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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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Speaker 1: with Jonathan Farrell and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best an economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal and the Bloomberg Business App.

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Speaker 2: Dead Limit talks stolen. Greg Paters of pGEM Fixed Income

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Speaker 2: saying investors a pang for default protection in the near term.

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Speaker 2: We went out the curve somewhat as our sneaking suspicion

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Speaker 2: is that it will continue year after year. The congressional

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Speaker 2: disruption in DC is not going away anytime soon. Tks.

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Speaker 2: This he the old normal, the new normal, what do

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Speaker 2: you want to call it.

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Speaker 1: I'm so glad you picked this paragraph from his research. John,

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Speaker 1: This is the fixed income note I've seen in ten days,

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Speaker 1: maybe two weeks. Reg Peters at PGM right now on

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Speaker 1: where we are and where we're moving forward. Joining us, Greg,

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Speaker 1: It's a really complex thing. I think we need to

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Speaker 1: talk for an hour with you this morning, but I

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Speaker 1: want you to set up what the market reaction is

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Speaker 1: going to be if we get pgeum persistency and yield

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Speaker 1: or dare I say we go to a higher five

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Speaker 1: point six five point eight and then the dreaded six

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Speaker 1: percent yield? What happens when we get there?

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Speaker 3: Well, I think we're a long way to six percent.

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Speaker 3: But at the end of the day, we do think

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Speaker 3: yields are too low. If you look at the move

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Speaker 3: that we've seen, particularly in the front end around the

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Speaker 3: banking crisis of March, there was a really deep move lower,

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Speaker 3: and that doesn't make a lot of sense to us.

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Speaker 3: And so, you know, when we're looking at the curve,

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Speaker 3: we feel like it's miss priced. We feel like it's

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Speaker 3: already pricing in a recession. And then when you look

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Speaker 3: at risk reward, even if you do get a recession,

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Speaker 3: which is still you know, probable, of course, will you

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Speaker 3: be rewarded for it? And the question on the table

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Speaker 3: I think suggests, now.

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Speaker 1: Let's go pro here. There's a thing Greg called credit

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Speaker 1: default swaps. Brando talks about this all the time. You say,

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Speaker 1: there's a real efficacy to follow the CDs market for

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Speaker 1: mere mortals listening and watching explain the linkage of their

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Speaker 1: yield world with the CDs world.

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Speaker 3: Well, it just is a measure of credit risk of

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Speaker 3: the US sovereign, right, and so you know what we've

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Speaker 3: seen over the past couple months or so is that

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Speaker 3: that risk is elevated of course, right, So this debt

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Speaker 3: ceiling debate, let's call it, is creeping into the risk

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Speaker 3: of the market. You're seeing that in the CDs curves.

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Speaker 3: And so what you've seen is investors really pay up

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Speaker 3: for short data protection in the event of a default

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Speaker 3: or some type disruption. What we decided to do, and

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Speaker 3: to be clear, this is very much of a drop

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Speaker 3: in the ocean type of trade, but what we've decided

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Speaker 3: to do is actually not pay up for you know,

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Speaker 3: the couple months or even one year, because we do

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Speaker 3: think it's a persistent problem. So you know, we really

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Speaker 3: worry about I really worry about a PGM that you know,

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Speaker 3: this political debate around spending and using the depth ceiling

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Speaker 3: as a prop will be a common occurrence. And with that,

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Speaker 3: you know, we think it's good to have a little

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Speaker 3: protection on.

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Speaker 2: So Greg, can we go out further along the curve

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Speaker 2: away from the front end, Let's go all the way

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Speaker 2: to the back end. What's the thirty year doing up

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Speaker 2: in there four percent.

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Speaker 3: Yeah, So the thirty year has different characteristics than the

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Speaker 3: intermediate part of the curve and definitely the front end

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Speaker 3: part of the curve. What you have in the back

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Speaker 3: end is this still do this very much, you know,

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Speaker 3: need for duration investors have to go out and hedge,

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Speaker 3: or you know, pension funds and LDI accounts have to

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Speaker 3: be out in the back of the curve. So there's

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Speaker 3: different characteristics there. So I think that the informational content

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Speaker 3: that comes out of the thirty year is a lot

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Speaker 3: less kind of worthy than the intermedia and the front end.

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Speaker 3: So for me, you know, I look at more at

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Speaker 3: the intermediate part of the curve and more in the

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Speaker 3: front end of the curve than I do the thirty year.

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Speaker 3: I mean, it's important, but it's not nearly as important

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Speaker 3: from an informational content standpoint. Greg.

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Speaker 4: At a time when you do expect this turmoil to

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Speaker 4: continue in Washington, do you consider corporate debt of very

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Speaker 4: highly rated companies to essentially be more credit worthy right

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Speaker 4: now than the US government itself.

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Speaker 3: Oh, I think that's a tenuous argument. I've heard that argument.

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Speaker 3: That doesn't make a lot of sense to me that

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Speaker 3: crops up, you know, every several years or so. You know,

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Speaker 3: I really push back on that. So, you know, everything

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Speaker 3: feeds off US Treasury US rates, So if the risk

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Speaker 3: free gets repriced, everything gets repriced off of it. So,

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Speaker 3: you know, hiding out in high quality credit seems like

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Speaker 3: a fool's errand to me, and you're not going to

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Speaker 3: protect yourself in a way that you think you will

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Speaker 3: be protected.

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Speaker 4: Do you think that people who are going into credit

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Speaker 4: in particular risk of your credit right now are also

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Speaker 4: engaging in a fool's errand just simply because of the

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Speaker 4: risk that you're seeing down the line of perhaps some

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Speaker 4: of the defaults or there's at least the Washington turmoil continuing,

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Speaker 4: and this idea of some sort of recession getting priced

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Speaker 4: in to the curve.

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Speaker 3: Well, if you're definitely going down in quality and credit,

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Speaker 3: you are basically an essentially betting that there will be

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Speaker 3: no recession, there will be a soft landing. And so

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Speaker 3: I think that is also a kind of a difficult

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Speaker 3: case to make. So to me, there's much more value

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Speaker 3: being up in quality and not going deep down and

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Speaker 3: you know, deep recyclical type of company. So I don't know,

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Speaker 3: you know, being down in quality doesn't make a lot

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Speaker 3: of sense to me. I'm not sure you're getting paid

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Speaker 3: for it either. I think it's too early, very simple premise.

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Speaker 3: I have yet to see credit spreads tightened into a recession,

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Speaker 3: so if you have a high probability of a recession,

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Speaker 3: you're you know, leaning against that narrative. So I don't know.

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Speaker 3: To me, it's more of a high quality gain dispersion

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Speaker 3: is super high.

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Speaker 1: Though.

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Speaker 3: There are lots of relative value opportunities, and we see

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Speaker 3: a lot more value structure products as an example, than

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Speaker 3: we do corporate credit.

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Speaker 2: Greg, can we try and make this really simple? Just

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Speaker 2: to wrap things up, There were some headlines yesterday about

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Speaker 2: a security that come to market with a yield to

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Speaker 2: six percent and it has one of those at risk

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Speaker 2: maturities early next month, Greg, can you explain to people

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Speaker 2: what is the actual risk there? What is the risk

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Speaker 2: there with that security? Because ultimately, surely doesn't it get paid.

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Speaker 3: Well, hopefully it gets baide. This is the debate on

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Speaker 3: the table, Jonathan. But the question for an investor is like,

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Speaker 3: why would you actually target yourself for that particular maturity?

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Speaker 3: So you know, if you do the math around it,

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Speaker 3: you know it's a much higher yield divided by three

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Speaker 3: sixty five, you know, times ten days, is it really

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Speaker 3: worth the risk? So so it's somewhat of an anomalist

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Speaker 3: math equation. And so I wouldn't be so worried about

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Speaker 3: the six percent because that's not really what you're going

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Speaker 3: to earn. So, you know, from most investors' perspective, it's

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Speaker 3: just not worth targeting yourself and getting thrown into the

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Speaker 3: potential default pool. And hopefully that doesn't happen.

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Speaker 2: We all have that doesn't happen Face page and fixed income.

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Speaker 2: Thank you, Greg, appreciate it.

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Speaker 1: No one better in New York City to do this

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Speaker 1: in Oliver Chen, senior equity research analyst at Cowen who's

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Speaker 1: just totally plugged into our aspirations as well. Mister Arnold

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Speaker 1: has done this forty five times at the MH. John

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Speaker 1: has mentioned this. John's really followed this story. He brings

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Speaker 1: his sons to an American icon, Tiffany, and is it

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Speaker 1: right to say they blew it up.

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Speaker 5: Yeah, it's been tremendous in terms of the innovation there,

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Speaker 5: and luxury is about magic and logic and bringing new,

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Speaker 5: younger customers to the table as well. Tiffany is an

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Speaker 5: iconic brand. The partnerships with Nike really elevating the assortment,

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Speaker 5: and this flagship is one of the best stores in

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Speaker 5: the world right now in terms of what they're doing

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Speaker 5: experiential retail art, this unique experience. LVMH is definitely one

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Speaker 5: of our top ideas. China is about twenty five percent

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Speaker 5: of revenue, so it's quite material and we're really watching

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Speaker 5: these near term changes. The mRNA will be important.

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Speaker 2: You've coined a phrase that I love. It's South Wealth

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Speaker 2: and if you know, you know, I could spot Brunello,

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Speaker 2: I can spot the MS orange poking out at your

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Speaker 2: pocket right now. And then there are brandings, the aspirational stuff,

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Speaker 2: the people who line up outside the Gucci stores and

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Speaker 2: they do the buy now, pay later, fifty dollars a month,

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Speaker 2: get whatever you want, get a hoodie. It's got a

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Speaker 2: big brand in front of it. Lisa and I were

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Speaker 2: talking about this before we came on air. We're trying

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Speaker 2: to work out has the latter started to crack? Have

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Speaker 2: you noticed that at all? Because we used to see

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Speaker 2: all these lines around these luxury stores, and when we

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Speaker 2: used to speak to people in the store, the consumer

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Speaker 2: was changing. They were moving away from dropping five thousand

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Speaker 2: dollars on a handbag and maybe that we're thinking about

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Speaker 2: it through a monthly payment. Has that started to fade

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Speaker 2: started to break in this country for sure?

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Speaker 5: John, You bring up a great point in terms of

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Speaker 5: aspirational more entry point luxury logos as well as sunglasses

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Speaker 5: and footweark be gateways to luxury, and that's been softer.

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Speaker 5: We've seen inventory levels that are too high at nor

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Speaker 5: Trum Sacks and Nemon Marcus for that reason. At the

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Speaker 5: same time, when you think about stealth, well, it's about materials,

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Speaker 5: it's about touch and feel, it's about looking great at

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Speaker 5: work too. That's been a trend that's been working too.

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Speaker 5: As the consumers become more cautious and we've seen many shocks.

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Speaker 4: How much are we really parsing through the key shaped

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Speaker 4: recovery that we used to talk about that we seem

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Speaker 4: to have forgotten. We're basically people with the most power

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Speaker 4: are spending it on luxury and able to do so

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Speaker 4: in bulk, and you're seeing the others kind of fall

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Speaker 4: off as the price increases really catch up. More broadly

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Speaker 4: in the economy.

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Speaker 5: We're definitely seeing a consumer discretionary recession in terms of

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Speaker 5: those products and that market as a whole facing negative trends.

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Speaker 5: We're also still seeing shifts where dollars are spent on

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Speaker 5: travel and services hotels. At the high high end, that

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Speaker 5: customer is very strong and robust, so we're still seeing

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Speaker 5: strength at the high end. It's more of that area

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Speaker 5: right below the high end, the aspirational, where there's lots

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Speaker 5: of pressure. At the high end, the wealthy consumer always

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Speaker 5: has money. It's more about sentiment and emotions too. Certainly,

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Speaker 5: some of the financial shocks have been disturbing in terms

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Speaker 5: of putting that customer on pause. Consumer confidence has been

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Speaker 5: volatile as a whole, so it's definitely something we're watching.

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Speaker 4: The overlay here of China and what's going on there.

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Speaker 4: Is there a sense based on the luxury players that

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Speaker 4: are more exposed to the Chinese consumer and less exposed

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Speaker 4: of where that trend is. Is it falling off? Are

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Speaker 4: people really seeing a shift there?

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Speaker 6: Well?

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Speaker 5: Structurally, long term, China is the biggest deal in luxury.

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Speaker 5: It's thirty percent plus of the market plus even more growth,

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Speaker 5: so great luxury retailers and Louis Vuitton's the largest market

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Speaker 5: cap company in Europe, so it spends about ten million

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Speaker 5: dollars on advertising and promotion, and Tiffany Renovation is well

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Speaker 5: over two hundred and fifty million dollars just here in

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Speaker 5: New York. China will be important for the long term,

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Speaker 5: but it'll be fairly volatile as we watch these issues unfold.

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Speaker 5: The name of the game in luxury is flagship stores

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Speaker 5: and stores that really make you forget about price. So

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Speaker 5: being there physically is important as well as a modern, upgraded,

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Speaker 5: you know, rethinking the metaverse, a digital experience that's connected

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Speaker 5: as well.

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Speaker 1: Our department stores then dead. If I'm at the corner

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Speaker 1: of fifty seventh and fifth Avenue and I'm looking from

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Speaker 1: Tiffany's waving over at Burg, Hi, what's the future of Bergdorf?

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Speaker 5: And you mentioned earlier, Oh, Burgdorf is very exciting. It's

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Speaker 5: right there too, in these magic corners. Bergdorf is an

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Speaker 5: iconic institution. Our recommendation is Macy's department stores are not dead,

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Speaker 5: but they're transforming very rapidly and really needing to offer service,

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Speaker 5: differentiated product. They really need to get the younger customer end,

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Speaker 5: and that's been a constant, interesting epic struggle. We're following

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Speaker 5: Coles this morning, the gross margins were better than expected.

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Speaker 5: Back to the basics for retail as well as inventory

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Speaker 5: management and supply chain. But I teach at Columbia, don't

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Speaker 5: forget it's about magic and logic and really bringing things

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Speaker 5: you didn't know existed that you wanted in retail too.

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Speaker 1: He's the only want to know on the sell side

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Speaker 1: that could conflate coals in Tiffany in one conversation.

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Speaker 2: In Macy's as well, quickly, what is it about Macy's

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Speaker 2: that you like?

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Speaker 5: Inventory management? CFO really focused on an agile CEO, rethinking

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Speaker 5: the loyalty program using data. Artificial intelligence will play a

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Speaker 5: huge role in personalization the data sets as we think

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Speaker 5: about the future of retail, and Macy's has a loyal

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Speaker 5: customer too, needs a younger customer for sure.

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Speaker 1: We're not doing to giveaway a succession because Pharaoh's got

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Speaker 1: to watch season three and four top to bottom it happened.

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Speaker 1: What's a succession for our No at.

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Speaker 5: LVMH, Listen, the family is doing a really modern job

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Speaker 5: rethinking brands and captivating a younger customer, elevating brands. It's

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Speaker 5: a company that manages for the very long term.

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Speaker 1: Answer my question there's like three sons, two daughters, the

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Speaker 1: whole thing. What happens in season three of the LVMH.

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Speaker 5: Well, I think it's going to be intensity competition and

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Speaker 5: a real interesting battle for the best of the best,

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Speaker 5: and that's what happens. You really need this competitive spirit

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Speaker 5: to be culturally relevant. Retail is awesome, Luxury is awesome

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Speaker 5: because it's always changing. You've got to be in touch

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Speaker 5: with how music is moving, how TV is moving.

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Speaker 1: To be watching this.

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Speaker 2: I love this, Oliver. This is great. Thank you, Oliver.

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Speaker 2: Such a startish dude. Double breasted suit, Pete, I'm going to.

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Speaker 4: Just postulate that if he had a beating at the

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Speaker 4: White House, he would not be wearing shoes hybrids. I'm

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Speaker 4: just guessing that I won't.

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Speaker 2: I've got a word on the hybrids.

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Speaker 7: Kind of in the churches.

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Speaker 5: This is Brooks Brothers. So it's back to the basics,

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Speaker 5: rethinking and double breasted fashion is about all the new

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Speaker 5: and bringing traditional mix and matching. But I'm also versatile.

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Speaker 5: I'll do anything like you on the weekends.

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Speaker 1: The understated things.

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Speaker 5: About materials, craftsmanship, well, materials and heritage and how something

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Speaker 5: is made and if it feels great, I mean Cashmere

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Speaker 5: is here forever, Yes, and stitching and craftsmanship.

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Speaker 2: So you want again for shoe beautiful shoe half bro

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Speaker 2: chat Chase, British, British.

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Speaker 5: It is not a great tradition of that, so little

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Speaker 5: painful in the beginning, but it's worth it.

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Speaker 2: Break him in. Yeah, I great.

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Speaker 1: I just would kill to get at a larger desk.

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Speaker 1: Oliver Chen, Michael Burke who ran burg Dose for years,

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Speaker 1: and the great Vanessa Friedman of the New York all

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Speaker 1: in together bring ink from from London about He takes

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Speaker 1: it so seriously.

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Speaker 2: As he should.

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Speaker 4: It's a multi billion dollar.

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Speaker 1: What do you do if you put a sweatshirt in

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Speaker 1: the dryer and shrink it?

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Speaker 5: I mean you asked about this before. It really depends

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Speaker 5: on the material. But I've done it a few times,

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Speaker 5: and sometimes you want to shrink it and sometimes you don't.

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Speaker 2: But most of the time it's shrink it.

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Speaker 5: He reinvented rethinking a real stature in the industry.

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Speaker 1: Yeah, okay, I.

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Speaker 2: Think we don't outwait, Yeah, okay, good, thank you.

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Speaker 1: Two big stories here to talk to. Jim Lucier about

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Speaker 1: senior political analystic capital HEFA Partners barely describes the decades

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Speaker 1: of experience. We've got the theater in Florida, We've got

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Speaker 1: the theater in Washington. Jim, in your research to Know,

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Speaker 1: which I thought was a really calming note, you talk

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Speaker 1: about three subsets, the people that will bless this, the blessed,

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Speaker 1: the people that will say the deal is acceptable, and

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Speaker 1: I would suggest i'd add the furious as well. Who's

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Speaker 1: going to win out here in the next ten days

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Speaker 1: among the blessed, the acceptable, and the furious to move

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Speaker 1: on from his crisis?

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Speaker 7: I think the blessed and the acceptable are going to

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Speaker 7: outnumber the furious. If you look at the way these

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Speaker 7: negotiations proceeded, they've gone from hell, no, we're not budgeting

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Speaker 7: to what kind of freeze do you want to? Okay,

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Speaker 7: who's going to deliver the votes for this? So I

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Speaker 7: think that despite what you see on television about a standoff,

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Speaker 7: they're actually fairly close.

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Speaker 2: James, I've got to turn to what's going to take

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Speaker 2: place a little bit later on this afternoon, this talk

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Speaker 2: on Twitter for Gabnor Tsantis. What do you make of

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Speaker 2: this as a first step potentially towards a run for

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Speaker 2: the big role in the White House.

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Speaker 7: Well, I think it's an unlikely match of personalities. The

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Speaker 7: thing about Ron DeSantis is he's not exactly the most

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Speaker 7: warm and fuzzy guy out there, even though he is

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Speaker 7: a terrific administrator and terrific governor, terrific giver of press conferences.

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Speaker 7: To have an unscripted moment with Elon Musk suggests that

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Speaker 7: either he's prepared to roll the dice and try something

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Speaker 7: very different, or else he just doesn't know what he's

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Speaker 7: in for.

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Speaker 2: Do you think the first steps are important or do

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Speaker 2: you think in a couple of months time will forget this.

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Speaker 7: I think that in a couple of months time, we'll

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Speaker 7: forget this. We have forgotten Elon Musk throwing the iron

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Speaker 7: ball through the the truck. We've already forgotten the stealth

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Speaker 7: video in which President Biden announced his re election campaign

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Speaker 7: early in the morning two or three weeks ago. I

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Speaker 7: don't think the announcement makes that big a deal, but

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Speaker 7: it is important as we go into Memorial Day that

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Speaker 7: we start that one year countdown to the presidential campaign

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Speaker 7: beginning in Earnest, which is really going to be next

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Speaker 7: Memorial Day.

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Speaker 4: How interesting is it to you, James, that Twitter, a

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Speaker 4: social media platform, is not so much tiptoeing, as in screaming,

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Speaker 4: running into the whole media kind of sphere in Elon

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Speaker 4: Musk hosting this conversation. I mean, what is the distinction

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Speaker 4: at this point between social media and media? And from

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Speaker 4: a regulator standpoint, does this muddy the waters?

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Speaker 7: Well, Elon Musk likes to say that Twitter is the

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Speaker 7: app for everything, and how do you better prove that

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Speaker 7: you're the app for everything than by entertaining Tucker Carlson.

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Speaker 7: So he's demonstrating you can do a lot of things

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Speaker 7: on Twitter. I think Elong has a great commercial incentive

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Speaker 7: to show that Twitter's a very vast, lot, very effective platform,

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Speaker 7: right up there with Amazon or Netflix. I'm not sure

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Speaker 7: the regulators know how to do this yet. The regulators

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Speaker 7: are fighting a retroactive war, I think, battling Bigness, trying

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Speaker 7: to fight Bigness by breaking up and turing large mergers.

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Speaker 7: But I think Elana is far ahead of them at

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Speaker 7: this point.

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Speaker 4: Well, and to that point, James, I mean to John's

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Speaker 4: point earlier, he was saying, some are speculating that Twitter

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Speaker 4: and Elon Musk is becoming the main competitor to Fox

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Speaker 4: and sort of this alternative conservative universe, especially if you

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Speaker 4: have Tucker Curlson launching his own Twitter space or Twitter platform,

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Speaker 4: and you also have a sort of initiation of Ronda

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Speaker 4: Santiss campaign, all on the same site.

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Speaker 7: Well, you've got no shortage of people who tried to

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Speaker 7: launch alternative platforms. For instance, there is Glenn Beck, Megan

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Speaker 7: Kelly has your podcast. I guess O'Riley is still out there.

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Speaker 7: What's happening though, is that as you see conservative media

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Speaker 7: moving into this new video platform with Twitter, the old forum,

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Speaker 7: the AM media, the AM radio that was the home

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Speaker 7: turf of Rush Limbaugh that is slowly dying off. So

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Speaker 7: in other words, the old forest is dying and the

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Speaker 7: forest animals are looking for a new environment.

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Speaker 1: Jim, you got such a study of history on this.

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Speaker 1: I'm going to go back to the legit World War two.

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Speaker 1: Here Robert Dole of Kansas, he'd be one hundred by

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Speaker 1: here in July. Senator Dole ran for president, came out

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Speaker 1: of Kansas in the Midwest, and really never related with

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Speaker 1: the American public. Translate that over to the governor of Florida.

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Speaker 1: How does he come out of Florida where he won

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Speaker 1: big and translate over to a Republican and independent America.

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Speaker 7: Well, Bob Dole was a marvelously funny, warm and empathetic guy.

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Speaker 7: Everybody who knew him in person loved him. He was

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Speaker 7: famous for cracking jokes NonStop in the Senate cloak room.

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Speaker 7: He was famous after he retired for sending donuts to

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Speaker 7: the cloak room every day. You know, the memory of

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Speaker 7: Bob Dole is just incredible in that way. But he

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Speaker 7: did have I think a bit of awkwardness with large bodies. DeSantis,

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Speaker 7: though nobody's ever really said that DeSantis is warm and

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Speaker 7: fuzzy in that way. They're impressed with his smarts, they're

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Speaker 7: impressed with his ability to lead as a former military officer.

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Speaker 7: They're impressed with lots of things about him. But you

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Speaker 7: don't hear people talking about DeSantis inspiring the deep personal

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Speaker 7: loyalty among his constituents, among his base, among friends that

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Speaker 7: Bob Dole certainly did. I knew Bob Dole. My father

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Speaker 7: knew Bob Dole very well.

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Speaker 2: James wonderful to get a perspective on things, particularly that

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Speaker 2: in mind. James Lucy then of Capital Alpha Partners.

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Speaker 1: It's great about Liz Young. She writes his brutally direct notes.

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Speaker 1: This head of investment strategy it so far she loses

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Speaker 1: the ratio mumble jump and talks about the mood and

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Speaker 1: emotion that's out there. You're speaking of housing, Lis, but

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Speaker 1: I think just talking to Oliver Chen of Cowen about

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Speaker 1: the persistence of luxury, I'm going to steal a phrase

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Speaker 1: from you. We're in a milieu of bullet proof demand.

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Speaker 1: We just keep seeming to continue to prosper here amid

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Speaker 1: all the gloom. How do you see that?

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Speaker 8: Well, I think there's a difference between the demand that

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Speaker 8: we're still seeing from certain sets of consumers, and especially

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Speaker 8: in the housing market, in the face of rising mortgage

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Speaker 8: rates again, mortgage rates that are higher than they've been

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Speaker 8: in forty years, and there just continues to be this

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Speaker 8: appetite to spend. I think when you look at what's

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Speaker 8: happening signal wise, both in the economy and in many

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Speaker 8: parts of the market, this is pretty classic late cycle behavior.

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Speaker 8: The challenging part for many investors, myself included, is that

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Speaker 8: late cycle can last a very very long time. It

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Speaker 8: can last up to eighteen months, maybe even longer. So

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Speaker 8: we could continue to say it's clear that we're in

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Speaker 8: late cycle. At some point there's probably a contraction to

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Speaker 8: bring us back into early cycle that would soften that demand.

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Speaker 8: But could it be another six months perhaps? And I

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Speaker 8: think that's the frustrating part in the meantime to try

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Speaker 8: to make money in the market.

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Speaker 1: John brain Freeze surveillance correction. Liz Young is with us,

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Speaker 1: And I was thinking of the day I first heard

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Speaker 1: Liz Story the piano player, when she fell on the

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Speaker 1: scene of singers Songs, that this story Liz story, was

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Speaker 1: this storyline caacular? She's got spectacular voicings.

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Speaker 2: Was she as good on the piano?

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Speaker 1: Was Liz Young as Liz Young? Liz Young on piano

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Speaker 1: as a site to hold I'm so sorry.

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Speaker 4: Well, Liz, you said something I want to pick up

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Speaker 4: on this idea that late cycle can last a very

435
00:23:51,280 --> 00:23:53,960
Speaker 4: long time. How do you know when you're getting to

436
00:23:53,960 --> 00:23:56,040
Speaker 4: the end of a late cycle that can last for

437
00:23:56,080 --> 00:23:57,080
Speaker 4: eighteen months?

438
00:23:58,880 --> 00:24:02,080
Speaker 8: Well, it's o cult to know exactly what those signals are.

439
00:24:02,119 --> 00:24:03,960
Speaker 8: I think if we all knew exactly what it was

440
00:24:04,000 --> 00:24:07,440
Speaker 8: supposed to look like right before a recession came, we'd

441
00:24:07,480 --> 00:24:10,480
Speaker 8: not have all of this consternation about what's happening. One

442
00:24:10,480 --> 00:24:12,760
Speaker 8: of the things that I watch and I continue to

443
00:24:12,800 --> 00:24:16,440
Speaker 8: watch this every single day is the yield curve inversion.

444
00:24:16,560 --> 00:24:19,520
Speaker 8: Now we know that the inversion itself, especially at the

445
00:24:19,560 --> 00:24:23,680
Speaker 8: twos tens, is more of a signal pre recession or

446
00:24:23,720 --> 00:24:27,200
Speaker 8: a warning sign of, hey, there could be some bumps ahead.

447
00:24:27,440 --> 00:24:30,080
Speaker 8: We don't know when, we don't know how big. And

448
00:24:30,119 --> 00:24:32,640
Speaker 8: then you hear that old adage of the yield curve

449
00:24:32,720 --> 00:24:36,600
Speaker 8: has predicted nine of the last five recessions or something,

450
00:24:36,640 --> 00:24:40,280
Speaker 8: So it's not a fool proof indicator. But when that

451
00:24:40,400 --> 00:24:45,000
Speaker 8: inversion starts to re steepen, meaning the inversion becomes more shallow,

452
00:24:45,480 --> 00:24:48,080
Speaker 8: that tends to be the time when your ears should

453
00:24:48,080 --> 00:24:50,880
Speaker 8: perk up and you start to listen for indicators that

454
00:24:51,080 --> 00:24:53,439
Speaker 8: the FED may pause, the FED may have to cut,

455
00:24:53,680 --> 00:24:55,720
Speaker 8: And that's what we're looking at in the market right now.

456
00:24:55,760 --> 00:24:58,399
Speaker 8: The market still believes that the FED is going to

457
00:24:58,440 --> 00:25:00,600
Speaker 8: have to cut before the end of the year. The

458
00:25:00,680 --> 00:25:03,800
Speaker 8: FED holding steady and saying that absolutely not, we are

459
00:25:03,840 --> 00:25:07,080
Speaker 8: not talking about that yet. Also, their own projections of

460
00:25:07,119 --> 00:25:10,359
Speaker 8: inflation are still above target, both at a core and

461
00:25:10,440 --> 00:25:13,199
Speaker 8: a headline level by the end of this year, So

462
00:25:13,560 --> 00:25:16,320
Speaker 8: if things go the way that they expect, no cuts

463
00:25:16,359 --> 00:25:19,000
Speaker 8: on the horizon in twenty twenty three. The market is

464
00:25:19,040 --> 00:25:22,080
Speaker 8: sending a different signal saying, hey, we think that things

465
00:25:22,119 --> 00:25:25,280
Speaker 8: could weaken. It's possible that we see cuts. So when

466
00:25:25,359 --> 00:25:28,000
Speaker 8: you start to see those yield curbn versions get more shallow,

467
00:25:28,240 --> 00:25:31,080
Speaker 8: you start to see the expectation that the FED may

468
00:25:31,160 --> 00:25:34,199
Speaker 8: have to pivot, may have to change policy at some

469
00:25:34,280 --> 00:25:37,400
Speaker 8: point in the next twelve to eighteen months. That's usually

470
00:25:37,440 --> 00:25:39,720
Speaker 8: the time when you feel like the clock is really

471
00:25:39,760 --> 00:25:41,879
Speaker 8: ticking on, when we're going to find out whether or

472
00:25:41,920 --> 00:25:43,440
Speaker 8: not this recession actually occurs.

473
00:25:43,720 --> 00:25:46,720
Speaker 4: Given that the music is still playing, do you play?

474
00:25:46,760 --> 00:25:48,800
Speaker 4: Do you invest in stocks? I mean, are you basically

475
00:25:48,880 --> 00:25:51,440
Speaker 4: in the Sevita Supermanian camp and not on the Darryl

476
00:25:51,480 --> 00:25:55,560
Speaker 4: Kronk camp of saying cautious amid an n cycle that

477
00:25:55,600 --> 00:25:57,280
Speaker 4: could last for another year.

478
00:25:59,040 --> 00:26:01,800
Speaker 8: I'm cautious on the market, and I admit I did

479
00:26:01,840 --> 00:26:04,480
Speaker 8: not see this rally in tech stocks coming this year.

480
00:26:04,520 --> 00:26:06,679
Speaker 8: I mean, up twenty to twenty six percent, depending on

481
00:26:06,720 --> 00:26:09,920
Speaker 8: what part of the NASDAC you're looking at, is pretty astonishing.

482
00:26:10,680 --> 00:26:14,520
Speaker 8: But if you're a long term investor, and this constantly

483
00:26:14,640 --> 00:26:17,000
Speaker 8: is a theme that I think everybody should think about.

484
00:26:17,000 --> 00:26:19,800
Speaker 8: If you're a long term investor, you should be invested

485
00:26:19,800 --> 00:26:23,200
Speaker 8: in stocks on some level at all times, because there's

486
00:26:23,240 --> 00:26:27,920
Speaker 8: really no other place to generate capital growth in that way. However,

487
00:26:28,280 --> 00:26:30,040
Speaker 8: if you're a long term investor that doesn't have a

488
00:26:30,080 --> 00:26:32,760
Speaker 8: stomach for volatility in the short term, you do have

489
00:26:32,800 --> 00:26:36,880
Speaker 8: to position defensively in this environment, especially at a time

490
00:26:36,920 --> 00:26:39,320
Speaker 8: when we've got yields back up again. I know that

491
00:26:39,720 --> 00:26:42,400
Speaker 8: you talked about that earlier in the program. As yields

492
00:26:42,480 --> 00:26:46,719
Speaker 8: rise again in this environment, valuations really do matter, and

493
00:26:46,760 --> 00:26:49,280
Speaker 8: you're paying a lot for some of those names that

494
00:26:49,320 --> 00:26:52,120
Speaker 8: have done really well so far in twenty twenty three.

495
00:26:52,240 --> 00:26:54,919
Speaker 8: So if you're not somebody that has a ton of

496
00:26:54,920 --> 00:26:57,480
Speaker 8: stomach for short term volatility, and when I say short term,

497
00:26:57,520 --> 00:26:59,919
Speaker 8: I mean six months or less, then you have to

498
00:27:00,080 --> 00:27:02,199
Speaker 8: have defensive positions in the portfolio. But if you're a

499
00:27:02,200 --> 00:27:05,359
Speaker 8: long term investor, let's say beyond three to five years,

500
00:27:05,560 --> 00:27:07,119
Speaker 8: you do still have to have equities.

501
00:27:07,280 --> 00:27:20,080
Speaker 2: Hey, Liz, thank you, Lis Young there are so fine.

502
00:27:20,800 --> 00:27:22,280
Speaker 1: You know we're going to dive right into this right

503
00:27:22,320 --> 00:27:25,200
Speaker 1: away because it's like a three hour conversation with Douglas Cast.

504
00:27:25,240 --> 00:27:28,960
Speaker 1: He's at Seabear's Partners moving money around in Florida, and

505
00:27:29,040 --> 00:27:32,480
Speaker 1: he's been very vocal. But Doug, I want to start

506
00:27:32,800 --> 00:27:36,119
Speaker 1: with what I saw at Oakhill where I used to

507
00:27:36,200 --> 00:27:39,840
Speaker 1: caddy with just stunning memories of my ute. I went

508
00:27:39,880 --> 00:27:42,600
Speaker 1: to dancing school there, Doug, with girls with white gloves on,

509
00:27:42,680 --> 00:27:45,000
Speaker 1: and you know, the whole thing from another time and place.

510
00:27:45,920 --> 00:27:49,520
Speaker 1: And there's a guy from California. You hit a seventy

511
00:27:49,600 --> 00:27:52,640
Speaker 1: five last week, Doug cast in my dreams, I could

512
00:27:52,720 --> 00:27:56,560
Speaker 1: hit a seventy five. You're not too far from Michael Block.

513
00:27:56,680 --> 00:27:59,280
Speaker 1: I mean, you're really working at it. What do you

514
00:27:59,560 --> 00:28:03,320
Speaker 1: think of the miracle the PGA rot last weekend.

515
00:28:03,840 --> 00:28:07,199
Speaker 6: I think that for those that have no idea what

516
00:28:07,240 --> 00:28:10,800
Speaker 6: we're talking about, Michael Block was the PGA club pro

517
00:28:10,920 --> 00:28:14,159
Speaker 6: who had hold in one and finished tied for fifteenth

518
00:28:14,280 --> 00:28:17,600
Speaker 6: in the PGA Championship last week. And I think he's

519
00:28:17,640 --> 00:28:22,440
Speaker 6: the reason why we love sports. It's the unexpected which

520
00:28:22,480 --> 00:28:25,840
Speaker 6: excites us, like my seventy five year reference on Saturday,

521
00:28:26,320 --> 00:28:29,359
Speaker 6: or like Judges home run to tie the game last

522
00:28:29,440 --> 00:28:32,280
Speaker 6: night and Volpi's walk off and the recovery of the

523
00:28:32,359 --> 00:28:35,080
Speaker 6: Yankees in the last three weeks. It's why we root

524
00:28:35,160 --> 00:28:38,440
Speaker 6: for eight FC Richmond over West Ham Tom.

525
00:28:38,640 --> 00:28:40,960
Speaker 1: Yeah, Well, Richmond's doing well this.

526
00:28:40,960 --> 00:28:42,320
Speaker 6: Year, Tedence.

527
00:28:42,360 --> 00:28:45,760
Speaker 1: You know, Doug, they're in the bunkers, And when I

528
00:28:45,840 --> 00:28:47,960
Speaker 1: was at ol Kill, the bunkers didn't look like that.

529
00:28:48,080 --> 00:28:49,880
Speaker 1: It was like the Berlin wall in front of you

530
00:28:49,920 --> 00:28:53,680
Speaker 1: on the way to the green. And where does Michael

531
00:28:53,720 --> 00:28:57,360
Speaker 1: Block's hands fall apart because he's never faced a pressure.

532
00:28:57,680 --> 00:29:00,080
Speaker 1: Is it in the bunker, is it hitting the ball

533
00:29:00,120 --> 00:29:02,160
Speaker 1: the first time with the driver, or is it on

534
00:29:02,200 --> 00:29:02,840
Speaker 1: the putting green?

535
00:29:03,440 --> 00:29:08,880
Speaker 6: I don't know. It was the classic caddy Shack Cinderella's story. Yeah,

536
00:29:08,960 --> 00:29:10,800
Speaker 6: that's why we love the game.

537
00:29:12,040 --> 00:29:15,080
Speaker 1: Just woke up because you mention Caddyshack and she's like, Okay,

538
00:29:15,360 --> 00:29:17,120
Speaker 1: would you like to ask you a question that dodcasts

539
00:29:17,120 --> 00:29:18,920
Speaker 1: about the equity Barker, I would love.

540
00:29:18,800 --> 00:29:20,520
Speaker 9: To I finally recognize something.

541
00:29:20,640 --> 00:29:21,920
Speaker 6: Crey, Good morning, Hi.

542
00:29:21,920 --> 00:29:24,600
Speaker 9: Good morning, lovely to have you on. Let's talk about

543
00:29:24,640 --> 00:29:27,960
Speaker 9: this debt ceiling. What happens if we get say we

544
00:29:28,000 --> 00:29:30,280
Speaker 9: have vert a default. Do we get a relief rally

545
00:29:30,400 --> 00:29:31,600
Speaker 9: or is it just more glum and doom?

546
00:29:31,640 --> 00:29:32,400
Speaker 2: What happens next?

547
00:29:32,440 --> 00:29:36,800
Speaker 6: I think it's just a sideshow to the core problems

548
00:29:36,840 --> 00:29:42,520
Speaker 6: facing the markets. Creedy. Look, we all make mistakes in

549
00:29:42,600 --> 00:29:45,760
Speaker 6: this business, but one of the benefits of having experience

550
00:29:45,800 --> 00:29:47,800
Speaker 6: and managing money over the last year and a half

551
00:29:47,840 --> 00:29:51,520
Speaker 6: in particular, and having been around the block. Is the

552
00:29:51,600 --> 00:29:55,080
Speaker 6: quote Crosby, Stills, Nash, and Young. We have all been

553
00:29:55,120 --> 00:29:58,520
Speaker 6: here before. We were in nineteen ninety nine during the

554
00:29:58,600 --> 00:30:01,520
Speaker 6: dot com mania, we were in late two thousand and

555
00:30:01,520 --> 00:30:04,840
Speaker 6: seven in the home price mania, and again in twenty

556
00:30:04,960 --> 00:30:09,360
Speaker 6: twenty one in the arc disruptive stock mania. We are

557
00:30:09,440 --> 00:30:12,560
Speaker 6: there again in May twenty twenty three. Today it's a

558
00:30:12,600 --> 00:30:17,600
Speaker 6: speculation in AI and in as Mike Darda discussed really

559
00:30:17,640 --> 00:30:22,400
Speaker 6: well in the last segment, the negative market ramifications of

560
00:30:22,560 --> 00:30:26,400
Speaker 6: a top heavy market in which leadership is historically narrow,

561
00:30:26,760 --> 00:30:30,320
Speaker 6: which reminds us of nineteen seventy four when the nifty

562
00:30:30,360 --> 00:30:33,360
Speaker 6: to fifty blew up, leading to seven years of lean

563
00:30:33,440 --> 00:30:34,440
Speaker 6: returns for stocks.

564
00:30:35,320 --> 00:30:39,080
Speaker 9: So it sounds like the AI rally that you're seeing

565
00:30:39,360 --> 00:30:42,520
Speaker 9: not sustainable in your view, correct?

566
00:30:42,640 --> 00:30:46,600
Speaker 6: I think that the two circles we have the square crety,

567
00:30:47,120 --> 00:30:52,320
Speaker 6: are the soft landing and speculation in AI the markets

568
00:30:52,440 --> 00:30:55,960
Speaker 6: at nearly twenty times, it seems to be betting on

569
00:30:56,040 --> 00:30:59,400
Speaker 6: a soft landing, though in reality the market goes up

570
00:30:59,440 --> 00:31:03,440
Speaker 6: and down and oftentimes traders and investors simply chase an

571
00:31:03,480 --> 00:31:06,200
Speaker 6: eye the direction for no real reason other than they

572
00:31:06,200 --> 00:31:10,080
Speaker 6: are evaluated against the benchmark and care more about that

573
00:31:10,160 --> 00:31:13,240
Speaker 6: than they do in making money or preserving capital. I

574
00:31:13,240 --> 00:31:16,440
Speaker 6: think soft landings only tend to happen when the FED

575
00:31:16,480 --> 00:31:20,520
Speaker 6: has been proactive with monetary tightening. In this case, they've

576
00:31:20,560 --> 00:31:24,360
Speaker 6: been badly behind the curve and badly reactive, so forcing

577
00:31:24,360 --> 00:31:28,440
Speaker 6: a somewhat aggressive tightening cyclone the last fourteen months, especially

578
00:31:28,560 --> 00:31:31,040
Speaker 6: relative to the zero base we came from. So we

579
00:31:31,080 --> 00:31:35,520
Speaker 6: have sticky inflation mostly a functional labor costs. Soft landings

580
00:31:35,520 --> 00:31:38,320
Speaker 6: don't tend to take labor out of the system in

581
00:31:38,360 --> 00:31:42,200
Speaker 6: lower pressure on wages. Only hard landings do that. So

582
00:31:42,240 --> 00:31:44,720
Speaker 6: how do we get sticky inflation out of the system

583
00:31:45,080 --> 00:31:48,280
Speaker 6: without a hard landing that the market implicitly is betting against.

584
00:31:48,840 --> 00:31:51,640
Speaker 6: And then, secondly, of course, we have the hot sub

585
00:31:52,200 --> 00:31:56,200
Speaker 6: topic d Jore in which Tina has taken a new form.

586
00:31:56,600 --> 00:32:00,280
Speaker 6: It's in AI this time, but AI has been around

587
00:32:00,280 --> 00:32:02,560
Speaker 6: for years, and as I discussed in an article I

588
00:32:02,640 --> 00:32:05,960
Speaker 6: just wrote for Real Money pro the pathway to AI

589
00:32:06,080 --> 00:32:09,960
Speaker 6: adoption and profits is likely to be rockier than many expects.

590
00:32:09,960 --> 00:32:12,440
Speaker 1: And Critty this is so important mister cass is saying,

591
00:32:12,480 --> 00:32:15,000
Speaker 1: and I go to the railroad bottle. The railroads went

592
00:32:15,040 --> 00:32:17,880
Speaker 1: down in flames in the eighteen nineties for all sorts

593
00:32:17,880 --> 00:32:20,480
Speaker 1: of reasons, and then they finally got together the second

594
00:32:20,520 --> 00:32:23,240
Speaker 1: act around, Yeah saying you know we've seen this with

595
00:32:23,320 --> 00:32:24,120
Speaker 1: AI for years.

596
00:32:24,240 --> 00:32:24,440
Speaker 3: Yeah.

597
00:32:24,480 --> 00:32:27,320
Speaker 9: Well, Doug, I was just reading your column, actually, And

598
00:32:27,360 --> 00:32:30,280
Speaker 9: the case you make here is simply that the adoption

599
00:32:30,560 --> 00:32:32,400
Speaker 9: is going to take much longer than what the market

600
00:32:32,440 --> 00:32:35,840
Speaker 9: is pricing in. But what is the actual value to

601
00:32:36,200 --> 00:32:38,560
Speaker 9: a lot of these big tech companies sitting on piles

602
00:32:38,560 --> 00:32:41,120
Speaker 9: and piles of cash, record amounts of cash that are

603
00:32:41,160 --> 00:32:44,120
Speaker 9: all going into AI, Alphabet and Microsoft.

604
00:32:43,560 --> 00:32:44,040
Speaker 7: Et cetera.

605
00:32:44,520 --> 00:32:46,400
Speaker 9: So is it really fair to say that some of

606
00:32:46,440 --> 00:32:47,640
Speaker 9: these games are unjustified?

607
00:32:48,880 --> 00:32:51,520
Speaker 6: I think it is and creedy. I'm not a luddite,

608
00:32:51,600 --> 00:32:55,120
Speaker 6: you know. I was on with Tom and pol in

609
00:32:55,240 --> 00:32:59,080
Speaker 6: late twenty twenty twenty two when I was buying all

610
00:32:59,120 --> 00:33:03,000
Speaker 6: these stocks, I was buying them under four time sales.

611
00:33:03,800 --> 00:33:06,440
Speaker 6: And now with the stocks up dramatically, there's no longer

612
00:33:06,440 --> 00:33:09,600
Speaker 6: a value in my Yeah, Doug, with.

613
00:33:09,680 --> 00:33:12,680
Speaker 1: Time left here and I there's just so much to

614
00:33:12,720 --> 00:33:17,040
Speaker 1: talk about today. You have a Florida perspective like nobody.

615
00:33:17,120 --> 00:33:21,560
Speaker 1: I know the governor of your state tonight, I guess,

616
00:33:21,720 --> 00:33:26,040
Speaker 1: is going to launch a presidential campaign with Elon Musk. Now,

617
00:33:26,080 --> 00:33:29,520
Speaker 1: you know, mister Musk, you've been very supportive. I believe

618
00:33:29,640 --> 00:33:32,920
Speaker 1: the space stuff and all that, and you know you're

619
00:33:33,000 --> 00:33:36,400
Speaker 1: hugely visible on Twitter. But this is your governor. What

620
00:33:36,440 --> 00:33:39,000
Speaker 1: are you going to listen for from governor to Santa

621
00:33:39,240 --> 00:33:40,240
Speaker 1: this afternoon today?

622
00:33:41,360 --> 00:33:44,239
Speaker 6: Well, let's begin by framing it. You're talking to a

623
00:33:44,280 --> 00:33:52,840
Speaker 6: former Native raider and a progressive liberal who believes in

624
00:33:52,920 --> 00:33:58,320
Speaker 6: pro choice and has a political view, and my political

625
00:33:58,400 --> 00:34:00,080
Speaker 6: view is antithetical.

626
00:33:59,480 --> 00:34:02,120
Speaker 1: To this same He won big in year Florida. Can

627
00:34:02,160 --> 00:34:05,160
Speaker 1: he extend that across the comfortable Republic.

628
00:34:05,200 --> 00:34:07,880
Speaker 6: I don't think he has a chance against Trump. I

629
00:34:07,920 --> 00:34:11,439
Speaker 6: don't think he's a likable character. I actually think he's

630
00:34:11,480 --> 00:34:18,040
Speaker 6: on the spectrum based upon my conversations with him, and

631
00:34:18,320 --> 00:34:22,000
Speaker 6: I don't think he's going to be competitive against Trump.

632
00:34:22,120 --> 00:34:25,920
Speaker 6: So I think it's an academic question. You know, I'm

633
00:34:26,000 --> 00:34:27,680
Speaker 6: much more concerned about the market.

634
00:34:28,280 --> 00:34:30,399
Speaker 1: Yeah, well, you know, let me bring this back to Kidder.

635
00:34:30,440 --> 00:34:33,319
Speaker 1: Peabody being pritty doesn't know this, but long ago, you're

636
00:34:33,360 --> 00:34:36,000
Speaker 1: meeting potatoes. I think a Mario Gabelli and auto parts

637
00:34:36,320 --> 00:34:39,560
Speaker 1: and industrial stuff cass on the high ground in banking,

638
00:34:39,920 --> 00:34:41,600
Speaker 1: I looked at Peck West today and they got a

639
00:34:41,640 --> 00:34:46,040
Speaker 1: thirteen month five point five zero percent cd dug out

640
00:34:46,040 --> 00:34:48,359
Speaker 1: of our ute. I mean, are you going to load

641
00:34:48,400 --> 00:34:51,000
Speaker 1: the boat on regional bankers in crisis?

642
00:34:52,200 --> 00:34:56,160
Speaker 6: No, you can't right now because of the aforementioned conversation

643
00:34:56,320 --> 00:35:00,520
Speaker 6: you had in a prior segment. It simply stated the

644
00:35:00,520 --> 00:35:03,960
Speaker 6: the cost of capital, the cost of funds are going

645
00:35:04,080 --> 00:35:10,759
Speaker 6: up dramatically. This combined with FDICS, extra assessments and other factors,

646
00:35:10,920 --> 00:35:17,080
Speaker 6: are going to a really way on the secular earnings

647
00:35:17,080 --> 00:35:19,920
Speaker 6: growth rate of the industry over the next two three years.

648
00:35:20,360 --> 00:35:24,440
Speaker 6: And unfortunately Sellside has not yet reduced their estimates.

649
00:35:24,640 --> 00:35:24,920
Speaker 2: Doug.

650
00:35:24,960 --> 00:35:27,640
Speaker 9: A final quick question or last minute here when it

651
00:35:27,680 --> 00:35:32,439
Speaker 9: comes to the biggest concern after this debt saga, where

652
00:35:32,440 --> 00:35:35,000
Speaker 9: does China rate on your list the growth concerns that

653
00:35:35,000 --> 00:35:35,640
Speaker 9: we're seeing there.

654
00:35:37,880 --> 00:35:41,480
Speaker 6: China is, as as we all know, is the driver

655
00:35:41,600 --> 00:35:44,600
Speaker 6: of global economic growth, but that really is not my

656
00:35:44,719 --> 00:35:49,560
Speaker 6: primary concern visa visa speculation, I see, I'm not certain

657
00:35:49,600 --> 00:35:51,680
Speaker 6: of much, but one thing I'm certain about is that

658
00:35:51,719 --> 00:35:55,880
Speaker 6: the S and P is highly valued, especially against interest rates,

659
00:35:56,520 --> 00:36:01,239
Speaker 6: and our reasonable and much lower than consensus for Castler profits.

660
00:36:01,360 --> 00:36:04,640
Speaker 6: And I'll just briefly say that yesterday's closed, the Fed

661
00:36:04,680 --> 00:36:08,120
Speaker 6: funds rate was five to eight percent, the six month

662
00:36:08,200 --> 00:36:11,640
Speaker 6: Treasury yield was five point four percent, and that's roughly

663
00:36:11,680 --> 00:36:14,040
Speaker 6: three and a half times the SMP dividend yield of

664
00:36:14,120 --> 00:36:18,080
Speaker 6: one point sixty five percent. It costs seven point one

665
00:36:18,120 --> 00:36:21,920
Speaker 6: percent for a fixed rate mortgage, and the SMP basically

666
00:36:21,960 --> 00:36:24,880
Speaker 6: closed where it did fifteen months ago, when the Fed

667
00:36:24,920 --> 00:36:28,080
Speaker 6: funds rate was only eight basis points, the yield on

668
00:36:28,160 --> 00:36:30,919
Speaker 6: the sixth month note was one percent, or roughly two

669
00:36:31,000 --> 00:36:34,920
Speaker 6: thirds the SMP dividend yield, and the fixed rate mortgage

670
00:36:35,320 --> 00:36:40,719
Speaker 6: rate was around three percent, And the SMP is basically

671
00:36:40,760 --> 00:36:47,680
Speaker 6: the same price. And also fifteen months ago, the consensus

672
00:36:48,480 --> 00:36:52,279
Speaker 6: s and P estimate was two hundred and fifty two

673
00:36:52,280 --> 00:36:54,319
Speaker 6: dollars a share, and now it's most to two hundred

674
00:36:54,320 --> 00:36:55,440
Speaker 6: and fifteen dollars to share.

675
00:36:55,760 --> 00:36:58,319
Speaker 1: So I don't see any amount of time I wanted

676
00:36:58,320 --> 00:37:00,200
Speaker 1: to get to Garret Cole in the New York Out

677
00:37:00,239 --> 00:37:02,640
Speaker 1: of time, Dougcast, thank you so much. As Sea Breeze.

678
00:37:02,920 --> 00:37:06,759
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679
00:37:06,880 --> 00:37:11,080
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680
00:37:11,360 --> 00:37:14,840
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681
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682
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683
00:37:23,600 --> 00:37:27,560
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684
00:37:27,719 --> 00:37:29,279
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