1
00:00:09,880 --> 00:00:13,840
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee.

2
00:00:14,000 --> 00:00:17,599
Speaker 1: We bring you insight from the best in economics, finance, investment,

3
00:00:18,040 --> 00:00:23,560
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

4
00:00:23,640 --> 00:00:27,440
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg I

5
00:00:27,520 --> 00:00:29,720
Speaker 1: speak at George Bowie. Shall we well. Funcer Security has

6
00:00:29,720 --> 00:00:31,880
Speaker 1: had a fixed income research George, Great to see you,

7
00:00:32,120 --> 00:00:33,919
Speaker 1: Good morning. Trying to work out what's going on here

8
00:00:33,960 --> 00:00:36,640
Speaker 1: in global markets, trade risk diminishing, but a tip to say,

9
00:00:36,680 --> 00:00:39,280
Speaker 1: three months ago global growth bottom and gout. To what

10
00:00:39,360 --> 00:00:42,400
Speaker 1: degree is the latter exclusive from the former. I'm trying

11
00:00:42,400 --> 00:00:44,040
Speaker 1: to get my head around that. Many other people out

12
00:00:44,080 --> 00:00:46,360
Speaker 1: as well. Now. I think what we're seeing, at least

13
00:00:46,360 --> 00:00:48,880
Speaker 1: in the fixed income markets, it's it's a little bit

14
00:00:49,080 --> 00:00:51,080
Speaker 1: closer to sort of what you'd consider more of a

15
00:00:51,600 --> 00:00:54,440
Speaker 1: normal market in the sense that I've seen a pretty

16
00:00:54,440 --> 00:00:58,040
Speaker 1: material adjustment across the yield curve. Yield curve was was

17
00:00:58,040 --> 00:01:01,320
Speaker 1: was was was inverted earlier this year, we've seen that

18
00:01:01,400 --> 00:01:04,440
Speaker 1: steeping out as ten ure yields and longer dated yields

19
00:01:04,440 --> 00:01:06,920
Speaker 1: have moved up, while the feed is cut rates and

20
00:01:07,280 --> 00:01:10,680
Speaker 1: a positively sloped upward sloping yield curve is a very

21
00:01:10,680 --> 00:01:14,440
Speaker 1: good indicator, UH, certainly for future economic growth. It takes

22
00:01:14,480 --> 00:01:17,480
Speaker 1: this sting, if you will, out of things like tail risks. UH.

23
00:01:17,520 --> 00:01:20,640
Speaker 1: There's still some concerns obviously about trade, but trade seems

24
00:01:20,640 --> 00:01:23,000
Speaker 1: to be moving in the right direction, and the data

25
00:01:23,040 --> 00:01:25,360
Speaker 1: is getting a little bit better. The date is really better.

26
00:01:25,440 --> 00:01:28,479
Speaker 1: For those brave enough to go into long duration, long

27
00:01:28,520 --> 00:01:31,759
Speaker 1: ago and far away, they're up solid double digits, if

28
00:01:31,800 --> 00:01:36,200
Speaker 1: not more. What do you do now, or into yurine planning?

29
00:01:36,800 --> 00:01:40,960
Speaker 1: If you've got that big double digit gain in a ten,

30
00:01:41,120 --> 00:01:44,320
Speaker 1: twenty or even longer bet, whether it's munis or others,

31
00:01:44,360 --> 00:01:46,640
Speaker 1: what do you do? I think you move away away

32
00:01:46,720 --> 00:01:48,800
Speaker 1: from what we would call it sort of a duration bet,

33
00:01:48,920 --> 00:01:52,920
Speaker 1: so long long maturity bonds, and then you focus more

34
00:01:52,960 --> 00:01:56,360
Speaker 1: on bonds or our companies that are more cyclically exposed.

35
00:01:56,640 --> 00:01:58,600
Speaker 1: That if you're if you're willing to bet that there's

36
00:01:58,600 --> 00:02:02,480
Speaker 1: an economic soft landing, which we think is underway, then

37
00:02:02,800 --> 00:02:06,160
Speaker 1: parts of the bond market like high yield should do okay.

38
00:02:06,200 --> 00:02:09,040
Speaker 1: These are companies with a little bit more leverage, but

39
00:02:09,160 --> 00:02:13,480
Speaker 1: with higher yielding UH securities, higher yielding opportunities, A blended

40
00:02:13,520 --> 00:02:16,600
Speaker 1: portfolio is gonna have a yield of roughly about five

41
00:02:16,680 --> 00:02:20,240
Speaker 1: point six five five point seven five with not a

42
00:02:20,240 --> 00:02:23,639
Speaker 1: lot of duration. There's been a shift in sentiment over

43
00:02:23,680 --> 00:02:26,520
Speaker 1: the past couple of weeks from inflation will never pick

44
00:02:26,600 --> 00:02:30,200
Speaker 1: up again to we're seeing the beginnings of reflation and

45
00:02:30,240 --> 00:02:33,840
Speaker 1: inflation is underpriced in the market. Do you agree with

46
00:02:33,880 --> 00:02:36,920
Speaker 1: that sentiment shift? I think as we kind of move,

47
00:02:37,160 --> 00:02:38,960
Speaker 1: I think people are looking forward to the beginning of

48
00:02:39,040 --> 00:02:41,200
Speaker 1: next year and the data is getting a little bit better.

49
00:02:41,360 --> 00:02:43,440
Speaker 1: The economic data is better, and there is a little

50
00:02:43,440 --> 00:02:46,280
Speaker 1: bit of an upward lift on the inflationary front. But

51
00:02:46,400 --> 00:02:49,480
Speaker 1: in addition to that, the technicalities of how inflation is

52
00:02:49,520 --> 00:02:53,440
Speaker 1: calculated is likely to deliver a lift early next year

53
00:02:54,040 --> 00:02:57,519
Speaker 1: as the linked effects of last year start to roll

54
00:02:57,560 --> 00:03:00,920
Speaker 1: off the numbers. This is all very technical, not wildly exciting,

55
00:03:01,120 --> 00:03:04,480
Speaker 1: but it will show optically that the headline inflation numbers

56
00:03:04,480 --> 00:03:06,440
Speaker 1: are gonna start to rise as we get into the

57
00:03:06,480 --> 00:03:08,680
Speaker 1: beginning of next year, and you're starting to see that

58
00:03:08,720 --> 00:03:11,240
Speaker 1: getting priced in now in some of the securities. What

59
00:03:11,280 --> 00:03:13,520
Speaker 1: do I do if I'm a saver, I got a

60
00:03:13,560 --> 00:03:16,040
Speaker 1: pot of money. It's not a lot of money, but

61
00:03:16,080 --> 00:03:19,400
Speaker 1: I got a pot of money, and I just don't

62
00:03:19,680 --> 00:03:23,200
Speaker 1: want to be in equities. So you buy dominion, you know,

63
00:03:23,280 --> 00:03:26,040
Speaker 1: you buys a couple of utilities from the old days,

64
00:03:26,080 --> 00:03:30,960
Speaker 1: Florida power and light, and then you buy coupon. What

65
00:03:31,040 --> 00:03:33,880
Speaker 1: do you buy right now? So you know, I think

66
00:03:33,880 --> 00:03:36,040
Speaker 1: what you I think? You have to calibrate your return

67
00:03:36,120 --> 00:03:40,080
Speaker 1: expectations of fixed income. That's well's far ago talk John

68
00:03:40,400 --> 00:03:44,600
Speaker 1: for lower yields, lower yields, and how much expecting more

69
00:03:44,680 --> 00:03:49,720
Speaker 1: than a full like a three percent full yield is optimistic. Uh,

70
00:03:49,760 --> 00:03:53,200
Speaker 1: And it's challenging if you're a saver anywhere in the world.

71
00:03:53,600 --> 00:03:56,720
Speaker 1: Anywhere in the world, it is very difficult to generate

72
00:03:56,880 --> 00:04:01,000
Speaker 1: significant coupon income. So if you're you know, a mom

73
00:04:01,040 --> 00:04:04,600
Speaker 1: and pop saver out there, an investment grade relatively low

74
00:04:04,720 --> 00:04:07,800
Speaker 1: risk portfolio is in this sort of three percent kind

75
00:04:07,840 --> 00:04:09,680
Speaker 1: of range. If you want to take a little bit

76
00:04:09,680 --> 00:04:12,480
Speaker 1: more risk and you go into high yield you know,

77
00:04:12,520 --> 00:04:16,440
Speaker 1: now we're talking five and three quarters percent type of yields.

78
00:04:16,480 --> 00:04:19,640
Speaker 1: Beyond that, you're now going into the depths of emerging markets.

79
00:04:19,680 --> 00:04:22,320
Speaker 1: You're going overseas, you're going into corners of the market.

80
00:04:22,520 --> 00:04:25,720
Speaker 1: We're gonna pick up a significant amount of risks. So

81
00:04:26,200 --> 00:04:28,600
Speaker 1: I think a three percent kind of yield, maybe a

82
00:04:28,600 --> 00:04:31,479
Speaker 1: little bit higher depending on how you blend your portfolio.

83
00:04:31,800 --> 00:04:33,760
Speaker 1: It's about the best you can hope for. And I

84
00:04:33,800 --> 00:04:37,240
Speaker 1: think you have to be realistic about your fixed income portfolio.

85
00:04:37,640 --> 00:04:42,480
Speaker 1: It's an anchor. It it's an anchor to your overall portfolio.

86
00:04:42,560 --> 00:04:44,720
Speaker 1: But it's but but the but the yield on it

87
00:04:44,760 --> 00:04:48,160
Speaker 1: is gonna be gonna be relatively low. Is the best

88
00:04:48,200 --> 00:04:50,320
Speaker 1: that you can hope for in the world of fixed

89
00:04:50,360 --> 00:04:53,680
Speaker 1: income that's gonna be tough gun at into for many

90
00:04:53,720 --> 00:04:55,400
Speaker 1: if you out there on now. It's just a final

91
00:04:55,480 --> 00:04:59,040
Speaker 1: question on the regional boss. You mentioned emerging markets. Many

92
00:04:59,040 --> 00:05:01,599
Speaker 1: people thinking about that high bite a trade to the

93
00:05:01,640 --> 00:05:04,600
Speaker 1: trade story. I want to buy the foreign assets Europe.

94
00:05:04,960 --> 00:05:07,120
Speaker 1: Even though fixed income has araut it really hard on

95
00:05:07,240 --> 00:05:09,839
Speaker 1: the last couple of years, I'm thinking more about emerging markets.

96
00:05:09,880 --> 00:05:12,200
Speaker 1: What's your advice to those people? So on the emerging

97
00:05:12,240 --> 00:05:14,680
Speaker 1: markets front, I think you have to tread cautiously, especially

98
00:05:14,760 --> 00:05:17,560
Speaker 1: as it relates to fixed income. You've mentioned a few earlier,

99
00:05:17,839 --> 00:05:19,400
Speaker 1: and I think you're gonna talk about it later in

100
00:05:19,440 --> 00:05:22,400
Speaker 1: the show. You know, there's a variety of meaningful geopolitical

101
00:05:22,520 --> 00:05:26,599
Speaker 1: issues around the world, which maybe makes emerging markets look

102
00:05:26,600 --> 00:05:29,359
Speaker 1: optically cheap, but they're cheap for a reason. You have

103
00:05:29,400 --> 00:05:32,000
Speaker 1: a lot of political unrest in different parts of the market.

104
00:05:32,200 --> 00:05:34,200
Speaker 1: The thing we would look for is um you know,

105
00:05:34,400 --> 00:05:38,359
Speaker 1: if the dollars is getting stronger, that sometimes kind of

106
00:05:38,360 --> 00:05:40,839
Speaker 1: can weigh a little bit on on EM. We'd sort

107
00:05:40,839 --> 00:05:43,040
Speaker 1: of take an up and quality type of trade for

108
00:05:43,040 --> 00:05:45,400
Speaker 1: for e M that's gonna have a yield sort of

109
00:05:45,520 --> 00:05:47,719
Speaker 1: roughly equivalent to high yields, so you can use it

110
00:05:47,760 --> 00:05:51,080
Speaker 1: as a diversification, but not a real sort of material

111
00:05:51,200 --> 00:05:54,800
Speaker 1: yield pickups. So we would use em as a more selective,

112
00:05:55,320 --> 00:05:59,000
Speaker 1: selective type of of of allocation for fixed income portfolio.

113
00:05:59,080 --> 00:06:00,840
Speaker 1: Juge BORI, thank you big week I had for you.

114
00:06:00,880 --> 00:06:02,960
Speaker 1: We appreciate your time this morning. George Boy Then West

115
00:06:02,960 --> 00:06:20,960
Speaker 1: Founca Securities had a fixed income research right now in

116
00:06:21,120 --> 00:06:24,600
Speaker 1: Hong Kong, providing great leadership to Bloomberg Television and to

117
00:06:24,680 --> 00:06:27,520
Speaker 1: Bloomberg Newsy Von Man joins us as well. Von this

118
00:06:27,560 --> 00:06:32,200
Speaker 1: weekend was different. Quickly here describe why this weekend was

119
00:06:32,279 --> 00:06:37,320
Speaker 1: so different for the chief executive Carry Lamb. Well, Tom,

120
00:06:37,320 --> 00:06:40,920
Speaker 1: this the protest right now have reached another level here

121
00:06:41,160 --> 00:06:44,279
Speaker 1: after the death of a student last week. This man

122
00:06:44,720 --> 00:06:47,520
Speaker 1: was a twenty two year old student, the university student

123
00:06:47,560 --> 00:06:51,080
Speaker 1: who fell off a car park near during a demonstration

124
00:06:51,200 --> 00:06:53,719
Speaker 1: where police used tear gas disperse a crowd, and that

125
00:06:53,920 --> 00:06:57,400
Speaker 1: is what sparked the violence over the weekend and what

126
00:06:57,600 --> 00:07:01,920
Speaker 1: has really transpired here this evening riot police right now

127
00:07:02,000 --> 00:07:06,120
Speaker 1: are still in the streets territory wide trying to stop

128
00:07:06,160 --> 00:07:08,840
Speaker 1: these protesters, but we haven't seen any kind of site

129
00:07:08,880 --> 00:07:11,320
Speaker 1: at this point. And and more violence here this morning.

130
00:07:11,440 --> 00:07:15,280
Speaker 1: Those two incidents of of a man that was set

131
00:07:15,320 --> 00:07:18,760
Speaker 1: on fire by a protester after there were some verbal clashes,

132
00:07:18,800 --> 00:07:21,520
Speaker 1: and of course that police officer that shot a protester

133
00:07:21,640 --> 00:07:25,080
Speaker 1: at point blanks this morning. Yvonne on the ground there

134
00:07:25,600 --> 00:07:27,800
Speaker 1: is this is the mood different have you Can you

135
00:07:27,800 --> 00:07:33,160
Speaker 1: actually feel the shift? Yeah, I mean we have felt

136
00:07:33,160 --> 00:07:36,080
Speaker 1: the shift. And there was a while the last couple

137
00:07:36,080 --> 00:07:38,360
Speaker 1: of weeks where things were stimmering down a little bit,

138
00:07:38,760 --> 00:07:41,720
Speaker 1: and now we've reached another type of fever pitch, I

139
00:07:41,760 --> 00:07:44,960
Speaker 1: would say, because the death of the student is what

140
00:07:45,040 --> 00:07:48,239
Speaker 1: really sparked more people on the streets over the weekend.

141
00:07:48,280 --> 00:07:52,680
Speaker 1: We had already ninety arrest on Saturday and Sunday. Dozens

142
00:07:52,720 --> 00:07:56,960
Speaker 1: injured already. Today, school was canceled for some universities and

143
00:07:57,040 --> 00:08:00,800
Speaker 1: some secondary schools, and a hundred and seventy flights were canceled.

144
00:08:00,840 --> 00:08:03,559
Speaker 1: So we're kind of back into this more violent type

145
00:08:03,560 --> 00:08:06,960
Speaker 1: of wave that we've seen, uh, and the crowds have

146
00:08:07,080 --> 00:08:09,360
Speaker 1: really it hasn't just been one area now, it's it's

147
00:08:09,360 --> 00:08:13,240
Speaker 1: the Central Business business district where we saw traffic was disrupted.

148
00:08:13,720 --> 00:08:17,880
Speaker 1: Police refined tear gas near Central Landmark, one of the

149
00:08:18,320 --> 00:08:20,880
Speaker 1: close to the business district here where many people are

150
00:08:20,880 --> 00:08:23,320
Speaker 1: going to work. They had to hide and take covers

151
00:08:23,320 --> 00:08:25,720
Speaker 1: in the luxury malls here as they were pure gas

152
00:08:25,760 --> 00:08:28,320
Speaker 1: and washing washing their eyes with water. And that was

153
00:08:28,360 --> 00:08:30,920
Speaker 1: something that we hadn't seen in some time. And so

154
00:08:31,000 --> 00:08:33,720
Speaker 1: you feel it and you certainly feel it, especially with

155
00:08:33,760 --> 00:08:37,080
Speaker 1: the closures around the retail malls, the banks, and of

156
00:08:37,120 --> 00:08:39,280
Speaker 1: course the vandalism that we've seen all across the city.

157
00:08:39,679 --> 00:08:43,599
Speaker 1: How explosive was President Ji Jim Ping's explanation that he

158
00:08:43,640 --> 00:08:47,319
Speaker 1: would like to see a patriot ruling Hong Kong regardless

159
00:08:47,320 --> 00:08:51,800
Speaker 1: of people. Better get used to Ceo lamb, right. I

160
00:08:51,800 --> 00:08:54,760
Speaker 1: mean that was another China just digging their heels saying

161
00:08:54,760 --> 00:08:57,080
Speaker 1: that they're not going to give in to any of

162
00:08:57,120 --> 00:09:00,200
Speaker 1: these demands. But the police, Hong Kong Police spoke mean

163
00:09:00,280 --> 00:09:02,720
Speaker 1: today during a press conference did say that they that

164
00:09:02,800 --> 00:09:05,760
Speaker 1: he believes that there is no chance at this point

165
00:09:05,760 --> 00:09:07,880
Speaker 1: of the p l a W will be deployed in

166
00:09:07,920 --> 00:09:11,440
Speaker 1: the city. So they're still sticking by police, Hong Kong

167
00:09:11,480 --> 00:09:14,640
Speaker 1: Police at the moment and defending their actions, especially with

168
00:09:14,760 --> 00:09:18,120
Speaker 1: this morning with that shooting. But it is once again

169
00:09:18,440 --> 00:09:21,920
Speaker 1: carry Lamb talking today saying that these actions from the

170
00:09:21,960 --> 00:09:25,400
Speaker 1: writers that she called them go far beyond just demands

171
00:09:25,520 --> 00:09:29,160
Speaker 1: right now. Now they're treating citizens, as she says, as enemies.

172
00:09:29,240 --> 00:09:32,720
Speaker 1: So you know, she's still calling for a doctor the violence,

173
00:09:32,760 --> 00:09:34,840
Speaker 1: but we haven't seen any of that yet. Even man,

174
00:09:34,880 --> 00:09:37,400
Speaker 1: thank you so much. On the Monday evening of Hong

175
00:09:37,480 --> 00:09:51,880
Speaker 1: Kong with us here in the studio in place to say,

176
00:09:51,880 --> 00:09:54,960
Speaker 1: is Sarah Manic moving global equity seat I oh, good

177
00:09:54,960 --> 00:09:57,920
Speaker 1: morning to Sarah. Morning. Within the equity market at all

178
00:09:57,960 --> 00:10:00,400
Speaker 1: time high, there is this rotation that many people are

179
00:10:00,400 --> 00:10:04,120
Speaker 1: focused on two cyclicals from defensives to value from growth.

180
00:10:04,400 --> 00:10:06,840
Speaker 1: Your thoughts on what is underpinning that move and where

181
00:10:06,840 --> 00:10:08,679
Speaker 1: it's heading in the months to come so a couple

182
00:10:08,679 --> 00:10:10,839
Speaker 1: of things on value which we think can lead for

183
00:10:10,880 --> 00:10:13,079
Speaker 1: the next couple of quarters. So, first of all, this

184
00:10:13,200 --> 00:10:15,760
Speaker 1: rally and value the encyclicals that we've seen has been

185
00:10:15,800 --> 00:10:18,760
Speaker 1: about the strongest that's happened since late two thousand and sixteen,

186
00:10:18,800 --> 00:10:21,240
Speaker 1: which is when the election occurred. And also it's been

187
00:10:21,320 --> 00:10:23,679
Speaker 1: less fits and starts and more sustainable, so we do

188
00:10:23,760 --> 00:10:26,400
Speaker 1: think it has legs. Basically, what we've seen is the

189
00:10:26,400 --> 00:10:29,160
Speaker 1: economy is less bad than we thought, Earnings came in

190
00:10:29,240 --> 00:10:32,440
Speaker 1: better than expected. We're seeing some progress on tariffs, but

191
00:10:32,640 --> 00:10:35,280
Speaker 1: definitely that's in kind of fits and starts itself. All

192
00:10:35,400 --> 00:10:38,360
Speaker 1: that should lead to value continuing to be the leader

193
00:10:38,360 --> 00:10:40,520
Speaker 1: in the market for a quarter or two, but after

194
00:10:40,600 --> 00:10:43,360
Speaker 1: that earnings growth load of mid single digits next year,

195
00:10:43,480 --> 00:10:45,800
Speaker 1: we probably will go back to this quality growth kind

196
00:10:45,800 --> 00:10:49,160
Speaker 1: of environment less bad. Sounds like the conditions to generate

197
00:10:49,200 --> 00:10:52,480
Speaker 1: a squeeze, not a sustainable rally, not a sustainable rotation.

198
00:10:52,600 --> 00:10:54,920
Speaker 1: Is that essentially what you're communicates into clients. Yeah, I'm

199
00:10:54,960 --> 00:10:56,880
Speaker 1: seeing more of a reversion to the mean. Value has

200
00:10:56,880 --> 00:10:59,199
Speaker 1: been undervalued for a while, and we think it will

201
00:10:59,240 --> 00:11:00,920
Speaker 1: go back to the mean. But then after that, not

202
00:11:01,040 --> 00:11:03,559
Speaker 1: traded a premium because what you need in place or

203
00:11:03,640 --> 00:11:06,040
Speaker 1: value to really work is strong earnings growth and a

204
00:11:06,160 --> 00:11:09,439
Speaker 1: stronger economy, which we're not going to see that going forward.

205
00:11:09,480 --> 00:11:12,400
Speaker 1: Earlier this morning, Tom came made a really good point

206
00:11:12,480 --> 00:11:16,280
Speaker 1: that five stocks account for of the S and P

207
00:11:16,480 --> 00:11:20,040
Speaker 1: five hundred. Those stocks are tech. What will drive tech

208
00:11:20,400 --> 00:11:22,800
Speaker 1: further up at this point? I think that's going to

209
00:11:22,880 --> 00:11:25,959
Speaker 1: be challenging the old world of where investors. You know,

210
00:11:26,040 --> 00:11:28,080
Speaker 1: what we saw this narrow market for most of this

211
00:11:28,200 --> 00:11:30,520
Speaker 1: cycle of the past decade was investors were willing to

212
00:11:30,559 --> 00:11:33,920
Speaker 1: pay pretty high premiums for these high structural growth companies.

213
00:11:34,040 --> 00:11:35,480
Speaker 1: We think it's going to be more of a garp

214
00:11:35,640 --> 00:11:38,640
Speaker 1: environment growth a reasonable price. People won't pay these premiums

215
00:11:38,640 --> 00:11:41,280
Speaker 1: for these tech comes. So does that mean that another

216
00:11:41,400 --> 00:11:44,040
Speaker 1: sector will get leadership here or that we'll just sort

217
00:11:44,080 --> 00:11:46,960
Speaker 1: of uh, not see very much by way of gains here.

218
00:11:47,360 --> 00:11:50,160
Speaker 1: We think that other sectors will get leadership like quality

219
00:11:50,160 --> 00:11:53,000
Speaker 1: growth with more defensive characteristics that are less dependent on

220
00:11:53,040 --> 00:11:55,480
Speaker 1: the economy. But people are going to be careful about

221
00:11:55,520 --> 00:11:57,440
Speaker 1: how much they pay for that growth. So you can

222
00:11:57,480 --> 00:12:01,120
Speaker 1: see pockets of healthcare where pipelines are strong payments, companies

223
00:12:01,120 --> 00:12:03,400
Speaker 1: with a good tail win on global payments areas such

224
00:12:03,400 --> 00:12:08,319
Speaker 1: as that. The the acclaim of nouvene over decades is

225
00:12:08,400 --> 00:12:11,240
Speaker 1: you knew what you owned. That was the whole nouvene racket.

226
00:12:11,240 --> 00:12:13,520
Speaker 1: Way back. Instead of buying a mutual fun you bought

227
00:12:13,520 --> 00:12:16,280
Speaker 1: a fixed portfolio of bonds and it was a great

228
00:12:16,280 --> 00:12:19,760
Speaker 1: and beautiful thing, particularly when priced down yield up. Now

229
00:12:19,880 --> 00:12:23,440
Speaker 1: you're in the equity area of it. But I'm fascinated

230
00:12:23,640 --> 00:12:29,720
Speaker 1: how Nouvine is structured to protect people when we finally normalize,

231
00:12:29,800 --> 00:12:32,600
Speaker 1: there's a belief out there somewhere in the future will

232
00:12:32,640 --> 00:12:35,360
Speaker 1: get somewhat higher rates. Somewhere in the future, we may

233
00:12:35,360 --> 00:12:38,760
Speaker 1: actually get a correction. Heaven forbid a bear market. How

234
00:12:38,800 --> 00:12:41,800
Speaker 1: does Nuvine protect against that like you did a zillion

235
00:12:41,880 --> 00:12:44,560
Speaker 1: years ago. Well, we think of Nuvine today. It's a

236
00:12:44,600 --> 00:12:46,640
Speaker 1: lot different than it used to be. It's a trillion

237
00:12:46,679 --> 00:12:50,520
Speaker 1: dollar asset manager, multi asset class firm, offerings across publics

238
00:12:50,559 --> 00:12:53,160
Speaker 1: and private so we can provide any kind of solution

239
00:12:53,240 --> 00:12:56,600
Speaker 1: for investors. The equity business is a three billion assets

240
00:12:56,559 --> 00:13:00,560
Speaker 1: center management business, deep specialist movement doing it for sixty

241
00:13:00,600 --> 00:13:04,160
Speaker 1: five years. And domestic equities, so you very deep history

242
00:13:04,160 --> 00:13:05,880
Speaker 1: and investing that we think that you're part of t

243
00:13:06,000 --> 00:13:07,720
Speaker 1: I a Kreft. I mean you were there before, but

244
00:13:07,760 --> 00:13:09,800
Speaker 1: now you're part of TI a Creft, right, that's right.

245
00:13:09,880 --> 00:13:13,360
Speaker 1: T I acquired Nuvine. Yeah, they acquired Okay, what's your

246
00:13:13,440 --> 00:13:16,440
Speaker 1: ex real assumption? I mean, you know, we're just the

247
00:13:16,480 --> 00:13:19,160
Speaker 1: four of us. Nobody's listening. But what you know, what's

248
00:13:19,160 --> 00:13:22,480
Speaker 1: your actual assumption you're working with right now with all

249
00:13:22,520 --> 00:13:25,959
Speaker 1: the heritage of Nwvine's bond view. I mean, you know,

250
00:13:26,040 --> 00:13:28,000
Speaker 1: I'm on the equity side, so no, but I still

251
00:13:28,120 --> 00:13:30,280
Speaker 1: got to have an actual assumption. What is it? I

252
00:13:30,320 --> 00:13:32,400
Speaker 1: mean I don't personally have one. I don't think that's

253
00:13:32,440 --> 00:13:34,640
Speaker 1: my area of expertise. And what we're thinking about right

254
00:13:34,679 --> 00:13:37,040
Speaker 1: now with the equity business, what we're thinking about is

255
00:13:37,080 --> 00:13:40,120
Speaker 1: how do we position our client portfolios around the world

256
00:13:40,320 --> 00:13:42,840
Speaker 1: so that we can offer them diversification. Make sure that

257
00:13:43,040 --> 00:13:46,839
Speaker 1: you know, we're able to UM diversify, not have large

258
00:13:46,880 --> 00:13:50,600
Speaker 1: factor bets, so that we can own quality companies UM

259
00:13:50,640 --> 00:13:52,360
Speaker 1: you know, around the world, and make sure they are

260
00:13:52,360 --> 00:13:55,719
Speaker 1: a client portfolios are diversified within equities. So let's talk

261
00:13:55,720 --> 00:13:58,680
Speaker 1: about that regional diversification. At the moment, many people are

262
00:13:58,760 --> 00:14:00,960
Speaker 1: thinking about going GEP brought from outside the United States

263
00:14:01,000 --> 00:14:04,520
Speaker 1: into places like Europe, into emerging markets, what your advice

264
00:14:04,600 --> 00:14:07,040
Speaker 1: for them at the moment. So with this value rebound

265
00:14:07,040 --> 00:14:09,040
Speaker 1: that we've seeing, we actually think it's positive for Europe,

266
00:14:09,080 --> 00:14:11,360
Speaker 1: which has been a huge la rate over the past decade,

267
00:14:11,440 --> 00:14:13,959
Speaker 1: so your tends to be more cyclical. We actually think

268
00:14:13,960 --> 00:14:17,120
Speaker 1: that Germany may be starting to stabilize this brexit may

269
00:14:17,120 --> 00:14:19,320
Speaker 1: make some progress, So Europe in general, we're a little

270
00:14:19,320 --> 00:14:22,120
Speaker 1: bit more positive on emerging markets. We like those a lot,

271
00:14:22,160 --> 00:14:24,560
Speaker 1: particularly Brazil, which is a little bit out of the

272
00:14:24,600 --> 00:14:28,240
Speaker 1: trade cross hairs. Nice reform story in place, and China

273
00:14:28,360 --> 00:14:30,400
Speaker 1: if tariffs can continue to make progress, we think that

274
00:14:30,480 --> 00:14:33,080
Speaker 1: China should continue to rebound. From here, let's start with Europe.

275
00:14:33,080 --> 00:14:35,040
Speaker 1: If I go in at the index level and end

276
00:14:35,080 --> 00:14:37,520
Speaker 1: up owning a load of financials, do I want them?

277
00:14:37,720 --> 00:14:41,120
Speaker 1: Donnot want them? We kind of generally like financials from here.

278
00:14:41,200 --> 00:14:43,040
Speaker 1: We think that they can continue to do well as

279
00:14:43,080 --> 00:14:46,000
Speaker 1: a ten year creeps up. European financials we think could

280
00:14:46,040 --> 00:14:49,280
Speaker 1: look reasonably attractive if Europe does start to stabilize the

281
00:14:49,320 --> 00:14:52,920
Speaker 1: European financials, European industrials could be a nice sector that

282
00:14:53,000 --> 00:14:55,760
Speaker 1: it's nice sectors to own going forward. I'm trying to

283
00:14:55,840 --> 00:14:58,800
Speaker 1: understand how you price geopolitical risk, and I'm thinking of

284
00:14:58,840 --> 00:15:02,520
Speaker 1: Hong Kong uh the Hang Sang Index losing almost three

285
00:15:02,600 --> 00:15:05,240
Speaker 1: percent on the heels of the violence that we saw

286
00:15:05,600 --> 00:15:09,120
Speaker 1: overnight in the region. How do you view that in

287
00:15:09,240 --> 00:15:14,880
Speaker 1: terms of specific momentary risk versus larger systemic issues. I mean,

288
00:15:14,920 --> 00:15:17,360
Speaker 1: geo political risk has been an issue around the world

289
00:15:17,440 --> 00:15:19,920
Speaker 1: for a long time, ranging from Brexit to the protests

290
00:15:19,920 --> 00:15:22,720
Speaker 1: in Hong Kong. Typically, what we've seen is it remains

291
00:15:23,000 --> 00:15:25,760
Speaker 1: somewhat localized and has not become a global problem like

292
00:15:25,800 --> 00:15:28,040
Speaker 1: it has in the past. So for us, it's been

293
00:15:28,280 --> 00:15:30,720
Speaker 1: making sure that you avoid that local area while these

294
00:15:30,880 --> 00:15:33,120
Speaker 1: very hard to predict events are taking place. So not

295
00:15:33,200 --> 00:15:36,280
Speaker 1: buying the dip, not buying the dip Right now, I

296
00:15:36,360 --> 00:15:38,360
Speaker 1: want to give you a massive shout out. Maybe it's

297
00:15:38,360 --> 00:15:41,760
Speaker 1: because you're in Chicago with Morning Star leaning over your shoulder,

298
00:15:41,840 --> 00:15:44,360
Speaker 1: but the way on your website you display your funds

299
00:15:44,400 --> 00:15:46,520
Speaker 1: track record as an act of God, I just wish

300
00:15:46,600 --> 00:15:49,200
Speaker 1: everybody did this, where you just say look, this is

301
00:15:49,280 --> 00:15:51,600
Speaker 1: year to date. That's what people want to know. And

302
00:15:51,600 --> 00:15:53,600
Speaker 1: it's great that the new ven e s G Large

303
00:15:53,640 --> 00:15:57,239
Speaker 1: cap value fund. You know it's three beeps under SPX,

304
00:15:57,240 --> 00:16:00,880
Speaker 1: but it's not bad at all this year. We'll take it.

305
00:16:01,200 --> 00:16:04,840
Speaker 1: How do you respond to so many people in funds

306
00:16:04,880 --> 00:16:09,000
Speaker 1: through well intentioned reasons, that are enjoying single digit returns

307
00:16:09,040 --> 00:16:11,200
Speaker 1: this year? They're looking at the cross heres of the

308
00:16:11,240 --> 00:16:13,240
Speaker 1: year end and they're going, wait a minute, what am

309
00:16:13,280 --> 00:16:15,640
Speaker 1: I doing? Yeah? I mean I think you know the

310
00:16:15,720 --> 00:16:18,880
Speaker 1: job of the active managers to lead by performance. So

311
00:16:19,000 --> 00:16:20,680
Speaker 1: you know two goals here. One is you want to

312
00:16:20,680 --> 00:16:22,800
Speaker 1: make sure that you can beat your benchmark and also

313
00:16:22,960 --> 00:16:25,280
Speaker 1: that you can't perform relative to your peers that you

314
00:16:25,320 --> 00:16:27,800
Speaker 1: can justify the fees that you're charging. So I mean,

315
00:16:27,840 --> 00:16:30,160
Speaker 1: I think you know, if you have funds that are struggling,

316
00:16:30,160 --> 00:16:32,360
Speaker 1: you need to be looking closely at them and figuring out,

317
00:16:32,520 --> 00:16:35,000
Speaker 1: you know, what we need to do better, because if

318
00:16:35,040 --> 00:16:37,960
Speaker 1: you're going to be an active manager with the infiltration

319
00:16:37,960 --> 00:16:39,680
Speaker 1: of passive, you need to make sure that you cannot

320
00:16:39,680 --> 00:16:43,320
Speaker 1: beat your benchmark and deserve the fee that you're you're charging. Sarah,

321
00:16:43,360 --> 00:16:45,000
Speaker 1: thank you, it's great to say this morning. We're gonna

322
00:16:45,000 --> 00:16:46,040
Speaker 1: have to get you back. I know you've got to

323
00:16:46,080 --> 00:16:48,760
Speaker 1: run out of the studio for another employment some michalled

324
00:16:48,760 --> 00:16:50,880
Speaker 1: bloom Black TV. I think Sarah Manic has to go

325
00:16:50,960 --> 00:16:53,360
Speaker 1: to She's gonna run out of one studio to another

326
00:16:53,520 --> 00:16:55,120
Speaker 1: because she has to leave a little bit early. Sarah,

327
00:16:55,200 --> 00:17:11,680
Speaker 1: thank you. John. Let's get right to it with our guests,

328
00:17:11,720 --> 00:17:13,679
Speaker 1: because this is like a road show. You got your

329
00:17:13,720 --> 00:17:16,440
Speaker 1: rubber Chicken, and you're all set up here right now

330
00:17:16,800 --> 00:17:20,560
Speaker 1: for your road show for the Saudi Arabian Oil Company.

331
00:17:21,320 --> 00:17:23,880
Speaker 1: Doing it with the Ritz with Steven Short. Who's gonna

332
00:17:23,960 --> 00:17:26,359
Speaker 1: stand up and tell them what oil is gonna be

333
00:17:26,600 --> 00:17:30,639
Speaker 1: from the Short Report with the most insanely hyper detailed

334
00:17:30,720 --> 00:17:35,000
Speaker 1: view of American hydrocarbon Stephen Short, and we're through. Design's

335
00:17:35,040 --> 00:17:38,040
Speaker 1: been way too long, Stephen, good morning. Can you tell

336
00:17:38,040 --> 00:17:41,200
Speaker 1: a ram Co that they need to settle on fifty

337
00:17:41,240 --> 00:17:44,240
Speaker 1: dollar oil or sixty dollar oil? Which way is that

338
00:17:44,280 --> 00:17:47,119
Speaker 1: gonna cut? I think at this point, Tom, with what

339
00:17:47,160 --> 00:17:49,879
Speaker 1: we're seeing in the market, with regard to economic growth

340
00:17:50,119 --> 00:17:53,639
Speaker 1: demand to k going out into the future, that lower

341
00:17:53,680 --> 00:17:57,320
Speaker 1: for longer would certainly be the mantra. I think even

342
00:17:57,359 --> 00:18:00,399
Speaker 1: at that sixty dollar range, I think that is clearly

343
00:18:01,280 --> 00:18:05,080
Speaker 1: excuse me, a a realistic range. But for all intents

344
00:18:05,080 --> 00:18:07,879
Speaker 1: and purposes. It is well below what a ramco is

345
00:18:07,920 --> 00:18:10,359
Speaker 1: planning on and what it's trying to sell its investors on.

346
00:18:10,520 --> 00:18:13,639
Speaker 1: So I think that there's a good degree of hopium

347
00:18:13,880 --> 00:18:17,199
Speaker 1: that um that Saudi Aramco is hoping the market is

348
00:18:17,200 --> 00:18:20,800
Speaker 1: smoking on on this idea that will see higher prices.

349
00:18:20,960 --> 00:18:23,360
Speaker 1: Is that the New York giants here this weekend hope? Yeah,

350
00:18:26,320 --> 00:18:29,520
Speaker 1: you're going to rub that in a little bit. Lincoln

351
00:18:30,160 --> 00:18:32,879
Speaker 1: one point five trillion dollar valuation potentially would yield a

352
00:18:32,960 --> 00:18:37,760
Speaker 1: five dividend yield based on an initial seventy five billion

353
00:18:38,000 --> 00:18:40,880
Speaker 1: dollar dividend. Stephen doesn't get it done versus the all

354
00:18:40,960 --> 00:18:45,920
Speaker 1: majors in Europe in the United States five uh five percent.

355
00:18:46,080 --> 00:18:50,199
Speaker 1: I think I'm highly skeptical on a percentage and on

356
00:18:50,280 --> 00:18:54,119
Speaker 1: the assumptions going into that that percentage, we're we're dealing

357
00:18:54,280 --> 00:18:58,280
Speaker 1: with the market that's undergoing a tectonic shift with regard

358
00:18:58,359 --> 00:19:00,760
Speaker 1: to the future prospects of growth. We'll see. What's so

359
00:19:00,800 --> 00:19:04,520
Speaker 1: important here is you are the king of calculating the

360
00:19:04,640 --> 00:19:08,399
Speaker 1: flows the first second derivative of all these barrels. Do

361
00:19:08,480 --> 00:19:12,399
Speaker 1: we have any clue what Saudi Aramco has? Do we

362
00:19:12,680 --> 00:19:16,760
Speaker 1: have any understanding of the underlying assets or their Shorky

363
00:19:16,840 --> 00:19:21,000
Speaker 1: and derivatives. Yes, no, not that we can we can

364
00:19:21,040 --> 00:19:25,560
Speaker 1: tell UH ascortaining with any sort of significant confidence. It's

365
00:19:25,560 --> 00:19:29,880
Speaker 1: almost similar akin to the economic numbers that we get

366
00:19:29,880 --> 00:19:31,760
Speaker 1: out of China. You just have to kind of go

367
00:19:31,840 --> 00:19:35,639
Speaker 1: along and trust the process and hope the oil is there.

368
00:19:36,480 --> 00:19:40,400
Speaker 1: We certainly have have a mechanism UH in the market

369
00:19:40,560 --> 00:19:43,320
Speaker 1: of a balancing act and looking at the spread markets.

370
00:19:43,400 --> 00:19:47,480
Speaker 1: But but certainly I think there is a degree of skepticism.

371
00:19:47,520 --> 00:19:51,440
Speaker 1: But that said, Tom, I think this is a demand

372
00:19:51,520 --> 00:19:55,560
Speaker 1: size sized market rather than supply side. We just had

373
00:19:55,920 --> 00:20:00,960
Speaker 1: the Iranians just announced the fifty billion barrel discovery of

374
00:20:01,119 --> 00:20:04,679
Speaker 1: new oil. And when we consider that this market demand

375
00:20:04,760 --> 00:20:09,560
Speaker 1: decay or demand peaking within the next twenty years. Really,

376
00:20:09,760 --> 00:20:12,600
Speaker 1: you know, the question is how long can demand last

377
00:20:12,760 --> 00:20:15,400
Speaker 1: rather that how much supply is still in the ground? Yeah,

378
00:20:15,440 --> 00:20:18,040
Speaker 1: demand peaking in the next twenty years. One of the

379
00:20:18,040 --> 00:20:22,359
Speaker 1: potential details in the six hundred page Hairsale prospectus that

380
00:20:22,440 --> 00:20:26,840
Speaker 1: was released on Saturday, giving more insight into Aramco's financials,

381
00:20:26,880 --> 00:20:29,320
Speaker 1: which is unusual. It was reversal in course for them

382
00:20:29,840 --> 00:20:32,640
Speaker 1: having denied that in the past as being a possibility

383
00:20:32,800 --> 00:20:36,560
Speaker 1: also though, revealing a sharp drop in profit related to

384
00:20:36,560 --> 00:20:39,080
Speaker 1: the attacks on its facilities in September. How big of

385
00:20:39,080 --> 00:20:42,280
Speaker 1: a concern was that for you? Uh? Well, certainly, I

386
00:20:42,320 --> 00:20:46,600
Speaker 1: think that it is with with with any of that region.

387
00:20:46,960 --> 00:20:50,440
Speaker 1: When you have a one one source that is your

388
00:20:50,440 --> 00:20:53,200
Speaker 1: primary source of income, whether it is for Iraq or

389
00:20:53,359 --> 00:20:56,280
Speaker 1: in Saudi Arabia and so forth, when you see that

390
00:20:56,359 --> 00:20:59,639
Speaker 1: kind of vulnerability in the supply chain. Uh. In the

391
00:20:59,640 --> 00:21:04,439
Speaker 1: process spects of the the younger generation of people around

392
00:21:04,440 --> 00:21:08,920
Speaker 1: the world and their view on fossil fuels, it's not positive. Uh.

393
00:21:09,000 --> 00:21:11,840
Speaker 1: And so my my biggest concern going forward and spend

394
00:21:11,880 --> 00:21:14,080
Speaker 1: my biggest concern because I always thought it was kind

395
00:21:14,080 --> 00:21:18,119
Speaker 1: of odd and worrisome that people were looking at the

396
00:21:18,160 --> 00:21:21,560
Speaker 1: demise of oil as as a as a weapon, as

397
00:21:21,600 --> 00:21:23,920
Speaker 1: a as a price weapon, and they were looking at

398
00:21:23,960 --> 00:21:26,600
Speaker 1: as some kind of with some kind of glee. And

399
00:21:26,680 --> 00:21:29,879
Speaker 1: my concern and this will I am confident, well it

400
00:21:29,960 --> 00:21:32,960
Speaker 1: is bearing out and will only escalate in the years

401
00:21:33,000 --> 00:21:36,120
Speaker 1: to come, is when these economies that have been late

402
00:21:36,200 --> 00:21:39,040
Speaker 1: to the game to diversify in Saudi Arabia with the

403
00:21:39,040 --> 00:21:41,359
Speaker 1: serampical I I p O. Let's face it, there are

404
00:21:41,480 --> 00:21:44,879
Speaker 1: ten years too late with this, I p O. And

405
00:21:44,920 --> 00:21:47,119
Speaker 1: they are not going to get the valuations and the

406
00:21:47,200 --> 00:21:51,240
Speaker 1: long term benefits UH to diversify. So I think it's

407
00:21:51,240 --> 00:21:54,720
Speaker 1: going to lead to an extreme level of of geopolitical

408
00:21:54,920 --> 00:21:58,680
Speaker 1: unrust unlike we've we've ever seen in any of our lifetimes.

409
00:21:58,760 --> 00:22:00,520
Speaker 1: Steven a wife and the politics. Just for a moment,

410
00:22:00,520 --> 00:22:03,000
Speaker 1: I just want to focus on how the stock will behave,

411
00:22:03,080 --> 00:22:05,600
Speaker 1: how will perform the traits of the company relative to

412
00:22:06,000 --> 00:22:07,760
Speaker 1: its peers in the oil market. There was a great

413
00:22:07,840 --> 00:22:10,760
Speaker 1: article over the weekend and Barons about the royalty agreement

414
00:22:11,080 --> 00:22:13,960
Speaker 1: with the Kingdom. The royalty agreement with the Kingdom is

415
00:22:14,040 --> 00:22:17,199
Speaker 1: highly progressive, and I just wondered to what degree that

416
00:22:17,280 --> 00:22:20,040
Speaker 1: will make it more or less sensitive to the oil

417
00:22:20,080 --> 00:22:23,359
Speaker 1: price just in terms of the equity performance. Yeah, I

418
00:22:23,400 --> 00:22:25,679
Speaker 1: think that that And and I don't want to you know,

419
00:22:25,760 --> 00:22:27,360
Speaker 1: I mean, I I appreciate you want to stay away

420
00:22:27,359 --> 00:22:30,400
Speaker 1: from the geopolitics, but but certainly we're with that special

421
00:22:30,480 --> 00:22:35,160
Speaker 1: arrangement between between the House and its relationship with with

422
00:22:35,160 --> 00:22:37,040
Speaker 1: with the state company, and now you want to open

423
00:22:37,080 --> 00:22:40,640
Speaker 1: this up to outside investors. UH. It clearly is going

424
00:22:40,680 --> 00:22:42,760
Speaker 1: to be a sticking point and and quite Frankly, I

425
00:22:43,200 --> 00:22:46,960
Speaker 1: don't have any sort of crystal ball and and this

426
00:22:47,040 --> 00:22:50,040
Speaker 1: is why I'm staying away, uh from from this issue

427
00:22:50,600 --> 00:22:53,320
Speaker 1: at this point, that there are just too many known

428
00:22:53,359 --> 00:22:56,360
Speaker 1: unknowns uh I and I. This is getting a lot

429
00:22:56,400 --> 00:22:59,639
Speaker 1: of height because it is a monumental decision given given

430
00:22:59,680 --> 00:23:02,960
Speaker 1: the c grissy of of the Saudi government. But when

431
00:23:03,040 --> 00:23:06,080
Speaker 1: we look at Western oil companies, western oil companies, the

432
00:23:06,119 --> 00:23:09,720
Speaker 1: likes of BP and Shell, they don't even call themselves

433
00:23:09,800 --> 00:23:12,560
Speaker 1: oil companies anymore. That they are natural gas, their power,

434
00:23:12,640 --> 00:23:16,040
Speaker 1: their energy companies. And I think Saudi is using this

435
00:23:16,160 --> 00:23:21,000
Speaker 1: as a potential way to rebrand themselves as well. But

436
00:23:21,080 --> 00:23:24,520
Speaker 1: when you throw in, uh that that special relationship with

437
00:23:24,520 --> 00:23:27,040
Speaker 1: with the House and and and and what what they're

438
00:23:27,080 --> 00:23:29,240
Speaker 1: going to get, I think there's going to be a

439
00:23:29,600 --> 00:23:32,919
Speaker 1: lot of well or you know, known unknowns as to

440
00:23:33,040 --> 00:23:37,520
Speaker 1: the impact of their of MBS desire to diversify the

441
00:23:37,600 --> 00:23:40,800
Speaker 1: kingdom away from its mainstay of oil output. Yeah, I

442
00:23:40,800 --> 00:23:42,480
Speaker 1: think it's I think it's really markable that you're saying

443
00:23:42,480 --> 00:23:44,760
Speaker 1: if they're ten years too late with this, I p O.

444
00:23:45,160 --> 00:23:46,960
Speaker 1: I do want to just go back to the point

445
00:23:47,320 --> 00:23:50,800
Speaker 1: made in that perspective that global oil demand may peak

446
00:23:50,840 --> 00:23:53,800
Speaker 1: within the next twenty years. They were citing a forecast

447
00:23:53,840 --> 00:23:58,000
Speaker 1: from industry consultant I h S Market. I'm wondering, Uh,

448
00:23:58,119 --> 00:24:01,040
Speaker 1: when do you think that we will see peak oil demand?

449
00:24:01,880 --> 00:24:03,640
Speaker 1: I think it's Lisa. I think it's gonna be sooner

450
00:24:03,720 --> 00:24:07,919
Speaker 1: rather than later. I think long term forecasting was invented

451
00:24:08,160 --> 00:24:12,800
Speaker 1: to make astrology look respectable. So what I I believe

452
00:24:12,880 --> 00:24:15,200
Speaker 1: my eyeballs and and my eyeballs are telling me every

453
00:24:15,240 --> 00:24:18,080
Speaker 1: time that I see a Tesla or a Prius or

454
00:24:18,200 --> 00:24:20,919
Speaker 1: BMW now doubling the amount of evs it's going to

455
00:24:20,960 --> 00:24:23,480
Speaker 1: make two going to deliver it to the market, and

456
00:24:23,480 --> 00:24:26,159
Speaker 1: the decisions by Volvo and so forth. Uh, that is

457
00:24:26,240 --> 00:24:28,840
Speaker 1: oil demand that is lost. It is never coming back.

458
00:24:29,160 --> 00:24:31,960
Speaker 1: I myself, I'm an oil guy. I own an electric

459
00:24:32,040 --> 00:24:35,840
Speaker 1: hybrid SUV my children. I don't envision ever owning a

460
00:24:35,920 --> 00:24:40,679
Speaker 1: gasoline only car. So with regard to demand, Okay, it

461
00:24:40,760 --> 00:24:44,359
Speaker 1: happens sooner rather than later. Stuff. We're gonna use five

462
00:24:45,119 --> 00:24:47,639
Speaker 1: as a potential jumping off point when we peak. I

463
00:24:47,680 --> 00:24:50,080
Speaker 1: think it happens well before that. Steven Shark, thank you

464
00:24:50,160 --> 00:24:53,359
Speaker 1: so much, really appreciate it. We protect the copyright of

465
00:24:53,359 --> 00:25:08,760
Speaker 1: all our guests and particularly Mr Shark, this is a

466
00:25:08,880 --> 00:25:10,800
Speaker 1: joy to have on right now, A lot for a

467
00:25:11,200 --> 00:25:14,920
Speaker 1: thun who was with the Economic Cycle Research Institute. This

468
00:25:15,040 --> 00:25:19,760
Speaker 1: is a venerable approach to thinking about our economy back

469
00:25:19,800 --> 00:25:21,639
Speaker 1: into the thirties. And a gentleman by the name of

470
00:25:21,680 --> 00:25:26,040
Speaker 1: Jeffrey Moore, which centers around E c R I economic

471
00:25:26,160 --> 00:25:30,760
Speaker 1: cycles and that and also the structural changes of the

472
00:25:30,800 --> 00:25:34,760
Speaker 1: American economy. I want to start with an open, open

473
00:25:34,840 --> 00:25:37,959
Speaker 1: conversation as you join us from London today, you and

474
00:25:38,000 --> 00:25:41,320
Speaker 1: I are at Clarridgees. We're having our usual afternoon tay

475
00:25:42,200 --> 00:25:45,240
Speaker 1: and we're having a tay and someone from the United

476
00:25:45,320 --> 00:25:48,480
Speaker 1: Kings turns to you and says, why is the US

477
00:25:48,600 --> 00:25:53,720
Speaker 1: so dominant in technology? What is technology done to your

478
00:25:53,800 --> 00:25:57,919
Speaker 1: cycle research that many, including Jeffrey Moore, didn't have to

479
00:25:57,920 --> 00:26:03,840
Speaker 1: worry about. Well, it's uh, you know, these are disruptors,

480
00:26:04,280 --> 00:26:10,159
Speaker 1: the various innovations, uh, and so it's certainly changing the

481
00:26:10,240 --> 00:26:14,680
Speaker 1: contours of the cycle, the amplitudes of the cycle. Um

482
00:26:14,680 --> 00:26:20,640
Speaker 1: here and there, but um as long as we and

483
00:26:20,640 --> 00:26:22,680
Speaker 1: and by the way, when we do cycle research, we're

484
00:26:22,680 --> 00:26:25,320
Speaker 1: not talking about the last decade or the last couple

485
00:26:25,320 --> 00:26:28,240
Speaker 1: of decades. We're talking about the last couple of centuries

486
00:26:28,960 --> 00:26:33,920
Speaker 1: during which there's been a lot of technological change, you know, um,

487
00:26:37,040 --> 00:26:39,160
Speaker 1: you know these mentions of both all of these things.

488
00:26:39,240 --> 00:26:43,520
Speaker 1: And so what you find is that as you have

489
00:26:43,800 --> 00:26:49,040
Speaker 1: large new innovations, disruptive innovations, UM, they can change the

490
00:26:49,080 --> 00:26:53,000
Speaker 1: contours of the cycle. They can um eventually lead to

491
00:26:53,080 --> 00:26:57,399
Speaker 1: hopefully some productivity growth, some boost and productivity growth. UM.

492
00:26:57,480 --> 00:27:01,160
Speaker 1: But as long as you are in a free market

493
00:27:01,200 --> 00:27:05,880
Speaker 1: oriented economy, you also are going to be contending with

494
00:27:06,320 --> 00:27:10,600
Speaker 1: the business cycle itself. And that we've seen that time

495
00:27:10,640 --> 00:27:14,600
Speaker 1: and time again. We've tried to find the the circumstances

496
00:27:14,640 --> 00:27:19,040
Speaker 1: under which, um, the free market cycle is not expressed,

497
00:27:19,240 --> 00:27:23,280
Speaker 1: and it's fairly limited, I mean, certainly nothing that we're

498
00:27:23,280 --> 00:27:26,400
Speaker 1: dealing with at the moment. So I know your research

499
00:27:26,760 --> 00:27:31,040
Speaker 1: called out that the current global industrial slowdown that we're

500
00:27:31,040 --> 00:27:34,680
Speaker 1: experiencing right now actually began before the trade war began

501
00:27:34,720 --> 00:27:37,240
Speaker 1: in early Is that also just suggest that maybe it

502
00:27:37,280 --> 00:27:41,560
Speaker 1: can start turning before we get any kind of movement

503
00:27:41,600 --> 00:27:46,040
Speaker 1: on the trade deal. Yeah, absolutely it does. UM. So

504
00:27:46,440 --> 00:27:51,040
Speaker 1: I think when when turning points happen, uh, and and

505
00:27:51,080 --> 00:27:55,440
Speaker 1: they usually catch people off guard. UM. The natural instinct

506
00:27:55,480 --> 00:27:57,640
Speaker 1: is to look around and and and look for what's

507
00:27:57,640 --> 00:28:00,439
Speaker 1: salient and maybe connect the dots and say, you know,

508
00:28:00,520 --> 00:28:03,600
Speaker 1: this made that happen. And and certainly the trade war,

509
00:28:03,920 --> 00:28:09,800
Speaker 1: the real onset of the hard trade war developments, uh

510
00:28:10,000 --> 00:28:14,400
Speaker 1: seemed to coincide with the global industrial slowdown that we've

511
00:28:14,440 --> 00:28:17,720
Speaker 1: been experiencing. But actually, as you say that, the industrial

512
00:28:17,720 --> 00:28:22,320
Speaker 1: slowdown began quite a bit earlier. And now everybody is,

513
00:28:22,480 --> 00:28:25,280
Speaker 1: you know, hanging on bated breath, what's the next development

514
00:28:25,320 --> 00:28:27,760
Speaker 1: in the in the trade war to you know, tomorrow

515
00:28:27,880 --> 00:28:29,920
Speaker 1: the President is going to be speaking in New York.

516
00:28:30,280 --> 00:28:32,400
Speaker 1: Is he going to give anything away in terms of

517
00:28:32,600 --> 00:28:35,560
Speaker 1: what the next development is. Everybody's waiting to hear that.

518
00:28:36,000 --> 00:28:41,320
Speaker 1: But meantime, the cycle itself is moving along, and our

519
00:28:41,400 --> 00:28:44,800
Speaker 1: work is showing that the forward looking data the leading

520
00:28:44,840 --> 00:28:49,120
Speaker 1: indicators of global industrial growth, not actual global industrial growth,

521
00:28:49,360 --> 00:28:53,400
Speaker 1: but the leading indicators have have um started to move up.

522
00:28:54,040 --> 00:28:58,040
Speaker 1: And so we are more oriented, we're once more ready

523
00:28:58,080 --> 00:29:01,640
Speaker 1: to see an upturn in global industrial with or without

524
00:29:01,680 --> 00:29:04,040
Speaker 1: the trade war end keep him for another three blocks,

525
00:29:04,120 --> 00:29:10,560
Speaker 1: crisis over. I mean, if if the industrial cycle globally

526
00:29:10,920 --> 00:29:14,160
Speaker 1: is going to see a stabilization, maybe beginnings of a

527
00:29:14,320 --> 00:29:17,160
Speaker 1: turn up. We have to have China driving there, don't

528
00:29:17,200 --> 00:29:20,640
Speaker 1: we What's going on in China? Yeah, it's interesting. What's

529
00:29:20,640 --> 00:29:23,280
Speaker 1: what here? So the US, by the way, the manufacturing

530
00:29:23,280 --> 00:29:27,640
Speaker 1: cycle is still decelerating. Um. Europe, I think is where

531
00:29:27,680 --> 00:29:33,360
Speaker 1: everything is actually started in terms of the global industrial upturn.

532
00:29:33,440 --> 00:29:37,280
Speaker 1: They seem in many ways even just becoming less bad

533
00:29:37,720 --> 00:29:40,600
Speaker 1: to have kind of kicked this off. And you're right, UM,

534
00:29:40,640 --> 00:29:46,000
Speaker 1: in China, UM are leading indicators of global and excuse me,

535
00:29:46,080 --> 00:29:50,920
Speaker 1: of Chinese industrial production growth UM have begun to improve.

536
00:29:51,320 --> 00:29:53,400
Speaker 1: I know that the p m I is the official

537
00:29:53,400 --> 00:29:57,600
Speaker 1: p m I or the Jason p m I are

538
00:29:57,640 --> 00:30:01,520
Speaker 1: giving conflicting signals at the moment. Uh, but our leading

539
00:30:01,520 --> 00:30:05,320
Speaker 1: indicator of Chinese industrial growth is moving to the upside.

540
00:30:05,680 --> 00:30:09,800
Speaker 1: They are participating. I think other kind of ex Asia,

541
00:30:09,880 --> 00:30:13,800
Speaker 1: extra Japan economies are already starting to participate as well.

542
00:30:14,040 --> 00:30:15,640
Speaker 1: Last and very quickly here and I want to come

543
00:30:15,680 --> 00:30:18,320
Speaker 1: back and continuing this. Buried in your report is a

544
00:30:18,400 --> 00:30:21,760
Speaker 1: trench in four or five paragraphs where you are adamant

545
00:30:21,800 --> 00:30:25,320
Speaker 1: manufacturing is not flat on its back. What's the vector

546
00:30:25,400 --> 00:30:29,400
Speaker 1: on US manufacturing right now? Uh? Well, we we are,

547
00:30:29,480 --> 00:30:31,640
Speaker 1: we are at the end of the line. I'm afraid

548
00:30:31,680 --> 00:30:36,200
Speaker 1: in terms of the global manufacturing cycles, we went in

549
00:30:37,120 --> 00:30:40,360
Speaker 1: to the downturn later than the rest of the world,

550
00:30:40,840 --> 00:30:44,320
Speaker 1: and we do not have any clear signs of an

551
00:30:44,360 --> 00:30:48,760
Speaker 1: upturn there yet. And and in US manufacturing, and we

552
00:30:48,840 --> 00:30:52,160
Speaker 1: are seeing some bottoming in our in our would hopefully

553
00:30:52,200 --> 00:30:54,440
Speaker 1: we don't know that it's bottoming, but perhaps bottoming in

554
00:30:54,520 --> 00:30:58,920
Speaker 1: the US manufacturing indicators. The problem, the fly in the

555
00:30:59,040 --> 00:31:03,760
Speaker 1: ointment in the United's dates is the employment cycle, the

556
00:31:03,840 --> 00:31:07,240
Speaker 1: job cycle that is still cycling down. And I think

557
00:31:07,240 --> 00:31:09,800
Speaker 1: it's still happening in manufacturing. It gets a little difficult

558
00:31:09,800 --> 00:31:13,120
Speaker 1: to read with the GM strike um, but it's it's there,

559
00:31:13,200 --> 00:31:15,600
Speaker 1: and that's worrisome. This has been wonderful lot from Thank

560
00:31:15,600 --> 00:31:17,720
Speaker 1: you so much to tell about this with the Economic

561
00:31:17,760 --> 00:31:23,960
Speaker 1: Cycle Research Institute UH from London today. Thanks for listening

562
00:31:24,000 --> 00:31:28,560
Speaker 1: to the Bloomberg Surveillance podcast. Subscribe and listen to interviews

563
00:31:28,560 --> 00:31:33,800
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

564
00:31:34,360 --> 00:31:37,720
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You

565
00:31:37,720 --> 00:31:41,120
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio