Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley.
Speaker 1: We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Very
Speaker 1: pleased to say that joining us here in New York
Speaker 1: City is Darra Maya, HSBC's US head of FX strategy.
Speaker 1: Can morning chit Dara in just a moment, when Tom
Speaker 1: King's finished doing his hair, He'll join us on bloom
Speaker 1: Black Radio. What are you doing? They put in this pillar?
Speaker 1: Thank you for all the comments and our beautiful news studio,
Speaker 1: the Interactive Broker's Studio. We had a huge comments yesterday,
Speaker 1: John and some photos are Chris Rosh down at Carolina
Speaker 1: wrote us up in Talking Busines News and you see
Speaker 1: the mirror. The noticed that continues. None of the articles
Speaker 1: writing about the new studio mentioned your mirror behind your
Speaker 1: mic position which at the moment you're staring at you
Speaker 1: this vein at home. Do you compete for mirror time
Speaker 1: with Mrs Keane? No, no, no, afterthoughts the mirror? Okay,
Speaker 1: I put a mortgage PM and what am I meant
Speaker 1: to do with this for the next two hours, I
Speaker 1: don't talk to Dara about the dollars? Can I do that? Now?
Speaker 1: You're going to engage, You're going to focus on the
Speaker 1: market just quickly. Yeah, you're in great. Let's get to
Speaker 1: the note. The consensus is consistent on the dollar consistently wrong,
Speaker 1: it seems, having missed the rally in April. The medium
Speaker 1: forecast is for the dollar to week and by seven
Speaker 1: percent in the coming year, according to Bloomberg Data. While
Speaker 1: this is a medium term view, we believe it is
Speaker 1: fostering an attitude of denial. That's the research from HSBC.
Speaker 1: Who is that? Who did write that? Come on, Dara,
Speaker 1: what's the takeaway at the moment? Why is that your
Speaker 1: takeaway right now? Well, because I do think they're just
Speaker 1: constantly the markets looked at the dollar rally that we've
Speaker 1: had since the end of April and they said, well,
Speaker 1: that doesn't make sense. I think it does, but they
Speaker 1: said it doesn't make sense, so therefore I want to
Speaker 1: sell into it. And it's it's created this positioning, tactical
Speaker 1: position where we're always looking for an opportunity to sell
Speaker 1: the dollar. When I go and see clients. They don't say, hey,
Speaker 1: that's how much for do you think this dollar rally
Speaker 1: can go? It's always is now the time to sell?
Speaker 1: Is now the time to sell? And I think that's
Speaker 1: the problem, is credit this bias in the background. I
Speaker 1: suspect because a strong dollar kills the whole E M story,
Speaker 1: which they're all desperate to work. And I think that's
Speaker 1: the problem because it hasn't been working for some EM
Speaker 1: of late. Well, there's some signs at the moment that
Speaker 1: the long U s versus e M crowd that started
Speaker 1: to emerge over the last couple of months, they're riching
Speaker 1: to pivot and there's some signs right now that they're pivoting.
Speaker 1: Are you saying they're gonna get burned? Well, I think
Speaker 1: they're at risk, and particularly if if it's if they're
Speaker 1: relying on the dollar weakness has been a key leg
Speaker 1: of that equation. I mean, great if you get reduced
Speaker 1: EM risk for whatever reason, political developments, growth, trade wars, whatever,
Speaker 1: But if they're relying on dollar weakness when the Fed
Speaker 1: is going to tighten and continue to tighten along the dots,
Speaker 1: I just don't see where you get there. The rate
Speaker 1: story is a bit of a pain trade right now.
Speaker 1: I was looking at tens the US versus Germany on
Speaker 1: a ten year maturity, fresh whites, fresh multi decade whites,
Speaker 1: and everyone's looking for that convergence to push up euro dollar,
Speaker 1: for rates to move in the euro's favorite you saying
Speaker 1: that's not going to happen. It doesn't feel like but
Speaker 1: you know what's weird. Even just yesterday we had a
Speaker 1: push up in US yells. You you know, Tom's talking
Speaker 1: about it, You've talked about it, and the dollar didn't
Speaker 1: move with it, and it's created a twitchiness I think
Speaker 1: in the market that are we for a rerun of
Speaker 1: twenty seventeen? You know, are we for a rerun where
Speaker 1: rates seem to say the dollars going hird but the
Speaker 1: dollar is not going Asker is just critical And the
Speaker 1: idea here, the yield, folks of the United States and John,
Speaker 1: when you take Germany is compared to the yield of
Speaker 1: Germany is as wide as it's bend since basically time began,
Speaker 1: since records began. Whatever majority it's two d and fifty
Speaker 1: nine bases dreams instability, right, I mean the Green Book
Speaker 1: of the I m F. It screams instability. Right, Well,
Speaker 1: certainly screams divergence. I mean, honestly, you could you could
Speaker 1: say that that's as much as we're seeing. But what
Speaker 1: it what it points to me is, you know, the
Speaker 1: FED is delivering and the ECB is snow playing, snow
Speaker 1: plowing red expectations further and further into the future, as
Speaker 1: there are many other central banks. So it's a peculiar divergence.
Speaker 1: But and I think when the market always sat would
Speaker 1: close and it just hasn't happened such on something important.
Speaker 1: In seventeen, great differentials weren't the dominant story driving euro dollar.
Speaker 1: Why is twenty eighteen different? Why does it stay different?
Speaker 1: I think, well, one of the reasons it was different
Speaker 1: in twenty seventeen was, if you remember, inflation in the
Speaker 1: US was undershooting, but the FED were still able to
Speaker 1: tighten because the dollar was weaker. You know, there was
Speaker 1: an offset there in terms of what it did to
Speaker 1: monetary conditions. At the moment, it feels different because you
Speaker 1: obviously don't have inflation undershooting. The US economy is is
Speaker 1: growing pretty strongly, and whereas in the Eurozone core inflation.
Speaker 1: So I think that's the key difference. And also I
Speaker 1: think in terms of how the markets position in the
Speaker 1: market thought the dollars should be stronger and great differentials,
Speaker 1: and it wasn't, so they got killed. And now I
Speaker 1: think you shouldn't be where's your big figure call right now?
Speaker 1: I mean dollar And you say, yen is not going
Speaker 1: to move that much versus the dollar. But if I
Speaker 1: really want to make a big figure opportunity, which e
Speaker 1: M is the one that's most vulnerable as compared to
Speaker 1: dollar strength. Honestly, Tom is gonna be the usual suspects.
Speaker 1: It's Argentina, It's Brazil. Argentina at a forty and it
Speaker 1: hasn't given it back. It's going to move out to
Speaker 1: even week we got it at fifty five zero big figures. Yeah,
Speaker 1: I mean bear in mind, look that's what moved, but
Speaker 1: a lot of that inflation. That's important for John Ferrell
Speaker 1: because it's usually leverage seven to one. I thought we
Speaker 1: were both in an all cash portfolio. The leverage cash portfolio.
Speaker 1: That's what I'm in, the double leverage in the leverage.
Speaker 1: Could see a bit of risk appetite around the around
Speaker 1: the tableaun sounds and risk appetite irimple effects surveillance Darrek
Speaker 1: just looking at the situation in the United States, there
Speaker 1: was a fear through seventeen that high yields would be
Speaker 1: accompanied by a week of dollar. That's the dynamic we
Speaker 1: see right now. And I think the narrative that's going
Speaker 1: to quickly emerge, and I've already hearing it, is that
Speaker 1: to finance the fiscal deficit in the United States, to
Speaker 1: attract the foreign capital, you can have one or the
Speaker 1: other or both. And essentially it's high yields and a
Speaker 1: weaker dollar, and the weaker dollar is going to what
Speaker 1: what is going to be what it takes to attract
Speaker 1: the foreign capital. Does that narrative start to emerge again?
Speaker 1: It could, it could, but it's the structural story that
Speaker 1: So this is the thing that that's the structural line
Speaker 1: on a on a fiscal deficit. The cyclical line on
Speaker 1: a fiscal deficit is, hey, it's given us tremendous growth.
Speaker 1: It's inflationary, it's supporting affair that wants to tighten through
Speaker 1: neutral it will force the rates market to say, actually,
Speaker 1: they're going to deliver. So look there is so there
Speaker 1: is an offset, and you have to decide which one
Speaker 1: is going to be dominant. I mean, to my opinion,
Speaker 1: and the evidence of the last few months has been
Speaker 1: the cyclical side of that equation is the dominant one,
Speaker 1: the structure one really in the background. Well with within
Speaker 1: this and again you know the strong dollar call. Can
Speaker 1: you fold it into equity markets, HSBC. We talked about
Speaker 1: Steve Major, we talked about Derrenyer, but bring it over
Speaker 1: to equity markets and what it means. Well for me,
Speaker 1: what it means is I'm going to see a lot
Speaker 1: more equity clients. You know, they used to be the
Speaker 1: time where I go out marketing and I just see
Speaker 1: a bond guy or just see an FX guy. Now
Speaker 1: the equity fund managers want to speak to me because
Speaker 1: they recognize that this is a swing fact, that this
Speaker 1: could be a chief determinant. I don't want to call
Speaker 1: the equity make the equity call, but that's definitely a
Speaker 1: point of interest dying to get along, emerging market equities dying,
Speaker 1: and a lot of most people. The prerequisite, the prerequisite
Speaker 1: for that to succeed, as UBS pointed out, is a
Speaker 1: weaker dollar coll dere HSBC. Thank you so much for
Speaker 1: being with us today right now, uh speaking to us
Speaker 1: on policy, Terry Haines, and as we do Terry All
Speaker 1: policy in Washington bounces off the mood of the president,
Speaker 1: which is on oil. It's too I do we have
Speaker 1: a US energy policy inside the Beltway. I think the
Speaker 1: energy policy would be expressed by the President and Republicans
Speaker 1: as drill, baby, drill, and by the Democrats and don't
Speaker 1: do any of that stuff. So we don't really. I mean,
Speaker 1: I remember talking years ago to various secretaries of energy.
Speaker 1: We I mean, I think it's a mystery of a
Speaker 1: lot of people. We really don't have a view on
Speaker 1: energy as a nation. It's just sort of left up
Speaker 1: to private enterprise to figure it out. Right. Well, it is, yeah,
Speaker 1: but in part because the circumstances have changed greatly. I mean,
Speaker 1: people of of our vintage think of you know, energy
Speaker 1: is scarce and all the rest and noworder the point
Speaker 1: where the United States is a net exporter of oil
Speaker 1: and the like. So it's a very different situation than
Speaker 1: it was when that first got to got to be
Speaker 1: the vogue. John, you go back ten twenty years here,
Speaker 1: and it was just raging about energy, and a lot
Speaker 1: of people would say the reason we succeeded because we
Speaker 1: didn't have a Washington base. I remember I remember you
Speaker 1: saying on Bloomberg Surveillance TV many many years ago, Saudi America.
Speaker 1: Do you remember when we had the big shell boom
Speaker 1: Saudi America and we started referring to the country as that.
Speaker 1: And I just wanted to tell whether, I do whether
Speaker 1: whether the United States is actually entitled to do its
Speaker 1: best to influence the cartel which is opaque at a
Speaker 1: time where actually the United States is a major oil
Speaker 1: producer from one of the biggest on the planet entitled sure,
Speaker 1: you know, the you know, the the bump up of
Speaker 1: the sovereign nations and trading blocks is always open for
Speaker 1: for influence. So yeah, absolutely, why not? It just seems
Speaker 1: that the president is also intent on trading foreign policy
Speaker 1: for help on the eco side. We saw that with
Speaker 1: China in North Korea. Is that what we're seeing now
Speaker 1: with Saudi Arabia and the Middle East? Yeah? I think
Speaker 1: a little bit. But and again I think that's always
Speaker 1: been true to the uh. You know, geopolitics always plays
Speaker 1: a role in the in the domestic policies of the
Speaker 1: United States, and that's no less true today. What are
Speaker 1: you looking at? I want to ask an open question here.
Speaker 1: You're a grizzled veteran of the Washington scene. You've um,
Speaker 1: You've got a brass plaque on a chair at the
Speaker 1: hay Adams right lunch, you know, in the lunch room
Speaker 1: there my door, they Hay Adams. But no, well they
Speaker 1: do a good sale. The ice tea is everyone in
Speaker 1: the room, John, you're going to Hey Adams. Are sixty
Speaker 1: hitters in the room. Oh man, Hey Adams? Is we
Speaker 1: could go an hour on the joint house of Hay
Speaker 1: and Adams. John hay are iconic Secretary State Panama Canal
Speaker 1: and all that tore it down and they build a hotel. Okay,
Speaker 1: and that's where guys like Terry Haynes go. No, No,
Speaker 1: I've never been there, you know, don't. Redd O, keeper
Speaker 1: of the m X is listening to this. But at
Speaker 1: the Hay Adams, what are they talking about right now
Speaker 1: into the election? What's the theme? Open question? Terry Haynes.
Speaker 1: The Well, the theme is that the the result is
Speaker 1: very very uncertain. You know, you've got it, I would say,
Speaker 1: both ways, Oh yeah, absolutely. I mean you've got a
Speaker 1: very evenly divided country and and you know this this
Speaker 1: plays out. You can see this playing out a lot
Speaker 1: of ways in public from individual races to the kavan
Speaker 1: on matter all kinds of things where uh, you know,
Speaker 1: a very evenly divided country and a very evenly divided Congress,
Speaker 1: and uh, and these parties are pushing forward and backward
Speaker 1: against each other very strongly, and with a you know,
Speaker 1: with a very open question about who's going to prevail
Speaker 1: from speaking to many investors on a regular basis and
Speaker 1: getting in touch with what our audience really cares about.
Speaker 1: I think the number one thing that many people listening
Speaker 1: right now worried about who have money in this market
Speaker 1: is the prospect for policy rollback. What is the prospect
Speaker 1: of policy rollback? And talk to me about that through
Speaker 1: the prism of the midterms coming up. Yeah, of course,
Speaker 1: the the short answer is that policy rollback is very
Speaker 1: very unlikely in any of the three scenarios. And today
Speaker 1: I have as my six base case a very small
Speaker 1: Democratic majority in the House of ten seats are less
Speaker 1: a slightly increased Republican Senate. In that circumstance, I think
Speaker 1: how markets will will react initially is a concern about
Speaker 1: whether or not there will be policy rollback, and they
Speaker 1: will they will understand very quickly that that is not possible.
Speaker 1: In a first of all, in a divided government, but secondly,
Speaker 1: where the Democrats themselves are going to be riven between
Speaker 1: progressives and centrists, to the centrist will probably be responsible
Speaker 1: for giving them the small majority. Uh. And a lot
Speaker 1: of those people are much more business friendly. Uh. They
Speaker 1: are many of them pledged not to vote for Nancy
Speaker 1: Pelosi's speaker, that sort of thing. So I think that
Speaker 1: there there will be an understanding very early on that
Speaker 1: divided government will not roll back anything. It won't It
Speaker 1: won't allow for another uh well you know, tax bill
Speaker 1: or anything like that. But there won't be a rollback,
Speaker 1: and it will stay away from impeachment and all the
Speaker 1: other you know, the stirma daying of cable news. You're
Speaker 1: suggesting that the new Democrats will lessen or dampen the
Speaker 1: progressive Democrats need to get things done if the House
Speaker 1: takes over. I am interesting. What kind of Democrats are
Speaker 1: these new Democrats? Are these Scoop Jacks and Hubert Humphrey Democrats?
Speaker 1: Are they a new breed? I would suggest they're a
Speaker 1: new breed. It's it's it's the nostalgia we have for
Speaker 1: maybe a middle ground Republican and Democrat from another time.
Speaker 1: But it's not the same as it It's not the same,
Speaker 1: but there there are there are similarities. Uh, a lot
Speaker 1: of people on the coast. And again nothing against the coasts,
Speaker 1: but go ahead, I can see the ocean. I mean,
Speaker 1: not not nothing. It's a coast. But the coasts think
Speaker 1: that somebody like Ocasio Cortez here in Queens is a
Speaker 1: big story. Whatever else that is. That is not a
Speaker 1: Democratic pickup. That is somebody who that That is somebody
Speaker 1: who is replacing another Democrat. The people who are going
Speaker 1: to be responsible for the pickups are people like who
Speaker 1: we saw in the March special election in western Pennsylvania
Speaker 1: Shape Country, Connor Lamb. These are people who are trying
Speaker 1: to actually represent the views of their districts. And somebody
Speaker 1: like Lamb is you know, not Pelosi Second Amendment pro
Speaker 1: all that. I want to bring this right over to England.
Speaker 1: Can there be labor pickups in conservative I mean, I
Speaker 1: think Terry's observation in America is really a can labor
Speaker 1: take a seat from conservatives? The interesting thing about the
Speaker 1: United Kingdom right now is not a traditional left right
Speaker 1: split anymoxact. It's very much about nationalism and populism. Versus globalism,
Speaker 1: and that traditionally does not go through left wing right
Speaker 1: wing lines. I mean that's changed, that's changed massively in
Speaker 1: the political landscape in the UK has changed because of that.
Speaker 1: But I think Terry, what you pick up on is
Speaker 1: really important. Many of our listeners are worried about a
Speaker 1: massive radical shift to the left. Um are you saying
Speaker 1: the socialists that are out there right now promising everyone
Speaker 1: of free pony, unfunded, They're not gonna make it. They're
Speaker 1: not going to change the Democrat Party. I am saying that.
Speaker 1: I think I think the Sanders moment has passed. I
Speaker 1: think there are is certainly passion for those those points
Speaker 1: of view in pockets of the country, in the in
Speaker 1: the northeast and in the coast. But what's going to
Speaker 1: bring Democrats majorities in in a continuation as a viable
Speaker 1: party are going to be the Centrists who don't share
Speaker 1: those views. Fascinating stuff, Tom, I think this is really
Speaker 1: really important. And I also think it goes to Terry's
Speaker 1: point that on the coast, and I will speak for London,
Speaker 1: this happened in the United Kingdom. When you're in London
Speaker 1: and you were reporting on a story like Brexit, whatever
Speaker 1: it might be. You were surrounded by a certain group
Speaker 1: of people and you have literally no idea what is
Speaker 1: happening in the rest of the country. And when we
Speaker 1: were going through the Brexit vote, I remember going literally
Speaker 1: a couple of hours outside the capital back home to
Speaker 1: the Midlands just to sit in the pub with my
Speaker 1: friends to get their thoughts on Brexit. And guess what,
Speaker 1: they had a very very different view on the future
Speaker 1: of the country to my friends down when the cosmopolitan
Speaker 1: home of the elites in the capital of the country,
Speaker 1: it's a very very different scene. And here in New
Speaker 1: York you do get this idea that somehow the socialist
Speaker 1: and the Democrat wing are going to come out and
Speaker 1: revolutionize the party, um terry. You just need to travel
Speaker 1: out to the rest of America, don't you to get
Speaker 1: an idea of what's really going on? Oh? I think so, yeah, absolutely,
Speaker 1: Uh yeah. A lot of politics today to me looks
Speaker 1: like the old joke about university faculty politics. The uh
Speaker 1: the fight is so vicious because the issues are so small.
Speaker 1: Uh So, there's an aspect of that, but it is
Speaker 1: by no means true that what what the coasts care
Speaker 1: about is is what anybody else cares about here, Terry,
Speaker 1: thank you so much whatever I s I greatly appreciate
Speaker 1: this morning. Joining us now is Snolly Bassika Bloomberg to
Speaker 1: tell us all about Canna Fitzgerald and how they have
Speaker 1: really change their their entire business and all. It's always
Speaker 1: a pleasure tell us about this story about Howard Lutnick
Speaker 1: and how he turned Cantor Fitzgerald into this big little guy,
Speaker 1: big little guy. Absolutely, it's been a real interesting journey
Speaker 1: to watch. I was sitting there last New Year's Day
Speaker 1: when on show Jaine, the former CITYO of Deutsche Bank,
Speaker 1: joined and we were sitting there thinking, what's the plan,
Speaker 1: what's going on? And since then they've hired some of um,
Speaker 1: the you know, really really prominent traders on Wall Street,
Speaker 1: sometimes paying more than ten million dollars a piece to
Speaker 1: bring them over from Credit SUITEZ or JP Morgan, and
Speaker 1: we saw them rebuilding trading desks and we found out
Speaker 1: through series of filings that he's a billionaire. Um, so
Speaker 1: it's the first time Howard Lutnik is a billionaire. UM.
Speaker 1: You know, people suspected, but nobody knew. And now um,
Speaker 1: we know that his stake in Candor Fitzgerald has grown
Speaker 1: to more than about sixty and so you know, he
Speaker 1: owns most of the thing, and now he's also spending
Speaker 1: hundreds of millions of his own dollar lers to push
Speaker 1: it into new businesses, including prime brokerage. And they're financing
Speaker 1: hedge funds, especially smaller hedge funds at the largest banks
Speaker 1: are not really taking on Why why is he making
Speaker 1: that push into those particular areas and maybe you could
Speaker 1: just describe what has been their main focus absolutely so, um,
Speaker 1: you know, prime brokerage is an area on Wall Street
Speaker 1: that um, you know, the larger it takes a lot
Speaker 1: of risk, right, you do have to lend these hedge
Speaker 1: funds a significant amount of money. And you know, talent
Speaker 1: really has been moving around on Wall Street quite a bit.
Speaker 1: So it's a good time for him to you know,
Speaker 1: take a lot of people who are disgruntled at JPMorgan
Speaker 1: or disgruntled that Credit Suites, or discruntled that Bank of America,
Speaker 1: UM who where they don't want you know, they're they're
Speaker 1: really discerning about how they're spending their balance sheets. What's
Speaker 1: interesting here is we spent a lot of time about
Speaker 1: the future of Deutsche Bank or future of big European platforms.
Speaker 1: Here's a smaller firm everyone I think, including Hardwood degree.
Speaker 1: It's very entrepreneurial, almost quartered a quarter definitely year to year.
Speaker 1: Where do they fit in in New York? Not a
Speaker 1: regional decidedly. Where do they slot in with the names
Speaker 1: we know better? Well, for one thing, they're actually located
Speaker 1: across the street from Bloomberg's offices. They fit in and
Speaker 1: they actually are right there. But they also, you know,
Speaker 1: you were talking about the big guys, they don't want
Speaker 1: to be one of the big guys. What they want
Speaker 1: to be the biggest little guy. They wanna you know.
Speaker 1: The one thing that he kept saying was he wants
Speaker 1: to be on a certain side, one side of the
Speaker 1: Grand Canyon, not the other. His biggest rival is Jefferies. Ironically,
Speaker 1: he's stolen dozens of bankers from Jeffreys in the last
Speaker 1: year year and a half. UM. Most recently he's um,
Speaker 1: you know, took over twenty four power and energy bankers
Speaker 1: to build out an entirely new power and energy team.
Speaker 1: They're UM working a lot on convertible bond offerings as well,
Speaker 1: so esoteric things that you know, you need specialized talent for.
Speaker 1: He also wants to get into real estate, or I
Speaker 1: guess he already is in real estate, but he wants
Speaker 1: to get into real estate in a bigger way. Yes,
Speaker 1: people forget that b GC is part of the cantor Um.
Speaker 1: You know, Howard Lutnox Empire. There's b GC and Newmark
Speaker 1: and those contribute significantly to his um wealth and and
Speaker 1: you know to what he's really building. And all the
Speaker 1: pieces kind of fit together in a not so obvious way.
Speaker 1: But um, you know he he does have these huge
Speaker 1: real estate platforms where he wants to own the entire
Speaker 1: structure of the financing of real estate. A little bit
Speaker 1: on the history of Canador Fitzgerald, and we always have
Speaker 1: to mention not eleven when we think of it. It
Speaker 1: is everywhere in Canador Fitzgerald. Um, Howard's office and it's
Speaker 1: you know, studded throughout this entire story. But you walk
Speaker 1: in and their steel plates from the building. Um, there
Speaker 1: are pictures of people He's lost. And yeah, the Candorfitsgerald
Speaker 1: charity day, you know Tom was there. You you go
Speaker 1: and you know there's a ton of celebrities and and
Speaker 1: they're raising money and but you know, I'm not there
Speaker 1: like a celebrity. They just want me to teach the
Speaker 1: new guys how to log on, you know, that's all.
Speaker 1: It's like a It's like al. What's great about a
Speaker 1: PIM is there's a lot of these other charity days,
Speaker 1: you know, they're they're all wonderful. What's amazing what Lutnick
Speaker 1: has done is its sustained. You know, you knew it
Speaker 1: would be good for one or two years. It's actually
Speaker 1: gotten better over the years. Steve Bsming and others have
Speaker 1: really made the true celebrities have really made a commitment
Speaker 1: to this, which is great. But what's the nature of
Speaker 1: the billion? Is a billion a nature of a cycle
Speaker 1: of the market or is there a sustainability to Mr
Speaker 1: Lutnick's newfound wealth? Well that's the question. I mean, he's
Speaker 1: well over a billion, so I think it'll be sustained.
Speaker 1: But you know that's you know, and and so um
Speaker 1: the question is and you know he has some headwinds
Speaker 1: on his side, for example, and getting into the hedge
Speaker 1: one universe at a time when volatility is coming back
Speaker 1: could be a good bet. Okay, how's to read of
Speaker 1: the day For New York Wall Street? I would suggest
Speaker 1: for Global Wall Street as well, Mr. Lutnick and Kentor
Speaker 1: fitzger Old. It is penned, it is quilled, as they
Speaker 1: say in print, Tom at Kevin Sinelli, bask As well Bloomer,
Speaker 1: you'll see that. I'll get it out on social here
Speaker 1: at some point Pim Fox and Tom Kane without question
Speaker 1: or interview of the day on the equity markets, Douglas
Speaker 1: cass Sea Breeze Partners, Doug we could talk for an
Speaker 1: hour right now of the dynamics of fixed income versus equities.
Speaker 1: Another hour on long Twitter, another hour on what shorts
Speaker 1: could do. All that cut to the chase yields her up.
Speaker 1: Alan Ruskin at Deutsche Bank says three point one three
Speaker 1: percent is a tip point where three point zero eight
Speaker 1: percent on the tenure yield. How much are rising yields
Speaker 1: competition for the certitude of dividends and dividend growth. I
Speaker 1: think our mutual friend Jason Trenter coined the term tina
Speaker 1: that is a no alternative, and I say move over
Speaker 1: team to look at sit A c I t A
Speaker 1: cash as the alternative. To me, it's really amazing how
Speaker 1: stocks are ignoring what you just described. You know, a
Speaker 1: real rapid rate rise which is now becoming even more conspicuous.
Speaker 1: You know my two, my two idols investment idols, Warren
Speaker 1: Buffet and Leon Cooperman. I've been talking for years about
Speaker 1: stocks being cheap relative to bond market yields, but that's
Speaker 1: not true anymore. And if you look at the differential
Speaker 1: between the three month Treasury bill rate two point two
Speaker 1: versus the SMP yield at one point seven, so we're
Speaker 1: at the largest spread, largest wide in a decade. So
Speaker 1: buying overvalued stocks because bonds are even moreover valued, has
Speaker 1: the feeling of choosing a less painful poison. How about
Speaker 1: just being patient and not taking the poison at all?
Speaker 1: Doug cast what of the notion, I'm sorry, what about
Speaker 1: the notion of letting your winners run? You know, that's
Speaker 1: approach that many take. I look at intrinsic value versus
Speaker 1: share price value, and when those two things widen, when
Speaker 1: stocks are cheap relative to intrinsic value or private market value,
Speaker 1: I buy when there's a premium, as I believe is
Speaker 1: the case now between share prices and the intrinsic value.
Speaker 1: I short. So that leads me to being in a
Speaker 1: short position. And if you're invested in an index, fund
Speaker 1: SMP five over nine year to date. Do you take
Speaker 1: your winnings, go home and wait for a better day.
Speaker 1: I would. I think the the ingredients for a market
Speaker 1: UM drop are now in place. Obviously you look at
Speaker 1: til ray it's uh. It's indicative of over zealousness and
Speaker 1: over abolitionists on the part of the retail investor. This
Speaker 1: is the cannabis specultive activity we saw in early two thousand.
Speaker 1: UM investor complacency is on the rise. I don't know
Speaker 1: a soul pim save the perma bears who are looking
Speaker 1: for anything like a large markdown in the market. Again,
Speaker 1: we have rising interest rates, we have a whole possible No, Doug,
Speaker 1: I don't. I don't mean interrupt, other than to say
Speaker 1: I agree with you that the complacency is out there.
Speaker 1: When do you institute shorts into a rising market? Well,
Speaker 1: my approach, as you know, has always been to average
Speaker 1: into positions both long and short. I don't believe I
Speaker 1: have a concession on finding the absolute right entry price
Speaker 1: level for both my longs and shorts. I've been in
Speaker 1: the business for too many decades to realize that Mr
Speaker 1: market UM, you know, UM beats the heck out of
Speaker 1: all of us, So I average in and it's sort
Speaker 1: of like the funnel. As prices go higher, I have
Speaker 1: larger positions on the short side. And conversely, if prices
Speaker 1: go lower in a bear market, UM, I have larger
Speaker 1: lungs as a prices decline. I do think now that
Speaker 1: you know, the first level thinking is how great the
Speaker 1: economy is and how great corporate profits are. And I
Speaker 1: guess I would say I'm at the polar opposite of
Speaker 1: may West, who once said too much of a good
Speaker 1: thing can be wonderful because there are second order impacts
Speaker 1: on interest rates and inflation which affect the market and
Speaker 1: the prime. If you if you study Graham and Dot,
Speaker 1: you know that the core foundation evaluation is a dividend
Speaker 1: discount model, and that includes an expectation of future cash
Speaker 1: cash flow coupled with an appropriate indust rate. And that
Speaker 1: interest rate, that discount factor or risky rate of return
Speaker 1: is rising and now rising rapidly. Pim May West will
Speaker 1: be that's in the eight o'clock hour tomorrow, Okay, along
Speaker 1: with Doug cast. Is it expensive to hedge away along
Speaker 1: portfolio right now? No, It's very cheap with the vics low, right,
Speaker 1: So that would mean if you don't want to sell,
Speaker 1: you can actually buy yourself some protection. You can buy protecting,
Speaker 1: buy out of the money options for nothing. You find
Speaker 1: that a lot of your investors are asking you to
Speaker 1: do so. No, no, no, they know my predilection and
Speaker 1: towards taking outside of the box positions, and um, you
Speaker 1: know I have one right now. The market to the market,
Speaker 1: as you know, tell Us has has exceeded my expectation
Speaker 1: of a trading range. I did think that the January
Speaker 1: high would be the high for the year, and we're
Speaker 1: basically at that, but I did not expect the last
Speaker 1: sep points. Yeah, give us an update on Twitter here,
Speaker 1: we've had a Doug cast move fifteen to thirty year
Speaker 1: genius forty you're a bigger genius, and then a pullback.
Speaker 1: What does Doug Kass do on pullback? About the stock
Speaker 1: at fifteen seventy five cents, sold it in the high thirties,
Speaker 1: and I've been buying back it back recently between I
Speaker 1: would say twenty nine and thirty and a half. I
Speaker 1: think there's extraordinary value in Twitter, the scarcity value in
Speaker 1: two Um. It's amazing to me that Tilray has a
Speaker 1: market cap today which exceeds Twitter's market cap by two
Speaker 1: billion dollars. Twitter right now is seventy three up more
Speaker 1: than so far this year. Well done. I mean, I look,
Speaker 1: Doug it Twitter and and and folks were biased here.
Speaker 1: Of course, Bloomberg with our relationship with TikTok and I'm
Speaker 1: thrilled to do downs Bloomberg surveillance streaming three hours every
Speaker 1: morning across Twitter, which we're excited about. But Doug, is
Speaker 1: that international play or is there something you know within
Speaker 1: the perennial discussion of who will take them out? I
Speaker 1: think they'll be taken out by Google. Um, probably in
Speaker 1: the next six or twelve months. I would say that
Speaker 1: I would assign a probability to that Google has the money,
Speaker 1: seventy billion of cash and has the market cap clearly. Okay, Now, Doug,
Speaker 1: we've got to go to where I don't want to
Speaker 1: go here. Now, you got that one to call me
Speaker 1: old fashioned, no, So I figured i'd be a little
Speaker 1: more Dougie fresh today. Number two to talk about the Yankees,
Speaker 1: and I don't remind you that they are not statistically
Speaker 1: out of the race. Thank you. Well, I've reminded myself
Speaker 1: that five times this morning. Doug ESPN brilliantly notes that
Speaker 1: the Red Sox have given up finding the bat on
Speaker 1: ball in September as well. Is Mr Judge, what's critical
Speaker 1: for the New York Yankees in a one game Wild
Speaker 1: Corps Wild Card Playoffs? Every day? It's critical? Well, Mr
Speaker 1: Savareeno and all that. But but I mean, I'm looking
Speaker 1: at the Yankee team with some momentum here in September.
Speaker 1: I'm not quite sure season ends a week from Sunday.
Speaker 1: Come on, I'm a Red Sox fan. I can't believe.
Speaker 1: It's like Flatters Society. I can't believe they won a
Speaker 1: couple of times of the season, the New York Yankees.
Speaker 1: I thought they go undefeated. What do you think? What
Speaker 1: do you think about? What? What do you think happens?
Speaker 1: Let's say what Yankees get into the Wild Card? They
Speaker 1: play the Athletics, and then who the winner of that
Speaker 1: plays the Red Sox. Yeah, I can only hope it's
Speaker 1: a coin. It's a coin to us any game as
Speaker 1: it's a coin to it. Doug Cast, thank you so
Speaker 1: much and the best of luck with long Twitter and
Speaker 1: christ Mr Cash, Mr cass looking with caution, thanks for
Speaker 1: listening to the Bloomberg surveillance podcast. Subscribe and listen to
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keene before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio