1 00:00:09,840 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,240 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Very 5 00:00:32,280 --> 00:00:34,080 Speaker 1: pleased to say that joining us here in New York 6 00:00:34,120 --> 00:00:38,800 Speaker 1: City is Darra Maya, HSBC's US head of FX strategy. 7 00:00:38,880 --> 00:00:41,360 Speaker 1: Can morning chit Dara in just a moment, when Tom 8 00:00:41,440 --> 00:00:43,960 Speaker 1: King's finished doing his hair, He'll join us on bloom 9 00:00:44,000 --> 00:00:47,160 Speaker 1: Black Radio. What are you doing? They put in this pillar? 10 00:00:47,320 --> 00:00:49,880 Speaker 1: Thank you for all the comments and our beautiful news studio, 11 00:00:50,000 --> 00:00:53,240 Speaker 1: the Interactive Broker's Studio. We had a huge comments yesterday, 12 00:00:53,320 --> 00:00:57,280 Speaker 1: John and some photos are Chris Rosh down at Carolina 13 00:00:57,480 --> 00:01:00,360 Speaker 1: wrote us up in Talking Busines News and you see 14 00:01:00,400 --> 00:01:04,280 Speaker 1: the mirror. The noticed that continues. None of the articles 15 00:01:04,319 --> 00:01:08,160 Speaker 1: writing about the new studio mentioned your mirror behind your 16 00:01:08,240 --> 00:01:13,000 Speaker 1: mic position which at the moment you're staring at you 17 00:01:13,760 --> 00:01:15,920 Speaker 1: this vein at home. Do you compete for mirror time 18 00:01:15,959 --> 00:01:20,600 Speaker 1: with Mrs Keane? No, no, no, afterthoughts the mirror? Okay, 19 00:01:20,760 --> 00:01:22,600 Speaker 1: I put a mortgage PM and what am I meant 20 00:01:22,640 --> 00:01:24,120 Speaker 1: to do with this for the next two hours, I 21 00:01:24,160 --> 00:01:28,200 Speaker 1: don't talk to Dara about the dollars? Can I do that? Now? 22 00:01:28,400 --> 00:01:30,280 Speaker 1: You're going to engage, You're going to focus on the 23 00:01:30,360 --> 00:01:33,480 Speaker 1: market just quickly. Yeah, you're in great. Let's get to 24 00:01:33,560 --> 00:01:37,600 Speaker 1: the note. The consensus is consistent on the dollar consistently wrong, 25 00:01:37,680 --> 00:01:40,120 Speaker 1: it seems, having missed the rally in April. The medium 26 00:01:40,160 --> 00:01:42,160 Speaker 1: forecast is for the dollar to week and by seven 27 00:01:42,200 --> 00:01:45,080 Speaker 1: percent in the coming year, according to Bloomberg Data. While 28 00:01:45,160 --> 00:01:48,000 Speaker 1: this is a medium term view, we believe it is 29 00:01:48,080 --> 00:01:52,000 Speaker 1: fostering an attitude of denial. That's the research from HSBC. 30 00:01:52,280 --> 00:01:55,320 Speaker 1: Who is that? Who did write that? Come on, Dara, 31 00:01:55,840 --> 00:01:57,880 Speaker 1: what's the takeaway at the moment? Why is that your 32 00:01:57,880 --> 00:02:00,600 Speaker 1: takeaway right now? Well, because I do think they're just 33 00:02:00,880 --> 00:02:03,920 Speaker 1: constantly the markets looked at the dollar rally that we've 34 00:02:03,960 --> 00:02:05,480 Speaker 1: had since the end of April and they said, well, 35 00:02:05,560 --> 00:02:07,600 Speaker 1: that doesn't make sense. I think it does, but they 36 00:02:07,640 --> 00:02:09,239 Speaker 1: said it doesn't make sense, so therefore I want to 37 00:02:09,280 --> 00:02:12,480 Speaker 1: sell into it. And it's it's created this positioning, tactical 38 00:02:12,560 --> 00:02:15,119 Speaker 1: position where we're always looking for an opportunity to sell 39 00:02:15,160 --> 00:02:17,160 Speaker 1: the dollar. When I go and see clients. They don't say, hey, 40 00:02:17,720 --> 00:02:19,560 Speaker 1: that's how much for do you think this dollar rally 41 00:02:19,600 --> 00:02:21,600 Speaker 1: can go? It's always is now the time to sell? 42 00:02:21,720 --> 00:02:23,679 Speaker 1: Is now the time to sell? And I think that's 43 00:02:23,720 --> 00:02:26,320 Speaker 1: the problem, is credit this bias in the background. I 44 00:02:26,400 --> 00:02:30,160 Speaker 1: suspect because a strong dollar kills the whole E M story, 45 00:02:30,280 --> 00:02:32,880 Speaker 1: which they're all desperate to work. And I think that's 46 00:02:32,880 --> 00:02:35,480 Speaker 1: the problem because it hasn't been working for some EM 47 00:02:35,680 --> 00:02:37,600 Speaker 1: of late. Well, there's some signs at the moment that 48 00:02:37,680 --> 00:02:39,880 Speaker 1: the long U s versus e M crowd that started 49 00:02:39,919 --> 00:02:42,040 Speaker 1: to emerge over the last couple of months, they're riching 50 00:02:42,120 --> 00:02:44,760 Speaker 1: to pivot and there's some signs right now that they're pivoting. 51 00:02:44,840 --> 00:02:47,160 Speaker 1: Are you saying they're gonna get burned? Well, I think 52 00:02:47,160 --> 00:02:49,679 Speaker 1: they're at risk, and particularly if if it's if they're 53 00:02:49,680 --> 00:02:52,040 Speaker 1: relying on the dollar weakness has been a key leg 54 00:02:52,080 --> 00:02:54,200 Speaker 1: of that equation. I mean, great if you get reduced 55 00:02:54,280 --> 00:02:58,400 Speaker 1: EM risk for whatever reason, political developments, growth, trade wars, whatever, 56 00:02:59,160 --> 00:03:01,760 Speaker 1: But if they're relying on dollar weakness when the Fed 57 00:03:01,880 --> 00:03:04,280 Speaker 1: is going to tighten and continue to tighten along the dots, 58 00:03:04,800 --> 00:03:06,840 Speaker 1: I just don't see where you get there. The rate 59 00:03:06,880 --> 00:03:08,560 Speaker 1: story is a bit of a pain trade right now. 60 00:03:08,720 --> 00:03:11,400 Speaker 1: I was looking at tens the US versus Germany on 61 00:03:11,480 --> 00:03:15,160 Speaker 1: a ten year maturity, fresh whites, fresh multi decade whites, 62 00:03:15,200 --> 00:03:18,520 Speaker 1: and everyone's looking for that convergence to push up euro dollar, 63 00:03:18,560 --> 00:03:20,639 Speaker 1: for rates to move in the euro's favorite you saying 64 00:03:20,680 --> 00:03:22,639 Speaker 1: that's not going to happen. It doesn't feel like but 65 00:03:22,760 --> 00:03:25,040 Speaker 1: you know what's weird. Even just yesterday we had a 66 00:03:25,120 --> 00:03:27,119 Speaker 1: push up in US yells. You you know, Tom's talking 67 00:03:27,120 --> 00:03:29,120 Speaker 1: about it, You've talked about it, and the dollar didn't 68 00:03:29,440 --> 00:03:33,160 Speaker 1: move with it, and it's created a twitchiness I think 69 00:03:33,200 --> 00:03:34,880 Speaker 1: in the market that are we for a rerun of 70 00:03:34,920 --> 00:03:37,400 Speaker 1: twenty seventeen? You know, are we for a rerun where 71 00:03:38,040 --> 00:03:39,920 Speaker 1: rates seem to say the dollars going hird but the 72 00:03:39,960 --> 00:03:43,080 Speaker 1: dollar is not going Asker is just critical And the 73 00:03:43,240 --> 00:03:47,080 Speaker 1: idea here, the yield, folks of the United States and John, 74 00:03:47,120 --> 00:03:49,840 Speaker 1: when you take Germany is compared to the yield of 75 00:03:50,000 --> 00:03:54,640 Speaker 1: Germany is as wide as it's bend since basically time began, 76 00:03:54,920 --> 00:03:58,640 Speaker 1: since records began. Whatever majority it's two d and fifty 77 00:03:58,720 --> 00:04:04,040 Speaker 1: nine bases dreams instability, right, I mean the Green Book 78 00:04:04,040 --> 00:04:07,480 Speaker 1: of the I m F. It screams instability. Right, Well, 79 00:04:07,560 --> 00:04:10,040 Speaker 1: certainly screams divergence. I mean, honestly, you could you could 80 00:04:10,040 --> 00:04:12,560 Speaker 1: say that that's as much as we're seeing. But what 81 00:04:12,720 --> 00:04:14,880 Speaker 1: it what it points to me is, you know, the 82 00:04:15,240 --> 00:04:17,800 Speaker 1: FED is delivering and the ECB is snow playing, snow 83 00:04:17,839 --> 00:04:21,200 Speaker 1: plowing red expectations further and further into the future, as 84 00:04:21,240 --> 00:04:24,760 Speaker 1: there are many other central banks. So it's a peculiar divergence. 85 00:04:24,960 --> 00:04:26,680 Speaker 1: But and I think when the market always sat would 86 00:04:26,680 --> 00:04:29,279 Speaker 1: close and it just hasn't happened such on something important. 87 00:04:29,320 --> 00:04:33,960 Speaker 1: In seventeen, great differentials weren't the dominant story driving euro dollar. 88 00:04:34,279 --> 00:04:36,640 Speaker 1: Why is twenty eighteen different? Why does it stay different? 89 00:04:37,120 --> 00:04:38,799 Speaker 1: I think, well, one of the reasons it was different 90 00:04:38,839 --> 00:04:41,040 Speaker 1: in twenty seventeen was, if you remember, inflation in the 91 00:04:41,160 --> 00:04:44,160 Speaker 1: US was undershooting, but the FED were still able to 92 00:04:44,279 --> 00:04:46,840 Speaker 1: tighten because the dollar was weaker. You know, there was 93 00:04:46,839 --> 00:04:48,880 Speaker 1: an offset there in terms of what it did to 94 00:04:49,000 --> 00:04:53,200 Speaker 1: monetary conditions. At the moment, it feels different because you 95 00:04:53,240 --> 00:04:56,040 Speaker 1: obviously don't have inflation undershooting. The US economy is is 96 00:04:56,080 --> 00:04:59,760 Speaker 1: growing pretty strongly, and whereas in the Eurozone core inflation. 97 00:05:01,760 --> 00:05:04,560 Speaker 1: So I think that's the key difference. And also I 98 00:05:04,600 --> 00:05:07,240 Speaker 1: think in terms of how the markets position in the 99 00:05:07,279 --> 00:05:09,800 Speaker 1: market thought the dollars should be stronger and great differentials, 100 00:05:09,880 --> 00:05:11,560 Speaker 1: and it wasn't, so they got killed. And now I 101 00:05:11,640 --> 00:05:14,280 Speaker 1: think you shouldn't be where's your big figure call right now? 102 00:05:14,360 --> 00:05:16,000 Speaker 1: I mean dollar And you say, yen is not going 103 00:05:16,040 --> 00:05:18,280 Speaker 1: to move that much versus the dollar. But if I 104 00:05:18,400 --> 00:05:20,920 Speaker 1: really want to make a big figure opportunity, which e 105 00:05:21,200 --> 00:05:24,080 Speaker 1: M is the one that's most vulnerable as compared to 106 00:05:24,200 --> 00:05:27,120 Speaker 1: dollar strength. Honestly, Tom is gonna be the usual suspects. 107 00:05:27,120 --> 00:05:30,560 Speaker 1: It's Argentina, It's Brazil. Argentina at a forty and it 108 00:05:30,640 --> 00:05:32,960 Speaker 1: hasn't given it back. It's going to move out to 109 00:05:33,080 --> 00:05:37,000 Speaker 1: even week we got it at fifty five zero big figures. Yeah, 110 00:05:37,320 --> 00:05:40,120 Speaker 1: I mean bear in mind, look that's what moved, but 111 00:05:40,400 --> 00:05:42,919 Speaker 1: a lot of that inflation. That's important for John Ferrell 112 00:05:42,960 --> 00:05:46,520 Speaker 1: because it's usually leverage seven to one. I thought we 113 00:05:46,600 --> 00:05:49,520 Speaker 1: were both in an all cash portfolio. The leverage cash portfolio. 114 00:05:50,080 --> 00:05:53,839 Speaker 1: That's what I'm in, the double leverage in the leverage. 115 00:05:55,480 --> 00:05:57,440 Speaker 1: Could see a bit of risk appetite around the around 116 00:05:57,480 --> 00:06:02,119 Speaker 1: the tableaun sounds and risk appetite irimple effects surveillance Darrek 117 00:06:02,200 --> 00:06:04,120 Speaker 1: just looking at the situation in the United States, there 118 00:06:04,160 --> 00:06:07,080 Speaker 1: was a fear through seventeen that high yields would be 119 00:06:07,120 --> 00:06:09,120 Speaker 1: accompanied by a week of dollar. That's the dynamic we 120 00:06:09,200 --> 00:06:11,200 Speaker 1: see right now. And I think the narrative that's going 121 00:06:11,240 --> 00:06:13,880 Speaker 1: to quickly emerge, and I've already hearing it, is that 122 00:06:14,000 --> 00:06:17,160 Speaker 1: to finance the fiscal deficit in the United States, to 123 00:06:17,320 --> 00:06:20,080 Speaker 1: attract the foreign capital, you can have one or the 124 00:06:20,160 --> 00:06:22,840 Speaker 1: other or both. And essentially it's high yields and a 125 00:06:22,920 --> 00:06:24,960 Speaker 1: weaker dollar, and the weaker dollar is going to what 126 00:06:25,120 --> 00:06:27,440 Speaker 1: what is going to be what it takes to attract 127 00:06:27,520 --> 00:06:30,160 Speaker 1: the foreign capital. Does that narrative start to emerge again? 128 00:06:30,640 --> 00:06:33,920 Speaker 1: It could, it could, but it's the structural story that 129 00:06:34,120 --> 00:06:36,120 Speaker 1: So this is the thing that that's the structural line 130 00:06:36,200 --> 00:06:38,760 Speaker 1: on a on a fiscal deficit. The cyclical line on 131 00:06:38,800 --> 00:06:41,839 Speaker 1: a fiscal deficit is, hey, it's given us tremendous growth. 132 00:06:42,400 --> 00:06:45,840 Speaker 1: It's inflationary, it's supporting affair that wants to tighten through 133 00:06:45,880 --> 00:06:48,640 Speaker 1: neutral it will force the rates market to say, actually, 134 00:06:48,680 --> 00:06:51,040 Speaker 1: they're going to deliver. So look there is so there 135 00:06:51,120 --> 00:06:52,960 Speaker 1: is an offset, and you have to decide which one 136 00:06:53,040 --> 00:06:54,840 Speaker 1: is going to be dominant. I mean, to my opinion, 137 00:06:55,080 --> 00:06:56,960 Speaker 1: and the evidence of the last few months has been 138 00:06:57,000 --> 00:06:59,240 Speaker 1: the cyclical side of that equation is the dominant one, 139 00:06:59,279 --> 00:07:03,359 Speaker 1: the structure one really in the background. Well with within 140 00:07:03,480 --> 00:07:06,160 Speaker 1: this and again you know the strong dollar call. Can 141 00:07:06,240 --> 00:07:10,679 Speaker 1: you fold it into equity markets, HSBC. We talked about 142 00:07:10,760 --> 00:07:13,400 Speaker 1: Steve Major, we talked about Derrenyer, but bring it over 143 00:07:13,480 --> 00:07:16,520 Speaker 1: to equity markets and what it means. Well for me, 144 00:07:16,720 --> 00:07:18,600 Speaker 1: what it means is I'm going to see a lot 145 00:07:18,640 --> 00:07:20,640 Speaker 1: more equity clients. You know, they used to be the 146 00:07:20,680 --> 00:07:22,360 Speaker 1: time where I go out marketing and I just see 147 00:07:22,360 --> 00:07:24,160 Speaker 1: a bond guy or just see an FX guy. Now 148 00:07:24,320 --> 00:07:26,200 Speaker 1: the equity fund managers want to speak to me because 149 00:07:26,200 --> 00:07:28,440 Speaker 1: they recognize that this is a swing fact, that this 150 00:07:28,520 --> 00:07:30,200 Speaker 1: could be a chief determinant. I don't want to call 151 00:07:30,240 --> 00:07:33,120 Speaker 1: the equity make the equity call, but that's definitely a 152 00:07:33,120 --> 00:07:36,800 Speaker 1: point of interest dying to get along, emerging market equities dying, 153 00:07:37,080 --> 00:07:40,680 Speaker 1: and a lot of most people. The prerequisite, the prerequisite 154 00:07:40,720 --> 00:07:43,400 Speaker 1: for that to succeed, as UBS pointed out, is a 155 00:07:43,480 --> 00:07:47,200 Speaker 1: weaker dollar coll dere HSBC. Thank you so much for 156 00:07:47,320 --> 00:08:02,360 Speaker 1: being with us today right now, uh speaking to us 157 00:08:02,400 --> 00:08:05,240 Speaker 1: on policy, Terry Haines, and as we do Terry All 158 00:08:05,360 --> 00:08:08,720 Speaker 1: policy in Washington bounces off the mood of the president, 159 00:08:09,320 --> 00:08:11,600 Speaker 1: which is on oil. It's too I do we have 160 00:08:11,720 --> 00:08:15,840 Speaker 1: a US energy policy inside the Beltway. I think the 161 00:08:15,960 --> 00:08:19,760 Speaker 1: energy policy would be expressed by the President and Republicans 162 00:08:19,800 --> 00:08:23,240 Speaker 1: as drill, baby, drill, and by the Democrats and don't 163 00:08:23,280 --> 00:08:25,120 Speaker 1: do any of that stuff. So we don't really. I mean, 164 00:08:25,160 --> 00:08:29,480 Speaker 1: I remember talking years ago to various secretaries of energy. 165 00:08:30,120 --> 00:08:32,120 Speaker 1: We I mean, I think it's a mystery of a 166 00:08:32,240 --> 00:08:35,760 Speaker 1: lot of people. We really don't have a view on 167 00:08:36,040 --> 00:08:38,320 Speaker 1: energy as a nation. It's just sort of left up 168 00:08:38,360 --> 00:08:41,360 Speaker 1: to private enterprise to figure it out. Right. Well, it is, yeah, 169 00:08:41,400 --> 00:08:44,920 Speaker 1: but in part because the circumstances have changed greatly. I mean, 170 00:08:45,200 --> 00:08:48,360 Speaker 1: people of of our vintage think of you know, energy 171 00:08:48,440 --> 00:08:50,400 Speaker 1: is scarce and all the rest and noworder the point 172 00:08:50,440 --> 00:08:54,080 Speaker 1: where the United States is a net exporter of oil 173 00:08:54,160 --> 00:08:56,480 Speaker 1: and the like. So it's a very different situation than 174 00:08:56,520 --> 00:08:58,360 Speaker 1: it was when that first got to got to be 175 00:08:58,400 --> 00:09:00,600 Speaker 1: the vogue. John, you go back ten twenty years here, 176 00:09:00,720 --> 00:09:03,160 Speaker 1: and it was just raging about energy, and a lot 177 00:09:03,200 --> 00:09:06,719 Speaker 1: of people would say the reason we succeeded because we 178 00:09:06,880 --> 00:09:10,199 Speaker 1: didn't have a Washington base. I remember I remember you 179 00:09:10,360 --> 00:09:15,319 Speaker 1: saying on Bloomberg Surveillance TV many many years ago, Saudi America. 180 00:09:15,679 --> 00:09:17,679 Speaker 1: Do you remember when we had the big shell boom 181 00:09:17,760 --> 00:09:20,599 Speaker 1: Saudi America and we started referring to the country as that. 182 00:09:21,000 --> 00:09:24,080 Speaker 1: And I just wanted to tell whether, I do whether 183 00:09:24,480 --> 00:09:28,000 Speaker 1: whether the United States is actually entitled to do its 184 00:09:28,080 --> 00:09:30,880 Speaker 1: best to influence the cartel which is opaque at a 185 00:09:31,000 --> 00:09:34,040 Speaker 1: time where actually the United States is a major oil 186 00:09:34,080 --> 00:09:37,520 Speaker 1: producer from one of the biggest on the planet entitled sure, 187 00:09:38,280 --> 00:09:41,439 Speaker 1: you know, the you know, the the bump up of 188 00:09:42,160 --> 00:09:46,160 Speaker 1: the sovereign nations and trading blocks is always open for 189 00:09:47,480 --> 00:09:50,120 Speaker 1: for influence. So yeah, absolutely, why not? It just seems 190 00:09:50,160 --> 00:09:52,880 Speaker 1: that the president is also intent on trading foreign policy 191 00:09:53,240 --> 00:09:55,160 Speaker 1: for help on the eco side. We saw that with 192 00:09:55,280 --> 00:09:57,080 Speaker 1: China in North Korea. Is that what we're seeing now 193 00:09:57,160 --> 00:09:59,280 Speaker 1: with Saudi Arabia and the Middle East? Yeah? I think 194 00:09:59,320 --> 00:10:01,440 Speaker 1: a little bit. But and again I think that's always 195 00:10:01,480 --> 00:10:04,679 Speaker 1: been true to the uh. You know, geopolitics always plays 196 00:10:04,679 --> 00:10:07,920 Speaker 1: a role in the in the domestic policies of the 197 00:10:08,040 --> 00:10:11,000 Speaker 1: United States, and that's no less true today. What are 198 00:10:11,040 --> 00:10:12,920 Speaker 1: you looking at? I want to ask an open question here. 199 00:10:12,960 --> 00:10:16,280 Speaker 1: You're a grizzled veteran of the Washington scene. You've um, 200 00:10:16,720 --> 00:10:18,360 Speaker 1: You've got a brass plaque on a chair at the 201 00:10:18,360 --> 00:10:21,679 Speaker 1: hay Adams right lunch, you know, in the lunch room 202 00:10:21,720 --> 00:10:25,040 Speaker 1: there my door, they Hay Adams. But no, well they 203 00:10:25,120 --> 00:10:27,439 Speaker 1: do a good sale. The ice tea is everyone in 204 00:10:27,480 --> 00:10:29,199 Speaker 1: the room, John, you're going to Hey Adams. Are sixty 205 00:10:29,280 --> 00:10:34,240 Speaker 1: hitters in the room. Oh man, Hey Adams? Is we 206 00:10:34,280 --> 00:10:37,320 Speaker 1: could go an hour on the joint house of Hay 207 00:10:37,480 --> 00:10:41,400 Speaker 1: and Adams. John hay are iconic Secretary State Panama Canal 208 00:10:41,480 --> 00:10:45,080 Speaker 1: and all that tore it down and they build a hotel. Okay, 209 00:10:45,160 --> 00:10:48,760 Speaker 1: and that's where guys like Terry Haynes go. No, No, 210 00:10:48,840 --> 00:10:51,400 Speaker 1: I've never been there, you know, don't. Redd O, keeper 211 00:10:51,400 --> 00:10:53,640 Speaker 1: of the m X is listening to this. But at 212 00:10:53,679 --> 00:10:55,679 Speaker 1: the Hay Adams, what are they talking about right now 213 00:10:55,960 --> 00:10:59,480 Speaker 1: into the election? What's the theme? Open question? Terry Haynes. 214 00:11:00,080 --> 00:11:03,800 Speaker 1: The Well, the theme is that the the result is 215 00:11:03,920 --> 00:11:06,439 Speaker 1: very very uncertain. You know, you've got it, I would say, 216 00:11:06,520 --> 00:11:08,679 Speaker 1: both ways, Oh yeah, absolutely. I mean you've got a 217 00:11:08,720 --> 00:11:10,920 Speaker 1: very evenly divided country and and you know this this 218 00:11:11,040 --> 00:11:12,920 Speaker 1: plays out. You can see this playing out a lot 219 00:11:12,960 --> 00:11:16,400 Speaker 1: of ways in public from individual races to the kavan 220 00:11:16,480 --> 00:11:19,079 Speaker 1: on matter all kinds of things where uh, you know, 221 00:11:19,160 --> 00:11:22,400 Speaker 1: a very evenly divided country and a very evenly divided Congress, 222 00:11:22,480 --> 00:11:25,800 Speaker 1: and uh, and these parties are pushing forward and backward 223 00:11:25,840 --> 00:11:29,120 Speaker 1: against each other very strongly, and with a you know, 224 00:11:29,200 --> 00:11:31,520 Speaker 1: with a very open question about who's going to prevail 225 00:11:31,600 --> 00:11:33,839 Speaker 1: from speaking to many investors on a regular basis and 226 00:11:33,880 --> 00:11:36,000 Speaker 1: getting in touch with what our audience really cares about. 227 00:11:36,040 --> 00:11:38,160 Speaker 1: I think the number one thing that many people listening 228 00:11:38,520 --> 00:11:41,320 Speaker 1: right now worried about who have money in this market 229 00:11:41,800 --> 00:11:44,640 Speaker 1: is the prospect for policy rollback. What is the prospect 230 00:11:44,679 --> 00:11:47,720 Speaker 1: of policy rollback? And talk to me about that through 231 00:11:47,800 --> 00:11:50,360 Speaker 1: the prism of the midterms coming up. Yeah, of course, 232 00:11:50,559 --> 00:11:56,000 Speaker 1: the the short answer is that policy rollback is very 233 00:11:56,200 --> 00:11:59,319 Speaker 1: very unlikely in any of the three scenarios. And today 234 00:11:59,440 --> 00:12:02,760 Speaker 1: I have as my six base case a very small 235 00:12:02,800 --> 00:12:05,280 Speaker 1: Democratic majority in the House of ten seats are less 236 00:12:05,960 --> 00:12:10,000 Speaker 1: a slightly increased Republican Senate. In that circumstance, I think 237 00:12:10,040 --> 00:12:13,600 Speaker 1: how markets will will react initially is a concern about 238 00:12:13,640 --> 00:12:15,920 Speaker 1: whether or not there will be policy rollback, and they 239 00:12:15,960 --> 00:12:20,319 Speaker 1: will they will understand very quickly that that is not possible. 240 00:12:21,160 --> 00:12:24,840 Speaker 1: In a first of all, in a divided government, but secondly, 241 00:12:25,000 --> 00:12:28,400 Speaker 1: where the Democrats themselves are going to be riven between 242 00:12:28,880 --> 00:12:33,439 Speaker 1: progressives and centrists, to the centrist will probably be responsible 243 00:12:33,520 --> 00:12:36,440 Speaker 1: for giving them the small majority. Uh. And a lot 244 00:12:36,520 --> 00:12:39,679 Speaker 1: of those people are much more business friendly. Uh. They 245 00:12:39,760 --> 00:12:43,720 Speaker 1: are many of them pledged not to vote for Nancy 246 00:12:43,760 --> 00:12:46,920 Speaker 1: Pelosi's speaker, that sort of thing. So I think that 247 00:12:47,080 --> 00:12:49,319 Speaker 1: there there will be an understanding very early on that 248 00:12:49,480 --> 00:12:53,079 Speaker 1: divided government will not roll back anything. It won't It 249 00:12:53,160 --> 00:12:55,880 Speaker 1: won't allow for another uh well you know, tax bill 250 00:12:55,960 --> 00:12:57,960 Speaker 1: or anything like that. But there won't be a rollback, 251 00:12:58,000 --> 00:13:00,319 Speaker 1: and it will stay away from impeachment and all the 252 00:13:00,400 --> 00:13:04,240 Speaker 1: other you know, the stirma daying of cable news. You're 253 00:13:04,320 --> 00:13:10,079 Speaker 1: suggesting that the new Democrats will lessen or dampen the 254 00:13:10,240 --> 00:13:14,880 Speaker 1: progressive Democrats need to get things done if the House 255 00:13:15,000 --> 00:13:18,400 Speaker 1: takes over. I am interesting. What kind of Democrats are 256 00:13:18,440 --> 00:13:22,520 Speaker 1: these new Democrats? Are these Scoop Jacks and Hubert Humphrey Democrats? 257 00:13:22,960 --> 00:13:25,000 Speaker 1: Are they a new breed? I would suggest they're a 258 00:13:25,040 --> 00:13:27,959 Speaker 1: new breed. It's it's it's the nostalgia we have for 259 00:13:28,120 --> 00:13:31,520 Speaker 1: maybe a middle ground Republican and Democrat from another time. 260 00:13:31,840 --> 00:13:34,480 Speaker 1: But it's not the same as it It's not the same, 261 00:13:34,600 --> 00:13:39,240 Speaker 1: but there there are there are similarities. Uh, a lot 262 00:13:39,320 --> 00:13:41,680 Speaker 1: of people on the coast. And again nothing against the coasts, 263 00:13:42,280 --> 00:13:44,840 Speaker 1: but go ahead, I can see the ocean. I mean, 264 00:13:44,920 --> 00:13:48,079 Speaker 1: not not nothing. It's a coast. But the coasts think 265 00:13:48,120 --> 00:13:51,599 Speaker 1: that somebody like Ocasio Cortez here in Queens is a 266 00:13:51,679 --> 00:13:54,800 Speaker 1: big story. Whatever else that is. That is not a 267 00:13:54,920 --> 00:13:58,040 Speaker 1: Democratic pickup. That is somebody who that That is somebody 268 00:13:58,120 --> 00:14:01,280 Speaker 1: who is replacing another Democrat. The people who are going 269 00:14:01,320 --> 00:14:03,920 Speaker 1: to be responsible for the pickups are people like who 270 00:14:04,000 --> 00:14:07,599 Speaker 1: we saw in the March special election in western Pennsylvania 271 00:14:07,720 --> 00:14:10,679 Speaker 1: Shape Country, Connor Lamb. These are people who are trying 272 00:14:10,679 --> 00:14:14,400 Speaker 1: to actually represent the views of their districts. And somebody 273 00:14:14,480 --> 00:14:17,679 Speaker 1: like Lamb is you know, not Pelosi Second Amendment pro 274 00:14:17,880 --> 00:14:19,800 Speaker 1: all that. I want to bring this right over to England. 275 00:14:19,960 --> 00:14:22,840 Speaker 1: Can there be labor pickups in conservative I mean, I 276 00:14:22,960 --> 00:14:26,880 Speaker 1: think Terry's observation in America is really a can labor 277 00:14:27,040 --> 00:14:29,720 Speaker 1: take a seat from conservatives? The interesting thing about the 278 00:14:29,800 --> 00:14:32,360 Speaker 1: United Kingdom right now is not a traditional left right 279 00:14:32,360 --> 00:14:37,480 Speaker 1: split anymoxact. It's very much about nationalism and populism. Versus globalism, 280 00:14:37,560 --> 00:14:40,240 Speaker 1: and that traditionally does not go through left wing right 281 00:14:40,280 --> 00:14:42,880 Speaker 1: wing lines. I mean that's changed, that's changed massively in 282 00:14:42,920 --> 00:14:45,520 Speaker 1: the political landscape in the UK has changed because of that. 283 00:14:45,880 --> 00:14:47,360 Speaker 1: But I think Terry, what you pick up on is 284 00:14:47,400 --> 00:14:50,200 Speaker 1: really important. Many of our listeners are worried about a 285 00:14:50,600 --> 00:14:54,080 Speaker 1: massive radical shift to the left. Um are you saying 286 00:14:54,160 --> 00:14:56,480 Speaker 1: the socialists that are out there right now promising everyone 287 00:14:56,520 --> 00:14:59,240 Speaker 1: of free pony, unfunded, They're not gonna make it. They're 288 00:14:59,280 --> 00:15:02,040 Speaker 1: not going to change the Democrat Party. I am saying that. 289 00:15:02,200 --> 00:15:05,080 Speaker 1: I think I think the Sanders moment has passed. I 290 00:15:05,160 --> 00:15:07,680 Speaker 1: think there are is certainly passion for those those points 291 00:15:07,720 --> 00:15:10,880 Speaker 1: of view in pockets of the country, in the in 292 00:15:10,960 --> 00:15:13,840 Speaker 1: the northeast and in the coast. But what's going to 293 00:15:13,920 --> 00:15:17,760 Speaker 1: bring Democrats majorities in in a continuation as a viable 294 00:15:17,840 --> 00:15:20,960 Speaker 1: party are going to be the Centrists who don't share 295 00:15:21,000 --> 00:15:23,960 Speaker 1: those views. Fascinating stuff, Tom, I think this is really 296 00:15:24,000 --> 00:15:26,480 Speaker 1: really important. And I also think it goes to Terry's 297 00:15:26,520 --> 00:15:29,240 Speaker 1: point that on the coast, and I will speak for London, 298 00:15:29,320 --> 00:15:31,920 Speaker 1: this happened in the United Kingdom. When you're in London 299 00:15:32,320 --> 00:15:35,160 Speaker 1: and you were reporting on a story like Brexit, whatever 300 00:15:35,240 --> 00:15:37,480 Speaker 1: it might be. You were surrounded by a certain group 301 00:15:37,520 --> 00:15:39,840 Speaker 1: of people and you have literally no idea what is 302 00:15:39,840 --> 00:15:41,560 Speaker 1: happening in the rest of the country. And when we 303 00:15:41,640 --> 00:15:43,920 Speaker 1: were going through the Brexit vote, I remember going literally 304 00:15:43,960 --> 00:15:46,280 Speaker 1: a couple of hours outside the capital back home to 305 00:15:46,360 --> 00:15:47,800 Speaker 1: the Midlands just to sit in the pub with my 306 00:15:47,920 --> 00:15:50,480 Speaker 1: friends to get their thoughts on Brexit. And guess what, 307 00:15:50,760 --> 00:15:53,200 Speaker 1: they had a very very different view on the future 308 00:15:53,240 --> 00:15:56,400 Speaker 1: of the country to my friends down when the cosmopolitan 309 00:15:56,680 --> 00:15:59,280 Speaker 1: home of the elites in the capital of the country, 310 00:15:59,400 --> 00:16:01,600 Speaker 1: it's a very very different scene. And here in New 311 00:16:01,680 --> 00:16:05,280 Speaker 1: York you do get this idea that somehow the socialist 312 00:16:05,320 --> 00:16:07,280 Speaker 1: and the Democrat wing are going to come out and 313 00:16:07,360 --> 00:16:10,760 Speaker 1: revolutionize the party, um terry. You just need to travel 314 00:16:10,800 --> 00:16:12,560 Speaker 1: out to the rest of America, don't you to get 315 00:16:12,600 --> 00:16:16,400 Speaker 1: an idea of what's really going on? Oh? I think so, yeah, absolutely, 316 00:16:16,640 --> 00:16:20,040 Speaker 1: Uh yeah. A lot of politics today to me looks 317 00:16:20,120 --> 00:16:23,960 Speaker 1: like the old joke about university faculty politics. The uh 318 00:16:25,640 --> 00:16:27,880 Speaker 1: the fight is so vicious because the issues are so small. 319 00:16:28,240 --> 00:16:31,680 Speaker 1: Uh So, there's an aspect of that, but it is 320 00:16:31,720 --> 00:16:34,640 Speaker 1: by no means true that what what the coasts care 321 00:16:34,720 --> 00:16:37,600 Speaker 1: about is is what anybody else cares about here, Terry, 322 00:16:37,800 --> 00:16:41,240 Speaker 1: thank you so much whatever I s I greatly appreciate 323 00:16:41,360 --> 00:16:55,200 Speaker 1: this morning. Joining us now is Snolly Bassika Bloomberg to 324 00:16:55,280 --> 00:16:58,720 Speaker 1: tell us all about Canna Fitzgerald and how they have 325 00:16:58,920 --> 00:17:02,920 Speaker 1: really change their their entire business and all. It's always 326 00:17:02,920 --> 00:17:05,800 Speaker 1: a pleasure tell us about this story about Howard Lutnick 327 00:17:06,160 --> 00:17:10,240 Speaker 1: and how he turned Cantor Fitzgerald into this big little guy, 328 00:17:10,480 --> 00:17:13,560 Speaker 1: big little guy. Absolutely, it's been a real interesting journey 329 00:17:13,640 --> 00:17:16,760 Speaker 1: to watch. I was sitting there last New Year's Day 330 00:17:17,240 --> 00:17:19,720 Speaker 1: when on show Jaine, the former CITYO of Deutsche Bank, 331 00:17:19,960 --> 00:17:22,760 Speaker 1: joined and we were sitting there thinking, what's the plan, 332 00:17:22,960 --> 00:17:26,600 Speaker 1: what's going on? And since then they've hired some of um, 333 00:17:26,680 --> 00:17:29,960 Speaker 1: the you know, really really prominent traders on Wall Street, 334 00:17:30,280 --> 00:17:32,760 Speaker 1: sometimes paying more than ten million dollars a piece to 335 00:17:32,840 --> 00:17:35,680 Speaker 1: bring them over from Credit SUITEZ or JP Morgan, and 336 00:17:36,040 --> 00:17:38,560 Speaker 1: we saw them rebuilding trading desks and we found out 337 00:17:39,000 --> 00:17:41,879 Speaker 1: through series of filings that he's a billionaire. Um, so 338 00:17:41,960 --> 00:17:45,240 Speaker 1: it's the first time Howard Lutnik is a billionaire. UM. 339 00:17:45,480 --> 00:17:48,919 Speaker 1: You know, people suspected, but nobody knew. And now um, 340 00:17:49,040 --> 00:17:51,920 Speaker 1: we know that his stake in Candor Fitzgerald has grown 341 00:17:52,000 --> 00:17:54,800 Speaker 1: to more than about sixty and so you know, he 342 00:17:54,880 --> 00:17:57,600 Speaker 1: owns most of the thing, and now he's also spending 343 00:17:57,680 --> 00:18:01,080 Speaker 1: hundreds of millions of his own dollar lers to push 344 00:18:01,119 --> 00:18:04,440 Speaker 1: it into new businesses, including prime brokerage. And they're financing 345 00:18:04,480 --> 00:18:07,120 Speaker 1: hedge funds, especially smaller hedge funds at the largest banks 346 00:18:07,119 --> 00:18:09,800 Speaker 1: are not really taking on Why why is he making 347 00:18:09,880 --> 00:18:13,280 Speaker 1: that push into those particular areas and maybe you could 348 00:18:13,359 --> 00:18:17,680 Speaker 1: just describe what has been their main focus absolutely so, um, 349 00:18:17,840 --> 00:18:19,960 Speaker 1: you know, prime brokerage is an area on Wall Street 350 00:18:20,080 --> 00:18:22,159 Speaker 1: that um, you know, the larger it takes a lot 351 00:18:22,240 --> 00:18:24,560 Speaker 1: of risk, right, you do have to lend these hedge 352 00:18:24,560 --> 00:18:27,320 Speaker 1: funds a significant amount of money. And you know, talent 353 00:18:27,600 --> 00:18:29,800 Speaker 1: really has been moving around on Wall Street quite a bit. 354 00:18:30,119 --> 00:18:31,840 Speaker 1: So it's a good time for him to you know, 355 00:18:31,960 --> 00:18:34,199 Speaker 1: take a lot of people who are disgruntled at JPMorgan 356 00:18:34,359 --> 00:18:37,280 Speaker 1: or disgruntled that Credit Suites, or discruntled that Bank of America, 357 00:18:37,760 --> 00:18:40,080 Speaker 1: UM who where they don't want you know, they're they're 358 00:18:40,119 --> 00:18:43,080 Speaker 1: really discerning about how they're spending their balance sheets. What's 359 00:18:43,080 --> 00:18:44,760 Speaker 1: interesting here is we spent a lot of time about 360 00:18:44,800 --> 00:18:47,680 Speaker 1: the future of Deutsche Bank or future of big European platforms. 361 00:18:47,720 --> 00:18:51,399 Speaker 1: Here's a smaller firm everyone I think, including Hardwood degree. 362 00:18:51,400 --> 00:18:56,280 Speaker 1: It's very entrepreneurial, almost quartered a quarter definitely year to year. 363 00:18:56,920 --> 00:19:00,440 Speaker 1: Where do they fit in in New York? Not a 364 00:19:00,520 --> 00:19:04,639 Speaker 1: regional decidedly. Where do they slot in with the names 365 00:19:04,720 --> 00:19:07,280 Speaker 1: we know better? Well, for one thing, they're actually located 366 00:19:07,320 --> 00:19:10,119 Speaker 1: across the street from Bloomberg's offices. They fit in and 367 00:19:10,240 --> 00:19:12,560 Speaker 1: they actually are right there. But they also, you know, 368 00:19:12,640 --> 00:19:14,199 Speaker 1: you were talking about the big guys, they don't want 369 00:19:14,240 --> 00:19:16,719 Speaker 1: to be one of the big guys. What they want 370 00:19:16,760 --> 00:19:18,480 Speaker 1: to be the biggest little guy. They wanna you know. 371 00:19:18,600 --> 00:19:20,520 Speaker 1: The one thing that he kept saying was he wants 372 00:19:20,560 --> 00:19:22,040 Speaker 1: to be on a certain side, one side of the 373 00:19:22,080 --> 00:19:26,240 Speaker 1: Grand Canyon, not the other. His biggest rival is Jefferies. Ironically, 374 00:19:26,520 --> 00:19:30,760 Speaker 1: he's stolen dozens of bankers from Jeffreys in the last 375 00:19:30,880 --> 00:19:33,639 Speaker 1: year year and a half. UM. Most recently he's um, 376 00:19:33,840 --> 00:19:38,240 Speaker 1: you know, took over twenty four power and energy bankers 377 00:19:38,280 --> 00:19:41,000 Speaker 1: to build out an entirely new power and energy team. 378 00:19:41,560 --> 00:19:45,000 Speaker 1: They're UM working a lot on convertible bond offerings as well, 379 00:19:45,240 --> 00:19:48,800 Speaker 1: so esoteric things that you know, you need specialized talent for. 380 00:19:49,840 --> 00:19:51,639 Speaker 1: He also wants to get into real estate, or I 381 00:19:51,680 --> 00:19:53,640 Speaker 1: guess he already is in real estate, but he wants 382 00:19:53,680 --> 00:19:55,480 Speaker 1: to get into real estate in a bigger way. Yes, 383 00:19:55,560 --> 00:19:58,280 Speaker 1: people forget that b GC is part of the cantor Um. 384 00:19:58,359 --> 00:20:01,440 Speaker 1: You know, Howard Lutnox Empire. There's b GC and Newmark 385 00:20:01,840 --> 00:20:05,520 Speaker 1: and those contribute significantly to his um wealth and and 386 00:20:05,880 --> 00:20:07,879 Speaker 1: you know to what he's really building. And all the 387 00:20:07,920 --> 00:20:10,880 Speaker 1: pieces kind of fit together in a not so obvious way. 388 00:20:11,359 --> 00:20:14,440 Speaker 1: But um, you know he he does have these huge 389 00:20:14,480 --> 00:20:17,879 Speaker 1: real estate platforms where he wants to own the entire 390 00:20:18,160 --> 00:20:22,399 Speaker 1: structure of the financing of real estate. A little bit 391 00:20:22,480 --> 00:20:25,639 Speaker 1: on the history of Canador Fitzgerald, and we always have 392 00:20:25,760 --> 00:20:28,320 Speaker 1: to mention not eleven when we think of it. It 393 00:20:29,320 --> 00:20:33,840 Speaker 1: is everywhere in Canador Fitzgerald. Um, Howard's office and it's 394 00:20:34,000 --> 00:20:36,360 Speaker 1: you know, studded throughout this entire story. But you walk 395 00:20:36,440 --> 00:20:38,919 Speaker 1: in and their steel plates from the building. Um, there 396 00:20:38,960 --> 00:20:42,720 Speaker 1: are pictures of people He's lost. And yeah, the Candorfitsgerald 397 00:20:42,840 --> 00:20:46,159 Speaker 1: charity day, you know Tom was there. You you go 398 00:20:46,560 --> 00:20:49,879 Speaker 1: and you know there's a ton of celebrities and and 399 00:20:50,119 --> 00:20:54,200 Speaker 1: they're raising money and but you know, I'm not there 400 00:20:54,280 --> 00:20:56,119 Speaker 1: like a celebrity. They just want me to teach the 401 00:20:56,200 --> 00:20:58,520 Speaker 1: new guys how to log on, you know, that's all. 402 00:20:58,680 --> 00:21:01,359 Speaker 1: It's like a It's like al. What's great about a 403 00:21:01,440 --> 00:21:04,320 Speaker 1: PIM is there's a lot of these other charity days, 404 00:21:04,560 --> 00:21:08,399 Speaker 1: you know, they're they're all wonderful. What's amazing what Lutnick 405 00:21:08,440 --> 00:21:11,720 Speaker 1: has done is its sustained. You know, you knew it 406 00:21:11,720 --> 00:21:13,960 Speaker 1: would be good for one or two years. It's actually 407 00:21:14,080 --> 00:21:18,440 Speaker 1: gotten better over the years. Steve Bsming and others have 408 00:21:18,640 --> 00:21:22,520 Speaker 1: really made the true celebrities have really made a commitment 409 00:21:22,560 --> 00:21:25,480 Speaker 1: to this, which is great. But what's the nature of 410 00:21:25,680 --> 00:21:28,240 Speaker 1: the billion? Is a billion a nature of a cycle 411 00:21:28,359 --> 00:21:31,520 Speaker 1: of the market or is there a sustainability to Mr 412 00:21:31,640 --> 00:21:34,840 Speaker 1: Lutnick's newfound wealth? Well that's the question. I mean, he's 413 00:21:34,880 --> 00:21:37,160 Speaker 1: well over a billion, so I think it'll be sustained. 414 00:21:37,320 --> 00:21:42,879 Speaker 1: But you know that's you know, and and so um 415 00:21:43,200 --> 00:21:45,840 Speaker 1: the question is and you know he has some headwinds 416 00:21:45,920 --> 00:21:48,240 Speaker 1: on his side, for example, and getting into the hedge 417 00:21:48,240 --> 00:21:50,640 Speaker 1: one universe at a time when volatility is coming back 418 00:21:51,359 --> 00:21:53,879 Speaker 1: could be a good bet. Okay, how's to read of 419 00:21:53,920 --> 00:21:55,800 Speaker 1: the day For New York Wall Street? I would suggest 420 00:21:55,840 --> 00:21:59,320 Speaker 1: for Global Wall Street as well, Mr. Lutnick and Kentor 421 00:21:59,440 --> 00:22:02,720 Speaker 1: fitzger Old. It is penned, it is quilled, as they 422 00:22:03,240 --> 00:22:07,000 Speaker 1: say in print, Tom at Kevin Sinelli, bask As well Bloomer, 423 00:22:07,000 --> 00:22:08,760 Speaker 1: you'll see that. I'll get it out on social here 424 00:22:09,160 --> 00:22:23,440 Speaker 1: at some point Pim Fox and Tom Kane without question 425 00:22:23,600 --> 00:22:26,399 Speaker 1: or interview of the day on the equity markets, Douglas 426 00:22:26,520 --> 00:22:29,280 Speaker 1: cass Sea Breeze Partners, Doug we could talk for an 427 00:22:29,359 --> 00:22:33,080 Speaker 1: hour right now of the dynamics of fixed income versus equities. 428 00:22:33,480 --> 00:22:37,439 Speaker 1: Another hour on long Twitter, another hour on what shorts 429 00:22:37,520 --> 00:22:41,000 Speaker 1: could do. All that cut to the chase yields her up. 430 00:22:41,080 --> 00:22:44,040 Speaker 1: Alan Ruskin at Deutsche Bank says three point one three 431 00:22:44,119 --> 00:22:46,719 Speaker 1: percent is a tip point where three point zero eight 432 00:22:46,800 --> 00:22:51,200 Speaker 1: percent on the tenure yield. How much are rising yields 433 00:22:51,320 --> 00:22:56,399 Speaker 1: competition for the certitude of dividends and dividend growth. I 434 00:22:56,440 --> 00:22:59,760 Speaker 1: think our mutual friend Jason Trenter coined the term tina 435 00:22:59,840 --> 00:23:02,720 Speaker 1: that is a no alternative, and I say move over 436 00:23:02,800 --> 00:23:05,280 Speaker 1: team to look at sit A c I t A 437 00:23:05,440 --> 00:23:08,840 Speaker 1: cash as the alternative. To me, it's really amazing how 438 00:23:08,960 --> 00:23:12,680 Speaker 1: stocks are ignoring what you just described. You know, a 439 00:23:12,800 --> 00:23:18,600 Speaker 1: real rapid rate rise which is now becoming even more conspicuous. 440 00:23:19,200 --> 00:23:24,080 Speaker 1: You know my two, my two idols investment idols, Warren 441 00:23:24,160 --> 00:23:27,560 Speaker 1: Buffet and Leon Cooperman. I've been talking for years about 442 00:23:27,600 --> 00:23:30,960 Speaker 1: stocks being cheap relative to bond market yields, but that's 443 00:23:31,000 --> 00:23:33,879 Speaker 1: not true anymore. And if you look at the differential 444 00:23:34,240 --> 00:23:37,720 Speaker 1: between the three month Treasury bill rate two point two 445 00:23:38,680 --> 00:23:42,440 Speaker 1: versus the SMP yield at one point seven, so we're 446 00:23:42,440 --> 00:23:45,879 Speaker 1: at the largest spread, largest wide in a decade. So 447 00:23:46,040 --> 00:23:49,720 Speaker 1: buying overvalued stocks because bonds are even moreover valued, has 448 00:23:49,760 --> 00:23:53,040 Speaker 1: the feeling of choosing a less painful poison. How about 449 00:23:53,119 --> 00:23:55,800 Speaker 1: just being patient and not taking the poison at all? 450 00:23:56,560 --> 00:24:02,000 Speaker 1: Doug cast what of the notion, I'm sorry, what about 451 00:24:02,040 --> 00:24:05,960 Speaker 1: the notion of letting your winners run? You know, that's 452 00:24:06,000 --> 00:24:09,080 Speaker 1: approach that many take. I look at intrinsic value versus 453 00:24:09,160 --> 00:24:14,560 Speaker 1: share price value, and when those two things widen, when 454 00:24:14,640 --> 00:24:18,399 Speaker 1: stocks are cheap relative to intrinsic value or private market value, 455 00:24:18,440 --> 00:24:22,639 Speaker 1: I buy when there's a premium, as I believe is 456 00:24:22,680 --> 00:24:26,520 Speaker 1: the case now between share prices and the intrinsic value. 457 00:24:26,600 --> 00:24:28,560 Speaker 1: I short. So that leads me to being in a 458 00:24:28,640 --> 00:24:32,520 Speaker 1: short position. And if you're invested in an index, fund 459 00:24:33,119 --> 00:24:36,680 Speaker 1: SMP five over nine year to date. Do you take 460 00:24:36,760 --> 00:24:39,000 Speaker 1: your winnings, go home and wait for a better day. 461 00:24:39,760 --> 00:24:42,040 Speaker 1: I would. I think the the ingredients for a market 462 00:24:42,320 --> 00:24:45,960 Speaker 1: UM drop are now in place. Obviously you look at 463 00:24:46,040 --> 00:24:50,320 Speaker 1: til ray it's uh. It's indicative of over zealousness and 464 00:24:50,400 --> 00:24:52,960 Speaker 1: over abolitionists on the part of the retail investor. This 465 00:24:53,080 --> 00:24:57,280 Speaker 1: is the cannabis specultive activity we saw in early two thousand. 466 00:24:58,000 --> 00:25:01,320 Speaker 1: UM investor complacency is on the rise. I don't know 467 00:25:01,440 --> 00:25:04,440 Speaker 1: a soul pim save the perma bears who are looking 468 00:25:04,520 --> 00:25:07,639 Speaker 1: for anything like a large markdown in the market. Again, 469 00:25:07,720 --> 00:25:12,000 Speaker 1: we have rising interest rates, we have a whole possible No, Doug, 470 00:25:12,040 --> 00:25:13,920 Speaker 1: I don't. I don't mean interrupt, other than to say 471 00:25:14,080 --> 00:25:18,080 Speaker 1: I agree with you that the complacency is out there. 472 00:25:18,880 --> 00:25:24,719 Speaker 1: When do you institute shorts into a rising market? Well, 473 00:25:24,800 --> 00:25:27,080 Speaker 1: my approach, as you know, has always been to average 474 00:25:27,119 --> 00:25:30,480 Speaker 1: into positions both long and short. I don't believe I 475 00:25:30,600 --> 00:25:36,160 Speaker 1: have a concession on finding the absolute right entry price 476 00:25:36,280 --> 00:25:38,399 Speaker 1: level for both my longs and shorts. I've been in 477 00:25:38,440 --> 00:25:42,480 Speaker 1: the business for too many decades to realize that Mr 478 00:25:42,600 --> 00:25:46,040 Speaker 1: market UM, you know, UM beats the heck out of 479 00:25:46,080 --> 00:25:48,760 Speaker 1: all of us, So I average in and it's sort 480 00:25:48,800 --> 00:25:51,280 Speaker 1: of like the funnel. As prices go higher, I have 481 00:25:51,520 --> 00:25:55,040 Speaker 1: larger positions on the short side. And conversely, if prices 482 00:25:55,119 --> 00:25:58,879 Speaker 1: go lower in a bear market, UM, I have larger 483 00:25:58,960 --> 00:26:02,520 Speaker 1: lungs as a prices decline. I do think now that 484 00:26:03,240 --> 00:26:05,800 Speaker 1: you know, the first level thinking is how great the 485 00:26:05,880 --> 00:26:09,159 Speaker 1: economy is and how great corporate profits are. And I 486 00:26:09,240 --> 00:26:11,920 Speaker 1: guess I would say I'm at the polar opposite of 487 00:26:12,040 --> 00:26:14,480 Speaker 1: may West, who once said too much of a good 488 00:26:14,520 --> 00:26:18,280 Speaker 1: thing can be wonderful because there are second order impacts 489 00:26:18,359 --> 00:26:21,320 Speaker 1: on interest rates and inflation which affect the market and 490 00:26:21,720 --> 00:26:24,320 Speaker 1: the prime. If you if you study Graham and Dot, 491 00:26:24,520 --> 00:26:29,120 Speaker 1: you know that the core foundation evaluation is a dividend 492 00:26:29,160 --> 00:26:33,040 Speaker 1: discount model, and that includes an expectation of future cash 493 00:26:33,840 --> 00:26:36,800 Speaker 1: cash flow coupled with an appropriate indust rate. And that 494 00:26:36,920 --> 00:26:39,720 Speaker 1: interest rate, that discount factor or risky rate of return 495 00:26:40,160 --> 00:26:42,920 Speaker 1: is rising and now rising rapidly. Pim May West will 496 00:26:42,920 --> 00:26:45,920 Speaker 1: be that's in the eight o'clock hour tomorrow, Okay, along 497 00:26:45,960 --> 00:26:51,359 Speaker 1: with Doug cast. Is it expensive to hedge away along 498 00:26:51,480 --> 00:26:56,560 Speaker 1: portfolio right now? No, It's very cheap with the vics low, right, 499 00:26:56,600 --> 00:26:58,560 Speaker 1: So that would mean if you don't want to sell, 500 00:26:58,840 --> 00:27:02,280 Speaker 1: you can actually buy yourself some protection. You can buy protecting, 501 00:27:02,359 --> 00:27:05,840 Speaker 1: buy out of the money options for nothing. You find 502 00:27:05,880 --> 00:27:08,560 Speaker 1: that a lot of your investors are asking you to 503 00:27:08,640 --> 00:27:12,480 Speaker 1: do so. No, no, no, they know my predilection and 504 00:27:13,320 --> 00:27:17,920 Speaker 1: towards taking outside of the box positions, and um, you 505 00:27:18,000 --> 00:27:21,280 Speaker 1: know I have one right now. The market to the market, 506 00:27:21,320 --> 00:27:25,080 Speaker 1: as you know, tell Us has has exceeded my expectation 507 00:27:25,200 --> 00:27:27,840 Speaker 1: of a trading range. I did think that the January 508 00:27:27,960 --> 00:27:29,600 Speaker 1: high would be the high for the year, and we're 509 00:27:29,640 --> 00:27:32,400 Speaker 1: basically at that, but I did not expect the last 510 00:27:32,440 --> 00:27:36,720 Speaker 1: sep points. Yeah, give us an update on Twitter here, 511 00:27:36,760 --> 00:27:39,320 Speaker 1: we've had a Doug cast move fifteen to thirty year 512 00:27:39,440 --> 00:27:42,400 Speaker 1: genius forty you're a bigger genius, and then a pullback. 513 00:27:42,440 --> 00:27:45,240 Speaker 1: What does Doug Kass do on pullback? About the stock 514 00:27:45,320 --> 00:27:48,880 Speaker 1: at fifteen seventy five cents, sold it in the high thirties, 515 00:27:49,240 --> 00:27:53,560 Speaker 1: and I've been buying back it back recently between I 516 00:27:53,600 --> 00:27:56,200 Speaker 1: would say twenty nine and thirty and a half. I 517 00:27:56,280 --> 00:27:59,720 Speaker 1: think there's extraordinary value in Twitter, the scarcity value in 518 00:27:59,760 --> 00:28:03,159 Speaker 1: two Um. It's amazing to me that Tilray has a 519 00:28:03,240 --> 00:28:06,359 Speaker 1: market cap today which exceeds Twitter's market cap by two 520 00:28:06,400 --> 00:28:12,399 Speaker 1: billion dollars. Twitter right now is seventy three up more 521 00:28:12,440 --> 00:28:20,720 Speaker 1: than so far this year. Well done. I mean, I look, 522 00:28:20,800 --> 00:28:23,760 Speaker 1: Doug it Twitter and and and folks were biased here. 523 00:28:23,800 --> 00:28:26,720 Speaker 1: Of course, Bloomberg with our relationship with TikTok and I'm 524 00:28:26,760 --> 00:28:29,840 Speaker 1: thrilled to do downs Bloomberg surveillance streaming three hours every 525 00:28:29,920 --> 00:28:35,159 Speaker 1: morning across Twitter, which we're excited about. But Doug, is 526 00:28:35,200 --> 00:28:38,680 Speaker 1: that international play or is there something you know within 527 00:28:39,160 --> 00:28:42,760 Speaker 1: the perennial discussion of who will take them out? I 528 00:28:42,800 --> 00:28:46,360 Speaker 1: think they'll be taken out by Google. Um, probably in 529 00:28:46,440 --> 00:28:48,280 Speaker 1: the next six or twelve months. I would say that 530 00:28:49,000 --> 00:28:52,480 Speaker 1: I would assign a probability to that Google has the money, 531 00:28:52,960 --> 00:28:57,240 Speaker 1: seventy billion of cash and has the market cap clearly. Okay, Now, Doug, 532 00:28:57,280 --> 00:28:58,920 Speaker 1: we've got to go to where I don't want to 533 00:28:58,960 --> 00:29:05,680 Speaker 1: go here. Now, you got that one to call me 534 00:29:05,800 --> 00:29:08,960 Speaker 1: old fashioned, no, So I figured i'd be a little 535 00:29:08,960 --> 00:29:12,640 Speaker 1: more Dougie fresh today. Number two to talk about the Yankees, 536 00:29:12,800 --> 00:29:15,280 Speaker 1: and I don't remind you that they are not statistically 537 00:29:15,320 --> 00:29:17,960 Speaker 1: out of the race. Thank you. Well, I've reminded myself 538 00:29:18,040 --> 00:29:21,120 Speaker 1: that five times this morning. Doug ESPN brilliantly notes that 539 00:29:21,200 --> 00:29:23,280 Speaker 1: the Red Sox have given up finding the bat on 540 00:29:23,480 --> 00:29:27,800 Speaker 1: ball in September as well. Is Mr Judge, what's critical 541 00:29:27,880 --> 00:29:32,520 Speaker 1: for the New York Yankees in a one game Wild 542 00:29:32,600 --> 00:29:37,000 Speaker 1: Corps Wild Card Playoffs? Every day? It's critical? Well, Mr 543 00:29:37,040 --> 00:29:40,000 Speaker 1: Savareeno and all that. But but I mean, I'm looking 544 00:29:40,040 --> 00:29:43,360 Speaker 1: at the Yankee team with some momentum here in September. 545 00:29:44,000 --> 00:29:46,880 Speaker 1: I'm not quite sure season ends a week from Sunday. 546 00:29:48,360 --> 00:29:50,200 Speaker 1: Come on, I'm a Red Sox fan. I can't believe. 547 00:29:50,240 --> 00:29:53,200 Speaker 1: It's like Flatters Society. I can't believe they won a 548 00:29:53,280 --> 00:29:55,880 Speaker 1: couple of times of the season, the New York Yankees. 549 00:29:55,920 --> 00:29:58,040 Speaker 1: I thought they go undefeated. What do you think? What 550 00:29:58,120 --> 00:29:59,720 Speaker 1: do you think about? What? What do you think happens? 551 00:30:00,160 --> 00:30:03,080 Speaker 1: Let's say what Yankees get into the Wild Card? They 552 00:30:03,120 --> 00:30:05,760 Speaker 1: play the Athletics, and then who the winner of that 553 00:30:05,880 --> 00:30:09,240 Speaker 1: plays the Red Sox. Yeah, I can only hope it's 554 00:30:09,280 --> 00:30:11,280 Speaker 1: a coin. It's a coin to us any game as 555 00:30:11,320 --> 00:30:13,520 Speaker 1: it's a coin to it. Doug Cast, thank you so 556 00:30:13,680 --> 00:30:15,600 Speaker 1: much and the best of luck with long Twitter and 557 00:30:15,680 --> 00:30:24,680 Speaker 1: christ Mr Cash, Mr cass looking with caution, thanks for 558 00:30:24,800 --> 00:30:29,160 Speaker 1: listening to the Bloomberg surveillance podcast. Subscribe and listen to 559 00:30:29,360 --> 00:30:35,080 Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 560 00:30:35,640 --> 00:30:38,960 Speaker 1: I'm on Twitter at Tom Keene before the podcast. You 561 00:30:39,040 --> 00:30:42,400 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio