Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Single best idea and the single best idea this weekend
Speaker 2: across this nation is to be intelligent about the heat.
Speaker 2: I've learned a lot about it. I'm pretty ignorant about it.
Speaker 2: A shout out to the New York Times, which I
Speaker 2: think is part the difference between the word dangerous in
Speaker 2: the difference with excess heat or whatever. And the answer
Speaker 2: is from what I can tell, you don't know you're
Speaker 2: doing heat exhaustion until it's too late, is sort of
Speaker 2: the what I've learned in this new heat and particularly
Speaker 2: not the number of degrees and index and all that stuff,
Speaker 2: but the number of days back to back seems to
Speaker 2: be new. We heard that from Rob Carolyn Our, Bloomberg
Speaker 2: meteorologist about the three day heat wave is becoming the
Speaker 2: five day heat wave. Careful because this this heat exhaustion thing,
Speaker 2: whatever your age, whatever your background, it creeps up on you.
Speaker 2: One of the things that's crept up on us is
Speaker 2: drought worldwide. We went to the authority. We try to
Speaker 2: do that on Bloomberg Surveillance. ConA Haek is with Ed
Speaker 2: n f Man. If you don't know that name, it
Speaker 2: is truly one of the romantic names of the history
Speaker 2: of finance. Edf and Man goes back forever, kings and queens.
Speaker 2: It's been around, and ConA Haek is truly the most
Speaker 2: intelligent person on softs. We know safts are agricultural economies.
Speaker 2: In America, rice is no big deal. In Cambodia, rice
Speaker 2: really matters. ConA Haek on rice.
Speaker 3: Yeah, so rice was very tight. The markets were very
Speaker 3: tight the last year and a bit. India had a
Speaker 3: rice export ban and they're the world's largest exporter. Thailand
Speaker 3: had a drought, as mentioned, you know, causing severe declining
Speaker 3: rice yields so an Asia. For Asians, rice is the staple.
Speaker 3: It's the potatoes of the UK, It's the grains of
Speaker 3: the USA. You know, without rice, you know, you get
Speaker 3: food inflation. And that's what happened. And unfortunately there just
Speaker 3: wasn't enough. The monsoons are absolutely critical to help the
Speaker 3: rice yields recover.
Speaker 2: One of the great themes Conaek there, Edie and f Man.
Speaker 2: One of the great themes of the week has been
Speaker 2: the word solid. There's been all sorts of interviews and
Speaker 2: maybe this nuance, that nuance and the rest of it,
Speaker 2: but the answer is people are summarizing to their interpretation
Speaker 2: of a solid economy, the financial economy, the stock market
Speaker 2: economy is wrapped around a group of people that have
Speaker 2: participated in what six, seven, eight, ten stocks and those
Speaker 2: that have it. And there's a partitionere that we deal
Speaker 2: with every day with the mail that we see, YouTube,
Speaker 2: live chat and all the context people in restaurants, people
Speaker 2: in the street here in New York City, and there's
Speaker 2: this underlying belief. I think that everybody has that at
Speaker 2: some point, like musical chairs, the music's going to stop.
Speaker 2: Matt Michigan is with John Hancock in Boston with all
Speaker 2: sorts of experience, a really brilliant conversation, and here Matt
Speaker 2: Michigan on when the music will stop.
Speaker 1: I believe in reversion the meme, I do you know?
Speaker 1: And I think this concentration is historic. It is historic.
Speaker 1: I mean, that's the data. This is an outlier. You're
Speaker 1: never see ten stocks represent only almost forty percent of
Speaker 1: the S and P five hundred. So reversion the mean
Speaker 1: suggests that that's going to move down, that they're not
Speaker 1: going to be that big. But it could be worse, right,
Speaker 1: It could be that these companies don't make money that
Speaker 1: they're not great companies. These companies have great profit margins,
Speaker 1: great balance sheets, great return on equity or overweight tech.
Speaker 1: We've been overweight tech for the last five years, and
Speaker 1: that's the best airings engine in the world.
Speaker 2: People ask me all the time how I measure this,
Speaker 2: And of course we do not give investment advice here.
Speaker 2: Of course we're asconced, you know, with all the different
Speaker 2: trusts for the children and the triple leveraged all cash fund.
Speaker 2: But what I would say is there has to be
Speaker 2: a new respect away from financial media ratios to what
Speaker 2: the grown ups like Matt Michigan look at, and that
Speaker 2: is free cash flow. In this strange phrase, capital allocation.
Speaker 2: The Bloomberg has a wonderful screen, the WACC screen, the
Speaker 2: weighted average cost of capital screen that shows for each company, Apple, whatever,
Speaker 2: American Chin Strap. It shows eva weighted average cost of capital,
Speaker 2: return on invested capital, and the difference that spreads the
Speaker 2: differences between those. I use it like religion. It's hugely
Speaker 2: important in my first study of any company. So what
Speaker 2: do you do? Pro tip, and particularly for those of
Speaker 2: you that are students, capital allocation is a religion. Easily
Speaker 2: going back twenty years, if not thirty. At the High
Speaker 2: Altar is Michael Mobison m au BB Michael Mobison now
Speaker 2: at Morgan Stanley. Read Michael Mobison. I don't know what
Speaker 2: else to say, but that will give you a better
Speaker 2: idea of what Matt Michigan was talking about, which is
Speaker 2: the concentration is ridiculous. But the fact is there's still
Speaker 2: minting money. So look to Michael Mobison at Morgan Stanley
Speaker 2: for some leadership. There. There's some good books. Bill Priest's
Speaker 2: book on free cash flow. Shareholder Yield is also another
Speaker 2: thing to look at. William Priest. Shareholder Yield is a
Speaker 2: great great short read on free cash flow. Our short
Speaker 2: read is staggered a Monday. It's good to know that
Speaker 2: Paul Sweeney will have dinner with John Tucker tonight after
Speaker 2: the Sea Streak ferry over to New Jersey because the
Speaker 2: trains aren't working. It'll be a stressless weekend. Red Keeper
Speaker 2: of the AMX, of course, will pick up all that
Speaker 2: vast expense. We're on YouTube search and subscribe to Bloomberg
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