcasts. 695 00:36:17,680 --> 00:36:21,759 Speaker 1: Listen live every weekday starting at seven am Eastern. I'm 696 00:36:21,800 --> 00:36:25,799 Speaker 1: Bloomberg dot Com, the iHeartRadio app, tune In, and the 697 00:36:25,800 --> 00:36:29,840 Speaker 1: Bloomberg Business App. You can watch us live on Bloomberg 698 00:36:29,880 --> 00:36:34,120 Speaker 1: Television and always I'm the Bloomberg Terminal. Thanks for listening. 699 00:36:34,600 --> 00:36:37,400 Speaker 1: I'm Tom Keen, and this is Bloomberg