WEBVTT - Surveillance: Yield Curve with Peters 0:00:05.120 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:08.520 --> 0:00:12.360 with Jonathan Farrell and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.840 for insight from the best an economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.119 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:29.880 the Bloomberg Terminal and the Bloomberg Business App. 0:00:30.080 --> 0:00:33.000 Dead Limit talks stolen. Greg Paters of pGEM Fixed Income 0:00:33.080 --> 0:00:36.080 saying investors a pang for default protection in the near term. 0:00:36.520 --> 0:00:39.680 We went out the curve somewhat as our sneaking suspicion 0:00:40.080 --> 0:00:42.920 is that it will continue year after year. The congressional 0:00:42.920 --> 0:00:47.239 disruption in DC is not going away anytime soon. Tks. 0:00:47.280 --> 0:00:50.120 This he the old normal, the new normal, what do 0:00:50.120 --> 0:00:50.680 you want to call it. 0:00:50.720 --> 0:00:54.040 I'm so glad you picked this paragraph from his research. John, 0:00:54.120 --> 0:00:57.040 This is the fixed income note I've seen in ten days, 0:00:57.040 --> 0:01:00.120 maybe two weeks. Reg Peters at PGM right now on 0:01:00.200 --> 0:01:04.639 where we are and where we're moving forward. Joining us, Greg, 0:01:04.920 --> 0:01:06.760 It's a really complex thing. I think we need to 0:01:06.800 --> 0:01:09.280 talk for an hour with you this morning, but I 0:01:09.360 --> 0:01:12.039 want you to set up what the market reaction is 0:01:12.120 --> 0:01:15.240 going to be if we get pgeum persistency and yield 0:01:15.920 --> 0:01:18.880 or dare I say we go to a higher five 0:01:18.920 --> 0:01:22.240 point six five point eight and then the dreaded six 0:01:22.319 --> 0:01:25.000 percent yield? What happens when we get there? 0:01:26.400 --> 0:01:28.920 Well, I think we're a long way to six percent. 0:01:29.120 --> 0:01:31.039 But at the end of the day, we do think 0:01:31.120 --> 0:01:33.839 yields are too low. If you look at the move 0:01:33.880 --> 0:01:37.040 that we've seen, particularly in the front end around the 0:01:37.080 --> 0:01:44.560 banking crisis of March, there was a really deep move lower, 0:01:44.760 --> 0:01:46.920 and that doesn't make a lot of sense to us. 0:01:47.000 --> 0:01:50.200 And so, you know, when we're looking at the curve, 0:01:51.160 --> 0:01:53.280 we feel like it's miss priced. We feel like it's 0:01:53.320 --> 0:01:56.400 already pricing in a recession. And then when you look 0:01:56.400 --> 0:02:00.000 at risk reward, even if you do get a recession, 0:02:00.120 --> 0:02:03.920 which is still you know, probable, of course, will you 0:02:04.000 --> 0:02:06.280 be rewarded for it? And the question on the table 0:02:06.520 --> 0:02:08.440 I think suggests, now. 0:02:08.600 --> 0:02:11.160 Let's go pro here. There's a thing Greg called credit 0:02:11.320 --> 0:02:15.359 default swaps. Brando talks about this all the time. You say, 0:02:15.360 --> 0:02:19.639 there's a real efficacy to follow the CDs market for 0:02:19.800 --> 0:02:23.880 mere mortals listening and watching explain the linkage of their 0:02:23.960 --> 0:02:26.680 yield world with the CDs world. 0:02:27.600 --> 0:02:29.880 Well, it just is a measure of credit risk of 0:02:31.280 --> 0:02:35.400 the US sovereign, right, and so you know what we've 0:02:35.440 --> 0:02:38.240 seen over the past couple months or so is that 0:02:38.240 --> 0:02:42.280 that risk is elevated of course, right, So this debt 0:02:42.360 --> 0:02:47.560 ceiling debate, let's call it, is creeping into the risk 0:02:48.000 --> 0:02:50.800 of the market. You're seeing that in the CDs curves. 0:02:50.800 --> 0:02:54.320 And so what you've seen is investors really pay up 0:02:54.760 --> 0:02:59.359 for short data protection in the event of a default 0:02:59.480 --> 0:03:02.960 or some type disruption. What we decided to do, and 0:03:03.000 --> 0:03:04.880 to be clear, this is very much of a drop 0:03:04.880 --> 0:03:08.280 in the ocean type of trade, but what we've decided 0:03:08.320 --> 0:03:12.200 to do is actually not pay up for you know, 0:03:12.520 --> 0:03:15.639 the couple months or even one year, because we do 0:03:15.680 --> 0:03:19.680 think it's a persistent problem. So you know, we really 0:03:19.720 --> 0:03:22.920 worry about I really worry about a PGM that you know, 0:03:23.000 --> 0:03:27.000 this political debate around spending and using the depth ceiling 0:03:27.400 --> 0:03:31.320 as a prop will be a common occurrence. And with that, 0:03:31.639 --> 0:03:33.200 you know, we think it's good to have a little 0:03:33.200 --> 0:03:33.799 protection on. 0:03:34.200 --> 0:03:36.600 So Greg, can we go out further along the curve 0:03:36.680 --> 0:03:38.120 away from the front end, Let's go all the way 0:03:38.160 --> 0:03:40.400 to the back end. What's the thirty year doing up 0:03:40.400 --> 0:03:41.160 in there four percent. 0:03:43.320 --> 0:03:46.120 Yeah, So the thirty year has different characteristics than the 0:03:46.560 --> 0:03:49.440 intermediate part of the curve and definitely the front end 0:03:49.760 --> 0:03:52.720 part of the curve. What you have in the back 0:03:52.800 --> 0:03:55.120 end is this still do this very much, you know, 0:03:55.240 --> 0:03:59.200 need for duration investors have to go out and hedge, 0:03:59.360 --> 0:04:02.160 or you know, pension funds and LDI accounts have to 0:04:02.160 --> 0:04:04.280 be out in the back of the curve. So there's 0:04:04.320 --> 0:04:08.720 different characteristics there. So I think that the informational content 0:04:08.760 --> 0:04:11.840 that comes out of the thirty year is a lot 0:04:11.960 --> 0:04:16.400 less kind of worthy than the intermedia and the front end. 0:04:16.480 --> 0:04:18.720 So for me, you know, I look at more at 0:04:18.720 --> 0:04:20.760 the intermediate part of the curve and more in the 0:04:20.760 --> 0:04:23.080 front end of the curve than I do the thirty year. 0:04:23.600 --> 0:04:26.360 I mean, it's important, but it's not nearly as important 0:04:26.400 --> 0:04:28.960 from an informational content standpoint. Greg. 0:04:29.000 --> 0:04:31.160 At a time when you do expect this turmoil to 0:04:31.200 --> 0:04:35.440 continue in Washington, do you consider corporate debt of very 0:04:35.560 --> 0:04:38.840 highly rated companies to essentially be more credit worthy right 0:04:38.839 --> 0:04:40.520 now than the US government itself. 0:04:41.760 --> 0:04:44.359 Oh, I think that's a tenuous argument. I've heard that argument. 0:04:44.440 --> 0:04:46.640 That doesn't make a lot of sense to me that 0:04:46.680 --> 0:04:51.320 crops up, you know, every several years or so. You know, 0:04:51.360 --> 0:04:54.680 I really push back on that. So, you know, everything 0:04:54.720 --> 0:04:59.920 feeds off US Treasury US rates, So if the risk 0:05:00.080 --> 0:05:03.760 free gets repriced, everything gets repriced off of it. So, 0:05:04.279 --> 0:05:07.080 you know, hiding out in high quality credit seems like 0:05:07.120 --> 0:05:10.839 a fool's errand to me, and you're not going to 0:05:10.839 --> 0:05:14.159 protect yourself in a way that you think you will 0:05:14.200 --> 0:05:14.880 be protected. 0:05:15.279 --> 0:05:17.159 Do you think that people who are going into credit 0:05:17.200 --> 0:05:19.400 in particular risk of your credit right now are also 0:05:19.600 --> 0:05:22.440 engaging in a fool's errand just simply because of the 0:05:22.560 --> 0:05:24.600 risk that you're seeing down the line of perhaps some 0:05:24.640 --> 0:05:29.000 of the defaults or there's at least the Washington turmoil continuing, 0:05:29.080 --> 0:05:31.520 and this idea of some sort of recession getting priced 0:05:31.520 --> 0:05:32.479 in to the curve. 0:05:33.839 --> 0:05:36.880 Well, if you're definitely going down in quality and credit, 0:05:36.960 --> 0:05:41.480 you are basically an essentially betting that there will be 0:05:41.600 --> 0:05:44.760 no recession, there will be a soft landing. And so 0:05:44.800 --> 0:05:47.919 I think that is also a kind of a difficult 0:05:47.960 --> 0:05:51.280 case to make. So to me, there's much more value 0:05:51.640 --> 0:05:56.040 being up in quality and not going deep down and 0:05:56.160 --> 0:06:00.480 you know, deep recyclical type of company. So I don't know, 0:06:00.839 --> 0:06:02.680 you know, being down in quality doesn't make a lot 0:06:02.680 --> 0:06:04.960 of sense to me. I'm not sure you're getting paid 0:06:04.960 --> 0:06:08.719 for it either. I think it's too early, very simple premise. 0:06:08.800 --> 0:06:12.560 I have yet to see credit spreads tightened into a recession, 0:06:12.680 --> 0:06:15.359 so if you have a high probability of a recession, 0:06:16.160 --> 0:06:20.560 you're you know, leaning against that narrative. So I don't know. 0:06:21.240 --> 0:06:24.240 To me, it's more of a high quality gain dispersion 0:06:24.320 --> 0:06:25.039 is super high. 0:06:25.120 --> 0:06:25.240 Though. 0:06:25.320 --> 0:06:29.000 There are lots of relative value opportunities, and we see 0:06:29.000 --> 0:06:31.560 a lot more value structure products as an example, than 0:06:31.600 --> 0:06:32.599 we do corporate credit. 0:06:32.800 --> 0:06:34.479 Greg, can we try and make this really simple? Just 0:06:34.480 --> 0:06:36.880 to wrap things up, There were some headlines yesterday about 0:06:36.880 --> 0:06:38.520 a security that come to market with a yield to 0:06:38.560 --> 0:06:41.440 six percent and it has one of those at risk 0:06:41.520 --> 0:06:45.479 maturities early next month, Greg, can you explain to people 0:06:45.520 --> 0:06:48.440 what is the actual risk there? What is the risk 0:06:48.480 --> 0:06:52.040 there with that security? Because ultimately, surely doesn't it get paid. 0:06:53.279 --> 0:06:56.000 Well, hopefully it gets baide. This is the debate on 0:06:56.040 --> 0:07:01.200 the table, Jonathan. But the question for an investor is like, 0:07:01.279 --> 0:07:05.440 why would you actually target yourself for that particular maturity? 0:07:05.560 --> 0:07:07.880 So you know, if you do the math around it, 0:07:08.320 --> 0:07:10.880 you know it's a much higher yield divided by three 0:07:10.960 --> 0:07:14.080 sixty five, you know, times ten days, is it really 0:07:14.080 --> 0:07:17.480 worth the risk? So so it's somewhat of an anomalist 0:07:17.520 --> 0:07:20.239 math equation. And so I wouldn't be so worried about 0:07:20.240 --> 0:07:22.960 the six percent because that's not really what you're going 0:07:23.000 --> 0:07:26.920 to earn. So, you know, from most investors' perspective, it's 0:07:27.040 --> 0:07:30.239 just not worth targeting yourself and getting thrown into the 0:07:30.280 --> 0:07:33.679 potential default pool. And hopefully that doesn't happen. 0:07:33.800 --> 0:07:36.960 We all have that doesn't happen Face page and fixed income. 0:07:37.480 --> 0:07:39.080 Thank you, Greg, appreciate it. 0:07:42.640 --> 0:07:44.320 No one better in New York City to do this 0:07:44.400 --> 0:07:48.320 in Oliver Chen, senior equity research analyst at Cowen who's 0:07:48.360 --> 0:07:53.720 just totally plugged into our aspirations as well. Mister Arnold 0:07:53.720 --> 0:07:56.320 has done this forty five times at the MH. John 0:07:56.360 --> 0:07:59.360 has mentioned this. John's really followed this story. He brings 0:07:59.400 --> 0:08:03.440 his sons to an American icon, Tiffany, and is it 0:08:03.520 --> 0:08:05.000 right to say they blew it up. 0:08:05.680 --> 0:08:08.240 Yeah, it's been tremendous in terms of the innovation there, 0:08:08.240 --> 0:08:11.680 and luxury is about magic and logic and bringing new, 0:08:11.720 --> 0:08:14.520 younger customers to the table as well. Tiffany is an 0:08:14.720 --> 0:08:19.000 iconic brand. The partnerships with Nike really elevating the assortment, 0:08:19.080 --> 0:08:21.680 and this flagship is one of the best stores in 0:08:21.720 --> 0:08:23.640 the world right now in terms of what they're doing 0:08:23.680 --> 0:08:27.760 experiential retail art, this unique experience. LVMH is definitely one 0:08:27.800 --> 0:08:31.160 of our top ideas. China is about twenty five percent 0:08:31.240 --> 0:08:35.079 of revenue, so it's quite material and we're really watching 0:08:35.520 --> 0:08:38.400 these near term changes. The mRNA will be important. 0:08:39.000 --> 0:08:41.480 You've coined a phrase that I love. It's South Wealth 0:08:41.960 --> 0:08:44.160 and if you know, you know, I could spot Brunello, 0:08:44.640 --> 0:08:47.040 I can spot the MS orange poking out at your 0:08:47.040 --> 0:08:51.280 pocket right now. And then there are brandings, the aspirational stuff, 0:08:51.480 --> 0:08:54.200 the people who line up outside the Gucci stores and 0:08:54.240 --> 0:08:57.160 they do the buy now, pay later, fifty dollars a month, 0:08:57.800 --> 0:08:59.599 get whatever you want, get a hoodie. It's got a 0:08:59.600 --> 0:09:01.720 big brand in front of it. Lisa and I were 0:09:01.720 --> 0:09:03.800 talking about this before we came on air. We're trying 0:09:03.840 --> 0:09:06.240 to work out has the latter started to crack? Have 0:09:06.360 --> 0:09:08.200 you noticed that at all? Because we used to see 0:09:08.200 --> 0:09:10.880 all these lines around these luxury stores, and when we 0:09:10.920 --> 0:09:12.840 used to speak to people in the store, the consumer 0:09:12.960 --> 0:09:15.640 was changing. They were moving away from dropping five thousand 0:09:15.720 --> 0:09:17.640 dollars on a handbag and maybe that we're thinking about 0:09:17.640 --> 0:09:20.079 it through a monthly payment. Has that started to fade 0:09:20.120 --> 0:09:21.719 started to break in this country for sure? 0:09:21.800 --> 0:09:23.560 John, You bring up a great point in terms of 0:09:23.640 --> 0:09:28.200 aspirational more entry point luxury logos as well as sunglasses 0:09:28.240 --> 0:09:33.240 and footweark be gateways to luxury, and that's been softer. 0:09:33.480 --> 0:09:36.040 We've seen inventory levels that are too high at nor 0:09:36.160 --> 0:09:39.400 Trum Sacks and Nemon Marcus for that reason. At the 0:09:39.400 --> 0:09:42.880 same time, when you think about stealth, well, it's about materials, 0:09:42.920 --> 0:09:46.040 it's about touch and feel, it's about looking great at 0:09:46.080 --> 0:09:48.720 work too. That's been a trend that's been working too. 0:09:49.240 --> 0:09:52.480 As the consumers become more cautious and we've seen many shocks. 0:09:52.880 --> 0:09:55.400 How much are we really parsing through the key shaped 0:09:55.440 --> 0:09:57.440 recovery that we used to talk about that we seem 0:09:57.480 --> 0:10:00.680 to have forgotten. We're basically people with the most power 0:10:00.960 --> 0:10:03.400 are spending it on luxury and able to do so 0:10:03.600 --> 0:10:06.200 in bulk, and you're seeing the others kind of fall 0:10:06.320 --> 0:10:09.520 off as the price increases really catch up. More broadly 0:10:09.559 --> 0:10:10.800 in the economy. 0:10:10.600 --> 0:10:14.440 We're definitely seeing a consumer discretionary recession in terms of 0:10:14.480 --> 0:10:18.280 those products and that market as a whole facing negative trends. 0:10:18.280 --> 0:10:21.360 We're also still seeing shifts where dollars are spent on 0:10:21.520 --> 0:10:26.200 travel and services hotels. At the high high end, that 0:10:26.240 --> 0:10:30.120 customer is very strong and robust, so we're still seeing 0:10:30.280 --> 0:10:32.680 strength at the high end. It's more of that area 0:10:32.800 --> 0:10:35.320 right below the high end, the aspirational, where there's lots 0:10:35.360 --> 0:10:38.439 of pressure. At the high end, the wealthy consumer always 0:10:38.480 --> 0:10:41.880 has money. It's more about sentiment and emotions too. Certainly, 0:10:41.920 --> 0:10:45.320 some of the financial shocks have been disturbing in terms 0:10:45.320 --> 0:10:49.000 of putting that customer on pause. Consumer confidence has been 0:10:49.080 --> 0:10:52.360 volatile as a whole, so it's definitely something we're watching. 0:10:52.760 --> 0:10:56.480 The overlay here of China and what's going on there. 0:10:56.679 --> 0:10:59.360 Is there a sense based on the luxury players that 0:10:59.400 --> 0:11:02.280 are more exposed to the Chinese consumer and less exposed 0:11:02.640 --> 0:11:05.320 of where that trend is. Is it falling off? Are 0:11:05.360 --> 0:11:06.839 people really seeing a shift there? 0:11:07.160 --> 0:11:07.360 Well? 0:11:07.400 --> 0:11:11.000 Structurally, long term, China is the biggest deal in luxury. 0:11:11.040 --> 0:11:14.520 It's thirty percent plus of the market plus even more growth, 0:11:14.880 --> 0:11:18.680 so great luxury retailers and Louis Vuitton's the largest market 0:11:18.760 --> 0:11:22.520 cap company in Europe, so it spends about ten million 0:11:22.600 --> 0:11:26.439 dollars on advertising and promotion, and Tiffany Renovation is well 0:11:26.480 --> 0:11:28.600 over two hundred and fifty million dollars just here in 0:11:28.640 --> 0:11:31.360 New York. China will be important for the long term, 0:11:31.360 --> 0:11:35.040 but it'll be fairly volatile as we watch these issues unfold. 0:11:35.280 --> 0:11:38.720 The name of the game in luxury is flagship stores 0:11:38.920 --> 0:11:42.079 and stores that really make you forget about price. So 0:11:42.160 --> 0:11:46.760 being there physically is important as well as a modern, upgraded, 0:11:46.880 --> 0:11:50.520 you know, rethinking the metaverse, a digital experience that's connected 0:11:50.559 --> 0:11:51.360 as well. 0:11:51.480 --> 0:11:54.560 Our department stores then dead. If I'm at the corner 0:11:54.600 --> 0:11:58.280 of fifty seventh and fifth Avenue and I'm looking from 0:11:58.320 --> 0:12:03.160 Tiffany's waving over at Burg, Hi, what's the future of Bergdorf? 0:12:03.160 --> 0:12:06.280 And you mentioned earlier, Oh, Burgdorf is very exciting. It's 0:12:06.360 --> 0:12:11.800 right there too, in these magic corners. Bergdorf is an 0:12:12.000 --> 0:12:16.520 iconic institution. Our recommendation is Macy's department stores are not dead, 0:12:16.600 --> 0:12:21.080 but they're transforming very rapidly and really needing to offer service, 0:12:21.679 --> 0:12:24.839 differentiated product. They really need to get the younger customer end, 0:12:25.080 --> 0:12:29.320 and that's been a constant, interesting epic struggle. We're following 0:12:29.320 --> 0:12:33.040 Coles this morning, the gross margins were better than expected. 0:12:33.400 --> 0:12:36.160 Back to the basics for retail as well as inventory 0:12:36.200 --> 0:12:39.480 management and supply chain. But I teach at Columbia, don't 0:12:39.480 --> 0:12:43.120 forget it's about magic and logic and really bringing things 0:12:43.120 --> 0:12:45.640 you didn't know existed that you wanted in retail too. 0:12:45.720 --> 0:12:47.240 He's the only want to know on the sell side 0:12:47.280 --> 0:12:51.680 that could conflate coals in Tiffany in one conversation. 0:12:51.960 --> 0:12:54.480 In Macy's as well, quickly, what is it about Macy's 0:12:54.480 --> 0:12:54.880 that you like? 0:12:55.160 --> 0:13:00.600 Inventory management? CFO really focused on an agile CEO, rethinking 0:13:00.679 --> 0:13:04.400 the loyalty program using data. Artificial intelligence will play a 0:13:04.559 --> 0:13:08.360 huge role in personalization the data sets as we think 0:13:08.400 --> 0:13:10.839 about the future of retail, and Macy's has a loyal 0:13:10.920 --> 0:13:13.360 customer too, needs a younger customer for sure. 0:13:13.400 --> 0:13:15.679 We're not doing to giveaway a succession because Pharaoh's got 0:13:15.679 --> 0:13:18.840 to watch season three and four top to bottom it happened. 0:13:19.320 --> 0:13:21.120 What's a succession for our No at. 0:13:21.080 --> 0:13:25.600 LVMH, Listen, the family is doing a really modern job 0:13:25.720 --> 0:13:31.360 rethinking brands and captivating a younger customer, elevating brands. It's 0:13:31.400 --> 0:13:34.120 a company that manages for the very long term. 0:13:35.120 --> 0:13:37.760 Answer my question there's like three sons, two daughters, the 0:13:37.800 --> 0:13:41.400 whole thing. What happens in season three of the LVMH. 0:13:41.000 --> 0:13:45.240 Well, I think it's going to be intensity competition and 0:13:45.960 --> 0:13:48.880 a real interesting battle for the best of the best, 0:13:49.440 --> 0:13:52.040 and that's what happens. You really need this competitive spirit 0:13:52.120 --> 0:13:55.760 to be culturally relevant. Retail is awesome, Luxury is awesome 0:13:55.800 --> 0:13:58.000 because it's always changing. You've got to be in touch 0:13:58.040 --> 0:14:01.280 with how music is moving, how TV is moving. 0:14:01.080 --> 0:14:03.240 To be watching this. 0:14:03.880 --> 0:14:06.199 I love this, Oliver. This is great. Thank you, Oliver. 0:14:07.040 --> 0:14:12.560 Such a startish dude. Double breasted suit, Pete, I'm going to. 0:14:12.640 --> 0:14:15.000 Just postulate that if he had a beating at the 0:14:15.000 --> 0:14:19.440 White House, he would not be wearing shoes hybrids. I'm 0:14:19.480 --> 0:14:20.560 just guessing that I won't. 0:14:20.960 --> 0:14:24.600 I've got a word on the hybrids. 0:14:24.400 --> 0:14:25.440 Kind of in the churches. 0:14:25.480 --> 0:14:28.040 This is Brooks Brothers. So it's back to the basics, 0:14:28.080 --> 0:14:31.840 rethinking and double breasted fashion is about all the new 0:14:31.920 --> 0:14:36.120 and bringing traditional mix and matching. But I'm also versatile. 0:14:36.240 --> 0:14:40.360 I'll do anything like you on the weekends. 0:14:40.360 --> 0:14:42.200 The understated things. 0:14:43.240 --> 0:14:48.880 About materials, craftsmanship, well, materials and heritage and how something 0:14:48.960 --> 0:14:51.920 is made and if it feels great, I mean Cashmere 0:14:52.000 --> 0:14:55.040 is here forever, Yes, and stitching and craftsmanship. 0:14:55.640 --> 0:14:59.880 So you want again for shoe beautiful shoe half bro 0:15:00.160 --> 0:15:01.840 chat Chase, British, British. 0:15:01.880 --> 0:15:04.960 It is not a great tradition of that, so little 0:15:04.960 --> 0:15:06.680 painful in the beginning, but it's worth it. 0:15:06.800 --> 0:15:08.320 Break him in. Yeah, I great. 0:15:09.160 --> 0:15:12.160 I just would kill to get at a larger desk. 0:15:12.520 --> 0:15:15.400 Oliver Chen, Michael Burke who ran burg Dose for years, 0:15:15.440 --> 0:15:18.920 and the great Vanessa Friedman of the New York all 0:15:19.000 --> 0:15:24.120 in together bring ink from from London about He takes 0:15:24.120 --> 0:15:25.480 it so seriously. 0:15:25.200 --> 0:15:25.680 As he should. 0:15:27.000 --> 0:15:28.960 It's a multi billion dollar. 0:15:29.680 --> 0:15:31.640 What do you do if you put a sweatshirt in 0:15:31.680 --> 0:15:32.840 the dryer and shrink it? 0:15:33.200 --> 0:15:36.120 I mean you asked about this before. It really depends 0:15:36.120 --> 0:15:39.600 on the material. But I've done it a few times, 0:15:39.680 --> 0:15:43.200 and sometimes you want to shrink it and sometimes you don't. 0:15:43.240 --> 0:15:47.920 But most of the time it's shrink it. 0:15:49.040 --> 0:15:54.240 He reinvented rethinking a real stature in the industry. 0:15:54.360 --> 0:15:55.920 Yeah, okay, I. 0:15:55.840 --> 0:15:59.400 Think we don't outwait, Yeah, okay, good, thank you. 0:16:09.560 --> 0:16:12.520 Two big stories here to talk to. Jim Lucier about 0:16:12.560 --> 0:16:17.000 senior political analystic capital HEFA Partners barely describes the decades 0:16:17.000 --> 0:16:20.720 of experience. We've got the theater in Florida, We've got 0:16:20.760 --> 0:16:23.720 the theater in Washington. Jim, in your research to Know, 0:16:23.840 --> 0:16:26.640 which I thought was a really calming note, you talk 0:16:26.680 --> 0:16:30.080 about three subsets, the people that will bless this, the blessed, 0:16:30.800 --> 0:16:34.400 the people that will say the deal is acceptable, and 0:16:34.480 --> 0:16:37.280 I would suggest i'd add the furious as well. Who's 0:16:37.320 --> 0:16:39.200 going to win out here in the next ten days 0:16:39.560 --> 0:16:43.080 among the blessed, the acceptable, and the furious to move 0:16:43.120 --> 0:16:44.240 on from his crisis? 0:16:45.240 --> 0:16:47.680 I think the blessed and the acceptable are going to 0:16:47.720 --> 0:16:50.680 outnumber the furious. If you look at the way these 0:16:50.680 --> 0:16:54.120 negotiations proceeded, they've gone from hell, no, we're not budgeting 0:16:54.120 --> 0:16:57.400 to what kind of freeze do you want to? Okay, 0:16:57.480 --> 0:16:59.680 who's going to deliver the votes for this? So I 0:16:59.720 --> 0:17:04.600 think that despite what you see on television about a standoff, 0:17:04.680 --> 0:17:06.359 they're actually fairly close. 0:17:07.080 --> 0:17:08.840 James, I've got to turn to what's going to take 0:17:08.840 --> 0:17:12.040 place a little bit later on this afternoon, this talk 0:17:12.080 --> 0:17:14.280 on Twitter for Gabnor Tsantis. What do you make of 0:17:14.320 --> 0:17:16.919 this as a first step potentially towards a run for 0:17:16.920 --> 0:17:18.440 the big role in the White House. 0:17:19.600 --> 0:17:22.680 Well, I think it's an unlikely match of personalities. The 0:17:22.720 --> 0:17:25.440 thing about Ron DeSantis is he's not exactly the most 0:17:25.480 --> 0:17:27.800 warm and fuzzy guy out there, even though he is 0:17:27.840 --> 0:17:32.399 a terrific administrator and terrific governor, terrific giver of press conferences. 0:17:32.760 --> 0:17:36.560 To have an unscripted moment with Elon Musk suggests that 0:17:36.640 --> 0:17:40.119 either he's prepared to roll the dice and try something 0:17:40.240 --> 0:17:42.400 very different, or else he just doesn't know what he's 0:17:42.400 --> 0:17:42.639 in for. 0:17:43.160 --> 0:17:44.960 Do you think the first steps are important or do 0:17:44.960 --> 0:17:46.680 you think in a couple of months time will forget this. 0:17:48.320 --> 0:17:50.640 I think that in a couple of months time, we'll 0:17:50.680 --> 0:17:53.960 forget this. We have forgotten Elon Musk throwing the iron 0:17:54.040 --> 0:17:57.879 ball through the the truck. We've already forgotten the stealth 0:17:58.000 --> 0:18:01.840 video in which President Biden announced his re election campaign 0:18:01.920 --> 0:18:05.159 early in the morning two or three weeks ago. I 0:18:05.200 --> 0:18:08.520 don't think the announcement makes that big a deal, but 0:18:08.720 --> 0:18:11.199 it is important as we go into Memorial Day that 0:18:11.240 --> 0:18:15.320 we start that one year countdown to the presidential campaign 0:18:15.880 --> 0:18:18.760 beginning in Earnest, which is really going to be next 0:18:18.800 --> 0:18:19.480 Memorial Day. 0:18:19.680 --> 0:18:22.359 How interesting is it to you, James, that Twitter, a 0:18:22.440 --> 0:18:27.240 social media platform, is not so much tiptoeing, as in screaming, 0:18:27.359 --> 0:18:31.000 running into the whole media kind of sphere in Elon 0:18:31.119 --> 0:18:34.240 Musk hosting this conversation. I mean, what is the distinction 0:18:34.400 --> 0:18:38.080 at this point between social media and media? And from 0:18:38.080 --> 0:18:40.760 a regulator standpoint, does this muddy the waters? 0:18:41.800 --> 0:18:44.399 Well, Elon Musk likes to say that Twitter is the 0:18:44.600 --> 0:18:47.800 app for everything, and how do you better prove that 0:18:47.840 --> 0:18:51.680 you're the app for everything than by entertaining Tucker Carlson. 0:18:52.119 --> 0:18:54.520 So he's demonstrating you can do a lot of things 0:18:54.560 --> 0:18:58.000 on Twitter. I think Elong has a great commercial incentive 0:18:58.080 --> 0:19:02.359 to show that Twitter's a very vast, lot, very effective platform, 0:19:02.440 --> 0:19:05.840 right up there with Amazon or Netflix. I'm not sure 0:19:05.840 --> 0:19:08.679 the regulators know how to do this yet. The regulators 0:19:08.720 --> 0:19:13.200 are fighting a retroactive war, I think, battling Bigness, trying 0:19:13.240 --> 0:19:18.320 to fight Bigness by breaking up and turing large mergers. 0:19:18.680 --> 0:19:20.679 But I think Elana is far ahead of them at 0:19:20.680 --> 0:19:21.280 this point. 0:19:21.440 --> 0:19:23.520 Well, and to that point, James, I mean to John's 0:19:23.520 --> 0:19:26.679 point earlier, he was saying, some are speculating that Twitter 0:19:26.760 --> 0:19:30.600 and Elon Musk is becoming the main competitor to Fox 0:19:30.680 --> 0:19:33.879 and sort of this alternative conservative universe, especially if you 0:19:33.880 --> 0:19:39.119 have Tucker Curlson launching his own Twitter space or Twitter platform, 0:19:40.000 --> 0:19:42.480 and you also have a sort of initiation of Ronda 0:19:42.560 --> 0:19:45.440 Santiss campaign, all on the same site. 0:19:46.320 --> 0:19:48.800 Well, you've got no shortage of people who tried to 0:19:48.880 --> 0:19:52.879 launch alternative platforms. For instance, there is Glenn Beck, Megan 0:19:52.960 --> 0:19:56.520 Kelly has your podcast. I guess O'Riley is still out there. 0:19:56.840 --> 0:19:59.879 What's happening though, is that as you see conservative media 0:20:00.200 --> 0:20:04.679 moving into this new video platform with Twitter, the old forum, 0:20:04.760 --> 0:20:09.280 the AM media, the AM radio that was the home 0:20:09.359 --> 0:20:12.679 turf of Rush Limbaugh that is slowly dying off. So 0:20:12.720 --> 0:20:15.040 in other words, the old forest is dying and the 0:20:15.040 --> 0:20:17.240 forest animals are looking for a new environment. 0:20:17.720 --> 0:20:19.639 Jim, you got such a study of history on this. 0:20:19.760 --> 0:20:21.760 I'm going to go back to the legit World War two. 0:20:21.840 --> 0:20:24.800 Here Robert Dole of Kansas, he'd be one hundred by 0:20:24.880 --> 0:20:28.800 here in July. Senator Dole ran for president, came out 0:20:28.840 --> 0:20:33.280 of Kansas in the Midwest, and really never related with 0:20:33.359 --> 0:20:37.760 the American public. Translate that over to the governor of Florida. 0:20:37.960 --> 0:20:40.200 How does he come out of Florida where he won 0:20:40.280 --> 0:20:45.760 big and translate over to a Republican and independent America. 0:20:46.880 --> 0:20:51.560 Well, Bob Dole was a marvelously funny, warm and empathetic guy. 0:20:51.760 --> 0:20:54.879 Everybody who knew him in person loved him. He was 0:20:54.960 --> 0:20:58.240 famous for cracking jokes NonStop in the Senate cloak room. 0:20:58.480 --> 0:21:01.119 He was famous after he retired for sending donuts to 0:21:01.160 --> 0:21:04.520 the cloak room every day. You know, the memory of 0:21:04.560 --> 0:21:08.359 Bob Dole is just incredible in that way. But he 0:21:08.440 --> 0:21:14.199 did have I think a bit of awkwardness with large bodies. DeSantis, 0:21:14.240 --> 0:21:17.760 though nobody's ever really said that DeSantis is warm and 0:21:17.800 --> 0:21:20.880 fuzzy in that way. They're impressed with his smarts, they're 0:21:20.920 --> 0:21:24.360 impressed with his ability to lead as a former military officer. 0:21:24.600 --> 0:21:27.439 They're impressed with lots of things about him. But you 0:21:27.480 --> 0:21:31.880 don't hear people talking about DeSantis inspiring the deep personal 0:21:31.960 --> 0:21:37.000 loyalty among his constituents, among his base, among friends that 0:21:37.400 --> 0:21:39.880 Bob Dole certainly did. I knew Bob Dole. My father 0:21:40.000 --> 0:21:41.080 knew Bob Dole very well. 0:21:41.400 --> 0:21:43.840 James wonderful to get a perspective on things, particularly that 0:21:43.960 --> 0:21:47.320 in mind. James Lucy then of Capital Alpha Partners. 0:21:51.320 --> 0:21:55.600 It's great about Liz Young. She writes his brutally direct notes. 0:21:55.640 --> 0:21:58.600 This head of investment strategy it so far she loses 0:21:58.640 --> 0:22:02.159