Speaker 1: Who you put your trust in matters. Investors have put
Speaker 1: their trust and independent registered investment advisors to the two
Speaker 1: and four trillion dollars. Why learn more at find your
Speaker 1: Independent Advisor dot com. Welcome to the Bloomberg Surveillance Podcast.
Speaker 1: I'm Tom Keene with David Gura. Daily we bring you
Speaker 1: insight from the best in economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and
Speaker 1: of course on the Bloomberg. Alberto Gallo was at RBS
Speaker 1: now at Algebras and we want to dive into the
Speaker 1: market view right now with Alberto. Bring up the chart, Anthony,
Speaker 1: if you would. This is a chart we showed four
Speaker 1: or five years ago about three times a day. This
Speaker 1: is the Spanish German spread, the difference in yield between
Speaker 1: Spain and Germany. And all you need to know is
Speaker 1: albert O Galla loaded the boat right there and did
Speaker 1: better than good in trying to game how race would
Speaker 1: come down for Spain, Italy, Greece and the rest of them.
Speaker 1: And the major question, Alberto is we're down here now
Speaker 1: and what does that symbolize for the old and the
Speaker 1: new levels of Spain. Is it a new regime for Spain?
Speaker 1: Is it all clear for Spain? It's a law and
Speaker 1: you're supposed to be cautious. Spain fortunately has a stable
Speaker 1: political situation. But generally what we're gonna see in Europe
Speaker 1: is the emergence of the same populous wave that we
Speaker 1: are that we have seen in the UK and the US.
Speaker 1: I think the next week points the next vulnerable countries
Speaker 1: are Italy and France. So that's the areas where we're
Speaker 1: more worried about the rising eilds and in spreads. Italy
Speaker 1: goes to vote a referendum on the fourth of the
Speaker 1: December about simplifying the constitution and simplifying the government. But
Speaker 1: this vote has been painted by the opposition as a
Speaker 1: way to kick out the current government, a little bit
Speaker 1: like Brexit was painted as a way to kick the
Speaker 1: former UK government. And then you have in France the
Speaker 1: risk of le pan um rising. While the current leading
Speaker 1: center right candidate is very harsh on economic policy is
Speaker 1: a general statement and Marty Feldstein was on yesterday talking
Speaker 1: about asset bubbles. Professor Feldstein with real concern about elevated markets.
Speaker 1: Do you agree with that our markets frothy or is
Speaker 1: there value there in the galo bonds space or for
Speaker 1: that matter, the non galo equity space. We have been
Speaker 1: cautious on bonds. We've been calling for this bubble to
Speaker 1: deflate for many months, and particularly you know, we're worried
Speaker 1: about Italian bonds, were worried about French bonds and about
Speaker 1: UK bonds. You know, here in the UK inflation expect
Speaker 1: stations are three and a half. You're getting one point
Speaker 1: four percent on Guild ten year yields. So there is
Speaker 1: no value in bonds. You've got to be in a
Speaker 1: type of investment which is positioned for a rising inflation
Speaker 1: or environment and a rising bond yield environment. And currently
Speaker 1: bond funds are not set for that environment because they
Speaker 1: were all long, they were all in a lot of
Speaker 1: btfs where all positive strategies, and as an investor in
Speaker 1: those funds, you're sitting doc right. But Alberto, we need
Speaker 1: risk back on the markets right. What DTV has done
Speaker 1: it rightly so is to give time for fiscal spending
Speaker 1: so you don't price risk when when you look at
Speaker 1: bond yields anymore. This has to come back if we're
Speaker 1: going to keep in check so some kind of populous
Speaker 1: measures which are counterproductive. Yeah, but you know, risk buying
Speaker 1: bonds is not really a risk trade. It's it's when
Speaker 1: you think at the moment. Yeah, if you think growth
Speaker 1: is low and and central banks are going to keep
Speaker 1: the world from falling apart, you buy bonds. If you
Speaker 1: actually think that there is some growth and fiscal spending,
Speaker 1: then you start buying. Either you buy high yield bonds,
Speaker 1: or you buy stocks or your position for a steeper
Speaker 1: yield curve. You buy banks and insurance companies. You buy
Speaker 1: all those things that people were not looking at because
Speaker 1: they were linked to growth. Remember, even inequities. People were
Speaker 1: buying utilities and telecoms, which was a dividend trade. It
Speaker 1: wasn't a growth trade. So we're seeing a huge rotation now, right.
Speaker 1: But you remember, probably as much as I do, there
Speaker 1: there was a point when berluscing Sylvia Brosco and it
Speaker 1: was in charge. There was no growth. But actually the
Speaker 1: real opposition wasn't political. It was a bond market that
Speaker 1: kicked him out right, and we had a technocratic government.
Speaker 1: We don't have that anymore. We don't have that. But
Speaker 1: you know, you know, drug is living in January. If
Speaker 1: we have a no vote in Italy, and if we
Speaker 1: have lepan rising in France, you know, do whatever it takes.
Speaker 1: Pledge is not gonna work as well. So we could
Speaker 1: still see Italy spread going above two hundred against boons
Speaker 1: and France spread going around the hundred against boons if
Speaker 1: there is a no vote at the referendum in Italy,
Speaker 1: which is possible, or if there is a chance of
Speaker 1: lepan higher than thirty percent, which is and to become
Speaker 1: true and and and this this is the real issue,
Speaker 1: inequality leading to population. Monetary policy hasn't solved the problem.
Speaker 1: I want to send this up with economics here, Alberto,
Speaker 1: I think this is just absolutely critical. Let's bring up
Speaker 1: the Francy and the quadrart. This is nominal GDP in
Speaker 1: Francis Italy and it's not a pretty story. There is
Speaker 1: the presidential four year moving average of the animal spirit
Speaker 1: of Italy and it ain't there. Do you see and
Speaker 1: with with davidy Sarah, do you see albert O Gallo
Speaker 1: any indication of economic growth or does Mr Trump and
Speaker 1: Chancellor Miracle and others have to work within a no
Speaker 1: growth analysis. I think it's very different. I think the
Speaker 1: US we're gonna see a stronger growth because sound of
Speaker 1: fiscal policies will have an impact. In particular, if you
Speaker 1: do infrastructure spending, you spend a dollar, you increase GDP
Speaker 1: by around a dollar or maybe even more. If you
Speaker 1: cut taxes to the one percent, then you don't have
Speaker 1: that same effect. But infrastructure spending is good. In the UK,
Speaker 1: you're probably gonna see the same although inflation is going
Speaker 1: to outpace GDP because the pound is weak and there's
Speaker 1: a lot of uncertainty. So but in Europe, show ball.
Speaker 1: The German finance minister yesterday said we're going to double
Speaker 1: the incer plan. The inucor plan is only zero point
Speaker 1: one percent of GDP, so you actually need to to
Speaker 1: make it ten times eager to have an impact in Europe,
Speaker 1: there's a problem. Yeah, that factor analysis is important. Let's
Speaker 1: finally look at the euro here and I look at
Speaker 1: the markets, folks with Alberto Gala, Alberto, do you just
Speaker 1: sum a dashed through parody? Once twice, three four times?
Speaker 1: We've made the dash to parity is a weaker yro
Speaker 1: the solution for all these different issues. I think it helps,
Speaker 1: but we it's not the solution. It helps, and we're
Speaker 1: gonna see another dash to party. I agree with you
Speaker 1: as you suggested, but I think the Europe the weak
Speaker 1: ero helps Germany, helps some countries, some businesses that export,
Speaker 1: but you really need inclusive growth policies, so you need
Speaker 1: some spending in infrastructure, You need some spending in the
Speaker 1: periphery countries. I have done austerity like Greece or you know,
Speaker 1: or Spain or Italy. Because now the dividing growth between Germany,
Speaker 1: which benefits the most by the week euro versus the
Speaker 1: other countries, you know, it is too large. And if
Speaker 1: the other countries all vote for populist governments, then there's
Speaker 1: no more Europe. Europe parody with the dollar will ever happen. Yeah,
Speaker 1: I think your party is in the cards, especially if
Speaker 1: you see a no vote at the Italian referenum, or
Speaker 1: if you see lepen rising in France. All these trends
Speaker 1: are going to weaken the Europe definitely and and increased
Speaker 1: spreads in peripheral bonds. All right, there you go, Berta
Speaker 1: Gallus saying your parody tom possibly in the cards, depending
Speaker 1: of course, on the outcome of this referendomnity December four.
Speaker 1: It's a great pleasure to have with a small Street Coumar,
Speaker 1: president of Street Umar Global Strategies. Here in are Bloomberg
Speaker 1: eleven three or is it years? And New york'sre great
Speaker 1: to see. Let's start with the dollar against slightly weaker today,
Speaker 1: but this has been a strong dollar story at least
Speaker 1: since the election. How long do you do you expect
Speaker 1: that to persist? And what's driving it? I have been
Speaker 1: a dollar bull for quite some time. I think this
Speaker 1: is the start. For instance, if you were to look
Speaker 1: in terms of where the dollar euro exchange rate is going,
Speaker 1: I have been saying two clients that we should expect
Speaker 1: the euro to go to parody. We are now talking
Speaker 1: about one or six, one or seven, so we have
Speaker 1: a little bit further to go. What propels it, David,
Speaker 1: is the fact that one you have a FED hike,
Speaker 1: which was will they hike in December? Won't they hike
Speaker 1: in December? And as you just said a couple of
Speaker 1: minutes ago, you now have a hundred percent probability according
Speaker 1: to the marketer. And I think the Trump election and
Speaker 1: the fact that he has said that he will not
Speaker 1: renominate Janet Yellen to the chairmanship when her term expires
Speaker 1: in January tween means that the Fed essentially has no pull.
Speaker 1: She's not going to get if she's not going to
Speaker 1: be renominated, she might as well do what is necessary
Speaker 1: and hike. And I'm looking for at least two hikes
Speaker 1: next year, which is again a switch from what I
Speaker 1: thought before the elections. So the elections have changed it
Speaker 1: quite a bit. You're going to have quite a few
Speaker 1: more rate hikes and that boost the dollar. In addition,
Speaker 1: if there is anything like a trade restriction taking place
Speaker 1: on the part of Trump, I hope not. I hope
Speaker 1: it's more on the fiscal stimulus side rather than trade restrictions.
Speaker 1: But if restrictions come into force, that is going to
Speaker 1: strengthen the dollar as well. It increases global uncertainty, it
Speaker 1: increases increases global risk, and global investors bring money into
Speaker 1: the United States. When that happens, all of that is
Speaker 1: going to be good for the dollar. And the side
Speaker 1: point to what you asked, David, as that happens, I
Speaker 1: have started to say that the two thirty five ten
Speaker 1: year yield we saw in the last couple of days
Speaker 1: and today it's just below two thirty, it's just not
Speaker 1: sustainable because you have such a we have more than
Speaker 1: a two percent spread with the German tenure Buld. It's
Speaker 1: the highest we have had since nine and this is
Speaker 1: just unsustainable. At what I think it means is that
Speaker 1: the bond vigilantes have gone a bit too far in
Speaker 1: terms of selling the treasury. So it's a treasury yields
Speaker 1: come down and the dollar continues to strengthen. What you're
Speaker 1: you're implying there, I guess, is that you have a
Speaker 1: father's politically aware, not necessarily political as a as an institution.
Speaker 1: They would fiercely say that that they're not, but there
Speaker 1: was some awareness here that that they could doing something
Speaker 1: at the last meeting, could have done something with regard
Speaker 1: to to the election. How politically cognizant is this Federal Reserve?
Speaker 1: Do you think? Well, we have one again in controvertible fact,
Speaker 1: And that is according to the Federal Election Commission. Lyle Brainard,
Speaker 1: who is a permanent voter and a member of the
Speaker 1: FED Board of Governors. She was a contributor to the
Speaker 1: Hillary Clinton campaign, rumored to be in the running for
Speaker 1: Treasury secretary in a Clinton administration, and the responses this
Speaker 1: is properly legal. But the question to you and me
Speaker 1: is does it. How does it look whether it is
Speaker 1: legal or not. So I think it puts the whole
Speaker 1: question of political independence into into issue. And we have
Speaker 1: had a long history in this country, David, of presidents
Speaker 1: from time to time bullying the FED. One of the
Speaker 1: star instances I think of is my the former chairman
Speaker 1: of my economics department at Columbia, Author Burns, who became
Speaker 1: the chairman in the early seventies, essentially was bullied into
Speaker 1: increasing the money supply in n seventy two to finance
Speaker 1: Richard Nixon's Vietnam War, and so it has been done.
Speaker 1: So the FED does not have a history of continued independence.
Speaker 1: Paul Wolker, if anything, was probably an exception to the rule.
Speaker 1: What was Arthur Burns like to review for our young
Speaker 1: number ones here today? There was Cherry chairman, Bernanke, Chairman Greenspan,
Speaker 1: huge uproar when we went from Greenspan Bernankey, and before
Speaker 1: that there were selected others. But Arthur Burns defined a
Speaker 1: kind of economics. Could he do economics today? In the
Speaker 1: need for transparency today? I mean, would we accept him
Speaker 1: pipe smoking in the House of the Senate, Humphrey Hawkins,
Speaker 1: just as one idea, I think the world has changed.
Speaker 1: I think your your question is spot on, Tom, because
Speaker 1: I don't see the author Burns kind of pipe smoking
Speaker 1: uh omp chat economist, contemplative thinking hard right. I mean, David,
Speaker 1: this is a serious deal because if you go back
Speaker 1: and look, Arthur Burns wasn't measured. He wasn't measured. I
Speaker 1: mean they made serious jumps in yields when they chose
Speaker 1: to and of course not to forget one more, David,
Speaker 1: since you asked a question about political independence. We had
Speaker 1: a very little remembered FED chairman called g William Miller
Speaker 1: who lasted in his job for exactly one year, in
Speaker 1: challenging to say the last when when when you look
Speaker 1: at that we bought the show to a complete Arthur
Speaker 1: once again with three commands, I fell asleep, No, no,
Speaker 1: no three. When you when you look at the future
Speaker 1: of this FED over the next twelve months eighteen months,
Speaker 1: Donald Trump the president, let us have a huge opportunity
Speaker 1: here to reshape it, whether we're not not even necessarily
Speaker 1: by bullying. He's going to have a lot of personnel
Speaker 1: changes that that that he can make. What does a
Speaker 1: Donald Trump FED look like? And we've been talking about
Speaker 1: past chairman what what is the the ideal Donald Trump,
Speaker 1: Chairman of the Fan. That's a great question, David. I
Speaker 1: would characterize the FED policy that we have had in
Speaker 1: the last few years as essentially seat of the pants
Speaker 1: policy making. You look at the latest data point that
Speaker 1: you get and then decide whether to hike or not
Speaker 1: to hike. If there is the slightest bit of a
Speaker 1: problem elsewhere, you decide to postpone. And that was the
Speaker 1: That's what happened. For instance, in September of twenty fifteen,
Speaker 1: when there was in the Jackson Hole a month prior,
Speaker 1: the FED had essentially Janet Ellen seemed to indicate a
Speaker 1: September eight hike which never happened groundworkers there, and so
Speaker 1: that is what we had. So the markets have been
Speaker 1: pushed up, held back by what the FED is going
Speaker 1: to do. So the change I would like to see,
Speaker 1: and I think many of the conservative people advising the
Speaker 1: President elect come from that camp, is more rules based.
Speaker 1: For instance, another one of my professors in my PhD
Speaker 1: dissertation was John Taylor, famous for his tailor rule, who
Speaker 1: is now at Stanford University. And in terms of what
Speaker 1: it is my cap by my calculation, the tailor rule
Speaker 1: would call for a federal funds rate of about plus
Speaker 1: one and a half percent today, which shown also about
Speaker 1: the let's talk to you now, Rules versus discretion. Sherman
Speaker 1: Greenspan says more discretion. John Taylor Stanford says more rules,
Speaker 1: which works. Three. Absolutely. I'm in favor of rules because
Speaker 1: I think discretion gives rise to all kinds of subjectivity
Speaker 1: which you do not want. The market gets certainty as
Speaker 1: a result of rules. In other words, the problem there,
Speaker 1: Tom is not rules versus discretion as much as the
Speaker 1: fact that a rule space policy makes it unnecessary to
Speaker 1: have these twelve members voting on the Federal Reserve decisions.
Speaker 1: You and I can guess exactly what the fit should
Speaker 1: be doing, and the market has certainty. Street Commar with
Speaker 1: Us from Street Commar Global Strategy is one of the
Speaker 1: great joys of having doctor uh Commar in with us
Speaker 1: is the idea of eighteen things to talk about. Let
Speaker 1: me go to the emotion of our listeners, which is,
Speaker 1: where's the next pay raise, whether it's them, their kids, whatever.
Speaker 1: So if I get a Trumpian inflation, do you just
Speaker 1: assume I get be in growth with that? Or is
Speaker 1: the worst outcome here? I get a higher inflation without
Speaker 1: the growth that drives wage growth, which is I think
Speaker 1: you are going to have some inflation pickup, Tom, if
Speaker 1: you have a significant increase in physical spending and before
Speaker 1: that has an impact on productivity. The spending alone is
Speaker 1: likely to push up prices. Now, whether you get a
Speaker 1: salary increase or not compared with that inflation is going
Speaker 1: to depend very much in terms of what kind of
Speaker 1: work that person is doing. For instance, the low wage
Speaker 1: or manufacturing jobs where the competitors happened to be in
Speaker 1: Mexico or China or other countries, those jobs are gone forever.
Speaker 1: I don't think trade restrictions are threats by the new
Speaker 1: president Electrump do for those people you just describe who
Speaker 1: were his core constituency. We have a lesson there from
Speaker 1: what happened in Germany in two thousand three, Tom. What
Speaker 1: they had was known as the Hearts Reforms, which cost
Speaker 1: the Den Chancellor Gerhard Schreuder to be thrown out of office.
Speaker 1: In two thousand five, Angela Merkel came in, but it
Speaker 1: essentially said workers need to be retrained, they need to
Speaker 1: be educated in jobs which have a greater demand. And
Speaker 1: as you go for an education, as you accept the training,
Speaker 1: you will get some form of salary to keep you going,
Speaker 1: and in the future you will be self sustaining as
Speaker 1: a result of better skills. But if you're going to
Speaker 1: stay with your skill level and you want to be
Speaker 1: supported and you want to get a job, you cannot
Speaker 1: prevent the Chinese, Indians and Mexicans from competing with you.
Speaker 1: Do you think that it's a certitude here that we're
Speaker 1: going to get a big fiscal stimulus package, that we're
Speaker 1: going to get the kind of infrastructure spending the Donald
Speaker 1: Trump was talking about on the campaign trail. Uh? And
Speaker 1: and and if that's the case, what are the lessons
Speaker 1: learned from back in two thousand and eight two thousand nine,
Speaker 1: how do you make this package more effected than the
Speaker 1: one back then? Uh? I'll answer you into a three
Speaker 1: parts because you have a number of questions that I think, yes,
Speaker 1: there is going to be fiscal stimulus. The easy part
Speaker 1: of the fiscal stimulus is to give tax cuts. Rather
Speaker 1: than decide how to build a bridge and where you're
Speaker 1: going to spend the money, that's going to take quite
Speaker 1: a bit longer to get done. So the tax cuts
Speaker 1: themselves are immediately going to give some form of a
Speaker 1: flip in terms increase on the growth rate in the
Speaker 1: short term. Give a temporary stimulus. Now, how much of
Speaker 1: benefit that has depends on where the tax cut is structured.
Speaker 1: If it is structed, if it is structured to give
Speaker 1: it only at the highest income levels, it's not going
Speaker 1: to percolate down to the core Trump supporters who brought
Speaker 1: him to office. And that's not going to work. And
Speaker 1: in terms of what needs to be done subsequently is
Speaker 1: you need to have these fiscal stimulus programs on infrastructure
Speaker 1: to be well set. You need the participation of the
Speaker 1: private sector. For instance, you can have a toll road
Speaker 1: where the private sector in est has the benefit in
Speaker 1: the tones being used. Then you have less expenditure on
Speaker 1: the part of the public. All of those are important
Speaker 1: and they're going to take time. That's why I don't
Speaker 1: think you're going to have a big bust and growth immediately.
Speaker 1: Three and I'm depressed. Yea. I came out of the
Speaker 1: building yesterday. Folks were next to Bloomingdale's here on Lexington Avenue.
Speaker 1: On there the windows are open, rest of lights and
Speaker 1: the holiday windows, and they said, should I walk home?
Speaker 1: And it's four blocks, I mean three four city blocks.
Speaker 1: There's a photo on on Twitter folks of young David Gura. David,
Speaker 1: you live just this side of the Hampton's. How long
Speaker 1: is it you walk on ourt? That's about six that's
Speaker 1: about six miles, but six miles, Yeah, I've never done.
Speaker 1: That's like a marathon. There you go. Let me get
Speaker 1: a headline in the headline here crossing the turbo from
Speaker 1: MSNBC which says President elect Donald Trump will not pursue
Speaker 1: an investigation into Hillary Clinton. Again, this is report from
Speaker 1: MSNBC that's not been confirmed by Bloomberg, saining Donald Trump
Speaker 1: will not pursue an investigation into Hillary Clinton. Remember during
Speaker 1: the campaign he often pledged to do that if he
Speaker 1: were to be elected. He launched an investigation over her
Speaker 1: usage of personal email, so he appears to be reversing
Speaker 1: course on that. Again, an unconfirmed report here from MSNBC.
Speaker 1: And will bring you more details on that as we
Speaker 1: get the most of The New York Times responding Michael
Speaker 1: Barr mentioning the fact that Donald Trump canceled his meeting
Speaker 1: with The New York Times today, The New York Times
Speaker 1: saying it first became aware of that when it when
Speaker 1: the editor where they saw the tweet from Doc Donald
Speaker 1: Trump this morning while we're looking at the news flow
Speaker 1: NBC saying that Mr Giuliani Mayor Giuliani considered for Trump
Speaker 1: National Intelligence director, sort of the stream of consciousness. It's
Speaker 1: it's a whole new world day. Yeah, more meetings today
Speaker 1: a Trump tower before he heads to to Florida. I
Speaker 1: think for the president in two or three or four terms,
Speaker 1: do they use Snapchat? What platform is next? What's the
Speaker 1: next president chatting American public? I don't know. It's a
Speaker 1: brave new world. We're thrilled you're with us worldwide Bloomberg surveillance.
Speaker 1: This is Bloomberg. Who you put your trust in matters.
Speaker 1: Investors have put their trust in independent registered investment advisors
Speaker 1: to the two and of four trillion dollars. Why they
Speaker 1: see their roles to serve, not sell. That's why Charles
Speaker 1: Schwab is committed to the success over seven thousand independent
Speaker 1: financial advisors who passionately dedicate themselves to helping people achieve
Speaker 1: their financial goals. Learn more and find your independent advisor
Speaker 1: dot com. Write what I said at the top of
Speaker 1: the show, the w I r P function on the
Speaker 1: bloomber looking at fed at funds future showing a probability
Speaker 1: of a race went probably like, come on, I must
Speaker 1: have like astonished. I have not seen that before, but
Speaker 1: indeed it's been that way since yesterday afternoon. I want
Speaker 1: to bring Kim show Holts, Professor of Management Practice in
Speaker 1: the Economics Department n y U Sturring School of Business,
Speaker 1: form a global chief economist at City Group. It's great
Speaker 1: to have you with us. And we were talking to
Speaker 1: to Sri Kumar a few minutes ago about the the
Speaker 1: the pluses and minuses of a rules based system for
Speaker 1: for the FED Reserve. This is something that Congress is
Speaker 1: actively chewing over. It seems like there is a possibility
Speaker 1: we could see this happen here in the new term
Speaker 1: walkerster as you see at the the the pluses and
Speaker 1: minuses of a system like that the Fords and the against. Well,
Speaker 1: let's start with where we are. We currently have a
Speaker 1: system in which Congress monitors the Fed and judges their
Speaker 1: performance against a mandate. The mandate is price stability and
Speaker 1: keeping unemployment close to some low sustainable level. And on
Speaker 1: that basis, the Fed has done a reasonably good job,
Speaker 1: and especially considering the enormous scale of the recent crisis,
Speaker 1: inflation has been relatively low and stable, in fact, if anything,
Speaker 1: a little bit too low. Um so uh. I think
Speaker 1: that that has turned out to be a successful system.
Speaker 1: What's being proposed is that Congress switched to monitoring the
Speaker 1: operational tools that the FED users, namely conventional interest rates,
Speaker 1: and they want to set their The proposal has been
Speaker 1: to set up a policy rule, the Tailor rule, as
Speaker 1: a benchmark against which the FED could create its own rule,
Speaker 1: but would still be measured not only against its own
Speaker 1: rule but against the tailor rule. And while that has
Speaker 1: some benefits, it does tend to constrain FED discretion more
Speaker 1: than what we observe today. They could also have some
Speaker 1: real downsides. And in particular, any simple rule that we
Speaker 1: can think of is often going to need to be
Speaker 1: violated in practice, and basically because it just can't take
Speaker 1: account of the complexity of the world we're in that
Speaker 1: it sounds like the proposed legislation would would allow for
Speaker 1: some flexibility there. I think there will be those who
Speaker 1: wonder about the counter factual here, if you look back
Speaker 1: over the last ten fifteen years, how things would be
Speaker 1: different or might be different if a rule like this
Speaker 1: we're in place. Well, it's it's hard to say. I mean,
Speaker 1: one of the questions is, uh, would the Federal Reserve
Speaker 1: be more um obliged to try and stick to a
Speaker 1: rule or stay close to a rule even if they
Speaker 1: thought that wasn't the optimal policy. So, for example, they're
Speaker 1: often very sharp changes in financial conditions, equity market crashes, um,
Speaker 1: big crises that we've observed, and they don't show up
Speaker 1: instantaneously in a rule, typically not a simple one like
Speaker 1: the tailor rule. So have the Fed waited to respond
Speaker 1: to those kinds of shocks until it shows up in
Speaker 1: GDP and inflation? That could have been a real big problem. Now,
Speaker 1: on the other hand, to be fair, um, having a
Speaker 1: rule probably reduces the chances of really large errors. So UM,
Speaker 1: the question is how do you judge the last thirty
Speaker 1: years from the Fed? I think a lot of people
Speaker 1: would say, aside for the financial crisis, they got the
Speaker 1: basics of keeping inflation low and stable. Right, let's go
Speaker 1: ned phelps on everyone nehru and a I R you
Speaker 1: is one of the plug ins of the tailor rule.
Speaker 1: I would suggest if you get six economists in a room,
Speaker 1: you're gonna get fourteen opinions. On Nehru. How can we
Speaker 1: have a tailor rule where we don't know what one
Speaker 1: of the major plugins is, Tom, I couldn't agree more. Actually,
Speaker 1: I think you'll find out that there would be even
Speaker 1: more disagreement about measuring potential GDP, which is another way
Speaker 1: another element of a different formulation of the tailor rule,
Speaker 1: and the one about which there is the most disagreement
Speaker 1: is the natural rate of interest. That first number that
Speaker 1: appears in the tailor rule. UM. Taylor used the number two.
Speaker 1: It seemed reasonable at the time because it was the
Speaker 1: average for the short term real interest rate he'd observed.
Speaker 1: Today they are estimates that that number should be as
Speaker 1: low as zero UM, and that that source of uncertainty
Speaker 1: about what the right love all the races is just enormous.
Speaker 1: So I don't think any simple rule can account for that.
Speaker 1: Kim schoen holts with us as we are. You gonna
Speaker 1: tweet out today so everybody can know what you're doing. UM.
Speaker 1: You know the new n y U distribution system. This
Speaker 1: is great. UM. I actually don't tweet under my own name,
Speaker 1: but Steve Chacketty and I write a blog exactly Money
Speaker 1: and Banking dot Com, and we every time we do postum,
Speaker 1: which is usually on Monday mornings, we tweet out the
Speaker 1: message that we've done a post It's under real Stephen Chacketty,
Speaker 1: an esteemed economist. I'm accept no invitation work at b
Speaker 1: I S in Switzerland. Chrima sen Holtz with it's professor
Speaker 1: shoen Holtz, Dr. Schoen Holts of New York University. What
Speaker 1: was the shift like to go from market big bank
Speaker 1: economics to academics. When you go into classroom for the
Speaker 1: first time to teach, I mean, did you take the pharmaceutical?
Speaker 1: Did you were you sit? What do you do? You know?
Speaker 1: I tell it the other way Tom. You know, in
Speaker 1: the twenty years I was a market economist, I was
Speaker 1: doing economics one oh one for clients all the time,
Speaker 1: trying to teach them applied macroeconomics and evaluating asset prices.
Speaker 1: So I just brought that to the classroom, uh and
Speaker 1: felt pretty much right at home. What do NBA students
Speaker 1: want and folks? Full disclosure here. N y u Stern
Speaker 1: was literally my first supporter when we did Bloomberg on
Speaker 1: the Economy. They're the first people, along with sector spiders,
Speaker 1: who stood up and said, yeah, we're going to sponsor
Speaker 1: this program. What do the NBA students want from academics
Speaker 1: like you? Look, I think they want several things. First,
Speaker 1: they want a broad understanding of the world so they
Speaker 1: can do their jobs, not just now, but in the
Speaker 1: long run. They want to have careers, not just first jobs.
Speaker 1: But second, they want to set of skills that are
Speaker 1: going to prepare them for the for the workplace today,
Speaker 1: and those skills are changing. UM. Big example of that
Speaker 1: is financial technology, UM, which is changing the way people
Speaker 1: operating finance. How do you teach the ambiguity that you
Speaker 1: and I know from microeconomics. The the what I find
Speaker 1: so challenging is for people it's not on the one hand,
Speaker 1: on the other hand, it's the mathemamatically ambiguous dynamics within
Speaker 1: every economic discussion. How do you teach ambiguity? You know?
Speaker 1: My I think, in practical sense, Tom, the best way
Speaker 1: to do it is actually put people in the position
Speaker 1: of thinking about a decision they have to make. It's
Speaker 1: it's a bit bit like game playing or a war
Speaker 1: game in some sense, and you have to challenge them
Speaker 1: to think about, how do you make this decision? What
Speaker 1: are the factors that are going to influence your decision
Speaker 1: what do you need to know? And then when you drive,
Speaker 1: when you drill down, you find out what are the
Speaker 1: things you can you can know and what are the
Speaker 1: things you can't. I think that's actually the most practical.
Speaker 1: It was sort of David like Harvard football last weekend.
Speaker 1: They had to figure out the ambiguous outcome. Yes it
Speaker 1: was not ambiguous outcome. Do you get students who are
Speaker 1: interested in going into government at this point? Is that
Speaker 1: an attractive career path? Talking about going to to to government? Economics?
Speaker 1: For you have to take tweet one O one. It's
Speaker 1: a minority and I but you know, for you know,
Speaker 1: I think in many ways they think. To keep in
Speaker 1: mind is if you ask how do you change the
Speaker 1: world today? You may be able to do that better
Speaker 1: through creating a new business and changing the technologies that
Speaker 1: are available to us than entering government. So um entrepreneurial
Speaker 1: activity big plus. We we encourage people to do that.
Speaker 1: It's reading your most recent notes and you write a
Speaker 1: lot about the problems with how we measure inflation. You
Speaker 1: bring up the new frontier their financial technology, how about
Speaker 1: the new new terrain of of forecasting? Are we getting
Speaker 1: any better at getting a sense of how the economy
Speaker 1: is doing. Um, we're we're okay, but we're not good
Speaker 1: and uh. And it's partly because you know, there are
Speaker 1: certain things about the economy that are inherently unfecastable. People
Speaker 1: form expectations about the future, sometimes in ways we do
Speaker 1: not understand, and those expectations have a huge influence on
Speaker 1: the way they behave on whether they invest, whether they save,
Speaker 1: whether they spend more, um, whether they're willing to pay
Speaker 1: a higher price. Um. So there are a lot of
Speaker 1: things about which we need to learn more. The good
Speaker 1: news is there's a lot more microeconomic work that's being
Speaker 1: done to inform what we think about the macroeconomy. And
Speaker 1: I have good I have hopes that ten or twenty
Speaker 1: years from now that will actually improve our way of
Speaker 1: thinking about the world. Taking this back to what we
Speaker 1: were talking about a few minutes ago, a more rules
Speaker 1: based system. Tom was asking about ambiguity of mathematics and
Speaker 1: the micro economics space. How big a hurdle is that
Speaker 1: to overcome there? The ambiguity that central bankers face on
Speaker 1: a daily basis. Look, they have to make decisions, they're
Speaker 1: they're in the game. They can't Uh, it's a little
Speaker 1: bit like you know, when when you you face uncertainty.
Speaker 1: They're a bit like an airline pilot. They're already up
Speaker 1: in the air and if there's a challenge, they have
Speaker 1: to figure out how to land the plane, not to
Speaker 1: stop and say, let's think about this as an academic exercise.
Speaker 1: So from their point of view, getting the plane down
Speaker 1: safely is the big challenge. A brilliant model. The brilliant model,
Speaker 1: the dynamics the institutions and policymakers have to work. And
Speaker 1: I go, we mentioned Rick Michigan before on this, but
Speaker 1: the basic idea of the dynamics. Do you observe that
Speaker 1: the people around the presidential president elect can move him
Speaker 1: from Trump incertitude, which we all know and I think
Speaker 1: of Mr Trump, thank you. I know, but but but
Speaker 1: if you have Trump incertitude, can he amend that to
Speaker 1: a dynamic analysis? You know, I can't say with any
Speaker 1: degree of certainty. You know probably better than I do,
Speaker 1: but I do. I did think that President Obama added
Speaker 1: some insight into this the other day when he said,
Speaker 1: when you get into the Oval office, it changes the
Speaker 1: way you see the world exactly. And I think that,
Speaker 1: you know, we'll see how that works out after January. David,
Speaker 1: I'll be honest here, I'm sort of optimistic about it,
Speaker 1: because every president is overcome by events, every single one. Yeah, yes, invariably.
Speaker 1: I was struck. They're reading that piece in New York
Speaker 1: Times over the weekend by Maggie Haberman about uh, Donald
Speaker 1: Trump after that meeting in the Oval Office, how he
Speaker 1: was sort of back to his old old routine and
Speaker 1: didn't do We've seen the tweets this morning, so yes,
Speaker 1: maybe we're waiting for that, that event or those events.
Speaker 1: He's not there yet. I was going to go over
Speaker 1: to the Gucci store yesterday and I gave up. Couldn't
Speaker 1: get through it. He couldn't fight through the crowds. He
Speaker 1: just was going over to look weekly window shopping. Now,
Speaker 1: why you and our producer folks, why you and he
Speaker 1: wants the he wants the little loafers with a fur
Speaker 1: around the edges, snake tops of this Christmas list? Let
Speaker 1: me ask you. You know, we're talking about our introspection
Speaker 1: president elect, coming to terms with the gravity of his office.
Speaker 1: We've seen that in the central banking space as well.
Speaker 1: You've written about this, this to the Bank of Japan,
Speaker 1: becoming introspective reevaluating its policies. UH, is this going to
Speaker 1: become more widespread? Do you think we've seen central banks
Speaker 1: learning along the way here? But the BJ did take
Speaker 1: a real pause to take speak they've had to. I mean,
Speaker 1: this is necessity is the mother of invention. They've tried
Speaker 1: a lot of different things and they're not working that well. Um.
Speaker 1: Their goal is to try and get an inflation target
Speaker 1: of two and they're far below it, and the odds
Speaker 1: of them hitting it are not that good in the
Speaker 1: next couple of years. So UM, I admire their willingness
Speaker 1: to to review their UH performance, to think about new
Speaker 1: ways of approaching the problem, and to try things that
Speaker 1: other central banks just haven't done. Having said that, they're
Speaker 1: on a pretty risky path and there's no no certainty
Speaker 1: that what they're trying now will work, and it puts
Speaker 1: them at some risk. One final question, if we could
Speaker 1: within the last press conference, which seems light years ago,
Speaker 1: I was thunderstruck about chair yelling, struggled with an ex
Speaker 1: post x anti before the fact After the fact analysis,
Speaker 1: it seems like it's an institution that wants to get
Speaker 1: out front with a crystal ball, but understands every bit
Speaker 1: of History says they're reactive by definition. They are an
Speaker 1: ex post after the fact institution, aren't they. You know,
Speaker 1: if they could see the future, they would anticipate it
Speaker 1: in bejo behave accordingly. But like most of us mortals there,
Speaker 1: they have limits in their ability to foresee what will happen.
Speaker 1: So the best they can really do toime is tell
Speaker 1: you how they will behave when the events create shocks.
Speaker 1: And if you know that, you can anticipate their behavior
Speaker 1: in advance, and you actually make policy more effective because
Speaker 1: what you do in markets responds before they do. Kim
Speaker 1: john Olds, thank you so much. With Stern School, New
Speaker 1: York University of course, assisting on economics this day of
Speaker 1: a likelihood of a December rate rise, I don't know
Speaker 1: if you've ever seen that before, but there it is.
Speaker 1: I thought so yesterday, But I mean I made a joke.
Speaker 1: Do we go to a hundred ten percent right play?
Speaker 1: You're to bring Jim Paulson, strategist, Wells Capital Management, Jim,
Speaker 1: good morning, Good morning. Let's let's pick up here with
Speaker 1: where we were we just we're talking to Jane Foley
Speaker 1: about how sorry Tom Keane inter Jackson, please the only
Speaker 1: reason Paulson's on as the Vikings are playing the Lions
Speaker 1: PM Thanksgiving Day dinner before or after Jim, I went
Speaker 1: to Rachel Worsban and I said, we got to talk
Speaker 1: to Paulson about Vikings Lions. I mean, that's why Thanksgiving
Speaker 1: the Pilgrims looked at the Lions play. Yeah, that's the
Speaker 1: NFC North title is on the line. I'm gonna be uh,
Speaker 1: I'm gonna be eating late tom after the game. I
Speaker 1: think very good to come. We got that out of
Speaker 1: the way. Continued to dispensed with, dispensed with these important
Speaker 1: as Jim Jane Foley talking about how how correlated everything
Speaker 1: is right now. You look at the equity space, you're
Speaker 1: looking also at FX, you're looking at commodities as well.
Speaker 1: You agree with that we're a time of high correlation. Well, um,
Speaker 1: I'm not sure I totally do. I mean, I certainly
Speaker 1: get risk on is correl and risk off is correlated. Um,
Speaker 1: you know, you certainly got u. Um. You know a
Speaker 1: completely different relationship of lady between bond yields and the
Speaker 1: stock market, for example, different than has been in much
Speaker 1: of this recovery, with stocks and yields going you know,
Speaker 1: directly higher, certainly got the dividend aristocrats and bon surrogate
Speaker 1: stocks and low ball consumer stocks you know, significantly underperforming,
Speaker 1: while the cyclical areas in the market you know, are
Speaker 1: doing doing much better. So, if anything, I think there's
Speaker 1: been uh less correlation than then there has been over
Speaker 1: much of this recovery, although I agree that a lot
Speaker 1: of the risk on parts are uh, you know, small caps.
Speaker 1: You know, there's there's a broader participation in this rally
Speaker 1: than we've had in earlier ones. What was the u
Speaker 1: the catalyst for what we saw yesterday, the records that
Speaker 1: we saw yesterday, Well, I think that, you know, I
Speaker 1: think a lot of this the catalyst to this market
Speaker 1: has been building most of the year, you know. I
Speaker 1: I think we came off the loads of eighteen hundred
Speaker 1: back in February because of the expectation global growth picking
Speaker 1: up a little bit. And I think a lot of
Speaker 1: the trends that we saw since the election, for example,
Speaker 1: that people have attributed to Trump, I think we're in place,
Speaker 1: starting at least in the summer. I mean, if you
Speaker 1: look at the underperformance of you know, bond surrogate defensive
Speaker 1: stocks that started in the summer, the outperformance of more
Speaker 1: cyclical started then as well. The yield curve started steeping
Speaker 1: then a little bit and accelerated the early fall uh
Speaker 1: inflation expectations started to climb UH then. And I think
Speaker 1: the big canaist to me is if you think about
Speaker 1: it prior, prior to the third quarter, we had sub
Speaker 1: real GDP growth in the United States for quite a while,
Speaker 1: and we also had negative year on year earnings growth.
Speaker 1: Going on now in the third quarter would happen as
Speaker 1: we shot up to almost three GDP growth and we're
Speaker 1: looking now the GDP Atlanta fed now number is three
Speaker 1: points six percent for the fourth quarter, and also in
Speaker 1: the third quarter, year on your earnings growth went positive
Speaker 1: for the first time in more than a year, and
Speaker 1: it looks to be even stronger in the fourth quarter.
Speaker 1: In addition to that, in the third quarter, you had
Speaker 1: a notable pickup and overseas growth. So China reports got
Speaker 1: decided little better. Look at Japan posting a two plus
Speaker 1: gd real GDP number in the latest quarter. The United Kingdom,
Speaker 1: which was feared to fall apart, is actually improved. So
Speaker 1: I think we went from you know, very sluggish growth
Speaker 1: throughout the world, negative year on your earnings to suddenly
Speaker 1: going to an accelerated growth in the United States and
Speaker 1: abroad and the return of positive earnings, and I think
Speaker 1: that's set off a move towards risk on assets, which
Speaker 1: even got exacerbated by the election. How many chapters are
Speaker 1: left here in the story of the strengthening dollar. Well,
Speaker 1: that's where I differ a little bit with consensus um.
Speaker 1: You know, I know that the dollar indexes at a
Speaker 1: fourteen year high or whatever, um, But I think the
Speaker 1: reality is it's it's pretty close to the top end
Speaker 1: of a trading range it's been in since the start
Speaker 1: of January two fifteen. If you go back to January fifteen,
Speaker 1: the dollars about the same then as it is right now.
Speaker 1: I think it's peaking. I think the dollar is gonna
Speaker 1: come down over the next couple of years, and that
Speaker 1: will be the biggest surprise I think in the markets.
Speaker 1: If there's one one way consensus trade at the moment,
Speaker 1: it's the dollars on a freight train north, and I
Speaker 1: think it's gonna go the other way. This is an
Speaker 1: important outlier call, folks, and we're hearing this from a
Speaker 1: number of our guests, really trying to push against this
Speaker 1: massive uh consensus to you, Jim, I want to come
Speaker 1: back and talk about how our listeners should adapt and
Speaker 1: adjust too. And I say this with respect for those
Speaker 1: cautious the doom and gloom view frame for us, the
Speaker 1: level of doomish and gloomish Now, how bad is it? Well,
Speaker 1: you know it's and there's a question, tom Um, it's
Speaker 1: some sense with the market breaking the new highs UM
Speaker 1: and with yields starting to move higher. I think it's
Speaker 1: sort of improved some of those outlooks you know, we've had,
Speaker 1: and maybe maybe the Trump election too, but we've had
Speaker 1: some big voices that have turned more bullish on the
Speaker 1: outlook for things. UM. I think to some extent there's
Speaker 1: still a barrish undertow there. There's no doubt in that, UM,
Speaker 1: But I think if anything, it's turned a little more
Speaker 1: positive of late. We're taking a broader correlated view today.
Speaker 1: We're talking to people about their special abilities, but also
Speaker 1: to our good guests about how everything blends in together.
Speaker 1: Jim Paulson, with his capital management, he has been a
Speaker 1: resilient optimist. He has been on board his markets have
Speaker 1: moved higher. Jim, Um, you know I had Saint his
Speaker 1: relatives that we you know, some of them are up
Speaker 1: for sainthood. Uh and put up with me who read
Speaker 1: Joe Grahamville religiously. And there's always every generation there's somebody
Speaker 1: who's a little bit cautious, a little bit gloomy. I've
Speaker 1: never seen the doom and gloom now, particularly on Friday's
Speaker 1: across the internet, across the bandwidth that all of our
Speaker 1: listeners read. It's like every Friday, go to cash? Is
Speaker 1: this primal screen? How do you deal with that? How
Speaker 1: do you rationalize staying in your four oh n K,
Speaker 1: staying investments when you're buffeted by all this gloom? Yeah,
Speaker 1: that's been a constant theme, I think ever since two
Speaker 1: thousand and eight. In my view, this this recovery, to me,
Speaker 1: will always be remembered as you know, climbing a perpetual
Speaker 1: wall worry like no other recovery I remember. And indeed,
Speaker 1: despite the fact that we're up, you know, more than
Speaker 1: threefold in the stock market, despite the fact that we've
Speaker 1: created uh uh, you know, record setting numbers of jobs
Speaker 1: and the unemployer rates come down below five a lot
Speaker 1: of good profitability under the bridge, and I could go on.
Speaker 1: Despite all that, this is this recovery has never generated
Speaker 1: confidence in the future. It really has been absent that
Speaker 1: we have never really seen the full out of animal
Speaker 1: spirit behaviors that you normally associate with this long of
Speaker 1: a renewed expansion. And um, I think confidence has been
Speaker 1: our biggest challenge in this country. You know, certainly demographics
Speaker 1: have held as our growth rate back. That's a problem
Speaker 1: proactivities and issue, but I would put confidence up there
Speaker 1: with with with those issues is probably the most important
Speaker 1: economic issue. And I think leadership, including the Federal Reserve,
Speaker 1: needs to think more about treating confidence as opposed to
Speaker 1: just treating balance sheets and income flows. Um. And and
Speaker 1: that's why I'm a bit excited that for the first time,
Speaker 1: with yields going up and with the Fed showing every
Speaker 1: indication that's going to raise yields, that might start to
Speaker 1: do more good for animal spirit behaviors that we're getting
Speaker 1: towards normalization again in a way from zero interest rates.
Speaker 1: Then the higher rates will do bad for balance sheeting
Speaker 1: income flus. I think treating confidence might be one of
Speaker 1: the biggest things that could benefit the broadness of this
Speaker 1: economic recovery going forward. You're proposing training confidence directly, how's
Speaker 1: the FED going to do that? Well? I think that
Speaker 1: I think the Fed by maintaining a crisis like policy
Speaker 1: far beyond any kind of sense of crisis. The crisis
Speaker 1: probably ended with an eighteen to twenty four months of
Speaker 1: the recovery start, the work continuing to practice unconventional massive
Speaker 1: monetary stimulus along with you know, zero interest rate structures,
Speaker 1: and far past the crisis point. I think, without saying
Speaker 1: a word, every day, it's actions scream we're very scared
Speaker 1: and you should be scared too. And I would say
Speaker 1: a lot of our leaders have done the same kind
Speaker 1: of thing, uh in this sentry, rather than rather than
Speaker 1: maybe show some confidence, if they showed some confidence the
Speaker 1: private sector, what are they scared of? Well, there's just
Speaker 1: been an overwhelming sense that, you know, ever since oh eight,
Speaker 1: that we're this close to the second coming of the
Speaker 1: Great Depression and the deflationary global of this. Don't you
Speaker 1: suggest that they are scared of the bi part America,
Speaker 1: which is the haves and they have not the inner
Speaker 1: quality of opportunity. Yeah, there's certainly some of that, and
Speaker 1: there has been a warping on the income distribution since
Speaker 1: we've hit disinflation, since the night. I think, um, the
Speaker 1: best thing for that time, in my view, would be
Speaker 1: if we could improve productivity in this country and that
Speaker 1: that could that could go a long ways. If we
Speaker 1: could resurrect some private capital spending, and that takes confidence.
Speaker 1: If we could, if we could get confidence among corporations
Speaker 1: they take that massive excess cash hoards they have and
Speaker 1: put it into capital expansions and more capital for labor.
Speaker 1: And I think we did that, productivity arise and the
Speaker 1: share of labor's take of national come would also do better.
Speaker 1: How is this next administration going to do that? We
Speaker 1: we here floated here, tax cuts, tax reform, infrastructure spending.
Speaker 1: What strides is that going to make here? Getting us
Speaker 1: to to a more confident consumer, more confident economy. Well,
Speaker 1: if it actually happens. I think one of the things
Speaker 1: I think the market is over estimating the pace and
Speaker 1: the degree of change it's going to happen under the
Speaker 1: Trump presidency. This idea the way the markets moving that
Speaker 1: within the first hundred days, we're gonna have a massive
Speaker 1: rose of elding like capital spending program, We're going to
Speaker 1: build a wall around the country. We're gonna repeal violent
Speaker 1: care in place it. I think Minnesota, that's a writer
Speaker 1: in there. I I think that I think it's gonna
Speaker 1: be far slower. I think there's gonna be a lot
Speaker 1: of gridlock even among Trump and the Republicans, let alone
Speaker 1: on the Democratic side of the aisle as well. And
Speaker 1: I don't expect we're going to get a lot of
Speaker 1: fiscal change until the next recession. I think in the
Speaker 1: next recession we may get a bigger fiscal spending program,
Speaker 1: but I don't look for a lot of change until then.
Speaker 1: Where do you see opportunity here? Quickly? I know you've
Speaker 1: liked materials in the past. In light of what we've
Speaker 1: seen here over the last two weeks, is that is
Speaker 1: that oversold? I think on the first thing I'd say
Speaker 1: is I think that i'd look international right now that
Speaker 1: has lagged here in this most recent rally, both emerging
Speaker 1: in international markets and away from the United States. I'd secondly,
Speaker 1: with the sectors right now, I like the materials and
Speaker 1: energy UH sectors overall in technology UM that are I
Speaker 1: think on the industrial producer capital goods sort of the
Speaker 1: equation that's gonna do well and the rest of this recovery,
Speaker 1: But those have trailed for example, the small cap stocks
Speaker 1: that have done real well of late, or the industrials
Speaker 1: that have done real well of late. UH and the financials.
Speaker 1: I like those as well, but I think those stocks
Speaker 1: are a little ahead of themselves right now, and I'd
Speaker 1: look more at the materials, energy, UH areas of the marketplace.
Speaker 1: Jim Paulson, Thank you so much, Jim paul Thanks Capital
Speaker 1: manageming some wisdom there within the parson of his optimism.
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on iTunes, SoundCloud, or whichever podcast platform
Speaker 1: you prefer. I'm out on Twitter at Tom Keene. David
Speaker 1: Gura is at David Gura. Before the podcast, you can
Speaker 1: always catch us worldwide. I'm Bloomberg Radio. Who you put
Speaker 1: your trust in? Matters? Investors have put their trust and
Speaker 1: independent registered investment advisors to the two and four trillion dollars.
Speaker 1: Why learn more and find your independent adviser dot com