1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:31,280 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. I 7 00:00:31,320 --> 00:00:34,080 Speaker 1: am honored to bring in if you told vash Chikovsky. 8 00:00:34,159 --> 00:00:36,960 Speaker 1: He is Minister of Foreign Affairs for the Republic of 9 00:00:37,000 --> 00:00:40,240 Speaker 1: Poland and he comes to us from our Washington, d C. Office. 10 00:00:40,400 --> 00:00:42,800 Speaker 1: Have you told? Thank you so much for joining us. 11 00:00:42,920 --> 00:00:45,320 Speaker 1: I would love to start with a number of news 12 00:00:45,479 --> 00:00:47,839 Speaker 1: news articles that have been running in the US. There 13 00:00:47,840 --> 00:00:51,920 Speaker 1: seems to be a perception that laws that ultimately were rejected, 14 00:00:52,080 --> 00:00:55,480 Speaker 1: that were brought up in Poland to possibly remove the 15 00:00:55,520 --> 00:00:58,800 Speaker 1: independence of the judicial area were broadly slammed by the 16 00:00:58,840 --> 00:01:02,240 Speaker 1: European Union and if so, exacerbated the tensions. Do you 17 00:01:02,280 --> 00:01:05,080 Speaker 1: think that the tensions between Poland and the European Union 18 00:01:05,080 --> 00:01:07,920 Speaker 1: have been overblown? Do you think that they're getting worse? Uh? 19 00:01:08,080 --> 00:01:10,959 Speaker 1: And what was sort of the endgame here? Yes, good morning, 20 00:01:11,000 --> 00:01:14,280 Speaker 1: Thank you for for inviting me for this for this program. 21 00:01:15,080 --> 00:01:18,679 Speaker 1: These are rumors, of course, sounds very scary, but not 22 00:01:18,680 --> 00:01:23,679 Speaker 1: not true. We are trying to to finish on our transformation. 23 00:01:24,040 --> 00:01:27,920 Speaker 1: Transformation we started twenty seven eight years ago after the 24 00:01:27,959 --> 00:01:31,240 Speaker 1: collapse of the Soviet Union, the Soviet Block and the 25 00:01:31,360 --> 00:01:36,360 Speaker 1: last area which was not transformed, which was not modernized. 26 00:01:36,800 --> 00:01:41,040 Speaker 1: It is a judicial system, legal system UH. And that 27 00:01:41,480 --> 00:01:43,760 Speaker 1: was the demand of how people when two years ago 28 00:01:43,880 --> 00:01:49,000 Speaker 1: we we were we won the election, so generally there 29 00:01:49,080 --> 00:01:53,160 Speaker 1: was appeal of a population to to change, to modernize 30 00:01:53,160 --> 00:01:56,560 Speaker 1: this system. We are not inventing anything new. We are 31 00:01:56,600 --> 00:02:00,000 Speaker 1: just importing the solution, existing solution which are existing already 32 00:02:00,120 --> 00:02:04,560 Speaker 1: in the other members of the European Union. The problem 33 00:02:04,640 --> 00:02:07,960 Speaker 1: is that we are engaged in a in a dialogue. 34 00:02:07,960 --> 00:02:10,560 Speaker 1: There are no tensions. There is a dialogue with the 35 00:02:10,440 --> 00:02:12,720 Speaker 1: with the Commission because there are some of our standards 36 00:02:12,720 --> 00:02:16,720 Speaker 1: in the Commission and Commission things that what is acceptable 37 00:02:16,800 --> 00:02:22,040 Speaker 1: for other countries, especially the Western UH friends in the 38 00:02:22,080 --> 00:02:25,440 Speaker 1: European Union, is not acceptable for the young democracy like Poland, 39 00:02:25,760 --> 00:02:30,400 Speaker 1: is not acceptable for the country which has UH allegedly 40 00:02:31,120 --> 00:02:35,440 Speaker 1: a different legal culture in our parts of Europe. This 41 00:02:35,520 --> 00:02:38,160 Speaker 1: is unacceptable for for us. We are as. I said, 42 00:02:38,200 --> 00:02:41,560 Speaker 1: we are not inventing anything new, We are not breaking 43 00:02:41,600 --> 00:02:45,720 Speaker 1: the tradition. We are not imposing any restriction on the 44 00:02:45,800 --> 00:02:49,600 Speaker 1: judicial system. We just want to modernize the system, make 45 00:02:49,639 --> 00:02:52,520 Speaker 1: it more efficient. Well, but what's what's at stake here? 46 00:02:52,560 --> 00:02:55,360 Speaker 1: Because there is the potential for the European Union to 47 00:02:55,440 --> 00:03:00,160 Speaker 1: even reduce the funding that it gives you, or to 48 00:03:00,200 --> 00:03:02,920 Speaker 1: reduce voting rights. Do you think that that's at stake, 49 00:03:02,960 --> 00:03:06,040 Speaker 1: because that's just some of the things that have been positive. No, 50 00:03:06,280 --> 00:03:09,880 Speaker 1: this is not at stake because they cannot reduce funding 51 00:03:09,960 --> 00:03:13,840 Speaker 1: because the fundings are not for the good behavior or 52 00:03:13,960 --> 00:03:19,280 Speaker 1: for certain pattern of behavior. The structural funds we are 53 00:03:19,280 --> 00:03:23,360 Speaker 1: getting from from Brussels a part of the deal we 54 00:03:23,400 --> 00:03:26,280 Speaker 1: signed when we join European Union. They are part of 55 00:03:26,320 --> 00:03:30,480 Speaker 1: the European Treatise and this is a compensation for the 56 00:03:30,560 --> 00:03:35,520 Speaker 1: opening of the market. We join European Union two thousand four, 57 00:03:35,920 --> 00:03:39,200 Speaker 1: but we open our markets at the beginning of ninety nineties, 58 00:03:39,240 --> 00:03:43,360 Speaker 1: so more than twenty about twenty five years ago. So 59 00:03:43,360 --> 00:03:45,640 Speaker 1: so this is the deal in your opinion, that the 60 00:03:45,720 --> 00:03:50,640 Speaker 1: weaker economies can be can compensate the opening of the 61 00:03:50,680 --> 00:03:54,160 Speaker 1: markets to the bigger and sow economy said, so this 62 00:03:54,280 --> 00:03:58,640 Speaker 1: is nothing to do with status of democracy or or 63 00:03:59,480 --> 00:04:03,800 Speaker 1: legal system. The other problem, of course is the voting 64 00:04:04,160 --> 00:04:10,600 Speaker 1: procedure Article seven of a treaty. But it requires the 65 00:04:10,680 --> 00:04:16,160 Speaker 1: consensus in your opinion too to prevent us from participating voting. 66 00:04:16,200 --> 00:04:18,400 Speaker 1: There is no such a consensus because there are a 67 00:04:18,440 --> 00:04:21,799 Speaker 1: number of countries members of the opinion. They believe that 68 00:04:22,040 --> 00:04:25,839 Speaker 1: there is nothing wrong going on in Poland. Um One other, 69 00:04:26,000 --> 00:04:29,080 Speaker 1: one other article that has definitely one other idea that 70 00:04:29,120 --> 00:04:32,360 Speaker 1: has called the attention of the media in the United 71 00:04:32,400 --> 00:04:36,840 Speaker 1: States is this request by Poland that Germany owes it 72 00:04:37,000 --> 00:04:40,279 Speaker 1: at least one trillion dollars in reparations for World War 73 00:04:40,360 --> 00:04:44,680 Speaker 1: two damages. Has a Poland discussed how to pursue this 74 00:04:44,800 --> 00:04:49,039 Speaker 1: money and how this will impact relations between Warsaw and Berlin. 75 00:04:49,800 --> 00:04:52,279 Speaker 1: This is there is no official decision of the government. 76 00:04:52,320 --> 00:04:57,719 Speaker 1: This is just ongoing discussion, discussion among her politicians in 77 00:04:57,760 --> 00:05:01,680 Speaker 1: the media. Of course, the problem is that after the 78 00:05:01,720 --> 00:05:05,680 Speaker 1: Second World War there was no peace treaty with Germany, 79 00:05:05,880 --> 00:05:11,240 Speaker 1: and neither Poland nor many other countries which were devastated 80 00:05:11,279 --> 00:05:15,960 Speaker 1: by the German occupation. German Nazi occupation never got any 81 00:05:16,560 --> 00:05:20,200 Speaker 1: any money any compensation for the for the lost. Let 82 00:05:20,279 --> 00:05:23,400 Speaker 1: me remind you that during the Second World War, Poland 83 00:05:23,480 --> 00:05:28,880 Speaker 1: lost six million people. Uh. They after the Second World 84 00:05:28,880 --> 00:05:33,920 Speaker 1: War they moved the foreign countries, they moved our borders, 85 00:05:34,920 --> 00:05:39,680 Speaker 1: and of course the number we lost in a material way. 86 00:05:40,440 --> 00:05:45,200 Speaker 1: For instance, the capital of Poland, Warsaw, was devastated that 87 00:05:45,720 --> 00:05:49,000 Speaker 1: more than eighty percent, maybe nine of the of the 88 00:05:49,040 --> 00:05:52,159 Speaker 1: buildings were totally destroyed in the ninety five it was 89 00:05:52,200 --> 00:05:57,160 Speaker 1: a stone desert. So uh, this is a discussion right 90 00:05:57,200 --> 00:06:00,240 Speaker 1: now which is going on in Poland. Uh why we 91 00:06:00,320 --> 00:06:04,080 Speaker 1: haven't got any conversation for the sort the tragic loss 92 00:06:04,440 --> 00:06:07,800 Speaker 1: during the Second World War. But decision is not taken 93 00:06:07,839 --> 00:06:10,520 Speaker 1: by the by the government. So those figures who are 94 00:06:10,560 --> 00:06:14,839 Speaker 1: just mentioned just figures which are existing in the media only. 95 00:06:15,360 --> 00:06:18,919 Speaker 1: And just real quick with Poland, consider a similar request 96 00:06:19,080 --> 00:06:23,760 Speaker 1: from Russia. Some have suggested that's another problem, of course, 97 00:06:23,800 --> 00:06:30,760 Speaker 1: because uh we were partitioned, uh due to the UH 98 00:06:30,960 --> 00:06:36,960 Speaker 1: from the German Soviet Pact. Uh. And Uh, that's the 99 00:06:37,000 --> 00:06:41,200 Speaker 1: war started the nine thirty nine and Poland was occupied 100 00:06:41,680 --> 00:06:45,840 Speaker 1: parsonally by Nazi chairman, but party by by Soviets. And 101 00:06:45,880 --> 00:06:48,960 Speaker 1: then of course we had forty five years or domination 102 00:06:49,040 --> 00:06:53,520 Speaker 1: over over Poland. So all these things are considered right 103 00:06:53,520 --> 00:06:56,760 Speaker 1: now and discussed in Poland. But as I said, there 104 00:06:56,880 --> 00:06:59,520 Speaker 1: is no decision taking the government yet. Thank you so 105 00:06:59,600 --> 00:07:01,919 Speaker 1: much for joining us. Truly a pleasure to speak with 106 00:07:01,920 --> 00:07:05,679 Speaker 1: you and for setting the stage from a point of honesty, 107 00:07:05,800 --> 00:07:10,120 Speaker 1: the told Vashtchikovsky, Minister of Foreign Affairs for the Republic 108 00:07:10,160 --> 00:07:13,800 Speaker 1: of Poland. Uh coming to us from our Washington d 109 00:07:13,920 --> 00:07:19,480 Speaker 1: C Bureau. Definitely interesting as the Polish government forms and 110 00:07:19,720 --> 00:07:34,080 Speaker 1: negotiates with the European Union for its place. Well, the 111 00:07:34,120 --> 00:07:37,440 Speaker 1: dollar is pretty much a flat today after I guess 112 00:07:37,440 --> 00:07:39,880 Speaker 1: surging yesterday, but I guess it's just a surge compared 113 00:07:39,920 --> 00:07:44,160 Speaker 1: to the incredible weakening that we've seen throughout of the 114 00:07:44,200 --> 00:07:47,440 Speaker 1: dollar versus it's peers. I want to be in Doug Barthwick, 115 00:07:47,440 --> 00:07:50,160 Speaker 1: he's managing director and head of f X at Chapter 116 00:07:50,240 --> 00:07:52,880 Speaker 1: Lane and Company. And Doug, you know, this really is 117 00:07:53,240 --> 00:07:57,080 Speaker 1: one of the key questions in financial markets of the year, 118 00:07:57,480 --> 00:08:00,080 Speaker 1: which is the week dollar and how long it and 119 00:08:00,200 --> 00:08:04,400 Speaker 1: keep weakening in light of the FEDS likely December rate hike. 120 00:08:04,760 --> 00:08:06,680 Speaker 1: Why do you think the dollar has a good chance 121 00:08:06,720 --> 00:08:10,840 Speaker 1: of continuing to weaken going forward well, rate hikes and 122 00:08:10,920 --> 00:08:13,400 Speaker 1: you haven't been happening since the start of the year, 123 00:08:13,440 --> 00:08:16,400 Speaker 1: and the dollars continue to weaken because as the US 124 00:08:16,560 --> 00:08:19,760 Speaker 1: hikes rates other countries that the dollar trades against. They 125 00:08:19,760 --> 00:08:21,800 Speaker 1: also turned around their center banks to say, you know what, 126 00:08:21,840 --> 00:08:24,280 Speaker 1: we're thinking about getting out of quantity of using as well. 127 00:08:24,760 --> 00:08:26,960 Speaker 1: If you actually look at the numbers that were talked 128 00:08:27,000 --> 00:08:29,440 Speaker 1: about yesterday on the quantity of using and the pullback 129 00:08:29,480 --> 00:08:31,640 Speaker 1: for the balance sheet, it's going to be up until 130 00:08:31,680 --> 00:08:34,440 Speaker 1: it it's gonna take until April of next year for 131 00:08:34,480 --> 00:08:37,120 Speaker 1: the balance she'd actually start getting reduced. Because really what 132 00:08:37,120 --> 00:08:39,959 Speaker 1: they're doing is they're tapering the current quei or reinvestment 133 00:08:39,960 --> 00:08:42,959 Speaker 1: that's happening right now. So if they turned around and 134 00:08:42,960 --> 00:08:45,760 Speaker 1: said we're gonna stop reinvesting, that's one thing. But instead 135 00:08:45,800 --> 00:08:47,640 Speaker 1: they said, you know what, we're gonna keep on doing. 136 00:08:47,840 --> 00:08:50,480 Speaker 1: We're just gonna reduced to reinvestment by maybe six billion 137 00:08:50,640 --> 00:08:52,640 Speaker 1: on the treasuries for the next three months, then after 138 00:08:52,679 --> 00:08:55,800 Speaker 1: that twelve and after that eighteen. So it's gonna take 139 00:08:55,880 --> 00:08:58,320 Speaker 1: quite some time for them to get to a point 140 00:08:58,320 --> 00:09:00,800 Speaker 1: where they're not still reinvesting. That's gonna be April of 141 00:09:00,880 --> 00:09:03,080 Speaker 1: next year, at which time fatsy l and may not 142 00:09:03,120 --> 00:09:05,880 Speaker 1: even be in her position now. The week the week 143 00:09:05,920 --> 00:09:08,240 Speaker 1: dollar is something that's been going on for quite some time. 144 00:09:08,320 --> 00:09:11,440 Speaker 1: It's a stated fact that the president right now once 145 00:09:11,480 --> 00:09:13,439 Speaker 1: a week or dollar to make the US more competitive. 146 00:09:13,880 --> 00:09:16,760 Speaker 1: Secretary Treasury Nutans also pushed that point and said, it's 147 00:09:16,760 --> 00:09:18,920 Speaker 1: not that the dollars we could set other there's other 148 00:09:18,960 --> 00:09:21,000 Speaker 1: The dollar has been strongly as to the other countries 149 00:09:21,000 --> 00:09:23,359 Speaker 1: have been way too weak. So he wants other currencies 150 00:09:23,400 --> 00:09:26,720 Speaker 1: to strengthen their their currencies, and we see a continuation 151 00:09:26,760 --> 00:09:28,960 Speaker 1: of that. We see yesterday's move as being a pullback 152 00:09:29,280 --> 00:09:32,760 Speaker 1: based upon stop losses because folks were very much looking 153 00:09:32,840 --> 00:09:35,679 Speaker 1: for the fet to step back because of hurricanes that 154 00:09:35,720 --> 00:09:37,800 Speaker 1: didn't happen, So you saw a pullback based on the 155 00:09:37,800 --> 00:09:40,800 Speaker 1: stop losses. Today the year is up about forty points 156 00:09:40,840 --> 00:09:43,640 Speaker 1: because you know from yesterday's lows because of that, as 157 00:09:43,679 --> 00:09:46,520 Speaker 1: folks read through the numbers, all right, but you know, 158 00:09:46,720 --> 00:09:51,079 Speaker 1: the dollars weakening has been the biggest decline against its 159 00:09:51,120 --> 00:09:54,720 Speaker 1: peers in about a decade. We're seeing a number of 160 00:09:55,040 --> 00:09:58,319 Speaker 1: big investment managers starting to tiptoe back into the dollar. 161 00:09:58,559 --> 00:10:02,680 Speaker 1: Implicit in your marks is the idea that European and 162 00:10:02,800 --> 00:10:07,040 Speaker 1: other economies are accelerating faster than the U S is. 163 00:10:07,080 --> 00:10:09,480 Speaker 1: Do you think that perhaps traders are discounting the strength 164 00:10:09,480 --> 00:10:12,040 Speaker 1: that we're seeing in the economy in the US. Oh, 165 00:10:12,160 --> 00:10:14,600 Speaker 1: for for sure. I don't think traders really believe that 166 00:10:14,640 --> 00:10:16,600 Speaker 1: their strength in the US economy quite as much as 167 00:10:16,600 --> 00:10:18,600 Speaker 1: the FETE does. And remember what the FETE did yesterday 168 00:10:18,640 --> 00:10:21,319 Speaker 1: is they stated an intention, they didn't actually move the rates. 169 00:10:21,880 --> 00:10:24,160 Speaker 1: And I think that's important to understand is that since 170 00:10:24,320 --> 00:10:27,040 Speaker 1: the start of the year, the fedsman aggressively talking about 171 00:10:27,080 --> 00:10:29,480 Speaker 1: how they're going to start raising rates, and raised rates, 172 00:10:29,559 --> 00:10:32,280 Speaker 1: you know, quickly, and what's happened is the Fed step back, 173 00:10:32,320 --> 00:10:36,120 Speaker 1: step back, step back. So certainly they've talked about having 174 00:10:36,120 --> 00:10:37,959 Speaker 1: a rate rise at the end of this year in December, 175 00:10:38,000 --> 00:10:40,520 Speaker 1: but it's still only six prices in the futures market, 176 00:10:40,600 --> 00:10:44,760 Speaker 1: so folks aren't really buying into what the Feds thing. So, Doug, 177 00:10:45,080 --> 00:10:47,719 Speaker 1: which is the most important cross to really watch. I'm 178 00:10:47,720 --> 00:10:50,160 Speaker 1: looking at the US dollar versus the euro and it's 179 00:10:50,200 --> 00:10:54,160 Speaker 1: currently at a zero point about zero point eight for 180 00:10:54,880 --> 00:10:59,560 Speaker 1: euros uh per dollar. I'm wondering, where do you see 181 00:10:59,559 --> 00:11:01,920 Speaker 1: that go I mean, how low can it go. But 182 00:11:02,080 --> 00:11:03,920 Speaker 1: we look at the euro against the dollars, so that's 183 00:11:03,920 --> 00:11:07,120 Speaker 1: a one twenty right now. We believe in the fair 184 00:11:07,160 --> 00:11:09,800 Speaker 1: point right now, it's probably around one. Remember we were 185 00:11:09,800 --> 00:11:13,600 Speaker 1: trading one to one thirty before Greece came into the 186 00:11:13,640 --> 00:11:15,559 Speaker 1: issue and we saw the move down to one four 187 00:11:15,640 --> 00:11:18,480 Speaker 1: one oh five in the euro. Grease no longer has 188 00:11:18,480 --> 00:11:20,880 Speaker 1: talked about in the markets. Nobody is concerned about what's 189 00:11:20,880 --> 00:11:23,000 Speaker 1: happening in greases, so there should be a natural bounce 190 00:11:23,040 --> 00:11:27,200 Speaker 1: back to that level playing field of the level which 191 00:11:27,240 --> 00:11:29,960 Speaker 1: we believe should happen. I think we see probably one 192 00:11:30,040 --> 00:11:32,160 Speaker 1: twenty five by the end of next month, and we'll 193 00:11:32,160 --> 00:11:34,120 Speaker 1: probably see one thirty by the end of the year. 194 00:11:34,520 --> 00:11:36,840 Speaker 1: I think that this dollar weakness is something that isn't 195 00:11:36,840 --> 00:11:39,880 Speaker 1: even talked about in Germany at all. You know, when 196 00:11:39,960 --> 00:11:41,960 Speaker 1: the ECB was when drag he was asked what do 197 00:11:41,960 --> 00:11:45,360 Speaker 1: you think of the Euro? In his statement, he discussed 198 00:11:45,360 --> 00:11:48,160 Speaker 1: about the volatility, but he didn't discuss the specific level. 199 00:11:48,480 --> 00:11:51,160 Speaker 1: The Zoo index, talked about how German industry isn't thinking 200 00:11:51,160 --> 00:11:54,320 Speaker 1: about the euro whatsoever. And marqual As she's gone around, 201 00:11:54,440 --> 00:11:56,440 Speaker 1: you know, trying to push to get the votes so 202 00:11:56,480 --> 00:11:59,360 Speaker 1: she can run and get re elected, hasn't taught, hasn't 203 00:11:59,360 --> 00:12:00,680 Speaker 1: brought up the euro at all in any of her 204 00:12:00,720 --> 00:12:03,439 Speaker 1: campaign speeches. So I don't think there's a concern right 205 00:12:03,440 --> 00:12:05,480 Speaker 1: now about the level of the europe by Germany. But 206 00:12:05,559 --> 00:12:07,440 Speaker 1: certainly there's a concerned about the level of the dollar 207 00:12:07,480 --> 00:12:10,920 Speaker 1: in the United States and the US administration certainly once 208 00:12:10,920 --> 00:12:13,160 Speaker 1: a week or dollar going forward, Doug, what does this 209 00:12:13,200 --> 00:12:16,000 Speaker 1: mean for emerging markets currencies which have had an incredible 210 00:12:16,040 --> 00:12:18,839 Speaker 1: rally this year, do you expect them to continue going 211 00:12:18,880 --> 00:12:22,240 Speaker 1: that direction as the dollar weekends do Yeah, and there's 212 00:12:22,240 --> 00:12:25,360 Speaker 1: a direct correlation here. As the dollar weekends against the yen, 213 00:12:25,440 --> 00:12:27,840 Speaker 1: and there's a dollar weekends against the euro, emerging markets 214 00:12:27,840 --> 00:12:31,120 Speaker 1: do well. If the dollar strengthens, the emerging markets don't 215 00:12:31,120 --> 00:12:33,560 Speaker 1: have a problem because emerging markets have a considerable amount 216 00:12:33,559 --> 00:12:36,760 Speaker 1: of external debt that's denominating US dollars. So if the 217 00:12:36,800 --> 00:12:38,920 Speaker 1: dollars should weaken, let's say dollar Mexico is to jump 218 00:12:38,920 --> 00:12:42,880 Speaker 1: from up to twenty again, Mexican companies would have a 219 00:12:42,920 --> 00:12:44,880 Speaker 1: bit of an issue in paying back their external debt. 220 00:12:45,320 --> 00:12:47,840 Speaker 1: And so emerging markets are very sensitive to the strength 221 00:12:47,840 --> 00:12:49,439 Speaker 1: of the dollar, but they do very well as the 222 00:12:49,480 --> 00:12:52,560 Speaker 1: dollar weakens. Doug Borthwick, thank you so much. This is 223 00:12:52,640 --> 00:12:55,120 Speaker 1: a crucial topic because even as the as a dollar, 224 00:12:55,200 --> 00:12:57,760 Speaker 1: if the dollar does keep weakening, that will also provide 225 00:12:57,760 --> 00:13:01,200 Speaker 1: a support to commodity prices and as Doug was saying, 226 00:13:01,240 --> 00:13:05,000 Speaker 1: will also to provide ongoing support for emerging markets nations. 227 00:13:05,040 --> 00:13:07,720 Speaker 1: Doug Borthwick, Managing Director and head of f X at 228 00:13:07,800 --> 00:13:10,960 Speaker 1: Chatelin and Company. This is certainly something that we will 229 00:13:11,000 --> 00:13:13,560 Speaker 1: be watching. There are some pretty big money managers who 230 00:13:13,559 --> 00:13:16,439 Speaker 1: recently have been talking about how they're actually going back 231 00:13:16,520 --> 00:13:20,040 Speaker 1: and buying the dollar, including Melon Capital Management and State 232 00:13:20,160 --> 00:13:35,439 Speaker 1: Street Global Advisors. There was a fantastic story in this 233 00:13:35,520 --> 00:13:38,679 Speaker 1: week's edition of Bloomberg Business Week looking at Mark Zuckerberg, 234 00:13:38,760 --> 00:13:42,439 Speaker 1: the head of Facebook, and looking at his political awakening. 235 00:13:42,480 --> 00:13:45,760 Speaker 1: The author of this wonderful article joins me now, Max Chafkin, 236 00:13:46,000 --> 00:13:50,520 Speaker 1: technology reporter for Bloomberg Business Week, And you know, Max, 237 00:13:50,559 --> 00:13:55,520 Speaker 1: I love that Mark Zuckerberg went on paternity leave almost 238 00:13:55,559 --> 00:13:57,240 Speaker 1: to make a statement saying that men need to go 239 00:13:57,280 --> 00:14:00,160 Speaker 1: and plut a paternity leave in order to take of 240 00:14:00,160 --> 00:14:02,480 Speaker 1: their children and their families. At the end of August. 241 00:14:02,520 --> 00:14:07,640 Speaker 1: But it's not exactly been in this peaceful period of absence. 242 00:14:07,920 --> 00:14:10,920 Speaker 1: Has not been the most relaxing paternity leave I imagined. 243 00:14:10,960 --> 00:14:13,640 Speaker 1: Not not that any paternity leave would be not that relaxing, 244 00:14:13,679 --> 00:14:17,920 Speaker 1: but uh, he you know, even before uh this this 245 00:14:18,040 --> 00:14:22,600 Speaker 1: story that uh, the Robert Miller's special counsel is looking 246 00:14:22,640 --> 00:14:25,280 Speaker 1: into stuff that happened on Facebook. He was getting involved 247 00:14:25,320 --> 00:14:29,960 Speaker 1: in the DOCCA advocacy, He was raising money for the 248 00:14:30,080 --> 00:14:33,720 Speaker 1: hurricane victims. He was sort of, you know, basically present 249 00:14:33,760 --> 00:14:35,640 Speaker 1: on Facebook like he had never gone away. And I 250 00:14:35,640 --> 00:14:37,560 Speaker 1: think and that speaks to the fact that, you know, 251 00:14:37,920 --> 00:14:40,800 Speaker 1: over the last eight months or so, Mark Zuckerberg has 252 00:14:40,840 --> 00:14:43,960 Speaker 1: become a political figure. He's gone on this listening tour. 253 00:14:44,480 --> 00:14:48,360 Speaker 1: He's putting himself out there in a way that you know, 254 00:14:48,720 --> 00:14:51,960 Speaker 1: basically people who are running for president do. Now, that 255 00:14:51,960 --> 00:14:54,320 Speaker 1: doesn't necessarily mean he's running for president, and I think 256 00:14:54,360 --> 00:14:57,840 Speaker 1: that's pretty unlikely, but it is a shift for him, 257 00:14:57,880 --> 00:15:00,320 Speaker 1: and it it speaks both to his influence and and 258 00:15:00,520 --> 00:15:04,480 Speaker 1: power and also Facebook's um, you know, influence and power 259 00:15:04,640 --> 00:15:06,280 Speaker 1: and and the fact that this company is worth like 260 00:15:06,480 --> 00:15:08,800 Speaker 1: a half a trillion dollars. Well, so when you talk 261 00:15:08,840 --> 00:15:12,920 Speaker 1: about his politicking, we're talking about a national tour where 262 00:15:12,960 --> 00:15:16,800 Speaker 1: he went to factories, where he went to churches, a 263 00:15:16,960 --> 00:15:22,240 Speaker 1: very classic kind of, uh campaign run sort of affair. 264 00:15:22,880 --> 00:15:25,800 Speaker 1: If it's not to set the stage for a possible 265 00:15:25,840 --> 00:15:29,400 Speaker 1: political career, why is he doing it? So? I think 266 00:15:29,720 --> 00:15:32,120 Speaker 1: it's it is possible that he's setting the stage for 267 00:15:32,120 --> 00:15:34,640 Speaker 1: a political career if he's not UM and he says 268 00:15:34,680 --> 00:15:37,480 Speaker 1: he's not running for president. He told me and my 269 00:15:37,520 --> 00:15:39,840 Speaker 1: co writer Sarah Fraar he's not running for president. I 270 00:15:39,880 --> 00:15:43,240 Speaker 1: think what he's doing is basically playing a little bit 271 00:15:43,240 --> 00:15:46,320 Speaker 1: of defense. I mean, I think the uh, the events 272 00:15:46,320 --> 00:15:49,520 Speaker 1: over the last uh a few months, really pretty much 273 00:15:49,560 --> 00:15:53,080 Speaker 1: since the election, UM have raised questions about how Facebook 274 00:15:53,160 --> 00:15:56,360 Speaker 1: is affecting our discourse. Mark Zuckerberg kind of in the 275 00:15:56,560 --> 00:15:59,920 Speaker 1: immediate aftermath at election said he didn't think that fake news, 276 00:16:00,400 --> 00:16:01,920 Speaker 1: you know, was much of a thing and kind of 277 00:16:02,000 --> 00:16:04,960 Speaker 1: laughed it off. And as we've learned more both about 278 00:16:05,160 --> 00:16:08,280 Speaker 1: you know, kind of what happened during the presidential campaign 279 00:16:08,280 --> 00:16:11,240 Speaker 1: and how important social media was, and now these new 280 00:16:11,440 --> 00:16:14,440 Speaker 1: revelations that maybe it wasn't just that um, you know, 281 00:16:14,560 --> 00:16:18,080 Speaker 1: that Clinton and Trump used social media in the campaign, 282 00:16:18,120 --> 00:16:20,200 Speaker 1: which we kind of knew, but that the you know, 283 00:16:20,320 --> 00:16:22,640 Speaker 1: the Russian government or people connect to the Russian government, 284 00:16:22,640 --> 00:16:24,960 Speaker 1: we're also trying to use this thing. Um, it really 285 00:16:25,000 --> 00:16:28,200 Speaker 1: cuts against the sort of brand promise of Facebook, and 286 00:16:28,240 --> 00:16:31,080 Speaker 1: I think could lead to, you know, additional regulation. We're 287 00:16:31,120 --> 00:16:33,840 Speaker 1: we're seeing, um, you know a lot of scrutiny in 288 00:16:33,880 --> 00:16:37,760 Speaker 1: Europe right now. You know that there's there, there's several 289 00:16:37,920 --> 00:16:41,640 Speaker 1: different actions going on, and and that scrutiny is now 290 00:16:41,680 --> 00:16:44,120 Speaker 1: migrating to the United States. So I think if he's 291 00:16:44,120 --> 00:16:48,480 Speaker 1: not running for president, um, he is probably partly you know, 292 00:16:48,600 --> 00:16:51,200 Speaker 1: just wants to get a better sense of whose customers 293 00:16:51,240 --> 00:16:53,760 Speaker 1: are and I think partly wants to you know, show 294 00:16:53,800 --> 00:16:57,120 Speaker 1: people that Facebook is is not to be feared. Yeah. Well, 295 00:16:57,120 --> 00:16:59,760 Speaker 1: I imagined that the regulation is definitely something that they 296 00:16:59,800 --> 00:17:03,120 Speaker 1: talk a lot about internally at Facebook. Another tension that 297 00:17:03,200 --> 00:17:06,359 Speaker 1: your article really highlighted, which I really loved, was this 298 00:17:06,440 --> 00:17:09,080 Speaker 1: idea that while Mark Zuckerberg would like to think of 299 00:17:09,080 --> 00:17:12,199 Speaker 1: Facebook is bringing people together and has espoused, uh, you know, 300 00:17:12,240 --> 00:17:15,520 Speaker 1: sort of the universalism of a lot of tech companies, 301 00:17:16,000 --> 00:17:19,679 Speaker 1: a lot of people criticize Facebook for alienating people and 302 00:17:19,760 --> 00:17:22,879 Speaker 1: not being a satisfying kind of relationship building tool, but 303 00:17:23,080 --> 00:17:25,840 Speaker 1: rather something that keeps people in their bubbles and frankly 304 00:17:26,080 --> 00:17:29,040 Speaker 1: away from actual human interaction, right. I mean this is 305 00:17:29,119 --> 00:17:31,040 Speaker 1: he's sort of over the last few months he's developed 306 00:17:31,040 --> 00:17:33,760 Speaker 1: this kind of political philosophy, which is that, uh, the 307 00:17:33,840 --> 00:17:38,680 Speaker 1: reason that Donald Trump won, the reason that Brexit um, 308 00:17:38,720 --> 00:17:40,680 Speaker 1: you know, happened, the reason that we have this rise 309 00:17:40,680 --> 00:17:43,760 Speaker 1: of nationalism you know, around the world is that there's 310 00:17:43,760 --> 00:17:47,400 Speaker 1: sort of a sense of isolation. People are not joining 311 00:17:47,440 --> 00:17:50,080 Speaker 1: things in the way they used to. Church attendance is lower, 312 00:17:50,240 --> 00:17:53,080 Speaker 1: you know, little leagues are lower. This this idea became 313 00:17:53,119 --> 00:17:56,119 Speaker 1: popular around two thousand with the publications book Bowling Alone. 314 00:17:56,600 --> 00:18:00,240 Speaker 1: Zugerberg has kind of discovered the idea. The problem is 315 00:18:00,320 --> 00:18:02,720 Speaker 1: that a lot of people think Facebook is sort of 316 00:18:02,760 --> 00:18:06,399 Speaker 1: causing this exactly, and so so he his argument is 317 00:18:06,400 --> 00:18:08,040 Speaker 1: sort of like the way to make the world better 318 00:18:08,160 --> 00:18:11,200 Speaker 1: is with more Facebook, whereas a critic might say no, 319 00:18:11,320 --> 00:18:14,280 Speaker 1: in fact, you know, you're this is this is like 320 00:18:14,400 --> 00:18:16,560 Speaker 1: the an expression of all all the things that are 321 00:18:16,560 --> 00:18:18,280 Speaker 1: wrong with the world. And I think that is what 322 00:18:18,480 --> 00:18:22,080 Speaker 1: is so dangerous about what's happening in Washington right now. 323 00:18:22,119 --> 00:18:26,240 Speaker 1: Like that is why Facebook is worried, because this really 324 00:18:26,280 --> 00:18:29,840 Speaker 1: cuts against the sort of promise of the of the company. Yeah, 325 00:18:29,880 --> 00:18:31,800 Speaker 1: you you had a statistic in here that about five 326 00:18:31,880 --> 00:18:36,280 Speaker 1: percent of Facebook users consider the interactions that they have 327 00:18:36,760 --> 00:18:40,359 Speaker 1: to be meaningful on Facebook. That was stunning to me. 328 00:18:41,040 --> 00:18:43,240 Speaker 1: How does he respond to that? So, so the statistic 329 00:18:43,320 --> 00:18:46,680 Speaker 1: is they're they're part of groups that they find meaningful. 330 00:18:46,920 --> 00:18:49,320 Speaker 1: Um and and and a lot of almost everyone on 331 00:18:49,359 --> 00:18:52,560 Speaker 1: facebooks sort of has interacted with the group's portion of it. 332 00:18:52,560 --> 00:18:54,480 Speaker 1: It's it's like how you go to an event or 333 00:18:54,720 --> 00:18:57,200 Speaker 1: or whatever. Pant suit Nation, the Hillary Clinton group was 334 00:18:57,240 --> 00:19:00,800 Speaker 1: a group. Um. Mark Zuckerberg is disp wointed in that 335 00:19:00,920 --> 00:19:03,000 Speaker 1: he you know, the fact that only a hundred million 336 00:19:03,000 --> 00:19:04,879 Speaker 1: people hundred million people sounds like a lot are in 337 00:19:04,920 --> 00:19:07,879 Speaker 1: meaningful groups strikes him as as a failure of the 338 00:19:07,960 --> 00:19:10,200 Speaker 1: platform and something that needs to be corrected. And he's 339 00:19:10,280 --> 00:19:13,280 Speaker 1: told his employees, as we've as we wrote in the story, 340 00:19:13,320 --> 00:19:15,840 Speaker 1: that he wants to get to a billion people in 341 00:19:15,880 --> 00:19:21,280 Speaker 1: meaningful groups. Mark Zuckerberg loves things that come in you know, billions. Uh. 342 00:19:21,359 --> 00:19:23,200 Speaker 1: And so that's the big goal. That's the push. That 343 00:19:23,280 --> 00:19:26,639 Speaker 1: would be like a tenfold improvement in in their group's products. 344 00:19:26,640 --> 00:19:28,199 Speaker 1: So that's what they're working on right now. This is 345 00:19:28,200 --> 00:19:30,080 Speaker 1: a fantastic story. I love the ending to or he 346 00:19:30,119 --> 00:19:33,439 Speaker 1: really bristles against former coverage of Bloomberg Business Week and 347 00:19:33,480 --> 00:19:37,280 Speaker 1: how he outsources some of his personalized Facebook page and 348 00:19:37,480 --> 00:19:39,760 Speaker 1: other um. It sort of highlights how he wants to 349 00:19:39,800 --> 00:19:42,159 Speaker 1: seem like the guy next door, kind of can't be 350 00:19:42,160 --> 00:19:43,960 Speaker 1: because he likes things and billions and most of us 351 00:19:44,000 --> 00:19:45,679 Speaker 1: can't afford to Max chaff and thank you so much 352 00:19:45,680 --> 00:19:49,200 Speaker 1: for joining me. Max chaffin his technology reporter for Bloomberg 353 00:19:49,320 --> 00:19:53,239 Speaker 1: Business Week, really a fabulous story. I recommend checking it 354 00:19:53,400 --> 00:20:10,200 Speaker 1: out well. Right now, I have two big questions about 355 00:20:10,240 --> 00:20:14,800 Speaker 1: equity markets. One is will banks benefit as the FED 356 00:20:14,920 --> 00:20:18,440 Speaker 1: withdraw stimulus or not? And the second one is is 357 00:20:18,520 --> 00:20:21,199 Speaker 1: tech the next shoe to drop with some of the 358 00:20:21,240 --> 00:20:25,560 Speaker 1: big favorites of the year uh plunged facing a potential fall. 359 00:20:25,840 --> 00:20:28,200 Speaker 1: To answer both of those questions, as Phil Orlando, chief 360 00:20:28,240 --> 00:20:33,080 Speaker 1: equity strategistic Federated Investors who joins us now, Phil, I 361 00:20:33,119 --> 00:20:36,560 Speaker 1: want to start with the first question. Bank stocks. They're 362 00:20:36,640 --> 00:20:39,080 Speaker 1: up more than ten percent this year. A lot of 363 00:20:39,080 --> 00:20:41,720 Speaker 1: people think that they're going to be in prime position 364 00:20:41,760 --> 00:20:44,919 Speaker 1: to capture extra profits. For many of volatility is the 365 00:20:44,960 --> 00:20:47,600 Speaker 1: fedbacks away from their stimulus as well as higher yields. 366 00:20:47,760 --> 00:20:50,439 Speaker 1: What we're seeing now is not a very clear picture. 367 00:20:50,560 --> 00:20:55,120 Speaker 1: Volatility expectations not up even as the FED withdraw stimulus. Rates, Yes, 368 00:20:55,160 --> 00:20:57,040 Speaker 1: in the short term up, but long term we're seeing 369 00:20:57,080 --> 00:21:00,160 Speaker 1: that yield curve narrow. Is this a net benefit where 370 00:21:00,160 --> 00:21:02,040 Speaker 1: the banks or frankly, is this going to make it 371 00:21:02,080 --> 00:21:04,800 Speaker 1: even harder for the banks going forward? So our view 372 00:21:04,880 --> 00:21:07,760 Speaker 1: is that the banks are one of the prime beneficiaries 373 00:21:07,880 --> 00:21:10,520 Speaker 1: of of what we believe will be this sort of 374 00:21:10,600 --> 00:21:15,560 Speaker 1: unfolding FED policy. So Yelling yesterday lays out UH the 375 00:21:15,640 --> 00:21:19,199 Speaker 1: case for beginning to balance sheet shrinkage starting in October. 376 00:21:20,000 --> 00:21:23,440 Speaker 1: UH That shrinkage over the course of the next few 377 00:21:23,520 --> 00:21:26,840 Speaker 1: years should gradually take the Fed's balance sheet down from 378 00:21:26,840 --> 00:21:29,919 Speaker 1: about four and a half trillion to something in the 379 00:21:30,000 --> 00:21:32,960 Speaker 1: order of two and a half to three trillion dollars. 380 00:21:33,000 --> 00:21:34,800 Speaker 1: That's the level that I think will be sort of 381 00:21:34,800 --> 00:21:37,480 Speaker 1: the new normal for the FED. But the some of 382 00:21:37,480 --> 00:21:40,600 Speaker 1: the experts have said that that process will be the 383 00:21:40,640 --> 00:21:44,280 Speaker 1: equivalent of of moving interest rates up by about seventy 384 00:21:44,280 --> 00:21:49,280 Speaker 1: five basis points over time UM with inflation UH troughing 385 00:21:49,280 --> 00:21:51,480 Speaker 1: a little bit. Here. The FED wants to give itself 386 00:21:51,480 --> 00:21:54,880 Speaker 1: a couple more months for the core PC to perk up. 387 00:21:55,000 --> 00:21:57,000 Speaker 1: By the end of the year, we think that will happen. 388 00:21:57,080 --> 00:22:00,639 Speaker 1: We think there's another rate high coming quarter point at 389 00:22:00,680 --> 00:22:03,480 Speaker 1: the end of the year. So the prospect of the 390 00:22:03,560 --> 00:22:08,480 Speaker 1: withdrawal of accommodation from the Federal Reserve, both in terms 391 00:22:08,680 --> 00:22:12,480 Speaker 1: of the balance sheet and adjusting the FED funds rate, 392 00:22:12,840 --> 00:22:16,240 Speaker 1: we think will will allow interest rates to move up 393 00:22:16,280 --> 00:22:19,080 Speaker 1: over time. I think the bond market has started to 394 00:22:19,119 --> 00:22:21,840 Speaker 1: price that in already. Just in the last month or so, 395 00:22:21,920 --> 00:22:25,160 Speaker 1: we've gone from just over the two percent level. We're 396 00:22:25,240 --> 00:22:27,359 Speaker 1: up in the two and a quarter to two point 397 00:22:27,440 --> 00:22:33,640 Speaker 1: three percent level right now. And thank you benchmark ten's. UH. 398 00:22:33,800 --> 00:22:37,240 Speaker 1: Banks will benefit from higher interest rates, it will lighten 399 00:22:37,320 --> 00:22:42,280 Speaker 1: their margins. UH. Just what the Fed is doing implies 400 00:22:42,359 --> 00:22:46,600 Speaker 1: that there is an expectation of firmer economic growth. Increased 401 00:22:46,640 --> 00:22:49,200 Speaker 1: lending activity will help the banks as well. So we're 402 00:22:49,200 --> 00:22:53,119 Speaker 1: absolutely right there with your first premise. Financial stock should 403 00:22:53,119 --> 00:22:55,520 Speaker 1: benefit from this, and I think that's why they're they're 404 00:22:55,520 --> 00:22:59,480 Speaker 1: starting a rally. So which banks in particular do you 405 00:22:59,560 --> 00:23:04,480 Speaker 1: like from here? Given current valuations and given that forecast 406 00:23:04,760 --> 00:23:09,280 Speaker 1: for banks benefiting from the Feds withdrawal. Well, you know, 407 00:23:09,320 --> 00:23:11,920 Speaker 1: I wasn't prepared to come on and drop a bunch 408 00:23:11,960 --> 00:23:16,200 Speaker 1: of names, but certainly our favorite uh JP Morgan Chase 409 00:23:16,320 --> 00:23:21,480 Speaker 1: in terms of UH, their their management, their their capitalization, 410 00:23:21,720 --> 00:23:25,439 Speaker 1: the UH the breath of the markets that they're involved in, 411 00:23:25,720 --> 00:23:29,240 Speaker 1: that they should be the poster child of of the 412 00:23:29,400 --> 00:23:33,320 Speaker 1: large cap money center bank that that will benefit from 413 00:23:33,320 --> 00:23:36,560 Speaker 1: the trench we've discussed. What about. Okay, so let's let's shift. 414 00:23:36,560 --> 00:23:38,440 Speaker 1: So your your bullish on banks from here, and you 415 00:23:38,480 --> 00:23:42,080 Speaker 1: think that they they stand to benefit UH from the 416 00:23:42,080 --> 00:23:45,000 Speaker 1: fed's withdrawal from their stimulus, Let's move on to tech 417 00:23:45,040 --> 00:23:47,840 Speaker 1: because the fang stocks obviously have been huge drivers behind 418 00:23:47,840 --> 00:23:50,320 Speaker 1: this year's rally and in the SP five hundred NASDAK. 419 00:23:50,600 --> 00:23:53,480 Speaker 1: I mean, I'm just wondering, from your perspective, do you 420 00:23:53,560 --> 00:23:58,359 Speaker 1: think that they are threatened from here due to increased 421 00:23:58,400 --> 00:24:03,160 Speaker 1: scrutiny from governments as well as frankly, not being able 422 00:24:03,240 --> 00:24:05,480 Speaker 1: to really meet such high benchmarks that they have set 423 00:24:05,480 --> 00:24:10,080 Speaker 1: for themselves. Well, you know, technology stocks are a sector 424 00:24:10,200 --> 00:24:13,120 Speaker 1: that we've liked, and they've actually done pretty well here. 425 00:24:13,600 --> 00:24:17,960 Speaker 1: If anything, we think that the pattern of regulation that 426 00:24:18,000 --> 00:24:20,080 Speaker 1: we've seen over the last seven or eight years has 427 00:24:20,119 --> 00:24:24,440 Speaker 1: probably peaked and is starting to go the other way. Additionally, 428 00:24:24,720 --> 00:24:27,080 Speaker 1: as as we would look at sort of this change 429 00:24:27,119 --> 00:24:30,119 Speaker 1: in administration, one of the things that we're hoping to 430 00:24:30,200 --> 00:24:33,200 Speaker 1: see frankly, that we expect to see over the next 431 00:24:33,240 --> 00:24:38,119 Speaker 1: year or so is UH this whole repatriation idea UH. 432 00:24:38,160 --> 00:24:40,920 Speaker 1: And and one of the one of the central tenets 433 00:24:40,920 --> 00:24:44,560 Speaker 1: of that UH is that if we're successful on repatriation, 434 00:24:45,480 --> 00:24:48,320 Speaker 1: literally a couple of trillion dollars is going to come 435 00:24:48,359 --> 00:24:52,600 Speaker 1: flowing back into the United States from overseas coffers looking 436 00:24:52,680 --> 00:24:55,760 Speaker 1: for something productive to do with it. One of the 437 00:24:55,800 --> 00:24:57,919 Speaker 1: things that that we think is going to happen is 438 00:24:57,960 --> 00:25:01,200 Speaker 1: that companies, and if you study the US, the corporate 439 00:25:01,240 --> 00:25:03,800 Speaker 1: cap X has just fallen off a cliff for the 440 00:25:03,880 --> 00:25:07,119 Speaker 1: last five or six years. Companies have stopped investing in themselves. 441 00:25:07,600 --> 00:25:12,119 Speaker 1: And I think if there's this incremental amount of cash 442 00:25:12,160 --> 00:25:14,760 Speaker 1: flow that needs to find a home companies have not 443 00:25:14,880 --> 00:25:17,280 Speaker 1: invested in themselves, that that we we are in need 444 00:25:17,320 --> 00:25:20,920 Speaker 1: of a technology upgrade in a lot of of legacy 445 00:25:20,960 --> 00:25:24,719 Speaker 1: type companies. I think there's gonna be a technology upgrade cycle, 446 00:25:25,320 --> 00:25:28,280 Speaker 1: UH as part of this cap X boom that we're 447 00:25:28,280 --> 00:25:31,680 Speaker 1: looking for that will benefit technology companies. Now, maybe that's 448 00:25:31,760 --> 00:25:34,240 Speaker 1: one of the reasons why tech companies have done so 449 00:25:34,280 --> 00:25:36,879 Speaker 1: well to date. We think there's a little bit of 450 00:25:36,920 --> 00:25:40,480 Speaker 1: a sort of a value rotation going on right now, 451 00:25:40,640 --> 00:25:44,360 Speaker 1: energy stocks doing better, financial stocks doing better as opposed 452 00:25:44,359 --> 00:25:46,720 Speaker 1: to the growth stocks like technology, which have had a 453 00:25:46,800 --> 00:25:49,800 Speaker 1: terrific year up until now. But I think looking longer 454 00:25:49,920 --> 00:25:53,200 Speaker 1: term out into the cycle, we think technology stocks will 455 00:25:53,240 --> 00:25:57,840 Speaker 1: be a beneficiary of some sort of an infrastructure you know, 456 00:25:58,040 --> 00:26:01,920 Speaker 1: upgrade cycle based upon cap X dollars flowing back into 457 00:26:01,960 --> 00:26:03,639 Speaker 1: the market. You know, I want to push back on 458 00:26:03,680 --> 00:26:06,119 Speaker 1: that a little bit, because you know, there is this 459 00:26:06,200 --> 00:26:09,600 Speaker 1: expectation that cash repatriation will create some kind of boon 460 00:26:09,800 --> 00:26:13,520 Speaker 1: to uh to those particular companies, at least their stocks. 461 00:26:13,840 --> 00:26:17,600 Speaker 1: And yet a company like Apple has basically used a 462 00:26:17,600 --> 00:26:19,880 Speaker 1: lot of the cash that they have stored overseas by 463 00:26:19,920 --> 00:26:22,960 Speaker 1: way of borrowing money. They can issue as much dead 464 00:26:23,000 --> 00:26:25,359 Speaker 1: as they want, and they've been issuing incredibly aggressively, more 465 00:26:25,359 --> 00:26:28,000 Speaker 1: than seven issuances so far this year, and they've been 466 00:26:28,080 --> 00:26:30,480 Speaker 1: using the proceeds to do buy back shares and do 467 00:26:30,520 --> 00:26:32,000 Speaker 1: whatever they want. I mean, they've been buying back three 468 00:26:32,400 --> 00:26:36,720 Speaker 1: billion dollars worth of shares through eighteen, I believe through 469 00:26:36,760 --> 00:26:38,600 Speaker 1: next year. So I mean you could argue that they 470 00:26:38,600 --> 00:26:42,680 Speaker 1: already have been deploying that cash through the debt markets. 471 00:26:42,720 --> 00:26:47,600 Speaker 1: Not every company is is as pristine as Apple. Uh 472 00:26:47,680 --> 00:26:50,119 Speaker 1: you can make the argument though, And they've talked about 473 00:26:50,160 --> 00:26:52,720 Speaker 1: the fact of trying to move some of their manufacturing 474 00:26:52,920 --> 00:26:56,400 Speaker 1: from let's say China back into the United States. So 475 00:26:56,400 --> 00:26:59,480 Speaker 1: so maybe if they got some of their cash home, uh, 476 00:26:59,520 --> 00:27:02,280 Speaker 1: they may use that to uh, you know, build that 477 00:27:02,440 --> 00:27:06,520 Speaker 1: that that new you know, high end plants somewhere. Um. 478 00:27:06,560 --> 00:27:11,240 Speaker 1: You know, Amazon has talked about building a second corporate 479 00:27:11,240 --> 00:27:14,600 Speaker 1: headquarters somewhere in the United States, uh, you know, New 480 00:27:14,680 --> 00:27:17,119 Speaker 1: York or Chicago or Detroit or whatever. We don't know 481 00:27:17,119 --> 00:27:19,560 Speaker 1: where they're going to do this. But so I think 482 00:27:19,600 --> 00:27:22,119 Speaker 1: companies for the first time in a really long time, 483 00:27:22,640 --> 00:27:26,359 Speaker 1: are looking at this sort of see change, if you will, 484 00:27:26,400 --> 00:27:29,960 Speaker 1: in terms of mindset out of Washington, in terms of 485 00:27:30,000 --> 00:27:32,879 Speaker 1: being either business friendly or not business friendly, or saying 486 00:27:32,880 --> 00:27:35,560 Speaker 1: wait a second, you know, we had an environment where 487 00:27:35,600 --> 00:27:39,600 Speaker 1: where Washington wasn't terribly friendly to us. Now that's changed. 488 00:27:39,800 --> 00:27:42,160 Speaker 1: Now we may get a couple of billion dollars back 489 00:27:42,240 --> 00:27:46,560 Speaker 1: to to UH impart invest in things like like corporate capex, 490 00:27:46,600 --> 00:27:48,800 Speaker 1: which frankly we haven't done for the last five or 491 00:27:48,840 --> 00:27:51,520 Speaker 1: six years, So this may be an opportunity to sort 492 00:27:51,520 --> 00:27:54,480 Speaker 1: of dust off those plans that we shelled and UH 493 00:27:54,560 --> 00:27:56,320 Speaker 1: to take a look at whether or not it it 494 00:27:56,640 --> 00:27:59,639 Speaker 1: makes sense to do something here. Fill Orlando, it's always 495 00:27:59,640 --> 00:28:01,600 Speaker 1: a pleasure speaking with you. Thank you so much for 496 00:28:01,680 --> 00:28:06,160 Speaker 1: joining us. Phil Orlando, Chief Equity Strategistic Federated Investors, bullish 497 00:28:06,280 --> 00:28:10,800 Speaker 1: on banks, seeing long term opportunity in tech stocks. Definitely 498 00:28:10,800 --> 00:28:14,040 Speaker 1: an interesting issue to keep track of the cash repatriation 499 00:28:14,119 --> 00:28:17,480 Speaker 1: and what that would do both respect to capital investment 500 00:28:17,520 --> 00:28:23,480 Speaker 1: as well as share buybacks. Thanks for listening to the 501 00:28:23,520 --> 00:28:26,640 Speaker 1: Bloomberg P and L podcast. You can subscribe and listen 502 00:28:26,640 --> 00:28:30,800 Speaker 1: to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform 503 00:28:30,840 --> 00:28:34,760 Speaker 1: you prefer. I'm pim Fox. I'm on Twitter at pim Fox. 504 00:28:35,080 --> 00:28:38,600 Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast. 505 00:28:38,640 --> 00:28:41,240 Speaker 1: You can always catch us worldwide on Bloomberg Radio.