1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,640 Speaker 2: Terminal and the Bloomberg Business App. Lori Calvicina of RBC 10 00:00:37,800 --> 00:00:40,360 Speaker 2: saying this for a material move higher in the market 11 00:00:40,400 --> 00:00:42,519 Speaker 2: by year end to be justified on the math, we 12 00:00:42,600 --> 00:00:45,199 Speaker 2: think investors will need to start focusing on the outlook 13 00:00:45,240 --> 00:00:49,479 Speaker 2: for twenty five, where visibility still seems a bit limited. 14 00:00:49,680 --> 00:00:51,440 Speaker 3: Laurie's with us here in New York. Lori, good morning 15 00:00:51,479 --> 00:00:51,640 Speaker 3: to you. 16 00:00:51,960 --> 00:00:54,080 Speaker 2: Thanks for having let's talk about twenty twenty five. I 17 00:00:54,080 --> 00:00:56,160 Speaker 2: think it's so difficult to do without really knowing what 18 00:00:56,160 --> 00:00:57,040 Speaker 2: happens in November. 19 00:00:57,160 --> 00:00:58,560 Speaker 3: How hard is it to answer that question? 20 00:00:58,600 --> 00:01:01,040 Speaker 4: Well, I think that's a great point. The exact point 21 00:01:01,040 --> 00:01:03,720 Speaker 4: of client I spoke with last week made And it's 22 00:01:03,760 --> 00:01:06,160 Speaker 4: interesting because, on the one hand, I have equity investors 23 00:01:06,280 --> 00:01:08,399 Speaker 4: US based ones at least saying, oh, you know, there's 24 00:01:08,400 --> 00:01:10,240 Speaker 4: not a lot to do on the election. We're not 25 00:01:10,280 --> 00:01:13,280 Speaker 4: putting on any trades, and it's like, well, but visibility 26 00:01:13,319 --> 00:01:16,000 Speaker 4: is limited, and you know, what happens in November really matter? 27 00:01:16,080 --> 00:01:16,800 Speaker 3: So which one is it? 28 00:01:17,640 --> 00:01:19,800 Speaker 4: I think you sort of a lack of clarity about 29 00:01:19,840 --> 00:01:22,200 Speaker 4: what to do is also contributing to the fog. 30 00:01:22,360 --> 00:01:24,800 Speaker 2: You had a line that we repeated over and over 31 00:01:24,800 --> 00:01:26,840 Speaker 2: again on this program for the last several months. You 32 00:01:26,880 --> 00:01:29,320 Speaker 2: said that talking about the election with clients was like 33 00:01:29,440 --> 00:01:30,160 Speaker 2: staring at the sun. 34 00:01:30,400 --> 00:01:31,800 Speaker 3: Is it still like staring at the sun? 35 00:01:31,920 --> 00:01:34,119 Speaker 4: It shifted a little bit, and you know, my joke's 36 00:01:34,120 --> 00:01:37,120 Speaker 4: not funny anymore post eclipse. But the reality is now 37 00:01:37,120 --> 00:01:39,520 Speaker 4: I'm using the line safety and numbers because what I'm 38 00:01:39,560 --> 00:01:42,360 Speaker 4: sensying from the US again, the US based people, not 39 00:01:42,400 --> 00:01:44,440 Speaker 4: the people based outside of the US, but the US 40 00:01:44,520 --> 00:01:47,160 Speaker 4: based people. They still don't really want to talk about 41 00:01:47,160 --> 00:01:49,120 Speaker 4: the election all that much. And again I've heard some 42 00:01:49,320 --> 00:01:52,800 Speaker 4: very impassioned defenses of I traded this in twenty sixteen, 43 00:01:52,800 --> 00:01:54,760 Speaker 4: I traded this in twenty twenty. I'm not trading this 44 00:01:54,840 --> 00:01:56,720 Speaker 4: again kind of coming out of the hedge fund community. 45 00:01:56,720 --> 00:01:58,360 Speaker 4: The long goalies are like, yeah, I'll believe it when 46 00:01:58,400 --> 00:02:00,400 Speaker 4: I see it. But the long goal only is what 47 00:02:00,440 --> 00:02:02,840 Speaker 4: I'm hearing from them is that they're getting questions from 48 00:02:02,880 --> 00:02:05,880 Speaker 4: their clients primarily based in Europe and Canada and Asia 49 00:02:06,000 --> 00:02:08,359 Speaker 4: and other places outside the US. They're having to come 50 00:02:08,440 --> 00:02:10,720 Speaker 4: up with talking points and they're having to dust off 51 00:02:10,720 --> 00:02:13,880 Speaker 4: the historical playbooks and come up with something to say. Frankly, 52 00:02:14,600 --> 00:02:16,720 Speaker 4: I don't think there is a lot of conviction from 53 00:02:16,720 --> 00:02:19,320 Speaker 4: investors and again US based ones on which way the 54 00:02:19,360 --> 00:02:21,240 Speaker 4: outcome is going to be. But there is a general 55 00:02:21,280 --> 00:02:23,680 Speaker 4: sense that Congress is going to be divided and that 56 00:02:23,680 --> 00:02:25,960 Speaker 4: you're going to have a split government generally, so not 57 00:02:26,160 --> 00:02:27,920 Speaker 4: much is going to get done down the road. But 58 00:02:27,960 --> 00:02:29,760 Speaker 4: that's really where people are right now. So we joke 59 00:02:29,800 --> 00:02:31,960 Speaker 4: safety in numbers, let's talk about the charts, let's talk 60 00:02:31,960 --> 00:02:33,720 Speaker 4: about the data, and we'll keep you all out of fights. 61 00:02:33,840 --> 00:02:36,000 Speaker 5: Well, isn't that conviction itself that there's going to be 62 00:02:36,040 --> 00:02:37,080 Speaker 5: gridlock in Washington? 63 00:02:37,400 --> 00:02:39,720 Speaker 4: I think so, And look that is my base case 64 00:02:39,760 --> 00:02:41,800 Speaker 4: as well. But what I've told people is if you 65 00:02:42,080 --> 00:02:44,360 Speaker 4: kind of again separate the two investor bases, And if 66 00:02:44,360 --> 00:02:46,840 Speaker 4: you talk to non people who don't sit in the US, 67 00:02:46,880 --> 00:02:49,800 Speaker 4: they've generally been leaning into the Republican sweep idea for 68 00:02:49,880 --> 00:02:53,320 Speaker 4: quite some time. So you know, it's always a question, right, 69 00:02:53,360 --> 00:02:56,280 Speaker 4: what are investors expecting? What's priced in? Different parts of 70 00:02:56,280 --> 00:02:58,520 Speaker 4: the market are pricing in different things, I think, but 71 00:02:58,560 --> 00:03:01,440 Speaker 4: I don't think anybody's seen in the Democratic sweep. And 72 00:03:01,440 --> 00:03:04,120 Speaker 4: even though that's not high on my radar either, I 73 00:03:04,160 --> 00:03:06,120 Speaker 4: have been telling people you got to think about it 74 00:03:06,160 --> 00:03:07,519 Speaker 4: a little bit, just because no one. 75 00:03:07,440 --> 00:03:09,120 Speaker 5: Is okay, So what if you do think about it 76 00:03:09,160 --> 00:03:11,320 Speaker 5: and you do say to yourself, okay, this is how 77 00:03:11,320 --> 00:03:15,040 Speaker 5: I would position for blue sweep versus red sweep. What's 78 00:03:15,080 --> 00:03:16,280 Speaker 5: the number one trade for each? 79 00:03:16,720 --> 00:03:19,079 Speaker 4: So I think, you know, I heard one comment from 80 00:03:19,080 --> 00:03:21,679 Speaker 4: a non US investor, you know, when we were talking 81 00:03:21,720 --> 00:03:24,000 Speaker 4: about this concept of divided government, and they said, oh, 82 00:03:24,040 --> 00:03:26,960 Speaker 4: I guess no more fiscal stimulus. So I thought that 83 00:03:27,040 --> 00:03:28,600 Speaker 4: was I thought that was interesting. It was a very 84 00:03:28,639 --> 00:03:31,720 Speaker 4: you know, kind of kind innocent little comment. But I 85 00:03:31,960 --> 00:03:34,280 Speaker 4: thought that was really, you know, just sort of interesting 86 00:03:34,320 --> 00:03:38,240 Speaker 4: because there's been so much consternation about, you know, well, 87 00:03:38,280 --> 00:03:40,360 Speaker 4: this market shouldn't be this high, you know, gush darn 88 00:03:40,400 --> 00:03:44,200 Speaker 4: that fiscal stimulus, and you know, sort of taking that 89 00:03:44,320 --> 00:03:46,680 Speaker 4: idea out from out from you know, kind of the 90 00:03:46,680 --> 00:03:49,920 Speaker 4: market backdrop I think is puzzling, you know, to some investors. 91 00:03:50,480 --> 00:03:52,600 Speaker 4: To be honest, though, A Marie, we did a survey, 92 00:03:52,720 --> 00:03:54,560 Speaker 4: you know, back in kind of early to mid April, 93 00:03:54,560 --> 00:03:56,880 Speaker 4: where we actually asked our investors what would you you know, 94 00:03:56,920 --> 00:03:58,280 Speaker 4: what would you buy, what would you sell? What's your 95 00:03:58,320 --> 00:04:01,880 Speaker 4: outlook for different industries under the different scenarios and the 96 00:04:01,920 --> 00:04:04,440 Speaker 4: Democratic sweep scenario. I think we only had like seventeen 97 00:04:04,480 --> 00:04:07,200 Speaker 4: percent of our analysts were bearish, Fewer than that were bullish. 98 00:04:07,240 --> 00:04:10,200 Speaker 4: Most were in the neutral camp. Generally, it's the healthcare 99 00:04:10,280 --> 00:04:12,840 Speaker 4: sectors and the energy sectors that come up as bullish 100 00:04:12,880 --> 00:04:16,120 Speaker 4: or bearish under different outcomes. You talk to my healthcare analysts, 101 00:04:16,120 --> 00:04:18,040 Speaker 4: they're going to downplay the impact and tell you they're 102 00:04:18,080 --> 00:04:20,840 Speaker 4: not really expecting too much out of either candidate depending 103 00:04:20,839 --> 00:04:23,520 Speaker 4: on who wins. And with energy, I do, frankly wonder 104 00:04:23,560 --> 00:04:25,440 Speaker 4: if people are just looking back at twenty twenty and 105 00:04:25,440 --> 00:04:27,680 Speaker 4: don't realize that Biden's running a very different campaign than 106 00:04:27,720 --> 00:04:28,400 Speaker 4: he was back then. 107 00:04:28,520 --> 00:04:31,039 Speaker 6: He said, it's a kind of innocent comment to think 108 00:04:31,040 --> 00:04:33,040 Speaker 6: that there's going to be no fiscal stimulus with SAVIDI 109 00:04:33,080 --> 00:04:35,440 Speaker 6: governmor are you basically saying there is going to be 110 00:04:35,480 --> 00:04:38,600 Speaker 6: fiscal stimulus additional rounds regardless of who wags you know. 111 00:04:38,600 --> 00:04:40,440 Speaker 4: I don't know, but I will tell you that when 112 00:04:40,480 --> 00:04:42,320 Speaker 4: I look at Trump and Biden and I look at 113 00:04:42,360 --> 00:04:44,040 Speaker 4: the different issues, and you know, we kind of went 114 00:04:44,080 --> 00:04:46,719 Speaker 4: through the Trump campaign website pretty closely. I know there's 115 00:04:46,720 --> 00:04:48,680 Speaker 4: a lot of other stuff out there, but you know, 116 00:04:48,760 --> 00:04:50,839 Speaker 4: it's sort of a struggle in our seat, frankly to 117 00:04:50,839 --> 00:04:53,040 Speaker 4: figure out what to focus on and what's noise and 118 00:04:53,080 --> 00:04:55,719 Speaker 4: what's real. But when I kind of go through, you know, 119 00:04:55,800 --> 00:04:57,440 Speaker 4: kind of cut through the rhetoric and go through the 120 00:04:57,440 --> 00:05:00,720 Speaker 4: policy ideas of different of the two different camps, it 121 00:05:00,760 --> 00:05:02,839 Speaker 4: seems like they're both you know, talking about wanting to 122 00:05:02,880 --> 00:05:05,279 Speaker 4: keep jobs in the US. There's a big commitment to 123 00:05:05,360 --> 00:05:08,120 Speaker 4: restoring and I talk to investors, they think both these 124 00:05:08,160 --> 00:05:11,280 Speaker 4: candidates are inflationary in terms of their views on trade 125 00:05:11,320 --> 00:05:13,920 Speaker 4: and immigration. So I will say I think also US 126 00:05:14,000 --> 00:05:17,120 Speaker 4: based investors again are struggling to come up with assalient 127 00:05:17,160 --> 00:05:20,680 Speaker 4: differences from an investment perspective between the two candidates. 128 00:05:20,160 --> 00:05:23,320 Speaker 6: At this point, then why are you just neutral? Why 129 00:05:23,400 --> 00:05:25,520 Speaker 6: are you feeling not that great about stocks given the 130 00:05:25,520 --> 00:05:28,200 Speaker 6: fact that probably either candidate is going to try to 131 00:05:28,440 --> 00:05:31,560 Speaker 6: stimulate the economy after they wig, regardless of which party. 132 00:05:31,640 --> 00:05:33,120 Speaker 4: Well, again, we go back to our base case and 133 00:05:33,200 --> 00:05:36,560 Speaker 4: politics one oh one, and you know my politics one 134 00:05:36,600 --> 00:05:38,680 Speaker 4: o one class Larry Sabadela used to always tell us 135 00:05:38,680 --> 00:05:41,120 Speaker 4: all politics is local. But he also reminded us how 136 00:05:41,160 --> 00:05:43,839 Speaker 4: bills get created. And that's what I find I educate 137 00:05:43,839 --> 00:05:45,880 Speaker 4: a lot of investors about. It doesn't matter what these 138 00:05:45,920 --> 00:05:48,640 Speaker 4: two candidates say, right, You've actually got to have cooperation 139 00:05:49,040 --> 00:05:51,560 Speaker 4: from both chambers of Congress to get anything done. And 140 00:05:51,600 --> 00:05:53,680 Speaker 4: as you look at the landscape, do you really see, 141 00:05:53,760 --> 00:05:57,560 Speaker 4: unless you have a United government, anybody cooperating with anybody 142 00:05:57,560 --> 00:06:00,520 Speaker 4: in the next four years? Me, not so much. So 143 00:06:00,800 --> 00:06:03,000 Speaker 4: you know that, frankly, I think informs our view and 144 00:06:03,040 --> 00:06:05,240 Speaker 4: a lot of investors' views, Like, on the one hand, 145 00:06:05,279 --> 00:06:07,599 Speaker 4: doesn't really matter, is anything actually going to be able 146 00:06:07,640 --> 00:06:08,080 Speaker 4: to get done? 147 00:06:08,200 --> 00:06:10,640 Speaker 2: We're looking out to November because there's very little happening 148 00:06:10,680 --> 00:06:13,039 Speaker 2: over the next week or so. What we saw happen 149 00:06:13,120 --> 00:06:15,000 Speaker 2: last week, and I think we should go over it 150 00:06:15,160 --> 00:06:16,400 Speaker 2: we saw a lot of people put a lot of 151 00:06:16,440 --> 00:06:18,719 Speaker 2: weight on what most people would consider to be second 152 00:06:18,720 --> 00:06:21,120 Speaker 2: tier economic data, which is an S and P global 153 00:06:21,279 --> 00:06:22,479 Speaker 2: PMI in America. 154 00:06:22,560 --> 00:06:24,640 Speaker 3: Surprising to the upside. 155 00:06:24,200 --> 00:06:26,240 Speaker 2: Ignoring in video and video was up on the week 156 00:06:26,279 --> 00:06:29,680 Speaker 2: by fifteen percent S and P five hundred, dead flat. 157 00:06:29,760 --> 00:06:30,520 Speaker 3: What was that about? 158 00:06:30,760 --> 00:06:33,000 Speaker 4: So I don't know so much about that particular data point, 159 00:06:33,040 --> 00:06:34,720 Speaker 4: But if I rewind a couple weeks ago, I was 160 00:06:34,760 --> 00:06:36,880 Speaker 4: out on the road and people were freaking out about 161 00:06:36,920 --> 00:06:39,719 Speaker 4: the employment cost Index and I didn't even really even 162 00:06:39,760 --> 00:06:42,599 Speaker 4: remember that that was a thing. And then the next 163 00:06:42,640 --> 00:06:44,920 Speaker 4: week investors were making fun of the people who were 164 00:06:45,000 --> 00:06:47,560 Speaker 4: freaking out about that the prior week. Sure, so I 165 00:06:47,600 --> 00:06:49,680 Speaker 4: think it all goes back to if you look at 166 00:06:49,680 --> 00:06:52,040 Speaker 4: twenty twenty five again, and we want to be forward looking, 167 00:06:52,040 --> 00:06:53,800 Speaker 4: there's a lot of fog out there. There's a lot 168 00:06:53,800 --> 00:06:57,840 Speaker 4: of clouds, not necessarily storm clouds, but just lack of visibility, 169 00:06:58,160 --> 00:06:59,920 Speaker 4: and we're all just stuck. 170 00:06:59,640 --> 00:07:00,880 Speaker 3: Talking about the FED. 171 00:07:01,560 --> 00:07:03,760 Speaker 4: I joked with a friend of mine recently that you know, 172 00:07:03,760 --> 00:07:06,360 Speaker 4: in equity land, we've all had to become rate strategists 173 00:07:06,400 --> 00:07:08,400 Speaker 4: and you know, kind of make friends with the economists 174 00:07:09,000 --> 00:07:12,800 Speaker 4: and so any little breadcrumb of information that can shed 175 00:07:12,880 --> 00:07:15,280 Speaker 4: light on the will they won't they? When they? You know, 176 00:07:15,280 --> 00:07:17,200 Speaker 4: when are they going to go? That's all people seem 177 00:07:17,240 --> 00:07:19,720 Speaker 4: to care about right now. And I think investing has 178 00:07:19,840 --> 00:07:22,800 Speaker 4: changed over the years. We all get access to information, 179 00:07:22,840 --> 00:07:25,040 Speaker 4: you know, whether it's the terminal or these other data sources. 180 00:07:25,320 --> 00:07:29,000 Speaker 4: We can analyze things much much faster. That accelerated during COVID. 181 00:07:29,240 --> 00:07:32,440 Speaker 4: So people are looking for any incremental piece of data 182 00:07:32,480 --> 00:07:34,600 Speaker 4: that's not widely watched to get some sort of clue 183 00:07:34,600 --> 00:07:35,160 Speaker 4: on this debate. 184 00:07:35,240 --> 00:07:37,600 Speaker 2: Do you think we are just as sensitive to upside 185 00:07:37,600 --> 00:07:40,280 Speaker 2: surprises as we are downside surprises? And with that in mind, 186 00:07:40,560 --> 00:07:42,960 Speaker 2: what do you advocate for inequities at the moment? 187 00:07:43,360 --> 00:07:46,840 Speaker 4: So in my mind, the rotation thesis still makes a 188 00:07:46,840 --> 00:07:48,720 Speaker 4: lot of sense, and I actually can see that being 189 00:07:48,760 --> 00:07:52,080 Speaker 4: consistent with a sideways market. If you think about the 190 00:07:52,160 --> 00:07:54,760 Speaker 4: rate of upward revisions as a good gauge for earning sentiment, 191 00:07:54,840 --> 00:07:57,600 Speaker 4: it's actually shifted back in favor of the top ten 192 00:07:57,680 --> 00:07:59,720 Speaker 4: market cap names in the S and P five hundred, 193 00:07:59,840 --> 00:08:02,200 Speaker 4: But throughout most of this reporting season, most of the 194 00:08:02,320 --> 00:08:04,840 Speaker 4: upper revisions were coming for the other four hundred ninety 195 00:08:04,840 --> 00:08:08,000 Speaker 4: stocks In the SMP, so I think, you know, we've 196 00:08:08,080 --> 00:08:10,160 Speaker 4: seen a little bit of bumps in that, but generally 197 00:08:10,600 --> 00:08:13,880 Speaker 4: that megacap growth trade is still quite expensive. It's still 198 00:08:13,920 --> 00:08:16,800 Speaker 4: quite crowded, and it's got decelerating earnings growths and that 199 00:08:16,920 --> 00:08:21,160 Speaker 4: always makes growth investors nervous. Now, the rotation thesis, I 200 00:08:21,160 --> 00:08:23,640 Speaker 4: think it's not just about valuation, but it's also about 201 00:08:23,640 --> 00:08:25,720 Speaker 4: the economic tailwinds that have been building. And if you 202 00:08:25,760 --> 00:08:27,920 Speaker 4: look at twenty twenty four GDP, it's kind of stalled 203 00:08:27,920 --> 00:08:30,760 Speaker 4: out around two point four percent. That's right at average. 204 00:08:30,760 --> 00:08:33,439 Speaker 4: We haven't seen any movement to the twenty twenty five 205 00:08:33,520 --> 00:08:35,200 Speaker 4: numbers yet, which are still sitting around. 206 00:08:35,000 --> 00:08:36,920 Speaker 3: One to seven. That is weak GDP. 207 00:08:37,160 --> 00:08:39,400 Speaker 4: And that's why I feel a little bit stuck right 208 00:08:39,440 --> 00:08:42,000 Speaker 4: now because to really get excited on twenty twenty five, 209 00:08:42,600 --> 00:08:44,400 Speaker 4: I need to see that number go up, and it's not. 210 00:08:44,559 --> 00:08:46,440 Speaker 4: And it's not really going down either. It's not doing 211 00:08:46,480 --> 00:08:49,480 Speaker 4: anything now the downside, I think your question is brilliant, 212 00:08:49,520 --> 00:08:51,679 Speaker 4: you know, sort of the tail risks on both sides. 213 00:08:51,960 --> 00:08:54,360 Speaker 4: What could drive us down? I think we're pretty fairly 214 00:08:54,440 --> 00:08:56,440 Speaker 4: priced for a FED that you know, kind of maybe 215 00:08:56,480 --> 00:08:59,679 Speaker 4: cuts once moderating inflation, maybe a little stickier than we 216 00:08:59,760 --> 00:09:02,720 Speaker 4: end surely thought. But if we start to really see 217 00:09:03,000 --> 00:09:06,439 Speaker 4: inflation expectations deteriorate, you know, in terms of moving up, 218 00:09:06,760 --> 00:09:09,319 Speaker 4: if we start to see the Fed narrative fall apart, again, 219 00:09:09,360 --> 00:09:11,240 Speaker 4: there's a little bit of downside risk to this market, 220 00:09:11,240 --> 00:09:12,559 Speaker 4: and I think that's underappreciated. 221 00:09:12,640 --> 00:09:14,880 Speaker 2: Flying blind into twenty five is becoming a little bit 222 00:09:14,920 --> 00:09:17,400 Speaker 2: of a thing. Lori Cavsen and there F RPC. 223 00:09:27,520 --> 00:09:28,280 Speaker 3: Joining us now. 224 00:09:28,280 --> 00:09:31,520 Speaker 2: Prat s ReRAM Farcleys and Debor Cunning of Federated Hermes 225 00:09:31,559 --> 00:09:33,360 Speaker 2: for a conversation about the Federal Reserve pleasure. 226 00:09:33,400 --> 00:09:34,080 Speaker 3: I want to start with you. 227 00:09:34,080 --> 00:09:37,079 Speaker 2: You've talked about the healthy skepticism you have about the 228 00:09:37,120 --> 00:09:40,680 Speaker 2: degree of restrictiveness this Federal Reserve has with this policy rate, 229 00:09:40,960 --> 00:09:41,840 Speaker 2: with this economy. 230 00:09:42,000 --> 00:09:42,880 Speaker 3: Where'd you stand on that? 231 00:09:42,960 --> 00:09:43,160 Speaker 7: Now? 232 00:09:45,040 --> 00:09:46,520 Speaker 8: Hi, thanks for having me on the show. 233 00:09:47,280 --> 00:09:49,600 Speaker 9: Yes, we've had our doubts. 234 00:09:49,280 --> 00:09:53,720 Speaker 8: About if policy is restrictive enough, and I think you know, 235 00:09:53,840 --> 00:09:56,959 Speaker 8: one thing that keeps fueling that doubt is just given 236 00:09:57,000 --> 00:10:02,080 Speaker 8: how resilient the macroeconomic backdrob remain. You know, we've we 237 00:10:02,080 --> 00:10:06,679 Speaker 8: we saw you know, pretty firm data on spending in 238 00:10:06,760 --> 00:10:09,840 Speaker 8: Q one UH and honestly, our take on. 239 00:10:09,720 --> 00:10:10,480 Speaker 9: The retail sales. 240 00:10:10,520 --> 00:10:13,800 Speaker 8: The latest retail sales print is really that maybe demand 241 00:10:13,960 --> 00:10:17,640 Speaker 8: just normalized after a very big March increased, and there's 242 00:10:17,840 --> 00:10:20,839 Speaker 8: you know, the fundamentals for the US consumer still looks 243 00:10:20,840 --> 00:10:25,199 Speaker 8: pretty firm. And I think, you know, we we echo 244 00:10:25,320 --> 00:10:27,400 Speaker 8: what we learned from the minutes that there is some 245 00:10:27,600 --> 00:10:31,040 Speaker 8: uncertainty regarding the restrictiveness of monitory pantacy. 246 00:10:31,600 --> 00:10:36,160 Speaker 2: Debrah, how skeptically you you know, I'm probably not quite 247 00:10:36,200 --> 00:10:37,040 Speaker 2: that skeptical. 248 00:10:37,120 --> 00:10:41,800 Speaker 1: I do believe that even in an environment where inflation 249 00:10:42,000 --> 00:10:45,360 Speaker 1: remains at three to four percent, five and a quarter 250 00:10:45,400 --> 00:10:48,959 Speaker 1: to five and a half, with the YO curve fairly 251 00:10:49,080 --> 00:10:52,360 Speaker 1: flat inverted to some degrees, you go further out of 252 00:10:52,400 --> 00:10:56,760 Speaker 1: the curve where you know, expectations are different from a 253 00:10:56,800 --> 00:11:00,400 Speaker 1: timeframe standpoint. But I do believe, given where we are 254 00:11:00,720 --> 00:11:04,600 Speaker 1: from a standpoint of growth in the economy, where we 255 00:11:04,640 --> 00:11:08,800 Speaker 1: are from inflationary levels having you know, come down as 256 00:11:08,800 --> 00:11:10,839 Speaker 1: far as they are, but still with the ways to go, 257 00:11:11,520 --> 00:11:14,720 Speaker 1: that the level that is currently being dictated in the 258 00:11:14,760 --> 00:11:18,680 Speaker 1: market at five plus percent, you know, for the money markets, 259 00:11:18,720 --> 00:11:23,280 Speaker 1: five minus percent small amounts for the bond markets, seems 260 00:11:23,320 --> 00:11:26,600 Speaker 1: to be doing its job. And I feel like the 261 00:11:26,679 --> 00:11:30,120 Speaker 1: FED rhetoric that we have been hearing for pretty much 262 00:11:31,160 --> 00:11:34,679 Speaker 1: from from everyone since the last meeting has been that 263 00:11:34,800 --> 00:11:36,840 Speaker 1: it's high enough, it doesn't need to go higher at 264 00:11:36,840 --> 00:11:39,040 Speaker 1: this point. So I feel like we're going to don't 265 00:11:39,040 --> 00:11:41,160 Speaker 1: fight the FED type of trade at this point. 266 00:11:41,400 --> 00:11:41,760 Speaker 3: That's said. 267 00:11:41,760 --> 00:11:43,040 Speaker 6: Dever, do you think it would be a mistake to 268 00:11:43,040 --> 00:11:44,960 Speaker 6: cut race here, given the fact that so many people 269 00:11:45,000 --> 00:11:48,440 Speaker 6: are seeing enough momentum in the economy to really risk 270 00:11:48,480 --> 00:11:50,400 Speaker 6: the potential for reacceleration and fleetion. 271 00:11:52,000 --> 00:11:52,360 Speaker 3: I do. 272 00:11:52,440 --> 00:11:54,320 Speaker 1: I think we're not to the most We're not to 273 00:11:54,400 --> 00:11:57,040 Speaker 1: the time period that we need to see in place 274 00:11:57,320 --> 00:11:59,720 Speaker 1: or touch due to inflation. Yet at this point we 275 00:11:59,800 --> 00:12:02,160 Speaker 1: have seen some you know, maybe cracks in some of 276 00:12:02,200 --> 00:12:05,920 Speaker 1: the data, you know, barring some of the secondsier data 277 00:12:05,920 --> 00:12:07,800 Speaker 1: that that Mike was talking about earlier and that you 278 00:12:07,840 --> 00:12:10,200 Speaker 1: were all speaking about. I think, you know, when you 279 00:12:10,280 --> 00:12:13,000 Speaker 1: look at some of the employment statistics, if you look 280 00:12:13,120 --> 00:12:16,360 Speaker 1: at you know, the Jolts data, maybe some of the 281 00:12:16,360 --> 00:12:19,840 Speaker 1: broader indices. From an inflationary perspective, it certainly is not 282 00:12:20,080 --> 00:12:22,640 Speaker 1: what I would call a crack that turns into you know, 283 00:12:22,679 --> 00:12:25,040 Speaker 1: a big fisher or canyon. It's just something that I 284 00:12:25,080 --> 00:12:28,679 Speaker 1: think probably takes the growth side of the equation down 285 00:12:28,720 --> 00:12:32,000 Speaker 1: a little bit, more dependent upon the consumer, more dependent 286 00:12:32,200 --> 00:12:36,280 Speaker 1: upon services than goods, and all of that plays into, 287 00:12:36,520 --> 00:12:38,559 Speaker 1: you know, sort of keeping rates where they are. I 288 00:12:38,559 --> 00:12:43,120 Speaker 1: don't think the Fed is at this point in any need, 289 00:12:43,400 --> 00:12:46,560 Speaker 1: nor are they being compelled to move rates in either direction. 290 00:12:46,800 --> 00:12:47,880 Speaker 6: Pusha what's your take on this? 291 00:12:47,960 --> 00:12:48,760 Speaker 9: Tubsesaurius A. 292 00:12:48,800 --> 00:12:50,800 Speaker 6: Strateigis was on earlier and he was saying that it 293 00:12:50,840 --> 00:12:53,079 Speaker 6: would be a policy error for the Fetcher reserve to 294 00:12:53,120 --> 00:12:55,120 Speaker 6: cut this year, given the fact that there is so 295 00:12:55,200 --> 00:12:58,360 Speaker 6: much momentum and a lot of in the pipeline inflationary 296 00:12:58,400 --> 00:13:00,480 Speaker 6: pressure that's going to come through next year. 297 00:13:00,520 --> 00:13:01,439 Speaker 9: Do you agree? 298 00:13:02,720 --> 00:13:02,800 Speaker 10: So? 299 00:13:02,800 --> 00:13:05,160 Speaker 8: I think it really depends on how the data evolved 300 00:13:05,200 --> 00:13:08,880 Speaker 8: here on. You know, our own baseline expectation is that 301 00:13:08,960 --> 00:13:12,240 Speaker 8: perhaps they will find an opportunity to initiate a rate 302 00:13:12,280 --> 00:13:16,520 Speaker 8: cut this year, you know, most likely in September, equally 303 00:13:16,640 --> 00:13:20,319 Speaker 8: likely in December, just depending on you know, how the data, 304 00:13:20,400 --> 00:13:24,880 Speaker 8: particularly the inflation prints play out, and and if we indeed, 305 00:13:24,960 --> 00:13:27,280 Speaker 8: you know, get a series of point two percent month 306 00:13:27,360 --> 00:13:30,280 Speaker 8: or a month on core pyce and you know that 307 00:13:30,280 --> 00:13:33,439 Speaker 8: that evidence accumulates, I think it will be very hard 308 00:13:33,559 --> 00:13:37,880 Speaker 8: for there would be no reason why they remain on hold. 309 00:13:37,880 --> 00:13:39,920 Speaker 8: I think they can, you know, get their foot in 310 00:13:40,080 --> 00:13:42,720 Speaker 8: and at least get one rate cut for it. From 311 00:13:42,760 --> 00:13:45,840 Speaker 8: a from a risk management perspective, you know, policy would 312 00:13:45,880 --> 00:13:49,760 Speaker 8: still be relatively restrictive in that world, but you know 313 00:13:50,040 --> 00:13:51,800 Speaker 8: that will be a nod to the fact that the 314 00:13:51,840 --> 00:13:54,080 Speaker 8: disinflationary progress has started. 315 00:13:54,640 --> 00:13:56,600 Speaker 2: I'm pretty sure. I think this is the struggle we 316 00:13:56,640 --> 00:13:58,839 Speaker 2: always have. We all know it's about the economic data. 317 00:13:58,920 --> 00:14:03,000 Speaker 2: But what economic data? Do you ignore the solid jobless claims? 318 00:14:03,280 --> 00:14:06,200 Speaker 2: Do you maybe put some emphasis on the slow down 319 00:14:06,240 --> 00:14:08,360 Speaker 2: and reas house salves, do you put some weight on the. 320 00:14:08,280 --> 00:14:09,840 Speaker 3: PMI from last week? 321 00:14:09,840 --> 00:14:12,319 Speaker 2: Of all things, where do you place the most emphasis 322 00:14:12,360 --> 00:14:14,199 Speaker 2: right now and the incoming information? And what do you 323 00:14:14,280 --> 00:14:15,880 Speaker 2: choose to discount to ignore? 324 00:14:17,280 --> 00:14:19,200 Speaker 8: Well, I think at this point we can't choose to 325 00:14:19,240 --> 00:14:22,440 Speaker 8: discount or ignore anything. We know that you know, the 326 00:14:23,080 --> 00:14:26,120 Speaker 8: FED is highly data dependent and the data is really 327 00:14:26,160 --> 00:14:30,040 Speaker 8: our only guide to give us a sense of, you know, 328 00:14:30,280 --> 00:14:33,920 Speaker 8: how restrictive monetary policy is and where and how the 329 00:14:33,960 --> 00:14:39,080 Speaker 8: conditions are to support the disinflation process. But you know, 330 00:14:39,200 --> 00:14:41,840 Speaker 8: just in terms of what we're really looking at, you know, 331 00:14:41,960 --> 00:14:45,920 Speaker 8: it's the inflation outcomes themselves, which I think are top, 332 00:14:46,000 --> 00:14:48,520 Speaker 8: top of the line, very important at this point in time. 333 00:14:48,960 --> 00:14:51,680 Speaker 8: And I think after that comes the labor market data 334 00:14:51,840 --> 00:14:55,640 Speaker 8: and you know, prints related to consumer spending, so be 335 00:14:55,680 --> 00:14:59,320 Speaker 8: it retail sales or the real personal spending estimates like 336 00:14:59,400 --> 00:15:02,280 Speaker 8: we get this, I think those are the hard data 337 00:15:02,320 --> 00:15:05,280 Speaker 8: that you know, we're really looking for keeping an eye out. 338 00:15:06,360 --> 00:15:09,240 Speaker 8: And then again, you you know, it seems like every 339 00:15:09,240 --> 00:15:12,080 Speaker 8: little data point is important, and as you rightly pointed out, 340 00:15:12,360 --> 00:15:14,040 Speaker 8: you know, the market's reacted to the S and P 341 00:15:14,200 --> 00:15:17,800 Speaker 8: global last week, So I think at this point in time, 342 00:15:17,880 --> 00:15:19,800 Speaker 8: we can't afford to discount anything. 343 00:15:20,000 --> 00:15:22,080 Speaker 6: Deborah, what's your take on this, given the fact that 344 00:15:22,120 --> 00:15:25,160 Speaker 6: it seems like literally one comment in the page book 345 00:15:25,200 --> 00:15:27,600 Speaker 6: potentially that we are not aware of, could move things 346 00:15:27,640 --> 00:15:31,160 Speaker 6: if it is something that confirms a sneaking suspicion or 347 00:15:31,160 --> 00:15:31,880 Speaker 6: fear in the market. 348 00:15:33,920 --> 00:15:35,560 Speaker 9: You know, I agree that it's a mosaic. 349 00:15:35,640 --> 00:15:38,000 Speaker 1: You can't it's hard to discount anything at this point, 350 00:15:38,040 --> 00:15:40,400 Speaker 1: so taking in as much information as what you're being 351 00:15:40,440 --> 00:15:43,280 Speaker 1: given and trying to digest it and put it into 352 00:15:43,320 --> 00:15:46,240 Speaker 1: some you know, mosaic form that you can you know, 353 00:15:46,320 --> 00:15:50,160 Speaker 1: theorize based on what your expectations are off of that 354 00:15:50,160 --> 00:15:54,320 Speaker 1: that that collection of information and with the intention that 355 00:15:54,400 --> 00:15:56,760 Speaker 1: hopefully that has something to do with you know, what 356 00:15:56,760 --> 00:15:59,440 Speaker 1: what the FEDS intentions are. I think, you know, the 357 00:15:59,640 --> 00:16:05,880 Speaker 1: the slow down in labor market quits, maybe the ratio 358 00:16:06,320 --> 00:16:11,360 Speaker 1: of open positions to those available to be hired. Certainly 359 00:16:11,360 --> 00:16:13,960 Speaker 1: the retail sales. I mean, the consumer really has been 360 00:16:14,040 --> 00:16:18,120 Speaker 1: driving this economy. So really anything that has to do 361 00:16:18,400 --> 00:16:22,160 Speaker 1: with the consumer in specific, but also from a broader 362 00:16:22,200 --> 00:16:26,720 Speaker 1: mosaic standpoint, you can't ignore global you can't ignore you know, 363 00:16:27,000 --> 00:16:28,920 Speaker 1: the non consumer. 364 00:16:28,480 --> 00:16:30,400 Speaker 9: Aspect of the market either. 365 00:16:30,760 --> 00:16:33,160 Speaker 1: It all forms you know, sort of the theory that 366 00:16:33,200 --> 00:16:36,560 Speaker 1: you're trying to come up with, which is higher for longer. 367 00:16:36,600 --> 00:16:38,680 Speaker 1: I still think too, when we're talking about rake cuts 368 00:16:38,720 --> 00:16:41,120 Speaker 1: this year, we're only in main now. Granted we're at 369 00:16:41,120 --> 00:16:43,200 Speaker 1: the end of May, we're almost at the beginning of summer, 370 00:16:43,760 --> 00:16:45,480 Speaker 1: but there's a lot of this year to go, more 371 00:16:45,520 --> 00:16:48,000 Speaker 1: than half of it. So I think many many things 372 00:16:48,000 --> 00:16:50,640 Speaker 1: can happen. And what the FED is still trying to do, 373 00:16:50,720 --> 00:16:53,400 Speaker 1: it's gain confidence, and I think that takes them somewhere 374 00:16:53,400 --> 00:16:55,720 Speaker 1: in the neighborhood of probably two to five months, and 375 00:16:55,760 --> 00:16:59,200 Speaker 1: that still puts US in twenty twenty four end of 376 00:16:59,240 --> 00:17:01,520 Speaker 1: twenty twenty, but we're there end. 377 00:17:01,400 --> 00:17:05,159 Speaker 5: Of twenty twenty four. But Deborah, to Lisa's point earlier, 378 00:17:05,200 --> 00:17:06,800 Speaker 5: a lot of guests have come on this program and 379 00:17:06,960 --> 00:17:10,840 Speaker 5: talking about all the inflation and pressures potentially in twenty 380 00:17:11,000 --> 00:17:14,399 Speaker 5: twenty five, is the FED potentially how do they How 381 00:17:14,440 --> 00:17:16,439 Speaker 5: do you think they think about twenty twenty five when 382 00:17:16,440 --> 00:17:18,880 Speaker 5: they think about inflation, and when some people are saying 383 00:17:18,880 --> 00:17:21,240 Speaker 5: that they mean to hike after they cut at the 384 00:17:21,320 --> 00:17:22,160 Speaker 5: end of this year. 385 00:17:23,359 --> 00:17:25,520 Speaker 9: I think that's overthinking it. At this point. 386 00:17:25,600 --> 00:17:29,359 Speaker 1: I believe that, you know, their goal is to take 387 00:17:29,440 --> 00:17:32,480 Speaker 1: what's available for them now. And yes, they do give 388 00:17:32,640 --> 00:17:36,240 Speaker 1: one to three year types of forecasts in their series 389 00:17:36,280 --> 00:17:40,240 Speaker 1: of economic projections, But in fact, I think they're really 390 00:17:40,280 --> 00:17:42,960 Speaker 1: focused on what they do need to do now, and 391 00:17:43,040 --> 00:17:45,560 Speaker 1: to the extent that that has some impact on the 392 00:17:45,600 --> 00:17:47,680 Speaker 1: next year, the next two years, they'll deal with that 393 00:17:47,720 --> 00:17:52,360 Speaker 1: at that particular point in time. So I really think 394 00:17:52,359 --> 00:17:54,800 Speaker 1: they're focusing on what happens the rest of this year 395 00:17:55,000 --> 00:17:59,480 Speaker 1: and then twenty twenty five. You know, maybe energy prices 396 00:17:59,520 --> 00:18:04,800 Speaker 1: stop being the deflationary trend they've been, maybe housing stops 397 00:18:04,880 --> 00:18:07,520 Speaker 1: being the inflationary trend that it's been. Maybe there are 398 00:18:07,720 --> 00:18:10,679 Speaker 1: offsets that are different, but I think again that's something 399 00:18:10,760 --> 00:18:13,960 Speaker 1: that they will address as that happens, not as it's 400 00:18:14,080 --> 00:18:17,080 Speaker 1: you know, sort of forecast in the in the next year, 401 00:18:17,200 --> 00:18:19,439 Speaker 1: but rather in the next next six months or so. 402 00:18:19,680 --> 00:18:21,880 Speaker 6: Fujah, we're in the business of overthinking things, so let's 403 00:18:21,880 --> 00:18:24,119 Speaker 6: go there. Sorry, but it is the key thing that 404 00:18:24,119 --> 00:18:25,680 Speaker 6: a lot of people are trying to game out how 405 00:18:25,760 --> 00:18:29,880 Speaker 6: much we do see in November, either policy shift from 406 00:18:29,880 --> 00:18:33,760 Speaker 6: either candidate actually turbo charging any kind of inflationary pressure 407 00:18:33,840 --> 00:18:37,120 Speaker 6: that's in the pike. How are you gaming out how 408 00:18:37,200 --> 00:18:40,240 Speaker 6: this kind of percolates, whether it's immigration changes or tariff 409 00:18:40,280 --> 00:18:43,639 Speaker 6: changes that actually end up being inflationary this year. 410 00:18:45,760 --> 00:18:49,040 Speaker 8: So I think in terms of being inflationary this year, 411 00:18:49,200 --> 00:18:51,399 Speaker 8: I don't think those policy changes that are likely to 412 00:18:51,440 --> 00:18:56,040 Speaker 8: have an immediate effect. You know, we in terms of tatiffs, 413 00:18:56,280 --> 00:18:58,600 Speaker 8: we we've done some work in the past when we 414 00:18:58,640 --> 00:19:01,880 Speaker 8: had the previous round of statiffs imposed. It takes time 415 00:19:01,920 --> 00:19:04,760 Speaker 8: for these prices to filter through to the economy. So 416 00:19:04,800 --> 00:19:07,639 Speaker 8: if there is a policy change in that direction, sure, 417 00:19:07,720 --> 00:19:10,000 Speaker 8: you know it is, it will be an added impulse 418 00:19:10,040 --> 00:19:13,439 Speaker 8: to inflation. But it's unlikely to be something that we 419 00:19:13,600 --> 00:19:16,640 Speaker 8: feel in twenty twenty four. And of course I think 420 00:19:16,640 --> 00:19:20,239 Speaker 8: the second the second step to that thinking is you 421 00:19:20,240 --> 00:19:22,600 Speaker 8: know the scale of the policy, you know how many 422 00:19:22,760 --> 00:19:25,280 Speaker 8: goods are we talking about, what's the share for all 423 00:19:25,320 --> 00:19:28,760 Speaker 8: of that in our import basket? And even then, you know, 424 00:19:28,840 --> 00:19:31,840 Speaker 8: the share of imports in the CPI or the PCE 425 00:19:32,119 --> 00:19:36,359 Speaker 8: basket is fairly limited. So direct effects are limited and 426 00:19:36,400 --> 00:19:38,960 Speaker 8: it'll take time for the second round effects to play out. 427 00:19:39,280 --> 00:19:41,119 Speaker 2: I post it, thank you, We've got to leave it 428 00:19:41,119 --> 00:19:42,240 Speaker 2: there and to temper as well. 429 00:19:42,320 --> 00:19:43,680 Speaker 3: To the by for you. Thank you very much. 430 00:19:53,280 --> 00:19:56,359 Speaker 2: An eighteenth MBI site, So it's insight for the Boston Southex, 431 00:19:56,400 --> 00:19:58,960 Speaker 2: the team advancing to their second NBA Finals in the 432 00:19:59,000 --> 00:20:02,520 Speaker 2: past three years after completing a series sweep of the 433 00:20:02,560 --> 00:20:06,040 Speaker 2: Indiana Pacers in the Eastern Conference finals. An NBA title 434 00:20:06,080 --> 00:20:09,600 Speaker 2: would cap a successful season for co owner Steve Paliuca, 435 00:20:09,800 --> 00:20:12,600 Speaker 2: who just last week saw his Italian football side at 436 00:20:12,600 --> 00:20:16,000 Speaker 2: Atlanta win the Europa League. Steve, it's wonderful to catch 437 00:20:16,080 --> 00:20:18,520 Speaker 2: up with you, sir. We've been talking offline. I know 438 00:20:18,960 --> 00:20:21,159 Speaker 2: I was so happy for you. Congratulations to you and 439 00:20:21,160 --> 00:20:23,639 Speaker 2: a team I want to begin with Atalanta, and I 440 00:20:23,640 --> 00:20:26,320 Speaker 2: want to go through what this means to you. They 441 00:20:26,359 --> 00:20:30,920 Speaker 2: are the underdogs of bergamow overshadowed by their glamorous counterparts 442 00:20:31,200 --> 00:20:34,280 Speaker 2: of Inter and Milan out of Milan. How important was 443 00:20:34,320 --> 00:20:36,639 Speaker 2: that for you, for that side, for the history of 444 00:20:36,680 --> 00:20:37,119 Speaker 2: that club. 445 00:20:38,080 --> 00:20:39,000 Speaker 7: Well, I think it was huge. 446 00:20:39,040 --> 00:20:42,040 Speaker 10: The Atlanta has not won the europe a couple one 447 00:20:42,080 --> 00:20:47,240 Speaker 10: hundred years and the city of Bermos is just ecstatic 448 00:20:47,320 --> 00:20:50,480 Speaker 10: right now. When the team came back from the game, 449 00:20:50,800 --> 00:20:53,800 Speaker 10: there's a nice shot of the fans in the stands. 450 00:20:53,800 --> 00:20:56,919 Speaker 7: There's ten thousand folks from Bergamo there and when they 451 00:20:56,960 --> 00:20:58,359 Speaker 7: came back, they couldn't eve get out of the airport. 452 00:20:58,400 --> 00:20:58,800 Speaker 7: It was mob. 453 00:20:58,880 --> 00:21:01,399 Speaker 10: And then they they took a bus to the practice 454 00:21:01,400 --> 00:21:03,919 Speaker 10: facility and that was also a mob. And at the field, 455 00:21:04,320 --> 00:21:07,240 Speaker 10: so they're feeling great. There's Cardi Seciar goalie with the 456 00:21:07,240 --> 00:21:10,560 Speaker 10: metal and it was just just a wonderful time. 457 00:21:10,920 --> 00:21:13,960 Speaker 7: That's a big cup. By the way, two NBA championships 458 00:21:13,960 --> 00:21:14,960 Speaker 7: were inside that cup. 459 00:21:15,760 --> 00:21:17,600 Speaker 2: Steve, your approach to this club and the way this 460 00:21:17,640 --> 00:21:20,119 Speaker 2: business has been run should be a case study in 461 00:21:20,160 --> 00:21:22,080 Speaker 2: a lot of schools. I just want to go through 462 00:21:22,080 --> 00:21:24,760 Speaker 2: some of that. So our audience really understands the background here. 463 00:21:24,960 --> 00:21:26,720 Speaker 2: You've taken a chance on a lot of players that 464 00:21:26,800 --> 00:21:29,720 Speaker 2: some clubs have left behind, including my own club Milan 465 00:21:29,800 --> 00:21:33,400 Speaker 2: and the likes of CDK. You picked up Scamaka Lookman too. 466 00:21:33,800 --> 00:21:36,960 Speaker 2: You've identified talent the likes of Coop Miners. This hasn't 467 00:21:37,000 --> 00:21:41,040 Speaker 2: happened once, It's not happened twice. It's happened repeatedly. It's 468 00:21:41,040 --> 00:21:44,000 Speaker 2: not an accident, Steve, where does that come from. 469 00:21:44,600 --> 00:21:48,360 Speaker 10: I've got a lot of credits to Luca Percassi and 470 00:21:48,400 --> 00:21:52,399 Speaker 10: the Italian team we have on the field there. They've 471 00:21:52,480 --> 00:21:56,080 Speaker 10: done a fantastic job evaluating talent and really the mainstay 472 00:21:56,080 --> 00:21:59,560 Speaker 10: of Atalanta is their academy. They invested heavily in the 473 00:21:59,600 --> 00:22:02,480 Speaker 10: academy in the last fifteen years and that's paid a 474 00:22:02,480 --> 00:22:04,560 Speaker 10: lot of dividends. Sol Being's a twenty one year old 475 00:22:05,040 --> 00:22:07,000 Speaker 10: defenseman that starts the youngest one in. 476 00:22:07,640 --> 00:22:10,280 Speaker 7: The entire Seria, and several others like that. 477 00:22:10,359 --> 00:22:12,920 Speaker 10: And then I think really really taking players and putting 478 00:22:12,960 --> 00:22:15,399 Speaker 10: them into a team orian sistem like the Celtics, and 479 00:22:15,440 --> 00:22:17,720 Speaker 10: having them pass the ball and putting them the right spot. 480 00:22:17,800 --> 00:22:22,160 Speaker 10: So the coaching staff, Luca Percassi. The whole organization gets 481 00:22:22,160 --> 00:22:23,919 Speaker 10: credit for that, and you know it's been it's been 482 00:22:24,040 --> 00:22:24,960 Speaker 10: been wonderful watch. 483 00:22:25,040 --> 00:22:25,199 Speaker 7: You know. 484 00:22:25,359 --> 00:22:28,480 Speaker 10: It also helped that we took a risk on Rests 485 00:22:28,520 --> 00:22:32,480 Speaker 10: Finland two years ago and he's a very young player. 486 00:22:32,520 --> 00:22:35,600 Speaker 10: I met him in stermn Gross Austria team that he 487 00:22:35,600 --> 00:22:38,280 Speaker 10: played for, and he was eighteen and we paid I 488 00:22:38,359 --> 00:22:40,760 Speaker 10: think a record sum for Roman record sums for eighteen 489 00:22:40,800 --> 00:22:44,280 Speaker 10: year old that time. Twenty million in Manchester United came 490 00:22:44,320 --> 00:22:45,840 Speaker 10: knocking the door of the season or we hated to 491 00:22:45,840 --> 00:22:46,760 Speaker 10: lose them, but they paid. 492 00:22:46,600 --> 00:22:47,200 Speaker 7: Eighty five million. 493 00:22:47,240 --> 00:22:50,119 Speaker 10: Then we invested in Scamaca and several other players to 494 00:22:50,119 --> 00:22:52,159 Speaker 10: improve the squad and it's been a magical season. 495 00:22:52,320 --> 00:22:52,560 Speaker 3: Stave. 496 00:22:52,600 --> 00:22:54,040 Speaker 2: Could we talk a little bit about that's one of 497 00:22:54,040 --> 00:22:56,720 Speaker 2: the difference between Atalanta and the Celtics. When you have 498 00:22:56,760 --> 00:22:59,920 Speaker 2: a star like Highland and you get Manchester United coming 499 00:23:00,040 --> 00:23:02,240 Speaker 2: and with massive money, how difficult it is to retain 500 00:23:02,280 --> 00:23:04,840 Speaker 2: that talent at a club like Atalanta, and whether that 501 00:23:04,960 --> 00:23:07,520 Speaker 2: is still the future, is that inevitable, whether you're going 502 00:23:07,600 --> 00:23:11,560 Speaker 2: to have to sell somebody stars again to continuously reinvent yourself, 503 00:23:11,600 --> 00:23:13,000 Speaker 2: reinvent the club going forward. 504 00:23:14,119 --> 00:23:15,600 Speaker 10: It's really not a different the NBAS and when you 505 00:23:15,640 --> 00:23:19,359 Speaker 10: should win a championship, everybody watched your players, and so 506 00:23:20,359 --> 00:23:24,320 Speaker 10: we think we can continue to prosper Atalanta with a 507 00:23:24,400 --> 00:23:26,200 Speaker 10: mix of young players and a mix of players that 508 00:23:26,760 --> 00:23:30,760 Speaker 10: are sold because they have great opportunities. I think we'll 509 00:23:30,800 --> 00:23:34,200 Speaker 10: change that a bit. We'll play in European football. Before 510 00:23:34,240 --> 00:23:36,439 Speaker 10: that win, we qualified for the Champions League and that 511 00:23:36,480 --> 00:23:38,480 Speaker 10: win gives you a slide in the Champions legue as well, 512 00:23:39,240 --> 00:23:40,960 Speaker 10: So that's going to be really helpful in our recruitment 513 00:23:41,119 --> 00:23:42,520 Speaker 10: of players to improve the team. 514 00:23:42,520 --> 00:23:44,320 Speaker 3: Further states, to really put you on the spot. 515 00:23:44,320 --> 00:23:46,359 Speaker 2: Has it been harder to run a football club or 516 00:23:46,400 --> 00:23:48,440 Speaker 2: a basketball team? 517 00:23:48,960 --> 00:23:50,680 Speaker 7: They both have similar challenges. You know. 518 00:23:50,720 --> 00:23:52,920 Speaker 10: It's all about getting and retaining top talent and keeping 519 00:23:52,960 --> 00:23:55,320 Speaker 10: them motivated and trying to do everything that you can 520 00:23:55,720 --> 00:23:57,560 Speaker 10: to make their lives easy so they go out of 521 00:23:57,560 --> 00:23:59,800 Speaker 10: the pitch or go on the court and play hard. 522 00:24:00,040 --> 00:24:02,639 Speaker 10: Try to do that in both organizations, it's very similar. 523 00:24:02,840 --> 00:24:05,080 Speaker 10: Atalanta is kind of the can and do team with 524 00:24:05,080 --> 00:24:08,280 Speaker 10: the great culture in Italy. It's the favorite team of 525 00:24:08,320 --> 00:24:12,399 Speaker 10: many in Brahma Northern Lawn, but also also it's a 526 00:24:12,400 --> 00:24:14,800 Speaker 10: favorite it's probably everybody's second favorite team in Italy where 527 00:24:14,880 --> 00:24:18,120 Speaker 10: I just came back from Rome, and when we went 528 00:24:18,119 --> 00:24:19,960 Speaker 10: to a hotel room, my wife and I found a 529 00:24:20,040 --> 00:24:23,360 Speaker 10: large cake with an Atlanta symbol on it, So it's 530 00:24:23,520 --> 00:24:25,280 Speaker 10: it's stem Atlanta fever in Italy. 531 00:24:25,400 --> 00:24:28,400 Speaker 6: Right now, Steve, you are living pretty much everybody's dream. 532 00:24:28,480 --> 00:24:31,320 Speaker 6: So congratulations for winning life. You have definitely done it. 533 00:24:31,359 --> 00:24:34,680 Speaker 6: There is this idea, especially as you have two really 534 00:24:34,680 --> 00:24:38,280 Speaker 6: successful team Celtics heading to their NBA finals, the second 535 00:24:38,480 --> 00:24:41,639 Speaker 6: finals appearance in three seasons, how do you monetize this? 536 00:24:41,720 --> 00:24:43,000 Speaker 6: And I know that that's not the reason why you 537 00:24:43,040 --> 00:24:44,679 Speaker 6: do this. You're in this for the love of the 538 00:24:44,720 --> 00:24:47,560 Speaker 6: sport and all the passion. Is it going direct to 539 00:24:47,600 --> 00:24:50,479 Speaker 6: the distributors? Do you find it actually more compelling right 540 00:24:50,520 --> 00:24:55,439 Speaker 6: now because you have the actual intellectual property in a 541 00:24:55,480 --> 00:24:58,840 Speaker 6: way that has changed with new technological advancements. 542 00:24:59,520 --> 00:25:00,000 Speaker 7: Absolutely. 543 00:25:00,640 --> 00:25:03,000 Speaker 10: You know, when we purchased the Celtics back in two 544 00:25:03,040 --> 00:25:07,880 Speaker 10: thousand and three, there was no Facebook or minimal social media, 545 00:25:07,880 --> 00:25:10,960 Speaker 10: almost nothing that maybe email was the technology of the day. 546 00:25:11,640 --> 00:25:14,520 Speaker 10: Now what we have is fans were counted back then 547 00:25:14,560 --> 00:25:15,640 Speaker 10: in the hundreds of thousands. 548 00:25:15,920 --> 00:25:18,920 Speaker 7: Now they're counting in the millions and possibly. 549 00:25:18,720 --> 00:25:22,080 Speaker 10: Five hundred million a million for you know, global soccer 550 00:25:22,200 --> 00:25:25,119 Speaker 10: teams and also the NBA which is prospering in Europe 551 00:25:25,160 --> 00:25:26,400 Speaker 10: and China and all the world. 552 00:25:26,520 --> 00:25:28,080 Speaker 7: So the landscap's really changed. 553 00:25:28,280 --> 00:25:32,040 Speaker 10: These teams have become teams of the world, and the 554 00:25:32,080 --> 00:25:35,360 Speaker 10: Boss of Celtics certainly have that reputation. It's in terms 555 00:25:35,359 --> 00:25:38,159 Speaker 10: of monetization, it's just a virtual of circle. If you 556 00:25:38,160 --> 00:25:40,720 Speaker 10: get more popular, you get great players, you have more 557 00:25:40,720 --> 00:25:44,200 Speaker 10: great players, you get more fans, and it's great. It's 558 00:25:44,200 --> 00:25:45,840 Speaker 10: a great place to be right now with being in 559 00:25:45,880 --> 00:25:47,080 Speaker 10: the files a couple of years in a row. 560 00:25:47,280 --> 00:25:49,680 Speaker 5: On that point, though, Steve, when you get a trophy, 561 00:25:49,960 --> 00:25:53,000 Speaker 5: where does it immediately start to translate into money? Is 562 00:25:53,040 --> 00:25:55,240 Speaker 5: it immediately in merchandise, ticket sales? 563 00:25:56,560 --> 00:25:59,240 Speaker 7: The main area quickly translates into his sponsorship. 564 00:25:59,320 --> 00:26:03,080 Speaker 10: So for the for the Celtics, just the building of 565 00:26:03,080 --> 00:26:05,400 Speaker 10: the brand and having a championship team gets us more 566 00:26:05,640 --> 00:26:06,560 Speaker 10: sponsorship income. 567 00:26:07,240 --> 00:26:09,120 Speaker 7: When we bought the club especially. 568 00:26:08,960 --> 00:26:12,080 Speaker 10: Was Demnimus and now it's in the tens of millions 569 00:26:12,280 --> 00:26:15,600 Speaker 10: and approaching hundreds of millions. You know, brands want to 570 00:26:15,640 --> 00:26:18,040 Speaker 10: be associated with the brand, like the Celtics and Atalanta 571 00:26:18,080 --> 00:26:18,480 Speaker 10: as well. 572 00:26:18,640 --> 00:26:21,040 Speaker 7: Getting the champions League gets up to lonch to more eyeballs. 573 00:26:21,440 --> 00:26:24,679 Speaker 10: So having that championship culture and the brand and the 574 00:26:24,720 --> 00:26:27,880 Speaker 10: reputation that that's what does it for the long term 575 00:26:27,920 --> 00:26:28,760 Speaker 10: and creates value in. 576 00:26:28,680 --> 00:26:29,400 Speaker 7: The short term. 577 00:26:29,560 --> 00:26:32,400 Speaker 5: You went through what makes Atalanta so special and how 578 00:26:32,440 --> 00:26:36,640 Speaker 5: you really transformed that team. What about the Celtics they're 579 00:26:36,680 --> 00:26:38,400 Speaker 5: always winning? Why are they so good? 580 00:26:40,720 --> 00:26:42,280 Speaker 7: Well, that's one of the better questions I've ever had. 581 00:26:42,400 --> 00:26:45,119 Speaker 10: I guess I think they're good because we've had an 582 00:26:45,119 --> 00:26:48,040 Speaker 10: incredible management team who lived by Wick Grosspec for twenty 583 00:26:48,119 --> 00:26:51,680 Speaker 10: years now Rich Gothama President. It started out with Danny 584 00:26:51,680 --> 00:26:54,240 Speaker 10: Age and Albrad Stevens in the basketball operation, a great coach. 585 00:26:55,080 --> 00:26:57,359 Speaker 10: They all work together as a team and have been 586 00:26:57,440 --> 00:26:59,720 Speaker 10: very smart and player trading and acquisitions. 587 00:27:00,080 --> 00:27:01,240 Speaker 7: Same story in Atlanta. 588 00:27:01,359 --> 00:27:04,160 Speaker 10: So it's all about tying, trying to get the top 589 00:27:04,240 --> 00:27:07,480 Speaker 10: talent on the field and doing you know, in both organizations, 590 00:27:07,520 --> 00:27:09,800 Speaker 10: we've lived doing more work and exploring. 591 00:27:09,680 --> 00:27:12,600 Speaker 7: Using statistics, you know, using scouts. 592 00:27:12,160 --> 00:27:14,600 Speaker 10: To see players twenty or thirty or forty times, following 593 00:27:15,040 --> 00:27:18,280 Speaker 10: players from when they're eight years old into high school 594 00:27:18,320 --> 00:27:21,159 Speaker 10: and college, and so that work ethic and kind of 595 00:27:21,160 --> 00:27:25,120 Speaker 10: a will to win championship pervades each organization, and we've 596 00:27:25,160 --> 00:27:28,080 Speaker 10: never been happier with those folks, and that's the great 597 00:27:28,119 --> 00:27:32,119 Speaker 10: thing to see in both these situations. People were crying 598 00:27:32,480 --> 00:27:34,640 Speaker 10: on the pitch at Atalanta after. 599 00:27:34,200 --> 00:27:39,760 Speaker 7: That victory, and last night in Indiana, which is a 600 00:27:39,760 --> 00:27:41,000 Speaker 7: great basketball town. 601 00:27:41,440 --> 00:27:44,280 Speaker 10: You know, there was a huge celebration after that victory, 602 00:27:44,440 --> 00:27:46,280 Speaker 10: and I'm just so happy for those players who work 603 00:27:46,359 --> 00:27:49,080 Speaker 10: so hard. It's just really hard to win championships, and 604 00:27:49,200 --> 00:27:51,200 Speaker 10: the NBA has had different champions the last five years. 605 00:27:51,520 --> 00:27:55,120 Speaker 7: Same thing in Europe. It's just hard to get. 606 00:27:55,000 --> 00:27:58,760 Speaker 10: Up every night and beat these great teams and overcome injuries. 607 00:27:59,119 --> 00:28:01,280 Speaker 10: So I'm just pinched myself and hopefully the dree will 608 00:28:01,280 --> 00:28:02,320 Speaker 10: continue next week. 609 00:28:02,359 --> 00:28:05,880 Speaker 6: Steve, it sounded like you are a stabermetrics believer there 610 00:28:05,920 --> 00:28:07,480 Speaker 6: for a second, so that seems to be part of 611 00:28:07,520 --> 00:28:09,720 Speaker 6: what's going on. I will just say right now, you 612 00:28:09,800 --> 00:28:12,080 Speaker 6: must be on such a high. Probably haven't slept in a. 613 00:28:12,000 --> 00:28:12,560 Speaker 3: Couple of weeks. 614 00:28:12,560 --> 00:28:15,200 Speaker 6: There is this question of what's next in terms of 615 00:28:15,320 --> 00:28:17,520 Speaker 6: are you still interested in buying other teams? Is there 616 00:28:17,560 --> 00:28:19,720 Speaker 6: still value out there or do you think that basically 617 00:28:20,320 --> 00:28:22,639 Speaker 6: things have been bid up to such degree given all 618 00:28:22,640 --> 00:28:25,920 Speaker 6: of the interests that pretty much the opportunities aren't there anymore. 619 00:28:27,440 --> 00:28:30,600 Speaker 10: Well, when we bought the Celts in two thousand and three, 620 00:28:31,080 --> 00:28:34,040 Speaker 10: the headline was a venture capitalist paid record price for 621 00:28:34,080 --> 00:28:36,240 Speaker 10: team that was three hundred and sixty million, and now 622 00:28:36,280 --> 00:28:40,000 Speaker 10: the values are counted in the four in the four billions. 623 00:28:40,360 --> 00:28:43,560 Speaker 10: So that's been a question asked it every single year. 624 00:28:44,000 --> 00:28:46,600 Speaker 10: I think the fact that this technology has changed. 625 00:28:46,360 --> 00:28:47,680 Speaker 7: And sports are now global. 626 00:28:49,680 --> 00:28:54,360 Speaker 10: In the fight for eyeballs between the new media such 627 00:28:54,360 --> 00:28:59,560 Speaker 10: as Facebook and Apple and old media, the networks continues 628 00:28:59,800 --> 00:29:02,480 Speaker 10: and everyone wants properties and get eyeballs, and the properties 629 00:29:02,480 --> 00:29:04,440 Speaker 10: that get eyeballs are sports property. 630 00:29:04,520 --> 00:29:06,440 Speaker 7: So I think there's still room to go up. 631 00:29:07,480 --> 00:29:09,240 Speaker 2: Stay before we go, we've got to talk about a 632 00:29:09,240 --> 00:29:12,000 Speaker 2: loss to the basketball world over a weekend. Bill Walton, 633 00:29:12,080 --> 00:29:14,760 Speaker 2: we'd love a final word from you on his legacy. 634 00:29:17,000 --> 00:29:19,280 Speaker 7: Yeah, I was devastated, Lesson. I'm so glad we won 635 00:29:19,320 --> 00:29:21,440 Speaker 7: that game. I felt like Bill was looking down on it. 636 00:29:21,760 --> 00:29:23,719 Speaker 7: I was very close to Bill in the twenty year 637 00:29:23,800 --> 00:29:24,480 Speaker 7: run we had here. 638 00:29:24,640 --> 00:29:26,720 Speaker 10: His son made you work for us at the Celtics, 639 00:29:26,720 --> 00:29:30,360 Speaker 10: and I just texted Bill two weeks ago. He sent 640 00:29:30,400 --> 00:29:33,960 Speaker 10: me his sons, I mean, I message about the winning 641 00:29:34,000 --> 00:29:34,640 Speaker 10: the Europa Cup. 642 00:29:34,680 --> 00:29:35,560 Speaker 7: Yes, he was watching that. 643 00:29:36,120 --> 00:29:38,200 Speaker 10: He was an avid sports fan and avid Celtics fan, 644 00:29:38,280 --> 00:29:41,240 Speaker 10: and everywhere he went he proselytized that what a great 645 00:29:41,240 --> 00:29:43,280 Speaker 10: experience it was to be a Celtic and be a champion. 646 00:29:43,360 --> 00:29:46,480 Speaker 7: So the world and the NBA has had a major. 647 00:29:46,240 --> 00:29:49,360 Speaker 10: Loss in Bill russ In Bill Walton and two years 648 00:29:49,360 --> 00:29:51,760 Speaker 10: before Bill Russell, two of the most iconic centers of 649 00:29:51,800 --> 00:29:53,880 Speaker 10: the game. And we're going to really miss Bill, and 650 00:29:54,200 --> 00:29:57,640 Speaker 10: hopefully our players will take extra heart into the games 651 00:29:57,680 --> 00:29:59,080 Speaker 10: because of remembering Bill. 652 00:30:00,120 --> 00:30:03,160 Speaker 2: We appreciate you, sir. Let's catch up soon. Congratulations for 653 00:30:03,200 --> 00:30:06,360 Speaker 2: all your hard work and success. Boston Celtics co owner 654 00:30:06,720 --> 00:30:11,280 Speaker 2: Steve Paluka. This is the Bloomberg Surveillance podcast, bringing you 655 00:30:11,560 --> 00:30:14,960 Speaker 2: the best in markets, economics, and geopolitics. You can watch 656 00:30:15,000 --> 00:30:17,760 Speaker 2: the show live on Bloomberg TV weekday mornings from six 657 00:30:17,800 --> 00:30:21,360 Speaker 2: am to nine am Eastern. Subscribe to the podcast on Apple, 658 00:30:21,640 --> 00:30:24,480 Speaker 2: Spotify or anywhere else you listen, and as always on 659 00:30:24,520 --> 00:30:27,000 Speaker 2: the Bloomberg Terminal and the Bloomberg Business app.