1
00:00:05,160 --> 00:00:08,480
Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

2
00:00:08,520 --> 00:00:12,319
Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

3
00:00:12,400 --> 00:00:16,880
Speaker 1: for insight from the best and economics, geopolitics, finance and investment.

4
00:00:17,280 --> 00:00:22,119
Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

5
00:00:22,320 --> 00:00:26,600
Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot com,

6
00:00:26,640 --> 00:00:30,760
Speaker 1: the Bloomberg Terminal and the Bloomberg Business App. Christopher Erwon

7
00:00:30,840 --> 00:00:33,760
Speaker 1: joins us now had a technical and macro strategy. It's

8
00:00:33,760 --> 00:00:36,559
Speaker 1: strtigas it is a Baird company. Christopher own, thank you

9
00:00:36,560 --> 00:00:38,920
Speaker 1: so much for joining us. Which chart matters right now?

10
00:00:39,600 --> 00:00:41,760
Speaker 2: I think there's nothing more important in the world right

11
00:00:41,800 --> 00:00:44,640
Speaker 2: now in terms of what bon yields do over the

12
00:00:44,720 --> 00:00:46,920
Speaker 2: next number of weeks here I mean ten years. Yields

13
00:00:46,920 --> 00:00:50,320
Speaker 2: have been chopping basically since last October. This is going

14
00:00:50,400 --> 00:00:53,040
Speaker 2: to resolve itself very soon. We're simply running out of

15
00:00:53,120 --> 00:00:55,600
Speaker 2: real estate on the chart. And think you start pushing

16
00:00:55,640 --> 00:00:58,680
Speaker 2: above three ninety three ninety five on tens, that's a

17
00:00:58,680 --> 00:01:00,600
Speaker 2: big deal. I think it's a big deal multiples. I

18
00:01:00,600 --> 00:01:03,800
Speaker 2: think it's a big deal for the growth value equation.

19
00:01:04,560 --> 00:01:07,320
Speaker 2: And Lisa, as you point out very quietly the last

20
00:01:07,360 --> 00:01:09,520
Speaker 2: week or so, there's been some stalling in tech and

21
00:01:09,600 --> 00:01:12,720
Speaker 2: I wonder if that's some reflection in where rates go

22
00:01:12,760 --> 00:01:15,479
Speaker 2: from here. I also think the weakness and utilities might

23
00:01:15,480 --> 00:01:17,800
Speaker 2: be a reflection of where rates may go from here.

24
00:01:18,280 --> 00:01:22,640
Speaker 2: And the move in UK has been absolutely explosive. Here

25
00:01:22,720 --> 00:01:24,880
Speaker 2: you have two year guilts and ten year guildts basically

26
00:01:24,920 --> 00:01:27,839
Speaker 2: back to where they were when all these revelations about

27
00:01:27,920 --> 00:01:30,840
Speaker 2: LDI and British pensions were revealed last fall.

28
00:01:30,959 --> 00:01:33,600
Speaker 3: Can you judge technically? And I we had a guest

29
00:01:33,640 --> 00:01:34,840
Speaker 3: yesterday that talked about this.

30
00:01:35,360 --> 00:01:38,080
Speaker 1: What we really need to see is the high two

31
00:01:38,160 --> 00:01:41,760
Speaker 1: year yields come out to a high five year yield.

32
00:01:42,200 --> 00:01:46,000
Speaker 1: Do you see within the charts of spreads, the charts

33
00:01:46,040 --> 00:01:49,960
Speaker 1: of an actual single yield where we're going to broaden.

34
00:01:49,640 --> 00:01:52,240
Speaker 3: Out these high yields into a higher yield regime.

35
00:01:52,840 --> 00:01:54,960
Speaker 2: You know what's interesting we always look at this relationship

36
00:01:54,960 --> 00:01:58,160
Speaker 2: between twos and FED funds right and twos have largely

37
00:01:58,280 --> 00:02:02,080
Speaker 2: traded south of FED fund on since call it February

38
00:02:02,160 --> 00:02:04,440
Speaker 2: or March of this year. They're starting to creep back

39
00:02:04,520 --> 00:02:08,200
Speaker 2: up there in terms of reclaiming the bar of FED

40
00:02:08,240 --> 00:02:11,400
Speaker 2: funds here and if you look at who's raised rates recently,

41
00:02:11,520 --> 00:02:15,960
Speaker 2: the OSS's, the CADS and UK. What's happened in all

42
00:02:16,000 --> 00:02:19,080
Speaker 2: those markets they've softened, And what's happened with the banks

43
00:02:19,240 --> 00:02:22,840
Speaker 2: in those industries they've softened as well. Canadian banks, OSC banks,

44
00:02:22,880 --> 00:02:25,560
Speaker 2: UK banks are all pretty soft here, as those central

45
00:02:25,560 --> 00:02:27,520
Speaker 2: banks have hiked over the last several weeks.

46
00:02:27,560 --> 00:02:29,880
Speaker 4: There's a real tension heading into this nine thirty AM

47
00:02:29,960 --> 00:02:32,520
Speaker 4: panel of how important the central bankers are and determining

48
00:02:32,560 --> 00:02:35,519
Speaker 4: what happens next in markets. There was a brief second

49
00:02:35,600 --> 00:02:38,320
Speaker 4: where people thought maybe we have moved beyond central banks

50
00:02:38,440 --> 00:02:41,400
Speaker 4: and we're moving to fundamentals. God Willing, are you saying

51
00:02:41,400 --> 00:02:42,480
Speaker 4: that that's not the case.

52
00:02:42,840 --> 00:02:45,519
Speaker 2: I don't think it's the case yet, or at a minimum,

53
00:02:45,600 --> 00:02:48,000
Speaker 2: I think the message or the interpretation of the bond

54
00:02:48,120 --> 00:02:51,040
Speaker 2: market to all of this is still paramount in our

55
00:02:51,080 --> 00:02:53,280
Speaker 2: thinking about what the second half of the year looks like.

56
00:02:53,320 --> 00:02:56,000
Speaker 2: But a Lisa, as you point out, the trend here

57
00:02:56,080 --> 00:02:57,520
Speaker 2: is still the trend, and the trend is in the

58
00:02:57,560 --> 00:03:01,600
Speaker 2: trend in stocks are still up. There are areas of weakness,

59
00:03:01,639 --> 00:03:04,119
Speaker 2: and there are pockets that may get weak, but in

60
00:03:05,080 --> 00:03:07,560
Speaker 2: basically broad aggregate here the Trendon's dock is up. What

61
00:03:07,720 --> 00:03:09,320
Speaker 2: I want to watch as we think about the second

62
00:03:09,320 --> 00:03:12,000
Speaker 2: half of the year. We've seen some modest broadening over

63
00:03:12,040 --> 00:03:14,480
Speaker 2: the last two or three weeks. Does that stall or

64
00:03:14,520 --> 00:03:17,680
Speaker 2: does that continue? We're sitting here today with about sixty

65
00:03:17,720 --> 00:03:19,320
Speaker 2: percent of the S and P above the two HUNDREDAY

66
00:03:19,320 --> 00:03:23,160
Speaker 2: moving average. That's a reading that ordinarily wouldn't worry me

67
00:03:23,240 --> 00:03:27,280
Speaker 2: that much. It's just unusual in a first year off

68
00:03:27,320 --> 00:03:30,680
Speaker 2: below that were not broader. Narrow markets are common, but

69
00:03:30,720 --> 00:03:32,799
Speaker 2: they're common late, they're not common early.

70
00:03:32,840 --> 00:03:33,520
Speaker 3: In a new advance.

71
00:03:33,680 --> 00:03:36,040
Speaker 4: You mentioned that we have seen this stalling out in

72
00:03:36,080 --> 00:03:38,480
Speaker 4: the tech trade. There have been a number of downgrades

73
00:03:38,480 --> 00:03:41,240
Speaker 4: from banks saying perhaps it's gone a little bit too far.

74
00:03:41,760 --> 00:03:44,560
Speaker 4: Are you saying it's more related to the yield story

75
00:03:44,720 --> 00:03:47,920
Speaker 4: and the waking up to an old paradigm that we

76
00:03:47,960 --> 00:03:50,600
Speaker 4: saw a whole six months ago that people had abandoned

77
00:03:50,640 --> 00:03:52,480
Speaker 4: when we had the no landing, the soft landing, and

78
00:03:52,520 --> 00:03:55,000
Speaker 4: the maculate disinflation of say February.

79
00:03:55,080 --> 00:03:56,840
Speaker 2: You know, it feels like a different world ago. We

80
00:03:57,240 --> 00:04:00,520
Speaker 2: spent basically twenty one and twenty two thinking the world

81
00:04:00,560 --> 00:04:02,520
Speaker 2: to change, and we were on the cusp of some

82
00:04:02,560 --> 00:04:05,560
Speaker 2: big regime change for that view to be massively challenged

83
00:04:05,560 --> 00:04:08,480
Speaker 2: over the last three or four months. My suspicion is,

84
00:04:08,760 --> 00:04:10,800
Speaker 2: if we really get rates up here, and I'm talking

85
00:04:10,800 --> 00:04:13,280
Speaker 2: to say, above four on tens, maybe above four to

86
00:04:13,320 --> 00:04:16,560
Speaker 2: ten on thirty's new highs on twos, you're going to

87
00:04:16,640 --> 00:04:18,720
Speaker 2: really begin to question some of the valuations that are

88
00:04:18,720 --> 00:04:20,880
Speaker 2: put on these tech names. And I wonder if that's

89
00:04:20,920 --> 00:04:22,920
Speaker 2: why there's a hint of them starting to stall here.

90
00:04:22,960 --> 00:04:25,159
Speaker 2: It's not everywhere. Apple made a new high yesterday, but

91
00:04:25,600 --> 00:04:29,440
Speaker 2: quietly Google's come in here, AMD's come in here, Microsoft

92
00:04:29,480 --> 00:04:32,080
Speaker 2: has softened a touch. They've all ridden their fifty day

93
00:04:32,120 --> 00:04:34,279
Speaker 2: averages all year. I think those would be very big

94
00:04:34,360 --> 00:04:36,720
Speaker 2: levels moving forward. And if you want to look at

95
00:04:36,720 --> 00:04:39,039
Speaker 2: a test, this is a different sector, but use this

96
00:04:39,080 --> 00:04:43,479
Speaker 2: as a test. The European luxury names, HERMEZ, LVMAH, etc.

97
00:04:44,160 --> 00:04:47,160
Speaker 2: They've all been very tech like this year. Those that

98
00:04:47,279 --> 00:04:49,600
Speaker 2: actually started to stall the last two weeks, I think

99
00:04:49,600 --> 00:04:53,119
Speaker 2: we're going to learn about other corners of the world

100
00:04:53,200 --> 00:04:55,120
Speaker 2: from how those stocks respond going forward.

101
00:04:55,200 --> 00:04:59,320
Speaker 3: Bloomberg with a great story to dan is it Lewis

102
00:04:59,320 --> 00:05:04,039
Speaker 3: Futon the stock yet as well.

103
00:05:04,279 --> 00:05:06,719
Speaker 1: You know, a technical analysis is about looking at the

104
00:05:06,760 --> 00:05:09,600
Speaker 1: past and learning lessons. We came off the mat seventy three,

105
00:05:09,680 --> 00:05:12,080
Speaker 1: seventy four, we had a nice leg up, and then

106
00:05:12,120 --> 00:05:15,520
Speaker 1: in December of nineteen seventy five we discovered a second

107
00:05:15,600 --> 00:05:18,560
Speaker 1: leg up in the market. Can people like Chris Vorone

108
00:05:18,720 --> 00:05:21,120
Speaker 1: discover a second leg before it happens?

109
00:05:22,560 --> 00:05:25,560
Speaker 2: You know, when I think about markets, I don't really

110
00:05:25,960 --> 00:05:28,599
Speaker 2: operate in the world of levels. I operate in the

111
00:05:28,640 --> 00:05:31,239
Speaker 2: world of what is the characteristics of a certain advance?

112
00:05:31,839 --> 00:05:33,919
Speaker 2: And I think, on balance, when you look at this

113
00:05:34,080 --> 00:05:38,080
Speaker 2: current advance, the leadership is still pretty risk seeking. We

114
00:05:38,120 --> 00:05:40,320
Speaker 2: see it with industrials, We see it with discretionary better

115
00:05:40,360 --> 00:05:42,680
Speaker 2: than staple. So I would use those characteristics and say,

116
00:05:42,720 --> 00:05:46,400
Speaker 2: nothing really meaningful has changed yet. I think a shift

117
00:05:46,440 --> 00:05:49,080
Speaker 2: there would cause alarm, but I'm not seeing that here yet.

118
00:05:49,080 --> 00:05:52,560
Speaker 2: And Tom, you bring up this nineteen seventies period. It's

119
00:05:52,640 --> 00:05:55,800
Speaker 2: often referred to as this ten year range. I kind

120
00:05:55,800 --> 00:06:00,040
Speaker 2: of reject that. It was periods of bull.

121
00:05:59,800 --> 00:06:02,200
Speaker 3: A bear markets. Yeah, it was two years.

122
00:06:02,080 --> 00:06:04,400
Speaker 2: Up, two years down, two years It wasn't two weeks

123
00:06:04,480 --> 00:06:07,600
Speaker 2: up two weeks down. So this idea of the seventies

124
00:06:07,640 --> 00:06:10,000
Speaker 2: being a range I actually don't think is very accurate

125
00:06:10,360 --> 00:06:11,920
Speaker 2: if you want to look for a range. I think

126
00:06:11,920 --> 00:06:14,600
Speaker 2: there's some parallels to this market kind of post World

127
00:06:14,600 --> 00:06:17,599
Speaker 2: War two forty five to fifty, I think is very interesting.

128
00:06:17,600 --> 00:06:20,159
Speaker 2: Also a period where all the economists kept thinking recession

129
00:06:20,200 --> 00:06:23,360
Speaker 2: was coming, recession was coming, and it never came. Interesting there.

130
00:06:23,640 --> 00:06:27,160
Speaker 4: Given that fact check, do you reject this idea that

131
00:06:27,200 --> 00:06:30,160
Speaker 4: the past indicators are no longer working, that the models

132
00:06:30,160 --> 00:06:34,040
Speaker 4: are broken, and the technical analysis doesn't hold the same

133
00:06:34,120 --> 00:06:34,640
Speaker 4: kind of cloud.

134
00:06:34,760 --> 00:06:37,440
Speaker 2: You know, it's funny. I suppose it's your definition of

135
00:06:37,440 --> 00:06:38,440
Speaker 2: what technicals is.

136
00:06:38,680 --> 00:06:39,320
Speaker 3: We wake up.

137
00:06:39,279 --> 00:06:41,800
Speaker 2: Every morning and we ask ourselves the simple question, does

138
00:06:41,880 --> 00:06:44,560
Speaker 2: the market agree with the consensus? That's my definition of

139
00:06:44,560 --> 00:06:48,760
Speaker 2: what technical analysis is. Anytime in my career where I've

140
00:06:48,920 --> 00:06:52,400
Speaker 2: begun to question whether the indicators are valid anymore, in

141
00:06:52,480 --> 00:06:55,359
Speaker 2: new regimes, they're about to become very valid. So I

142
00:06:55,360 --> 00:06:57,560
Speaker 2: would just keep that in mind here, you know, put

143
00:06:57,560 --> 00:07:00,240
Speaker 2: that in contact of some of the tech names. Four

144
00:07:00,279 --> 00:07:03,560
Speaker 2: weeks ago we got what I would only characterize is

145
00:07:03,680 --> 00:07:06,440
Speaker 2: blow off like volume in a lot of these semis.

146
00:07:06,480 --> 00:07:09,039
Speaker 2: And what do we know historically about blow off like volume?

147
00:07:09,480 --> 00:07:12,440
Speaker 2: It very rarely marks the top, but it can begin

148
00:07:12,520 --> 00:07:15,000
Speaker 2: the sequence of putting in the top and you were

149
00:07:15,040 --> 00:07:17,120
Speaker 2: doing about a month ago, you were doing four or

150
00:07:17,120 --> 00:07:19,880
Speaker 2: five average weekly four or five times average weekly volume

151
00:07:19,880 --> 00:07:23,320
Speaker 2: in Nvidia amd Avago. So some of those makings, they

152
00:07:23,320 --> 00:07:25,080
Speaker 2: are a very blowoff e type volume.

153
00:07:25,440 --> 00:07:27,960
Speaker 1: With all your study of charts and the in and

154
00:07:28,000 --> 00:07:31,040
Speaker 1: out and being bullish, being embarrassed, does market timing work?

155
00:07:32,520 --> 00:07:33,720
Speaker 3: Okay? If I mean cash?

156
00:07:33,840 --> 00:07:37,720
Speaker 1: Can I figure out when to get in efficiently, productively effectively?

157
00:07:37,840 --> 00:07:40,720
Speaker 2: I might replace the phrase market timing with trend following.

158
00:07:41,160 --> 00:07:43,960
Speaker 2: I think trend following works. I think we can do

159
00:07:44,000 --> 00:07:45,360
Speaker 2: a pretty good job. I think all of us can

160
00:07:45,400 --> 00:07:48,440
Speaker 2: do a pretty good job of getting that middle seventy

161
00:07:48,520 --> 00:07:51,280
Speaker 2: or seventy five percent of a move. I haven't yet

162
00:07:51,320 --> 00:07:55,360
Speaker 2: any I haven't met anyone yet who's particularly good at

163
00:07:55,360 --> 00:07:59,600
Speaker 2: the turns that that middle chunk. We can know all

164
00:07:59,640 --> 00:08:02,000
Speaker 2: the money in this business is made in the trend

165
00:08:02,000 --> 00:08:04,840
Speaker 2: and not at the pulse, right, we can, I think,

166
00:08:04,920 --> 00:08:06,760
Speaker 2: play trends, and that's what we've tri to do.

167
00:08:06,960 --> 00:08:09,040
Speaker 3: I set them up with that question. I knew what

168
00:08:09,120 --> 00:08:10,040
Speaker 3: the answer would.

169
00:08:09,920 --> 00:08:11,200
Speaker 2: Be, and I think.

170
00:08:12,880 --> 00:08:13,960
Speaker 4: I think everyone knew that.

171
00:08:14,960 --> 00:08:17,000
Speaker 3: This is the gospel, the gospel of her own.

172
00:08:17,720 --> 00:08:20,440
Speaker 1: I mean, there's no other way to put it, Christopher,

173
00:08:20,520 --> 00:08:22,680
Speaker 1: and thank you so much for I came out of that.

174
00:08:22,720 --> 00:08:23,240
Speaker 3: You're a bull.

175
00:08:24,600 --> 00:08:26,400
Speaker 2: I think it's too early to back away from the

176
00:08:26,440 --> 00:08:30,119
Speaker 2: trend with your guard on for some things to change.

177
00:08:30,160 --> 00:08:32,920
Speaker 2: But watch rates here, Rachel decide the second half of

178
00:08:32,920 --> 00:08:33,160
Speaker 2: the year.

179
00:08:33,280 --> 00:08:35,200
Speaker 3: Chris, thank you so much, greatly appreciate.

180
00:08:39,440 --> 00:08:42,920
Speaker 4: We are heading toward the midyear level. We are two

181
00:08:43,040 --> 00:08:45,960
Speaker 4: days away from that reset. And joining us now to

182
00:08:45,960 --> 00:08:49,480
Speaker 4: help us reset is someone who is resetting in a

183
00:08:49,520 --> 00:08:52,360
Speaker 4: material way. Joseph Amato, President and Chief investment Officer for

184
00:08:52,400 --> 00:08:55,840
Speaker 4: Equities and Newberberger Berman and joining us here on set.

185
00:08:56,559 --> 00:09:00,319
Speaker 4: How are you, Joe changing your view head into the

186
00:09:00,360 --> 00:09:01,400
Speaker 4: second half of this year.

187
00:09:02,320 --> 00:09:04,640
Speaker 5: Well, we've had an intense debate, like there's going on

188
00:09:04,720 --> 00:09:07,080
Speaker 5: in the market, and you know, our debate within our

189
00:09:07,080 --> 00:09:10,160
Speaker 5: asset Allocation committee probably reflects a lot of the dispersion

190
00:09:10,200 --> 00:09:12,280
Speaker 5: that exists out there in the marketplace. We've got folks

191
00:09:12,280 --> 00:09:13,760
Speaker 5: that are quite bullish and we've got folks that are

192
00:09:13,840 --> 00:09:16,480
Speaker 5: quite verish. But we went into the year expecting the

193
00:09:16,520 --> 00:09:19,640
Speaker 5: economy to slow down at a more significant pace and

194
00:09:19,800 --> 00:09:22,720
Speaker 5: earnings to be more on the disappointing side, and that

195
00:09:22,760 --> 00:09:25,880
Speaker 5: really hasn't played out necessarily, so we went in underweight

196
00:09:26,640 --> 00:09:29,480
Speaker 5: equities and risk assets. We moved up in quality, and

197
00:09:29,520 --> 00:09:31,400
Speaker 5: that's been, you know, so far the wrong call, because

198
00:09:31,440 --> 00:09:33,960
Speaker 5: markets have been pretty good first half of the year, as.

199
00:09:33,800 --> 00:09:34,840
Speaker 3: You guys have talked about.

200
00:09:35,120 --> 00:09:37,559
Speaker 5: But as we debated the issues, and as it looks

201
00:09:37,640 --> 00:09:41,199
Speaker 5: like any slow down is probably extended and pushed out further,

202
00:09:41,679 --> 00:09:46,520
Speaker 5: the earnings decline pushed out further, we felt neutralize our bet,

203
00:09:47,040 --> 00:09:48,839
Speaker 5: sort of lived to fight another day and see, we

204
00:09:48,840 --> 00:09:50,720
Speaker 5: always have a chance to make that a change if

205
00:09:50,760 --> 00:09:54,440
Speaker 5: we see earnings disappoint But right now, you know, we

206
00:09:54,480 --> 00:09:57,679
Speaker 5: took that underweight off and still have a bias toward.

207
00:09:57,320 --> 00:09:59,120
Speaker 4: Quality for sure, So there's going to be more of

208
00:09:59,120 --> 00:10:01,760
Speaker 4: an aggressive shift, albeit on the margins, heading into the

209
00:10:01,800 --> 00:10:05,480
Speaker 4: second half. We've been debating all morning what's more important

210
00:10:05,800 --> 00:10:08,680
Speaker 4: what happens with the individual corporations or what happening and

211
00:10:08,720 --> 00:10:12,000
Speaker 4: what happens today at nine thirty am Eastern in Centro

212
00:10:12,160 --> 00:10:14,679
Speaker 4: with central bankers taking a hawkish tone, how much are

213
00:10:14,720 --> 00:10:17,439
Speaker 4: they still in the driver's seat of what happens next?

214
00:10:18,000 --> 00:10:20,640
Speaker 5: Central bankers are certainly still very much in the center

215
00:10:20,679 --> 00:10:23,560
Speaker 5: of debate around around what's going to happen in the

216
00:10:23,600 --> 00:10:26,720
Speaker 5: economy given the challenges that they have in inflation, and

217
00:10:27,160 --> 00:10:29,200
Speaker 5: you look at across the range of central banks, you

218
00:10:29,240 --> 00:10:31,080
Speaker 5: have a pretty wide dispersion there as well. You have

219
00:10:31,120 --> 00:10:33,960
Speaker 5: the US, which was more aggressive earlier on inflation, has

220
00:10:34,000 --> 00:10:36,520
Speaker 5: come down at a more rapid pace, although still we

221
00:10:36,600 --> 00:10:38,480
Speaker 5: think will be a challenge to get down to the

222
00:10:38,520 --> 00:10:41,400
Speaker 5: FEDCE target. On the other extreme, you've got Japan which

223
00:10:41,440 --> 00:10:45,520
Speaker 5: maintains a quite permissive, if you will, monetary policy, and

224
00:10:45,559 --> 00:10:47,960
Speaker 5: then the UK has got a real inflation problem, so

225
00:10:47,960 --> 00:10:50,160
Speaker 5: they've got to be more hawkish and there used to

226
00:10:50,200 --> 00:10:52,319
Speaker 5: be somewhere in the middle. So that's going to be

227
00:10:52,360 --> 00:10:54,520
Speaker 5: an important issue that we continue to watch over the

228
00:10:54,559 --> 00:10:55,280
Speaker 5: course of the second off.

229
00:10:55,200 --> 00:10:56,760
Speaker 3: Of the year. What matters right now?

230
00:10:56,800 --> 00:10:59,920
Speaker 1: I mean Newburger Berman is priding itself on active management,

231
00:11:00,000 --> 00:11:01,240
Speaker 1: and I want to go into the history of what

232
00:11:01,280 --> 00:11:04,320
Speaker 1: you'd accomplished with Lehman Brothers in a bit, but the

233
00:11:04,360 --> 00:11:08,120
Speaker 1: basic idea here away from passive active is factor analysis.

234
00:11:08,240 --> 00:11:10,680
Speaker 3: Right now. What factors matter into the end.

235
00:11:10,559 --> 00:11:14,400
Speaker 5: Of the year, Well, I think I think quality matters

236
00:11:14,880 --> 00:11:19,760
Speaker 5: for sure, and profitability because if we're in our broad allocations,

237
00:11:19,800 --> 00:11:22,040
Speaker 5: think more up in quality. Whether you're on the credit

238
00:11:22,080 --> 00:11:23,920
Speaker 5: side or the equity side. I think you want you

239
00:11:24,000 --> 00:11:28,800
Speaker 5: want to certainly be overweight that factor and beta. You probably,

240
00:11:29,080 --> 00:11:31,240
Speaker 5: in our view, you want to be underweight beta in

241
00:11:31,280 --> 00:11:33,000
Speaker 5: that sense, you know, again with a bit of a

242
00:11:33,000 --> 00:11:36,080
Speaker 5: more defensive posture. Even though we've neutralized our equity bet again,

243
00:11:36,120 --> 00:11:39,120
Speaker 5: we still lean toward lower beta, higher quality.

244
00:11:40,320 --> 00:11:44,439
Speaker 1: I look at where we are and a bullmarket unloved.

245
00:11:44,840 --> 00:11:47,520
Speaker 1: Can you calibrate and see you on a second leg

246
00:11:47,520 --> 00:11:51,199
Speaker 1: of a bullmarket clicks in? I mean, there was seventy

247
00:11:51,280 --> 00:11:54,240
Speaker 1: six seventy seven, which no one expected after the moon

248
00:11:54,320 --> 00:11:57,079
Speaker 1: shut off of seventy four. Can you find a second

249
00:11:57,120 --> 00:11:58,800
Speaker 1: leg of a bull market or do you just have

250
00:11:58,880 --> 00:12:01,400
Speaker 1: to go back to core fundamental analysis.

251
00:12:02,240 --> 00:12:06,600
Speaker 5: I think the level of dispersion that exists within the

252
00:12:06,640 --> 00:12:08,800
Speaker 5: economy I think to suggest we still need to do

253
00:12:08,840 --> 00:12:11,360
Speaker 5: a lot of bottom up analysis as it relates to

254
00:12:11,679 --> 00:12:14,320
Speaker 5: a bull market. Where we are, it's been you know,

255
00:12:14,360 --> 00:12:17,000
Speaker 5: the equity markets have been quite perplexing over the first

256
00:12:17,000 --> 00:12:19,520
Speaker 5: half of the year because you've had a group of

257
00:12:19,800 --> 00:12:23,360
Speaker 5: seven extraordinary stocks that are up fifty sixty percent that

258
00:12:23,440 --> 00:12:26,880
Speaker 5: dominate the US large cap index. As again, you guys

259
00:12:26,880 --> 00:12:28,600
Speaker 5: talk a lot about and then you've got everything else

260
00:12:28,880 --> 00:12:32,920
Speaker 5: and that everything else has been flatished up modestly. So

261
00:12:33,000 --> 00:12:35,160
Speaker 5: that's been you know, that's been a challenge if you're

262
00:12:35,200 --> 00:12:38,000
Speaker 5: trying to invest and you see the index perform so well,

263
00:12:38,600 --> 00:12:40,800
Speaker 5: yet some of these you know, very few active managers

264
00:12:40,840 --> 00:12:43,120
Speaker 5: are going to put forty percent of their portfolio in

265
00:12:43,200 --> 00:12:45,719
Speaker 5: seven stocks right to be overweight the megacap. So it's

266
00:12:45,720 --> 00:12:47,760
Speaker 5: been you feel, as an active manager, you've been just

267
00:12:47,840 --> 00:12:48,760
Speaker 5: chasing your tail over.

268
00:12:48,640 --> 00:12:49,400
Speaker 3: The first half of the year.

269
00:12:49,440 --> 00:12:52,000
Speaker 4: We're speaking with Joe Motto of Neuberger Berman CIO for

270
00:12:52,040 --> 00:12:55,440
Speaker 4: Equities over there at a time we are resetting into

271
00:12:55,480 --> 00:12:57,400
Speaker 4: the new year and into the new half of the year,

272
00:12:57,440 --> 00:12:59,800
Speaker 4: it feels like a new year. We've been talking a

273
00:12:59,800 --> 00:13:01,640
Speaker 4: lot about some of the trends, and you said that

274
00:13:01,679 --> 00:13:03,440
Speaker 4: there are a number of stocks that have dominated with

275
00:13:03,559 --> 00:13:07,040
Speaker 4: forty fifty sixty percent gains. I think chip makers, and

276
00:13:07,080 --> 00:13:09,480
Speaker 4: then I think geopolitical risk and what we see this

277
00:13:09,600 --> 00:13:14,439
Speaker 4: morning with a proposed plan by the Biden administration. Are

278
00:13:14,480 --> 00:13:17,480
Speaker 4: you going all in on AI. Are you seeing this

279
00:13:17,559 --> 00:13:21,320
Speaker 4: as a lasting trend that can withstand any geopolitical tensions,

280
00:13:21,760 --> 00:13:24,280
Speaker 4: or are you kind of being more tepid about it.

281
00:13:24,840 --> 00:13:25,520
Speaker 3: I think AA is.

282
00:13:25,520 --> 00:13:27,720
Speaker 5: Going to be an incredible long term trend for sure.

283
00:13:27,800 --> 00:13:29,320
Speaker 5: I mean that's going to be as profound as some

284
00:13:29,360 --> 00:13:31,000
Speaker 5: of the things we've seen over the last twenty twenty

285
00:13:31,000 --> 00:13:35,880
Speaker 5: five years. Similar to the Internet broadly broadly defined, but

286
00:13:35,960 --> 00:13:39,719
Speaker 5: as we have seen with different technological innovations, you have

287
00:13:39,840 --> 00:13:42,679
Speaker 5: sort of a boom bust period, things consolidate, and then

288
00:13:42,720 --> 00:13:44,319
Speaker 5: you have long term growth. So I think AI is

289
00:13:44,320 --> 00:13:45,959
Speaker 5: probably going to go through that, but it's going to

290
00:13:45,960 --> 00:13:48,280
Speaker 5: be quite profound. I know, from our firm standpoint, we're

291
00:13:48,320 --> 00:13:50,960
Speaker 5: all in. We're diving in deeply in terms of how

292
00:13:50,960 --> 00:13:54,160
Speaker 5: it can enhance our productivity and our investment insights. So

293
00:13:54,800 --> 00:13:57,880
Speaker 5: it's quite quite important. At the same time, you raise

294
00:13:57,920 --> 00:14:02,120
Speaker 5: the geopolitical issues, which, having just been in China, you know,

295
00:14:02,160 --> 00:14:04,320
Speaker 5: it's an issue that we're very focused on. It's an

296
00:14:04,360 --> 00:14:07,240
Speaker 5: issue that Chinese are very focused on, and I think

297
00:14:07,240 --> 00:14:09,520
Speaker 5: as it relates to AI, that's probably one of the

298
00:14:09,520 --> 00:14:13,160
Speaker 5: most sensitive issues in the transfer of technology between the

299
00:14:13,240 --> 00:14:15,000
Speaker 5: US and China. I think it's going to continue to

300
00:14:15,000 --> 00:14:16,600
Speaker 5: be an issue you guys talked about this morning in

301
00:14:16,640 --> 00:14:20,720
Speaker 5: terms of potential restrictions on selling chips.

302
00:14:20,480 --> 00:14:24,120
Speaker 3: And now, folks, the most important conversation with the global

303
00:14:24,120 --> 00:14:28,360
Speaker 3: Wall Street to the place is of the Lehman Brothers.

304
00:14:28,880 --> 00:14:30,080
Speaker 3: I'm going to cut to the chase.

305
00:14:30,120 --> 00:14:33,360
Speaker 1: There's blood in the street. Credit SUEEE is throwing thousands out.

306
00:14:33,400 --> 00:14:37,000
Speaker 1: Every other firm is throwing those fancy ib bankers out

307
00:14:37,000 --> 00:14:40,360
Speaker 1: the door that you can't stand. You and Jack Riffkin

308
00:14:41,040 --> 00:14:44,400
Speaker 1: build Lehman Brothers from nineteen ninety seven to two thousand

309
00:14:44,440 --> 00:14:47,600
Speaker 1: and three. I remember looking at the cell side analyst,

310
00:14:47,800 --> 00:14:50,640
Speaker 1: is the sheets rather, Lisa, this is when we had

311
00:14:50,720 --> 00:14:55,400
Speaker 1: printed research reports. They got better every year until Lehman

312
00:14:55,480 --> 00:14:59,160
Speaker 1: dominated the business in Newburger Burman involved with that and

313
00:14:59,280 --> 00:15:02,320
Speaker 1: all that is that a history of the past. Are

314
00:15:02,360 --> 00:15:05,320
Speaker 1: we at a point now where we're taking the intellectual

315
00:15:05,440 --> 00:15:08,480
Speaker 1: capital out of the business with all these layoffs, all

316
00:15:08,520 --> 00:15:10,840
Speaker 1: this uproar that's going on in the street right now.

317
00:15:12,280 --> 00:15:15,680
Speaker 5: I don't think so, Tom. I think the fundamental bottom

318
00:15:15,800 --> 00:15:19,640
Speaker 5: up analytical work that helped propel us back in the

319
00:15:19,720 --> 00:15:23,040
Speaker 5: day in terms of our own research rankings or the

320
00:15:23,080 --> 00:15:26,760
Speaker 5: work that we do today at Newburger Burman is still

321
00:15:26,880 --> 00:15:30,640
Speaker 5: hugely important. You have different tools that you use, right

322
00:15:30,680 --> 00:15:34,680
Speaker 5: the bar is higher, for sure. I think the cell

323
00:15:34,760 --> 00:15:37,600
Speaker 5: side has underinvested in research over the course of the

324
00:15:37,680 --> 00:15:39,320
Speaker 5: past decade or so.

325
00:15:39,320 --> 00:15:41,480
Speaker 1: What do you what do you want to see from

326
00:15:41,520 --> 00:15:43,440
Speaker 1: the big banks. If we were having a conversation right

327
00:15:43,440 --> 00:15:45,400
Speaker 1: now with Brian moynhan in the future of Bank of

328
00:15:45,440 --> 00:15:48,720
Speaker 1: America securities research, what would be your counsel to mister

329
00:15:48,800 --> 00:15:50,640
Speaker 1: moynhand Oh.

330
00:15:51,240 --> 00:15:54,800
Speaker 5: I think the breadth of global research that these firms

331
00:15:54,840 --> 00:15:56,680
Speaker 5: are committed to is important to us. We're a global

332
00:15:56,720 --> 00:15:58,920
Speaker 5: investment manager, so there are a lot of parts of

333
00:15:58,960 --> 00:16:02,760
Speaker 5: the globe, whether it's the small cap space or large

334
00:16:02,800 --> 00:16:04,800
Speaker 5: cap for that matter, that have less coverage. Now in

335
00:16:04,800 --> 00:16:08,240
Speaker 5: some respects that's advantageous to active managers because we've invested

336
00:16:08,280 --> 00:16:11,320
Speaker 5: a huge amount research. So the more inefficient the cell

337
00:16:11,400 --> 00:16:13,320
Speaker 5: side is, if you will, the more advantage we have

338
00:16:13,400 --> 00:16:16,200
Speaker 5: as a byside firm if we're committed to research. But

339
00:16:16,280 --> 00:16:19,400
Speaker 5: that said, we value quality research and if it's provided

340
00:16:19,400 --> 00:16:22,880
Speaker 5: by whether it's Brian Mornhance firm or other large firms,

341
00:16:23,640 --> 00:16:24,720
Speaker 5: that's super valuable to us.

342
00:16:24,760 --> 00:16:26,600
Speaker 1: I don't want the dust break with the credit sweets

343
00:16:26,680 --> 00:16:30,240
Speaker 1: resumes coming in. Joseph Amato is at Newburger.

344
00:16:29,880 --> 00:16:41,160
Speaker 3: Burman right now.

345
00:16:41,240 --> 00:16:45,040
Speaker 1: Joining us is Way lead Global chief investment strategist at

346
00:16:45,080 --> 00:16:48,160
Speaker 1: black Rock, and there's always fourteen things to talk about.

347
00:16:48,200 --> 00:16:50,720
Speaker 1: I really want to lead with Secretary Yellen into China

348
00:16:50,720 --> 00:16:54,240
Speaker 1: and what China means within an investment strategy, but I

349
00:16:54,280 --> 00:16:55,960
Speaker 1: got to rip up the script here. There's a guy

350
00:16:56,040 --> 00:16:59,640
Speaker 1: named Fink who's talking about something black Rock has led on.

351
00:17:00,120 --> 00:17:01,960
Speaker 1: You've been directly involved.

352
00:17:01,480 --> 00:17:06,040
Speaker 3: With this, which is the value, the efficacy, the usefulness

353
00:17:06,080 --> 00:17:07,040
Speaker 3: of ESG.

354
00:17:08,200 --> 00:17:11,320
Speaker 1: Larry's come out as a real proponent of talking about

355
00:17:11,320 --> 00:17:12,560
Speaker 1: it inside.

356
00:17:12,600 --> 00:17:15,440
Speaker 3: It's been a challenging time out of the pandemic a

357
00:17:15,560 --> 00:17:19,960
Speaker 3: color force. How you are reinterpreting ESG right now within

358
00:17:20,000 --> 00:17:21,800
Speaker 3: your investment strategy.

359
00:17:21,840 --> 00:17:27,520
Speaker 6: Well, sustainable investing is investing right. We're incorporating considerations around

360
00:17:27,600 --> 00:17:32,000
Speaker 6: the impact of climate in our capitol market assumption. We're

361
00:17:32,040 --> 00:17:35,879
Speaker 6: also thinking about how the transition could look like and

362
00:17:35,920 --> 00:17:40,520
Speaker 6: really thinking about how that then is reflected in portfolio construction.

363
00:17:40,920 --> 00:17:45,480
Speaker 6: Toward extent, it is really in the price. So as

364
00:17:45,480 --> 00:17:51,000
Speaker 6: we think about transition as one example of mega forces,

365
00:17:51,119 --> 00:17:54,840
Speaker 6: what we're doing actually in this media outlook that we're

366
00:17:54,880 --> 00:18:00,000
Speaker 6: releasing today is that we're prominently highlighting a few mega forces,

367
00:18:00,280 --> 00:18:04,920
Speaker 6: including sustainability and transition to net zero, but also including

368
00:18:05,000 --> 00:18:11,399
Speaker 6: gropolitical fragmentation, including aging demographics, including AI to really incorporate

369
00:18:11,480 --> 00:18:13,880
Speaker 6: those mega forces in portfolio construction.

370
00:18:13,960 --> 00:18:16,040
Speaker 4: As you put the review out two days left in

371
00:18:16,080 --> 00:18:18,400
Speaker 4: the first half of the year, what changes for you

372
00:18:18,520 --> 00:18:21,000
Speaker 4: in terms of your positioning after six months of being

373
00:18:21,040 --> 00:18:22,119
Speaker 4: really cautious.

374
00:18:23,040 --> 00:18:26,320
Speaker 6: Well, I think the biggest change is as we think

375
00:18:26,359 --> 00:18:30,199
Speaker 6: about kind of the environment where yields have reason is

376
00:18:30,240 --> 00:18:35,160
Speaker 6: that we're actually within fixed income excited about opportunities across

377
00:18:35,200 --> 00:18:37,440
Speaker 6: the spectrum. So we have been talking a lot about

378
00:18:37,480 --> 00:18:39,639
Speaker 6: front end of the curve, which we still like, but

379
00:18:39,720 --> 00:18:43,360
Speaker 6: we're actually also putting cash to work across the broader

380
00:18:43,560 --> 00:18:49,200
Speaker 6: exposures in a fix income, including MBS mortgage backed securities,

381
00:18:49,320 --> 00:18:53,720
Speaker 6: including inflation linked bonds, especially in the US, and also

382
00:18:53,800 --> 00:18:57,400
Speaker 6: including high grade credit and local currency, emergent market debt,

383
00:18:57,600 --> 00:18:59,840
Speaker 6: and more broadly, as we think about what has changed,

384
00:19:00,080 --> 00:19:03,520
Speaker 6: we're rolling out the new investment playbook, where the first

385
00:19:03,640 --> 00:19:07,879
Speaker 6: layer is around macro based as a location, but macro

386
00:19:07,960 --> 00:19:10,679
Speaker 6: can only take us this far in this environment of

387
00:19:10,680 --> 00:19:14,240
Speaker 6: supply constraint, so we're also thinking about having the second

388
00:19:14,280 --> 00:19:22,639
Speaker 6: layer of very granular, uncorrelated individual investment opportunities to overlay

389
00:19:22,840 --> 00:19:24,760
Speaker 6: on top of the first layer, and then the third

390
00:19:24,800 --> 00:19:26,120
Speaker 6: layer is the megaphosis diet.

391
00:19:26,160 --> 00:19:30,119
Speaker 4: It is talked about where is the idiosyncrasy of artificial

392
00:19:30,119 --> 00:19:32,520
Speaker 4: intelligence in the overlay that you talk about?

393
00:19:33,119 --> 00:19:36,120
Speaker 6: Well, so far, if you look at markets this year,

394
00:19:36,240 --> 00:19:40,600
Speaker 6: it's been a very narrow thematic markets, right, So that

395
00:19:40,640 --> 00:19:44,639
Speaker 6: has taught us that just base as a location a

396
00:19:44,840 --> 00:19:49,480
Speaker 6: macro assessment along is not enough anymore. So far, we

397
00:19:49,560 --> 00:19:53,600
Speaker 6: have talked about bias towards quality, a tute towards quality

398
00:19:53,760 --> 00:19:57,760
Speaker 6: in our US equity allocation. But what we're doing differently

399
00:19:57,840 --> 00:20:00,159
Speaker 6: at this media outlook is to break that out and

400
00:20:00,280 --> 00:20:05,200
Speaker 6: explicitly call out a conviction in develop market AI which

401
00:20:05,240 --> 00:20:08,120
Speaker 6: we have had indirect exposure towards, but now we want

402
00:20:08,119 --> 00:20:11,879
Speaker 6: to call them out explicitly because the interplay between the

403
00:20:12,000 --> 00:20:16,760
Speaker 6: cyclical framing and the structural mega forces is so complicated

404
00:20:16,760 --> 00:20:19,560
Speaker 6: and nuanced that we cannot afford to model them and

405
00:20:19,600 --> 00:20:20,520
Speaker 6: mix them up together.

406
00:20:20,680 --> 00:20:24,960
Speaker 1: Your san outlook, here is a view from sixty thousand feet.

407
00:20:25,040 --> 00:20:28,320
Speaker 1: It is very macro, It is very big picture, and

408
00:20:28,400 --> 00:20:32,960
Speaker 1: in the middle of it is a massive micro reality.

409
00:20:33,600 --> 00:20:37,560
Speaker 1: You say that the pandemic supply constraints that have affected

410
00:20:37,600 --> 00:20:41,240
Speaker 1: the world will have a persistency that they will be

411
00:20:41,400 --> 00:20:45,840
Speaker 1: permanent in some way. That's a stunning statement. Why can't

412
00:20:45,880 --> 00:20:49,400
Speaker 1: we get back to supply demand normality?

413
00:20:50,400 --> 00:20:54,840
Speaker 6: While some of that supply constraint is pandemic induced, but

414
00:20:54,920 --> 00:20:57,200
Speaker 6: a lot of that is getting washed out in terms

415
00:20:57,200 --> 00:21:00,960
Speaker 6: of the cyclical pandemic induced supply consc. But what we

416
00:21:01,040 --> 00:21:04,000
Speaker 6: are putting out, which we have been off the view

417
00:21:04,080 --> 00:21:06,439
Speaker 6: for a while, is that we're moving away from the

418
00:21:06,520 --> 00:21:12,120
Speaker 6: last thirty forty years of Great Moderation characterized by demound

419
00:21:12,240 --> 00:21:16,240
Speaker 6: shocks to the current environment characterized by supply constraint coming

420
00:21:16,240 --> 00:21:20,959
Speaker 6: from structural forces like the Nazeral transition, like geopolitical fragmentation,

421
00:21:21,200 --> 00:21:24,679
Speaker 6: and also aging demographics. And what that means in the

422
00:21:24,680 --> 00:21:27,560
Speaker 6: context of this week being the CenTra a week, is

423
00:21:27,560 --> 00:21:29,919
Speaker 6: that when it comes to central bank policy, you know,

424
00:21:30,040 --> 00:21:34,560
Speaker 6: during the Great Moderation, because of the structural this inflation

425
00:21:35,119 --> 00:21:39,199
Speaker 6: are they were inclined to keep policy easy and the

426
00:21:39,240 --> 00:21:39,760
Speaker 6: rest large.

427
00:21:39,960 --> 00:21:41,400
Speaker 3: For fifteen years that was.

428
00:21:41,400 --> 00:21:43,720
Speaker 6: Easy, and then now they're in an environment where they

429
00:21:43,760 --> 00:21:47,440
Speaker 6: are actually they need to keep policy tight in order

430
00:21:47,520 --> 00:21:49,720
Speaker 6: to lean against this inflationary pressure.

431
00:21:49,840 --> 00:21:52,159
Speaker 1: Mathematically, what we've got here was we finally got a

432
00:21:52,200 --> 00:21:54,400
Speaker 1: return to a risk free rate. We've got a legitimate

433
00:21:54,440 --> 00:21:57,840
Speaker 1: sharp ratio with our question some of the traditional dynamics

434
00:21:58,040 --> 00:22:01,240
Speaker 1: when I studied in book, What does that mean for

435
00:22:01,280 --> 00:22:02,600
Speaker 1: the center panel today?

436
00:22:02,880 --> 00:22:04,720
Speaker 3: What are you going to listen for from these.

437
00:22:04,560 --> 00:22:08,000
Speaker 1: People about their new reality which is a reality from

438
00:22:08,040 --> 00:22:09,000
Speaker 1: seventeen years ago.

439
00:22:10,080 --> 00:22:13,480
Speaker 6: Their new reality is the reality from maybe even thirty

440
00:22:13,560 --> 00:22:17,360
Speaker 6: forty years ago, right, because the Great Moderation is over,

441
00:22:17,560 --> 00:22:22,240
Speaker 6: including the period after Great after the global financial crisis.

442
00:22:22,400 --> 00:22:24,960
Speaker 6: So what I will be paying attention to is to

443
00:22:25,080 --> 00:22:30,159
Speaker 6: understand if they acknowledge the tradeoffs facing them, which is

444
00:22:30,200 --> 00:22:33,520
Speaker 6: that the cost of fighting inflation in a supply constrained

445
00:22:33,600 --> 00:22:36,560
Speaker 6: environment is a lot higher. So if they acknowledge that,

446
00:22:36,640 --> 00:22:39,280
Speaker 6: and also number two, what are they going to choose

447
00:22:39,280 --> 00:22:42,440
Speaker 6: when faced with this stark trade off growth or inflation.

448
00:22:42,560 --> 00:22:44,760
Speaker 4: There's a real tension when you were speaking, and is

449
00:22:44,760 --> 00:22:48,399
Speaker 4: there a possibility for markets for US equities to rally

450
00:22:48,480 --> 00:22:51,000
Speaker 4: even if we do get a recession and even if

451
00:22:51,240 --> 00:22:53,840
Speaker 4: the FED does become very hakish and we get that.

452
00:22:54,080 --> 00:22:55,920
Speaker 4: Is that what you're saying that you could still see

453
00:22:55,920 --> 00:22:59,959
Speaker 4: the market respond in an untraditional way to a central

454
00:23:00,080 --> 00:23:01,160
Speaker 4: and can you slow down.

455
00:23:01,560 --> 00:23:05,720
Speaker 6: Well, US equity market. Currently, the broad market is still

456
00:23:05,800 --> 00:23:09,439
Speaker 6: pricing in earnings to accelerate in the second half of

457
00:23:09,440 --> 00:23:12,240
Speaker 6: the year, which in the context of growth slow down

458
00:23:12,560 --> 00:23:14,720
Speaker 6: is too optimistic, which is why as we think about

459
00:23:14,800 --> 00:23:17,399
Speaker 6: US allocation for the broader market, when it comes to

460
00:23:17,600 --> 00:23:20,399
Speaker 6: US equities, we have a minus one out of a

461
00:23:20,480 --> 00:23:23,720
Speaker 6: scale of minus three to plus three. And translating that

462
00:23:23,840 --> 00:23:27,600
Speaker 6: into portfolios global portfolio US equity is the benchmark is

463
00:23:27,640 --> 00:23:31,840
Speaker 6: around thirty three percent. This minus one modest underweight to

464
00:23:31,920 --> 00:23:34,720
Speaker 6: translate to about thirty one percent. So we're invested, but

465
00:23:34,800 --> 00:23:38,520
Speaker 6: we're modestly underweight. Now, having said that, there are themes

466
00:23:38,600 --> 00:23:41,440
Speaker 6: that we would like to embrace, such as artificial intelligence,

467
00:23:41,480 --> 00:23:43,680
Speaker 6: so we kind of add that on top of the

468
00:23:43,720 --> 00:23:48,280
Speaker 6: broad market underweight modest to underweight to get to a

469
00:23:48,440 --> 00:23:52,600
Speaker 6: closer to neutral but not quite there, which is still modest.

470
00:23:52,640 --> 00:23:59,400
Speaker 3: Jown Willie, thank you so much. With black rock. What

471
00:23:59,480 --> 00:24:00,680
Speaker 3: is it about the airlines?

472
00:24:00,760 --> 00:24:04,000
Speaker 1: Helene Becker joins the SOW Senior Research analyst Most Hated

473
00:24:04,040 --> 00:24:05,480
Speaker 1: person in the World at TD.

474
00:24:05,440 --> 00:24:08,800
Speaker 3: Cowen This morning, Helene, I'm just going to cut to

475
00:24:08,880 --> 00:24:12,439
Speaker 3: the chase. Who do we blame for this early summer mess?

476
00:24:14,600 --> 00:24:19,720
Speaker 7: So it's weather and then there's the airlines who are prepared,

477
00:24:20,000 --> 00:24:24,280
Speaker 7: but there's the government who's not prepared. So the airlines

478
00:24:24,320 --> 00:24:28,280
Speaker 7: are doing less with more that they have more employees

479
00:24:28,320 --> 00:24:31,320
Speaker 7: now than they did in twenty eighteen, but the government

480
00:24:31,400 --> 00:24:34,160
Speaker 7: has fewer air traffic controllers now than they did four

481
00:24:34,240 --> 00:24:38,160
Speaker 7: years ago. And this mess is going to continue for

482
00:24:38,200 --> 00:24:41,479
Speaker 7: the next at least five or seven years because the

483
00:24:41,600 --> 00:24:45,520
Speaker 7: FAA doesn't seem to have a plan to resolve the

484
00:24:45,560 --> 00:24:49,000
Speaker 7: shortage of air traffic controllers. We're supposed to have fourteen thousand,

485
00:24:49,080 --> 00:24:52,360
Speaker 7: we only have eleven. I think something like twenty five

486
00:24:52,440 --> 00:24:56,600
Speaker 7: hundred retired in the last couple of years, and the

487
00:24:56,640 --> 00:25:00,199
Speaker 7: government was supposed to hire fifteen hundred this year. We

488
00:25:00,240 --> 00:25:04,480
Speaker 7: find something like nine hundred and sixty or seventy. We

489
00:25:04,520 --> 00:25:07,280
Speaker 7: expect about half that many to retire and half that

490
00:25:07,320 --> 00:25:09,440
Speaker 7: many to wash out, so they're only going to net

491
00:25:09,480 --> 00:25:13,160
Speaker 7: about five hundred and when you're short, three thousand, five

492
00:25:13,240 --> 00:25:17,000
Speaker 7: hundred into three thousand and six. So yeah, this problem's

493
00:25:17,040 --> 00:25:18,160
Speaker 7: going to last for a while.

494
00:25:18,600 --> 00:25:21,679
Speaker 1: Some of us have a certain vintage, can remember saying

495
00:25:21,680 --> 00:25:25,320
Speaker 1: in any great train station, South Station, Boston, Union Station,

496
00:25:26,240 --> 00:25:28,879
Speaker 1: in Washington, I spent a whole night once in the

497
00:25:28,920 --> 00:25:32,199
Speaker 1: Omaha train station, and the trains used to be like

498
00:25:32,240 --> 00:25:35,600
Speaker 1: people all lined up going in eight different directions. Are

499
00:25:35,600 --> 00:25:39,520
Speaker 1: we asking too much of the airlines to be like

500
00:25:39,600 --> 00:25:42,879
Speaker 1: our train stations of another time and place? Is it

501
00:25:43,000 --> 00:25:46,160
Speaker 1: too much to ask for Newark to be the old

502
00:25:46,240 --> 00:25:47,440
Speaker 1: Penn Central.

503
00:25:48,080 --> 00:25:51,480
Speaker 7: And it's not, and it should be. It should not

504
00:25:51,640 --> 00:25:55,560
Speaker 7: have these problems. The airlines, I mean, the airports I'll

505
00:25:55,600 --> 00:25:58,800
Speaker 7: start there, are just bursting at the seams because demand

506
00:25:58,920 --> 00:26:03,719
Speaker 7: is just so strong. United is forecasting that between June

507
00:26:03,880 --> 00:26:07,760
Speaker 7: thirtieth and September fifth or fourth, whenever Labor Day is,

508
00:26:08,000 --> 00:26:11,040
Speaker 7: they're going to carry five million passengers, and if you

509
00:26:11,119 --> 00:26:13,480
Speaker 7: kind of extrapolate that out to American in Delta, it's

510
00:26:13,480 --> 00:26:16,359
Speaker 7: probably similar. So that's fifteen million right there, and then

511
00:26:16,359 --> 00:26:18,200
Speaker 7: you add in all the other airlines you'd probably have

512
00:26:18,240 --> 00:26:20,879
Speaker 7: another nine or ten million. So we're looking at twenty

513
00:26:20,880 --> 00:26:22,600
Speaker 7: four to twenty five million people that are going to

514
00:26:22,600 --> 00:26:25,600
Speaker 7: travel over the next three months, the rest of June,

515
00:26:25,720 --> 00:26:29,960
Speaker 7: what's that two months July and August, and the industry

516
00:26:29,960 --> 00:26:32,680
Speaker 7: should be able to handle if they have relatively new aircraft.

517
00:26:33,000 --> 00:26:35,800
Speaker 7: You look at American, Delta, United, they've all been refleeting

518
00:26:36,760 --> 00:26:41,399
Speaker 7: most of the other airlines, the Jet Blue, Spirit, Frontier Southwest.

519
00:26:41,440 --> 00:26:45,080
Speaker 7: They also have Young fully Fish and fleets, and so

520
00:26:45,119 --> 00:26:50,000
Speaker 7: it's not an aircraft maintenance problem. It's just that weather

521
00:26:50,160 --> 00:26:54,080
Speaker 7: rolls in and the FAA goes on a ground stop

522
00:26:54,200 --> 00:26:56,880
Speaker 7: and instead of lifting it in an hour or half

523
00:26:56,920 --> 00:27:00,439
Speaker 7: an hour, they it lasts for three or five and

524
00:27:00,480 --> 00:27:02,720
Speaker 7: then crews start to time out. I mean, we still

525
00:27:02,760 --> 00:27:06,320
Speaker 7: have the safest airline system in the world. So you

526
00:27:06,400 --> 00:27:11,000
Speaker 7: add all that, and you add all these people into

527
00:27:11,080 --> 00:27:14,200
Speaker 7: the next and you wind up with these awful delays

528
00:27:14,200 --> 00:27:16,320
Speaker 7: and cancelations and unhappy travelers.

529
00:27:16,480 --> 00:27:19,600
Speaker 4: Alane, yesterday we did hear from Delta CEO at their

530
00:27:19,640 --> 00:27:24,080
Speaker 4: annual meeting, and he acknowledged that business travel is still

531
00:27:24,119 --> 00:27:28,520
Speaker 4: twenty five percent below where it was pre pandemic, given

532
00:27:28,600 --> 00:27:30,560
Speaker 4: all the roadblocks, given the expense.

533
00:27:30,920 --> 00:27:31,880
Speaker 2: Do you expect it.

534
00:27:31,840 --> 00:27:33,840
Speaker 4: To get back to the same levels that it used

535
00:27:33,840 --> 00:27:35,560
Speaker 4: to be, so.

536
00:27:36,280 --> 00:27:41,080
Speaker 7: Lisa, yes and no, the typical analyst answer. So when

537
00:27:41,080 --> 00:27:45,520
Speaker 7: you think about business travel and GDP, it should get

538
00:27:45,560 --> 00:27:49,480
Speaker 7: back to it should be the same percentage of GDP

539
00:27:49,680 --> 00:27:53,120
Speaker 7: as it was in the past. And I think what

540
00:27:53,160 --> 00:27:57,359
Speaker 7: you don't see is that people are just traveling differently

541
00:27:57,720 --> 00:28:03,280
Speaker 7: and from a corporate like large corporate tech for example.

542
00:28:03,400 --> 00:28:06,480
Speaker 7: Tech people from the tech industry haven't really come back.

543
00:28:06,520 --> 00:28:11,160
Speaker 7: Financial services hasn't really come back, So from that perspective,

544
00:28:11,400 --> 00:28:15,320
Speaker 7: we're not expecting it to come back. But we are

545
00:28:15,400 --> 00:28:19,159
Speaker 7: expecting the same number of people to travel for work

546
00:28:19,280 --> 00:28:21,639
Speaker 7: as we've seen in the past on a relative to

547
00:28:21,760 --> 00:28:25,040
Speaker 7: GDP basis. But think about it, Lisa, we're seeing two

548
00:28:25,119 --> 00:28:27,119
Speaker 7: and a half to two point seven million people a

549
00:28:27,240 --> 00:28:30,480
Speaker 7: day travel. That's what we saw in twenty eighteen, with

550
00:28:31,000 --> 00:28:34,640
Speaker 7: twenty five percent more business travelers and fifteen percent more

551
00:28:34,680 --> 00:28:35,800
Speaker 7: international travelers.

552
00:28:35,880 --> 00:28:38,560
Speaker 4: And Helene to that point, and just quickly here, there

553
00:28:38,560 --> 00:28:42,400
Speaker 4: has been a shift under the cover of businesses using

554
00:28:42,680 --> 00:28:46,160
Speaker 4: economy instead of business class because of how much the

555
00:28:46,200 --> 00:28:50,320
Speaker 4: prices there have risen and companies trying to restrain costs.

556
00:28:50,640 --> 00:28:54,240
Speaker 4: How much is that part of why costs, why the

557
00:28:54,280 --> 00:28:57,480
Speaker 4: revenues for some of these airlines isn't picking up from

558
00:28:57,520 --> 00:28:58,880
Speaker 4: business in the same kind of way.

559
00:28:59,520 --> 00:29:03,680
Speaker 7: Yeah, exactly, so so so customers. Businesses are trading down

560
00:29:03,720 --> 00:29:09,080
Speaker 7: from business class to premium premium economies, and then people

561
00:29:09,160 --> 00:29:13,120
Speaker 7: are using mileage their own miles to upgrade into into

562
00:29:13,160 --> 00:29:16,080
Speaker 7: the front cabin. So we definitely are seeing that. And yes, Lisa,

563
00:29:16,120 --> 00:29:17,120
Speaker 7: that's a part of it too.

564
00:29:17,520 --> 00:29:18,680
Speaker 3: What's your single best buy?

565
00:29:20,480 --> 00:29:24,960
Speaker 7: So our top three picks are United, Delta, and Copa

566
00:29:24,960 --> 00:29:26,320
Speaker 7: Airlines in that order.

567
00:29:27,080 --> 00:29:29,440
Speaker 3: Interesting, what's the United Delta distinction?

568
00:29:31,360 --> 00:29:34,760
Speaker 7: So United's bigger in international markets right now than Delta

569
00:29:34,880 --> 00:29:39,600
Speaker 7: is United as about fifty percent international, fifty percent domestic

570
00:29:39,680 --> 00:29:44,080
Speaker 7: and Delta sixty forty domestic international. And the travel is

571
00:29:44,160 --> 00:29:47,680
Speaker 7: really international this summer. So that's that's the difference.

572
00:29:47,840 --> 00:29:49,600
Speaker 3: Helene Backer, brilliant. Thank you so much.

573
00:30:00,120 --> 00:30:04,600
Speaker 1: Paul. You know it's widely understood. I mean whether you

574
00:30:04,640 --> 00:30:07,360
Speaker 1: go to Rosy's or Flora. I mean, the fact is

575
00:30:07,640 --> 00:30:11,600
Speaker 1: every day is brunch day in the Hampshire tearing himself

576
00:30:11,640 --> 00:30:14,840
Speaker 1: away from brunch a three hour brunch joining us now

577
00:30:14,880 --> 00:30:16,960
Speaker 1: Douglas cass use theest case.

578
00:30:17,720 --> 00:30:20,440
Speaker 8: It is a pleasure speak to the Bob Weir and

579
00:30:20,520 --> 00:30:22,600
Speaker 8: John Mayer business commentators.

580
00:30:22,760 --> 00:30:25,640
Speaker 1: Well, we've had a lot of fun with it your coverage. Frankly, folks,

581
00:30:25,920 --> 00:30:28,920
Speaker 1: I'm not a deadhead. I mean I'm really I'm a

582
00:30:29,040 --> 00:30:34,080
Speaker 1: child compared to Jerome Pal But I gotta admit Doug

583
00:30:34,120 --> 00:30:38,600
Speaker 1: Your's spirit of covering the dead and company traveling around

584
00:30:38,760 --> 00:30:42,040
Speaker 1: in honor of fifty years of music has been great?

585
00:30:42,520 --> 00:30:44,200
Speaker 1: Were you in Ithaca.

586
00:30:43,760 --> 00:30:44,320
Speaker 3: When I was?

587
00:30:44,400 --> 00:30:47,520
Speaker 1: When we were buying white bootleg albums?

588
00:30:47,960 --> 00:30:53,680
Speaker 8: By the way, the greatest universally agreed that the greatest

589
00:30:53,680 --> 00:30:56,520
Speaker 8: grave of the concert era was in Barton Hall at

590
00:30:56,520 --> 00:30:59,480
Speaker 8: Cornell University May's nineteen seventy seven.

591
00:31:00,280 --> 00:31:01,920
Speaker 1: It was great about that was you go over to

592
00:31:01,960 --> 00:31:05,840
Speaker 1: the Rangovian Embassy, you know, across the way, and load

593
00:31:05,920 --> 00:31:09,160
Speaker 1: up at the Rangovian Embassy before you went to the concert.

594
00:31:09,920 --> 00:31:15,360
Speaker 8: Doug Kanning A sigh, Paul you. Frederick Nietzsche, thereat German philosopher,

595
00:31:15,440 --> 00:31:18,880
Speaker 8: once said without music, life would be a mistake. And

596
00:31:18,880 --> 00:31:19,640
Speaker 8: I think it's true.

597
00:31:19,960 --> 00:31:22,480
Speaker 4: I'm down that sure, Douglas.

598
00:31:22,920 --> 00:31:24,760
Speaker 8: Last thing on the Dead I was at the Palaestra

599
00:31:25,240 --> 00:31:29,840
Speaker 8: in November nineteen seventy of your fair City. It was

600
00:31:29,880 --> 00:31:33,280
Speaker 8: one of the fifteen marvelous Grateful Dead concerts.

601
00:31:33,640 --> 00:31:36,480
Speaker 1: Doug, I think there's a lot to talk about here,

602
00:31:36,640 --> 00:31:39,280
Speaker 1: but I really think we've got to talk about market

603
00:31:39,280 --> 00:31:42,880
Speaker 1: positioning right now. Unfortunately, the three of us have a

604
00:31:42,920 --> 00:31:46,320
Speaker 1: fun memory of a leg up in seventy four and

605
00:31:46,360 --> 00:31:49,640
Speaker 1: the absolute shock of the second leg up, I believe

606
00:31:49,680 --> 00:31:54,040
Speaker 1: in December of seventy six or seventy seven, What does

607
00:31:54,040 --> 00:31:56,360
Speaker 1: the second leg of a bull market look like, and

608
00:31:56,440 --> 00:31:58,040
Speaker 1: particularly if you're not in.

609
00:31:57,840 --> 00:32:04,200
Speaker 8: Play, well, I think it's a great question, an unexpected question.

610
00:32:04,400 --> 00:32:08,520
Speaker 8: I think it's very humbling trying to trade against a

611
00:32:08,680 --> 00:32:13,360
Speaker 8: primary or bull market trend, which some of us have

612
00:32:13,400 --> 00:32:16,600
Speaker 8: been trying to do over the last two months. You know,

613
00:32:16,640 --> 00:32:19,680
Speaker 8: it requires discipline. I've always said that most retail investors

614
00:32:19,680 --> 00:32:23,800
Speaker 8: should in shortstocks because for a number of reasons, but

615
00:32:23,880 --> 00:32:28,800
Speaker 8: it does require a huge amount of price discipline and

616
00:32:29,360 --> 00:32:35,080
Speaker 8: a money management control that most people don't have. Let

617
00:32:35,160 --> 00:32:38,000
Speaker 8: this too shall pass, everybody does. Remind me of the

618
00:32:39,240 --> 00:32:46,400
Speaker 8: liquidity infused in the market post bear Stearns being acquired

619
00:32:46,400 --> 00:32:49,240
Speaker 8: by JP Morgan and Lehman in two thousand and eight,

620
00:32:49,520 --> 00:32:52,960
Speaker 8: and you remember we had a similar rally of maybe

621
00:32:52,960 --> 00:32:55,239
Speaker 8: twelve or thirteen percent, which led to a twenty two

622
00:32:55,280 --> 00:32:59,400
Speaker 8: percent decline. And I'm fearful of the market's both an

623
00:32:59,400 --> 00:33:03,640
Speaker 8: absolute term and when compared to the credit markets. I

624
00:33:03,680 --> 00:33:05,520
Speaker 8: think I think we have to think in terms of

625
00:33:05,520 --> 00:33:06,800
Speaker 8: the boiling frog syndrome.

626
00:33:07,880 --> 00:33:10,600
Speaker 5: So, Doug, I mean you take a look at the SMP.

627
00:33:10,800 --> 00:33:14,480
Speaker 1: I mean the boiling frog system is also when in

628
00:33:14,600 --> 00:33:16,760
Speaker 1: hell does Judge come back exactly?

629
00:33:16,800 --> 00:33:18,040
Speaker 7: We could use that in a big way.

630
00:33:18,240 --> 00:33:20,080
Speaker 8: You told me you weren't going to talk about the yen.

631
00:33:21,360 --> 00:33:22,840
Speaker 2: So Doug, what do you do when when you when

632
00:33:22,840 --> 00:33:24,240
Speaker 2: you look at an S and P up, you know,

633
00:33:24,360 --> 00:33:26,280
Speaker 2: up twenty two percent off that October low.

634
00:33:26,960 --> 00:33:27,760
Speaker 3: That's a bull market.

635
00:33:27,800 --> 00:33:29,120
Speaker 6: But I think if you ask you.

636
00:33:29,040 --> 00:33:32,240
Speaker 8: Know the person on the street, they're not feeling it necessarily,

637
00:33:32,320 --> 00:33:33,320
Speaker 8: So what do you.

638
00:33:33,320 --> 00:33:33,880
Speaker 3: Do from here?

639
00:33:34,240 --> 00:33:36,520
Speaker 8: Well, question I asked myself is not whether I should

640
00:33:36,520 --> 00:33:39,080
Speaker 8: be that short, which I am, but rather how short

641
00:33:39,120 --> 00:33:43,640
Speaker 8: I should be, again recognizing at the same time how

642
00:33:43,720 --> 00:33:48,360
Speaker 8: humbling training against the trend can be and how discipline

643
00:33:48,400 --> 00:33:50,680
Speaker 8: you have to be to avoid losses. But at the

644
00:33:50,720 --> 00:33:52,480
Speaker 8: core of my concern is a level and path of

645
00:33:52,600 --> 00:33:56,720
Speaker 8: interest rates. And if we solely look at interest rates

646
00:33:57,000 --> 00:34:01,000
Speaker 8: versus stock prices and valuations, sure equities really are more

647
00:34:01,040 --> 00:34:03,800
Speaker 8: overvalued against rates today than they were at the end

648
00:34:03,800 --> 00:34:08,839
Speaker 8: of twenty twenty one, which is saying something. And the

649
00:34:08,880 --> 00:34:13,279
Speaker 8: divergences between valuations and real rates is as wide as

650
00:34:13,280 --> 00:34:15,520
Speaker 8: I've seen in more than a decade. If you think

651
00:34:15,520 --> 00:34:18,480
Speaker 8: about evaluations have risen on the S and P from

652
00:34:18,840 --> 00:34:22,080
Speaker 8: about fifteen times to close to twenty times since the

653
00:34:22,120 --> 00:34:27,320
Speaker 8: October lows. While inflation adjusted interest rates have stayed elevated,

654
00:34:27,360 --> 00:34:29,879
Speaker 8: as you just mentioned in the last segment, against ten

655
00:34:29,920 --> 00:34:33,080
Speaker 8: year it's about one point five percent. So higher rates

656
00:34:33,120 --> 00:34:37,520
Speaker 8: typically reduce the present value future cash flows and valuations,

657
00:34:37,600 --> 00:34:40,880
Speaker 8: so relationships to me out of whack and I'm watching

658
00:34:40,960 --> 00:34:45,240
Speaker 8: for a mean reversion. In addition, the equity risk premium

659
00:34:45,280 --> 00:34:49,080
Speaker 8: is unattractive and also suggests that credit is cheaper than equities.

660
00:34:49,440 --> 00:34:52,200
Speaker 8: And finally, the SMP dividend yield is all the way

661
00:34:52,239 --> 00:34:55,759
Speaker 8: down to one point five five percent. Compare that to

662
00:34:55,840 --> 00:34:58,200
Speaker 8: the one year yield of five point four percent. Again

663
00:34:58,239 --> 00:35:00,600
Speaker 8: of multi decade wide casts.

664
00:35:00,880 --> 00:35:03,600
Speaker 1: For your supporters and for those that go after you

665
00:35:03,680 --> 00:35:06,759
Speaker 1: each and every day, particularly out on the Elon must scape,

666
00:35:07,400 --> 00:35:10,680
Speaker 1: I'm fascinated by a simple question, how do you know

667
00:35:10,760 --> 00:35:16,200
Speaker 1: when to cover a short? What's the setup methodology you

668
00:35:16,320 --> 00:35:17,240
Speaker 1: use to say?

669
00:35:17,520 --> 00:35:18,520
Speaker 3: Enough? I'm out?

670
00:35:20,239 --> 00:35:24,799
Speaker 8: Well, you know I I lecture at Bob Schuler's course

671
00:35:25,040 --> 00:35:28,120
Speaker 8: at Yale Business School, second year Advanced Economics course, and

672
00:35:28,160 --> 00:35:31,360
Speaker 8: I have a three and a half hour lecture on

673
00:35:31,560 --> 00:35:34,480
Speaker 8: short selling, of which about half of it is structure

674
00:35:34,520 --> 00:35:40,680
Speaker 8: of short selling and I'm a short I'm not a

675
00:35:40,680 --> 00:35:45,880
Speaker 8: short seller. I'm a legitimate long short hedge fund manager

676
00:35:45,880 --> 00:35:49,400
Speaker 8: who has basically a bias towards the short side, whereas

677
00:35:49,440 --> 00:35:52,840
Speaker 8: most long short guys have like ninety nine percent of

678
00:35:52,920 --> 00:35:57,160
Speaker 8: bias towards alongside. And what I do is I start

679
00:35:57,200 --> 00:36:01,200
Speaker 8: positions very small and kind of funnel in on strength.

680
00:36:03,280 --> 00:36:06,640
Speaker 8: So I actually want in the beginning the short to

681
00:36:06,680 --> 00:36:08,320
Speaker 8: go against myself.

682
00:36:10,080 --> 00:36:13,360
Speaker 4: And then okay, you get up to your net short

683
00:36:13,400 --> 00:36:14,120
Speaker 4: position that you feel.

684
00:36:14,160 --> 00:36:14,640
Speaker 3: Well.

685
00:36:14,640 --> 00:36:18,920
Speaker 8: The other thing, Paul, is that my in terms of

686
00:36:19,000 --> 00:36:24,040
Speaker 8: sizing short position absolutely and visa v sizing long positions,

687
00:36:25,120 --> 00:36:27,600
Speaker 8: my maximum size on a short is about one and

688
00:36:27,600 --> 00:36:30,279
Speaker 8: a half percent versus say a maximum four or five

689
00:36:30,280 --> 00:36:32,759
Speaker 8: percent on a long position. So that sort of explains

690
00:36:32,880 --> 00:36:37,160
Speaker 8: to you the I create. Remember there are three problems

691
00:36:37,160 --> 00:36:40,360
Speaker 8: with short selling. Number one, the gravitational pull of of

692
00:36:40,520 --> 00:36:45,440
Speaker 8: stocks is higher over time. Number two, Obviously, a short

693
00:36:45,480 --> 00:36:48,799
Speaker 8: sale provides an asymmetric risk reward. You can only make

694
00:36:48,840 --> 00:36:51,000
Speaker 8: one hundred percent if you find a bankruptcy, but you

695
00:36:51,040 --> 00:36:55,440
Speaker 8: can lose an infinite amount as Na Video or Resorts

696
00:36:55,560 --> 00:36:59,600
Speaker 8: for Bob Wilson found out Resorts International. And the final

697
00:36:59,640 --> 00:37:02,239
Speaker 8: thing which people don't really discuss is that when a

698
00:37:02,320 --> 00:37:05,040
Speaker 8: show it goes against you, it's waiting increases. But when

699
00:37:05,080 --> 00:37:08,680
Speaker 8: along goes against you, another m goes down, it's sort

700
00:37:08,719 --> 00:37:12,560
Speaker 8: of systemic risk control because the waiting is reduced.

701
00:37:12,840 --> 00:37:13,440
Speaker 3: Oh, we got to.

702
00:37:13,480 --> 00:37:15,399
Speaker 1: Leave it there, we're out of time. But Doug cast

703
00:37:15,480 --> 00:37:19,080
Speaker 1: that was a fabulous. Subscribe to the Bloomberg Surveillance podcast

704
00:37:19,160 --> 00:37:22,960
Speaker 1: on Apple, Spotify, and anywhere else you get your podcasts.

705
00:37:23,440 --> 00:37:27,400
Speaker 1: Listen live every weekday starting at seven am Eastern on

706
00:37:27,520 --> 00:37:31,520
Speaker 1: Bloomberg dot Com, the iHeartRadio app tune In, and.

707
00:37:31,480 --> 00:37:32,800
Speaker 3: The Bloomberg Business app.

708
00:37:33,239 --> 00:37:36,920
Speaker 1: You can watch us live on Bloomberg Television and always.

709
00:37:37,280 --> 00:37:41,200
Speaker 1: I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keane,

710
00:37:41,360 --> 00:37:43,080
Speaker 1: and this is Bloomberg